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As Filed With the Securities and Exchange Commission on February 29, 2000
REGISTRATION NO. 333-95335
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMENDMENT NO. 1
INTEGRITY BANCSHARES, INC.
------------------------
(Name of Small Business Issuer in its Charter)
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<CAPTION>
GEORGIA 6021 58-2508612
- ------------------------------ ---------------------------- ------------------------------------
<S> <C> <C>
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
11130 State Bridge Road
Suite D-203
Alpharetta, Georgia 30022
(770) 777-0324
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(Address, and telephone number of principal executive offices)
11130 State Bridge Road
Suite D-203
Alpharetta, Georgia 30022
(770) 777-0324
(Address of principal place of business or intended principal place of business)
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COPIES TO:
STEVEN M. SKOW T. KENNERLY CARROLL, JR., ESQ.,
11130 STATE BRIDGE ROAD MICHAEL P. MARSHALL, JR., ESQ.
SUITE D-203 MILLER & MARTIN LLP
ALPHARETTA, GEORGIA 30022 1275 PEACHTREE STREET, N.E.
(770) 777-0324 SEVENTH FLOOR
ATLANTA, GEORGIA 30309-3576
(Name, address and telephone number (404) 962-6406
of agent for service)
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Approximate date of proposed sale to the public: AS SOON AS PRACTICABLE AFTER
THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE.
If this Form is filed to register additional securities for an offering pursuant
to rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE:
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Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price per Unit (1) Aggregate Offering Registration Fee
Price (1)
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Common stock, no par value 1,200,000 shares $10.00 $12,000,000 $3,168
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THE PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS DATED JANUARY 25, 2000; SUBJECT TO COMPLETION
INTEGRITY BANCSHARES, INC.
A Proposed Bank Holding Company for
INTEGRITY BANK
[IBANK LOGO]
(Proposed)
1,200,000 SHARES OF COMMON STOCK
(Minimum Purchase: 2,500 Shares)
Integrity Bancshares, Inc. is offering a minimum of 700,000 shares and
a maximum of 1,200,000 shares of its common stock to organize Integrity Bank., a
proposed state bank. Integrity Bancshares' organizers will offer and sell the
common stock on a best-efforts basis without compensation. Prior to this
offering, Integrity Bancshares has not conducted active business operations, and
there has not been a public market for the shares of common stock. Integrity
Bancshares does not anticipate that a secondary market will develop for the
shares of common stock.
INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN
THE"RISK FACTORS" SECTION BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
The shares of common stock offered are not deposits, savings accounts,
or other obligations of a bank or savings association and are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
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<CAPTION>
Per Share Total Minimum Total Maximum
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Price to public ...................................... $ 10.00 $ 7,000,000 $12,000,000
Fees and commissions ................................. -0- -0- -0-
Net proceeds, before expenses, to Integrity Bancshares $ 10.00 $ 7,000,000 $12,000,000
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
We will promptly deposit subscription proceeds in an escrow account
with our escrow agent, The Banker's Bank of Atlanta. The escrow agent will hold
the subscription proceeds until we receive subscriptions for at least 700,000
shares and satisfy certain other conditions. We plan to end the offering on July
31, 2000, unless we decide to end it sooner or extend it. If we are unable to
sell 700,000 shares of common stock or satisfy the other conditions, the escrow
agent will return all subscription proceeds to investors, without interest, and
we will pay all of Integrity Bancshares' expenses.
THE DATE OF THIS PROSPECTUS IS JANUARY 25, 2000
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TABLE OF CONTENTS
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Summary........................................................................................................ 1
Risk factors................................................................................................... 3
The offering................................................................................................... 7
Plan of distribution........................................................................................... 9
Use of proceeds................................................................................................ 9
Capitalization................................................................................................. 11
Dividends...................................................................................................... 12
Management's discussion and analysis
Of financial condition and plan of operations.................................................................. 12
Proposed business of Integrity Bancshares and Integrity Bank................................................... 14
Management..................................................................................................... 20
Executive compensation......................................................................................... 22
Related party transactions..................................................................................... 23
Description of capital stock of Integrity Bancshares........................................................... 23
Important provisions of the articles of incorporation and bylaws............................................... 24
Shares eligible for future sale................................................................................ 27
Supervision and regulation..................................................................................... 27
Legal matters.................................................................................................. 33
Reports to shareholders........................................................................................ 33
Experts........................................................................................................ 33
Additional information......................................................................................... 33
Index to financial statements.................................................................................. F-1
Preliminary subscription agreement............................................................................. A-1
Diagram of premises............................................................................................ A-2
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SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary and does not contain all the information you should
consider before investing in the common stock. You should read carefully the
entire prospectus.
IN GENERAL
Integrity Bancshares is a Georgia corporation that was incorporated to
serve as the holding company for Integrity Bank, a proposed Georgia bank.
Integrity Bank will operate as a full service commercial bank
emphasizing prompt, personalized customer service to individuals and businesses
located in Alpharetta, Georgia (Fulton County). Integrity Bank expects to
operate out of an office to be constructed at 11130 State Bridge Road, Suite
D-203, Alpharetta, Georgia 30022. The telephone number of its main office will
be (770) 777-0324. Integrity Bank anticipates opening on April 1, 2000. The
actual opening date, however, may be delayed beyond April 1, 2000.
Integrity Bancshares and Integrity Bank must receive all necessary
regulatory approvals before Integrity Bancshares may purchase Integrity Bank's
common stock and before Integrity Bank may begin business. We have filed all of
the necessary applications with the banking regulators, and they are pending. We
anticipate that we will receive the necessary approvals and begin business in
the second quarter of 2000.
THE INTEGRITY MARKET
Integrity Bank will be located in Alpharetta, Georgia. We believe that
a majority of our potential customers shall reside within five miles of our
office in Alpharetta. Our primary market will consist of the geographic area
falling within a three mile radius of the Alpharetta office. Our secondary
market adds an additional two mile radius.
We believe the degree of success of any community bank is determined by
the growth rate of its market and the level of local competition. We conducted a
120-city bank market share analysis of potential growth areas which showed that
the Atlanta area had the highest deposits per bank location, deposits per
county, and population growth as of June 30, 1999. We believe that these
findings, coupled with the fact that there are few community banks remaining in
Alpharetta, will give Integrity Bank the opportunity for rapid growth of
deposits and loans.
We also believe that the proper strategy for Integrity Bank is to
emphasize customer relationships more than products. The large banks tend to
emphasize products. By contrast, if we emphasize customer relationships, we
think our customers will be more likely to bank with us for a long time and will
not be as sensitive to the price of our services. We also think a bank can
differentiate itself from other banks by identifying certain underserved but
profitable groups, developing customer relationships within those groups, and
then developing products to satisfy the financial needs of those customers. In
the Alpharetta market, we believe that consumers and small businesses are
underserved by other banks, and we plan to focus on them as customers.
PRODUCTS AND SERVICES
We plan to offer Integrity Bank's products and services through high
quality, personalized delivery systems, with a focus on community involvement
while providing our customers with the financial sophistication and array of
products typically offered by a larger bank. Integrity Bank's lending services
will include commercial loans to small- and medium-sized businesses and
professional concerns, consumer loans to individuals, and real estate-related
loans.
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Integrity Bank will offer a broad array of competitively priced deposit
services, including interest-bearing and non-interest bearing checking accounts,
statement savings accounts, money market deposits, certificates of deposit and
individual retirement accounts. To complement our lending and deposit services,
we will also provide ATM and debit cards, travelers checks, official checks,
MasterCard(R) and VISA(R) credit cards, direct deposit, automatic transfer,
savings bonds, night depository, stop payments, collections, wire transfer,
overdraft protection, and courier services.
DIRECTORS AND OFFICERS
Our management team will include individuals who have significant
experience in the banking industry. Steven M. Skow is the President and Chief
Executive Officer of Integrity Bancshares and will serve as the President and
the Chief Executive Officer of Integrity Bank. Mr. Skow has over 30 years of
banking experience, including 22 years of experience as President and Chief
Executive Officer of high performing banks. Integrity Bank is in the process of
identifying and interviewing candidates for other key employment positions.
The directors of Integrity Bancshares and Integrity Bank consist of the
9 organizers. Eight of the directors live, work, and/or own businesses in or
around Fulton County. The directors expect to utilize their diverse backgrounds
and their extensive local business relationships to attract customers from all
segments of the community. The directors and executive officers also intend to
purchase approximately 190,000 shares of the common stock offered by this
prospectus (27.1% of the minimum and 15.8% of the maximum number of shares to be
sold). The directors' financial interest in Integrity Bancshares and Integrity
Bank should encourage their active participation in growing our franchise.
BUSINESS STRATEGY
Our strategy as an independent bank holding company will be carried out
through the operations and growth of Integrity Bank. In an effort to emphasize
prompt, responsive service to our target customers and to expand our presence in
the Alpharetta market, our strategies include:
- maintaining the overall asset quality of Integrity Bank;
- maintaining Integrity Bank's profitability;
- achieving core deposit growth; and
- maximizing productivity.
EXECUTIVE OFFICES
Our offices will be located at 11130 State Bridge Road, Suite D-203,
Alpharetta, Georgia 30022. Our telephone number is 770-777-0324. Integrity
Bancshares does not currently have plans to open another office.
Integrity Bank will not open any branches until profits warrant expansion.
THE OFFERING
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Common stock offered...................................... Common stock, no par value, of Integrity Bancshares
Common stock to be outstanding after the offering ........ Minimum 700,000 shares;
Maximum 1,200,000 shares
Offering price............................................ $10.00 per share
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Use of proceeds........................................... To capitalize Integrity Bank, to pay organizational, offering
and pre-opening expenses, to construct Integrity Bank's main
office and to provide working capital for Integrity Bank to be
used for business purposes, including making loans and other
investments. See "Use of Proceeds" (page 10).
</TABLE>
The organizers will offer and sell the common stock to potential investors
without compensation.
NO DIVIDENDS
We do not intend to pay dividends at any time in the foreseeable
future.
RISK FACTORS
An investment in the common stock involves a significant degree of
risk. You should not invest in the common stock unless you can afford to lose
your entire investment. You should consider carefully the following risk factors
and other information in this prospectus before deciding to invest in the common
stock.
The following paragraphs describe some of the material risks of an
investment in the common stock. You should also carefully read the cautionary
statement following the Risk Factors regarding the use of forward-looking
statements.
WE HAVE NO OPERATING HISTORY, ANTICIPATE LOSSES AND MAY NOT BE ABLE TO IMPLEMENT
OUR BUSINESS STRATEGY.
Integrity Bank's proposed operations are subject to the risks inherent
in establishing a new business and specifically to those of opening a new bank.
Certain of these inherent risks, including the lack of an operating history, the
anticipation of losses and the potential inability to implement business
strategies, are discussed in more detail below.
No operating history. Neither Integrity Bancshares nor Integrity Bank
has any operating history on which to base any estimate of their future earnings
prospects. Integrity Bancshares was only recently formed, and Integrity Bank
will not receive regulatory approval to begin operations until after this
offering is completed. Consequently, you will not have access to historical
information that would be helpful in deciding whether to invest in Integrity
Bancshares.
Anticipated losses. Typically, most new banks incur substantial
start-up expenses, are not profitable in the first year of operation and, in
some cases, are not profitable for several years. Additionally, many of
Integrity Bank's loans initially will be new loans to new borrowers.
Accordingly, it will take several years to determine the borrowers' payment
histories, and management may not be able to evaluate reliably the quality of
the loan portfolio until that time. Our profitability will depend on Integrity
Bank's profitability, and we can give no assurance that Integrity Bank will ever
operate profitably. If we are ultimately unsuccessful, you may not recover all
or any part of your investment in the common stock. See "Management's Discussion
and Analysis of Financial Condition and Plan of Operations" (page 12).
Potential inability to implement business strategies. We have developed
a business plan that describes the strategy we intend to implement to achieve
profitable operations. The strategy includes hiring and retaining experienced
and qualified employees. If we cannot hire or retain qualified employees, or
otherwise cannot implement our business strategy, we will be hampered in our
ability to develop business and serve our customers,
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which could have an adverse affect on our financial performance. Even if we
successfully implement this strategy, it may not have the favorable impact on
operations that we anticipate. See "Proposed Business of Integrity Bancshares
and Integrity Bank -- Business Strategy" (page 14).
POTENTIAL DELAY IN OPENING MAY INCREASE OUR ACCUMULATED DEFICIT.
Any delay in Integrity Bank's opening for business will increase its
pre-opening expenses and postpone its realization of potential revenues. Such a
delay will cause our accumulated deficit to continue to increase as a result of
continuing operating expenses such as salaries and other administrative
expenses. Although we expect to receive all regulatory approvals and to open for
business in the second quarter of 2000, we can give no assurance as to when, if
at all, these events will occur.
WE MAY DISSOLVE AND LIQUIDATE IF REGULATORY CONDITIONS ARE NOT SATISFIED.
Although we have applied for all regulatory approvals required to begin
operations, we may not receive final approvals in a timely manner if at all. The
closing of this offering is not conditioned upon our receiving final approval to
begin business. If after the close of this offering, we do not receive final
approval to start banking operations or we do not satisfy other regulatory
requirements, we will solicit shareholder approval for dissolution and
liquidation of Integrity Bancshares under Georgia law. If Integrity Bancshares
is dissolved and liquidated, we will distribute to shareholders our net assets
remaining after payment or provision for payment of all claims against Integrity
Bancshares. Shareholders will receive only a portion, if any, of their original
investment because we will have used the proceeds of the offering to pay all
expenses and capital costs incurred by Integrity Bancshares. These expenses
would include the expenses of the offering, the organizational and pre-opening
expenses of Integrity Bancshares and Integrity Bank and the claims of creditors.
CHANGES IN OUR KEY PERSONNEL OR DIRECTORS MAY HAVE AN ADVERSE EFFECT ON OUR
SUCCESS.
Mr. Steven M. Skow is important to our success and if he leaves his
position with Integrity Bancshares or Integrity Bank, our financial condition
and results of operations may be adversely affected. Mr. Skow has been
instrumental in our organization and will be the key management official in
charge of daily business operations. Additionally, our directors' community
involvement, diverse backgrounds and extensive local business relationships are
important to our success. If the composition of our Board of Directors changes
materially, our growth could be adversely affected. See "Management" (page 20).
INDUSTRY COMPETITION MAY HAVE AN ADVERSE EFFECT ON OUR SUCCESS.
