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As filed with the Securities and Exchange Commission on September 24,1999.
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
NBG BANCORP, INC.
(Name of Small Business Issuer in its Charter)
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Georgia 6711 00-0000000
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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2234 West Broad Street, Athens, Georgia 30606 (706) 355-3122
(Address and Telephone Number of Principal Executive Offices and Principal
Place of Business)
William S. Huggins
NBG Bancorp, Inc.
P.O. Box 6507
Athens, Georgia 30604
(706) 355-3122
(Name, Address, and Telephone Number of Agent for Service)
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Copy to:
Thomas O. Powell, Esq.
Troutman Sanders LLP
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308-2216
Phone (404) 885-3294
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Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to Be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price Per Unit Aggregate Offering Price Registration Fee
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Common Stock, $1.00 par value per share 800,000 $10.00 $8,000,000/(1)/ $2,224
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Warrants to purchase common stock 372,500 N/A/(2)/ N/A/(2)/ N/A/(2)/
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(2) Because no separate consideration will be paid for the warrants, the
registration fee is included in the fee for the Common Stock.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the securities act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
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SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 1999
800,000 Shares of Common Stock
372,500 Common Stock Purchase Warrants
NBG Bancorp, Inc.
A Proposed Bank Holding Company for
The National Bank of Georgia (In Organization)
Common Stock
______________________
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. Bancorp will be the holding
company and sole shareholder of NBG after NBG is organized. Bancorp is offering
a minimum of 610,000 shares and a maximum of 800,000 shares at a price of $10.00
per share. Bancorp is also offering to its organizers 372,500 warrants to
purchase shares of Bancorp common stock. Our executive officers and directors
will be marketing 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 ______________, but Bancorp may extend
it-without notice to subscribers-until _____________, at the latest. 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 Bancorp does not receive subscriptions for 610,000 shares by
_____________, Bancorp will terminate this offering and promptly return all
funds to subscribers, with interest. Bancorp reserves the right to reject all or
part of any subscription for any reason.
Investing in Bancorp common stock involves risks which are described in the
"Risk Factors" section beginning on page 6 of this prospectus.
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Minimum Maximum
Per Share Offering Total
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Public offering price....................... $10.00 $6,100,000 $8,000,000
Proceeds to 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 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 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 __________, 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 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. NBG
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 NBG.
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 BankSouth).
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
NBG 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. NBG'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. NBG 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 our lending and
deposit services, NBG intends to also provide cash management services, safe-
deposit boxes, travelers checks, direct deposit, automatic drafts, and courier
services to commercial customers. NBG 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 NBG. 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 Bancorp's
organization. Thomas Z. Lanier, III, who will serve as Executive Vice
President-Lending of NBG, and Michael R. Carson, who will serve as Executive
Vice President-Operations of NBG, collectively have over 40 years of experience
in banking and are both natives of Georgia. See "Management" (page 33).
The Board of Directors of Bancorp consists of 13 organizers who, if
approved by the Office of the Comptroller of the Currency, will also be the
directors of NBG. 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. Bancorp's directors and executive officers intend to purchase
approximately 372,500 shares of 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 Bancorp and
NBG-will be granted warrants to purchase additional shares of 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 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
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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 14) and "Description of Capital Stock of Bancorp-Organizers' Warrants"
(page 43). We believe our directors' financial interest in Bancorp will
encourage their active participation in growing our franchise.
Business Strategy
Our strategy as an independent bank holding company will be carried out
through the operations and growth of NBG. 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 NBG'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 Bancorp common stock and
372,500 common stock purchase warrants. To
complete this offering, 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 12).
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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 Bancorp common stock issuable upon the
exercise of the common stock purchase warrants.
Offering Price Per Share....................... $10.00
Plan of Distribution........................... Shares of Bancorp common stock will be sold on a
best efforts basis by Bancorp's directors and
executive officers who will receive no
commissions for any sales they make. See "Plan
of Distribution" (page 15).
Use of Proceeds................................ To capitalize NBG, to pay organization, offering
and pre-opening expenses, to improve NBG's main
office and to provide working capital for NBG,
including making loans and other investments.
See "Use of Proceeds" (page 16).
Offering Conditions............................ We must satisfy the following conditions to
complete our offering:
. at least $6,100,000 must be deposited with
Bancorp's escrow agent, Georgia First Bank, N.A.,
Gainesville, Georgia;
. the Board of Governors of the Federal Reserve
System must approve Bancorp's application to
become a bank holding company;
. the Office of the Comptroller of the Currency
must preliminarily approve NBG's charter
application;
. the Federal Deposit Insurance Corporation must
approve NBG's deposit insurance application; and
. 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 12).
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Escrow Arrangements............................ Until we have satisfied all of the offering
conditions, Bancorp will place all subscription
funds in an escrow account with Georgia First.
If we do not meet the offering conditions by
____________, we will return to all subscribers
their funds placed in the escrow account, with
interest.
Once we have satisfied all of the offering
conditions, Georgia First will release all
subscription funds to Bancorp. Any funds
received after this time will not be placed in
escrow, but will be immediately available for use
by us. At this point, subscribers may lose a
portion of their investment if we do not receive
necessary regulatory approvals. Prior to the
release of the funds, Georgia First may invest
the funds in short-term investments as William S.
Huggins, the President of Bancorp, shall decide.
See "Terms of the Offering -- Escrow of
Subscription Funds" (page 13).
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RISK FACTORS
An investment in Bancorp common stock involves a significant degree of
risk. You should not invest in 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.
NBG, which initially will be the sole subsidiary of Bancorp, is in
organization and neither Bancorp, nor NBG, 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 receive regulatory approvals, you could lose all or a portion of
your investment.
If you invest in Bancorp common stock and funds are released from the
escrow account and we incur start-up expenses, but fail to receive required
regulatory approvals, we will seek to dissolve and liquidate. Bancorp would
return to its subscribers all of their funds with interest, less all expenses
incurred by us. We can give you no assurance that our liabilities would not
exceed our assets, in which case, you would lose your entire investment. See
"Terms of the Offering-Failure of Bancorp to Begin Operations" (page 13).
If we do not receive regulatory approvals in a timely manner, it could delay the
date on which NBG 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 NBG's operations
will increase our pre-opening expenses and postpone our realization of potential
revenues. Such a delay will cause our accumulated deficit to increase as a
result of continuing operating expenses, such as salaries and other
administrative expenses, and our lack of revenue.
NBG 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. NBG will incur substantial expenses in establishing itself
as a going concern, and we can give you no assurance that NBG will be profitable
or that future earnings, if any, will meet the levels of earnings prevailing in
the banking industry. Because Bancorp will initially act as the sole
shareholder of NBG, the profitability of Bancorp will depend upon the successful
operation of NBG. See "Plan of Operation" (page 20).
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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 Bancorp and NBG-Business Strategy" (page
25).
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 NBG's daily business operations. Mr. Lanier will be in
charge of NBG's lending operations. Mr. Carson will be the key officer in
charge of NBG'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 33).
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 Bancorp and NBG. The organizers may have interests
that are different from yours as an investor. Our organizers intend to purchase
372,500 shares of 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
Bancorp and NBG" (page 33).
Bancorp intends to grant warrants to our organizers and stock options to some of
NBG's employees which, if exercised, would reduce your percentage ownership in
Bancorp.
Upon completion of the minimum offering, Bancorp will grant to our
organizers warrants to purchase additional shares of Bancorp common stock in
recognition of the financial risks undertaken by them in forming Bancorp and
NBG. 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 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 14) and "Description of Capital Stock of
Bancorp-Organizers' Warrants" (page 43).
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In addition, Bancorp has established an incentive stock option plan which
will allow Bancorp to grant stock options to employees of NBG who are
contributing significantly to the management or operation of the business of
NBG. Under this plan, Bancorp has reserved 70,000 shares of 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 NBG meets established performance goals. See "Executive Compensation-Stock
Option Plan" (page 39). Any future exercise of warrants or options would dilute
your percentage of ownership interest in 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 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, NBG
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 NBG 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 Bancorp and NBG-Market
Opportunities-Competition" (page 24).
Our success will depend significantly upon general economic conditions in the
Athens and Oconee County area.
Since the majority of NBG'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 NBG. 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 Bancorp common stock.
NBG'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, NBG'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, NBG will have a
legal lending limit for unsecured loans of $____________ to any one borrower.
NBG's lower lending limit may discourage potential borrowers who have lending
needs that exceed NBG's limits, which may restrict our ability to grow. NBG may
try to serve the needs of these
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borrowers by selling loan participations to other institutions, but this
strategy may not succeed. See "Proposed Business of Bancorp and NBG-Lending
Services" (page 27).
