PROSPECTUS
Vision Bancshares, Inc.
1,000,000 Shares of Common Stock
Purchase Price of $10.00 per Share
This prospectus describes an offer by Vision Bancshares, Inc.
of shares of its common stock at a purchase price of $10 per share.
Vision Bancshares is being organized as a bank holding company for
Vision Bank in Gulf Shores, Alabama. Vision Bank is also being
organized as a new bank. Thus, your purchase of the shares will
represent an investment in a start-up banking venture.
SEE "RISK FACTORS" AT PAGE 5 FOR A DISCUSSION OF THE MATERIAL
RISKS THAT YOU SHOULD CONSIDER BEFORE YOU INVEST.
Offering Price Per Minimum Proceeds to Vision Bancshares
Share.................$10.00 if 800,000 shares are sold...$8.0 million
Selling Discounts or Maximum Proceeds to Vision Bancshares
Commissions......... $ 0 if 1,000,000 shares are sold....$10 million
No public market currently exists for our shares and no public
market is expected to develop. The offering price may not reflect
the value of our shares after the offering.
Our address and telephone number are: 2201 West 1st Street,
Gulf Shores, Alabama 36542; (334) 967-4212.
The minimum purchase per purchaser is 100 shares and the
maximum purchase allowed is 25,000 shares. Funds will be placed in
an escrow account with an unaffiliated bank until the minimum of
800,000 shares has been sold. The offering will terminate no later
than March 31, 2000.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense. The shares offered by this prospectus are not deposits and
are not insured by the Federal Deposit Insurance Corporation or any
other governmental agency.
The date of this prospectus is December 3, 1999
<PAGE>
SUMMARY
The following gives you a brief description of some matters
that are more fully described in other parts of this prospectus.
You should read this prospectus in full before deciding to invest
in the shares.
Vision Bancshares. . . . . Vision Bancshares is an Alabama corporation formed in
1999 to be a bank holding company for Vision Bank.
Vision Bancshares will file reports with the
Securities and Exchange Commission for fiscal
year 1999. After December 31, 1999, Vision
Bancshares will be required to file such
reports for a fiscal year only if it has 300
or more shareholders at the beginning of such
fiscal year.
Vision Bank. . . . . . . . We expect Vision Bank to commence operations in
January, 2000. Vision Bank will operate as a
community bank, emphasizing prompt
personalized customer service to individuals
and businesses located in Baldwin County, Alabama.
We plan to offer a broad array of competitively
priced products and services including:
* demand deposits
* regular savings accounts
* money market deposits
* certificates of deposit
* individual retirement accounts
* safe-deposit boxes and
* commercial, consumer and personal loans
J. Daniel Sizemore will serve as chairman and
chief executive officer of Vision Bank. Mr.
Sizemore has 20 years of banking experience.
Regulatory Approvals. . . The directors of Vision Bancshares
and Vision Bank consist of 15
persons. The organizers of Vision
Bank, which consist of 14 of these
15 persons, have made or will make
the following regulatory
applications to:
* the Alabama Banking Department to
organize and incorporate Vision Bank
under Alabama law;
* the Federal Deposit Insurance
Corporation to become an insured bank
under the Federal Deposit Insurance Act;
and
* the Board of Governors of the Federal
Reserve System for permission for Vision
Bancshares to become a bank holding
company under federal law.
Issuance of the shares offered by this
prospectus are subject to all of these
regulatory approvals.
The Offering. . . . . . . Shares to be Sold. Vision Bancshares is
offering a minimum of 800,000 shares of its
common stock, $1.00 par value per share, at a
price of $10.00 per share. The directors of
Vision Bancshares intend to acquire an aggregate
of at least 422,700 shares at an aggregate
price of $4,227,000 in the offering.
Use of Proceeds. If the minimum number of
shares are sold, Vision Bancshares will
receive proceeds of $8,000,000, before
payment of expenses of the offering. We
estimate expenses to be $70,980.
Vision Bancshares will invest $7,500,000 of
the total minimum proceeds as capital in
Vision Bank. Vision Bancshares will retain
approximately $500,000 as working capital for
Vision Bancshares, before deducting expenses
associated with the offering.
Increase in Shares. At any time prior to
termination of the offering, Vision
Bancshares may, at its discretion, increase
this offering by any amount up to an
additional 200,000 shares. An increase could
bring the total maximum number of shares sold
in this offering to 1,000,000 shares
representing $10,000,000 of total proceeds.
The additional proceeds of up to $2,000,000
will be retained by Vision Bancshares for
working capital, but could be invested in
Vision Bank, if needed.
Purchase Limits. There is a minimum purchase
of 100 shares in the offer representing a
minimum purchase price of $1,000. No person
may purchase more than 25,000 shares, except
that this limit does not apply to the
proposed directors. Vision Bancshares may
reject subscriptions for shares for any
reason. The offering will terminate upon the
earlier to occur of (i) Vision Bancshares's
receipt of a number of subscriptions that
Vision Bancshares deems sufficient, assuming
subscriptions for at least 800,000 shares
have been received; (ii) cancellation of the
offering by Vision Bancshares; or (iii) March
31, 2000.
Commissions. J. Daniel Sizemore is acting as
agent for Vision Bancshares in the offering.
Mr. Sizemore will not be paid any direct or
indirect remuneration for soliciting any
purchaser of shares. Vision Bancshares has
not hired a securities broker-dealer or
underwriter to sell the shares and does not
plan to do so.
Other Terms. Vision Bancshares may decline
any subscription, and cancel accepted
subscriptions, until all required regulatory
approvals have been received. Vision
Bancshares will issue the shares that have
been properly subscribed, paid for and
accepted promptly after the receipt of all
required regulatory approvals.
Escrow. Subscription funds will be placed in
escrow with an unaffiliated bank until the
minimum number of shares has been sold.
Cautionary Statement
About Forward-Looking
Statements. . . . . . . . This prospectus uses certain forward-looking
statements about the financial projections,
proposed operations and business of Vision
Bancshares. The words "estimate," "project,"
"intend," "anticipate," "expect," "believe" and
similar expressions identify forward-looking
statements. These forward-looking statements
are subject to risks and uncertainties that could
cause actual results to differ materially from
those contemplated in such statements. Because
forward-looking statements involve risks
and uncertainties, there are important factors
that could cause actual results to differ
materially from those expressed or implied by
the forward-looking statements. Those factors
are risks associated with starting a new business,
a potential delay in beginning operations, our
dependence on our directors and key
personnel, the potential adverse effect of
competition, interest rate 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" at page 5.
RISK FACTORS
Any investment you make in the shares offered by this
prospectus will carry a number of risks. In addition to the
information elsewhere in this prospectus, you should pay close
attention to the following:
Because we are a new business enterprise, we have no operating
history that could provide you a basis upon which to assess
either our past or our future performance.
Vision Bancshares and Vision Bank will be newly-formed.
This means they will be subject to all the risks incident to a
new business, including the absence of any history of operations
and performance. Vision Bancshares will have no significant on-
going operations and will act primarily as the parent company of
Vision Bank. Thus, the success of Vision Bancshares will depend
solely on the success of Vision Bank. A new bank generally
encounters problems, expenses and difficulties as a start-up
business. In particular, our Bank will have to attract deposits
and loan business, and many customers who make deposits with or
obtain loans from Vision Bank may have to decide to move their
business from other banks in the area. As a result of these
factors, we do not expect Vision Bank to make a profit in its
first year of operation, and because Vision Bank is a start-up
business, we can make no predictions about future profits.
The banking business involves risks over which management has
little, if any, direct control.
The banking business is subject to risks that are part of
the business of banking and over which management has little
control. These risks are:
* Loan Losses - Making loans involves the risk that loans
will not be repaid by the borrower. Vision Bank will
reserve for potential loan losses, but there is no
precise method of predicting loan losses and reserves
could be insufficient to absorb losses.
* Changes in Interest Rates - Changes in interest rates,
especially increasing rates, can have a negative impact
on profitability, especially if loans made at lower
rates are long-term loans.
* Asset/Liability Management - Vision Bank's
profitability can be affected by the spread between its
interest income and interest expense. If interest
expense is greater than interest income, or if interest
expense increases at a rate higher than interest
income, profitability could be affected negatively.
Because we will be significantly smaller than the majority of our
competitors, we may lack the financial and technological
resources to compete successfully.
Banking is a highly competitive business. Vision Bank will
compete for customers and employees with banks that are more
established as well as with other financial and depository
institutions. Many of these institutions have much greater
financial resources and experience. The banking business is
becoming more dependent on technology, and many customers of
banks are utilizing new ways to conduct their banking business
such as through the use of personal computers and the Internet.
This technology is enabling financial institutions to reach
potential customers in geographic areas and in ways not
previously served by these institutions. In addition,
legislation recently passed by Congress will permit banks and
bank holding companies to acquire and operate securities firms,
insurance companies, and other businesses in the financial
services industry. This legislation may be particularly helpful
to larger banks. We believe there is a need for an independent,
locally-owned bank in Vision Bank's proposed market area. We
also believe that Vision Bank will have the benefit of
experienced management. Nevertheless, our Bank may not be able
to compete successfully or profitably with other financial
institutions.
Because we are a start-up corporation, we will not pay dividends
for the foreseeable future.
As a start-up corporation, it is not likely that Vision
Bancshares or Vision Bank will achieve in its early years of
operations a level of profitability that would justify or allow
the payment of dividends. We believe the following factors will
affect Vision Bancshares's ability to pay dividends in the near
future:
* Vision Bancshares will not likely generate any
significant earnings on its own, and it will depend
upon the payment of dividends by Vision Bank if
it is to pay dividends on the shares.
* We expect that for at least the first three years of
operation all earnings will be retained by Vision Bank
for Vision Bank's future needs.
* State and federal banking laws restrict the payment of
dividends by banks, and in no event may dividends be
paid by Vision Bank during the first three years of
operation without the approval of the Alabama Banking
Department and the Federal Deposit Insurance
Corporation.
Because our offering price has been determined arbitrarily by us,
the offering price does not necessarily reflect the value of our
stock.
We have established the offering price of $10.00 per share
arbitrarily. That price bears no relationship to Vision Bank's
projected assets, possible future earnings, book value or other
generally accepted valuation criteria. Accordingly, the offering
price of the shares is not an indication of their value or the
value of Vision Bank. You should not assume that the shares can
be sold in the future for a price at or above the offering price.
Because our business success will depend significantly on key
management personnel, the departure of those personnel could
impair operations.
Vision Bank will depend greatly upon its senior management.
We believe that Vision Bank will have a strong senior management
team and that Vision Bank's incentive compensation and employment
arrangements will enhance its management and operations. J.
Daniel Sizemore will serve as CEO and chairman of Vision
Bancshares and Vision Bank. Mr. Sizemore has 20 years in the
banking business. The loss to Vision Bank of the services of Mr.
Sizemore, or any of its proposed senior management, or the
inability to attract other experienced banking personnel could
adversely affect Vision Bank's business. Some of these adverse
effects could include the loss of personal contacts with existing
or potential customers as well as the loss of special technical
knowledge, experience and skills of such individuals who are
responsible for the operations of Vision Bank.
Because management will have broad discretion in allocating
the proceeds of the offering, we may not allocate all of the
net proceeds in the most profitable manner.
Vision Bank will be capitalized with at least $7.5 million.
Our board of directors and management will have broad discretion
in allocating a total of approximately $5.1 million, or 64%, of
the net proceeds of the offering. We cannot predict the precise
extent to which we will allocate these funds-generating assets,
capital assets or liquidity, but we expect to allocate most of
these funds to loans to customers. This allocation will directly
affect our earnings, and, as a result, it will be difficult to
predict our results or operations. Although we intend to utilize
the funds to serve Vision Bank's best interests, we cannot
assure you that our allocation will ultimately reflect the most
profitable application of these proceeds.
Our computer systems, or those of our service providers,
suppliers or customers, may not operate properly on year 2000-
sensitive dates.
Vision Bancshares and Vision Bank will rely on computers for
the daily conduct of business and for data processing. There is
general concern in the U.S. and world economies that on January
1, 2000 computers will be unable to "read" the new year and as a
consequence there could be widespread computer malfunctions.
Specifically, the year 2000 issue confronting Vision
Bancshares, Vision Bank and Vision Bank's suppliers, customers,
customers' suppliers and competitors centers on the inability of
computer systems to recognize the year 2000 and other year 2000-
sensitive dates. Many existing computer programs and systems
originally were programed with six-digit dates that provided only
two digits to identify the calendar year in the date field. With
the impending new millennium, these programs and computers may
recognize '00" as the year 1900 rather than the year 2000. Like
most financial service providers, Vision Bancshares and its
operations may be affected significantly by the year 2000 issue
as a result of its dependence on computer-generated financial
information. Software, hardware and equipment both within and
outside Vision Bancshares's and Vision Bank's direct control, and
third parties with whom Vision Bancshares and Vision Bank
electronically or operationally interface (including customers
and third party vendors providing data processing, information
systems management, computer system maintenance and credit bureau
information) are likely to be affected. If computer systems are
not able to identify the year 2000, many computer applications
could fail or create erroneous results. Consequently, many
calculations that rely on date field information, such as
interest, payment or due dates and other operating functions,
could generate significantly misstated results, and Vision
Bancshares and Vision Bank could lose their ability to process
transactions, prepare statements or engage in similar normal
business activities. In addition, under certain circumstances,
failure to address adequately the year 2000 issue could adversely
affect the viability of Vision Bank's suppliers and creditors and
the creditworthiness of its borrowers. If not adequately
addressed, the year 2000 issue could ultimately have a
significant adverse impact on Vision Bancshares's and Vision
Bank's products, services and competitive condition and, in turn,
their financial condition and results of operations.
