SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1999
Commission file number: 0-25505
ATLANTIC BANCGROUP,INC.
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(Exact Name of Registrant as Specified in Its Charter)
Florida 59-3543956
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(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
710 North Third Street, Jacksonville Beach, Florida 32250
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(Address of Principal Executive Offices) (Zip Code)
Securities registered under Section 12(b) of the Exchange Act: None
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
Warrants to Purchase Common Stock at $10.00 per share
(Title of Class)
(904) 247-9494
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
The Issuer's revenues for its most recent fiscal year were $4,066,000.
The aggregate market value of the common stock of the issuer held by
non-affiliates of the issuer (469,365 shares) on March 1, 2000, was
approximately $4.7 million based on the initial bid quoted price of $10.00 per
share as quoted on the "Over the Counter Bulletin Board." For the purposes of
this response, directors, executive officers, and holders of 5% or more of the
issuer's common stock are considered the affiliates of the issuer at that date.
As of March 1, 2000, there were issued and outstanding 595,350 shares of the
issuer's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held on April 27, 2000, filed as Exhibit 22.1 herein, are incorporated into Part
III, Items 10 through 13 of this Annual Report on Form 10-KSB.
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ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I.......................................................................1
Item 1. Description of Business........................................1
General........................................................1
Lending Activities.............................................2
Deposit Activities.............................................3
Investments....................................................4
Correspondent Banking..........................................4
Interest and Usury.............................................4
Primary Service Area...........................................4
Competition....................................................5
Supervision and Regulation.....................................5
Common Stock..................................................10
Warrants......................................................10
Preferred Stock...............................................11
Indemnification of Directors and Officers.....................11
Employees.....................................................12
Statistical Profile and Other Financial Data..................12
Item 2. Description of Properties.....................................13
Item 3. Legal Proceedings.............................................13
Item 4. Submission of Matters to a Vote of Security Holders...........13
PART II.....................................................................14
Item 5. Market Price for the Registrant's Common Equity and
Related Stockholder Matters...............................14
Dividends.....................................................14
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................15
Selected Financial Data.......................................15
General.......................................................16
Forward-Looking Statements....................................16
Results of Operations.........................................17
Net Income (Loss).............................................17
Comparison of Years Ended December 31, 1999 and 1998..........19
Net Interest Income...........................................19
Provision for Credit Losses...................................19
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Page
Other Income..................................................19
Other Expenses................................................19
Loans Receivable..............................................20
Classification of Assets......................................21
Allowance for Credit Losses...................................22
Securities....................................................23
Deposits......................................................24
Capital Requirements/Ratios...................................27
Interest Rate Sensitivity.....................................29
Liquidity.....................................................30
Other Borrowings..............................................31
Contingencies and Uncertainties - Year 2000 Compliance
Matters.......................................................31
Future Accounting Requirements................................32
Impact of Inflation...........................................32
Item 7. Financial Statements..........................................33
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................52
PART III ..............................................................52
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.....52
Item 10. Executive Compensation........................................52
Item 11. Security Ownership of Certain Beneficial Owners and
Management....................................................52
Item 12. Certain Relationships and Related Transactions................52
Item 13. Exhibits, Financial Statement Schedules, and Reports of
Form 8-K......................................................53
SIGNATURES..................................................................54
EXHIBIT INDEX...............................................................55
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General
Bank Holding Company Reorganization. On April 3, 1999, the shareholders of
Oceanside Bank ("Oceanside") approved the Agreement and Plan of Reorganization
("Reorganization") whereby Oceanside became a wholly-owned subsidiary of
Atlantic BancGroup, Inc. ("Atlantic"). The Reorganization was completed on May
5, 1999, and was reported under the pooling-of-interests method of accounting.
Atlantic conducts holding company operations from facilities it owns. These
facilities are located at 710 North Third Street, Jacksonville Beach, Florida.
See "Description of Properties." Atlantic and its wholly-owned subsidiaries are
referred to hereinafter as Atlantic.
Oceanside Mortgage. On July 20, 1999, Oceanside Mortgage Group, Inc. ("Oceanside
Mortgage") was incorporated as a wholly-owned subsidiary of Atlantic for the
purpose of conducting mortgage banking operations. Oceanside Mortgage conducts
its operations from facilities leased from Atlantic at 710 North Third Street,
Jacksonville Beach, Florida. See "Description of Properties."
Oceanside Bank. Oceanside Bank, a Florida state bank, was formed in March, 1997,
and operates as a community bank in its primary service area ("PSA"), providing
general commercial banking services to businesses and individuals in the
community it serves. The principal business of Oceanside is to receive demand
and time deposits from the public and to make loans and other investments.
Oceanside operates from a main office located at 1315 South Third Street,
Jacksonville Beach, Florida, and a branch office located at 560 Atlantic
Boulevard, Neptune Beach, Florida. See "Description of Properties." Oceanside
draws most of its customer deposits and conducts a significant portion of its
lending transactions from and within its PSA in the "beaches area" of
Jacksonville, Florida. See "Description of Business/Primary Service Area."
Oceanside operates as a locally-owned and operated institution that emphasizes
providing prompt, efficient, and personalized service to individuals, small and
medium-sized businesses, professionals and other local organizations. Generally,
customers have one account officer to serve all of their banking needs and have
ready access to senior management when necessary. In addition, a committee of
the board of directors is responsible for maintaining a visible profile for
Oceanside in the local community. Because the officers and directors have
established reputations in the local community, they believe they are able to
actively promote Oceanside within the PSA.
Oceanside's principal strategy is to:
o Expand its commercial and small business customer base within the PSA;
o To make real estate mortgage loans within the PSA, as well as
throughout Duval County; and
o Expand its consumer loan base within the PSA.
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Oceanside believes that the most profitable deposit relationships are
characterized by high deposit balances, low frequency of transactions and low
distribution requirements. Oceanside believes that a community bank with local
management is well-positioned to establish these relationships with smaller
commercial customers and households. Oceanside aggressively markets its high
quality and innovative services to the customer.
The principal sources of funds for Oceanside's loans and other investments are
demand, time, savings, and other deposits, amortization and prepayment of loans,
sales to other lenders or institutions of loans or participations in loans, fees
received from other lenders or institutions for servicing loans sold to such
lenders or institutions and borrowings. The principal sources of income for
Oceanside are interest and fees collected on loans, including fees received for
servicing loans sold to other lenders or institutions, and to a lesser extent,
interest and dividends collected on other investments. The principal expenses of
Oceanside are interest paid on savings and other deposits, interest paid on
other borrowings of Oceanside, employee compensation, office expenses, and other
overhead and operational expenses. Oceanside offers several deposit accounts,
including demand deposit accounts, negotiable order of withdrawal accounts
("NOW" and "Super-NOW" accounts), money market accounts, certificates of
deposit, and various retirement accounts. In addition, Oceanside has joined an
electronic banking network so that its customers may use the automated teller
machines (the "ATMs") of other financial institutions and operates a drive-in
teller service and 24-hour depository.
Management of Oceanside focuses its efforts on filling the void created by the
increasing number of locally-owned community banks that have been acquired by
large regional holding companies, negatively impacting the personal nature of
the delivery, quality, and availability of banking services available in the PSA
and surrounding areas.
Lending Activities
Atlantic offers a wide range of loans to individuals and small businesses and
other organizations that are located in, or conduct a substantial portion of
their business in, Atlantic's market area. Atlantic's consolidated total loans
at December 31, 1999 were $41.0 million, or 75.8% of total Atlantic consolidated
assets. The interest rates charged on loans vary with the degree of risk,
maturity, and amount of the loan, and are further subject to competitive
pressures, money market rates, availability of funds, and government
regulations. Atlantic has no foreign loans or loans for highly leveraged
transactions.
Atlantic's loans are concentrated in three major areas: commercial loans, real
estate loans, and consumer loans. A majority of Atlantic's loans are made on a
secured basis. As of December 31, 1999, approximately 56.7% of Atlantic's
consolidated loan portfolio consisted of loans secured by mortgages on real
estate, of which approximately 33.2% of the total loan portfolio is secured by
commercial real estate properties.
Atlantic's real estate loans are secured by mortgages and consist primarily of
loans to individuals and businesses for the purchase, improvement of, refinance
of, or investment in real estate and for the construction of single-family
residential units or the development of single-family residential building lots.
These real estate loans may be made at fixed or variable interest rates.
Atlantic generally does not make fixed-rate commercial real estate loans for
terms exceeding three years. Loans in excess of three years are generally
adjustable rate loans. Atlantic's residential real estate
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loans generally are repayable in monthly installments, based on up to a 30-year
amortization schedule, with variable interest rates.
Atlantic's commercial loan portfolio includes loans to individuals and
small-to-medium-sized businesses located primarily in Duval and St. Johns
counties for working capital, equipment purchases, and various other business
purposes. A majority of commercial loans are secured by real estate, equipment,
or similar assets, but these loans may also be made on an unsecured basis.
Commercial loans may be made at variable or fixed rates of interest. Commercial
lines of credit are typically granted on a one-year basis, with loan covenants.
Other commercial loans with terms or amortization schedules of longer than one
year will normally be made at interest rates which vary with the prime lending
rate and will become payable in full in three to five years. Commercial loans
not secured by real estate amounted to approximately 30.5% of Atlantic's total
loan portfolio as of December 31, 1999.
Atlantic's consumer loan portfolio consists primarily of loans to individuals
for various consumer purposes, but includes some business purpose loans which
are payable on an installment basis. The majority of these loans are for terms
of less than five years and are secured by liens on various personal assets of
the borrowers; however, consumer loans may also be made on an unsecured basis.
Consumer loans are made at fixed and variable interest rates, and are often
based on up to a five-year amortization schedule.
For additional information regarding Atlantic's loan portfolio, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Loan originations are derived from a number of sources. Loan originations can be
attributed to direct solicitation by Atlantic's loan officers, existing
customers and borrowers, advertising, walk-in customers and, in some instances,
referrals from brokers.
Certain credit risks are inherent in making loans. These include prepayment
risks, risks resulting from uncertainties in the future value of collateral,
risks resulting from changes in economic and industry conditions, and risks
inherent in dealing with individual borrowers. In particular, longer maturities
increase the risk that economic conditions will change and adversely affect
collectibility. Atlantic attempts to minimize credit losses through various
means. In particular, on larger loans, Atlantic generally relies on the cash
flow of a debtor as the source of repayment and secondarily on the value of the
underlying collateral. In addition, Atlantic attempts to utilize shorter loan
terms in order to reduce the risk of a decline in the value of such collateral.
Deposit Activities
Deposits are the major source of Atlantic's funds for loans and other investment
activities. Atlantic considers the majority of its regular savings, demand, NOW
and money market deposit accounts to be core deposits. These accounts comprised
approximately 68.7% of Atlantic's consolidated total deposits at December 31,
1999. Approximately 31.3% of Atlantic's consolidated deposits at December 31,
1999, were certificates of deposit. Generally, Atlantic attempts to maintain the
rates paid on its deposits at a competitive level. Time deposits of $100,000 and
over made up approximately 10.3% of Atlantic's consolidated total deposits at
December 31, 1999. For additional information regarding Atlantic's deposit
accounts, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
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Investments
Atlantic invests a portion of its assets in U.S. Government agency obligations,
certificates of deposit, collateralized mortgage obligations ("CMO's"), and
federal funds sold. Atlantic's investments are managed in relation to loan
demand and deposit growth, and are generally used to provide for the investment
of excess funds at minimal risks while providing liquidity to fund increases in
loan demand or to offset fluctuations in deposits.
Atlantic's total investment portfolio may be invested in U.S. Treasury and
general obligations of its agencies because such securities generally represent
a minimal investment risk. Occasionally, Atlantic purchases certificates of
deposits of national and state banks. These investments may exceed $100,000 in
any one institution (the limit of FDIC insurance for deposit accounts). CMO's
are secured with Federal National Mortgage Association ("FNMA") and General
National Mortgage Association ("GNMA") mortgage-backed securities and generally
have a shorter life than the stated maturity. Federal funds sold is the excess
cash Atlantic has available over and above daily cash needs. This money is
invested on an overnight basis with approved correspondent banks.
Atlantic monitors changes in financial markets affecting its portfolio
investments. Atlantic also monitors its daily cash position to ensure that all
available funds earn interest at the earliest possible date.
Correspondent Banking
Correspondent banking involves one bank providing services to another bank which
cannot provide that service for itself from an economic or practical standpoint.
Atlantic is required to purchase correspondent services offered by larger banks,
including check collections, purchase of federal funds, security safekeeping,
investment services, coin and currency supplies, overline and liquidity loan
participations and sales of loans to or participation with correspondent banks.
Atlantic sells loan participations to correspondent banks with respect to loans
which exceed Atlantic's lending limit.
Interest and Usury
Atlantic is subject to state and federal statutes that affect the interest rates
that may be charged on loans. These laws do not, under present market
conditions, deter Atlantic from continuing the process of originating loans.
Primary Service Area
Atlantic's PSA, which encompasses the easternmost portion of Duval County,
Florida, and the northeasternmost portion of St. Johns County, Florida, is
bounded by the St. Johns River to the north, State Road 210 in St. Johns County
to the south, the Atlantic Ocean to the east, and the Intracoastal Waterway in
Duval County and the Duval/St. Johns County line in St. Johns County to the
west. The PSA includes the communities and municipalities of Ponte Vedra Beach,
Jacksonville Beach, Atlantic Beach, Neptune Beach, Florida, and that portion of
the City of Jacksonville known as Mayport (the home of the Mayport U.S. Naval
Air Station). Duval and St. Johns Counties enjoy an abundant and educated work
force, attractive business costs, and a good relationship between the private
and public sectors.
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In general, commercial real estate in the PSA consists of small shopping centers
and office buildings. The type of residential real estate within the PSA varies,
with a number of condominiums and townhouses located along the beaches, a
greater concentration of apartments in the Mayport area and single-family
housing dispersed throughout the PSA. New residential growth in the PSA consists
primarily of working professionals with families. Over half of the population of
the PSA is between the ages of 15 and 44.
Atlantic caters to a base of local stockholders and customers. Because it is a
local organization, all policies and procedures are tailored to the local market
instead of to statewide or regional markets. This is not the case for the
majority of the financial institutions currently operating in the PSA.
Atlantic believes that the PSA is a desirable market in which to operate an
independent, locally-owned bank. Atlantic's broad base of shareholders and
customers from the beaches area of Jacksonville, and the favorable economic
environment of the PSA, should provide Atlantic the opportunity to gain market
share.
Competition
The business of banking is highly competitive. Atlantic competes with other
banks and credit unions in the PSA and with banks, savings and loan associations
and credit unions elsewhere in the Jacksonville market. As of December 31, 1999,
management believed there to be nine banks operating in the PSA, comprising a
total of 14 banking offices, and two credit unions.
Atlantic's competitive strategy with respect to the financial institutions
described above consists of:
o reviewing loan requests quickly with a locally-based loan committee;
o maintaining flexible but prudent lending policies;
o personalizing service by establishing long-term banking relationships
with its customers; and
o maintaining a strong ratio of employees to customers to enhance the
level of service.
Supervision and Regulation
Both Atlantic and Oceanside are subject to comprehensive regulation,
examination, and supervision by the Federal Reserve, the Florida Department of
Banking and Finance (the "Department") and the Federal Deposit Insurance
Corporation ("FDIC") and are subject to other laws and regulations applicable to
banks and bank holding companies. Such regulations include limitations on loans
to a single borrower and to Oceanside's directors, officers, and employees;
restrictions on the opening and closing of branch offices; the maintenance of
required capital and liquidity ratios; the granting of credit under equal and
fair conditions; disclosure of the costs and terms of such credit; and
restrictions as to permissible investments. Both are examined periodically by
the Federal Reserve, or the Department and the FDIC, each of whom will submit
periodic reports regarding its financial condition and other matters. These
agencies have a broad range of powers to enforce regulations under their
respective jurisdictions, and to take discretionary actions determined to be for
the protection of the safety and soundness of Atlantic and Oceanside, including
the institution of cease
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and desist orders and the removal of directors and officers.
Bank Holding Company Regulation. Atlantic is a bank holding company, registered
with the Federal Reserve under the BHC Act. As such, Atlantic is subject to the
supervision, examination and reporting requirements of the BHC Act and the
regulations of the Federal Reserve. The BHC Act requires that a bank holding
company obtain the prior approval of the Federal Reserve before (i) acquiring
direct or indirect ownership or control of more than 5% of the voting shares of
any bank, (ii) taking any action that causes a bank to become a subsidiary of
the bank holding company, or (iii) merging or consolidating with any other bank
holding company.
The BHC Act generally prohibits a bank holding company from engaging in
activities other than banking, or managing or controlling banks or other
permissible subsidiaries, and 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. For example, factoring accounts
receivable, acquiring or servicing loans, leasing personal property, conducting
securities brokerage activities, performing certain data processing services,
acting as agent or broker in selling credit life insurance and certain other
types of insurance in connection with credit transactions, and certain 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.
Gramm-Leach-Bliley Act. On November 12, 1999, President Clinton signed into law
the Gramm-Leach-Bliley Act which reforms and modernizes certain areas of
financial services regulation. The law permits the creation of new financial
services holding companies that can offer a full range of financial products
under a regulatory structure based on the principle of functional regulation.
The legislation eliminates the legal barriers to affiliations among banks and
securities firms, insurance companies, and other financial services companies.
The law also provides financial organizations with the opportunity to structure
these new financial affiliations through a holding company structure or a
financial subsidiary. The new law reserves the role of the Federal Reserve Board
as the supervisor for bank holding companies. At the same time, the law also
provides a system of functional regulation which is designed to utilize the
various existing federal and state regulatory bodies.
The law also includes a minimum federal standard of financial privacy. Financial
institutions are required to have written privacy policies that must be
disclosed to customers. The disclosure of a financial institution's privacy
policy must take place at the time a customer relationship is established and
not less than annually during the continuation of the relationship. The act also
provides for the functional regulation of bank securities activities. The law
repeals the exemption that banks were afforded from the definition of "broker,"
and replaces it with a set of limited
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exemptions that allow the continuation of some historical activities performed
by banks. In addition, the act amends the securities laws to include banks
within the general definition of dealer. Regarding new bank products, the law
provides a procedure for handling products sold by banks that have securities
elements. In the area of CRA activities, the law generally requires that
financial institutions address the credit needs of low-to-moderate income
individuals and neighborhoods in the communities in which they operate. Bank
regulators are required to take the CRA ratings of a bank or of the bank
subsidiaries of a holding company into account when acting upon certain branch
and bank merger and acquisition applications filed by the institution. Under the
law, financial holding companies and banks that desire to engage in new
financial activities are required to have satisfactory or better CRA ratings
when they commence the new activity.
Most of the provisions of the law take effect on March 11, 2000, with other
provisions being phased in over a one to two year period thereafter. It is
anticipated that the effects of the law, while providing additional flexibility
to bank holding companies and banks, may result in additional affiliation of
different financial services providers, as well as increased competition,
resulting in lower prices, more convenience, and greater financial products and
services available to consumers.
FDIC Regulations. Oceanside's deposit accounts are insured by the Bank Insurance
Fund ("BIF") of the FDIC up to a maximum of $100,000 per insured depositor. The
FDIC issues regulations, conducts periodic examinations, requires the filing of
reports, and generally supervises the operations of its insured banks. The
approval of the FDIC is required prior to a merger or consolidation or the
establishment or relocation of an office facility. This supervision and
regulation is intended primarily for protection of depositors and not
stockholders.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") imposed major regulatory reforms, stronger capital standards for
savings and loan associations and stronger civil and criminal enforcement
provisions. FIRREA 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 in connection with:
o the default of a commonly controlled FDIC insured depository
institution; or
o any assistance provided by the FDIC to a commonly controlled FDIC
insured institution in danger of default.
Also important in terms of its effect on banks has been the deregulation of
interest rates paid by banks on deposits and the types of deposit accounts that
may be offered by banks. Most regulatory limits on permissible deposit interest
rates and minimum deposit amounts expired several years ago. The effect of the
deregulation of deposit interest rates generally has been to increase the costs
of funds to banks and to make their costs of funds more sensitive to
fluctuations in money market rates. A result of the pressure on bank's interest
margins due to deregulation has been a trend toward expansion of services
offered by banks and an increase in the emphasis placed on fee or noninterest
income.
Banks are subject to the provisions of the Community Reinvestment Act of 1977
(the "CRA"). Under the terms of the CRA, the appropriate federal bank regulatory
agency is required, in connection with its examination of a bank, to assess such
bank's record in meeting the credit needs of the community served by that bank,
including low- and moderate-income neighborhoods. The
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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 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
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
substantially revised the depository institution regulatory and funding
provisions of the Federal Deposit Insurance Act. Amount other things, FDICIA
requires the federal banking regulators to take prompt corrective action in
respect of depository institutions that do not meet minimum requirements. FDICIA
establishes five capital tiers: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly capitalized," and "critically
undercapitalized." A depository institution is well capitalized if it
significantly exceeds the minimum level required by regulation for each relevant
capital measure, adequately capitalized if it meets each such measure,
undercapitalized if it fails to meet any such measure, significantly
undercapitalized if it is significantly below such measure, and critically
undercapitalized if it fails to meet any critical capital level set forth in
regulations. A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) if the depository institution
would thereafter be undercapitalized. In addition, undercapitalized depository
institutions are subject to growth limitations and are required to submit
capital restoration plans. The federal banking agencies may not accept a capital
plan without determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the depository
institution's capital. If a depository fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks. Critically
undercapitalized depository institutions are subject to appointment of a
receiver or conservator.
FDICIA provides authority for special assessments against insured deposits and
for the development of a general risk-based insurance assessment system. The
risk-based insurance assessment system would be used to calculate a depository
institution's semi-annual deposit insurance assessment based on the probability
(as defined in the statute) that the BIF will incur a loss with respect to the
institution. In accordance with FDICIA, the FDIC implemented a transitional
risk-based insurance premium system. Since implementation, average assessments
have fallen to the point where most banks, including Oceanside, paid no
assessments in 1998 or 1999.
FDICIA also contains various provisions related to an institution's interest
rate risk. Under certain circumstances, an institution may be required to
provide additional capital or maintain higher capital
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levels to address interest rate risks.
In addition, the FDIC has adopted a minimum leverage ratio of 3%. The minimum
leverage ratio is the ratio of common equity, retained earnings, and certain
amounts of perpetual preferred stock (after subtracting goodwill and after
making certain other adjustments) to the total assets of the institution.
Generally, banking organizations are expected to operate well above the minimum
required capital level of 3%, unless they meet certain specified criteria,
including that they have the highest regulatory ratings. Most banking
organizations are required to maintain a leverage ratio of 3% plus an additional
cushion of 1% to 2%. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels
without significant reliance upon intangible assets.
Dividend Restrictions. In addition to dividend restrictions placed on Oceanside
by the FDIC based on Oceanside's minimum capital requirements, the Florida
Financial Institutions Code prohibits the declaration of dividends in certain
circumstances. Section 658.37, Florida Statutes, prohibits the declaration of
any dividend until a bank has charged off bad debts, depreciation and other
worthless assets, and has made provision for reasonably-anticipated future
losses on loans and other assets. Such dividend is limited to the aggregate of
the net profits of the dividend period combined with a bank's retained net
profits of the preceding two years. A bank may declare a dividend from retained
net profits accruing prior to the preceding two years with the approval of the
Department. However, a bank will be required, prior to the declaration of a
dividend on its common stock, to carry 20% of its net profits for such preceding
period as is covered by the dividend to its surplus fund, until the surplus fund
equals at least the amount of the bank's common and preferred stock then issued
and outstanding. In no event may a bank declare a dividend at any time in which
its net income from the current year, combined with the retained net income from
the preceding two years is a loss or which would cause the capital accounts of
the bank to fall below the minimum amount required by law, regulation, order, or
any written agreement with the Department or the FDIC.
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 Atlantic 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 and the FDIC before
acquiring control of any state bank (such as Oceanside). Upon receipt of such
notice, the FDIC may approve or disapprove the acquisition. The Change in Bank
Control Act creates a rebuttable presumption of control if a member or group
acquires a certain percentage or more 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.
Riegle-Neal Interstate Banking and Branching Efficiency Act. The Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
Act") provides that as of June 1, 1997, adequately capitalized and managed banks
will be able to engage in interstate branching by merging banks in different
states, including Florida.
9
<PAGE>
Effect of Governmental Policies. The earnings and businesses of Atlantic and
Oceanside 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.
The foregoing is necessarily a general description of certain provisions of
federal and state law and does not purport to be complete. Proposals to change
the laws and regulations governing the banking industry are frequently
introduced in Congress, in the state legislatures, and before the various bank
regulatory agencies. The likelihood and timing of any such changes and the
impact such changes might have on Atlantic or Oceanside cannot be determined at
this time.
Common Stock
Atlantic has 10,000,000 shares of its $0.01 par value common stock authorized.
As of March 1, 2000, 595,350 shares were outstanding. The holders of common
stock are entitled to one vote for each share held of record on all matters to
be voted on by stockholders. Upon liquidation, dissolution, or winding-up of
Atlantic, the holders of common stock are entitled to receive pro rata all
assets remaining legally available for distribution to shareholders. The holders
of common stock have no right to cumulate their votes in the election of
directors. The common stock has no preemptive or other subscription rights, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such shares. All the outstanding shares of common stock are fully
paid and non-assessable.
The holders of common stock are entitled to receive such dividends, if any, as
may be declared from time to time by the board of directors in its discretion
from funds legally available therefor. Significant restrictions apply to
Oceanside's ability to pay dividends to Atlantic and, thereby, limit Atlantic's
ability to pay dividends to its shareholders under applicable banking laws and
regulations. See "Supervision and Regulation, Dividend Restrictions." Atlantic
and Oceanside have not declared or paid any dividends on the common stock to
date and do not anticipate paying any cash dividends on its common stock in the
foreseeable future. Atlantic anticipates that the earnings of Atlantic will be
retained by Atlantic during the foreseeable future and held for purposes of
enhancing Atlantic's capital.
Warrants
Each subscriber to the initial offering of Atlantic's common stock received
warrants to purchase common stock ("warrants") equal to the number of shares of
common stock purchased. Each warrant gives the holder the right to purchase one
share of common stock at $10.00 per share at any time during the five (5) year
period beginning on the date of the opening of Atlantic; provided, however, that
at any time after one year following the date Atlantic commences business, the
board of directors of Atlantic, by written notice to each warrant holder may
shorten the period during which the warrant may be exercised to a period ending
no sooner than 30 days after such notice is mailed. The warrants may be
exercised by delivery to Atlantic of a check for the purchase price of the
number of shares of common stock being purchased or by authorizing Atlantic to
retain whole shares of common stock which would otherwise by issuable upon
exercise of the warrant having a fair market value equal
10
<PAGE>
to the exercise price. The warrants are separately transferable. Holders of the
warrants do not have any of the rights or privileges of shareholders of Atlantic
(except to the extent they otherwise own common stock) prior to the exercise of
the warrants. The warrants are entitled to the benefit of adjustments in the
exercise price and in the number of shares of common stock deliverable upon the
exercise thereof upon the occurrence of certain events, including stock
dividends, stock splits, reclassification, reorganizations, consolidations, and
mergers. The foregoing is a summary of the principal terms of the warrants and
does not purport to be complete.
Preferred Stock
In addition to the 10,000,000 shares of authorized common stock, Atlantic's
articles of incorporation authorize up to 2,000,000 shares of preferred stock.
The board of directors are further authorized to establish designations, powers,
preferences, rights, and other terms for preferred stock by resolution. No
shares of preferred stock have been issued.
Indemnification of Directors and Officers
Atlantic's Bylaws afford indemnification rights to its officers and directors to
the fullest extent permitted or required by the Florida Business Corporation
Act.
Under Section 607.0850 of the Florida Business Corporation Act, officers and
directors of a Florida corporation may be entitled to indemnification by the
corporation against liability incurred in connection with any threatened,
pending, or completed action, suit, or other type of proceeding, whether civil,
criminal, administrative, or investigative and whether formal or informal;
provided, however, that such officer or director acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Such indemnification
includes obligations to pay a judgment, settlement, penalty, fine, and expenses
actually and reasonably incurred with respect to a proceeding. In addition,
Florida law provides that officers and directors shall be indemnified by a
Florida corporation against expenses actually and reasonably incurred by such
officer or director, to the extent that such officer or director has been
successful on the merits or otherwise in defense of any proceeding (as defined
in Section 607.0850) or in defense of any claim, issue, or matter therein.