Rapidly rising or falling interest rates could significantly harm our business.
A rapid increase or decrease in interest rates could significantly harm
NBG's net interest income, capital and liquidity. NBG'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 NBG's earnings, which, in turn, would impact Bancorp's
business. See "Proposed Business of Bancorp and NBG-Asset/Liability
Management" (page 30).
Bancorp's ability to pay dividends is limited and depends on NBG's ability to
pay dividends and NBG does not expect to pay dividends for at least several
years.
Bancorp will initially have no source of income other than dividends it
receives from NBG. Bancorp's ability to pay dividends will therefore depend on
NBG's ability to pay dividends to it, which will be based on NBG's 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 Bancorp and NBG 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, Bancorp does not plan to pay dividends until NBG is
profitable. See "Dividends" (page 19).
The offering price for Bancorp common stock was arbitrarily set by our
organizers and may not accurately reflect the value of an investment in Bancorp
common stock.
Because we were only recently formed and NBG is in the process of being
organized, the public offering price could not be set by referencing historical
measures of NBG's financial performance. Therefore, the public offering price
may not indicate the market price for 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 Bancorp's growth potential and cash flow and earnings prospects.
See "Plan of Distribution-Determination of Offering Price" (page 15).
We do not expect that an active trading market for 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 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 Bancorp
common stock.
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The market price of Bancorp common stock may be volatile.
If a market develops for Bancorp common stock after this offering,
significant market price volatility may be experienced. Factors that may affect
the price of 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 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 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 NBG'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. In particular, legislation and regulations currently proposed in
Congress that would deregulate the banking industry could aversely affect our
business along with that of the entire banking industry by creating additional
competition. We cannot predict the effects of any potential changes, but they
could adversely affect our future operations. See "Supervision and Regulation"
(page 48).
The operation of NBG may in the future require more capital than 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 Bancorp
common stock or other securities. Even if we were able to obtain additional
capital through the issuance of additional shares of 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 Bancorp.
Bancorp's Articles of Incorporation and Bylaws contain provisions which could
deter or prevent takeover attempts by a potential purchaser of Bancorp common
stock that would be willing to pay you a premium for your stock.
Bancorp's Articles of Incorporation and Bylaws contain provisions that may
deter or prevent an attempt to change or gain control of Bancorp. As a result,
you may be deprived of opportunities to sell some or all of your shares of
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
10
<PAGE>
your shares of Bancorp common stock, and flexibility in evaluating acquisition
proposals. See "Important Provisions of Bancorp's Articles of Incorporation and
Bylaws" (page 43).
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," "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. These factors include, among others, risks
associated with:
. starting a new business;
. a potential delay in beginning operations;
. the risk that we will be dissolved if regulatory conditions are not
satisfied;
. our dependence on our directors and key personnel;
. the potential adverse effect of competition;
. interest rate and liquidity risks;
. the potential adverse effect of unpredictable economic conditions;
. potential limitations on growth resulting from low lending limits;
. risks associated with the year 2000; and
. other factors discussed under "Risk Factors."
11
<PAGE>
TERMS OF THE OFFERING
General
Bancorp is offering up to 800,000 shares of its common stock for cash at a
price of $10.00 per share. In addition, Bancorp is offering to our organizers
up to 372,500 warrants to purchase Bancorp common stock. The warrants are
exercisable for a period of ten years, beginning on the first anniversary of
NBG'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 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 Bancorp, and
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
Bancorp's reduction. Once a subscription has been accepted by Bancorp, you may
not withdraw your subscription for any reason. 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 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 Bancorp's book value, net worth or any
other such recognized criteria of value. In determining the offering price of
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 Bancorp common stock, the post-offering market price will equal or exceed
Bancorp's $10.00 offering price.
Conditions of the Offering
This offering will expire at 5:00 p.m. Eastern Time, on __________________,
unless this date is extended by Bancorp. However, the __________________
expiration date may be extended by Bancorp without notice to subscribers for up
to three consecutive 90-day periods, or not later than ________________. This
offering is expressly conditioned upon the fulfillment of the following
conditions on or prior to ___________. The offering conditions, which may not
be waived, are as follows:
. at least $6,100,000 must be deposited with Bancorp's escrow agent,
Georgia First Bank, N.A., Gainesville, Georgia ("Georgia First");
. 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 NBG;
. NBG must receive approval of its deposit insurance application from the
Federal Deposit Insurance Corporation (the "FDIC"); and
. 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, Bancorp will
certify this fact to the escrow agent and the escrow agent will release all
funds, with interest, to Bancorp.
Prior to the release of the funds from the escrow account, the escrow agent
is authorized, upon written instructions from William S. Huggins, Bancorp's
President and Chief Executive Officer, to 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, with maturities not to exceed 90
days. Bancorp will invest all funds obtained after the release of the funds from
the escrow account and before it infuses capital into Bancorp in a similar
manner. Bancorp will use the offering proceeds to purchase all of the capital
stock of NBG and to repay expenses incurred in the organization. See "Use of
Proceeds" (page 16).
If the offering conditions are not met by ______________, 1999, the
escrow agent will promptly return to 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 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 Bancorp withdraws
the funds from the subscription escrow account, all profits and earnings on the
account will belong to 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 subscription
escrow account to Bancorp and investors will become shareholders of Bancorp.
Thereafter, subscribers' funds will be paid directly to 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 Bancorp common stock.
Failure of Bancorp to Begin Operations
The OCC requires that a new national bank obtain its charter and open
for business within 18 months after receiving preliminary approval from the OCC.
The organizers anticipate that NBG will open for business in early 2000.
Because final approval of NBG's charter is conditioned on Bancorp's raising
funds to capitalize NBG at $6,000,000, shares of Bancorp common stock are
expected to be issued before NBG has obtained all of it's final regulatory
approvals. NBG received preliminary approval from the OCC on _____________,
1999. Therefore, if Bancorp issues shares of common stock and the OCC does not
grant final regulatory approval by _____________, 2000, Bancorp will seek
shareholder approval for dissolution and liquidation. Upon liquidation, Bancorp
will promptly return to subscribers all funds, with interest, less all expenses
incurred by us, including the expenses of the offering and the organization and
pre-opening expenses of Bancorp and NBG. Therefore, if either Bancorp or NBG
does not receive final regulatory approval, subscribers whose funds were
originally placed in escrow but became available to Bancorp may lose a portion
of their investment. It is possible that the amount
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<PAGE>
returned to you may be further reduced by amounts paid to satisfy claims of
creditors, as discussed below.
Once Bancorp issues shares of common stock, the offering proceeds will
be considered part of Bancorp's general corporate funds and may be subject to
the claims of creditors of Bancorp, including claims against Bancorp 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 Bancorp begins banking operations. If such an attachment
occurred and it became necessary to return funds to you because of a failure to
obtain all necessary regulatory approvals, the payment process might be delayed.
Further, if it became necessary to pay creditors from the subscription funds,
the payment to you 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
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 Bancorp and NBG" (page 33).
In consideration for assisting in our organization, on the date NBG
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 Bancorp without paying for the warrant shares
initially.
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 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 Bancorp common stock upon completion of this offering.
Each warrant will become exercisable on the first anniversary of the
date on which NBG 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 NBG 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 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 Bancorp-Organizers' Warrants."
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<PAGE>
PLAN OF DISTRIBUTION
General
Bancorp may terminate this offering for any reason at any time during its
pendency for any reason whatsoever. Shares of 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 Bancorp in its sole discretion), through
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, Bancorp may engage sales agents to sell shares on a best efforts
basis. 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 Bancorp common stock, Bancorp will accept or
reject the subscription. Subscriptions not rejected by Bancorp within this ten
day period will be accepted. Once a subscription is accepted by Bancorp, it
cannot be withdrawn by you.
How to Subscribe
If you desire to purchase shares of 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
3. Deliver the completed subscription agreement and check to 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 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 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 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
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<PAGE>
prospects of Bancorp, an assessment of NBG'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 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.
USE OF PROCEEDS
The gross proceeds from the sale of shares of 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 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 Bancorp, after breaking escrow, primarily for
the purchase of all of the issued and outstanding capital stock of NBG. NBG
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 NBG's charter application filed with the OCC, Bancorp
intends to capitalize NBG at $6,000,000. Any remaining funds from this offering
are expected to be held by Bancorp and reserved for general corporate purposes
at the holding company level. 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 Bancorp for the purpose of funding any required additions to the
capital of NBG. Since national banks are regulated with respect to the ratio
that their total assets may bear to their total capital, if NBG 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 NBG'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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The following is a schedule of the estimated use by NBG of the proceeds
from the sale of 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 NBG'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 $_______
was outstanding on the line of credit at _______________, 1999. This loan
has been guaranteed by our organizers, bears interest at the prime rate
minus one as published in the Money Rates section of The Wall Street
Journal, and is due on _________________.