The banking business is highly competitive. Our profitability will
depend on our ability to compete successfully. Integrity Bank will compete with
numerous other lenders and deposit-takers, including other commercial banks,
savings and loan associations, credit unions, finance companies, mutual funds,
insurance companies and brokerage and investment banking firms. We will compete
primarily with other financial institutions in the Alpharetta market, but may
also compete with internet banks and financial institutions located throughout
the United States for products such as large certificates of deposit. All of our
competitors actively solicit business from residents of Fulton County. Some of
these institutions are not subject to the same degree of regulation as we will
be and have greater resources than will be available to us. See "Proposed
Business of Integrity Bancshares and Integrity Bank--Market
Opportunities--Competition" (page 15).
UNANTICIPATED CHANGES IN INTEREST RATES MAY HAVE AN ADVERSE EFFECT ON OUR NET
INTEREST INCOME.
Integrity Bank's operations will depend substantially on its net
interest income, which is the difference between the interest income earned on
its interest-earning assets and the interest expense paid on its
interest-bearing liabilities, such as deposits and borrowings. An increase or
decrease in interest rates could have a material adverse effect on the bank's
net income, capital and liquidity. Integrity Bank's earnings and net interest
income will be
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affected by changes in market interest rates and other economic factors beyond
its control. While we intend to take measures to guard against interest rate
risk, these measures may not be effective in minimizing the exposure to interest
rate risk. Also, Integrity Bank's results of operations will be affected by
credit policies of monetary authorities, particularly the Board of Governors of
the Federal Reserve System and other fiscal authorities. See "Management's
Discussion and Analysis of Financial Condition and Plan of Operations--Liquidity
and Interest Rate Sensitivity" (page 13).
POTENTIAL ADVERSE EFFECT OF UNPREDICTABLE ECONOMIC CONDITIONS MAY HAVE AN
ADVERSE EFFECT ON OUR SUCCESS.
The majority of Integrity Bank's borrowers and depositors will be
individuals and businesses located and doing business in the Alpharetta area.
Integrity Bank's success will therefore depend on the general economic
conditions in Alpharetta, which management cannot predict with certainty.
Factors that adversely affect the Alpharetta economy could adversely affect
Integrity Bank's performance. For example, an adverse change in the local
economy would make it more difficult for borrowers to repay their loans, which
could lead to loan losses for Integrity Bank. See "Proposed Business of
Integrity Bancshares and Integrity Bank" (page 14).
LOW LENDING LIMITS MAY LIMIT OUR ABILITY TO GROW.
At least during its first years of operations, Integrity Bank's legally
mandated lending limits will be lower than those of many of its competitors
because it will initially have less capital than many of its competitors. Our
lower lending limits may discourage potential borrowers who have lending needs
that exceed our limits and this may restrict our ability to grow. We may try to
serve the needs of these borrowers by selling loan participations to other
institutions, but this strategy may not succeed. See "Proposed Business of
Integrity Bancshares and Integrity Bank--Lending Services-Lending Limits" (page
17).
OUR ABILITY TO PAY DIVIDENDS IS LIMITED.
Integrity Bancshares does not plan to pay dividends in the foreseeable
future. Integrity Bancshares will initially have no source of income other than
dividends that it receives from Integrity Bank. Our ability to pay dividends to
you will therefore depend on Integrity Bank's ability to pay dividends to
Integrity Bancshares Bank holding companies and national banks are both subject
to significant regulatory restrictions on the payment of cash dividends. In
light of these restrictions and the need for Integrity Bancshares and Integrity
Bank to retain and build capital, it will be the policy of each of their Boards
of Directors to reinvest earnings for the period of time necessary to help
support the success of their operations. Our future dividend policy will depend
on our earnings, capital requirements, financial condition and other factors
that the Boards of Directors of Integrity Bancshares and Integrity Bank consider
relevant. We can give no assurance that dividends will ever be paid. See
"Dividends" (page 12).
THE OFFERING PRICE WAS ARBITRARILY DETERMINED AND THEREFORE MAY NOT BE
INDICATIVE OF RESALE VALUE.
Because we were only recently formed and Integrity Bank is in the
process of being organized, the offering price of $10.00 per share could not be
set with reference to historical measures of Integrity Bancshares' financial
performance. Therefore, the offering price was determined arbitrarily by the
organizers. We did not retain an independent investment banking firm to assist
in determining the offering price. Shareholders may not be able to resell the
common stock for the offering price or any other amount. See "The Offering"
(page 8).
IT IS UNLIKELY THAT AN ACTIVE TRADING MARKET WILL DEVELOP AND YOU COULD HAVE
DIFFICULTY IN SELLING YOUR SHARES
Prior to the offering, there has been no public trading market for
Integrity Bancshares' common stock, and an active trading market is not likely
to develop or continue to develop after the offering. If an active trading
market does not develop or continue after the offering, you may not be able to
sell your shares at or above the price at which these shares are being offered
to the public. You should consider carefully the limited liquidity of your
investment before purchasing any shares of common stock.
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GOVERNMENT REGULATION MAY ADVERSELY AFFECT OUR ABILITY TO SUCCEED
Bank holding companies and banks are subject to extensive state and
federal government supervision and regulation. Existing state and federal
banking laws and regulations subject us to substantial limitations relating to
making loans, purchasing securities, paying dividends and many other aspects of
our banking business, and therefore may affect our ability to achieve
profitability and to grow. Many of these laws and regulations are intended to
protect depositors, the public, and the FDIC, not shareholders. In addition, the
burden imposed by federal and state laws and regulations may place us at a
competitive disadvantage compared to competitors who are less regulated.
Applicable laws, regulations, interpretations and enforcement policies have been
subject to significant, and sometimes retroactively applied, changes in recent
years, and may be subject to significant future changes. Future legislation or
government policy may adversely affect the banking industry, our operations and
our shareholders. See "Supervision and Regulation" (page 28).
WE CANNOT GIVE ANY ASSURANCE OF THE CONTINUED SERVICE OF OUR PRESIDENT, MR.
STEVEN SKOW, AND HIS LOSS COULD SIGNIFICANTLY ADVERSELY AFFECT OUR ABILITY
TO OPERATE SUCCESSFULLY
Mr. Steven Skow, the President and Chief Executive Officer of both
Integrity Bank and Integrity Bancshares does not have an employment contract and
therefore may leave his positions at any time without penalty. Neither Integrity
Bank nor Integrity Bancshares can give any assurances that Mr. Skow will
continue to serve as its president. The loss of Mr. Skow would significantly
affect Integrity Bank's and Integrity Bancshares' ability to operate
successfully.
IT MAY BE DIFFICULT TO RAISE ADDITIONAL CAPITAL, IF NEEDED, AND THIS MAY AFFECT
OUR ABILITY TO SUCCEED
Integrity Bank and Integrity Bancshares can give no guarantee that the
proceeds raised in this offering will be sufficient to meet their organizational
needs. The Board of Directors may determine from time to time that we need to
obtain additional capital through the issuance of additional shares of common
stock or other securities. We can give no assurance that we will be able to
access the capital markets in the future to obtain this additional capital or
that any newly issued shares will be sold at prices or on terms better than or
equal to those you receive in this offering. In addition, a future issuance of
common stock could dilute your ownership interests in Integrity Bancshares.
THE DETERRENT EFFECT OF ANTITAKEOVER PROVISIONS MAY DEPRIVE SHAREHOLDERS OF
OPPORTUNITIES TO SELL THEIR COMMON STOCK AT A PREMIUM OVER MARKET PRICE
Our Articles of Incorporation and Bylaws contain antitakeover
provisions that may deter an attempt to change or gain control of Integrity
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. These
antitakeover provisions include the existence of staggered terms for the
directors, restrictions on the ability to change the number of directors or to
remove a director, supermajority voting requirements, and flexibility in
evaluating proposed actions. See "Description of Capital Stock of Integrity
Bancshares" (page 24) and "Important Provisions of the Articles of Incorporation
and Bylaws" (page 24).
OUR DIRECTORS AND OFFICERS WILL BE ABLE TO EXERCISE SIGNIFICANT CONTROL OVER
OUR MANAGEMENT AND AFFAIRS WHICH COULD LIMIT THE INFLUENCE OF OTHER SHAREHOLDERS
TO INFLUENCE CORPORATE ACTIONS
After the offering, we anticipate that our directors and executive
officers will directly or indirectly own at least 190,000 shares, representing
approximately 27.1% of the minimum and 15.8% of the maximum number of shares to
be sold in this offering. As a result, our directors and executive officers will
be able to exercise significant control over Integrity Bancshares' management
and affairs. See "Description of Capital Stock of Integrity Bancshares" (page
24) and "Important Provisions of the Articles of Incorporation and Bylaws" (page
24).
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OUR MANAGEMENT WILL HAVE DISCRETION AS TO THE USE OF ANY UNALLOCATED NET
PROCEEDS AND THIS MAY RESULT IN AN INEFFICIENT USE OF CAPITAL
Integrity Bancshares and Integrity Bank intend to use the net proceeds
of this offering to capitalize Integrity Bank, purchase equipment and other
assets for Integrity Bank's operations, fund loans, provide working capital for
general corporate purposes, and pay offering, pre-opening and initial operating
expenses. The Georgia Department of Banking and Finance will require Integrity
Bancshares to contribute a minimum of $6.5 million to Integrity Bank as initial
capital. Our Board of Directors intends to contribute up to $9.5 million of the
proceeds of this offering, less amounts used to pay pre-opening expenses and
costs of this offering, to Integrity Bank.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus under the captions "Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Plan of Operations" and "Proposed Business of Integrity Bancshares and Integrity
Bank" and elsewhere in this prospectus are "forward-looking statements."
Forward-looking statements include, among other things, statements about the
competitiveness of the banking industry, potential regulatory obligations,
Integrity Bancshares' strategies and other statements that are not historical
facts. When used in this prospectus, the words "anticipate," "believe,"
"estimate" and similar expressions generally identify forward-looking
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. These factors
include, among other things:
- risks associated with starting a new business;
- a potential delay in beginning operations;
- a risk that Integrity Bancshares will be dissolved if
regulatory conditions are not satisfied;
- our dependence on our directors and key personnel;
- the potential adverse affect of competition;
- interest rate risks;
- the potential adverse affect of unpredictable economic
conditions;
- potential limitations on our growth resulting from low lending
limits; and
- other factors discussed under "Risk Factors."
THE OFFERING
MINIMUM/MAXIMUM
Integrity Bancshares is offering a minimum of 700,000 shares and a
maximum of 1,200,000 shares of its common stock for a price of $10.00 per share,
for a total minimum price of $7,000,000 and a total maximum price of
$12,000,000. The minimum purchase for any investor is 500 shares of common
stock, unless Integrity Bancshares, in its sole discretion, accepts a
subscription for a lesser number of shares. The maximum purchase for any
investor is 34,999 shares of common stock, unless Integrity Bancshares, in its
sole discretion, accepts a subscription for a greater number of shares.
8
<PAGE> 13
ORGANIZER SUBSCRIPTIONS
The organizers of Integrity Bancshares intend to purchase a total of
190,000 shares of common stock in this offering. This represents approximately
27.1% of the minimum and 15.8% of the maximum number of shares to be sold in
this offering. The organizers may also acquire additional shares of the common
stock, up to a maximum aggregate number for each individual organizer of 120,000
shares, in order to achieve the minimum subscription level necessary to release
subscription proceeds from escrow.
OFFERING PERIOD
The offering period for the shares will end when all of the shares of
the common stock are sold or 5:00 p.m., Georgia time, on July 31, 2000,
whichever occurs first. We may extend this date at our discretion for additional
periods not exceeding a total of 180 days (i.e., until January 31, 2001). We
will promptly notify subscribers of any extensions. The date on which this
offering ends plus any extension is referred to in this prospectus as the
"expiration date."
We also reserve the right to end the offering at any time after 700,000
shares have been subscribed if we determine that the total amount of
subscriptions will provide adequate capitalization for Integrity Bancshares
after payment of expenses.
HOW TO SUBSCRIBE
Preliminary nonbinding subscription. To subscribe, complete the
attached preliminary subscription agreement and return it to Integrity
Bancshares Since this is a preliminary prospectus, the preliminary subscription
agreements received by Integrity Bancshares,Inc. will not be binding on
subscribers. Preliminary subscription agreements should not be accompanied by
any subscription funds.
Final binding subscription. When this prospectus is finalized, we will
ask investors who have already submitted preliminary subscription agreements to
send us a check in the amount of $10.00 multiplied by the number of shares
subscribed. Our receipt of the check will convert the subscriber's preliminary
nonbinding subscription agreement into a final binding subscription agreement.
All other investors who wish to subscribe will need to send us a completed and
signed final subscription agreement and a check in the amount of $10.00
multiplied by the number of shares subscribed. All checks should be payable to
"The Bankers Bank-Escrow Account for Integrity Bancshares." ALL FINAL BINDING
SUBSCRIPTIONS WILL BE IRREVOCABLE UNTIL THE CLOSE OF THE OFFERING.
COMPANY DISCRETION
We reserve the right, in our sole discretion, to accept or reject any
subscription in whole or in part on or before the expiration date. If the
offering is over subscribed, we plan to give preference to subscribers who are
residents of Fulton County. We also reserve the right to accept subscriptions on
a first-come, first-served basis or on a prorated basis if we receive
subscriptions for more than 1,200,000 shares. We will notify all subscribers
within ten business days after the expiration date whether their subscriptions
have been accepted. If we do not accept all or a portion of a subscription, we
will also return the unaccepted portion of the subscription funds, without
interest.
ESCROW
We will promptly deposit all subscription proceeds in an escrow account
with our escrow agent, The Banker's Bank of Atlanta, located in Atlanta,
Georgia. The escrow agent will invest the subscription proceeds in short-term
United States Government securities, or interest bearing accounts offered by the
escrow agent, or in other short-term investments as we may agree upon with the
escrow agent. The escrow agent has not investigated the desirability or
advisability of an investment in Integrity Bancshares, and has not approved,
endorsed, or passed upon the merits of the common stock.
9
<PAGE> 14
RELEASE FROM ESCROW
The escrow agent will release the subscription proceeds to us when all
of the following events have occurred:
- we have received subscriptions and subscription proceeds for a
total of at least 700,000 shares of common stock;
- the Board of Governors of the Federal Reserve System and the
Georgia Department of Banking and Finance have approved
Integrity Bancshares' application to become a bank holding
company; and
- the Georgia Department of Banking and Finance has
preliminarily approved Integrity Bank's application to operate
as a state chartered bank.
