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As filed with the Securities and Exchange Commission on August 20, 1999
Registration Statement No. 333-75033
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 3)
COASTAL COMMUNITY GROUP, INC.
(Formerly known as Coastal BHC, Inc.)
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(Name of Small Business Issuer in its Charter)
FLORIDA 6712 65-0867286
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(State or other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction) Classification Code Number) Identification No.)
255 PALM AVENUE
MIAMI BEACH, FLORIDA 33139
(305) 673-9442
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(Address and Telephone Number of Principal Executive Offices)
255 PALM AVENUE
MIAMI BEACH, FLORIDA 33139
(305) 673-9442
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(Address of Principal Place of Business or
Intended Principal Place of Business)
RICHARD J. BISCHOFF, ESQ.
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
ONE BISCAYNE TOWER, TWO SOUTH BISCAYNE BLVD., SUITE 3400
MIAMI, FLORIDA 33131 - 1897
(305) 376-6016 PHONE (305) 376-6010 FACSIMILE
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(Name, Address, and Telephone Number of Agent for Service)
Copies to:
Mark J. Scheer, Esq. Robert J. Ahrenholz, Esq.
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A. KUTAK ROCK
One Biscayne Tower, Two South Biscayne Blvd., 717 17 Street, Suite 2900
Suite 3400 Denver, Colorado 80202
Miami, Florida 33131 (303) 297-2400
(305) 376-6040 (ATTORNEY FOR COAST PARTNERS
(ATTORNEY FOR COASTAL COMMUNITY GROUP, INC.) SECURITIES, INC.)
Approximate date of proposed sale to the public: As soon as practicable
after this registration statement becomes effective.
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Each Class Amount Maximum Maximum Amount of
of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Unit Offering Price Fee
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Common Stock $.01 1,000,000 $10 $10,000,000 $2,780
Par Value Per Share
Per Share
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<S> <C> <C> <C> <C>
Total 1,000,000 $10 $10,000,000 $2,780*
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</TABLE>
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* Previously paid.
Coastal Community Group hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until Coastal
Community Group 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, as amended, or until the
registration statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
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COASTAL COMMUNITY GROUP, INC.
Cross Reference Sheet
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<S> <C>
ITEMS OF FORM SB-2 PROSPECTUS CAPTION OR LOCATION
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PART I - INFORMATION REQUIRED IN
PROSPECTUS
1. FRONT OF REGISTRATION STATEMENT AND OUTSIDE FACING PAGE OF REGISTRATION
FRONT COVER PAGE OF PROSPECTUS ...................... STATEMENT; FRONT COVER PAGE OF
PROSPECTUS
2. INSIDE FRONT AND OUTSIDE BACK COVER PAGES INSIDE FRONT COVER PAGE;
OF PROSPECTUS........................................ TABLE OF CONTENTS
3. SUMMARY INFORMATION AND RISK FACTORS ................ PROSPECTUS SUMMARY;
RISK FACTORS
4. USE OF PROCEEDS ..................................... USE OF PROCEEDS
5. DETERMINATION OF OFFERING PRICE...................... PLAN OF DISTRIBUTION
6. DILUTION............................................. NOT APPLICABLE
7. SELLING SECURITY HOLDERS............................. NOT APPLICABLE
8. PLAN OF DISTRIBUTION................................. PLAN OF DISTRIBUTION; CERTAIN
TRANSACTIONS
9. LEGAL PROCEEDINGS.................................... LEGAL MATTERS
10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS...................................... MANAGEMENT
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT................................ MANAGEMENT
12. DESCRIPTION OF SECURITIES............................ DESCRIPTION OF CAPITAL STOCK
13. INTEREST OF NAMED EXPERTS AND COUNSEL................ NOT APPLICABLE
14. DISCLOSURE OF COMMISSION POSITION ON DESCRIPTION OF CAPITAL STOCK
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES....... -- CERTAIN ANTI-TAKEOVER,
INDEMNIFICATION AND LIMITED LIABILITY
PROVISIONS
15. ORGANIZATION WITHIN LAST FIVE YEARS.................. CERTAIN TRANSACTIONS
16. DESCRIPTION OF BUSINESS.............................. BUSINESS; SUPERVISION AND
REGULATION; AVAILABLE
INFORMATION
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<TABLE>
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17. MANAGEMENT'S DISCUSSION AND ANALYSIS OR MANAGEMENT'S DISCUSSION AND
PLAN OF OPERATION.................................... ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATION
18. DESCRIPTION OF PROPERTY.............................. BUSINESS -- BANK PREMISES
19. CERTAIN RELATIONSHIPS AND RELATED MANAGEMENT; CERTAIN
TRANSACTIONS ........................................ TRANSACTIONS
20. MARKET FOR COMMON EQUITY AND RELATED SHARES ELIGIBLE FOR FUTURE
STOCKHOLDER MATTERS.................................. SALE; PLAN OF DISTRIBUTION
21. EXECUTIVE COMPENSATION............................... MANAGEMENT -- EMPLOYMENT
AGREEMENTS; INCENTIVE STOCK OPTION
PLAN
22. FINANCIAL STATEMENTS................................. FINANCIAL STATEMENTS
23. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE........................................... NOT APPLICABLE
PART II - INFORMATION NOT REQUIRED IN PAGE II - 1
PROSPECTUS
24. INDEMNIFICATION OF OFFICERS AND DIRECTORS PAGE II - 1
25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION PAGE II - 1
26. RECENT SALES OF UNREGISTERED SECURITIES PAGE II - 1
27. EXHIBITS PAGE II - 2
28. UNDERTAKINGS PAGE II - 3
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SUBJECT TO COMPLETION, DATED AUGUST 20, 1999
Initial Public Offering
PROSPECTUS
COASTAL COMMUNITY GROUP, INC.
COMMON STOCK
MINIMUM: 900,000 SHARES------ MAXIMUM: 1,000,000 SHARES
$10.00 PER SHARE
We are offering shares of our common stock to fund the start-up of a
new commercial bank named Coastal Community Bank. We will be the sole owner of
Coastal Community Bank which will have its executive offices in Miami, Florida.
Coastal Community Bank will offer a full range of commercial and consumer
banking services.
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<CAPTION>
PER SHARE MINIMUM MAXIMUM
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<S> <C> <C> <C>
Price to Public $10.00 $ 9,000,000 $10,000,000
Maximum Offering Commissions $ 0.95 $ 855,000 $ 950,000
Proceeds to Coastal Community Group $ 9.05 $ 8,145,000 $ 9,050,000
</TABLE>
We are offering shares of common stock in minimum amounts of 250 shares [$2,500]
and you may purchase a maximum of 50,000 shares [$500,000], unless we waive
these minimum and maximum requirements.
This is our initial public offering and no public market currently exists for
our shares. The offering will end ninety days after the effective date. Coastal
Community Group, Inc. has the option of extending the offering period for an
additional ninety days.
The common stock is being offered on a best-efforts basis, and no common stock
will be sold unless we sell a minimum of 900,000 shares.
Until the minimum number of shares are sold and until Coastal Community Bank
receives preliminary regulatory approval, your subscriptions will be deposited
into an escrow account. SEE "Terms of the Offering."
Proposed Trading Symbol: OTC Bulletin Board(R) - ______
The common stock offered by this prospectus involves a high degree of risk. You
should purchase shares only if you can afford a complete loss. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The shares of common stock offered hereby are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, any other
governmental agency or otherwise.
The information contained in this prospectus is not complete and may be amended.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
COAST PARTNERS SECURITIES, INC.
__________, 1999
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PROSPECTUS SUMMARY
You should read the entire prospectus carefully to fully understand the
offering. All information in this prospectus assumes that the minimum number of
shares is sold unless we indicate otherwise.
COASTAL COMMUNITY GROUP AND COASTAL COMMUNITY BANK
Coastal Community Group was formed as a bank holding company and was
organized on October 6, 1998, as a Florida corporation. We will operate as a
bank holding company under the Federal Bank Holding Company Act of 1956, and
will own all of the common stock of Coastal Community Bank. We will organize
Coastal Community Bank as a Florida state chartered commercial bank with
depository accounts to be insured by the FDIC to the extent permitted by law. We
intend to offer a full range of commercial and consumer banking services
primarily in the communities of Miami-Dade County, Florida. We have filed or
will, at the appropriate time, file applications with the Florida Department of
Banking and Finance, the FDIC, and the Federal Reserve Bank of Atlanta and plan
to start business in the fourth quarter of 1999. This starting date depends upon
timely approval of the applications and the successful completion of this
offering. We currently have our temporary offices at 255 Palm Avenue, Miami
Beach, Florida 33139. We will lease our main facility and have signed an option
to lease space for our operations. Coastal Community Bank's address will be 8700
North Kendall Drive, Miami, Florida. Coastal Community Bank and Coastal
Community Group's temporary phone number is (305) 673-9442.
OUR PLANS FOR COASTAL COMMUNITY BANK
We seek to create a customer oriented bank which provides high value to
clients by delivering products and services matched directly to their needs. We
believe that such a bank can attract clients who prefer to conduct business with
a locally-managed bank that takes an active interest in their business and
personal affairs.
We believe that Coastal Community Bank will be able to generate
competitively priced loans and deposits with an experienced staff providing a
specialized level of personalized service. We anticipate that the staff will use
current data processing systems selected to deliver high-quality products and
provide responsive customer service. We anticipate that Coastal Community Bank
will enter into agreements with other companies to provide customers with
convenient electronic access to their accounts and other bank products through
debit cards, voice response and home banking. Our use of these other companies
should allow Coastal Community Bank to use current technology while minimizing
the costs. We expect customers to appreciate a combination of the most
innovative technology with personalized service. We expect that customers will
prefer this approach to the depersonalized environment of Coastal Community
Bank's larger competitors. SEE "Business - Business Strategy."
COASTAL COMMUNITY BANK'S MARKET AREA
Coastal Community Bank's primary service area for its banking services will
be the Kendall area of Miami, Florida. This area is covered by postal zip codes
33143, 33156, 33176, and 33173. It is bounded by Miller Road to the North, SW
104th Street to the South, Biscayne Bay to the East, and SW 107th Avenue to the
West. The extended market area will comprise Miami-Dade County, Florida.
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OUR BANKING LOCATION
We have entered into an option to lease commercial office space at 8700
North Kendall Drive, Miami, Florida in one of three buildings in the Lennar
Medical Center office complex. The building is located on the corner of 87th
Avenue and North Kendall Drive which is a busy intersection in an area of
medical offices and private homes.
We anticipate that Coastal Community Bank will occupy approximately 4,600
square feet of office space on the first floor of the building. The other
occupants of the building are physicians and other medical and dental service
providers. We expect to open for business in the fourth quarter of 1999.
MANAGEMENT
We have hired Hans C. Mueller to serve as Chairman, President, and Chief
Executive Officer of Coastal Community Group and Coastal Community Bank. Mr.
Mueller has 25 years of experience serving the banking industry both as an
executive and as a service professional. Mr. Mueller most recently served as
President of PanAmerican Bank from 1996 to 1998. PanAmerican Bank is a small
community bank with less than $100,000,000 in assets, located in Miami, Florida.
Previously Mr. Mueller was President of Trade National Bank in Miami, Florida.
We also expect to assemble an experienced senior management team and board
of directors who share a common vision and commitment to the success of Coastal
Community Bank. Some officers and directors of Coastal Community Group and
Coastal Community Bank have significant experience and familiarity with our
primary service area, having previously worked with banks serving the South
Florida community.
The other directors are business people who have lived in the Miami-Dade
County area for many years or have otherwise had significant business interests
in the community or extensive banking experience. These directors have developed
a number of business and personal relationships in Miami-Dade County which they
believe will add to our success. The directors believe that their long standing
ties to the community, coupled with their combined business and banking
experience, give them insight into the area's needs and its desire for a new
independent bank under local control. They believe that the community will react
favorably to this new enterprise.
DIVIDEND POLICY
We do not anticipate paying dividends on the common stock for the
immediately foreseeable future.
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SUMMARY
Securities offered We are offering a maximum of 1,000,000 shares of
common stock. We are requiring that a minimum of
900,000 shares be sold in this offering. We
anticipate that members of our board of directors and
their affiliates will purchase approximately 187,500
shares in this offering. See "Principal
Shareholders."
Minimum purchase 250 shares [$2,500]
Maximum purchase 50,000 shares [$500,000]
Common stock to be Minimum: 900,500 shares
outstanding after this Maximum: 1,000,500 shares
offering
Use of proceeds We estimate that the net proceeds to us from this
offering will be $8,176,250 after deducting Coast
Partners Securities, Inc.'s discounts, fees and the
estimated offering expenses. Our organizers have
advanced $650,000 to us to partially cover the
expense of this offering and the organizing and
pre-opening expenses of Coastal Community Bank.
Organizational expenses are expenses related to the
initial organization of Coastal Community Bank and
include regulatory application fees, legal and
accounting fees, and salaries. Pre-opening expenses
are expenses incurred in the establishment of Coastal
Community Bank other than for organizational matters.
These include furniture, fixtures and equipment,
construction, computer hardware, architects' fees,
data processing set up and signage. Offering
expenses are expenses related solely to the offering
of Coastal Community Group's common stock and include
legal and accounting fees in connection with the
issuance and registration of the common stock, dealer
commissions, escrow fees, printing costs and filing
fees. After receipt of preliminary approval by the
Department of Banking and Finance evidenced by our
receipt of the "Notice of Intent to Approve," we will
use part of the net proceeds to repay, with interest,
the funds advanced by the organizers. Until such
approval is received, all funds shall remain in
escrow. We will invest the balance in overnight
repurchase agreements with commercial banks secured
by United States Treasury and agency securities.
Once Coastal Community Bank is authorized to
incorporate, we will use a substantial portion of the
remaining proceeds from the sale of the common stock
to purchase all of Coastal Community Bank's common
stock for $7.5 million.
Coastal Community Bank will use approximately
$582,000 from the proceeds of the sale of the common
stock to lease its office space, improve real estate
for its main banking facility site, construct its
main office and purchase furniture, fixtures and
equipment and other necessary assets for its
operations. We anticipate that the balance of the net
proceeds contributed to Coastal Community Bank will
be used to fund investments in loans and securities
and for the payment of the operating expenses of
Coastal Community Bank.
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The remaining proceeds, if any, after our purchase of
Coastal Community Bank's common stock, will be
invested in repurchase agreements with Coastal
Community Bank secured by United States Treasury and
agency securities. These remaining proceeds will be
held as working capital for general corporate
purposes and to pay operating expenses as well as for
possible future capital contributions to Coastal
Community Bank. SEE "Use of Proceeds."
RISK FACTORS Purchasing securities is risky and you should
purchase our securities only if you can afford a
complete loss. You should read the "Risk Factors"
section before deciding whether to invest in the
offering. SEE "Risk Factors."
RISK FACTORS
The common stock is a risky investment. It is not a deposit or an account
insured by the FDIC or any other government agency. The following are some of
the potential risks of an investment in the common stock and you should read
them carefully before purchasing shares of common stock. There may also be other
risks that we have not discussed. We have, however, disclosed all material risk
factors now known to us.
IF STATE OR FEDERAL REGULATORY APPROVAL IS DELAYED OR DENIED, COASTAL COMMUNITY
BANK MAY NOT BE ABLE TO COMMENCE ITS BANKING ACTIVITIES AND MAY BE LIQUIDATED
AND YOU MAY LOSE ALL OF YOUR INVESTMENT.
Coastal Community Bank must obtain regulatory approval from state and
federal bank regulatory agencies in order to operate as a bank. If regulatory
approval is denied, Coastal Community Bank will not be able to commence its
banking activities and investors could lose all or part of their investment. If
regulatory approval is inordinately delayed, Coastal Community Group's
accumulated deficit will continue to increase which will reduce the value of
Coastal Community Group.
Coastal Community Bank has applied for a Florida bank charter, for deposit
insurance with the FDIC, and for membership in the Federal Reserve System.
Coastal Community Group has applied to the Federal Reserve to become a bank
holding company. We may not have received regulatory approvals when the closing
of this offering takes place. There can be no assurance that the necessary
approvals will be forthcoming or that Coastal Community Bank and Coastal
Community Group could comply with any additional requirements.
If we receive preliminary approval from the Florida Department of Banking
and Finance, but if final approval to begin banking operations is not granted
within 18 months after the receipt of preliminary approval, or if we are unable
to commence business for some other reason, we will ask the shareholders to
approve our dissolution and liquidation. If this happens, we will return your
investment, less the organizers' advances and all expenses incurred by us,
including the expenses of the offering, the organizational and pre-opening
expenses of Coastal Community Group and Coastal Community Bank, and claims of
creditors. As a result, funds returned to you, if any, will be reduced or
possibly completely depleted. Because the organizers' expenses will be paid
before your funds are returned to you, the risk the organizers took by making
the advances to us will be diminished or eliminated by reallocation of the risk
to you. SEE "Return of Proceeds to Investors If Coastal Community Bank, Inc.
Does Not Open For Business."
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DUE TO START-UP COSTS IN CREATING AND OPENING A NEW BANK, WE EXPECT SIGNIFICANT
LOSSES FOR AT LEAST TWO YEARS.
Because of the substantial start-up costs that must be incurred by a new
bank, we expect to incur significant operating losses during our initial years
of operations. Our profitability will depend primarily upon Coastal Community
Bank's operations and there is no assurance that Coastal Community Bank will
ever operate profitably. As of April 30, 1999, our accumulated deficit was
$387,364 and we will continue to incur pre-opening expenses until Coastal
Community Bank opens. Any delay in opening will increase pre-opening expenses
and postpone our receipt of potential revenues and income. Until we start
operating at a profit, our accumulated deficit will continue to increase, and
book value per share decrease, as operating expenses such as rent on Coastal
Community Bank's proposed premises, salaries and other administrative and
professional expenses continue to be incurred.
BECAUSE THE CURRENT TENANT HAS NOT VACATED THE OFFICE SPACE WE INTEND TO OCCUPY,
WE MAY BE UNABLE TO OCCUPY THE PREMISES AND OPEN FOR BUSINESS.
Whether we open for business is dependent on our ability to occupy the
leased premises. Although we expect to begin operations in our leased facility
in the fourth quarter of 1999, there can be no assurance as to when, if at all,
this will occur. Although we have an option to lease office space at our planned
location, the option is contingent upon the current tenant leaving the office
space. The current tenant intends to relocate but is not obligated to do so.
There can be no assurance that the current tenant will leave in a timely manner,
if at all. If the current tenant decides to remain, it has told us that it is
willing to sublease office space to us but it is under no obligation to do so.
There can be no assurance that we would be able to enter into such a sublease
arrangement. Before we undertake the leasehold improvements and construction
needed to operate a bank, we must obtain building permits and approvals of
parking from the Miami-Dade County Planning and Zoning authorities. Although we
do not expect the building permit or the review of the parking facilities will
meet with opposition from the County, there can be no assurance that these
permits and approvals will be granted or, if granted, granted on a timely basis.
BECAUSE WE DEPEND HEAVILY ON THE EXPERIENCE AND SERVICE OF HANS C. MUELLER, HE
WOULD BE DIFFICULT TO REPLACE AND HIS LOSS COULD ADVERSELY AFFECT OUR
OPERATIONS.
Since we are dependent upon the services of Mr. Mueller, the Chairman of
the Board and Chief Executive Officer of Coastal Community Group and Coastal
Community Bank, the loss of Mr. Mueller could adversely affect the operations of
Coastal Community Group and Coastal Community Bank. We have entered into an
employment agreement with Mr. Mueller in an effort to retain his services for an
extended period of time. Our board of directors has adopted a resolution to
obtain a policy of key person life insurance on Mr. Mueller to compensate
Coastal Community Group for the possible loss of his services. SEE "Business -
Employees" and "Management."
BECAUSE WE NEED EXPERIENCED PERSONNEL IN ORDER TO OPERATE, WE MAY BE UNABLE TO
OPEN FOR BUSINESS IF WE ARE UNABLE TO ADEQUATELY STAFF COASTAL COMMUNITY BANK.
In order to operate, we must hire experienced personnel to run the day to
day operations of Coastal Community Bank. If we are unable to hire an
experienced staff, we will not be able to open for business. Coastal Community
Bank anticipates that in addition to Mr. Mueller, it will require a Senior Vice
President in charge of lending, a Senior Vice President in charge of operations,
as well as three tellers, three back room and accounting employees, and one loan
and other operations staff member. There can be no assurance that Coastal
Community Bank will be able to hire a staff sufficient for its operations.
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WE ARE A NEW BUSINESS WITH NO OPERATING HISTORY.
We have only recently formed Coastal Community Group and have only recently
applied for the necessary regulatory approvals to establish Coastal Community
Bank. Because we have not opened for business as of the date of this prospectus,
you do not have access to all of the information that is available to the
purchasers of securities of a financial institution with a history of
operations. This information may be important to you in assessing your proposed
investment.