/(2)/ Represents expenses which will be incurred prior to NBG's opening for
business.
/(3)/ Costs of purchasing NBG's permanent facility are based on an agreed upon
sale price with the owner of the facility. See "Proposed Business of
Bancorp and NBG-Facilities."
/(4)/ Represents operating expenses which will be incurred during NBG'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 NBG's first 12 months
of operations. It is presently anticipated that NBG 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 NBG for the expected level of operations.
The expenses described above are estimates only and assume NBG will open
for business in February, 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 NBG during its first year of operation.
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<PAGE>
CAPITALIZATION
The following table shows Bancorp's capitalization as of ___________, 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 Bancorp common stock in this offering.
Upon Bancorp's incorporation, William S. Huggins, the President of NBG and
Bancorp and Chief Executive Officer of NBG, purchased one share of common stock
at the price of $1.00. 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 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 Bancorp's stock
incentive plan. For additional information regarding the number and terms of
those warrants and options, see "Description of Capital Stock of 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 $ $ $
---------------- ------------------ ---------------
Shareholders' Equity Actual And As Adjusted
- -------------------------------------------
Preferred stock, par value $1.00 per share;
800,000 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- $ 5,490,000 $ 9,000,000
Accumulated deficit during development stage $ (______)/(1)/ $ (______)/(2)/ $ (______)/(2)/
Total shareholders' equity $ $ $
================== ==================== =================
</TABLE>
- -----------
/(1)/ This deficit reflects pre-opening expenses incurred through ___________,
1999, consisting primarily of salaries and employee benefits.
/(2)/ The "As Adjusted" accumulated deficit results from estimated
organizational and pre-opening expenses of $_______ incurred through
NBG's target opening date in ________, 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.
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DIVIDENDS
Bancorp will initially have no source of income other than dividends that
NBG pays to it. Bancorp's ability to pay dividends to its shareholders will
therefore depend on NBG's ability to pay dividends to Bancorp. In the future,
Bancorp may begin income-producing operations independent from those of NBG,
which may provide another source of income from which 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 Bancorp and NBG to retain and build capital, the
Boards of Directors of Bancorp and NBG plan to reinvest earnings for the period
of time necessary to support successful operations. As a result, 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 Bancorp and NBG and on other factors
that Bancorp's Board of Directors considers relevant.
Additionally, regulatory authorities may determine, under circumstances
relating to the financial condition of Bancorp or NBG, that the payment of
dividends would be an unsafe or unsound practice and may prohibit dividend
payment. See "Supervision and Regulation-Payment of Dividends."
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<PAGE>
PLAN OF OPERATION
General
Bancorp is in the development stage and will remain in that stage until
this offering is completed. Bancorp was organized on September __, 1999 to
serve as a holding company for NBG. Since it was organized, 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.
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 Statements."
Bancorp's operations from ____________, 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 $_______ was outstanding at _______________,
1999. This loan has been guaranteed by our organizers, bears interest at the
prime rate minus one as published in the Money Rates section of The Wall Street
Journal, and is due on _________________.
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 NBG, 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 _________, amounted to $___________.
Liquidity and Interest Rate Sensitivity
Since Bancorp has been in the development stage, there are no results to
present at this time. Nevertheless, once NBG begins operations, net interest
income, NBG's 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 that repricing opportunities exist for both
assets and liabilities in roughly equal amounts at approximately the same time
intervals. 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 manage actively 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 NBG'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 NBG continues to grow, we will continuously structure its rate
sensitivity position in an effort to hedge against rapidly rising or falling
interest rates. NBG's Asset and Liability Management
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<PAGE>
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. NBG can obtain these funds by converting assets to cash or by
attracting new deposits. NBG'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, NBG's or 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 NBG.
Accordingly, we do not anticipate that it will be necessary to raise additional
funds to operate Bancorp or NBG 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 Bancorp and NBG."
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 NBG 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.
21
<PAGE>
PROPOSED BUSINESS OF BANCORP AND NBG
Background
Bancorp. Bancorp was incorporated as a Georgia corporation on September
__, 1999 to serve as a bank holding company for NBG. Bancorp plans to use
$6,000,000 of the net proceeds of this offering to capitalize NBG. In return,
NBG will issue all of its common stock to Bancorp, and Bancorp will be NBG's
sole shareholder. Initially, NBG will be Bancorp's sole operating subsidiary.
Bancorp will apply to the Federal Reserve and the Georgia Department of Banking
and Finance for approval to capitalize NBG. If these agencies grant the
necessary approvals, 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 NBG's common stock. See
"Supervision and Regulation-General."
Bancorp has been organized to make it easier for NBG to serve its future
customers. The holding company structure will provide flexibility for expanding
NBG'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 Bancorp to raise capital for NBG because
Bancorp will be able to issue securities without the need for prior banking
regulatory approval and the proceeds of debt securities issued by Bancorp can be
invested in NBG as primary capital.
NBG. Our organizers filed applications on behalf of NBG with the OCC and
with the FDIC on June 29, 1999 for authority to organize as a national bank with
federally insured deposits. NBG 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 NBG's receipt of at least $6,000,000 in
capital from Bancorp and upon compliance with other standard conditions expected
to be imposed by the OCC. These conditions are generally designed to
familiarize NBG 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. NBG received preliminary approval of its charter
application from the OCC on ___________, 1999 and received approval of its
application for deposit insurance from the FDIC on _______, 1999, but is
awaiting final approval from the OCC and receipt of a charter.
Market Opportunities
Primary Service Area. NBG '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.
Economic and Demographic Factors. Athens is the key economic focal point
of the Athens Metropolitan Statistical Area ("MSA") as well as 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
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that one of the most important characteristics of the Athens MSA, as well as
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 largest of those sectors, saw the
most rapid growth in the years preceding the Olympics. 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 healthy 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
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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 Bancorp's formation. As a community bank, NBG
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 Bancorp's long-term
success.
Competition. The banking business is highly competitive. NBG 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 Bancorp's primary service
area.
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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)
<S> <C> <C>
Financial Institution
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 NBG's competitors have substantially greater resources and lending
limits than NBG will and some provide other services, such as extensive and
established branch networks and trust services, that NBG does not expect to
provide initially. As a result of these competitive factors, NBG 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 NBG'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 NBG's primary
service area, no other locally-owned community banks are headquartered in Athens
and NBG 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.
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 NBG'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 NBG from other
financial institutions primarily through personal service and strong involvement
in our market.
Business Strategy
Management Philosophy. NBG'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. NBG 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 NBG to serve customers more
efficiently and will aid in NBG's growth and success. Additionally, we believe
that the expansion and growth of NBG's services will be a significant factor in
NBG's success. Accordingly, we will implement the following operating and
growth strategies:
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Operating Strategy. In order to achieve the level of prompt, responsive
service that we believe will be necessary to attract customers and to develop
NBG'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. NBG'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, NBG's principal executive officer, William S. Huggins, has over
30 years of banking experience, NBG's principal lending officer, Thomas
Z. Lanier, III, has over 25 years of banking experience and NBG'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. NBG's Board of Directors will
consist predominately of long time residents of the Athens and Oconee
County area who represent NBG's target markets and will be sensitive and
responsive to the needs of the community. Additionally, NBG'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 NBG as a result of their
experience and involvement.
. Community Involvement. All of NBG'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 NBG and its
products and services.
. Officer and Director Call Program. We intend to implement an active
officer and director call program to promote NBG. The purpose of this
call program will be to visit prospective customers and describe NBG's
products and services.
. Highly Visible Site. NBG'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 NBG's image as a strong competitor.
. Individual Customer Focus. NBG 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, NBG will respond to credit
requests quickly and be more flexible in approving loans based on
collateral quality and personal knowledge of the customer.
. Local Decision Making. NBG'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 NBG to be more responsive to
customer requests and to the needs of customers within the community.
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<PAGE>
. Marketing and Advertising. We plan to promote NBG 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 NBG's
customer base will be a significant factor in NBG's success, we plan to
implement the following growth strategies:
. Capitalize on Trend Toward Consolidation. NBG 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
undeserved 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, NBG 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. NBG'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. NBG 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. NBG is established to generally support the Athens and
Oconee County area. Consequently, NBG will aggressively lend money to
creditworthy borrowers within this limited geographic area. NBG 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,
NBG will also make consumer loans.