If the above conditions are met, we may instruct the escrow agent to release to
us the subscription proceeds. We will not deposit in the escrow account any
subscription proceeds we receive after the above conditions are met but before
this offering ends. Instead, those funds will be available for our immediate
use.
If we do not meet the conditions to release the funds from the escrow
account by the expiration date then the escrow agent will return the
subscription agreements and the full amount of all subscription funds, without
interest, to subscribers within ten business days after the expiration date.
Although we have applied for all regulatory approvals required to begin
operations, we may not receive final approvals in a timely manner, if at all.
The closing of this offering is not conditioned upon our receiving final
approval to doing business. If after the close of this offering, we do not
receive final approval to start banking operations or we do not satisfy other
regulatory requirements, we will solicit shareholder approval for dissolution
and liquidation of Integrity Bancshares under Georgia law. If Integrity
Bancshares is dissolved and liquidated, we will distribute to shareholders our
net assets remaining after payment or provision for payment of all claims
against Integrity Bancshares Shareholders will receive only a portion, if any,
of their original investment because we will have used the proceeds of the
offering to pay all expenses and capital costs incurred by Integrity Bancshares
These expenses would include the expenses of the offering, the organizational
and pre-opening expenses of Integrity Bancshares and Integrity Bank and the
claims of creditors.
PLAN OF DISTRIBUTION
Integrity Bancshares' organizers will offer and sell the common stock
on a best-efforts basis without compensation. We may find it desirable to
utilize the services of brokers and/or dealers to sell the common stock. We have
no present arrangements with any brokers or dealers relating to this offering.
If we use brokers or dealers, they would sell the common stock on a best-efforts
basis, and we would pay them a commission based on the shares sold by them. We
do not expect that sales of common stock through brokers or dealers will
comprise a major part of this offering.
USE OF PROCEEDS
We estimate that the minimum net proceeds of the offering to Integrity
Bancshares will be $7 million and the maximum will be $12 million. The table
illustrates how we intend to use the net proceeds of this offering.
10
<PAGE> 15
<TABLE>
<CAPTION>
Minimum Maximum
------- -------
<S> <C> <C>
Repay amounts drawn on line of credit
used to pay organizational expenses $ 500,000 $ 500,000
Working capital 6,500,000 11,500,000
Total $7,000,000 $12,000,000
========== ===========
</TABLE>
As of January 7, 2000, Integrity Bancshares had drawn $350,000 under
its line of credit with The Banker's Bank of Atlanta and had used these funds to
pay organizational and pre-opening expenses. Integrity Bancshares will
contribute up to $9.5 million of its working capital, less amounts used to pay
expenses of this offering, to Integrity Bank as capital when Integrity Bank
receives final regulatory approval. Any amounts received pursuant to this
offering which exceed $9.5 million, after repaying the line of credit and
deducting expenses of this offering, will be held by Integrity Bancshares for
working capital and for future investments.
Integrity Bancshares' offering expenses will consist primarily of
registration fees and legal, accounting, and printing expenses. Integrity
Bancshares will use its working capital initially for liquidity and thereafter
for expansion and for general purposes such as payment of operating expenses,
the provision of additional capital for Integrity Bank or the purchase of
certificates of deposit from Integrity Bank, if necessary or deemed desirable by
Integrity Bancshares.
After Integrity Bank receives the necessary regulatory approvals,
Integrity Bancshares will repay amounts drawn on line of credit used to pay
organizational expenses and purchase all of Integrity Bank's common stock for a
minimum of $6,500,000 and a maximum of $9,500,000. Integrity Bank intends to use
these proceeds for the following purposes:
<TABLE>
<CAPTION>
Minimum Maximum
<S> <C> <C>
Purchase of land for Integrity Bancshares' main office $ 850,000 $ 850,000
Construction of the main office building $1,960,000 $1,960,000
Furniture, fixtures and equipment for Integrity Bank's main office $ 301,900 $ 301,900
Funds to be used for loans to customers, for investments and for $3,388,100 $6,388,100
other general purposes
Total $6,500,000 $9,500,000
========== ==========
</TABLE>
We estimate that Integrity Bank's organizational expenses will be
$499,410 as follows:
<TABLE>
<S> <C>
Attorney Fees $ 45,000
Consulting Fees $148,844
Pre-Opening Salaries $243,066
Application and Investigation Fees $ 17,000
Other Expenses $ 45,500
Total $499,410
</TABLE>
Until we apply the net proceeds of this offering to the specific
purposes described above, we plan to invest them in short-term, investment-grade
securities, federal funds, certificates of deposit or guaranteed obligations of
the United States government. We anticipate earning $141,750 in pre-opening
interest income on these investments which will be used to offset the
organizational expenses.
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<PAGE> 16
CAPITALIZATION
The following table shows its pro forma consolidated capitalization, as
adjusted to give effect to the receipt of the net proceeds from the sale of a
minimum of 700,000 shares and a maximum of 1,200,000 shares of common stock in
this offering.
Steven M. Skow purchased 5 shares of common stock upon Integrity
Bancshares' incorporation. Integrity Bancshares will redeem these shares for
$50.00, which is the price Mr. Skow paid for the 5 shares.
<TABLE>
<CAPTION>
Actual Minimum Maximum
Shareholders' Equity January 7, 2000 As Adjusted As Adjusted
- -------------------- --------------- ------------- -------------
<S> <C> <C> <C>
Common stock, no par value; 10,000,000
shares authorized; 5 shares issued
($10.00 each) and outstanding; 700,000 and
1,200,000 shares, respectively, issued
($10.00 each) and outstanding as adjusted $ 50 $ 6,935,100 * $ 11,935,100 *
Accumulated deficit $ (350,000)** $ (357,660)*** $ (357,660)***
------------ ------------ ------------
Total shareholders' equity $ (350,000) $ 6,577,440 $ 11,577,440
============ ============ ============
Book value per share $ (70,000) $ 9.40 $ 9.65
============ ============ ============
</TABLE>
- -----------------------------
* We will charge the expenses of the offering against this account. We
estimate that our offering expenses will be $64,900, including legal,
accounting, printing and filing fees.
** This deficit reflects pre-opening expenses incurred through January 7,
2000, consisting primarily of professional and filing fees.
*** The "As Adjusted" accumulated deficit results from estimated
pre-opening expenses of $499,410 which we expect to incur through April
1, 2000, Integrity Bank's target opening date, less pre-opening income
estimated at $141,750. Actual pre-opening expenses may be higher and
may therefore increase the deficit accumulated during the pre-opening
stage and further reduce shareholders' equity.
DIVIDENDS
Integrity Bancshares does not plan to pay dividends in the foreseeable
future. Integrity Bancshares will initially have no source of income other than
dividends that Integrity Bank pays to it. Integrity Bancshares' ability to pay
dividends to its shareholders will therefore depend on Integrity Bank's ability
to pay dividends to Integrity Bancshares. Bank holding companies and state
chartered banks are both subject to significant regulatory restrictions on the
payment of cash dividends. In light of these restrictions and the need for
Integrity Bancshares and Integrity Bank to retain and build capital, it will be
the policy of each of their Boards of Directors to reinvest earnings for the
period of time necessary to help support the success of their operations. As a
result, we do not plan to pay dividends in the foreseeable future, if at all.
Our future dividend policy will depend on our earnings, capital
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<PAGE> 17
requirements, financial condition and other factors that the Boards of Directors
of Integrity Bancshares and Integrity Bank consider relevant.
Additionally, regulatory authorities may determine, under certain
circumstances relating to the financial condition of Integrity Bank or Integrity
Bancshares, that the payment of dividends would be an unsafe or unsound practice
and to prohibit dividend payments. See "Supervision and Regulation- Payment of
Dividends."
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PLAN OF OPERATIONS
Integrity Bancshares' financial statements and related notes, which are
included in this prospectus, provide additional information relating to the
following discussion of its financial condition. See "Index to Financial
Statements."
Integrity Bancshares was organized on November 12, 1999, to serve as a
holding company for a proposed state chartered bank. Since it was organized, the
main activities of Integrity Bancshares have been centered on seeking,
interviewing and selecting its directors and officers, applying for a State of
Georgia bank charter, applying for FDIC deposit insurance, applying to become a
bank holding company and raising equity capital through this offering.
Integrity Bancshares' operations from its inception through the close
of the offering have been and will continue to be funded through a line of
credit from The Banker's Bank of Atlanta. The total amount available on the line
of credit is $500,000, of which approximately $350,000 was outstanding at
January 7, 2000. This loan bears interest at the prime rate of eight percent
(8%), and is due on September 16, 2000. Integrity Bancshares plans to repay the
line of credit after the closing of this offering.
From inception through December 15, 1999, Integrity Bancshares' net
loss amounted to $271,246. The estimated net loss for the period from inception
through April 1, 2000, the anticipated opening date of Integrity Bank, is
$499,410, which is attributable to the following estimated noninterest expenses:
<TABLE>
<S> <C>
legal fees...................................................... $ 45,000
consulting fees................................................. $148,844
pre-opening salaries............................................ $243,066
application, investigation, and registration fees............... $ 17,000
temporary office expenses....................................... $ 29,000
travel, printing, site fees, moving and misc.................. $ 16,500
--------
Total........................................................... $499,410
</TABLE>
On October 8, 1999, Integrity Bancshares executed a Purchase and Sale
Agreement for the purchase of approximately 1.3 acres of land at 11130 State
Bridge Road, Suite D-203, Alpharetta, Georgia 30022 at a purchase price of
$850,000. The land was purchased from James E. Bridges, a director of Integrity
Bancshares Integrity Bank will use this property as the site for its main
office. Integrity Bancshares intends to close the purchase and sale on or before
March 31, 2000 using either the net proceeds of this offering or borrowings
under the line of credit. After Integrity Bancshares contributes the proceeds of
this offering to Integrity Bank as capital, Integrity Bank will purchase the
property from Integrity Bancshares for the same price that Integrity Bancshares
paid for it. We anticipate that Integrity Bank will operate a modular banking
office on the property while a permanent building is under construction, and
expect to begin construction in April, 2000 and complete construction in
November, 2000. Integrity Bank will fund the construction of the main building,
estimated at $1,960,000, with the proceeds received from the issuance of its
stock to Integrity Bancshares. The construction contract will be with Richard H.
Peden, Sr., a director of Integrity Bancshares
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<PAGE> 18
LIQUIDITY AND INTEREST RATE SENSITIVITY
Since Integrity Bancshares has been in the organizational stage, there
are no results to present concerning liquidity and interest rate sensitivity at
this time. Nevertheless, once Integrity Bank starts operations, net interest
income, Integrity Bancshares' primary source of earnings, will fluctuate with
significant interest rate movements. To lessen the impact of these margin
swings, we intend to structure the balance sheet so that repricing opportunities
exist for both assets and liabilities in roughly the same amounts at
approximately the same time intervals. Imbalance in these repricing
opportunities at any point in time constitutes interest rate sensitivity.
Interest rate sensitivity refers to the responsiveness of
interest-bearing assets and liabilities to change in market interest rates. The
rate sensitive position, or gap, is the difference in the volume of rate
sensitive assets and liabilities at a given time interval. The general objective
of gap management is to manage actively rate sensitive assets and liabilities to
reduce the impact of interest rate fluctuations on the net interest margin. We
will generally attempt to maintain a balance between rate sensitive assets and
liabilities as the exposure period is lengthened to minimize Integrity Bank's
overall interest rate risk.
We will regularly evaluate the asset mix of the balance sheet in terms
of several variables: yield, credit quality, appropriate funding sources and
liquidity. To effectively manage the balance sheet's liability mix, we plan to
focus on expanding Integrity Bank's deposit base and other sources of funds.
As Integrity Bank continues to grow, we will continuously structure
its rate sensitivity position to best hedge against rapidly rising or falling
interest rates. Their strategy will include anticipating future interest rate
movements.
Liquidity represents the ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient
funds to cover deposit withdrawals and payment of debt and operating
obligations. We can obtain these funds by converting assets to cash or by
attracting new deposits. Integrity Bank's ability to maintain and increase
deposits will serve as its primary source of liquidity.
Other than the offering, we know of no trends, demands, commitments,
events or uncertainties that should result in or are reasonably likely to result
in Integrity Bancshares' liquidity increasing or decreasing in any material way
in the foreseeable future.
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 interests. 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, implemented by federal bank
regulatory authorities, relates to the leverage ratio. The leverage ratio is
computed by dividing tier 1 capital into total assets. In the case of Integrity
Bank and other banks that have not received the highest regulatory rating by
their primary regulator, 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.
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<PAGE> 19
The Board of Governors of the Federal Reserve System and the FDIC
recently established a rule 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 on the balance sheet, as well as
off-balance sheet items, would be reported according to maturity, repricing
dates and cash flow characteristics. The bank would then multiply its reporting
position by duration-based risk factors that weight its position according to
rate sensitivity. The appropriate supervisory agency would assess capital
adequacy using this net risk weighted position. The objective of this complex
proposal is to determine a bank's sensitivity to various rising and falling
interest rate scenarios.
We believe that the net proceeds of the offering will satisfy our cash
requirements for at least the five-year period following the opening of
Integrity Bank. Accordingly, we do not anticipate that it will be necessary to
raise additional funds to operate Integrity Bancshares or Integrity Bank over
the next five years. For additional information about planned expenditures, see
"Use of Proceeds." For additional information about our plan of operations, see
"Proposed Business of Integrity Bancshares and Integrity Bank" and "Management."
PROPOSED BUSINESS OF INTEGRITY BANCSHARES
AND INTEGRITY BANK
BACKGROUND
Integrity Bancshares. Integrity Bancshares was incorporated as a
Georgia corporation on November 12, 1999, to serve as a bank holding company for
Integrity Bank. Integrity Bancshares plans to use up to a maximum of $9,500,000
of the net proceeds of this offering to capitalize Integrity Bank. In return,
Integrity Bank will issue all of its common stock to Integrity Bancshares, and
Integrity Bancshares will be Integrity Bank's sole shareholder. Integrity
Bancshares has applied to the Georgia Department of Banking and Finance and will
apply to the Federal Reserve Bank of Atlanta for prior approval to capitalize
Integrity Bank as soon as it receives preliminary approval from the Georgia
Department of Banking and Finance. If these agencies grant the necessary
approvals, upon its purchase of Integrity Bank's common stock, Integrity
Bancshares will become a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as currently in effect, and the Georgia Bank
Holding Company Act upon its purchase of Integrity Bank's common stock. See
"Supervision and Regulation--General."