DETERMINATION OF THE OFFERING PRICE IS NOT BASED ON EARNINGS OR OPERATING
HISTORY.
The initial public offering price of $10.00 per share was determined by
negotiations between us and Coast Partners Securities, Inc. This price was
arbitrarily determined and is not based upon earnings or any history of
operations and should not be construed to indicate the present or anticipated
future value of the common stock. SEE "Plan of Distribution."
BECAUSE WE ARE HEAVILY REGULATED AND SUPERVISED BY BOTH STATE AND FEDERAL
AGENCIES, OUR ABILITY TO ATTRACT DEPOSITS, MAKE LOANS AND ACHIEVE SATISFACTORY
INTEREST RATE SPREADS MAY BE AFFECTED.
We will be subject to extensive federal and state government supervision
and regulation which will substantially limit us with respect to loans,
purchases of securities, payment of dividends and many other aspects of our
banking business. These laws may be changed and future legislation or government
policy may adversely affect the banking industry or the operations of Coastal
Community Bank. SEE "Supervision and Regulation."
BECAUSE OUR COMPETITORS ARE LARGER AND MORE EXPERIENCED, AND SOME COMPETITORS
ARE LESS-REGULATED THAN COASTAL COMMUNITY BANK, WE MAY BE UNABLE TO SUCCESSFULLY
COMPETE.
We will face strong competition for deposits, loans and other financial
services from numerous Florida and out-of-state banks, thrifts, credit unions
and other financial institutions as well as other entities which provide
financial services. Some of the financial institutions and financial services
organizations with which we will compete, such as brokerage firms and credit
unions, are not regulated as heavily as Coastal Community Bank.
As of April 30, 1999, approximately 12 branch bank offices were located
within our primary service area. SEE "Business - General" and "Business - Market
Area." Many of these financial institutions aggressively compete for business in
the primary service area. Most of these competitors have been in business for
many years and have established customer bases. Most are also larger and have
substantially higher lending limits than Coastal Community Bank. Coastal
Community Bank will have only one location when it commences business. This may
put Coastal Community Bank at a competitive disadvantage with respect to
competitors which offer services, including multiple branches and international
banking services, that we can offer only through correspondents, if at all. In
addition, most of these entities have greater capital resources than Coastal
Community Bank. This may allow them to offer services at a lower cost to the
customer and to provide larger credit facilities than we could. SEE "Business -
Market Area" and "Business - Competition." Additionally, recently enacted
federal and Florida legislation regarding interstate branching and banking may
act to increase competition in the future from larger out-of-state banks. SEE
"Supervision and Regulation - Interstate Banking."
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IN ORDER TO SUCCESSFULLY COMPETE, WE MAY NEED TO EXPAND OPERATIONS OR UNDERTAKE
STRATEGIC ACQUISITIONS, WHICH WILL INCREASE OUR CAPITAL NEEDS.
We will likely need additional capital beyond that which will be provided
by this offering and any amounts likely to be generated by Coastal Community
Bank's operations over the next four years before we undertake any significant
acquisitions or other expansion of operations. There can be no assurance that
any funds necessary to finance such acquisitions or expansion will be available.
If additional capital is not generated, any expansion will be delayed or
canceled and this may affect book value per share. Regulatory capital
requirements and borrowing restrictions may have the effect of constraining
future growth. We do not, however, expect to need additional capital in the next
12 months to open for business.
WE MAY NEED TO SELL ADDITIONAL STOCK IN THE FUTURE IN ORDER TO RAISE CAPITAL,
AND THEREFORE YOUR INTEREST MAY BE DILUTED.
To the extent that we rely upon the sale of additional stock to finance
future expansion or our operations, those sales could result in significant
dilution to the interests of investors purchasing shares in this offering.
BECAUSE WE ARE SUBJECT TO LENDING LIMITS, WE MAY BE UNABLE TO ATTRACT LARGE
CUSTOMERS.
Because of lending limits, the size of the loans which Coastal Community
Bank can offer to potential customers is less than the size of loans that most
of our competitors are able to offer. Initially, this limit may adversely affect
our ability to form relationships with the area's larger businesses. Based upon
capitalization of $7.5 million, we will be subject to a limit of 15% of capital
or $1,125,000 on unsecured loans that we may make to any one borrower and 25% of
capital or $1,875,000 on secured loans that we may make to any one borrower. The
board of directors of Coastal Community Bank will establish a limit that will be
somewhat lower than our legal lending limit. The board may from time to time
raise or lower the limit as it deems appropriate to comply with safe and sound
banking practices and respond to overall economic conditions. We expect to
accommodate loan volumes larger than our lending limit by selling participation
in such loans to other banks. However, there can be no assurance that we will be
successful in attracting or maintaining customers seeking larger loans or that
we will be able to engage in the sale of participation in such loans on terms
favorable to us.
BECAUSE WE INTEND TO FOCUS OUR LENDING TO SMALLER BUSINESSES, WE MAY NEED TO
ASSUME A HIGHER RISK.
We expect to focus on small-to-medium sized businesses. This may result in
a larger concentration by Coastal Community Bank of loans to such businesses,
and we may find it necessary to assume greater lending risks than banks which
tend to make loans to larger companies. We also expect to offer short term
adjustable rate mortgages with terms from 3-5 years. The principal and interest
payments on these loans is not completely amortized over the term of the loan.
Instead, the loan is paid off with a large payment at the end of the term. While
the interest rate risk is low with this type of loan, the large payment at the
end of the term increases the repayment risk. We will attempt to minimize our
credit exposure by carefully monitoring the concentration of our loans within
specific industries and through prudent loan application and approval
procedures. However, there can be no assurance that such monitoring and
procedures will reduce lending risks. The risk that loans will not be repaid is
inherent in commercial banking. If nonpayment occurs, our earnings and overall
financial condition may suffer and the value of our stock may decrease.
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SINCE OUR BUSINESS WILL BE HEAVILY CONCENTRATED ON LOANS TO THE HEALTHCARE
INDUSTRY, ANY NEGATIVE CONDITIONS IN THAT INDUSTRY MAY AFFECT OUR PROFITABILITY.
Adverse conditions in any one or more of the industries operating in
Coastal Community Bank's primary service area or a slowdown in general economic
conditions could have an adverse effect on us, including our ability to
originate and collect loans. The business economy of Coastal Community Bank's
primary service area is largely represented by the health care industry,
including a major hospital, clinics and medical and dental offices. We may have
concentrations of credit extended to this industry group. SEE "Business - Market
Area."
SINCE OUR CUSTOMERS WILL BE CONCENTRATED IN MIAMI-DADE COUNTY, A DECLINE IN THE
MIAMI-DADE COUNTY ECONOMY COULD NEGATIVELY AFFECT US.
Substantially all of our loans will be to businesses and individuals in the
Miami-Dade County, Florida area. Any decline in the economy of this area could
have an adverse impact on us. Although we do not plan to make any foreign loans
or investments, the economy of Miami and Miami Dade County is based in
significant part on international trade and investment and international
tourism, particularly with respect to Latin America. The economies and
governments of Latin America have historically been, and continue to be, fragile
and volatile. Any economic downturn or political or economic crisis in the
region as a whole, or in a particular country important to the local market such
as Brazil or Venezuela, would have an adverse effect on the local economy and
might negatively affect Coastal Community Bank.
AS A FINANCIAL INSTITUTION, OUR PROFITABILITY IS HEAVILY AFFECTED BY INTEREST
RATE FLUCTUATION AND ECONOMIC DOWNTURN.
The profitability of financial institutions, including Coastal Community
Bank, may be negatively affected by changes in economic conditions. These
changes may include declines in real estate market values, rapid changes in
interest rates and monetary and fiscal policies of the federal government. Our
profitability is partially dependent upon the spread between the interest rates
that we earn on investments and loans and the interest rates that we pay on
deposits and other interest-bearing liabilities.
Like most banking institutions, our net interest spread and margin will be
affected by general economic conditions and other factors that influence market
interest rates. Additionally, our ability to respond to changes in such rates
may also be affected. At any given time, our assets and liabilities will be
affected differently by a given change in interest rates. As a result, several
variables could have a positive or negative effect on Coastal Community Bank's
net income, capital and liquidity. These include:
o an increase or decrease in interest rates
o the length of loan terms
o the mix of adjustable and fixed rate loans in Coastal Community Bank's
portfolio
BECAUSE BANKING INSTITUTIONS ARE HEAVILY DEPENDENT ON TECHNOLOGICAL
IMPROVEMENTS, FAILURE TO UPDATE OUR TECHNOLOGY MAY NEGATIVELY AFFECT OUR
BUSINESS.
The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. Many of our
competitors have substantially greater resources to invest in technological
improvements than we do. Our future success will depend in part on our ability
to address the varying needs of our customers. There can
8
<PAGE> 14
be no assurance that we will be able to effectively implement new
technology-driven products and services or be successful in marketing such
products and services to our customers. SEE "Business--Business Strategy."
ALTHOUGH WE HAVE TAKEN PRECAUTIONS, WE CONTINUE TO FACE RISKS RELATING TO YEAR
2000 COMPLIANCE.
There can be no assurance that Coastal Community Bank's Year 2000
compliance program will adequately address unforseen and/or large scale national
or global problems or that Year 2000 problems will not have a material adverse
effect on Coastal Community Bank. Year 2000 problems arise due to the fact that
many computer programs use only two digits to represent a year. When we enter
the Year 2000 computers may interpret "00" as "1900" instead of "2000." As a
result, many computers and computer dependent systems may produce errors or
cease to function all together. We will obtain certification from our vendors
and suppliers of computer hardware and software that all of our systems will be
Year 2000 compliant. Coastal Community Bank will also require representations
and warranties from its borrowers of their Year 2000 compliance. Further, bank
regulatory agencies such as the FDIC and the Federal Reserve have in place Year
2000 compliance programs to protect the banking industry. There is no reliable
forecast of the effect of the Year 2000 problem on the national and global
economy or of what other related issues may arise. SEE "Business--Year 2000."
ANTI-TAKEOVER PROVISIONS MAY LOWER THE PRICE YOU RECEIVE FOR YOUR STOCK.
Anti-takeover provisions in our articles of incorporation may have the
effect of delaying or preventing a change in control of Coastal Community Group
without action by the shareholders. These provisions, along with state and
federal law, could make us less attractive to a potential acquirer or cause you
to receive less for your shares than otherwise might be available if there is a
change in control of Coastal Community Group.
Federal banking law contains provisions that will make it more difficult
for anyone to acquire us without our board of directors' approval. SEE
"Supervision and Regulation."
Florida law also contains provisions which may have the effect of deterring
unsolicited attempts to acquire us. Further, our articles of incorporation
divide the board of directors into three classes with the term of office of one
class expiring each year. The articles of incorporation also authorize the board
of directors of Coastal Community Group to issue shares of preferred stock, with
such rights as the directors may determine upon issuance. SEE "Description of
Capital Stock - Anti-Takeover Provisions."
CONTROL BY MANAGEMENT MAY LOWER THE PRICE YOU RECEIVE FOR YOUR STOCK.
Although the combined ownership and control over our common stock by our
officers and directors is likely to be less than 30% after this offering, they
will be able to exert a significant measure of control over our affairs and
policies. Such control could be used, for example, to help prevent someone from
acquiring us. This might preclude shareholders from receiving a higher price for
our common stock from a potential acquirer. SEE "Principal Shareholders."
BECAUSE WE EXPECT A LIMITED TRADING MARKET, AS A START-UP COMPANY, IT MAY BE
DIFFICULT FOR YOU TO RESELL YOUR STOCK.
A public trading market may not develop or may develop slowly which may
make it difficult to resell your stock. You should carefully consider the
potentially illiquid and long-term nature of your investment in the shares being
sold in this offering. Prior to this offering, there has been no public trading
market for our
9
<PAGE> 15
common stock and the offering price of $10 per share has been determined by
negotiations between us and Coast Partners Securities, Inc. The offering price
may be greater than the market price for the common stock following this
offering. Coast Partners Securities, Inc. has advised us that, upon completion
of this offering, either it or its syndicate members intend to act as a market
maker in the common stock, subject to applicable laws and regulatory
requirements. Making a market in securities involves maintaining bid and ask
quotations and being able, as principal, to buy and sell the securities in
reasonable quantities at those quoted prices, subject to laws and regulatory
requirements.
The development of a public trading market depends, however, upon the
existence of willing buyers and sellers. Neither Coastal Community Group,
Coastal Community Bank nor any market maker can control this development. Even
with a market maker, factors such as the limited size of this offering, the lack
of earnings history and the absence of a reasonable expectation of dividends
within the near future mean that there can be no assurance of the development of
an active liquid market for the common stock in the foreseeable future.
EVEN IF A MARKET DEVELOPS, THERE CAN BE NO ASSURANCE THAT A MARKET WILL
CONTINUE, OR THAT YOU WILL BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE OFFERING
PRICE OF $10 PER SHARE.
Coast Partners Securities, Inc. has no obligation to make a market in the
common stock and even if it begins to make a market, it may stop at any time.
The potential size of a secondary market for the common stock might, at least
initially, be limited to some extent by the requirement of a $2,500 minimum
investment imposed in this offering. The minimum investment requirement may
restrict the number of shareholders and make subsequent trading of small numbers
of shares less likely even though this $2,500 minimum investment requirement
will not apply to trading subsequent to this offering.
BECAUSE WE HAVE INDEMNIFIED OUR DIRECTORS AS FULLY AS POSSIBLE, THIS MIGHT
RESULT IN A CHARGE AGAINST EARNINGS.
Our articles of incorporation and bylaws provide for the indemnification of
officers and directors and insulate officers and directors from liability for
breaches of the duty of care. Additionally, we have entered into indemnification
agreements with each of our directors to provide them with the maximum possible
protection. This was done in order to attract officers and directors with the
proper background in banking and healthcare. It is possible that the
indemnification obligations imposed under our articles of incorporation, bylaws
and indemnification agreements could result in a charge against our earnings.
Consequently, it may affect the availability of funds for payment of dividends
to you. SEE "Description of Capital Stock - Indemnification and Limited
Liability Provisions."
WE HAVE NO PLANS TO PAY DIVIDENDS.
We do not anticipate paying dividends on the common stock for the
immediately foreseeable future. We will likely be largely dependent upon
dividends paid by Coastal Community Bank for funds to pay dividends on our
common stock, if and when such dividends are declared. Coastal Community Bank
does not anticipate paying dividends during at least the first three years of
operations. The ability of a state bank to pay dividends is subject to its
profitability and to government regulations which limit the aggregate amount of
cash dividends based on then-current income levels. No assurance can be given
that future earnings of Coastal Community Bank, and any resulting dividends to
us, will be sufficient to permit the legal payment of dividends to you at any
time in the future. Even if we may legally declare dividends, the amount and
timing of such dividends will be at the discretion of our board of directors.
The board may in its sole discretion decide not to declare dividends. For a more
detailed discussion of other regulatory limitations on our payment of cash
dividends, SEE "Dividend Policy."
10
<PAGE> 16
RECENT DEVELOPMENTS
On March 10, 1999, our organizers advanced $350,000 in the form of a loan
under the same terms as the initial advance of the $300,000 organizational
expense fund. SEE "Management-Organizers' Warrants". These funds will be used to
cover the costs associated with this offering and some pre-opening expenses of
Coastal Community Bank. Since April 30, 1999, the date of Coastal Community
Group's most recent audited financial statements, Coastal Community Group has
continued to incur organizational and offering expenses. As of April 30, 1999,
Coastal Community Group's accumulated deficit was $387,364. The expenses
incurred relate to salaries, filing fees, supplies, and legal and other
professional fees incurred in the organization of Coastal Community Bank, the
regulatory application process and in connection with this offering.
TERMS OF THE OFFERING
Coastal Community Group is offering up to 1,000,000 shares of its common
stock for cash at a price of $10.00 per share. A minimum purchase of 250 shares
is required for each initial investor. Individual investors, other than the
organizers, may subscribe for up to a maximum of 50,000 shares in the offering
period. The purchase price of $10.00 per share shall be paid in full upon the
closing of the offering. Coastal Community Group will offer the shares to the
public for a period of 90 days, unless extended by Coastal Community Group in
its sole discretion for an additional 90 days.
The offering conditions, which may not be waived, are as follows:
(a) Subscriptions for a minimum of 900,000 shares shall be received, and
not less than $9,000,000 in subscriptions shall be received, during the offering
period; and
(b) Coastal Community Group shall not have terminated this offering prior
to the closing of the offering.
All funds raised during the offering period shall be held in escrow by
SunTrust Bank, Miami, Florida as escrow agent. If less than $9,000,000 is raised
during the offering period the offering will be canceled and all funds shall be
returned promptly to investors. In addition to the foregoing offering
conditions, if the minimum of $9,000,000 is raised during the offering period
but Coastal Community Bank has not received preliminary approval from the
Florida Department of Banking and Finance, evidenced by our receipt of the
"Notice of Intent to Approve" our application, all funds shall remain in escrow,
and the closing shall not occur, until such approval is granted. If Coastal
Community Bank does not receive preliminary approval within 180 days after the
end of the offering period the offering will be canceled and all funds will be
returned in full to investors. In the event that the escrowed subscription funds
are returned to investors because any of the above conditions are not satisfied
within the specified time periods, any interest which may have accrued on such
funds will be distributed to investors as equitably as possible pro rata in
accordance with each investor's subscription amount and the length of time such
amount is held in escrow. In the event the conditions are satisfied and the
closing occurs, any and all interest which may have accrued on such funds will
be retained by Coastal Community Group.
If Coastal Community Bank is granted preliminary approval but subsequently
fails to receive final approval to begin banking operations within 18 months
after the receipt of the preliminary approval or subsequently fails to commence
business, all remaining funds shall be returned to investors, after we have paid
organizational and pre-opening expenses and the costs of the offering and repaid
the organizers' advances. SEE "Risk Factors - If state or federal regulatory
approval is delayed or denied,
11
<PAGE> 17
Coastal Community Bank may not be able to commence its banking activities and
may be liquidated and you may lose all of your investment" and "Return of
Proceeds to Investors If Coastal Community Bank, Inc. Does Not Open for
Business." Coastal Community Group may cancel this offering for any reason at
any time prior to the closing of this offering.
We can give no assurance that proceeds from the sale of the common stock
can or will be invested at the highest rate of return available or that any
income will be realized from the investment of funds.
[THIS SPACE INTENTIONALLY LEFT BLANK]
12
<PAGE> 18
USE OF PROCEEDS
SUMMARY TABLE OF USE OF PROCEEDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
A B
---------- ----------
MIN. MAX
---------- ----------
<S> <C> <C>
Net Proceeds(1): $8,176,250 $9,081,250
========== ==========
1) Invested in Bank:
Organizational Expenses:
Compensation $ 120,000 $ 120,000
Regulatory Application Fees 15,000 15,000
Accounting and Legal Fees 90,000 90,000
Other 75,000 75,000
---------- ----------
Total Organizational Expenses 300,000 300,000
Leasehold improvements 250,000 250,000
Furniture, Fixtures & Equip. 200,000 200,000
First year occupancy expense 115,000 115,000
Loans 3,000,000 3,000,000
Investments 2,000,000 2,000,000
Working Capital 1,635,000 1,635,000
---------- ----------
Total Invested in Bank 7,500,000 7,500,000
2) Remaining in Coastal Community Group
Working Capital $ 676,250 $1,581,250
---------- ----------
TOTAL NET PROCEEDS $8,176,250 $9,081,250
- ------------------ ========== ==========
</TABLE>
(1) The net proceeds are net of offering commissions which are $723,750 and
$818,750 respectively for minimum and maximum results of the offering, assuming
that officers, directors and affiliates purchase an aggregate of 187,500 shares
in the offering, and offering expenses of $100,000 with respect to both the
minimum and maximum results of the offering. The offering expenses include up to
a maximum of $50,000 of reimbursement expenses paid to Coast Partners Securities
Inc.
Upon receipt of regulatory approval to incorporate Coastal Community Bank,
$7.5 million of the net proceeds of this offering will be invested by Coastal
Community Group in shares of common stock of Coastal Community Bank to provide
Coastal Community Bank's initial capitalization. If preliminary approval is not
obtained all funds will be returned to investors. If final regulatory approval
is not obtained, but Coastal Community Bank has received preliminary approval
from the Department of Banking and Finance evidenced by our receipt of "Notice
of Intent to Approve" our application, the net proceeds, less
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<PAGE> 19
organizational and pre-opening expenses of Coastal Community Group and Coastal
Community Bank and less the organizers' loans, will be returned to investors.
