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As filed with the SEC on March 23, 1999
Registration No. 333-69555
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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FIRST CAPITAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
South Carolina 6021 57-1070990
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(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or Organization) Classification Code Number)
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207 Highway 15/401 Bypass East
Bennettsville, South Carolina 29512
(843) 454-9337
(Address and Telephone Number of Principal Executive Offices and Intended
Principal Place of Business)
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James Aubrey Crosland
President
207 Highway 15/401 Bypass East
Bennettsville, South Carolina 29512
(843) 454-9337
(Name, Address, and Telephone Number of Agent For Service)
----------------------------
Copies of all communications, including copies of all communications
sent to agent for service, should be sent to:
Neil E. Grayson, Esq. A. George Igler, Esq.
C. Russell Pickering, Esq. Igler & Dougherty, P.A.
Nelson Mullins Riley & Scarborough, L.L.P. 1501 Park Avenue East
999 Peachtree Street, N.E., Suite 1400 Tallahassee, Florida 32301
Atlanta, Georgia 30309 (850) 878-2411
(404) 817-6000 (850) 878-1230 (Fax)
(404) 817-6225 (Fax)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
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. [ ]
--------------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE FEE*
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value.... 720,000 $10.00 $7,200,000 $2,002
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* Previously paid.
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The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the SEC is
effective. This prospectus is not an offer to but these securities in any state
where the offer or sale is not permitted.
PROSPECTUS
THIS PRELIMINARY PROSPECTUS IS NOT YET COMPLETE. MARCH 23, 1999
FIRST CAPITAL BANCSHARES, INC.
[INSERT COMPANY LOGO HERE]
720,000 Shares of Common Stock
$10.00 per share
-------------------------------
We are offering shares of common stock of First Capital Bancshares,
Inc. to fund the start-up of a new bank named First Capital Bank. We will be the
sole owner of First Capital Bank, which will be headquartered in Marlboro
County, South Carolina. We expect the bank to open in the second quarter of
1999. First Capital Bank will provide a full range of commercial and consumer
banking services to individuals and small- to medium-sized businesses. This is
our first offering of stock to the public and there is no public market for our
shares. The shares will not be listed on Nasdaq or any national exchange.
The shares will be sold primarily by our sales agent, Banc Stock
Financial Services, Inc., and by our officers and directors. The sales agent has
agreed to use its best efforts to sell the shares offered, but must sell a
minimum of 500,000 shares if it sells any. The offering is scheduled to end on
June 15, 1999, but we may extend the offering until January 31, 1999, at the
latest. The minimum purchase requirement is 100 shares.
We will place all the money we receive in the offering with an
independent escrow agent who will hold the money until we sell at least 500,000
shares and we receive preliminary approval from our bank regulatory agencies for
the new bank. If we do not meet these conditions before the end of the offering
period, we will return all funds to the subscribers with interest earned.
This table summarizes the offering. It shows the maximum commissions we
expect to pay to the sales agent.
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<CAPTION>
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Per Share Minimum Total Maximum Total
--------- ------------- -------------
(500,000 Shares) (720,000 Shares)
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Public Offering Price................ $10.00 $5,000,000 $7,200,000
Sales Agency Commissions............. 0.70 315,160 469,160
Proceeds to First Capital............ 9.30 4,684,840 6,730,840
===========================================================================================
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THIS IS A RISKY INVESTMENT. IT IS NOT A DEPOSIT OR AN ACCOUNT AND IS
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS YOU CAN AFFORD TO LOSE
YOUR ENTIRE INVESTMENT. SOME OF THE RISKS OF THIS INVESTMENT ARE DESCRIBED UNDER
THE HEADING "RISK FACTORS" BEGINNING ON PAGE 6.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[BANC STOCK LOGO HERE]
March___ , 1999
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FIRST CAPITAL BANCSHARES, INC.
[A map of South Carolina, highlighting the Bennettsville area, and an
architect's rendering of the main office of the bank is included here.]
<PAGE> 4
SUMMARY
We encourage you to read the entire prospectus carefully before
investing. See page 5 for instructions on how to subscribe for shares.
GENERAL
First Capital Bancshares is raising capital in this offering to open
First Capital Bank. First Capital Bancshares was organized by the following
Marlboro County area business leaders who will also make up its board of
directors:
Shoukath Ansari Lee Howell
Wylie Cartrette Paul Rush
J. Aubrey Crosland Lee C. Shortt
Glenn Dowdy Dale Hutchins
First Capital Bank will be a new locally owned and operated bank in
Marlboro County, South Carolina. Our initial office will be in Bennettsville,
South Carolina. We also plan to open a branch in McColl, South Carolina and are
considering a second branch in the neighboring town of Laurinburg, North
Carolina. The bank will be a federal thrift and its deposits will be insured by
the FDIC. We expect to open the bank for business in the second quarter of 1999.
Our principal executive offices are located at:
207 Highway 15/401 Bypass East
Bennettsville, South Carolina 29512
Telephone: (843) 454-9337
Fax: (843) 454-9338
MARKET STRATEGY
Most of the banks currently located in the Marlboro County area of
South Carolina are branches of large regional and national banks. We believe
there is demand for a new local bank. To capitalize on this demand, we will
emphasize our local ownership and management and our strong ties to the
community. We plan to concentrate primarily on individuals and small- to
medium-sized businesses. We will offer general commercial and consumer banking
services with a focus on personalized service and on building long-term customer
relationships. As a federal thrift, we will also have the ability to offer other
products and services. Although initially we plan to limit our activities to
traditional banking, we may consider offering products such as property and
casualty insurance in the future.
MANAGEMENT
Our experienced management team consists of the following individuals:
- - Lee C. Shortt will be the chairman and chief executive officer of First
Capital Bancshares. Mr. Shortt has lived in Bennettsville for over 20 years
and is the president of Shortt Auction and Realty Co., which he founded in
1975.
- - James Aubrey Crosland will be president of both First Capital Bancshares
and First Capital Bank. Mr. Crosland is a native of Bennettsville and has
25 years of bank experience. He was most recently the financial manager for
Marlboro Constructors, Inc. before leaving to focus on the organization of
First Capital Bank. Mr. Crosland's other experience includes serving as the
Pee Dee area executive for Carolina First Bank, community banking director
for NationsBank in neighboring Florence, South Carolina, city executive for
Carolina Bank & Trust in Bennettsville, operations officer and commercial
lender for First National Bank of South Carolina in Bennettsville, and
credit manager at Wachovia.
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- - Randy McDonald will be the chief executive officer and chief lending
officer of First Capital Bank. Mr. McDonald has been in banking since 1979,
most recently serving as the loan and asset management officer of the
Citizens Bank and the city executive in the Lake City, South Carolina
office of Carolina First Bank.
- - John M. Digby will serve as chief financial officer for both First Capital
Bancshares and First Capital Bank. Mr. Digby has 27 years of banking
experience and 10 years' experience as the chief financial officer of
community banks in Georgia and Clemson, South Carolina. He was most
recently a vice president of Community Capital Corporation in Greenwood,
South Carolina.
OBTAINING REGULATORY APPROVAL AND OPENING THE BANK
We have submitted an application to the Office of Thrift supervision
which must be approved before we can open First Capital Bank. We anticipate
receiving conditional approval in the second quarter of 1999. We have already
received conditional approval for deposit insurance from the FDIC. In order to
open for business, we anticipate that these agencies will require that the bank
have at least $4.5 million in starting capital.
USE OF PROCEEDS FROM THE OFFERING
We hope to sell between 500,000 and 720,000 shares in this offering at
a price of $10.00 per share to raise between $5 million and $7.2 million. Our
directors have already purchased 30,000 shares of common stock at this price,
and intend to purchase at least 55,200 additional shares in this offering.
We will use the first $4.5 million raised in the offering, and 25% of
the amount raised in excess of $4.5 million, to provide the initial capital for
First Capital Bank. We will use the remaining proceeds to pay the cost of
organizing First Capital Bancshares, the expenses of this offering, and to
provide general working funds for First Capital Bancshares.
First Capital Bank intends to use the $4.5 million it receives from
First Capital Bancshares for expenses incurred to organize and open the bank,
for purchase, renovation and furnishing of the bank's initial offices, and for
general working funds, including paying the salaries of officers and employees
and making loans and investments.
WE DO NOT PLAN TO PAY DIVIDENDS
We do not plan to pay dividends in the near future. Because we are a
start-up enterprise, we will use all earnings to fund our ongoing operation and
the growth of the business.
WE WILL HOLD THE SUBSCRIPTION FUNDS IN ESCROW
Because we cannot open the bank without regulatory approvals, we will
place all the proceeds from outside investors in this offering with an
independent escrow agent. The escrow agent will hold these funds until we raise
a minimum of $5 million and obtain preliminary regulatory approval from the
Office of Thrift Supervision to open the bank. We expect to receive this
approval in the second quarter of 1999. We currently intend to close the
offering on June 15, 1999, but may extend the offering up to January 31, 1999.
If we fail to meet these conditions by the close of the offering, our escrow
agent will promptly refund your subscription in full with interest earned. Even
if we meet these conditions and release the proceeds from escrow, we will return
your subscriptions in full with interest if we fail to open the bank for any
reason. In these events, we will use the investments by our founding
shareholders to pay expenses and liquidate the company.
WE WILL USE A SALES AGENT TO SELL SHARES IN THE OFFERING
We have engaged Banc Stock Financial Services Inc., a subsidiary of The
Banc Stock Group, Inc., as our sales agent to sell shares in the offering. The
sales agent has agreed to use its best efforts to sell the shares
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offered, but must sell at least 500,000 shares in order to sell any. We have
agreed to pay the sales agent a 2.5% commission on shares sold in the offering
to our founding directors, a 6.5% commission on shares sold to investors which
we identify (up to 200,000 shares), and a 7.0% commission on shares sold to the
public. This will result in fees and commissions of approximately $315,000 on
the minimum of 500,000 shares and $470,000 on the maximum of 720,000 shares. We
will also reimburse the sales agent for its costs and expenses up to an
additional $60,000.
HOW TO SUBSCRIBE
If you wish to subscribe for shares you should:
1. Complete, date, and execute the stock order form delivered
with this prospectus;
2. Make a check, bank draft, or money order payable to The
Banker's Bank, Escrow Account for First Capital Bancshares,
Inc., in the amount of $10.00 multiplied by the number of
shares for which you subscribed; and
3. Deliver the completed subscription agreement and check to the
sales agent at the following address:
Banc Stock Financial Services, Inc.
1105 Schrock Road
Suite 437
Columbus, OH 43229
Attention: Ms. Lisa R. Hunter, Executive Vice
President/Compliance Officer
or to the Escrow Agent at the following address:
The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, GA 30339-4098
Attention: Mr. William R. Burkett, Senior Vice
President
If you have any questions about the offering or how to subscribe,
please call Mr. Crosland at (843) 454-9337 or Mr. Edward Schmidt or Ms. Hunter
at Banc Stock Financial Services, Inc. at (800) 347-2265. You should retain a
copy of the completed subscription agreement for your records. The subscription
price is due and payable when the subscription agreement is delivered.
NOTE REGARDING FORWARD LOOKING STATEMENTS: This prospectus contains
certain "forward-looking statements" concerning First Capital Bancshares and
First Capital Bank and their operations, performance, financial conditions, and
likelihood of success. These statements are based on many assumptions and
estimates. Our actual results will depend on many factors about which we are
unsure, including those discussed above. Many of these risks and factors are
beyond our control. The words "may," "would," "could," "will," "expect,"
"anticipate," "believe," "intend," "plan," and "estimate," as well as similar
expressions, are meant to identify such forward-looking statements.
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RISK FACTORS
Investing in First Capital Bancshares common stock involves risks. Our
stock is not a deposit or an account and is not insured by the FDIC or any other
government agency. We are a new company and may not succeed due to many factors.
You should not invest in the common stock unless you can afford to lose your
entire investment. Before investing, we encourage you to read this entire
prospectus, including the following risk factors.
WE ARE A NEW BUSINESS AND CANNOT PREDICT WHETHER WE WILL BE SUCCESSFUL.
Neither First Capital Bancshares nor First Capital Bank has any
operating history. The operations of new businesses are always risky. Because
First Capital Bank has not yet opened, we do not have historical financial data
and similar information that would be available for a financial institution that
has been operating for several years. We cannot predict whether we will be
successful.
WE EXPECT TO INCUR LOSSES FOR AT LEAST TWO YEARS AND CANNOT PREDICT WHEN OR IF
WE WILL BECOME PROFITABLE.
In order for us to become profitable, we will need to attract a large
number of customers to deposit and borrow money. It will take time for us to
produce revenue. We expect to incur large initial expenses and therefore incur
losses. We may not be profitable for several years, if ever. Through December
31, 1998, we had incurred a net loss of $163,490. Prior to opening we expect to
incur losses in excess of $300,000. Although we expect to become profitable in
our second year, it is possible that we may never become profitable and that you
will lose part or all of your investment.
WE CANNOT OPEN THE BANK FOR BUSINESS UNTIL WE RECEIVE REGULATORY APPROVALS WHICH
ARE AT THE DISCRETION OF OUR REGULATORY AGENCIES.
We cannot begin operations until we receive all required regulatory
approvals. We will not receive these approvals until we satisfy certain rules
and requirements for new banks imposed by state and federal regulatory agencies.
We believe one requirement will be that we have at least $4.5 million to
capitalize the bank. We expect to satisfy these requirements and obtain all
necessary approvals by the second quarter of 1999, but it may take longer. We
cannot open the bank without regulatory approvals. To reduce the risks to
subscribers in this offering we will place all proceeds from outside investors
with an independent escrow agent as described in the summary above.
WE WILL DEPEND HEAVILY ON MR. SHORT, MR. CROSLAND, MR. MCDONALD AND MR. DIGBY,
AND OUR BUSINESS WOULD SUFFER IF SOMETHING WERE TO HAPPEN TO ANY OF THEM OR IF
ANY OF THEM WERE TO LEAVE.
We will depend heavily on the senior management to make the bank
successful. In particular, we will depend on Mr. Short, Mr. Crosland, Mr.
McDonald, and Mr. Digby. These individuals will provide valuable services to us,
and each would be difficult to replace. The loss of one or more of the senior
management team could impair our ability to succeed. We have an employment
agreement with each of Messrs. Crosland, McDonald, and Digby, and we carry
$1,000,000 of life insurance payable to the bank on Mr. Crosland.
THE OFFERING PRICE OF $10.00 WAS DETERMINED ARBITRARILY AND IT WILL FLUCTUATE
ONCE THE SHARES BECOME FREELY TRADED AFTER THE OFFERING.
Because we are a start-up company and have no historical operations on
which to base the offering price, the market price of the stock after the
offering may be more susceptible to fluctuations than it otherwise might be. The
market price will be affected by our operating results, which could fluctuate
greatly. These fluctuations could result from expenses of operating and
expanding First Capital Bank, trends in the banking industry, economic
conditions in our market area, stock market fluctuations, and other factors
which are beyond our control. If our operating results are below expectations,
the market price of the common stock would probably fall.
