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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-87763
[Company Logo]
800,000 Shares of Common Stock
372,500 Common Stock Purchase Warrants
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NBG Bancorp, Inc. is conducting this initial public offering of shares of
its common stock to raise capital to form The National Bank of Georgia, a
national bank organizing in Athens, Georgia. NBG Bancorp will be the holding
company and sole shareholder of The National Bank of Georgia after the bank's
organization is completed. NBG Bancorp is offering a minimum of 610,000 shares
and a maximum of 800,000 shares at a price of $10.00 per share. NBG Bancorp is
also offering to its organizers 372,500 warrants to purchase shares of NBG
Bancorp common stock. Our executive officers will be marketing NBG Bancorp
common stock on a best efforts basis and will not receive any commissions for
sales they make. Because this is a best efforts offering, there is no guarantee
that the required minimum number of 610,000 shares will be sold. The minimum
subscription amount is 1,000 shares per investor. Shares sold in this offering
will not be listed on Nasdaq or any national exchange.
This offering is scheduled to end on March 5, 2000, but NBG Bancorp may
extend it - without notice to subscribers - until November 30, 2000, at the
latest. NBG Bancorp will deposit all subscription funds in an interest-bearing
escrow account with an independent escrow agent until it has received
subscriptions for 610,000 shares. If NBG Bancorp does not receive subscriptions
for 610,000 shares by November 30, 2000, NBG Bancorp will terminate this
offering and promptly return all funds to subscribers, with interest. NBG
Bancorp reserves the right to reject all or part of any subscription for any
reason.
Investing in NBG Bancorp common stock involves risks which are described in
the "Risk Factors" section beginning on page 7 of this prospectus.
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Minimum Maximum
Per Share Offering Offering
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Public offering price....................... $10.00 $6,100,000 $8,000,000
Proceeds to NBG Bancorp
before expenses............................ $10.00 $6,100,000 $8,000,000
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of NBG Bancorp's securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The shares of NBG Bancorp common stock and the purchase warrants offered
are not deposits, savings accounts, or other obligations of a bank or savings
association and are not insured by the FDIC or any other governmental
agency.
______________________
The date of this prospectus is December 6, 1999
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SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all of the information you should consider before
investing in NBG Bancorp common stock. To fully understand this offering, you
should read the entire prospectus carefully, including the risk factors and the
financial statements. References in this prospectus to "we," "us," and "our"
refer to NBG Bancorp, Inc. and The National Bank of Georgia.
General
NBG Bancorp, Inc. was formed to serve as a bank holding company for The
National Bank of Georgia, a national bank organizing in Athens, Georgia. The
National Bank of Georgia will operate as a community bank emphasizing prompt,
personalized customer service to the individuals and businesses located in
Athens, Georgia, including Clarke County, and a portion of adjacent Oconee
County, including the City of Watkinsville. After receiving all necessary
regulatory approvals, we anticipate beginning banking operations in early 2000.
Our offices are located at 2234 West Broad Street, Athens, Georgia 30306. Our
telephone number is (706) 355-3122.
The Athens and Oconee County Market
We believe the Athens and Oconee County market presents a growing and
highly diversified economic environment that will support the formation of The
National Bank of Georgia. Home to The University of Georgia, Athens is known as
the "Classic City." Athens is a cosmopolitan community with an eclectic mix of
history and learning, music and art, sports and recreation, as well as fairs,
festivals, dining and shopping. Adjacent Oconee County is growing even more
rapidly than Athens and with its low unemployment and relatively well educated
population, is a natural complement to Athens.
As the banking industry in Northeast Georgia has been consolidating, we
believe an attractive opportunity exists in the Athens and Oconee County market
for a locally-owned community bank that focuses on personalized service to
individuals and businesses. Over the last ten years, the following financial
institutions have entered or expanded in the Athens and Oconee County market by
acquiring community banks located in the area:
. SouthTrust Bank, N.A. (acquired The Georgia National Bank);
. Main Street Bank (acquired First Federal of Georgia);
. Wachovia Bank, N.A. (acquired Southern Heritage Savings Bank);
. Synovus Financial Corp./Athens First Bank & Trust (acquired Athens
Federal Savings Bank in Athens and Bank of Georgia in Watkinsville); and
. Bank of America (acquired Bank South Corporation).
As a result of these acquisitions, there are no longer any locally-owned
community banks in Athens and only one in Oconee County. However, we are aware
of a state bank in Oconee County that is in the organizational stages, but as of
the date of this prospectus, has not opened.
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Acquisitions of community banks by larger regional banks often result in
the dissolution of local boards of directors and in significant turnover in
management and customer service personnel who possess extensive banking
experience and strong ties to the local community. We believe that we have an
opportunity to attract and retain experienced and talented individuals who are
familiar with the banking needs of the local community. Bank mergers and
acquisitions also necessitate the consolidation of data processing systems which
often create disruptions in customer service. As the only locally-owned
community bank in Athens and one of the only locally-owned community banks
serving Oconee County, we will offer convenient service, local decision-making
and competitive loans. Additionally, by focusing our operations on the
community we serve, we believe that we will be able to respond to changes in our
market more quickly than large, centralized institutions.
Products and Services
The National Bank of Georgia plans to offer high quality products and
personalized services while providing its customers with the financial
sophistication and array of products typically offered by a larger bank. The
bank's lending services will include consumer loans to individuals, commercial
loans to small- to medium-sized businesses and professional concerns and real
estate-related loans. The National Bank of Georgia will offer a broad array of
competitively priced deposit services including demand deposits, regular savings
accounts, money market deposits, certificates of deposit and individual
retirement accounts. To complement its lending and deposit services, the bank
intends to also provide cash management services, safe-deposit boxes, travelers
checks, direct deposit, automatic drafts, and courier services to commercial
customers. The National Bank of Georgia intends to offer its services through a
variety of avenues, including automated teller machines and telephone
banking.
Directors and Officers
Our management team includes individuals who have significant experience in
the banking industry in Georgia and in our market area particularly. William S.
Huggins will serve as the President and the Chief Executive Officer of The
National Bank of Georgia. He has held numerous senior banking positions in
Georgia during his 30-year banking career, including President and Chief
Executive Officer of Georgia National Bank, which was recently acquired by
SouthTrust Bank, N.A., prior to NBG Bancorp's organization. Thomas Z. Lanier,
III, who will serve as the bank's Executive Vice President-Lending, and Michael
R. Carson, who will serve as the bank's Executive Vice President-Operations,
collectively have over 40 years of experience in banking and are both natives of
Georgia. See "Management" (page 36).
The Board of Directors of NBG Bancorp consists of 13 organizers who, if
approved by the Office of the Comptroller of the Currency, will also be the
directors of The National Bank of Georgia. All of the directors are residents
of, or own businesses in, the Athens and Oconee County area and are active
participants in the community. The directors intend to utilize their diverse
backgrounds and their extensive local business relationships to attract
customers from all segments of the community. NBG Bancorp's directors and
executive officers intend to purchase approximately 372,500 shares of NBG
Bancorp common stock, representing approximately 61% of the 610,000 shares of
common stock to be outstanding upon completion of the minimum offering, or
approximately 47% of the 800,000 shares to be outstanding if the maximum
offering is completed. In addition, our organizers - in recognition of the
financial risks undertaken by them in forming NBG Bancorp and The National Bank
of Georgia - will be granted warrants to purchase additional shares of NBG
Bancorp common stock. Each warrant will entitle the organizer to purchase one
additional share of common stock. The actual number of warrants granted will
depend on the number of shares of NBG Bancorp common stock our organizers
actually purchase in the offering. Therefore, given the organizers' intent to
purchase 372,500 shares in this
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offering, we expect that they will be granted warrants to purchase an aggregate
of 372,500 shares. If all of these warrants were exercised, our organizers would
own approximately 76% of the shares outstanding after the minimum offering and
64% of the outstanding shares after the maximum offering. See "Terms of the
Offering - Purchases by Organizers" (page 15) and "Description of Capital Stock
of NBG Bancorp - Organizers' Warrants" (page 46). We believe our directors'
financial interest in NBG Bancorp will encourage their active participation in
growing our business.
Business Strategy
Our strategy as an independent bank holding company will be carried out
through the operations and growth of The National Bank of Georgia. In an effort
to emphasize prompt, responsive service to our target customers and expand our
presence in our market, our business strategy is comprised of two components -
an operating strategy and a growth strategy - which are highlighted below.
Operating Strategy:
. Hire and retain highly experienced and qualified banking personnel.
. Provide individualized attention with local decision-making
authority.
. Capitalize on our directors' and officers' diverse community
involvement and business experience.
. Establish a community identity.
. Implement an aggressive marketing program.
Growth Strategy:
. Build on The National Bank of Georgia's position as the only
locally-owned community bank in Athens and one of the only
locally-owned community banks serving Oconee County.
. Hire and retain employees with established customer relationships.
. Utilize technology and strategic outsourcing to provide a broad
array of banking products and services.
The Offering
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Securities Offered............................. 800,000 shares of NBG Bancorp common stock and
372,500 common stock purchase warrants. To
complete this offering, NBG Bancorp must sell a
minimum of 610,000 shares, 372,500 of which are
expected to be sold to our organizers. Each
investor must purchase a minimum of 1,000 shares.
Each warrant entitles the holder to purchase one
share of common stock at an exercise price of
$10.00 per share. See "Terms of the Offering"
(page 13).
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Common Stock to be Outstanding After
the Offering.................................. Minimum - 610,000 shares
Maximum - 800,000 shares
These totals do not include up to 372,500 shares
of NBG Bancorp common stock issuable upon the
exercise of the common stock purchase warrants.
Offering Price Per Share............................ $10.00
Plan of Distribution................................ Shares of NBG Bancorp common stock will be sold
on a best efforts basis by NBG Bancorp's
executive officers who will receive no
commissions for any sales they make. See "Plan
of Distribution" (page 16).
Use of Proceeds..................................... To capitalize The National Bank of Georgia, to
pay organization, offering and pre-opening
expenses, to improve The National Bank of
Georgia's main office and to provide working
capital for The National Bank of Georgia,
including making loans and other investments.
See "Use of Proceeds" (page 18).
Offering Conditions................................. We must satisfy the following conditions to
complete our offering:
. at least $6,100,000 must be deposited with NBG
Bancorp's escrow agent, Georgia First Bank, N.A.,
Gainesville, Georgia;
. the Board of Governors of the Federal Reserve
System must approve NBG Bancorp's application to
become a bank holding company;
. the Office of the Comptroller of the Currency
must preliminarily approve The National Bank of
Georgia's charter application;
. the Federal Deposit Insurance Corporation must
approve The National Bank of Georgia's deposit
insurance application; and
. NBG Bancorp must not have canceled this
offering before funds are withdrawn from the
escrow account.
See "Terms of the Offering - Conditions of the
Offering" (page 13).
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Escrow Arrangements................................. Until we have satisfied all of the offering
conditions, NBG Bancorp will place all
subscription funds in an escrow account with
Georgia First. If we do not meet the offering
conditions by November 30, 2000, we will return
to all subscribers their funds placed in the escrow
account, with interest. Prior to the release of
the funds, Georgia First will invest the funds in
interest-bearing bank accounts. See "Terms of
the Offering Escrow of Subscription Funds" (page
14).
Once we have satisfied all of the offering
conditions, Georgia First will release all
subscription funds to NBG Bancorp. Any funds
received after this time will not be placed in
the escrow account, but will be immediately
available for use by us. Once the offering
conditions have been satisfied and subscription
funds released to NBG Bancorp, shareholders may
lose a portion of their investment. For example,
The National Bank of Georgia must obtain final
approval of its charter application and open for
business by April 26, 2001. In addition, even
though we will have received the approvals of the
Federal Reserve and the FDIC prior to withdrawing
funds from the escrow account, their approvals
will contain conditions that will not be able to
be fulfilled until The National Bank of Georgia
is capitalized and is near opening. The approval
of the Georgia Department of Banking and Finance
will also be required for NBG Bancorp to operate
as a bank holding company. In the event we are
unable to begin banking operations after funds
have been withdrawn from the escrow account, NBG
Bancorp will seek shareholder approval for
dissolution and liquidation. Upon liquidation,
NBG Bancorp will promptly return to shareholders
all funds, with interest, less all expenses
incurred by us, including the expenses of this
offering and our organization and pre-opening
expenses. See "Terms of the Offering Failure to
Begin Banking Operations" (page 14).
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Dividends........................................... In light of regulatory restrictions and the need
for us to retain and build capital, we plan to
reinvest earnings and not pay dividends for the
next several years. NBG Bancorp's future
dividend policy will depend on our earnings,
capital requirements and financial condition, as
well as on other factors NBG Bancorp's Board of
Directors considers relevant. See "Dividends"
(page 21).
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RISK FACTORS
An investment in NBG Bancorp common stock involves a significant degree of
risk. You should not invest in NBG Bancorp common stock unless you can afford
to lose your entire investment. You should consider carefully the following
risk factors and other information in this prospectus before deciding to invest.
You should also carefully read the cautionary statement following this Risk
Factors section regarding our use of forward-looking statements.
We have no operating history upon which to base an estimate of our future
success.
The National Bank of Georgia, which initially will be the sole subsidiary
of NBG Bancorp, is in organization and neither NBG Bancorp, nor The National
Bank of Georgia, has any operating history on which to base any estimate of
their future performance. Accordingly, the financial statements presented in
this prospectus may not be as meaningful as those of a company which does have a
history of operations. In addition, the success of our operations must be
considered in light of the expenses, complications, and delays frequently
encountered in connection with the opening and development of a new bank.
Because of our lack of operating history, you do not have access to the type and
amount of information that would be available to a purchaser of securities of a
financial institution with an operating history.
If we fail to begin banking operations, you could lose all or a portion of your
investment.
If you subscribe to this offering and funds are released from the escrow
account and we incur start-up expenses, but are unable to begin banking
operations, we will seek to dissolve and liquidate. In this event, NBG Bancorp
would return to shareholders all of their funds with interest, less all expenses
incurred by us. If we dissolve and liquidate, we can give you no assurance that
our liabilities will not exceed our assets, in which case, you would lose your
entire investment. After withdrawing funds from the escrow account, we must
satisfy the following requirements in order to begin banking operations:
. receive the OCC's final approval of The National Bank of Georgia's
charter application and open for business by April 26, 2001;
. satisfy conditions of the Federal Reserve's and the FDIC's approvals;
and
. receive the Georgia Department of Banking and Finance's approval for NBG
Bancorp to operate as a bank holding company.
Although we believe we will have little difficulty satisfying the above
requirements after funds are withdrawn from the escrow account, we may be
incorrect in our assumptions. If we are incorrect, you could lose all or a
portion of your investment. See "Terms of the Offering - Failure to Begin
Banking Operations" (page 14).
If we do not receive regulatory approvals in a timely manner, it could delay the
date on which The National Bank of Georgia opens for business, which would
increase our pre-opening expenses and would result in additional losses.
Although we expect to receive all regulatory approvals and to open for
business in the first quarter of 2000, we can give you no assurance as to when,
if at all, these events will occur. Any delay in beginning The National Bank of
Georgia's operations will increase our pre-opening expenses and postpone our
realization of potential revenues. Such a delay will cause our accumulated
deficit to
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increase as a result of continuing operating expenses, such as salaries and
other administrative expenses, and our lack of revenue.
The National Bank of Georgia will incur substantial start-up expenses and does
not expect to be profitable in the near future.
Typically, new banks incur substantial start-up expenses, are not
profitable in the first year of operation and, in some cases, are not profitable
for several years. The National Bank of Georgia will incur substantial expenses
in establishing itself as a going concern, and we can give you no assurance that
it will be profitable or that future earnings, if any, will meet the levels of
earnings prevailing in the banking industry. Because NBG Bancorp will initially
act as the sole shareholder of The National Bank of Georgia, the profitability
of the company will depend upon the bank's successful operation. See "Plan of
Operation" (page 22).
Failure to implement our business strategies may adversely affect our financial
performance.
If we cannot implement our business strategy, our financial performance may
be adversely affected. Our organizers have developed a business plan that
details the strategies that we intend to implement in our efforts to achieve
profitable operations. The strategies include hiring and retaining experienced
and qualified employees and attracting individual and business customers from
Athens and Oconee County. Even if these strategies are successfully
implemented, they may not have the favorable impact on operations that we
anticipate. See "Proposed Business of NBG Bancorp and The National Bank of
Georgia - Business Strategy" (page 27).
Departures of our key personnel or directors may impair our operations.
William S. Huggins, Thomas Z. Lanier, III, and Michael R. Carson are
important to our success and, if we were to lose any of their services, our
financial condition and results of operations could be adversely affected. Mr.
Huggins has been instrumental in our organization and will be the key management
official in charge of The National Bank of Georgia's daily business operations.
Mr. Lanier will be in charge of the bank's lending operations. Mr. Carson will
be the key officer in charge of the bank's financial and accounting operations.
Although we have entered into employment agreements with each of Messrs.
Huggins, Lanier, and Carson, we have not purchased key man life insurance on any
of them and we cannot be assured of their continued service. Additionally, our
directors' community involvement, diverse backgrounds and extensive local
business relationships are important to our success. Our growth could be
adversely affected if the composition of our Board of Directors changes
significantly. See "Management" (page 36).
Our organizers as a group will be able to exercise greater control over our
management and affairs than will any individual investor and they may have
interests that are different from yours as an investor.
Our organizers - who will become our directors and executive officers after
this offering - will be able to exercise significant control over the management
and affairs of NBG Bancorp and The National Bank of Georgia. The organizers may
have interests that are different from yours as an investor. Our organizers
intend to purchase 372,500 shares of NBG Bancorp common stock which will equal
approximately 61% of the 610,000 shares to be outstanding upon completion of the
minimum offering or approximately 47% of the 800,000 shares to be outstanding if
the maximum number of shares is sold. See "Management - Proposed Directors and
Executive Officers of NBG Bancorp and The National Bank of Georgia" (page
36).
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NBG Bancorp intends to grant warrants to our organizers and stock options to
some of The National Bank of Georgia's employees which, if exercised, would
reduce your percentage ownership in NBG Bancorp.
Upon completion of the minimum offering, NBG Bancorp will grant to our
organizers warrants to purchase additional shares of NBG Bancorp common stock in
recognition of the financial risks undertaken by them in forming NBG Bancorp and
The National Bank of Georgia. Each warrant will entitle the organizer to
purchase one additional share of common stock. The actual number of warrants
granted will depend on the number of shares of NBG Bancorp common stock our
organizers actually purchase in the offering. Therefore, given the organizers'
intent to purchase 372,500 shares in this offering, we expect that they will be
granted warrants to purchase an aggregate of 372,500 shares. If all of these
warrants were exercised, our organizers would own approximately 76% of the
shares outstanding after the minimum offering and 64% of the outstanding shares
after the maximum offering. See "Terms of the Offering - Purchases by
Organizers" (page 15) and "Description of Capital Stock of NBG Bancorp -
Organizers' Warrants" (page 46).
In addition, NBG Bancorp has established an incentive stock option plan which
will allow NBG Bancorp to grant stock options to employees of The National Bank
of Georgia who are contributing significantly to the management or operation of
the business of the bank. Under this plan, NBG Bancorp has reserved 70,000
shares of NBG Bancorp common stock for the issuance of options, of which Messrs.
Huggins, Lanier and Carson in the aggregate currently may receive options to
purchase up to 49,000 shares in the event The National Bank of Georgia meets
established performance goals. See "Executive Compensation - Stock Option Plan"
(page 42). Any future exercise of warrants or options would dilute your
percentage of ownership interest in NBG Bancorp. For example, prior to the
exercise of their warrants, our organizers will own 61% of the 610,000 shares to
be outstanding upon completion of the minimum offering or approximately 47% of
the 800,000 shares to be outstanding if the maximum number of shares is sold.
If all of the warrants and the maximum number of options were exercised,
organizers and employees would own approximately 77% of NBG Bancorp's
outstanding common stock after the minimum offering and 66% after the maximum
offering.
We will be competing primarily in and around Athens and Oconee County with many
other larger financial institutions which have greater financial resources than
us.
We will be competing primarily with other financial institutions in Athens
and Oconee County, but may also compete with internet banks and financial
institutions located throughout the United States for products such as large
certificates of deposit. All of our local competitors actively solicit business
from residents of the Athens and Oconee County area. Some of these institutions
are not subject to the same degree of regulation as we will be and all will have
greater resources than will be immediately available to us. In addition, The
National Bank of Georgia will compete with numerous other lenders and deposit-
takers, including other commercial banks, savings and loan associations,
internet banks, credit unions, finance companies, mutual funds, insurance
companies and brokerage and investment banking firms. Because there are no
longer any locally-owned community banks in Athens and only one other locally-
owned community bank in Oconee County, we could face increased competition if
another community bank like The National Bank of Georgia were to open in our
market area. We are aware of a state bank in Oconee County that is in the
organizational stages, but as of the date of this prospectus, has not opened.
See "Proposed Business of NBG Bancorp and The National Bank of Georgia - Market
Opportunities - Competition" (page 26).
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Our success will depend significantly upon general economic conditions in the
Athens and Oconee County area.
Since the majority of The National Bank of Georgia's borrowers and
depositors are projected to be individuals and businesses located and doing
business in the Athens and Oconee County area, our success will depend
significantly upon the general economic conditions in and around Athens and
Oconee County. For example, an adverse change in the local economy could make
it more difficult for borrowers to repay their loans, which could lead to loan
losses for The National Bank of Georgia. In addition, because many of our
shareholders will most likely be residents of this same area, a prolonged
downturn in the general economic conditions of the Athens and Oconee County area
could result in sales of large amounts of NBG Bancorp common stock.
The National Bank of Georgia's initial lending limit will be lower than many of
its competitors, which may discourage potential customers and restrict our
growth.
At least during its early years of operations, The National Bank of
Georgia's legally mandated lending limits will be lower than those of many of
its competitors because it will have less capital than many of its competitors.