Because Vision Bancshares and Vision Bank will be newly
organized businesses, Vision Bancshares will not have existing
"legacy" systems or equipment requiring year 2000 testing and
remediation. Rather, Vision Bancshares has purchased or will
purchase all of its office equipment, hardware and software and
has obtained outsourcing service commitments from vendors and
service providers that can certify that their products and
services are year 2000 compliant. We believe that Vision
Bancshares will be able to obtain these products and services
from vendors and service providers that can supply the necessary
certification. If Vision Bancshares is unable to do so, however,
it will either forego acquiring the product or service until the
required certification is forthcoming or, if the product or
service is essential to its operations, arrange for independent
testing and verification of year 2000 compliance.
If shares are issued in the future at a price less than the book
value of the common stock, the issuance of those shares would
cause a reduction in the book value and perhaps the market value
of existing shares.
Vision Bancshares's articles of incorporation permit Vision
Bancshares to issue 10,000,000 shares of common stock. At least
800,000 shares will be outstanding after this offer. Those
shares outstanding do not include the proposed issuance of
145,000 shares subject to issuance upon exercise of options to be
granted under Vision Bancshares's stock option plans and 7,500
shares reserved for issuance under the Employee Stock Purchase
Plan. Future issuance of any new shares could cause a dilution
in the value of the shares issued pursuant to this offering, and
outstanding at the time of the issuance of shares in the future.
We do not believe it is likely that an active trading market for
our shares will develop and, therefore, you may find it
difficult to resell your shares.
Although the shares offered by this prospectus have been
registered under applicable securities laws, Vision Bancshares
has no plan to list the shares on any public trading market.
Thus, it is likely that no active trading market, or price
quotations, for the shares will develop. It may not be possible
for you to readily liquidate your investment in the shares.
Because the directors of Vision Bancshares will own approximately
55 percent of the outstanding common stock, they will have more
influence over actions requiring a shareholder vote than you may
have
Our directors will own approximately 55 percent of Vision
Bancshares common stock after this offer. As a result, they will
be able to control the outcome of director elections or block a
significant transaction that might otherwise be favored by the
shareholders who are not directors.
Because our articles of incorporation contains provisions that
may deter a change in control, you may be deprived of an
opportunity to sell your shares at a premium over market prices.
Our articles of incorporation contain two provisions that
may deter an attempt to change or gain control of Vision
Bancshares. First, the articles authorize a separate class of
preferred stock, the terms of which may be established by the
board of directors. Preferred stock could be issued to persons
selected by, and friendly to, the board of directors. Second,
they provide that directors shall be elected to terms of three
years with approximately one-third of the board elected each
year, and directors may only be removed by the shareholders for
cause. Thus, two director elections would be required to change
a majority of the board. These provisions could make it more
difficult to change control of Vision Bancshares. As a result,
you may be deprived of opportunities to sell some or all of your
shares at prices that represent a premium over market prices.
Regulatory requirements may impose additional costs on Vision
Bank and adversely affect profitability.
State and federal banking laws will have a material effect
on the business and operations of Vision Bancshares and Vision
Bank. The operation of Vision Bank and Vision Bancshares will at
all times be subject to these laws, regulations and procedures.
The purpose of those laws is to protect the financial stability
of the banking system and consumer and commercial confidence in
that system and is not to protect investors. Vision Bancshares
and Vision Bank will be required to comply with all such laws,
regulations and procedures.
TERMS OF THE OFFERING
The Offering - Terms of Purchase
Vision Bancshares is offering the shares at a cash price of
$10.00 per share. There is no established public market for the
shares and we expect no established market to develop. The
offering price of the shares was determined arbitrarily by Vision
Bancshares based upon the amount of capital needed by Vision
Bancshares and a per share price that Vision Bancshares deemed to
be reasonable and attractive to potential investors in Vision
Bank's local market area.
This offering is for a minimum of 800,000 shares, subject to
a possible increase at the discretion of Vision Bancshares to any
amount greater than 800,000 shares but not exceeding 1,000,000
shares. Any decision to increase the offering will be made by
Vision Bancshares in its discretion. Vision Bancshares is likely
to increase the offering if there is a demand for the shares.
Vision Bancshares believes that widespread ownership of the
shares in the Gulf Shores and South Alabama area will be
beneficial for the business of Vision Bank, and, therefore, if
more than the minimum of 800,000 shares can be sold, Vision
Bancshares is likely to sell as many shares as possible subject
to the maximum limit of 1,000,000 shares. In no event will
subscriptions for more than 1,000,000 shares be accepted.
The offering will terminate upon the earlier to occur of the
following: (i) Vision Bancshares's receipt of a number of
subscriptions deemed sufficient by Vision Bancshares assuming the
minimum of 800,000 shares can be sold; (ii) cancellation of the
offering by Vision Bancshares; or (iii) March 31, 2000. If by
March 31, 2000, any shares remain unsubscribed, the organizers of
Vision Bancshares may, but are not required to, subscribe for any
unsold shares. If by that date, Vision Bancshares has not
received subscriptions for at least 800,000 shares, the offering
will be terminated and all subscriptions which have been accepted
up to that time will be canceled.
Vision Bancshares reserves the right to decline all or any
part of any subscription. There is no requirement that
persons subscribing for shares agree to open or maintain accounts
with Vision Bank. However, preference may be given to persons
who have indicated their intention to conduct business with
Vision Bank.
In all circumstances, the formation of Vision Bancshares and
the issuance of the shares is subject to appropriate regulatory
approvals, and Vision Bancshares reserves the right to cancel
accepted subscription offers at the direction of the appropriate
banking agencies or otherwise, until the date Vision Bancshares
has received all required regulatory approvals.
Shares duly subscribed and paid for will be issued upon
acceptance by Vision Bancshares as soon as practicable after
Vision Bancshares receives all such required regulatory
approvals.
Procedure for Subscribing for Shares
The shares will be offered by J. Daniel Sizemore, as agent
for Vision Bancshares, through personal contact with potential
investors. No commissions, finders fees, or other remuneration
has or will be paid to Mr. Sizemore or any other person in
connection with the offer and sale of the shares.
If you wish to purchase shares you must sign a subscription
agreement and deliver the subscription agreement along with a
check in the amount of the purchase price for the shares you wish
to purchase in accordance with the subscription agreement on or
before the date of termination of the offering. If you have
questions, please call J. Daniel Sizemore at (334) 967-4212. A
subscription agreement will be delivered to you after the
effective date of the registration statement of which this
prospectus is a part. Until you receive a subscription agreement
from us, you should not tender any funds for the purchase of
shares.
You must purchase at least 100 shares and you may not
purchase more than 25,000 shares. These purchase limits do not
apply to Vision Bancshares' proposed directors.
Escrow Account
Until subscriptions for the minimum amount of $8,000,000
have been received, payments for shares will be deposited in an
interest-bearing escrow account established for the purpose of
this offering at National Bank of Commerce of Birmingham,
Birmingham, Alabama, as the escrow agent. Funds will be held in
the escrow until Vision Bancshares has received payment for at
least 800,000 shares and has received approval from the Alabama
Banking Department and the FDIC for the formation of Vision Bank.
Thereafter all funds received in payment for shares, plus
interest earned on such funds, less the escrow agent's fees and
expenses, will at that time be delivered to Vision Bancshares and
the shares will be issued to you as soon as practicable
thereafter. If Vision Bancshares cancels the offering and any
subscriptions accepted up to that time (whether because the
offering has not been fully subscribed, because subscribers have
not made timely payment for their shares, because of failure to
obtain all required regulatory approvals, or for any other
reason), then any funds remitted by you in payment for your
shares, plus any interest earned on the funds, will be returned
to you on a pro rata basis based on the number of days on deposit
in the escrow. If the expenses of the escrow agent exceed the
total interest earned on the escrowed funds, those costs will be
paid by the organizers of Vision Bancshares.
The form of the escrow agreement is included as an exhibit
to the registration statement of which this prospectus is a part.
USE OF PROCEEDS
The proceeds from the sale of the shares by Vision
Bancshares will aggregate at least $8,000,000. From the total
minimum proceeds of $8,000,000, Vision Bancshares will pay the
legal, printing and other expenses associated with this offering,
estimated at $70,980. At least $7,500,000 of the offering
proceeds will be invested by Vision Bancshares as capital in
Vision Bank. In general, these proceeds will then be used by
Vision Bank to pay organizational expenses and pre-operating
expenses incurred before Vision Bank opens for business, to pay
operating expenses for the first twelve months after Vision Bank
opens for business, to make leasehold improvements and acquire
furniture and equipment for Vision Bank's premises, and for
general corporate purposes. We estimate that these funds will be
utilized by Vision Bank in the amounts set forth below:
Organizational and
pre-operating expenses . . . . . . . . . . . . . . $ 291,500
First year operating expenses:
Salaries and benefits. . . . . . . . $ 620,100
Interest on deposits. . . . . . . . $ 566,300
Net occupancy expenses. . . . . . . . $ 120,900
Furniture and Equipment. . . . . . . $ 124,800
Provision for loan losses. . . . . . $ 288,000
Other operating expenses. . . . . . . $ 349,000
Total first year operating expenses:. . . . . . .$2,069,100
Funds to be used for loans to customers,
investments and general corporate purposes. . . . . . . $5,139,400
Total $7,500,000
We expect that most of the $5.1 million noted above for
loans, investments and general corporate purposes will be used by
Vision Bank to fund loans to customers.
Vision Bancshares will retain approximately $500,000 from
the proceeds of the offering, before deducting expenses
associated with the offering and after investing $7,500,000 in
Vision Bank. These funds will be used for unanticipated costs,
and could be invested in Vision Bank as additional capital to
fund loans, defray expenses, or other general corporate purposes.
We expect that the proceeds from the offering will satisfy Vision
Bancshares's and Vision Bank's capital requirements for at least
the next 12 months. Vision Bancshares does not anticipate the
need to raise additional capital during that period.
If the offering is increased and the maximum of 1,000,000
shares are sold, representing $10,000,000 in proceeds, the
additional proceeds raised will be invested in Vision Bank for
the purpose primarily of funding loans, but such funds could also
be used for investments and to pay operating costs.
The foregoing amounts are estimates, are based upon
information and assumptions Vision Bancshares believes accurate
and reasonable, and actual expenditures could vary, perhaps
significantly, from these estimates. In particular, the projected
expenditures reflect, among other things, the assumptions and
projections of management that Vision Bank will be able to
attract deposits during its first year of operation. Because
banking regulations and sound banking practice require the
maintenance of certain levels and ratios of assets, deposits and
equity capital, it is possible that expenditures would have to be
reduced or that, at some point in the future, additional capital
would have to be raised by Vision Bancshares.
PRO FORMA CAPITALIZATION
The following table sets forth as of August 31, 1999 the pro
forma capitalization of Vision Bancshares after accounting for
the payment for and issuance of the shares described in this
offering.
Stockholder's equity:
Common stock, $1.00 par value:
10,000,000 shares authorized,
800,000 shares to be outstanding (1) $ 800,000
Additional paid-in capital (2) 7,200,000
Accumulated Deficit (181,820)
Total capitalization: $7,818,180
(1) This table assumes the minimum of 800,000 shares are sold
for an aggregate of $8,000,000. It does not reflect an
aggregate 145,000 shares which could be granted under stock
option plans, or 7,500 shares reserved for issuance under
Vision Bancshares's Employee Stock Purchase Plan, or a
possible increase in the offering.
(2) Does not include offering expense of approximately $70,980
(consisting primarily of legal, accounting and printing
expenses and registration fees).
BUSINESS OF VISION BANK
General
Vision Bancshares was organized as an Alabama corporation on
July 16, 1999. When approval from the Federal Reserve Board is
received, Vision Bancshares will be licensed as a bank holding
company.
When incorporated and organized, Vision Bank will be a state
banking corporation organized under the laws of the State of
Alabama. Vision Bank proposes to provide general retail and
commercial banking services principally to customers in Gulf
Shores and Baldwin County, Alabama. Vision Bank does not propose
to provide trust or fiduciary services in the initial two years
of operation, but may do so in the future.
Vision Bank's primary location will be 2201 West 1st Street,
Gulf Shores, Alabama 36542 with a branch at 25051 Canal Street,
Orange Beach, Alabama 36561, and its phone number is (334) 967-
4212. Its mailing address is P.O. Box 1248, Gulf Shores, Alabama
36547. Vision Bancshares will also be located at this address.
Vision Bancshares will not have any significant operations and
will serve primarily as the parent company for Vision Bank.
Under the Bank Holding Company Act of 1956, Vision Bancshares, as
a bank holding company, may engage in certain bank related
businesses that Vision Bank may not conduct, although Vision
Bancshares has no present plans for such activities. See
"Supervision and Regulation." Vision Bancshares will have no
employees, and its officers and directors will receive no
compensation for their services to Vision Bancshares but,
instead, they will be compensated for services performed in
comparable capacities for Vision Bank.
Vision Bank's lobby hours of operation will be 9 a.m. to 5
p.m. Monday through Thursday, 9 a.m. to 6 p.m. on Friday, and
closed on Saturday. Drive-in hours will be 8 a.m. to 5 p.m.
Monday through Thursday, 8 a.m. to 6 p.m. Friday, and 8 a.m. to
12 noon Saturday. Vision Bank anticipates having 12 to 15
employees.
Vision Bank will contract for off-premise electronic data
processing services.
Available Information
Vision Bancshares is not a public company and currently
files no reports with the Securities and Exchange Commission or
any other agency. Upon the effective date of the registration
statement of which this prospectus is a part and at least for the
fiscal year ending December 31, 1999, Vision Bancshares will be
subject to the informational requirements of the Securities
Exchange Act of 1934, and in accordance therewith will file
annual, quarterly and periodic reports with the SEC. Such
reports and other information can be inspected and copied at the
public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the SEC's Regional Offices in New York (7 World Trade
Center, Suite 1300, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661). Copies of such materials can be
obtained from the public reference section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Information on the operation of the public reference
facilities of the SEC may be obtained by calling the SEC at 1-
800-SEC-0330. The Commission also maintains a Web Site that
contains reports and other information regarding registrants that
file electronically with the Commission at http://www.sec.gov.