Integrity Bancshares has been organized to make it easier for Integrity
Bank to serve its future customers. The holding company structure will provide
flexibility for expansion of Integrity Bancshares' banking business through the
possible acquisition of other financial institutions and the provision of
additional capital and banking-related services that are permissible for bank
holding companies and for state chartered banks. A holding company structure
will make it easier to raise capital for Integrity Bank because Integrity
Bancshares will be able to issue securities without the need for prior banking
regulatory approval and the proceeds of any debt securities issued by Integrity
Bancshares can be invested in Integrity Bank as primary capital.
Integrity Bank. The organizers filed applications on behalf of
Integrity Bank with the Georgia Department of Banking and Finance and with the
FDIC on November 12, 1999 for authority to organize as a state chartered bank
with federally insured deposits. Integrity Bank will not be authorized to
conduct its banking business until it obtains a charter from the Georgia
Department of Banking and Finance. The issuance of the charter will depend,
among other things, upon Integrity Bank's receiving at least $6.5 million in
capital from Integrity Bancshares and upon compliance with other standard
conditions expected to be imposed by the FDIC and the Georgia Department of
Banking and Finance. These conditions are generally designed to familiarize
Integrity Bank with certain operating requirements and to prepare it to begin
business. The Georgia Department of Banking and Finance requires that a new
Georgia bank open for business within 24 months after receipt of preliminary
approval from the Georgia Department of Banking and Finance. Integrity Bank's
application to the Georgia Department of Banking
15
<PAGE> 20
and Finance to form a bank is pending. Integrity Bank's application to the FDIC
for deposit insurance also is pending.
MARKET OPPORTUNITIES
Primary service area. Most of Integrity Bank's potential customers
reside within five miles of its Alpharetta office. Our primary service area is
within three miles of the Alpharetta office. Our secondary service area adds an
additional two mile radius. Current projections indicate that the population of
these areas will reach 160,481 by 2004.
Economic and demographic factors. The city of Alpharetta is the key
economic focal point of Integrity Bank's primary service area. According to the
1990 Census, the population of the portion of Alpharetta lying within five miles
of Integrity Bank's office at that time was 65,397 persons. According to
information compiled by National Decision Systems, the median age of that
population is 35.17 and the median family income is $87,009.
Employment. Alpharetta's economy is strong and growing. Its employment
sectors are diversified, representing virtually all industries. Service
employment is the largest sector, providing 41% of the businesses and 30% of the
employees in the five mile area surrounding Integrity Bank. Retail trade is the
next largest contributor, providing 21% of the businesses and 20% of the
employees. Manufacturing is also important to the area's economy, providing
approximately 9% of the businesses and 13% of the employees.
Bank site. Integrity Bank will be located at 11130 State Bridge Road,
Suite D-203, Alpharetta, Georgia 30022, which is part of the Grand Pavillion
shopping center. We selected the site because of its proximity to a large number
of businesses and households in the Alpharetta market, which will allow us to
reach customers throughout Alpharetta. We propose to build a 16,000 sq. foot
building at this location and to operate in a temporary, modular facility at
this location while the building is under construction.
Competition. The banking business is highly competitive. Integrity Bank
will compete with other commercial banks, savings and loan associations, credit
unions, and money market mutual funds operating in Alpharetta. The three mile
radius surrounding Integrity Bank's location is currently served by 6 financial
institutions with a total of 10 branches. Bank of America (formally
NationsBank), with 4 branches, has the largest presence. Its branches control
32.74% of the $362.27 million in deposits in the area. Premier Bank, located at
3209 Buford Highway, Duluth, Georgia 30096, also has a significant presence. Its
single location controls 22.55% of the deposits in the area.
The five mile radius surrounding Integrity Bank's location is currently
served by 13 financial institutions with a total of 30 branches. Bank of
America, SunTrust, and SouthTrust, with 8, 6, and 3 branches respectively, have
the largest presence. Together, these 17 branches control 45.5% of the $845.74
million in deposits in the area.
The large regional banks tend to market their products to the masses
and to large companies, resulting in a reduction in personal service. We believe
that we will be able to effectively compete with these regional banks in our
market area by emphasizing personal service. Currently, Alpharetta has few
community banks as many have been acquired by larger regional and national
banks. We cannot guarantee, however, that community banks will not be opened in
the future which could present significant competition to Integrity Bank.
All of the banks in the Alpharetta area have grown rapidly over the
past five years and indications are that this growth will continue. The large
banks are likely to continue doing what they do best, which is to market to the
masses and to very large businesses. The community banks are likely to continue
to grow rapidly by competing for customers that want a more personal approach to
transacting business, as well as by generating new business from the rapidly
increasing population.
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<PAGE> 21
BUSINESS STRATEGY
Management philosophy. Integrity Bank's philosophy will be to operate
as a community bank emphasizing prompt, personalized customer service to the
individuals and businesses located in Alpharetta and its surrounding areas.
Integrity Bank has adopted this philosophy in order to attract customers and to
acquire market share now controlled by other financial institutions operating in
the market. We believe that local ownership and control will allow Integrity
Bank to serve customers more efficiently and will aid in Integrity Bank's growth
and success. Additionally, we believe that the expansion and growth of Integrity
Bank's operations will be a significant factor in the success of Integrity
Bancshares Accordingly, we will implement the following operating strategy.
Operating strategy. In order to achieve the level of prompt, responsive
service that we believe will be necessary to attract customers and to develop
Integrity Bank's image as a local bank with an individual focus, we will employ
the following operating strategies:
- - Asset Quality - To maintain overall asset quality Integrity Bank will
adhere to our loan policy and utilize our Loan Committee. It will
follow an investment policy to produce a high quality investment
portfolio and will obtain professional investment advice for this
purpose.
- - Profitability - To maintain overall bank profitability Integrity Bank
will move toward a net interest margin of 5% or better by providing
above market pricing and providing high quality service to our
customers. It will develop a sales program and sales culture that will
allow its staff to give the highest quality service in the market area
to obtain higher fees. Integrity Bank will offer a variety of fee-based
services that will enhance profitability.
- - Deposit Growth - To achieve core deposit growth Integrity Bank will
continue the development of a sales program that will keep it at the
top of the market area. We will emphasize servicing the customer's
needs and will develop services and products to fulfill those needs.
The staff will continue to be trained on proper sales technique, cross
selling to build multiple relationships. We intend to develop quality
service standards that will be followed. Integrity Bank will develop a
formal marketing plan to schedule marketing and advertising goals and
objectives. It will form an officer calling program to achieve sales
goals. Integrity Bank intends to coordinate its marketing efforts with
a local marketing firm.
- - Productivity - To maximize productivity, Integrity Bank will promote
employee education programs to develop quality employees, promote a
cross-training program to increase efficiency, conduct staff sessions
on time management and how-to-work-smart vs. long hours and utilize
computer systems capabilities to streamline operations. We will develop
action plans to increase non-interest income along with increasing core
deposit growth.
LENDING SERVICES
Lending policy. Integrity Bank is being established to support
Alpharetta and its surrounding areas. Consequently, Integrity Bank will
aggressively seek creditworthy borrowers within a limited geographic area.
Integrity Bank's primary lending function will be to make consumer loans to
individuals and commercial loans to small businesses and professional concerns.
In addition, Integrity Bank plans to make real estate related loans, including
construction loans for residential and commercial properties, and primary and
secondary mortgage loans for the acquisition or improvement of personal
residences. We project that consumer loans to individuals will comprise 10% of
the portfolio, commercial loans to small businesses will comprise 30% of the
portfolio, and real estate related loans (including both consumer and
commercial) will comprise 60% of the portfolio. Of the real estate related
loans; we anticipate 67% to be commercial real estate loans and 33% to be
residential real estate loans.
Loan approval and review. Integrity Bank is currently in the process of
developing a comprehensive loan policy that will address the specific
underwriting criteria for each loan category. Integrity Bank's loan approval
policies will provide for various levels of officer lending authority. When the
total amount of loans to a single borrower exceeds that individual officer's
lending authority, an officer with a higher lending limit or Integrity Bank's
Loan Committee will determine whether to approve the loan request. Initially,
however, all loans regardless of amount will go to the Loan Committee.
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<PAGE> 22
Integrity Bank will not make a loan to its directors or executive officers
unless the Board of Directors approves the loan and the terms of the loan are no
more favorable than would be available to any other borrower.
Lending limits. Integrity Bank's lending activities will be subject to
a variety of lending limits imposed by federal and state law. Differing limits
apply in certain circumstances based on the type of loan or the nature of the
borrower, including the borrower's relationship to Integrity Bank. In general,
however, Integrity Bank will be able to loan any one borrower a maximum amount
equal to either: (1) 15% of Integrity Bank's capital and surplus or (2) 25% of
its capital and surplus if the excess over 15% is secured by good collateral or
other ample security. Based on the proposed capitalization of Integrity Bank and
its projected pre-opening expenses, Integrity Bank's initial lending limit will
be approximately $1,436,616 for loans not fully secured plus an additional
$957,744, for a total of approximately $2,394,360 million, for loans that are
secured by fully marketable securities. Integrity Bank has not yet established
any minimum or maximum loan limits other than the statutory lending limits
described above. These limits will increase or decrease as Integrity Bank's
capital increases or decreases as a result of its earnings or losses, among
other reasons. Integrity Bank will need to sell loan participations to other
financial institutions to meet the needs of customers requiring loans above
these limits.
Credit risks. The principal economic risk associated with each category
of the loans that Integrity Bank expects to make is the creditworthiness of the
borrower. Borrower creditworthiness is affected by general economic conditions
and the strength of the services and retail market segments. Risks associated
with real estate loans also include fluctuations in the value of real estate,
new job creation trends, tenant vacancy rates and, in the case of commercial
borrowers, the quality of the borrower's management. In addition, a commercial
borrower's ability both to evaluate properly changes in the supply and demand
characteristics affecting its markets for products and services and to respond
effectively to such changes are significant factors in the creditworthiness of a
commercial borrower. General economic factors affecting a borrower's ability to
repay include interest, inflation and employment rates, as well as other factors
affecting a borrower's customers, suppliers and employees.
The well established banks in the Alpharetta market are likely to make
proportionately more loans to medium to large-sized businesses than Integrity
Bank. Many of the commercial loans that Integrity Bank expects to make will
likely be made to small businesses which may be less able to withstand
competitive, economic and financial pressures than larger borrowers.
Real estate loans. Integrity Bank will make commercial real estate
loans, construction and development loans, and residential real estate loans in
and around the Alpharetta area. These loans include certain commercial loans
where Integrity Bank takes a security interest in real estate out of an
abundance of caution and not as the principal collateral for the loan, but will
exclude home equity loans, which are classified as consumer loans. Interest
rates may be fixed or adjustable. Integrity Bank will generally charge an
origination fee. We will attempt to reduce the credit risk of our commercial
real estate loans by emphasizing loans on owner-occupied office and retail
buildings where the ratio of the amount of the loan to the value of the
collateral, established by independent appraisals, does not exceed 80%. In
addition, we may require personal guarantees from the principal owners of the
property backed with a review by Integrity Bank's management of the personal
financial statements of the principal owners.
Integrity Bank will compete for real estate loans with competitors that
are well established in the Alpharetta market.
Integrity Bank may also originate mortgage loans for sale to
institutional investors in the secondary market. Integrity Bank intends to limit
interest rate risk and credit risk on these loans by locking in the interest
rate for each loan with the secondary market investor and receiving the
investor's underwriting approval before making the loan.
Commercial loans. We expect that loans for commercial purposes in
various lines of businesses will be one of the primary components of Integrity
Bank's loan portfolio. The terms of these loans will vary by their
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purpose and by their underlying collateral, if any. Integrity Bank will
typically make equipment loans for a term of seven years or less at fixed or
variable rates, with the loan fully amortized over the term. Equipment loans
generally will be secured by the financed equipment, and the ratio of the amount
of the loan to the value of the financed equipment or other collateral will
generally be 80% or less. Loans to support working capital will typically have
terms of one year or less and will usually be secured by accounts receivable,
inventory or personal guarantees of the principals of the business. For loans
secured by accounts receivable or inventory, principal will typically be repaid
as the assets securing the loan are converted into cash, and for loans secured
with other types of collateral, principal will typically be due at maturity.
Consumer loans. Integrity Bank will make a variety of loans to
individuals for personal, family and household purposes, including secured and
unsecured installment and term loans, home equity loans and lines of credit. We
expect that the principal competitors for consumer loans will be the established
banks in the Alpharetta market.
Lending officers. Integrity Bank intends to hire a commercial lender
and a consumer lender in order to develop its loan portfolios. We expect that
each lender will have experience in the Alpharetta market and will be expected
to bring substantial contacts to Integrity Bank.
INVESTMENTS
In addition to loans, Integrity Bank will make other investments
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other taxable securities. No
investment in any of those instruments will exceed any applicable limitation
imposed by law or regulation. The Investment Committee will review the
investment portfolio on an ongoing basis to ensure that investments are
profitable and conform to Integrity Bank's policy set by the Board of Directors.
ASSET AND LIABILITY MANAGEMENT
Integrity Bank intends to have its Investment Committee manage its
assets and liabilities. This committee will strive to provide an optimum and
stable net interest margin, a profitable after-tax return on assets and return
on equity, and adequate liquidity. The committee will conduct these management
functions within the framework of written loan and investment policies that
Integrity Bank will adopt. The committee will attempt to maintain a balanced
position between rate sensitive assets and rate sensitive liabilities.
Specifically, it will chart assets and liabilities on a matrix by maturity,
effective duration and interest adjustment period and attempt to manage any gaps
in maturity ranges.
DEPOSIT SERVICES
Integrity Bank will seek to establish solid core deposits, including
checking accounts, money market accounts, a variety of certificates of deposit
and IRA accounts. To attract deposits, Integrity Bank will employ an aggressive
marketing plan for the Alpharetta market, and will feature a broad product line
and competitive services. The primary sources of deposits will be residents of,
and businesses and their employees located within five miles of Integrity Bank's
location. Integrity Bank plans to obtain these deposits primarily through
personal solicitation by its officers and directors, direct mail solicitations,
radio advertisements during peak driving times, and advertisements published in
the local media. It plans to generate deposits by offering a broad array of
competitively priced deposit services, including demand deposits, regular
savings accounts, money market deposits, certificates of deposit, retirement
accounts and other legally permitted deposit or funds transfer services that may
be offered to remain competitive in the market.