Initially, the bank will have a legal lending limit for unsecured loans of
$855,000 to any one borrower. The National Bank of Georgia's lower lending
limit may discourage potential borrowers who have lending needs that exceed the
bank's limits, which may restrict our ability to grow. The bank may try to
serve the needs of these borrowers by selling loan participations to other
institutions, but this strategy may not succeed. See "Proposed Business of NBG
Bancorp and The National Bank of Georgia - Lending Services" (page 29).
Rapidly rising or falling interest rates could significantly harm our business.
A rapid increase or decrease in interest rates could significantly harm The
National Bank of Georgia's net interest income, capital and liquidity. The
bank's profitability will depend substantially on its net interest income, which
is the difference between the interest income earned on its interest-earning
assets and the interest expense paid on its interest-bearing liabilities (such
as deposits and borrowings). To the extent that the maturities of these assets
and liabilities differ, rapidly rising or falling interest rates could
significantly and adversely effect The National Bank of Georgia's earnings,
which, in turn, would impact NBG Bancorp's business. See "Proposed Business of
NBG Bancorp and The National Bank of Georgia - Asset and Liability Management"
(page 33).
NBG Bancorp's ability to pay dividends is limited and depends on The National
Bank of Georgia's ability to pay dividends and the bank does not expect to pay
dividends for at least several years.
NBG Bancorp will initially have no source of income other than dividends it
receives from The National Bank of Georgia. NBG Bancorp's ability to pay
dividends will therefore depend on the bank's ability to pay dividends to it,
which will be based on its earnings, capital requirements, and financial
condition, among other factors.
Bank holding companies and national banks are both subject to significant
regulatory restrictions on the payment of cash dividends. In light of these
restrictions and the need for NBG Bancorp and The National Bank of Georgia to
retain and build capital, it will be the policy of each of their respective
board of directors to reinvest earnings for the period of time necessary to help
support the success of their operations. As a result, NBG Bancorp does not plan
to pay dividends until The National Bank of Georgia is cumulatively profitable.
See "Dividends" (page 21).
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The offering price for NBG Bancorp common stock was arbitrarily set by our
organizers and may not accurately reflect the value of an investment in NBG
Bancorp common stock.
Because we were only recently formed and The National Bank of Georgia is in
the process of being organized, the public offering price could not be set by
referencing historical measures of the bank's financial performance. Therefore,
the public offering price may not indicate the market price for NBG Bancorp
common stock after this offering. The public offering price was arbitrarily
determined by our organizers based on several factors. These factors included
prevailing market conditions, the price to earnings and price to book value
multiples of comparable publicly traded companies and NBG Bancorp's growth
potential and cash flow and earnings prospects. See "Plan of Distribution -
Determination of Offering Price" (page 17).
We do not expect that an active trading market for NBG Bancorp common stock will
develop, which means that you may not be able to sell your shares.
Since the size of this offering is relatively small, we do not expect that
an active and liquid trading market for NBG Bancorp common stock will develop
within the next five years. Therefore, you should not invest in this offering
if you have a short-term investment intent.
If an active trading market does not develop, you may not be able to sell
your shares promptly or perhaps at all. You should consider carefully the
limited liquidity of your investment before purchasing any shares of NBG Bancorp
common stock.
The market price of NBG Bancorp common stock may be volatile.
If a market develops for NBG Bancorp common stock after this offering,
significant market price volatility may be experienced. Factors that may affect
the price of NBG Bancorp common stock include its depth and liquidity, investor
perception of our financial strength, conditions in the banking industry such as
credit quality and monetary policies, and general economic and market
conditions. Our quarterly operating results, changes in analysts' earnings or
other developments affecting us could cause the market price of NBG Bancorp
common stock to fluctuate substantially. In addition, from time to time the
stock market experiences extreme price and volume fluctuations. This volatility
may significantly affect the market price of NBG Bancorp common stock for
reasons unrelated to our operating performance.
Our profitability and growth could be adversely affected by changes in the law,
especially changes deregulating the banking industry.
We will be subject to extensive federal government supervision and
regulation. Our ability to achieve profitability and to grow could be adversely
affected by federal and state banking laws and regulations. These and other
restrictions limit the manner in which we may conduct our business and obtain
financing, including The National Bank of Georgia's ability to attract deposits,
make loans and achieve satisfactory interest spreads. Many of these regulations
are intended to protect depositors, the public, and the FDIC, not shareholders.
In addition, the burden imposed by federal and state regulations may place us at
a competitive disadvantage compared to competitors who are less regulated.
Applicable laws, regulations, interpretations and enforcement policies have been
subject to significant, and sometimes retroactively applied, changes in recent
years, and may be subject to significant future changes. Future legislation or
government policy may also adversely affect the banking industry or our
operations. We cannot predict the effects of any potential changes, but they
could adversely affect our future operations. See "Supervision and Regulation"
(page 52).
11
<PAGE>
The operation of The National Bank of Georgia may in the future require more
capital than NBG Bancorp will raise in this offering and we may not be able to
obtain additional capital on terms which are favorable to investors.
In the future, should we need additional capital, we may not be able to
raise additional funds through the issuance of additional shares of NBG Bancorp
common stock or other securities. Even if we were able to obtain additional
capital through the issuance of additional shares of NBG Bancorp common stock or
other securities, we may not issue these securities at prices or on terms better
than or equal to the public offering price and terms of this offering. The
issuance of new securities could dilute your ownership interest in NBG Bancorp.
NBG Bancorp's Articles of Incorporation and Bylaws contain provisions which
could deter or prevent takeover attempts by a potential purchaser of NBG Bancorp
common stock that would be willing to pay you a premium for your stock.
NBG Bancorp's Articles of Incorporation and Bylaws contain provisions that
may deter or prevent an attempt to change or gain control of NBG Bancorp. As a
result, you may be deprived of opportunities to sell some or all of your shares
of NBG Bancorp common stock at prices that represent a premium over market
prices. These provisions include the possible existence of preferred stock,
staggered terms for directors, restrictions on the ability to change the number
of directors or to remove a director, special provisions regarding combinations
with "interested" shareholders and the price at which an acquirer may purchase
your shares of NBG Bancorp common stock, and flexibility in evaluating
acquisition proposals. See "Important Provisions of NBG Bancorp's Articles of
Incorporation and Bylaws" (page 46).
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus are "forward-looking statements."
Forward-looking statements include statements about the competitiveness of the
banking industry, potential regulatory obligations, potential economic growth in
our primary service area, our strategies and other statements that are not
historical facts. When we use in this prospectus words like "anticipate,"
"believe," "expect," "estimate" and similar expressions, you should consider
them as identifying forward-looking statements. Because forward-looking
statements involve risks and uncertainties, there are important factors that
could cause actual results to differ significantly from those expressed or
implied by the forward-looking statements. Some of these factors are set forth
above in the section entitled "Risk Factors" on page 7.
12
<PAGE>
TERMS OF THE OFFERING
General
NBG Bancorp is offering up to 800,000 shares of its common stock for cash
at a price of $10.00 per share. In addition, NBG Bancorp is offering to our
organizers up to 372,500 warrants to purchase NBG Bancorp common stock. The
warrants are exercisable for a period of ten years, beginning on the first
anniversary of The National Bank of Georgia's opening, at an exercise price of
$10.00 per share. The minimum subscription amount is 1,000 shares per investor
which may be waived by NBG Bancorp in its sole discretion. The purchase price
of $10.00 per share must be paid in full upon signing and delivering a
subscription agreement. A subscription agreement for your use is attached to
this prospectus as Appendix B. All subscriptions delivered by subscribers are
subject to acceptance by NBG Bancorp, and NBG Bancorp reserves the absolute and
unqualified right to reject or reduce any subscription for any reason prior to
acceptance. Rejected subscriptions will be returned to the subscriber without
interest. If your subscription is reduced, you may withdraw your subscription
within ten days after being notified of NBG Bancorp's reduction. Once a
subscription has been accepted by NBG Bancorp, you may not withdraw your
subscription for any reason. NBG Bancorp reserves the right to terminate this
offering at any time, for any reason whatsoever, prior to the time it withdraws
funds from the subscription escrow account.
Prior to this offering, there has been no established public trading market
for NBG Bancorp common stock or the warrants and we do not anticipate that an
established market will develop. The offering price has been arbitrarily
determined and is not a reflection of NBG Bancorp's book value, net worth or any
other such recognized criteria of value. In determining the offering price of
NBG Bancorp common stock, our organizers considered, among other factors,
prevailing market conditions and price to book value multiples of comparable
publicly traded companies. There can be no assurance that, if a market should
develop for NBG Bancorp common stock, the post-offering market price will equal
or exceed NBG Bancorp's $10.00 offering price.
Conditions of the Offering
This offering will expire at 5:00 p.m. Eastern Time, on March 5, 2000,
unless this date is extended by NBG Bancorp. The expiration date may be extended
by NBG Bancorp without notice to subscribers for up to three consecutive 90-day
periods, or not later than November 30, 2000. This offering is expressly
conditioned upon the fulfillment of the following conditions on or prior to
November 30, 2000. The offering conditions, which may not be waived, are as
follows:
. at least $6,100,000 must be deposited with NBG Bancorp's escrow agent,
Georgia First Bank, N.A., Gainesville, Georgia ("Georgia First");
. NBG Bancorp must receive approval from the Board of Governors of the
Federal Reserve System (the "Federal Reserve") of its application to
become a bank holding company;
. our organizers must receive preliminary approval from the Office of the
Comptroller of the Currency (the "OCC") to charter The National Bank of
Georgia;
. The National Bank of Georgia must receive approval of its deposit
insurance application from the Federal Deposit Insurance Corporation
(the "FDIC"); and
. NBG Bancorp must not have canceled this offering prior to the time funds
are withdrawn from the subscription escrow account.
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<PAGE>
Escrow of Subscription Funds
Until the above offering conditions have been met, all subscriptions and
documents delivered by subscribers will be placed in an escrow account with
Georgia First. Under the terms of the escrow agreement (a copy of which is
attached as Appendix A), if all of the offering conditions are met, NBG Bancorp
will certify this fact to the escrow agent and the escrow agent will release all
funds, with interest, to NBG Bancorp.
Prior to the release of the funds from the escrow account, the escrow
agent will invest the funds in interest-bearing bank accounts, including savings
accounts and bank money market accounts, short-term direct obligations of the
United States Government and/or in short-term FDIC insured bank certificates of
deposit. NBG Bancorp will invest all funds obtained after the release of the
funds from the escrow account and before it infuses capital into NBG Bancorp in
a similar manner. NBG Bancorp will use the offering proceeds to purchase all of
the capital stock of The National Bank of Georgia and to repay expenses incurred
in the organization. See "Use of Proceeds."
If the offering conditions are not met by November 30, 2000, the
escrow agent will promptly return to NBG Bancorp's subscribers their
proportionate share of the funds. The escrow agent will also return to
subscribers their proportionate share of any interest earned. If the offering
conditions are not satisfied, the expenses incurred by NBG Bancorp will be borne
by our organizers and not by subscribers.
No assurance can be given that the funds in the escrow account can or will
be invested at the highest rate of return available or that any profits will be
released from the investment of these funds.
If all of the offering conditions are satisfied, and NBG Bancorp withdraws
the funds from the subscription escrow account, all profits and earnings on the
account will belong to NBG Bancorp. If the minimum offering of 610,000 shares of
common stock are sold before the expiration date, a minimum closing will be
held. At that minimum closing, the funds will be released from the escrow
account to NBG Bancorp and subscribers to this offering will become shareholders
of NBG Bancorp. Thereafter, subscribers' funds will be paid directly to NBG
Bancorp, rather than the escrow agent, upon acceptance.
Georgia First, by accepting appointment as escrow agent under the escrow
agreement, in no way endorses the purchase of NBG Bancorp common stock.
Failure to Begin Banking Operations
Although we believe it is unlikely, it is possible that subscribers
whose funds were originally placed in the escrow account may lose a portion of
their investment because while we may be able to fulfill the conditions of this
offering - and thus be able to withdraw funds from the escrow account - we may
fail to begin banking operations. When the conditions of this offering are met
and funds are withdrawn from the escrow account, shares of NBG Bancorp common
stock will be issued to subscribers whose funds had been deposited in the escrow
account. At that time, we will not have begun banking operations because final
approval of The National Bank of Georgia's charter application will not have
been received and conditions imposed by other regulatory authorities will not
have been satisfied.
Within 18 months after receiving preliminary approval of its charter
application, the OCC requires a new national bank to receive final approval of
the application and open for business. The National Bank of Georgia's charter
application received preliminary approval from the OCC on October 26, 1999.
Therefore, if The National Bank of Georgia does not obtain its charter and open
for business by April 26, 2001, the bank's preliminary charter approval will
expire. Other than capitalizing The
14
<PAGE>
National Bank of Georgia with at least $6,000,000, we believe obtaining the
charter and opening for business will be based on meeting various requirements,
such as purchasing stock in the Federal Reserve Bank of Atlanta and passing a
pre-opening examination. Because of our experienced management team, we expect
The National Bank of Georgia will have little difficulty satisfying these
requirements after funds are withdrawn from the escrow account. In addition,
even though we will have received the approvals of the Federal Reserve and the
FDIC prior to withdrawing funds from the escrow account, their approvals will
contain conditions that will not be able to be fulfilled until The National Bank
of Georgia is capitalized and is near opening. We expect these conditions will
be procedural in nature and capable of prompt resolution. NBG Bancorp will also
require the permission of the Georgia Department of Banking and Finance (the
"DBF") to operate as a bank holding company. Since the DBF typically bases its
permission in large measure on the Federal Reserve's review and approval, we
believe receipt of the DBF's approval will also be timely.
However, in the event our assumptions are incorrect and we are unable to
begin banking operations after funds have been withdrawn from the escrow
account, NBG Bancorp will seek shareholder approval for dissolution and
liquidation. Upon liquidation, NBG Bancorp will promptly return to shareholders
all funds, with interest, less all expenses incurred by us, including the
expenses of this offering and our organization and pre-opening expenses. It is
possible that the amount returned to shareholders may be further reduced by
amounts paid to satisfy claims of creditors, as discussed below.
Once NBG Bancorp issues shares to subscribers, the offering proceeds will
be considered part of NBG Bancorp's general corporate funds and may be subject
to the claims of creditors of the company, including claims against the company
that may arise out of actions of its officers, directors, or employees. It is
possible, therefore, that one or more creditors may seek to attach the proceeds
of the offering before NBG Bancorp begins banking operations. If such an
attachment occurred and it became necessary to dissolve and liquidate NBG
Bancorp, the payment process might be delayed. Further, if it became necessary
to pay creditors from the subscription funds, the payment to shareholders might
be further reduced.
Purchases by Organizers
Our organizers anticipate purchasing 372,500 shares of common stock in
this offering, which will constitute approximately 61% of the 610,000 shares to
be outstanding upon completion of the minimum offering, or approximately 47% of
the 800,000 shares to be outstanding should the maximum number of shares be
sold. All purchases of shares by the organizers will be made at the same public
offering price, $10.00 per share, as that paid by other investors and will count
toward achieving the minimum offering. The organizers have represented to NBG
Bancorp that their purchases will be made for investment purposes only and not
with a view to resell their shares. See "Management - Proposed Directors and
Executive Officers of NBG Bancorp and The National Bank of Georgia."
In consideration for assisting in our organization, on the date The
National Bank of Georgia opens for business, each of our organizers will be
granted warrants to purchase additional shares of common stock. The warrants
will be granted to the organizers in recognition of the financial risk they have
undertaken in connection with the organizational expenses of this project.
Particularly, each of the organizers has personally guaranteed a line of credit
obtained from Georgia First. The warrants will provide our organizers with the
opportunity to profit from any future increase in the market value of the common
stock or any increase in the net worth of NBG Bancorp without paying for the
warrant shares initially.
15
<PAGE>
Each warrant will entitle an organizer to purchase one share of common
stock for each share he purchases in the offering. The actual number of
warrants granted to an organizer will depend on the number of shares of NBG
Bancorp common stock the organizer actually purchases in the offering.
Therefore, given the intent of our organizers to purchase 372,500 shares in the
offering, we expect that they will be granted warrants to purchase an aggregate
of 372,500 shares of NBG Bancorp common stock upon completion of this offering.
Each warrant will become exercisable on the first anniversary of the
date on which The National Bank of Georgia opens for business. At that time,
only 20% of the warrant will be exercisable. Thereafter, the warrant will
become exercisable in 20% annual increments. Each warrant will expire ten years
after the first anniversary of the date on which The National Bank of Georgia
opens for business. An organizer exercising his warrant will pay $10.00 for
each share purchased under the warrant, subject to adjustment for stock splits,
recapitalizations or other similar events. Any future exercise of the
organizers' warrants will reduce your percentage ownership interest in NBG
Bancorp. Assuming all of the warrants are exercised, the organizers will own
approximately 76% of the shares outstanding after the minimum offering and 64%
of the outstanding shares after the maximum offering. See "Description of
Capital Stock of NBG Bancorp - Organizers' Warrants."
PLAN OF DISTRIBUTION
General
NBG Bancorp may terminate this offering for any reason at any time during
its pendency for any reason whatsoever. Shares of NBG Bancorp common stock will
be marketed on a best efforts basis, with a required 1,000 share minimum per
investor (which may be waived by NBG Bancorp in its sole discretion), through
NBG Bancorp's directors and executive officers, none of whom will receive any
commissions or other form of remuneration based on the sale of the shares. In
addition, NBG Bancorp may engage sales agents to sell shares on a best efforts
basis. NBG Bancorp anticipates that if sales agents are retained, such persons
would be paid sales commissions not exceeding 10% of the aggregate dollar amount
of the common stock sold by the sales agents as well as marketing-related
expenses. As soon as practicable, but no more than ten business days after
receipt of a subscription to purchase shares of NBG Bancorp common stock, NBG
Bancorp will accept or reject the subscription. Subscriptions not rejected by
NBG Bancorp within this ten day period will be accepted. Once a subscription is
accepted by NBG Bancorp, it cannot be withdrawn by you.
How to Subscribe
If you desire to purchase shares of NBG Bancorp common stock, you
should:
1. Complete, date, and execute the subscription agreement you received
with this prospectus;
2. Make a check, bank draft, or money order payable to "Georgia First
Bank, N.A., Escrow Account for NBG Bancorp, Inc.," in the amount of
$10.00 times the number of shares you wish to purchase; and
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<PAGE>
3. Deliver the completed subscription agreement and check to NBG Bancorp
at the following address:
William S. Huggins
President and Chief Executive Officer
NBG Bancorp, Inc.
P.O. Box 6507
Athens, Georgia 30604
No subscription agreement is binding until accepted by NBG Bancorp, which
may, in its sole discretion, refuse to accept any subscription for shares, in
whole or in part, for any reason whatsoever. Rejected subscriptions will be
returned to the subscriber without interest. If your subscription is reduced,
you may withdraw your subscription within ten days after being notified of NBG
Bancorp's reduction.
If you have any questions about this offering or how to subscribe,
please call Mr. Huggins at (706) 355-3122 (or any of the other organizers). If
you subscribe, you should retain a copy of the completed subscription agreement
for your records. You must pay the subscription price at the time you deliver
the subscription agreement.
Determination of Offering Price
Prior to this offering, there has been no public market for NBG
Bancorp common stock. The offering price of $10.00 per share in this offering
has been determined by our organizers based on a number of factors, including
prevailing market conditions, estimates of the business potential and earnings
prospects of NBG Bancorp, an assessment of The National Bank of Georgia's
management and the consideration of the above factors in relation to the market
valuation of other community banks and community bank holding companies in the
Southeast. In the event a market should develop for NBG Bancorp's common stock
after completion of this offering, there can be no assurance that its market
price will not be lower than the offering price in this offering.
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<PAGE>
USE OF PROCEEDS
The gross proceeds from the sale of shares of NBG Bancorp common stock will
be $6,100,000 assuming the sale of a minimum of 610,000 shares, and $8,000,000
assuming the sale of a maximum of 800,000 shares. However, if 610,000 shares
are not sold prior to the expiration date of the offering, then NBG Bancorp will
terminate this offering and promptly return all funds received from subscribers,
with interest. See "Terms of the Offering."
The estimated expenses of this offering are as follows:
<TABLE>
<CAPTION>
<S> <C>
Registration fees, including blue sky fees and expenses.............................. $ 12,000
Legal fees and expenses.............................................................. 35,000
Accounting fees and expenses......................................................... 5,000
Printing and engraving expenses...................................................... 10,000
Entertainment........................................................................ 3,500
Miscellaneous........................................................................ 6,000
----------
Total Expenses.................................................................. $ 71,500
==========
Net Proceeds
Minimum offering................................................................ $6,028,500
Maximum offering................................................................ $7,928,500
</TABLE>
The net proceeds of this offering as well as any interest earned on the
subscription funds will be used by NBG Bancorp, after breaking escrow, primarily
for the purchase of all of the issued and outstanding capital stock of The
National Bank of Georgia. The National Bank of Georgia will, in turn, use the
funds as capital to begin its business operations, including paying officers'
and employees' salaries, purchasing its facility, and repaying expenses incurred
in its organization.
As indicated in The National Bank of Georgia's charter application filed
with the OCC, NBG Bancorp intends to capitalize The National Bank of Georgia at
$6,000,000. Any remaining funds from this offering are expected to be held by
NBG Bancorp and reserved for general corporate purposes at the holding company
level. NBG Bancorp anticipates that the proceeds received upon exercise of the
warrants, if any, will be used for working capital purposes.
A portion of the net proceeds of this offering beyond the minimum will be
retained by NBG Bancorp for the purpose of funding any required additions to the
capital of The National Bank of Georgia. Since national banks are regulated
with respect to the ratio that their total assets may bear to their total
capital, if The National Bank of Georgia experiences greater growth than
anticipated, it may require the infusion of additional capital to support that
growth. Management anticipates, however, that the proceeds of this offering
will be sufficient to support The National Bank of Georgia's immediate capital
needs and will seek, if necessary, additional long-and short-term financing to
support any additional needs; however, we can give you no assurance that such
financing, if needed, will be available or if available will be on terms
acceptable to us.