These reports include Vision Bancshares' registration statement.
Vision Bancshares has filed with the SEC a registration
statement (No. 333-88073) on Form SB-2 under the Securities Act
of 1933, registering the shares to be issued pursuant to this
prospectus. This prospectus does not contain all of the
information set forth in the registration statement and the
exhibits thereto. For further information regarding Vision
Bancshares and the shares offered hereby, you may review the
complete registration statement, including all of its amendments
and exhibits. Statements contained in this prospectus or in any
document incorporated by reference herein as to the contents of
documents are necessarily summaries of the documents, and each
statement is qualified in its entirety by reference to the copy
of the applicable document filed with the Commission.
Assuming the registration statement becomes effective in
1999, Vision Bancshares must file reports with the Commission for
fiscal year 1999. The obligation of Vision Bancshares to file
such reports for any fiscal year after 1999 will be suspended if,
for any such fiscal year, Vision Bancshares has less than 300
shareholders on the first day of such fiscal year. If the
registration statement becomes effective in 2000, Vision
Bancshares will file such reports for 2000, and for any fiscal
year thereafter if Vision Bancshares has 300 or more shareholders
at the beginning of any such fiscal year.
Bank Premises
Vision Bank intends to lease a building, consisting of two
stories and approximately 9,600 square feet, located at 2201 West
1st Street, Gulf Shores, AL 36542 for its main office. The
building is under construction and will be owned by Gulf Shores
Investment Group, LLC, an entity owned by certain organizers of
Vision Bancshares. Construction should be completed within nine
months. Pending completion of the building, Vision Bank will
operate out of a temporary modular building on the site. The
site is located in the downtown area of the city, with a
residential area behind Vision Bank. Downtown Gulf Shores is a
civic area; approximately two miles south is the beach, located
on the Gulf of Mexico, two strip shopping centers are within
1/2 mile of downtown. Highway 59 near the bank site offers
access to and from the downtown district. Surrounding the bank
office building are other large and small office buildings with
new construction across the street and behind the building. The
location is convenient to both residential areas and businesses.
Vision Bank intends to provide customary banking services,
in-lobby safe deposit boxes to its customers, and is considering
various options regarding convenient, cost-effective access to
automated teller machines. As a key aspect of its marketing
strategy, Vision Bank intends to provide courier services for its
more significant banking relationships, including individuals, in
an effort to improve banking convenience, and reduce parking
needs. Vision Bank intends to serve the retail and business
needs of the community as one of the few locally owned,
independent banks in the area. In addition, the organizers have
expertise and business development skills in the areas of small
business and real estate lending. Vision Bank will also have
more extensive operating hours than any competing institution.
The proposed branch will be located on Canal Street in
Orange Beach approximately 10 miles east of Gulf Shores, in a one
story building consisting of approximately 3,500 square feet, to
be owned by Gulf Shores Investment Group, LLC and leased to
Vision Bank. Construction should be completed within 12 months.
Pending completion, the branch will operate out of a temporary
modular building on the site. The property is flanked by small
businesses and is located near a prime traffic conduit. The
variety of the surrounding businesses will encourage use at
diverse hours; the site is located next to a retail center,
across the street from a movie theater, adjacent to a
governmental authority and less than one block from Columbia
Southern University.
These lease arrangements for the main and branch office
sites are subject to FDIC approval. If the FDIC does not approve
these lease arrangements, Vision Bank will acquire the land for
its main office at a price of $350,000 and the land for its
branch office at a price of $275,000. Construction costs for the
bank buildings will be $1,150,000 for the main office and
$425,000 for the branch office. Vision Bank would most likely
finance these costs from a commercial lender.
Management intends to insure its properties adequately.
Management's Discussion and Analysis of Financial Condition
and Plan of Operations
The following discussion of the financial condition of Vision
Bancshares should be read in conjunction with Vision Bancshares's
financial statements and related notes, which are included in this
prospectus. See "Index to Financial Statements."
Vision Bancshares was organized as an Alabama corporation on
July 16, 1999. Since inception, the main activities of Vision
Bancshares have been centered on seeking, interviewing and
selecting Vision Bancshares's directors and officers, applying
for a state bank charter, applying for Federal Deposit Insurance
Corporation deposit insurance, applying to become a bank holding
company and raising equity capital through this offering.
The operations of Vision Bancshares from its inception
through the close of the offering have been and will continue to
be funded by advances received from the organizers. The
organizers have agreed to contribute a total of $350,000, of
which $140,000 was outstanding at August 31, 1999. Management
anticipates that Vision Bancshares will repay any advances from
the organizers after the closing of this offering.
Vision Bank does not anticipate any significant changes in
the number of its employees. Vision Bank expects to employ
between 12 to 15 people during its first year.
Liquidity and Interest Rate Sensitivity. Since Vision
Bancshares has been in the organizational stage, there are no
results to present at this time. Nevertheless, once Vision Bank
commences operations, net interest income, Vision Bancshares's
primary source of earnings, will fluctuate with significant
interest rate movements. To lessen the impact of these margin
swings, management intends to structure the balance sheet so that
repricing opportunities exist for both assets and liabilities in
roughly equivalent 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 changes 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 so as to reduce the impact of interest rate
fluctuations on the net interest margin. Management will
generally attempt to maintain a balance between rate sensitive
assets and liabilities as the exposure period is lengthened to
minimize Vision Bank's overall interest rate risks.
The asset mix of the balance sheet will be evaluated
regularly in terms of several variables: yield, credit quality,
appropriate funding sources and liquidity. To manage effectively
the liability mix of the balance sheet, management plans to focus
on expanding the various funding sources.
As Vision Bank continues to grow, management will
continuously structure its rate sensitivity position in an effort
to hedge against rapidly rising or falling interest rates.
Vision Bank's asset and liability management committee of its
board of directors will meet on a quarterly basis to develop
management's strategy for the upcoming period. Such strategy
includes anticipations of 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. These funds can be
obtained by converting assets to cash or by attracting new
deposits. Vision Bank's primary source of liquidity will come
from its ability to maintain and increase deposits.
Management knows of no trends, demands, commitments, events
or uncertainties that should result in or are reasonably likely
to result in Vision Bancshares's liquidity increasing or
decreasing in any material way in the foreseeable future, other
than this offering.
Capital Adequacy. There are now two primary measures of
capital adequacy for banks and bank holding companies: (1) risk-
based capital guidelines and (2) the leverage ratio.
The risk-based capital guidelines measure the amount of a
bank's required capital in relation to the degree of risk
perceived in its assets and its off-balance sheet items. Under
the risk-based capital guidelines, capital is divided into two
"tiers." Tier 1 capital consists of common shareholders' equity,
noncumulative and cumulative (bank holding companies only)
perpetual preferred stock and minority interest. Goodwill is
subtracted from the total. Tier 2 capital consists of the
allowance for loan losses, hybrid capital instruments, term
subordinated debt and intermediate term preferred stock. Banks
are required to maintain a minimum risk-based capital ratio of
8.0%, with at least 4.0% consisting of Tier 1 capital.
The second measure of capital adequacy relates to the
leverage ratio. The FDIC and the Alabama Department of Banking
have established a 3.0% minimum leverage ratio requirement. The
leverage ratio is computed by dividing Tier 1 capital into total
assets. For banks that have not received the highest regulatory
rating by their primary regulator (which includes Vision Bank),
the minimum leverage ratio should be 3.0% plus an additional
cushion of at least 1% to 2%, depending upon risk profiles and
other factors.
A new rule was recently promulgated by the Federal Reserve
Board and the FDIC that adds a measure of interest rate risk to
the determination of supervisory capital adequacy. In connection
with this new rule, the agencies have also proposed a measurement
process to measure interest rate risk. Under this proposal, all
items reported on the balance sheet, as well as off-balance sheet
items, would be reported according to maturity, repricing dates
and cash flow characteristics. A bank's reporting position would
be multiplied by duration-based risk factors and weighted
according to rate sensitivity. The net risk weighted position
would be used in assessing capital adequacy. The objective of
this complex proposal is to determine the sensitivity of a bank
to various rising and declining interest rate scenarios.
Management believes that the net proceeds of this offering
should satisfy Vision Bancshares's and Vision Bank's cash
requirements for at least the three-year period following the
opening of Vision Bank. Accordingly, management does not
anticipate that it will be necessary to raise additional funds
for the operation of Vision Bancshares or Vision Bank over the
next three years. For additional information regarding material
expenditures during such period, see "Use of Proceeds."
Market Area and Demographic Information
The organizers are well acquainted with the communities of
South Baldwin County, Alabama. The attractive coastline draws
considerable tourism to the area and fosters strong activity in
the retail and housing areas of the local economy. Bordering
communities house industries that range from electronics to
health care. The banking industry has shown strong growth in the
past five years as well, although only one independent bank is
headquartered in the area. The organizers have identified
several services and products which a local bank could offer
competitively to the community within an expanding banking
market: personal banking; expanded hours; and a commitment to
fostering local real estate growth through lending.
The Primary Service Area (PSA) for Vision Bank will be South
Baldwin County, which includes the coastal communities of Gulf
Shores and Orange Beach, the cities in which Vision Bank will
establish offices. South Baldwin County is defined as the area
of the County south of U.S. Highway 98.
The Secondary Service Area (SSA) for Vision Bank encompasses
the remainder of Baldwin County and portions of neighboring
Escambia County in Florida, primarily Perdido Key. The
organizers believe that at least 75 percent of Vision Bank's
proposed customers will be businesses and residents located in
the PSA and SSA.
Baldwin County is the seventh-largest county in the State of
Alabama. Although smaller, Baldwin County is growing much more
rapidly than neighboring Mobile County. South Baldwin County is
known for its beautiful beaches and is a major tourist
destination, thus attracting people from all over the state and
country. The area has grown considerably over the past several
years, with strong residential and commercial construction,
particularly in the towns of Orange Beach and Gulf Shores. The
following table summarizes various economic indicators of Baldwin
County.
<TABLE>
<CAPTION>
ITEM PAST 5 YEARS
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Population 115,809 119,966 124,257 128,820 132,828
No. of housing starts
(residential building
permits) 1,914 1,591 1,526 1,661 1,869
Industrial & commercial
building permits issued 359 397 496 490 473
Retail sales ($000s) 811,454 865,483 922,424 1,092,483 1,101,896
</TABLE>
Tourism is a major industry in South Baldwin County.
According to the Gulf Coast Convention and Visitors Bureau, the
Gulf Coast area, which includes Gulf Shores, Orange Beach and
Fort Morgan, has an inventory of 219 hotels, motels and
condominiums, for a total of 13,214 available units.
Further, a new hurricane evacuation route, which would
originate in Gulf Shores and include a bridge near one of the
proposed bank locations, is planned for the area. This route
would connect Gulf Shores directly to Interstate 10, and provide
increased and easier access to the coastal communities of South
Baldwin County. Increased visitation would be expected to
promote further growth in related industries in the area.
Population
Based on population projections prepared by the Center for
Business and Economic Research of the University of Alabama,
Baldwin County is projected to be the fourth fastest growing
county in the state between 1995 and 2000. South Baldwin County,
the PSA, is fueling much of this growth. The area grew from
28,203 persons in 1990 to an estimated 39,801 residents in 1997.
Out of 443 cities and towns in Alabama, the town of Orange Beach
had the fourth greatest percentage increase in population between
the years of 1990 and 1996, nearly doubling its population. The
town of Foley ranked 15th, increasing its population by almost
one-third, and Gulf Shores ranked 28th in population growth, with
an increase of almost 24 percent. The following table depicts
population estimates and projections for Baldwin County overall
as well as key locations in the PSA and SSA. All of these areas
experienced sizeable growth in population between 1990 and 1996.
This growth is projected to continue over the next several years,
as indicated in the table below.
<TABLE>
Population of Service Area
<CAPTION>
------------Estimates-----------
1990 2003 % Change
Census 1992 1994 1996 1998(1) Projection 1990-1996
<S> <C> <C> <C> <C> <C> <C> <C>
Baldwin County 98,920 106,226 115,809 124,257 130,168 147,419 25.6%
Foley 4,937 5,499 5,936 6,433 N/A N/A 30.3%
Gulf Shores 3,261 3,467 3,680 4,029 4,316 4,855 23.6%
Orange Beach 2,253 2,420 2,547 3,327 3,845 4,722 47.7%
Perdido Key, Florida 1,326 N/A N/A N/A 2,022 2,348 N/A
</TABLE>
The resident population of the PSA is only part of the
overall population picture. Tourism is a major industry. Many
people reside in South Baldwin for the warmer months, and others
for even smaller amounts of time. During the summer months when
people flock to the coastal areas, the population of South
Baldwin increases dramatically. Based on information presented
in the following table, the seasonal population in the cities of
Gulf Shores and Orange Beach is almost six times the resident
population.
<TABLE>
Seasonal Population and Projections - Gulf Coast Area
<CAPTION>
1988 1998 2000
<S> <C> <C> <C>
Gulf Shores 15,744 29,744 40,944
Orange Beach 18,236 25,836 32,484
Unincorporated 3,732 4,876 5,808
Total 37,712 60,456 79,236
</TABLE>
Estimates of the population by age groups show that there is
a slightly higher-than-average percentage of retirees in Baldwin
County (15% versus 13% nationally), but also a sizeable
concentration in the age groups that comprise most of the labor
force (ages 25-64, for a total of 52%):
<TABLE>
1995 Population by Age - Baldwin County
<CAPTION>
Number %
<S> <C> <C>
Total Population 119,966 100%
Ages 0-4 8,244 7%
Ages 5-17 21,957 18%
Ages 18-24 9,565 8%
Ages 25-44 34,549 29%
Ages 45-64 27,227 23%
Age 65+ 18,424 15%
</TABLE>
Industry and Employment
The PSA is renowned as a vacation destination and businesses
in the area reflect this fact. Hotels, restaurants and retail
centers are among the top employers in the PSA. Also present are
businesses that benefit from the robust construction. The
portion of the PSA that is not immediately bordering on the coast
has a more diverse mix of businesses, with a mixture of
manufacturing, electronics, government and health care
businesses. The following table lists the top 20 employers in
South Baldwin County.