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WE WILL NOT HAVE A LARGE NUMBER OF SHAREHOLDERS OR A LARGE NUMBER OF SHARES
AVAILABLE AFTER THE OFFERING, WHICH MAY LIMIT YOUR ABILITY TO SELL OR TRADE THE
SHARES AFTER THE OFFERING.
There is currently no market for our common stock. We will not be
listed on Nasdaq or any national stock exchange. After the offering, we
anticipate that at least two broker-dealers will attempt to match buy and sell
orders for our common stock on the Over-the-Counter Bulletin Board and that bid
and ask quotations on our stock will be displayed on the Electronic Pink Sheet
System. However, we do not expect a liquid market for our common stock to
develop for several years, if at all. A public market having depth and liquidity
depends on having enough buyers and sellers at any given time. Because this a
relatively small offering, we do not expect to have enough shareholders or
outstanding shares to support an active trading market in the foreseeable
future.
WE WILL FACE STRONG COMPETITION FOR CUSTOMERS FROM LARGER AND MORE ESTABLISHED
BANKS WHICH COULD PREVENT US FROM OBTAINING CUSTOMERS AND MAY CAUSE US TO HAVE
TO PAY HIGHER INTEREST RATES TO ATTRACT CUSTOMERS.
There is strong competition for customers from existing banks and other
types of financial institutions in the Marlboro County area and elsewhere. Some
of these competitors have been in business for a long time and have already
established their customer base and name recognition. Most are larger than we
will be and have greater financial and personal resources than we will have.
Some are affiliated with large regional and national banks, like Carolina First
and Wachovia, and offer services that we either do not expect to provide or will
not provide for some time, such as extensive and established branch networks and
trust services. Because of this competition we may have to pay higher rates of
interest to attract deposits. This would increase our costs and make it more
difficult to be profitable.
A LOCAL OR NATIONAL ECONOMIC DOWNTURN COULD REDUCE OUR CUSTOMER BASE, OUR LEVEL
OF DEPOSITS, AND DEMAND FOR FINANCIAL PRODUCTS SUCH AS LOANS.
We will operate in Marlboro County, South Carolina. An economic
downturn in the area would hurt our business. The county's population has
dropped slightly in the last 7 years, and a continuation or acceleration of this
trend could cause a drop in business opportunities for the bank. Additionally,
the per capita income for the area was generally low at $11,326, indicating that
an economic downturn could affect Marlboro County to a greater extent than other
areas of South Carolina or the United States in general.
AS A BANK, OUR PROFITABILITY DEPENDS ON THE INTEREST RATES WHICH WE PAY ON
DEPOSITS AND COLLECT ON LOANS. INTEREST RATES HAVE HISTORICALLY VARIED GREATLY
AND WE CANNOT PREDICT OR CONTROL THEM.
Our profitability depends on our net interest income and net interest
spread. Net interest income is the difference between the income we earn on
assets and the interest we pay on deposits and other borrowings. Net interest
income is largely determined by our net interest spread, which is the difference
between the rates we receive on loans and investments and the rates we pay for
deposits and other borrowings. Our net interest income and net interest spread
will depend on many factors that we cannot control. These factors include
competition, government economic and monetary policies, and national and local
economic conditions. For example, in a growing economy, interest rates we earn
on loans may drop, while rates we pay on deposits may remain stable, causing a
decrease in our interest rate spread and our net interest income. Although we
will try to minimize our exposure to interest rate risk, we cannot eliminate it.
WE WOULD SUFFER LOSSES IF OUR BORROWERS DEFAULT ON THEIR LOANS.
There are risks inherent in making all loans, and the risks of loan
defaults by borrowers is unavoidable in the banking business. These risks
include:
- Risks caused by the length of the loan repayment period.
Longer repayment periods carry higher risk because of
increased uncertainty about the future.
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- Risks caused by concentrations in types of loans. For
instance, a high percentage of home mortgage loans would be
susceptible to a risk of a drop in the value of real estate.
- Risks caused by changes in the local or national economy or a
downturn for particular industries.
- Risks of nonpayment by individual borrowers.
- Risks resulting from uncertainties about the future value of
collateral used to secure our loans.
Because we will be smaller than most of our competitors, our loan
portfolio will not be as diverse, and these risks will be greater. We will try
to limit our exposure to these risks through prudent lending practices and by
carefully monitoring the amount of loans we make within specific industries, but
we cannot eliminate these risks. Substantial credit losses would result in a
decrease of our net income or an increase in our net losses, and could cause a
reduction in the amount of our bank's capital.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CUSTOMERS
BECAUSE OUR LENDING LIMITS WILL BE LOWER THAN THEIRS.
The amount we can loan a single borrower will be limited to 15% of our
capital. We expect that our initial lending limit will be approximately $675,000
immediately following the offering. To the extent we lose money following the
offering, our capital will decrease and our lending limits will also decrease.
Our lending limit will be significantly less than the limit for most of our
competitors and may affect our ability to seek relationships with larger
businesses in our market area. We intend to accommodate larger loans by selling
participations in those loans to other financial institutions, but we may not be
successful.
WE HAVE IMPLEMENTED ANTI-TAKEOVER DEVICES WHICH COULD PREVENT ANOTHER COMPANY
FROM PURCHASING US, EVEN THOUGH SUCH A PURCHASE MAY INCREASE SHARE VALUE.
In many cases, shareholders would receive a premium for their shares if
we are purchased by another company. However, state and federal law and our
articles of incorporation and bylaws make it difficult for anyone to purchase
First Capital without approval of our board of directors.
In addition, under South Carolina law no other financial institution
may acquire control of First Capital until First Capital has been in existence
for at least five years. For a discussion of some of these provisions, please
see "Description of Capital Stock - Antitakeover Effects" on page 32.
IT IS POSSIBLE THAT OUR COMPUTER SYSTEMS OR THOSE OF OUR PROCESSING VENDORS OR
LOAN CUSTOMERS COULD FAIL TO OPERATE ON JANUARY 1, 2000.
Like many financial institutions, we will rely upon computers for
conducting our business and for information systems processing. There is concern
among industry experts that on January 1, 2000, computers will be unable to read
or interpret the new year and there may be widespread computer malfunctions. We
will generally rely on software and hardware developed by independent third
parties for our information systems. We will require warranties about year 2000
compliance from all third party hardware and software system providers we use.
We believe that our internal systems and software, including our network
connections, will be programmed to comply with year 2000 requirements, although
there is a risk they may not. Based on information currently available, we
believe that we will not incur significant expenses in connection with the year
2000 issue.
The year 2000 issue may also negatively affect the business of our
customers. We intend to include year 2000 readiness in our lending criteria to
minimize this risk. However, we cannot be certain that this will address the
issue and any financial difficulties our customers' experience caused by year
2000 issues could impair their ability to repay loans to the bank. For more
information on year 2000 issues please refer to page 19.
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THE OFFERING
GENERAL
We are offering for sale a minimum of 500,000 shares and a maximum of
720,000 shares of our common stock at a price of $10.00 per share to raise gross
proceeds of between $5 million and $7.2 million. The minimum purchase for any
investor, together with the investor's affiliates, is 100 shares and the maximum
purchase is 5% of the offering unless we accept a subscription for more or less.
Prior to this offering, the organizers purchased 30,000 shares of
common stock at $10.00 per share to fund the organization of First Capital
Bancshares and First Capital Bank. The organizers and their immediate families
intend to purchase at least 55,200 additional shares of common stock in this
offering, for a total investment of 85,200 shares and $852,000. As a result, the
organizers will own approximately 16.1% of the outstanding common stock if we
sell the minimum number of 530,000 shares in the offering and 11.4% of the
outstanding common stock if we sell the maximum number of 750,000 shares in the
offering. Although they have not promised to do so, the organizers and
affiliates of the sales agent may purchase additional shares in the offering, up
to 100% of the minimum offering if necessary to complete the offering. All of
these individuals purchased shares for investment and not with the intent to
resell. Because purchases by these organizers and sales agent may be
substantial, you should not assume that the sale of the minimum offering amount
indicates the merits of this offering or that their investment decision is
shared by public investors.
We will accept subscriptions to purchase shares until midnight, eastern
standard time, on May 15, 1999, unless we sell all of the shares earlier or
otherwise terminate or extend the offering. See "Conditions to the Offering and
Release of Funds" below. We reserve the right to terminate the offering at any
time, or to extend the expiration date through December 31, 1999. Although we
are not required to give you prior written notice of an extension of the
offering period, we expect to communicate quarterly with subscribers and notify
them of extensions. If the offering is extended, subscriptions we have already
accepted will still be binding. Once we become subject to the reporting
requirements of the Securities Exchange Act of 1934, we will file quarterly
reports on Form 10-Q and will make such documents available to shareholders who
request a copy. Extension of the expiration date may increase our organizational
and pre-opening expenses and the expenses of this offering.
Subscriptions will be binding on subscribers once we accept them and
may not be revoked without our consent. We reserve the right to cancel accepted
subscriptions at any time and for any reason until the proceeds of this offering
are released from escrow. We may reject all or part of any subscription. We may
allocate shares among subscribers if the offering is oversubscribed. In
determining which subscriptions to accept we may take into account any factors
we consider relevant, including:
- the order in which subscriptions are received,
- a subscriber's potential to do business with or to direct
customers to us, and
- our desire to have a broad distribution of stock ownership.
If we reject any subscription, or accept a subscription but subsequently cancel
all or part of it, we will promptly refund the amount remitted for the portion
of the subscription rejected or canceled, with interest earned. We will issue
certificates for shares which have been subscribed, accepted and paid for
promptly upon the satisfaction of the offering conditions and release of the
escrowed funds.
CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS
Initially, we will place all subscription proceeds we receive in an
escrow account maintained by an independent escrow agent. The escrow agent will
not release these funds and we will not issue any shares in the offering until
we meet all of the following conditions:
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- We have accepted subscriptions and payment in full for a
minimum of 500,000 shares (which will result in gross offering
proceeds in excess of $5 million).
- We have obtained preliminary approval from the Office of
Thrift Supervision to acquire the stock of First Capital Bank.
- The bank has received preliminary approval of its application
for a charter from the Office of Thrift Supervision.
If First Capital Bancshares terminates the offering prior to
satisfaction of these conditions or if the conditions are not satisfied prior to
the expiration of the offering, which would be December 31, 1999, at the latest,
then:
- We will cancel all subscription agreements and subscribers
will not receive shares or become shareholders of First
Capital Bancshares.
- The funds held in the escrow account will not be subject to
the claims of any creditor of First Capital Bancshares or
available to defray the expenses of this offering.
- We will return full amount of all subscription funds promptly
with interest earned.
The escrow agent has not investigated or passed upon the merits of an
investment in our stock. The escrow agent will invest subscription funds at our
direction in interest-bearing savings accounts, short-term United States
Treasury securities, FDIC-insured bank deposits, or such other investments as we
agree on with the escrow agent. We do not intend to invest the subscription
proceeds held in escrow in instruments that would mature after the expiration
date of the offering.
Even if the funds are released from escrow, if we do not receive final
regulatory approval or do not open the bank for any other reason, we will return
your subscriptions in full, together with any interest actually earned on the
subscriptions while they were held in escrow. We will use the investments by our
founding shareholders to pay expenses and then liquidate the company.
PLAN OF DISTRIBUTION
We have entered into an sales agency agreement with Banc Stock
Financial Services, Inc., a subsidiary of The Banc Stock Group, Inc. The sales
agent has agreed to use its best efforts to sell between 500,000 and 720,000
shares of common stock to the public at the offering price. The sales agent may
not sell any shares unless it can sell at least 500,000 shares. The sales agent
will receive a 2.5% commission on shares sold in the offering to the organizers,
a 6.5% commission on shares sold in the offering to certain investors identified
by the organizers (up to 200,000 shares), and a 7.0% commission on other shares
sold in the offering. The sales agent did not receive any commission on the
30,000 shares purchased by the organizers prior to the offering. First Capital
will also pay the sales agent's expenses in the offering, up to a maximum of
$35,000, and its legal fees up to $25,000. The sales agent may select to sell
shares through other dealers who are members of the National Association of
Securities Dealers, Inc.
The sales agent has the right to terminate the sales agency agreement
under some circumstances, for example, if the sales agent believes that there is
not a favorable public market for the sale of the shares. If the sales agent
terminates the sales agency agreement, we may sell the shares ourselves through
our officers and directors, or we may engage one or more other broker/dealers.
We do not currently have arrangements with any other broker/dealers. Until we
have sold the minimum number of shares, we will promptly forward all funds we
receive from the sale of shares to the escrow agent.
The sales agency agreement provides for reciprocal indemnification
between us and the sales agent against certain liabilities in connection with
this offering, including liabilities under the securities laws. The SEC
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<PAGE> 12
has advised us that it believes that such indemnification is against public
policy and may be unenforceable. We have also granted the sales agent a right of
first refusal to serve as managing underwriter on any future financing or to act
as an adviser on any merger or similar transaction occurring within one year
after this offering. In any such transaction, we will agree on compensation that
is reasonable and customary within the industry.
MARKET FOR COMMON STOCK
As of the date of this prospectus, there is no public market for the
shares. Following the offering, we intend that the common stock be quoted on the
OTC Bulletin Board under the trading symbol "_____", and the sales agent intends
to act as a "market maker" in the common stock. However, we do not anticipate
that an active market will develop for the shares anytime soon. Making a market
in securities involves maintaining bid and ask quotations and being able, as
principal, to effect transactions in reasonable quantities at those quoted
prices, subject to various securities laws and other regulatory requirements.
The development of a public trading market depends on the existence of an
adequate number of willing buyers and sellers. We will have a relatively small
number of shareholders and shares outstanding and therefore may not have an
adequate number of buyers and sellers at any time. Based on our discussions with
the sales agent, we expect that a secondary market may eventually develop for
the shares, but we cannot be sure.
In general, if a secondary market does develop, the shares will be
freely transferable and assignable, and nonaffiliate shareholders may sell any
number of shares in such secondary market. Shareholders who are affiliates,
including officers, directors and 10% shareholders, will have certain
restrictions on their ability to resell shares imposed by the securities laws.
See "Description of the Capital Stock of First Capital Bancshares - Shares
Eligible for Future Sale" on page 33. In addition, we cannot assure you that the
market makers will continue to maintain the secondary market indefinitely. This
will depend on many factors, including those beyond our control such as the
volume of activity in the secondary market.
We have agreed with the sales agent not to sell any shares for a period
of six months after the date of this prospectus without the sales agent's prior
written consent. The sales agent anticipates that its affiliates will purchase
up to 9.9% of shares at the public offering price for their own accounts.
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<PAGE> 13
USE OF PROCEEDS
We expect to raise between $5 million and $7 million in this offering.
The two tables on the next page summarize our anticipated use of the funds, or
proceeds, which we receive in this offering. These figures are estimates and
projections based on information currently available. Actual numbers will vary,
possibly quite a bit. We believe that the minimum proceeds of $5 million from
the offering will satisfy the cash requirements for the first three years for
both First Capital Bancshares and First Capital Bank, but we cannot be sure.