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<PAGE>
The following is a schedule of the estimated use by The National Bank of
Georgia of the proceeds from the sale of NBG Bancorp common stock, including its
estimated operating expenses for its first 12 months of operation.
<TABLE>
<S> <C>
Organizational and pre-opening expenses, including salaries, legal and accounting
fees(1).......................................................................... $ 300,000(2)
Purchase of and improvements to bank facility(3).................................... 1,173,000(4)
Salaries and benefits(5)............................................................ 633,380(2)
General and administrative expenses, composed primarily of data processing,
marketing and advertising, telephone and casualty
and deposit insurance(6)......................................................... 331,446(4)
Furniture, fixtures and equipment(7)................................................ 450,000(2)
Working capital..................................................................... 3,112,174
----------
$6,000,000
==========
</TABLE>
__________________
(1) These expenses will be incurred prior to The National Bank of Georgia's
opening for business and are being funded from a line of credit our
organizers obtained from Georgia First in the principal amount of $250,000.
Approximately $38,000 was outstanding on the line of credit at October 31,
1999. This loan has been guaranteed by our organizers, bears interest at the
highest prime rate minus one as published in the Money Rates section of The
Wall Street Journal, and is due on May 23, 2000.
(2) Includes expenses which will be incurred prior to The National Bank of
Georgia's opening for business.
(3) Costs of purchasing The National Bank of Georgia's permanent facility are
based on an agreed upon sale price with the owner of the facility. See
"Proposed Business of NBG Bancorp and The National Bank of Georgia -
Facilities."
(4) Represents operating expenses which will be incurred during The National
Bank of Georgia's first 12 months of operations.
(5) Salaries and benefits are based on management's estimates of the number and
types of employees which will be required during The National Bank of
Georgia's first 12 months of operations. It is presently anticipated that
the bank will employ ten persons during its first 12 months, including three
officers.
(6) These expenses are based on the experiences of similar size banks in the
region and on management's previous banking experience.
(7) Furniture and equipment cost is based on our organizers' estimates and upon
information from suppliers of bank equipment of the costs required to
furnish and equip The National Bank of Georgia for the expected level of
operations.
The expenses described above are estimates only and assume The National Bank
of Georgia will open for business in March 2000, or as soon thereafter as
practicable. Actual expenses may exceed these amounts. A portion of these
expenses will be offset by revenues generated by the bank during its first year
of operation.
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<PAGE>
CAPITALIZATION
The following table shows NBG Bancorp's capitalization as of October 31,
1999 and its pro forma consolidated capitalization, as adjusted to give effect
to the receipt of the net proceeds from the sale of a minimum of 610,000 and a
maximum of 800,000 shares of NBG Bancorp common stock in this offering.
Upon NBG Bancorp's incorporation, William S. Huggins, the President of The
National Bank of Georgia and NBG Bancorp and Chief Executive Officer of The
National Bank of Georgia, purchased one share of common stock at the price of
$1.00. NBG Bancorp will redeem this share for $1.00 upon the issuance of shares
in this offering. The number of shares shown as outstanding after giving effect
to this offering do not include shares of NBG Bancorp common stock issuable upon
the exercise of warrants that will be granted to our organizers or pursuant to
options that may be granted under NBG Bancorp's stock incentive plan. For
additional information regarding the number and terms of those warrants and
options, see "Description of Capital Stock of NBG Bancorp - Organizers'
Warrants" and "Executive Compensation - Stock Option Plan."
<TABLE>
<CAPTION>
As Adjusted As Adjusted
for Minimum for Maximum
Actual Offering Offering
------------------ --------------------- --------------------
<S> <C> <C> <C>
Borrowings
- ----------
Note Payable $ 38,000 $ -0- $ -0-
Shareholders' Equity Actual And As Adjusted
- -------------------------------------------
Preferred stock, par value $1.00 per share;
1,000,000 shares authorized; no shares issued
and outstanding $ -0- $ -0- $ -0-
Common stock, par value $1.00 per share;
10,000,000 shares authorized; 1 share issued
and outstanding; 610,000 shares issued and
outstanding as adjusted (minimum offering);
800,000 shares issued and outstanding as adjusted
(maximum offering) $ 1 $ 610,000 $ 800,000
Additional paid-in capital $ -0- $5,418,500 $7,128,500
Accumulated deficit during development stage $(139,149)(1) $ (300,000)(2) $ (300,000)(2)
Total shareholders' equity $(101,149) $5,728,500 $7,628,500
========= ========== ==========
</TABLE>
___________________________
(1) This deficit reflects pre-opening expenses incurred through October 31,
1999, consisting primarily of salaries and employee benefits.
(2) The "As Adjusted" accumulated deficit results from estimated organizational
and pre-opening expenses of $300,000 incurred through The National Bank of
Georgia's target opening date in March 2000. Actual organizational and
pre-opening expenses may be higher and may therefore increase the deficit
accumulated during the pre-opening stage and further reduce shareholders'
equity.
20
<PAGE>
DIVIDENDS
NBG Bancorp will initially have no source of income other than dividends
that The National Bank of Georgia pays to it. NBG Bancorp's ability to pay
dividends to its shareholders will therefore depend on the bank's ability to pay
dividends to NBG Bancorp. In the future, NBG Bancorp may begin income-producing
operations independent from those of The National Bank of Georgia, which may
provide another source of income from which NBG Bancorp could pay dividends to
you. However, we can give you no assurance as to when, if at all, these
operations may begin or whether they will be profitable.
Bank holding companies and national banks are both subject to significant
regulatory restrictions on the payment of cash dividends. In light of these
restrictions and the need for NBG Bancorp and The National Bank of Georgia to
retain and build capital, the Boards of Directors of the company and the bank
plan to reinvest earnings for the period of time necessary to support successful
operations. As a result, NBG Bancorp does not plan to pay dividends until it
recovers any losses incurred and becomes profitable, and its future dividend
policy will depend on the earnings, capital requirements and financial condition
of the company and the bank and on other factors that NBG Bancorp's Board of
Directors considers relevant.
Additionally, regulatory authorities may determine, under circumstances
relating to the financial condition of NBG Bancorp or The National Bank of
Georgia, that the payment of dividends would be an unsafe or unsound practice
and may prohibit dividend payment. See "Supervision and Regulation - Payment of
Dividends."
21
<PAGE>
PLAN OF OPERATION
General
NBG Bancorp is in the development stage and will remain in that stage
until this offering is completed. NBG Bancorp was organized in September 1999
to serve as a holding company for The National Bank of Georgia. Since it was
organized, NBG Bancorp's main activities have been centered on seeking,
interviewing and selecting its directors, applying for a national bank charter,
applying for FDIC deposit insurance, applying to become a bank holding company
and raising equity capital through this offering.
NBG Bancorp's financial statements and related notes, which are included in
this prospectus, provide additional information relating to the following
discussion of its financial condition. See "Index to Financial Report."
NBG Bancorp's operations from June 1, 1999 through the close of the
offering have been, and will continue to be, funded through a line of credit
from Georgia First. The total amount available on the line of credit is
$250,000, of which approximately $38,000 was outstanding at October 31, 1999.
This loan has been guaranteed by our organizers, bears interest at the highest
prime rate minus one as published in the Money Rates section of The Wall Street
Journal, and is due on May 23, 2000.
A portion of the proceeds of this offering will be used to repay the line
of credit, to the extent that such repayment is reasonable and not detrimental
to the operations of The National Bank of Georgia, and to the extent that such
repayment is allowed by the OCC and other appropriate regulatory authorities.
See "Use of Proceeds." Total organizational costs, as of October 31, 1999,
amounted to $139,149.
Liquidity and Interest Rate Sensitivity
Since NBG Bancorp has been in the development stage, there are no results
to present at this time. Nevertheless, once The National Bank of Georgia begins
operations, net interest income, its primary source of earnings, will fluctuate
with significant interest rate movements. To lessen the impact of these margin
swings, we intend to structure the balance sheet so we will have regular
opportunities to change the interest rates on (or "reprice") the bank's
interest-bearing assets and liabilities. Imbalance in these repricing
opportunities at any point in time constitute interest rate sensitivity.
Interest rate sensitivity refers to the responsiveness of interest-bearing
assets and liabilities to change in market interest rates. The rate sensitive
position, or gap, is the difference in the volume of rate sensitive assets and
liabilities at a given time interval. The general objective of gap management
is to actively manage rate sensitive assets and liabilities in order to reduce
the impact of interest rate fluctuations on the net interest margin. We will
generally attempt to maintain a balance between rate sensitive assets and
liabilities as the exposure period is lengthened to minimize The National Bank
of Georgia's overall interest rate risks.
We will evaluate regularly the balance sheet's asset mix in terms of
several variables: yield, credit quality, appropriate funding sources and
liquidity. To manage effectively the balance sheet's liability mix, we plan to
focus on expanding our deposit base and converting assets to cash as necessary.
As The National Bank of Georgia continues to grow, we will continuously
structure its rate sensitivity position in an effort to hedge against rapidly
rising or falling interest rates. The bank's Asset
22
<PAGE>
and Liability Management Committee will meet on a quarterly basis to develop a
strategy for the upcoming period. The committee's strategy will include
anticipating future interest rate movements.
Liquidity represents the ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient
funds to cover deposit withdrawals and payment of debt and operating
obligations. The National Bank of Georgia can obtain these funds by converting
assets to cash or by attracting new deposits. The National Bank of Georgia's
ability to maintain and increase deposits will serve as its primary source of
liquidity.
We know of no trends, demands, commitments, events or uncertainties that
should result in, or are reasonably likely to result in, The National Bank of
Georgia's or NBG Bancorp's liquidity increasing or decreasing in any material
way in the foreseeable future, other than this offering.
Capital Adequacy
We believe that the net proceeds of this offering will satisfy our cash
requirements for at least the next 12 months following the opening of The
National Bank of Georgia. Accordingly, we do not anticipate that it will be
necessary to raise additional funds to operate NBG Bancorp or The National Bank
of Georgia for at least the next 12 months. All anticipated material
expenditures for such period have been identified and provided for out of the
proceeds of this offering. For additional information about planned
expenditures, see "Use of Proceeds." For additional information about our plan
of operations, see "Proposed Business of NBG Bancorp and The National Bank of
Georgia."
Year 2000 Issues
Like many financial institutions, we will rely upon computers for the
daily conduct of our business and for information systems processing. There is
concern among industry experts that on January 1, 2000, computers will be unable
to "read" the new year and there may be widespread computer malfunctions. We
will generally be relying on software and hardware developed by independent
third parties for our information systems.
We anticipate opening The National Bank of Georgia after January 1, 2000,
at which time we believe that most of the uncertainty surrounding the year 2000
issue should be resolved. In this event, our risks associated with computer
malfunctions should be greatly reduced, but we will still seek to ensure that
our computer systems and our major vendors' and clients' computer systems are in
compliance and functioning properly.
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PROPOSED BUSINESS OF NBG BANCORP
AND THE NATIONAL BANK OF GEORGIA
Background
NBG Bancorp. NBG Bancorp was incorporated as a Georgia corporation on
September 23, 1999 to serve as a bank holding company for The National Bank of
Georgia. NBG Bancorp plans to use $6,000,000 of the net proceeds of this
offering to capitalize The National Bank of Georgia. In return, the bank will
issue all of its common stock to the company, and the company will be the bank's
sole shareholder. Initially, The National Bank of Georgia will be NBG Bancorp's
sole operating subsidiary. NBG Bancorp will apply to the Federal Reserve and
the Georgia Department of Banking and Finance for approval to capitalize The
National Bank of Georgia. If these agencies grant the necessary approvals, NBG
Bancorp will become a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as currently in effect, and the Georgia Bank
Holding Company Act when it purchases The National Bank of Georgia's common
stock. See "Supervision and Regulation - General."
NBG Bancorp has been organized to make it easier for The National Bank of
Georgia to serve its future customers. The holding company structure will
provide flexibility for expanding The National Bank of Georgia's banking
business by possibly acquiring other financial institutions and providing
additional capital and banking-related services. A holding company structure
will make it easier for NBG Bancorp to raise capital for the bank because NBG
Bancorp will be able to issue securities without the need for prior banking
regulatory approval and the proceeds of debt securities issued by the company
can be invested in the bank as primary capital.
The National Bank of Georgia. Our organizers filed applications on behalf
of The National Bank of Georgia with the OCC and with the FDIC on June 29, 1999
for authority to organize as a national bank with federally insured deposits.
The National Bank of Georgia will not be authorized to conduct its banking
business until it obtains a charter from the OCC. The issuance of the charter
will depend, among other things, upon The National Bank of Georgia's receipt of
at least $6,000,000 in capital from NBG Bancorp and upon compliance with other
standard conditions expected to be imposed by the OCC. These conditions are
generally designed to familiarize The National Bank of Georgia with national
bank operating requirements and to prepare it to begin business operations. The
OCC requires that a new national bank obtain a charter and open for business
within 18 months after receipt of its preliminary approval from the OCC. The
National Bank of Georgia received preliminary approval of its charter
application from the OCC on October 26, 1999 and is awaiting approval of its
FDIC deposit insurance application as well as final approval from the OCC and
receipt of a charter. We expect The National Bank of Georgia will open for
business in March 2000.
Market Opportunities
Primary Service Area. The National Bank of Georgia's initial primary
service area is the approximate ten mile radius surrounding its main office,
which is located at 2234 West Broad Street in Athens, Georgia. The primary
service area represents a geographic area that includes the City of Athens,
Clarke County, and the northeastern portion of Oconee County. Athens is served
by several major thoroughfares, including U.S. Highways 29 and 129. Athens is
located approximately 65 miles northeast of Atlanta.
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Economic and Demographic Factors. Athens is the key economic focal point
of the Athens Metropolitan Statistical Area ("MSA") as well as NBG Bancorp's
primary service area, which encompasses a smaller geographic area than the
Athens MSA. Athens' continuing expansion is due to its location in the path of
Atlanta's growth, increasing enrollments at The University of Georgia, major
infra-structure improvements and a growing hospitality industry. The estimated
per capita personal income for Clarke and Oconee Counties in 1988 were $22,044
and $24,755, respectively. From 1993 through 1998, Clarke County's per capita
personal income grew at an annual growth rate of 4.8%, while Oconee County's
grew at an annual growth rate of 4.4%. Clarke County's, as well as Oconee's,
per capita personal income annual growth rate is projected to slow down to 3.7%
and 2.9%, respectively through 2003. We believe that one of the most important
characteristics of the Athens MSA, as well as NBG Bancorp's primary service
area, is that it tends to be insulated from severe economic downturns. With
over 30,000 students, we believe The University of Georgia provides a
stabilizing effect economically on the area and will continue to insure that it
remains a unique market with growth opportunities.
Population. The estimated populations for Clarke and Oconee Counties in
1998 were 92,281 and 24, 274, respectively. According to The University of
Georgia's Selig Center for Economic Growth (the "Selig Center"), from 1993
through 1997 Clarke County's population grew at an annual growth rate of 0.8%
while Oconee County's population grew at an annual growth rate of 4.7%. Clarke
County's annual growth rate is projected to increase to 1.4% through 2003, while
Oconee County's annual growth rate is projected to remain vibrant at 4.5%. The
number of households within the Athens MSA has increased from 38,583 in 1980 to
nearly 51,000 in 1990.
Industry, Labor and Employment. According to the Selig Center, the number
of nonagricultural workers increased in the Athens MSA from 59,700 in 1990 to
71,500 in 1997, an average annual increase of 2.6%. In the first three quarters
of 1998, nonagricultural employment in the Athens MSA grew faster than in any
other metropolitan area in Georgia. An unusually fast increase in government
sector jobs accounts for this rapid growth. The Athens MSA has an unusually
high number of college-educated workers, which is regularly supplemented by
hundreds of graduates from The University of Georgia. Moreover, large numbers
of students provide a core of part-time workers for employers where flexible
scheduling is viable.
The University of Georgia, together with other state, federal and local
government institutions, provided 27.6% of the Athens MSA's area jobs in 1997.
Employment in the government sector increased at a low 0.8% average annual rate
between 1990 and 1997. After declining in 1996 and 1997, the government sector
expanded at a rapid rate of 15.3% in the first nine months of 1998.
The services and trade sectors provided almost half of the Athens MSA's
nonagricultural jobs in 1997. They also were the area's fastest growing
industries between 1990 and 1997. Services added jobs at a high 6.0% average
annual rate, and trade followed with a 4.0% average annual growth. The rate of
growth slowed significantly in both of those sectors in 1997, and the first nine
months of 1998 saw 0.4% decline in service jobs, a 2.7% growth in retail trade
employment, and a 4.6% decline in wholesale trade employment.
Manufacturing, responsible for 16.2% of jobs in 1997, has been the slowest
growing sector in the Athens MSA economy, adding jobs at a 0.2% average annual
rate, which translates into 200 jobs between 1990 and 1997. Between January and
September of 1998, employment in manufacturing rose by 1.1%, up from a 1.7%
decline in 1997.
In 1997, jobs in the construction, transportation, communications and
public utilities, and financial sectors made up about 9.1% of the area's total
nonagricultural employment. Construction, the
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largest of those sectors, saw the most rapid growth in the years preceding the
1996 Olympic Games. Athens was the site of three venues during the 1996 Olympic
Games. Between 1994 and 1995, the sector grew by 8.7%. After registering 4.0%
growth in 1997, employment in contract construction declined by 0.9% in the
first quarters of 1998. After two years of growth, employment in transportation,
communications, and public utilities suffered a 10.0% decline in 1997. The
sector regained some of its losses and grew by 3.2% in the first nine months of
1998.
Unemployment rates in Athens declined steadily from 1994 to 1997, a trend
that continued into the first nine months of 1998. The Athens MSA had the
lowest unemployment rate among Georgia's MSAs both in 1997 (3.0%) and in 1998
(2.9%). In particular, Clarke County's and Oconee County's average unemployment
rates in 1997 were 3.2% and 2.0%, respectively, well below the state's average
unemployment rate of 4.5% for that year.
According to the Georgia Department of Labor, the largest non-government
employers in Clarke County are Gold Kist, Inc., Seaboard Farms and St. Mary's
Hospital. Athens' top ten employers are listed below and illustrate the
diversification of business and trade in the area.
<TABLE>
<CAPTION>
Athens' Top Ten Employers Total Employees Industry
------------------------- --------------- ------------
<S> <C> <C>
The University of Georgia......................... 8,903 Education
Athens Regional Medical Centers................... 1,882 Health Care
Seaboard Farms.................................... 1,688 Agriculture
Clarke County School District..................... 1,600 Education
Athens-Clarke County.............................. 1,375 Public Service
St. Mary's Hospital............................... 1,110 Health Care
Gold Kist, Inc.................................... 1,056 Agriculture
Reliance Electric Corp............................ 900 Manufacturing
General Time Corporation.......................... 700 Manufacturing
ABB Power T&D Company, Inc........................ 605 Manufacturing
</TABLE>
From 1993 through 1998, the number of persons employed in Clarke and Oconee
Counties grew at annual growth rates of 3.3% and 9.2%, respectively. Although
Clarke County's annual growth rate is projected to decrease to 2.2% through
2003, Oconee County's annual job growth rate is expected to remain strong at
7.3% through 2003.
We believe that the Athens MSA presents a stable and diversified economic
environment that will support NBG Bancorp's formation. As a community bank, The
National Bank of Georgia will be designed to serve the needs of the citizens and
businesses within this growing economy. We believe continued economic growth in
the Athens MSA - especially Clarke and Oconee Counties - will be important to
NBG Bancorp's long-term success.
Competition. The banking business is highly competitive. The National
Bank of Georgia will compete with other commercial banks, savings and loan
associations, credit unions, and money market mutual funds operating in its
primary service area. Clarke County is served by at least seven insured
financial institutions operating a total of 30 retail branches as of June 30,
1998, the latest date for which information is available. In Oconee County, as
of June 30, 1998, there were at least five insured financial institutions
operating a total of eight retail branches. A number of these competitors are
well established in NBG Bancorp's primary service area.
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<PAGE>
The following tables illustrate the June 30, 1998 deposit base and market
share of the financial institutions located in Clarke and Oconee Counties.
<TABLE>
<CAPTION>
Clarke County $ %
- ------------- --- ---
(Dollars in millions)
Financial Institution
<S> <C> <C>
Athens First Bank and Trust Company.................................. 309 28.2
SunTrust Bank, Northeast Georgia..................................... 222 20.2
Bank of America (formerly NationsBank)............................... 208 18.9
Wachovia Bank........................................................ 147 13.4
First American Bank & Trust Company.................................. 94 8.5
SouthTrust Bank (formerly The Georgia National Bank)................. 74 6.8
Main Street Bank..................................................... 44 4.0
Oconee County
- -------------
Financial Institution
Oconee State Bank.................................................... 105 56.5
Athens First Bank and Trust Company.................................. 73* 39.2
Bank of America (formerly NationsBank)............................... 7 3.8
First American Bank & Trust Company.................................. 1 0.5
</TABLE>
__________
* Includes deposits of Bank of Georgia which was acquired by Athens First
after June 30, 1998.
Some of The National Bank of Georgia's competitors have substantially
greater resources and lending limits than The National Bank of Georgia will, and
some competitors provide other services - such as extensive and established
branch networks and trust services - that The National Bank of Georgia does not
expect to provide initially. As a result of these competitive factors, The
National Bank of Georgia may have to pay higher interest rates to attract
depositors or extend credit with lower interest rates to attract borrowers, thus
decreasing its net interest margin.
Several of the larger regional banks have a presence in The National Bank
of Georgia's primary service area through branch offices. Many of their
customer service functions, as well as authority for loan approval, however, are
located outside of the area. Although several community banks also have
branches in The National Bank of Georgia's primary service area, no other
locally-owned community banks are headquartered in Athens and The National Bank
of Georgia will be one of the only locally-owned community banks serving Oconee
County. We are aware, however, of a state bank in Oconee County that is
currently in the organizational stages, but as of the date of this prospectus,
has not opened.