<TABLE>
Top 20 Employers in South Baldwin County
September, 1998
<CAPTION>
Full-Time
Equivalent
Company Product/Service Employment
<S> <C> <C>
Riviera Center Outlet Mall Retail 1,200
Packard Hughes Interconnect Electronic Products 825
South Baldwin Hospital Medical 450
BF Goodrich Aerospace Thrust Reversers 447
Wal Mart Super Center Retail 430
Hazel's Family of Restaurants Restaurants 365
Perdido Beach Resort Hotel 350-375
Solutia Manufacturing Company Aluminum Castings 350
Gulf Telephone Telecommunications 338
Voyagers Gulf Beach Hotel, Inc. Hotel 260
Gulf State Park Recreation, Motel 250
Vulcan, Inc. Aluminum & Steel Products 206
Foley Nursing Home Nursing Home 175
Baldwin County EMC Utilities 174
Bon Secour Fisheries Seafood Processing 170
Riviera Utilities Utilities 164
City of Gulf Shores Municipal Government 144
City of Foley Municipal Government 117
Peavey Electronics Sound Equipment 95
Reynolds Ready Mix Ready Mix Concrete 90
</TABLE>
Unemployment in Baldwin County was 3.2 percent in May, 1999,
which was well below the state and national unemployment rates.
The size of the labor force continues to grow, as the number of
persons employed in Baldwin County has increased almost 70
percent since 1990. The composition of the labor force is 80
percent in service-producing jobs, and the remaining 20 percent
work in goods-producing jobs, which includes manufacturing and
construction. Construction employment in the Gulf Coast area was
estimated to be 1,009 by Dun & Bradstreet's Marketplace Report as
of the second quarter of 1999. The overall employment mix in
Baldwin County is comparable to the nation's job mix. All of
these indicate a robust and diversified economy in the County.
The following table denotes trends in employment for the County.
<TABLE>
Baldwin County Labor Force Information
1990 - 1998
<CAPTION>
1990 1992 1994 1996 1998
<S> <C> <C> <C> <C> <C>
Civilian Labor Force (1) 46,360 52,140 57,970 64,210 68,670
Employed persons living in County (1) 43,910 48,930 55,240 61,400 66,800
Unemployment Rate (1) 5.3% 6.2% 4.7% 4.4% 2.7%
Persons working in Baldwin County (2) 27,300 31,520 36,810 41,620 46,230
Goods-Producing Employment (2) 6,350 6,440 7,320 7,860 9,000
Service-Producing Employment (2) 20,940 25,080 29,490 33,760 37,230
<FN>
(1) Based on place of residence.
(2) Based on place of work.
</FN>
</TABLE>
Baldwin County had the fifth highest per capita income in
1997 in the State of Alabama at $22,431. This is 108 percent of
the State's per capita income and 111 percent of the Mobile
area's per capita income. As indicated in the following table,
median household income is much higher in the coastal cities
than in Baldwin County overall.
<TABLE>
Household Income for Service Area
<CAPTION>
1998
Median
Household
Area Income
<S> <C>
Baldwin County, Alabama $ 35,431
Gulf Shores, Alabama $ 42,461
Orange Beach, Alabama $ 42,688
Perdido Key, Florida $ 49,708
</TABLE>
Competitors & Growth in Deposits
Banking is a highly competitive business, and Vision Bank
will be competing for customers primarily in Baldwin County.
The following banks and savings and loan institutions are
located in Baldwin County:
<TABLE>
<CAPTION>
DISTANCE FROM
LOCATION DEPOSITS BANK
NAME OF INSTITUTION (City and State) ($000's omitted) (miles)
<S> <C> <C> <C>
AmSouth Bank Foley, AL $35,090 10.5
AmSouth Bank Gulf Shores, AL $50,227 .4
Citizen's Bank, Inc. Foley, AL $ 1,080 10.6
Colonial Bank (West Laurel) Foley, AL $97,841 10.5
Colonial Bank (So. McKenzie) Foley, AL $ 3,330 10.5
Colonial Bank Gulf Shores, AL $34,606 .2
Colonial Bank Lillian, AL $ 6,686 18.1
Colonial Bank Orange Beach, AL $ 7,636 .7
First Gulf Bank Foley, AL $11,404 10.5
First Gulf Bank
(W. Ft. Morgan Road) Gulf Shores, AL $17,249 .9
First Gulf Bank
(W. Ft. Morgan Road) Gulf Shores, AL $35,765 .7
Regions Bank Elberta, AL $36,166 13.6
Regions Bank (W. Roosevelt) Foley, AL $67,738 10.5
Regions Bank Foley, AL $ 76 10
Regions Bank Gulf Shores, AL $62,007 .9
Regions Bank Orange Beach, AL $10,818 7
South Alabama Bank Foley, AL $ 1,304 10.6
SouthTrust Bank Foley, AL $32,062 10.7
SouthTrust Bank Gulf Shores, AL $35,999 .5
Union Planters Bank Foley, AL $ 3,795 10.4
United Bank Foley, AL $22,008 10.3
United Bank Lillian, AL $ 3,152 18
Whitney National Bank Foley, AL $ 89 10.5
Whitney National Bank Gulf Shores, AL $16,712 .4
Whitney National Bank Orange Beach, AL $10,414 6.9
</TABLE>
Baldwin County Banking Market
The banking market in Baldwin County totaled $1.476 billion
in deposits as of June 30, 1998. Eleven institutions operate a
total of 56 branches in the County. The County's banking market
is dominated by five large multi-branch commercial banks, with
several smaller regional banks as noted below:
<TABLE>
Market Share of FDIC-Insured Deposits in Baldwin County
By Banking Institution; Sorted by Market Share
June 10, 1998
<CAPTION>
Total
No. of Offices Deposits Market
Insitution Name Headquarters in Baldwin Co. ($000s) Share
<S> <C> <C> <C> <C>
Regions Bank Birmingham, AL 12 $ 389,342 26.4%
SouthTrust Bank, NA Birmingham, AL 7 $ 256,061 17.4%
Colonial Bank Montgomery, AL 8 $ 215,699 14.6%
AmSouth Bank Birmingham, AL 7 $ 212,642 14.4%
Compass Bank Birmingham, AL 4 $ 195,355 13.2%
First Gulf Bank Gulf Shores, AL 6 $ 96,618 6.6%
Citizen's Bank, Inc. Robertsdale, AL 4 $ 49,782 3.4%
Whitney National Bank New Orleans, LA 3 $ 27,215 1.8%
United Bank Atmore, AL 2 $ 25,160 1.7%
Union Planters Bank, NA Memphis, TN 2 $ 6,482 0.4%
South Alabama Bank Mobile, AL 1 $ 1,304 0.1%
Total 56 $1,475,660 100%
</TABLE>
There are no banks located in Perdido Key, Florida, which is
considered part of the SSA.
The banking market in Baldwin County grew at an average
annual rate of 8.3 percent from mid-1994 through mid-1998, from
deposits totaling $1.074 billion to $1.476 billion as of June 30,
1998.
Primary Service Area Banking Market
Within South Baldwin County, the PSA, there are ten banking
institutions with 25 offices. The entire PSA market had $603.3
million in aggregate deposits as of June 30, 1998. Two
institutions have over 50 percent of the area's market share for
deposits - Regions and Colonial. Compass Bank, which has a
strong presence in the County, does not have an office in the
PSA. First Gulf Bank is the only independent bank with
headquarters in the PSA. Its market share is close to 11
percent. The following table lists deposits and market share by
institution in the PSA.
<TABLE>
Market Share of FDIC-Insured Deposits in PSA
By Institution; Sorted by Market Share
June 30, 1998
<CAPTION>
No. of Total
Offices in Deposits Market
Name PSA ($000s) Share
<S> <C> <C> <C>
Regions Bank 5 $176,805 29.3%
Colonial Bank 5 150,099 24.9%
AmSouth Bank 2 85,317 14.1%
SouthTrust Bank 2 68,061 11.3%
First Gulf Bank 3 64,418 10.7%
Whitney National Bank 3 27,215 4.5%
United Bank 2 25,160 4.2%
Union Planters Bank 1 3,795 0.6%
South Alabama Bank 1 1,304 0.2%
Citizen's Bank, Inc. 1 1,080 0.2%
Total 25 $603,254 100.0%
</TABLE>
The South Baldwin banking market grew at an annual rate of
10.9 percent from mid-1994 through mid-1998. The number of
banking offices doubled in the area during this time, growing
from 12 branch locations in 1994 to 25 in 1998.
Because of the market dominance of the top two commercial
banks which control over 50 percent of deposits in the PSA, a new
entrant could increase competition and provide the public with
greater choices for obtaining banking services. The overall
strength of the banking market also provides all competing
institutions with additional opportunities for growth.
Deposit and Loan Assumptions
The organizers developed a peer group to use as a basis for
determining Vision Bank's projected deposit and loan growth mix.
Seven banks that serve the PSA have been included in this "Peer
Group." Assets for these peer institutions as of December 31,
1998 ranged from $112 million to $38 billion. Included in the
Peer Group is one bank headquartered in Vision Bank's primary
service area of South Baldwin County.
The following table contains deposit and market share
information for each banking office in the PSA as of June 30,
1998.
<TABLE>
Market Share of FDIC-Insured Deposits in South Baldwin County
By Bank Branch; Sorted by Market Share
June 30, 1998
<CAPTION>
Total
Deposits Market
Name City ($000s) Share
<S> <C> <C> <C>
AmSouth Bank - McKenzie Street Foley $35,090 5.8%
AmSouth Bank - Hwy 59 Gulf Shores 50,227 8.3%
Citizen's Bank, Inc. - Orange Ave. Foley 1,080 0.2%
Colonial Bank - West Laurel Foley 97,841 16.2%
Colonial Bank - So. McKenzie Street Foley 3,330 0.6%
Colonial Bank - Gulf Shores Pkwy. Gulf Shores 34,606 5.7%
Colonial Bank - US Hwy 98 Lillian 6,686 1.1%
Colonial Bank - Perdido Bch Blvd. Orange Beach 7,636 1.3%
First Gulf Bank - Hwy 59 Foley 11,404 1.9%
First Gulf Bank - W. Fort Morgan Rd. Gulf Shores 17,249 2.9%
First Gulf Bank - W. Fort Morgan Rd. Gulf Shores 35,765 5.9%
Regions Bank - East State St. Elberta 36,166 6.0%
Regions Bank - W. Roosevelt Foley 67,738 11.2%
Regions Bank Foley 76 0.0%
Regions Bank - Gulf Shores Pkwy. Gulf Shores 62,007 10.3%
Regions Bank - Orange Bch Blvd. Orange Beach 10,818 1.8%
South Alabama Bank - So. McKenzie Foley 1,304 0.2%
SouthTrust Bank - McKenzie Foley 32,062 5.3%
SouthTrust Bank - Hwy 59 Gulf Shores 35,999 6.0%
Union Planters Bank - 1190 So. McKenzie Foley 3,795 0.6%
United Bank - 516 So. McKenzie Foley 22,008 3.6%
United Bank - Hwy 98 Lillian 3,152 0.5%
Whitney National Bank - So. McKenzie Foley 89 0.0%
Whitney National Bank - Gulf Shores Pkwy. Gulf Shores 16,712 2.8%
Whitney National Bank - Org. Bch. Blvd. Orange Beach 10,414 1.7%
Total $603,254 100.0%
</TABLE>
Deposit Assumptions
The deposit growth potential for Vision Bank is strong. The
average annual growth rate of aggregate deposits in South Baldwin
County between 1994 and 1998 equaled 10.9 percent. The table
below demonstrates that not only have deposits grown, but also
the number of bank branches has more than doubled from 1994
through 1998. As of June 30, 1998 deposits totaled $603.3
million in the PSA, and there were 25 banking offices.
<TABLE>
Growth in Deposits
1994 - 1998
<CAPTION>
Average
Annual
1994 1995 1996 1997 1998 Growth
<S> <C> <C> <C> <C> <C> <C>
Total Deposits ($000) $399.054 $426.535 $481.231 $540.145 $603.254 10.9%
Offices 12 12 17 20 25
</TABLE>
Vision Bank's share of projected deposits is based on an
analysis of the average deposit growth rate in the PSA since
1994. It was assumed that total market deposits would continue
annual growth for the next three years equal to the average
growth rate experienced from June 30, 1994 to June 30, 1998.
Given this growth assumption, total aggregate deposits in South
Baldwin County at the end of the third year of operation are
projected at $822.8 million.
Deposit levels for Vision Bank are based on the organizers'
estimates of available business in Vision Bank's PSA, given the
projected market growth rates. It is believed that Vision Bank
will achieve market share gains in each of the first three years
of operation. For reference, the Peer Group Deposit Mix is as
follows:
Peer Group Deposit Mix
Demand Deposits 14.9%
Now Accounts 3.6%
CD's under $100,000 34.9%
CD's over $100,000 12.2%
MMA and Savings 34.4%
Loan Assumptions
The organizers believe that the loan demand within the
market areas is substantial. Commercial and real estate loans
will be the prevalent loan types for Vision Bank. The organizers
recognize that South Baldwin County offers both tourism and
manufacturing-based lending opportunities. The initial
prospective customers of Vision Bank will include professional
contacts of the organizers - a group with a long and successful
history in the real estate and small business community. The
customer base will be grown with expanded manufacturing and
service-based clients as Vision Bank's community visibility
heightens. The targeted customers are businesses and
corporations of various sizes and in various industries and
professions which have banking needs that include operating
accounts, cash management services, lines of credit, term loans
and real estate loans.