In addition, Section 607.0831 of the Florida Business Corporation Act provides
that a director is not personally liable for monetary damages to a corporation
or any other person for any statement, vote, decision, or failure to act,
regarding corporate management or policy, by a director, unless such director
breached or failed to perform his duties as a director and such breach or
failure to perform constitutes:
o a violation of the criminal law, unless the director had reasonable
cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful;
o a transaction from which the director derived an improper personal
benefit, either directly or indirectly;
o a circumstance involving a director's liability for unlawful
distributions under the Florida Business Corporation Act;
11
<PAGE>
o in proceedings by or in the right of the corporation to procure a
judgment or by or in the right of a shareholder, conscious disregard
for the best interest of the corporation, or willful misconduct; or
o in a proceeding by or in the right of someone other than the
corporation or a shareholder, 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.
Employees
Atlantic and its wholly-owned subsidiaries have approximately 27 full-time
employees and 3 part-time employees. No significant changes in the number of its
full-time employees are currently anticipated. Because Atlantic believes that a
primary deficiency of large regional banks is the constant turnover of personnel
and therefore a lack of continuing personal relationships with local customers,
Atlantic's goal is to maintain a competently trained staff of local bankers who
have settled in the community on a permanent basis. Atlantic allocates funding
for continuing on-the-job and educational training, and personnel are encouraged
to enroll in various banking courses and other seminars to improve their overall
knowledge of the banking business.
Statistical Profile and Other Financial Data
Reference is hereby made to the statistical and financial data contained in the
section captioned "Management's Discussion and Analysis of Financial Condition
and Results of Operations," for statistical and financial data providing a
review of Atlantic's business activities.
12
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTIES.
On October 29, 1996, Oceanside purchased from an unaffiliated entity the
two-story, 3,100 square-foot building at 1315 South Third Street, Jacksonville
Beach, Florida, as its main office ("Main Office"). The Main Office includes
three inside teller stations, four drive-up teller windows, an automated teller
machine, and on-site parking. The Main Office is the former home of a Barnett
Bank branch office. Oceanside purchased the facility for $850,000 and used a
portion of the proceeds of the initial offering of Atlantic's common stock to
add 2,200 square feet to the Facility. Oceanside acquired the Main Office with
funds drawn on a line of credit with Columbus Bank and Trust Company, which was
repaid out of the proceeds of the offering.
On June 3, 1998, Oceanside purchased from SouthTrust Bank, N.A., a 1,968 square
foot building located at 560 Atlantic Boulevard, Neptune Beach, Florida. This
facility was formerly a branch office of SouthTrust Bank, N.A. Oceanside
purchased this building for $426,650 and spent $49,963 on renovations and
upgrades. This facility includes two offices, three inside teller windows,
general lobby space, three drive-up teller windows, an ATM, and on-site parking.
The current capital structure of Oceanside supported this purchase.
On August 13, 1999, Atlantic purchased from an unaffiliated individual, a 4,960
square foot office building located at 710 Third Street North, Jacksonville
Beach, Florida. The building serves as the location for Oceanside's operations
center, Oceanside Mortgage, and holding company offices. Atlantic purchased this
building for $540,000 and spent $50,576 on renovations and upgrades. This
facility includes twelve offices and on-site parking. Atlantic acquired this
facility with funds drawn on an existing line of credit with Columbus Bank and
Trust Company.
The Main Office and branch facility are centrally located within the PSA and are
within convenient travel distance to the concentration of the residential
population and to areas of major commercial activity within the PSA. Using the
existing road system within the PSA, residents and daytime inhabitants in and
near the PSA are able to access both locations by means of two major north/south
roads and four east/west roads. Third Street/A1A, on which Oceanside's Main
Office is located, stretches north from St. Johns County to Mayport, and is the
main north-south thoroughfare in the PSA. In addition, Beach Boulevard, Atlantic
Boulevard, and J. Turner Butler Boulevard provide convenient travel to the
facilities for residents and businesses located west of the PSA, including
downtown Jacksonville.
ITEM 3. LEGAL PROCEEDINGS.
There are no material proceedings to which Atlantic or its subsidiaries is a
party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of Atlantic security holders during the
fourth quarter of the year ended December 31, 1999.
13
<PAGE>
PART II
ITEM 5 . MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Prior to October 28, 1999, the shares of Atlantic common stock were not actively
traded, and such trading activity, as it occurred, took place in privately
negotiated transactions. On October 28, 1999, Atlantic's common stock was
approved for trading on the "Over-the-Counter Bulletin Board," with the stock
price quoted on the "electronic pink sheets." The initial bid quote was $10.00
per share.
On March 1, 2000, the first trading activity for Atlantic's common stock was
reported as follows
Open High Low Close Volume
---- ---- --- ----- ------
$11.50 $11.9844 411.50 $11.9844 4,000
Atlantic has engaged a transfer agent to maintain the record keeping for its
common stock and Atlantic is not aware of the high and low trading prices of its
common stock during 1998 and 1999. As of March 1, 2000, there were 595,350
shares of common stock and 593,510 warrants outstanding and approximately 800
holders of record of common stock.
Dividends
Atlantic anticipates that for the foreseeable future, earnings will be retained
for the development of its business. Accordingly, Atlantic does not anticipate
paying dividends on the common stock in the foreseeable future. The payment of
future dividends will be at the sole discretion of Atlantic's board of directors
and will depend on, among other things, future earnings, capital requirements,
the general financial condition of Atlantic, and general business conditions.
14
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's discussion and analysis of earnings and related financial data are
presented herein to assist investors in understanding the financial condition of
Atlantic at, and results of operations for Atlantic for, the periods ended,
December 31, 1999 and 1998. This discussion should be read in conjunction with
the financial statements and related footnotes of Atlantic presented elsewhere
herein.
Selected Financial Data (dollars and shares in thousands)
<TABLE>
<CAPTION>
At or for the
Period Ended December 31,
---------------------------------------
1999 1998 1997
---- ---- ----
Statement of Operations Data:
<S> <C> <C> <C>
Total interest income $ 3,704 $ 2,287 $ 346
Total interest expense 1,210 867 85
Net interest income before provision for credit losses 2,494 1,420 261
Provision for credit losses 221 334 186
Net interest income after provision for credit losses 2,273 1,086 75
Noninterest income 362 196 33
Noninterest expense 2,167 1,450 501
Cumulative effect of a change in accounting principle (59) -- --
Income tax benefit (90) -- --
Net income (loss) 499 (168) (393)
Balance Sheet Data:
Total assets $ 54,161 $ 45,571 $ 18,314
Earning assets 47,144 38,977 14,688
Investment securities 6,109 7,858 2,072
Loans 40,935 25,998 9,269
Allowance for credit losses 738 520 186
Deposit accounts 43,889 40,374 13,020
Stockholders' equity 5,404 5,050 5,265
Share Data:
Basic earnings per share $ 0.84 $ (0.28) $ (0.70)
Book value per share (period end) $ 9.08 $ 8.49 8.85
Common shares outstanding (period end) 595 595 595
Weighted average shares outstanding 595 595 560
Performance Ratios:
Return on average assets 1.06% -0.55% -7.38%
Return on average equity 9.83% -3.27% -17.20%
Interest-rate spread during the period 5.03% 4.31% 4.46%
Net interest margin 5.96% 5.31% 6.20%
Noninterest expenses to average assets 4.59% 4.71% 9.41%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Asset Quality Ratios:
<S> <C> <C> <C>
Allowance for credit losses to period end loans 1.80% 2.00% 2.01%
Net charge-offs to average loans 0.01% -- --
Nonperforming assets to period end loans -- -- --
Nonperforming assets to period end total assets -- -- --
Capital and Liquidity Ratios (Oceanside):
Average equity to average assets (Consolidated) 10.75% 16.69% 42.92%
Leverage (4.00% required minimum) 11.09% 12.92% 35.00%
Risk-based capital:
Tier 1 12.54% 17.42% 53.27%
Total 13.79% 18.68% 54.53%
Average loans to average deposits 80.92% 69.30% 66.14%
</TABLE>
15
<PAGE>
General
At December 31, 1999, Atlantic had grown to approximately $54.2 million in total
assets, $40.9 million in total loans, $43.9 million in deposits, and $5.4
million in stockholders' equity. The following discussion should be read in
conjunction with the preceding "Selected Financial Data" and Atlantic's
financial statements on pages 33 - 51 herein, and the other financial data
included elsewhere.
Atlantic's principal asset is its ownership of Oceanside. Accordingly,
Atlantic's results of operations are primarily dependent upon the results of
operations of Oceanside. Oceanside conducts commercial banking business
consisting of attracting deposits from the general public and applying those
funds to the origination of commercial, consumer, and real estate loans
(including commercial loans collateralized by real estate). Profitability
depends primarily on net interest income, which is the difference between
interest income generated from interest-earning assets (i.e., loans and
investments) less the interest expense incurred on interest-bearing liabilities
(i.e., customer deposits and borrowed funds). Net interest income is affected by
the relative amounts of interest-earning assets and interest-bearing
liabilities, and the interest rate earned and paid on these balances. Net
interest income is dependent upon Oceanside's interest-rate spread which is the
difference between the average yield earned on its interest-earning assets and
the average rate paid on its interest-bearing liabilities. When interest-earning
assets approximate or exceed interest-bearing liabilities, any positive interest
rate spread will generate net interest income. The interest rate spread is
impacted by interest rates, deposit flows, and loan demand. Additionally, and to
a lesser extent, Oceanside's profitability is affected by such factors as the
level of noninterest income and expenses, the provision for credit losses, and
the effective tax rate. Noninterest income consists primarily of service fees on
deposit accounts. Noninterest expense consists of compensation and employee
benefits, occupancy and equipment expenses, deposit insurance premiums paid to
the FDIC, and other operating expenses.
Forward-looking Statements
When used in this Form 10-KSB, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in Atlantic's market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in Atlantic's market
area and competition, that could cause actual results to differ materially from
those presently anticipated or projected. Readers should not place undue
reliance on any such forward-looking statements, which speak only as to the date
made. Readers are advised that the factors listed above could affect Atlantic's
financial performance and could cause Atlantic's actual results for future
periods to differ materially from any opinions or statements expressed with
respect to future periods in any current statements. Atlantic does not
undertake, and specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
16
<PAGE>
Results of Operations
Net Income (Loss)
Atlantic recorded net losses of $393,000 (a negative $0.70 per share) from
inception (July 21, 1997) to December 31, 1997, and $168,000 (a negative $0.28
per share) in 1998. The return on average assets in 1999 was 1.06% versus a
negative 7.38% for 1997, and a negative 0.55% for 1998. Amortization of
organizational costs, the provision for credit losses, and other overhead and
start-up costs associated with a de novo bank operation in its first two years
contributed to the losses recognized in 1997 and 1998. In 1999, Atlantic's
earnings were $499,000 (or $0.84 per share), which bring the total earnings
since inception to within $62,000 of break-even.
Table 1.1 - Rate/Volume Analysis (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------
1999 1998
--------------------------------- --------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
Earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans $33,236 $ 3,207 9.65% $17,688 $ 1,792 10.13%
Investment securities 6,903 374 5.42% 5,325 293 5.50%
Other interest-earning assets (1) 1,720 123 7.15% 3,738 202 5.40%
--------- -------- --------- --------
Total interest-earning assets 41,859 3,704 8.85% 26,751 2,287 8.55%
------- -------
Noninterest-earning assets 5,344 4,019
--------- ---------
Total assets $47,203 $30,770
======= =======
Interest-bearing liabilities:
Demand deposits $16,618 441 2.65% $ 9,643 247 2.56%
Savings 1,160 27 2.33% 363 7 1.93%
Certificates of deposit 13,074 690 5.28% 10,419 613 5.88%
Other borrowings 855 52 6.08% - - 0.00%
---------- --------- ---------- -----------
Total interest-bearing liabilities 31,707 1,210 3.82% 20,425 867 4.24%
-------- --------
Noninterest-bearing liabilities 10,421 5,211
Stockholders' equity 5,075 5,134
--------- ---------
Total liabilities and
stockholders' equity $47,203 $30,770
======= =======
Net interest income $ 2,494 $ 1,420
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Interest-rate spread (2) 5.03% 4.31%
===== =====
Net interest margin (3) 5.96% 5.31%
===== =====
Ratio of average interest-earning assets
to average interest-bearing liabilities 132.02% 130.97%
======= =======
</TABLE>
(1) Includes interest-bearing deposits due from other banks and federal
funds sold.
17
<PAGE>
(2) Interest-rate spread represents the difference between the average
yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(3) Net interest margin is net interest income divided by average
interest-earning assets.
Table 1.2 - Rate/Volume Analysis (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1999 vs. 1998
Increase (Decrease) Due to
-------------------------------
Rate Volume Volume Total
---- ------ ------ -----
Interest-earning assets:
<S> <C> <C> <C> <C>
Loans $ (85) $ 1,575 $ (75) $ 1,415
Investment securities (4) 86 (1) 81
Other interest-earning assets 65 (109) (35) (79)
------- ------- ------- -------
Total interest-earning assets (24) 1,552 (111) 1,417
------- ------- ------- -------
Interest-bearing liabilities:
Demand deposits 9 179 6 194
Savings 1 16 3 20
Certificates of deposit (63) 156 (16) 77
Other borrowings -- -- 52 52
------- ------- ------- -------
Total interest-bearing liabilities (53) 351 45 343
------- ------- ------- -------
Net interest income $ 29 $ 1,201 $ (156) $ 1,074
======= ======= ======= =======
</TABLE>
Table 2 - Weighted Average Yield or Rate:
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------
1999 1998
---- ----
Interest-earning assets:
<S> <C> <C>
Loans 9.65% 10.13%
Investment securities 5.42% 5.50%
Other interest-earning assets 7.15% 5.40%
All interest-earning assets 8.85% 8.55%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Interest-bearing liabilities:
NOW deposits 0.92% 0.92%
Money market deposits 3.96% 3.96%
Savings 2.33% 1.93%
Certificates of deposit 5.28% 5.88%
Other borrowings 6.08% 0.00%
All interest-bearing liabilities 3.82% 4.24%
Interest-rate spread 5.03% 4.31%
</TABLE>
18
<PAGE>
Comparison of Years Ended December 31, 1999 and 1998
Net Interest Income
Net interest income is Atlantic's primary source of operating income. Net
interest income is the difference between interest earned on loans and
securities and interest paid on deposits and other funding sources. The factors
that influence net interest income include changes in interest rates and changes
in the volume and mix of assets and liability balances.
Net interest income was $2,494,000 and $1,420,000 for 1999 and 1998,
respectively, an increase of 75.6% from 1998 to 1999, which in part was due to
the increase in average earning assets of 56.5%. The average balances, interest
income and expense, and the average rates earned and paid for assets and
liabilities are found in Tables 1 and 2 on the preceding pages.
During 1999 and 1998, the average yield on earning assets was 8.85% and 8.55%,
respectively, while the average cost of funds was 3.82% in 1999 and 4.24% in
1998. Atlantic's net interest margin rose from 5.31% in 1998 to 5.96% in 1999,
reflecting the favorable trends in interest rates earned versus rates paid. For
1999, the average loan-to-interest-earning deposit ratio rose 107.7% versus
86.6% in 1998, which improved earnings as the mix of interest-earning assets
shifted towards the higher yielding loans. At December 31, 1999, the
loan-to-interest-earning deposit ratio was 124.8%.
The favorable shifts in the mix of earning assets as well as the growth in loans
more than offset the decline in average yields on loans from 10.13% in 1998 to
9.65% in 1999.
Provision for Credit Losses
The provision for credit losses declined from $334,000 in 1998 to $221,000 in
1999, which reflects management's assessment of the needed level of the
allowance for credit losses as the loan growth begins to slow from the growth
experienced in 1997 and 1998.
Other Income
Other income increased in 1999 to $362,000 from $196,000 for 1998. This increase
reflects the growth in the number of deposit accounts. Income from service
charges on customer accounts accounted for approximately 78% and 68% of total
other income for the years ended 1999 and 1998, respectively.
Other Expenses
Other expenses totaled $2,167,000 for 1999 and $1,450,000 for 1998, or 4.59% and
4.71% of average assets for respective year ends. Salaries and employee benefits
accounted for approximately 47% of total other expenses for 1999 as opposed to
49% for 1998. Increases in other expenses reflect the opening of a new branch on
September 1, 1998, and total asset growth during 1999. The increase in other
expenses of 49.4% from 1998 to 1999 was less than the increases in total
interest income and other income of 62.0% and 84.7%, respectively, for the same
periods.
19
<PAGE>
Loans Receivable
Average loans receivable, before the allowance for credit losses were
$33,236,000 for the year ended 1999 as compared to $17,688,000 for 1998, an
increase of 87.9%. Management believes the growth in loans was directly
attributable to community acceptance, the reputations of our lending team, and
favorable economic conditions in our market area. Table 3 below provides an
analysis of Atlantic's loan distribution at the end of 1999 and 1998. Loans
which are secured by real estate include residential and nonresidential
mortgages, and home equity loans to individuals.
Table 3 - Loan Portfolio (in thousands)
For the Year
Ended December 31,
------------------
1999 1998
---- ----
Commercial and agricultural $ 12,501 $ 6,039
Real estate 23,283 16,853
Consumer and other loans 5,250 3,194
-------- --------
Total loans 41,034 26,086
Less:
Less, unearned income (99) (88)
Less, allowance for credit losses (738) (520)
-------- --------
$ 40,197 $ 25,478
======== ========
The following table shows the maturity of loans receivable.
Table 4 - Loan Maturities at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
1 Year 1 Through After
or Less 5 Years 5 Years Total
------- ------- ------- -----
<S> <C> <C> <C> <C>
Commercial and agricultural $ 5,499 $ 3,759 $ 3,243 $12,501
Real estate 6,944 4,638 11,701 23,283
Consumer and other loans 1,543 2,828 879 5,250
--------- --------- ---------- ---------
Total loans $13,986 $11,225 $15,823 $41,034
======= ======= ======= =======
Loans with maturities over one year:
Fixed rate $22,587
Variable rate 4,461
---------
Total maturities greater than one year $27,048
=======
</TABLE>
20
<PAGE>
Table 5 - Loans Originated and Repaid (in thousands):
Years Ended December 31,
------------------------
1999 1998
---- ----
Originations:
Commercial and agricultural loans $ 6,816 $ 7,778
Real estate loans 17,418 12,615
Consumer and other loans 4,096 5,723
-------- --------
Total 28,330 26,116
Principal reductions (13,382) (9,343)
-------- --------
Increase in loans $ 14,948 $ 16,773
======== ========
Classification of Assets
Generally, interest on loans accrues and is credited to income based upon the
principal balance outstanding. It is management's policy to discontinue the
accrual of interest income and classify a loan as nonaccrual when principal or
interest is past due 90 days or more and the loan is not adequately
collateralized, or when in the opinion of management, principal or interest is
not likely to be paid in accordance with the terms of the obligation. Consumer
installment loans are generally charged-off after 90 days of delinquency unless
adequately collateralized and in the process of collection. Loans are not
returned to accrual status until principal and interest payments are brought
current and future payments appear reasonably certain. Interest accrued and
unpaid at the time a loan is placed on nonaccrual status is charged against
interest income. Subsequent payments received are applied to the outstanding
principal balance.
Real estate acquired by Atlantic as a result of foreclosure or by deed in lieu
of foreclosure is classified as other real estate owned ("OREO"). OREO
properties are recorded at the lower of cost or fair value less estimated
selling costs, and the estimated loss, if any, is charged to the allowance for
credit losses at the time it is transferred to OREO. Further allowances for
losses in OREO are recorded at the time management believes additional
deterioration in value has occurred.
Management has adopted Statement of Financial Accounting Standards No. 114
("SFAS No. 114"), Accounting by Creditors for Impairment of a Loan, which
considers a loan to be impaired if it is probable that Atlantic will be unable
to collect all amounts due under the contractual terms of the loan agreement. If
a loan is considered impaired, its value generally should be measured based on
the present value of expected cash flows discounted at the loan's effective
interest rate. As a practical expedient, however, the loan's value may be based
on:
o the loan's market price; or
o the fair value of the loan's collateral, less discounted estimated
costs to sell, if the collateral is expected to be the sole source of
repayment.
21
<PAGE>
If the value of the loan is less than the recorded investment in the loan, a
loss should be recognized by recording a valuation allowance and a corresponding
increase to the provision for credit losses charged to operating expenses.
Situations may occur where:
o Atlantic receives physical possession of a debtor's assets regardless
of whether formal foreclosure proceedings have been initiated or
completed; or
o the debtor has effectively surrendered control of the underlying
collateral in contemplation of foreclosure.
These situations are referred to as "in-substance foreclosures." SFAS No. 114
recognizes the practical problems of accounting for the operation of an asset
the creditor does not possess, and states that a loan for which foreclosure is
probable should continue to be accounted for as a loan.
At December 31, 1999 and 1998, management had not observed any significant
problem loans in its portfolio. Loans past due for 30 days or more (but less
than 60 days) at December 31, 1999, and 1998, totaled $73,800 and $1,200,
respectively. At December 31, 1999, management had classified three loans
totaling approximately $29,000 as substandard.
At December 31, 1999 and 1998, there were no loans considered by management to
be impaired or in-substance foreclosed.
Allowance for Credit Losses
The amount charged to operations and the related balance in the allowance for
credit losses is based upon periodic evaluations of the loan portfolio by
management. These evaluations consider several factors including but not limited
to, current economic conditions, loan portfolio composition, prior credit loss
experience, trends in portfolio volume, and management's estimation of future
potential losses. Management believes that the allowance for credit losses is
adequate. Table 6 is an analysis of the allowance for credit losses for 1999 and
1998.
Table 6 - Allowance for Credit Losses (in thousands):
1999 1998
---- ----
Balance, at beginning of period $ 520 $ 186
Provision for credit losses 221 334
Loans charged off (8) --
Recoveries 5 --
----- -----
Balance, at end of period $ 738 $ 520
===== =====
The specific allocations of the allowance for credit losses are based on
management's evaluation of the risks inherent in the specific portfolios for the
dates indicated. Amounts in a particular category may be used to absorb losses
if another category allocation proves to be inadequate. Table 7 reflects the
allocations of the allowance for the years ended 1999 and 1998.
22
<PAGE>
Table 7 - Allocation of Allowance for Credit Losses (in thousands):
At December 31,
--------------------------------------------
1999 1998
----------------- ---------------------
% of % of
Loans to Loans to
Total Total
Amount Loans Amount Loans
Commercial and agricultural $ -- 30% $ -- 23%
Real estate -- 57 -- 65
Consumer and other loans -- 13 -- 12
Unallocated 738 0 520 0
---- ---- ---- ----
$738 100% $520 100%
==== ==== ==== ====
Highly leveraged transactions generally include loans and commitments made in
connection with recapitalizations, acquisitions, and leveraged buyouts, and
result in the borrower's debt-to-total assets ratio exceeding 75%. Atlantic had
no loans at December 31, 1999 and 1998, that qualified as highly leveraged
transactions.
Securities
Banks classify their investment securities as either "held-to-maturity" or
"available-for-sale." Securities classified as held-to-maturity are carried at
amortized cost and include those securities that a bank has the intent and
ability to hold to maturity. Securities classified as available-for-sale, which
are those securities that a bank intends to hold for an indefinite amount of
time, but not necessarily to maturity, are carried at fair value with the
unrealized holding gains or losses, net of taxes, reported as a component of the
stockholders' equity on a bank's balance sheet. At December 31, 1999 and 1998,
all of Atlantic's securities were classified as available-for-sale.
Tables 8.1 and 8.2 set forth the carrying amount of securities at the dates
indicated.
Table 8.1 - Carrying Value of Investment Securities (in thousands):
At December 31,
--------------------
1999 1998
---- ----
Securities available-for-sale:
Mortgage-backed securities (GNMA and FNMA) $5,938 $7,803
Other 171 55
------ ------
Balance, end of year $6,109 $7,858
====== ======
23
<PAGE>
Table 8.2 - Investment Securities at Amortized Cost (in thousands):
At December 31,
---------------
1999 1998
---- ----
Securities available-for-sale:
Mortgage-backed securities (GNMA and FNMA) $ 6,255 $ 7,850
Other 171 55
------- -------
Balance, end of year $ 6,426 $ 7,905
======= =======
Table 9 sets forth the maturities (excluding principal paydowns on
mortgage-backed securities) and the weighted average yields of securities by
contractual maturities at December 31, 1999 and 1998.
Table 9 - Analysis of Investment Securities (dollars in thousands)
<TABLE>
<CAPTION>
Due in Ten
Years or More Other
--------------------------- ---------------------
Average Average
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
At December 31, 1999:
Mortgage-backed securities
(GNMA and FNMA) $ 5,938 6.22% $ - -
Other - - 171 6.60%
------- -------
$ 5,938 6.22% $ 171 6.60%
======= =======
<CAPTION>
Due in One
Year or Less Other
-------------------------- ---------------------
Average Average
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
At December 31, 1998:
Mortgage-backed securities
(GNMA and FNMA) $ 7,803 6.24% $ - -
Other - - 55 7.25%
------- --------
$ 7,803 6.24% $ 55 7.25%
======= ========
</TABLE>
Deposits
Deposits are the major source of Atlantic's funds for lending and other
investment purposes. Deposits are attracted principally from within Atlantic's
primary market area through the offering of a broad variety of deposit
instruments including checking accounts, money market accounts, regular savings
accounts, term certificate accounts (including "jumbo" certificates in
denominations of $100,000 or more) and retirement savings plans.
24
<PAGE>
Maturity terms, service fees and withdrawal penalties are established by
Atlantic on a periodic basis. The determination of rates and terms is predicated
on funds acquisition and liquidity requirements, rates paid by competitors,
growth goals and federal regulations.
FDIC regulations limit the ability of certain insured depository institutions to
accept, renew, or rollover deposits by offering rates of interest which are
significantly higher than the prevailing rates of interest on deposits offered
by other insured depository institutions having the same type of charter in such
depository institutions' normal market area. Under these regulations, "well
capitalized" depository institutions may accept, renew, or rollover deposits at
such rates without restriction, "adequately capitalized" depository institutions
may accept, renew or rollover deposits at such rates with a waiver from the FDIC
(subject to certain restrictions on payments of rates), and "undercapitalized"
depository institutions may not accept, renew or rollover deposits at such
rates. The regulations contemplate that the definitions of "well capitalized,"
"adequately capitalized" and "undercapitalized" will be the same as the
definitions adopted by the agencies to implement the prompt corrective action
provisions of applicable law. See "Description of Business/Supervision and
Regulation." As of December 31, 1999, Oceanside met the definition of a "well
capitalized" depository institution.
Atlantic's primary source of funds is core deposit accounts that include both
interest- and noninterest-bearing demand, savings, and time deposits under
$100,000. At December 31, 1999 and 1998, core deposits accounted for
approximately 90% and 88%, respectively, of all deposits. For the year ended
1998, the deposit mix had shifted so that interest-bearing demand deposits was
the single largest category of core deposits, with time deposits under $100,000
the second largest category. At December 31, 1999 and 1998, jumbo certificates
of deposit (time deposits $100,000 and greater) represented approximately 10%
and 12%, respectively, of total deposits. At December 31, 1999 and 1998, time
deposits outstanding in an individual amount of $100,000 or more totaled
$4,534,000 and $4,704,000, respectively. The maturity of these deposits are
reflected in Table 12 herein.
Interest-bearing demand accounts, consisting of NOW and money market accounts,
averaged $16,618,000 for the year ended 1999 and $9,643,000 for the year ended
1998, or approximately 54% and 38% of average total noninterest and
interest-bearing deposits in 1999 and 1998, respectively. This increase in the
percentage of lower cost deposits to total deposits in 1999 contributed to the
decline in the average cost of funds from 4.24% in 1998 to 3.82% in 1999.