NBG intends to maintain a balanced loan portfolio. NBG 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. NBG 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, NBG will maintain an
allowance for loan losses based on, among other things, an evaluation of NBG'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, NBG's management will make various 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 NBG's regulatory
agencies.
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<PAGE>
Loan Approval and Review. NBG'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, an
officer with a higher lending limit or NBG's Loan Committee will determine
whether to approve the loan request. NBG 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 NBG, and the loan
otherwise complies with applicable law.
Lending Limits. NBG'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, NBG will be able to
loan any one borrower a maximum amount equal to either: (i) 15% of NBG'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, NBG's initial lending limit will be
approximately $855,000 for loans not fully secured plus an additional $570,00,
or a total of approximately $1,425,000, for loans that meet the federal
guidelines. NBG 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 NBG's capital increases or decreases as a result of its
earnings or losses, among other reasons. NBG 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 NBG 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. NBG 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.
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 NBG
will make. Many of NBG'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.
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<PAGE>
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, NBG 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. NBG will make commercial real estate loans,
construction and development loans, and residential real estate loans. These
loans include some commercial loans where NBG takes 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.
NBG 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, NBG
may require personal guarantees from the principal owners of the property
supported by a review by NBG'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. NBG will
limit its risk by analyzing borrowers' cash flow and collateral value on an
ongoing basis. NBG 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 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. NBG's residential real estate loans will
consist of residential first and second mortgage loans and residential
construction loans. We 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 NBG'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
29
<PAGE>
from a downturn in the residential real estate market. NBG 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. NBG 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 NBG's loan
portfolio. The terms of these loans will vary by purpose and by type of
underlying collateral, if any. NBG 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. NBG 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.
Investments
In addition to loans, NBG 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 NBG'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 NBG'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 NBG will
adopt. The committee will attempt to maintain a balanced position between rate
sensitive assets and rate sensitive liabilities.
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<PAGE>
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
NBG will establish solid core deposits, including checking accounts, money
market accounts, a variety of certificates of deposit and IRA accounts. To
attract deposits, NBG 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. 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. Bancorp 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. NBG may offer
annuities, mutual funds and other financial services through a third party that
has not yet been chosen. NBG also plans to offer Mastercard(R) and VISA(R)
credit card services through a correspondent bank as an agent for NBG. NBG will
not exercise trust powers during its initial 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.
NBG 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 NBG will initially have only one location.
Marketing and Advertising
NBG'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, NBG will have approximately ten employees and
one part-time employee. We do not expect Bancorp to have any employees who are
not also employees of NBG.
William S. Huggins is the President of Bancorp and will be the President
and Chief Executive Officer of NBG. 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 NBG's senior lending officer. Mr. Lanier has
over 25 years of banking experience, including extensive lending and management
experience.
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Michael R. Carson will be in charge of NBG'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 NBG'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 NBG's primary
service area.
Legal Proceedings
As of the date of this prospectus, there were no material legal proceedings
to which we, NBG or any of our properties were subject.
32
<PAGE>
MANAGEMENT
Proposed Directors and Executive Officers of Bancorp and NBG
The following table sets forth, for the directors and executive officers of
Bancorp, (i) their names, addresses and ages at September 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
- -----------------------------------------------------------------------------------------------------------------------------------
Class I Directors:
(Initial term expiring in 2000)
<S> <C> <C> <C> <C> <C>
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 Vice 10,000 1.6/1.3 10,000 12,853*
210 Waterford Way 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>
33
<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
- ----------------------------------------------------------------------------------------------------------------------------------
Class III Directors:
(Initial term expiring 2002)
<S> <C> <C> <C> <C> <C>
Thomas Z. Lanier, III (47) Director, Executive Vice 22,500 3.7/2.8 22,500 15,263*
240 Oak Bend Drive 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 NBG
achieves performance goals. See "Executive Compensation--Employment
Agreements.
Each person listed above has been a director of Bancorp since September
__, 1999. Directors of Bancorp serve staggered terms, which means that one-
third of the directors will be elected each year at 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. Bancorp's officers are appointed by the Board of
Directors and hold office at the will of the Board. See "Important Provisions
of Bancorp's Articles of Incorporation and Bylaws."
Each person listed above is also a proposed director of NBG. Each of NBG's
proposed directors will, upon approval of the OCC, serve until NBG's first
shareholders' meeting, which will convene shortly after Bancorp receives its
charter. Bancorp, as the sole shareholder of NBG, will nominate each proposed
director to serve as director of NBG at that meeting. After the first
shareholders' meeting, directors of NBG will serve for a term of one year and
will be elected by Bancorp each year at NBG's annual meeting of shareholders.
NBG's officers will be appointed by its Board of Directors and will hold office
at the will of the Board.
34
<PAGE>
John Harold Barrett has been in the construction and development business
in the Southeast and 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 portion 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.
35
<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, 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 for the Athens Regional Commission and is active in many
other charitable organizations.
36
<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 Bancorp the
independent public accountants to be selected to audit Bancorp's and NBG'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 NBG's internal accounting staff. Additionally,
the committee will provide oversight to Bancorp's and NBG'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 Bancorp and NBG, 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 Claude Williams, Jr., and
also will include Robert E. Burton, Michael S. Gautreaux, and Ted R. Ridlehuber.
Loan Committee. NBG's Loan Committee will review any loan request made by
a potential borrower over an established credit threshold for compliance with
NBG'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 Thomas W. Scott, 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 Bancorp and NBG in balancing the
yields and maturities in NBG'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.
37
<PAGE>
EXECUTIVE COMPENSATION
1999 Compensation
The following table shows information for 1999 with regard to compensation
for services rendered in all capacities to 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 21,667/(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 $10,833.33 per month until NBG receives
final regulatory approvals to open. See "--Employment Agreements."
Employment Agreements
Bancorp and NBG 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 NBG, Mr. Lanier's
employment as Executive Vice President-Lending of NBG and Mr. Carson's
employment as Executive Vice President-Operations of NBG. Under the terms of
the agreements, Mr. Huggins will receive a base salary of $130,000 per year, Mr.
Lanier will receive a base salary of $95,000 per year and Mr. Carson will
receive a base salary of $80,000 per year. These salaries have been accruing
since the date NBG's charter application was filed with the OCC (June 29, 1999)
and will continue to do so until NBG receives final regulatory approvals to open
from the OCC and the FDIC. As soon as practicable after NBG receives these
final approvals, NBG 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 Bancorp's
Board of Directors, based on NBG's performance. Additionally, the agreements
provide that Bancorp will grant incentive stock options to purchase a number of
shares of Bancorp common stock also based on NBG'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). Bancorp will also provide an
automobile to Mr. Huggins and country club memberships for Messrs. Huggins,
Lanier and Carson.
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:
38
<PAGE>
. by Bancorp for cause (as defined in the agreements);
. by the employee if Bancorp breaches any material provision of his
agreement; or
. upon employee's death or disability.
If Bancorp or NBG terminates employment without cause or the employee
terminates employment with cause, Bancorp or NBG 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 Bancorp or NBG or soliciting its customers or employees within
the geographic area set forth in the agreement for two years from 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)
Bancorp will have to pay the employee's then-current compensation and benefits
for 12 months after termination.
Director Compensation
The directors of Bancorp and NBG 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. Bancorp has adopted an Incentive Stock Option Plan that provides
Bancorp with the flexibility to grant the stock incentives described in this
section of the prospectus to key employees, officers and directors of Bancorp or
NBG for the purpose of giving them a proprietary interest in, and to encourage
them to remain in the employ of, Bancorp or NBG. Bancorp's Board of Directors
has reserved 70,000 shares of 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 were reserved 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 Bancorp's Audit, Compliance and
Compensation Committee, which is comprised of at least two non-employee
directors appointed by Bancorp's Board of Directors, will administer the plan.
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 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 it may deem necessary or advisable to administer the plan.
The plan permits the Audit, Compliance and Compensation Committee or
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 Bancorp's Board
of Directors, will determine, within the limits of the plan, the number of
shares of 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.
39
<PAGE>
Option Terms. The plan provides for incentive stock options and non-
qualified stock options. The Audit, Compliance and Compensation Committee or
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 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 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 Bancorp's outstanding common
stock. When the incentive stock option is exercised, 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 not be less than 85% of 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, by the delivery of previously owned shares of common
stock, 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 committee may make cash awards designed to cover tax obligations
of employees that result from the receipt or exercise of a stock option.
The Audit, Compliance and Compensation Committee or Bancorp's Board of
Directors, will also determine the term of an option. The term of an incentive
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 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 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 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 Bancorp or NBG, upon a specified date, upon the holder's
death or disability, or upon the occurrence of a change in control of 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 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.
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 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.