As a result of the various mergers that have taken place in the Athens and
Oconee County area over the past years, we believe an attractive opportunity
exists in The National Bank of Georgia's primary service area for a new bank
that positions itself as a locally-owned community bank prepared to take
advantage of changes occurring in the regional banking structure. We intend to
differentiate The National Bank of Georgia from other financial institutions
primarily through personal service and strong involvement in our market.
Business Strategy
Management Philosophy. The National Bank of Georgia's philosophy is to
operate as a community bank emphasizing prompt, personalized customer service to
the individuals and businesses located in Athens, and northeastern Oconee
County. The National Bank of Georgia has adopted this philosophy in order to
attract customers and acquire market share now controlled by other financial
institutions in its primary service area. We believe that local ownership and
control will allow the bank to serve customers
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<PAGE>
more efficiently and will aid in its growth and success. Additionally, we
believe that the expansion and growth of The National Bank of Georgia's services
will be a significant factor in its success. Accordingly, we will implement the
following operating and growth strategies:
Operating Strategy. In order to achieve the level of prompt, responsive
service that we believe will be necessary to attract customers and to develop
The National Bank of Georgia's image as a local bank with an individual focus,
we will employ the following operating strategies:
. Quality Employees. We will strive to hire highly trained and seasoned
staff. We plan to train the staff to answer questions about all of our
products and services so that the first employee the customer encounters
can resolve customer questions. We are committed to hiring experienced
and qualified staff, although this may result in higher personnel costs
than are typically experienced by similar financial institutions.
. Experienced Senior Management. The National Bank of Georgia's senior
management possesses extensive experience in the banking industry as
well as substantial business and banking contacts in the Athens and
Oconee County area. For example, the bank's principal executive officer,
William S. Huggins, has over 30 years of banking experience, the bank's
principal lending officer, Thomas Z. Lanier, III, has over 25 years of
banking experience and the bank's principal accounting officer, Michael
R. Carson, has over 17 years of banking experience. Collectively,
Messrs. Huggins, Lanier and Carson have over 35 years of banking
experience in the Athens and Oconee County area. See "Management."
. Community-Oriented Board of Directors. The National Bank of Georgia's
Board of Directors will consist predominately of long time residents of
the Athens and Oconee County area who represent the bank's target
markets and will be sensitive and responsive to the needs of the
community. Additionally, The National Bank of Georgia's Board of
Directors will represent a wide array of business experience and
community involvement. We expect that the directors will bring
substantial business and banking contacts to the bank as a result of
their experience and involvement.
. Community Involvement. All of The National Bank of Georgia's officers
and proposed directors are active in the Athens and Oconee County area,
and their continued active community involvement will provide an
opportunity to promote the bank and its products and services.
. Officer and Director Call Program. We intend to implement an active
officer and director call program to promote The National Bank of
Georgia. The purpose of this call program will be to visit prospective
customers and describe the bank's products and services.
. Highly Visible Site. The National Bank of Georgia's main office location
is visible and accessible and is near one of the busiest intersections
in the Athens MSA. We believe this will enhance the bank's image as a
strong competitor.
. Individual Customer Focus. The National Bank of Georgia will focus on
providing individualized service and attention to its target customers,
which include individuals and small- to medium-sized businesses. As its
employees, officers and directors become familiar with its customers,
the bank will respond to credit requests quickly and be more flexible in
approving loans based on collateral quality and personal knowledge of
the customer.
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<PAGE>
. Local Decision Making. The National Bank of Georgia's position as the
only locally-owned community bank in Athens, and one of the only
locally-owned community banks serving Oconee County, will allow the bank
to be more responsive to customer requests and to the needs of customers
within the community.
. Marketing and Advertising. We plan to promote The National Bank of
Georgia and to develop its image as a community-oriented bank with an
emphasis on quality service and personal contact. We will also use media
services such as local newspapers, drive-time radio, direct mail
campaigns and television to promote its products and services.
Growth Strategy. Because we believe that growth and expansion of The
National Bank of Georgia's customer base will be a significant factor in the
bank's success, we plan to implement the following growth strategies:
. Capitalize on Trend Toward Consolidation. The National Bank of Georgia
will capitalize on its position as the only locally-owned community bank
in Athens and one of the only locally-owned community banks serving
Oconee County to attract individual and small- to medium-sized business
customers that may be underserved as a result of recent bank
consolidations.
. Attract Employees with Established Customer Relationships. We will hire
employees who have, through their experience in banking, established
significant customer relationships. By hiring employees with established
customer relationships, we believe The National Bank of Georgia will
grow more rapidly than it would if it were to hire employees who would
require time to develop a customer base.
. Offer Fee-Generating Products and Services. The National Bank of
Georgia's range of services, pricing strategies, interest rates paid and
charged, and hours of operation will be structured to attract its target
customers and increase its market share. The bank will offer small
businesses, professionals, entrepreneurs and consumers superior loan
services while charging aggressively for such services and using
technology and engaging third-party service providers to perform some
functions at a lower cost to increase fee income.
Lending Services
Lending Policy. The National Bank of Georgia is being established to
generally support the Athens and Oconee County area. Consequently, the bank
will aggressively lend money to creditworthy borrowers within this limited
geographic area. The National Bank of Georgia will emphasize both commercial
loans to small- and medium-sized businesses and professional concerns as well as
real estate-related loans, including construction loans for residential and
commercial properties, and primary and secondary mortgage loans for the
acquisition or improvement of personal residences. To a lesser extent, the bank
will also make consumer loans.
The National Bank of Georgia intends to maintain a balanced loan portfolio.
The bank estimates that real estate-related loans will comprise 50% of the
portfolio, commercial loans to small- to medium-sized businesses will comprise
40% of the portfolio, and consumer loans to individuals will comprise 10% of the
portfolio. The bank plans to avoid concentrations of loans to a single industry
or based on a single type of collateral. To address the risks inherent in
making loans, the bank will maintain an allowance for loan losses based on,
among other things, an evaluation of the bank's loan loss experience, the amount
of past due and nonperforming loans, current and anticipated economic changes
and the values of certain loan collateral. Based upon such factors, the bank's
management will make various
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<PAGE>
assumptions and judgments about the ultimate collectibility of the loan
portfolio and provide an allowance for potential loan losses based upon a
percentage of the outstanding balances and for specific loans. However, because
there are certain risks that cannot be precisely quantified, management's
judgment of the allowance is necessarily an approximation and imprecise. The
adequacy and methodology of the allowance for loan losses will be subject to
regulatory examination and compared to a peer group of financial institutions
identified by the bank's regulatory agencies.
Loan Approval and Review. The National Bank of Georgia's loan approval
policies will provide for various levels of officer lending authority. When the
amount of total loans to a single borrower exceeds that individual officer's
lending authority, either an officer with a higher lending limit or the bank's
Loan Committee will determine whether to approve the loan request. The bank
will not make any loans to any of its directors or executive officers unless its
Board of Directors approves the loan, the terms of the loan are no more
favorable than would be available to any other applicant with similar credit
factors not affiliated with the bank, and the loan otherwise complies with
applicable law.
Lending Limits. The National Bank of Georgia's lending activities will be
subject to a variety of lending limits imposed by law. Differing limits apply
in some circumstances based on the type of loan or the nature of the borrower,
including the borrower's relationship to the bank. In general, however, the
bank will be able to loan any one borrower a maximum amount equal to either: (i)
15% of the bank's capital and surplus or (ii) 25% of its capital and surplus if
the excess over 15% is within federal guidelines, which provide an exception to
the 15% limit for some types of secured debt. Based on its proposed minimum
capitalization and projected pre-opening expenses, the bank's initial lending
limit will be approximately $855,000 for loans not fully secured plus an
additional $570,000, or a total of approximately $1,425,000, for loans that meet
the federal guidelines. The bank has not yet established any minimum or maximum
loan limits other than the statutory lending limits described above. These
limits will increase or decrease as the bank's capital increases or decreases as
a result of its earnings or losses, among other reasons. The bank may sell
participations in its loans to other financial institutions in order to meet all
of the lending needs of loan customers.
Credit Risks. The principal economic risk associated with each category of
loans that The National Bank of Georgia expects to make is the creditworthiness
of the borrower. Borrower creditworthiness is affected by general economic
conditions and the strength of the services and retail market segments. General
economic factors affecting a borrower's ability to repay include interest,
inflation and employment rates, as well as other factors affecting a borrower's
customers, suppliers and employees.
With respect to real estate loans generally, the ability of a borrower to
repay a real estate loan will depend upon a number of economic factors,
including employment levels and fluctuations in the value of real estate. In
the case of a real estate purchase loan, the borrower may be unable to repay the
loans at the end of the loan term and may thus be forced to refinance the loan
at a higher interest rate, or, in certain cases, the borrower may default as a
result of its inability to refinance the loan. In either case, the risk of
nonpayment by the borrower is increased. In the case of a real estate
construction loan, there is generally no income from the underlying property
during the construction period, and the developer's personal obligations under
the loan are typically limited. Each of these factors increases the risk of
nonpayment by the borrower. The National Bank of Georgia will also face
additional credit risks to the extent that it engages in adjustable rate
mortgage loans ("ARMs"). In the case of an ARM, as interest rates increase, the
borrower's required payments increase, thus increasing the potential for
default. The marketability of all real estate loans, including ARMs, is also
generally affected by the prevailing level of interest rates.
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<PAGE>
The risks associated with commercial loans vary with many economic factors,
including the economy in the Athens and Oconee County area. The well established
financial institutions in the Athens and Oconee County area are likely to make
proportionately more loans to large-sized businesses than The National Bank of
Georgia will make. Many of the bank's anticipated commercial loans will likely
be made to small- to medium-sized businesses that may be less able to withstand
competitive, economic and financial pressures than larger borrowers. In
addition, because payments on loans secured by commercial property generally
depend to a large degree on the results of operations and management of the
properties, repayment of such loans may be subject, to a greater extent than
other loans, to adverse conditions in the real estate market or the economy.
Consumer loans generally involve more credit risks than other loans because
of the type and nature of the underlying collateral or because of the absence of
any collateral. Consumer loan repayments are dependent on the borrower's
continuing financial stability and are likely to be adversely affected by job
loss, divorce and illness. Furthermore, the application of various federal and
state laws, including federal and state bankruptcy and insolvency laws, may
limit the amount which can be recovered on such loans in the case of default. In
most cases, any repossessed collateral will not provide an adequate source of
repayment of the outstanding loan balance. Although the underwriting process for
consumer loans includes a comparison of the value of the security, if any, to
the proposed loan amount, The National Bank of Georgia cannot predict the extent
to which the borrower's ability to pay, and the value of the security, will be
affected by prevailing economic and other conditions.
Real Estate Loans. The National Bank of Georgia will make commercial real
estate loans, construction and development loans, and residential real estate
loans. These loans will include some commercial loans where the bank will take a
security interest in real estate out of an abundance of caution and not as the
principal collateral for the loan, but will exclude home equity loans, which are
classified as consumer loans.
. Commercial Real Estate. Commercial real estate loan terms generally will
be limited to five years or less, although payments may be structured on
a longer amortization basis. Interest rates may be fixed or adjustable.
The National Bank of Georgia will generally charge an origination fee.
We will attempt to reduce credit risk on our commercial real estate
loans by emphasizing loans on owner-occupied office and retail buildings
where the ratio of the loan principal to the value of the collateral as
established by independent appraisal does not exceed 80% and net
projected cash flow available for debt service equals 120% of the debt
service requirement. In addition, the bank may require personal
guarantees from the principal owners of the property supported by a
review by the bank's management of the principal owners' personal
financial statements. Risks associated with commercial real estate loans
include fluctuations in the value of real estate, new job creation
trends, tenant vacancy rates and the quality of the borrower's
management. The bank will limit its risk by analyzing borrowers' cash
flow and collateral value on an ongoing basis. The bank will compete for
real estate loans with competitors that are well established in its
primary service area.
. Construction and Development Loans. Construction and development loans
will be made both on a pre-sold and speculative basis. If the borrower
has entered into an agreement to sell the property prior to beginning
construction, then the loan is considered to be on a pre-sold basis. If
the borrower has not entered into an agreement to sell the property
prior to beginning construction, then the loan is considered to be on a
speculative basis. Construction and development loans are generally made
with a term of nine months and interest is paid periodically. The ratio
of the loan principal to the value of the collateral as established by
independent appraisal will not generally exceed 80%. Speculative loans
will be based on the borrower's financial strength and cash flow
position. Loan proceeds will be disbursed based on
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<PAGE>
the percentage of completion and only after the project has been
inspected by an experienced construction lender or appraiser. Risks
associated with construction loans include fluctuations in the value of
real estate and new job creation trends.
. Residential Real Estate. The National Bank of Georgia's residential real
estate loans will consist of residential first and second mortgage loans
and residential construction loans. The bank will offer fixed and
variable rates on our mortgages with the amortization of first mortgages
with maturity dates of three years and beyond. These loans will be made
consistent with the bank's appraisal policy and with the ratio of the
loan principal to the value of collateral as established by independent
appraisal generally not to exceed 95%. We expect these loan to value
ratios will be sufficient to compensate for fluctuations in real estate
market value and to minimize losses that could result from a downturn in
the residential real estate market. The National Bank of Georgia plans
to open a mortgage department to process home loans immediately upon
opening, which will allow it to originate long term mortgages to be sold
on the secondary market. The bank intends to limit interest rate risk
and credit risk on these loans by locking in the interest rate for each
loan with the secondary market investor and receiving the investor's
underwriting approval before funding the loan.
Commercial Loans. We expect that loans for commercial purposes in
various lines of businesses also will be one of the primary components of The
National Bank of Georgia's loan portfolio. The terms of these loans will vary by
purpose and by type of underlying collateral, if any. The bank will typically
make equipment loans for a term of five years or less at fixed or variable
rates, with the loan fully amortized over the term. Equipment loans generally
will be secured by the financed equipment, and the ratio of the loan principal
to the value of the financed equipment or other collateral will generally be 80%
or less. Loans to support working capital will typically have terms not
exceeding one year and will usually be secured by accounts receivable,
inventory, or other collateral, as well as personal guarantees of the principals
of the business. For loans secured by accounts receivable or inventory,
principal will typically be repaid as the assets securing the loan are converted
into cash, and for loans secured with other types of collateral, principal will
typically be due at maturity. The quality of the commercial borrower's
management and its ability both to evaluate properly changes in the supply and
demand characteristics affecting its markets for products and services and to
respond effectively to such changes are significant factors in a commercial
borrower's creditworthiness.
Consumer Loans. The National Bank of Georgia will make a variety of
loans to individuals for personal, family and household purposes, including
secured and unsecured installment and term loans, home equity loans and lines of
credit. Consumer loan repayments depend upon the borrower's financial stability
and are more likely to be adversely affected by divorce, job loss, illness and
personal hardships. Because many consumer loans are secured by depreciable
assets such as boats, cars, and trailers the loan should be amortized over the
useful life of the asset. The borrower will generally be required to be employed
for at least 12 months prior to obtaining the loan. The loan officer will review
the borrower's past credit history, past income level, debt history and, when
applicable, cash flow and determine the impact of all these factors on the
ability of the borrower to make future payments as agreed. We expect that the
principal competitors for consumer loans will be the established banks in the
Athens and Oconee County area.
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Investments
In addition to loans, The National Bank of Georgia will make other
investments primarily in obligations of the United States or obligations
guaranteed as to principal and interest by the United States and other taxable
securities. No investment in any of those instruments will exceed any
applicable limitation imposed by law or regulation. The Asset and Liability
Management Committee will review the investment portfolio on an ongoing basis in
order to ensure that the investments conform to the bank's policy as set by the
Board of Directors. The members of the committee will be Jack L. Barton,
Michael R. Carson, Ronald L. Hill and William S. Huggins. The committee will be
chaired by Tommy E. Warner. See "Management - Committees of the Boards of
Directors."
Asset and Liability Management
The Asset and Liability Management Committee will manage The National Bank
of Georgia's assets and liabilities and will strive to provide an optimum and
stable net interest margin, a profitable after-tax return on assets and return
on equity and adequate liquidity. The committee will conduct these management
functions within the framework of written loan and investment policies that the
bank will adopt. The committee will attempt to maintain a balanced position
between rate sensitive assets and rate sensitive liabilities. Specifically, it
will chart assets and liabilities on a matrix by maturity, effective duration
and interest adjustment period and attempt to manage any gaps in maturity
ranges.
Deposit Services
The National Bank of Georgia will establish solid core deposits, including
checking accounts, money market accounts, a variety of certificates of deposit
and IRA accounts. To attract deposits, the bank will employ an aggressive
marketing plan in the overall service area and feature a broad product line and
competitive services. The primary sources of deposits will be residents of, and
businesses and their employees located in, the Athens and Oconee County area.
NBG Bancorp plans to obtain these deposits through personal solicitation by its
officers and directors, direct mail solicitations and advertisements published
in the local media. It will generate deposits by offering a broad array of
competitively priced deposit services, including demand deposits, regular
savings accounts, transaction and investment money market deposits, certificates
of deposit, retirement accounts and other legally permitted deposit or funds
transfer services that may be offered to remain competitive in the market.
Other Banking Services
Other anticipated bank services include cash management services, safe-
deposit boxes, travelers checks, direct deposit of payroll and social security
checks, and automatic drafts for various accounts. The National Bank of Georgia
plans to become associated with a shared network of automated teller machines
that its customers will be able to use throughout Georgia and other regions.
The bank may offer annuities, mutual funds and other financial services through
a third party that has not yet been chosen. The bank also plans to offer
Mastercard(R) and VISA(R) credit card services through a correspondent bank as
an agent for the bank. The National Bank of Georgia will not exercise trust
powers during its early years of operation. It may in the future offer a
full-service trust department, but cannot do so without the prior approval of
the OCC.
The National Bank of Georgia will also offer its targeted commercial
customers a courier service that will pick up non-cash deposits from the
customer's place of business and deliver them to the bank. We believe that this
will be an important service for our customers because the bank will initially
have only one location.
33
<PAGE>
Marketing and Advertising
The National Bank of Georgia's target customers will be the residents and
the small- to medium-sized businesses and their employees located in the Athens
and Oconee County area.
We plan to use a targeted marketing approach through local newspapers,
radio advertisements during peak driving times, direct mail campaigns, and
television spots as necessary. Additionally, we plan to sponsor community
activities on an ongoing basis.
Employees
When it begins operations, The National Bank of Georgia will have
approximately ten employees and one part-time employee. We do not expect NBG
Bancorp to have any employees who are not also employees of the bank.
William S. Huggins is the President of NBG Bancorp and will be the
President and Chief Executive Officer of The National Bank of Georgia. Mr.
Huggins has over 30 years of banking experience, including extensive experience
in the areas of finance and management.
Thomas Z. Lanier, III will be The National Bank of Georgia's senior lending
officer. Mr. Lanier has over 25 years of banking experience, including
extensive lending and management experience.
Michael R. Carson will be in charge of The National Bank of Georgia's
operations. Mr. Carson has over 17 years of banking experience, including
extensive experience in the areas of finance and operations.
See "Management" for additional information about our executive officers
and their qualifications.
Facilities
We are located at 2234 West Broad Street in Athens, Georgia. On June 1,
1999, we entered into a letter agreement with Century South Banks, Inc., the
owner of our West Broad Street facility, under which Century South will sell us
the facility when the conditions to this offering are met and subscription funds
are released from the escrow account. See "Terms of the Offering - Escrow of
Subscription Funds." The purchase price, which is good until March 1, 2000, or
when subscription funds are released from the escrow account - whichever occurs
first - is $1,078,052. Until we purchase the facility, we have agreed to rent
it from Century South at a rate of $3,000 per month plus utilities. Georgia
First, our escrow agent, is a wholly-owned subsidiary of Century South.
The facility consists of approximately 3,000 square feet and includes one
vault, three offices, a loan operations area, five teller stations, three drive-
in windows, and one automated teller machine. We plan to update and improve the
facility, the estimated costs of which are expected to total $95,000. We do not
anticipate any material expenditures in connection with complying with
environmental laws related to our occupancy of the facility.
Located within 200 yards of one of the busiest intersections in The
National Bank of Georgia's primary service area, our facility offers high
visibility and ample parking in an area with significant traffic. We believe
our location is the central location for business, residential, commuting and
shopping in the bank's primary service area.
34
<PAGE>
Legal Proceedings
As of the date of this prospectus, there were no material legal proceedings to
which we, or any of our properties, were subject.
35
<PAGE>
MANAGEMENT
Proposed Directors and Executive Officers of NBG Bancorp and The National Bank
of Georgia
The following table sets forth, for the directors and executive officers of
NBG Bancorp, (i) their names, addresses and ages at November 1, 1999, (ii) their
respective positions with us, (iii) the number of shares of common stock they
intend to purchase in the offering, (iv) the percentage of outstanding shares
such number will represent, and (v) the number of shares subject to warrants and
options that they will receive when we complete this offering.