Because this is a new enterprise, we cannot predict our future revenue or cash
flow or whether it will be sufficient to sustain continued operation. Therefore,
we do not know how much money we will actually spend or need. To date our
expenses have been funded by the initial $300,000 investment of the organizers
and by a line of credit with The Bankers Bank guaranteed by the organizers.
USE OF FUNDS BY FIRST CAPITAL BANCSHARES
The following table shows the anticipated use of proceeds by First
Capital Bancshares based on the sale of the minimum number and maximum number of
shares in this offering. The investment in First Capital Bank will be $4.5
million plus 25% of the amount by which the net proceeds of the offering exceed
$4.5 million. Net proceeds are the proceeds of the offering less our sales
commissions and offering expenses.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
500,000 Shares 720,000 Shares
-------------- --------------
<S> <C> <C>
Gross proceeds from offering.................................. $ 5,000,000 $ 7,200,000
Sales Agent's commission...................................... (315,160) (469,160)
Expense of organizing First Capital Bancshares................ (23,000) (23,000)
Offering expenses............................................. (127,000) (127,000)
Investment in capital stock of First Capital Bank............. $ (4,500,000) $ (5,025,960)
-------------- --------------
Remaining proceeds............................................ $ 25,840 $ 1,434,340
============== ==============
</TABLE>
BY FIRST CAPITAL BANK
The following table shows the anticipated use of proceeds by First
Capital Bank. All proceeds received by First Capital Bank will be in the form of
an investment by First Capital Bancshares in First Capital Bank's capital stock.
We have already purchased the bank site with a loan from The Bankers Bank for
$350,000. We will use proceeds of the offering to repay such loan.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
500,000 Shares 720,000 Shares
-------------- --------------
<S> <C> <C>
Investment from First Capital Bancshares...................... $ 4,500,000 $ 5,025,960
Organizational and pre-opening expenses of First Capital
Bank.......................................................... (300,000) (300,000)
Furniture, fixtures and equipment............................. (344,000) (344,000)
Purchase of temporary facilities.............................. (74,000) (74,000)
Purchase of bank site and offices............................. (350,000) (350,000)
Renovation of bank offices.................................... $ (475,000) $ (475,000)
-------------- --------------
Remaining proceeds............................................ $ 2,957,000 $ 3,482,960
============== ==============
</TABLE>
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<PAGE> 14
CAPITALIZATION
The following table shows First Capital Bancshares' capitalization as
of December 31, 1998, and the pro forma consolidated capitalization of First
Capital Bancshares and First Capital Bank, as adjusted to give effect to the
sale of the minimum and maximum number of shares in this offering. The bank has
targeted the second quarter of 1999 for opening First Capital Bank. "Additional
paid-in capital" shown in the "As Adjusted" columns was calculated by
subtracting the estimated expenses of the offering, including sales agent
commissions, and legal, accounting, printing and other expenses. We estimate
these expenses to be approximately $442,160 in the minimum offering and $596,160
in the maximum offering. The "Deficit accumulated in the pre-opening stage"
reflects actual expenses incurred through December 31, 1998, and the "As
Adjusted" columns reflect expenses estimated to be incurred to organize and
prepare to open First Capital Bancshares and First Capital Bank. Refer to "Use
of Proceeds" above for more information about these expenses. Please note that
you are likely to experience additional dilution due to operating losses
expected to be incurred during the initial years of First Capital Bank's
operations.
<TABLE>
<CAPTION>
As Adjusted As Adjusted
for For
Minimum Maximum
December 31, 1998 Offering Offering
----------------- -------- --------
<S> <C> <C> <C>
SHAREHOLDERS EQUITY:
Common Stock, par value $.01 per share; 10,000,000 shares
authorized; 30,000 shares issued and outstanding; 530,000 shares
issued and outstanding as adjusted (minimum offering); 750,000
shares issued and outstanding (maximum offering).................... 300 5,300 7,500
Preferred Stock, par value $.01 per share; 10,000,000 shares
authorized; no shares issued and outstanding........................ 0 0 0
Additional paid-in capital.......................................... 299,700 4,852,540 6,896,340
Deficit accumulated during the pre-opening stage.................... (163,490) (323,000) (323,000)
---------- ------------ ------------
Total shareholders' equity ...................................... $ 136,510 $ 4,534,840 $ 6,580,840
========== ============ ============
</TABLE>
DIVIDEND POLICY
We do not expect to pay any dividends in the near term, and may never
pay dividends. Initially we plan to retain earnings and use them to operate and
expand the business. As First Capital Bancshares will initially act primarily as
a holding company for First Capital Bank and will not generate any independent
revenue, First Capital Bancshares' ability to pay dividends will depend on the
payment of dividends by First Capital Bank. In order to pay dividends to First
Capital Bancshares, First Capital Bank must comply with the requirements of all
applicable laws and regulations. See "Supervision and Regulation - Capital
Requirements" on page 21 and "Supervision and Regulation - Dividends" on page
23. In addition to the availability of funds from First Capital Bank, the future
dividend policy of First Capital Bancshares is subject to the discretion of the
board of directors and will depend upon a number of factors, including future
earnings, financial condition, cash needs, and general business conditions.
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<PAGE> 15
PROPOSED BUSINESS AND PLAN OF OPERATION
ORGANIZATION AND GENERAL OPERATION
We incorporated First Capital Bancshares as a South Carolina
corporation in June 1998, primarily to own and control all of the capital stock
of First Capital Bank. First Capital Bancshares initially will engage only in
the business of owning and managing First Capital Bank. As discussed below, we
have applied for a federal savings bank, or thrift, charter for the bank. As a
federally chartered savings bank, First Capital Bank will have general authority
to originate and purchase loans secured by real estate, secured or unsecured
loans for commercial, corporate, business, or agricultural purposes, and loans
for personal, family, or household purposes. We will emphasize retail banking,
home mortgages, real estate loans, and consumer lending needs. We will not be
permitted to make non-real estate commercial purpose loans that exceed 20% of
the assets of the bank or non-real estate consumer purpose loans that exceed 35%
of the assets of the bank. While not restricted by law, we expect initially to
limit our lending activities primarily to Marlboro County and the surrounding
communities, including the neighboring towns of McColl, South Carolina and
Laurinburg, North Carolina.
The thrift charter will allow First Capital Bank to operate in all 50
states and to branch into any county in the state of South Carolina without any
additional regulatory approval. The thrift charter will also give First Capital
Bancshares more flexibility to pursue strategic opportunities to grow its
customer base and to create cross-selling opportunities to those same customers.
We have chosen a holding company structure under which First Capital
Bancshares will own all of the capital stock of First Capital Bank. We believe
the holding company structure will provide flexibility that would not otherwise
be available to the bank alone, including the ability to acquire other financial
institutions and the ability to provide other non-banking services such as
insurance. We do not have any current plans to this effect.
REGULATORY APPROVALS REQUIRED TO OPEN THE BANK
We filed an application with the Office of Thrift Supervision on August
4, 1998 to charter First Capital Bank as a federal savings bank. The issuance of
a charter will depend, among other things, upon compliance with certain legal
requirements that may be imposed by the Office of Thrift Supervision, including
capitalization of the bank with a minimum amount of capital which we believe
will be $4.5 million. Additionally, we must obtain the approval of the Office of
Thrift Supervision for First Capital Bancshares to become a thrift holding
company before acquiring the capital stock of First Capital Bank. We also filed
an application with the FDIC for deposit insurance for the bank and obtained
preliminary approval of this application on February 5, 1999. We expect to
receive all other regulatory approvals by the second quarter of 1999, but cannot
be sure that we will receive approval by then, or ever.
OFFICES, FACILITIES AND SERVICE AREA
Our office is currently located in a modular bank unit at 207 Highway
15/401 Bypass East, in Bennettsville, South Carolina, at the site of a former
Shoney's restaurant. We purchased this property for $350,000 on March 1, 1999,
with a loan from The Bankers Bank for $335,000. This loan has a term of one year
and carries interest at the prime rate minus 1%. We intend to repay this loan
from the proceeds of the offering.
We will renovate the existing 5,200 square foot building for use as our
principal office and have budgeted $475,000 for that purpose. We intend to
commence construction in early 1999 and anticipate that the office will be ready
by October 1999. We have contracted with Spectrum Financial Systems, Inc. to
purchase the modular bank unit for approximately $100,000. Upon completion of
the office space, we will move the temporary unit six miles to McColl, South
Carolina to become our first branch. We are also considering opening a branch in
neighboring Laurinburg, North Carolina in the near future. We believe that these
facilities will adequately serve our needs for the first several years of
operation.
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<PAGE> 16
We expect initially to draw virtually all of our business from Marlboro
County and the surrounding areas in South Carolina. The county's population had
a slight drop in population from 29,361 in 1990 to 29,173 in 1997, making it the
32nd largest county in the state. Per capita income in the county was $11,326 as
of 1997.
MARKETING FOCUS
There are currently seven branches of financial institutions operating
in Marlboro County, none of which are locally owned. Most are local branches of
large regional banks. Although size gives the larger banks certain advantages in
competing for business from large corporations, including higher lending limits
and the ability to offer services in other areas of South Carolina and the
Marlboro County area, we believe that these banks cannot provide the customer
service and individual attention of a locally owned bank. We believe this leaves
a void in the market which we hope to fill. As a result, we generally will not
attempt to compete for the banking relationships of large corporations, but will
concentrate our efforts on building relationships with small- to medium-sized
businesses and on individuals.
We plan to emphasize our local ownership, community based nature, and
ability to provide more personalized service than our competition. Our
directors, as long-time residents and businessmen in the Marlboro County area,
have determined the credit needs of the area through personal experience and
communications with their business colleagues. We believe that the proposed
focus on the community is likely to succeed in the market and that the area will
react favorably to our emphasis on service to small businesses, individuals, and
professional concerns.
DEPOSITS
We intend to offer a full range of deposit services that are typically
available in most banks and savings and loan associations, including:
- checking accounts,
- commercial accounts,
- savings accounts, and
- other time deposits of various types, ranging from daily money
market accounts to longer-term certificates of deposit.
We will tailor accounts and time certificates to our principal market area at
rates competitive to those offered in the Marlboro County area. In addition, we
intend to offer certain retirement account services, such as IRAs. We will
solicit these accounts from individuals, businesses, associations,
organizations, and governmental authorities.
CAPITALIZATION AND EXPENSES
As of December 31, 1998, we had total assets of $145,510, consisting of
$103,293 in cash, an option on real estate valued at $15,000, and $27,217 in
prepaid organizational costs. We incurred a net loss of $163,490 for the period
from inception December 19, 1997 through December 31, 1998.
After we complete the offering and open the bank, we expect we will
have incurred the following expenses:
- $23,000 in expenses to organize First Capital Bancshares.
- $155,000 in expenses to organize First Capital Bank, including
legal fees for incorporation and legal and consulting fees for
obtaining regulatory approval.
- $145,000 in expenses to open First Capital Bank, including
salaries, overhead and other operating expenses.
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<PAGE> 17
- $127,000 in expenses of the offering.
All expenses will be charged against operating results, except expenses of the
offering which will be deducted from the funds received in the offering.
LENDING ACTIVITIES
General. We intend to offer a range of lending services, including real
estate, commercial and consumer loans. We will target individuals and small- to
medium-sized businesses and professional concerns that are located in or conduct
a substantial portion of their business in our market area. We will initially
emphasize retail banking, home mortgages, real estate, and consumer lending
needs. We will not be permitted to make non-real estate commercial purpose loans
that exceed 20% of the bank's assets or non-real estate consumer purpose loans
that exceed 35% of the bank's assets.
Real Estate Loans. We expect that loan secured by first or second
mortgages on real estate will make up a significant portion of the bank's loan
portfolio. These loans will generally fall into one of three categories:
commercial real estate loans, construction and development loans, or residential
real estate loans. Each of these categories is discussed in more detail below,
including their specific risks. Home equity loans are not included because they
are classified as consumer loans, which are discussed below under a separate
heading. Interest rates for all categories may be fixed or adjustable, and will
more likely be fixed for shorter term loans. The bank will generally charge an
origination fee for each loan.
The principal economic risk associated with real estate loans is the
creditworthiness of the borrowers. Other risks associated with real estate loans
vary with many economic factors, including employment levels, strength of local
and national economy and fluctuations in the value of real estate. We will
compete for these loans with competitors who are well established in the
Marlboro County area and have greater resources and lending limits. As a result,
we may have to charge lower interest rates to attract borrowers.
We will require a valid mortgage lien on all real property loans along
with a title lien policy which insures the validity and priority of the lien. We
will also require borrowers to obtain hazard insurance policies and flood
insurance if applicable.
We will have the ability to originate real estate loans for sale into
the secondary market. We may be able to limit our interest rate and credit risk
on these loans by locking the interest rate for each loan with the secondary
investor and receiving the investor's underwriting approval prior to originating
the loan.
Commercial Real Estate Loans. Commercial real estate loans will
generally have terms of five years or less, although payments may be structured
on a longer amortization basis. The primary risk associated with commercial real
estate loans include the general risk of the failure of each commercial
borrower, which will be different for each type of business and commercial
entity. We will evaluate each business on an individual basis and attempt to
determine its business risks and credit profile. We may or may not be
successful. We will attempt to reduce credit risk in the commercial real estate
portfolio by emphasizing loans on owner-occupied office and retail buildings
where the loan-to-value ratio, established by independent appraisals, does not
exceed 80%. We will also generally require that debtor cash flow exceed 120% of
monthly debt service obligations. We will typically review of the personal
financial statements of the principal owners of each borrower and require their
personal guarantees. Such reviews generally reveal secondary sources of payment
and liquidity to support a loan request.
Construction and Development Real Estate Loans. We will offer
adjustable and fixed rate residential and commercial construction loans to
builders and developers and to consumers who wish to build their own homes. The
term of construction and development loans will generally be limited to one
year, although payments may be structured on a longer amortization basis. These
loans are generally interim loans and are refinanced as general commercial real
estate loans upon completion of the project or paid off on the sale of the
property. Construction
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<PAGE> 18
and development loans generally carry a higher degree of risk than long term
financing of existing properties. Repayment depends on the ultimate completion
of the project and usually on the sale of the property. Risks include:
- cost overruns,
- mismanaged construction,
- inferior or improper construction techniques,
- economic changes or downturns during construction,
- a downturn in the real estate market,
- rising interest rates which may prevent sale of the property,
and
- failure to sell completed projects in a timely manner.
We will attempt to reduce risk by obtaining personal guarantees where possible,
and by keeping the loan to value ratio of the completed project below specified
percentages. We may also reduce risk by selling participations in larger loans
to other institutions when possible.
Residential Real Estate Loans. Residential real estate loans will
generally have longer terms up to 30 years. We will offer fixed and adjustable
rate mortgages. Adjustable rate mortgages offer more protection against interest
rate fluctuation, but carry other risks because as interest rates increase, the
borrower's payments increase, increasing the risk of default. Risks associated
with residential real estate loans include:
- the inability to resell foreclosed real estate in a down
market or economy,
- shifts in the demographics of a given market from residential
zonings to commercial,
- displacement of individual borrowers due to corporate
downsizing/loss of income,
- loss of borrowers jobs due to an overall economic downturn or
an economic downturn in a specific industry, and
- drops in the real estate market in general.