40
<PAGE>
Amendment and Termination of the Plan. Bancorp's Board of Directors has
the authority to amend or terminate the plan. Bancorp's Board of Directors is
not required to obtain shareholder approval to amend or terminate 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 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 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 Bancorp common stock and the
amount for which he or she sells the stock. If the participant does not
sell the shares of 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 Bancorp will not get a corresponding deduction. If the participant
sells the shares of 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. If
the participant sells the shares of 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 Bancorp common stock on
the date the option is exercised over the price paid for the stock, and
Bancorp will then be entitled to a corresponding deduction.
Depending upon the time period for which shares of 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 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
Bancorp common stock to 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.
41
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bancorp and NBG may have banking and other business transactions in the
ordinary course of business with directors and officers of Bancorp and NBG,
including members of their families or corporations, partnerships or other
organizations in which these directors and officers have a controlling interest.
If transactions between Bancorp or NBG 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 Bancorp and NBG;
. 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 BANCORP
Common Stock
Bancorp's Articles of Incorporation authorize 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 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 Bancorp common stock to be sold in this offering, were reserved for
issuance upon the exercise of stock options to be issued under Bancorp's
Incentive Stock Option Plan and 372,500 shares of Bancorp common stock were
reserved for issuance upon the exercise of warrants to be issued to our
organizers.
All shares of Bancorp common stock will be entitled to share equally in
dividends from legally available funds, when, as and if declared by Bancorp's
Board of Directors. Upon Bancorp's voluntary or involuntary liquidation or
dissolution, all shares of Bancorp common stock will be entitled to share
equally in all of Bancorp's assets that are available for distribution to the
shareholders. Bancorp does not anticipate paying any cash dividends on Bancorp
common stock in the near future. Each holder of Bancorp common stock will be
entitled to one vote for each share on all matters submitted to shareholders.
Holders of Bancorp common stock will not have any right to acquire authorized
but unissued capital stock of 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 Bancorp
common stock. All shares of Bancorp common stock issued in the offering will be
fully paid and non-assessable.
Preferred Stock
Bancorp's Articles of Incorporation also authorize its Board of Directors
to issue up to 800,000 shares of preferred stock, par value $1.00 per share.
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 Bancorp's Board of Directors. Although Bancorp has no present
plans to issue any preferred stock, the ownership and control of Bancorp by the
holders of the common stock would be diluted if Bancorp were to issue preferred
stock that had voting rights.
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Organizers' Warrants
Our organizers intend to purchase approximately 372,500 shares of 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, Bancorp will issue to our organizers
warrants to purchase additional shares of Bancorp common stock. 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 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 NBG opens for business. Warrants will remain exercisable for the ten
year period following the first anniversary of the date on which NBG 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 Bancorp's or NBG's capital falls below
the minimum level mandated by its primary federal regulator, 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 Bancorp common stock outstanding after the minimum offering and
64% of the outstanding shares after the maximum offering.
IMPORTANT PROVISIONS OF BANCORP'S
ARTICLES OF INCORPORATION AND BYLAWS
Protective Provisions
General. Shareholders' rights and related matters are governed by the
Georgia Business Corporation Code and Bancorp's Articles of Incorporation and
Bylaws. Bancorp's Articles of Incorporation and Bylaws contain protective
provisions that would have the effect of impeding an attempt to change or remove
Bancorp's management or to gain control of Bancorp if a particular transaction
was not supported by 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 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 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.
Although Bancorp's management believes the protective provisions are
beneficial to Bancorp's shareholders, they also may tend to discourage some
takeover bids. As a result, 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, Bancorp
may be able to avoid those expenditures of time and money.
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The protective provisions also may discourage open market purchases by a
potential acquirer. These purchases could increase the market price of 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 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 Bancorp by replacing its Board of Directors and management. Furthermore, the
provisions could make it more difficult for 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 Bancorp's best interests.
The protective provisions contained in Bancorp's Articles of Incorporation
and Bylaws are discussed more fully below.
Preferred Stock. The existence of preferred stock could impede a takeover
of Bancorp without the approval of its Board of Directors. This is because
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 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 Bancorp
common stock and, in certain circumstances, could decrease its market price.
Staggered Terms for Board of Directors. Bancorp's Articles of
Incorporation provide that 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 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 Bancorp's shareholders
to replace a majority of 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. 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
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 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. 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
Bancorp's assets or securities) with an "interested shareholder" (a person
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who beneficially owns 10% or more of 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 Bancorp's voting
shares approves the acquisition.
Fair Price. Similar to the protective provisions relating to business
combinations, 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 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. Bancorp's Articles
of Incorporation provide factors that Bancorp's Board of Directors must consider
in evaluating whether an acquisition proposal made by another party is in the
best interest of Bancorp and its shareholders. The term "acquisition proposal"
refers to any offer of another party:
. to make a tender offer or exchange offer for Bancorp's common stock or
any other equity security of Bancorp;
. to merge or consolidate Bancorp with another corporation; or
. to purchase or otherwise acquire all or substantially all of the
properties and assets owned by Bancorp.
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 Bancorp at the time of the proposal as determined
in a freely negotiated transaction and (ii) to the Board of Directors'
estimate of Bancorp's future value as an independent company at the time
of the proposal;
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. the expected social and economic effects of the transaction on the
employees, customers and other constituents--such as suppliers of goods
and services--of Bancorp and NBG; and
. the expected social and economic effects on the communities within which
Bancorp and NBG operate.
Bancorp's Board of Directors may also consider other relevant factors.
This provision is included in Bancorp's Articles of Incorporation because
Bancorp is charged with providing support to, and being involved with, the
communities it serves. As a result, 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
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, Bancorp's Board of Directors believes it is appropriate also to
consider all other relevant factors. For example, this provision directs
Bancorp's Board of Directors to evaluate what is being offered in relation to
the current value of 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 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. 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 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 Bancorp's Board of Directors, these
provisions will strengthen its position in dealing with any potential offeror
that might attempt to acquire Bancorp through a hostile tender offer. Another
effect of these provisions may be to dissuade Bancorp shareholders who might be
displeased with the Board of Directors' response to an acquisition proposal from
engaging Bancorp in costly litigation. These provisions permit Bancorp's Board
of Directors to determine that an acquisition proposal is not in Bancorp's and
its shareholders' best interest, and 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
Bancorp's Bylaws contain indemnification provisions that provide that
Bancorp's directors and officers, and, in some cases, 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, Bancorp's Bylaws provide that Bancorp must
advance to its insiders reasonable expenses of any claim or proceeding so long
as the insider furnishes Bancorp with a written affirmation of his or her good
faith belief that the applicable standard of conduct has been met
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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 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 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 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.
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.
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. 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. 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
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 Bancorp would have had the power to indemnify
against such liability.
Bancorp is not aware of any pending or threatened action, suit or
proceeding involving any of its insiders for which indemnification from 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
Bancorp under the foregoing provisions, or otherwise, 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.
Limitation of Liability
Bancorp's Articles of Incorporation, eliminate, with certain exceptions,
the potential personal liability of a director for monetary damages to 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 Bancorp business
opportunity;
. an act or omission involving intentional misconduct or a knowing
violation of law;
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. 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, Bancorp included these
types of provisions in its Articles of Incorporation. While Bancorp has not
experienced any problems in locating directors, it could experience difficulty
in the future as its business activities increase and diversify. Bancorp also
adopted liability limiting provisions to enhance its ability to secure liability
insurance for its directors at a reasonable cost. 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 Bancorp to obtain such insurance on terms more favorable
than if they were not included in Bancorp's Articles of Incorporation.
Amendments
Any amendment of the provisions contained in Bancorp's Articles of
Incorporation regarding:
. Bancorp's staggered Board of Directors;
. the ability of 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 Bancorp's
capital stock who are entitled to vote in an election of directors.
Except as may otherwise be required by Georgia law, Bancorp's Board of
Directors may amend any provision of Bancorp's Bylaws by the affirmative vote of
a majority of the entire Board, unless Bancorp's shareholders have adopted,
amended or repealed a particular bylaw provision and, in doing so, have
expressly reserved to Bancorp's shareholders the right of amendment or repeal
therefor. 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 Bancorp then entitled to vote
generally in the election of directors to amend Bancorp's Bylaws.
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 NBG.
General
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, 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.
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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.
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 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
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
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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.
NBG's deposits will be insured by the FDIC to the maximum extent provided
by law. NBG 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 NBG'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
Bancorp is a legal entity separate and distinct from NBG. The principal
sources of Bancorp's cash flow, including cash flow to pay dividends to its
shareholders, are dividends that NBG pays to its sole shareholder, Bancorp.