25
<PAGE>
Table 10 - Distribution of Deposit Accounts by Type (dollars in thousands):
<TABLE>
<CAPTION>
At December 31,
------------------------------------------------------------
1999 1998
---------------------------- ---------------------------
% of % of
Amount Deposits Amount Deposits
<S> <C> <C> <C> <C>
Demand deposits $11,084 25.3% $ 7,168 17.8%
NOW deposits 7,138 16.3 12,193 30.2
Money market deposits 10,787 24.6 6,542 16.2
Savings deposits 1,159 2.6 737 1.8
--------- ------- ---------- -------
Subtotal 30,168 68.8 26,640 66.0
-------- ------ -------- ------
Certificates of deposit:
3.00% - 3.99% 124 0.3 175 0.4
4.00% - 4.99% 3,697 8.4 2,458 6.1
5.00% - 5.99% 9,370 21.3 7,182 17.8
6.00% - 6.99% 530 1.2 3,919 9.7
---------- ------- --------- ------
Total certificates of deposit (1) 13,721 31.2 13,734 34.0
-------- ------ -------- ------
Total deposits $43,889 100.0% $40,374 100.0%
======= ===== ======= =====
</TABLE>
(1) Includes individual retirement accounts ("IRAs") totaling $1,106,000
and $1,158,000 in 1999 and 1998, respectively, all of which are in the
form of certificates of deposit.
Table 11 - Average Deposits and Average Rates (dollars in thousands)
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------
1999 1998
------------------------- --------------------------
Average Average Average Average
Balance Rate Balance Rate
Demand, money market
<S> <C> <C> <C> <C>
and NOW deposits $ 26,840 1.64% $ 14,742 1.68%
Savings deposits 1,160 2.33% 363 1.93%
Certificates of deposit 13,074 5.28% 10,419 5.88%
--------- ---------
Total deposits $ 41,074 2.82% $ 25,524 3.40%
======== ========
</TABLE>
26
<PAGE>
Table 12 - Maturities of Time Deposits of $100,000 or more (in thousands)
At December 31,
---------------
1999 1998
---- ----
Due in three months or less $ 829 $ 1,237
Over three through twelve months 3,597 3,366
Over three years 108 101
--------- ---------
$ 4,534 $ 4,704
======= =======
Table 13 - Certificates of Deposits by Rate and Maturity Date (in thousands):
<TABLE>
<CAPTION>
Year Ending December 31,
-------------------------------------------------------------------------------
2000 2001 2002 2003 2004 Total
---- ---- ---- ---- ---- -----
At December 31, 1999:
<S> <C> <C> <C> <C> <C> <C> <C>
3.00% - 3.99% $ 124 $ -- $ -- $ -- $ -- $ 124
4.00% - 4.99% 3,673 24 -- -- -- 3,697
5.00% - 5.99% 9,058 123 -- 179 10 9,370
6.00% - 6.99% 387 -- 2 141 -- 530
------- ------- ------- ------- ------- -------
Total certificates of deposit $13,242 $ 147 $ 2 $ 320 $ 10 $13,721
======= ======= ======= ======= ======= =======
Year Ending December 31,
-------------------------------------------------------------------------------
1999 2000 2001 2002 2003 Total
---- ---- ---- ---- ---- -----
At December 31, 1998:
3.00% - 3.99% $ 175 $ -- $ -- $ -- $ -- $ 175
4.00% - 4.99% 2,422 14 22 -- -- 2,458
5.00% - 5.99% 6,781 148 80 -- 173 7,182
6.00% - 6.99% 3,804 -- -- 2 113 3,919
------- ------- ------- ------- ------- -------
Total certificates of deposit $13,182 $ 162 $ 102 $ 2 $ 286 $13,734
======= ======= ======= ======= ======= =======
</TABLE>
Capital Requirements/Ratios
Atlantic and Oceanside place a significant emphasis on maintaining a strong
capital base. The capital resources of Oceanside consist of two major components
of regulatory capital, stockholders' equity and the allowance for credit losses.
Current capital guidelines issued by federal regulatory authorities require a
company to meet minimum risk-based capital ratios in an effort to make
regulatory capital more responsive to the risk exposure related to a company's
on and off-balance sheet items.
Risk-based capital guidelines re-define the components of capital, categorize
assets into risk classes, and include certain off-balance sheet items in the
calculation of capital requirements. The components of risk-based capital are
<PAGE>
segregated as Tier I and Tier II capital. Tier I capital is composed of total
stockholders' equity reduced by goodwill and other intangible assets. Tier II
capital is comprised of the allowance for credit losses and any qualifying debt
obligations. Regulators also have adopted minimum requirements of 4% of Tier I
capital and 8% of risk-adjusted assets in total capital.
27
<PAGE>
Oceanside is also subject to leverage capital requirements. This requirement
compares capital (using the definition of Tier I capital) to balance sheet
assets and is intended to supplement the risk-based capital ratio in measuring
capital adequacy. The guidelines set a minimum leverage ratio of 3% for
depository institutions that are highly rated in terms of safety and soundness,
and which are not experiencing or anticipating any significant growth. Other
depository institutions are expected to maintain capital levels of at least 1%
or 2% above the minimum. Oceanside's actual capital amounts, capital ratios, and
leverage ratios at December 31, 1999 and 1998, are reflected in the table below.
Table 14 - Capital Ratios (in thousands):
<TABLE>
<CAPTION>
At December 31,
-----------------------
1999 1998
---- ----
Tier I
<S> <C> <C>
Stockholders' equity $ 5,664 $ 5,097
Less, intangible assets -- (95)
-------- --------
5,664 5,002
Tier II
Allowable portion of allowance for credit losses 565 362
-------- --------
Risk-based capital $ 6,229 $ 5,364
======== ========
Risk adjusted assets $ 45,164 $ 28,722
======== ========
Tier I risk-based capital ratio 12.54% 17.42%
======== ========
Total risk-based capital ratio 13.79% 18.68%
======== ========
Adjusted assets $ 51,053 $ 38,706
======== ========
Leverage ratio 11.09% 12.92%
======== ========
</TABLE>
Note: Any unrealized appreciation and depreciation on securities
available-for-sale was excluded from regulatory capital components of risk-based
capital and leverage ratios.
<PAGE>
Table 15 - Capital Analysis
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Average equity as a percentage of average assets 10.75% 16.69%
Equity to total assets at end of year 9.98% 11.08%
Return on average equity 9.83% (3.27)%
Return on average assets 1.06% (0.55)%
Noninterest expenses to average assets 4.59% 4.71%
</TABLE>
In 1996, Oceanside commenced the sale of units (consisting of one share of
common stock and one warrant to purchase one share of common stock at a price of
$10.00 per share) at a price of $10.00 per unit. During 1996 and 1997, a total
of 594,430 shares were sold. During 1999 and 1998, 600 and 20 warrants,
respectively, were exercised, the proceeds of which were $6,000 in 1999 and less
28
<PAGE>
than $1,000 in 1998.
Stockholders' equity is adjusted for the effect of unrealized appreciation or
depreciation, net of tax, on securities classified as available-for-sale. As of
December 31, 1999, stockholders' equity increased $354,000 from December 31,
1998, as a result of the net income of $499,000 and $5,000 of other net
adjustments in 1999 offset by the decline in fair market value of investment
securities of $150,000. The return on average equity for the years ended
December 31, 1999 and 1998, was a positive 9.83% and a negative 3.27%,
respectively.
Interest Rate Sensitivity
The operations of Atlantic are subject to risk resulting from interest rate
fluctuations to the extent that there is a difference between the amount of
Atlantic's interest-earning assets and the amount of interest-bearing
liabilities that are prepaid/withdrawn, mature, or reprice in specified periods.
The principal objective of Atlantic's asset/liability management activities is
to provide consistently higher levels of net interest income while maintaining
acceptable levels of interest rate and liquidity risk and facilitating the
funding needs of Atlantic. Atlantic utilizes an interest rate sensitivity model
as the primary quantitative tool in measuring the amount of interest rate risk
that is present. The traditional maturity "gap" analysis, which reflects the
volume difference between interest rate sensitive assets and liabilities during
a given time period, is reviewed regularly by management. A positive gap occurs
when the amount of interest sensitive assets exceeds interest sensitive
liabilities. This position would contribute positively to net income in a rising
interest rate environment. Conversely, if the balance sheet has more liabilities
repricing than assets, the balance sheet is liability sensitive or negatively
gapped. Management continues to monitor sensitivity in order to avoid
overexposure to changing interest rates.
Another method used by management to review its interest sensitivity position is
through "simulation." In simulation, Atlantic projects the future net interest
streams in light of the current gap position. Various interest rate scenarios
are used to measure levels of interest income associated with potential changes
in Atlantic's operating environment. Management cannot measure levels of
interest income associated with potential changes in Atlantic's operating
environment. Management cannot predict the direction of interest rates or how
the mix of assets and liabilities will change. The use of this information will
help formulate strategies to minimize the unfavorable effect on net interest
income caused by interest rate changes.
The operations of Atlantic do not subject it to foreign currency exchange or
commodity price risk. Also, Atlantic does not utilize interest rate swaps, caps,
or other hedging transactions. Atlantic's overall sensitivity to interest rate
risk is low due to its non-complex balance sheet. Atlantic has implemented
several strategies to manage interest rate risk that include originating most
residential mortgages for a third party lender, increasing the volume of
variable rate commercial loans, requiring interest rate calls on commercial
loans, and maintaining a short repricing maturity a significant portion of its
investment portfolio.
29
<PAGE>
The following table provides information about Atlantic's financial instruments
that are sensitive to changes in interest rates. For securities, loans, and
deposits, the table presents principal cash flows and related weighted average
interest rates by maturity dates or repricing frequency. Atlantic has no market
risk sensitive instruments entered into for trading purposes.
Table 16 - Interest Rate Sensitivity at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
Under 3 to 12 Over
3 Months Months 1 - 5 Years 5 Years Total
-------- ------ ----------- ------- -----
<S> <C> <C> <C> <C> <C>
Federal funds sold $ -- $ -- $ -- $ -- $ --
Interest-bearing deposits in other banks 100 -- -- -- 100
Loans(1) 10,971 3,015 11,225 15,724 40,935
Securities(2) -- 1,727 -- 4,382 6,109
-------- -------- -------- -------- --------
Total rate-sensitive assets $ 11,071 $ 4,742 $ 11,225 $ 20,106 $ 47,144
======== ======== ======== ======== ========
Money market and NOW(2) $ 10,787 $ -- $ -- $ 7,138 $ 17,925
Savings accounts (2) -- -- -- 1,159 1,159
Certificates of deposit (2) 2,773 10,469 149 330 13,721
-------- -------- -------- -------- --------
Total rate-sensitive liabilities $ 13,560 $ 10,469 $ 149 $ 8,627 $ 32,805
======== ======== ======== ======== ========
Gap (repricing differences) $ (2,489) $ (5,727) $ 11,076 $ 11,479 $ 14,339
======== ======== ======== ======== ========
Cumulative Gap $ (2,489) $ (8,216) $ 2,860 $ 14,339
======== ======== ======== ========
Cumulative Gap/total assets -4.60% -15.17% 5.28% 26.47%
======== ======== ======== ========
Total assets $ 54,161
========
</TABLE>
(1)In preparing the table above, adjustable-rate loans were included in the
period in which the interest rates are next scheduled to adjust rather than
in the period in which the loans mature. Fixed-rate loans were scheduled
according to their contractual maturities.
(2)Excludes noninterest-bearing deposit accounts. Money market deposits were
regarded as maturing immediately, and other core deposits were assumed to
mature in the over 5-year category. All other time deposits were scheduled
through the maturity or repricing dates. Investments were scheduled through
their contractual, repricing, or principal payment dates.
Management anticipates that its one-year gap will remain negative during its
initial growth period; however, management attempts to maintain a range of
positive 20% to negative 20%.
<PAGE>
Liquidity
Liquidity management involves meeting the funds flow requirements of customers
who may either be depositors wanting to withdraw funds, or borrowers needing
assurance that sufficient funds will be available to meet their credit needs.
Liquid assets consist of vault cash, securities, and maturities of earning
assets.
Atlantic's principal sources of asset liquidity are federal funds sold and the
securities portfolio, including principal paydowns from mortgage-backed
securities. In 1999 and 1998, such payments totaled $1,498,000 and $1,227,000,
respectively.
30
<PAGE>
Other sources of funds are principal paydowns and maturities in the loan
portfolio. The loan maturity schedule (Table 4) illustrates the maturities of
loans receivable at December 31, 1999.
Oceanside also has sources of liability liquidity that include core deposits as
previously discussed.
At December 31, 1999 and 1998, Oceanside's liquidity ratio of liquid assets to
transaction deposit accounts was 16.1% and 38.5%, respectively. Management
believes that Oceanside's liquidity is sufficient to meet its anticipated needs.
Other Borrowings
Atlantic has lines of credit with Columbus Bank and Trust Company totaling
$1,000,000, which mature on August 11, 2000, with principal and interest at
0.50% below prime. The purpose of this loan was to provide working capital to
Atlantic and its wholly-owned subsidiary, Oceanside Mortgage. The holding
company headquarters was purchased using proceeds from these lines. At December
31, 1999, Atlantic had $258,000 available under these lines of credit.
On December 29, 1999, Oceanside obtained an advance from FHLB of $2,300,000
collateralized by Oceanside's FHLB capital stock and a blanket lien consisting
of wholly-owned residential (1-4 units) first mortgage loans of approximately
$4,200,000. This advance matures on December 29, 2000, and carries a current
interest rate of 6.25%.
Oceanside has sold securities under agreements to repurchase with a par value of
approximately $1,859,000 and a fair value of approximately $1,757,000 to secure
overnight borrowings totaling $1,589,000. The interest rate on this overnight
borrowing was 6.5%.
Contingencies and Uncertainties - Year 2000 Compliance Matters
During the periods leading up to January 1, 2000, Atlantic addressed the
potential problems associated with the possibility that the computers that
control or operate Atlantic's information technology system and infrastructure
may not have been programmed to read four-digit date codes and, upon arrival of
the year 2000, may have recognized the two-digit code "00" as the year 1900,
causing systems to fail to function or generate erroneous data.
Atlantic expended approximately $35,000 through the periods ended December 31,
1999, in connection with its Year 2000 compliance program. Atlantic experienced
no significant problems related to its information technology systems upon
arrival of the Year 2000, nor was there any reported interruption in service to
its customers of any kind.
Atlantic could incur losses if Year 2000 issues adversely affect its depositors
or borrowers. Such problems could include delayed loan payments due to Year 2000
problems affecting any significant borrowers or impairing the payroll systems of
large employers in Atlantic's primary market areas. Because Atlantic's loan
portfolio is highly diversified with regard to individual borrowers and types of
businesses, Atlantic does not expect, and to date has not realized, any
significant or prolonged difficulties that will affect net earnings or cash
flow.
31
<PAGE>
Future Accounting Requirements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which addresses the accounting for
derivative instruments and provides for matching the timing of gain or loss
recognition on the hedging instrument. Guidance on identifying derivative
instruments is also provided as well as additional disclosures. SFAS 133 becomes
effective for all fiscal quarters of all fiscal years beginning after September
15, 1999. Earlier application is permitted with certain exceptions. Management
does not anticipate that adoption of SFAS 133 will have a material impact on the
financial condition or results of operations of Atlantic.
Impact of Inflation
The financial statements and related data presented herein have been prepared in
accordance with generally accepted accounting principles, which require the
measurements of financial position and operating results in terms of historical
dollars, without considering changes in the relative purchasing power of money
over time due to inflation. Unlike most industrial companies, substantially all
of the assets and liabilities of Atlantic are monetary in nature. As a result,
interest rates have a more significant impact on Atlantic's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or in the same magnitude as the prices of goods and
services, since such prices are affected by inflation to a larger extent than
interest rates. As discussed previously, management seeks to manage the
relationships between interest sensitive assets and liabilities in order to
protect against wide interest rate fluctuations, including those resulting from
inflation.
ITEM 7. FINANCIAL STATEMENTS.
The consolidated financial statements of Atlantic as of and for the periods
ended December 31, 1999 and 1998, are set forth on pages 33 - 51 of this Form
10-KSB.
32
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Atlantic BancGroup, Inc. and Subsidiaries
Jacksonville Beach, Florida
We have audited the consolidated balance sheets of Atlantic BancGroup, Inc. and
Subsidiaries ("Atlantic") as of December 31, 1999 and 1998, and the related
consolidated statements of operations and comprehensive income, cash flows and
changes in stockholders' equity, for each of the two years in the period ended
December 31, 1999. These consolidated financial statements are the
responsibility of Atlantic's management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Atlantic as of
December 31, 1999 and 1998, and the results of its consolidated operations and
its cash flows for each of the two years in the period ended December 31, 1999,
in conformity with generally accepted accounting principles.
/s/ STEVENS, SPARKS & COMPANY, P.A.
- ------------------------------------
STEVENS, SPARKS & COMPANY, P.A.
Jacksonville, Florida
February 3, 2000
33
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------
1999 1998
---- ----
(Dollars in Thousands, Except Per Share Data)
ASSETS
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks $ 4,569 $ 4,862
Federal funds sold -- 4,915
------- -------
Total cash and cash equivalents 4,569 9,777
Interest-bearing deposits in other banks 100 206
Securities available-for-sale 6,109 7,858
Loans 40,197 25,478
Facilities 2,489 1,860
Accrued interest receivable 271 190
Deferred income taxes 312 --
Other assets 114 202
------- -------
Total assets $54,161 $45,571
======= =======
LIABILITIES
Deposits:
Noninterest-bearing demand deposits $11,084 $ 7,168
Demand deposits 7,138 12,193
Money market accounts 10,787 6,542
Savings accounts 1,159 737
Time, $100,000 and over 4,534 4,704
Other time deposits 9,187 9,030
------- -------
Total deposits 43,889 40,374
------- -------
Other borrowings 4,631 --
Accrued interest payable on deposits 53 51
Accounts payable and accrued liabilities 184 96
------- -------
Total liabilities 48,757 40,521
------- -------
Commitments and contingencies -- --
------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, authorized 10,000,000 shares,
<S> <C> <C>
issued 595,350 shares in 1999 and 594,750 shares in 1998 6 2,974
Additional paid-in capital 4,213 1,243
Retained earnings 1,382 880
Accumulated other comprehensive income
Net unrealized holding losses on securities (197) (47)
--------- ---------
Total stockholders' equity 5,404 5,050
--------- ---------
Total liabilities and stockholders' equity $ 54,161 $ 45,571
========= =========
Book value per common share $ 9.08 $ 8.49
========= =========
Common shares outstanding, adjusted for stock dividend 595,350 594,750
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
34
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
---- ----
(Dollars in Thousands, Except Per Share Data)
INTEREST INCOME
<S> <C> <C>
Interest and fees on loans $ 3,207 $ 1,792
Interest and dividend income from investment securities 374 293
Interest on federal funds sold 111 192
Interest on deposits with other banks 12 10
--------- ---------
Total interest income 3,704 2,287
--------- ---------
INTEREST EXPENSE
Interest on deposits 1,158 867
Other 52 --
--------- ---------
Total interest expense 1,210 867
--------- ---------
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES 2,494 1,420
PROVISION FOR CREDIT LOSSES 221 334
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 2,273 1,086
--------- ---------
OTHER INCOME
Service charges on deposit accounts 283 134
Other fees for customer service and other income 79 62
--------- ---------
Total other income 362 196
--------- ---------
OTHER EXPENSES
Salaries and employee benefits 1,017 704
Expenses of bank premises and fixed assets 457 313
Other operating expenses 693 433
--------- ---------
Total other expenses 2,167 1,450
--------- ---------
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 468 (168)
PROVISION (BENEFIT) FOR INCOME TAXES (90) --
--------- ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE
<S> <C> <C>
IN ACCOUNTING PRINCIPLE 558 (168)
--------- ---------
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
(Net of income taxes of $36) (59) --
NET INCOME (LOSS) 499 (168)
--------- ---------
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES:
Unrealized holding gains (losses) on securities arising during period (150) (47)
--------- ---------
COMPREHENSIVE INCOME (LOSS) $ 349 $ (215)
========= =========
AVERAGE COMMON SHARES OUTSTANDING 594,593 594,735
========= =========
EARNINGS PER SHARE
Basic earnings (loss) per share $ 0.84 $ (0.28)
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
35
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31,
------------------------
1999 1998
---- ----
(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 499 $ (168)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision for credit losses 221 334
Depreciation and amortization 132 69
Net premium amortization and discount accretion 96 (27)
Deferred income taxes (192) --
Amortization of organizational costs -- 27
(Increase) decrease in assets:
Accrued interest receivable (81) (191)
Other assets 88 --
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 89 118
-------- --------
Net cash provided by operating activities 852 162
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available-for-sale:
Purchases (115) (7,033)
Principal repayments mortgage-backed investment securities 1,498 1,227
Increase (decrease) in interest-bearing deposits in other banks 106 (106)
Increase in loans (14,940) (16,729)
Purchases of facilities (761) (695)
-------- --------
Net cash used in investing activities (14,212) (23,336)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in deposits:
Noninterest-bearing 3,916 4,549
Interest-bearing (401) 22,805
Proceeds from other borrowings 4,631 --
Proceeds from stock warrants exercised 6 --
-------- --------
Net cash provided by financing activities 8,152 27,354
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,208) 4,180
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,777 5,597
-------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,569 $ 9,777
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash received during the year for interest and dividends $ 3,623 $ 2,161
======== ========
Cash paid during the year for interest $ 1,208 $ 827
======== ========
Cash paid during the year for income taxes $ 80 $ --
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
36
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Net
Unrealized
Holding
Common Stock Additional Gains Total
----------------------- Paid-in Retained (Losses) on Stockholders'
Shares Amount Capital Earnings Securities Equity
------ ------ ------- -------- ---------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 594,730 $ 2,974 $ 1,243 $ 1,048 $ -- $ 5,265
Stock warrants exercised 20 -- -- -- -- --
Comprehensive income:
Net income (loss) -- -- -- (168) --
Net change in net unrealized
holding gains on securities -- -- -- -- (47)
Total comprehensive income -- -- -- -- -- (215)
------- ------- ------- ------- ----- -------
Balance, December 31, 1998 594,750 2,974 1,243 880 (47) 5,050
Bank holding company reorganization -- (2,968) 2,964 3 -- (1)
Stock warrants exercised 600 -- 6 -- -- 6
Comprehensive income:
Net income -- -- -- 499 --
Net change in net unrealized
holding losses on securities -- -- -- -- (150)
Total comprehensive income -- -- -- -- -- 349
------- ------- ------- ------- ----- -------
Balance, December 31, 1999 595,350 $ 6 $ 4,213 $ 1,382 $ (197) $ 5,404
======= ======= ======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financialstatements.
37
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
General:
The consolidated financial statements include the accounts and transactions of
Atlantic BancGroup, Inc. and its wholly-owned subsidiaries ("Atlantic"),
Oceanside Bank ("Oceanside"), which opened July 21, 1997, as a state-chartered
banking organization, and Oceanside Mortgage Group, Inc. ("Oceanside Mortgage").
All significant intercompany accounts and transactions have been eliminated in
consolidation. The accounting and reporting policies of Atlantic and its
subsidiaries conform with generally accepted accounting principles and with
general practices within the banking industry.
Oceanside provides a wide range of banking services to individual and corporate
customers primarily in Duval and St. Johns County, Florida.
Atlantic and Oceanside are subject to regulations issued by certain regulatory
agencies and undergoes periodic examinations by those agencies.
Bank Holding Company Reorganization:
On April 3, 1999, the shareholders of Oceanside approved the Agreement and Plan
of Reorganization ("Reorganization") whereby Oceanside became a wholly-owned
subsidiary of Atlantic. Each shareholder of Oceanside owns an equal number of
shares of common stock and warrants of Atlantic. The Reorganization was
completed on May 5, 1999, and was reported under the pooling-of-interests method
of accounting.
Oceanside Mortgage:
On July 20, 1999, Oceanside Mortgage was incorporated as a wholly-owned
subsidiary of Atlantic for the purpose of conducting mortgage banking
operations. The financial position and results of operations of Oceanside
Mortgage have been included in the consolidated financial statements; however,
such amounts are immaterial since inception.
Use of Estimates:
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for credit losses, the fair value
of financial instruments, and the valuation of real estate acquired in
connection with foreclosures or in satisfaction of loans ("Other Real Estate
Owned"). In connection with the determination of the allowances for credit
losses and foreclosed real estate, management obtains independent appraisals for
significant properties.
Management believes that the allowance for credit losses is adequate. While
management uses available information to recognize losses on loans, including
<PAGE>
independent appraisals for significant properties, future additions to the
allowance may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the allowance based on their judgments about information
available to them at the time of their examination.
Cash and Due From Banks:
Oceanside is required to maintain reserve funds in cash or on deposit with the
Federal Reserve Bank. The required reserve at December 31, 1999 and 1998, was
$251,000 and $175,000, respectively.
Investments:
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities ("SFAS No. 115"), sets the standard
for classification of and accounting for investments in equity securities that
have readily determinable fair values, and all investments in debt securities
that are to be classified as held-to-maturity securities, available-for-sale
securities, or trading securities.
38
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)
Debt securities that an enterprise has the positive intent and ability to hold
to maturity are classified as held-to-maturity securities and reported at
amortized cost. Debt and equity securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and losses included
in earnings. Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified as
available-for-sale securities and reported at fair value, with unrealized gains
and losses excluded from earnings and reported as a separate component of
stockholders' equity.
Oceanside classifies its investments at the purchase date in accordance with the
above-described guidelines. Premiums or discounts on securities at the date of
purchase are being amortized or accreted, respectively, over the estimated life
of the security using a method which approximates the level yield method. Gains
and losses realized on the disposition of securities are based on the specific
identification method and are reflected in other income.
Loans:
Loans receivable are stated at unpaid principal balances, less the allowance for
credit losses and net deferred loan fees and unearned discounts. Unearned
discounts on installment loans are recognized as income over the term of the
loans using a method that approximates the interest method.
Interest on loans is accounted for on the accrual basis. Generally, Oceanside's
policy is to discontinue the accrual of interest on loans delinquent over ninety
days unless fully secured and in the process of collection. The accrued and
unpaid interest is reversed from current income and thereafter interest is
recognized only to the extent payments are received. A nonaccrual loan may be
restored to accrual basis when interest and principal payments are current and
prospects for future recovery are no longer in doubt.
Oceanside has adopted Statement of Financial Accounting Standards No. 114,
Accounting by Creditors for Impairment of a Loan ("SFAS No. 114"), which sets
the standard for recognition of loan impairment and the measurement methods for
certain impaired loans and loans whose terms are modified in troubled debt
restructurings.
Under SFAS No. 114, a loan is impaired when it is probable that a creditor will
be unable to collect the full amount of principal and interest due according to
the contractual terms of the loan agreement. When a loan is impaired, a creditor
has a choice of ways to measure the impairment. The measurement of impairment
may be based on (1) the present value of the expected future cash flows of the
impaired loan discounted at the loan's original effective interest rate, (2) the
observable market price of the impaired loan, or (3) the fair value of the
collateral of a collateral-dependent loan. Creditors may select the measurement
method on a loan-by-loan basis, except that collateral-dependent loans for which
foreclosure is probable must be measured at the fair value of the collateral. A
creditor in a troubled debt restructuring involving a restructured loan should
measure impairment by discounting the total expected future cash flows at the
<PAGE>
loan's original effective rate of interest. If the value of the loan is less
than the recorded investment in the loan, a loss should be recognized by
recording a valuation allowance and a corresponding increase to the provision
for credit losses charged to operating expenses.
Loan Fees:
Loan origination and commitment fees and certain direct loan origination costs
are deferred and recognized over the term of the related loans as a yield
adjustment using the straight-line method, which is not materially different
from the interest method. Amortization of deferred fees and costs is
discontinued when collectibility of the related loan is deemed uncertain. Fees
and direct loan origination costs for unexercised commitments are recognized in
income upon expiration of commitment.
Organizational Costs:
As of December 31, 1998, certain costs incurred in organizing Oceanside had been
deferred and were being amortized to expense on the straight-line method over
five years from the date of opening for business. In 1999, Atlantic changed its
accounting for organizational costs (see Note 17).