SEE "Risk Factors - If state or federal regulatory approval is delayed or
denied, Coastal Community Bank may not be able to commence its banking
activities and may be liquidated and you may lose all of your investment" and
"Return of Proceeds to Investors If Coastal Community Bank, Inc. Does Not Open
for Business." Coastal Community Bank expects to use approximately $300,000 for
organizational expenses and $565,000 to lease, improve, furnish and equip the
permanent premises in which Coastal Community Bank will be located. The
remaining amount of $6,766,250 will be used by Coastal Community Bank to fund
investments in loans and U.S. government and agency securities, and for working
capital.
A total of approximately $650,000 has been advanced by an affiliate of one
of the organizers to Coastal Community Group to cover expenses of organizing
Coastal Community Bank and offering and pre-opening expenses. Under the terms of
these advances, the lender will receive repayment in full plus interest at a
rate of prime plus 2%, on or about the closing of this offering. SEE "Certain
Transactions."
The balance of the net proceeds of the offering, after capitalizing Coastal
Community Bank with $7.5 million, is estimated to be approximately $1,581,250 if
1,000,000 shares are sold or $676,250 if 900,000 shares are sold. Such amounts
will initially be invested by Coastal Community Group in overnight repurchase
agreements with commercial banks secured by U.S. Treasury and agency securities
and otherwise will be held by Coastal Community Group as working capital for
general corporate purposes as well as for possible future capital contributions
to Coastal Community Bank to support asset growth. Such uses by Coastal
Community Group, however, may be subject to change. Coastal Community Group
believes that the net proceeds of the offering will satisfy Coastal Community
Group's cash requirements for at least the first 12-month period following the
opening of Coastal Community Bank.
Coastal Community Group's organizers also have indicated their present
intention to purchase shares of common stock in this offering. SEE "Principal
Shareholders."
RETURN OF PROCEEDS TO INVESTORS IF COASTAL COMMUNITY BANK, INC.
DOES NOT OPEN FOR BUSINESS
We expect to open for business upon receipt of final approval from the
Florida Department of Banking and Finance. We expect the Florida Department of
Banking and Finance to approve our application after completing its
investigation. We will need the approval of the FDIC and the Federal Reserve
Bank of Atlanta before we will be able to commence operations. There can be no
assurance that the Florida Department of Banking and Finance will grant either
preliminary or final approval or that the approvals of the FDIC or of the
Federal Reserve Bank of Atlanta will be granted.
We expect to obtain preliminary approval on or about October 1, 1999 but
there is no assurance that we will receive such approval at that time or at all.
If Coastal Community Bank's application is denied before it receives preliminary
approval evidenced by our receipt of the "Notice of Intent to Approve" our
application, all funds shall be returned to investors.
After the offering and before Coastal Community Bank receives final
approvals from the Florida Department of Banking and Finance and the FDIC to
commence banking operations, the proceeds from this offering will be available
for organizational and pre-opening expenses of Coastal Community Group and
Coastal Community Bank and for the offering expenses.
As of this date the accumulated organizational expenses of Coastal
Community Bank are estimated to be approximately $300,000. This amount includes
monies spent for deposits, salaries, insurance, accounting and legal fees,
regulatory filing fees and other organizational expenses. In the period between
14
<PAGE> 20
the time that we obtain preliminary approval and the time when the Bank opens
for business, we expect to incur pre-opening expenses of approximately $550,000.
These expenses include the expenses for interior construction including
architects' and design fees, construction costs and furniture, fixtures and
equipment, the cost of Coastal Community Bank's data processing system, the
installation of a local area network computer system, rental expense, salaries,
additional legal fees, and other expenses required to allow Coastal Community
Bank to open for business and operate. In addition, we expect that the offering
expenses will total approximately $100,000. These expenses include legal and
accounting fees, financial printing costs, filing fees, and other expenses
associated with the offering and the initial operations of Coastal Community
Group. Assuming that officers, directors and affiliates purchase an aggregate of
187,500 shares in the offering, we expect that Coast Partners Securities, Inc.'s
discounts and commissions will be within a range between $723,750 to $818,750.
The minimum and maximum range will decrease if more than 187,500 shares are
purchased by officers, directors, affiliates or investors identified by Coastal
Community Group. However, once the officers, directors and affiliates purchase
400,000 shares in the offering, the minimum and maximum range will be unaffected
by any further purchases.
If final approval is not granted in a timely manner or if the opening of
Coastal Community Bank is delayed for other reasons, we expect to make a
decision, no later than 18 months after the receipt of preliminary approval,
whether we should continue in our efforts to establish Coastal Community Bank.
If the board determines that continued efforts would be futile, we will ask the
shareholders to approve the dissolution and liquidation of Coastal Community
Group. If this happens, we will return your investment, less the organizers'
advances and all expenses incurred by us up to that point including the expenses
of the offering, the organizational and pre-opening expenses of both Coastal
Community Group and Coastal Community Bank, and any claims of creditors. As a
result, if we liquidate, we expect that the approximate total amount that you
would be at risk that would not be returned to you if Coastal Community Bank
failed to open would be $1,800,000 or approximately 18% of an expected
investment of $10,000,000. It is possible that your loss could exceed this
estimate. Because the organizers' advances will be paid by Coastal Community
Bank prior to any liquidating distribution to you, the risks incurred by the
organizers in advancing monies to Coastal Community Bank will be shifted to you
after Coastal Community Bank's receipt of preliminary approval and the closing
of the offering.
DIVIDEND POLICY
Coastal Community Group initially expects that all its earnings and Coastal
Community Bank's earnings, if any, will be retained to finance the growth of
Coastal Community Group and Coastal Community Bank and that no cash dividends
will be paid for the foreseeable future. If and when dividends are declared,
Coastal Community Group will probably be largely dependent upon dividends paid
by Coastal Community Bank for funds to pay dividends on the common stock. It is
also possible, however, that Coastal Community Group will pay dividends in the
future generated from investment income and other activities of Coastal
Community Group. Under federal regulation, Coastal Community Bank will be
restricted as to the maximum amount of dividends it may pay on its common stock.
Moreover, the approval of the Florida Department of Banking and Finance is
required for the payment of any dividend if the aggregate amount of all
dividends paid by Coastal Community Bank during such calendar year would exceed
the sum of:
(a) the total net profits of Coastal Community Bank for that year; and
(b) the retained net profits of Coastal Community Bank for the previous
two years less any amounts required to be transferred to surplus.
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<PAGE> 21
The Florida Department of Banking and Finance and the FDIC are also
authorized to prohibit the payment of dividends by Coastal Community Bank. Under
federal law and Federal Reserve policy, a bank holding company is required to
serve as a source of financial strength to its subsidiary bank and to commit
resources to support the bank. The Federal Reserve has stated that, as a matter
of prudent banking, a bank holding company generally should not pay cash
dividends unless the available net income of the bank holding company is
sufficient to fully fund the dividends, and the prospective rate of earnings
retention appears to be consistent with the bank's needs, asset quality and
overall financial condition. For additional information regarding restrictions
on payment of dividends, SEE "Supervision and Regulation--Dividends."
CAPITALIZATION
The following table sets forth the capitalization of Coastal Community
Group as of April 30, 1999, and as adjusted to reflect the sale of the shares of
common stock offered hereby, assuming the maximum number of shares is sold:
<TABLE>
<CAPTION>
APRIL 30, 1999
--------------------------------
ACTUAL (1) AS ADJUSTED(1)
---------- --------------
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 10,000,000
shares authorized; 500 shares issued and
outstanding (1,000,500 shares as adjusted) $5 $10,005
Preferred Stock, $.01 par value, 2,000,000
shares authorized; no shares issued or
outstanding -none- -none-
Additional paid-in capital 4,995 9,076,245 (2)
Accumulated deficit (3) (387,364) (387,364)
---------- ------------
Total stockholders' equity $ (382,364) $ 8,698,886
========== ============
</TABLE>
- -------------------
(1) Does not include 200,000 shares of common stock issuable upon exercise of
outstanding options under Coastal Community Group's incentive stock option
plan and 200,000 shares of common stock issuable under options and warrants
granted to Coastal Community Group's organizers. SEE "Management -
Incentive Stock Option Plan" and "Management - Organizers' Warrants."
(2) After deducting offering discounts and commissions of $818,750 to Coast
Partners Securities, Inc. and other offering costs of approximately
$100,000.
(3) The accumulated deficit as of April 30, 1999, is comprised primarily of
aggregate organizational and offering expenses related to legal and other
professional fees, salaries, filing fees and other costs and expenses
incurred in the regulatory application process and in the creation of
Coastal Community Group. The accumulated deficit will continue to increase
prior to the start of Coastal Community Bank's operations, and will then
increase further as Coastal Community Bank incurs expected initial
operating losses. Coastal Community Bank will hire additional employees
prior to opening and then will incur further salary expenses and training
costs. Coastal Community Group will also incur additional professional fees
in connection with this offering and other corporate matters.
16
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Coastal Community Group is still in a development stage and will remain in
that stage until the offering of Coastal Community Group's common stock is
completed and Coastal Community Bank starts operating. Coastal Community Group
has funded its start-up and organization costs through $650,000 in advances from
the organizers to Coastal Community Group. Under the terms of these advances,
the organizers will receive repayment in full plus interest on or about the
closing of this offering. The net proceeds of the offering will be segregated
until Coastal Community Bank receives final approvals from the Florida
Department of Banking and Finance and the FDIC to begin banking operations, but
will be available for organizational and pre-opening expenses of Coastal
Community Group and Coastal Community Bank. Coastal Community Group believes
that the remaining net proceeds of the offering will satisfy Coastal Community
Group's cash requirements for at least the first 12-month period following the
opening of Coastal Community Bank. Accordingly, Coastal Community Group does not
anticipate that it will be necessary to raise additional funds for the operation
of Coastal Community Group and Coastal Community Bank over the next 12 months.
For additional information about material expenditures during this period, SEE
"Use of Proceeds." For information about the increase in employees following the
opening of Coastal Community Bank, SEE "Business-Employees." For additional
information about the plan of operations for Coastal Community Group and Coastal
Community Bank, SEE "Business" and "Management." For a discussion of Year 2000
issues, SEE Risk Factors - "Although we have taken precautions, we continue to
face risks relating to Year 2000 compliance" and "Business- Year 2000."
BUSINESS
GENERAL
Coastal Community Group was incorporated under the laws of the State of
Florida on October 6, 1998 and filed a name change amendment to become Coastal
Community Group on May 6, 1999. Coastal Community Group was formed to own all of
the common stock of Coastal Community Bank and to engage in the business of a
bank holding company under the Federal Bank Holding Company Act of 1956.
Coastal Community Bank is organizing as a Federal Reserve member Florida
state chartered commercial bank with depository accounts to be insured by the
FDIC to the extent permitted by law. Coastal Community Bank intends to offer a
full range of commercial and consumer banking services primarily within its
designated primary service area which includes the Kendall area of Miami,
Florida comprising the area covered by postal zip codes 33143, 33156, 33176, and
33173 and generally described as the area bounded by Miller Road to the North,
SW 104th Street to the South, Biscayne Bay to the East, and SW 107th Avenue to
the West.
Coastal Community Group and Coastal Community Bank have applied or will, at
the appropriate time, apply for all necessary regulatory approvals. Assuming
that Coastal Community Bank and Coastal Community Group receive the regulatory
approvals, and successfully complete this offering, Coastal Community Group and
Coastal Community Bank anticipate starting business in the fourth quarter of
1999 at 8700 North Kendall Drive, Miami, Florida. Coastal Community Bank expects
to receive Florida Department of Banking and Finance preliminary approval on or
about October 1, 1999 which is only an estimate and is subject to many factors
inherent in the regulatory approval process.
Coastal Community Bank intends to open for business as soon as reasonably
possible upon completion of the offering and the satisfaction of any conditions
imposed by the regulatory authorities. Preliminary approval is granted after the
Florida Department of Banking and Finance has completed its review of the
charter application and approved the plan to form a de novo bank as stated in
the
17
<PAGE> 23
application. Final approval is granted after the Florida Department of Banking
and Finance has completed its investigation with respect to the information
contained in the application and has determined that Coastal Community Bank is
ready to commence business.
In addition to approval by the Florida Department of Banking and Finance,
Coastal Community Bank must receive approval from the FDIC in order to obtain
deposit insurance and approval from the Federal Reserve Bank of Atlanta for
membership in the Federal Reserve System. Coastal Community Group also must
receive approval from the Federal Reserve Bank of Atlanta to operate as a
registered bank holding company. SEE "Risk Factors - If state or federal
regulatory approval is delayed or denied, Coastal Community Bank may not be able
to commence its banking activities and may be liquidated and you may lose all of
your investment." Coastal Community Group currently maintains its offices at 255
Palm Avenue, Miami Beach, Florida 33139. Coastal Community Group's telephone
number is (305) 673-9442.
BACKGROUND
Recent changes in federal and State of Florida interstate banking laws have
allowed interstate banking and branching to take place much more extensively
than was formerly possible. This has led to substantial consolidation of the
banking industry in Florida and the Southeast Florida area. Since the early
1980's, large regional bank holding companies have acquired a substantial number
of the area's locally owned or locally managed financial institutions. Members
of the board, many of whom have been participants or observers of the local
banking scene for many years, have noticed the need for a locally owned, highly
service-oriented banking organization to fill a void created by this
consolidation in the banking industry. Specifically, the board believes that the
area could greatly benefit from a financial institution whose focus would be to
serve the business and personal banking needs of local entrepreneurs and local
business owners. The board also believes that this niche is currently being
under-served by other banks.
In the opinion of Coastal Community Group's management and board, this
situation has created a favorable opportunity for a new commercial bank with
headquarters in the Miami-Dade County area. Management of Coastal Community
Group believes that such a bank can attract those customers who prefer to
conduct business with a locally-managed institution that demonstrates an active
interest in their businesses and personal financial affairs. Coastal Community
Group believes that a locally managed institution will be better able to deliver
more timely responses to customer requests, provide customized financial
products or services which address out-of-the-ordinary matters and offer the
personal attention of senior banking officers. Coastal Community Bank will seek
to take advantage of this opportunity by emphasizing in its marketing plan its
local management and its ties and commitment to the local community.
Coastal Community Group and Coastal Community Bank to date have conducted
no business other than organizational matters, including negotiations with
additional prospective executive officers and directors. When this offering is
complete and before the start of operations, Coastal Community Bank intends to
occupy and furnish its office, hire and train staff, purchase or lease and
install equipment necessary to transact business, establish correspondent
banking relationships and make other arrangements for necessary services.
BUSINESS STRATEGY
In addition, Coastal Community Bank intends to hire two additional
experienced individuals to serve as Senior Vice Presidents of Coastal Community
Bank. One Senior Vice President will serve as Coastal Community Bank's Senior
Lending Officer and the second Senior Vice President will serve as Coastal
Community Bank's Senior Operations Officer. The Senior Lending Officer will be
an individual with
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experience in that capacity within Coastal Community Bank's market area while
the Senior Operations Officer will have bank operations experience with
community banks in the Miami-Dade Florida area.
Coastal Community Bank plans to encourage its employees to be active in
civic, charitable and social organizations in the local communities. Most of
Coastal Community Group's directors currently hold, and have held in the past,
leadership positions in a number of community organizations, and intend to
continue this active involvement in future years. Other members of the
management team will also be encouraged to volunteer for such positions.
Coastal Community Group's goal is to create a customer oriented
organization focused on providing high value to customers by promptly delivering
products and services matched directly to their needs. Coastal Community Bank
will strive to establish a high standard of quality in each service it provides
and the employees of Coastal Community Bank will be expected to emphasize
service in their dealings with customers. Because Coastal Community Bank intends
to begin operations with a staff of fewer than 15 full time employees, these
employees will need to be flexible in the duties they perform in an effort to
satisfy customers. However, management believes that the use of current
technology will permit each employee to devote more time and attention to
personal service, respond more quickly to a customer's requests and deliver
services in the most timely manner possible. Management expects this combination
of technology and personal service to be appealing to customers.
When it opens, Coastal Community Bank plans to undertake a marketing
campaign using an officer calling program and community-based promotions. The
campaign will emphasize Coastal Community Bank's independence, local management
and special focus on customer service. All employees will be expected to
actively market Coastal Community Bank's services.
Coastal Community Bank will be subject to a lending limit of 15% of capital
or $1,125,000 on unsecured loans that it may make to any one borrower and 25% of
capital or $1,875,000 on secured loans that it may make to any one borrower. The
board of directors of Coastal Community Bank will establish a limit that will be
somewhat lower than Coastal Community Bank's legal lending limit. The board may
periodically raise or lower this limit as it sees fit to comply with safe and
sound banking practices and respond to overall economic conditions. Initially,
this limit will affect the ability of Coastal Community Bank to seek
relationships with the area's larger businesses. However, in light of senior
management's previous experience and their relationships with a number of the
region's other financial institutions, Coastal Community Bank may originate loan
volumes in excess of its lending limit and sell participation in such loans to
other banks. Likewise, it is quite possible that Coastal Community Bank will
purchase participation from other area institutions. SEE "Risk Factors - Because
we are subject to lending limits, we may be unable to attract large customers."
PRODUCTS AND SERVICES
Coastal Community Bank's hours of operation will initially be 8:00 a.m. to
4:00 p.m., Monday through Thursday and from 8:00 a.m. to 6:00 p.m. on Friday. In
addition, Coastal Community Bank's employees will be available to customers
wishing to make appointments outside traditional banking hours, either at
Coastal Community Bank or at the customers' homes or businesses. By providing
appointment banking, Coastal Community Bank intends to demonstrate its high
level of responsiveness and service to its customers.
Coastal Community Bank intends to offer a range of deposit services,
including checking accounts, NOW accounts, savings accounts and time deposits of
various types. The transaction accounts and time certificates will be tailored
to the principal market area at rates competitive with those offered in the
area. All deposit accounts will be insured by the FDIC up to the maximum amount
permitted by law. Coastal Community Bank intends to solicit these accounts from
individuals, businesses, associations,
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organizations, financial institutions and government authorities. It does not
intend to accept brokered deposits. Coastal Community Bank may also use
alternative funding sources as needed, including advances from Federal Reserve
Banks, conduit financing and the packaging of loans for securitization and sale.
Coastal Community Bank will offer a range of short to intermediate term
personal and commercial loans as well as real estate loans. Coastal Community
Bank expects that the percentage mix of the loan portfolio to be 40% real estate
loans, 9% personal loans and 51% commercial loans.
Coastal Community Bank intends to make personal loans directly to
individuals for various purposes, including purchases of automobiles, mobile
homes, boats and other recreational vehicles, home improvements, education and
personal investments. Coastal Community Bank plans to retain substantially all
of these loans. Coastal Community Bank intends initially to offer only balloon
payment and adjustable rate mortgages. It does not anticipate offering long-term
fixed rate mortgage products, except through an arrangement with outside
providers. Coastal Community Bank expects that any fixed rate residential
mortgage loans it generates will be sold to third party investors, although
Coastal Community Bank may continue to service some of the loans for a fee.
Coastal Community Bank plans to make commercial loans primarily to small and
mid-sized businesses. These loans will be both secured and unsecured and will be
available for general operating purposes, acquisition of fixed assets, including
real estate, purchases of equipment and machinery, financing of inventory and
accounts receivable as well as any other purpose considered appropriate.
Coastal Community Bank currently plans to offer other services, including
credit cards, money orders, traveler's checks, automated teller services with
access to one or more regional or national automated teller networks and safe
deposit services. Although Coastal Community Bank has been involved in
discussions with a number of vendors regarding the provision of such services,
Coastal Community Bank does not expect to make final decisions about the service
providers until approximately 60 days before it opens for business. Coastal
Community Bank also intends to establish relationships with correspondent banks
and other financial institutions to provide other services for its clients. This
may include requesting correspondent banks to participate in loans where the
loan amount exceeds Coastal Community Bank's policies or legal lending limit.
Many of the data processing services, including on-line teller service,
will be purchased on a contract basis, reducing the number of persons otherwise
required to handle the operations of Coastal Community Bank. Coastal Community
Bank is in the process of discussing arrangements with potential data processing
companies.
ASSET/LIABILITY MANAGEMENT
Coastal Community Group and Coastal Community Bank plan to manage assets
and liabilities to provide a satisfactory, consistent level of profitability
within the framework of established cash, loan, investment, borrowing and
capital policies. Coastal Community Bank's management will be responsible for
monitoring the policies and procedures to insure an acceptable asset/liability
mix, and to provide stability and leverage of all sources of funds while
adhering to prudent banking practices. It also will be the overall philosophy of
management to support asset growth primarily through the growth of deposits,
which include deposits of all categories made by individuals, partnerships and
corporations. Management of Coastal Community Bank will seek to invest the
largest portion of its assets in commercial, consumer and real estate loans.