We will attempt to limit risk by requiring loan to value ratios of 80% or
higher, co-signers when we believe it is necessary, and by generally assessing
the credit worthiness of each borrower on an individual basis.
Commercial Loans. We will make loans for commercial purposes in various
lines of businesses. Equipment loans will typically have a term of five years or
less at fixed or variable rates, be fully amortized over the term, secured by
the financed equipment, an have a loan-to-value ratio of 80% or less. Working
capital loans will typically have terms of one year or less and will usually be
secured by accounts receivable, inventory, or personal guarantees of the
principals of the business. Loans secured by accounts receivable or inventory
will typically require repayment as the assets securing the loan are converted
into cash, and in other cases principal will typically be due at maturity. The
principal economic risk associated with each category of anticipated loans,
including commercial loans, is the creditworthiness of the borrowers. The risks
associated with commercial loans vary with many economic factors, including the
economy in the Marlboro County area. The risks associated with commercial loans
are generally higher than the risks associated with residential or commercial
real estate loans. The well-established banks in the Marlboro County area will
make proportionately more loans to medium- to large-sized businesses than we
will. Many of our anticipated commercial loans will likely be made to small- to
medium-sized businesses which may be less able to withstand competitive,
economic, and financial conditions than larger borrowers.
Consumer Loans. We will make a variety of loans to individuals for
personal and household purposes, including secured and unsecured installment and
term loans, home equity loans and lines of credit, and revolving lines of credit
such as credit cards. These loans will typically carry balances of less than
$25,000 and, in the case of non-revolving loans, will either be amortized over a
period of 48 months or structured as 90-day term loans. In each case loans will
have a fixed interest rate. Revolving loans will typically bear interest at a
fixed rate and require monthly payments of interest and a portion of the
principal balance. The underwriting criteria for home equity loans and lines of
credit will generally be the same as for first mortgage loans, as described
above, and home equity lines of credit will typically expire ten years or less
after origination. As with the other categories of
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<PAGE> 19
loans, the principal economic risk associated with consumer loans is the
creditworthiness of our borrowers, and the principal competitors for consumer
loans will be the established banks in the Marlboro County area.
Loan Approval and Review. The bank's loan approval policies will assign
a different level of lending authority to each officer of the bank. Each officer
will have an individual lending limit. When the amount of aggregate loans to a
single borrower exceeds that individual officer's lending authority, we will
escalate the loan request for approval to an officer with a higher lending
limit. We anticipate that the lending limit of the chief executive officer of
First Capital Bank will initially be set at $100,000. We will establish an
officers' loan committee to consider loans which exceed the lending authority of
any individual officer, and a director's loan committee to consider loans which
exceed the lending authority of the officer's committee. The bank will not be
allowed to make any loans to any of its directors, officers, or employees unless
the loan is approved by the bank's board of directors and has terms no more
favorable than terms available to a person who is not affiliated with the bank.
Lending Limits. Federal law imposes a variety of lending limits on the
bank. The circumstances of a loan, including the type of loan, the nature of the
borrower, and the borrower's relationship to the bank determine the particular
lending limits which will be applicable to the loan. In general, the bank will
be subject to limits on the amount it can loan to any one borrower. Since the
enactment of the Financial Institution Reform Recovery and Enforcement Act in
1989, a savings association generally may not make loans to one borrower and
related entities in an amount which exceeds 15% of its unimpaired capital and
surplus, although loans in an amount equal to an additional 10% of unimpaired
capital and surplus may be made to a borrower if the loans are fully secured by
readily marketable securities. Unless the bank is able to sell participations in
its loans to other financial institutions, the bank will not be able to meet all
of the lending needs of loan customers requiring aggregate extensions of credit
above these limits. We do not anticipate that the bank will have an initial loan
loss reserve when it commences operations.
OTHER BANKING SERVICES
We anticipate that the bank will provide other bank services including:
- cash management services,
- safe deposit boxes,
- travelers checks,
- direct deposit of payroll,
- social security checks, and
- automatic drafts for various accounts.
We plan to become associated with a shared network of automated teller
machines that our customers may use throughout Marlboro County and other
regions. We believe that an association with a shared ATM network will enable us
to better serve our customers and attract customers who are accustomed to the
convenience of ATMs. We do not believe that maintaining this association will be
critical to our success. We intend to begin offering these services shortly
after we open the bank. We also plan to offer MasterCard and VISA credit card
services through a correspondent bank as agent. We do not expect the bank to
exercise trust powers during its initial years of operation.
COMPETITION
The banking business is highly competitive. The bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, and money market mutual funds operating in the
Marlboro County area and elsewhere. In 1997, there were more than seven branches
of financial institutions operating in Marlboro County, holding over
$154,163,000 in deposits. These include branches of Wachovia, First Citizens
Bank, Carolina First Bank, and Carolina Bank & Trust. A number of these
competitors are well established in the Marlboro County area and throughout the
state. Most of them have substantially
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<PAGE> 20
greater resources and lending limits and offer certain services, such as
extensive and established branch networks and trust services, that the we do not
expect to provide or do not expect to provide initially. As a result of these
competitive factors, the bank may have to pay higher rates of interest to
attract deposits.
EMPLOYEES
We anticipate that, upon opening, the bank will have approximately 10
full-time employees in the modular unit. We estimate that we will increase the
number of employees to 14 once the bank moves into its permanent facilities.
First Capital Bancshares will not have any employees other than its officers.
LEGAL PROCEEDINGS
Neither First Capital Bancshares nor First Capital Bank or any of their
properties are subject to any material legal proceedings.
YEAR 2000 CONCERNS
Like many financial institutions, we will rely upon computers for the
daily conduct of our business and for information systems processing. There is
concern among industry experts that on January 1, 2000, computers will be unable
to "read" the new year and there may be widespread computer malfunctions. We
will be generally relying on software and hardware developed by independent
third parties for our information systems. We are a new company and therefore,
despite our reliance upon third parties for many of our information systems, we
believe that by following the procedures that are outlined below, we have the
ability to ensure that our vendors' computer systems are year 2000 compliant.
We have entered into an agreement with Fiserv Solutions, Inc. to
provide our mission critical hardware and software, and to perform all overnight
processing and reconciliation of our daily transaction data. Fiserv is a well
established company which provides similar systems and services to thousands of
financial institutions in the United States. Fiserv has completed testing the
system we will be using with generic data which has been artificially "aged" to
simulate all critical year 2000 related dates. We have reviewed these tests and
are satisfied that the system tested is similar to ours and that the Fiserv
system did not encounter any year 2000 problems. We therefore do not expect to
encounter any year 2000 issues in the Fiserv system. Our agreements with Fiserv
include warranties that their system is year 2000 compliant in all respects,
although the remedies available under such agreements are limited and
specifically exclude special, incidental, indirect, and consequential damages.
We will require all other vendors to provide similar test results and
warranties regarding year 2000 compliance. Because we have chosen our
information systems and software with the year 2000 in mind, we do not believe
we will have any significant expenses associated with that year 2000 separate
for the expense of choosing and acquiring these systems. We have hired our
accountants to assist us in assessing our year 2000 risks and worst case
scenario and to prepare a year 2000 contingency plan to address the possibility
that Fiserv or any of our other vendors encounter material problems related to
the year 2000. We will complete this analysis before May 30, 1999. We cannot be
sure that such plan will mitigate any losses we might have or resolve year 2000
issues which may arise.
We may also incur losses if our loan customers encounter year 2000
problems which would prevent them from repaying loans. We intend to require
certification from each commercial borrower that their systems are year 2000
compliant and that they do not expect to be adversely affected by the year
change. Although these certifications will be helpful, it would be very
difficult for us to accurately assess the year 2000 readiness of any borrower.
We may therefore suffer loan losses from customers who have significant year
2000 problems.
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<PAGE> 21
SUPERVISION AND REGULATION
First Capital Bancshares and First Capital Bank are subject to state
and federal banking laws and regulations which impose requirements and
restrictions on virtually all aspects of operations. These regulations also
provide for regulatory oversight of the bank and its operations. These laws and
regulations are generally intended to protect depositors, not shareholders. The
following summary briefly describes certain statutory and regulatory provisions.
These regulations are very complex and we refer you to the particular statutory
and regulatory provisions for a thorough understanding. Changes in applicable
laws or regulations may have a material effect on our business and prospects.
With the enactment of the Financial Institution Report Recovery and Enforcement
Act in 1989 and the FDIC Improvement Act in 1991, numerous additional regulatory
requirements have been placed on the banking industry in the past several years,
and additional changes have been proposed. The banking industry is also likely
to change significantly as a result of the passage of the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994. We cannot predict the nature or
the extent of the effect on our business and earnings of fiscal or monetary
policies, economic controls, or new federal or state legislation.
SUPERVISION OF FIRST CAPITAL BANCSHARES
We will be a registered holding company under the Savings and Loan
Holding Company Act set forth in Section 10 of the Home Owners Loan Act of 1933.
We will be regulated under such acts by the Office of Thrift Supervision. As a
savings and loan holding company, First Capital Bancshares will be required to
file an annual report with the Office of Thrift Supervision and such additional
information as they may require from time to time. The Office of Thrift
Supervision will also conduct periodic examinations of First Capital Bancshares
and each of its subsidiaries, including First Capital Bank.
As a savings and loan holding company owning only one savings
institution, First Capital Bancshares will generally be allowed to engage and
invest in a broad range of business activities not permitted to commercial bank
holding companies or multiple savings and loans holding companies, provided that
First Capital Bank continues to qualify as a "qualified thrift lender." See
"Qualified Thrift Lender Requirements" on page 24.
The Savings and Loan Holding Company Act will prohibit First Capital
Bancshares from acquiring control of another savings association or another
savings and loan holding company without prior approval from the Office of
Thrift Supervision. However, savings and loan holding companies are allowed to
acquire or to retain as much as 5% of the voting shares of another savings
institution or savings and loan holding company without regulatory approval.
The Office of Thrift Supervision may not approve an acquisition that
would result in the formation of certain types of interstate holding company
networks. For instance, the Office of Thrift Supervision may not approve an
acquisition that would result in the formation of multiple holding companies
controlling institutions in more than one state unless each acquisition in each
additional state is authorized under Section 13(k) of the Federal Deposit
Insurance Act or by the statutes of each state in which the target institutions
are located.
SUPERVISION OF FIRST CAPITAL BANK
General. Subject to receipt of the necessary approvals of its pending
applications, First Capital Bank will operate as a federal savings bank
incorporated under the laws of the United States. It will be subject to periodic
examination by the Office of Thrift Supervision. The Office of Thrift
Supervision will regulate or monitor virtually all areas of First Capital Bank's
operations, including:
- security devices and procedures,
- adequacy of capitalization and loss reserves,
- loans,
- investments,
- borrowings,
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<PAGE> 22
- deposits,
- mergers,
- issuances of securities,
- payment of dividends,
- interest rates payable on deposits,
- interest rates or fees chargeable on loans,
- establishment of branches,
- corporate reorganizations,
- maintenance of books and records, and
- adequacy of staff training to carry on safe lending and
deposit gathering practices.
The Office of Thrift Supervision will require First Capital Bank to
maintain certain capital ratios and will impose limitations on the bank's
aggregate investment in real estate, bank premises, and furniture and fixtures.
The Office of Thrift Supervision will require the bank to prepare quarterly
reports on its financial condition and to conduct an annual audit of its
financial affairs in compliance with their minimum standards and procedures.
Office of Thrift Supervision regulations generally provide that each federal
savings bank must be examined at least every 18 months. The bank is also subject
to assessments by the Office of Thrift Supervision to cover the costs of such
examinations.
As a federally-chartered savings institution, First Capital Bank
generally will not be subject to the provisions of South Carolina law governing
state chartered financial institutions or to the jurisdiction of the South
Carolina Board which governs banking.
Various state usury laws will apply to loans made by the bank,
generally depending on the state where each borrower is located. South Carolina
law establishes a ceiling of 6% on interest rates except in transactions
involving written agreements which may establish any interest rate.
As a subsidiary of a savings and loan holding company, First Capital
Bank will be subject to certain restrictions imposed by the Federal Reserve Act
on extensions of credit to First Capital Bancshares or any of its subsidiaries,
on investments in the stock or other securities of First Capital Bancshares, and
on taking any stock or securities of First Capital Bancshares as collateral for
any loan. In addition, First Capital Bancshares and First Capital Bank will be
prohibited from engaging in tying arrangements in connection with extensions of
credit or provision of any property or services.
Capital Requirements. Office of Thrift Supervision regulations will
require that First Capital Bank maintain:
"Tangible capital" in an amount of not less than 1.5% of total assets. "Tangible
capital" generally is defined as:
- core capital
- less intangible assets and investments in certain subsidiaries
- excluding purchased mortgage-servicing rights.
"Core capital" in an amount not less than 3.0% of total assets. "Core capital"
generally includes:
- common stockholders' equity,
- noncumulative perpetual preferred stock and related surplus,
- minority interests in the equity accounts of consolidated
subsidiaries less unidentifiable intangible assets (other than
certain amounts of supervisory goodwill)
- certain investments in certain subsidiaries, and
- 90% of the fair market value of readily marketable purchased
mortgage-servicing rights and purchased credit card
relationships.
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<PAGE> 23
"Risk-based capital" equal to 8.0% of "risk-weighted assets". In determining
total risk-weighted assets for purposes of the risk-based requirement:
- each off-balance sheet asset must be converted to its
on-balance sheet credit equivalent amount by multiplying the
face amount of each such item by a credit conversion factor
ranging from 0% to 100% (depending upon the nature of the
asset);
- the credit equivalent amount of each off-balance sheet asset
and each on-balance sheet asset must be multiplied by a risk
factor ranging from 0% to 200% (again depending upon the
nature of the asset); and
- the resulting amounts are added together and constitute total
risk-weighted assets.
"Total capital" - risk-based capital requirement equals the sum of core capital
plus supplementary capital (which, as defined, includes the sum of, among other
items, perpetual preferred stock not counted as core capital, limited life
preferred stock, subordinated debt, and general loan and lease loss allowances
up to 1.25% of risk-weighted assets) less certain deductions. The amount of
supplementary capital that may be counted towards satisfaction of the total
capital requirement may not exceed 100% of core capital, and Office of Thrift
Supervision regulations require the maintenance of a minimum ratio of core
capital to total risk-weighted assets of 4%.
Office of Thrift Supervision regulations also includes an interest-rate
risk component in the risk-based capital requirement. Under this regulation, an
institution is considered to have excess interest rate-risk if, based upon a
200-basis point change in market interest rates, the market value of an
institution's capital changes by more than 2%. The Office of Thrift Supervision
risk-based capital standards also provide for concentration of credit risk, risk
from nontraditional activities and actual performance, and expected risk of loss
on multi-family mortgages.
The Office of Thrift Supervision may impose capital requirements which
are higher than the generally applicable minimum requirement if it determines
that our capital is or may become inadequate.