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<PAGE> 24
OTHER BANKING SERVICES
Integrity Bank intends to provide traveler's checks, direct deposit of
payroll and social security checks, and automatic transfers for various
accounts. Integrity Bank also plans to become associated with a shared network
of automated teller machines that Bank customers will be able to use throughout
Georgia and other regions. We plan to offer MasterCard(R) and VISA(R) credit
card services through a correspondent bank as an agent for Integrity Bank.
Integrity Bank does not plan to exercise trust powers during its initial years
of operation. In the future, it may offer a full-service trust department, but
cannot do so without the prior approval of the Georgia Department of Banking and
Finance.
MARKETING AND ADVERTISING
Integrity Bank's target customers will be the residents and the small
businesses and their employees located within five miles of its location. We
intend to develop a niche in providing banking services to these customers.
We plan to use a targeted marketing approach through local newspapers,
radio advertisements during peak driving times, direct mail campaigns, and
television spots as necessary. Additionally, we plan to sponsor community
activities on an active, ongoing basis.
EMPLOYEES
Integrity Bank expects to have approximately 14 employees when it opens
for business. Integrity Bancshares does not expect to have any employees who are
not also employees of Integrity Bank.
Steven M. Skow is the President and Chief Executive Officer of
Integrity Bancshares and will be the President of Integrity Bank. Mr. Skow has
over 30 years of banking experience, including 22 years as a bank President and
Chief Executive Officer. Integrity Bancshares and Integrity Bank are currently
in the process of identifying and interviewing candidates for other key
employment positions.
FACILITIES
Integrity Bank will be located at 11130 State Bridge Road, Suite D-203,
Alpharetta, Georgia 30022, which lies within Fulton County. The facility
consists of approximately 16,000 square feet and will include 4 inside teller
stations and 2 drive-up teller stations.
Integrity Bank's proposed location offers high visibility in an area
with significant traffic, and is located within the main shopping and retail
area in Alpharetta, Georgia.
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<PAGE> 25
MANAGEMENT
PROPOSED EXECUTIVE OFFICERS AND DIRECTORS OF INTEGRITY BANCSHARES AND INTEGRITY
BANK
The following table sets forth, for the initial members of the Board of
Directors of both Integrity Bancshares and Integrity Bank:
(1) their names, addresses, and ages at December 31, 1999,
(2) their respective positions with Integrity Bancshares and
Integrity Bank,
(3) the number of shares of common stock they intend to purchase
in the offering,
(4) the percentage of the minimum number of 700,000 shares and the
maximum number of 1,200,000 shares that such number will
represent.
<TABLE>
<CAPTION>
Minimum/
Maximum
Percentage Of
Position(s) Number Outstanding
Name And Address (Age): To Be Held Of Shares Shares
- ----------------------- ---------- --------- -------------
<S> <C> <C> <C>
Steven M. Skow (52) Director/ 10,000 1.4%/0.8%
8900 Glen Ferry Drive President and
Alpharetta, GA 30022 Chief Executive
Officer
James E. Bridges (52) Director 20,000 2.9%/1.7%
3030 Castle Pines Drive
Duluth, GA 30097
Johnny E. Cunningham (56) Director 20,000 2.9%/1.7%
3268 Crow Mountain Road
Russellville, AR 72802
Clinton M. Day (40) Director 50,000 7.1%/4.17%
10775 Bell Road (Chairman
Duluth, GA 30097 of Board)
Kent Lee Hannah (42) Director 20,000 2.9%/1.7%
52 Lewellen Drive
Marietta, GA 30064
Don C. Hartsfield (63) Director 20,000 2.9%/1.7%
8340 Lanier Drive
Cumming, GA 30041
Richard H. Peden, Sr. (57) Director 30,000 4.3%/2.5%
4645 Candacraig
Alpharetta, GA 30022
</TABLE>
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<PAGE> 26
<TABLE>
<S> <C> <C> <C>
Charles J. Puckett (67) Director 10,000 1.4%/0.8%
3844 Highway 166
Douglasville, GA 30135
Gerald Oneal ("Neal") Reynolds (44) Director 10,000 1.4%/0.8%
95 Old Stratton Chase
Atlanta, GA 30328
</TABLE>
Each person listed above will be a director of both Integrity
Bancshares and Integrity Bank. Directors of Integrity Bancshares serve staggered
terms which means that one-third of the directors will be elected each year at
Integrity Bancshares' annual meeting of shareholders. The initial Class I
directors include James E. Bridges, Johnny E. Cunningham, and Clinton M. Day.
Their terms will expire in 2000. The initial Class II directors include Kent Lee
Hannah, Don C. Hartsfield, and Richard H. Peden, Sr. Their terms will expire in
2001. The initial Class III directors include Charles I. Puckett, Gerald Oneal
("Neal") Reynolds, and Steven M. Skow. Their terms will expire in 2003.
Thereafter, each director will serve for a term of three years. Integrity
Bancshares' officers are appointed by the Board of Directors and hold office at
the will of the Board. See "Important Provisions of the Articles of
Incorporation and Bylaws-Staggered Terms for Board of Directors."
Each of Integrity Bank's proposed directors will, upon approval by the
Georgia Department of Banking and Finance, serve until Integrity Bank's first
shareholders meeting, which will be held shortly after Integrity Bank receives
its charter. Integrity Bancshares, as the sole shareholder of Integrity Bank,
will nominate each proposed director to serve as director of Integrity Bank at
that meeting. After the first shareholders meeting, directors of Integrity Bank
will serve for a term of one year and will be elected by Integrity Bancshares
each year at Integrity Bank's annual meeting of shareholders. Integrity Bank's
officers will be appointed by its Board of Directors and will hold office at the
will of its Board.
Additional information about the directors of Integrity Bancshares and
Integrity Bank follows.
Steven M. Skow - Mr. Skow has 30 years of banking experience, with
the last 22 years as President and Chief Executive
Officer of high performing banks. Prior to joining
the organizational team for Integrity Bank in June of
1999, Mr. Skow had served as an independent bank
consultant since October of 1997. Mr. Skow served as
the President and Chief Executive Officer of First
National Bank & Trust Co. in Williston, North Dakota
from January 1991 until October 1997. His initial
term as director will expire in 2002.
James E. Bridges - Mr. Bridges has since 1975 served as the President
of JEBCO Ventures, Inc., a real estate developing
firm. His initial term as director will expire in
2000.
Johnny E. Cunningham - Mr. Cunningham has since 1972 served as the
President and General Manager of Cunningham Metals,
Inc, which processes and sells scrap metal. He also
serves as the President of River Valley Steel, JLC,
LLC, and Aspen Trading, and the Vice President of
Davis Iron & Metals. His initial term as director
will expire in 2000.
Clinton M. Day - Mr. Day has for the last 15 years served as the
President of Del South Restaurants, Inc., an
investment properties firm. He also holds interests
in several real estate investment companies and is a
Vice President of DCR, Inc. His initial term as
director will expire in 2000.
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<PAGE> 27
Kent Lee Hannah - Mr. Hannah has since December 1998 served as the
Vice President of Financial Administration of
Advanced Computer Technologies, a network services
company. Prior to that time he was the owner and
manager of Keystone Consulting Group, a recruiting
and staffing company which he started in 1993. His
initial term as director will expire in 2001.
Don C. Hartsfield - Mr. Hartsfield currently serves as the President of
DCH, Inc. (since 1994), D.H. Lands, Inc. (since
1992), Georgia 400 Office Park, Inc. (since 1997),
The Commerce Co. (since 1994), Overlook Associates,
Inc. (since 1986), Top-Spin, Inc. (since 1999), and
Eagle 75, LLC (since 1998), all of which are involved
in various real estate development projects. His
initial term as director will expire in 2001.
Richard H. Peden, Sr. - Mr. Peden has since 1968 been the owner and
President of U.S. General Construction, a
construction company. His initial term as director
will expire in 2001. His initial term as director
will expire in 2001.
Charles J. Puckett - Mr. Puckett has been retired since he sold People's
Dodge, a car dealership, in 1998. He had owned the
dealership since 1988. His initial term as director
will expire in 2002.
Gerald ONeal
("Neal") Reynolds - Mr. Reynolds has since 1990 served as the Chairman
and Chief Executive Officer of The Ad Shop, Inc., an
advertising agency. His initial term as director will
expire in 2002.
COMMITTEES OF THE BOARDS OF DIRECTORS
The Board of Directors of Integrity Bancshares has established the
committees described below. The members of each committee will be the same for
Integrity Bank and Integrity Bancshares
Loan committee. The Loan Committee will establish and update loan
policies, review loan management and administration, review loan approval
procedures, review loan loss reserve adequacy, review loan problems
administration, and review real estate appraisal policies and OREO management.
The initial members of the Loan Committee are expected to be James E. Bridges,
Don C. Hartsfield, Steven M. Skow, and Clinton M. Day.
Investment committee. The Investment Committee will establish and
update investment, liquidity, and asset/liability policies, monitor those
policies for compliance, monitor Integrity Bancshares' and Integrity Bank's
capital adequacy position, and set and monitor investment strategies. The
initial members of the Investment Committee are expected to be Gerald ONeal
("Neal") Reynolds, and Richard H. Peden, Sr.
Audit committee. The Audit Committee will review examinations and
responses to those examinations, select both internal and external auditors,
monitor internal controls, conduct annual audit planning, and conduct quarterly
meetings with the internal auditor. The initial members of the Audit Committee
are expected to be Kent L. Hannah, Charles J. Puckett, and Johnny E. Cunningham.
EXECUTIVE COMPENSATION
1999 COMPENSATION
The following table shows information for 1999 with regard to
compensation for services rendered in all capacities to Integrity Bancshares and
Integrity Bank by its Chief Executive Officer. No executive officer earned more
than $100,000 in salary and bonus in 1999.
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<PAGE> 28
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------------------------
Other (1)
Name and Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- ------------------ ---- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Steven M. Skow 1999 $40,000 $0 $25,344
President and Chief
Executive Officer
</TABLE>
(1) The $25,344 in other annual compensation consists of consulting fees
paid to Mr. Skow. Mr. Skow receives no long-term compensation.
Currently, Mr. Skow does not have an employment contract, which means his
employment may be terminated by any party at any time for any reason. Once
operational, Integrity Bank and Integrity Bancshares may enter into a joint
employment agreement with Mr. Skow which will have comparable terms as other
employment agreements with bank Chief Executive Officers with similar
experience. Any such employment agreement may contain provisions for long term
compensation through stock options, stock appreciation rights, or other similar
vehicles.
DIRECTOR COMPENSATION
Integrity Bancshares and Integrity Bank will not separately compensate
their directors for their service as directors until they have recovered all of
their losses. Thereafter, Integrity Bancshares and Integrity Bank may adopt
compensatory policies for their directors that conform to applicable law.
RELATED PARTY TRANSACTIONS
Integrity Bancshares has entered into a purchase and sale agreement
with James E. Bridges for the purchase of its site at 11130 State Bridge Road.
The purchase price for this land is $850,000, which is lower than the values
assigned to the property by two independent appraisals. All of the organizers
other than Mr. Bridges approved the purchase agreement and believe this price to
be fair. Integrity Bancshares also expects to enter into a construction contract
with Richard H. Peden, Sr. for the construction of its facility. The cost of the
construction, estimated to be $1,960,000, was approved by all of the organizers
other than Mr. Peden and is considered by them to be a fair price.
In addition to the above, Integrity Bancshares and Integrity Bank will
have banking and other business transactions in the ordinary course of business
with their directors and officers, including members of the directors' and
officers' families or corporations, partnerships or other organizations in which
their directors and officers have a controlling interest. If these transactions
occur, each transaction:
- will be on substantially the same terms, including price or
interest rate and collateral, as those prevailing at the time
for comparable transactions with unrelated parties, and any
banking transactions will not be expected to involve more than
the normal risk of collectibility or present other unfavorable
features to Integrity Bank;
- will be on terms no less favorable than could be obtained from
an unrelated party; and
- will be approved by a majority of the directors, including a
majority of the directors who do not have an interest in the
transaction.
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<PAGE> 29
DESCRIPTION OF CAPITAL STOCK OF INTEGRITY BANCSHARES
COMMON STOCK
Integrity Bancshares' Articles of Incorporation authorize it to issue
up to 10 million shares of common stock, no par value, of which a minimum of
700,000 up to a maximum of 1,200,000 shares will be issued in this offering.
All shares of common stock will be entitled to share equally in
dividends from legally available funds, when, as and if declared by Integrity
Bancshares Inc.'s Board of Directors. Upon Integrity Bancshares' voluntary or
involuntary liquidation or dissolution, all shares of common stock will be
entitled to share equally in all of Integrity Bancshares' assets available for
distribution to the shareholders. We do not anticipate that Integrity Bancshares
will pay any cash dividends on the common stock in the near future. Each holder
of common stock will be entitled to one vote for each share on all matters
submitted to the shareholders. Holders of common stock will not have any right
to acquire authorized but unissued capital stock of Integrity Bancshares
whenever it issues new shares of capital stock. No cumulative voting,
redemption, sinking fund or conversion rights or provisions apply to the common
stock. All shares of the common stock issued in the offering will be fully paid
and non-assessable.
IMPORTANT PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
ANTITAKEOVER PROVISIONS
The following is a description of the antitakeover provisions that are
in the Integrity Bancshares' articles of incorporation and bylaws.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Article 7 of Integrity Bancshares's articles of incorporation divides
the board of directors into three classes, Class I, Class II and Class III, each
of which is as nearly equal in numbers as possible. The directors in each class
will hold office for staggered terms of three years each, after initial terms of
one year, two years and three years, respectively. Each director also serves
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal. If the number of directors is modified, any
increase or decrease in directorships would be apportioned among the classes so
as to make all classes as nearly equal in number as possible.
CHANGE IN NUMBER OF DIRECTORS
Article 3.2 of Integrity Bancshares's bylaws provides that a change in
the number of directors of Integrity Bancshares would have to be made by the
affirmative vote of two-thirds of the entire board of directors or by the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of Integrity Bancshares stock. Article 8 of the articles of
incorporation of Integrity Bancshares provides that any amendment to this Bylaw
will require the affirmative vote of at least two-thirds of the issued and
outstanding shares of Integrity Bancshares stock. The applicable provisions of
the Georgia Business Corporation Code provide that, in the absence of a
provision such as article 8, the number of directors may be increased or
decreased from time to time as provided in the bylaws unless the number of
directors is otherwise fixed by the shareholders.