Bank management also will view Coastal Community Bank's investment portfolio as
a source of liquidity and as a means to balance its asset/liability mix. Coastal
Community Bank will invest primarily in obligations of the United States or
obligations guaranteed as to principal and interest by the United States, or
other taxable securities and obligations of states and municipalities. Coastal
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Community Bank also will enter into federal funds transactions with its
principal correspondent banks, which represent a short term or overnight loan
from one bank to another, to balance its liquidity needs.
Coastal Community Bank intends to monitor its asset/liability mix on a
daily basis and to prepare a monthly report reflecting interest-sensitive assets
and interest-sensitive liabilities to be presented to Coastal Community Bank's
Asset and Liability Management committee. The objective of this policy will be
to manage liquidity and control interest-sensitive assets and liabilities to
minimize the impact of substantial movements in interest rates on Coastal
Community Bank's earnings.
MARKET AREA
The population of Miami-Dade County is currently 2.06 million residents of
whom more than 1 million reside in unincorporated Miami-Dade County with the
balance living in its 29 municipalities. The city of Miami is the largest
municipality with 400,000 residents. Miami-Dade County is part of one of the
fastest growing areas in the country and as the gateway to Latin America and the
Caribbean it is a center for international trade and commerce and tourism. The
population of the County increased from 1990 to 1997 by 6.9%. The largest
industries in Miami-Dade County are tourism, international trade, banking and
finance, film and television, agriculture and manufacturing.
Millions of tourists pass through Miami International Airport each year and
the Port of Miami is the busiest passenger cruise port in the world. The Miami
Free Trade Zone is the first and largest privately owned and operated free trade
zone in the world. Exports processed through U.S. Customs in Miami totaled $12.7
billion in 1997, an increase from $9.2 billion in 1994. Miami-Dade County is a
world financial center with 135 financial institutions and agencies located
here. Film and television production in Miami-Dade County totaled more that $200
million in 1997. In addition, there are nearly 3,000 manufacturing companies
employing approximately 80,000 employees.
Coastal Community Bank anticipates that the primary service area for its
services will be the Kendall area of Miami, Florida which is located in a well
established southeastern portion of Miami-Dade County. The primary service area
will comprise the area covered by postal zip codes 33143, 33156, 33176, and
33173 and generally described as the area bounded by Miller Road to the North,
SW 104th Street to the South, Biscayne Bay to the East, and SW 107th Avenue to
the West.
The vast majority of the area consists of residential neighborhoods that
contain single family detached homes with a small number of condominium and
rental apartments. Prices of residences in the primary service area range from
$225,000 to $2,500,000. The primary service area also contains a low income
minority area that consists of single family homes and rental apartments.
Residences in this area range in value from $65,000 to $125,000.
The primary service area also contains various major retail shopping malls
and strip shopping centers. In the central portion of the primary service area
is located the second largest retail mall in the State of Florida, Dadeland
Mall. Approximately three miles north, located at Sunset Drive and US-1, a new
mall has opened known as the Shops of Sunset. From the northern boundary of the
primary service area to the southern boundary of the primary service area along
US-1 are situated a high density of retail and commercial enterprises that
provide goods and services to the surrounding residential areas of the primary
service area.
The primary service area also contains three hospitals, Baptist Hospital,
South Miami Hospital and Larkin Hospital. These health care facilities are
surrounded by professional offices that house the health care professionals and
their staffs that serve the hospitals and the community. Baptist Hospital is the
largest "not for profit" hospital in South Florida and is affiliated to South
Miami Hospital which is the fourth largest "not for profit" hospital in South
Florida. Management believes that this diverse growing
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commercial base provides potential for business banking services, together with
personal banking services for owners and employees of these enterprises.
Within a 1.5 mile radius surrounding the proposed location of Coastal
Community Bank, there are no financial institutions serving the needs of the
immediate area. Yet within the same 1.5 mile radius there are over 800 medical
offices and Baptist Hospital. The hospital presently employs over 2,500 full
time staff members and has over 2,500 visitors daily. The doctors, medical
staffs, patients and visitors to the area primarily reside in the primary
service area and the areas immediately beyond the boundaries of the primary
service area. Although we know of no other bank which plans to establish an
office within this 1.5 mile radius, another bank could be established, subject
to regulatory approvals, within the immediately surrounding 1.5 mile radius and
there can be no assurance that a competing bank will not be established in this
area at some time in the future.
COMPETITION
Coastal Community Bank's intended market area is highly competitive. There
are currently 11 banks and thrifts with 12 offices in the primary service area.
Coastal Community Bank will also face competition from finance companies,
insurance companies, mortgage companies, securities brokerage firms, money
market funds, loan production offices and other providers of financial services.
Most of Coastal Community Bank's competitors have been in business for many
years and have established customer bases. Most are substantially larger and
have substantially larger lending limits than Coastal Community Bank. Because of
this, Coastal Community Bank's competitors can offer additional services,
including multiple branches and international banking services, that Coastal
Community Bank will be able to offer only through correspondent banks, if at
all. This may allow them to offer services at a lower cost to the customer and
to provide larger credit facilities than Coastal Community Bank. First Union
National Bank, one of the largest banks in the United States, operates a branch
approximately 1.5 miles to the east of Coastal Community Bank's proposed
location. Large regional banks with branches in the primary service area include
SunTrust, Colonial Bank, Union Planters National Bank and Republic National Bank
each of which is a multi-billion dollar bank. All of the banks within the
primary service area have operations at more than one location. Coastal
Community Bank will have only one location when it commences business and this
may put Coastal Community Bank at a competitive disadvantage with respect to
banks with several branches either locally or regionally. Coastal Community
Group anticipates that Coastal Community Bank's legal lending limit of
approximately $1,250,000 for unsecured loans to one borrower and $1,875,000 for
secured loans to one borrower will be adequate to satisfy the credit needs of
most of its clients and that the needs of its clients in excess of this amount
will be met through loan participation arrangements with correspondent banks and
others.
BANK PREMISES
Coastal Community Group has executed an option to lease its premises at
8700 North Kendall Drive, Miami, Florida. The option is contingent upon the
current tenant terminating its lease and vacating the premises. Although the
current tenant has indicated that it intends to terminate the lease, it is not
obligated to do so. SEE "Risk Factors - Because the current tenant has not
vacated the office space we intend to occupy, we may be unable to occupy the
premises and open for business." The terms of the lease provide for the lease of
4,600 square feet of space for five years at $115,000 per year payable monthly
at $9,583.33 plus applicable taxes with an option to renew for five additional
years at the then prevailing market rate. The lease provides for a security
deposit of $16,666, fixed minimum rent increases based on the Consumer Price
Index, tenant participation in operating expenses estimated to be $90.00 per
month and tenant participation in real estate taxes based upon the tenant's pro
rata share of the amount that such taxes exceed the real estate taxes for the
base tax year of 1998. The banking facility will include a conference room. The
facility will have 3 inside teller stations and 2 customer service platform
stations.
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It is anticipated that the estimated cost of improvements and furnishings
will total approximately $450,000 with construction costs totaling approximately
$250,000 and total costs for equipment and furnishings for the leased premises
totaling approximately $200,000. Coastal Community Group has not entered into
any agreement with respect to the foregoing expenditures and, accordingly, the
amounts actually incurred by Coastal Community Group may exceed these estimates.
EMPLOYEES
Coastal Community Bank intends to open for business with a staff of
approximately 10 full-time equivalent employees who will consists of three
officers, three tellers, one new accounts supervisor and three accounting and
bookkeeping employees. Mr. Mueller will serve as the Chairman of the Board and
Chief Executive Officer. At present, Mr. Mueller is the only employee actively
involved in the organization of Coastal Community Group and Coastal Community
Bank and, commencing in September 1998, has been receiving a monthly salary of
$10,000. SEE "Management - Compensation of Management." Coastal Community Group
also anticipates that Coastal Community Bank will hire two experienced
individuals to serve as Senior Vice Presidents of Coastal Community Bank. One
Vice President will serve as Coastal Community Bank's Senior Lending Officer and
the second Vice President will serve as Coastal Community Bank's Senior
Operations Officer. Coastal Community Group and Coastal Community Bank
anticipate that the Senior Lending Officer will be an individual with experience
in that capacity within Coastal Community Bank's market area while Coastal
Community Group and Coastal Community Bank anticipate that the Senior Operations
Officer will have bank operations experience with community banks in the
Miami-Dade Florida area. There can be no assurance that individuals with this
specialized local experience will be available for employment with Coastal
Community Bank.
Coastal Community Group does not anticipate a problem in finding qualified
employees due in part to recent bank consolidation which has resulted in
additional experienced personnel seeking employment. Company management
anticipates that Coastal Community Bank will increase its staff from 10 to 20
full-time equivalent employees during the second year of its operations in order
to provide for anticipated growth. Coastal Community Bank plans to employ as its
officers and employees primarily persons from its market areas who have
experience in banking. Coastal Community Bank intends to pay competitive
salaries to attract and retain such officers and employees.
YEAR 2000
Coastal Community Group recognizes that despite its and Coastal Community
Bank's efforts to avoid the possible consequences of Year 2000 issues, those
issues may have a material effect upon it and Coastal Community Bank. Coastal
Community Bank will obtain certification from its data processing provider that
the computer hardware and software to be provided to Coastal Community Bank for
its operations will be Year 2000 compliant. Additionally, Coastal Community Bank
will obtain Year 2000 compliance certification from its other vendors and
suppliers that, to the extent applicable, the products and services that they
supply are Year 2000 compliant. Coastal Community Bank will require such
certification with respect to all computer hardware and software comprising of
information technology systems as well as with respect to non-information
technology systems and equipment which may be affected by Year 2000 issues due
to embedded microcontroller technology such as those in security devices and
telephones. Additionally, Coastal Community Bank will obtain representations
from borrowers and other customers, where applicable, that their businesses are
Year 2000 compliant.
Coastal Community Bank expects that due to its small size, its staff will
be able to operate manually, without computers in the event of a computer
malfunction due to Year 2000 problems. In the event that such problems occur,
credits and debits will be manually posted for transaction and loan accounts.
Coastal Community Bank expects to have a written contingency plan in place prior
to opening which will detail the procedures for its manual operation.
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Coastal Community Bank, as a start-up institution, does not anticipate
incurring any material costs related to Year 2000 issues because it expects to
commence business in the fourth quarter of 1999 with new systems and equipment
that are Year 2000 compliant and will not require upgrading or reprogramming.
SUPERVISION AND REGULATION
Banks and their holding companies, and many of their affiliates, are
extensively regulated under both federal and state law. The following is a brief
summary of statutes, rules, and regulations affecting Coastal Community Group
and Coastal Community Bank. This summary is qualified in its entirety by
reference to the particular statutory and regulatory provisions referred to
below and is not intended to be an exhaustive description of the statutes or
regulations applicable to the business of Coastal Community Group and Coastal
Community Bank. Any change in the applicable law or regulation may have a
material effect on the business and prospects of Coastal Community Group and
Coastal Community Bank. SEE "Risk Factors - Because we are heavily regulated and
supervised by both state and federal agencies, our ability to attract deposits,
make loans and achieve satisfactory interest rate spreads may be affected."
Supervision, regulation, and examination of banks by regulatory agencies are
intended primarily for the protection of depositors, rather than shareholders.
BANK HOLDING COMPANY REGULATION
Coastal Community Group is a bank holding company which will seek to become
registered with the Federal Reserve under the Federal Bank Holding Company Act
of 1956 and is subject to the supervision, examination and reporting
requirements of the Federal Bank Holding Company Act of 1956 and the regulations
of the Federal Reserve. Coastal Community Group is required to furnish to the
Federal Reserve an annual report of its operations at the end of each fiscal
year, and such additional information as the Federal Reserve may require under
the Federal Bank Holding Company Act of 1956. The Federal Bank Holding Company
Act of 1956 requires that a bank holding company obtain the prior approval of
the Federal Reserve before:
o acquiring direct or indirect ownership or control of more than 5% of
the voting shares of any bank;
o taking any action that causes a bank to become a subsidiary of the
bank holding company; or
o merging or consolidating with any other bank holding company.
The Federal Bank Holding Company Act of 1956 further provides that the
Federal Reserve may not approve any transaction that would result in a monopoly
or that would be in furtherance of any combination or conspiracy to monopolize
or attempt to monopolize the business of banking in any section of the United
States. Further, the Federal Reserve may not approve any transaction that might
substantially lessen competition or to tend to create a monopoly in any section
of the country, or that in any other manner would be in restraint of trade. The
Federal Reserve may approve such transactions if their anti-competitive effects
are clearly outweighed by the public interest in meeting the convenience and
needs of the community to be served. The Federal Reserve is also required to
consider the financial and managerial resources and future prospects of the bank
holding companies and banks concerned and the convenience and needs of the
community to be served. Consideration of financial resources generally focuses
on capital adequacy and consideration of convenience and needs issues includes
the parties' performance under the Community Reinvestment Act of 1977, both of
which are discussed below.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from engaging in activities other than banking, or managing or
controlling banks or other permissible
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subsidiaries. Bank holding companies are also generally prohibited from
acquiring or retaining direct or indirect control of any company engaged in any
activities other than those activities determined by the Federal Reserve to be
so closely related to banking or managing or controlling banks as to be a proper
incident thereto. In determining whether a particular activity is permissible,
the Federal Reserve must consider whether the performance of such an activity
can reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices.
Examples of permissible bank holding company activities include factoring
accounts receivable, acquiring or servicing loans, leasing personal property,
conducting securities brokerage activities, performing data processing services,
acting as agent or broker in selling credit life insurance and other types of
insurance in connection with credit transactions, and insurance underwriting
activities have all been determined by regulations of the Federal Reserve to be
permissible activities of bank holding companies. Despite prior approval, the
Federal Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or terminate its ownership or control of any subsidiary,
when it has reasonable cause to believe that continuation of such activity or
such ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiary of that bank holding company.
Banks are subject to the provisions of the Community Reinvestment Act of
1977. Under the terms of the Community Reinvestment Act of 1977, the appropriate
federal bank regulatory agency is required, in connection with its examination
of a bank, to assess the bank's record in meeting the credit needs of the
community served by that bank, including low-income and moderate-income
neighborhoods. The regulatory agency's assessment of the bank's record is made
available to the public. Further, such assessment is required of any bank which
has applied to:
o charter a national bank;
o obtain deposit insurance coverage for a newly chartered institution;
o establish a new branch office that will accept deposits;
o relocate an office; or
o merge or consolidate with, or acquire the assets or assume the
liabilities of, a federally regulated financial institution.
In the case of a bank holding company applying for approval to acquire a
bank or other bank holding company, the Federal Reserve will assess the record
of each subsidiary bank of the applicant bank holding company, and such records
may be the basis for denying the application.
BANK REGULATION
Coastal Community Bank will seek to be chartered by the Florida Department
of Banking and Finance under Florida law and will seek to be a Federal Reserve
member. Coastal Community Bank's deposits will be insured by the FDIC to the
extent provided by law. Coastal Community Bank will be subject to comprehensive
regulation, examination and supervision by the Florida Department of Banking and
Finance and the Federal Reserve. Coastal Community Bank also will be subject to
other laws and regulations applicable to banks. Such regulations include:
o limitations on loans to a single borrower and to its directors,
officers and employees;
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o restrictions on the opening and closing of branch offices;
o the maintenance of required capital and liquidity ratios;
o the granting of credit under equal and fair conditions; and
o the disclosure of the costs and terms of such credit.
Coastal Community Bank will be examined periodically by the Florida
Department of Banking and Finance and the Federal Reserve, to whom Coastal
Community Bank will submit periodic reports regarding its financial condition
and other matters. Coastal Community Bank will also be subject to examination by
the FDIC which will be provided with the examination data of the other
regulators. The Florida Department of Banking and Finance and the Federal
Reserve have a broad range of powers to enforce regulations under their
jurisdiction, and to take discretionary actions determined to be for the
protection and safety and soundness of banks. These actions include the
institution of cease and desist orders and the removal of directors and
officers. The Florida Department of Banking and Finance and the Federal Reserve
also have the authority to approve or disapprove mergers, consolidations, and
similar corporate actions.
Under federal law, federally insured banks are subject, with exceptions, to
restrictions on any extension of credit to their parent holding companies or
other affiliates, on investment in the stock or other securities of affiliates,
and on the taking of such stock or securities as collateral from any borrower.
In addition, banks are prohibited from engaging in tie-in arrangements in
connection with any extension of credit or the providing of any property or
service.
In 1989, the Financial Institutions Reform, Recovery and Enforcement Act of
1989 was enacted and contains major regulatory reforms, stronger capital
standards for savings and loan associations and stronger civil and criminal
enforcement provisions. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 also provides that a depository institution insured by
the FDIC can be held liable for any loss incurred by, or reasonably expected to
be incurred by, the FDIC after August 9, 1989 in connection with (i) the default
of a commonly controlled FDIC insured depository institution, or (ii) any
assistance provided by the FDIC to a commonly controlled FDIC insured
institution in danger of default.
In 1991, the FDIC Improvement Act of 1991 was enacted which made a number
of reforms addressing the safety and soundness of deposit insurance funds,
supervision, accounting, and prompt regulatory action, and also implemented
other regulatory improvements. Full-scope, on-site examinations, per statutes,
are required of all insured depository institutions. The cost for conducting an
examination of an institution may be assessed to that institution, with special
consideration given to affiliates and penalties imposed for any failure to
provide information requested. Insured state banks also are precluded from
engaging as principal in any type of activity that is impermissible for a
national bank, including activities relating to insurance and equity
investments. The FDIC Improvement Act of 1991 also re-codified current law
restricting extensions of credit to insiders under the Federal Reserve Act.
TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to which Coastal
Community Group and any future non-bank subsidiaries can borrow or otherwise
obtain credit from Coastal Community Bank. There also are legal restrictions on
Coastal Community Bank's purchase of or investments in:
o the securities of and purchases of assets from Coastal Community Group
and any of its future non-bank subsidiaries;
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o Coastal Community Bank's loans or extensions of credit to third parties
collateralized by the securities or obligations of Coastal Community
Group and any of its future non-bank subsidiaries;
o guarantees, acceptances, and letters of credit issued on behalf of
Coastal Community Group and any of its future non-bank subsidiaries;
and
o bank transactions with Coastal Community Group and any of its future
non-bank subsidiaries, or with respect to which Coastal Community Group
and non-bank subsidiaries act as agent, participate or have a financial
interest.
Subject to limited exceptions, Coastal Community Bank may not extend credit
to Coastal Community Group or to any other affiliate in an amount which exceeds
10% of Coastal Community Bank's capital stock and surplus and may not extend
credit in the aggregate to such affiliates in an amount which exceeds 20% of its
capital stock and surplus. Further, there are legal requirements as to the type,
amount and quality of collateral which must secure such extensions of credit
transactions between Coastal Community Bank and Coastal Community Group or such
other affiliates, and such transactions must be on terms and under
circumstances, including credit standards, that are substantially the same or at
least as favorable to Coastal Community Bank as those prevailing at the time for
comparable transactions with non-affiliated companies. Also, Coastal Community
Group and its subsidiaries are prohibited from engaging in tie-in arrangements
in connection with any extension of credit, lease or sale of property or
furnishing of services.
DIVIDENDS
Dividends from Coastal Community Bank will constitute the primary source of
funds for dividends to be paid by Coastal Community Group. For additional
information, SEE "Risk Factors - We have no plans to pay dividends" and
"Dividend Policy." There also are various statutory and contractual limitations
on the ability of Coastal Community Bank to pay dividends, extend credit, or
otherwise supply funds to Coastal Community Group. As a Florida state chartered
bank, Coastal Community Bank may not pay dividends from its paid-in surplus. All
dividends must be paid out of undivided profits from the previous two years then
on hand, after deducting expenses, including reserves for losses and bad debts.
With Florida Department of Banking and Finance approval a Florida state
chartered bank may declare a dividend from retained profits which accrued prior
to the previous two years. In addition, a Florida state chartered bank is
prohibited from declaring a dividend on its shares of common stock until its
surplus equals its stated capital, unless there has been transferred to surplus
no less than twenty percent of the bank's net profits of the preceding two year
period. Florida state chartered banks are prohibited from declaring dividends in
any calendar year where the total of its net profits for that year combined with
its retained net profits for the preceding two years is a loss or falls below
the minimum amount required by law, regulation, order or any written agreement
with the Florida Department of Banking and Finance or a state or federal
regulatory agency. Florida law applicable to companies, including Coastal
Community Group, provides that dividends may be declared and paid only if, after
paying the dividends, (i) it is able to pay its debts as they become due in the
usual course of business, and (ii) its total assets would be greater than the
sum of its total liabilities plus the amount that would be needed if it were to
be dissolved at the time of the dividend to satisfy the preferential rights upon
the dissolution of shareholders whose preferential rights are superior to those
receiving the dividend.