Deposit Insurance. Deposits at First Capital Bank are insured by the
FDIC up to $100,000 for each insured depositor. The FDIC establishes rates for
the payment of premiums by federally insured commercial banks and savings banks,
or thrifts, for deposit insurance. The FDIC maintains a separate Bank Insurance
Fund for banks and Savings Association Insurance Fund for savings banks and
thrifts. Insurance premiums are charged to financial institutions in each
category and are used to offset losses from insurance payouts when banks and
thrifts fail. Since 1993, insured banks and thrifts have paid for deposit
insurance under a risk-based premium system, with higher risk institutions
paying higher premiums. Risk is determined by each institution's federal
regulator on a semi-annual basis and based on its capital reserves and other
factors. Until mid-1995 deposit institutions paid the Bank Insurance Fund or
Savings Association Insurance Fund from $0.23 to $0.31 per $100 of insured
deposits depending on its risk profile. Once the Bank Insurance Fund reached its
legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for
well-capitalized banks, eventually to $.00 per $100, with a minimum semiannual
assessment of $1,000. Most recently, Congress enacted the Deposit Insurance
Funds Act of 1996, which eliminated even the minimum assessment. It also
separated the Financial Corporation (FICO) assessment to service the interest on
its bond obligations. The amount assessed on individual institutions by FICO is
in addition to the amount paid for deposit insurance according to the
risk-related assessment rate schedule. Increases in deposit insurance premiums
or changes in risk classification will increase First Capital Bank's cost of
funds, and we cannot be sure that we can pass such cost on to our customers.
As an insurer, the FDIC issues regulations, conducts examinations and
generally supervises the operations of its insured institutions. The FDIC has
the power to sanction any insured institution which does not operate in
accordance with or conform to FDIC regulations, policies and directives. The
FDIC may suspend or terminate deposit insurance if it finds that an institution
has engaged in unsafe or unsound practices, is operating in an unsafe or unsound
condition, or has violated any applicable law, regulation, rule, order, or
condition imposed by the FDIC. The FDIC continues to insure deposits for two
years following termination. The FDIC
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<PAGE> 24
requires an annual audit by independent accountants and also periodically makes
its own examinations of insured institutions.
In addition to deposit insurance premiums, First Capital Bank as a
savings institution must bear a portion of the administrative costs of the
Office of Thrift Supervision through an assessment based on its total assets and
based on whether it is classified as a troubled or nontroubled savings
institutions. Additionally, the Office of Thrift Supervision assesses fees for
the processing of various applications.
Transactions With Affiliates and Insiders. The bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which place limits on
transactions with officers, directors, large shareholders, subsidiaries and
other insiders on the amount of loans or credit to and investments in such
persons. They also limit the amount of advances to third parties collateralized
by the securities or obligations of such persons. The aggregate of all covered
transactions is limited in amount, as to any one affiliate, to 10% of a bank's
capital and surplus and, as to all affiliates combined, to 20% of a bank's
capital and surplus. Furthermore, within the foregoing limitations as to amount,
each covered transaction must meet specified collateral requirements. We must
also comply with certain provisions designed to prevent us from taking low
quality assets.
First Capital Bank will also be subject to the provisions of Section
23B of the Federal Reserve Act which, among other things, prohibits an
institution from engaging in transactions with affiliates unless the
transactions are on substantially the same terms, or at least as favorable to
such institution, as those prevailing at the time for comparable transactions
with non-affiliated companies. The bank is subject to certain restrictions on
extensions of credit to executive officers, directors, certain principal
shareholders, and their related interests. Such extensions of credit must be
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with third parties
and must not involve more than the normal risk of repayment or present other
unfavorable features.
Dividends. The bank will be subject to regulatory restrictions on the
payment of dividends, including a prohibition on payment of dividends from its
capital. All dividends may only be paid out of the bank's currently available
profits less expenses, including losses and bad debts. The bank must notify the
Office of Thrift Supervision prior to the payment of any dividends. In addition,
under the FDIC Improvement Act, the bank may not pay a dividend if it would
cause the bank to become undercapitalized.
Branching. Because we will be a federal savings bank, we will not have
any regulatory restrictions on our ability to branch within or outside the State
of South Carolina, except that we must first obtain the approval of the Office
of Thrift Supervision.
Community Reinvestment Act. The Community Reinvestment Act requires the
Office of Thrift Supervision to evaluate our record of meeting the credit needs
of our local community, including low and moderate-income neighborhoods. The
Office of Thrift supervision must also consider these factors when it evaluates
mergers, acquisitions, and applications to open a branch or facility. Failure to
meet these standards could result in restrictions on our operations.
Liquidity. Under applicable federal regulations, we will be required to
maintain an average daily balance of liquid assets equal to the monthly average
of not less than a specified percentage of the average daily balance of the
savings association's net withdrawable deposits plus short-term borrowings.
Liquid assets include cash, certain time deposits, certain bankers' acceptances,
certain corporate debt securities and highly rated commercial paper, securities
of certain mutual funds and specified United States government, state or federal
agency obligations. Under HOLA, this liquidity requirement may be changed from
time to time by the Office of Thrift Supervision to any amount from 4% to 10%
depending upon economic conditions and the deposit flows of member institutions.
The current number is 5%. We will also be required to maintain an average daily
balance of short-term liquid assets at a specified percentage (currently 1%) of
the total of the average daily balance of our net withdrawable deposits and
short-term borrowings.
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<PAGE> 25
Equity Investments. The Office of Thrift Supervision has revised its
risk-based capital regulations to modify the treatment of certain equity
investments and to clarify the treatment of other equity investments. They will
no longer deduct permissible equity investments from our calculations of total
capital over a five-year period. Instead, permissible equity investments will be
placed in the 100% risk-weight category, mirroring the capital treatment
prescribed for those investments when made by national banks under the
regulations of the Office of the Comptroller of the Currency. Equity investments
held by savings associations that are not permissible for national banks must
still be deducted from assets and total capital.
Qualified Thrift Lender Requirement. We will qualify as a "qualified
thrift lender" as long as our "qualified thrift investments" equal or exceed 65%
of our "portfolio assets" on a monthly average basis in 9 out of every 12
months. Qualified thrift investments generally consist of various housing
related loans and investments such as residential construction and mortgage
loans, home improvement loans, mobile home loans, home equity loans and
mortgage-backed securities, certain obligations of the FDIC, and shares of stock
issued by any Federal Home Loan Board, the FHLMC or the FNMA. Qualified thrift
investments also include certain other specified investments, subject to a
percentage of portfolio assets limitation. For purposes of the qualified thrift
lender test, the term "portfolio assets" means the savings institution's total
assets minus goodwill and other intangible assets, the value of property used by
the savings institution to conduct its business, and liquid assets held by the
savings institution in an amount up to 20% of its total assets.
Office of Thrift Supervision regulations provide that any savings
association that fails to meet the definition of a qualified thrift lender must
either convert to a national bank charter or limit its future investments and
activities (including branching and payments of dividends) to those permitted
for both savings associations and national banks. Further, within one year of
the loss of qualified thrift lender status, a holding company of a savings
association that does not convert to a bank charter must register as a bank
holding company and will be subject to all statutes applicable to bank holding
companies. In order to exercise the powers granted to federally chartered
savings associations and maintain full access to Federal Home Loan Board
advances, First Capital Bank must meet the definition of a qualified thrift
lender.
Loans to One Borrower Limitations. The Home Owners Loan Act will
generally require that we comply with the limitations on loans to a single
borrower applicable to national banks. National banks generally may make loans
to a single borrower in amounts up to 15% of their unimpaired capital and
surplus, plus an additional 10% of capital and surplus for loans secured by
readily marketable collateral. The Home Owners Loan Act provides exceptions
under which a savings association may make loans to one borrower in excess of
the generally applicable national bank limits. A savings association may make
loans to one borrower in excess of such limits under one of the following
circumstances: for any purpose, in any amount less than $500,000; or to develop
domestic residential housing units, in an amount less than the lesser of $30
million or 30% of the savings association's unimpaired capital and unimpaired
surplus, provided other conditions are satisfied. We anticipate that First
Capital Bank's lending limit would initially be approximately $500,000.
Commercial Real Property Loans. The Home Owners Loan Act limits the
aggregate amount of commercial real estate loans that a federal savings
association may make to an amount not in excess of 400% of the savings
association's capital.
Elimination of Federal Savings Association Charter. In 1998, Congress
considered legislation that would eliminate the federal savings association
charter. Although such legislation did not pass, similar legislation may be
proposed again in 1999. If such legislation is enacted, First Capital Bank would
be required to convert its federal savings bank charter either to a national
bank charter or to a state depository institution charter. Such conversion could
prevent First Capital Bank from opening or operating any branches in another
state, including the branch planned for North Carolina. If First Capital Bank
opens a branch in North Carolina prior to such legislation, it may or may not be
allowed to continue to operate in North Carolina, depending on the provisions of
such legislation. Various legislative proposals may also result in the
restructuring of federal regulatory oversight, including, for example,
consolidation of the Office of Thrift Supervision into another agency, or
creation of a new Federal banking agency to replace the various agencies which
presently exist. We cannot predict whether such legislation will be enacted or
what the effect of such legislation might be.
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<PAGE> 26
Federal Home Loan Bank System. The Federal Home Loan Board System
consists of 12 regional Federal Home Loan Boards, each subject to supervision
and regulation by the Federal Housing Finance Board. The Federal Home Loan
Boards provide a central credit facility for member savings associations. The
maximum amount that the Federal Home Loan Board of Atlanta will advance
fluctuates from time to time in accordance with changes in policies of the
Federal Home Finance Board and the Federal Home Loan Board of Atlanta.
Borrowings from any other source will generally reduce the maximum amount. In
addition, the amount of Federal Home Loan Board advances becomes restricted if
an institution fails to qualify as a qualified lender.
Federal Reserve System. The Federal Reserve Board has adopted
regulations that require savings associations to maintain nonearning reserves
against their transaction accounts, primarily NOW and regular checking accounts.
These reserves may be used to satisfy liquidity requirements imposed by the
Office of Thrift Supervision. Because required reserves must be maintained in
the form of cash or a non-interest-bearing account at a Federal Reserve Bank,
this reserve requirement will reduce the amount of the bank's interest-earning
assets.
Savings institutions also have the authority to borrow from the Federal
Reserve "discount window." Federal Reserve Board regulations, however, require
savings associations to exhaust all Federal Home Loan Board sources before
borrowing from a Federal Reserve bank.
Other Regulations. Interest and certain other charges collected or
contracted for by First Capital Bank are subject to state usury laws and certain
federal laws concerning interest rates. The bank's loan operations are also
subject to certain federal laws applicable to credit transactions, including the
following:
- the federal Truth-In-Lending Act, governing disclosures of
credit terms to consumer borrowers;
- the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution
will be fulfilling its obligation to help meet the housing
needs of the community it serves;
- the Equal Credit Opportunity Act, prohibiting discrimination
on the basis of race, creed or other prohibited factors in
extending credit;
- the Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
- the Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
- the rules and regulations of the various federal agencies
charged with the responsibility of implementing such federal
laws.
The deposit operations of First Capital Bank are also subject to
- the Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative
subpoenas of financial records, and
- the Electronic Funds Transfer Act and Regulation E issued by
the Federal Reserve Board to implement that act, which governs
automatic deposits to and withdrawals from deposit accounts
and customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking
services.
Enforcement Powers. The Financial Institution Report Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties". Institution-affiliated parties
primarily include management, employees, and agents of a financial institution,
as well as independent contractors such as attorneys and accountants and others
who participate in the conduct of the financial institution's affairs. These
practices can include the failure of an institution to timely file required
reports or the filing of false or misleading information or the submission of
inaccurate reports. Civil penalties may be as high as $1,000,000 a day for such
violations.
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<PAGE> 27
Criminal penalties for some financial institution crimes have been
increased to twenty years. In addition, regulators have greater flexibility to
commence enforcement actions against institutions and institution-affiliated
parties. Possible enforcement actions include the termination of deposit
insurance. Furthermore, the Financial Institution Report Recovery and
Enforcement Act expanded the appropriate banking agencies' power to issue
cease-and-desist orders that may, among other things, require affirmative action
to correct any harm resulting from a violation or practice, including
restitution, reimbursement, indemnifications or guarantees against loss. The
banking agencies may also order a financial institution to restrict its growth,
dispose of certain assets, rescind agreements or contracts, or take other
actions as such agency determines are appropriate.
RECENT LEGISLATIVE DEVELOPMENTS
From time to time, various bills are introduced in the United States
Congress with respect to the regulation of financial institutions. Certain of
these proposals, if adopted, could significantly change the regulation of banks
and the financial services industry. We cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect First
Capital Bancshares or First Capital Bank.
EFFECT OF GOVERNMENTAL MONETARY POLICIES
Our earnings will be affected by domestic economic conditions and the
monetary and fiscal policies of the United States government and its agencies.
The Federal Reserve Board's monetary policies have had, and will likely continue
to have, an important impact on the operating results of commercial banks
through its power to implement national monetary policy in order, among other
things, to curb inflation or combat a recession. The monetary policies of the
Federal Reserve Board have major effects upon the levels of bank loans,
investments and deposits through its open market operations in United States
government securities and through its regulation of the discount rate on
borrowings of member banks and the reserve requirements against member bank
deposits. It is not possible to predict the nature or impact of future changes
in monetary and fiscal policies.
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<PAGE> 28
MANAGEMENT
GENERAL
The following table shows the number and percentage of outstanding
shares of common stock beneficially owned as of the date of this prospectus by
the organizers of First Capital Bancshares. Beneficial ownership of common stock
is based upon "beneficial ownership" concepts set forth in rules of the SEC
under Section 13(d) of the Securities Exchange Act of 1934. Under these rules a
person is a "beneficial owner" of a security if that person has or shares
"voting power," which includes the power to vote or direct the voting of each
security, or "investment power," which includes the power to dispose of or to
direct the disposition of such security. A person is also a beneficial owner of
any security of which that person has the right to acquire beneficial ownership
within 60 days, including, without limitation, shares of common stock subject to
currently exercisable options. Under the rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he has no beneficial
interest. For instance, beneficial ownership includes spouses, minor children,
and other relatives residing in the same household, and trusts, partnerships,
corporations or deferred compensation plans which are affiliated with the
principal. This table also reflects the anticipated purchases by the organizers
in the offering. The organizers purchased shares prior to the offering at a
price of $10.00 per share, the same price at which shares are being offered to
the public.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES ANTICIPATED TO BE OWNED FOLLOWING
PRIOR TO THE OFFERING THE OFFERING
------------------------- -------------------------------------
PERCENTAGE OF PERCENTAGE
MINIMUM OF MAXIMUM
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE NUMBER OFFERING OFFERING
- ------------------------ ------ ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C>
Shoukath Ansari, M.D. 4,000 13.3% 12,500 2.36% 1.67%
Wylie F. Cartrette 4,000 13.3% 10,000 1.89% 1.33%
James Aubrey Crosland* 4,000 13.3% 10,000 1.89% 1.33%
Robert G. Dowdy 1,600 5.3% 10,000 1.89% 1.33%
Harry L. Howell, Jr. 4,200 14.0% 12,700 2.40% 1.69%
Luther D. Hutchins 4,000 13.3% 10,000 1.89% 1.33%
Paul F. Rush, M.D. 4,200 14.0% 10,000 1.89% 1.33%
Lee C. Shortt 4,000 13.3% 10,000 1.89% 1.33%
Total 30,000 100% 85,200 16.10% 11.34%
</TABLE>
* These numbers do not reflect options to be granted to Mr. Crosland under
the terms of his employment agreement to purchase up to 8,000 shares of
common stock.