REMOVAL OF DIRECTORS
Article 9 of the articles of incorporation of Integrity Bancshares
provides that directors of Integrity Bancshares may be removed during their
terms for "cause" by the affirmative vote of the holders of a majority of the
outstanding shares of Integrity Bancshares stock or by the affirmative vote of a
majority of the directors then in office. They may be removed without cause only
by the affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares. The articles of incorporation define "cause" for this
purpose as final conviction of a felony, request or demand for removal by any
bank regulatory authority having jurisdiction over Integrity Bancshares,
adjudication as an incompetent by a court, determination by at least two-thirds
of the incumbent directors of Integrity Bancshares that the conduct of the
director to be removed has been inimical to the best interest of Integrity
Bancshares, or the director was an employee or officer of Integrity Bancshares
or any of its subsidiaries and was discharged or resigned at the request of the
board of directors of Integrity Bancshares or any subsidiary of Integrity
Bancshares for reasons relating to the performance of his or her duties.
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<PAGE> 30
In the absence of a provision dealing with the removal of directors,
such as article 9, the Georgia Business Corporation Code provides that if the
directors have staggered terms, then the shareholders may remove directors only
for cause, unless the articles of incorporation or a bylaw adopted by the
shareholders provides otherwise.
ADVANTAGES AND DISADVANTAGES OF ARTICLES 7, 8 AND 9
Articles 7, 8 and 9 of Integrity Bancshares' articles of incorporation
would make it more difficult for shareholders of Integrity Bancshares, including
those holding a majority of the outstanding shares of Integrity Bancshares
stock, to force an immediate change in the composition of a majority of the
board of directors, even if the reason for the change was the performance of the
present directors. Under article 7, the terms of only one-third of the incumbent
directors will expire each year, provided no new directorships are created and
no directors resign or are removed from office. Under article 8 and article 3.2
of Integrity Bancshares' bylaws, it will be more difficult to create new
directorships, and under article 9, it will be more difficult to remove
directors without cause. Accordingly, generally two annual shareholders'
meetings will be required to change a majority of the directors of Integrity
Bancshares instead of one such meeting.
The board believes that articles 7, 8 and 9 will help to assure
continuity and stability in the leadership and policies of Integrity Bancshares.
We also believe that these articles will enable Integrity Bancshares to protect
the interests of its shareholders in the event that another party, through a
takeover bid or otherwise, obtains a substantial number of shares of Integrity
Bancshares stock.
It would be impossible, assuming that no new directorships were
created, no directors resigned and no directors were removed from office, for
shareholders to change a majority of the directors at any one annual meeting
should they consider such a change desirable unless the shareholders controlled
sufficient votes to amend articles 7, 8 or 9 (two-thirds of the outstanding
shares). Although articles 7, 8 and 9 will make it more difficult to acquire
operating control of Integrity Bancshares in an unfriendly manner, directors who
oppose or who are discouraged by new controlling shareholders might resign,
thereby allowing directors elected by the new controlling shareholders to fill
the vacancies created by such resignations.
SUPERMAJORITY VOTING ON CERTAIN TRANSACTIONS
Article 13 of the articles of incorporation of Integrity Bancshares,
provides, with certain exceptions, that any merger or share exchange involving
Integrity Bancshares or any sale or other disposition of all or substantially
all of its assets will require the affirmative vote of the holders of at least
two-thirds of the issued and outstanding shares of Integrity Bancshares stock.
However, an exception to this rule exists where the board of directors of
Integrity Bancshares has approved the particular transaction by the affirmative
vote of more than two-thirds of the entire board. In cases where this exception
applies, the applicable provisions of the Georgia Business Corporation Code
govern, and shareholder approval of the transaction would require a favorable
vote by a majority of all votes entitled to be cast.
The primary purpose of this article is to discourage any party from
attempting to acquire control of Integrity Bancshares without negotiation with
the board of directors. Such a merger or sale might not be in the best interests
of Integrity Bancshares or its shareholders. This provision may also serve to
reduce the risk of a potential conflict of interest between a substantial
shareholder on the one hand and Integrity Bancshares and its other shareholders
on the other.
You should recognize that the foregoing provision could enable the
holders of a minority of the shares of Integrity Bancshares stock to prevent a
transaction favored by the holders of a majority of such shares. Also, in some
circumstances, the board of directors could, by withholding its consent to such
a transaction, cause a two-thirds vote to be required to approve the
transaction, thereby enhancing the ability of management to retain control over
the affairs of Integrity Bancshares and their positions with Integrity
Bancshares. However, of the nine persons who are directors of Integrity
Bancshares, only one is affiliated with Integrity Bancshares or one of its
subsidiary banks in full-time management positions.
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<PAGE> 31
EVALUATION OF AN ACQUISITION PROPOSAL
Article 14 provides that the response of Integrity Bancshares to any
acquisition proposal made by another party will be based on the board's
evaluation of the best interests of Integrity Bancshares and its shareholders.
As used in this Prospectus, an acquisition proposal refers to any offer of
another party:
1. to make a tender offer or exchange offer for any equity
security of Integrity Bancshares;
2. to merge or consolidate Integrity Bancshares with another
corporation; or
3. to purchase or otherwise acquire all or substantially all of
the assets owned by Integrity Bancshares.
Article 14 charges the board, in evaluating an acquisition proposal, to
consider all relevant factors, including:
- the expected social and economic effects of the transaction on
the employees, customers and other constituents (e.g.,
suppliers of goods and services) of Integrity Bancshares and
its subsidiaries;
- the expected social and economic effects on the communities
within which Integrity Bancshares and its subsidiaries
operate; and
- the consideration being offered by the other corporation in
relation
- to the then current value of Integrity Bancshares as
determined by a freely negotiated transaction; and
- to the board of directors' then estimate of Integrity
Bancshares' future value as an independent entity.
The enumerated factors are not exclusive, and the board may consider other
relevant factors.
Integrity Bancshares included this article in its articles of
incorporation because banks are charged with providing support to and being
involved with the communities they serve. The board believes its obligations in
evaluating an acquisition proposal extend beyond evaluating merely the
consideration being offered in relation to the then market or book value of
Integrity Bancshares stock. Neither the Georgia Business Corporation Code nor
the Georgia Financial Institutions Code specifically enumerates the factors the
board of directors of a corporation or a bank, respectively, should consider in
the event the corporation or the bank is presented with an acquisition proposal.
While the value of the consideration offered to shareholders is the
main factor when weighing the benefits of an acquisition proposal, the board
believes it appropriate also to consider all other relevant factors. For
example, this article directs the board to evaluate the consideration being
offered in relation to the then current value of Integrity Bancshares determined
in a freely negotiated transaction and in relation to the board's then estimate
of the future value of Integrity Bancshares as an independent concern. A
takeover bid often places the target corporation virtually in the position of
making a forced sale, sometimes when the market price of its stock may be
depressed. The board believes that frequently the consideration offered in such
a situation, even though it may be in excess of the then market value (i.e., the
value at which shares are then currently trading), is less than that which could
be obtained in a freely negotiated transaction. In a freely negotiated
transaction, management would have the opportunity to seek a suitable partner at
a time of its choosing and to negotiate for the most favorable price and terms
which reflect not only the current value, but also the future value of Integrity
Bancshares.
One effect of this article may be to discourage a tender offer in
advance. Often a potential acquirer consults the board of a target corporation
prior to or after commencing a tender offer in an attempt to avoid a contest
from developing. In the opinion of the board, this provision will strengthen its
position in dealing with any potential acquirer which might attempt to acquire
Integrity Bancshares through a hostile tender offer. Another effect of this
article may be to dissuade shareholders who might be displeased with the board's
response to an acquisition
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proposal from engaging Integrity Bancshares in costly litigation. This
provision, however, does not affect the right of a shareholder displeased with
the board's response to an acquisition proposal to institute litigation against
Integrity Bancshares and to allege that the board breached an obligation to
shareholders by not limiting its evaluation of an acquisition proposal to the
value of the consideration being offered in relation to the then market or book
value of Integrity Bancshares stock.
Article 14 would not make an acquisition proposal regarded by the board
as being in the best interests of Integrity Bancshares more difficult to
accomplish. It would, however, permit the board to determine that an acquisition
proposal was not in the best interests of Integrity Bancshares (and thus to
oppose it) on the basis of the various factors deemed relevant. In some cases,
such opposition by the board might have the effect of maintaining the positions
of incumbent management.
AMENDMENT OF ANTITAKEOVER PROVISIONS
Any amendment of articles 7, 8, 9, 13 and 14 of Integrity Bancshares'
articles of incorporation requires the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Integrity Bancshares stock, unless
two-thirds of the entire board of directors approves the amendment. If
two-thirds of the board approves the amendment, the applicable provisions of the
Georgia Business Corporation Code would govern, and the amendment would be
approved by a majority of the shares entitled to be cast on the amendment.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Integrity Bancshares' articles of incorporation eliminate a director's
personal liability for breach of duty as a director to the fullest extent
permitted by law.
Integrity Bancshares' bylaws provide for indemnification to the fullest
extent permitted by law. Federal law prohibits Integrity Bancshares from paying
any indemnification with respect to any liability or legal expense incurred by a
director, officer, or employee as result of an action or proceeding by a federal
banking agency resulting in a civil money penalty or certain other remedies
against such person.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
Integrity Bancshares pursuant to the foregoing provisions, Integrity Bancshares
has been informed that in the opinion of the SEC indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, Integrity Bancshares will have a
minimum of 700,000 and a maximum of 1,200,000 shares of common stock
outstanding. These shares will be freely tradable without restriction, except
that "affiliates" of Integrity Bancshares must comply with the registration
requirements of the Securities Act of 1933 or an exemption from registration,
such as an exemption provided by Rule 144.
Rule 144 defines an affiliate of a company as a person who directly or
indirectly controls, or is controlled by, or is under common control with, the
company. Affiliates of a company generally include its directors, officers and
principal shareholders.
Each of Integrity Bancshares' affiliates who purchases common stock in
this offering may sell under Rule 144, within any three-month period, such
number of shares of common stock that does not exceed the greater of:
(1) 1% of the outstanding shares of common stock, or
(2) Integrity Bancshares' average weekly trading volume during the
four calendar weeks preceding the affiliate's proposed sale.
Sales by affiliates under Rule 144 are also subject to certain manner
of sale provisions, notice requirements and the availability of current public
information about Integrity Bancshares.
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<PAGE> 33
Prior to the offering, there has not been a public market for the
common stock, and we cannot predict the effect, if any, that the sale of shares
or the availability of shares for sale will have on the market price prevailing
from time to time. Nevertheless, sales of substantial amounts of common stock on
the public market could adversely affect prevailing market prices and the
ability of Integrity Bancshares to raise equity capital in the future.
SUPERVISION AND REGULATION
The following discussion sets forth the material elements of the
regulatory framework that applies to banks and bank holding companies and
provides certain specific information related to Integrity Bancshares
GENERAL
Integrity Bancshares will be a bank holding company registered with the
Board of Governors of the Federal Reserve System under the Bank Holding Company
Act of 1956 and the Georgia Department of Banking and Finance under the Georgia
Bank Holding Company Act, as currently in effect. As a result, Integrity
Bancshares and any future non-bank subsidiaries it establishes will be subject
to the supervision, examination, and reporting requirements of these acts and
the regulations of the Federal Reserve and the Georgia Department of Banking and
Finance issued under these acts.
The Bank Holding Company Act requires every bank holding company to
obtain the Federal Reserve's prior approval before:
(1) it may acquire direct or indirect ownership or control of any
voting shares of any bank if, after the acquisition, the bank
holding company will directly or indirectly own or control
more than 5% of the bank's voting shares;
(2) it or any of its non-bank subsidiaries may acquire all or
substantially all of the assets of any bank; or
(3) it may merge or consolidate with any other bank holding
company.
The Bank Holding Company Act further provides that the Federal Reserve
may not approve any transaction that would result in or tend to create a
monopoly, substantially lessen competition or otherwise function as a restraint
of trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. The Federal Reserve's consideration of financial resources generally
focuses on capital adequacy, which is discussed below.
Integrity Bancshares and any other bank holding company located in
Georgia may acquire a bank located in any other state, and any bank holding
company located outside of Georgia may acquire any Georgia-based bank,
regardless of state law to the contrary. In either case, certain
deposit-percentage, aging requirements, and other restrictions apply. National
and state-chartered banks may branch across state lines by acquiring banks in
other states. By adopting legislation prior to June 1, 1997, a state could elect
either to "opt in" and accelerate the date after which interstate branching
would be permissible or "opt out" and prohibit interstate branching altogether.
The Georgia Interstate Banking Act provides that interstate acquisitions by or
of institutions located in Georgia are permitted in states that also allow
national interstate acquisitions. The Georgia Interstate Branching Act permits
Georgia-based banks and bank holding companies owning or acquiring banks outside
of Georgia and all non-Georgia banks and bank holding companies owning or
acquiring banks in Georgia to merge any lawfully acquired bank into an
interstate branch network. The Georgia Interstate Branching Act also allows
banks to establish new branches throughout Georgia.
Except as amended by the Gramm-Leach-Bliley Act of 1999 discussed
below, the Bank Holding Company Act generally prohibits Integrity Bancshares
from engaging in activities other than banking or managing or controlling banks
or other permissible subsidiaries and from acquiring or keeping direct or
indirect control of any company engaged in any activities other than those
activities that the Federal Reserve determines that to be closely related to
banking or managing or controlling banks. In determining whether a particular
activity is permissible, the
29
<PAGE> 34
Federal Reserve must consider whether the activity reasonably can be expected to
produce benefits to the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased or unfair competition,
conflicts of interest, or unsound banking practices. For example, the Federal
Reserve has determined that factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities are permissible activities of bank holding
companies. The Bank Holding Company Act does not place territorial limitations
on permissible non-banking activities of bank holding companies. Despite prior
approval, the Federal Reserve may order a holding company or its subsidiaries to
terminate any activity or ownership or control of any subsidiary when it has
reasonable cause to believe that the holding company's continued activity,
ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiaries.