The organizers have significant knowledge of the Gulf Shores
market. It is the belief of the organizers, based on discussions
with prospective customers, that the projected loan levels are
achievable, without sacrificing loan quality. The loan to
deposit ratio for the peer groups as of June 30, 1998 was 75.6%.
The organizers anticipate that Vision Bank will have a
loan/deposit ratio of 80 percent for each of its first three
years of operation.
The organizers have assumed that prevailing interest rates
will continue to exist. However, the organizers recognize the
risks associated with increasing rates, which may be the
operating environment when Vision Bank opens for business. The
business plan is based on the premise that Vision Bank will
attempt to maintain a constant positive spread between the
interest earned in investments and loans, and the interest cost
incurred on deposits. The positive spread will be achieved by
generally offering floating rate loans. Fixed rate loans will be
offered only when their maturities match the projected maturities
of long term certificates of deposits or other borrowings.
The organizers have assumed that the pricing for loans will
continue to be very competitive and has assumed the following
interest rates in Vision Bank's three year business plan:
Assumptions of Interest on Loans
Commercial Loans 8.00%-9.00%
Real Estate Loans 8.00%
Consumer Loans 9.00%
Federal Funds Sold 4.80%
Other Investments 5.50%
Assumptions on Interest Rates on Deposits
Now Accounts 3.50%
Savings Accounts 4.90%
Money Market Accounts 3.50%
CDs Less than $100,000 5.25%
CDs Over $100,000 5.25%
Asset and Liability Structure
The asset/liability mix of Vision Bank will be designed to
earn a maximum rate of return within the confines of reasonable
liquidity, interest sensitivity, and credit risk. The
anticipated mix of loans will cover a broad enough segment of the
market to prevent concentrations of credit in any loan type or
industry segment. The loan mix will be similar to that of other
Gulf Shores community banks. The mix of loans will allow
reasonable liquidity due to maturity schedules and amortization.
The mix of loans will be related to loan growth in the
marketplace and the interest sensitivity requirements of Vision
Bank.
The liability mix will not differ significantly from that of
other banks in the marketplace. The target deposit customer will
often maintain interest bearing transaction and savings accounts.
Time deposits will be kept short but may be extended based on the
liquidity and growth expectation of Vision Bank. Large time
deposits and brokered deposits will not be sought.
The investment portfolio will consist primarily of short
maturities, but may be extended based on the liquidity and growth
expectations of Vision Bank. The loan portfolio will be
comprised primarily of adjustable rate loans with average
maturities of less than five years.
Vision Bank will have a funds management policy that will
attempt to match maturities and interest rate sensitivity of
assets and liabilities, allowing for reasonable tolerance. The
organizers realize that a perfect match of assets and liability
interest rates sensitivity is not possible and may not be
desirable in some cases.
Business Strategy
Vision Bank expects to develop as a full-service commercial
banking organization by initially developing the extensive
relationship networks of the proposed president and senior
lender. Prospective customers are businesses and corporations of
various sizes and in various industries and professions which
have banking needs that include operating accounts, cash
management services, lines of credit, term loans and real estate
loans. It is also expected that Vision Bank will have the
opportunity to bid for the operating accounts of public agencies
in the City of Gulf Shores and Orange Beach. The organizers are
aware of the increased processing and administrative costs of
handling public operating accounts and are aware of the pledging
requirements for public deposits. The organizers also intend to
develop banking relationships with the seasonal residents of Gulf
Shores, individuals who generally are wealthy and who have not
yet developed significant ties with any of the financial
institutions in the area.
Through strategic alliances yet to be finalized with either
third-party vendors or correspondent banks, Vision Bank expects
to offer specialized services to enhance the personal nature of
the banking relationship and provide greater value as a way of
capturing and retaining customer loyalty. These services will
include courier service, internet banking through Vision Bank's
data processing vendor, investment services, debit cards, credit
cards, and payroll services.
In order to accommodate the credit needs of the businesses
and corporations that have been identified as likely prospective
customers, Vision Bank expects to enter into loan participations
with several correspondent banks that are familiar with the
marketplace and with Vision Bank's officers and credit standards.
Examples of such correspondent banking relationships could be
several large Alabama banks such as Compass, National Bank of
Commerce, The Banker's Bank, and SouthTrust. Vision Bank expects
to have numerous opportunities to consider financing for small
businesses and certain entrepreneurial organizations, and will
extend credit through participation in the Small Business
Administration programs. It is expected that these loans, if
any, will be organized and then packaged and sold to enhance fee
income for Vision Bank.
Vision Bank plans to engage in aggressive direct marketing
and officer calling during the first year of operation to achieve
loan and deposit goals and to fully implement Vision Bank's
strategy to acquire banking relationships of the targeted
contacts of the organizers. Depending on the success of this
effort, Vision Bank will expand marketing and promotional efforts
as appropriate, including expanding staff to include a full-time
business development officer.
Proposed Deposit Services
Vision Bank proposes to offer the following deposit-related
products to its customers:
Consumer Deposit Products Miscellaneous Services
Regular Checking ATM/Debit Card
Interest Checking Night Depository
Money Market Checking Safe Deposit Boxes
Senior (Age 50+) Checking Stop Payments
Regular Savings Collections
Certificates of Deposit Direct Deposits
Individual Retirement Accounts Savings Bonds
Wire Transfers
Commercial Deposit Products Bank by Mail
Travelers Checks
Regular Business Checking Official Checks
Regular Business Interest Checking MasterCard/Visa
Money Market Checking Automatic Transfer
Regular Savings Courier Service
Certificates of Deposit Overdraft Protection
Vision Bank has no pre-determined deposit composition. The
deposit mix and other services will depend upon market conditions
and customer demand.
Loans and Loan Policy
Vision Bank intends to offer the following types of loans in
the following approximate amounts relative to total loans:
Commercial Loans - 42%
Installment Loans - 37.5%
Single Pay Loans - 12.5%
Real Estate Loans - 8.3%
Commercial loans will consist primarily of loans to local
businesses.
Installment loans will consist primarily of consumer loans
such as automobile loans, loans for recreational equipment such
as campers, boats, motor homes, etc. and home equity lines of
credit.
Single pay loans will consist of short term (such as 90 to
120 day) loans to well established customers.
Real estate loans will consist ofloans secured by real
property to individuals and businesses. Much of these loans will
be mortgage loans on 1-4 family residences.
As a general rule, commercial loans carry more risk than
home mortgage loans because they tend to be larger in amount, and
they are subject to the success of the commercial enterprise
involved. Vision Bank will attempt to minimize these risks, as
well as the risks generally associated with making loans, as
explained immediately below in this subsection.
Vision Bank has not yet adopted a formal loan policy, but we
expect that the underwriting and other criteria for loans that we
make will be consistent with prudent banking practices. For
example, the primary credit risk associated with any loan is the
creditworthiness of the borrower and the primary source of
repayment for any loan will be the borrower's financial strength.
Adequate collateral for loans will normally be required. However,
collateral value will not make a non-creditworthy borrower
creditworthy. Personal guarantees will be required when the
value or marketability of the collateral is in doubt or, in the
case of a commercial loan, the commercial enterprise carries
additional risk. Credit risk insurance will be offered as an
option, but will only be required when management determines that
the risk indicates need for insurance.
We expect that Vision Bank's loan policy will provide for
various levels of officer lending authority, with a requirement
of loan committee approval or full board approval for loans that
exceed certain amounts or loans that otherwise carry unusual
risk.
In addition, we expect that Vision Bank will have in place
on the date of opening loan requirements that are specified for
various types of loans to be made. For example:
* We will require a first or second mortgage on any real
estate loan equal to a specified minimum percentage of
the loan amount. These percentages may vary based on
the type of loan, such as a loan-to-value limit of 65
percent for raw land, 80 percent for construction
loans, and 85 percent for 1-4 family residential loans.
* We will generally limit commercial loans to short-term
loans to local businesses, with amortization of the
loan for a greater period sometimes permitted. Long
term commercial loans may be made when the economic
feasibility of the loan is established, the term of the
loan does not exceed its economic purpose, and an
acceptable repayment schedule can be demonstrated.
* We will require independent appraisals on all
residential and commercial loans secured by real
estate.
* Consumer loans will normally be made for the purchase
of automobiles, recreational equipment, and equity
lines of credit. Personal signature loans will
generally be limited to well established customers who
have a sound credit history.
Loans will be made at both fixed and variable rates,
depending upon market and competitive conditions.
Vision Bank will not extend credit to any member of its
board of directors or any executive officer unless the extension
is on substantially the same terms and conditions, including
interest rate and collateral, as those prevailing for comparable
transactions with non-affiliated borrowers and does not involve
more than the normal risk of repayment. Such extensions must
also have prior board of director approval with the related-party
abstaining from the approval.
SUPERVISION AND REGULATION
Bank holding companies and banks are regulated extensively
under both federal and state law. The following information
describes some but not all of the applicable statutory and
regulatory provisions, and it is qualified in its entirety by
reference to the particular statutory and regulatory provisions.
Any change in applicable law or regulation may have a material
effect on the business of Vision Bancshares and Vision Bank.
Vision Bancshares
Vision Bancshares will be a bank holding company registered
with, and subject to supervision by, the Board of Governors of
the Federal Reserve System under the Bank Holding Company Act of
1956 (the "BHC Act"). The Federal Reserve Board may examine
Vision Bancshares and Vision Bank.
The BHC Act requires prior Federal Reserve Board approval
for, among other things, the acquisition by a bank holding
company of direct or indirect ownership or control of more than
5% of the voting shares or substantially all the assets of any
bank, or for a merger or consolidation of a bank holding company
with another bank holding company. With certain exceptions, the
BHC Act prohibits a bank holding company from acquiring direct or
indirect ownership or control of any voting shares of any company
which is not a bank or bank holding company and from engaging
directly or indirectly in any activity other than banking or
managing or controlling banks or performing services for its
authorized subsidiaries. A bank holding company may, however,
engage in or acquire an interest in a company that engages in
activities which the Federal Reserve Board has determined, by
regulation or order, to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.
Recent legislation passed by Congress will permit bank holding
companies to acquire securities, insurance and other financial
services related businesses and, thus, permit bank holding
companies to engage in a wide range of financial activities
not previously permitted.
Vision Bancshares and Vision Bank will be subject to the
Federal Reserve Act, Section 23A. Section 23A defines "covered
transactions" to include extensions of credit and limits a bank's
covered transactions with any single affiliate to no more than
10% of a bank's capital and surplus. Covered transactions with
all affiliates combined are limited to no more than 20% of a
bank's capital and surplus. All covered and exempt transactions
between a bank and its affiliates must be on terms and conditions
consistent with safe and sound banking practices and a bank and
its subsidiaries are prohibited from purchasing low quality assets
from Vision Bank's affiliates. Finally, Section 23A requires that
all of a bank's extensions of credit to an affiliate be
appropriately secured by collateral. Vision Bancshares and Vision
Bank will also be subject to Federal Reserve Act, Section 23B,
which further limits transactions among affiliates.
Vision Bancshares's ability to pay dividends will depend
upon the earnings and financial condition of Vision Bank and
certain legal requirements. The Federal Reserve Board has stated
that bank holding companies should not pay dividends except out
of current earnings and unless the prospective rate of earnings
retention by Vision Bancshares appears consistent with its
capital needs, asset quality and overall financial condition.
In the future, Vision Bancshares will rely upon the payment
to it, if any, of dividends by Vision Bank for the payment of
dividends on its shares of common stock.
Vision Bank
Vision Bank will be a state bank organized under the laws of
the State of Alabama and its deposits will be insured by the
"FDIC" up to the maximum amount permitted by law. Vision Bank
will be subject to regulation, supervision and regular
examination by the Superintendent of the Alabama State Banking
Department and the FDIC. Federal and state banking laws and
regulations regulate, among other things, the scope of the
banking business conducted by Vision Bank, its loans and investments,
reserves against deposits, mergers and acquisitions, borrowings,
dividends, minimum capital requirements, and the locations of
branch offices and certain facilities.
Under the Alabama Banking Code, a state bank may not declare
or pay a dividend in excess of 90% of the net earnings of such
bank until the surplus of the bank is equal to at least 20% of
its capital, and thereafter the prior written approval of the
Superintendent is required if the total of all dividends declared
by the bank in any calendar year exceeds the total of its net
earnings for that year combined with its retained net earnings
for the preceding two years less any required transfers to
surplus. No dividends, withdrawals or transfers may be made from
the bank's surplus without prior written approval of the
Superintendent. As a newly organized bank, Vision Bank may not
pay dividends during its first three years of operation without
the prior approval of the Superintendent and the FDIC.
The various federal bank regulators, including the Federal
Reserve Board, have adopted a risk-based capital requirement for
assessing bank and bank holding company capital adequacy. These
standards establish minimum capital standards in relation to the
relative credit risk of assets and off-balance sheet exposures.
Capital is classified into two tiers. Tier I capital consists of
common shareholders' equity and perpetual preferred stock
(subject to certain limitations) and is reduced by goodwill and
minority interests in the common equity accounts of consolidated
subsidiaries. Tier II capital consists of the allowance for
possible loan losses (subject to certain limitations) and certain
subordinated debt. The risk-based capital guidelines require
financial institutions to maintain specific defined credit risk
factors (risk-adjusted assets). The minimum Tier I capital ratio
is 4.0%, and the combined Tier I and Tier II capital to risk-
weighted assets ratio is 8.0%. The Federal Reserve Board also
has adopted regulations which supplement the risk-based capital
guidelines to include a minimum leverage ratio of Tier I capital
to total assets of 3.0% to 5.0%.