Statutory and regulatory limitations apply to NBG's payment of dividends to
Bancorp as well as to Bancorp's payment of dividends to its shareholders.
If, in the opinion of the OCC, NBG were engaged in or about to engage in an
unsafe or unsound practice, the OCC could require, after notice and a hearing,
NBG 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 Bancorp and NBG may also be affected by other
factors, such as the requirement to maintain adequate capital above regulatory
guidelines.
Capital Adequacy
Bancorp and NBG will be required to comply with the capital adequacy
standards established by the Federal Reserve in the case of Bancorp and the OCC
in the case NBG. 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.
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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 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.
NBG 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, Bancorp is expected to act as a source of
financial strength for, and to commit resources to support, NBG. This support
may be required at times when, without this Federal Reserve policy, Bancorp
might not be inclined to provide it. In addition, any capital loans by a bank
holding company to NBG will be repaid only after its deposits and certain other
indebtedness are repaid in full. In the event of a bank holding 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.
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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.
Proposed Legislation and Regulatory Action
Because of concerns relating to the competitiveness and the safety and
soundness of the financial services industry, the United States Congress
continues to consider a number of wide-ranging proposals for altering the
structure, regulation, and competitive relationships of the nation's financial
institutions. Among such bills are proposals to prohibit depository
institutions and bank holding companies from conducting certain types of
activities, to subject depository institutions to increased disclosure and
reporting requirements, to alter the statutory separation of commercial and
investment banking, to require federal savings banks to convert to commercial
bank charters, and to further expand the powers of depository institutions, bank
holding companies, and competitors of depository institutions. It cannot be
predicted whether or in what form any of these proposals will be adopted or the
extent to which our business may be affected.
LEGAL MATTERS
Troutman Sanders LLP, Atlanta, Georgia will pass upon the validity of the
shares of common stock offered by this prospectus for Bancorp.
52
<PAGE>
EXPERTS
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, 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
Bancorp common stock is held of record by less than 300 persons.
At any time that 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.
Bancorp's fiscal year ends on December 31. Additionally, Bancorp will also
furnish such other reports as it may determine to be appropriate or as otherwise
may be required by law.
ADDITIONAL INFORMATION
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 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 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 Bancorp, that file electronically with the
Securities and Exchange Commission.
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 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 Bancorp and
information in public files and records maintained by
53
<PAGE>
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.
Bancorp specifically disaffirms those projections for purposes of this
prospectus and cautions you against relying on them for purposes of making an
investment decision.
54
<PAGE>
NBG BANCORP, INC.
(A Development Stage Company)
FINANCIAL REPORT
AUGUST 31, 1999
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
PAGE
----
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
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>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
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 28,313
--------
Total liabilities 56,313
--------
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 (43,199)
--------
Total stockholders' (deficit) (43,199)
--------
Total liabilities and stockholders' (deficit) $ 13,114
========
</TABLE>
See Notes to Financial Statements.
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>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Expenses
Personnel expenses 22,841
Interest 315
Equipment and occupancy expenses 8,831
Filing and application fees 8,115
Other expenses 3,097
--------
43,199
--------
Net loss and deficit accumulated
during the development stage $(43,199)
========
</TABLE>
See Notes to Financial Statements.
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>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
OPERATING ACTIVITIES
Net loss $(43,199)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 294
Increase in accrued expenses 28,313
--------
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
========
</TABLE>
See Notes to Financial Statements.
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 to be 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. However, these fees are not payable unless
final regulatory approval is obtained. Therefore, these fees,
totaling approximately $50,833 at August 31, 1999, have not been
included 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 1,000,000 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
__________, 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, 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 to the Company in the manner specified
by the Company. If, however, any portion of the Escrowed Funds
are not Collected Funds, then the Escrow Agent shall notify the
Company of such fact and shall distribute such funds to the
Company only after such funds become Collected Funds. For
purposes of this Agreement:
(i) 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 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
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 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;
(ii) the term "Collected Funds" shall mean all funds received by
the Escrow Agent which have cleared the normal bank
collection process and are available to the Escrow Agent
hereunder; and
(iii) the term "Closing Date" shall mean the third business day
following the earlier of (i) the date of receipt by you of
Total Receipts aggregating $6,100,000 and executed
Subscription Agreements and copies of written acceptances of
the Company in connection therewith.
(b) If the Escrowed Funds do not, on or prior to the Closing Date,
become deliverable to the Company based on the failure to meet
the conditions described in Paragraph 3(a) of this Agreement, or
if the Company terminates the Offering at any time prior to the
Closing Date and delivers written notice to the Escrow Agent of
such termination, then the Escrow Agent shall return the Escrowed
Funds which are Collected 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 time,
plus interest earned thereon divided
A-3
<PAGE>
amongst the Subscribers according to the number of Shares
subscribed and the amount of time the Subscriber's Subscription
Funds have been held in escrow 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.
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 account will accrue a service charge
of $15.00 per month each month that it holds Escrowed Funds. In
addition, a $20.00 per check fee will be charged if the Escrow Account
has to be refunded due to a failure to complete the 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.
A-4
<PAGE>
(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.
(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 part by reason of this Agreement. The Escrow
Agent shall be entitled to tender into the registry or custody of
any court of competent jurisdiction all money or property in its
hands under the terms of this Agreement, and to file such legal
proceedings as it deems appropriate, and shall thereupon by
discharged from all further duties under this Agreement. Any
such legal action may be brought in any such court as the Escrow
Agent shall determine to have jurisdiction thereof. In
connection with such dispute, the Company shall indemnify the
Escrow Agent against its court costs and reasonable attorney's
fees incurred.
(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:
A-5
<PAGE>
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
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.
455 Jesse Jewell Parkway
Gainesville, Georgia 30501-3640
Attention: Perry Hendrix, President
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.
A-6
<PAGE>
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties hereto
and their respective administrators, successors and assigns. The
Escrow Agent shall be bound only by the terms of this Escrow
Agreement and shall not be bound by or incur any liability with
respect to any other agreement or understanding between the
parties except as herein expressly provided. The Escrow Agent
shall not have any duties hereunder except those specifically set
forth herein.
(g) No interest in any part to this Agreement shall be assignable in
the absence of a written agreement by and between all 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: _____________________
William S. Huggins
President and Chief Executive Officer
ESCROW AGENT:
GEORGIA FIRST BANK, N.A.
By: _____________________
Perry Hendrix
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 _____ 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 10 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 10 days of the date hereof.
Very Truly Yours,
NBG BANCORP, INC.
By:
--------------------------------------
William S. Huggins
President and Chief Executive Officer
B-5
<PAGE>
(This page intentionally left blank)
<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................................... 6
Forward-Looking Statements..................... 11
Terms of the Offering.......................... 12
Plan of Distribution........................... 15
Use of Proceeds................................ 16
Capitalization................................. 18
Dividends...................................... 19
Plan of Operation.............................. 20
Proposed Business of Bancorp and NBG........... 22
Management..................................... 33
Executive Compensation......................... 38
Certain Relationships and Related
Transactions................................. 42
Description of Capital Stock of Bancorp........ 42
Important Provisions of Bancorp's Articles of
Incorporation and Bylaws..................... 43
Supervision and Regulation..................... 48
Legal Matters.................................. 52
Experts........................................ 53
Reports to Shareholders........................ 53
Additional Information......................... 53
Index to Financial Statements.................. F-1
Appendix A -- Escrow Agreement
Appendix B -- Subscription Materials
------------
Until ____________, 1999 (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
372,500 Common Stock
Purchase Warrants
NBG BANCORP, INC.
A Proposed Bank Holding Company
for
THE NATIONAL BANK OF GEORGIA
(In Organization)
Common Stock
_________________
PROSPECTUS
_________________
____________, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Consistent with the applicable provisions of the laws of Georgia, the
Registrant's Bylaws provide that the Registrant shall have the power to
indemnify its directors, officers, employees and agents against expenses
(including attorneys' fees) and liabilities arising from actual or threatened
actions, suits or proceedings, whether or not settled, to which they become
subject by reason of having served in such role if such director, officer,
employee or agent acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Registrant and,
with respect to a criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. Advances against expenses shall be
made so long as the person seeking indemnification agrees to refund the advances
if it is ultimately determined that he or she is not entitled to
indemnification. A determination of whether indemnification of a director,
officer, employee or agent is proper because he or she met the applicable
standard of conduct shall be made (i) by the Board of Directors of the
Registrant, (ii) in certain circumstances, by independent legal counsel in a
written opinion or (iii) by the affirmative vote of a majority of the shares
entitled to vote.