<TABLE>
<CAPTION>
Percentage of
Outstanding Shares Shares
of minimum/maxi- Shares Subject Subject to
Name and Address (Age) Positions to Be Held Number of Shares mum offerings to Warrants Options
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class I Directors:
(Initial term expiring in 2000)
John Harold Barrett (45) Director 50,000 8.2/6.3 50,000 -0-
325 Red Oak Trail
Athens, Georgia 30606
Jack Lee Barton (45) Director 25,000 4.1/3.1 25,000 -0-
1100 Shoals Pointe
Athens, Georgia 30606
Robert E. Burton (51) Director 50,000 8.2/6.3 50,000 -0-
105 Post Oak Trail
Athens, Georgia 30606
Michael R. Carson (39) Director, Executive 10,000 1.6/1.3 10,000 12,853*
210 Waterford Way Vice President
Athens, Georgia 30606
Class II Directors:
(Initial term expiring in 2001)
Michael S. Gautreaux (50) Director 15,000 2.5/1.9 15,000 -0-
1522 Highway 330
Bogart, Georgia 30622
Ronald Lewis Hill (47) Director 10,000 1.6/1.3 10,000 -0-
1516 Annapolis Way
Grayson, Georgia 30017
William S. Huggins (52) Director, President and 25,000 4.1/3.1 25,000 20,884*
1051 Ridge Pointe Chief Executive Officer
Athens, Georgia 30606
Henry D. Joiner (48) Director 25,000 4.1/3.1 25,000 -0-
410 Millstone Circle
Athens, Georgia 30606
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Outstanding Shares Shares
of minimum/maxi- Shares Subject Subject to
Name and Address (Age) Positions to Be Held Number of Shares mum offerings to Warrants Options
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class III Directors:
(Initial term expiring 2002)
Thomas Z. Lanier, III (47) Director, Executive 22,500 3.7/2.8 22,500 15,263*
240 Oak Bend Drive Vice President
Athens, Georgia 30606
Ted R. Ridlehuber (60) Director 40,000 6.6/5.0 40,000 -0-
211 McWhorter Drive
Athens, Georgia 30606
Thomas W. Scott (36) Director 20,000 3.3/2.5 20,000 -0-
265 Lullwater Road
Athens, Georgia 30606
Tommy E. Warner (54) Director 50,000 8.2/6.3 50,000 -0-
180 Wedgefield Lane
Athens, Georgia 30606
Claude Williams, Jr. (76) Director 30,000 4.9/3.8 30,000 -0-
570 Springdale Street
Athens, Georgia 30606 --------------- ------- -------- ------- ------
All Proposed Directors and 372,500 61/47 372,500 49,000
Executive Officers as a Group
(13 persons)
</TABLE>
_______________
* Represents the maximum number of incentive stock options to be granted if The
National Bank of Georgia achieves performance goals. See "Executive
Compensation - Employment Agreements.
Each person listed above has been a director of NBG Bancorp since
September 23, 1999. Directors of NBG Bancorp serve staggered terms, which means
that one-third of the directors will be elected each year at NBG Bancorp's
annual meeting of shareholders. The initial term of the Class I directors
expires in 2000, the initial term of the Class II directors expires in 2001, and
the initial term of the Class III directors expires in 2002. Thereafter, each
director will serve for a term of three years. NBG Bancorp's officers are
appointed by the Board of Directors and hold office at the will of the Board.
See "Important Provisions of NBG Bancorp's Articles of Incorporation and
Bylaws."
Each person listed above is also a proposed director of The National Bank
of Georgia. Each of the bank's proposed directors will, upon approval of the
OCC, serve until the bank's first shareholders' meeting, which will convene
shortly after NBG Bancorp receives its charter. NBG Bancorp, as the sole
shareholder of The National Bank of Georgia, will nominate each proposed
director to serve as director of the bank at that meeting. After the first
shareholders' meeting, directors of the bank will serve for a term of one year
and will be elected by NBG Bancorp each year at the bank's annual meeting of
shareholders. The bank's officers will be appointed by its Board of Directors
and will hold office at the will of the Board.
37
<PAGE>
John Harold Barrett has been in the construction and development business
in the Southeast and NBG Bancorp's primary service area since finishing his
education at The University of Georgia in 1974. He is the founder of Barrett
Properties, Inc., a property management company that manages his family's real
estate interests, including approximately 1,500 rental units in the Southeast, a
large number of which are located in Athens. Mr. Barrett is currently on the
board of trustees of Athens Academy and has served on the board of directors of
the Athens YMCA, the Chamber of Commerce, and the Athens Area Homebuilders
Association.
Jack Lee Barton is the majority owner of Lintel, Inc., a holding company
for Hart Telephone Company of Hartwell, Georgia. He has been employed by the
company since 1976 and currently serves as its chief executive officer. Mr.
Barton has been instrumental in the development of the YMCA of Hartwell and was
the developer of Catteegee Golf Club of Hartwell. He and his family currently
reside in Athens and are active in the community. Mr. Barton graduated from The
University of Georgia in 1976 with a business degree. He is the past president
of the Hart County Chamber of Commerce and the Hartwell Rotary Club. Mr. Barton
is also the past president of the Georgia Telephone Association and was for six
years director of the National Telephone Association. Mr. Barton has served on
the advisory board of the Rural Telephone Finance Cooperative, a financial
services institution lending to electric utilities and telephone companies
throughout the United States.
Robert E. Burton is the co-founder of Flowers, Inc., the largest wholesaler
of balloons and gift items in the United States. He has been the company's
chief executive officer since 1971. Mr. Burton graduated from The University of
Georgia in 1971. Mr. Burton is active in several real estate investment
partnerships and is an active investor in commercial banking ventures.
Michael R. Carson most recently served as senior vice president and chief
financial officer of The Georgia National Bank (which was recently purchased by
SouthTrust, National Association), a position he had held since 1989. In this
capacity, he was responsible for all bank operations, bank investments,
personnel, accounting, and data processing activities. Mr. Carson graduated
from The University of Georgia in 1981 with a business degree. Mr. Carson also
earned a graduate degree in banking from The Banking School of the South in
Baton Rouge, Louisiana in 1991. Mr. Carson has served as an instructor in bank
operations for the Community Bankers Association of Georgia for the last seven
years. He also has served on the board of directors of the Hope Haven School
for Adult Mentally Handicapped Persons since 1991. Mr. Carson has further
served on the local board of directors of the American Heart Association and has
been a mentor in the Clarke County School System.
Michael Sidney Gautreaux co-owns Athens Insurers, an insurance agency
selling a wide range of insurance products to large and small businesses and
individuals. He has been an owner of the company since 1974. Mr. Gautreaux
served as an advisory board member for Bank South's (now Bank of America's)
Athens branches for one year. He has a degree in industrial engineering from
the University of Rhode Island and an MBA from The University of Georgia. Mr.
Gautreaux is past chairman of the Independent Insurance Agents of America, where
he served on the E&O Professional Liability Committee, and is currently a
President's Club member of Selective Insurance Agents. Mr. Gautreaux is active
in the local community and serves as a member of the board of trustees of Athens
Academy. He is also on the board of trustees of the Athens YMCA and serves as
committee chairman of the membership committee of the Athens Chamber of
Commerce.
Ronald Lewis Hill owns two automobile dealerships in Athens, University
Motors, Inc., a Ford and Mazda dealership, and University Automotive, Inc., a
Lincoln, Mercury and Jeep dealership. Mr. Hill has owned and operated these two
dealerships since 1994. Mr. Hill attended DeKalb Junior College and has been
involved in the automobile business in Atlanta and Athens for over 23 years.
Mr. Hill is a member of the Athens Rotary Club.
38
<PAGE>
William S. Huggins most recently served as president and chief executive
officer and a director of The Georgia National Bank, a position he had held
since 1993. From 1992 to 1993, he served as president and chief executive
officer of Embry National Bank in Atlanta. From 1969 to 1991, Mr. Huggins was
employed by Bank South Corporation, Atlanta, where he served as executive vice
president of its corporate banking group. A native of Athens, Mr. Huggins
graduated in 1969 from The University of Georgia with a business degree. He is
also a graduate of The Banking School of the South in Baton Rouge, Louisiana.
Mr. Huggins is on the board of directors of the Athens YMCA. He is also a member
of the Athens Rotary Club and serves as an advisory director of Presidential
Financial Corporation of Atlanta.
Henry D. Joiner is a real estate broker with Joiner and Associates, an
Athens real estate company he has owned since 1996. Prior to 1996, Mr. Joiner
owned ReMax Associates, an Athens real estate company, and Athena Management
Company, a real estate management company based in Athens. He is a graduate of
Gainesville Junior College and attended The University of Georgia.
Thomas Z. Lanier, III most recently served as executive vice president and
a director of The Georgia National Bank, a position he had held since 1993.
Prior to joining The Georgia National Bank, he had served as vice president and
loan officer for C&S National Bank of Athens (now Bank of America). Mr. Lanier
graduated from The University of Georgia in 1974 with a marketing degree. He is
active in the Athens Little League program and has served as its president for
the last four years. He also serves as the treasurer of the Clarke Central
Booster Club.
Ted Ruff Ridlehuber owns Cannon Financial Institute, a financial services
training and consulting company headquartered in Athens that serves regional
banking companies throughout the country. Mr. Ridlehuber has served as chief
executive officer of the company since 1993. Prior to that time, he was senior
vice president with the C&S National Bank of Athens (now Bank of America) from
1964 to 1983. Mr. Ridlehuber was an organizer and a director of The Georgia
National Bank, where he served as chairman of its strategic planning committee.
Mr. Ridlehuber graduated from The University of Georgia in 1962 and earned his
law degree from The University of Georgia in 1963.
Thomas Wells Scott is a certified public accountant who has served a
variety of business and individual clients through his firm, Thomas W. Scott and
Associates, since 1989. Mr. Scott graduated from The University of Georgia with
an accounting degree in 1986. In addition to his accounting practice, Mr. Scott
is a partner in a number of commercial real estate projects.
Tommy Edward Warner has owned and served as president of several
Blockbuster Video franchises, since 1990. Mr. Warner also manages Warner
Properties, LLC, a real estate investment company owning residential properties.
Mr. Warner served as a director of The Georgia National Bank, where he was a
member of the asset/liability committee. Mr. Warner graduated from The
University of Georgia in 1968 with a business degree.
Claude Williams, Jr. has managed his family's controlling interest in
Allison Outdoor Advertising, Ltd., and co-owned Williamson Outdoor Advertising
since 1997. Mr. Williams was an organizer of The Georgia National Bank and
served as its chairman. He also has served as a director of First American Bank
of Athens and Citizens Bank of Gainesville. Mr. Williams has been in the media
business for much of his life, having owned interests in radio stations, outdoor
advertising companies, and newspapers. Mr. Williams is currently a trustee of
The University of Georgia Foundation and is past chairman of the North Georgia
College board of trustees. He is a past president of the Athens Chamber of
Commerce, past chairman of the Athens Regional Hospital Development Council and
is active in many other charitable organizations.
39
<PAGE>
Committees of the Boards of Directors
We have established the following committees. Other committees may be
established as needed once we begin banking operations.
Audit, Compliance and Compensation Committee. The Audit, Compliance and
Compensation Committee will recommend to the Board of Directors of NBG Bancorp
the independent public accountants to be selected to audit NBG Bancorp's and The
National Bank of Georgia's annual financial statements and will approve any
special assignments given to the independent public accountants. The committee
also will review the planned scope of the annual audit, any changes in
accounting principles and the effectiveness and efficiency of the bank's
internal accounting staff. Additionally, the committee will provide oversight
to NBG Bancorp's and The National Bank of Georgia's compliance staff for
adherence with regulatory rules and regulations, including the Community
Reinvestment Act. The committee further will establish compensation levels for
officers of NBG Bancorp and The National Bank of Georgia, review management
organization and development, review significant employee benefit programs and
establish and administer executive compensation programs, including the Stock
Option Plan described in this prospectus. The committee will be chaired by
Thomas W. Scott, and also will include Robert E. Burton, Michael S. Gautreaux,
and Ted R. Ridlehuber.
Loan Committee. The National Bank of Georgia's Loan Committee will review
any loan request made by a potential borrower over an established credit
threshold for compliance with the bank's lending policies and federal and state
rules and regulations governing extensions of credit. After making this review,
the committee will decide whether to extend credit to the potential borrower.
The committee will be chaired by Claude Williams, Jr., and also will include
John M. Barrett, William S. Huggins, Henry D. Joiner, and Thomas Z. Lanier, III.
Asset and Liability Management Committee. The Asset and Liability
Management Committee will provide guidance to NBG Bancorp and The National Bank
of Georgia in balancing the yields and maturities in the bank's loans and
investments to its deposits. The committee will be chaired by Tommy E. Warner,
and also will include Jack L. Barton, Michael R. Carson, Ronald L. Hill, and
William S. Huggins.
40
<PAGE>
EXECUTIVE COMPENSATION
1999 Compensation
The following table shows information for 1999 with regard to compensation
for services rendered in all capacities to NBG Bancorp by its President and
Chief Executive Officer. No other executive officer earned more than $100,000
in salary and bonus in 1999.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
----------------------------------------------------------------------
Name and Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- -------------------------- --------------------- --------------------- --------------------- ----------------
<S> <C> <C> <C> <C>
William S. Huggins, 1999 44,333(1) -0- -0-
President and Chief
Executive Officer
</TABLE>
(1) Represents salary accrued since June 29, 1999. Mr. Huggins' salary will
continue to accrue at a rate of $11,083.33 per month until The National Bank
of Georgia receives final regulatory approvals to open. See "- Employment
Agreements."
Employment Agreements
NBG Bancorp and The National Bank of Georgia have entered into employment
agreements with William S. Huggins, Thomas Z. Lanier, III and Michael R. Carson
regarding Mr. Huggins' employment as President and Chief Executive Officer of
the bank, Mr. Lanier's employment as Executive Vice President-Lending of the
bank and Mr. Carson's employment as Executive Vice President-Operations of the
bank. Under the terms of the agreements, Mr. Huggins will receive a base salary
of $133,000 per year, Mr. Lanier will receive a base salary of $99,000 per year
and Mr. Carson will receive a base salary of $84,000 per year. These salaries
have been accruing since the date The National Bank of Georgia's charter
application was filed with the OCC (June 29, 1999) and will continue to do so
until the bank receives final regulatory approvals to open from the OCC and the
FDIC. As soon as practicable after The National Bank of Georgia receives these
final approvals, the bank will pay Messrs. Huggins, Lanier and Carson their
accrued compensation in a lump sum payment and, thereafter, in bi-weekly
installments. The agreements provide that at the end of each year, Messrs.
Huggins, Lanier and Carson will be entitled to receive a cash bonus, to be
awarded by NBG Bancorp's Board of Directors, based on the bank's performance.
Additionally, the agreements provide that NBG Bancorp will grant incentive stock
options to purchase a number of shares of NBG Bancorp common stock also based on
the bank's performance. If granted, the options will become exercisable in
equal annual increments of 20% beginning on the one-year anniversary of the date
of grant and will have an exercise price of $10.00 per share. The aggregate and
maximum number of shares that would be granted under the options in the event
all performance goals were achieved is 49,000 (Messrs. Huggins, Lanier and
Carson would each receive 20,884 shares, 15,263 shares and 12,853 shares,
respectively). NBG Bancorp will also provide an automobile to Mr. Huggins.
41
<PAGE>
The initial term of the employment agreements commenced on June 29, 1999
and will continue for a period of three years. At the end of the first year of
each agreement, and at the end of each year thereafter, each agreement will be
extended for a successive one-year period unless one of the parties to the
agreement notifies the other parties of his or its intent not to extend the
agreement. Employment under the employment agreements may be terminated:
. by NBG Bancorp for cause (as defined in the agreements);
. by the employee if NBG Bancorp breaches any material provision of his
agreement; or
. upon employee's death or disability.
If NBG Bancorp or The National Bank of Georgia terminates employment
without cause or the employee terminates employment with cause, the company or
the bank will be required to pay the compensation and provide the health and
dental insurance coverage due under the agreement for a period equal to the
greater of 12 months from the date of termination or the remaining term of the
agreement. If the employment of the employee is terminated for any reason, the
employee will be prohibited from competing with NBG Bancorp or The National Bank
of Georgia or soliciting its customers or employees within the geographic area
set forth in the agreement for two years after the date of termination. If the
employee provides notice of termination of employment within 90 days following a
change of control (as defined in each agreement) NBG Bancorp will pay the
employee's then-current compensation and benefits for 12 months after
termination.
Director Compensation
The directors of NBG Bancorp and The National Bank of Georgia will not be
compensated separately for their services as directors until we become
cumulatively profitable. Thereafter, we will adopt compensatory policies for
our directors that conform to applicable law.
Stock Option Plan
General. NBG Bancorp has adopted a Stock Option Plan that provides NBG
Bancorp with the flexibility to grant the stock incentives described in this
section of the prospectus to key employees, officers, directors, consultants and
advisers of NBG Bancorp or The National Bank of Georgia for the purpose of
giving them a proprietary interest in, and to encourage them to remain in the
employ or service of, the company or the bank. NBG Bancorp's Board of Directors
has reserved 70,000 shares of NBG Bancorp common stock - an amount equal to
approximately 11.5% of the minimum and approximately 7.0% of the maximum amount
of shares of stock to be sold in this offering - for issuance under the plan.
The number of shares reserved for issuance may change in the event of a stock
split, recapitalization or similar event as described in the plan.
Administration. It is expected that NBG Bancorp's Audit, Compliance and
Compensation Committee, which is comprised of at least two non-employee
directors appointed by NBG Bancorp's Board of Directors, will administer the
plan. NBG Bancorp's Board of Directors will consider the standards contained in
both Section 162(m) of the Internal Revenue Code of 1986, as currently in effect
and Rule 16(b)(3) under the Securities Exchange Act of 1934, as currently in
effect, when appointing members to the Compensation Committee. The Audit,
Compliance and Compensation Committee and NBG Bancorp's Board of Directors will
have the authority to grant awards under the plan, to determine the terms of
each award, to interpret the provisions of the plan and to make all other
determinations that they may deem necessary or advisable to administer the
plan.
42
<PAGE>
The plan permits the Audit, Compliance and Compensation Committee or NBG
Bancorp's Board of Directors, to grant stock options to eligible persons.
Options may be granted on an individual basis or to a group of eligible persons.
Accordingly, the Audit, Compliance and Compensation Committee or NBG Bancorp's
Board of Directors, will determine, within the limits of the plan, the number of
shares of NBG Bancorp common stock subject to an option, to whom an option is
granted and the exercise price and forfeiture or termination provisions of each
option. A holder of a stock option generally may not transfer the option during
his or her lifetime.
Option Terms. The plan provides for incentive stock options and non-
qualified stock options. The Audit, Compliance and Compensation Committee or
NBG Bancorp's Board of Directors, will determine whether an option is an
incentive stock option or a non-qualified stock option when it grants the
option, and the option will be evidenced by an agreement describing the material
terms of the option.
The Audit, Compliance and Compensation Committee or NBG Bancorp's Board of
Directors will determine the exercise price of an option. The exercise price of
an incentive stock option may not be less than the fair market value of NBG
Bancorp common stock on the date of the grant, or less than 110% of the fair
market value if the participant owns more than 10% of NBG Bancorp's outstanding
common stock. When the incentive stock option is exercised, NBG Bancorp will be
entitled to place a legend on the certificates representing the shares of common
stock purchased upon exercise of the option to identify them as shares of common
stock purchased upon the exercise of an incentive stock option. The exercise
price of non-qualified stock options may be greater than, less than or equal to
the fair market value of the common stock on the date that the option is
awarded, based upon any reasonable measure of fair market value. The committee
may permit the exercise price to be paid in cash or by the delivery of
previously owned shares of common stock, and, if permitted in the applicable
option agreement, through a cashless exercise executed through a broker or by
having a number of shares of common stock otherwise issuable at the time of
exercise withheld.
The Audit, Compliance and Compensation Committee or NBG Bancorp's Board of
Directors, will also determine the term of an option. The term of an incentive
stock option or non-qualified stock option may not exceed ten years from the
date of grant, but any incentive stock option granted to a participant who owns
more than 10% of NBG Bancorp's outstanding common stock will not be exercisable
after the expiration of five years after the date the option is granted.
Subject to any further limitations in the applicable agreement, if a
participant's employment terminates, an incentive stock option will terminate
and become unexercisable no later than three months after the date of
termination of employment. If, however, termination of employment is due to
death or disability, one year will be substituted for the three-month period.
Incentive stock options are also subject to the further restriction that the
aggregate fair market value, determined as of the date of the grant, of NBG
Bancorp common stock as to which any incentive stock option first becomes
exercisable in any calendar year is limited to $100,000 per recipient. If
incentive stock options covering more than $100,000 worth of NBG Bancorp common
stock first become exercisable in any one calendar year, the excess will be non-
qualified options. For purposes of determining which options, if any, have been
granted in excess of the $100,000 limit, options will be considered to become
exercisable in the order granted.
Termination of Options. The terms of particular options may provide that
they terminate, among other reasons, upon the holder's termination of employment
or other status with NBG Bancorp or The National Bank of Georgia, upon a
specified date, upon the holder's death or disability, or upon the occurrence of
a change in control of NBG Bancorp. An agreement may provide that if the holder
dies or becomes disabled, the holder's estate or personal representative may
exercise the option. The Audit, Compliance and Compensation Committee or NBG
Bancorp's Board of Directors, may, within the terms of the plan and the
applicable agreement, cancel, accelerate, pay or continue an option that would
otherwise terminate for the reasons discussed above.
43
<PAGE>
Reorganizations. The plan provides for an appropriate adjustment in the
number and kind of shares subject to unexercised options in the event of any
change in the outstanding shares of common stock by reason of a stock split,
stock dividend, combination or reclassification of shares, recapitalization,
merger or similar event. In the event of some types of corporate
reorganizations, the Audit, Compliance and Compensation Committee or NBG
Bancorp's Board of Directors, may, within the terms of the plan and the
applicable agreement, substitute, cancel, accelerate, cancel for cash or
otherwise adjust the terms of an option.
Amendment and Termination of the Plan. NBG Bancorp's Board of Directors
has the authority to amend or terminate the plan. NBG Bancorp's Board of
Directors is not required to obtain shareholder approval to terminate the plan
or, generally, to amend the plan, but may condition any amendment or termination
of the plan upon shareholder approval if it determines that shareholder approval
is necessary or appropriate under tax, securities, or other laws. However, any
action by NBG Bancorp's Board of Directors may not adversely affect the rights
of a holder of a stock option without the holder's consent.
Federal Income Tax Consequences. The following discussion outlines
generally the federal income tax consequences of participation in the plan.
Individual circumstances may vary and each participant should rely on his or her
own tax counsel for advice regarding federal income tax treatment under the
plan.