The Federal Reserve Board's risk based capital guidelines
will be applied to Vision Bancshares and Vision Bank on a
consolidated basis. This will limit Vision Bancshares's ability
to engage in acquisitions financed by debt. The FDIC has adopted
similar risk-based capital requirements that are applicable to
Vision Bank. The Federal Reserve Board, the FDIC and the
Superintendent have imposed minimum capital (leverage)
requirements. Those rules may affect the future development of
Vision Bancshares's long-term business and capital plans, and may
affect its ability to acquire additional financial institutions
and other companies.
Support of Subsidiary Institutions
Under Federal Reserve Board policy, Vision Bancshares will
be expected to act as a source of financial strength for, and to
commit resources to support, Vision Bank. This support may be
required at times when, without this Federal Reserve Board
policy, Vision Bancshares might not be inclined to provide it.
In addition, any capital loans by Vision Bancshares to Vision
Bank may 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.
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 depositary 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: (1) well capitalized; (2) adequately
capitalized; and (3) 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.
In addition, effective January 1, 1997, the FDIC imposed
assessments to help pay off the $780 million in annual interest
payments on the $8 billion Financing Corporation bonds issued in
the late 1980s as part of the government rescue of the thrift
industry. The FDIC will assess banks at a rate of 1.3 cents per
$100 deposits until December 31, 1999. Thereafter, it will add
approximately 2.4 cents per $100 of deposits to each assessment.
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.
Other Legislative Action
Other legislative and regulatory proposals regarding changes
in banking, and the regulation of banks, thrifts and other
financial institutions are considered from time to time by the
executive branch of the federal government, Congress and various
state governments. Some of those proposals, if adopted, could
significantly change the regulation of banks and the financial
services industry. It cannot be predicted whether any proposals
will be adopted, and, if adopted, how these will affect Vision
Bancshares or Vision Bank.
Monetary and Fiscal Policy
Banking is a business which depends on interest rate
differentials. In general, the difference between the interest
paid by a bank on its deposits and its other borrowings and the
interest received by a bank on its loans to customers and its
securities holdings constitutes the major portion of a bank's
earnings. Thus, the earnings and growth of Vision Bancshares and
Vision Bank will be subject to the influence of economic
conditions generally, both domestic and foreign, and also to the
monetary and fiscal policies of the United States and its
agencies, particularly the Federal Reserve Board. The Federal
Reserve Board regulates the supply of money through various
means, including open-market dealings in United States government
securities, the discount rate at which members may borrow, and
reserve requirements on deposits and funds availability
regulations. These instruments are used in varying combinations
to influence the overall growth of bank loans, investments and
deposits and also affect interest rates charged on loans or paid
on deposits. The policies of the Federal Reserve Board have had
a significant effect on the operating results of commercial banks
in the past and will continue to do so in the future. The nature
and timing of any future changes in Federal Reserve Board
policies and their impact on Vision Bancshares cannot be
predicted.
DIRECTORS AND OFFICERS
Background
The organizers of Vision Bancshares together with Olen
Crawford will serve as members of the board of directors of
Vision Bancshares, or Vision Bank, or both. The table below lists
the directors and executive officers of Vision Bancshares.
<TABLE>
<CAPTION>
Position
with Vision
Bancshares and Principal Occupation
Name and Age Vision Bank for the Last Five Years
<S> <C> <C>
J. Daniel Sizemore, 51 Proposed CEO and Proposed CEO and
Chairman of the Chairman
Board of Vision Bancshares
of Vision Bancshares and Vision Bank
& Vision Bank since April, 1999;
President and Chief
Executive
Officer, The Bank,
Birmingham, Alabama
1998 - 1999;
President and Chief
Executive
Officer, Commerce
Bank
of Alabama,
Albertville, Alabama
1994 - 1998
James R. Owen, Jr., 47 Director of Vision President, Gulf Shores
Bancshares & Vision Title Insurance Co., Inc.
Bank (Title Insurance Company)
Olen E. Crawford, 47 Vision Bancshares Business Developer
Director (self-employed) since 1998;
President, Call Points
Business Unit of Vialog
Communication 1997-1998;
Executive Vice President,
Conference Source
International,
1992-1997
Joe C. Campbell, 53 Vision Bancshares District Manager, ALFA
Director Insurance Company
(General Insurance)
Donald W. Peak, 59 Director of Vision President, Forest Manor
Bancshares & Vision Nursing Home, Inc.
Bank (long-term care facility);
President, Phoenix
Therapy Associates
(rehabilitation
therapy); President,
Central Medical
Supplies of Alabama
(durable medical equipment)
Thomas Gray Skipper, 28(1) Vision Bancshares Vice President, Scotch
Director Plywood Company
Gordon Barnhill, Jr., 44 Director of Vision Owner, Barnhill Land
Bancshares & Vision and Real Estate
Bank (Real Estate Business)
and farmer
Daniel M. Scarbrough, Director of Vision Vice President, Community
M.D., 54 Bancshares & Vision Health Systems, Inc. since
Bank Private practice of medicine
prior to July 4, 1997
Patrick Willingham, CPA, Director of Vision President and CEO,
54 Bancshares & Vision Community Health
Bank Systems, Inc.
(Certified Public
Accountant)
S. Millard Johnson, 75 Vision Bancshares Retired Business Executive
Director
William T. Carlson, Jr., 48 Vision Bancshares Of Counsel,
Director Capell & Howard, P.C.
(Lawyer)
Rick A. Phillips, 47 Director of Vision Owner, Professional Real
Bancshares & Vision Estate Partners, Inc.
Bank (Real Estate Brokerage
and Marketing)
William D. Moody, 52 Director of Vision President, Alpha Development
Bancshares & Vision Group, Inc.
Bank (Real Estate Development)
George W. Skipper, III, Vision Bancshares Vice President, Skipper
54 (1) Director Insurance
(General Insurance)
Julian Brackin, 49 Vision Bancshares Partner, Brackin and
Director McGriff, P.C.
(Attorney)
Nancy Jayne Jackson, 42 Senior Vice President Senior Vice President,
Vision Bancshares; Senior
Vice President, Operations
Ready Bank, Ft. Walton
Beach, Florida, 1999; Vice
President and Information
Systems Auditor, Aliant
Bank, Montgomery, Alabama
prior to 1999.
<FN>
(1) George W. Skipper, III is the father of Thomas Gray Skipper.
</FN>
</TABLE>
Tommy Files, a resident of Gulf Shores and a banker with 14 years
of experience in the Gulf Shores area, will serve as executive vice
president of Vision Bank and the branch manager of the branch in
Orange Beach. Mr. Files will receive options on 2,500 shares of common
stock.
Election and Terms of Board of Directors
Directors of Vision Bancshares will be elected annually for
three year terms. The terms will be staggered with approximately
one-third of the directors being elected each year for three year
terms. The following directors will serve until the 2000 annual
meeting: Messers. Barnhill, Brackin, Campbell, Carlson and
Crawford. Directors Johnson, Moody, Owen, Peak and Phillips will
serve until the 2001 annual meeting, and directors Scarbrough,
Sizemore, George W. Skipper, III, Thomas Gray Skipper and
Willingham will serve until the 2002 annual meeting. Directors
of Vision Bank will be elected annually and serve one year terms.
Officers of Vision Bancshares and Vision Bank serve at the
discretion of the respective boards of directors.
During Vision Bank's first fiscal year, directors will not
receive any fees for serving in that capacity. Thereafter,
director fees may be paid in amounts determined by the board of
directors of Vision Bank. Directors who are employees of Vision
Bank will receive no compensation for serving as bank directors.
The directors of Vision Bancshares could receive director fees
from Vision Bancshares paid out of the capital retained by Vision
Bancshares.
Vision Bancshares's articles of incorporation set the
minimum number of directors at 6 and the maximum at 20, with the
exact number to be determined by resolution of the directors.
Initially, there are expected to be 15 members of the board, as
shown above. It is presently contemplated that Vision Bank will
employ a senior vice president and that the person holding that
position will be appointed by the other board members as a member
of the board of directors.
Committees of the Board
The board of directors of Vision Bank will initially have an
audit committee, loan committee and investment committee.
The audit committee, consisting of Messrs. Patrick
Willingham, Gordon Barnhill, Rick A. Phillips and Daniel M.
Scarbrough, will recommend to the board of directors the
independent accountants to be selected as Vision Bancshares'
auditors, review the audit plan, financial statement and audit
results, review with internal and independent auditors and bank
examiners Vision Bank's accounting practices and policies, and
overall accounting and financial controls, and conduct an
appropriate review of any related party transactions and
potential conflict of interest situations.
The investment committee will consist of Messrs. J. Daniel
Sizemore, James R. Owen, Jr., William D. Moody, Gordon Barnhill,
and Daniel M. Scarbrough. In addition, it is anticipated that a
senior vice president of Vision Bank will serve on this
committee. The investment committee will be charged with
reviewing Vision Bank's investment portfolio and investment
activities.
The loan committee will include Messrs. J. Daniel Sizemore,
James R. Owen, Jr., Patrick Willingham, William D. Moody and
Rick A. Phillips, as well as Vision Bank's senior loan officer.
Executive Compensation
Officers of Vision Bancshares and Vision Bank will serve at
the discretion of the board of directors.
The following tables show on a prospective basis for 1999
the anticipated annual rate of compensation and stock option
grants to be paid to Vision Bancshares' chairman and chief
executive officer.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long Term
Compensation
Award
Name and Securities
Principal Other Annual Underlying
Position Year Salary ($) Bonus ($) Compensation Options (#)
<S> <C> <C> <C> <C> <C>
J. Daniel Sizemore
Chairman and CEO 1999 $120,000 (1) $0 35,000 (2)
<FN>
(1) Bonuses will be determined annually.
(2) The exercise price is $10.00 per share.
</FN>
</TABLE>
<TABLE>
Options to be Granted
<CAPTION>
Number of
Securities % of Total
Underlying Options Exercise
Options to Granted to Price Expiration
Name be Granted Employees ($/Sh) Date
<S> <C> <C> <C> <C>
J. Daniel Sizemore 35,000 70% $10 10 Year
</TABLE>
Employment Agreements
J. Daniel Sizemore has an employment agreement with Vision
Bancshares to serve as president and chief executive officer of
Vision Bancshares and chairman and chief executive officer of
Vision Bank. The agreement has a three year term and may be
renewed daily for a continuous three year term. The agreement
may only be terminated upon three years notice except that the
agreement may be terminated by Vision Bancshares at any time for
cause. Mr. Sizemore will receive a base salary of $120,000 per
year, and be entitled to certain benefits such as life insurance,
a $750 per month automobile allowance, and country club and civic
dues. The agreement also provides that Mr. Sizemore will receive
options of 35,000 shares of Vision Bancshares's common stock at a
price of $10 per share.
Certain Relationships and Related Transactions
Gulf Shores Investment Group, LLC (the "Investment Group")
is an Alabama limited liability company that proposes, subject to
regulatory approval, to own the real estate and construct and own
the buildings for Vision Bank's main office and branch office.
The Investment Group will be formed by those persons who are
directors of Vision Bancshares, except Olen E. Crawford . The
lease agreement for Vision Bank's main office will have a three
year term and will provide for annual lease payments of $155,295,
payable monthly with additional rental payments made based upon
certain operating costs of the building. The lease may be
extended for three, three year terms. Vision Bank will operate
out of a temporary modular unit owned by Vision Bank for
approximately nine months and will pay $2,630 per month in ground
lease payments to the Investment Group.
The lease for the branch office will have a three year term
and provide for annual lease payments of $63,000, payable
monthly, with additional rental payments made based upon certain
operating costs of the building. The lease may be extended for three,
three year terms. It is anticipated that the construction of
the branch office will not be completed until approximately
August, 2000. In the meantime, the Investment Group will lease
the ground for the branch to Vision Bank at a monthly lease of
$1,975. Vision Bank will maintain a temporary modular building
on this site for use as the branch bank premises. The Investment
Group will purchase the site of this branch from George W.
Skipper, III, and Thomas Grey Skipper, organizers and directors
of Vision Bancshares, for a purchase price of $275,000.
Each of the organizers has signed an agreement providing
that each person will contribute up to a maximum of $25,000 to
pay his pro rata portion of the organizational expenses for
Vision Bank and Vision Bancshares. The agreement provides that
upon receipt of appropriate regulatory approvals, Vision Bank
will reimburse the organizers for these expenses. From these
contributions, Vision Bancshares paid $17,500 on an option to
purchase the land on which Vision Bank will be located and $7,280
to architects for building plans. The Investment Group will
reimburse Vision Bancshares for these payments.
The foregoing lease arrangements are subject to approval of
the FDIC. If the FDIC does not approve the lease arrangements,
Vision Bank will buy the real estate and construct and own the
bank buildings at such sites.
In the opinion of the directors of Vision Bancshares, the
terms of these lease agreements (including the purchase price for
the branch site) and reimbursements for costs between the
Investment Group and Vision Bancshares or Vision Bank are at
least as favorable as those that could have been obtained from an
unaffiliated party.
In the future, Vision Bank may make loans to its directors
and officers in the ordinary course of business. Such loans, or
other banking transactions involving these persons, will be made
on the same terms, including interest rate and collateral
requirements, that Vision Bank would make to the general public.
Incentive Stock Compensation Plan
The board of directors of Vision Bancshares has adopted an
Incentive Stock Compensation Plan. The directors believe an
incentive program will be an important asset in attracting and
retaining qualified personnel and motivating their efforts on
behalf of Vision Bank and its interests. This plan will be
submitted to a vote of Vision Bancshares shareholders at the
first meeting of shareholders.
The following discussion outlines some of the essential
features of this plan, but is qualified in its entirety by
reference to the full text of the plan which is included as an
exhibit to the registration statement of which this prospectus is
a part.
