As filed with the Securities and Exchange Commission on August 6, 1998
Registration File No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-----------------------------
FORM S-4
Registration Statement
Under
The Securities Act of 1933
Synovus Financial Corp.
(Exact Name of registrant as specified in its charter)
Georgia 6022 58-1134883
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation of Classification Number)
organization) Code Number)
Suite 301, One Arsenal Place
901 Front Avenue
Columbus, Georgia 31901
(706) 649-2387
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
------------------------------------
Kathleen Moates, Senior Vice President and Deputy General Counsel
Synovus Financial Corp.
Suite 202, One Arsenal Place
901 Front Avenue
Columbus, Georgia 31901
(706) 649-4818
(Name, Address, including zip code, and Telephone Number of Agent for Service)
Approximate date of commencement of the
proposed sale of the securities to the public:
The date of mailing the Proxy Statement/Prospectus to the shareholders
of Bank of Georgia.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. _____
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration 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. ______
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Proposed
each class of Amount maximum maximum
securities to be offering aggregate Amount of
to be registered registered price per unit offering price registration fee
- ---------------- ---------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Common Stock 850,399 <F1> <F1> $1,722
$1.00 par value
Common Stock
Rights 850,399 <F2> <F2> <F2>
<FN>
<F1> Determined pursuant to Rule 457(f)(2) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee.
Based upon the book value of common stock of Bank of Georgia at June
30, 1998, there being 132,500 shares of such stock issued and
outstanding on that date, having an aggregate book value on that date
of approximately $5,835,970.
<F2> The Common Stock Rights (the "Rights") are attached to and trade with
the common stock of Synovus Financial Corp. The value, if any,
attributable to the Rights is reflected in the market price of the
common stock of Synovus Financial Corp.
</FN>
</TABLE>
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.
BANK OF GEORGIA
2100 Experiment Station Road
Watkinsville, Georgia 30677
_______, 1998
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders
(the "Special Meeting") of Bank of Georgia to be held at 7:30 p.m., local time,
on _________, 1998 at Bank of Georgia's office at 2100 Experiment Station Road,
Watkinsville, Georgia 30677.
As described in the enclosed Proxy Statement/Prospectus, at the Special
Meeting you will be asked to consider and vote upon an Agreement and Plan of
Merger, as amended (the "Merger Agreement"), dated April 22, 1998, by and
between Bank of Georgia and Athens First Bank & Trust Company ("Athens First"),
a wholly owned subsidiary of Synovus Financial Corp. ("Synovus"), and joined
into by Synovus. The Merger Agreement provides for the Merger of Bank of Georgia
with and into Athens First. After the Merger, the office of Bank of Georgia will
operate as a branch of Athens First. The material terms of the Merger Agreement
are described in the enclosed Proxy Statement/Prospectus.
Bank of Georgia's Board of Directors has approved the Merger Agreement
and recommends that you vote FOR the proposed Merger.
Whether or not you plan to attend the Special Meeting in person, you
are requested to complete, date, and sign the enclosed proxy and return it
promptly in the enclosed envelope as soon as possible. If you decide to attend
the Special meeting and wish to change your proxy vote, you may do so by voting
in person at the Special Meeting. If you need assistance in completing your
Proxy, please call Coleman Whitehead or me.