39
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)
Allowance for Credit Losses:
The provision for credit losses charged to operating expenses is based upon
management's judgment of the adequacy of the allowance giving consideration to
its loan loss experience and an evaluation of the current loan portfolio. Such
provisions, less net charge-offs, comprise the allowance, which is deducted from
loans and is available for future charge-offs.
Facilities:
Facilities are stated at cost, less accumulated depreciation and amortization.
Charges to income for depreciation and amortization are computed on the
straight-line method over the assets' estimated useful lives.
When properties are sold or otherwise disposed of, the gain or loss resulting
from the disposition is credited or charged to income. Expenditures for
maintenance and repairs are charged against income and renewals and betterments
are capitalized.
Other Real Estate Owned:
Real estate properties acquired through, or in lieu of, loan foreclosure are to
be sold and are initially recorded at fair value at the date of foreclosure
establishing a new cost basis. After foreclosure, valuations are periodically
performed by management and the real estate is carried at the lower of carrying
amount or fair value less cost to sell. Revenue and expenses from operations and
changes in the valuation allowance are included in loss on foreclosed real
estate.
Off-Balance Sheet Instruments:
In the ordinary course of business, Oceanside has entered into off-balance sheet
financial instruments consisting of commitments to extend credit and standby
letters of credit. Such financial instruments are recorded in the consolidated
financial statements when they become payable.
Employee Benefits:
Pension costs are charged to salaries and employee benefits expense and are
funded as accrued.
Income Taxes:
Provisions for income taxes are based on amounts reported in the statements of
operations, after exclusion of non-taxable income such as interest on state and
municipal securities, and include deferred taxes on temporary differences in the
recognition of income and expense for tax and financial statement purposes. The
principal temporary differences are depreciation and amortization, provision for
credit losses, and unrealized holding gains (losses) on securities. Deferred
taxes are computed on the liability method as prescribed in SFAS No. 109,
Accounting for Income Taxes.
<PAGE>
Computation of Per Share Earnings:
Basic earnings (loss) per share amounts are computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding during the
period. Diluted earnings per share are computed by dividing net earnings by the
weighted average number of shares and all dilutive potential shares outstanding
during the period. At December 31, 1999 and 1998, the outstanding warrants
totaled 593,510 and 594,110, respectively; however, the warrants were not
dilutive. The following information was used in the computation of earnings per
share on both a basic and diluted basis for the years ended December 31, 1999
and 1998 (in thousands except per share data):
<TABLE>
<CAPTION>
For the Year Ended December 31,
1999 1998
---- ----
Basic EPS computation:
<S> <C> <C>
Numerator - Net income (loss) $ 499 $ (168)
Denominator - Weighted average shares outstanding 595 595
------ ------
Basic EPS $ 0.84 $(0.28)
====== ======
</TABLE>
40
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)
Statements of Cash Flows:
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts on deposit in noninterest bearing accounts with other commercial
banks, and federal funds sold.
Advertising and Business Development:
Atlantic expenses advertising and business development costs as incurred.
Advertising and business development costs for 1999 and 1998 as included in
other operating expenses were $39,000 and $36,000, respectively.
Reclassification of Accounts:
Certain items in the consolidated financial statements for 1998 have been
reclassified to conform to the classifications used for the current year.
NOTE 2 - INVESTMENT SECURITIES
The amortized cost and estimated fair value of instruments in debt and equity
securities at December 31, 1999 and 1998, follow:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1999
----------------- -----------------
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
---- ----- ------ ----- ---- ----- ------ -----
(Dollars in Thousands) (Dollars in Thousands)
Available for sale
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage-backed securities $6,255 $ -- $ (317) $5,938 $7,850 $ -- $ (47) $7,803
Other 171 -- -- 171 55 -- -- 55
------ ----- ------ ------ ------ ------ ------ ------
Total available-for-sale $6,426 $ -- $ (317) $6,109 $7,905 $ -- $ (47) $7,858
====== ===== ====== ====== ====== ====== ====== ======
</TABLE>
The fair value of securities fluctuates during the investment period. No
provision for loss has been made in connection with the decline of fair value
below book value, because the securities are purchased for investment purposes
and the decline is not deemed to be other than temporary. Temporary declines in
fair value of securities available-for-sale at December 31, 1999, of $197,000
(net of deferred income taxes of $120,000) are regarded as an adjustment to
stockholders' equity. The estimated fair value of securities is determined on
the basis of market quotations. At December 31, 1999, securities with an
amortized cost of $4,578,000 and market value of $4,338,000 were pledged to
secure deposits and for other operating purposes (see Note 6).
<PAGE>
No investment securities were sold during 1999 or 1998.
The cost and estimated fair value of debt and equity securities at December 31,
1999, by contractual maturities, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
Securities Available-for-Sale
-----------------------------
Amortized Fair
Cost Value
(Dollars in Thousands)
Due in ten years or more $ 6,255 $ 5,938
Other 171 171
------- -------
$ 6,426 $ 6,109
======= =======
41
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - LOANS
The loan portfolio is classified as follows (dollars in thousands):
1999 1998
---- ----
Commercial and agricultural $ 12,501 $ 6,039
Real estate 23,283 16,853
Consumer and other loans 5,250 3,194
-------- --------
Total loans 41,034 26,086
Less, unearned income (99) (88)
Less, allowance for credit losses (738) (520)
-------- --------
$ 40,197 $ 25,478
======== ========
The following is a summary of the transactions in the allowance for credit
losses (dollars in thousands):
1999 1998
---- ----
Balance, beginning of period $ 520 $ 186
Provisions charged to operating expenses 221 334
Loans charged-off (8) -
Recoveries 5 -
------ ------
Balance, end of period $ 738 $ 520
====== ======
At December 31, 1999 and 1998, and for the periods then ended, Oceanside had no
loans classified as impaired or nonaccrual.
NOTE 4 - FACILITIES
Facilities are summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
Accumulated Estimated
Depreciation and Net Book Useful
Cost Amortization Value Lives
---- ------------ ----- -----
December 31, 1999:
<S> <C> <C> <C> <C>
Land and land improvements $ 946 $ -- $ 946
Bank building and improvements 1,295 90 1,205 5 - 40 years
Furniture, fixtures, and equipment 469 131 338 3 - 10 years
------ ------ ------
$2,710 $ 221 $ 2,489
====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998:
<S> <C> <C> <C> <C>
Land and land improvements $ 750 $ -- $ 750
Bank building and improvements 897 45 852 5 - 40 years
Furniture, fixtures, and equipment 302 44 258 3 - 10 years
------ ------ ------
$1,949 $ 89 $1,860
====== ====== ======
</TABLE>
Depreciation and amortization of facilities totaled $132,000 and $69,000 in 1999
and 1998, respectively.
Atlantic did not have any material noncancellable operating leases during 1999
and 1998.
42
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 5 - TIME DEPOSITS
Time deposits at December 31, 1999 and 1998, totaled $13,721,000 and
$13,734,000, respectively. Maturities of such deposits follow (dollars in
thousands):
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
------------------------------- -----------------------------
Time, $100,000 Other Time Time, $100,000 Other Time
And Over Deposits And Over Deposits
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Three months or less $ 829 $ 1,944 $ 1,237 $ 2,635
Over three through twelve months 3,597 6,872 3,366 5,924
Over twelve months through three years - 149 - 264
Over three years 108 222 101 207
--------- --------- ------------ -----------
$ 4,534 $ 9,187 $ 4,704 $ 9,030
======= ======= ======= =======
</TABLE>
Interest expense on certificates of deposit of $100,000 or more totaled $242,000
and $210,000 for 1999 and 1998, respectively.
NOTE 6 - OTHER BORROWINGS
A summary follows:
December 31,
1999 1998
---- ----
(Dollars In Thousands)
FHLB of Atlanta advances $2,300 $ --
Revolving lines of credit 742 --
Securities sold under agreements to repurchase 1,589 --
------ --------
$4,631 $ --
====== ========
FHLB of Atlanta Advances:
On December 29, 1999, Oceanside obtained an advance from FHLB of $2,300,000
collateralized by Oceanside's FHLB capital stock and a blanket lien consisting
of wholly-owned residential (1-4 units) first mortgage loans of approximately
$4,200,000. This advance matures on December 29, 2000, and carries a current
interest rate of 6.25%.
Revolving Lines of Credit:
<PAGE>
On February 11, 1999, Atlantic obtained a revolving line of credit in the amount
of $50,100 from Columbus Bank and Trust Company ("Columbus"). On August 11,
1999, Atlantic obtained two revolving lines of credit from Columbus totaling
$1.0 million, and repaid existing advances under the line of credit dated
February 11, 1999. For the remaining two lines of credit, principal and interest
at 0.50% below prime are due on August 11, 2000. The proceeds from the lines of
credit are to be used to acquire real estate, fund start-up costs for the
mortgage banking operations, and provide additional working capital for
Atlantic. At December 31, 1999, $742,000 had been advanced to Atlantic under the
lines of credit, which are secured by the common stock of Atlantic's
wholly-owned banking subsidiary, Oceanside Bank.
Securities Sold Under Agreements to Repurchase:
Oceanside has sold securities under agreements to repurchase with a par value of
approximately $1,859,000 and a fair value of approximately $1,757,000 to secure
overnight borrowings totaling $1,589,000. The interest rate on this overnight
borrowing was 6.5%.
43
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 7 - INCOME TAXES
The provision (benefit) for income taxes on income is summarized as follows:
Year Ended December 31,
1999 1998
---- ----
(Dollars In Thousands)
Current:
Federal $ 56 $ --
State 10 --
----- --------
66 --
----- --------
Deferred:
Federal (133) --
State (23) --
----- --------
(156) --
----- --------
Total income tax provision (benefit) $ (90) $ --
===== ========
A reconciliation of the income tax benefit computed at the federal statutory
rate of 34% and the income tax provision (benefit) shown on the statement of
operations, follows:
Year Ended December 31,
1999 1998
---- ----
(Dollars In Thousands)
Tax computed at statutory rate $ 159 $ --
Increase (decrease) resulting from:
Utilization of net operating loss carryover (262) --
Other 13 --
----- ---------
Income tax provision (benefit) $ (90) $ --
===== =========
The components of the net deferred income tax assets are as follows:
<PAGE>
December 31,
1999 1998
---- ----
(Dollars In Thousands)
Deferred tax asset:
Federal $ 293 $ --
State 50 --
----- -------
343 --
----- -------
Deferred tax liability:
Federal (26) --
State (5) --
----- -------
(31) --
----- -------
Net deferred tax asset $ 312 $ --
===== =======
44
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 7 - INCOME TAXES (Continued)
Atlantic recorded no provision for income taxes in 1998 due to its net operating
loss, which was fully utilized in 1999. Utilization of deferred income tax
assets in 1998 was dependent on future taxable profits; therefore, management
had recorded a valuation allowance in 1998 to offset deferred income tax assets
of $259,000. During 1999, management reversed the valuation allowance to reflect
the profitability of Atlantic.
The tax effects of each type of significant item that gave rise to deferred
taxes are:
December 31,
1999 1998
---- ----
(Dollars In Thousands)
Net unrealized holding losses on securities $ 120 $ --
Allowance for credit losses 198 135
Depreciation 9 --
Net operating losses -- 124
Other (15) --
----- -----
Deferred income tax asset before valuation allowance 312 259
Valuation allowance -- (259)
----- -----
Net deferred tax asset $ 312 $ --
===== =====
NOTE 8 - EMPLOYEE BENEFITS
Atlantic sponsors a SIMPLE Plan that covers substantially all employees.
Atlantic matches each participant's contribution, subject to a maximum of 3% of
the participant's salary. The SIMPLE Plan is a prototype plan and has been
approved by the Internal Revenue Service.
The amount included in salaries and employee benefits as pension expense for
1999 totaled $22,000.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The consolidated financial statements do not reflect various commitments and
contingent liabilities that may arise in the normal course of business and that
involve elements of credit risk, interest rate risk, and liquidity risk. These
commitments and contingent liabilities of Oceanside are commitments to extend
credit and standby letters of credit. A summary of Oceanside's commitments and
contingent liabilities follows (dollars in thousands):
At December 31, 1999
--------------------
Commitments to extend credit $ 7,648
Standby letters of credit $ 500
<PAGE>
Commitments to extend credit and letters of credit all include exposure to some
credit loss in the event of non-performance of the customer. Oceanside's credit
policies and procedures for credit commitments and financial guarantees are the
same as those for extension of credit instruments that are recorded in the
consolidated financial statements. In the opinion of management, these
instruments do not generally present any significant liquidity risk to
Oceanside. Oceanside's experience has been that substantially all loan
commitments are drawn upon by customers. Oceanside did not incur any losses on
its commitments in either 1999 or 1998.
45
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
Atlantic may become a party to litigation, outstanding commitments, and other
contingent liabilities arising in the normal course of business. In the opinion
of management, the resolution of such matters will not have a material effect on
the consolidated financial statements.
At December 31, 1999, Oceanside had $1,500,000 unfunded lines of credit from
other banks for the purchase of overnight federal funds.
NOTE 10 - CONCENTRATIONS OF CREDIT
Substantially all of Oceanside's loans, commitments, and standby letters of
credit have been granted to customers in north Florida. The concentrations of
credit by type of loan are set forth in Note 3. The distribution of commitments
to extend credit approximates the distribution of loans outstanding. Standby
letters of credit were granted primarily to commercial borrowers.
NOTE 11 - RELATED PARTIES
Atlantic has entered into transactions with its directors, executive officers,
significant stockholders, and their affiliates (Related Parties). Such
transactions were made in the ordinary course of business on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other customers,
and did not, in the opinion of management, involve more than normal credit risk
or present other unfavorable features. Total loans to related parties amounted
to $646,000 and $1,239,000 at December 31, 1999 and 1998, respectively.
A summary of activity for 1999 and 1998 for such loans follows (dollars in
thousands):
Beginning End of
of Period Additions Reductions Period
--------- --------- ---------- ------
December 31, 1999 $ 1,239 $ 226 $ 819 $ 646
======= ======== ====== ========
December 31, 1998 $ 103 $ 1,371 $ 235 $ 1,239
======= ======== ====== ========
Unfunded commitments to the same parties totaled approximately $954,000 at
December 31, 1999.
Deposits of insiders and their related interests totaled $5,160,000 at December
31, 1999.
NOTE 12 - STOCKHOLDERS' EQUITY
Preferred Stock:
In addition to the 10,000,000 shares of authorized common stock, Atlantic's
articles of incorporation authorize up to 2,000,000 shares of preferred stock.
The board of directors are further authorized to establish designations, powers,
preferences, rights, and other terms for preferred stock by resolution. No
shares of preferred stock have been issued.
Warrants:
In connection with Oceanside's 1997 offering, each investment unit consisted of
one share of common stock and one transferable warrant to purchase one share of
common stock at $10.00 per share during the five-year period beginning on the
date Oceanside opened for business (July 21, 1997). After July 21, 1998, the
board of directors of Oceanside, by written notice to each stockholder, may
shorten the period during which the warrants may be exercised to a period ending
no sooner than 30 days after such notice is mailed.
46
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 12 - STOCKHOLDERS' EQUITY (Continued)
A summary of the warrant activity during 1999 and 1998 follows:
Weighted
Average
Number of Exercise
Warrants Price
-------- -----
Outstanding at December 31, 1997 594,130 $ 10.00
Warrants exercised, 1998 (20) $ 10.00
-------
Outstanding at December 31, 1998 594,110 $ 10.00
Warrants exercised, 1999 (600) $ 10.00
-------
Outstanding at December 31, 1999 593,510 $ 10.00
=======
All outstanding warrants were fully vested and exercisable at December 31, 1999,
with a remaining contractual life of approximately 31 months.
Dividends:
The ability of Atlantic to pay dividends to stockholders depends primarily on
dividends received by Atlantic from its subsidiaries, Oceanside and Oceanside
Mortgage. Oceanside's ability to pay dividends is limited by federal and state
banking regulations based upon Oceanside's profitability and other factors.
State banking statutes further require (i) prior approval and (ii) that at least
20% of the prior year's earnings be transferred to additional paid-in capital
(surplus) annually until surplus equals or exceeds Oceanside's common stock.
At December 31, 1999, state regulatory restrictions prevent Oceanside from
paying dividends to Atlantic. For the year ending December 31, 2000, Oceanside's
earnings would have to exceed approximately $107,000 before Oceanside could
apply for state approval to pay cash dividends to Atlantic. At December 31,
1999, Oceanside Mortgage was not profitable.
NOTE 13 - NONINTEREST OPERATING EXPENSES
Other expenses follow (dollars in thousands):
1999 1998
---- ----
Advertising and business development $ 39 $ 36
Processing and settlement fees 77 57
Professional, legal, and audit fees 105 75
ATM expense 41 44
Stationary, printing, and supplies 72 50
Amortization of organizational costs 30 27
Dues and subscriptions 14 16
<PAGE>
Education, training, and conventions 34 14
Insurance (excluding group insurance) 32 19
Telephone 33 14
Director fees 26 9
Year 2000 expenses 35 -
Postage and freight 24 15
Other miscellaneous expenses 131 57
------- --------
$ 693 $ 433
======= =======
47
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash, Cash Equivalents, and Short-term Investments:
For those short-term instruments, the carrying amount is a reasonable
estimate of fair value.
Investment Securities:
For securities held as investments, fair value equals quoted market
price, if available. If a quoted market price is not available, fair
value is estimated using quoted market prices for similar securities.
Loans Receivable:
For loans subject to repricing and loans intended for sale within six
months, fair value is estimated at the carrying amount plus accrued
interest.
The fair value of other types of loans is estimated by discounting the
future cash flows using the current rates at which similar loans would
be made to borrowers with similar credit ratings and for the same
remaining maturities.
Deposit Liabilities:
The fair value of demand deposits, savings accounts, and certain money
market deposits is the amount payable on demand at the reporting date.
The fair value of long-term fixed maturity certificates of deposit is
estimated using the rates currently offered for deposits of similar
remaining maturities.
Short-term Debt:
For short-term debt, including accounts and demand notes payable, the
carrying amount is a reasonable estimate of fair value.
Other Borrowings:
Since this borrowing is at a recent market interest rate, the carrying
amount is a reasonable estimate of fair value.
The estimated fair values of Atlantic's financial instruments at December 31,
1999, follow (dollars in thousands):
<PAGE>
Carrying Fair
Amount Value
------ -----
Financial Assets
Cash and deposits in other banks $ 4,669 $ 4,669
Investment securities 6,109 6,109
Loans 40,197 40,137
--------- ---------
Total assets valued $ 50,975 $ 50,915
======== ========
Financial Liabilities
Deposits $ 43,889 $ 43,895
Other borrowings 4,631 4,631
--------- ---------
Total liabilities valued $ 48,520 $ 48,526
======== ========
48
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
While these estimates of fair value are based on management's judgment of the
most appropriate factors, there is no assurance that, were Atlantic to have
disposed of such items at December 31, 1999, the estimated fair values would
necessarily have been achieved at that date, since market values may differ
depending on various circumstances. The estimated fair values at December 31,
1999, should not necessarily be considered to apply at subsequent dates.
NOTE 15 - REGULATORY CAPITAL MATTERS
The Federal Reserve Board and other bank regulatory agencies have adopted
risk-based capital guidelines for banks and bank holding companies. The main
objectives of the risk-based capital framework are to provide a more consistent
system for comparing capital positions of banking organizations and to take into
account the different risks among banking organizations' assets, liabilities,
and off-balance sheet items. Bank regulatory agencies have supplemented the
risk-based capital standard with a leverage ratio for Tier I capital to total
reported assets.
Failure to meet the capital adequacy guidelines and the framework for prompt
corrective actions could initiate actions by the regulatory agencies, which
could have a material effect on the consolidated financial statements.
As of December 31, 1999, the most recent notification from the FDIC, Oceanside
was categorized as well capitalized under the regulatory framework for prompt
corrective action. To remain categorized as well capitalized, it will have to
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios
as disclosed in the table below. There are no conditions or events since the
most recent notification that management believes have changed the prompt
corrective action category.
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under Prompt
For Capital Corrective Action
Actual Adequacy Purposes Provisions
---------------- -------------------- ------------------
Amount Ratio > Amount > Ratio > Amount > Ratio
------ ----- - ------ - ----- - ------ - -----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1999:
Total Risk-Based Capital
(To Risk-Weighted Assets) $ 6,229 13.79% $ 3,613 8.00% $ 4,516 10.00%
Tier I Capital
(To Risk-Weighted Assets) $ 5,664 12.54% $ 1,807 4.00% $ 2,710 6.00%
Tier I Capital
(To Adjusted Total Assets) $ 5,664 11.09% $ 2,042 4.00% $ 2,553 5.00%
As of December 31, 1998:
Total Risk-Based Capital
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(To Risk-Weighted Assets) $ 5,364 18.68% $2,298 8.00% $2,872 10.00%
Tier I Capital
(To Risk-Weighted Assets) $ 5,002 17.42% $1,149 4.00% $1,723 6.00%
Tier I Capital
(To Adjusted Total Assets) $ 5,002 12.92% $1,548 4.00% $1,935 5.00%
</TABLE>
49
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 16 - PARENT COMPANY FINANCIAL INFORMATION
Presented below are condensed financial statements for Atlantic BancGroup, Inc.
(parent only):
<TABLE>
<CAPTION>
Condensed Balance Sheets as of December 31: 1999 1998
---- ----
(Dollars In Thousands)
Assets
<S> <C> <C>
Cash and cash equivalents $ 10 $ --
Investment in and advances to subsidiary bank 5,467 --
Investment in mortgage banking subsidiary 18 --
Other assets 651 --
------- --------
Total $ 6,146 $ --
======= ========
Liabilities and Stockholders' Equity
Liabilities $ 742 $ --
Stockholders' equity 5,404 --
------- --------
Total $ 6,146 $ --
======= ========
1999 1998
Condensed Statements of Operations and Stockholders' Equity ---- ----
Years Ended December 31: (Dollars In Thousands)
Equity in net income of subsidiary bank $ 568 $ --
Equity in net loss of mortgage banking subsidiary (1) --
Other income --
Other expenses (68) --
------- --------
Net income 499 --
Stockholders' Equity:
Beginning of year 5,050 --
Stock warrants exercised and rounding 5 --
Net change in unrealized holding gains on
securities in subsidiary bank (150) --
------- --------
End of year $ 5,404 $ --
======= ========
Condensed Statements of Cash Flows
Years Ended December 31:
1999 1998
---- ----
(Dollars In Thousands)
Operating Activities
Net income $ 499 $ --
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Adjustment to reconcile net income to net cash
provided by operating activities:
<S> <C> <C>
Equity in undistributed earnings of subsidiaries (567) --
Other (43) --
------- --------
Net Cash Used In Operating Activities (111) --
Net Cash Used by Investing Activities:
Purchase of facilities (609) --
Net Cash Provided by Financing Activities:
Proceeds from other borrowings 742 --
Advances to mortgage banking subsidiary (18) --
Proceeds from stock warrants exercised 6 --
------- --------
Increase in Cash and Cash Equivalents 10 --
Cash and Cash Equivalents:
Beginning of year -- --
------- --------
End of year $ 10 $ --
======= ========
</TABLE>
50
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 17 - CHANGE IN ACCOUNTING PRINCIPLE
Atlantic has adopted Statement of Position 98-5, Reporting on the Costs of
Start-Up Activities ("SOP 98-5"). As a result of adopting SOP 98-5, Atlantic
expensed the unamortized balance of its organizational costs as of January 1,
1999, which totaled $95,000. This charge to earnings has been reported as a
cumulative effect of a change in accounting principle on the consolidated
statement of operations and comprehensive income net of income taxes of $36,000.
51
<PAGE>
55
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The information contained under the section captioned "Election of Directors" in
the registrant's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on April 27, 2000, to be filed with the SEC pursuant to
Regulation 14A within 120 days of their registrant's fiscal year end (the "Proxy
Statement"), as incorporated herein by reference.
SECTION 16(a) REPORTING REQUIREMENTS
Under Section 16(a) of the Securities Exchange Act of 1934, directors and
executive officers of Atlantic, and persons who beneficially own more than 10%
of Atlantic Common Stock, are required to make certain filings on a timely basis
with the Securities and Exchange Commission. Reporting persons are required by
SEC regulations to furnish the Atlantic with copies of all Section 16(a) forms
filed by them. Based on its review of the copies of Section 16(a) forms received
by it, and on written representations from reporting persons concerning the
necessity of filing a Form 5 - Annual Statement of Changes in Beneficial
Ownership, Atlantic believes that, during 1999, all filing requirements
applicable to reporting persons were met.
ITEM 10. EXECUTIVE COMPENSATION.
The information contained in the sections captioned "Committees of the Board of
Directors," and "Executive Compensation" and "Benefits" under "Election of
Directors" in the Proxy Statement, is incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained in the section captioned "Securities Ownership of
Management" under "Election of Directors" in the Proxy Statement, is
incorporated herein by reference.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained in the section captioned "Certain Relationships and
Related Transactions" under "Election of Directors" in the Proxy Statement is
incorporated herein by reference.
52
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
2.1 Agreement and Plan of Reorganization dated November
19, 1998, approved April 3, 1999, and completed May
5, 1999
3.1 Articles of Incorporation of Atlantic BancGroup, Inc.
included in the Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on
May 17, 1999
3.2 Bylaws of Atlantic BancGroup, Inc.
4.1 Specimen Stock Certificate of Atlantic BancGroup,
Inc. included in the Registration Statement on Form
8-A filed with the Securities and Exchange Commission
on May 17, 1999
4.2 Form of Common Stock Warrant and Agreement
10.1 Software License Agreement dated as of October 6,
1997, between Oceanside and File Solutions, Inc.
10.2 File Solutions Software Maintenance Agreement dated
as of July 15, 1997, between Oceanside and SPARAK
Financial Systems, Inc.
10.3 Remote Data Processing Agreement dated as of March 3,
1997, between Oceanside and Bankers Data Services,
Inc.
11 The computation of per share earnings is shown in the
consolidated financial statements of Atlantic
BancGroup, Inc. and Subsidiaries for December 31,
1999, contained in Item 7, on Page 40 of the Notes to
Consolidated Financial Statements
21.1 Subsidiaries of the Registrant
22.1 Atlantic BancGroup, Inc. Proxy Statement for the
Annual Meeting of Shareholders to be held on April
27, 2000
27.1 Financial Data Summary
(b) Reports on Form 8-K
A Form 8-K was filed by Atlantic on October 28, 1999, which reported
that the common stock for Atlantic BancGroup, Inc. was approved for
trading on the "Over the Counter Bulletin Board."
53
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has caused this report to be duly signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jacksonville Beach, State of Florida, on the 15th day of March, 1999.
ATLANTIC BANCGROUP, INC.
/s/ M. Michael Witherspoon
--------------------------
M. Michael Witherspoon
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the 15th day of March, 1999.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ Donald F. Glisson, Jr. Chairman of the Board
- ---------------------------------------
Donald F. Glisson, Jr.
/s/ M. Michael Witherspoon President and Chief Executive Officer
- ---------------------------------------
M. Michael Witherspoon
/s/ David L. Young Executive Vice President, Chief Financial Officer,
- --------------------------------------- and Corporate Secretary
David L. Young
/s/ Frank J. Cervone Director
- ---------------------------------------
Frank J. Cervone
/s/ Barry W. Chandler Director
- ---------------------------------------
Barry W. Chandler
/s/ Jimmy D. Dubberly Director
- ---------------------------------------
Jimmy D. Dubberly
/s/ Robin H. Scheiderman Director
- ---------------------------------------
Robin H. Scheiderman
/s/ G. Keith Watson Director
- ---------------------------------------
G. Keith Watson
/s/ Conrad L. Williams Director
- ---------------------------------------
Conrad L. Williams
/s/ Dennis M. Wolfson Director
- ---------------------------------------
Dennis M. Wolfson
</TABLE>
<PAGE>
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
Form 10-KSB
For Fiscal Year Ended December 31, 1999
EXHIBIT INDEX
Exhibit
No. Exhibit
2.1 Agreement and Plan of Reorganization dated November 19, 1998,
approved April 3, 1999, and completed May 5, 1999
3.2 Bylaws of Atlantic BancGroup, Inc.
4.2 Form of Common Stock Warrant and Agreement
10.1 Software License Agreement dated as of October 6, 1997, between
Oceanside and File Solutions, Inc.