CAPITAL REQUIREMENTS
The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make
regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies. The resulting capital ratios represent
qualifying capital as a percentage of total risk-weighted assets and off balance
sheet items. The
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guidelines are minimums, and the federal regulators have noted that banks and
bank holding companies contemplating significant expansion programs should not
allow expansion to diminish their capital ratios and should maintain all ratios
well in excess of the minimums. The current guidelines require all bank holding
companies and federally-regulated banks to maintain a minimum risk-based total
capital ratio equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1
capital includes common stockholders' equity, qualifying perpetual preferred
stock, and minority interests in equity accounts of consolidated subsidiaries,
but excludes goodwill and most other intangibles and excludes the allowance for
loan and lease losses. Tier 2 capital includes the excess of any preferred stock
not included in Tier 1 capital, mandatory convertible securities, hybrid capital
instruments, subordinated debt and intermediate term preferred stock, and
general reserves for loan and lease losses up to 1.25% of risk-weighted assets.
The FDIC Improvement Act of 1991 contains "prompt corrective action"
provisions pursuant to which banks are to be classified into one of five
categories based upon capital adequacy, ranging from "well capitalized" to
"critically undercapitalized" and which generally require the appropriate
federal banking agency to take prompt corrective action with respect to an
institution which becomes "significantly undercapitalized" or "critically
undercapitalized."
The Federal Reserve has issued final regulations to implement the "prompt
corrective action" provisions of the FDIC Improvement Act of 1991. In general,
the regulations define the five capital categories as follows:
(a) an institution is "well capitalized" if it has a total risk-based
capital ratio of 10% or greater, has a Tier 1 risk-based capital ratio of
6% or greater, has a leverage ratio of 5% or greater and is not subject to
any written capital order or directive to meet and maintain a specific
capital level for any capital measures;
(b) an institution is "adequately capitalized" if it has a total risk-based
capital ratio of 8% or greater, has a Tier 1 risk-based capital ratio of 4%
or greater, and has a leverage ratio of 4% or greater or a leverage ratio
of 3% or greater if the bank is rated composite 1 under the CAMELS bank
rating system in the most recent examination of the bank and is not
experiencing or anticipating significant growth;
(c) an institution is "undercapitalized" if it has a total risk-based
capital ratio of less than 8%, has a Tier 1 risk-based capital ratio that
is less than 4% or has a leverage ratio that is less than 4% or a leverage
ratio of 3% or greater if the bank is rated composite 1 under the CAMELS
bank rating system in the most recent examination of the bank and is not
experiencing or anticipating significant growth;
(d) an institution is "significantly undercapitalized" if it has a total
risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital
ratio that is less than 3% or a leverage ratio that is less than 3%; and
(e) an institution is "critically undercapitalized" if its "tangible
equity" is equal to or less than 2% of its total assets.
The Federal Reserve also, after an opportunity for a hearing, has authority
to downgrade an institution from "well capitalized" to "adequately capitalized"
or to subject an "adequately capitalized" or "undercapitalized" institution to
the supervisory actions applicable to the next lower category, for supervisory
concerns. The degree of regulatory scrutiny of a financial institution will
increase, and the permissible activities of the institution will decrease, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to:
o submit a capital restoration plan;
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o raise additional capital;
o restrict their growth, deposit interest rates, and other activities;
o improve their management;
o eliminate management fees; or
o divest themselves of all or part of their operations.
Bank holding companies controlling financial institutions can be called
upon to boost the institutions' capital and to partially guarantee the
institutions' performance under their capital restoration plans. These capital
guidelines can affect Coastal Community Group in several ways. After completion
of this offering, and the capitalization of Coastal Community Bank, Coastal
Community Bank's capital levels will be in excess of those required to be
maintained by a "well capitalized" financial institution. However, rapid growth,
poor loan portfolio performance, or poor earnings performance, or a combination
of these factors, could change Coastal Community Bank's capital position in a
relatively short period of time, making an additional capital infusion
necessary.
Additionally, the FDIC Improvement Act of 1991 requires, among other
things, that (i) only a "well capitalized" depository institution may accept
brokered deposits without prior regulatory approval and (ii) the appropriate
federal banking agency annually examine all insured depository institutions,
with some exceptions for small, "well capitalized" institutions and
state-chartered institutions examined by state regulators. The FDIC Improvement
Act of 1991 also contains a number of consumer banking provisions, including
disclosure requirements and substantive contractual limitations with respect to
deposit accounts.
ENFORCEMENT POWERS
Congress has provided the federal bank regulatory agencies with an array of
powers to enforce laws, rules, regulations and orders. The agencies may also
require that institutions cease and desist from banking activities, may preclude
persons from participating in the affairs of insured depository institutions,
may suspend or remove deposit insurance, and may impose civil money penalties
against institution-affiliated parties for violations. The State of Florida has
provided the Florida Department of Banking and Finance with similar powers.
MAXIMUM LEGAL INTEREST RATES
Like the laws of many states, Florida law contains provisions on interest
rates that may be charged by banks and other lenders on loans. Numerous
exceptions exist to the general interest limitations imposed by Florida law. The
relative importance of these interest limitation laws to the financial
operations of Coastal Community Bank will vary from time to time, depending on a
number of factors, including conditions in the money markets, the costs and
availability of funds, and prevailing interest rates.
BANK BRANCHING
Banks in Florida are permitted to branch state wide. Such branch banking by
Florida state chartered banks however, is subject to prior approval by the
Florida Department of Banking and Finance. Any such approval would take into
consideration several factors, including the bank's level of capital, the
prospects and economics of the proposed branch office, and other conditions
deemed relevant by the Florida Department of Banking and Finance for purposes of
determining whether approval should be granted to open a branch office. For
information regarding legislation on interstate branching in Florida, SEE
"Interstate Banking" below.
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CHANGE OF CONTROL
Federal law restricts the amount of voting stock of a bank holding company
and a bank that a person may acquire without the prior approval of banking
regulators. The overall effect of such laws is to make it more difficult to
acquire a bank holding company and a bank by tender offer or similar means than
it might be to acquire control of another type of corporation. Consequently,
shareholders of Coastal Community Group may be less likely to benefit from the
rapid increases in stock prices that may result from tender offers or similar
efforts to acquire control of other companies. Federal law also imposes
restrictions on acquisitions of stock in a bank holding company and a state
bank. Under the federal Change in Bank Control Act and the regulations
thereunder, a person or group must give advance notice to the Federal Reserve
before acquiring control of any bank holding company. Any person or group
acquiring a controlling interest in a Florida state chartered bank must first
make application to the Florida Department of Banking and Finance for a
certificate of approval. When they receive notice, the Federal Reserve or the
Florida Department of Banking and Finance, as the case may be, may approve or
disapprove the acquisition. The Change in Bank Control Act creates a rebuttable
presumption of control if a member or group acquires the requisite percentage of
a bank holding company's or state bank's voting stock, or if one or more other
control factors set forth in the act are present.
INTERSTATE BANKING
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
provides for nationwide interstate banking and branching. Under the law,
interstate acquisitions of banks or bank holding companies in any state by bank
holding companies in any other state are permissible subject to limitations.
Florida law allows out-of-state bank holding companies, located in states that
allow Florida bank holding companies to acquire banks and bank holding companies
in that state, to acquire Florida banks and Florida bank holding companies. The
law essentially provides for out-of-state entry by acquisition only and not by
de novo interstate branching and requires the acquired Florida bank to have been
in existence and continually operated for at least three years. Interstate
branching and consolidation of existing bank subsidiaries in different states is
permissible.
A Florida bank also may establish, maintain, and operate one or more
branches in a state other than Florida by way of an interstate merger
transaction in which the Florida bank is the resulting bank. An interstate
merger transaction resulting in the acquisition by an out-of-state bank of a
Florida bank is not permitted unless the Florida bank has been in existence and
continually operated, on the date of the acquisition, for more than three years.
EFFECT OF GOVERNMENTAL POLICIES
The earnings and businesses of Coastal Community Group and Coastal
Community Bank are affected by the policies of various regulatory authorities of
the United States, especially the Federal Reserve. The Federal Reserve, among
other things, regulates the supply of credit and deals with general economic
conditions within the United States. The instruments of monetary policy employed
by the Federal Reserve for those purposes influence in various ways the overall
level of investments, loans, other extensions of credit, and deposits, and the
interest rates paid on liabilities and received on assets.
INDUSTRY RESTRUCTURING
For well over a decade, the banking industry has been undergoing a
restructuring process which is anticipated to continue. The restructuring has
been caused by product and technological innovations in the financial services
industry, deregulation of interest rates, and increased competition from foreign
and nontraditional banking competitors, and has been characterized principally
by the gradual erosion of
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geographic barriers to intrastate and interstate banking and the gradual
expansion of investment and lending authorities for bank institutions.
Members of Congress and the administration have indicated their intention
to consider additional legislation designed to institute reforms to promote the
viability of the industry. Some of these proposals would revise the federal
regulatory structure for insured depository institutions, whereas others would
affect the nature of products, services, and activities that bank holding
companies and their subsidiaries may offer or engage in, and the types of
entities that may control depository institutions. There can be no assurance as
to whether or in what form any such proposed legislation might be enacted, or
what impact such legislation might have upon Coastal Community Group and Coastal
Community Bank.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of Coastal Community Group will also be the initial
officers and directors of Coastal Community Bank. As of the date hereof, the
directors and officers of Coastal Community Group are as follows:
<TABLE>
<CAPTION>
POSITIONS INITIAL POSITIONS
WITH COASTAL WITH COASTAL
NAME AGE COMMUNITY GROUP COMMUNITY BANK
---- --- --------------- -----------------
<S> <C> <C> <C>
Hans C. Mueller 48 Chairman of the Board, Chairman of the Board,
President and Chief President and Chief
Executive Officer Executive Officer
Jerome J. Bushman 56 Director Director
Allen M. Voelz 61 Director Director
Alex Soto 50 Director Director
James C. Merrill 48 Director Director
Linda Marraccini, M.D. 45 Director Director
</TABLE>
Coastal Community Group has a classified board of directors, with directors
serving staggered three-year terms. The terms of Messrs. Mueller and Bushman, as
Class I directors, expire in December 2001, the terms of Messrs. Voelz and Soto,
as Class II directors, expire in December 2000, and the terms of Mr. Merrill and
Dr. Marraccini, as Class III directors, expire in December 1999. There are no
family relationships among any of Coastal Community Group's directors, officers
or key personnel. Officers of Coastal Community Group and Coastal Community Bank
will be elected annually by their respective board of directors.
DIRECTORS' COMPENSATION
Each director will receive a fee of $250 per board meeting attended,
including telephonic attendance, and $150 per committee meeting. Out-of-town
directors will not be reimbursed for travel expenses by Coastal Community Bank.
Additionally, each non-employee director will automatically participate in the
Outside Directors Stock Option Plan of Coastal Community Group.
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COMMITTEES OF COASTAL COMMUNITY BANK
The board of directors will establish various working committees of its members.
Committees will meet routinely and will report directly to the entire board of
directors. The committees of the board will include:
ASSET - LIABILITY MANAGEMENT COMMITTEE
Responsible for:
o overall investment strategy, including liquidity and risk management;
o monitoring deposit level trends and pricing;
o monitoring asset level trends and pricing; o portfolio investment
decisions; and
o establishing appropriate levels of insurance.
AUDIT, COMPLIANCE AND COMMUNITY REINVESTMENT ACT COMMITTEE
Responsible for:
o insuring the board receives objective information regarding policies,
procedures and controls of Coastal Community Bank including auditing,
accounting, internal accounting controls, financial reporting;
o recommending the appointment of an independent auditor on an annual
basis;
o reviewing independent auditors' report and management's response;
o reviewing all reports from regulatory authorities and management's
response;
o establishing independent review and audits;
o insuring Coastal Community Bank is in full compliance with all
pertinent regulations and laws;
o establishing an appropriate and independent testing program for
compliance;
o developing a proactive CRA program;
o developing programs to insure compliance with Fair Lending Laws; and
o establishing appropriate levels of insurance.
COMPENSATION COMMITTEE
Responsible for:
o establishing appropriate levels of compensation throughout Coastal
Community Bank;
o analyzing compensation levels on an annual basis;
o recommending overall compensation increases and changes in benefits to
the board for approval;
o establishing policies with regard to compensation and benefits at
Coastal Community Bank; and
o recommending all compensation increases, benefit changes and bonuses
for senior officers to the board for approval.
LOAN COMMITTEE
Responsible for:
o establishing, in conjunction with management, and approving all major
policies and procedures pertaining to credit;
o establishing a loan approval system;
o reviewing all loans in excess of specific amounts determined in
policies and procedures;
o reviewing all past due reports, rated loan reports, real estate owned,
non-accrual reports, and other indicators of overall loan portfolio
quality;
o assuring adequate funding of the loan loss reserve exists; and
o handling other matters pertaining to the credit function, such as
yields and loan concentrations.
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EXPERIENCE OF DIRECTORS AND OFFICERS
DIRECTOR, CHAIRMAN AND CHIEF EXECUTIVE OFFICER:
HANS C. MUELLER
Mr. Mueller will serve as the Chairman, President and Chief Executive
Officer for Coastal Community Group and Coastal Community Bank. Mr. Mueller, age
48, was born in Miami and has worked in the banking industry there since 1968.
Most recently Mr. Mueller served from 1996 to 1998 as president and CEO of
PanAmerican Bank, a state chartered commercial bank with assets of $50 Million.
From 1995 to 1996 Mr. Mueller was Executive Vice President of Total Bank, a
state chartered commercial bank with assets of $200 Million. From 1994 to 1995
Mr. Mueller served as president and CEO of Trade National Bank, a nationally
chartered bank with assets of $85 Million. Prior to his service with Trade
National Bank, Mr. Mueller spent 1982-1994 as Executive Vice President of Plaza
Bank, a state chartered commercial bank with assets of $135 Million.
DIRECTORS:
JEROME J. BUSHMAN
Jerome J. Bushman, age 56, a native of Wisconsin, has worked in his
family's various agriculture businesses all of his life. These include,
Bushmans', Inc., a major supplier and packer of agriculture products, primarily
potatoes, of which Mr. Bushman has been president since 1974. In addition to the
agriculture business, Mr. Bushman also owns 60% of First Southeastern Banc Group
of Harmont, MN, which is a bank holding company which holds three community
banks. These banks are all located in smaller rural communities that provide
financial services primarily to the agricultural industry and the owner operator
farms. All three institutions are well run and profitable. Mr. Bushman serves as
a director of F&M Bank Central of Stevens Point, Wisconsin. Mr. Bushman
additionally is a director of Village Bank of Naples, Florida, in which he is
also an investor. Mr. Bushman is currently semi-retired and divides his time
between Wisconsin and Naples, Florida.
ALLEN M. VOELZ
Allen M. Voelz, age 61, is a native of Wisconsin. Mr. Voelz has been
involved in community banking for his entire career. From 1962 until his
retirement in 1996 Mr. Voelz was employed by Associated Bank North of Wausau,
Wisconsin, formerly known as Citizens State Bank of Wittenberg and F & M
Financial Services, holding virtually all banking positions from assistant
cashier to president and CEO at the time of his retirement. During his banking
career Mr. Voelz was also an instructor at the University of Wisconsin School of
Banking and also served in various committees and the board of the Wisconsin
Bankers Association, finally gaining the position of President of the Wisconsin
Bankers Association. Currently, Mr. Voelz resides in Wisconsin and in Florida.
Mr. Voelz is the owner and operator of numerous small business and a consultant
and financial advisor to small owner operated businesses.
ALEX SOTO
Alex Soto, age 50, is a Cuban-born long time Miami resident. Mr. Soto is
President and CEO of InSource Financial Services Inc., one of the largest
independent property and casualty insurance agencies in South Florida. Prior to
joining InSource Financial Services, Inc., Mr. Soto served as President of
Pennekamp & Soto Insurance Agency from 1972 to 1997.
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JAMES C. MERRILL
James C. Merrill, age 48, is a native Floridian born in Jacksonville. Mr.
Merrill has spent over twenty years working in the family business Merrill
Stevens Dry Dock Company, which is a commercial boatyard and marine outfitter
and the first incorporated business in the State of Florida. Today, Mr. Merrill
is the Chairman of Merrill Stevens Dry Dock Company, which was established in
Miami in the early 1920's. Over the past thirty years, Mr. Merrill has also been
employed in the writing and producing of theatrical projects for the commercial
theatre and other venues. He is also a freelance journalist in broadcasting and
publishing in New York City and other cities.
LINDA MARRACCINI, M.D.
Linda Marraccini, M.D., age 45, has engaged in the private practice of
family medicine in Miami since 1982. Dr. Marraccini received both her
undergraduate degree and her M.D. from the University of Miami and completed her
internship and residency at Jackson Memorial Hospital in Miami. She also
currently serves as Assistant Professor of Family Medicine at the University of
Miami School of Medicine.
EXECUTIVE OFFICERS OF COASTAL COMMUNITY BANK
At this time, the only person hired to become an executive officer of
Coastal Community Bank is Mr. Mueller who will be President and CEO.
COMPENSATION OF MANAGEMENT
Current management compensation is limited to the compensation of Mr.
Mueller as President and Chief Executive Officer of Coastal Community Group and
of Coastal Community Bank. Mr. Mueller will also serve as the Chairman of the
Board of Coastal Community Group and Coastal Community Bank upon his re-election
by both boards to that position. Mr. Mueller's yearly compensation totals
$192,840 which includes $170,000 in base salary upon the opening of Coastal
Community Bank, a monthly allowance of $500 for a car, costs and expenses of
$1,042 with respect to Mr. Mueller's split dollar life insurance policy and $320
for health insurance. Coastal Community Bank intends to enter into employment
agreements with a Senior Vice President for Lending and a Senior Vice President
for Operations before Coastal Community Bank commences operations.
Coastal Community Group entered into a revised employment agreement with
Mr. Mueller on June 11, 1999 for an initial three year term effective on
September 1, 1998 and terminating on August 31, 2001. Under this agreement,
Coastal Community Group pays Mr. Mueller a monthly salary of $10,000 during the
organizational period. At the end of this period, upon commencement of
operations of Coastal Community Bank, Coastal Community Group will pay Mr.
Mueller a lump sum amount based upon the differential between an annual
compensation of $120,000 and a base salary of $170,000. This differential is
equal to $4,166 per month and the total lump sum payment is expected to be
$49,992.00 based upon a September 1, 1999 commencement of operations. The
agreement shall be automatically renewed for successive one year extensions
unless Coastal Community Group and Coastal Community Bank or Mr. Mueller gives
notice to terminate to the other party 180 days prior to the expiration of the
term. After the organizational period, the employment agreement will provide
for:
o base salary of $170,000;
o annual incentive bonus in an amount determined by the board of
directors of Coastal Community Group;
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o participation in Coastal Community Group's health, life, disability,
retirement or any other company employee benefit plans;
o minimum of four weeks annual paid vacation;
o allowances for cellular phone;
o a car allowance of $500 per month;
o the grant of 50,000 non-statutory options to purchase Coastal
Community Group's common stock at $10.00 per share vesting at 10,000
per year at the opening of Coastal Community Bank and on each of the
next four anniversaries of Coastal Community Bank's opening; and
o the grant of warrants to purchase 50,000 shares of Coastal Community
Group's common stock at $10.00 per share. SEE - "Organizers'
Warrants".
Additionally, the employment agreement provides that Coastal Community
Group will purchase Mr. Mueller's existing $1,000,000 single premium split
dollar life insurance policy for $147,000 at the time that Coastal Community
Bank commences operations. This insurance policy was purchased by a previous
employer pursuant to a deferred compensation agreement with a term of 10 years.
Subsequent employers have continued the agreement by purchasing the insurance
policy. Currently the agreement has 5 years remaining before it terminates.
Prior to the commencement of operations, Coastal Community Group will pay
interest on the $147,000 at a rate of 1% over prime to Mr. Mueller's former
employer, PanAmerican Bank. Pursuant to its agreement with Mr. Mueller, 90 days
after Mr. Mueller terminated his employment with PanAmerican Bank, it booked the
$147,000 as a loan secured by the $1,000,000 death benefit and an assignment of
the cash surrender value of approximately $200,000. When the agreement
terminates, Mr. Mueller will reimburse Coastal Community Group for the $147,000
it paid for the policy. The cash surrender value of the policy will secure the
$147,000. Mr. Mueller is not required to pay Coastal Community Group or Coastal
Community Bank any interest with respect to this amount.
The employment agreement is terminable at any time by Coastal Community
Group's board of directors subject to the payment of severance benefits. In
addition, Mr. Mueller may terminate the employment agreement himself for "good
reason" as defined in the employment agreement. "Good reason" includes:
o Purported termination by Coastal Community Bank without proper notice;
and
o A change in control of Coastal Community Bank followed by a
determination by Mr. Mueller that his duties and responsibilities
and/or remuneration have been diminished, his working conditions have
materially changed or that Coastal Community Bank has breached the
employment agreement.