Very truly yours,
/s/Frank J. Christa
Frank J. Christa
President
BANK OF GEORGIA
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting (the "Special Meeting")
of Shareholders of Bank of Georgia will be held at 7:30 p.m., local time, on
_________, 1998 at Bank of Georgia's office at 2100 Experiment Station Road,
Watkinsville, Georgia 30677 for the following purposes:
To consider and vote upon a proposal to merge Bank of Georgia with and
into Athens First Bank & Trust Company ("Athens First"), a wholly owned
subsidiary of Synovus Financial Corp. ("Synovus"), with Athens First being the
resulting bank of the merger (the "Merger"), upon the terms and conditions
provided for in the Agreement and Plan of Merger, as amended, dated April 22,
1998 (the "Merger Agreement"), and to consider and act upon all matters
necessary or incidental to the Merger Agreement and the Merger; and
To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
Shareholders of Bank of Georgia shall have the right to dissent to the
Merger and receive payment in cash of the fair value for their shares of Bank of
Georgia Common Stock upon compliance with the procedures set forth in Section
14-2-1301 et. seq. of the Official Code of Georgia Annotated, as amended, a copy
of which is attached as Appendix "B" to the Proxy Statement/Prospectus which
accompanies this Notice of Special Meeting of Shareholders.
Only shareholders of record at the close of business on ____ __, 1998
will be entitled to receive notice of and to vote at the Special Meeting or any
adjournment thereof.
By Order of the Board of Directors
/s/Frank J. Christa
Watkinsville, Georgia Frank J. Christa
_______, 1998 President
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING OF BANK OF GEORGIA
SHAREHOLDERS, PLEASE VOTE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, SO
THAT BANK OF GEORGIA MAY BE ASSURED OF THE PRESENCE OF A QUORUM AT THE SPECIAL
MEETING. IF YOU DO ATTEND THE SPECIAL MEETING, YOU MAY, IF YOU WISH, VOTE IN
PERSON.
--------------------
THE BOARD OF DIRECTORS OF BANK GEORGIA RECOMMENDS THAT THE HOLDERS OF BANK OF
GEORGIA COMMON STOCK VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND AUTHORIZATION
OF THE MERGER.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Caption Page
<S> <C>
AVAILABLE INFORMATION.............................................................................................1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................1
SUMMARY OF PROXY STATEMENT/PROSPECTUS
The Companies and Their Businesses.......................................................................4
Bank of Georgia Special Shareholders' Meeting............................................................5
The Merger...............................................................................................5
Reasons for the Merger; Recommendation of Board of Directors.............................................5
Votes Required...........................................................................................6
Dissenters' Rights.......................................................................................6
Interests of Certain Persons
in the Merger..........................................................................................6
Tax Opinion..............................................................................................7
Accounting Treatment.....................................................................................7
Conditions to the Merger; Regulatory Approvals...........................................................7
Effective Date...........................................................................................8
Waiver and Amendment.....................................................................................8
Termination..............................................................................................8
Description of Stock and Effect of Merger
on Rights of Bank of Georgia Shareholders..............................................................8
Markets and Market Prices................................................................................9
COMPARATIVE PER SHARE DATA....................................................................................... 9
SELECTED FINANCIAL DATA..........................................................................................11
THE SPECIAL MEETING
General Information.....................................................................................13
Voting Information......................................................................................13
THE MERGER.......................................................................................................14
The Merger Agreement....................................................................................14
Terms of the Merger.....................................................................................15
Recommendation of Bank of Georgia Board of Directors; Background of
and Reasons for the Merger............................................................................16
Conditions to the Merger................................................................................17
Regulatory Approvals....................................................................................19
Waiver and Amendment....................................................................................19
Termination.............................................................................................19
Interests of Certain Persons in the Merger..............................................................20
Employee Benefits.......................................................................................21
Tax Opinion.............................................................................................21
Accounting Treatment....................................................................................22
Expenses................................................................................................22
Resales of Synovus Common Stock.........................................................................22
i
NYSE Listing............................................................................................23
DESCRIPTION OF STOCK AND EFFECT OF MERGER
ON RIGHTS OF BANK OF GEORGIA SHAREHOLDERS......................................................................23