In addition, Article 11 of the Registrant's Articles of Incorporation,
subject to certain exceptions, eliminates the potential personal liability of a
director for monetary damages to the Registrant and to the shareholders of the
Registrant for breach of a duty as a director. There is no elimination of
liability for (i) a breach of duty involving appropriation of a business
opportunity of the Registrant, (ii) an act or omission involving intentional
misconduct or a knowing violation of law, (iii) a transaction from which the
director derives an improper material tangible personal benefit or (iv) as to
any payment of a dividend or approval of a stock repurchase that is illegal
under the Georgia Business Corporation Code. The Articles of Incorporation do
not eliminate or limit the right of the Registrant or its shareholders to seek
injunctive or other equitable relief not involving monetary damages.
Item 25. Other Expenses Of Issuance And Distribution.
Estimated expenses, other than underwriting discounts and commissions, of
the sale of the Registrant's Common Stock, $1.00 par value per share, are as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................................ $ 3,260
Blue Sky Fees and Expenses......................................................... 8,740
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.......................................................................... $71,500
=======
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
On September __, 1999, the Registrant issued to William S. Huggins, in a
private placement, one share of the Registrant's Common Stock, $1.00 par value
per share, for an aggregate price of $1.00 in connection with the organization
of the Company. The sale to Mr. Huggins was exempt from registration under the
Securities Act of 1933, as amended (the "Act") pursuant to Section 4(2) of the
Act because it was a transaction by an issuer that did not involve a public
offering.
II-1
<PAGE>
Item 27. Exhibits.
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation
3.2 Bylaws*
4.1 Specimen Common Stock Certificate*
4.2 See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining rights of holders of the Common
Stock
4.3 Form of Organizer Warrant Agreement*
5.1 Legal Opinion of Troutman Sanders LLP*
10.1 Letter Agreement for purchase of main office property dated June 1,
1999*
10.3 Employment Agreement, dated __________, 1999, by and among The
National Bank of Georgia (In Organization), NBG Bancorp, Inc. and
William S. Huggins*
10.4 Employment Agreement, dated __________, 1999, by and among The
National Bank of Georgia (In Organization), NBG Bancorp, Inc. and
Thomas Z. Lanier, III*
10.5 Employment Agreement, dated __________, 1999, by and among The
National Bank of Georgia (In Organization), NBG Bancorp, Inc. and
Michael R. Carson*
10.6 Loan Agreement between NBG Bancorp, Inc. as Borrower, Georgia First
Bank, N.A. as Lender, and Organizers as Guarantors*
10.7 NBG Bancorp, Inc. 1999 Stock Incentive Plan*
10.8 Form of NBG Bancorp, Inc. Incentive Stock Option Award*
10.9 Escrow Agreement, dated as of __________, 1999, by and between NBG
Bancorp, Inc. and Georgia First Bank, N.A. (included as Appendix A to
the prospectus and incorporated by reference herein)
10.10 Form of Organizer Warrant Agreement (contained in Exhibit 4.3)
21.1 List of Subsidiaries*
23.1 Consent of Mauldin & Jenkins, LLC
23.2 Consent of Troutman Sanders LLP (contained in Exhibit 5.1)
24.1 Power of Attorney (included in the signature page to this
Registration Statement)
II-2
<PAGE>
27.1 Financial Data Schedule (for SEC use only)
99.1 Form of Subscription Agreement (included as Appendix B to the
prospectus and incorporated by reference herein)
- -------------------
*To be filed by Amendment
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes as follows:
(a)(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities being registered that remain unsold at the end of the
offering.
II-3
<PAGE>
The Registrant hereby undertakes as follows:
(b)(1) For determining any liability under the Securities Act, to treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant under Rule 424(b)(1), or (4) or
497(h) under the Securities Act as part of this Registration Statement as
of the time the Commission declared it effective.
(2) For determining any liability under the Securities Act, to treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration
Statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Athens, State of Georgia, on September 23, 1999.
NBG BANCORP, INC.
/s/ William S. Huggins
----------------------
William S. Huggins
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William S. Huggins and Thomas Z. Lanier, III, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
and substitution and resubstitution for him, in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises as fully and to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
/s/ John Harold Barrett Director September 23, 1999
- ---------------------------------
John Harold Barrett
/s/ Jack Lee Barton Director September 23, 1999
- ---------------------------------
Jack Lee Barton
/s/ Robert E. Burton Director September 23, 1999
- ---------------------------------
Robert E. Burton
/s/ Michael R. Carson Executive Vice President and September 23, 1999
- --------------------------------- Director
Michael R. Carson (principal financial and
accounting officer)
/s/ Michael Sidney Gautreaux Director September 23, 1999
- ---------------------------------
Michael Sidney Gautreaux
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Ronald Lewis Hill Director September 23, 1999
- ---------------------------------
Ronald Lewis Hill
/s/ William S. Huggins President and Chief Operating September 23, 1999
- --------------------------------- Officer and Director
William S. Huggins (principal executive officer)
/s/ Henry D. Joiner Director September 23, 1999
- ---------------------------------
Henry D. Joiner
/s/ Thomas Z. Lanier, III Executive Vice President and September 23, 1999
- --------------------------------- Director
Thomas Z. Lanier, III
/s/ Ted Ruff Ridlehuber Director September 23, 1999
- ---------------------------------
Ted Ruff Ridlehuber
/s/ Thomas Wells Scott Director September 23, 1999
- ---------------------------------
Thomas Wells Scott
/s/ Tommy Edward Warner Director September 23, 1999
- ---------------------------------
Tommy Edward Warner
/s/ Claude Williams, Jr. Director September 23, 1999
- ---------------------------------
Claude Williams, Jr.
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ -----------------------
3.1 Articles of Incorporation
23.1 Consent of Mauldin & Jenkins, LLC
27.1 Financial Data Schedule
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
NBG BANCORP, INC.
I.
The name of the corporation is NBG Bancorp, Inc. (the "Corporation").
II.
The Corporation is organized for the following purpose or purposes:
To act as a bank holding company and, to the extent permitted under
applicable federal and state laws, now or hereafter existing, to engage in such
business as related to banks and to bank holding companies and their activities;
To acquire, own, hold, sell, exchange, assign, transfer, create security
interests in, pledge or otherwise dispose of shares, or voting trust
certificates or depository receipts for shares, or capital stock of, or any
bonds, notes, debentures or other evidence of indebtedness, options, warrants or
other securities issued by any other business of any lawful character,
including, but not limited to, banks and other businesses providing goods or
services related to banking;
To acquire and hold other investment assets and to engage in any lawful
activities related thereto;
To acquire, own interest in and otherwise participate in and exercise
ownership rights in joint ventures, partnerships, limited partnerships, trusts,
corporations, unincorporated associations and other entities for the furtherance
of all corporate activities;
To borrow and to lend money and to buy, sell, guarantee and otherwise deal
in the obligations of others and conduct financing, brokerage, and discount and
factoring businesses in connection with the foregoing or otherwise;
In general, to carry on any other lawful business whatsoever, and to have,
enjoy and exercise all the rights, powers and privileges which are now or which
may hereafter be conferred upon corporations organized under the Georgia
Business Corporation Code, as amended (the "Code").
<PAGE>
III.
The Corporation shall have authority to issue 11,000,000 shares of capital
stock, which shall be divided into classes and shall have the following
designations, preferences, limitations and relative rights:
A. Common Stock. One class shall consist of 10,000,000 shares of common
stock of $1.00 par value per share, designated "Common Stock." The holders of
Common Stock shall be entitled to elect the members of the Board of Directors of
the Corporation, and such holders shall be entitled to vote as a class on all
matters required or permitted to be submitted to the shareholders of the
Corporation.
B. Preferred Stock. One class shall consist of 1,000,000 shares of
preferred stock of $1.00 par value per share, designated "Preferred Stock." The
Board of Directors of the Corporation shall be empowered to divide any and all
shares of the Preferred Stock into series and to fix and determine the relative
rights and preferences of the shares of any series so established. Before any
shares of Preferred Stock of any particular series shall be issued, the Board of
Directors of the Corporation shall fix and determine, and is hereby expressly
empowered to fix and determine, in the manner provided by law, the following
provisions of the shares of such series: (i) the distinctive designation of such
series and the number of shares which shall constitute such series, which number
may be increased (except where otherwise provided by the Board of Directors of
the Corporation in creating such series) or decreased (but not below the number
of shares thereof then outstanding) from time to time by like action of the
Board of Directors of the Corporation; (ii) the annual rate of dividends payable
on shares of such series, whether dividends shall be cumulative and conditions
upon which and the date when such dividends shall be accumulated on all shares
of such series issued prior to the record date for the first dividend of such
series; (iii) the time or times, if any, when the price or prices at which
shares of such series shall be redeemable at the option of the holder or of the
Corporation and the sinking fund provisions, if any, for the purchase or
redemption of such shares; (iv) the amount payable on shares of such series in
the event of any liquidation, dissolution or winding up of the affairs of the
Corporation and whether all or a portion is to be paid before any amount is paid
on Common Stock; (v) the rights, if any, of the holders of shares of such series
to convert such shares into, or exchange such shares for, shares of Common Stock
or shares of any other series of Preferred Stock and the terms and conditions of
such conversion or exchange; and (vi) whether the shares of such series have
voting rights and the extent of such voting rights, if any.