10.2 File Solutions Software Maintenance Agreement dated as of July
15, 1997, between Oceanside and SPARAK Financial Systems, Inc.
10.3 Remote Data Processing Agreement dated as of March 3, 1997,
between Oceanside and Bankers Data Services, Inc.
21.1 Subsidiaries of the Registrant
22.1 Atlantic BancGroup, Inc. Proxy Statement for the Annual Meeting
of Shareholders to be held on April 27, 2000
27.1 Financial Data Summary
AGREEMENT AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated this
19th day of November, 1998 is being entered into by and between Oceanside Bank,
a state-chartered bank ("Bank"), Atlantic BancGroup, Inc., a Florida corporation
("Atlantic BancGroup") and Oceanside Interim Bank, an interim state-chartered
bank ("Interim").
The Board of Directors of the Bank have determined that it is in the
best interest of the Bank and its shareholders for the Bank to be reorganized
into a holding company form of ownership. The Bank has caused Atlantic BancGroup
to be organized under Florida law for the purpose of becoming the parent holding
company of the Bank. It is intended that the reorganization will be accomplished
by causing Atlantic BancGroup to become the sole shareholder of the newly-formed
Interim and then merging Interim into the Bank, so that as part of the merger,
all of the outstanding shares of Common Stock of the Bank, as well as all of the
outstanding Warrants of the Bank, will automatically be converted into and
become the shares of Common Stock of Atlantic BancGroup, which would then become
the sole shareholder of the Bank (the "Reorganization").
NOW, THEREFORE, the parties hereto, intending to be legally bound by
this Agreement, agree to effect the Reorganization of the Bank into the holding
company form of ownership in accordance with and subject to the terms and
conditions set forth below.
ARTICLE I
Merger of Oceanside Interim Bank into
Oceanside Bank and Related Matters
Section 1.1 On the Effective Date (as defined in Article V herein),
Interim will be merged with and into the Bank and the Bank shall then be the
"Resulting Bank" (the "Merger"), and the separate existence of Interim shall
cease. All assets and property (real, personal and mixed, tangible and
intangible, chooses in action, rights and credits) then owned by Interim, or
which would inure to it, shall immediately and automatically, by operation of
law and without any conveyance, transfer, or further action, become the property
of the Bank and shall be deemed to be a continuation of Interim. The Bank shall
succeed to the rights and obligations of Interim. The Bank shall operate under
its original Articles of Incorporation, a copy of which is attached hereto as
Exhibit A, under the name "Oceanside Bank".
Section 1.2 Following the Merger, the existence of the Bank which will
be the Resulting Bank, shall continue unaffected and unimpaired by the Merger,
with all rights, privileges, immunities and powers, and subject to all the
duties and liabilities, of a state chartered bank organized under Florida law,
and the Articles of Incorporation, a copy of which is attached hereto as Exhibit
A, and Bylaws of the Bank as in effect on the Effective Date, shall continue in
full force and effect.
Section 1.3 From and after the Effective Date, and subject to the
actions of the Board of Directors of the Bank the business presently conducted
by the Bank will continue to be conducted by it, as a wholly-owned subsidiary.
The then executive officers of the Bank will continue in the positions they
currently hold until such time as the Board of Directors of the Bank determines
otherwise.
<PAGE>
The following is a list of the current Executive Officers:
Position with
Name Oceanside Bank
---- --------------
M. Michael Witherspoon Chairman and
Chief Executive Officer
Barry W. Chandler President
David L. Young Senior Vice President and
Chief Financial Officer
Section 1.4 On the Effective Date, the number of directors of the Bank
as stated in its Articles of Incorporation, shall be not less than five (5). The
directors set forth below shall serve as the interim directors of Atlantic
BancGroup until the first Annual Meeting of Shareholders. On the Effective Date,
the then Board of Directors of the Bank shall continue to serve as the Board of
Directors of the Bank until such time as their successors have been elected and
qualified. The names, resident addresses and terms of office of the directors of
the Bank on this date are as follows:
Name Address
---- -------
Frank J. Cervone 91 Nina Lane
Ponte Vedra Beach, FL 32082
Barry W. Chandler 1022 Seawood Drive
Neptune Beach, FL 32266
Jimmy D. Dubberly 108 Greenwood Drive
Glennville, GA 30427
Donald F. Glisson, Jr. 2195 Osprey Point Drive
Jacksonville, FL 32224
Robin Scheiderman 3419 Lands End Drive
St. Augustine, Florida 32095
Gordon K. Watson 1262 Fish Hook Way
Ponte Vedra Beach, FL 32082
Conrad I. Williams 314 12th Street
Atlantic Beach, FL 32233
M. Michael Witherspoon 3343 Lighthouse Pointe Lane
Jacksonville, FL 32250
Dennis M. Wolfson 9548 Waterford Road
Jacksonville, FL 32257
Section 1.5 The home office of Oceanside Bank is located at 1315 South
Third Street, Jacksonville Beach, Florida 32250, and it shall continue to be the
home office of the Bank from and after the Effective Date. The Bank currently
operates and intends to continue to operate the following full-service branch
offices after the Reorganization:
<PAGE>
North Beach Office
560 Atlantic Boulevard
Neptune Beach, Florida 32266
Section 1.6 The Bank currently does not have trust powers and does not
anticipate having trust powers at the Effective Date of the Reorganization.
ARTICLE II
Conversion of Stock
Section 2.1 The manner and basis of converting the Common Stock of the
parties to this Agreement shall be as follows:
A. On the Effective Date, all shares of Common Stock of
Atlantic BancGroup held by the Bank shall be canceled and shall no
longer be deemed to be issued or outstanding for any purpose.
B. On the Effective Date, except for those shares for which
"dissenters' rights" are exercised, for each share of Common Stock,
$5.00 par value, of the Bank ("Bank Common Stock") issued and
outstanding immediately prior to the Effective Date shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and become one (1) share of fully paid and
non-assessable Common Stock, par value $.01 per share, of Atlantic
BancGroup ("Atlantic BancGroup Common Stock"). From and after the
Effective Date, each certificate which, prior to the Effective Date,
represented shares of the Bank shall evidence ownership of Atlantic
BancGroup on the basis set forth herein.
C. All of the outstanding Warrants of Oceanside Bank
(entitling the holder thereof to purchase one share of Common Stock at
$10.00 per share) will be converted into and exchanged for, on a
one-for-one basis, Warrants for Atlantic BancGroup (entitling the
holder thereof to acquire one share of Atlantic BancGroup Common Stock,
$.01 per share par value, at $10.00 per share). From and after the
Effective Date, each warrant which, prior to the Effective Date,
represented rights to purchase shares in the Bank shall provide the
holder thereof the same rights to purchase shares in Atlantic
BancGroup.
D. Each share of Common Stock of Interim issued and
outstanding immediately prior to the Effective Date shall, on the
Effective Date, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become one share of
fully paid and non-assessable Common Stock, $5.00 par value, of the
Bank and shall not be further converted into shares of Atlantic
BancGroup so that from and after the Effective Date, all of the issued
and outstanding shares of Bank Common Stock shall be held by Atlantic
BancGroup. From and after the Effective Date, each certificate, if any,
which, prior to the Effective Date, represented shares of Interim,
shall evidence ownership of the Bank on the basis hereinabove set
forth.
<PAGE>
E. At or prior to the Effective Date, the Bank shall
designate an exchange agent to receive from the holders of the Bank
stock certificates which immediately prior to the Effective Date
represented Bank Common Stock and to exchange such certificates for
certificates of Atlantic BancGroup Common Stock as heretofore provided.
Promptly after the Effective Date, the exchange agent shall mail to
each record holder, as of the Effective Date, any outstanding
certificate or certificates, which prior to the Effective Date
represented shares of Bank Common Stock, a letter of transmittal (which
shall specify how delivery shall be effected, and that risk of loss and
title to such certificate or certificates shall pass only upon proper
delivery of such certificate or certificates, together with a properly
executed letter of transmittal, to the exchange agent at its address
stated therein) and instructions for use in effecting the surrender of
such certificate or certificates for exchange therefore. Upon surrender
to the exchange agent for such certificate or certificates, together
with such properly executed letter of transmittal, the exchange agent
shall exchange such certificate or certificates for stock certificates
of Atlantic BancGroup Common Stock as provided herein. Until so
surrendered, each such outstanding certificate which, prior to the
Effective Date, represented shares of Bank Common Stock shall be deemed
for all corporate purposes to evidence the ownership of the number of
whole shares of Atlantic BancGroup Common Stock into which such shares
of Bank Common Stock shall have been converted.
F. The conversion and exchange of shares of Bank Common
Stock and Warrants into shares of Atlantic BancGroup Common Stock and
Warrants, pursuant to this Article II, shall be in full satisfaction of
all rights pertaining to the converted shares and Warrants.
G. On the Effective Date, the holders of certificates
formerly representing Bank Common Stock outstanding on the Effective
Date shall cease to have any rights with respect to Bank Common Stock,
and their sole rights shall be with respect to Atlantic BancGroup
Common Stock into which their shares of Bank Common Stock shall have
been converted as a result of the Merger. On the Effective Date, the
holders of Warrants outstanding on the Effective Date shall cease to
have any rights with respect to Bank Common Stock , and their sole
rights shall be with respect to Atlantic BancGroup Common Stock into
which their shares of Bank Common Stock shall have been converted as a
result of the Merger.
H. No share of Bank Common Stock as to which dissenters'
appraisal rights have been validly exercised and perfected and for
which cash is payable pursuant to law (Dissenting Shares) shall be
converted into the right to receive Atlantic BancGroup, Inc. Common
Stock. In lieu thereof, the holder of Dissenting Shares shall be
entitled to payment in accordance with the applicable provisions of
Section 658.44, Florida Statutes, (the Dissenter/Appraisal Statute)
applicable to state-chartered banks. If any holder of Dissenting Shares
shall effectively withdraw or lose his dissenter rights under the
Dissenter/Appraisal Statute, such Dissenting Shares shall be converted
into Atlantic BancGroup Common Stock in accordance with the provisions
hereof. Dissenting Shares acquired by the Bank pursuant to payment
shall be held by the Bank as authorized but unissued shares. This
Agreement is subject to the condition that properly exercised dissenter
shares shall not exceed more than
<PAGE>
10% of the total number of shares outstanding or approximately 59,475
shares in order for this to be a tax free reorganization. Under the
terms of this Plan, management may chose to honor up to 10% in
dissenter shares in order to consummate the transaction. In order to
remain a "well capitalized bank" under the FDIC rules, the Bank intends
to do a private placement offering to provide sufficient capital to the
Bank to pay for dissenter shares that are tendered.
ARTICLE III
Conditions
Section 3.1 The obligations of the Bank, Atlantic BancGroup and Interim
to effect the Merger and otherwise consummate the Reorganization, which are the
subject matter hereof, shall be subject to satisfaction of the following
conditions:
A. The approval of this Agreement by a majority of the
outstanding shares of Bank Common Stock at a meeting of the
shareholders of the Bank duly called at which a quorum is present.
B. Receipt of any and all approvals from The Florida
Department of Banking and Finance ("Florida Department"), the Federal
Reserve Board ("FRB"), and the Federal Deposit Insurance Corporation
("FDIC") and any other governmental agency having jurisdiction
necessary for the lawful consummation of the Merger, and the issuance
and delivery of Atlantic BancGroup Common Stock as contemplated by this
Agreement.
C. Receipt of a ruling from the Internal Revenue Service or
an opinion from its legal counsel that the Merger will be treated as a
non-taxable transaction under Section 351 or other applicable
provisions of the Internal Revenue Code of 1986, as amended, and that
no gain or loss will be recognized by the Bank's shareholders upon the
exchange of Bank Common Stock held by them solely for Atlantic
BancGroup Common Stock.
D. Not more than 10% of the outstanding shares shall have
exercised dissenter's rights as provided for in Section 2.1(H) herein.
ARTICLE IV
Termination
Section 4.1 This Agreement may be terminated and the Merger need not be
consummated at the election of any of the parties hereto at any time before the
Effective Date, in the event that, for any reason, consummation of the holding
company formation contemplated by this Agreement is inadvisable in the opinion
of the Bank, Atlantic BancGroup, or Interim. Termination of this Agreement shall
be effected by written notice by the terminating party to the other parties.
Upon giving of such notice, this Agreement shall be terminated and there shall
be no liability hereunder or on account of such termination on the part of the
Bank, Atlantic BancGroup and/or Interim, or the directors, officers, employees,
or agents of any of them.
<PAGE>
Section 4.2 In the event of termination of this Agreement, the Bank
shall pay the fees and expenses incurred in connection with this Agreement and
the proposed formation of a holding company.
ARTICLE V
Effective Date of Merger
Section 5.1 Upon satisfaction or waiver (in accordance with the
provisions of this Agreement) of each of the conditions set forth in Article
III, the parties hereto shall execute and cause to be filed such certificates or
further documents as are required under applicable law, rule or regulation with
the Florida Department, the FRB and/or the FDIC and with such other federal and
state regulatory agencies as may be required in order to effect the Merger
provided for herein.
Section 5.2 The date and time by which all of such filings are
completed and accepted by the applicable agencies is referred to in this
Agreement as the "Effective Date".
ARTICLE VI
Miscellaneous
Section 6.1 Any of the terms or conditions of this Agreement, which may
legally be waived, may be waived at any time by any party hereto which is
entitled to the benefit thereof, or any of such terms or conditions may be
amended or modified in whole or in part at any time, to the extent authorized by
applicable law, by an agreement in writing, executed in the same manner as this
Agreement.
Section 6.2 This Agreement shall be governed by and construed under
Florida law, and where applicable, federal law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Reorganization as of the date first above written.
OCEANSIDE BANK
Attest: By:
---------------
David L. Young M. Michael Witherspoon
Chairman of the Board and
Chief Executive Officer
ATLANTIC BANCGROUP, INC.
Attest: By:
---------------
David L. Young M. Michael Witherspoon
Chairman of the Board and
Chief Executive Officer
OCEANSIDE INTERIM BANK
(In Organization)
Attest: By:
---------------
David L. Young Barry W. Chandler
President
ARTICLES OF INCORPORATION
OF
ATLANTIC BANCGROUP, INC.
In compliance with the requirements of Chapter 607, Florida Statutes,
the undersigned, being a natural person, does hereby act as an incorporator in
adopting and filing the following Articles of Incorporation for the purpose of
organizing a business corporation.
ARTICLE I - NAME
The name of the corporation is Atlantic BancGroup, Inc.
("Corporation"). The initial street address of the principal office of the
Corporation is 1315 South Third Street, Jacksonville Beach, Florida 32250 or at
such other place within the State of Florida as the Board of Directors may
designate.
ARTICLE II - NATURE OF BUSINESS
The Corporation has been formed to be the bank-holding company of
Oceanside Bank, state- chartered bank. The Corporation may engage in or transact
any or all lawful activities or business permitted under the laws of the United
States and the State of Florida, or any other state, country, territory or
nation.
ARTICLE III - CAPITAL STOCK
Section 1 - Classes of Stock: The total number of shares of all classes
of capital stock which the Corporation shall have authority to issue is
12,000,000, consisting of:
A. 2,000,000 shares of preferred stock ("Preferred Stock"); and
B. 10,000,000 shares of common stock, par value one cent ($0.01)
per share ("Common Stock").
Section 2 - Common Stock: There shall be one class of Common Stock.
Each share of Common Stock shall have the same relative rights and be identical
in all respects with every other share of Common Stock. The holders of Common
Stock are entitled to elect the members of the Board of Directors of the
Corporation and such holders are entitled to vote as a class on all matters
required or permitted to be submitted to the shareholders of the Corporation.
Each holder of Common Stock is entitled to one vote per share. No holder of any
class of stock of the Corporation has preemptive rights with respect to the
issuance of shares of that or any other class of stock and the Common Stock is
not entitled to cumulative voting rights with respect to the election of
directors.
Section 3 - Preferred Stock: The Board of Directors is authorized,
subject to any limitations prescribed by law, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable laws of the State of Florida (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series and to fix the stated
value, designation, powers, preferences and right of the shares of each such
<PAGE>
series and any qualifications, limitations or restrictions thereof. The number
of authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation.
ARTICLE IV - INITIAL REGISTERED AGENT AND STREET ADDRESS
The name of the registered agent is Igler & Dougherty, P.A., 1501 Park
Avenue East, Tallahassee, Florida 32301, which address is also the address of
the Registered Office of the Corporation.
ARTICLE V - MANAGEMENT OF THE CORPORATION
Section 1 - Authority of the Board: The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly conferred upon them
by the Florida Statutes or by these Articles of Incorporation or the Bylaws of
the Corporation, the directors are hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
Section 2 - Action by Shareholders: Any action required or permitted to
be taken by the shareholders of the Corporation must be effected at a duly
called Annual or Special Meeting of Shareholders of the Corporation and may not
be effected by any consent in writing by such shareholders.
Section 3 - Special Meeting of Shareholders: Special Meeting of
Shareholders of the Corporation may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), the Chairman of the Board or Chief Executive Officer of the
Corporation, or by shareholders holding at least 20% of the outstanding shares
of the Corporation.
ARTICLE VI - DIRECTORS
Section 1 - Number of Directors: The Board of Directors of the
Corporation shall be comprised of not less than three (3) nor more than fifteen
(15) directors and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board as
set forth in the Corporation's Bylaws. The Board of Directors is authorized to
increase the number of directors by no more than two and to immediately appoint
persons to fill the new director positions until the next Annual Meeting of
Shareholders, at which meeting the new director positions shall be filled by
persons elected by the shareholders of the voting power of all the then-
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.
Section 2 - Election and Term: Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. The term of the initial directors of the
Corporation expires at the first shareholders' meeting at which directors are
elected.
<PAGE>
Section 3 - Classes: The Directors shall be divided into three classes,
as nearly equal in number as reasonably possible, with the term of office of the
first class (Class I) to expire at the 1999 Annual Meeting of the Shareholders,
the term of office of the second class (Class II) to expire at the 2000 Annual
Meeting of Shareholders and the term of office of the third class (Class III) to
expire at the 2001 Annual Meeting of Shareholders. At each Annual Meeting of
Shareholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding Annual Meeting of Shareholders
after their election.
Section 4 - Vacancies: Subject to the rights of the holders of any
series of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors of any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, though less than a
quorum. Directors so chosen shall hold office for a term expiring at the next
Annual Meeting of Shareholders. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
Section 5 - Notice: Advance notice of shareholder nominations for the
election of directors and of business to be brought by shareholders before any
meeting of the shareholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
Section 6 - Removal by Shareholders: Subject to the rights of the
holders of any series of Preferred Stock then outstanding, any director, or the
entire Board of Directors, may be removed from office at any time by a majority
of the voting power of all of the then-outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class.
Section 7- Initial Board of Directors: The initial Board of Directors
shall consist of ten (10) members. The names and address of the persons who will
serve on the initial Board of Directors are:
Name Address
---- -------
Frank J. Cervone 91 Nina Lane
Ponte Vedra Beach, FL 32082
Barry W. Chandler 1022 Seawood Drive
Neptune Beach, FL 32266
Jimmy D. Dubberly 108 Greenwood Drive
Glennville, GA 30427
Donald F. Glisson, Jr. 2195 Osprey Point Drive
Jacksonville, FL 32224
Willard B. Nicholson, Jr. 699 Beach Avenue
Atlantic Beach, FL 32233
<PAGE>
Robin Scheiderman 3419 Lands End Drive
St. Augustine, Florida 32095
Gordon K. Watson 1262 Fish Hook Way
Ponte Vedra Beach, FL 32082
Conrad I. Williams 314 12th Street
Atlantic Beach, FL 32233
M. Michael Witherspoon 3343 Lighthouse Pointe Lane
Jacksonville, FL 32250
Dennis M. Wolfson 9548 Waterford Road
Jacksonville, FL 32257
ARTICLE VIII - ACQUISITION OFFERS
The Corporation shall not be merged or consolidated with another
corporation or entity and the Corporation shall not sell or otherwise dispose of
all or substantially all of the properties or assets of the Corporation unless
such merger, consolidation, sale or disposition is approved by a vote of at
least 70% of the outstanding shares of common stock of the Corporation.
The Board of Directors of the Corporation, when evaluating any offer of
another Person to: (i) make a tender or exchange offer for any equity security
of the Corporation, (ii) merge or consolidate the Corporation with another
corporation or entity, or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Corporation and its shareholders, give due consideration to all
relevant factors including, without limitation, the social and economic effect
of acceptance of such offer on the Corporation's present and future customers
and employees and those of its Subsidiaries; on the communities in which the
Corporation and its Subsidiaries operate or are located; on the ability of the
Corporation to fulfill its corporate objectives as a financial institution
holding company and on the ability of its subsidiary financial institutions to
fulfill the objectives of such institutions under applicable statutes and
regulations.
ARTICLE VIII - INCORPORATOR
The name and street address of the person signing these Articles of
Incorporation is:
Name Address
---- -------
Sam Lester, Esq. Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
ARTICLE IX - INDEMNIFICATION
The Corporation shall indemnify its directors, officers, employees, and
agents to the fullest extent permitted by Florida law.
<PAGE>
ARTICLE XIII - AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by Chapter
607, Florida Statutes, and all rights conferred upon shareholders are granted
subject to this reservation; however, an affirmative vote of at least 70% of the
outstanding common stock of the Corporation shall be necessary to amend Section
6 of Article VI and Article VIII of these Articles.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this _____ day of _______________, 1998.
---------------------------
Sam Lester, Esq.
Incorporator/General Counsel
<PAGE>
CERTIFICATE OF DESIGNATION OF
REGISTERED AGENT/REGISTERED OFFICE
PURSUANT TO THE PROVISIONS OF SECTION 607.0501, FLORIDA STATUTES, THE
UNDERSIGNED CORPORATION, ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA,
SUBMITS THE FOLLOWING STATEMENT IN DESIGNATING THE REGISTERED THE REGISTERED
OFFICE/REGISTERED AGENT, IN THE STATE OF FLORIDA.
1. The name of the corporation is Atlantic BancGroup, Inc.
-----------------------
2. The name and address of the registered agent and office is:
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated in this certificate, I hereby
accept the appointment as registered agent and agree to act in this capacity. I
further agree to comply with the provisions of all statutes relating to the
proper and complete performance of my duties, and I am familiar with and accept
the obligations of my position as registered agent.
Igler & Dougherty, P.A.
By: ____________________ _________________
Sam Lester, Esq. Date
BYLAWS
OF
ATLANTIC BANCGROUP, INC.
ARTICLE I
Stockholders
Section 1. The Annual Meeting of Stockholders of Atlantic BancGroup,
Inc. ("Corporation") shall be held on such date, and at such time and at such
place within or without the State of Florida, as may be fixed by the Board of
Directors, for the purpose of electing directors and for the transaction of such
other business as may properly be brought before the meeting.
Section 2. (a) Subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock of the Corporation as
to dividends or upon liquidation ("Preferred Stock"), any action required or
permitted to be taken by the stockholders of the Corporation must be effected at
an Annual or Special Meeting of Stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders. Subject to the rights
of the holders of any class or series of Preferred Stock, Special Meetings of
Stockholders of the Corporation may be called: (i) by the Board of Directors
pursuant to a resolution adopted by a majority of the total number of directors
which the Corporation would have if there were no vacancies on the Board of
Directors (hereinafter the "Full Board"); (ii) by the Chief Executive Officer;
(iii) by the Chairman of the Board of Directors; or (iv) by stockholders of the
Corporation holding at least 20% of the outstanding shares of Common Stock of
the Corporation.
(b) Special Meetings of Stockholders may be held at such time
and at such place within or without the State of Florida as may be stated in the
call. Section 3. Notice of the time and place of every meeting of stockholders
shall be delivered personally or mailed at least ten days and not more than
sixty days prior thereto to each stockholder of record entitled to vote at his
address as it appears on the records of the Corporation. Such further notice
shall be given as may be required by law. Business transacted at any Special
Meeting shall be confined to the purpose or purposes stated in the notice of
such Special Meeting. Meetings may be held without notice if all stockholders
entitled to vote are present or if notice is waived by those not present.
Section 4. At all meetings of stockholders any stockholder entitled to
vote may vote in person or by proxy. Such proxy or any revocation or amendment
thereof, shall be in writing, but need not be sealed, witnessed or acknowledged,
and shall be filed with the Secretary at or before the meeting.
Section 5. Except as otherwise provided by law or by the Articles of
Incorporation, the presence, in person or by proxy, of the holders of record of
shares of capital stock of the Corporation entitling the holders thereof to cast
a majority of the votes entitled to be cast by the holders of shares of capital
stock of the Corporation entitled to vote shall constitute a quorum at all
meetings of the stockholders. Where a separate vote by a class or classes is
required, a majority of the shares of such class or classes entitled to vote
thereon present in person or by proxy shall constitute a quorum entitled to take
action with respect to that vote on that matter. The chairman of the meeting or
the holders of record of a majority of such shares so present or represented may
adjourn the meeting from time
<PAGE>
to time, whether or not there is such a quorum. No notice of the time and place
of adjourned meetings need be given except as required by law.
Section 6. Election of directors at all meetings of the stockholders at
which directors are to be elected shall be by ballot, and, except as otherwise
set forth in any Preferred Stock Designation (as defined in Article III, Section
3 of the Articles of Incorporation) with respect to the right of the holders of
any class or series of Preferred Stock to elect additional directors under
specified circumstances, a plurality of the votes cast thereat shall elect.
Except as otherwise provided by law, the Articles of Incorporation, any
Preferred Stock Designation, the Bylaws of the Corporation or resolution adopted
by the Full Board, all matters other than the election of directors submitted to
the stockholders at any meeting shall be decided by a majority of the votes cast
with respect thereto.
Section 7. (a) At any Annual Meeting of Stockholders, only such
business shall be conducted as shall have been brought before the meeting (i) by
or at the direction of the Board of Directors or (ii) by any stockholder of the
Corporation who is entitled to vote with respect thereto and who complies with
the notice procedures set forth in this Section 7(a). For business to be
properly brought before an Annual Meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered or mailed to and received
at the principal executive offices of the Corporation not less than 60 days
prior to the date of the Annual Meeting; provided, however, that in the event
that less than 40 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the close of business on the 10th day following
the day on which such notice of the date of the Annual Meeting
was mailed or such public disclosure was made. A stockholder's notice to the
Secretary shall set forth as to each matter such stockholder proposes to bring
before the Annual Meeting (i) a brief description of the business desired to be
brought before the Annual Meeting and the reasons for conducting such business
at the Annual Meeting, (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (iii) the class
and number of shares of the Corporation's capital stock that are beneficially
owned by such stockholder and (iv) any material interest of such stockholder in
such business. Notwithstanding anything in these Bylaws to the contrary, no
business shall be brought before or conducted at an annual meeting except in
accordance with the provisions of this Section 7(a). The officer of the
Corporation or other person presiding over the annual meeting shall, if the
facts so warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Section 7(a) and, if he should so determine, he shall so declare to the meeting
and any such business so determined to be not properly brought before the
meeting shall not be transacted.
At any Special Meeting of Stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the party who called such meeting pursuant to Article V of the Articles of
Incorporation and Article I, Section 2 of these Bylaws.