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<PAGE> 29
EXECUTIVE OFFICERS AND DIRECTORS OF FIRST CAPITAL BANCSHARES
Below we provide information about our officers and directors as of the
date of this prospectus. Our articles of incorporation provide for a classified
board of directors, so that, as nearly as possible, one-third of the directors
are elected each year to serve three-year terms. The terms of office of the
classes of directors expire as follows: Class I at the 1999 annual meeting of
shareholders, Class II at the 2000 annual meeting of shareholders, and Class III
at the 2001 annual meeting of shareholders. Executive officers of First Capital
Bancshares serve at the discretion of First Capital Bancshares's board of
directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH FIRST CAPITAL BANCSHARES
- ---- --- --------------------------------------
<S> <C> <C>
Shoukath Ansari, M.D. 50 Director, Class I
Wylie F. Cartrette 45 Director, Class II
James Aubrey Crosland, Sr. 48 Director, Class III, President
Robert G. Dowdy 37 Director, Class I
John M. Digby 52 Chief Financial Officer
Harry L. Howell, Jr. 29 Director, Class II
Luther D. Hutchins 38 Director, Class III
J. Randy McDonald 51 Chief Executive Officer, First Capital Bank
Paul F. Rush, M.D. 43 Director, Class I
Lee C. Shortt 55 Director, Class II, Chief Executive Officer, First
Capital Bancshares
</TABLE>
Shoukath Ansari, M.D., Class I director, has been the president and a
physician of Marlboro Gastroenterology Association, P.A. in Bennettsville, South
Carolina since 1983. He served as chief of staff of Marlboro Park Hospital. He
graduated in 1964 from SRI Parama Kalyani College in Alwarkurichi, Tamilnadu,
India and earned an M.D. degree from Tirunelveli Medical College in Tirunelveli,
Tamilnadu, India in 1971. He is a certified internist and gastroenterologist and
has practiced gastroenterology for approximately 18 years, having opened his own
practice in 1983. Dr. Ansari was born in 1948 in India and has been a resident
and citizen of the United States since 1981.
Wylie F. Cartrette, Class II director, is currently a resident in
McColl, South Carolina. Since 1986, he has been the owner and operator of Wylie
Enterprises in McColl, South Carolina, a laundry and coin operated machine
business, and he has also handled some real estate rentals. Mr. Cartrette is a
member of the Masonic lodge of McColl. Mr. Cartrette holds a South Carolina
constable's commission, and is a former member of the McColl City Council. He
was born in 1953 in Laurinburg, North Carolina.
James Aubrey Crosland, Sr., class III director, is the president of
First Capital Bancshares and will be the president of First Capital Bank. Mr.
Crosland, a native of Bennettsville, South Carolina, received a B.A. degree from
Pembroke State University in 1972. He is also a graduate of both the South
Carolina Bankers School at the University of South Carolina and Louisiana State
University's Graduate School of Banking. From May 1997 until he joined First
Capital Bancshares in June 1998, Mr. Crosland served as the financial manager
for Marlboro Constructors, Inc. From August 1993 through May 1997, he served as
the Pee Dee Area executive for Carolina First Bank, where he was responsible for
Carolina First branches located in Bennettsville, McColl, and Lake City, South
Carolina. From 1988 until 1993, Mr. Crosland was the community banking director
of NationsBank in Florence, South Carolina, from 1984 until 1988, he was the
city executive of Carolina Bank & Trust in Bennettsville, and from 1977 to 1984
he served as an operations officer and commercial lender for First National Bank
of South Carolina in Bennettsville. Mr. Crosland began his banking career with
Wachovia Bank, serving as a credit manager in Wachovia's Laurinburg, North
Carolina office from 1973 to 1977. Mr. Crosland is a member of Saint Paul's
Episcopal Church in Bennettsville and the Bennettsville Rotary Club. He was also
the chairman of the Marlboro County Department of Social Services and a board
member of the Marlboro County Chamber of Commerce. Mr. Crosland was born in 1950
in Bennettsville, South Carolina.
28
<PAGE> 30
John M. Digby will serve as the chief financial officer for First
Capital Bancshares and First Capital Bank. He graduated from Georgia College in
Milledgeville, Georgia in 1970, and he received his certificates from the
Georgia Banker's School in 1984 and from the Georgia Banker's Commercial Lending
School in 1987. Mr. Digby has ten years of experience as a chief financial
officer from his employment with a community bank in Georgia. He also served as
the chief financial officer for Clemson Bank & Trust, a start-up de novo bank,
in Clemson, South Carolina, from 1995 to 1997. Mr. Digby recently served as vice
president for Community Capital Corporation in Greenwood, South Carolina. Mr.
Digby was born in 1946 in Hawkinsville, Georgia.
Robert G. Dowdy, Class I director, graduated with a pre-pharmacy degree
from Francis Marion University in 1982. He then graduated from the Medical
University of South Carolina with a B.S. in pharmacy in 1985. Mr. Dowdy obtained
his license as a registered pharmacist in 1985 from the South Carolina Board of
Pharmacy. He served as the director of pharmacy at Marlboro Park Hospital from
1986 to December 1994 when he left to work as director of pharmacy for
Grim-Smith Hospital in Missouri from 1994 to April 1996. Mr. Dowdy moved back to
Marlboro Park Hospital in April 1996 and is currently director of pharmacy. He
was born in 1961 in Bennettsville, South Carolina.
Harry L. Howell, Jr., Class II director, graduated from Flora McDonald
Academy in North Carolina in 1987. He is majority owner and has served as
president of Scotland Motors, Inc. in Laurinburg, North Carolina since December
1984. Mr. Howell owns Scotland Leasing & Rental, Inc., an auto rental business
as well as Lee Howell, Inc., a real estate rental business in Laurinburg. Mr.
Howell is a member of the First Baptist Church in Laurinburg. He was born in
1969 in Laurinburg, North Carolina.
Luther D. Hutchins, Class III director, graduated from Bennettsville
High School in 1979 and attended Wake Forest University in North Carolina. Mr.
Hutchins has been the sole owner of Marlboro Appliance Center and Marlboro Frame
Shoppe. He also owns a farm and a farm implement services company. Mr. Hutchins
was born in 1960 in Winston-Salem, North Carolina.
J. Randy McDonald will be the chief executive officer of First Capital
Bank. Mr. McDonald has been in banking since 1979. He most recently served as
the loan and asset management officer of The Citizens Bank and as the city
executive of the Lake City, South Carolina office of Carolina First Bank. Mr.
McDonald has also served as the office manager of the Florence, South Carolina
office of Southern National Bank and the vice president and city executive of
the Lake City, South Carolina office of Security Federal Savings Bank. Mr.
McDonald was a director of the Lake City Tobacco Festival, the Lake City
Chamber, the Florence County Progress Committee, and Florence County Economic
Development. He was born in 1947 in Lake City, South Carolina.
Paul F. Rush, M.D., Class I director, graduated with a B.S. in Biology
from Presbyterian College in South Carolina in 1978. He received his M.D. from
the University of South Carolina School of Medicine in 1982 and received his
physician's license from the state of North Carolina in 1982 and from the State
of South Carolina in 1987. Dr. Rush has held the position of senior physician at
Scotland Orthopedic, P.A. in Laurinburg, South Carolina, since August 1987. He
has been a 25% owner of Scotland Orthopedic, P.A. since 1987, as well as
Scotland Orthopedic Properties since 1989. Dr. Rush served as an advisory board
member of BB&T in Laurinburg from 1989 to May 1998, is the chairman of the
Scotland County Board of Education, serves on the board of trustees of Scotland
Memorial Hospital, and the board of trustees of Scotia Village. Dr. Rush is also
a fellow of the American Academy of Orthopedic Surgeons and a member of the
First United Methodist Church in Laurinburg, North Carolina. Dr. Rush was born
in 1956 in Charleston, South Carolina.
Lee C. Shortt, Class II director, is the chairman and chief executive
officer of First Capital Bancshares. Mr. Shortt has been in the auction business
since 1975 and has served as president and owner of Shortt Auction and Realty
Co., Inc. since 1976. Mr. Shortt holds real estate brokers licenses and
auctioneer licenses in each of South Carolina, North Carolina, and Virginia. He
is a member of the Bennettsville Rotary Club. Mr. Shortt was born in 1943 in
Pitsylvania County, Virginia.
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<PAGE> 31
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with Mr. McDonald, Mr.
Crosland, and Mr. Digby. Each is summarized below.
Employment Agreement with J. Aubrey Crosland. Mr. Crosland's employment
agreement has a three-year term, pursuant to which Mr. Crosland will serve as
the president of First Capital Bancshares and First Capital Bank. Mr. Crosland
will be paid a salary of $85,000, plus his yearly medical insurance premium. Mr.
Crosland will be eligible to participate in any management incentive program of
First Capital Bank or any long-term equity incentive program and will be
eligible for grants of stock options and other awards thereunder. Upon the
closing of the offering (or as soon thereafter as an appropriate stock option
plan is adopted by First Capital Bancshares), Mr. Crosland will be granted an
option to purchase 8,000 shares of common stock at $10.00 per share. The options
will vest over a six-year period and will have a term of ten years.
Additionally, Mr. Crosland will participate in First Capital Bank's retirement,
welfare and other benefit programs and is entitled to a life insurance policy
and an accident liability policy and reimbursement for automobile expenses, club
dues, and travel and business expenses. The agreement also provides that
following termination of his employment with First Capital Bank and for a period
of twelve months thereafter, Mr. Crosland may not compete with First Capital
Bancshares, the bank, or any of its affiliates by, directly or indirectly,
forming, serving as an organizer, director or officer of, or consultant to, or
acquiring or maintaining more than 1% passive investment in, a depository
financial institution or holding company thereof if such depository institution
or holding company has one or more offices or branches in the territory, solicit
major customers of First Capital Bank for the purpose of providing financial
services, or solicit employees of First Capital Bank for employment. If Mr.
Crosland's employment is terminated other than for cause, First Capital
Bancshares will be obligated to pay Mr. Crosland six months' severance plus
bonus earned through such date.
Employment Agreement with J. Randy McDonald. Mr. McDonald's employment
agreement provides that he will serve as the chief executive officer and chief
lending officer of First Capital Bank. He will be paid a consulting fee of
$4,000 per month by First Capital Bancshares until the bank opens. Thereafter
the bank will pay him an annual salary of $60,000 per year, plus a bonus to
gross up his salary prior to the opening of the bank as if he had been paid
$60,000 from the date of hire on January 4, 1999. Mr. McDonald will also
participate in any other benefit programs offered by the bank to its employees
in general, and will have an officer's liability insurance policy and two week's
vacation. The agreement also provides that following termination of his
employment with First Capital Bank and for a period of twelve months thereafter,
Mr. McDonald may not compete with First Capital Bancshares, the bank, or any of
its affiliates by, directly or indirectly, forming, serving as an organizer,
director or officer of, or consultant to, or acquiring or maintaining more than
1% passive investment in, a depository financial institution or holding company
thereof if such depository institution or holding company has one or more
offices or branches in the territory, solicit major customers of First Capital
Bank for the purpose of providing financial services, or solicit employees of
First Capital Bank for employment.
Employment Agreement with John M. Digby. Mr. Digby's employment
agreement is essentially the same as Mr. McDonald's, except that his title is
chief financial officer of First Capital Bancshares and First Capital Bank.
DIRECTOR COMPENSATION
Initially, neither First Capital Bancshares nor First Capital Bank will
pay directors' fees. After the offering, First Capital Bancshares expects to
adopt a stock option plan which will permit First Capital Bancshares to grant
options to officers, directors, and employees of First Capital Bancshares. We
anticipate that the plan will initially authorize the issuance of a number of
shares equal to 15% of the shares outstanding after the offering. The option
plan will provide that the exercise price for an option cannot be less than the
common stock's fair market value on the date of grant.
30
<PAGE> 32
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
We expect that First Capital Bancshares and First Capital Bank will
have banking and other transactions in the ordinary course of business with
their organizers, directors, and officers, including members of their families
or corporations, partnerships, or other organizations in which such organizers,
officers, or directors have a controlling interest. We do not expect that such
transactions will involve more than the normal risk of collectibility nor
present other unfavorable features. Loans to individual directors and officers
must also comply with the bank's lending policies and statutory lending limits,
and directors with a personal interest in any loan application will be excluded
from the consideration of such loan application. Transactions with organizers
and other related parties will be on terms no less favorable than transactions
with unaffiliated third parties and will be approved by a majority of our
disinterested directors.
The bank's property was purchased through Shortt Auction and Realty.
Lee C. Shortt is the chief executive officer and the chairman of First Capital
Bancshares and the president and owner of Shortt Auction and Realty. Mr. Shortt
will receive a commission as the listing agent to be paid by the seller of the
property, and therefore removed himself from the vote in the selection of the
site. All of the other directors approved the purchase and its terms. The
purchase price for the site and building was less than the most recent tax
assessment for the property.
EXCULPATION AND INDEMNIFICATION
Our articles of incorporation contain a provision which, subject to
certain limited exceptions, limits the liability of a director to First Capital
Bancshares or its shareholders for any breach of duty as a director. There is no
limitation of liability for any of the following:
- a breach of duty involving appropriation of a business
opportunity of First Capital Bancshares;
- an act or omission which involves intentional misconduct or a
knowing violation of law;
- any transaction from which the director derives an improper
personal benefit; or
- as to any payments of a dividend or any other type of
distribution that is illegal under Section 33-8-330 of the
South Carolina Business Corporation Act of 1988.
If the laws governing officers and directors indemnification are amended to
authorize further elimination or limitation of the liability of directors, then
the liability of each director of First Capital Bancshares will be eliminated or
limited to the fullest extent permitted by such provisions. We will not seek
shareholder consent for such expanded obligations unless it is required. The
provisions do not limit the right of First Capital Bancshares or its
shareholders to seek injunctive or other equitable relief against officers and
directors not involving monetary payments.
Our bylaws contain certain provisions which provide indemnification to
directors of First Capital Bancshares that is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the South Carolina
Business Corporation Act. To the extent that a director or officer of First
Capital Bancshares has been successful, on the merits or otherwise, in the
defense of any action or proceeding brought against such person because he or
she is or was a director or officer of First Capital Bancshares, Sections
33-8-510 and 33-8-520 would require First Capital Bancshares to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred. The Corporation Act expressly allows First Capital Bancshares to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval.