All key employees of Vision Bank are eligible to participate
in this plan. The selection of participants is entirely within
the discretion of the stock option plan committee which is to be
comprised of two or more members of the board of directors of
Vision Bancshares designated by resolution. The plan will be
administered by the committee, which has the exclusive right,
subject to the provisions of the plan, to interpret its provisions
and to prescribe, amend and rescind rules and regulations for its
administration.
Vision Bancshares has reserved a total of 75,000 shares of
common stock for issue under the plan. For "incentive stock
options" qualified as such under section 422(a) of the Internal
Revenue Code, the aggregate value of the shares for which an
employee may be granted options in any year cannot exceed
$100,000, measured by the fair market value at date of grant,
plus any unused carryover of this annual limitation. The price
of the option cannot be less than 100% of the fair market value
of the shares on the date the option is granted, except as to
persons who hold more than 10% of the voting power of Vision
Bancshares, in which case the option price cannot be less than
110% of fair market value.
No option may be exercised more than ten years after it is
granted. An option becomes exercisable, subject to the foregoing
limitation, any time after it is granted unless vesting
requirements are imposed with the grant. An option must be
exercised within 90 days of retirement, and within 90 days of
other termination from Vision Bancshares or Vision Bank. All
vesting requirements on options may be waived if there is a
change of control, or potential change of control of Vision
Bancshares.
The board of directors of Vision Bancshares has granted
options to Mr. Sizemore for 35,000 shares and plans to grant
options to other officers for an aggregate of 15,000 shares.
These options are exercisable at $10.00 per share, and otherwise
on the terms described above.
The plan also provides that notwithstanding any other
provision in the plan or any agreement under the plan, Vision
Bancshares's primary bank regulator shall at any time have the
right to require any holder of options to exercise such options
or forfeit options not exercised if Vision Bancshares's capital
falls below minimum capital required by Vision Bancshares'
primary bank regulator.
Employee Stock Purchase Plan
The board of directors of Vision Bancshares has also adopted
an Employee Stock Purchase Plan, which is intended to qualify
under Section 423(b) of the Internal Revenue Code. Under this
plan eligible Bank employees may purchase shares of Vision
Bancshares through a payroll deduction plan. We believe it is
important that employees of Vision Bank have an opportunity to
invest in Vision Bancshares's future, and that this plan can
be a valuable incentive for employees. This plan will also be
submitted to a vote at Vision Bancshares' first shareholders meeting.
The form of the Employee Stock Purchase Plan was filed as an
exhibit to the registration statement of which this prospectus is
a part. The following discussion outlines some of the essential
features of the plan, but is qualified in its entirety by
reference to the full text of the plan.
Generally, all active full-time employees of Vision Bank are
eligible to participate in the Employee Stock Purchase Plan. No
employee may be permitted to subscribe for shares if immediately
after subscribing he or she would own shares (including those
which may be purchased under outstanding subscriptions under the
Employee Stock Purchase Plan) representing 5% or more of the
total combined voting power or value of all classes of stock of
Vision Bancshares.
Employees will have the opportunity to subscribe to purchase
shares at a series of offerings occurring at six-month intervals.
Offering periods will be for 15 days. The total number of shares
available under all offerings on a cumulative basis is 7,500. To
subscribe to purchase shares, an employee must sign a
subscription agreement specifying the number of shares he or she
will purchase. During an offering period, an employee may
subscribe for a minimum of 10 shares and a maximum of 50. An
employee may subscribe to purchase stock in more than one
offering period.
The purchase price of a share must not be less than 85% of
the fair market value of the shares on the date offered.
No employee may subscribe to purchase shares under the
Employee Stock Purchase Plan if doing so would permit his or her
rights to purchase shares under all stock purchase plans of
Vision Bancshares to accrue at a rate which exceeds $25,000 of
the fair market value of such shares (determined at the time such
right to subscribe is granted) for each calendar year in which
such right to subscribe is outstanding at any time. Pursuant to
this limitation, Mr. Sizemore will not be eligible to participate
in the Employee Stock Purchase Plan.
Each employee who subscribes to purchase shares during an
offering period must sign an authorization for payroll deductions
by Vision Bank to pay the purchase price of the subscribed
shares. Payment will be made in equal regular installments, at
least monthly, over a period of 12 calendar months.
Employees will not have voting or other rights of
shareholders with respect to any shares covered by subscription
agreements until the date the full purchase price of all shares
covered by such subscription agreement has been paid.
Director Stock Plan
The board of directors of Vision Bancshares has adopted a
Director Stock Plan. This plan permits stock options to be
granted to directors and permits directors to receive director
fees in stock in lieu of cash.
The following discussion outlines some of the essential
features the plan which is included as an exhibit to the
registration statement of which this prospectus is a part.
The plan will be administered by the compensation committee
of the board, which has the exclusive right, subject to the
provisions of the plan, to interpret its provisions and to
prescribe, amend and rescind rules and regulations for its
administration.
Vision Bancshares has reserved a total of 70,000 shares of
common stock for issue under the plan and plans to issue options
to each non-employee director in the amount of 5,000 shares each.
J. Daniel Sizemore, as a full-time employee, will not receive
options under this plan because he has received options under the
Vision Bancshares Incentive Stock Compensation Plan described
above.
No option may be exercised more than ten years after it is
granted. Subject to the foregoing limitation, an option becomes
exercisable any time after it is granted, unless it is subject to
vesting requirements at the time of grant. The exercise price
for each option shall be the fair market value of the option on
the date of grant.
Under the plan, members of the board of directors may elect
to receive shares of common stock as restricted stock in lieu of
receiving cash director fees at an amount equal to the cash fees
that would be due to be paid divided by 75 percent of the fair
market value of the common stock.
The plan also provides that notwithstanding any other
provision in the plan or any agreement under the plan, Vision
Bancshares' primary bank regulator shall at any time have the
right to require any holder of options to exercise such options
or forfeit options not exercised if Vision Bancshares' capital
falls below minimum capital required as determined by Vision
Bancshares' primary bank regulator.
Change in Control Provisions
Both the Incentive Stock Compensation Plan and the Director
Stock Plan provide that if a change in control or potential
change in control of Vision Bancshares occurs, options
outstanding that are not yet exercisable as a result of vesting
requirements may nevertheless be exercised. Also, in lieu of
exercise, Vision Bancshares has the right to pay cash to the
holder equal to the "change of control price." The change of
control price is the highest price paid or offered in a change of
control or potential change of control within the preceding 60
days. A change in control occurs when a person or entity
acquires 20 percent or more of Vision Bancshares' common stock or
when certain other events occur such as a change in two-thirds of
the board of directors that is not recommended by the incumbent
directors.
A potential change in control occurs when Vision Bancshares
enters into an agreement that would result in a change of control
or a person or entity acquires 5 percent or more of Vision
Bancshares common stock and the board of directors determines by
resolution that such acquisition constitutes a change in control.
Indemnification of Directors and Officers
The bylaws of Vision Bancshares provide that Vision
Bancshares will indemnify its and Vision Bank's officers,
directors, employees and agents to the extent permitted by the
Alabama Business Corporation Act. That Act permits a corporation
to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action,
suit or proceeding by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, against
expenses (including attorney's fees), judgments, fines and
settlements incurred by him in connection with any such suit or
proceeding. In order to receive indemnification, the person must
have acted in good faith and in a manner reasonably believed to
be in or not opposed to the best interests of the corporation,
and, in the case of a derivative action on behalf of the
corporation, that he not be adjudged to be liable for negligence
or misconduct.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Vision Bancshares or Vision Bank,
pursuant to the foregoing provisions, or otherwise, Vision
Bancshares 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. In the event that a claim for indemnification
against such liabilities (other than payment by Vision Bancshares
of expenses incurred or paid by a director, officer or controlling
person of Vision Bancshares in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, Vision Bancshares will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SECURITY HOLDERS
The following table shows the proposed beneficial ownership
of the shares of common stock of the directors and executive
officers of Vision Bancshares, assuming the minimum of 800,000
shares will be outstanding after completion of the offer. The
directors intend to purchase directly or indirectly an aggregate
of at least 422,700 shares at a purchase price of $10.00 per
share.
<TABLE>
<CAPTION>
Number of Shares of Percentage
Name and Address Common Stock to be Owned Ownership
<S> <C> <C>
J. Daniel Sizemore 67,500 (1) 8.08% (1)
33343 River Road
Orange Beach, AL 36561
James R. Owen, Jr. 25,000 3.125%
P.O. Box 895
Gulf Shores, AL 36547
Olen E. Crawford 50,000 6.25%
7001 Val Monte Drive
Guntersville, AL 35976
Joe C. Campbell 30,000 3.75%
110 Eagle Drive
Albertville, AL 35951
Donald W. Peak 25,000 3.125%
2401 32nd Street
Northport, AL 35476
Thomas Gray Skipper 25,000 3.125%
1452 Drewry Road
Monroeville, AL 36460
Gordon Barnhill, Jr. 25,000 3.125%
Post Office Box 644
Robertsdale, AL 36567
Daniel M. Scarbrough, M.D. 25,000 (2) 3.125%
30815 Peninsula Drive
Orange Beach, AL 36561
Patrick Willingham, CPA 25,000 (3) 3.125%
30475 Harbour Drive
Orange Beach, AL 36561
S. Millard Johnson 25,100 (4) 3.137%
P.O. Box 375
216 W. Canal Road
Gulf Shores, AL 36547
William T. Carlson, Jr. 25,100 (5) 3.137%
3038 Taralane Drive
Birmingham, AL 35216
Rick A. Phillips 30,000 3.75%
Post Office Box 3351
Gulf Shores, AL 36547
William D. Moody 30,000 3.75%
4170 Spinnaker Drive
Unit #1020-D
Gulf Shores, AL 36542
George W. Skipper, III 25,000 3.125%
307 Skipper Drive
Jackson, AL 36545
Julian Brackin 25,000 3.125%
1261 Patrick Street
Daphne, AL 36526
Nancy Jayne Jackson 0 0%
9055 Eagle Lane
Foley, AL 36535
All Directors and Officers
as a group (16 persons) 457,700 (6) 54.81%
<FN>
(1) Includes 35,000 shares subject to options to be granted to
Mr. Sizemore under the Incentive Stock Compensation Plan.
(2) Dr. Scarbrough is medical director of Community Health
Systems, a non-profit corportion, which will acquire
50,000 shares. Dr. Scarbrough disclaims any beneficial
ownership of those shares. See footnotes (4) and (5).
(3) Mr. Willingham is president of Community Health Systems.
Mr. Willingham disclaims any beneficial ownership
over shares to be acquired by that entity. See footnotes
(2), (4) and (5).
(4) Mr. Johnson is a director of Community Health Systems and
will own 100 shares directly. Mr. Johnson will vote 25,000
of the 50,000 shares to be owned by that entity. See
footnote (2).
(5) Mr. Carlson is a director of Community Health Systems and
will own 100 shares directly. Mr. Carlson will vote 25,000
of the 50,000 shares to be owned by that entity. See
footnote (2).
(6) Includes options referenced in footnote (1). The percentage
for the group assumes that shares subject to options have
been issued.
</FN>
</TABLE>
DESCRIPTION OF CAPITAL STOCK
The following summarizes certain provisions of Vision
Bancshares's capital stock. Additional information regarding the
capital stock is set forth in the articles of incorporation and
bylaws of Vision Bancshares that are included as exhibits to the
registration statement of which this prospectus is a part and in
the applicable provisions of the Alabama Business Corporation Act
under which Vision Bancshares is incorporated and by which its
corporate affairs will be governed.
General
The authorized capital stock of Vision Bancshares consists
of 10,000,000 shares of common stock, $1.00 par value per share,
100 shares of which are currently issued to Daniel Sizemore for
organizational purposes, and 1,000,000 shares of preferred stock,
par value $1.00 per share, none of which is outstanding. A
minimum of 800,000 and a maximum of 1,000,000 shares of common
stock are offered by this prospectus. In addition, an aggregate
of 152,500 shares of common stock are reserved for issuance under
Vision Bancshares's stock option plans and the Employee Stock
Purchase Plan.
The preferred stock may be issued from time to time as a
class without series, or if so determined by the board of
directors, either in whole or in part in one or more series. The
voting rights, and such designations, preferences and relative,
participating, optional or other special rights, if any, and the
qualifications, limitations or restrictions thereof, if any,
including, but not limited to, the dividend rights, conversion
rights, redemption rights and liquidation preferences, if any, of
any wholly unissued series of preferred stock (or of the entire
class of preferred stock if none of such shares has been issued),
the number of shares constituting any such series and the terms
and conditions of the issue thereof may be fixed by resolution of
the board of directors. The preferred stock may have a
preference over the common stock with respect to the payment of
dividends and the distribution of assets in the event of the
liquidation or winding-up of Vision Bancshares and such other
preferences as may be fixed by the board of directors.
Voting
Holders of the shares are entitled to one vote per share on
all matters to be voted upon by shareholders. Vision
Bancshares's articles of incorporation provide that directors are
elected for three year terms. The holders of the shares of
common stock do not have cumulative voting rights, which means
that the holders of more than one-half of the outstanding shares
can elect all of the directors.
Shareholders may call special meetings of shareholders if
they own 10 percent or more of the outstanding shares of common
stock of Vision Bancshares. Shareholders may take action without
a shareholder meeting only by a written consent signed by all
shareholders entitled to vote on the subject matter at a
shareholder meeting.
The board of directors may increase or decrease by 30
percent or less the number of directors last elected by
shareholders and may fill any vacancies so created. Increases or
decreases in the number of directors by more than 30 percent may
only be made by shareholders, with shareholders filling any
vacancies as a result of such increase.
Dividends
Shareholders may receive dividends when and if declared by
the board of directors in accordance with applicable law. See
"Dividend Policy."
Other Rights
Holders of shares of common stock are entitled to share
ratably in the assets of Vision Bancshares legally available for
distribution to its shareholders in the event of liquidation,
dissolution or winding up of Vision Bancshares. Shareholders
have no preemptive, subscription, redemption or conversion
rights. All outstanding shares of common stock and the shares to
be issued in this offering will be, upon payment therefor and
issuance, fully paid and non-assessable.