The Board of Directors of the Corporation shall have the power to
reclassify any unissued shares of any series of Preferred Stock from time to
time by setting or changing the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption, including but not limited to, but subject to the
limitations described in, the above provisions.
Any action by the Board of Directors of the Corporation in authorizing the
issuance of Preferred Stock and fixing and determining the provisions thereof is
hereby ratified and approved.
<PAGE>
IV.
The street address of the initial registered office of the Corporation is
2234 West Broad Street, Athens, Georgia 30606. The initial registered office of
the Corporation is located in Clarke County. The initial registered agent of
the Corporation at such office is William S. Huggins.
V.
The mailing address of the initial principal office of the Corporation is
2234 West Broad Street, Athens, Georgia 30606.
VI.
A. Except as otherwise fixed by or pursuant to the provisions of these
Articles of Incorporation relating to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be fixed from time to time by
resolution of the Board of Directors; provided, however, that the number of
-------- --------
directors fixed by the Board of Directors shall not be less than five or more
than 25.
B. The Board of Directors of the Corporation shall be divided into three
classes, as nearly equal in number as possible, with the term of office of the
first class of directors to expire at the annual meeting of shareholders to be
held in 2000, the term of office of the second class of directors to expire at
the annual meeting of shareholders to be held in 2001, and the term of office of
the third class of directors to expire at the annual meeting of shareholders to
be held in 2002, with each member of each class to hold office, until his
successors are elected and qualified. At each annual meeting of shareholders,
and except as otherwise so fixed by or pursuant to the provisions of these
Articles of Incorporation relating to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, the
successors of the class of directors whose terms expire at that meeting shall be
elected to hold office for a term expiring at the annual meeting of shareholders
held in the third year following the year of their election.
C. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
number of directors or any vacancies occurring in the Board of Directors of the
Corporation resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled by the affirmative vote of a
majority of the remaining directors then in office, although less than a quorum
of the Board of Directors, or by the sole remaining director. A director so
chosen shall hold office until the next annual meeting of shareholders. No
decrease in the number of directors constituting the Board of Directors of the
Corporation shall shorten the term of any incumbent director.
<PAGE>
D. Notwithstanding the foregoing provisions of this Article VI, any
director whose term of office has expired shall continue to hold office until
his successor shall be elected and qualified.
E. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any director, or the entire Board of Directors of the
Corporation, 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
capital stock of the Corporation then entitled to vote generally in the election
of directors. The holder of each share of capital stock entitled to vote
thereon shall be entitled to cast the same number of votes as the holder of such
shares is entitled to cast generally in the election of each director.
F. Notwithstanding any other provisions of these Articles of Incorporation
or the Bylaws of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws of the Corporation), 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 capital stock of the Corporation then entitled to vote generally
in the election of directors shall be required to amend, alter, change or
repeal, or to adopt any provision as part of these Articles of Incorporation
inconsistent with, this Article VI. The holder of each share of capital stock
entitled to vote thereon shall be entitled to cast the same number of votes as
the holder of such shares is entitled to cast generally in the election of each
director.
VII.
The name and address of the incorporator of the Corporation are:
Thomas O. Powell
Troutman Sanders LLP
Bank of America Plaza
600 Peachtree Street, NE, Suite 5200
Atlanta, Georgia 30308-2216
VIII.
The fair price requirements contained in the Code (O.C.G.A. Sections 14-2-
1110 through 14-2-1113) shall apply to the Corporation.
IX.
The requirements regarding business combinations with interested
shareholders contained in the Code (O.C.G.A. Sections 14-2-1131 through 14-2-
1133) shall apply to the Corporation.
<PAGE>
X.
A. The Board of Directors of the Corporation, when evaluating any offer of
another individual, firm, corporation or other entity ("Person") (i) to make a
tender or exchange offer for any equity security of the Corporation, (ii) to
merge or consolidate the Corporation with such other Person, or (iii) to
purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation (such offers individually referred to as an
"Acquisition Proposal"), shall, in connection with the exercise of its business
judgment in determining what is in the best interest of the Corporation and its
shareholders, give due consideration to all relevant factors, including without
limitation, the consideration being offered in the Acquisition Proposal in
relation to the then-current market price of the Corporation's stock, but also
in relation to the then-current value of the Corporation in a freely negotiated
transaction and in relation to the Corporation's Board of Directors' then-
estimate of the future value of the Corporation as an independent entity, the
social and economic effects on the employees, customers, suppliers, and other
constituents of the Corporation and on the communities in which the Corporation
operates or is located and the desirability of maintaining independence from any
other business or business entity; provided, however, that this Article X shall
-------- -------
be deemed solely to grant discretionary authority to the Corporation's Board of
Directors and shall not be deemed to provide any constituency any right to be
considered.
B. If the Corporation's Board of Directors determines that an Acquisition
Proposal should be rejected, it may take any lawful action to accomplish its
purpose including, without limitation, any or all of the following: advising the
Corporation's shareholders not to accept the Acquisition Proposal, litigation
against the offeror, filing complaints with governmental and regulatory
authorities, acquiring the Corporation's securities, selling or otherwise
issuing authorized but unissued securities or treasury stock or granting options
with respect thereto, acquiring an unrelated entity to create an antitrust or
other regulatory problem for the offeror and soliciting a more favorable offer
from another individual or entity.
C. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article X, unless such amendment,
in addition to receiving any shareholder vote or consent required by law, shall
receive the affirmative vote or consent of the holders of 66 2/3% of the
outstanding shares of each class of stock of the Corporation entitled to vote in
elections of directors.
XI.
A. No director of the Corporation shall be liable to the Corporation or
its shareholders for monetary damages for any action taken, or any failure to
take any action as a director; provided, however, that to the extent required by
-------- -------
applicable law, this Article XI shall not eliminate or limit the liability of a
director (i) for any appropriation, in violation of his duties, of any business
opportunity of the Corporation, (ii) for acts or omissions which involve
intentional misconduct or a knowing violation of law, (iii) for the types of
liability set forth in Section 14-2-832 of the Code, or (iv) for any transaction
from which the director derived an improper personal benefit. If applicable law
is amended to authorize corporate action further eliminating or limiting the
liability of directors, then the liability of each director of the
<PAGE>
Corporation shall be eliminated or limited to the fullest extent permitted by
applicable law, as amended. Neither the amendment or repeal of this Article XI,
nor the adoption of any provision of these Articles of Incorporation
inconsistent with this Article XI, shall eliminate or reduce the effect of this
Article XI in respect of any acts or omissions occurring prior to such
amendment, repeal or adoption of an inconsistent provision.
B. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article XI, unless such
amendment, in addition to receiving any shareholder vote or consent required by
law, shall receive the affirmative vote or consent of the holders of 66 2/3% of
the outstanding shares of each class of stock of the Corporation entitled to
vote in elections of directors.
XII.
Except as otherwise specifically provided herein, these Articles of
Incorporation may be amended, altered, changed or repealed by the affirmative
vote or consent of the holders of at least 50% of the shares of each class of
stock of the Corporation entitled to vote in elections of directors.
XIII.
Should any provision of these Articles of Incorporation, or any clause
hereof, be held to be invalid, illegal or unenforceable, in whole or in part,
the remaining provisions and clauses of these Articles of Incorporation shall
remain valid and fully enforceable.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation on September 22, 1999.
/s/ Thomas O. Powell
------------------------
Thomas O. Powell
<PAGE>
EXHIBIT 23.1
CONSENT OF MAULDIN & JENKINS, LLC
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated September 8, 1999, accompanying the financial
statements as of and for the period ended August 31, 1999 contained in the
Registration Statement on Form SB-2 of NBG Bancorp, Inc. (the "Registration
Statement") and the Prospectus constituting a part thereof (the "Prospectus").
We consent to the use of the aforementioned report in the Registration Statement
and Prospectus, and to the use of our name as it appears under the caption
"Experts."
/s/ MAULDIN & JENKINS, LLC
- --------------------------
September 24, 1999
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