The agreement provides severance benefits in the event Mr. Mueller is
terminated "without cause," including severance compensation equal to 200% of
the aggregate amount that would have been payable to him for the entire fiscal
year in which employment is terminated. In addition, the severance package for
termination "without cause" includes unpaid base compensation through the
employment termination date, including accrued but unpaid allowances and expense
reimbursements, and any accrued and deferred incentive compensation from any
previous year. Coastal Community Group may terminate the agreement at any time
for "cause" without incurring any post-termination obligations beyond the
payment by Coastal Community Group within 10 days of termination of Mr.
Mueller's base compensation through the thirtieth
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day following the termination date. In the event that Mr. Mueller terminates the
employment agreement for "good reason" he will receive the same severance
benefits as though he were terminated "without cause" as described above.
INCENTIVE STOCK OPTION PLAN
Coastal Community Group's board of directors and initial shareholder have
adopted an Incentive Stock Option Plan to promote equity ownership of Coastal
Community Group by selected officers and employees of Coastal Community Group
and Coastal Community Bank, to increase their proprietary interest in the
success of Coastal Community Group and to encourage them to remain in the employ
of Coastal Community Group and Coastal Community Bank.
ADMINISTRATION
The Incentive Stock Option Plan will be administered by Coastal Community
Group's Compensation Committee which is comprised of at least two non-employee
directors appointed by Coastal Community Group's board of directors. Coastal
Community Group's Compensation Committee will have the authority to select the
officers and employees to whom awards may be granted, to determine the terms of
each award, to interpret the provisions of the Incentive Stock Option Plan and
to make all other determinations that it may deem necessary or advisable for the
administration of the Incentive Stock Option Plan.
The Incentive Stock Option Plan provides for the grant of "incentive stock
options," as defined under Section 422(A) of the Internal Revenue Code of 1986,
as amended. The board of directors has reserved 150,000 shares of common stock
for issuance under the Incentive Stock Option Plan. In general, if any award
granted under the Incentive Stock Option Plan expires, terminates, is forfeited
or is canceled for any reason, the shares of common stock allocable to such
award may again be made subject to an award granted under the Incentive Stock
Option Plan.
AWARDS
Officers and policy-making employees of Coastal Community Group and Coastal
Community Bank are eligible to receive grants under the Incentive Stock Option
Plan. Awards may be granted subject to a vesting requirement and in any event
will become fully vested upon a merger or change of control of Coastal Community
Group. The exercise price of incentive stock options must at least equal the
fair market value of the common stock on the date the option is granted.
An incentive stock option granted under the Incentive Stock Option Plan to
an employee owning more than 10% of the total combined voting power of all
classes of capital stock of Coastal Community Group or its parent or any of its
subsidiaries is subject to the further restriction that such option must have an
exercise price of at least 110% of the fair market value of the shares of common
stock issuable upon exercise of the option, determined as of the date the option
is granted, and may not have an exercise term of more than five years. Incentive
stock options are also subject to the further restriction that the aggregate
fair market value, determined as of the date of grant, of common stock as to
which any such incentive stock option first becomes exercisable in any calendar
year, is limited to $100,000. To the extent options covering more than $100,000
worth of common stock first become exercisable in any one calendar year, the
excess will be non-statutory options. For purposes of determining which, if any,
options have been granted in excess of the $100,000 limit, options will be
considered to become exercisable in the order granted.
Each officer and key employee eligible to participate in the Incentive
Stock Option Plan will be notified by the committee. To receive an award under
the Incentive Stock Option Plan, an award agreement must be executed which
specifies the type of award to be granted, the number of shares of common stock
to
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which the award relates, the terms and conditions of the award and the date
granted. In the case of an award of options, the award agreement will also
specify the price at which the shares of common stock subject to the option may
be purchased, and the dates on which the option becomes exercisable.
The full exercise price for all shares of common stock purchased upon the
exercise of options granted under the Incentive Stock Option Plan must be paid
by cash, personal check, personal note, award surrender or common stock owned at
the time of exercise. Incentive stock options granted to employees under the
Incentive Stock Option Plan may remain outstanding and exercisable for ten (10)
years from the date of grant or until the expiration of 90 days, or such lesser
period as the Committee may determine, from the date on which the person to whom
they were granted ceases to be employed by Coastal Community Group or Coastal
Community Bank. Options granted under the plan are exercisable in increments of
10% per year commencing on the date of grant.
INCOME TAX
Incentive stock options granted under the Incentive Stock Option Plan have
advantageous tax attributes to the recipient under the income tax laws. No
taxable income is recognized by the option holder for income tax purposes at the
time of the grant or exercise of an incentive stock option, although neither is
there any income tax deduction available to Coastal Community Group as a result
of such a grant or exercise. Any gain or loss recognized by an option holder on
the later disposition of shares of common stock acquired pursuant to the
exercise of an incentive stock option generally will be treated as capital gain
or loss if such disposition does not occur prior to one year after the date of
exercise of the option.
AMENDMENT AND TERMINATION
The Incentive Stock Option Plan expires 10 years after its adoption, unless
sooner terminated by the board of directors. The board of directors has
authority to amend the plan in such manner as it deems advisable, subject to
restrictions set forth in such plan. The plan provides for appropriate
adjustment, as determined by the committee, in the number and kind of shares
subject to unexercised options, in the event of any change in the outstanding
shares of common stock by reason of a stock split, stock dividend, combination
or reclassification of shares, recapitalization, merger or similar event.
OUTSIDE DIRECTOR STOCK OPTION PLAN
Coastal Community Group's board of directors and initial shareholder have
adopted an Outside Director Stock Option Plan to promote equity ownership of
Coastal Community Group by non-employee directors to increase their proprietary
interest in Coastal Community Group and to encourage them to continue as
directors of Coastal Community Group.
The Outside Director Stock Option Plan is a non-qualified plan under which
non-employee directors are automatically granted stock options. Each outside
director is granted 3,000 options as an annual award and outside directors
serving on any of Coastal Community Bank's committees are awarded an additional
1,000 options annually. The exercise price of the options is fair market value
as of the date of the grant. The automatic nature of the awards enables the
outside directors to sit on the compensation committee without any conflict of
interest. Coastal Community Group has reserved 150,000 shares of common stock
for the grant of options under the plan. The first options under this plan will
be granted on the first business day following the annual stockholders' meeting
of Coastal Community Group subsequent to the opening of Coastal Community Bank.
The options granted under the Outside Director Stock Option Plan do not
qualify for special tax treatment under Internal Revenue Code Section 422. This
means that income will be recognized when
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the option is exercised and that such recognition of income may not be deferred.
Since the options are granted at fair market value, no income is recognized at
the time of the grant and there are no tax consequences to the optionee. When
the option is exercised however, the recipient of the option is taxed on the
difference between the exercise price and the fair market value of the stock
upon exercise. This amount is taxed as ordinary income and Coastal Community
Group is entitled to a deduction. Upon the sale of the stock by the optionee,
the difference between the amount realized on the sale and the fair market value
of the stock on the date of exercise and is taxed as a capital gain if held for
the requisite time period.
The Outside Director Stock Option Plan expires 10 years after its adoption,
unless sooner terminated by the board of directors. The board of directors has
authority to amend the plan in such manner as it deems advisable. The plan
provides for appropriate adjustment in the event of any change in the
outstanding shares of common stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger or similar
event.
RESTRICTED NON-QUALIFIED STOCK OPTIONS
Coastal Community Group's board of directors and initial shareholder have
adopted a Restricted Non-Statutory Stock Option Plan to encourage Mr. Mueller to
increase his proprietary interest in Coastal Community Group.
The Restricted Non-Statutory Stock Option Plan is a non-qualified plan
under which Coastal Community Group has granted Mr. Mueller options to purchase
50,000 shares of Coastal Community Group's stock. The exercise price of the
options is $10.00 per share, determined by Coastal Community Group to be equal
to fair market value as of December 9, 1998, the date of the grant.
This plan is limited to the 50,000 options granted to Mr. Mueller. The
options vest beginning on the date of the opening of Coastal Community Bank for
10,000 shares, and vest for additional 10,000 share increments on each of the
next four anniversary dates of Coastal Community Bank's opening.
The options granted under the Restricted Non-Statutory Stock Option Plan do
not qualify for special tax treatment under Internal Revenue Code Section 422
and so do not defer the recognition of income beyond the date upon which the
option is exercised. Since the options are granted at fair market value, no
income is recognized at the time of the grant to the optionee. When the option
is exercised however, the recipient of the option is taxed on the difference
between the exercise price and the then fair market value of the stock upon
exercise. This amount is taxed as ordinary income and Coastal Community Group is
entitled to a deduction. Upon the sale of the stock by the optionee, the
difference between the amount realized on the sale and the fair market value of
the stock on the date of exercise is taxed as a capital gain.
The Restricted Non-Statutory Stock Option Plan expires 10 years after its
adoption, unless sooner terminated by the board of directors. The board of
directors has authority to amend the plan in such manner as it deems advisable;
provided that no amendment, modification or termination of such plan shall
adversely affect in any manner and option granted and vested under such plan.
The plan provides for appropriate adjustment in the event of any change in the
outstanding shares of common stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger or similar
event.
ORGANIZERS' WARRANTS
Coastal Community Group's five initial organizers are Messrs. Mueller,
Bushman, Voelz, Soto and Evaldo F. Dupuy. Coastal Community Group's board of
directors and its initial shareholders have adopted
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a warrant plan to compensate Messrs. Bushman and Mueller for their efforts to
establish a strategic plan for the formation of Coastal Community Bank and for
their efforts in funding the initial organizational expenses of Coastal
Community Bank and Coastal Community Group. Of these two organizers, Mr. Bushman
has caused one of his affiliates to lend Coastal Community Group $300,000 which
allowed an organizational expense fund to be created and caused a second loan of
$350,000 to be made to cover pre-opening expenses and offering expenses. Both of
these loans have been guaranteed by Mr. Bushman. Coastal Community Group will
act to repay the organizers prior to the opening of Coastal Community Bank. The
exercise price of the warrants will be $10 per share (the same price as the
initial offering of the common stock). The warrants will be non-transferable,
will vest immediately, will be exercisable on any business day subsequent to the
first anniversary date of the opening of Coastal Community Bank and will have a
term of 10 years from the issuance date at which time they will expire. Coastal
Community Group has reserved 150,000 shares of its common stock for issuance
thereunder, 50,000 warrants to Mr. Mueller and 100,000 warrants to Mr. Bushman.
The grant of organizers' warrants is not contingent upon the purchase of stock
by the organizers or upon any other condition.
PRINCIPAL SHAREHOLDERS
Except for 500 shares issued to Mr. Bushman at $10.00 per share for the
sole purpose of incorporating Coastal Community Group and electing its
directors, Coastal Community Group has not yet issued any common stock. SEE
"Description of Capital Stock - Common Stock." The following table sets forth
information with respect to the anticipated beneficial ownership of common stock
after the sale of shares offered hereby, by:
o each of the current directors and executive officers of Coastal
Community Group; and
o all such directors and executive officers of Coastal Community Group
as a group.
All share numbers are provided based upon estimates, supplied to Coastal
Community Group by the persons listed below, of the number of shares of common
stock expected to be purchased by such persons. SEE "Certain Transactions -
Organizational Advances."
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<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OWNED AFTER OUTSTANDING SHARES
NAME THIS OFFERING (1) OWNED AFTER THIS OFFERING(1)
- ---- ------------------------- ----------------------------
<S> <C> <C>
Hans C. Mueller (2) 1,000 0.1%
Jerome J Bushman (3)(4) 100,000 10%
Allen M. Voelz 1,000 0.1%
James C. Merrill (5) 10,000 1%
Alex Soto 2,000 0.2%
Linda Marraccini, M.D. 500 .05%
Other directors (6) 73,000 7.3%
Directors and executive officers as a 187,500 18.75%
group (six individuals) (6)
</TABLE>
- ----------------------
(1) The information contained in this column is based upon information
furnished to Coastal Community Group by the persons named above based upon
a sale of 1,000,000 shares. The nature of beneficial ownership for shares
shown in this column is sole voting and investment power. Inclusion of
shares shall not constitute an admission of beneficial ownership or voting
or investment power over included shares.
(2) Does not include 50,000 organizer warrants or 50,000 Restricted
Non-Qualified Stock Options granted to Mr. Mueller.
(3) Does not include 100,000 organizer warrants granted to Mr. Bushman.
(4) Includes sales of shares to Mr. Bushman's affiliates including 50,000
shares to Bushman's, Inc. 401(k) Plan, 10,000 shares to Derrick J. Bushman,
Mr. Bushman's son, and 10,000 shares to Tia Bushman, Mr. Bushman's
daughter.
(5) Includes sales of shares to Mr. Merrill's affiliates.
(6) The Florida Department of Banking and Finance has advised Coastal Community
Group's board of directors that, as a condition to granting preliminary
approval, it will require commitments from the current directors and
proposed directors to purchase an aggregate of $1,875,000 of the stock of
Coastal Community Group in order that the directors' aggregate investment
equals 25% of the capital of Coastal Community Bank. Additional proposed
directors have not been identified at this time, but are to be named prior
to preliminary approval being received by Coastal Community Bank.
CERTAIN TRANSACTIONS
ORGANIZATIONAL ADVANCES
Mr. Bushman has caused an affiliate to lend a total of $650,000 in two
separate loan amounts of $300,000 and $350,000 respectively for use in
connection with organizational, pre-opening and capital raising expenses. Mr.
Bushman has guaranteed the repayment of both of these loans. Mr. Bushman is an
organizer of Coastal Community Bank and of Coastal Community Group. All amounts
advanced to Coastal Community Group bear interest at a rate of two percentage
points above the prime rate. These advances will be repaid on or after the
closing of the offering. In compensation for the risk and for their efforts in
creating and funding the organization of Coastal Community Group and Coastal
Community
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Bank, Coastal Community Group has granted warrants to Messrs. Bushman and
Mueller to purchase common stock of Coastal Community Group for $10 per share.
SEE "Principal Shareholders," "Management - Organizers' Warrants" and
"-Transactions with Promoters."
BANKING TRANSACTIONS
It is anticipated that the directors and officers of Coastal Community
Group and Coastal Community Bank and the companies with which they are
associated will have banking and other transactions with Coastal Community Group
and Coastal Community Bank in the ordinary course of business. All transactions
between Coastal Community Group and affiliated persons, including 5%
stockholders, will be on terms no less favorable to Coastal Community Group than
could be obtained from independent third parties, including the insurance
purchases referred to below. Any loans and commitments to lend to such
affiliated persons or entities included in such transactions will be made in
accordance with all applicable laws and regulations and on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unaffiliated parties of similar
creditworthiness.
OTHER TRANSACTIONS WITH DIRECTORS
Mr. Alex Soto, a director of Coastal Community Group, is President of
InSource Financial Services Inc., one of the largest independent property and
casualty insurance agencies in South Florida. It is anticipated that InSource
could provide Coastal Community Group and Coastal Community Bank with insurance
products including a Bankers Blanket Bond, a policy of general liability
insurance, directors and officers liability insurance, and possibly other
insurance products. The total yearly premiums to be paid by Coastal Community
Group and Coastal Community Bank are estimated to be $40,000. This transaction
and any other transactions with directors will be made in accordance with all
applicable laws and regulations and on substantially the same terms as those
prevailing at the time for comparable transactions with unaffiliated parties.
TRANSACTIONS WITH PROMOTERS
Evaldo F. Dupuy, one of the organizers of Coastal Community Group and of
Coastal Community Bank, is the branch manager of the Miami office of Coast
Partners Securities, Inc. which will act as managing dealer of this offering.
Coast Partners Securities, Inc. will receive dealers' discounts and commissions
of up to $0.95 per share with respect to this offering which may total as much
as $818,750. Initially, Coastal Community Group agreed to grant Mr. Dupuy 50,000
organizers' warrants exercisable at $10.00 per share in recognition of his
efforts as an organizer and his guaranty of a $300,000 loan made to Coastal
Community Group to cover organizational expenses and a $350,000 loan to cover
offering and pre-opening expenses. However, Mr. Dupuy has waived his right to
the warrant and has been released from his guaranty of Coastal Community Group's
loans. Mr. Bushman has agreed to guaranty both loans in full, for which he will
receive 100,000 organizers' warrants exercisable at $10.00 per share.
INDEMNIFICATION
The articles of incorporation and bylaws of Coastal Community Group provide
for the indemnification of directors and officers of Coastal Community Group and
any person serving as a director or officer of another corporation at the
request of Coastal Community Group, including reasonable legal fees, incurred by
such directors and officers while acting for or on behalf of Coastal Community
Group or Coastal Community Bank as a director, officer, employee or agent,
subject to limitations. SEE "Description of Capital Stock - Indemnification and
Limited Liability Provisions." Additionally, Coastal Community Group has entered
into indemnification agreements, adopted by the shareholder, with the directors
of Coastal Community Group which provide a contractual obligation by Coastal
Community Group to indemnify the directors for liability, including legal fees
that they incur as a result of actions taken on behalf of Coastal
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Community Group. Coastal Community Bank expects to enter into similar
indemnification agreements with its directors. Coastal Community Group has
purchased directors' and officers' liability insurance for its directors and
officers.
The articles of incorporation of Coastal Community Bank provide for
indemnification of its officers and directors. FDIC regulations may prohibit the
indemnification of directors when a bank has been deemed to be a troubled
institution.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Coastal Community Group presently consists
of 10,000,000 shares of common stock, par value $.01 per share, and 2,000,000
shares of preferred stock, par value $.01 per share.
COMMON STOCK
As of the date of this prospectus, there were 500 shares of common stock
issued and outstanding, all of which are held by Mr. Bushman. These shares were
issued at a price of $10.00 per share for the purpose of incorporating Coastal
Community Group, and to provide a shareholder to enable Coastal Community Group
to undertake corporate actions requiring shareholder approval. All outstanding
shares of common stock offered hereby will be fully paid and non-assessable. The
holders of common stock are entitled to one vote for each share held of record
on all matters voted upon by stockholders. Subject to preferences that may be
applicable to any outstanding shares of preferred stock, each share of
outstanding common stock is entitled to participate equally in any distribution
of net assets made to the stockholders in liquidation, dissolution or winding up
Coastal Community Group and is entitled to participate equally in dividends as
and when declared by Coastal Community Group's board of directors. There are no
redemption, sinking fund, conversion or preemptive rights with respect to the
shares of common stock. All shares of common stock have equal rights and
preferences. The transfer agent and registrar for the common stock is American
Stock Transfer & Trust Co.
PREFERRED STOCK
As of the date of this prospectus, no shares of preferred stock were issued
or outstanding. The board of directors is authorized to fix or alter the rights,
preferences, privileges and restrictions of any wholly unissued series of
preferred stock, including the dividend rights, original issue price, conversion
rights, voting rights, terms of redemption, liquidation preferences and sinking
fund terms thereof. The board of directors is also authorized to fix or alter
the number of shares constituting any such series and the designation thereof
and to increase or decrease the number of shares of such series subsequent to
the issuance of shares of such series, but not below the number of shares then
outstanding. The board of directors, without shareholder approval, can issue
preferred stock with voting and conversion rights, which could adversely affect
the voting power of the shareholders of common stock.
ANTI-TAKEOVER PROVISIONS
Coastal Community Group's board of directors may authorize the issuance of
additional shares of common stock or preferred stock without further action by
Coastal Community Group shareholders, unless such action is required in a
particular case by applicable laws or regulation. The authority to issue
additional common stock or preferred stock provides Coastal Community Group with
the flexibility necessary to meet its future needs without the delay resulting
from seeking shareholder approval. The unissued common stock or preferred stock
may be issued from time to time for any corporate purposes, including without
limitation, stock splits, stock dividends, employee benefit and compensation
plans,
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acquisitions and public and private sales for cash as a means of raising
capital. Such shares could be used to dilute the stock ownership of persons
seeking to obtain control of Coastal Community Group.
In addition, the sale of a substantial number of shares of common stock or
preferred stock to persons who have an understanding with Coastal Community
Group concerning the voting of such shares, or the distribution or dividend of
common stock or preferred stock or right to receive such shares to Coastal
Community Group's shareholders, may have the effect of discouraging or otherwise
increasing the cost of unsolicited attempts to acquire control of Coastal
Community Group. Further, because Coastal Community Group's board has the power
to determine the voting, conversion or other rights of the preferred stock, the
issuance of a series of preferred stock to persons friendly to management could
effectively discourage or preclude consummation of a change in control
transaction or have the effect of maintaining the position of Coastal Community
Group's incumbent management. Coastal Community Group does not currently have
any plans or commitments to use its authority to effect any such issuance, but
reserves the right to take any action that the board of directors deems to be in
the best interests of Coastal Community Group and its shareholders.