. Incentive Stock Options. A participant will not recognize income upon
the grant of an incentive stock option. A participant who exercises an
incentive stock option will not be taxed when he or she exercises the
option or a portion of the option. Instead, the participant will be
taxed when he or she sells the shares of common stock purchased upon
exercise of the incentive stock option. The participant will be taxed on
the difference between the price he or she paid for the NBG Bancorp
common stock and the amount for which he or she sells the stock. If the
participant does not sell the shares of NBG Bancorp common stock prior
to two years from the date of grant of the incentive stock option and
one year from the date the stock is transferred to him or her, the gain
will be a capital gain and NBG Bancorp will not get a corresponding
deduction. If the participant sells the shares of NBG Bancorp common
stock at a gain before that time, the difference between the amount the
participant paid for the stock and the lesser of its fair market value
on the date of exercise or the amount for which the stock is sold will
be taxed as ordinary income and NBG Bancorp will be entitled to a
corresponding tax deduction. If the participant sells the shares of NBG
Bancorp common stock for less than the amount he or she paid for the
stock prior to the one- or two-year period indicated, no amount will be
taxed as ordinary income and the loss will be taxed as a capital loss.
Exercise of an incentive stock option may subject a participant to, or
increase a participant's liability for, the alternative minimum tax.
. Non-Qualified Options. A participant will not recognize income upon the
grant of a non-qualified option or at any time before the exercise of
the option or a portion of the option. When the participant exercises a
non-qualified option or portion of the option, he or she will recognize
compensation taxable as ordinary income in an amount equal to the excess
of the fair market value of NBG Bancorp common stock on the date the
option is exercised over the price paid for the stock, and NBG Bancorp
will then be entitled to a corresponding deduction.
Depending upon the time period for which shares of NBG Bancorp common stock
are held after exercising an option, the sale or other taxable disposition of
shares acquired by exercising a non-qualified option generally will result in a
short- or long-term capital gain or loss equal to the difference
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between the amount realized on the disposition and the fair market value of such
shares when the non-qualified option was exercised.
Special rules apply to a participant who exercises a non-qualified option
by paying the exercise price, in whole or in part, by the transfer of shares of
NBG Bancorp common stock to NBG Bancorp and to a participant who is subject to
the reporting requirements of Section 16 of the Securities Exchange Act of 1934,
as currently in effect.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NBG Bancorp and The National Bank of Georgia may have banking and other
business transactions in the ordinary course of business with directors and
officers of the company and the bank, including members of their families or
corporations, partnerships or other organizations in which these directors and
officers have a controlling interest. If transactions between NBG Bancorp or
The National Bank of Georgia and any of their directors or officers occur, the
transaction:
. will be on substantially the same terms, including price or interest
rate and collateral, as those prevailing at the time for comparable transactions
with unrelated parties, and any banking transactions will not be expected to
involve more than the normal risk of collectibility or present other unfavorable
features to the company or the bank;
. will be on terms no less favorable than could be obtained from an
unrelated third party; and
. will be approved by a majority of the directors, including a majority of
the directors who do not have an interest in the transaction.
DESCRIPTION OF CAPITAL STOCK OF NBG BANCORP
Common Stock
NBG Bancorp's Articles of Incorporation authorize NBG Bancorp to issue up
to 10,000,000 shares of common stock, par value $1.00 per share, of which up to
800,000 shares will be issued pursuant to this offering. As of the date of this
prospectus, 70,000 shares of NBG Bancorp common stock, or an amount equal to
approximately 11.5% of the minimum and approximately 7.0% of the maximum number
of shares of NBG Bancorp common stock to be sold in this offering, were reserved
for issuance upon the exercise of stock options to be issued under NBG Bancorp's
Incentive Stock Option Plan and 372,500 shares of NBG Bancorp common stock were
reserved for issuance upon the exercise of warrants to be issued to our
organizers.
All shares of NBG Bancorp common stock will be entitled to share equally in
dividends from legally available funds, when, as and if declared by NBG
Bancorp's Board of Directors. Upon NBG Bancorp's voluntary or involuntary
liquidation or dissolution, all shares of NBG Bancorp common stock will be
entitled to share equally in all of NBG Bancorp's assets that are available for
distribution to the shareholders. NBG Bancorp does not anticipate paying any
cash dividends on NBG Bancorp common stock in the near future. Each holder of
NBG Bancorp common stock will be entitled to one vote for each share on all
matters submitted to shareholders. Holders of NBG Bancorp common stock will not
have any right to acquire authorized but unissued capital stock of NBG Bancorp
whenever it issues new shares of capital stock. No cumulative voting right with
respect to the election of directors, redemption rights, sinking fund provisions
or conversion rights apply to NBG Bancorp common stock. All shares of NBG
Bancorp common stock issued in the offering will be fully paid and non-
assessable.
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Preferred Stock
NBG Bancorp's Articles of Incorporation also authorize its Board of
Directors to issue up to 1,000,000 shares of preferred stock, par value $1.00
per share. NBG Bancorp's Board of Directors may determine the terms of the
preferred stock. Preferred stock may have voting rights, subject to applicable
law and determination by NBG Bancorp's Board of Directors. Although NBG Bancorp
has no present plans to issue any preferred stock, the ownership and control of
NBG Bancorp by the holders of the common stock would be diluted if NBG Bancorp
were to issue preferred stock that had voting rights.
Organizers' Warrants
Our organizers intend to purchase approximately 372,500 shares of NBG
Bancorp common stock in this offering at a price of $10.00 per share. This
represents approximately 61% of the 610,000 shares that will be outstanding
after completing the minimum offering, or 47% of the 800,000 shares that will be
outstanding if the maximum offering is completed. Our organizers have
guaranteed a line of credit from Georgia First for an amount up to $250,000.
In recognition of the financial risks undertaken by personally guaranteeing
the line of credit with Georgia First, NBG Bancorp will issue to our organizers
warrants to purchase additional shares of NBG Bancorp common stock. NBG Bancorp
will issue to each organizer a warrant to purchase one share of common stock for
each share the organizer purchases in this offering. Accordingly, based on our
organizers' intent to purchase approximately 372,500 shares of NBG Bancorp
common stock in this offering, we expect the organizers to be able to purchase
up to 372,500 more shares through the exercise of warrants. The warrants will
become exercisable in 20% annual increments beginning on the one-year
anniversary of the date The National Bank of Georgia opens for business.
Warrants will remain exercisable for the ten year period following the first
anniversary of the date on which the bank opens for business. Each share
purchased under a warrant will be issued at a price of $10.00, subject to
adjustment for stock splits, recapitalizations or other similar events.
Additionally, if either NBG Bancorp's or The National Bank of Georgia's capital
falls below the minimum level mandated by its primary federal regulator, NBG
Bancorp may be directed to require the organizers to exercise or forfeit their
warrants. If all of the warrants were exercised, our organizers would own
approximately 76% of the shares of NBG Bancorp common stock outstanding after
the minimum offering and 64% of the outstanding shares after the maximum
offering.
IMPORTANT PROVISIONS OF NBG BANCORP'S
ARTICLES OF INCORPORATION AND BYLAWS
Protective Provisions
General. Shareholders' rights and related matters are governed by the
Georgia Business Corporation Code and NBG Bancorp's Articles of Incorporation
and Bylaws. NBG Bancorp's Articles of Incorporation and Bylaws contain
protective provisions that would have the effect of impeding an attempt to
change or remove NBG Bancorp's management or to gain control of NBG Bancorp if a
particular transaction was not supported by NBG Bancorp's Board of Directors.
These provisions are discussed in more detail below. In general, the purpose of
these provisions is to further and protect NBG Bancorp's interests and those of
its shareholders as appropriate under the circumstances, including if the Board
of Directors determines that a sale of control is in the best interests of NBG
Bancorp and its shareholders, by enhancing the Board of Director's ability to
maximize the value to be received by shareholders upon such a sale.
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Although NBG Bancorp's management believes the protective provisions are
beneficial to NBG Bancorp's shareholders, they also may tend to discourage some
takeover bids. As a result, NBG Bancorp's shareholders may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices. On the other hand, defeating undesirable
acquisition offers can be an expensive and time-consuming process. To the
extent that the protective provisions discourage undesirable proposals, NBG
Bancorp may be able to avoid those expenditures of time and money.
The protective provisions also may discourage open market purchases by a
potential acquirer. These purchases could increase the market price of NBG
Bancorp common stock temporarily, enabling shareholders to sell their shares at
a price higher than that which otherwise would prevail. In addition, the
provisions could decrease the market price of NBG Bancorp common stock by making
the stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The provisions also could
make it more difficult and time consuming for a potential acquirer to obtain
control of NBG Bancorp by replacing its Board of Directors and management.
Furthermore, the provisions could make it more difficult for NBG Bancorp's
shareholders to replace the Board of Directors or management, even if a majority
of the shareholders believes that replacing them would be in NBG Bancorp's best
interests.
The protective provisions contained in NBG Bancorp's Articles of
Incorporation and Bylaws are discussed more fully below.
Preferred Stock. The existence of preferred stock could impede a takeover
of NBG Bancorp without the approval of its Board of Directors. This is because
NBG Bancorp's Board of Directors could issue shares of preferred stock to
persons friendly to current management, which could render more difficult or
discourage any attempt to gain control of NBG Bancorp through a proxy contest,
tender offer, merger or otherwise. In addition, the issuance of shares of
preferred stock with voting rights may adversely affect the rights of the
holders of NBG Bancorp common stock and, in certain circumstances, could
decrease its market price.
Staggered Terms for Board of Directors. NBG Bancorp's Articles of
Incorporation provide that NBG Bancorp's Board of Directors will be divided into
three classes. Directors serve staggered terms, which means that one-third of
the directors will be elected each year at NBG Bancorp's annual meeting of
shareholders. The initial term of the Class I directors expires in 2000, the
initial term of the Class II directors expires in 2001 and the initial term of
the Class III directors expires in 2002. Thereafter, each director will serve
for a term of three years. This means that unless the existing directors were
to resign, it would take at least two annual meetings of NBG Bancorp's
shareholders to replace a majority of NBG Bancorp's directors.
Under Georgia law, directors are elected annually for a term of one year
unless the articles of incorporation provide otherwise.
Removal of Directors. NBG Bancorp's Articles of Incorporation provide that
one or more directors may be removed from office at any time, but only for
cause, and only by the affirmative vote of the holders of at least 66 2/3% of
the total number of votes entitled to be cast by the holders of all of the
shares of NBG Bancorp's capital stock who are entitled to vote in an election of
directors.
Under Georgia law, the shareholders may remove one or more directors with
or without cause unless the articles of incorporation or a bylaw adopted by the
shareholders provides that directors may be removed only for cause. A director
may be removed only by a majority of the votes entitled to be cast. If the
directors have staggered terms, directors may be removed only for cause, unless
the articles of
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incorporation or a bylaw adopted by shareholders provides otherwise. A director
may be removed by the shareholders only at a meeting called for the purpose of
removing him or her and the meeting notice must state the purpose, or one of the
purposes, of the meeting is the removal of the director.
Business Combinations. NBG Bancorp's Articles of Incorporation and Bylaws
explicitly "opt in" to Georgia's business combination statute. Generally, under
this statute, "business combinations" (mergers or purchases of 10% or more of
NBG Bancorp's assets or securities) with an "interested shareholder" (a person
who beneficially owns 10% or more of NBG Bancorp's voting stock) that occur
within five years of the acquirer becoming an interested shareholder are
prohibited unless:
. the Board of Directors approved the business combination or the
transaction that made the acquirer an interested shareholder;
. the interested shareholder attained 90% of the voting stock in the
transaction that made the shareholder an interested shareholder; or
. the interested shareholder attains 90% of the voting stock subsequent to
becoming an interested shareholder and a majority of NBG Bancorp's voting shares
approves the acquisition.
Fair Price. Similar to the protective provisions relating to business
combinations, NBG Bancorp's Articles of Incorporation and Bylaws explicitly "opt
in" to Georgia's fair price provisions. Under these provisions, in addition to
any other approvals required by law, a business combination with an interested
shareholder generally must be unanimously approved by the "continuing directors"
(any director who is not an affiliate or associate of the interested shareholder
and who was a director prior to the time the shareholder became an interested
shareholder) or recommended by at least 66 2/3% of the continuing directors and
approved by the affirmative vote of a majority of the shares not beneficially
owned by the interested shareholder unless:
. the consideration to be received by NBG Bancorp's shareholders meets
certain minimum levels (typically the highest price paid by the
interested shareholder for any shares it has acquired);
. the consideration to be received by shareholders who are not interested
is paid in cash or in the same form as the interested shareholder
previously paid for other purchased shares; and
. there has been no reduction in the annual dividend rate from that which
was paid prior to the time the interested shareholder became an
interested shareholder.
Considerations in Evaluating an Acquisition Proposal. NBG Bancorp's
Articles of Incorporation provide factors that NBG Bancorp's Board of Directors
must consider in evaluating whether an acquisition proposal made by another
party is in the best interest of NBG Bancorp and its shareholders. The term
"acquisition proposal" refers to any offer of another party:
. to make a tender offer or exchange offer for NBG Bancorp's common stock
or any other equity security of NBG Bancorp;
. to merge or consolidate NBG Bancorp with another corporation; or
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. to purchase or otherwise acquire all or substantially all of the
properties and assets owned by NBG Bancorp.
NBG Bancorp's Articles of Incorporation charge the Board of Directors, in
evaluating an acquisition proposal, to consider all relevant factors, including:
. the payment being offered by the other corporation in relation (i) to
the current value of NBG Bancorp at the time of the proposal as
determined in a freely negotiated transaction and (ii) to the Board of
Directors' estimate of NBG Bancorp's future value as an independent
company at the time of the proposal;
. the expected social and economic effects of the transaction on the
employees, customers and other constituents - such as suppliers of goods
and services - of NBG Bancorp and The National Bank of Georgia; and
. the expected social and economic effects on the communities within which
NBG Bancorp and The National Bank of Georgia operate.
NBG Bancorp's Board of Directors may also consider other relevant factors.
This provision is included in NBG Bancorp's Articles of Incorporation
because NBG Bancorp is charged with providing support to, and being involved
with, the communities it serves. As a result, NBG Bancorp's Board of Directors
believes its obligations in evaluating an acquisition proposal extend beyond
evaluating merely the payment being offered in relation to the market or book
value of NBG Bancorp common stock at the time of the proposal. Georgia law does
not specifically list the factors a corporation's board of directors should
consider in the event the corporation is presented with an acquisition proposal.
While the value of what is being offered to shareholders in exchange for
their stock is the main factor when weighing the benefits of an acquisition
proposal, NBG Bancorp's Board of Directors believes it is appropriate also to
consider all other relevant factors. For example, this provision directs NBG
Bancorp's Board of Directors to evaluate what is being offered in relation to
the current value of NBG Bancorp at the time of the proposal as determined in a
freely negotiated transaction and in relation to the Board of Directors'
estimate of the future value of NBG Bancorp as an independent concern at the
time of the proposal. A takeover bid often places the target corporation
virtually in the position of making a forced sale, sometimes when the market
price of its stock may be depressed. NBG Bancorp's Board of Directors believes
that frequently the payment offered in such a situation, even though it may
exceed the value at which shares are then trading, is less than that which could
be obtained in a freely negotiated transaction. In a freely negotiated
transaction, management would have the opportunity to seek a suitable partner at
a time of its choosing and to negotiate for the most favorable price and terms
that would reflect not only NBG Bancorp's current value, but also its future
value.
One effect of this provision, as well as the business combination and fair
price provisions discussed above, may be to discourage a tender offer in
advance. Often an offeror consults the board of directors of a target
corporation before or after beginning a tender offer in an attempt to prevent a
contest from developing. In the opinion of NBG Bancorp's Board of Directors,
these provisions will strengthen its position in dealing with any potential
offeror that might attempt to acquire NBG Bancorp through a hostile tender
offer. Another effect of these provisions may be to dissuade NBG Bancorp
shareholders who might be displeased with the Board of Directors' response to an
acquisition proposal from engaging NBG Bancorp in costly litigation. These
provisions permit NBG Bancorp's Board of Directors to determine that an
acquisition proposal is not in NBG Bancorp's and its shareholders' best
interest, and
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thus to oppose it. The effect of these provisions, as well as the other
protective provisions discussed above, in some cases, may have the effect of
maintaining incumbent management.
Indemnification
NBG Bancorp's Bylaws contain indemnification provisions that provide that
NBG Bancorp's directors and officers, and, in some cases, NBG Bancorp's
employees or agents (collectively, the "insiders"), will be indemnified against
expenses that they actually and reasonably incur if they are successful on the
merits of a claim or proceeding. In addition, NBG Bancorp's Bylaws provide that
NBG Bancorp must advance to its insiders reasonable expenses of any claim or
proceeding so long as the insider furnishes NBG Bancorp with a written
affirmation of his or her good faith belief that the applicable standard of
conduct has been met and a written statement that the insider will repay any
advances if it is ultimately determined that he or she is not entitled to
indemnification.
When a case or dispute is settled or otherwise not ultimately determined on
its merits, the indemnification provisions provide that NBG Bancorp will
indemnify insiders when they meet the applicable standard of conduct. The
applicable standard of conduct is met if the insider:
. in his or her official capacity, acted in a manner he or she in good
faith believed to be in NBG Bancorp's best interests;
. in all cases not involving official capacity or criminal activities, he
or she acted in a manner that was at least not opposed to NBG Bancorp's
best interests; and
. in the case of a criminal action or proceeding, if he or she had no
reasonable cause to believe his or her conduct was unlawful.
NBG Bancorp's Board of Directors, its shareholders or independent legal
counsel determines whether the insider has met the applicable standard of
conduct in each specific case.
NBG Bancorp's Bylaws also provide that the indemnification rights contained
in the Bylaws do not exclude other indemnification rights to which an insider
may be entitled under any bylaw, resolution or agreement, either specifically or
in general terms approved by the affirmative vote of the holders of a majority
of the shares entitled to vote. NBG Bancorp can also provide for greater
indemnification than is provided for in the Bylaws if it chooses to do so,
subject to approval by its shareholders. NBG Bancorp may not, however,
indemnify an insider for liability arising out of circumstances that would cause
the insider to remain liable for his or her actions as described under "-
Limitation of Liability" below.
The indemnification provisions of the Bylaws specifically provide that NBG
Bancorp may purchase and maintain insurance on behalf of any director against
any liability asserted against and incurred by him or her in his or her capacity
as a director, whether or not NBG Bancorp would have had the power to indemnify
against such liability.
NBG Bancorp is not aware of any pending or threatened action, suit or
proceeding involving any of its insiders for which indemnification from NBG
Bancorp may be sought.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of NBG
Bancorp under the foregoing provisions, or otherwise, NBG Bancorp has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
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Limitation of Liability
NBG Bancorp's Articles of Incorporation, eliminate, with certain
exceptions, the potential personal liability of a director for monetary damages
to NBG Bancorp or to its shareholders for any failure to take any action as a
director. However, there is no elimination of liability for:
. a breach of duty involving the appropriation of a NBG Bancorp business
opportunity;
. an act or omission involving intentional misconduct or a knowing
violation of law;
. a transaction from which the director derives an improper material
tangible personal benefit; or
. distributions - such as the payment of a dividend or approval of a stock
repurchase - that are illegal under Georgia law.
Georgia law allows corporations to include in their Articles of
Incorporation provisions eliminating or limiting the liability of directors,
except in the circumstances described above. As a result, and to encourage
qualified individuals to serve and remain as directors, NBG Bancorp included
these types of provisions in its Articles of Incorporation. While NBG Bancorp
has not experienced any problems in locating directors, it could experience
difficulty in the future as its business activities increase and diversify. NBG
Bancorp also adopted liability limiting provisions to enhance its ability to
secure liability insurance for its directors at a reasonable cost. NBG Bancorp
intends to obtain liability insurance covering actions taken by its directors in
their capacities as directors. The Board of Directors believes that liability
limiting provisions will enable NBG Bancorp to obtain such insurance on terms
more favorable than if they were not included in NBG Bancorp's Articles of
Incorporation.
Amendments
Any amendment of the provisions contained in NBG Bancorp's Articles of
Incorporation regarding:
. NBG Bancorp's staggered Board of Directors;
. the ability of NBG Bancorp's Board of Directors to consider various
factors when evaluating an acquisition proposal; or
. the limitation of a director's personal liability requires the
affirmative vote of the holders of 66 2/3% of the total number of votes
entitled to be cast by the holders of all of the shares of NBG Bancorp's
capital stock who are entitled to vote in an election of directors.
Except as may otherwise be required by Georgia law, NBG Bancorp's Board of
Directors may amend any provision of NBG Bancorp's Bylaws by the affirmative
vote of a majority of the entire Board, unless NBG Bancorp's shareholders have
adopted, amended or repealed a particular bylaw provision and, in doing so, have
expressly reserved to NBG Bancorp's shareholders the right of amendment or
repeal therefor. NBG Bancorp's Bylaws require the affirmative vote of the
holders of not less than 66 2/3% of the total number of votes entitled to be
cast by the holders of all of the shares of capital stock of NBG Bancorp then
entitled to vote generally in the election of directors to amend NBG Bancorp's
Bylaws.
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SUPERVISION AND REGULATION
The following discussion describes the material elements of the regulatory
framework that applies to banks and bank holding companies and provides certain
specific information related to The National Bank of Georgia.
General
NBG Bancorp will be a bank holding company registered with the Federal
Reserve under the Bank Holding Company Act of 1956, as currently in effect. As
a result, NBG Bancorp and any future non-bank subsidiaries will be subject to
the supervision, examination, and reporting requirements of the Bank Holding
Company Act and the regulations of the Federal Reserve.
The Bank Holding Company Act requires every bank holding company to obtain
the Federal Reserve's prior approval before:
. it may acquire direct or indirect ownership or control of any voting
shares of any bank if, after the acquisition, the bank holding company
will directly or indirectly own or control more than 5% of the bank's
voting shares;
. it or any of its non-bank subsidiaries may acquire all or substantially
all of the assets of any bank; or
. it may merge or consolidate with any other bank holding company.
The Bank Holding Company Act further provides that the Federal Reserve may
not approve any transaction that would result in or tend to create a monopoly
or, substantially lessen competition or otherwise function as restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. The Federal Reserve's consideration of financial resources generally
focuses on capital adequacy, which is discussed below.