The board of directors also has the authority to extend the same
indemnification rights held by directors to officers, employees, and agents,
subject to all of the accompanying conditions and obligations. The board of
directors intends to extend indemnification rights to all of its executive
officers.
The SEC has advised us that it believes that indemnification for
directors, officers, and controlling persons of First Capital Bancshares and
First Capital Bank is against public policy and may be unenforceable.
31
<PAGE> 33
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of First Capital Bancshares consists of
10,000,000 shares of common stock, par value $.01 per share, and 10,000,000
shares of preferred stock, par value $.01 per share. The following summary
describes the material terms of First Capital Bancshares's capital stock. Please
refer to the articles of incorporation of First Capital Bancshares for a
detailed description of the provisions summarized below. The articles were filed
as an exhibit to the registration statement of which this prospectus is a part.
COMMON STOCK
The board of directors may choose to pay dividends to the holders of
common stock. We do not plan to declare any dividends in the foreseeable future.
Holders of common stock are entitled to one vote per share on all matters on
which they are entitled to vote. Voting rights are not cumulative. Shareholders
have no preemptive, conversion, redemption or sinking fund rights. In the event
of a liquidation, dissolution or winding-up of First Capital Bancshares, holders
of common stock are entitled to share equally and ratably in the assets of First
Capital Bancshares, if any, remaining after the payment of all debts and
liabilities of First Capital Bancshares. If preferred stock is outstanding at
the time of liquidation, it may have preferential rights to receive liquidation
funds. The rights of the common stock holders will be subject to such preferred
rights. All shares of common stock currently outstanding are and all shares
issuable in this offering will be fully paid and nonassessable. The rights,
preferences and privileges of holders of common stock are subject to any classes
or series of preferred stock that First Capital Bancshares may issue in the
future.
Prior to this offering there has been no market for the common stock.
The common stock will be quoted on the OTC Bulletin Board under the symbol
"____". However, we cannot be sure that a liquid market will develop for the
common stock, or that the holders of common stock will be able to freely sell or
trade their shares. The public offering price of the shares offered hereby has
been determined solely by negotiations between First Capital Bank and Banc Stock
Financial Services, Inc. and may bear no relationship to the market price of the
common stock after this offering. See "The Offering - Plan of Distribution" on
page 10.
PREFERRED STOCK
The articles provide that the board of directors is authorized, without
further action by the holders of the common stock, to issue any number of shares
of one or more classes or series of preferred stock, up to 10,000,000 shares.
The director may fix the designations, powers, preferences, and relative,
participating, optional and other rights, qualifications, limitations, and
restrictions of such shares, including the dividend rate, conversion rights,
voting rights, redemption price, and liquidation preference. Such preferred
stock may be senior to the common stock with respect to the payment of dividends
or amounts upon liquidation, dissolution or winding-up, or both. In addition,
any such shares of preferred stock may have class or series voting rights.
Issuance of preferred stock, while providing First Capital Bancshares with
flexibility in connection with general corporate purposes, may, among other
things, have an adverse effect on the rights of holders of common stock and in
certain circumstances such issuances could have the effect of decreasing the
market price of the common stock. For example, preferred stock with voting or
conversion rights may adversely affect the voting power of the holders of common
stock. Upon completion of this offering, First Capital Bancshares will not have
any shares of preferred stock outstanding and we do not have any plans to issue
preferred stock. We will not issue preferred stock to organizers on terms more
favorable than terms offered to other shareholders.
ANTITAKEOVER EFFECTS
The provisions of First Capital Bancshares's articles, bylaws and South
Carolina law summarized in the following paragraphs may have anti-takeover
effects. They may delay, defer, or prevent a tender offer or other attempt to
takeover or purchase First Capital Bancshares, even though you may believe that
such a takeover or
32
<PAGE> 34
purchase might be in your best interest, including those attempts that might
result in a premium over the market price for our stock. Such provisions may
also make removal of management more difficult.
Authorized but Unissued Stock. Authorized but unissued shares of common
stock and preferred stock are available for future issuance without shareholder
approval. These additional shares may be used for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions, and employee benefit plans. The existence of authorized
but unissued and unreserved shares of common stock and preferred stock may
enable the board of directors to issue shares to persons friendly to current
management, which could make it more difficult or discourage any attempt to
obtain control of First Capital Bancshares by means of a proxy contest, tender
offer, merger or otherwise. This ability thereby acts to entrench First Capital
Bancshares's management.
Number of Directors. The bylaws provide that the number of directors
shall be fixed from time to time by a majority of the directors then in office.
The number of directors may not be fewer than five nor more than fifteen.
Individuals affiliated with competitors may not serve on our board of directors.
Classified board of directors. The articles and bylaws divide the board
of directors into three classes of directors serving staggered three-year terms.
As a result, approximately one-third of the board of directors will be elected
at each annual meeting of shareholders. The classification of directors,
together with the provisions in the articles and bylaws described below that
limit the ability of shareholders to remove directors and that permit the
remaining directors to fill any vacancies on the board of directors, will have
the effect of making it more difficult for shareholders to change the
composition of the board of directors. As a result, at least two annual meetings
of shareholders may be required for the shareholders to change a majority of the
directors, whether or not a change in the board of directors would be beneficial
to First Capital Bancshares and its shareholders and whether or not a majority
of First Capital Bancshares's desire to make such a change.
Removal of Directors and Filling Vacancies. The bylaws provide that all
vacancies on the board of directors, including those resulting from an increase
in the number of directors, may be filled by a majority of the remaining
directors, even if they do not constitute a quorum. When one or more directors
resign from the board of directors effective at a future date, a majority of
directors then in office, including the directors who are to resign, may vote on
filling the vacancy.
Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The bylaws establish advance notice procedures for shareholders to
make proposals and to nominate candidates for directors. All notices of
shareholder proposals and shareholder nominations for the election of directors
at a shareholders meeting must be in writing and be received by each director
not later than twenty-four hours prior to the meeting when delivered personally
or by telecopy or at least two days prior thereto when delivered by mail. We may
reject a shareholder proposal or nomination that is not made in accordance with
such procedures.
Nomination Requirements. The bylaws establish requirements for
nominating directors. The nominating party must provide First Capital Bancshares
within a specified time prior to the meeting: (i) notice that such party intends
to nominate a proposed director; (ii) the name of and certain biographical
information about the nominee; and (iii) a statement that the nominee has
consented to the nomination. The chairman of any shareholders' meeting may waive
these provisions. These provisions could reduce the likelihood that a third
party would nominate and elect individuals to serve on the board of directors.
SHARES ELIGIBLE FOR FUTURE SALE
The shares sold in this offering will be freely tradable, without
restriction or registration under the Securities Act, except for shares
purchased by "affiliates" of First Capital Bancshares. Shares held by affiliates
will be subject to resale restrictions under the Securities Act. An affiliate of
the issuer is defined in Rule 144 under the Securities Act as a person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the issuer. Rule 405 under the
Securities Act defines the term "control" to mean the possession, direct or
indirect, of the power to direct or cause the direction of the
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<PAGE> 35
management and policies of the person whether through the ownership of voting
securities, by contract or otherwise. Officers and directors of First Capital
Bancshares and First Capital Bank are affiliates under these rules.
Affiliates may sell securities without registration only in accordance
with Rule 144 or another exemption from registration. Rule 144 requires persons
holding restricted securities to hold the shares for at least one year prior to
sale. Thereafter, Rule 144 provides that an affiliate or other person holding
restricted shares may sell, within any three-month period, a number of shares no
greater than 1% of the then outstanding shares of the common stock or the
average weekly trading volume of the common stock during the four calendar weeks
preceding the sale, whichever is greater. Rule 144 also requires that the
securities be sold in "brokers' transactions," as defined in the Securities Act,
and that the person selling the securities may not solicit orders or make any
payment in connection with the offer or sale of securities to any person other
than the broker who executes the order to sell the securities. These
requirements may make it difficult for affiliates to sell their shares after the
offering if no trading market develops in the common stock.
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<PAGE> 36
LEGAL MATTERS
Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia will pass
upon the validity of the common stock offered hereby. Igler & Dougherty, P.A.,
Tallahassee, Florida will pass upon certain legal matters in connection with the
offering by the sales agent.
EXPERTS
The financial statements of First Capital Bancshares dated December 31,
1998 and for the period from December 17, 1997 (inception) until December 31,
1998 have been audited by Tourville, Simpson & Henderson, L.L.P., as stated in
their report appearing elsewhere herein. These financial statements have been
included in reliance on the report of such firm given upon their authority as an
expert in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a registration statement on Form SB-2 with the SEC under
the Securities Act of 1933 for the registration of the common stock offered
hereby. This prospectus forms a part of the registration statement and does not
contain all of the information set forth in the registration statement. For
further information with respect to First Capital Bancshares and the common
stock, you should refer to the registration statement and the exhibits thereto.
The registration statement may be examined at, and copies of the
registration statement may be obtained at prescribed rates from, the Public
Reference Section of the SEC, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549. The SEC also maintains a Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding First Capital Bancshares and other registrants that file
electronically with the SEC.
We have filed applications with the Office of Thrift Supervision and
the Federal Deposit Insurance Corporation which may contain similar information
to that in this prospectus. Prospective investors should rely only on
information contained in this prospectus and in First Capital Bancshares'
related registration statement in making an investment decision. This prospectus
supercedes all other available information, including information available from
First Capital Bancshares and information in public files and records maintained
by the Office of Thrift Supervision and the Federal Deposit Insurance
Corporation. Projections appearing in our applications were estimates based on
assumptions that we believed to be reasonable at the time. We specifically
disaffirm those projections for purposes of this prospectus and cautions
prospective investors against placing reliance on them for making an investment
decision. Statements contained in this prospectus as to the contents of any
contract or other document referred to herein are not necessarily complete. If
such contract or document is an exhibit to the registration statement, please
refer to that document for a complete disclosure of its contents.
As a result of this offering, First Capital Bancshares will become a
reporting company subject to the full informational requirements of the
Securities Exchange Act of 1934. We will fulfill our obligations with respect to
such requirements by filing periodic reports and other information with the SEC.
We will furnish our shareholders with annual reports containing audited
financial information for each fiscal year and will distribute quarterly reports
for the first three quarters of each fiscal year containing unaudited summary
financial information. Our fiscal year ends on December 31.
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<PAGE> 37
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Independent Accountants' Report F-2
Financial Statements:
Balance Sheet as of December 31, 1998 F-3
Statement of Operations and Accumulated Deficit For the Period
December 19, 1997 to December 31, 1998 F-4
Statement of Changes in Stockholders' Equity For the Period
December 19, 1997 to December 31, 1998 F-5
Statement of Cash Flows For the Period December 19, 1997
to December 31, 1998 F-6
Notes to Financial Statements F-7
</TABLE>
F-1
<PAGE> 38
INDEPENDENT ACCOUNTANTS' REPORT
To the Organizers
First Capital Bancshares, Inc.
We have audited the accompanying balance sheet of First Capital Bancshares,
Inc., (a Company in the development stage) as of December 31, 1998 and related
statements of operations and accumulated deficit, stockholders' equity and cash
flows for the period from inception December 19, 1997 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 Bancshares, Inc.,
(a Company in the development stage) as of December 31, 1998, and the results of
its operations and its cash flows for the period from inception December 19,
1997 to December 31, 1998 in conformity with generally accepted accounting
principles.
/s/ Tourville, Simpson & Henderson, L.L.P.
Tourville, Simpson & Henderson, L.L.P.
Columbia, South Carolina
February 18, 1999
F-2
<PAGE> 39
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
BALANCE SHEET
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 103,293
Option on real estate 15,000
Prepaid stock issuance costs 8,145
Other prepaid costs 19,072
-------------
Total assets $ 145,510
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES -
Accounts payable $ 9,000
-------------
STOCKHOLDERS' EQUITY--
Common stock, par value $.01 per share; 10,000,000 shares authorized;
30,000 shares issued and outstanding 300
Preferred stock - 10,000,000 shares authorized and unissued,
par value $.01 per share --
Paid-in-capital 299,700
Deficit accumulated in the development stage (163,490)
-------------
Total stockholders' equity 136,510
-------------
Total liabilities and stockholders' equity $ 145,510
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 40
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD DECEMBER 19, 1997 (INCEPTION) TO DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Income $ --
-------------
Expenses:
Management fees 65,500
Consultant fees 51,404
Professional fees 22,975
Other 23,611
-------------
Total expenses 163,490
-------------
Net loss and accumulated deficit $ (163,490)
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 41
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 19, 1997 (INCEPTION) TO DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated In
-------------------------------- Paid-In The Develop-
Shares Amount Capital ment Stage Total
------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock 30,000 $ 300 $ 299,700 $ $ 300,000
Net loss for the period
December 19, 1997
to December 31, 1998 (163,490) (163,490)
------------- -------------- ------------- -------------- -------------
Balance, December 31, 1998 30,000 $ 300 $ 299,700 $ (163,490) $ 136,510
============= ============== ============= ============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 42
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE PERIOD DECEMBER 19, 1997 (INCEPTION) TO DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES--
Net loss and accumulated deficit $ (163,490)
Adjustments to reconcile net loss and accumulated deficit to
cash provided by operating activities -
Increase in accounts payable 9,000
-------------
Cash used by operating activities (154,490)
-------------
CASH FLOWS FROM INVESTING ACTIVITIES--
Option on real estate (15,000)
Other prepaid costs (19,072)
-------------
Cash used by investing activities (34,072)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES--
Prepaid stock issuance costs (8,145)
Issuance of common stock 300,000
-------------
Cash provided by financing activities 291,855
-------------
CASH BALANCE AT END OF PERIOD $ 103,293
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 43
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
First Capital Bancshares, Inc. was formed to organize and own all of the capital
stock of First Capital Bank. The organizers of First Capital Bancshares filed an
application with the Office of Thrift Supervision to charter First Capital Bank
as a savings bank. Provided the necessary capital is raised and the necessary
regulatory approvals are received, it is expected that operations will commence
in the second quarter of 1999.
First Capital Bancshares plans to raise a minimum of $5,000,000 by offering for
sale 500,000 shares of its common stock. The organizers, directors, and members
of their immediate families expect to purchase a total of 85,200 shares at an
aggregate purchase price of approximately $852,000.
Upon the completion of the sale of common stock and the opening of First Capital
Bank, incurred organization and pre-opening costs will be charged against the
initial period's operating results. It is estimated that First Capital
Bancshares will incur approximately $23,000 in organizational expenses, and
First Capital Bank will incur approximately $300,000 in organizational and
pre-opening expenses.
The expenses related to the stock offering will be deducted from the proceeds of
the offering. These expenses are estimated to be approximately $442,160,
consisting principally of commissions and other directly related expenses of the
stock offering.
NOTE 2 - LIQUIDITY
First Capital Bancshares incurred a net loss of $163,490 the period from
December 19, 1997 to December 31, 1998. Activities since inception have
consisted of organizational activities necessary to obtain regulatory approvals
and to otherwise prepare to commence business as a financial institution.
At December 31, 1998, First Capital Bancshares had been primarily funded by the
$300,000 received from the issuance of 30,000 shares of its common stock to the
organizers.