Coastal Community Group's bylaws also contain provisions that provide that
the board of directors shall be divided into three classes as nearly equal in
number as the then total number of directors constituting the board permits,
with one class expiring each year. The classification of directors has the
effect of making it more difficult to change the composition of the board of
directors. At least two shareholder meetings, instead of one, is required to
effect a change in a majority of the board. The board believes that the longer
time required to elect a majority of a classified board will help to assure the
continuity and stability of Coastal Community Group's board and policies in the
future, since a majority of the directors at any given time will have prior
experience as directors of Coastal Community Group. The classification provision
applies for every election of directors, regardless of whether a change in the
board might arguably be beneficial to Coastal Community Group and its
shareholders and whether or not a majority of Coastal Community Group's
shareholders believe that such a change would be desirable.
Coastal Community Group is subject to Florida law which may deter or
frustrate unsolicited attempts to acquire certain Florida corporations. These
statutes, commonly referred to as the "Control Share Act" and the "Fair Price
Act," apply to most public corporations organized in Florida unless the
corporation has specifically elected to opt out of such provisions. Coastal
Community Group has not elected to opt out of these provisions. The Fair Price
Act generally requires that acquiring transactions between a public corporation
and an affiliate must be approved by two-thirds of the disinterested directors
or shareholders, not including those shares beneficially owned by an interested
shareholder. The Control Share Act generally provides that shares of a public
corporation acquired in excess of specified thresholds will not posses any
voting rights unless such voting rights are approved by a majority vote of the
corporation's disinterested shareholders. These anti-takeover provisions of
Florida law could result in Coastal Community Group being less attractive to a
potential acquirer and/or result in shareholders receiving less for their shares
than might otherwise be available in the event of an unsolicited takeover
attempt.
INDEMNIFICATION AND LIMITED LIABILITY PROVISIONS
The Florida Business Corporation Act authorizes a company to indemnify its
directors and officers against liabilities which they may incur by virtue of
their relationship with the company. A company may indemnify any director,
officer, employee or agent against judgments, fines, penalties, amounts paid in
settlement, and expenses incurred in any pending, threatened or completed civil,
criminal, administrative, or investigative proceeding, except an action by the
company, against him in his capacity as a director, officer, employee, or agent
of the company, or another company if serving in such capacity at the company's
request if he:
o acted in good faith;
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o acted in a manner which he reasonably believed to be in or not opposed
to the best interests of the company; and
o with respect to a criminal action, had no reasonable cause to believe
his conduct was unlawful.
Furthermore, a company may indemnify any director, officer, agent or
employee against expenses incurred in defense or settlement of any proceeding
brought by the company against him in his capacity as a director, officer,
employee or agent of the company, or another company if serving in such capacity
at the company's request, if he:
o acted in good faith;
o acted in a manner which he reasonably believed to be in or not opposed
to the best interests of the company; and
o is not adjudged to be liable to the company unless the court finds
that he is nevertheless reasonably entitled to indemnity for expenses
which the court deems proper. A company must repay the expenses of any
director, officer, employee or agent who is successful on the merits
of an action against him in his capacity as such.
A Florida company is authorized to make any other or further
indemnification or advancement of expenses of any of its directors, officers,
employees, or agents, except for acts or omissions which constitute:
o a violation of the criminal law unless the individual had reasonable
cause to believe it was lawful;
o a transaction in which the individual derived an improper personal
benefit;
o in the case of a director, a circumstance under which the provisions
of the Florida Business Corporation Act related to payment of
dividends or other distributions or repurchases of shares in violation
of such act are applicable; or
o willful misconduct or a conscious disregard for the best interest of
the company in a proceeding by the company, or a company shareholder.
A Florida company also is authorized to purchase and maintain liability
insurance for its directors, officers, employees and agents.
Coastal Community Group's articles of incorporation and bylaws provide that
it shall indemnify each of its directors and officers to the fullest extent
permitted by law, and that the indemnity will include advances for expenses and
costs incurred by such director or officer related to any action in regard to
which indemnity is permitted. Coastal Community Group expects to purchase
directors' and officers' liability insurance covering its directors and officers
against expenses and liabilities arising from actions to which they may become
subject by reason of having served in such role. Such insurance, if obtained, is
subject to the coverage amounts, exceptions, deductibles and other conditions
set forth in the policy. There is no assurance that Coastal Community Group will
obtain or will be able to maintain liability insurance for its directors and
officers. Ordinarily, such policies do not cover liability arising under the
securities laws.
Coastal Community Group has entered into indemnification agreements with
each of its directors. Pursuant to such agreements Coastal Community Group will
indemnify each director to the full extent allowed, authorized or not prohibited
by Florida Statutes Section 607.0850 covering indemnification of directors,
officers, employees and agents. The agreements are intended to indemnify the
directors
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against liability arising from their acts or omissions in such capacity in as
broad a manner as is possible under current law.
Florida Statutes Section 607.0831 limits the liability of directors.
Coastal Community Group's directors shall not be personally liable to Coastal
Community Group or its stockholders for monetary damages for the breach of the
duty of care or any other duty owed to Coastal Community Group as a director,
unless the breach of or failure to perform those duties constitutes: (i) a
violation of criminal law, unless the director had reasonable cause to believe
that his conduct was lawful, or had no reasonable cause to believe that his
conduct was unlawful; (ii) a transaction from which the director received an
improper personal benefit; (iii) for unlawful corporate distributions; (iv) an
act or omission which involves a conscious disregard for the best interests of
the corporation or which involves willful misconduct; or (v) an act of
recklessness or an act or omission which was committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety, or property.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, may be permitted to directors, officers, or controlling persons of
Coastal Community Group pursuant to the above provisions, or otherwise, Coastal
Community Group has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering and assuming the maximum number of shares
is sold, Coastal Community Group expects to have 1,000,500 shares of its common
stock outstanding. The 1,000,000 shares of Coastal Community Group's common
stock purchased in this offering have been registered with the SEC under the
Securities Act, and may generally be resold without registration under the
Securities Act unless they were acquired by directors, executive officers, or
other affiliates of Coastal Community Group or Coastal Community Bank.
Affiliates of Coastal Community Group may generally only resell shares of the
common stock publicly without registration under the Securities Act pursuant to
the Commission's Rule 144.
In general, under Rule 144 as currently in effect, an affiliate of Coastal
Community Group may sell shares of common stock within any three-month period in
an amount limited to the greater of 1% of the outstanding shares of Coastal
Community Group's common stock or the average weekly trading volume in Coastal
Community Group's common stock during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to manner-of-sale provisions, notice
requirements and the availability of current public information about Coastal
Community Group.
The directors and officers of Coastal Community Group and Coastal Community
Bank are expected to hold an aggregate of approximately 187,500 shares after
this offering. Those directors and officers and Coastal Community Group have
agreed, or will agree, that they will not issue, offer for sale, sell, grant any
options for the sale of or otherwise dispose of any shares of common stock or
any rights to purchase shares of common stock, in the open market or otherwise,
without the prior written consent of Coast Partners Securities, Inc. for a
period of 180 days from the date of this prospectus. Prior to this offering,
there has been no public trading market for the common stock, and no predictions
can be made as to the effect, if any, that sales of shares or the availability
of shares for sale will have on the prevailing market price of the common stock
after completion of this offering. Nevertheless, sales of substantial amounts of
common stock in the public market could have an adverse effect on prevailing
market prices.
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PLAN OF DISTRIBUTION
Subject to the terms and conditions contained in the Managing Dealer
Agreement, Coast Partners Securities, Inc., has agreed to use its best efforts
to sell a minimum of 900,000 shares and a maximum of 1,000,000 shares of Coastal
Community Group's common stock. Directors of Coastal Community Group and their
affiliates are expected to purchase a minimum of 187,000 shares in this
offering.
Coastal Community Group has been advised by Coast Partners Securities, Inc.
that it proposes to offer the common stock to the public at the public offering
price set forth on the cover page of this prospectus and to selling dealers at
such price, less a concession not in excess of $0.95 per share of which $0.25
represents an investment banking fee and the remaining $0.70 represents a Coast
Partners Securities, Inc. fee. However, no Coast Partners Securities, Inc. fee
will be assessed with respect to sales to investors identified by Coastal
Community Group to Coast Partners Securities, Inc. in writing, including the
directors of Coastal Community Group, up to a maximum of 400,000 shares. Coast
Partners Securities, Inc. and the selling dealers may realize a concession not
in excess of $0.60 per share to other dealers.
Coast Partners Securities, Inc. also will be reimbursed for its expenses
incurred in connection with this offering, up to a maximum of $50,000.
Unless waived by Coastal Community Group, shares of common stock will be
sold to the public only in minimum lots of 250 shares and any one investor will
be permitted to purchase a maximum of 50,000 shares.
Coast Partners Securities, Inc. has informed Coastal Community Group that
it does not intend to confirm sales of the shares of common stock offered hereby
to any accounts over which it exercises discretionary authority.
Coastal Community Group and Coast Partners Securities, Inc. have agreed to
enter into an escrow agreement under which the proceeds of the sale of common
stock will be held by SunTrust Bank, Miami, N.A., as escrow agent. These
proceeds shall be released by the escrow agent to Coastal Community Group at
such time as the minimum of $9,000,000 of common stock is sold, the proceeds
have been received by the escrow agent, Coastal Community Bank has received
preliminary regulatory approval and Coastal Community Group, Inc. has not
canceled this offering. If subscriptions for at least 900,000 shares of common
stock and at least $9,000,000 are not received within 90 days after the
effective date of the offering or as extended for up to an additional 90 days,
all proceeds, including any interest which may have accrued on the subscription
funds, will be promptly returned to investors. If the minimum of $9,000,000 is
raised during the offering period but Coastal Community Bank does not receive
preliminary approval from the Florida Department of Banking and Finance within
180 days after the end of the offering period, the offering will be canceled and
all proceeds, including any interest which may have accrued on the subscription
funds, will be promptly returned to investors.
Coastal Community Group, its directors and executive officers and those of
Coastal Community Bank have agreed or will agree with Coast Partners Securities,
Inc., for a period of 180 days after the date of this prospectus, not to issue,
sell, offer to sell, grant any options for the sale of, or otherwise dispose of
any shares of common stock or any rights to purchase shares of common stock, in
the open market or otherwise, without the prior written consent of Coast
Partners Securities, Inc.
Coast Partners Securities, Inc. has advised Coastal Community Group that
either it or its syndicate members presently intend to make a market in the
common stock after the closing of the offering, but no assurance can be made as
to the liquidity of the common stock or that an active and liquid trading market
will develop or, if developed, that it will be sustained. Coast Partners
Securities, Inc. will have no
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obligation to make a market in the common stock, however, and may cause
market-making activities, if commenced, to cease at any time.
Coastal Community Group and Coast Partners Securities, Inc. have agreed to
indemnify, or to contribute to payments made by, each other against civil
liabilities, including civil liabilities under the Securities Act.
There has been no public trading market for the common stock. The offering
price of $10 per share was determined by negotiations between Coastal Community
Group and Coast Partners Securities, Inc. This price is not based upon earnings
or any history of operations and should not be construed to indicate the present
or anticipated future value of the common stock. Several factors were considered
in determining the offering price of the common stock, among them the size of
the offering, the desire that the security being offered be attractive to
individuals and Coast Partners Securities, Inc.'s experience in dealing with
initial public offerings for financial institutions.
LEGAL PROCEEDINGS
Neither Coastal Community Bank nor Coastal Community Group is a party to,
nor is it aware of, any pending legal proceeding. Management believes there is
no litigation threatened in which Coastal Community Group or Coastal Community
Bank faces potential loss or exposure or which will materially affect
stockholders' equity or Coastal Community Group's business or financial
condition upon completion of this offering.
LEGAL MATTERS
The legality of the shares of common stock being offered hereby will be
passed upon for Coastal Community Group by Gunster, Yoakley, Valdes-Fauli &
Stewart, P.A. of Miami, Florida which is acting as counsel for Coastal Community
Group.
Legal matters will be passed upon for Coast Partners Securities, Inc. by
Kutak Rock, Denver, Colorado.
EXPERTS
The financial statements of Coastal Community Group included in this
prospectus have been audited by Morrison, Brown, Argiz & Co., independent public
accountants, as indicated in their report (included herein) on Coastal Community
Group. These financial statements have been included in this prospectus and in
the registration statement in reliance upon the authority of the accounting firm
as experts in accounting and auditing.
AVAILABLE INFORMATION
We intend to give to our shareholders annual reports containing financial
statements audited and reported upon by our independent public accounting firm
and we intend to make available quarterly reports for the first three quarters
of each year containing unaudited interim financial information.
We have filed a registration statement, as amended, with the SEC under the
Securities Act with respect to the common stock offered hereby. As permitted by
the rules and regulations of the SEC, this prospectus contains brief
descriptions and does not contain all the information set forth in the
registration
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statement and can be examined without charge at the public reference facilities
of the SEC located at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at the Northeast Regional Office of the Commission at 7
World Trade Center, Suite 1300, New York, New York 10048; the Midwest Regional
Office of the Commission, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; or at the Pacific Regional Office of the Commission at
5670 Wilshire Blvd., 11th Floor, Los Angeles, CA 90036, at prescribed rates. In
addition, the SEC maintains a web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC, including Coastal Community
Group, Inc. We will provide, without charge and upon request, a copy of the
information that is incorporated by reference in the prospectus. The statements
contained in this prospectus as to the contents of any contract or other
document filed as an exhibit to the registration statement summarize the
provisions of such contract or other document which are deemed material.
However, such summaries are, of necessity, brief descriptions and are not
necessarily complete; each such statement is qualified by reference to such
contract or document. The summaries do however disclose all material
information.
48
<PAGE> 54
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information.
We are not offering the common stock in any state where the offer is not
permitted.
<PAGE> 55
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT....................................... F-1
BALANCE SHEETS..................................................... F-2
STATEMENTS OF OPERATIONS........................................... F-3
STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT..................... F-4
STATEMENTS OF CASH FLOWS........................................... F-5
NOTES TO FINANCIAL STATEMENTS...................................... F-6-12
</TABLE>
<PAGE> 56
MORRISON, BROWN, ARGIZ
+ COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Coastal Community Group, Inc. (f/k/a Coastal BHC, Inc.)
We have audited the accompanying balance sheets of Coastal Community Group, Inc.
(f/k/a Coastal BHC, Inc.) (a development stage company) (the "Company") as of
April 30, 1999 and December 31, 1998, and the related statements of operations,
changes in stockholder's deficit, and cash flows for the four month period ended
April 30, 1999 and the period from October 6, 1998 (date of inception) to
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Coastal Community Group, Inc.
(f/k/a Coastal BHC, Inc.) as of April 30, 1999 and December 31, 1998, and the
results of its operations and its cash flows for the four month period ended
April 30, 1999 and the period from October 6, 1998 (date of inception) to
December 31, 1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in NOTE 1 to the
financial statements, the Company's ability to commence operations is dependent
on obtaining regulatory approval and adequate financial resources through a
contemplated public offering, or otherwise. The Company's ability to achieve the
foregoing elements of its business plan, which may be necessary to permit the
realization of assets and satisfaction of liabilities in the ordinary course of
business, is uncertain. Those conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
MORRISON, BROWN, ARGIZ & COMPANY
Certified Public Accountants
Miami, Florida
May 14, 1999
1001 Brickell Bay Drive, 9th Floor, Miami, Florida 33131 phone 305.373.5500 fax
305.373.0056 http://www.mba-cpa.com 1600 Stout Street, 11th Floor, Denver,
Colorado 80202 phone 303.615.9500 fax 303.615.9572
F-1
<PAGE> 57
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 275,359 $ 161,642
Other 10,000 14,106
--------- ---------
TOTAL CURRENT ASSETS 285,359 175,748
FURNITURE AND EQUIPMENT, net of
accumulated depreciation of $1,176 26,066 --
DEFERRED OFFERING COSTS 61,547 --
--------- ---------
$ 372,972 $ 175,748
========= =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 81,750 $ 58,569
Accrued interest payable - stockholder 23,586 7,753
Notes payable - stockholder 650,000 300,000
--------- ---------
TOTAL CURRENT LIABILITIES 755,336 366,322
--------- ---------
STOCKHOLDER'S DEFICIT:
Common stock, $.01 par value,
10,000,000 shares authorized;
500 shares issued and outstanding 5 5
Preferred stock, $.01 par value,
2,000,000 shares authorized;
none issued and outstanding -- --
Additional paid-in capital 4,995 4,995
Deficit accumulated during the development stage (387,364) (195,574)
--------- ---------
TOTAL STOCKHOLDER'S DEFICIT (382,364) (190,574)
--------- ---------
$ 372,972 $ 175,748
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 58
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998, THE FOUR MONTH PERIOD ENDED APRIL 30, 1999,
AND THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION) TO APRIL 30, 1999
<TABLE>
<CAPTION>
Four month October 6, 1998 October 6, 1998
period ended (Inception) to (Inception) to
April 30, December 31, April 30,
1999 1998 1999
------------ -------------- ---------------
<S> <C> <C> <C>
INTEREST INCOME $ 2,440 $ 2,452 $ 4,892
--------- --------- ---------
ADMINISTRATIVE EXPENSES (174,079) (190,273) (364,352)
INTEREST EXPENSE (20,151) (7,753) (27,904)
--------- --------- ---------
TOTAL EXPENSES (194,230) (198,026) (392,256)
--------- --------- ---------
NET LOSS $(191,790) $(195,574) $(387,364)
========= ========= =========
BASIC AND DILUTED
LOSS PER SHARE $ (383.58) $ (391.15) $ (774.73)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 59
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT
FOR THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998 AND THE FOUR MONTH PERIOD ENDED APRIL 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the Total
Common Paid-In Development Stockholder's
Stock Capital Stage Deficit
------ ---------- ------------ --------------
<S> <C> <C> <C> <C>
Initial issuance of
common stock $ 5 $4,995 $ -- $ 5,000
Net loss -- -- (195,574) (195,574)
------ ------ --------- ---------
Balances - December 31, 1998 5 4,995 (195,574) (190,574)
Net loss -- -- (191,790) (191,790)
------ ------ --------- ---------
Balances - April 30, 1999 $ 5 $4,995 $(387,364) $(382,364)
====== ====== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 60
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998, THE FOUR MONTH PERIOD ENDED APRIL 30, 1999,
AND THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION) TO APRIL 30, 1999
<TABLE>
<CAPTION>
Four month October 6, 1998 October 6, 1998
period ended (Inception) to (Inception) to
April 30, December 31, April 30,
1999 1998 1999
------------ --------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(191,790) $(195,574) $(387,364)
--------- --------- ---------
Adjustments to reconcile net loss to net cash
used in administrative activities during the
development stage:
Depreciation 1,176 -- 1,176
Change in operating assets and liabilities:
Other assets 4,106 (14,106) (10,000)
Accounts payable and accrued expenses 23,181 58,569 81,750
Accrued interest payable - stockholder 15,833 7,753 23,586
--------- --------- ---------
TOTAL ADJUSTMENTS 44,296 52,216 96,512
--------- --------- ---------
NET CASH USED IN
OPERATING ACTIVITIES (147,494) (143,358) (290,852)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture and equipment (27,242) -- (27,242)
Increase in deferred offering costs (61,547) -- (61,547)
--------- --------- ---------
NET CASH USED IN
INVESTING ACTIVITIES (88,789) -- (88,789)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable - stockholder 350,000 300,000 650,000
Proceeds from issuance of common stock -- 5,000 5,000
--------- --------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 350,000 305,000 655,000
--------- --------- ---------
NET INCREASE IN CASH 113,717 161,642 275,359
CASH - BEGINNING OF PERIOD 161,642 -- --
--------- --------- ---------
CASH - END OF PERIOD $ 275,359 $ 161,642 $ 275,359
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 4,318 $ -- $ 4,318
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 61
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) GENERAL
Coastal Community Group, Inc. (formerly known as Coastal BHC,
Inc.) (the "Company") is a development stage enterprise and
was incorporated on October 6, 1998 in the State of Florida.
The Company plans to apply for approval from the Board of
Governors of the Federal Reserve System ("Board of Governors")
to become a one-bank holding company and plans to acquire 100%
of the outstanding shares of Coastal Community Bank (the
"Bank"), which is planned to be incorporated and organized in
Tallahassee, Florida. The operations of the Company, which are
intended to consist solely of the ownership of the Bank, have
not commenced as of April 30, 1999. The accounting policies of
the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable
to development stage companies. The Company has adopted
December 31 as its fiscal year end.
(B) GOING CONCERN
The Company's ability to commence operations is dependent on
obtaining regulatory approval and adequate financial resources
through a contemplated public offering, or otherwise, as
described in NOTE 7. If unsuccessful, the Company may be
unable to continue in its present form. The financial
statements do not include any adjustments relating to the
realization, recoverability and classification of assets or
the amount, satisfaction and classification of liabilities
that might result should the Company be unable to continue as
a going concern.