NBG Bancorp and any other bank holding company located in Georgia may
acquire a bank located in any other state, and any bank holding company located
outside of Georgia may acquire any Georgia-based bank, regardless of state law
to the contrary. In each case, certain deposit-percentage, aging requirements
and other restrictions will apply. National and state-chartered banks may
branch across state lines by acquiring banks in other states. By adopting
legislation prior to June 1, 1997, a state could elect either to "opt in" and
accelerate the date after which interstate branching would be permissible or
"opt out" and prohibit interstate branching altogether. The Georgia Interstate
Banking Act provides that interstate acquisitions by or of institutions located
in Georgia are permitted in states that also allow national interstate
acquisitions. The Georgia Interstate Branching Act permits Georgia-based banks
and bank holding companies owning or acquiring banks outside of Georgia and all
non-Georgia banks and bank holding companies owning or acquiring banks in
Georgia to merge any lawfully acquired bank into an interstate branch network.
The Georgia Interstate Branching Act also allows banks to establish new start-up
branches throughout Georgia, which removes a barrier to competition.
The Bank Holding Company Act generally prohibits NBG Bancorp from engaging
in activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or keeping direct or indirect
control of any company engaged in any activities other than those
activities
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that the Federal Reserve determines to be closely related to banking or managing
or controlling banks. In determining whether a particular activity is
permissible, the Federal Reserve must consider whether the performance of such
an activity reasonably can be expected to produce benefits to the public, such
as greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices. For example, the Federal Reserve has determined that factoring
accounts receivable, acquiring or servicing loans, leasing personal property,
conducting discount securities brokerage activities, performing certain data
processing services, acting as agent or broker in selling credit life insurance
and certain other types of insurance in connection with credit transactions, and
performing certain insurance underwriting activities are permissible activities
of bank holding companies. The Bank Holding Company Act does not place
territorial limitations on permissible non-banking activities of bank holding
companies. Despite prior approval, the Federal Reserve may order a holding
company or its subsidiaries to terminate any activity or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that the holding company's continued ownership, activity or control constitutes
a serious risk to the financial safety, soundness, or stability of any of its
bank subsidiaries.
The National Bank of Georgia's deposits will be insured by the FDIC to the
maximum extent provided by law. The National Bank of Georgia will also be
subject to numerous state and federal statutes and regulations that will affect
its business, activities and operations, and it will be supervised and examined
by one or more state or federal bank regulatory agencies.
The OCC will regularly examine The National Bank of Georgia's operations
and has the authority to approve or disapprove mergers, the establishment of
branches and similar corporate actions. The OCC also has the power to prevent
the continuance or development of unsafe or unsound banking practices or other
violations of law.
Payment of Dividends
NBG Bancorp is a legal entity separate and distinct from The National Bank
of Georgia. The principal sources of NBG Bancorp's cash flow, including cash
flow to pay dividends to its shareholders, are dividends that The National Bank
of Georgia pays to its sole shareholder, NBG Bancorp. Statutory and regulatory
limitations apply to the bank's payment of dividends to the company as well as
to the company's payment of dividends to its shareholders.
If, in the opinion of the OCC, The National Bank of Georgia were engaged in
or about to engage in an unsafe or unsound practice, the OCC could require,
after notice and a hearing, the bank to cease and desist from the practice. The
federal banking agencies have indicated that paying dividends that deplete a
depository institution's capital base to an inadequate level would be an unsafe
and unsound banking practice. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991, a depository institution may not pay any dividend if
payment would cause it to become undercapitalized or if it already is
undercapitalized. Moreover, the federal agencies have issued policy statements
that provide that bank holding companies and insured banks should generally only
pay dividends out of current operating earnings. See "- Prompt Corrective
Action."
The payment of dividends by NBG Bancorp and The National Bank of Georgia
may also be affected by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
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Capital Adequacy
NBG Bancorp and The National Bank of Georgia will be required to comply
with the capital adequacy standards established by the Federal Reserve (in the
case of the company) and the OCC (in the case of the bank). The Federal Reserve
has established two basic measures of capital adequacy for bank holding
companies: a risk-based measure and a leverage measure. A bank holding company
must satisfy all applicable capital standards to be considered in
compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and bank
holding companies, to account for off-balance sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance sheet items,
such as letters of credit and unfunded loan commitments, are assigned to broad
risk categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and off-balance
sheet items.
The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. At least half of total capital must comprise common stock,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets, or
"Tier 1 Capital." The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves, or "Tier 2
Capital."
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets, of 3% for bank holding companies that meet certain specified
criteria, including having the highest regulatory rating. All other bank
holding companies generally are required to maintain a leverage ratio of at
least 3%, plus an additional cushion of 100 to 200 basis points. The guidelines
also provide that bank holding companies experiencing internal growth, as will
be the case for NBG Bancorp, or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels
without significant reliance on intangible assets. Furthermore, the Federal
Reserve has indicated that it will consider a bank holding company's Tier 1
Capital leverage ratio, after deducting all intangibles, and other indicators of
capital strength in evaluating proposals for expansion or new activities.
The National Bank of Georgia will be subject to risk-based and leverage
capital requirements adopted by the OCC, which are substantially similar to
those adopted by the Federal Reserve for bank holding companies.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business. As described below,
substantial additional restrictions can be imposed on FDIC-insured depository
institutions that fail to meet applicable capital requirements. See "- Prompt
Corrective Action."
Support of Subsidiary Institutions
Under Federal Reserve policy, NBG Bancorp is expected to act as a source of
financial strength for, and to commit resources to support, The National Bank of
Georgia. This support may be required at times when, without this Federal
Reserve policy, NBG Bancorp might not be inclined to provide it. In addition,
any capital loans by a bank holding company to The National Bank of Georgia will
be repaid only after its deposits and certain other indebtedness are repaid in
full. In the event of a bank holding
54
<PAGE>
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a banking subsidiary will
be assumed by the bankruptcy trustee and entitled to a priority of payment.
Prompt Corrective Action
The Federal Deposit Insurance Corporation Improvement Act of 1991
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system, the federal banking
regulators have established five capital categories (well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized), are required to take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, with respect to
institutions in the three undercapitalized categories. The severity of the
action will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the banking regulator must appoint a
receiver or conservator for an institution that is critically undercapitalized.
The federal banking agencies have specified by regulation the relevant capital
level for each category.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
A bank holding company must guarantee that a subsidiary depository institution
meets its capital restoration plan, subject to certain limitations. The
controlling holding company's obligation to fund a capital restoration plan is
limited to the lesser of 5% of an undercapitalized subsidiary's assets or the
amount required to meet regulatory capital requirements. An undercapitalized
institution is also generally prohibited from increasing its average total
assets, making acquisitions, establishing any branches or engaging in any new
line of business, except under an accepted capital restoration plan or with FDIC
approval. In addition, the appropriate federal banking agency may test an
undercapitalized institution in the same manner as it treats a significantly
undercapitalized institution if it determines that those actions are necessary.
FDIC Insurance Assessments
The FDIC has adopted a risk-based assessment system for insured depository
institutions that takes into account the risks attributable to different
categories and concentrations of assets and liabilities. The system assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. The FDIC also assigns
an institution to one of three supervisory subgroups within each capital group.
The supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation that the institution's primary federal regulator provides
to the FDIC and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. The FDIC then determines an institution's insurance assessment rate
based on the institution's capital category and supervisory category. Under the
risk-based assessment system, there are nine combinations of capital groups and
supervisory subgroups to which different assessment rates are applied.
Assessments range from 0 to 27 cents per $100 of deposits, depending on the
institution's capital group and supervisory subgroup.
The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.
55
<PAGE>
Recent Legislation
On November 15, 1999, President Clinton signed the Gramm-Leach-Bliley Act
of 1999. The Act addresses concerns relating to the competitiveness and the
safety and soundness of the financial services industry and alters the
structure, regulation, and competitive relationships of the nation's financial
institutions. Among other things, the Act:
. Repeals the Glass-Steagall Act of 1933 that separated commercial and
investment banking and eliminates the prohibition on insurance
underwriting activities under the Bank Holding Company Act of 1956.
. Creates "financial holding companies" that may conduct a broad list of
financial activities, including insurance and securities underwriting,
and real estate development and investment.
. Establishes the Federal Reserve as the primary federal regulator of
financial holding companies.
. Allows financial holding companies to conduct activities that are
"complementary" to banking.
. Allows banks to underwrite securities through direct subsidiaries and
use direct subsidiaries for insurance or securities sales or other
low-risk activities.
. Prohibits a bank holding company from merging with insurance or
securities firms or embarking on new powers if any of its banks earned
less than a "satisfactory" Community Reinvestment Act rating on its most
recent exam. The company would be barred from additional powers or
acquisitions if one of the banks' CRA ratings dropped below
"satisfactory" later.
. Extends the period between CRA exams to five years for banks and thrifts
under $250 million of assets that earned an "outstanding" rating in
their last exam. Small institutions with a "satisfactory" rating would
only be subject to CRA exams once every four years. Regulators could
conduct an exam sooner if a bank filed a merger application or if the
regulators have a "reasonable cause."
. Requires financial institutions to establish privacy policies and
disclose them at the start of a customer relationship and once a year
thereafter.
. Requires banks to give customers a chance to block sharing of
confidential information with third parties except in cases of marketing
agreements between financial institutions and some other marketing
agreements.
. Prohibits credit card and account numbers from being shared with third-
party marketers.
Although the Act is considered to be one of the most significant banking
laws since Depression-era statutes were enacted, because of our small size and
recent organization, we do not expect the Act to materially affect our initial
products, services or other business activities.
56
<PAGE>
LEGAL MATTERS
Troutman Sanders LLP, Atlanta, Georgia, will pass upon the validity of the
shares of common stock offered by this prospectus for NBG Bancorp.
EXPERTS
NBG Bancorp's audited financial statements for the period from June 1,1999
through August 31, 1999, included in this prospectus have been included in
reliance on the report of Mauldin & Jenkins, LLC, independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing.
REPORTS TO SHAREHOLDERS
Upon the effective date of the Registration Statement on Form SB-2 that
registers the shares of common stock offered by this prospectus with the
Securities and Exchange Commission, NBG Bancorp will be subject to the reporting
requirements of the Securities Exchange Act of 1934, as currently in effect,
which include requirements to file annual reports on Form 10-KSB and quarterly
reports on Form 10-QSB with the Securities and Exchange Commission. This
reporting obligation will exist for at least one year and will continue for
successive fiscal years, except that these reporting obligations may be
suspended for any subsequent fiscal year if at the beginning of such year NBG
Bancorp common stock is held of record by less than 300 persons.
At any time that NBG Bancorp is not a reporting company, it will furnish
its shareholders with annual reports containing audited financial information
for each fiscal year on or before the date of the annual meeting of shareholders
as required by Rule 80-6-1-.05 of the Georgia Department of Banking and Finance.
NBG Bancorp's fiscal year ends on December 31. Additionally, NBG Bancorp will
also furnish such other reports as it may determine to be appropriate or as
otherwise may be required by law.
ADDITIONAL INFORMATION
NBG Bancorp has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act of 1933, as
currently in effect, with respect to the shares of NBG Bancorp common stock
offered by this prospectus. This prospectus does not contain all of the
information contained in the Registration Statement. For further information
with respect to NBG Bancorp and its common stock, we refer you to the
Registration Statement and the exhibits to it. The Registration Statement may
be examined and copied at the public reference facilities maintained by the
Securities and Exchange Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Securities and Exchange Commission located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of the Registration Statement are
available at prescribed rates from the Public Reference Section of the
Securities and Exchange Commission, Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. You may obtain additional information regarding
the operation of the public reference facilities by calling the Securities and
Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission
also maintains a Web site (http:/ /www.sec.gov) that contains registration
statements, reports, proxy and information statements and other information
regarding registrants, such as NBG Bancorp, that file electronically with the
Securities and Exchange Commission.
NBG Bancorp and our organizers have filed or will file various applications
with the FDIC, the Federal Reserve, the OCC and the Georgia Department of
Banking and Finance. These applications and
57
<PAGE>
the information they contain are not incorporated into this prospectus. You
should rely only on information contained in this prospectus and in the related
Registration Statement in making an investment decision. To the extent that
other available information not presented in this prospectus, including
information available from NBG Bancorp and information in public files and
records maintained by the FDIC, the Federal Reserve, the OCC and the Georgia
Department of Banking and Finance is inconsistent with information presented in
this prospectus or provides additional information, that information is
superseded by the information presented in this prospectus and should not be
relied on. Projections appearing in the applications are based on assumptions
that our organizers believe are reasonable, but as to which they can make no
assurances. NBG Bancorp specifically disaffirms those projections for purposes
of this prospectus and cautions you against relying on them for purposes of
making an investment decision.
58
<PAGE>
NBG BANCORP, INC.
(A Development Stage Company)
FINANCIAL REPORT
AUGUST 31, 1999
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditor's Report........................................... F-2
Balance Sheet, August 31, 1999......................................... F-3
Statement of Loss, Period from June 1, 1999, Date of Inception,
to August 31, 1999................................................... F-4
Statement of Cash Flows, Period from June 1, 1999, Date of Inception,
to August 31, 1999................................................... F-5
Notes to Financial Statements.......................................... F-6
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------
To the Board of Directors
NBG Bancorp, Inc.
Athens, Georgia
We have audited the accompanying balance sheet of NBG Bancorp, Inc., a
development stage company, as of August 31, 1999, and the related statements of
loss and cash flows for the period from June 1, 1999, date of inception, to
August 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of NBG Bancorp, Inc., a
development stage company, as of August 31, 1999, and the results of its
operations and its cash flows for the period from June 1, 1999, date of
inception, to August 31, 1999, in conformity with generally accepted accounting
principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
September 8, 1999, except for
Note 1 as to which the date is
September 23, 1999
F-2
<PAGE>
NBG BANCORP, INC.
(A Development Stage Company)
BALANCE SHEET
AUGUST 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 4,191
Equipment (net of accumulated depreciation of $294) 8,923
--------
Total assets $ 13,114
========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES
Line of credit $ 28,000
Accrued expenses 73,291
--------
Total liabilities 101,291
--------
COMMITMENTS
STOCKHOLDERS' (DEFICIT)
Preferred stock, $1 par value; 1,000,000 shares
authorized; no shares issued and outstanding 0
Common stock, $1 par value; 10,000,000 shares
authorized; no shares issued and outstanding 0
Deficit accumulated during the development stage (88,177)
--------
Total stockholders' (deficit) (88,177)
--------
Total liabilities and stockholders' (deficit) $ 13,114
========
See Notes to Financial Statements.
</TABLE>
F-3
<PAGE>
NBG BANCORP, INC.
(A Development Stage Company)
STATEMENT OF LOSS
PERIOD FROM JUNE 1, 1999, DATE OF INCEPTION,
TO AUGUST 31, 1999
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expenses
<S> <C>
Personnel expenses 67,819
Interest 315
Equipment and occupancy expenses 8,831
Filing and application fees 8,115
Other expenses 3,097
--------
88,177
--------
Net loss and deficit accumulated
during the development stage $(88,177)
========
See Notes to Financial Statements.
</TABLE>
F-4
<PAGE>
NBG BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM JUNE 1, 1999, DATE OF INCEPTION,
TO AUGUST 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net loss $(88,177)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 294
Increase in accrued expenses 73,291
--------
Net cash used in operating activities (14,592)
--------
INVESTING ACTIVITIES
Purchase of equipment (9,217)
--------
Net cash used in investing activities (9,217)
--------
FINANCING ACTIVITIES
Proceeds from line of credit 28,000
--------
Net cash provided by financing activities 28,000
--------
Net increase in cash 4,191
Cash at beginning of period 0
--------
Cash at end of period $ 4,191
========
See Notes to Financial Statements.
</TABLE>
F-5
<PAGE>
NBG BANCORP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
NBG Bancorp, Inc. (the "Company") was incorporated on September 22,
1999, to operate as a bank holding company pursuant to the Federal
Bank Holding Company Act of 1956, as amended, and the Georgia Bank
Holding Company Act. The Company intends to acquire 100% of the
issued and outstanding capital stock of The National Bank of Georgia
(In Organization) (the "Bank"), a corporation organized under the
laws of the State of Georgia to conduct a general banking business in
Athens, Georgia. On June 29, 1999, the organizers filed an
application for approval of the organization of the Bank with the
Office of the Comptroller of the Currency ("OCC") and also with the
Federal Deposit Insurance Corporation ("FDIC") for insurance of the
Bank's deposits. As an insured bank, the Bank will be a member of
the Bank Insurance Fund. The Company will file an application with
the Federal Reserve Bank of Atlanta (the "FRB") and the Georgia
Department of Banking and Finance ("DBF") to become a bank holding
company upon receiving preliminary approval by the OCC. Upon
obtaining regulatory approval, the Company will be a registered bank
holding company subject to regulation by the FRB and DBF.
Activities since inception have consisted primarily of the Company's
and the Bank's organizers engaging in organizational and preopening
activities necessary to obtain regulatory approvals and to prepare to
commence business as a financial institution. The organizers have
also been involved in limited mortgage loan origination activities.
Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Organization and Stock Offering Costs
Organization costs will be expensed as incurred in accordance with
generally accepted accounting principles. Stock offering costs
will be charged to capital surplus upon completion of the stock
offering. Additional costs are expected to be incurred for
organization costs and stock offering costs.
Income Taxes
The Company will be subject to Federal and state income taxes when
taxable income is generated. No income taxes have been accrued
because of operating losses incurred during the preopening period.
Fiscal Year
The Company will adopt a calendar year for both financial reporting
and tax reporting purposes.
NOTE 2. LINE OF CREDIT
To facilitate the formation of the Company and the Bank, the
organizers have established a $250,150 line of credit with an
independent bank for the purpose of paying organization and
preopening expenses for the Company and the Bank and the expenses of
the Company's common stock offering. The line of credit bears
interest at the lender's prime rate less 1% and matures on November
25, 1999. Interest is payable at maturity. The interest rate at
August 31, 1999 was 7.25%. The organizers have personally guaranteed
repayment of the line of credit. All funds advanced on behalf of the
Company and the Bank will be repaid from the proceeds of the stock
offering. The Company's ability to repay these advances and relieve
the organizers from their personal guarantees depends upon the
completion of the offering.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3. COMMITMENTS
On June 1, 1999, the organizers entered into a lease agreement for
the proposed site of the Bank. The monthly lease is equal to $3,000
adjusted for a percentage of the mortgage origination fees retained
by the lessor. As of August 31, 1999, total rental expense incurred
was $5,156. The organizers intend to purchase the facility upon
release of the stock offering funds from escrow as the permanent
banking location.
Pursuant to employment contracts between the organizers and the
proposed executive officers of the Company, consulting fees will be
paid to the executive officers contingent upon the completion of
certain events during the development stage. These events include
receiving final approval from the OCC, FDIC, and the FRB. The
consulting fees began accruing on June 29, 1999 at a rate equal to
the base salaries of the executive officers as outlined in the
employment contracts. These fees are not payable unless final
regulatory approval is obtained. However, because obtaining final
regulatory approval is a probable event, the fees, which totaled
$52,667 at August 31, 1999, have been included with personnel
expenses in the financial statements of the Company.
Year 2000
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year.
Systems that do not properly recognize the year "2000" could
generate erroneous data or cause systems to fail. The Company will
be dependent on computer processing and telecommunication systems in
the daily conduct of business activities. The Company presently
believes that the Year 2000 issue will not pose significant
operational problems for the Company or have a material adverse
effect on future operating results.
NOTE 4. COMMON STOCK OFFERING
The Company proposes to file a Registration Statement on Form SB-2
with the Securities and Exchange Commission offering for sale a
minimum of 610,000 shares and a maximum of 800,000 shares of the
Company's common stock at a price of $10 per share.
F-8
<PAGE>
APPENDIX "A"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
November 10, 1999, by and between NBG Bancorp, Inc., a Georgia corporation (the
"Company"), and Georgia First Bank, N.A., a banking association organized and
existing under the laws of the United States (the "Escrow Agent").
WITNESSETH:
----------
WHEREAS, the Company proposes to publicly offer and sell (the "Offering") a
minimum of 610,000 shares (the "Minimum Offering") and a maximum of 800,000
shares (the "Maximum Offering") of its common stock, $1.00 par value per share
(the "Shares"), to investors at $10.00 per Share pursuant to a registered public
offering;
WHEREAS, the Offering will be made pursuant to a Prospectus (the
"Prospectus") and a related Subscription Agreement (the "Subscription
Agreement"), each of which will be distributed to prospective investors and a
form of each of which has been delivered to the Escrow Agent; and
WHEREAS, the Company desires to establish an escrow account (the "Escrow
Account") to hold and invest subscription funds ("Subscription Funds") that are
delivered by subscribers for the Shares ("Subscribers") pending satisfaction of
the conditions to the Minimum Offering, and the Escrow Agent is willing to serve
as escrow agent upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Deposit with Escrow Agent.
(a) The Escrow Agent understands that, pursuant to the instructions
contained in the Prospectus and the Subscription Agreement,
Subscribers in the Offering shall deliver to the Company a
completed Subscription Agreement together with Subscription Funds
for the Shares subscribed. The Company will accept only those
subscriptions that satisfy the following conditions:
(i) the Subscription Agreement is properly completed and
signed;
(ii) the Subscription Agreement is for the purchase of at least
1,000 Shares;
(iii) the Subscription Agreement is accompanied by Subscription
Funds in an amount sufficient to pay for all subscribed
Shares; and
(iv) the Subscription Funds are paid by check, money order or
other bona fide payment instrument to "Georgia First Bank,
N.A., NBG Escrow Agent."
If any of the foregoing conditions is not satisfied, the Company
will promptly return the Subscription Agreement and the
Subscription Funds to the Subscriber,
A-1
<PAGE>
showing the defects and requesting correction and return of a
properly completed Subscription Agreement and related payments,
and the Escrow Agent shall have no obligations with respect to
such rejected subscriptions.
(b) With respect to all subscriptions that satisfy the conditions set
forth in Section 1(a), the Company will promptly forward to the
Escrow Agent: (i) a copy of the Subscription Agreement, which
sets forth, among other things, the Subscriber's name and
address, certified tax identification number, and the number of
Shares subscribed, and (ii) the Subscription Funds payable to the
Escrow Agent for the number of Shares subscribed.