(b) Only persons who are nominated in accordance with the
procedures set forth in these Bylaws shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders at which directors are to
be elected only (i) by or at the direction of the Board of Directors or (ii) by
any stockholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
<PAGE>
this Section 7(b). Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made by timely notice in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice shall
be delivered or mailed to and received at the principal executive offices of the
Corporation not more than 60 days or less than 10 days prior to the date of the
meeting; provided, however, that in the event that less than 40 days' notice or
prior disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (i) as to each person whom such stockholder
proposes to nominate for election or re-election as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); and (ii) as to the
stockholder giving the notice (x) the name and address, as they appear on the
Corporation's books, of such stockholder and (y) the class and number of shares
of the Corporation's capital stock that are beneficially owned by such
stockholder. At the request of the Board of Directors any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the provisions of this Section 7(b). The officer of the Corporation or
other person presiding at the meeting shall, if the facts so warrant, determine
that a nomination was not made in accordance with such provisions and, if he or
she should so determine, he or she shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 8. There shall be appointed, for all meetings of the
stockholders, two Inspectors of the vote. Such Inspectors shall first take and
subscribe an oath or affirmation faithfully to execute the duties of Inspector
at such meeting with strict impartiality and according to the best of their
ability. Unless appointed in advance of any such meeting by the Board of
Directors, such Inspectors shall be appointed for the meeting by the person
presiding thereat. No director or candidate for the office of director shall be
appointed as such Inspector. Such Inspectors shall receive, examine and tabulate
all ballots and proxies, including proxies filed with the Secretary, shall
determine the presence or absence of a quorum and shall be responsible for
tallying and certifying the vote taken on any matter at each meeting which is
required to be tallied and certified by them in the resolution of the Board of
Directors appointing them or the appointment of the person presiding at such
meeting, as the case may be.
ARTICLE II
Directors
Section 1. (a) Subject to the rights of the holders of any class or
series of Preferred Stock to elect directors under specified circumstances, the
number of directors shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board.
Except for the Initial Board of Directors (as that term is defined in Article VI
of the Articles of Incorporation) who will serve until the first stockholders
meeting, the directors (other than those who may be elected by the holders of
any class or series of Preferred Stock) shall be divided, with respect to the
time for which they severally hold office, into three classes. After the first
<PAGE>
stockholders meeting, the term of office of the first class will expire at the
2000 Annual Meeting of Stockholders, the term of office of the second class to
expire at the 2001 Annual Meeting of Stockholders and the term of office of the
third class to expire at the 2002 Annual Meeting of Stockholders, with each
director to hold office until his or her successor shall have been duly elected
and qualified. At each Annual Meeting of Stockholders, commencing with the 2000
Annual Meeting, directors elected to succeed those directors whose terms then
expire shall be elected for a term of office to expire at the third succeeding
Annual Meeting of Stockholders after their election, with each director to hold
office until his or her successor shall have been duly elected and qualified.
(b) A whole number of directors equal to at least one third of
the Full Board shall constitute a quorum for the transaction of business, but if
at any meeting of the Board of Directors there shall be less than a quorum
present a majority of those present may adjourn the meeting from time to time
until a quorum shall have been obtained.
(c) Subject to the rights of the holders of any class or
series of Preferred Stock, and unless the Board of Directors otherwise
determines, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office, though less than a quorum, and directors so chosen shall hold
office for a term expiring at the Annual Meeting of Stockholders at which the
term of office of the class to which they have been elected expires and until
such director's successor shall have been duly elected and qualified. No
decrease in the number of authorized directors constituting the Full Board shall
shorten the term of any incumbent director.
(d) Subject to the rights of the holders of any class or
series of Preferred Stock, any director, or the entire Board of Directors, may
be removed from office at any time and only by the affirmative vote of the
holders of at least a majority of the voting power of all of the
then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"), voting together as
a single class.
Section 2. Meetings of the Board of Directors shall be held at such
place within or without the State of Florida as may from time to time be fixed
by, or determined in the manner provided by, resolution of the Board, or as may
be specified in the call of any meeting. Regular meetings of the Board of
Directors shall be held at such times as may from time to time be fixed by, or
determined in the manner provided by, resolution of the Board, and Special
Meetings may be held at any time upon the call of the Executive Committee or of
the Chairman of the Board of Directors by oral, telegraphic or written notice,
duly served on or sent or mailed to each director not less than two days before
such meeting. A meeting of the Board may be held without notice immediately
after the annual meeting of stockholders at the same place at which such meeting
was held. Notice need not be given of regular meetings of the Board held at
times and places fixed by resolution of the Board. A meeting may be held at any
time without notice if all the directors are present or if those not present
waive notice of the meeting in writing, either before or after such meeting.
<PAGE>
Section 3. The Board of Directors may, in its discretion, by resolution
passed by a majority of the Full Board, designate an Executive Committee to
consist of the Chairman, President and Chief Executive Officer of the
Corporation and such number of other directors as the Board may from time to
time determine (not less than three), which Committee, to the extent provided in
said resolution, shall have, and may exercise when the Board is not in session,
the powers of the Board in the management of the business and affairs of the
Corporation, except the power to change the membership or to fill vacancies in
the Board of said Committee. The Board shall have the power at any time to
change the membership of said Committee (subject to the requirement that the
Chairman, President and Chief Executive Officer be a member thereof), to fill
vacancies in it, or to dissolve it. The Executive Committee may make rules for
the conduct of its business and may appoint such committees and assistants as it
shall from time to time deem necessary. One-half of the members of such
Committee shall constitute a quorum.
Section 4. The Board of Directors may from time to time, in its
discretion, by resolution passed by a majority of the Full Board, designate, and
appoint, from the directors, other committees of one or more persons which shall
have and may exercise such lawfully delegable powers and duties conferred or
authorized by the resolutions of designation and appointment. Unless the Board
shall otherwise provide, a majority of any such committee may determine its
action and fix the time and place of its meetings. The Board shall have power at
any time to change the members of any such committee, to fill vacancies, and to
discharge any such committee.
Section 5. The Executive Committee, and any other committee so
designated if the resolution which designates such committee or a supplemental
resolution of the Board shall so provide, may exercise the power and authority
of the Board to declare a dividend, to authorize the issuance of stock or to
adopt a certificate of ownership and merge pursuant to Section 607.127 of the
Florida General Corporation Act.
ARTICLE III
Officers
Section 1. The Board of Directors as soon as may be practicable after
the Annual Meeting of Stockholders shall choose a Chief Executive Officer of the
Corporation, a President, one or more Vice Presidents, a Secretary and a
Treasurer and from time to time may choose such other officers as it may deem
proper. The Chairman of the Board of Directors shall be chosen from the
directors.
Section 2. The term of office of all officers shall be until the next
annual election of officers and until their respective successors are chosen,
but any officer may be removed from office at any time by the affirmative vote
of a majority of the members of the Full Board.
Section 3. All officers chosen by the Board of Directors shall each
have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article III. Such officers shall also
have such powers and duties as from time to time may be conferred by the Board
of Directors or by any committee thereof.
<PAGE>
Section 4. The Chief Executive Officer of the Corporation shall,
subject to the control of the Board of Directors, have general power over the
management and oversight of the administration and operation of the
Corporation's business and general supervisory power and authority over its
policies and affairs. He shall see that all orders and resolutions of the Board
of Directors and of any committee thereof are carried into effect.
Section 5. The President shall act in a general executive capacity and
shall assist the Chief Executive Officer of the Corporation in the
administration and operation of the Corporation's business and in the
supervision of its policies and affairs. During the absence or disability of the
Chief Executive Officer, the President shall have and exercise all the powers of
the Chief Executive Officer.
Each meeting of the stockholders and of the Board of Directors shall be
presided over by the Chairman, or in his absence the Chief Executive Officer, or
in his absence, by such officer as has been designated by the Board of Directors
or, in his absence, by such officer or other person as is chosen at the meeting.
The Secretary or, in his absence, the General Counsel of the Corporation or such
officer as has been designated by the Board of Directors or, in his absence,
such officer or other person as is chosen by the person presiding, shall act as
secretary of each such meeting.
Section 6. The Vice President or Vice Presidents shall perform the
duties of the President in his absence or during his disability to act. In
addition, the Vice Presidents shall perform the duties and exercise the powers
usually incident to their respective officers and/or such other duties and
powers as may be properly assigned to them from time to time by the Board of
Directors, the Chairman of the Board or the President.
Section 7. The Secretary or an Assistant Secretary shall issue notices
of meetings, shall keep their minutes, shall have charge of the seal and the
corporate books, shall perform such other duties and exercise such other powers
as are usually incident to such offices and/or such other duties and powers as
are properly assigned thereto by the Board of Directors, the Chairman, the Chief
Executive Officer or the President.
Section 8. The Treasurer shall have charge of all monies and securities
of the Corporation, other than monies and securities of any division of the
Corporation which has a treasurer or financial officer appointed by the Board of
Directors, and shall keep regular books of account. The funds of the Corporation
shall be deposited in the name of the Corporation by the Treasurer with such
banks or trust companies as the Board of Directors or the Executive Committee
from time to time shall designate. He shall sign or countersign such instruments
as require his signature, shall perform all such duties and have all such powers
as are usually incident to such office and/or such other duties and powers as
are properly assigned to him by the Board of Directors, the Chairman, the Chief
Executive Officer or the President, and may be required to give bond for the
faithful performance of his duties in such sum and with such surety as may be
required by the Board of Directors.
Section 9. The Board of Directors may appoint one or more assistant
secretaries and one or more assistant treasurers, or one appointee to both such
positions, which officers shall have such powers and shall perform such duties
as are provided in these Bylaws or as may be assigned to them by the Board of
Directors, the Chairman, the Chief Executive Officer or the President.
<PAGE>
ARTICLE IV
Certificates of Stock
Section 1. The interest of each stockholder of the Corporation shall be
evidenced by certificates for shares of stock in such form as the Board of
Directors may from time to time prescribe. The shares of the stock of the
Corporation shall be transferred on the books of the Corporation by the holder
thereof in person or by his attorney, upon surrender for cancellation of
certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof of
the authenticity of the signature as the Corporation or its agents may
reasonably require.
Section 2. The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution prescribe,
which resolution may permit all or any of the signatures on such certificate to
be in facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
Section 3. The Board of Directors may fix a record date or direct that
the stock transfer books be closed for a stated period for the purpose of making
any proper determination with respect to stockholders, including which
stockholders are entitled to notice of or to vote at a meeting or any
adjournment thereof, receive payment of any dividend or other distribution, or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock. The record date may not be more than 60
nor less than 10 days before the date on which the action requiring the
determination will be taken; the transfer books may not be closed for a period
longer than 20 days; and, in the case of a meeting of stockholders, the closing
of the transfer books shall be at least 10 days before the date of the meeting.
Section 4. The Board of Directors may determine the conditions upon
which a new certificate of stock will be issued to replace a certificate which
is alleged to have been lost, stolen, mutilated or destroyed, and the Board of
Directors may delegate to any officer of the Corporation the power to make such
determination and to cause such replacement certificates to be issued.
ARTICLE V
Checks, Notes, Etc.
All checks on the Corporation's bank accounts and all drafts, bills of
exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such person or persons
as shall be thereunto authorized from time to time by the Board of Directors or
by the Committee or officer or officers of the Corporation to whom the Board
shall have delegated the power to authorize such signing; provided, however,
that the signature of any person so authorized on checks and drafts drawn on the
Corporation's dividend and special accounts may be in facsimile if the Board of
Directors or the Committee or officer or officers, whichever shall have
authorized such person to sign such checks or drafts, shall have authorized such
<PAGE>
person to sign in facsimile; and provided further that in case notes or other
instruments for the payment of money (other than notes, bonds or debentures
issued under a trust instrument of the Corporation) are required to be signed by
two person, the signature thereon of only one of the persons signing any such
note or other instrument may be in facsimile, and that in the case of notes,
bonds or debentures issued under a trust instrument of the Corporation and
required to be signed by two officers of the Corporation, the signatures of both
such officers may be in facsimile if specifically authorized and directed by the
Board of Directors of the Corporation and if such notes, bonds or debentures are
required to be authenticated by a corporate trustee which is a party to the
trust instrument; and provided further that in case any person or persons who
shall have signed any such note or other instrument, either manually or in
facsimile, shall have ceased to be a person or persons so authorized to sign any
such note or other instrument, whether because of death or by reason of any
other fact or circumstance, before such note or other instrument shall have been
delivered by the Corporation, such note or other instrument may, nevertheless,
be adopted by the Corporation and be issued and delivered as though the person
or persons who so signed such note or other instrument had not ceased to be such
a person or persons.
ARTICLE VI
Offices
The Corporation may have offices outside of the State of Florida at
such places as shall be determined from time to time by the directors.
ARTICLE VII
Amendments
These Bylaws may be amended, added to, rescinded or repealed at any
meeting of the Board of Directors or of the stockholders, provided notice of the
proposed change was given in the notice of the meeting or, in the case of a
meeting of the Board of Directors, in a notice given not less than two days
prior to the meeting; provided, however, that, notwithstanding any other
provisions of these Bylaws or any provision of law which might otherwise permit
a lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the Voting Stock required by law, the
Articles of Incorporation, any Preferred Stock Designation or these Bylaws, the
affirmative votes of the holders of a majority of the voting power of all the
then-outstanding shares of the Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal any provisions of these Bylaws.
Dated: September 16, 1999
/s/ David L. Young
------------------
David L. Young, Corporate Secretary
<PAGE>
BYLAWS OF
OCEANSIDE MORTGAGE GROUP, INC.
ARTICLE I. HOME OFFICE
The home office of Oceanside Mortgage Group, Inc. ("Corporation") shall
be at 1315 South Third Street, Jacksonville Beach, Florida 32250.
ARTICLE II. SHAREHOLDERS
Section 1. Place of Meetings. All annual and special meetings of
shareholders shall be held at the home office of the Corporation or at such
other place in the State of Florida as the Board of Directors may determine.
Section 2. Annual Meeting. The annual meeting of the shareholders shall
be held on the last Thursday in April, in each and every year (or if said day be
a legal holiday, then on the next succeeding day not a legal holiday), or on
such other date prior thereto as chosen by the Board of Directors, for the
purpose of electing Directors and of transacting such other business as may be
properly brought before the meeting.
Section 3. Special Meetings. Special meetings of the shareholders for
any purpose or purposes, may be called at any time by the Chairman of the Board,
the President, the Chief Executive Officer, or a majority of the Board of
Directors and shall be called by the Chairman of the Board or the Chief
Executive Officer, upon the written request of the holders of not less than
fifty percent of all the outstanding capital stock of the Corporation entitled
to vote at the meeting. Such written request shall state the purpose or purposes
of the meeting and shall be delivered to the home office of the Corporation
addressed to the Chairman of the Board, the President, the Chief Executive
Officer, or the Secretary.
Section 4. Notice of Meetings. Written notice stating the place, day,
and hour of the meeting and the purpose(s) for which the meeting is called shall
be delivered not fewer than 10 nor more than 60 days before the date of the
meeting, either personally or by mail to each shareholder of record entitled to
vote at such meeting, by or at the direction of the Chairman of the Board, the
President or the Directors calling the meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the mail, addressed to the shareholder
at the address as it appears on the stock transfer books or records of the
Corporation as of the record date prescribed in Section 5 of this Article II,
with postage prepaid.
Section 5. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the Board of Directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more than
60 days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment.
<PAGE>
Section 6. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to constitute less than a quorum.
Section 7. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact. Proxies solicited on behalf of the management shall
be voted as directed by the shareholder or, in the absence of such direction, as
determined by a majority of the Board of Directors. No proxy shall be valid more
than eleven months from the date of its execution except for a proxy coupled
with an interest.
Section 8. Inspectors of Election. In advance of any meeting of the
shareholders, the Board of Directors may appoint Inspectors of Election, who
need not be shareholders, to act at such meetings or any adjournment thereof. If
Inspectors of Election have not been appointed, the Chairmen of any such meeting
may, and on the request of any stockholder or his proxy shall, make such
appointment at the meeting. The number of Inspectors shall be one or three. If
appointed at a meeting at the request of one or more shareholders or proxies,
the majority of shares present and entitled to vote shall determine whether one
or three Inspectors are to be appointed. No person who is a candidate for office
shall act as an Inspector. In case any person appointed an Inspector fails to
appear or refuses to act, the vacancy may be filled by appointment made by the
Board of Directors in advance of the convening of the meeting or at the meeting
by the person or officer acting as Chairman.
ARTICLE III. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be under the direction of its Board of Directors. The Board of Directors
shall annually elect a Chairman of the Board and a Chief Executive Officer from
among its members and shall designate, when present, either the Chairman of the
Board or the Chief Executive Officer to preside at its meetings.
Section 2. Number and Term. The Board of Directors shall consist of at
least five (5) and no more than eight (8) members who shall be elected for a
term of one year.
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, within the State of
Florida for the holding of additional regular meetings without other notice than
such resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the President,
the Chief Executive Officer or one- third of the Directors. The persons
authorized to call special meetings of the Board of Directors may fix any place,
within the State of Florida, as the place for holding any special meeting of the
Board of Directors called by such persons.
<PAGE>
Members of the Board of Directors may participate in special meetings
by means of conference telephone or similar communications equipment by which
all persons participating in the meeting can hear each other. Such participation
shall constitute presence in person but shall not constitute attendance for the
purpose of compensation pursuant to Section 9 of this Article III.
Section 5. Notice. Written notice of any special meeting shall be given
to each Director at least two days prior thereto when delivered personally or by
telegram or at least five days prior thereto when delivered by mail at the
address at which the Director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed or when delivered to the telegraph company if sent by
telegram. Any Director may waive notice of any meeting by a writing filed with
the Secretary. The attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting, except where a Director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. The business to be transacted at,
and the purpose of, the special meeting of the Board of Directors is to be
specified in the notice or waiver of such meeting.
Section 6. Quorum. A majority of the number of Directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors; but if less than such
majority is present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time. Notice of any adjourned meeting shall be
given in the same manner as prescribed by Section 5 of this Article III.
Section 7. Action Without a Meeting. Any action required or permitted
to be taken by the Board of Directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Directors.
Section 8. Vacancies. Any vacancy occurring on the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors,
although less than a quorum of the Board of Directors. A Director elected to
fill a vacancy shall be elected to serve until the next election of Directors by
the shareholders. Any directorship to be filled by reason of an increase in the
number of Directors may be filled by election by the Board of Directors for a
term of office continuing only until the next election of Directors by the
shareholders.
Section 9. Compensation. Directors, as such, may receive reasonable
fees for their services and may be reimbursed any expenses in connection with
actual attendance at each regular or special meeting of the Board of Directors.
Members of either standing or special committees may be allowed such
compensation for actual attendance at committee meetings as the Board of
Directors may determine.
Section 10. Removal of Directors. At a meeting of shareholders called
expressly for that purpose, any Director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
Directors.
Section 11. Indemnification. The Corporation shall indemnify officers
and Directors against reasonable expenses, settlements and judgments incurred in
connection with any claim, suit or proceeding in which he or she may be involved
by reason of he or she having been an officer or Director of the Corporation to
the fullest extent permitted by Section 607.0850, Florida Statutes as it may be
amended.
<PAGE>
ARTICLE IV. OFFICERS
Section 1. Positions. The officers of the Corporation shall be a Chief
Executive Officer, a President, a Secretary and a Treasurer, each of whom shall
be elected by the Board of Directors. The Board of Directors may also designate
the Chairman of the Board as an officer and name appoint or more Vice
Presidents. The offices of the Secretary and Treasurer may be held by the same
person and a Vice President may also be either the Secretary or the Treasurer.
The Board of Directors may designate one or more Vice Presidents as Executive
Vice President or Senior Vice President. The Board of Directors may also elect
or authorize the appointment of such other officers as the business of the
Corporation may require. The officers shall have such authority and perform such
duties as the Board of Directors may from time to time authorize or determine.
In the absence of action by the Board of Directors, the officers shall have such
powers and duties as generally pertain to their respective offices.
Section 2. Election and Term of Office. The officers of the Corporation
shall be elected annually at the first meeting of the Board of Directors held
after each annual meeting of the shareholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly elected
and qualified or until the officer's death, resignation, or removal in the
manner hereinafter provided. Election or appointment of an officer, employee, or
agent shall not of itself create contractual rights. The Board of Directors may
authorize the Corporation to enter into an employment contract with any officer;
but no such contract shall impair the right of the Board of Directors to remove
any officer, at any time, in accordance with Section 3 of this Article V.
Section 3. Removal. Any officer may be removed by the Board of
Directors whenever in the Board's judgment the best interests of the Corporation
will be served thereby. Such removal, however, if other than for cause, shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. The Board of Directors may elect an officer to
fill a vacancy in any office because of death, resignation, removal,
disqualification, or otherwise for the unexpired portion of the term.
Section 5. Remuneration. The remuneration of the officers shall be
fixed from time to time by the Board of Directors.
ARTICLE V. CAPITAL STOCK
Section 1. Certificates for Shares. Certificates representing shares of
capital stock of the Corporation shall be in such form as shall be determined by
the Board of Directors and approved by the officers. Such certificates shall be
signed by the Chief Executive Officer or by any other officer of the Corporation
authorized by the Board of Directors, attested by the Secretary or an Assistant
Secretary, and sealed with the corporate seal or a facsimile thereof. The
signatures of such officers upon a certificate may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar
other than the Corporation itself or one of its employees. Each certificate for
shares of capital stock shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares are issued, with the
number of shares and date of issue, shall be entered on the stock transfer books
<PAGE>
of the Corporation. All certificates surrendered to the Corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares has been surrendered and canceled,
except that in the case of a lost or destroyed certificate, a new certificate
may be issued upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of capital stock of
the Corporation shall be made only on its stock transfer books. Authority for
such transfer shall be given only by the holder of record or by his or her legal
representative, who shall furnish proper evidence of such authority, or by his
or her attorney thereunto authorized by a duly executed power of attorney filed
with the Corporation. Such transfer shall be made only on surrender for
cancellation of the certificate for such shares. The person in whose name shares
of capital stock stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
ARTICLE VI. DOCUMENTS, CONTRACTS, CHECKS, NOTES, ETC.
The Board of Directors may, by appropriate resolution, designate such
officers of the Corporation as are authorized and empowered to make and execute
all deeds, releases, leases, agreements, contracts, bills of sale, assignments,
powers of attorney or of substitution, and other instruments of writing.
All checks and drafts on the Corporation's bank accounts and all bills
of exchange and promissory notes and all acceptances, obligations and other
instruments for the payment of money, shall be signed by the Chief Executive
Officer or the President, or by such other officers or agents as shall be
thereunto authorized from time to time by the Board of Directors; provided,
however, that checks and drafts in excess of $2 million must be signed by two
such authorized officers. No bills or notes shall be signed by or on behalf of
the Corporation unless the Board of Directors shall expressly authorize the
same, and shall designate the officers who shall execute the same.
ARTICLE VII. AMENDMENTS
These Bylaws may be amended at any time by a majority vote of the full
Board of Directors or by a majority vote of the votes cast by the shareholders
of the Corporation at any legal meeting.
Dated this 25th day of August, 1999.
/s/ David L. Young
------------------
David L. Young, Corporate Secretary
NUMBER WARRANTS
VOID AFTER JULY 21,2000
WARRANT CERTIFICATE
FOR PURCHASE OF COMMON STOCK
ATLANTIC BANCGROUP, INC.
CUSIP 048221 11 3
THIS CERTIFIES THAT, in consideration for payment of good and valuable
consideration to Atlantic BancGroup, Inc., a Florida corporation (the
"Corporation"),
or registered assigns (the "Holder"), is entitled to subscribe for and purchase
from the Corporation, subject to the following terms and conditions,
fully-paid and nonassessable shares (the "Shares" of the Corporation's Common
Stock, $5.00 par value, at the price of $10.00 per share, subject to adjustments
described herein (the "Strike Price").
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement") on the reverse side
hereof.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
REFERENCE IS MADE TO THE PROVISIONS OF THE WARRANT AGREEMENT SET FORTH ON
THE REVERSE SIDE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH ON THE FRONT OF THIS CERTIFICATE.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of Florida.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Corporation has caused this Warrant Certificate to
be duly executed, manually or in facsimile, by two of its officers hereto
duly authorized and a facsimile of its corporate seal to be imprinted
thereon.
Dated: Atlantic BancGroup, Inc.
Attest: /s/ By: /s/
SECRETARY AND TREASURER PRESIDENT AND CHIEF EXECUTIVE OFFICER
SEAL
<PAGE>
COUNTERSIGNED:
RELIANCE TRUST COMPANY
(ATLANTA, GA)
AS WARRANT AGENT
BY
AUTHORIZED SIGNATURE
<PAGE>
COMMON STOCK WARRANT AGREEMENT
1. Exercise. The rights represented by this Warrant may be exercised by the
registered Holder hereof, in whole or in part (but not to as to a fractional
share of Common Stock), at any time on or before July 21, 2002, by the surrender
of this Warrant at the principal office of the Corporation, on the intended date
of the exercise, together with a duly completed form of exercise and either (i)
a check for the purchase price for the number of Shares being purchased or (ii)
by authorizing the Corporation to retain whole shares of Common Stock which
would otherwise be issuable upon exercise of this Warrant, having a fair market
value as of the day preceding such exercise equal to the total amount that would
have been paid by the Holder of this Warrant under clause (i) of this paragraph;
provided, however, that at any time after one year following the date the
Corporation commences business, the Board of Directors of the Corporation, by
written notice to each Holder, may shorten the period during which this Warrant
may be exercised to a period ending no sooner that thirty (30) days after such
notice is mailed by first class mail, postage prepaid, addressed to each
registered Holder of this Warrant at the address of such Holder as shown on the
books of the Corporation.
The Holder is aware that the Corporation is relying, and presently intends
to continue relying, upon exemptions from the securities registration
requirements of federal and state securities laws in the issuance of this
Warrant and in the issuance of the Shares. If, when this Warrant is exercised,
appropriate exemptions from registration are not available under federal and
state securities laws, the exercise shall not be consummated on the intended
date of exercise specified in the Holder's written notice of exercise and no
Shares shall be issued to the Holder unless and until such exemptions are
available. At such time, the Holder agrees to execute such documents and make
such representations, warranties and agreements as may be required in order to
comply with the exemption (s) relied upon by the Corporation for the issuance of
Shares.
2. Transferability. A register of the issuance of this Warrant shall be
kept at the offices of the Corporation, and this Warrant may be transferred only
on the books of the Corporation maintained in its office. Each transfer shall be
in writing in form acceptable to the Corporation signed by the then-registered
Holder hereof or the Holder's legal representatives or successors, and no
transfer hereof shall be binding upon the Corporation unless in writing and duly
registered on the register maintained at the Corporation's offices. Upon
transfer of this Warrant, the transferee, by accepting the Warrant, agrees to be
bound by the terms and conditions of this Warrant.
3. Issuance of Shares. The Corporation agrees that the Shares purchased
upon exercise of the Warrant shall be deemed to be issued to the record holder
hereof as of the close of business on the date on which this Warrant shall have
been surrendered and the Purchase Price delivered for such Shares as aforesaid.
Subject to the provisions of Section 4, certificates for the Shares so purchased
shall be delivered to the Holder hereof within a reasonable time after the
exercise of the Warrant has been so consummated, and a new Warrant representing
the number of Shares, if any, with respect to which this Warrant has not been
exercised shall also be delivered to the Holder hereof within such time.
Notwithstanding the foregoing, however, the Corporation shall not be
required to deliver any certificate for Shares upon exercise of this Warrant,
except in accordance with this provision and subject to the limitations of
Section 1 hereof.
<PAGE>
4. Covenants of the Corporation. The Corporation covenants and agrees that
all Shares which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be duly authorized and issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and without limiting the generality of the foregoing, the
Corporation covenants and agrees that it will from time to time take all such
actions as may be required to assure that the par value per share of the Common
Stock is at all times equal to or less than the then-effective Strike Price of
the Warrant. The Corporation further covenants and agrees that the Corporation
will at all times have authorized, and reserved for issuance upon exercise of
the subscription rights evidenced by this Warrant, a sufficient number of shares
of its Common Stock to provide for the exercise of the rights represented by
this Warrant.
5. Anti-Dilution Adjustments. The above provisions are, however, subject to
the following:
(a) The Strike Price shall be subject to adjustment from time to time,
calculated to the nearest cent, ad follows, except that no adjustments to
the Strike Price shall be made in respect of any accrued dividends, and no
adjustments need be made until cumulative adjustments would affect the
Strike Price by more than one percent:
(i) Adjustments for Increases in Capital Stock. If the Corporation:
(A) pays a dividend on its Common Stock in
shares of its Common stock or makes a
distribution on its Common Stock in shares of
any of its capital stock; or
(B) subdivides its outstanding shares of Common
Stock into a greater number of shares (whether
by reclassification, stick split or otherwise
than by payment of a dividend in Common Stock);
then the Strike Price in effect immediately prior to such action shall be
proportionately decreased, and the number of shares purchasable upon exercise
of this Warrant shall be proportionately increased, subject to further
adjustment pursuant to this section 5.