(C) ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
(D) FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost less accumulated
depreciation. Normal repairs and maintenance are expensed as
incurred. Depreciation is determined using the straight-line
method over the estimated useful lives of the respective
assets, which typically range from 5 to 7 years.
F-6
<PAGE> 62
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(E) DEFERRED OFFERING COSTS
Costs related to the Company's proposed registration and sale
of its common stock have been deferred (NOTE 7). Upon
completion of the stock offering, these costs will be charged
against paid-in capital. Should the offering be unsuccessful,
these deferred costs will be charged against operations.
(F) INCOME TAXES
The Company accounts for income taxes under the method
prescribed by Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes" ("FAS 109"). Under FAS 109,
deferred taxes are recorded based upon differences between the
financial statement and tax bases of assets and liabilities
and available tax loss carryovers.
(G) ORGANIZATIONAL EXPENSES
The Company has adopted Statement of Position 98-5 "Reporting
on Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5
requires the Company to expense costs of start-up activities,
including organization costs, as incurred.
(H) RECENT PRONOUNCEMENTS
In June, 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income," which requires companies to report by major
components and in total, the change in its net assets during
the period from non-owner sources. The FASB also issued SFAS
No. 131, "Disclosures about Segments of an Enterprise and
Related Information," which establishes annual reporting
standards for a company's operating segments and related
disclosures about its products, services, geographic areas and
major customers. The adoption of these standards did not have
an effect on the Company's financial position, results of
operations or cash flows.
(I) EARNINGS (LOSS) PER SHARE
The net income (loss) per share is computed by dividing the
net income or loss for the period by the weighted average
number of shares outstanding for the period plus the dilutive
effect of outstanding common stock options and warrants
considered to be common stock equivalents. Basic and diluted
earnings per share amounts are equal because the Company has a
net loss and stock options and other common stock equivalents
are excluded from the net loss per share calculations as their
effect would be antidilutive. The weighted average number of
shares used to compute earnings per share were 500 shares.
F-7
<PAGE> 63
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 2 - ORGANIZATION
On November 16,1998, the organizers of the Company filed an application
for authority to form a state-chartered bank with the Comptroller of
the State of Florida Department of Banking and Finance. The approval of
this application is contingent upon certain conditions being met. These
conditions include, among other things, the establishment of total
capital accounts of not less than $4 million, with not less than $2
million allocated to common capital, after all organizational and
pre-opening expenses and the approval by the Board of Governors of the
Federal Reserve System of the Company's application to acquire the
stock of the Bank as a registered bank holding company.
NOTE 3 - RELATED PARTIES
The Company has appointed one of its organizers as its President and
Chief Executive Officer.
The Company has borrowed $650,000, in the form of two unsecured demand
notes payable to its stockholder. These notes, which accrue interest at
a rate of prime plus 2% (9.75% at April 30, 1999 and December 31,
1998), have been used to fund organizational and other costs incurred
by the Company and the planned Bank and has been guaranteed by one of
the Company's organizers. It is intended that the notes will be repaid
from the proceeds of the Company's common stock offering.
NOTE 4 - INCOME TAXES
The Company has available an unused net operating loss carryforward of
approximately $380,000 for both regular and alternative minimum tax
purposes, which may be applied against future taxable income. The net
operating loss carryforward expires through the year 2014.
The approximate tax effects of significant temporary differences which
comprise the deferred tax assets at April 30, 1999 are as follows:
<TABLE>
<S> <C>
Net operating loss carryforward $ 143,000
Less valuation allowance (143,000)
---------------
$ -0-
===============
</TABLE>
Due to the uncertain nature of the ultimate realization of the
carryforward benefits, the Company has established a full valuation
allowance against the benefits of the net operating loss carryforward
and will recognize these benefits only as reassessment demonstrates
they are realizable. Ultimate realization is dependent upon future
earnings. While the need for this valuation allowance is subject to
periodic review, if the allowance is reduced, the tax benefits of the
carryforward will be recorded in future operations as a reduction of
the Company's income tax expense.
F-8
<PAGE> 64
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 5 - CONCENTRATIONS OF CREDIT RISK
The Company maintains cash deposited in local banks which may, at
times, exceed the FDIC insured limits. At April 30, 1999, the Company
exceeded this limit by approximately $193,000.
Substantially all of the Bank's loans are expected to be to businesses
and individuals in the Miami-Dade County, Florida area. Any decline in
the economy of this area could have an adverse impact on the Bank.
Although the Bank does not plan to make foreign loans or investments,
the economy of Miami and Miami-Dade County is based, in a significant
part, on international trade and investment and international tourism,
particularly with respect to Latin America. The economies and
governments of Latin America have historically been, and continue to
be, fragile and volatile. Any economic downturn or political or
economic crisis in the region as a whole, or in a particular country
important to the local market such as Brazil or Venezuela, would have
an adverse effect on the local economy and might negatively affect the
Bank.
NOTE 6 - COMMITMENTS
The Company has an option to lease bank facilities under an operating
lease. The option is contingent upon regulatory approval and upon the
termination of the current tenant's lease. In the event that the
current tenant does not terminate its lease, the current tenant has
agreed to sublease the facilities to the Company. Expected future
minimum rental commitments under a noncancelable lease will be
approximately $100,000 per year.
NOTE 7 - SALE OF COMMON SHARES AND WARRANTS
The Company plans to offer a total of 1,000,000 shares of its common
stock to the public. The price per share is expected to be $10. The
Company expects to incur approximately $100,000 in offering costs
relating to these sales and to pay between $855,000 and $950,000 in
discounts and fees to its placement agent.
NOTE 8 - INCENTIVE STOCK OPTION PLAN
The Company has adopted an Incentive Stock Option Plan ("Incentive
Plan"). The Incentive Plan provides for the grant of options, at the
discretion of a committee designated by the Board of Directors, to
administer the Incentive Plan. The option exercise price must be at
least 100% (110% in the case of a holder of 10% or more of the common
stock) of the fair market value of the stock on the date the option is
granted and the options are exercisable by the holder thereof, in full,
immediately or at anytime following a vesting period, as determined by
the committee and prior to their expiration in accordance with the
terms of the Incentive Plan. The Company has reserved 150,000 shares
for issuance under the Incentive Plan.
F-9
<PAGE> 65
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 9 - OUTSIDE DIRECTOR STOCK OPTION PLAN
The Company has adopted an Outside Director Stock Option Plan
("Outside Director Plan"). The Outside Director Plan provides for the
grant of options to non-employee directors automatically at the rate
of 3,000 options per year for each outside director and an additional
1,000 options to each director serving on any of the Bank's
committees. The exercise price of the options is required to be no
lower than the fair market value as of the date of the grant. The
options are exercisable immediately and remain exercisable for a
period of ten years. The Company has reserved 150,000 shares for
issuance under the Outside Director Plan.
NOTE 10 - WARRANT PLAN
The Company has adopted a Warrant Plan ("Warrant Plan"). Under the
Warrant Plan, the Company is committed to grant 50,000 warrants to
purchase the common stock of the Company at $10 per share to three
organizers of the Bank. The warrants are non-transferable, will vest
immediately and will be exercisable after the first anniversary of the
opening of the Bank and will remain exercisable for a period of ten
years. The Company has reserved 150,000 shares for issuance under the
Warrant Plan.
NOTE 11 - EXECUTIVE EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with its President on
December 9, 1998 for an initial three year term effective on September
1, 1998. Under this agreement, the Company pays the President a
monthly salary of $10,000 during the organizational period. At the end
of this period, and upon commencement of operations of the Bank, the
Company will pay the President a lump sum amount based upon the
differential between an annual compensation of $120,000 and a base
salary of $170,000. The agreement shall be automatically renewed for
successive one year periods unless the Company and the Bank or the
President gives notice to terminate to the other party 180 days prior
to the expiration of the term.
After the organizational period, the employment agreement will provide
for a base salary of $170,000, an annual incentive bonus in an amount
determined by the Board of Directors, participation in the Company's
health, life, disability, retirement or any other company employee
benefit plans, vacation, and certain expenses. Additionally, the
employment agreement provides that the Company will purchase an
existing $1,000,000 single premium split dollar life insurance policy
on the President's life for $147,000 (approximate cash surrender
value) at the time that the Bank commences operations. This insurance
policy is currently owned by a former employer pursuant to a deferred
compensation agreement with a term of ten years. Currently the
agreement has five years remaining before it terminates.
F-10
<PAGE> 66
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 11 - EXECUTIVE EMPLOYMENT AGREEMENT (CONTINUED)
Prior to the commencement of operations, the Company has been paying
interest on the $147,000 at a rate of 1% over prime to the President's
former employer. Pursuant to the former employer's agreement, 90 days
after the President terminated his employment with that former
employer, the former employer recorded the $147,000 as a loan, to the
President, secured by the $1,000,000 death benefit and an assignment
of the cash surrender value. When the agreement terminates, the
President will reimburse the Company for the $147,000 it paid for the
policy. The cash surrender value of the policy will secure the
$147,000. The President is not required to pay the Company or the Bank
any interest with respect to this amount.
NOTE 12 - NON-STATUTORY OPTIONS GRANTED UNDER THE EMPLOYMENT AGREEMENT
The Company is committed to grant the President 50,000 non-statutory
options to purchase its common stock at $10 per share, vesting at
10,000 shares per year at the opening of the Bank and on each of the
next four anniversaries of the Bank's opening. The Company has
reserved 50,000 shares for issuance under this agreement.
NOTE 13 - STOCKHOLDER'S EQUITY
The authorized capital stock of the Company presently consists of
10,000,000 shares of common stock, par value $.01 per share, and
2,000,000 shares of preferred stock, par value $.01 per share. As of
April 30, 1999, the Company has sold 500 shares of common stock for an
aggregate of $5,000. There were no shares of preferred stock issued or
outstanding.
The holders of common stock are entitled to one vote for each share of
record held on all matters voted upon by stockholders. Each share of
outstanding common stock is entitled to participate equally in any
distribution of net assets made to the stockholders in liquidation,
dissolution, or winding down of the Company and is entitled to
participate equally in dividends as and when declared by the Company's
Board of Directors.
The Board of Directors is authorized to fix or alter the rights,
preferences, privileges and restrictions of any wholly unissued series
of preferred stock, including the dividend rights, original issue
price, conversion rights, voting rights, terms of redemption,
liquidation preferences, and the number of shares constituting any
such series and the designation thereof and to increase or decrease
the number of shares of such series subsequent to the issuance of
shares of such series (but not below the number of shares then
outstanding). The Board of Directors, without shareholder approval,
can issue preferred stock, which could adversely affect the voting
power of the shareholders of common stock.
F-11
<PAGE> 67
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 14 - YEAR 2000 SYSTEMS COSTS
The Company expects to utilize software and related technologies
throughout its operations that may be affected by the date change in
the year 2000. The Company is in the process of evaluating the full
scope and related costs to insure that the Company's systems will meet
its internal needs and those of its customers. However, the Company
cannot measure the impact that the Year 2000 issue will have on its
investments, vendors, suppliers, customers and other parties with whom
it expects to conduct business.
NOTE 15 - SUBSEQUENT EVENTS
During May 1999, the Company's board of directors voted to change its
name from Coastal BHC, Inc. to Coastal Community Group, Inc.
F-12
<PAGE> 68
We represent the accuracy of the information in this prospectus only as of
the date set forth on the cover page.
Until ____________, 1999, all dealers effecting transactions in these
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This delivery requirement is in addition to the
obligation of dealers to deliver a prospectus when acting as a dealer and with
respect to their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary................................................................................................1
Risk Factors......................................................................................................4
Recent Developments..............................................................................................11
Terms of the Offering............................................................................................11
Use of Proceeds..................................................................................................13
Return of Proceeds to Investors if Coastal Community Bank, Inc. Does Not Open for Business.......................14
Dividend Policy..................................................................................................15
Capitalization...................................................................................................16
Management's Discussion and Analysis of Financial Condition and Results of Operations............................17
Business.........................................................................................................17
Supervision and Regulation.......................................................................................24
Management.......................................................................................................31
Principal Shareholders...........................................................................................39
Certain Transactions.............................................................................................41
Description of Capital Stock.....................................................................................42
Shares Eligible for Future Sales.................................................................................45
Plan of Distribution.............................................................................................46
Legal Proceedings................................................................................................47
Legal Matters....................................................................................................47
Experts..........................................................................................................47
Available Information............................................................................................48
Index to Financial Statements...................................................................................F-1
</TABLE>
================================================================================
1,000,000 SHARES
COASTAL COMMUNITY GROUP, INC.
COAST PARTNERS SECURITIES, INC.
COMMON STOCK PROSPECTUS
___________, 1999
<PAGE> 69
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24: INDEMNIFICATION OF OFFICERS AND DIRECTORS
As provided under Florida law, Coastal Community Group's directors
shall not be personally liable to Coastal Community Group or its stockholders
for monetary damages for the breach of the duty of care or any other duty owed
to Coastal Community Group as a director, unless the breach of or failure to
perform those duties constitutes: (i) a violation of criminal law, unless the
director had reasonable cause to believe that his conduct was lawful, or had no
reasonable cause to believe that his conduct was unlawful; (ii) a transaction
from which the director received an improper personal benefit; (iii) for
unlawful corporate distributions; (iv) an act or omission which involves a
conscious disregard for the best interests of the Corporation or which involves
willful misconduct; or (v) an act of recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property.
Coastal Community Group's articles of incorporation and bylaws provide
that Coastal Community Group shall indemnify each of its directors and officers
to the fullest extent permitted by law, and that the indemnity will include
advances for expenses and costs incurred by such director or officer related to
any action in regard to which indemnity is permitted. At present, Coastal
Community Group expects to purchase directors' and officers' liability insurance
covering its directors and officers against expenses and liabilities arising
from certain actions to which they may become subject by reason of having served
in such role.
ITEM 25: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered, other than Coast Partners Securities, Inc.'s discounts and
commissions, if any. All of the amounts shown are estimated except for the
registration fees of the SEC.
<TABLE>
<S> <C>
SEC Registration Fees.................................... $2,780.00
Blue Sky Registration Fees and Expenses.................. $1,950.00
Legal Fees and Expenses.................................. $70,000.00
NASD Filing Fees......................................... $1,500.00
Accounting Fees.......................................... $7,120.00
Printing Expenses........................................ $14,150.00
Advertising.............................................. $2,500.00
-----------
Total........................................... $100,000.00
===========
</TABLE>
ITEM 26: RECENT SALES OF UNREGISTERED SECURITIES
The only sale of stock of Coastal Community Group is to director Mr.
Bushman in the amount of 500 shares of common stock at $10.00 per share. The
sale to Mr. Bushman did not involve a public
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offering and Coastal Community Group claimed exemption from registration
pursuant to Section 4(2) of the Securities Act of 1933 and SEC Rule 506.
ITEM 27: EXHIBITS
The following exhibits are filed as part of this registration
statement:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
====================================================================================================================
<S> <C>
**1.1 Form of Managing Dealer Agreement between Coastal Community Group, Inc. and Coast
Partners Securities, Inc.
**1.2 Form of Escrow Agreement between Coastal Community Group, Inc., Coast Partners
Securities, Inc. and SunTrust Bank
*3.1 Articles of Incorporation of Coastal Community Group, Inc. filed on October 6, 1998
**3.1(a) Articles of Amendment of Articles of Incorporation of Coastal Community Group, Inc. filed on
May 6, 1999
*3.2 Bylaws of Coastal BHC, Inc.
**3.2(a) Amended and Restated Bylaws of Coastal BHC, Inc. adopted May 6, 1999
*4.1 Form of Specimen Common Stock Certificate
*4.2 Form of Warrant Plan adopted by Coastal Community Group, Inc. on December 9, 1998
**4.2(a) Form of Amendment to that Warrant Plan adopted by the Board of Directors of Coastal
Community Group, Inc. on December 9, 1998
*4.3 1998 Incentive Stock Option Plan and Agreement adopted by Coastal Community Group, Inc.
on December 9, 1998
*4.4 Form of Outside Director Stock Option Plan
*4.5 Indemnification Agreement by and between Coastal Community Group, Inc. and Hans C.
Mueller dated December 9, 1998
*4.6 Form of Restricted Non-Statutory Option Plan
**5.1 Opinion of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
*@10.1 Executive Employment Agreement between Coastal Community Group, Inc., Coastal
Community Bank and Hans C. Mueller dated as of September 1, 1998
**@10.1(a) Executive Employment Agreement between Coastal Community Group, Inc., Coastal
Community Bank and Hans C. Mueller dated as of September 1, 1998 and revised as of May
21, 1999
*10.2 Option to Lease between Coastal Community Group, Inc. and MCH Properties, Inc. dated
November 16, 1998
</TABLE>
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<PAGE> 71
<TABLE>
<S> <C>
**10.3 Option to Sublease between Coastal Community Group, Inc. and HEALTHSOUTH
Corporation dated June 4, 1999
**10.4 Form of Selected Dealer Agreement
**10.5 Form of Lock-Up Agreement
**10.6 Restated Promissory Note dated October 1, 1998 by Bushmans' Inc.
**10.7 Restated Promissory Note dated March 18, 1999 by Bushmans' Inc.
**10.8 Guaranty dated as of October 1, 1998 in the principal amount of $300,000.00
**10.9 Guaranty dated as of March 18, 1999 in the principal amount of $350,000.00
23.1 Consent of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. (included in Exhibit 5.1 hereto)
***23.2 Report of Independent Accountant, Morrison, Brown, Argiz & Company
*24. Power of Attorney (included on the signature page to this registration statement)
**27. Financial Data Schedule for Coastal Community Group, Inc.
</TABLE>
- ------------------
@ Contracts with executive officers
* Filed on Registration Statement on Form SB-2 filed with the U.S. Securities
and Exchange Commission on March 25, 1999
** Filed on First Amendment to Registration Statement on Form SB-2 filed with
the U.S. Securities and Exchange Commission on June 22, 1999.
*** Filed on Third Amendment to Registration Statement on Form SB-2 filed with
the U.S. Securities and Exchange Commission on August 20, 1999.
ITEM 28: UNDERTAKINGS
(d) Coastal Community Group will provide to Coast Partners Securities,
Inc. at the closing specified in the placement agreement, certificates in such
denominations and registered in such names as required by Coast Partners
Securities, Inc. to permit prompt delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or controlling
persons of Coastal Community Group pursuant to the foregoing provisions, or
otherwise, Coastal Community Group has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities,
other than the payment by Coastal Community Group of expenses incurred or paid
by a director, officer, or controlling person of Coastal Community Group in the
defense of any action, suit or proceeding, is asserted by such director,
officer, or controlling person in connection with the securities being
registered, Coastal Community Group 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.
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<PAGE> 72
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, Coastal Community Group, Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing this amendment on
Form SB-2 and authorized this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Miami, State of
Florida, on August 20, 1999.
COASTAL COMMUNITY GROUP, INC.
(Registrant)
By: /s/ Hans C. Mueller
------------------------------------
Hans C. Mueller, Chairman, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Hans C. Mueller as his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution for him in his
name, place, and stead in any and all capacities, to sign any and all
amendments, including post effective amendments, to this registration statement,
and to file same, with all exhibits thereto, and other documents in connection
therewith, with the SEC, granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<S> <C>
/s/ Hans C. Mueller /s/ Jerome J. Bushman
- -------------------------------------------- --------------------------------------------
Hans C. Mueller, Chairman, President Jerome J. Bushman, Director
and Chief Executive Officer, Chief Financial
and Accounting Officer
Date: August 20, 1999 Date: August 20, 1999
/s/ ALLEN M. VOELZ /s/ JAMES C. MERRILL
- -------------------------------------------- --------------------------------------------
Allen M. Voelz, Director James C. Merrill, Director
Date: August 20, 1999 Date: August 20, 1999
/s/ ALEX SOTO /s/ LINDA MARRACCINI, M.D.
- -------------------------------------------- --------------------------------------------
Alex Soto, Director Linda Marraccini, M.D., Director
Date: August 20, 1999 Date: August 20, 1999
</TABLE>
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EXHIBIT 23.2
MORRISON, BROWN, ARGIZ
+ COMPANY
Certified Public Accountants
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Registration Statement of Coastal Community Group,
Inc. on Form SB-2, of our report dated May 14, 1999, appearing in the
Prospectus, which is part of this Registration Statement, relating to the
financial statements of Coastal Community Group, Inc. as of December 31, 1998
and April 30, 1999. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ Morrison, Brown, Argiz & Company
Miami, Florida
August 18,1999
1001 Brickell Bay Drive, 9th Floor, Miami, Florida 33131 phone 305.373.5500 fax
305.373.0056 http://www.mba-cpa.com 1600 Stout Street, 11th Floor, Denver,
Colorado 80202 phone 303.615.9500 fax 303.615.9572