Management believes that the level of expenditures is well within the financial
capabilities of the organizers and is adequate to meet existing obligations and
fund current operations, but commencement banking operations is dependent upon
the successful completion of the stock offering and receipt of regulatory
approval.
To provide for permanent funding, First Capital Bancshares is currently
anticipating offering for sale a minimum of 500,000 and a maximum of 720,000
shares of its common stock at a sales price of $10 per share. Costs related to
the organization and registration of First Capital Bancshares common stock will
be paid from the gross proceeds of the offering. Should subscriptions for the
minimum offering not be obtained, amounts paid by subscribers with their
subscriptions will be returned, net of expenses, and the offer will be
withdrawn.
F-7
<PAGE> 44
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3 - INCOME TAXES
As of December 31, 1998, First Capital Bancshares had a net operating loss
carryforward of $163,490.
There was no provision (benefit) for income taxes for the period from December
19, 1997 to December 31, 1998, since a 100% valuation reserve is being
maintained for the net operating loss carryforward.
NOTE 4 - EMPLOYMENT CONTRACT AND STOCK OPTIONS
First Capital Bancshares has entered into a three-year employment contract with
its President beginning June 4, 1998. The contract provides that the President
will receive an initial annual salary of $60,000, which shall be increased to
not less than $85,000 per annum on the date the First Capital Bank opens. This
contract may be extended for additional time periods by mutual agreement of the
President and First Capital Bancshares.
Upon completion of the sale of its common stock, First Capital Bancshares shall
grant to the President an option to purchase 8,000 shares of common stock. The
stock option agreement will provide that the option will have a ten-year term
and will vest over a six-year period provided that the President is still
employed by First Capital Bancshares on each anniversary and that certain
performance goals for each year are met.
Annually, the Board of Directors agrees to set performance goals for First
Capital Bancshares and may grant to the President a cash bonus at the end of
each fiscal year in which such performance goals are met. The amount of any such
bonus will be determined by the Board.
Beginning on the date First Capital Bank opens, First Capital Bank shall provide
the President with a leased automobile with a lease rate not to exceed $400 per
month.
NOTE 5 - OPTION ON REAL ESTATE
As of December 31, 1998, First Capital Bancshares had paid $15,000 for an option
to purchase real estate in Bennettsville, South Carolina for the purpose of
building its main banking office. The option provides for a purchase price of
$350,000 payable in cash and expires March 1, 1999.
F-8
<PAGE> 45
FIRST CAPITAL BANCSHARES, INC.
(A Company in the Development Stage)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 6 - STOCKHOLDERS' EQUITY
COMMON STOCK - First Capital Bancshares has the authority to issue up to
10,000,000 shares of voting common stock, par value $.01 per share.
PREFERRED STOCK - First Capital Bancshares has the authority to issue up to
10,000,000 shares of preferred stock, par value $.01 per share. Also, First
Capital Bancshares has the right to establish and designate from time to time
any part or all of the shares by filing an amendment to First Capital
Bancshares's articles of incorporation, which is effective without shareholder
action, in such series and with such preferences, limitations, and relative
rights as may be determined by the Board of Directors. The number of authorized
shares of preferred stock may be increased or decreased by the affirmative vote
of the holders of the majority of the shares of common stock, without a vote of
the holders of the shares of preferred stock.
CUMULATIVE VOTING RIGHTS - First Capital Bancshares has elected not to have
cumulative voting, and no shares issued by First Capital Bancshares may be
cumulatively voted.
PREEMPTIVE RIGHTS - The stockholders of First Capital Bancshares shall not have
any preemptive rights regarding any issuance of First Capital Bancshares's
capital stock.
NOTE 7 - DATA PROCESSING
As of December 31, 1998 First Capital Bancshares has entered into an agreement
with Fiserv Solutions, Inc. ("Fiserv") to electronically process First Capital
Bancshares's daily transactions. Upon receiving regulatory approval to open
First Capital Bank, First Capital Bancshares will have to pay Fiserv
approximately $226,000 for computer hardware and software.
Like many financial institutions, First Capital Bancshares will rely upon
computers for the daily conduct of its business and for information processing.
There is concern among industry experts that on January 1, 2000 computers will
be unable to "read" the new year and there may be widespread computer
malfunctions. Generally, First Capital Bancshares will be relying on software
and hardware developed by independent third parties for its information systems.
The agreement with Fiserv includes a warranty that its system is year 2000
compliant in all respects. While management believes that the information
systems they agreed to acquire and the network connections that will be
maintained will comply with the year 2000 requirements, there is a risk that
they will not comply as they have been developed by others.
F-9
<PAGE> 46
720,000 SHARES
Common Stock
FIRST CAPITAL BANCSHARES, INC.
A Proposed Holding Company For
[insert First Capital Bank logo here]
(Proposed)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary ..................................................3
Note Regarding Forward Looking Statements.................5
Risk Factors..............................................6
The Offering..............................................9
Market for Common Stock..................................11
Use of Proceeds .........................................12
Capitalization...........................................13
Dividend Policy .........................................13
Proposed Business and Plan of Operation..................14
Supervision and Regulation...............................20
Management...............................................27
Description of Capital Stock.............................32
Legal Matters............................................35
Experts..................................................35
Additional Information ..................................35
Index to Financial Statements ..........................F-1
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE
HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION THAT IS DIFFERENT. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS ILLEGAL.
THE INFORMATION IN THIS PROSPECTUS IS COMPLETE AND ACCURATE AS OF THE DATE ON
THE COVER, BUT THE INFORMATION MAY CHANGE IN THE FUTURE.
UNTIL ____________________, ALL DEALERS THAT EFFECT TRANSACTIONS IN
THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
[Insert picture of bank here]
[Bank Stock logo here]
March ___, 1999
<PAGE> 47
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Item 24. Indemnification of Directors and Officers
Our articles of incorporation contain a provision which, subject to
certain limited exceptions, limits the liability of a director to First Capital
Bancshares or its shareholders for any breach of duty as a director. There is no
limitation of liability for: a breach of duty involving appropriation of a
business opportunity of First Capital Bancshares; an act or omission which
involves intentional misconduct or a knowing violation of law; any transaction
from which the director derives an improper personal benefit; or as to any
payments of a dividend or any other type of distribution that is illegal under
Section 33-8-330 of the South Carolina Business Corporation Act of 1988 (The
"Corporation Act"). In addition, if at any time the Corporation Act shall have
been amended to authorize further elimination or limitation of the liability of
director, then the liability of each director of First Capital Bancshares shall
be eliminated or limited to the fullest extent permitted by such provisions, as
so amended, without further action by the shareholders, unless the provisions of
the Corporation Act require such action. The provision does not limit the right
of First Capital Bancshares or its shareholders to seek injunctive or other
equitable relief not involving payments in the nature of monetary damages.
Our bylaws contain certain provisions which provide indemnification to
directors of First Capital Bancshares that is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the Corporation Act. To
the extent that a director or officer of First Capital Bancshares has been
successful, on the merits or otherwise, in the defense of any action or
proceeding brought by reason of the fact that such person was a director or
officer of First Capital Bancshares, Sections 33-8-510 and 33-8-520 of the
Corporation Act would require First Capital Bancshares to indemnify such persons
against expenses (including attorney's fees) actually and reasonably incurred in
connection therewith. The Corporation Act expressly allows First Capital
Bancshares to provide for greater indemnification rights to its officers and
directors, subject to shareholder approval.
Insofar as indemnification for liabilities arising under the
Corporation Act may be permitted to directors, officers, and controlling persons
of First Capital Bancshares and First Capital Bank pursuant to the articles of
incorporation or bylaws, or otherwise, First Capital Bancshares and First
Capital Bank have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Corporation Act and
is, therefore, unenforceable.
The board of directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The board of directors
has extended or intends to extend indemnification rights to all of its executive
officers.
We have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of First Capital
Bancshares against any liability asserted against him or incurred by him in any
such capacity, whether or not First Capital Bancshares would have the power to
indemnify him against such liability under the bylaws.
II-1
<PAGE> 48
Item 25. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting commissions) of the sale of
the shares of common stock are:
<TABLE>
<S> <C>
Registration Fee $ 2,000
Printing and Engraving 15,000
Legal Fees and Expenses 30,000
Accounting Fees 5,000
Blue Sky Fees and Expenses 10,000
Underwriter's expenses and legal fees 60,000
Miscellaneous Disbursements 5,000
-----------
TOTAL $ 127,000
===========
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
From the inception of the company and prior to filing the initial
registration statement, First Capital sold 30,000 shares of common stock to its
organizers at a price of $10.00 per share, the same price at which shares are
being offered to the public. No underwriters were involved in this transaction
and no commissions or underwriting discounts were paid to anyone in connection
with these sales. The issuance of these securities was made in reliance on an
exemption from registration provided by Section 4(2) of the Securities Act. All
of the purchasers of these securities are directors of First Capital. These
individuals represented their intention to acquire the securities for investment
purposes only and not with a view to or for the sale in connection with any
distribution thereof. These individuals also had adequate access, through their
relationships with First Capital, to information about First Capital.
Item 27. Exhibits.
3.1. Articles of Incorporation and all amendments*
3.2. Bylaws*
4.1. See Exhibits 3.1 and 3.2 for provisions in First Capital Bancshares's
Articles of Incorporation and bylaws defining the rights of holders of
the common stock*
4.2. Form of certificate of common stock*
5.1. Opinion Regarding Legality*
10.1. Revised and Restated Letter of Employment dated February 24, 1999,
between First Capital Bancshares and J. Aubrey Crosland*
10.2. Letter of Employment dated November 2, 1998, between First Capital
Bancshares and John M. Digby*
10.3 Purchase Agreement dated April 20, 1998, between First Capital
Bancshares, as buyer, and James B. Connelly, as seller*
10.4 Form of escrow agreement among First Capital Bancshares, Banc Stock
Financial Services, Inc. and The Banker's Bank*
10.5 Sales Agency Agreement among First Capital Bancshares and Banc Stock
Financial Services, Inc.*
10.6 An agreement for software and account processing services dated
December 7, 1998 with Fiserv Solutions, Inc.*
10.7 Revised and Restated Letter of Employment dated February 24, 1999,
between J. Randy McDonald and First Capital Bancshares*
II-2
<PAGE> 49
10.8 Form of Stock Order Form*
23.1. Consent of Independent Public Accountants
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)*
24.1. Power of Attorney (previously filed as part of signature page to the
registration statement)*
27.1. Financial Data Schedule (for electronic filing purposes)
* Previously filed.
Item 28. Undertakings.
The undersigned Company will:
(a)(1) 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; and
(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 statement of the securities
offered, and the offering of the securities at that 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 First Capital Bancshares pursuant to the provisions
described in Item 24 above, or otherwise, First Capital Bancshares has been
advised that in the opinion of the SEC 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 First Capital Bancshares of expenses incurred or paid
by a director, officer or controlling person of First Capital Bancshares 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, First Capital Bancshares will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of
Bennettsville, State of South Carolina, on March 23, 1999.
FIRST CAPITAL BANCSHARES, INC.
By: /s/ J. Aubrey Crosland
----------------------------------
J. Aubrey Crosland
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* /s/ Glenn Dowdy
- -------------------------------------
Glenn Dowdy Director March 23, 1999
* /s/ Wylie Cartrette
- -------------------------------------
Wylie Cartrette Director March 23, 1999
* /s/ Dale Hutchins
- -------------------------------------
Dale Hutchins Director March 23, 1999
* /s/ Shoukath Ansari
- -------------------------------------
Shoukath Ansari Director March 23, 1999
* /s/ Paul F. Rush
- -------------------------------------
Paul F. Rush Director March 23, 1999
* /s/ Lee Howell
- -------------------------------------
Lee Howell Director March 23, 1999
* /s/ Lee C. Short
- -------------------------------------
Lee C. Shortt Director March 23, 1999
/s/ J. Aubrey Crosland
- -------------------------------------
J. Aubrey Crosland Director and President March 23, 1999
(principal executive officer)
/s/ John M. Digby
- -------------------------------------
John M. Digby Chief Financial Officer March 23, 1999
(principal accounting and
financial officer)
*By: /s/ J. Aubrey Crosland
- -------------------------------------
J. Aubrey Crosland
*As attorney-in-fact
</TABLE>
<PAGE> 51
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
Item 27. Exhibits.
3.1. Articles of Incorporation and all amendments*
3.2. Bylaws*
4.1. See Exhibits 3.1 and 3.2 for provisions in First Capital Bancshares's
Articles of Incorporation and bylaws defining the rights of holders of
the common stock*
4.2. Form of certificate of common stock*
5.1. Opinion Regarding Legality*
10.1. Revised and Restated Letter of Employment dated February 24, 1999,
between First Capital Bancshares and J. Aubrey Crosland*
10.2. Letter of Employment dated November 2, 1998, between First Capital
Bancshares and John M. Digby*
10.3 Purchase Agreement dated April 20, 1998, between First Capital
Bancshares, as buyer, and James B. Connelly, as seller*
10.4 Form of escrow agreement among First Capital Bancshares, Banc Stock
Financial Services, Inc. and The Banker's Bank*
10.5 Sales Agency Agreement among First Capital Bancshares and Banc Stock
Financial Services, Inc.*
10.6 An agreement for software and account processing services dated
December 7, 1998 with Fiserv Solutions, Inc.*
10.7 Revised and Restated Letter of Employment dated February 24, 1999,
between J. Randy McDonald and First Capital Bancshares*
10.8 Form of Stock Order Form*
23.1. Consent of Independent Public Accountants
23.2. Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)*
24.1. Power of Attorney (previously filed as part of the signature page to
registration statement)*
27.1. Financial Data Schedule (for electronic filing purposes)
</TABLE>
- -------------------
* Previously filed.
<PAGE> 1
EXHIBIT 23.1
TOURVILLE, SIMPSON & HENDERSON
CERTIFIED PUBLIC ACCOUNTANTS
1615 Pickens Street
Columbia, South Carolina 29202
(803) 252-3000
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the inclusion of my report dated February 18, 1999, on the
financial statements of First Capital Bancshares, Inc., at December 31, 1998 and
for the period then ended in the Form SB-2 Registration Statement as filed by
First Capital Bancshares, Inc., under the Securities Act of 1933 and the
reference to us under the caption "Experts" in the same Form SB-2 Registration
Statement.
\s\ Tourville, Simpson & Henderson, L.L.P.
- ----------------------------------------------------
Tourville, Simpson & Henderson, L.L.P.
Columbia, South Carolina
March 23, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST CAPITAL BANCSHARES, INC. FOR THE YEAR ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 103,293
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 145,510
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 9,000
<LONG-TERM> 0
0
0
<COMMON> 300
<OTHER-SE> 136,210
<TOTAL-LIABILITIES-AND-EQUITY> 145,510
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 0
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 163,490
<INCOME-PRETAX> (163,490)
<INCOME-PRE-EXTRAORDINARY> (163,490)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (163,490)
<EPS-PRIMARY> (5.45)
<EPS-DILUTED> (5.45)
<YIELD-ACTUAL> 0.00
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