(ii) Adjustments for Decreases in Capital Stock. If the Corporation
combines its outstanding shares of Common Stock into a smaller number of
shares, then the Strike Price in effect immediately prior to such action
shall be proportionately increased, and the number of shares purchasable
upon exercise of this Warrant shall be proportionately decreased,
subject to further adjustment pursuant to this Section 5.
(iii) Date of Effectiveness. The adjustment shall become effective
immediately after the record date in the case of a divided or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.
(iv) When No Adjustments Required. No adjustment need be made for a
change in the par value of the Common Stock.
(v) Notice of Certain Transactions. If:
<PAGE>
(A) the Corporation takes any action that would require an adjustment in
the Strike Price pursuant to clause (i) or (ii) (other than the payment of
dividends on Common Stock in shares of Common Stock);
(B) the Corporation takes any action that would require an adjustment in
the Strike Price pursuant to clause (vi); or
(C) there is a liquidation or dissolution of the Corporation, the
Corporation shall mail to the Holder of this Warrant a notice stating the
proposed record date for a dividend or distribution or the proposed
effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The
Corporation shall mail the notice at least 15 days before such date.
Failure to mail the notice or any defect in it shall not affect the
validity of the transaction.
(vi) Reorganization of the Corporation. If the Corporation is a
party to a reclassification (excluding that referred to in clauses (i)
or (ii) or shall consolidate with or merge into any other corporation or
transfer all of its properties and assets as an entirety to any person,
upon consummation of such transaction notwithstanding any other
provisions hereof, this Warrant will be deemed exercisable as to only
the kind and amount of securities, cash or other assets which the Holder
of such Warrant would have owned immediately after such
reclassification, consolidation, merger or transfer if such holder had
exercised such Warrant immediately before the effective date of such
transaction. If this clause (vi) applies, clauses (i) and (ii) do not
apply.
(b) in the event of any consolidation of the Corporation with or merger of
the Corporation into any other corporation (other than a merger in which the
Corporation is the surviving corporation) or a sale of the assets of the
Corporation substantially as an entirety, the Holder of this Warrant shall have
the right, after such consolidation, merger or sale to exercise such Warrant and
receive the number and kind of shares of stock or other securities and the
amount and kind of property receivable upon such consolidation, merger or sale
as would a holder of the number of shares of Common Stock issuable upon exercise
of such warrant immediately prior to such consolidation, merger or sale.
Provision shall be made for adjustments in the Strike Price which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Section 5 (a). The provisions of this subsection shall similarly apply to
successive consolidations, mergers and sales.
(c ) Upon any adjustment provided for in this Section 5, the Corporation
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered Holder of this Warrant at the address of such Holder
as shown on the books of the Corporation, which notice shall state the Strike
Price resulting from such adjustment and the increase or decrease, if any, in
the number of Shares purchasable at such price upon the exercise of this
Warrant, and shall set forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
6. No voting or Other Rights. This Warrant shall not entitle the Holder
hereof to any voting rights as a stockholder of the Corporation.
<PAGE>
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
____________Warrants represented by this Warrant Certificate, and to purchase
the securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
____________________________________
____________________________________
____________________________________
____________________________________
(please print or type name and address)
and be delivered to
____________________________________
____________________________________
____________________________________
____________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated: _______________________________ X _____________________________
_____________________________
_____________________________
Address
_____________________________
Taxpayer Identification Number
_____________________________
Signature Guaranteed
_____________________________
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, ________________________________________hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
________________________________________
________________________________________
________________________________________
________________________________________
(please print or type name and address)
________________________________________________________________________________
of the Warrants represented by this Warrant Certificate, and hereby irrevocably
constitutes and appoints
________________________________________________________________________Attorney
to transfer this Warrant Certificate on the books of the Corporation, with full
power of substitutions in the premises.
Dated: _______________________ X_______________________
Signature Guaranteed
_______________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS PURSUANT TO THE SECURITIES AND
EXCHANGE COMMISSION RULE 17Ad-15.
EXHIBIT 10.1
SOFTWARE LICENSE AGREEMENT
THIS AGREEMENT entered into by and between FILE SOLUTIONS, INC.
(hereinafter referred to as "Licensor"), a Georgia Corporation, and the
undersigned (hereinafter referred to as "Licensee") determines the rights and
licenses granted to licensee in the Licensed Software (as hereinafter defined)
supplied by the Licensor hereunder.
1. Definitions. As used herein, the following definitions shall apply:
------------
(A) "Licensed product" shall mean collectively the Licensed
Software and Licensed Documentation (as hereinafter defined).
(B) "Licensed Software" shall mean the software identified on
Schedule "A" attached hereto and incorporated herein by referenced in object
code form, all updates and revisions are to be supplied by Licensor during the
term hereof and all permitted copies of the foregoing.
(C) "Licensed Documentation" shall mean all documentation other
than Licensed Software that is related to such software.
2. License.
--------
Subject to the payment of the License fees and charges to Licensor, Licensor
hereby grants to Licensee and Licensee hereby accepts a personal nonexclusive
and nontransferable license to use the Licensed Software during the term hereof
and to use the Licensed Documentation during the term hereof in support of the
use of the Licensed Software.
3. License Fees Charges and Taxes.
------------------------------
(A) The license fees and charges for the license herein granted to
licensee shall be the then current license fees and charges of Licensor for the
Licensed Product in effect at the time of the Licensor's acceptance of this
Agreement.
(B) License fees and charges, taxes and other applicable charges
shall be due and payable within ten (10) days after Licensee's receipt of the
invoice therefor. Licensee shall pay a late payment charge of one and one-half
percent (1.5%) per month or the maximum rate permitted by applicable law,
whichever is less, on any unpaid amount for each calendar month or fraction
thereof that any payment to Licensor is in arrears.
(C) Licensee shall pay all taxes based on or in any way measured by
this License agreement, the Licensed Product or any portion thereof, or any
services related thereto, excluding taxes based on Licensor's net income, but
including personal property taxes, if any. If Licensee challenges the
applicability of any such tax, it shall pay the same Licensor, and Licensee may
thereafter seek refund thereof.
4. Term of License Agreement and Licenses. Unless otherwise terminated
or cancelled as provided herein, the term of the licenses granted herein shall
commence on the effective date of this Agreement and shall continue until
Licensee discontinues the licenses of the Licensed Software.
<PAGE>
5. Protection of Licensed Product.
-------------------------------
(A) Licensee acknowledges and agrees that the Licensed Product and
all permitted copies thereof are Licensor's exclusive property and constitute a
valuable trade secret of Licensor. Licensee may not disclose or make available
to third parties the Licensed product or any portion thereof without license or
the prior written consent of the Licensor.
(B) Upon any termination, cancellation or expiration hereof, Licensee shall
immediately return the Licensed Product and all copies thereof to Licensor.
6. Reproduction and Modification of Licensed Product.
(A) Licensee may not reproduce more than two (2) copies, in whole
or in part, of the Licensed Software. All copies of the Licensed Software, in
whole or in part, shall contain all of Licensor's restrictive and proprietary
notices as they appear on the copies of the Licensed Software provided by
Licensor. In no event shall Licensee have the right to duplicate, in whole or in
part, the Licensed Documentation.
1
<PAGE>
(B) Licensee may modify the Licensed Software and merge it into
existing software provided such modified software and resulting merged software
shall be deemed to be a Licensed Product subject to all the terms and conditions
hereof. Upon any termination, cancellation or expiration hereof of any license
granted hereunder, Licensee shall remove the Licensed Software and all portions
thereof from the modified software and the resulting merged software, and
Licensee shall have no right thereafter to use the Licensed Software and any
portion thereof.
7. Shipment and Packaging.
----------------------
The Licensed product shall be delivered FOB Licensor's shipping point; and,
thereafter, Licensee shall assume all risk of loss therefor.
8. Services.
---------
Licensee shall have its own exclusive responsibility for the selection,
installation and use of the Licensed Product. Licensor shall provide Licensee
with technical support and services under terms and conditions of a separate
agreement at Licensor's then current charge therefor.
9. Negation of Warranty. THE LICENSED PRODUCT IS PROVIDED ON AN "AS IS"
BASIS, AND THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
LICENSEE SHALL BE SOLELY RESPOSIBLE FOR THE SELECTION, USE, EFFICIENCY AND
SUITABILITY OF THE LICENSED PRODUCT, AND LICENSOR SHALL HAVE NO LIABILITY
THEREFOR.
10. Negation of Proprietary Rights Indemnity.
----------------------------------------
LICENSOR SHALL HAVE NO LIABILITY TO LICENSEE FOR THE INFRINGEMENT OF PROPRIETARY
RIGHTS BY THE LICENSED PRODUCT OR ANY PORTION THEREOF.
11. Termination/Cancellation.
------------------------
(A) Licensor may terminate/cancel this License Agreement, and any
license granted to Licensee hereunder if:
(1) Licensee fails to pay Licensor any license fees or charges:
(2) Licensee is in default of any provision hereof and such
default has not been cured within ten (10) days after Licensor gives Licensee
written notice thereof; or
(3) Licensee becomes insolvent or seeks protection, voluntary
or involuntary, under any bankruptcy law.
(B) In the event of any termination or cancellation hereof, or of
any license granted to Licensee hereunder, Licensor may:
(1)Declare all amounts owed hereunder to Licensor to be
immediately due and payable:
(2)Require that Licensee cease any further use of the Licensed
Product or any portion thereof and immediately return the Licensed Product and
all copies thereof, in whole or in part: and
(3)Cease performance of all license or obligations hereunder
without liability to Licensee.
(C) Licensor's foregoing rights and remedies shall be cumulative in
addition to all other rights and remedies available to Licensor in law and in
equity.
12. Limitation of Liability.
- --------------------------------
(A) IN NO EVENT SHALL LICENSOR BE LAIBLE FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR RELATING TO THIS
LICENSE AGREEMENT OR THE PERFOORMANCE OR BREACH THEREOF EVEN IF LICENSOR HAS
BEEN ADVISED OF THE POSSIBILITY THEREOF. LICENSOR'S LIABILITY TO LICENSEE
HEREUNDER, IF ANY, SHALL IN NO EVENT EXCEED THE TOTEL OF THE LICENSE FEES PAID
TO LICENSOR HEREUNDER BY LICENSEE.
2
<PAGE>
(B) IN NO EVENT SHALL LICENSOR BE LIABLE TO LICENSEE FOR ANY
DAMAGES RESULTING FROM OR RELATED TO ANY FAILURE OF THE SOFTWARE PRODUCTS,
INCLUDING BUT NOT LIMITED TO, LOSS OF DATA, OR DELAY OF THE LICENSOR IN THE
DELIVERY OF THE LICENSED PRODUCT OR IN THE PERFORMANCE OF SERVICES UNSDER THIS
LICENSE AGREEMENT OR RELATED AGREEMENTS.
13. General.
- ----------------
(A) The effective date of this Agreement shall be upon execution hereof by
Licensee and Acceptance thereof by an authorized representative of Licensor.
(B) Any claim arising out of or related to this Agreement must be
brought no later than one (1) year after it is approved.
(C) This Agreement is the sole agreement between the parties
relating to the subject matter hereof and supersedes all prior understanding,
writings, proposals, representatives or communications, oral or written, of
either party. This Agreement may be amended only by a writing executed by the
authorized representatives of both parties.
(D) This Agreement and the licenses granted hereunder may not be
transferred or assigned by Licensee without the prior written consent of
Licensor.
(E) This Agreement shall be interpreted in accordance with the
laws of the State of Georgia.
LICENSOR: LICENSEE:
- --------- ---------
FILE SOLUTIONS, INC. OCEANSIDE BANK - JACKSONVILLE BEACH
By: /S/ By: /S/
--------------- -----------------
Title: PRESIDENT Title: CHAIRMAN/CEO
Date: 10/06/97 Date: 9/29/97
3
<PAGE>
SCHEDULE "A"
Licensed Product
File Solution(TM) Software System
EXHIBIT 10.2
File Solutions
Software Maintenance Agreement
This Agreement is entered into this 15th day of July, 1997, by and
between SPARAK Financial Systems, inc. (Vendor) and OCEANSIDE BANK -
JACKSONVILLE BEACH (Customer).
WHEREAS, Customer has purchased a certain Software package (Software),
more fully described in Software Schedule attached hereto, from Vendor or a
Dealer of Vendor; and,
WHEREAS, Vendor offers to provide maintenance and support of the
Software and Customer desires to obtain such maintenance and support of the
Software on the terms and conditions hereafter provided;
Term
This Agreement shall commence on the date indicated on the Software
Schedule attached hereto and incorporated herein by reference and receipt of the
Maintenance Fee (Fee) by Vendor. The initial term of this Agreement is for
twelve months from said date. Thereafter, this Agreement will continue in full
force and effect for twelve month periods provided the Fee is received by Vendor
by the anniversary date of this Agreement.
Maintenance Services
The maintenance and Support Services (Service) provided hereunder shall
consist of: (a) technical and/or operational assistance provided by Vendor to
Customer during normal business hours which shall be generally defined as Monday
through Friday, 8:00 AM to 5:00 PM, Central time, and (b) distribution by Vendor
to Customer of enhancements to the Software which may be developed from time to
time by File Solutions and which are made generally available to all users of
the Software.
Telecommunications
The Vendor shall install at the Customer's expense and the Customer
shall maintain for the duration of this Agreement, a modem and related software.
The Customer shall install a dial-up phone line and maintain service at
Customer's expense a while this agreement is in force. Vendor may, at its
option, use this modem, software and phone line in connection with the Service.
Access by Vendor shall be subject to prior approval of Customer in each
instance.
Scope
The purpose of the Agreement is to assist Customer with the Software as
listed in the Software Schedule attached to this Agreement. Vendor shall not be
responsible for maintaining the software when the system of which the Software
resides has been modified in any way by the Customer, or for maintaining
portions of the Software affected by Customer modified portions of the hardware
or hardware operating system. Further, this Agreement does not contemplate
assistance for any other software added to the system by Customer. Services
required as a result of Customer's modifications or system changes shall be
billed at Vendor's standard rate.
<PAGE>
Maintenance Fees
If the Customer desires the Service, the fee designated for each
Software System in the Software Schedule attached hereto shall be due upon the
terms provided, herein.
(a) The Customer shall reimburse Vendor for any out-of-pocket expenses,
including but not limited to travel expenses, incurred in connection with duties
performed under this Agreement that, upon mutual concurrence, required travel to
Customer location by Vendor.
(b) The Vendor may change the maintenance fee on any anniversary date,
after the initial term of the Agreement, upon thirty (30) days prior written
notice. Billing of annual fee shall constitute notice under this Section.
Additional Services
At the request of Customer, Vendor may also provide consulting or other
assistance to Customer in addition to those included or intended as a part of
this Agreement. Customer would be billed for these services at Vendor's standard
rates then in effect.
Assignment
Customer may not assign or transfer this Agreement or Customer's rights
and obligations hereunder without Vendor's prior written consent.
Limitation of Liability
(a) VENDOR OR FILE SOLUTIONS, INC. SHALL NOT BE LIABLE TO CUSTOMER FOR
ANY DAMAGES RESULTING FROM OR RELATED TO THE SERVICES PERFORMED BY VENDOR
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, ANY LOSS OF DATA OR SOFTWARE,
INABILITY OF VENDOR IN PERFORMING ANY SERVICES HEREUNDER.
(b) IN NO EVENT SHALL VENDOR OR FILE SOLUTIONS, INC. BE LIABLE TO THE
CUSTOMER FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS
ARISING OUT OF OR RELATED TO THIS MAINTENANCE AGREEMENT, EVEN IF VENDOR OR FILE
SOLUTIONS, INC. HAS BEEN ADVISED OF THE POSSIBILITY THEREOF OR KNEW OR SHOULD
HAVE KNOWN THEREOF. VENDOR'S OR FILE SOLUTIONS, INC. LIABILITY HEREUNDER TO THE
CUSTOMER, IF ANY, SHALL IN NO EVENT EXCEED THE TOTAL OF THE ANNUAL MAINTENANCE
FEE PAID TO VENDOR HEREUNDER BY THE CUSTOMER FOR THE IMMEDIATE PRECEDING
MAINTENANCE PERIOD.
Both parties hereby agree to and accept these conditions;
SPARAK Financial Systems, Inc. OCEANSIDE BANK - JACKSONVILLE BEACH
BY: /S/ STEVE ANDERSON BY: /S/
-------------------- -------------------
STEVE ANDERSON
TITLE: SECRETARY/TREASURER TITLE: CHAIRMAN/CEO
DATE: 09/30/97 DATE: 09/29/97
<PAGE>
SOFTWARE SCHEDULE
-----------------
Software Effective Date Annual Fee
The File Solution(TM) 08/01/97 $1400.00
-------- --------
This Agreement is in effect on receipt of the total of the fees listed
above for a period of 12 consecutive months from the effective date indicated
above, and shall continue thereafter only on receipt of the total of fees listed
above, or billed, prior to the anniversary date of this Agreement.
EXHIBIT 10.3
REMOTE DATA PROCESSING AGREEMENT
BANKERS DATA SERVICES, INC.
This REMOTE DATA PROCESSING AGREEMENT made and entered into on by and
between BANKERS DATA SERVICES, INC., (HEREAFTER "BDS"), located at 521 W. 11th
Street, Alma, Georgia 31510, and OCEANSIDE BANK (hereafter "Customer") located
at Jacksonville Beach, Florida 32240.
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the parties hereto agree as follows:
1. TERM. This Agreement is for an initial period of two (2) years
commencing upon installation of the system or the first day BDS receives work to
process for Customer. Thereafter, this Agreement shall automatically renew for
successive terms of one (1) year, unless and until either party shall give the
other six month advance written notice of termination at the conclusion of the
then-current term. This provision is subject to the right of BDS to terminate
for cause under paragraph 14 hereof.
2. SERVICES. BDS shall provide to customer the services described in
the schedule marked "Exhibit A" attached hereto and made a part hereof and shall
provide these services in accordance with the procedures outlined in said
schedule. In addition, BDS and Customer may agree from time to time on
additional data processing services to be performed by BDS and all such
additional services shall be performed by BDS subject to the terms and
conditions of this Agreement. The additional services shall be added hereto by a
written addendum to Exhibit A executed by both parties. BDS may make changes
from time to time in the procedures governing its data processing services, but
no substantial changes will be made in such procedures without giving Customer
written notice thereof and a reasonable opportunity to adapt its operations
procedures to such changes.
3. PROCESSING SCHEDULE. BDS will process work in a timely manner
satisfactory to and agreed upon by both BDS and Customer. BDS understand that
prompt performance of all work is necessary for Customer to meet its schedules
and that time is of the essence and will utilize all reasonable efforts to
process work in accordance with the mutually agreed upon schedule.
4. FEES. For performing data processing services for Customer, BDS will
charge the fees set forth in the attached schedule marked "Exhibit B", and these
fees shall remain firm for the initial two-year term of this Agreement. BDS
reserves the right to change said fees upon three months' prior written notice
to Customer. If Customer does not wish to agree to said increase in fees, it may
terminate this Agreement, notwithstanding the termination provision in Paragraph
1, or discontinue the service for which the fees are being raised by giving BDS
written notice 30 days prior to the date said increased fee goes
1
<PAGE>
into effect. If notice by Customer is not so given, Customer assents to the new
prices and waives any right of early termination under this paragraph. Any work
processed after the effective date of the price increase shall be subject to the
new prices notwithstanding Customer's notice to terminate this Agreement.
Payments shall be made to BDS 10 days after Customer's receipt of BDS invoices
therefor. Outstanding balances which remain unpaid after 30 days after same are
due and payable shall, I the sole discretion of BDS, bear interest at the lesser
of 1.5% per month, or the highest rate permitted by law.
5. EARLY TERMINATION BY CUSTOMER. If Customer terminates this Agreement
except as in accordance with Paragraph 1 or Paragraph 4 hereof, Customer agrees
to pay BDS for the remaining term of the contract the greater of actual fees
earned during each processing month after notice of intent to terminate or 80%
(eighty percent) of average monthly fees BDS earned during the three months
immediately prior to notice of termination.
6. BACK-UP PROVISIONS. BDS assumes responsibility for having adequate
back-up arrangements and equipment at its disposal in the event of a mechanical
failure. It will be the Customer's responsibility to enter into a maintenance
agreement with the equipment manufacturer or an authorized service
representative of the manufacturer to repair and maintain all data processing
equipment owned or leased by the Customer.
7. PRIORITY. BDS covenants to afford priority to all data processing
provided to bank customers, with all bank data processing which is due to be
completed and delivered before any nonbank data processing in
initiated.
8. OWNERSHIP. All systems, programs, operating instructions and other
documentation prepared by BDS shall remain the property of BDS. All data-source
documents shall remain the property of Customer. Upon termination of this
Agreement, Customer information retained in BDS' masters files shall be made
available to Customer on magnetic tapes furnished by Customer of a type suitable
for use on BDS equipment, and BDS will return to Customer, after Customer's
remittance to BDS of a reasonable fee to cover this final servicing and handling
process and to reimburse BDS for the cost of any unused stock of special forms
prepared for Customer.
9. DELIVERY OF DATA. The Customer will be responsible for its material
while in transit and shall bear all risk of loss damage while material is in
transit to or from BDS. Customers shall prepare its input material in a form
acceptable to BDS. This input and the information necessary for controls will be
delivered to BDS according to a schedule mutually agreeable to both parties.
Customer will be responsible for entering the input data furnished
by Customer into the computer systems and BDS will process all data received
from Customer in a form acceptable to BDS as promptly as practicable after
receipt thereof, but the time for processing such data shall be extended in the
event of the failure of BDS equipment or other situations beyond its control.
BDS may refuse to process and may return to
2
<PAGE>
Customer and documents, items, records or input data which, in BDS' opinion, are
not of a quality or condition satisfactory for process or which do not comply
with BDS applicable procedures manual or are not in a machine-readable form
acceptable to BDS. The Customer will be responsible for correcting the rejected
data and for submitting corrected material for reentry.
10. DUTY OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION.
BDS agrees to use the same care in processing Customer's material as it uses in
performing similar services for itself, but recognizing that data processing
involves certain possibilities of errors, omissions, delays, loss or mutilation
of documents and other occurrences which may give rise to loss or damage THE
PARTIES AGREE THAT BDS SHALL NOT BE LIABLE ON ACCOUNT OF SUCH MATTERS UNLESS
CAUSED BY ITS GROSS NEGLIGENCE. CUSTOMER AGREES THAT BDS SHALL BE EXCUSED FROM
PERFORMANCE AND SHALL NOT BE LIABLE FOR ANY DELAY IN DELIVERY OR FOR
NON-DELIVERY, IN WHOLE OR IN PART, CAUSED BY THE OCCURRENCE OF CONTINGENCIES
BEYOND THE CONTROL OF BDS, INCLUDING, BUT NOT LIMITED TO, WAR, SABOTAGE,
JUDICIAL ACTION, LABOR DISPUTE, ACCIDENT, FIRE, EXPLOSION, FLOOD, STORM, OR ANY
ACT OF GOD. CUSTOMER FURTHER AGREES THAT IN NO EVENT WILL BDS BE LIABLE FOR
INDIRECT, SPECIAL, COLLATERAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES. CUSTOMER
FURTHER AGREES THAT IN NO EVENT WILL THE TOTAL AGGREGATE LIABILITY OF BDS FOR
ANY DAMAGES ARISING UNDER THIS CONTRACT AND SERVICES PERFORMED HEREUNDER EXCEED
THAT TOTAL AMOUNT PAID BY THE CUSTOMER TO THE BDS DURING THE PRECEDING TWELEVE
MONTH PERIOD (OR, SHOULD THE CONTRACT HAVE BEEN IN EFFECT LESS THAN SUCH PERIOD,
FOR THE TERM OF THE CONTACT).
Customer understands that BDS uses certain computer programs to process
work which are licensed from their owners or distributors. Customer agrees not
to bring any action against any said vendor arising out of, or in any way
related to, the services to be performed by BDS hereunder.
Customer shall adopt such measures as it deems appropriate for its own
interest in respect of such matters, including (without limiting the generality
of the foregoing) provision for the ascertainment and correction of errors and
omissions, replacement of lost or mutilated documents and the reconstruction of
data. In any event, the Customer shall indemnify and hereby agrees to hold BDS
harmless against any and all claims or causes of actions by or on behalf of any
and all third parties whomsoever arising out of, or in any way related to, the
services to be performed by BDS here under.
11. CONFIDENTIAL TREATMENT OF INFORMATION. BDS agrees to receive in
confidence all information relating to the Customer's business and accounts and
represents and warrants to the Customer that this information will not be used
by BDS or any affiliated company for any purpose other than in strict compliance
with this
3
<PAGE>
Agreement. BDS will not release such information to any of its other departments
or affiliated companies, and such information will not be used to solicit new
business or to any other advantage by BDS. No information hereunder will be
considered confidential if (1) it is or becomes public knowledge through no
fault or negligence of BDS, (2) it is rightfully disclosed by some third party,
or (3) it is already known to BDS prior to this date and has not been obtained
in confidence under this Agreement.
12. AUDITS AND GOVERNMENTAL EXAMINATIONS. BDS agrees to allow
Customer's internal and outside auditors to perform audit procedures within BDS,
but this audit responsibility rests entirely upon the Customer. BDS also agrees
that upon Customer's written request assurances will be given to appropriate
federal and state supervisory agencies that the performance of the services by
BDS for the Customer under this Agreement will be subject to regulation and
examination by such agency to the same extent as if such services were being
performed by the Customer itself on its own premises, provided, however, that
the Customer will bear the full audit responsibility.
13. MODIFICATIONS. The terms of this Agreement may be modified by BDS
by written notice to Customer, except for the terms and conditions which relate
specifically to BDS duty of care as provided for in Paragraph 10 of this
Agreement and BDS' representation and warranty of confidential treatment of the
Customer's items processed as provided for in Paragraph 11 of this Agreement.
The Customer may terminate this Agreement or discontinue any of the services
hereunder affected by such modification upon six-month prior written notice to
BDS; otherwise, such modification shall become effective.
14. DEFAULT. The breach by either party or any obligation hereunder
that is not cured within thirty (30) days of written notice shall constitute a
"default".
Notwithstanding the agreed term of this Agreement, in the event of
default by Customer or BDS, or if either party ceases doing business or ceases n
its own initiative to provide service under this Agreement may be terminated by
the other party to a receivership proceeding, then this Agreement may be
terminated by the other party thereto. Should BDS send Customer written notice
of termination, BDS shall have no further duties or liabilities to Customer
hereunder, except to assemble at Customer's cost, Customer's documents and other
materials and make them available for Customer to pick up.
15. ENTIRE AGREEMENT. This instrument contains the entire Agreement
between the parties and supersedes any and all previous Agreements between the
parties on the subject matter hereof. All exhibits to which reference is made
herein are incorporated in this Agreement. The Agreement may be enlarged,
modified or altered only as provided in Paragraphs 2 and 13 above or in writing
signed by both the parties.
4
<PAGE>
16. GOVERNING LAW. This Agreement is being executed and delivered and
is intended to be performed in the State of Georgia, and shall be interpreted,
construed and enforced in accordance with the laws of such State.
17. This Agreement shall be binding upon and insure to the benefit of
the respective parties, their heirs, successors and assigns.
18. NOTICES. All notices under this Agreement shall be deemed duly
given upon delivery, if delivery is by hand; or three days after delivery into
the United States Mail if sent by registered mail, return receipt requested to a
party at the address hereinabove set forth or to such other address as a party
may designate by notice pursuant hereto.
19. ACCEPTANCE. This agreement shall be withdrawn if execution by both
parties is not complete within sixty (60) days of agreement date.
IN WITNESS WHEREOF< the parties have executed and sealed this Agreement
the day and year written below.