(c) The Escrow Agent agrees that it will from time to time accept, in
its capacity as escrow agent, Subscription Funds for the Shares,
which have been forwarded to the Escrow Agent by the Company, and
which, upon collection, the Escrow Agent will invest in
accordance with Section 2 hereof. The Escrow Agent agrees that
it will not accept any Subscription Agreements or Subscription
Funds sent from Subscribers directly to the Escrow Agent, and
that, in the event the Escrow Agent does receive Subscription
Agreements or Subscription Funds directly from Subscribers, the
Escrow Agent shall promptly forward them to the Company.
(d) All checks shall be made payable to the Escrow Agent. If any
check does not clear normal banking channels in due course, the
Escrow Agent will promptly notify the Company. Any check which
does not clear normal banking channels and is returned by the
drawer's bank to the Escrow Agent will be promptly turned over to
the Company along with all other subscription documents relating
to such check. Any check received that is made payable to a
party other than the Escrow Agent shall be returned to the
Company for return to the proper party. The Company in its sole
and absolute discretion may reject any subscription for shares
for any reason and upon such rejection it shall notify and
instruct the Escrow Agent in writing to return the Escrowed Funds
by check made payable to the Subscriber.
2. Investment of Escrowed Funds. Upon collection of each check by the
Escrow Agent, the Escrow Agent shall invest the Subscription Funds
(following their acceptance by the Escrow Agent and clearance of
normal bank collection processes and availability, the "Escrowed
Funds") in deposit accounts or certificates of deposit which are fully
insured by the Federal Deposit Insurance Corporation or another agency
of the United States government, short-term securities issued or fully
guaranteed by the United States government, federal funds, or such
other investments as the Escrow Agent and the Company shall agree.
The Company shall provide the Escrow Agent with instructions from time
to time concerning in which of the specific investment instruments
described above the Escrowed Funds shall be invested, and the Escrow
Agent shall adhere to such instructions. Unless and until otherwise
instructed by the Company, the Escrow Agent shall by means of a
"Sweep" or other automatic investment program invest the Escrowed
Funds in blocks of $10,000 in federal funds. Interest and other
earnings shall start accruing on such funds as soon as such funds
would be deemed to be available for access under applicable banking
laws and pursuant to the Escrow Agent's own banking policies.
A-2
<PAGE>
3. Distribution of Escrowed Funds. The Escrow Agent shall distribute the
Escrowed Funds in the amounts, at the times, and upon the conditions
hereinafter set forth in this Agreement.
(a) If at any time on or prior to the Expiration Date (as defined
herein) of the Offering, (i) the Escrow Agent has certified to
the Company in writing that the Escrow Agent has received at
least $6,100,000 in Escrowed Funds, and (ii) the Escrow Agent has
received confirmation from the President or the Chairman of the
Board of Directors of the Company that all of the other
conditions to the release of the Escrowed Funds as described in
the Prospectus with respect to the Minimum Offering have been
met, then, upon direction of the Company, the Escrow Agent shall
deliver the Escrowed Funds plus any profits or earnings thereon
after deducting the Escrow Agent's fees, if any, to the Company
in the manner specified by the Company. For purposes of this
Agreement, the term "Expiration Date" shall mean the date which
marks the 90th day after the date of the Prospectus; provided,
--------
however, in the event that the Escrow Agent is given oral
-------
notification, followed in writing, by the Company that it has
elected to extend the Minimum Offering for an additional period
of 90 days after the initial period, then the Expiration Date
shall mean the date which marks the 180th day after the date of
the Prospectus; provided further, in the event that the Escrow
-------- -------
Agent is given oral notification, followed in writing, by the
Company that it has elected to extend the Minimum Offering for an
additional period of 90 days after the first extension, then the
Expiration Date shall mean the date which marks the 270th day
after the date of the Prospectus; provided further, in the event
-------- -------
the Escrow Agent is given oral notification, followed in writing,
by the Company that it has elected to extend the Minimum Offering
for an additional period of 90 days after the second extension,
then the Expiration Date shall mean the date which marks the
360th day after the date of the Prospectus.
(b) If the Escrowed Funds do not, on or prior to the Expiration Date,
become deliverable to the Company based on the failure to meet
the conditions described in Section 3(a) hereof, or if the
Company terminates the Offering at any time prior to the
Expiration Date and delivers written notice to the Escrow Agent
of such termination, then the Escrow Agent shall return the
Escrowed Funds to Subscribers whose Subscription Agreements and
Subscription Funds were accepted by the Company, in amounts equal
to the Subscription Funds paid by each of them, plus interest
earned thereon divided amongst the Subscribers according to the
number of Shares subscribed and the amount of time the
Subscriber's Subscription Funds have been held in the Escrow
Account by the Escrow Agent.
The specific allocation of interest and net profits attributable
to each Subscriber shall be determined by the Escrow Agent as
follows: each Subscriber's allocated share of earnings on the
Escrowed Funds, after deducting the Escrow Agent's fees
hereunder, if any, shall be that fraction (i) the numerator of
which is equal to (x) the amount of each Subscriber's accepted
Subscription Funds multiplied by (y) the number of days between
the date that the Escrow Agent collected such funds and the date
of the Offering's termination (with respect to each Subscriber,
the Subscriber's "Time Subscription Factor"), and (ii) the
denominator of which is equal to the aggregate Time Subscription
Factors of all Subscribers' depositing Escrowed Funds in the
Escrow Account.
A-3
<PAGE>
All Subscription Funds which have been delivered to the Escrow
Agent by the Company but which have not been collected shall
first be collected by the Escrow Agent and subsequently returned
to the respective Subscribers without interest. The Company is
aware and understands that, until it becomes entitled to receive
the Escrowed Funds, as described in Section 3(a) hereof, the
Company is not entitled to any Escrowed Funds, and that no
amounts deposited in the Escrow Account shall become the property
of, or become subject to the debts of, the Company or any other
entity.
4. Fee of Escrow Agent. The Escrow Agent shall accrue a service charge
of $15.00 per month each month that it holds Escrowed Funds. In
addition, a $20.00 per check fee shall be charged if the Escrow
Account has to be refunded due to a failure to complete the Offering.
The Escrow Agent is hereby authorized to deduct such fees from the
Escrowed Funds prior to any release thereof pursuant to Section 3
hereof.
5. Liability of Escrow Agent.
(a) In performing any of its duties under this Agreement, or upon the
claimed failure to perform its duties hereunder, the Escrow Agent
shall not be liable to anyone for any damages, losses or expenses
which it may incur as a result of any action or the failure to
act by the Escrow Agent that is made in good faith by the Escrow
Agent; provided, however, the Escrow Agent shall be liable for
-------- -------
damages arising out of its willful default or misconduct or its
gross negligence under this Agreement. Accordingly, the Escrow
Agent shall not incur any such liability with respect to (i) any
action taken or omitted to be taken in good faith upon advice of
its counsel or counsel for the Company which is given with
respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder; or (ii) any
action taken or omitted to be taken in reliance upon any
document, including any written notice or instructions provided
for by this Agreement, not only as to its due execution and to
the validity and effectiveness of its provisions, but also as to
the truth and accuracy of any information contained therein, if
the Escrow Agent shall in good faith believe such document to be
genuine, to have been signed or presented by a proper person or
persons, and to conform with the provisions of this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow
Agent against any and all losses, claims, damages, liabilities
and expenses, including, without limitation, reasonable costs of
investigation and counsel fees and disbursements which may be
imposed by the Escrow Agent or incurred by it in connection with
its acceptance of this appointment as escrow agent hereunder or
the performance of its duties hereunder, including, without
limitation, any litigation arising from this Agreement or
involving the subject matter thereof, except, that if it is
determined that the Escrow Agent breached this Agreement,
willfully engaged in misconduct, or acted with gross negligence
in connection herewith, then, the Escrow Agent shall bear all
such losses, claims, damages and expenses.
A-4
<PAGE>
(c) If a dispute ensues between any of the parties hereto which, in
the opinion of the Escrow Agent, is sufficient to justify its
doing so, the Escrow Agent shall retain legal counsel of choice
as it reasonably may deem necessary to advise it concerning its
obligations hereunder and to represent it in any litigation to
which it may be a party by reason of this Agreement. The Escrow
Agent shall be entitled to tender into the registry or custody of
any court of competent jurisdiction all money or property in its
hands under the terms of this Agreement, and to file such legal
proceedings as it deems appropriate, and shall thereupon by
discharged from all further duties under this Agreement. Any
such legal action may be brought in any such court as the Escrow
Agent shall determine to have jurisdiction thereof. In
connection with such dispute, the Company shall indemnify the
Escrow Agent against its court costs and reasonable attorney's
fees incurred.
(d) The Escrow Agent may resign at any time upon giving 30 days
written notice to the Company. If a successor escrow agent is
not appointed by Company within 30 days after notice of
resignation, the Escrow Agent may petition any court of competent
jurisdiction to name a successor escrow agent and the Escrow
Agent shall be fully relieved of all liability under this
Agreement to any and all parties upon the transfer of the
Escrowed Funds and all related documentation thereto, including
appropriate information to assist the successor escrow agent with
the reporting of earnings of the Escrowed Funds to the
appropriate state and federal agencies in accordance with
applicable state and federal income tax laws.
6. Appointment of Successor. The Company may, upon the delivery of 30
days written notice appointing a successor escrow agent to the Escrow
Agent, terminate the services of the Escrow Agent hereunder. In the
event of such termination, the Escrow Agent shall immediately effect
the transfer of the Escrowed Funds and all related documentation
thereto, including appropriate information to assist the successor
escrow agent with the reporting of earnings of the Escrowed Funds to
appropriate state and federal agencies in accordance with applicable
state and federal income tax laws, less any fees and expenses due to
be paid to the Escrow Agent or required to be paid by the Escrow Agent
to a third party pursuant to this Agreement.
7. Notice. All notices, requests, demands and other communications or
deliveries required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given three days after
having been deposited for mailing if sent by registered mail, or
certified mail return receipt requested, or delivery by courier, to
the respective addresses set forth below:
If to the Subscribers for Shares: To their respective addresses as specified in
their Subscription Agreements.
The Company: William S. Huggins
President and Chief Executive Officer
NBG Bancorp, Inc.
P. O. Box 6507
Athens, Georgia 30604
A-5
<PAGE>
With a copy to: Thomas O. Powell, Esquire
Troutman Sanders LLP
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
The Escrow Agent: Georgia First Bank, N.A.
P. O. Box 667
Duluth, Georgia 30096
Attention: H. Randolph Lee, Jr.
8. Representations of the Company. The Company hereby acknowledges that
the Escrow Agent shall have the duties and responsibilities stated
herein, and the Company agrees that it will not represent or imply
that the Escrow Agent, by serving as the Escrow Agent hereunder or
otherwise, has investigated the desirability or advisability in an
investment in the Shares, or has approved, endorsed or passed upon the
merits of the Shares. The Company shall not use the name of the
Escrow Agent in any manner whatsoever in connection with the offer or
sale of the Shares, other than by disclosing this Agreement, the
Escrow Agent's services hereunder, and the Escrow Agent's name and
address to potential investors in the Offering.
9. General.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Georgia.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or
interpretation of this Agreement.
(c) This Agreement sets forth the entire agreement and understanding
of the parties with regard to this escrow transaction and
supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.
(d) This Agreement may be amended, modified, superseded or canceled,
and any of the terms or conditions hereof may be waived, only by
a written instrument executed by each party hereto or, in the
case of a waiver, by the party waiving compliance. The failure
of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right to require
such performance at a later time. No waiver in any one or more
instances by any party of any condition, or of the breach of any
term contained in this Agreement, whether by conduct or
otherwise, shall be deemed to be, or construed as, a further or
continuing waiver of any such condition or breach, or a waiver of
any other condition or of the breach of any other terms of this
Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties hereto
and their respective administrators, successors and assigns. The
Escrow Agent shall be bound only by the terms of this Escrow
Agreement and shall not be bound by or
A-6
<PAGE>
incur any liability with respect to any other agreement or
understanding between the parties except as herein expressly
provided. The Escrow Agent shall not have any duties hereunder
except those specifically set forth herein.
(g) No interest in any part to this Agreement shall be assignable in
the absence of a written agreement by and between all of the
parties to this Agreement, executed with the same formalities as
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
COMPANY:
NBG BANCORP, INC.
By: /s/ William S. Huggins
----------------------
William S. Huggins
President and Chief Executive Officer
ESCROW AGENT:
GEORGIA FIRST BANK, N.A.
By: /s/ H. Randolph Lee, Jr.
------------------------
H. Randolph Lee, Jr.
Acting President
A-7
<PAGE>
APPENDIX "B"
NBG BANCORP, INC.
SUBSCRIPTION AGREEMENT
To: NBG Bancorp, Inc.
P.O. Box 6507
Athens, Georgia 30604
Gentlemen:
You have informed the undersigned that NBG Bancorp, Inc. (the "Company") is
offering up to 800,000 shares of its $1.00 par value per share common stock (the
"Common Stock") at a price of $10.00 per share as described in and offered
pursuant to the Prospectus furnished to the undersigned herewith (the
"Prospectus"). In addition, you have informed the undersigned that the minimum
subscription is 1,000 shares.
1. Subscription. Subject to the terms and conditions hereof, the
undersigned hereby tenders this subscription, together with
payment in United States currency by check, bank draft or money
order payable to "Georgia First Bank, N.A., Escrow Agent for NBG
Bancorp, Inc." (the "Funds"), representing the payment of $10.00
per share for the number of shares of the Common Stock indicated
below.
2. Acceptance of Subscription. It is understood and agreed that the
Company shall have the right to accept or reject this
subscription in whole or in part, for any reason whatsoever. The
Company shall reject this subscription, if at all, in writing
within ten business days after receipt of this subscription. The
Company may reduce the number of shares for which the undersigned
has subscribed, indicating acceptance of less than all of the
shares subscribed on its written form of acceptance.
3. Acknowledgments. The undersigned hereby acknowledges receipt of
a copy of the Prospectus and agrees to be bound by the terms of
this Agreement and the Escrow Agreement.
4. Revocation. The undersigned agrees that once this Subscription
Agreement is accepted by the Company, it may not be withdrawn.
Therefore, until the earlier of the expiration of five business
days after receipt by the Company of this Subscription Agreement
or acceptance of this Subscription Agreement by the Company, the
undersigned may withdraw this subscription and receive a full
refund of the subscription price. The undersigned agrees that,
except as provided in this Section 4, the undersigned shall not
cancel, terminate or revoke this Subscription Agreement or any
agreement of the undersigned made hereunder and that this
Subscription Agreement shall survive the death, disability or
dissolution of the undersigned.
By executing this Subscription Agreement, the undersigned is not waiving any
rights the undersigned may have under federal securities laws, including the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended.
B-1
<PAGE>
Please fill in the information requested below, make your check payable to
"Georgia First Bank, N.A., Escrow Agent for NBG Bancorp, Inc." and mail the
Subscription Agreement, Stock Certificate Registration Instructions, Substitute
Form W-9, and check to the attention of William S. Huggins, President and Chief
Executive Officer, NBG Bancorp, Inc., P.O. Box 6507, Athens, Georgia 30604.
------------------------------------
No. of Shares Subscribed: (Signature of Subscriber)
_________________
------------------------------------
Funds Tendered ($10.00 (Name Please Print or Type)
per share subscribed):
$________________
Date:
-------------------------------
Phone Number:
(Home)
------------------------------
(Office)
-----------------------------
Residence Address:
------------------------------------
------------------------------------
------------------------------------
City, State and Zip Code
------------------------------------
Social Security Number or other
Taxpayer Identification Number
B-2
<PAGE>
STOCK CERTIFICATE REGISTRATION INSTRUCTIONS
Name:
------------------------------------------
Additional Name if Tenant in Common or Joint Tenant:
- -------------------------------------------------------------------------------
Mailing Address:
- -----------------------------
- -----------------------------
- -----------------------------
Social Security Number or other Taxpayer Identification Number:
-------------
Number of shares to be registered in above name(s):
---------------
Legal form of ownership:
___ Individual ___ Joint Tenants with Rights of Survivorship
___ Tenants in Common ___ Uniform Gift to Minors
___ Other___________________
INFORMATION AS TO BANKING INTERESTS
1. As a prospective shareholder, I would be interested in the following
services checked below:
<TABLE>
<CAPTION>
PERSONAL BUSINESS
<S> <C> <C>
(a) Checking Account ____ ____
(b) Savings Account ____ ____
(c) Certificates of Deposit ____ ____
(d) Individual Retirement Accounts ____ ____
(e) Checking Account Overdraft Protection ____ ____
(f) Consumer Loans (auto, etc.) ____ ____
(g) Commercial Loans ____ ____
(h) Equity Line of Credit ____ ____
(i) Mortgage Loans ____ ____
(j) Revolving Personal Credit Line ____ ____
(k) Safe Deposit Box ____ ____
(l) Automatic Teller Machines ____ ____
</TABLE>
2. I would like our new bank to provide the following additional services:
(a)
-----------------------------------
(b)
-----------------------------------
B-3
<PAGE>
Federal Income Tax Backup Withholding
In order to prevent the application of federal income tax backup
withholding, each subscriber must provide the escrow agent with a correct
Taxpayer Identification Number ("TIN"). An individual's social security number
is his or her TIN. The TIN should be provided in the space provided in the
Substitute Form W-9, which is set forth below.
Under federal income tax law, any person who is required to furnish his or
her correct TIN to another person, and who fails to comply with such
requirements, may be subject to a $50 penalty imposed by the Internal Revenue
Service ("IRS").
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of taxes, a refund
may be obtained from the IRS. Certain taxpayers, including all corporations,
are not subject to these backup withholding and reporting requirements.
If the shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, "Applied For" should be written
in the space provided for the TIN on the Substitute Form W-9.
- --------------------------------------------------------------------------------
Substitute Form W-9
Under penalties of perjury, I certify that: (i) The number shown on this
form is my correct Taxpayer Identification Number (or I am waiting for a
Taxpayer Identification Number to be issued to me), and (ii) I am not subject to
backup withholding because: (a) I am exempt from backup withholding; or (b) I
have not been notified by the Internal Revenue Service ("IRS") that I am subject
to backup withholding as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am no longer subject to backup
withholding.
You must cross out item (ii) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or
dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from
the IRS that you are not longer subject to backup withholding, do not cross out
item (ii).
Each subscriber should complete this section.
- --------------------------------- -----------------------------------
Signature of Subscriber Signature of Subscriber
- --------------------------------- -----------------------------------
Printed Name Printed Name
- --------------------------------- -----------------------------------
Social Security or Employer Social Security or Employer
Identification No.: Identification No.:
-------------- ----------------
B-4
<PAGE>
FORM OF ACCEPTANCE
NBG Bancorp, Inc.
P.O. Box 6507
Athens, Georgia 30604
[Date]
To:
----------------
----------------
----------------
Dear Subscriber:
NBG Bancorp, Inc. (the "Company") acknowledges receipt of your subscription
for _____ shares of its $1.00 par value per share Common Stock and your check
for $_________.
The Company hereby accepts your subscription for the purchase of _____
shares of its Common Stock, at $10.00 per share, for an aggregate of
$___________, effective as of the date of this letter.
Your stock certificate(s) representing shares of Company Common Stock duly
authorized and fully paid will be issued to you as soon as practicable after all
subscription funds are released to the Company from the Company's subscription
escrow account with Georgia First Bank, N.A., all as described in the
Subscription Agreement executed by you and in the Company's Prospectus furnished
to you. In the event that (i) the offering is canceled, or (ii) the minimum
number of subscriptions (610,000 shares) is not obtained, or (iii) the Company
shall not have received approval from the Board of Governors of the Federal
Reserve System to become a bank holding company, or (iv) The National Bank of
Georgia (In Organization) shall not have received final charter approval from
the Office of the Comptroller of the Currency and approval for deposit insurance
from the Federal Deposit Insurance Corporation, your subscription funds will be
returned to you, adjusted for net profits from the investment of such funds, if
any, as described in the Company's Prospectus.
If this acceptance is for a lesser number of shares than that number
subscribed by you as indicated in your Subscription Agreement, your payment for
shares of Common Stock in excess of the number of shares accepted hereby will be
refunded to you by mail, without interest, within ten days of the date hereof.
Very Truly Yours,
NBG BANCORP, INC.
By:
-------------------------------------
William S. Huggins
President and Chief Executive Officer
B-5
<PAGE>
================================================================================
Prospective investors may rely only on the information contained in this
prospectus. No one has authorized anyone to provide prospective investors with
information different from that contained in this prospectus. This prospectus
is not an offer to sell nor is it seeking an offer to buy these securities in
any jurisdiction where the offer or sale is not permitted. The information
contained in this prospectus is correct only as of the date of this prospectus,
regardless of the time of the delivery of this prospectus or any sale of these
securities.
------------
TABLE OF CONTENTS
Page
----
Summary................................. 1
Risk Factors............................ 7
A Warning About Forward-Looking
Statements........................... 12
Terms of the Offering................... 13
Plan of Distribution.................... 16
Use of Proceeds......................... 18
Capitalization.......................... 20
Dividends............................... 21
Plan of Operation....................... 22
Proposed Business of NBG Bancorp and
The National Bank of Georgia.......... 24
Management.............................. 36
Executive Compensation.................. 41
Certain Relationships and Related
Transactions.......................... 45
Description of Capital Stock of
NBG Bancorp........................... 45
Important Provisions of NBG Bancorp's
Articles of Incorporation and Bylaws.. 46
Supervision and Regulation.............. 52
Legal Matters........................... 57
Experts................................. 57
Reports to Shareholders................. 57
Additional Information.................. 57
Index to Financial Report............... F-1
Appendix A - Escrow Agreement
Appendix B - Subscription Materials
Until March 5, 2000 (90 days after the date of this prospectus), all dealers
that effect transfers in these securities or trade the common stock, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
800,000 Shares of Common Stock
372,500 Common Stock
Purchase Warrants
[COMPANY LOGO]
_________________
PROSPECTUS
_________________
December 6, 1999
================================================================================