Possible Issuance of Shares - Certain Anti-Takeover Effects
Under Vision Bancshares's articles of incorporation, and
after reserving for the maximum of 1,000,000 shares that could be
issued in the offer and 152,500 shares that may be issued under
benefit plans, the board of directors may issue up to an
additional 8,847,500 shares of Vision Bancshares's common stock
without further approval or authorization of the shareholders. It
is possible that additional shares could be issued in the future
and that such issuance could cause dilution in the value of
shares then outstanding. The existence of authorized shares
could enable the board of directors to issue shares to persons
friendly to current management, which could render more difficult
or discourage any attempt to gain control of Vision Bancshares by
a proxy contest, tender offer, merger or other means that is not
favored by management.
The authority of the board of directors to issue preferred
stock with such rights and privileges, including voting rights,
as it may deem appropriate could also enable the board to deter
or prevent a change in control despite a shift in the ownership
of the common stock.
Because directors are elected for three year terms, with
approximately one-third of the board elected each year, two
elections will be required to change a majority of the members of
the board. This method could delay, or make more difficult, a
change in the board or in control of Vision Bancshares.
Directors may only be removed by shareholders for cause.
MARKETABILITY OF SECURITIES
Although the 1,000,000 shares offered by this prospectus
will be registered under applicable state and federal securities
laws, we do not expect that a public trading market, or public
price quotations of the shares, will develop. Investors should
expect to hold their shares for an indefinite period of time.
After the offering, Vision Bancshares will have reserved
152,500 shares of common stock for issuance under its stock
plans. No holders of shares of common stock or options have the
right to require that Vision Bancshares undertake the
registration of their shares or to include their shares in any
registration statement undertaken by Vision Bancshares.
The shares sold in the offering will be freely tradeable
without restriction under the Securities Act of 1933, unless the
shares are held by persons deemed to be "affiliates" of Vision
Bancshares. An affiliate of an issuer is defined in Rule 144
under the Securities Act as a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by,
or is under common control with the issuer. Rule 405 under the
Securities Act defines the term "control" to mean the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of the person whether through the
ownership of voting securities, by contract or otherwise. All
directors of Vision Bancshares will be deemed to be affiliates.
The 457,500 shares of common stock held by affiliates will be
subject to restrictions on resale contained in the provisions of
Rule 144.
In general, under Rule 144, persons who are affiliates of
Vision Bancshares will be entitled to sell within any 90-day
period that number of shares which does not exceed the greater of
1% of the then outstanding shares or the average weekly trading
volume of the shares during the four calendar weeks preceding the
sale.
A condition to the use of Rule 144 is that Vision Bancshares
file public reports at the SEC or that information that would be
included in such reports be otherwise publicly available. Vision
Bancshares will file such reports for the fiscal year in which
its registration statement for the shares becomes effective, but
may not be required to file such reports for fiscal years
thereafter. Hence, Rule 144 may not be available for resales by
affiliates in the future.
DIVIDEND POLICY
We do not expect Vision Bank or Vision Bancshares to realize
a profit during its initial year of operation, and it is not
likely during the first few years that Vision Bancshares will
generate sufficient profit to justify or allow it to pay
dividends. Vision Bancshares will rely on the payment of
dividends to it by Vision Bank in order to provide funds for the
payment of dividends by it to its shareholders. In no event
during the first three years of operations can any dividends be
declared or paid by Vision Bank without the approval of the
Alabama Banking Department and the Federal Deposit Insurance
Corporation. In addition, banking regulations restrict the
payment of dividends under certain circumstances. Future
dividend policy of Vision Bancshares will be subject therefore
not only to banking regulations, but to the discretion of the
directors, and will be contingent on Vision Bank's financial
condition, capital requirements, general business conditions and
other factors. We do not expect cash dividends to be paid during
at least the first three years of operation, and all earnings
will be retained for Vision Bank's future needs.
LEGAL MATTERS
Certain legal matters regarding the shares offered hereby
will be passed upon for Vision Bancshares by Balch & Bingham,
LLP, Montgomery, Alabama.
EXPERTS
The financial statements of Vision Bancshares contained in
this prospectus have been included in reliance upon the report of
Mauldin & Jenkins LLC, Albany, Georgia, independent certified
public accountants, and upon the authority of such firm as
experts in accounting and auditing.
FINANCIAL REPORTS TO SHAREHOLDERS
Assuming the registration statement of which this prospectus
is a part becomes effective in 1999, Vision Bancshares will file
public reports with the Securities and Exchange Commission for
1999. As part of these reports, Vision Bancshares will file an
annual report on Form 10-K for the fiscal year ending December
31, 1999, which will contain audited financial statements.
Thereafter, whether Vision Bancshares will be required to file
such reports will depend upon the number of shareholders in
Vision Bancshares. If the number is less than 300 at the
beginning of any fiscal year, no reports at the Securities and
Exchange Commission will be required for that fiscal year.
Vision Bancshares will likely distribute an annual report to its
shareholders reviewing the previous year's operations, but the
report may not contain audited financial statements on Vision
Bancshares if Vision Bancshares is no longer required to file
public reports at the Securities and Exchange Commission.
<PAGE>
VISION BANCSHARES, INC.
(A Development Stage Company)
FINANCIAL REPORT
AUGUST 31, 1999
INDEX TO FINANCIAL STATEMENTS
Page
INDEPENDENT AUDITOR'S REPORT F-2
FINANCIAL STATEMENTS
Balance sheet as of August 31, 1999 F-3
Statement of loss and accumulated deficit F-4
for the period from July 16, 1999, date of
inception, to August 31, 1999
Statement of stockholder's deficit for F-5
the period from, July 16, 1999, date of
inception to August 31, 1999
Statement of cash flows for the period from F-6
July 16, 199, date of inception,
to August 31, 1999
Notes to financial statements F-7
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Vision Bancshares, Inc.
Gulf Shores, Alabama
We have audited the accompanying balance sheet of Vision
Bancshares, Inc., a development stage company, as of August 31,
1999, and the related statements of loss and accumulated deficit,
stockholder's deficit and cash flows for the period from July 16,
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 audits 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
Vision Bancshares, Inc. as of August 31, 1999, and the results of
its operations and its cash flows for the period from July 16,
1999, date of inception, to August 31, 1999, in conformity with
generally accepted accounting principles.
/s/ Mauldin & Jenkins, L.L.C.
Albany, Georgia
September 13, 1999
<PAGE>
<TABLE>
VISION BANCSHARES, INC.
(A Development Stage Company)
BALANCE SHEET
AUGUST 31, 1999
ASSETS
<S> <C>
Cash in bank $ 27,058
Other assets 24,780
$ 51,838
LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES
Due to organizers $ 140,000
Other liabilities 90,000
Total liabilities 230,000
COMMITMENTS
STOCKHOLDER'S DEFICIT
Common stock, $1 par value; 10,000,000
shares authorized; 100 shares
issued and outstanding 100
Additional paid-in capital 3,558
Deficit accumulated during the development stage (181,820)
Total stockholder's deficit (178,162)
$ 51,838
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
VISION BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
PERIOD FROM JULY 16, 1999, DATE OF INCEPTION,
TO AUGUST 31, 1999
<S> <C>
Income $ -
Expenses
Organizational expense 110,447
Personnel expense 57,476
Interest 2,658
Postage and telephone 2,054
Rental expense 1,933
Automobile expense 1,205
Education and training 3,551
Dues 1,300
Miscellaneous 1,196
181,820
Net loss for the period and accumulated deficit $ (181,820)
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
VISION BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S DEFICIT
PERIOD FROM JULY 16, 1999, DATE OF INCEPTION,
TO AUGUST 31, 1999
<CAPTION>
Deficit
Accumulated
Additional During the Total
Common Stock Paid-in Development Stockholders'
Shares Par Value Capital Stage Deficit
<S> <C> <C> <C> <C> <C>
Issue of common stock 100 $ 100 $ 900 $ - $ 1,000
Imputed interest on advances from
organizer credited to capital
surplus - - 2,658 - 2,658
Net loss for the period from
July 16, 1999, date of
inception, to August 31, 1999 - - - (181,820) (181,820)
Balance, August 31, 1999 100 $ 100 $ 900 $ (181,820) $ (178,162)
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
VISION BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM JULY 16, 1999, DATE OF INCEPTION,
TO AUGUST 31, 1999
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (181,820)
Adjustment to reconcile net loss to net cash used in
operating activities:
Imputed interest on advances from organizer 2,658
Other prepaids and accruals, net 65,220
Net cash used in operating activities (113,942)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances by organizer 140,000
Proceeds from issuance of common stock 1,000
Net cash provided by financing activities 141,000
Net increase in cash 27,058
Cash at beginning of period -
Cash at end of period $ 27,058
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
VISION BANCSHARES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
Vision Bancshares, Inc. (the "Company") was organized as an Alabama
Corporation on July 16, 1999 to operate as a bank holding company
pursuant to the Federal Bank Holding Company Act of 1956, as
amended, and to purchase 100% of the issued and outstanding capital
stock of Vision Bank (the "Bank"), an association to be organized
under the laws of the State of Alabama, which will conduct a
general banking business in Gulf Shores, Alabama. The organizers
have filed an application with the State of Alabama Department of
Banking (the "ADB") to charter the proposed bank. The Company has
filed an application to become a bank holding company with the
Board of Governors of the Federal Reserve System (the "Federal
Reserve") and the ADB. Upon obtaining regulatory approval, the
Company will be a registered bank holding company subject to
regulation by the Federal Reserve and the ADB.
Activities since inception have consisted of the organizers of the
Company and the Bank engaging in organizational and preopening
activities necessary to obtain regulatory approvals and to prepare
to commence business as a financial institution.
Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
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. OTHER ASSETS
Other assets consist of $17,500 paid as an option on the purchase
of land on which the proposed bank will be constructed and $7,280
paid to architects for building plans. The Company intends to
lease the building to serve as the Bank's main office. The Bank's
premises will be owned by an entity owned by certain organizers of
the Company. The Company expects the amounts included in other
assets to be reimbursed by the entity which will own the building
and lease it to the Bank
NOTE 3. DUE TO ORGANIZER
Organizers have advanced $140,000 to the Company to pay for
organizational expenses and other expenditures. The advances are
noninterest bearing. In the event that the requisite approvals are
obtained and the proposed stock offering is successfully completed,
a portion of the proceeds of the offering will be used to repay the
organizer's advances, without interest, to the extent such
repayment is allowed by regulatory authorities. To the extent that
repayment is not allowed by regulatory authorities, such advances,
if any, will be considered as contributed capital.
Interest on advances from the organizer has been imputed at the
prime rate of interest, which is currently 8.25%.
NOTE 4. EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with the
proposed President and Chief Executive Officer of the Company and
Chairman and Chief Executive Officer of the Bank. The agreement has
a three year term and may be renewed daily for a continuous three
years. The agreement may only be terminated upon three years'
notice except that the agreement may be terminated by the Company
at any time for cause. The agreement provides for a base annual
salary of $120,000, with up to 30% of base salary as a bonus, a
monthly car allowance of $750, reimbursement for business travel,
country club and civic dues, and life and disability insurance.
The agreement also provides that the proposed officer will receive
options of 35,000 shares of the Company's common stock at a price
of $10 per share.
NOTE 5. YEAR 2000 ISSUES
The Company and the Bank will rely heavily upon computers for the
conduct of their business and for their information processing
systems. Industry experts have expressed concern that there may be
widespread computer malfunctions on January 1, 2000 if computers
are unable to read the new year. The Company and the Bank will
generally rely on software and hardware developed by independent
third parties to provide the information systems used by them. The
Company is currently negotiating with vendors and intends to seek
assurances from any selected third party hardware or software
systems providers that any products provided by them will be Year
2000 compliant.
The Company believes that any information systems purchased
including hardware and software products will be adequately
programmed to address the Year 2000 issue. Based on information
currently available, management believes that it will not incur
significant costs in connection with the Year 2000 issue.
Nevertheless, some of the hardware and software products that
either the Company or the Bank acquires may not be Year 2000
compliant, and one cannot predict with certainty the costs the
Company or the Bank will incur to respond to any Year 2000 issue.
NOTE 6. COMMON STOCK OFFERING
The Company plans to commence a public offering to sell a minimum
of 800,000 and a maximum of 1,000,000 shares of the Company's $1
par value common stock at a price of $10 per share. The organizers
and directors intend to purchase an aggregate of 422,500 shares of
common stock in the offering at a price of $10 per share.
<PAGE>
TABLE OF CONTENTS
Page
Summary 3
Risk Factors 5
Terms of Offering 8
Use of Proceeds 9
Pro Forma Capitalization 10 VISION BANCSHARES, INC.
Business of the Bank 10 2201 West 1st Street
Supervision and Regulation 24 Gulf Shores, Alabama 36542
Directors and Officers 27 (334) 967-4212
Security Ownership of
Management and Principal
Security Holders 34 ___________________________
Description of Capital Stock 37 PROSPECTUS
Marketability of Securities 37 DATED DECEMBER 3, 1999
Dividend Policy 37 ___________________________
Legal Matters 38
Experts 38
Financial Reports to 1,000,000 Shares
Shareholders 38
of Common Stock
Index to Financial
Statements F-1
______________________
YOU SHOULD RELY ON THE INFORMATION
CONTAINED IN THIS DOCUMENT OR
INFORMATION THAT WE HAVE REFERRED
YOU TO. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
______________________
Until March 2, 2000, all dealers
that effect transactions in these
securities, whether or not
participating in this offering, may
be required to deliver a prospectus.
This is in addition to the dealers'
obligation to deliver a prospectus
when acting as underwriters and
with respect to their unsold
allotments or subscriptions.