Integrity Bank is a Georgia chartered commercial bank. As a result, it
is subject to the supervision, examination and reporting requirements of the
Georgia Department of Banking and Finance and the FDIC. The FDIC and the Georgia
Department of Banking and Finance regularly examine the operations of Georgia
chartered banks and are given the authority to approve or disapprove mergers,
consolidations, the establishment of branches and similar corporate actions. The
FDIC and the Georgia Department of Banking and Finance also have the power to
prevent the continuance or development of unsafe or unsound banking practices or
other violations of law.
GRAMM-LEACH-BLILEY ACT OF 1999
President Clinton signed the Gramm-Leach-Bliley Act of 1999, which
reforms financial services regulation, into law on November 12, 1999. This new
law covers various topics such as insurance, unitary thrifts, privacy protection
provisions for customers of financial institutions, the Federal Home Loan Bank
system's modernization, automatic teller machine reform, the Community
Reinvestment Act and certain changes related to the securities industry. This
new law also eliminates legal barriers to affiliations among banks and
securities firms, insurance companies, and other financial services companies.
The Gramm-Leach-Bliley Act amends the Bank Holding Company Act to
clarify that a bank holding company may hold shares of any company that the
Federal Reserve Board determined, as of the day before the date of enactment of
the Gramm-Leach-Bliley Act, to be engaged in activities that were sufficiently
closely related to banking. This act also amends the Bank Holding Company Act to
establish a new type of bank holding company--the "financial holding company".
Pursuant to the Gramm-Leach-Bliley Act, financial holding companies have the
authority to engage in financial activities in which other bank holding
companies may not engage. Financial holding companies may also affiliate with
companies that are engaged in financial activities. These financial activities
include activities that are:
- financial in nature;
- incidental to an activity that's financial in nature; or
- complimentary to a financial activity and don't pose a
substantial risk to the safety and soundness of depository
institutions or the financial system in general.
The Federal Reserve Board and the Secretary of the Treasury may determine which
activities meet these standards. However, the Gramm-Leach-Bliley Act lists
certain activities as being financial in nature. For example, some of these
activities are:
- lending, exchanging, transferring, investing for others, or
safeguarding money or securities;
- insuring, guaranteeing, or indemnifying against loss, harm,
damage, illness, disability, or death, or providing and
issuing annuities, and acting as principal, agent, or broker
for these purposes in any state;
- providing financial, investment or economic advice;
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<PAGE> 35
- issuing or selling interests in pools of assets that a bank
could hold directly;
- underwriting, dealing in or making markets in securities;
- engaging in any activity that the Federal Reserve Board
determined by an order or regulation that's in effect on the
date of enactment of the Gramm-Leach-Bliley Act to be related
closely to banking; and
- engaging within the United States in any activity that a bank
holding company could engage in outside of the United States,
if the Federal Reserve Board found before the
Gramm-Leach-Bliley Act that the activity was usual in
connection with banking or other financial operations
internationally.
The Gramm-Leach-Bliley Act also directs the Federal Reserve Board to
adopt a regulation or order defining certain additional activities as financial
in nature, to the extent that they are consistent with that act. These include:
- lending, exchanging, transferring, investing for others or
safeguarding financial assets other than money or securities;
- providing any device or other instrumentality for transferring
financial assets; and
- arranging, effecting or facilitating financial transactions
for third parties.
Not all bank holding companies may become financial holding companies.
A bank holding company must meet three requirements before becoming a financial
holding company:
- all of the bank holding company's depository institution
subsidiaries must be well capitalized;
- all of the bank holding company's depository institution
subsidiaries must be well managed; and
- the bank holding company must file with the Federal Reserve
Board a declaration of its election to become a financial
holding company, including a certification that its depository
institution subsidiaries meet the prior two criteria.
With only a few exceptions, in order to exercise the powers granted to them
under the Gramm-Leach-Bliley Act, a financial holding company or insured
depository institution also must meet the Community Reinvestment Act's
requirements. If any insured depository institution, insured depository
institution affiliate, or insured depository institution subsidiary of a
financial holding company didn't receive a Community Reinvestment Act rating of
at least "satisfactory record of meeting community credit needs" at its most
recent Community Reinvestment Act examination, the regulatory agencies are to
prevent the insured depository institution or financial holding company from
exercising the new powers, either directly or through a subsidiary.
A company that is not a bank holding company nor a foreign bank, which
becomes a financial holding company, may be able to continue to engage in
nonfinancial activities and the company may be able to keep its ownership
interests in other companies that are engaged in nonfinancial activities. The
ability to continue the nonfinancial activities or keep ownership interests in
other companies that are engaged in nonfinancial activities lasts for ten years
after the Gramm-Leach-Bliley Act's enactment and may be extended for an
additional five-year term if granted by the Federal Reserve Board pursuant to an
application. In order to continue in the nonfinancial activities:
- the holding company must have been engaged in the nonfinancial
activity or held the shares in the other companies engaged in
nonfinancial activities on September 30, 1999;
- the holding company must be predominantly engaged in financial
activities; and
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<PAGE> 36
- the company engaged in the nonfinancial activity must continue
to engage in the same nonfinancial activities it did on
September 30, 1999 and engage in other authorized activities
under the Gramm-Leach-Bliley Act.
A holding company is predominantly engaged in financial activities
where at least 85% of the consolidated annual gross revenues of the holding
company and its subsidiaries, other than depository institutions, come from
financial activities.
PAYMENT OF DIVIDENDS
Integrity Bancshares is a legal entity separate and distinct from
Integrity Bank. The principal sources of Integrity Bancshares' cash flow,
including cash flow to pay dividends to its shareholders, are dividends that
Integrity Bank pays to its sole shareholder, Integrity Bancshares Statutory and
regulatory limitations apply to Integrity Bank's payment of dividends to
Integrity Bancshares as well as to Integrity Bancshares' payment of dividends to
its shareholders.
If, in the opinion of the FDIC, Integrity Bank were engaged in or about
to engage in an unsafe or unsound practice, such authority could require, after
notice and a hearing, that Integrity Bank cease and desist from its practice.
The federal banking agencies have indicated that paying dividends that deplete a
depository institution's capital base to an inadequate level would be an unsafe
and unsound banking practice. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991, a depository institution may not pay any dividend if
payment would cause it to become undercapitalized or if it already is already
undercapitalized. Moreover, the federal agencies have issued policy statements
that provide that bank holding companies and insured banks should generally only
pay dividends out of current operating earnings. See "Prompt Corrective Action"
below.
The Georgia Financial Institutions Code and the Georgia Banking
Department's regulations provide:
- - that dividends of cash or property may be paid only out of the bank's
retained earnings;
- - that dividends may not be paid if the banks' paid-in capital and
retained earnings which are set aside for dividend payment and other
distributions do not, in combination, equal at least 20% of the bank's
capital stock; and
- - that dividends may not be paid without prior approval of the Georgia
Banking Department if
- the bank's total classified assets at its most recent
examination exceed 80% of its equity capital;
- the aggregate amount of dividends to be declared exceeds 50%
of the bank's net profits after taxes but before dividends for
the previous calendar year; or
- the ratio of equity capital to total adjusted assets is less
than 6%.
The payment of dividends by Integrity Bancshares and Integrity Bank may
also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Integrity Bancshares and Integrity Bank will be required to comply with
the capital adequacy standards established by the Federal Reserve in the case of
Integrity Bancshares and the Georgia Department of Banking and Finance in the
case of Bank. The Federal Reserve has established two basic measures of capital
adequacy for bank holding companies - a risk-based measure and a leverage
measure. A bank holding company must satisfy all applicable capital standards to
be considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items are assigned to broad
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risk categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. At least half of total capital must comprise common stock,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets, of 3% for bank holding companies that meet certain specified
criteria including having the highest regulatory rating. All other bank holding
companies generally are required to maintain a leverage ratio of at least 3%,
plus an additional cushion of 100 to 200 basis points. The guidelines also
provide that bank holding companies experiencing internal growth, as will be the
case for Integrity Bancshares, or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum supervisory
levels without significant reliance on intangible assets. Furthermore, the
Federal Reserve has indicated that it will consider a bank holding company's
Tier 1 Capital leverage ratio, after deducting all intangibles, and other
indicators of capital strength in evaluating proposals for expansion or new
activities.
Integrity Bank will be subject to risk-based and leverage capital
requirements adopted by the Georgia Department of Banking and Finance, which are
substantially similar to those adopted by the Federal Reserve for bank holding
companies.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed on FDIC-insured
depository institutions that fail to meet applicable capital requirements.
See "Prompt Corrective Action."
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Integrity Bancshares is expected to act
as a source of financial strength for, and to commit resources to support,
Integrity Bank. This support may be required at times when, without this Federal
Reserve policy, Integrity Bancshares might not be inclined to provide it. In
addition, any capital loans by a bank holding company to its subsidiary bank
will be repaid only after its deposits and certain other indebtedness are repaid
in full. In the event of a bank holding company's bankruptcy, any commitment by
the bank holding company to a federal bank regulatory agency to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
established 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), and are required to take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, relating 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 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' 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
<PAGE> 38
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 treat an undercapitalized institution in
the same manner as it treats a significantly undercapitalized institution, if it
determines that those actions are necessary.
FDIC INSURANCE ASSESSMENTS
The FDIC has adopted a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The system
assigns an institution to one of three capital categories: (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 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.
Effective January 1, 1997, the FDIC imposed assessments to help repay
the $780 million in annual interest payments on the $8 billion of 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
of deposits until December 31, 1999. Thereafter, it will add approximately 2.4
cents per $100 of deposits to each assessment.
The FDIC may terminate an institution's deposit insurance if it finds
that the institution has engaged in unsafe and unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC.
PROPOSED LEGISLATION AND REGULATORY ACTION
New regulations and statutes are regularly proposed that contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. We cannot predict whether
or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.
LEGAL MATTERS
Miller & Martin LLP, Atlanta, Georgia, will pass upon the validity of
the shares of common stock offered by this prospectus.
REPORTS TO SHAREHOLDERS
Upon the effective date of the Registration Statement on Form SB-2 that
registers the shares of common stock offered by this prospectus with the
Securities and Exchange Commission, Integrity Bancshares will be subject to the
reporting requirements of the Securities Exchange Act of 1934, as currently in
effect, which include requirements to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Securities and Exchange Commission.
This reporting obligation will exist at least through the end of this fiscal
year and will continue for fiscal years thereafter, except that these reporting
obligations may be suspended for any subsequent fiscal year if at the beginning
of the year the common stock is held of record by less than 300 persons.
At any time that Integrity Bancshares is not a reporting company, it
will furnish its shareholders with annual reports containing audited financial
information for each fiscal year on or before the date of the annual meeting of
shareholders as required by Rule 80-6-1-.05 of the Georgia Department of Banking
and Finance.
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Integrity Bancshares' fiscal year ends on December 31. Additionally, Integrity
Bancshares will also furnish such other reports as it may determine to be
appropriate or as otherwise may be required by law.
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EXPERTS
Integrity Bancshares' audited financial statements at January 12, 2000,
and from the period from June 11, 1999 (inception) until January 12, 2000,
included in this prospectus have been included in reliance on the report of
Mauldin & Jenkins, LLC, independent certified public accountants, given on the
authority of that firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
Integrity Bancshares has filed with the Securities and Exchange
Commission a Registration Statement on Form SB-2 under the Securities Act of
1933, as currently in effect, relating to the shares of common stock offered by
this prospectus. This prospectus does not contain all of the information
contained in the Registration Statement. For further information about Integrity
Bancshares and the common stock, we refer you to the Registration Statement and
its exhibits. The Registration Statement may be examined and copied at the
public reference facilities maintained by the Securities and Exchange Commission
at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the regional offices of the Securities and Exchange Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of the Registration Statement are available at prescribed rates from the
Public Reference Section of the Securities and Exchange Commission, Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549. The Securities
and Exchange Commission also maintains a Web site (http://www.sec.gov) that
contains registration statements, reports, proxy and information statements and
other information regarding registrants, such as Integrity Bancshares, that file
electronically with the Securities and Exchange Commission.
Integrity Bancshares and its directors have filed or will file various
applications with the FDIC, the Federal Reserve, and the Georgia Department of
Banking and Finance. These applications and the information they contain are not
incorporated into this prospectus. You should rely only on information contained
in this prospectus and in the related Registration Statement in making an
investment decision. To the extent that other available information not
presented in this prospectus, including information available from Integrity
Bancshares and information in public files and records maintained by the FDIC,
the Federal Reserve, and the Georgia Department of Banking and Finance, is
inconsistent with information presented in this prospectus or provides
additional information, that information is superseded by the information
presented in this prospectus and should not be relied on. Projections appearing
in the applications are based on assumptions that we believe are reasonable, but
as to which we can make no assurances. We specifically disaffirm those
projections for purposes of this prospectus and caution you against relying on
them for purposes of making an investment decision.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditor's Report....................................................................................F-2
Balance sheet, January 12, 2000.................................................................................F-3
Statement of loss, period from June 11, 1999, date of inception,
to January 12, 2000...........................................................................................F-4
Statement of cash flows, period from June 11, 1999, date of inception,
to January 12, 2000...........................................................................................F-5
Notes to financial statements...................................................................................F-6
</TABLE>
F-1
<PAGE> 42
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Integrity Bancshares, Inc.
Alpharetta, Georgia
We have audited the accompanying balance sheet of INTEGRITY
BANCSHARES, INC., a development stage company, as of January 12, 2000, and the
related statements of loss and cash flows for the period from June 11, 1999,
date of inception, to January 12, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Integrity
Bancshares, Inc., a development stage company, as of January 12, 2000, and the
results of its operations and its cash flows for the period from June 11, 1999,
date of inception, to January 12, 2000, in conformity with generally accepted
accounting principles.
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
January 17, 2000
F-2
<PAGE> 43
INTEGRITY BANCSHARES, INC.
(A Development Stage Company)
Balance Sheet
JANUARY 12, 2000
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Cash $ 21,813
Equipment (net of accumulated depreciation of $1,369) 64,990
Earnest money deposit on land 10,000
--------
Total assets $ 96,803
========
LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES
Line of credit 350,000
Note payable 31,875
Accrued expenses 1,556
--------
Total liabilities 383,431
--------
COMMITMENTS
STOCKHOLDER'S (DEFICIT)
Common stock, no par value; 10,000,000 shares
authorized, 5 shares issued and outstanding 50
Deficit accumulated during the development stage (286,678)
--------
Total stockholder's deficit (286,628)
--------
Total liabilities and stockholder's deficit $ 96,803
========
</TABLE>
See Notes to Financial Statements
F-3
<PAGE> 44
Integrity Bancshares, Inc.