BDS: CUSTOMER:
BANKERS DATA SERVICES, INC. OCEANSIDE BANK
BY: /S/ Andrew R. Corbett, BY: /S/ Mike Witherspoon
---------------------- --------------------
Andrew Rickey Corbett Mike Witherspoon
Vice President CEO
4-3-97 3-31-97
- --------------------- ---------------------
Date Date
5
<PAGE>
OCEANSIDE BANK
JACKSONVILLE, FLORIDA
MARCH 24, 1997
EXHIBIT A
Description of Data Processing Services
In consideration of the Remote Usage Fees contained in Exhibit B, BDS
shall provide the services set forth below and any others not specified below as
they may be described in other areas of this Agreement, of which the Exhibit is
a part.
Daily Activity
Maintain all information input by Customer with respect to the
accounts necessary to operate the System in accordance with
the documentation as provided by SPARAK or in such a manner as
shall be mutually agreed upon by the parties.
Functions
Maintain System availability for inquiry, input, and printing
purposes during Customer's business hours.
Process transactions input into the System by Customer once
nightly on a daily basis as directed by Customer.
At Customer's discretion, schedule all batch jobs necessary
for daily, weekly, monthly, quarterly, and annual system
processing of accounts.
Telephone Support
BDS will provide support to address questions regarding
operation and use of system.
System Description
The System consists of equipment and services supplied by BDS, Premier
Imaging, and application software known as SPARAK 3000 and is designed
to operate on mainframe computer equipment to provide data processing
services for financial institutions.
6
<PAGE>
OCEANSIDE BANK
JACKSONVILLE, FLORIDA
MARCH 24, 1997
EXHIBIT B
Fees
Monthly fee based on $100.00 per million in assets with a minimum of
$2000.00. Note that the fee will be calculated each anniversary based on the
then current total assets of the bank.
7
Exhibit 21.1
ATLANTIC BANCGROUP, INC. AND SUBSIDIARIES
Form 10-KSB
For Fiscal Year Ended December 31, 1999
Subsidiaries of Registrant
Oceanside Bank, incorporated under the laws of the State of Florida
Oceanside Mortgage Group, Inc., incorporated under the laws of
the State of Florida
<PAGE>
March 15, 2000
Dear Fellow Shareholders:
It is our pleasure to invite you to attend Atlantic BancGroup Inc.'s
Annual Meeting of Shareholders. The Annual Meeting will be held at the Sea
Turtle Inn, One Ocean Boulevard, Atlantic Beach, Florida on Thursday, April 27,
2000, at 2:00 p.m., Eastern Standard Time.
The Notice of the Annual Meeting of Shareholders and Proxy Statement
attached to this letter describe the formal business that will be transacted at
the Annual Meeting and provide material information concerning that business.
Directors and officers of Atlantic BancGroup, Inc., as well as a representative
of the accounting firm, Stevens, Sparks & Company, P.A. will be present at the
Annual Meeting to respond to your questions.
YOUR VOTE IS IMPORTANT. Please sign, date and mail the enclosed Proxy
Card promptly in the postage-paid envelope which has been provided for your use.
If you attend the Annual Meeting and prefer to vote in person, you will be given
that opportunity.
On behalf of the Board of Directors and all the employees of Atlantic
BancGroup, Inc., we look forward to seeing you at the Annual Meeting.
Sincerely,
Donald F. Glisson, Jr. M. Michael Witherspoon
Chairman of the Board Chief Executive Officer
<PAGE>
------------------------------------
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2000
------------------------------------
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders of
Atlantic BancGroup, Inc., Jacksonville Beach, Florida ("Annual Meeting"), will
be held at the Sea Turtle Inn, One Ocean Boulevard, Atlantic Beach, Florida on
April 27, 2000, at 2:00 p.m., Eastern Standard Time, for the following purposes:
(1) To elect three Class 1 directors (terms to expire in 2001),
three Class II directors (terms to expire 2002), and three
Class III directors (terms to expire in 2003) (Proposal I);
(2) To ratify the appointment the firm of Steven, Sparks &
Company, P.A. as the independent certified public accountants
for Atlantic BancGroup, Inc. and its wholly-owned
subsidiaries, for the fiscal year ending December 31, 2000
(Proposal II);
(3) To approve the adjournment of the Annual Meeting to solicit
additional proxies in the event that there are not sufficient
votes to approve any one or more of the proposals (Proposal
III); and
(4) To transact any other business as may properly come before
this Annual Meeting, or any adjournments thereof.
The Board of Directors has fixed the close of business on March 1,
2000, as the record date for the determination of shareholders entitled to
notice of and to vote at this Annual Meeting. Only holders of common stock of
record at the close of business on that date will be entitled to vote at this
Annual Meeting, or any adjournments thereof. In the event there are insufficient
votes for a quorum to approve any proposal at the time of the Annual Meeting,
the Annual Meeting may be adjourned in order to permit further solicitation of
proxies by Atlantic BancGroup, Inc.
By Order of the Board of Directors
/s/David L. Young
-----------------
David L. Young
Corporate Secretary
Jacksonville Beach, Florida
March 15, 2000
<PAGE>
ATLANTIC BANCGROUP, INC.
Jacksonville Beach, Florida
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
General
DATE: April 27, 2000
TIME: 2:00 P.M. (Eastern Standard Time)
LOCATION: Sea Turtle Inn, One Ocean Boulevard, Atlantic Beach, Florida
Solicitation and Voting of Proxies
This Proxy Statement and the accompanying Proxy Card are being
furnished to shareholders of record as of March 1, 2000, in connection with the
solicitation of proxies by the Board of Directors of Atlantic BancGroup, Inc.
("Atlantic BancGroup"), the parent holding company of Oceanside Bank ("Bank")
and Oceanside Mortgage Group, Inc., for use at the Annual Meeting as set forth
in the accompanying Notice of Annual Meeting of Shareholders ("Annual Meeting").
Please note that Atlantic BancGroup and its subsidiaries are collectively
referred to herein as the "Company".
Regardless of the number of shares of common stock that you may own, it
is important that your shares be represented by proxy or that you are present in
person at the Annual Meeting. To assist you in voting, we have enclosed a Proxy
Card, which we ask that you sign, date and return in the enclosed postage-paid
envelope. Please indicate your vote in the spaces provided on the Proxy Card.
Proxies solicited by the Board of Directors of Atlantic BancGroup will be voted
in accordance with the directions given therein. Where no instructions are
indicated, proxies will be voted "FOR" the election of directors; "FOR" the
appointment of Steven, Sparks & Company, P.A. as independent auditors for the
fiscal year ending December 31, 2000; and "FOR" the adjournment of the Annual
Meeting to solicit additional proxies if there are not sufficient votes to
approve any one of the proposals. If any other matters are properly brought
before the Annual Meeting, the Proxy Committee will vote the shares represented
by such proxies on such matters as determined by a majority of the Board of
Directors.
The Board of Directors knows of no additional business that will be
presented for consideration at the Annual Meeting. Execution of the enclosed
Proxy Card, however, confers on the designated proxy holders discretionary
authority to vote the shares in accordance with their best judgment on other
business, if any, that may properly come before this Annual Meeting, or any
adjournment thereof.
It is important that proxies be returned promptly. Whether you plan to
be present in person at the Annual Meeting or not, please vote, sign and date
the enclosed Proxy Card and return it in the enclosed envelope which does not
require postage if mailed in the United States.
<PAGE>
Revocation of Proxy
Your presence at this Annual Meeting will not automatically revoke your
proxy. You may revoke a proxy, however, at any time prior to its exercise by
filing with the Corporate Secretary:
o a written notice of revocation;
o by delivering to Atlantic BancGroup, a duly executed proxy
bearing a later date; or
o by attending the Annual Meeting and voting in person.
Voting Procedures
Under the Florida Business Corporation Act ("Act"), directors are
elected by a plurality of the votes cast at a meeting at which a quorum is
present. Our Bylaws provide that a majority of shares entitled to vote and
represented in person or by proxy at a meeting of the shareholders constitutes a
quorum. Other matters are approved if affirmative votes cast by the holders of
shares represented at a meeting at which a quorum is present and entitled to
vote on the subject matter exceed votes opposing the action, unless a greater
number of affirmative votes or voting by classes is required by the Act or our
Articles of Incorporation. Abstentions and broker non-votes have no effect under
Florida law.
The close of business on March 1, 2000, has been fixed by the Board of
Directors as the "Record Date" for determination of shareholders entitled to
notice of and to vote at this Annual Meeting, and any adjournments thereof. The
total number of shares of common stock outstanding on the Record Date was
595,350 shares.
Each shareholder of record on the Record Date has the right to vote, in
person or by proxy, the number of shares owned by him or her for as many persons
as there are directors to be elected. Our Bylaws do not provide for cumulative
voting; rather, shareholders have a right to one vote per share owned on any
matters presented for shareholder vote. Thus, or example, if a shareholder owns
five shares, that shareholder may vote a maximum of five shares for each
director to be elected.
Beneficial Ownership
The information below is furnished regarding persons or apparent groups
who are believed to be the beneficial owners of 5% or more of the outstanding
shares of Atlantic BancGroup's common stock as of the Record Date.
Percent
Name of Beneficial Owner Number of Shares of Class
------------------------ ---------------- --------
M. Michael Witherspoon 45,320(1) 7.33%
Robin H. Scheiderman 42,000(2) 6.82%
G. Keith Watson 54,000(3) 8.69%
- -----------------------
(1) Includes 22,660 shares subject to a presently exercisable warrant.
(2) Includes 21,000 shares subject to a presently exercisable warrant and 1,000
shares owned by Ms. Scheiderman's husband and his sister.
(3) Includes 27,000 shares subject to a presently exercisable warrant and 2,000
shares held by Mr. Watson as custodian for his minor children.
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 1
<PAGE>
Board of Directors Meetings
During the year ended December 31, 1999, Atlantic BancGroup's Board of
Directors held 12 meetings. No director attended fewer than 75% of the total
meetings of the Board of Directors for the full year. Atlantic BancGroup
currently does not pay Board fees. The Bank, however, pays directors $500 per
month for attending Board meetings. Directors who serve on the Loan Committee
receive $50 per meeting.
Committees of the Board of Directors
The Board of Directors of Atlantic BancGroup and the Bank conduct
business through meetings of the respective Boards. In 1999, Atlantic BancGroup
had only one standing committee, the Audit Committee, which is comprised of the
same members that serve on the Bank's Audit Committee. Atlantic BancGroup's
Audit Committee met one time during the year. In accordance with proposed
Securities and Exchange Commission regulations, Atlantic BancGroup's Audit
Committee will now meet, at a minimum, quarterly. The standing committees of the
Bank are as follows: Audit Committee, Loan Committee, Asset Liability/Investment
Committee, Bank Improvement Committee, and the Y2K Committee.
<TABLE>
<CAPTION>
Board Member Board Audit ALCO/ Loan Bank Year
Investment Improvement 2000
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Frank J. Cervone X X
- ------------------------------------------------------------------------------------------------------
Barry W. Chandler X X X X X
- ------------------------------------------------------------------------------------------------------
Chairman
Jimmy D. Dubberly X X X
- ------------------------------------------------------------------------------------------------------
Chairman
Donald F. Glisson, Jr. X X X X
- ------------------------------------------------------------------------------------------------------
Robin E. Scheiderman X X X
- ------------------------------------------------------------------------------------------------------
Gordon K. Watson X X
- ------------------------------------------------------------------------------------------------------
Conrad L. Williams X X X
- ------------------------------------------------------------------------------------------------------
M. Michael Witherspoon X X X X X
Chairman Chairman
- ------------------------------------------------------------------------------------------------------
Dennis M. Wolfson X X X
- ------------------------------------------------------------------------------------------------------
</TABLE>
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 3
<PAGE>
ALCO/Investment Committee - Establishes the asset and liability management
policies of the Bank, monitors and sets limitations for interest-rate risk and
formulate loan pricing.
Loan Committee - Meets as required to act upon loan requests to be handled by
the Bank individually or jointly with Citizens Bank.
Audit Committee - Reviews auditing, accounting, financial reporting and internal
control functions. Recommends our independent accountant and reviews their
services. All members are nonemployee directors.
Year 2000 Committee (for 1999 only) - Met monthly with management to evaluate
the progress being made and the steps being taken to ensure that the Company's
computer and data processing systems were Year 2000 compliant.
PROPOSAL I - ELECTION OF DIRECTORS
The Board of Directors of Atlantic BancGroup is presently comprised of
nine members. The Company's Articles of Incorporation provide that directors
shall be divided into three classes, as nearly equal in number as reasonably
possible. The term of office of the first class to expire at the first annual
meeting; the second class one year thereafter; the third class two years
thereafter. No person being nominated as a director is being proposed for
election pursuant to any agreement between any person and Atlantic BancGroup.
The nominees for directors named herein have indicated that they are
willing to stand for election and will serve if elected as directors. Should any
of the director nominees become unable or unwilling to serve, the proxies will
be voted for the election of such other person or persons as the Board of
Directors may choose to nominate.
The affirmative vote of a majority of the outstanding shares of common
stock is needed to elect a director. Abstentions and votes withheld for a
director will have the same effect as votes against.
Information relating to the business experience, age and beneficial
ownership of the Company's capital stock of each director is set forth below:
DIRECTORS WITH TERMS EXPIRING IN 2001
CLASS 1 DIRECTORS
Dr. Frank J. Cervone, 47, is a 24,400 shares of common stock,(1)
director of Atlantic BancGroup and the 4.02% of common stock outstanding
Bank. Dr. Cervone is also a director
of Oceanside Mortgage Group, Inc. He
is an Endodontist, practicing since
1990 in Jacksonville Beach, Florida.
Dr. Cervone is a graduate of the
University of Pittsburgh.
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 4
<PAGE>
Barry W. Chandler, 48, is a director 25,000 shares of common stock,(1)
of Atlantic BancGroup and the Bank. 4.12% of common stock outstanding
Mr. Chandler has served as President
of the Bank since 1996 and President
and CEO since December, 1999. Mr.
Chandler is also the Chairman of Oceanside Mortgage Group, Inc. Prior to joining
the Bank, Mr. Chandler was with Ponte Vedra National Bank, Ponte Vedra, Florida
from 1990 to 1996. He is a graduate of the Graduate School of Retail Banking
Management at the University of Virginia.
Jimmy D. Dubberly, 58, is a director 12,400 shares of common stock,(1)
of Atlantic BancGroup and the Bank. 2.06% of common stock outstanding
Mr. Dubberly is the President of South
Georgia Bank, Glenville, Georgia, a
position he has held since 1986. Mr.
Dubberly attended Armstrong State
College, the University of Georgia and
Louisiana State University.
DIRECTORS WITH TERMS
EXPIRING IN 2002
CLASS 2 DIRECTORS
Donald F. Glisson, Jr., 40, is 22,600 shares of common stock,(1)
Chairman of the Board of Atlantic 3.80% of common stock outstanding
BancGroup and a director of the Bank.
He is also a director of Oceanside
Mortgage Group, Inc. Since 1982, Mr.
Glisson has served as President of
Triad Financial Services, Inc. in
Jacksonville, Florida. He is a
graduate of Florida State University.
Robin H. Scheiderman, 43, is a 42,000 shares of common stock,(1)
director of Atlantic BancGroup, and 6.82% of common stock outstanding
the Bank. Ms. Scheiderman is a
self-employed Certified Public
Accountant. She earned a Bachelors
Degree and a Masters Degree from the
University of North Florida and
resides in St. Augustine, Florida.
Gordon K. Watson, 50, is a director of 54,000 shares of common stock,(1)
Atlantic BancGroup, and the Bank. He 8.69% of common stock outstanding
is also a director of Oceanside
Mortgage Group, Inc. Mr. Watson is an
attorney in the law firm of Watson &
Osborne, P.A. in Jacksonville,
Florida. He resides in Ponte Vedra
Beach, Florida and is a graduate of
the University of Florida.
<PAGE>
DIRECTORS WITH TERMS
EXPIRING IN 2003
CLASS 3 DIRECTORS
Conrad L. Williams, 70, is a director 10,000 shares of common stock,(1)
of Atlantic BancGroup, and Oceanside 1.67% of common stock outstanding
Bank. Mr. Williams is a retired
veterinarian. He resides in Atlantic
Beach, Florida and is a graduate of
the University of Georgia College of
Veterinarian Medicine.
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 5
<PAGE>
M. Michael Witherspoon, 55, is 45,320 shares of common stock,(1)
President and CEO and a director of 7.33% of common stock outstanding
Atlantic BancGroup, and the Bank. He
is the Chairman of the Board of
Oceanside Bank. He is also a director
of Oceanside Mortgage Group, Inc. He
previously served from 1992 to 1994 as
President/CEO of the Bank of Dodge
County, Eastman, Georgia and as the
founding President and CEO of the
United Bank and Trust of Rockmart,
Georgia. Mr. Witherspoon is a graduate
of Georgia State University and the
Stonier Graduate School of Banking at
Rutgers University. He resides in
Atlantic Beach, Florida.
Dennis M. Wolfson, 58, is a director 14,250 shares of common stock,(1)
of Atlantic BancGroup, and the Bank. 2.40% of common stock outstanding
Mr. Wolfson is a self employed real
estate developer and investor. Mr.
Wolfson is a trustee and executive committee member of Wolfson Children's
Hospital, Jacksonville, Florida. He is a graduate of the University of Georgia
and resides in Jacksonville, Florida
NON-DIRECTOR OFFICER
David L. Young, 54, is Executive Vice 4,000 shares of common stock, (1)
President and Chief Financial Officer 0.70% of common stock
of Atlantic BancGroup, and also serves
as outstanding Executive Vice
President and Chief Financial Officer
of the Bank, a position he has held
since the Bank's inception in 1996.
Mr. Young serves as
Secretary/Treasurer of Oceanside
Mortgage Group, Inc. Prior to joining
the Bank, Mr. Young was the Finance
Manager for the Loan and Investment
Operation Division of Barnett Bank,
Jacksonville, Florida from 1995 to
1997. He is a graduate of Jacksonville
University, Jacksonville, Florida and
the Graduate School of Retail Banking
Management at the University of
Virginia.
- -----------------------------------
(1) Includes shares for which the named person:
o has sole voting and investment power,
o has shared voting and investment power with a spouse, or o holds in an
IRA or other retirement plan program, unless otherwise
indicated in these footnotes o amount also includes shares that may be
acquired by exercising stock warrants.
<PAGE>
The Board of Directors of Atlantic BancGroup recommend that the shareholders
vote "For" the election of three Class 1 Directors (terms to expire in 2001),
three Class 2 Directors (terms to expire in 2002), and three Class 3 Directors
(terms to expire in 2003) as presented.
Executive Compensation
The following Summary Compensation Table shows compensation information
regarding Michael Witherspoon, President and Chief Executive Officer of Atlantic
BancGroup. No other executive officer received compensation at a level required
to be reported herein by the Securities and Exchange Commission regulations.
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 6
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
--------------------------------- ------------------------ -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Principal Year Salary($) Bonus($) Other Annual Restricted Securities LTIP All Other
Position Compensation Awards Underlying Payouts Compensations ($)
($) Options ($)
SARs (#)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M. Michael Witherspoon 1999 $98,520 $500 $6,584 None None None None
President/CEO
</TABLE>
Explanation of Columns
(c) Base Salary - total base salary paid during the calendar year. (d) Annual
Cash Bonus Award - annual incentive award paid for results achieved during the
calendar year.
(e) Other Annual Compensation - all additional forms of cash and non-cash
compensation paid, awarded or earned. Amount includes $2,200 in director's fees
and $4,384 for country club fees.
(f) Restricted Stock Awards - Stock awarded to an executive that carries vesting
restrictions. (g) Securities Underlying Options - Grants of stock options made
under the Company's 1996 Incentive Stock Option Plan.
(h) "LTIPs" - The dollar value of all payouts pursuant to long-term incentive
plans. (i) All Other Compensation - All other compensation that does not fall
under any of the aforementioned categories.
Benefits
Officers of the Company are provided hospitalization, major medical, short-
and long-term disability, dental insurance, and term life insurance under group
plans on generally the same basis to all full-time employees.
Employment Contracts
Atlantic BancGroup does not have an employment agreement with any of its
officers.
Certain Relationships and Related Transactions
Certain directors, officers and employees of Atlantic BancGroup and its
subsidiaries are customers of and have banking relations with the Bank. Loans
made to directors, executive officers and principal shareholders (defined as
individuals owning 5% or more of Atlantic BancGroup's common stock) are governed
under the provisions of Section 22(h) of the Federal Reserve Act. Section 22(h)
requires that any loans made by the Bank to such individuals, or to any related
interest of such individuals, must: (i) be on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with non-affiliated parties and; (ii) not involve more
than the normal risk of repayment or present other unfavorable features. These
restrictions do not affect preferential loans to full-time employees who are not
directors or executive officers of Atlantic BancGroup.
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 7
<PAGE>
The following table sets forth information as to all directors and
executive officers of Atlantic BancGroup, including members of their immediate
families and affiliated entities, who had loans in the aggregate of $60,000 or
more during the year ended December 31, 1999.
<TABLE>
<CAPTION>
Maturity Highest Principal Interest
Name and Position Date of Date of Balance Balance at Rate as of Type of
or Relationship Loan Loan During 1999 12/31/99 12/31/99 Loan
- --------------- ---- ---- ----------- -------- -------- ----
<S> <C> <C> <C> <C> <C>
Frank J. Cervone, D.M.D. 5/22/98 4/22/08 $202,139.38 $188,317.84 8.50% CM
5/12/99 5/15/04 30,260.57 27,364.05 7.75 IL
Triad Financial Services 4/15/99 4/15/02 15,156.45 12,082.65 7.75 IL
11/24/98 11/24/00 300,000.00 ----- 8.75 LOC
1/8/98 1/15/03 ----- ----- 11.50 LOC
Watson & Osborne, P.A. 2/11/98 2/11/01 139,363.49 952.56 8.50 LOC
G. Keith Watson 11/1/97 11/16/02 27,175.68 21,135.39 9.00 IL
Dennis M. Wolfson 12/15/98 1/15/20 355,131.47 355,131.47 8.25 CM
10/22/97 10/15/02 10,000.00 ----- 11.50 LOC
</TABLE>
- ---------------------------
Note: "CM" (Commercial Mortgage Loan); "IL" (Installment Fixed Rate Consumer
Loan); "LOC" (Line of Credit).
Securities Ownership of Management.
As of the Record Date, all executive officers and directors of Atlantic
BancGroup as a group, (a total of 10 persons), owned beneficially 126,110 shares
of common stock, and 127,860 warrants (with a right to purchase an equal number
of shares of common stock at $10.00 per share), or 31.12% of the common stock
outstanding if all of the executive officers and directors exercised their
warrants and no other shareholder exercised his or her warrants.
PROPOSAL II - APPOINTMENT OF AUDITORS FOR FISCAL YEAR
ENDING DECEMBER 31, 2000
The Board of Directors intends to retain the accounting firm of
Stevens, Sparks & Company, P.A. as the independent auditors for Atlantic
BancGroup and its subsidiaries for the fiscal year ending December 31, 2000. A
representative from the firm of Stevens, Sparks & Company, P.A. is expected to
be present at the Annual Meeting to respond to shareholder questions.
The Board of Directors recommends that shareholders vote "For" the appointment
of Stevens, Sparks & Company, P.A. as the independent auditors for the fiscal
year ending December 31, 2000.
<PAGE>
PROPOSAL III - ADJOURNMENT OF ANNUAL MEETING
Under this Proposal, we are seeking your approval to adjourn the Annual
Meeting in the event that the number of proxies sufficient to approve Proposals
I or II are not received by April 27, 2000. In order to permit proxies that have
been received by Atlantic BancGroup at the time of the Annual Meeting to be
voted, if necessary, for the adjournment, we are submitting the question of
adjournment to permit further solicitation of proxies to approve any one or more
of the proposals being submitted to the shareholders for their approval as a
separate matter for consideration. If it is necessary to adjourn the Annual
Meeting and the adjournment is for a period of less than 30 days, no notice of
the time and place of the adjourned meeting need be given the shareholders,
other than an announcement made at the Annual Meeting.
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 8
<PAGE>
The Board of Directors recommends that shareholders vote "For" the adjournment
of the Annual Meeting.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in Atlantic BancGroup's proxy
materials for next year's Annual Meeting of Shareholders, any shareholder
proposal to take action at such meeting must be received at our corporate office
at 710 North Third Street, Jacksonville Beach, Florida 32250, no later than
December 28, 2000. Any such proposals shall be subject to the requirements of
the proxy rules (Regulation 14A) adopted under the Securities Exchange Act of
1934, as amended.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN
ANNUAL MEETING AND SHAREHOLDER NOMINATIONS
Our Bylaws provide an advance notice procedure for certain business,
including nominations for directors, to be brought before an annual meeting. In
order for a shareholder to properly bring business before an annual meeting, the
shareholder must give written notice to the Corporate Secretary not less than
ten days before the time originally fixed for such meeting.
SOLICITATION
The cost of soliciting proxies on behalf of the Board of Directors for
the Annual Meeting will be borne by Atlantic BancGroup. Proxies may be solicited
by directors, officers or our regular employees, in person or by telephone,
telegraph or mail. We are requesting persons, firms and corporations holding
shares in their names, or in the names of their nominees for the benefit of
others, to send proxy materials to and obtain proxies form such beneficial
owners. Proxy holders will be reimbursed for their reasonable out-of-pocket
expenses.
OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING
The Board of Directors knows of no other business which will be
presented for consideration at the Annual Meeting other than those matters
described above in this Proxy Statement. However, if any other matters should
properly come before the Annual Meeting, it is intended that the proxies
solicited hereby will be voted in respect thereof in accordance with the
judgment of the person or persons voting the proxies. If you do not wish to
extend such authority, you may limit the proxy by marking the box on the reverse
side of the Proxy Card.
FINANCIAL STATEMENTS
Accompanying this Proxy Statement is the 1999 Form 10-KSB which
includes Atlantic BancGroup's 1999 audited Financial Statements for Atlantic
BancGroup and its subsidiaries. Form 10- KSB also serves as the Annual Report to
Shareholders and the Annual Disclosure Statement. Atlantic BancGroup's Annual
Report on Form 10-
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 9
<PAGE>
KSB and the Annual Disclosure Statement is available at no charge. Any
shareholder who would like an additional copy of these financial statements may
contact David L. Young, Corporate Secretary, Atlantic BancGroup, Inc., 710 North
Third Street, Jacksonville Beach, Florida 32250, telephone number (904)
247-9494.
Atlantic BancGroup currently files the 34 Act periodic reports
(including Form 10-KSB, Form 10-QSBs, Proxy Statements, etc.) with the
Securities and Exchange Commission. These periodic reports are filed
electronically via EDGAR by Atlantic BancGroup and can be inspected and copied
at the public reference facilities maintained by the Securities and Exchange
Commission at its Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549. The Securities and Exchange Commission maintains a web site that
contains registration statements, reports, proxy and information statements and
other information regarding registrants that file electronically with the
Securities and Exchange Commission. Information filed by Atlantic BancGroup is
available for review on this Web Site. The address of the Web Site is
http://www.sec.gov.
Atlantic BancGroup, Inc.
Dated: March 15, 2000
------------------------------------
ATLANTIC BANCGROUP, INC. PROXY STATEMENT
1315 South Third Street, o Jacksonville Beach, Florida 32250 10
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,569
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,109
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 40,935
<ALLOWANCE> 738
<TOTAL-ASSETS> 54,161
<DEPOSITS> 43,889
<SHORT-TERM> 4,631
<LIABILITIES-OTHER> 237
<LONG-TERM> 0
0
0
<COMMON> 6
<OTHER-SE> 5,398
<TOTAL-LIABILITIES-AND-EQUITY> 54,161
<INTEREST-LOAN> 3,207
<INTEREST-INVEST> 374
<INTEREST-OTHER> 123
<INTEREST-TOTAL> 3,704
<INTEREST-DEPOSIT> 1,158
<INTEREST-EXPENSE> 1,210
<INTEREST-INCOME-NET> 2,494
<LOAN-LOSSES> 221
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,167
<INCOME-PRETAX> 468
<INCOME-PRE-EXTRAORDINARY> 558
<EXTRAORDINARY> 0
<CHANGES> (59)
<NET-INCOME> 499
<EPS-BASIC> 0.84
<EPS-DILUTED> 0.84
<YIELD-ACTUAL> 5.96
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 520
<CHARGE-OFFS> 8
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 738
<ALLOWANCE-DOMESTIC> 738
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