(A Development Stage Company)
STATEMENT OF LOSS
PERIOD FROM JUNE 11, 1999, DATE OF INCEPTION,
TO JANUARY 12, 2000
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
Expenses
Personnel expenses $ 66,921
Interest 8,436
Equipment and occupancy expenses 4,919
Legal and consulting 138,162
Other expenses 68,240
------------
286,678
------------
Net loss and deficit accumulated during the development stage $ (286,678)
============
</TABLE>
See Notes to the Financial Statements.
F-4
<PAGE> 45
INTEGRITY BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM JUNE 11, 1999, DATE OF INCEPTION,
TO JANUARY 12, 2000
------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (286,678)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 1,369
Increase in accrued expenses 1,556
--------------
Net cash used in operating activities (283,753)
--------------
INVESTING ACTIVITIES
Purchase of premises and equipment (42,359)
--------------
Net cash used in investing activities (42,359)
--------------
FINANCING ACTIVITIES
Proceeds from line of credit 350,000
Repayment of note payable (2,125)
Proceeds from issuance of common stock 50
--------------
Net cash provided by financing activities 347,925
--------------
Net increase in cash 21,813
Cash at beginning of period 0
--------------
Cash at end of period $ 21,813
==============
NONCASH FINANCING ACTIVITIES:
Purchases of equipment financed $ 34,000
==============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 46
INTEGRITY BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Integrity Bancshares, Inc. (the "Company") was incorporated on November
12, 1999 to operate as a bank holding company pursuant to the Federal Bank
Holding Act of 1956, as amended, and the Georgia Bank Holding Company Act. The
Company intends to acquire 100% of the issued and outstanding capital stock of
Integrity Bank (In Organization) (the "Bank"), a corporation to be organized
under the laws of the State of Georgia to conduct a general banking business in
Alpharetta, Georgia. On November 12, 1999, the organizers filed an application
for approval of the organization of the Bank with the Georgia Department of
Banking and Finance ("DBF") and also with the Federal Deposit Insurance
Corporation ("FDIC") for insurance of the Bank's deposits. The Company has
applied to the DBF to become a bank holding company and will apply to the
Federal Reserve Bank of Atlanta ("FRB") as soon as it receives preliminary
approval from the DBF. Upon obtaining regulatory approval, the Company will be a
registered bank holding company subject to regulation by the FRB and DBF.
Activities since inception have consisted primarily of the Company's
and the Bank's organizers engaging in organizational and preopening activities
necessary to obtain regulatory approvals and to prepare to commence business as
a financial institution.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
ORGANIZATION AND STOCK OFFERING COSTS
Organization costs will be expensed as incurred in accordance with
generally accepted accounting principles. Stock offering costs will be charged
to capital surplus upon completion of the stock offering. Additional costs are
expected to be incurred for organization costs and stock offering costs.
EQUIPMENT
Equipment is carried at cost less accumulated depreciation.
Depreciation is computed by the straight-line method over an estimated useful
life of three to five years.
INCOME TAXES
The Company will be subject to Federal and state income taxes when
taxable income is generated. No income taxes have been accrued because of
operating losses incurred during the preopening period.
FISCAL YEAR
The Company will adopt a calendar year for both financial reporting and
tax reporting purposes.
NOTE 2. LINE OF CREDIT
To facilitate the formation of the Company and the Bank, the organizers
have established a $500,000 line of credit with an independent bank for the
purpose of paying organization and preopening expenses for the Company
and the Bank and the expenses of the Company's common stock offering. The line
of credit bears interest at the lender's prime rate less 1/2% and matures on
September 16, 2000. Interest is payable quarterly. The interest rate at January
12, 2000 was 8.00%. The organizers have personally guaranteed repayment of the
line of credit. All funds advanced on behalf of the Company and the Bank will be
repaid from the proceeds of the stock offering. The Company's ability to repay
these advances and relieve the organizers from their personal guarantees depends
upon the completion of the offering.
F-6
<PAGE> 47
NOTE 3. NOTE PAYABLE
Note payable consists of a note used to finance the purchase of the
Company's vehicle. The note requires 48 monthly payments of $861.73 including
interest at 9.75%.
NOTE 4. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company has entered into an agreement to purchase approximately 1.3
acres of land at a price of $850,000. The land was purchased from a director of
the Company and will be used as the site for its main office. As of January 12,
2000, the Company has made a $10,000 deposit on the land.
The Company is also leasing temporary office facilities on a
month-to-month basis for $900 from the aforementioned director. Total rental
expense included in the statement of loss under this arrangement amounted to
$2,700.
NOTE 5. COMMON STOCK OFFERING
The Company proposes to file a Registration Statement on Form SB-2 with
the Securities and Exchange Commission offering for sale a minimum of 700,000
shares and a maximum of 1,200,000 shares of the Company's common stock at a
price of $10 per share.
F-7
<PAGE> 48
***
No offer to buy the securities can be accepted and no part of the
purchase price can be received until the registration statement has
become effective, and any such offer may be withdrawn or revoked,
without obligation or commitment of any kind, at any time prior to
notice of its acceptance given after the effective date. An indication
of interest in response to this advertisement will involve no
obligation or commitment of any kind.
***
PRELIMINARY SUBSCRIPTION AGREEMENT
To the Board of Directors of
INTEGRITY BANCSHARES
11130 State Bridge Road, Suite D-203
Alpharetta, Georgia 30022
Gentlemen:
I intend to subscribe to purchase the number of shares of Integrity
Bancshares' common stock indicated below.
I am not sending the purchase price for the shares I wish to buy at
this time. After I receive the final prospectus, if I still wish to purchase
shares, I will send Integrity Bancshares a check in the amount of $10.00
multiplied by the number of shares I wish to buy. My check will be made payable
to "The Bankers Bank - Escrow Account for Integrity Bancshares."
WHEN INTEGRITY BANCSHARES RECEIVES MY CHECK, AND FINAL SUBSCRIPTION
AGREEMENT, THIS SUBSCRIPTION WILL BECOME FINAL AND BINDING AND WILL BE
IRREVOCABLE UNTIL THE OFFERING IS CLOSED.
Number of Shares (Minimum 500 shares): __________________
Total Subscription Price (at $10.00 per share): $__________________
------------------------------------------------
------------------------------------------------
(Please print or type exact name(s) in which the
shares should be registered)
Accepted as of __________________, 2000, as to _____________ shares.
INTEGRITY BANCSHARES
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
A-1
<PAGE> 49
SUBSTITUTE W-9
Under the penalties of perjury, I certify that: (1) the Social Security
number or Taxpayer Identification number given below is correct; and (2) I am
not subject to backup withholding. INSTRUCTION: YOU MUST CROSS OUT #2 ABOVE IF
YOU HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.
- --------------------------- ---------------------------------
Date Signature(s)*
- ---------------------------
Area Code and Telephone No.
---------------------------------
Please indicate the form of
ownership desired for the
shares (individual, joint
tenants with right of
survivorship, tenants in
common, trust, corporation,
partnership, custodian,
etc.)
- ---------------------------------
Social Security Number or Federal
Taxpayer Identification Number
----------------------------------
Street Address
----------------------------------
City/State/Zip Code
*When signing as attorney, trustee, administrator or guardian, please give your
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. In case of joint tenants, each joint
owner must sign.
<PAGE> 50
[INSIDE BACK COVER]
[DIAGRAM OF PREMISES]
A-2
<PAGE> 51
[OUTSIDE BACK COVER]
Dealer Prospectus Delivery Obligation. Until July 31, 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 in subscriptions.
<PAGE> 52
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Consistent with the applicable provisions of the laws of Georgia,
Integrity Bancshares' Bylaws provide that it shall have the power to indemnify
its directors and officers against expenses (including attorneys' fees) and
liabilities arising from actual or threatened actions, suits or proceedings,
whether or not settled, to which they become subject by reason of having served
in such role if such director or officer acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
Integrity Bancshares and, with respect to a criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful. Advances against
expenses shall be made so long as the person seeking indemnification agrees to
refund the advances if it is ultimately determined that he or she is not
entitled to indemnification. A determination of whether indemnification of a
director or officer is proper because he met the applicable standard of conduct
shall be made
- by the Board of Directors by majority vote of a quorum
consisting of Directors not at the time parties to the
proceeding, or, if a quorum cannot be obtained, by majority
vote of a committee duly designated by the Board of Directors
(in which designation Directors who are parties may
participate), consisting solely of two or more Directors not
at the time parties to the proceeding;
- in certain circumstances, by independent legal counsel; or
- by the shareholders, but shares owned by or voted under the
control of Directors who are at the time parties to the
proceeding may not be voted on the determination.
In addition, Article 11 of Integrity Bancshares' Articles of
Incorporation, subject to certain exceptions, eliminates the potential personal
liability of a director for monetary damages to Integrity Bancshares and to the
shareholders of Integrity Bancshares for breach of a duty as a director. There
is no elimination of liability for
- a breach of duty involving appropriation of a business
opportunity of Integrity Bancshares;
- an act or omission involving intentional misconduct or a
knowing violation of law;
- a transaction from which the director derives an improper
material tangible personal benefit; or
- as to any payment of a dividend or approval of a stock
repurchase that is illegal under the Georgia Business
Corporation Code.
The Articles of Incorporation do not eliminate or limit the right of
Integrity Bancshares or its shareholders to seek injunctive or other equitable
relief not involving monetary damages.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses of the sale of Integrity Bancshares' common stock
are as follows:
<PAGE> 53
Securities and Exchange Commission Registration Fee $ 3,168
Legal Fees and Expenses* __________
Accounting Fees and Expenses* __________
Printing and Engraving Expenses* __________
Mail and Distribution*
Miscellaneous* __________
Total $
==========
*To be filed by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Upon formation, Integrity Bancshares issued to Steven M. Skow in a
private placement, five shares of its common stock for a total price of $50.00
in connection with the organization of Integrity Bancshares The sale to Mr. Skow
was exempt from registration under the Securities Act pursuant to Section 4(2)
of the Act because it was a transaction by an issuer that did not involve a
public offering.
ITEM 27. EXHIBITS.
Exhibit
Number Description
- ------ -----------
3.1* Articles of incorporation
3.2* Bylaws
4.1* See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining rights of holders of the
common stock
5.1* Opinion re: legality
10.1* Purchase and Sale of Real Estate Contract
10.2* Promissory Note in favor of The Bankers Bank
10.3* Escrow Agreement
21.1* Subsidiaries of the registrant
23.1* See Exhibit 5.1 for Consent of Miller & Martin LLP
23.2 Consent of Mauldin & Jenkins dated February 25, 2000
24.1 A Power of Attorney relating to this Registration Statement is
set forth on the signature pages to this Registration
Statement(1)
27.1* Financial Data Schedule (for SEC use only)
99.1* Final Subscription Letter
99.2* Final Subscription Agreement
* Previously filed on January 25, 2000, with the Registration
Statement. These exhibits are hereby incorporated by reference
to the Registration Statement.
(1) Included in the Registration Statement filed January 25, 2000.
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Integrity
Bancshares pursuant to foregoing provisions, or otherwise, Integrity 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 the payment by Integrity Bancshares of
expenses incurred or paid by a director, officer or controlling person of
Integrity 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, Integrity 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.
<PAGE> 54
The undersigned registrant hereby undertakes as follows:
(a)(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration Statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities being registered that remain unsold at the end of the offering.
The undersigned registrant hereby further undertakes as follows:
(b)(1) For determining any liability under the Securities Act, to treat
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Integrity Bancshares under Rule 424(b)(1), or (4) or 497(h)
under the Securities Act as part of this Registration Statement as of the time
the Commission declared it effective.
(2) For determining any liability under the Securities Act, to treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration Statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, Integrity Bancshares certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-2 and
authorized this Registration Statement to be signed on its behalf by the
undersigned in the city of Alpharetta, State of Georgia, on January 25, 2000.
INTEGRITY BANCSHARES
By: /s/ Steven M. Skow
-----------------------------------
Steven M. Skow
President and Chief Executive Officer
<PAGE> 55
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Steven M. Skow Director February 29, 2000
- ----------------------------------------
Steven M. Skow
/s/ James E. Bridges Director February 29, 2000
- ----------------------------------------
James E. Bridges*
/s/ Johnny E. Cunningham Director February 29, 2000
- ----------------------------------------
Johnny E. Cunningham*
/s/ Clinton M. Day Director February 29, 2000
- ----------------------------------------
Clinton M. Day*
/s/ Kent Lee Hannah Director February 29, 2000
- ----------------------------------------
Kent Lee Hannah*
/s/ Don C. Hartsfield Director February 29, 2000
- ----------------------------------------
Don C. Hartsfield*
/s/ Richard H. Peden, Sr. Director February 29, 2000
- ----------------------------------------
Richard H. Peden, Sr.*
/s/ Charles J. Puckett Director February 29, 2000
- ----------------------------------------
Charles J. Puckett*
/s/ Gerald Oneal ("Neal") Reynolds Director February 29, 2000
- ----------------------------------------
Gerald Oneal ("Neal") Reynolds*
* By Power of Attorney
/s/ Steven M. Skow
- ----------------------------------------
Steven M. Skow
Attorney in Fact
Date: February 29, 2000
</TABLE>
<PAGE> 56
INDEX OF EXHIBITS
Exhibit
Number Description
- ------ -----------
3.1 Articles of incorporation
3.2 Bylaws
4.1 See Exhibits 3.1 and 3.2 for provisions of the Articles of
Incorporation and Bylaws defining rights of holders of the
common stock
5.1 Opinion re: legality
10.1 Purchase and Sale of Real Estate Contract
10.2 Promissory Note executed in favor of The Bankers' Bank
10.3 Escrow Agreement
21.1 Subsidiaries of the registrant
23.1 See Exhibit 5.1 for Consent of Miller & Martin LLP
23.2 Consent of Mauldin & Jenkins
24.1 Power of Attorney (refer to signature page)
27.1 Financial Data Schedule (for SEC use only)
99.1 Final Subscription Letter
99.2 Final Subscription Agreement
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the incorporation of our report dated January 17,
2000, relating to the financial statements of Integrity Bancshares, Inc., in the
Registration Statement on Form SB-2 and prospectus, and to the reference to our
firm therein under the caption "Experts."
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
February 25, 2000