Synovus Common Stock....................................................................................25
Voting Rights - Certain Anti-Takeover
Effects - The Voting Amendment........................................................................25
The Rights Plan.........................................................................................26
Staggered Board of Directors; Supermajority Approvals...................................................29
Evaluation of Business
Combinations..........................................................................................30
Bank of Georgia Common Stock............................................................................30
Dissenters' Rights......................................................................................31
Conduct of Business of Bank of Georgia
and Synovus Pending the Merger........................................................................33
DESCRIPTION OF SYNOVUS...........................................................................................33
Business................................................................................................33
Management and Additional Information...................................................................34
REGULATORY MATTERS...............................................................................................34
General.................................................................................................34
Dividends...............................................................................................35
Capital Requirements....................................................................................37
Commitments to Subsidiary Banks.........................................................................38
Prompt Corrective Action............................................................................... 38
Safety and Soundness Standards......................................................................... 39
Depositor Preference Statute........................................................................... 40
DESCRIPTION OF BANK OF GEORGIA.................................................................................. 40
Background..............................................................................................40
Business............................................................................................... 40
Bank of Georgia Common Stock Owned by Management........................................................41
Management's Discussion and Analysis of
Financial Condition and Results of Operations........................................................ 43
EXPERTS......................................................................................................... 53
Synovus................................................................................................ 53
Bank of Georgia........................................................................................ 53
OTHER MATTERS................................................................................................... 53
SHAREHOLDER PROPOSALS........................................................................................... 53
PRO FORMA FINANCIAL INFORMATION................................................................................. 53
INDEX TO FINANCIAL STATEMENTS................................................................................... 55
Appendix "A" - Agreement and Plan of Merger, As Amended
Appendix "B" - Section 14-2-1301 et. seq. of the Official Code of Georgia Annotated,
as amended, relating to the rights of dissenting shareholders
Appendix "C" - Tax Opinion of KPMG Peat Marwick LLP
</TABLE>
ii
PROSPECTUS
OF
SYNOVUS FINANCIAL CORP.
850,399 SHARES OF COMMON STOCK
PROXY STATEMENT
OF
BANK OF GEORGIA
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON __________, 1998
CALLED TO CONSIDER THE AGREEMENT
PROVIDING FOR THE MERGER
This Proxy Statement/Prospectus relates to the issuance in the Merger
described herein, pursuant to which Bank of Georgia will be merged with and into
Athens First Bank & Trust Company ("Athens First"), a wholly owned subsidiary of
Synovus Financial Corp. ("Synovus"), of up to 850,399 shares of common stock of
Synovus in exchange for all of the outstanding shares of common stock of Bank of
Georgia (the "Merger").
At the Special Meeting, Bank of Georgia shareholders will be asked to
approve an Agreement and Plan of Merger, as amended, dated April 22, 1998 (the
"Merger Agreement"), by and between Bank of Georgia and Athens First and joined
into by Synovus. The Merger Agreement is attached as Appendix "A" and is
incorporated herein by reference.
The Merger Agreement provides that on the effective date of the Merger
(the "Effective Date") all holders of the $5.00 par value common stock of Bank
of Georgia ("Bank of Georgia Common Stock"), except dissenting shareholders,
will be entitled to receive 6.4181 (less fractional shares for which cash shall
be paid in lieu thereof) of the $1.00 par value common stock of Synovus
("Synovus Common Stock") for each share of Bank of Georgia Common Stock held of
record. See "THE MERGER."
This Proxy Statement/Prospectus was first mailed to Bank of Georgia
shareholders on or about _________, 1998.
THE SECURITIES OF SYNOVUS TO BE ISSUED IN CONNECTION WITH THE MERGER HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. THE SHARES OF SYNOVUS COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS, OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
The Date of this Proxy Statement/Prospectus is _______, 1998.
AVAILABLE INFORMATION
Synovus is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission ("Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, NW,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission at: Chicago Regional Office, Citicorp Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661 and New York Regional Office, 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such reports,
proxy statements and other information can be obtained from the Commission at
prescribed rates by addressing a written request for such copies to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission maintains an Internet World Wide Web site
that contains reports, proxy and information statements and other information
about issuers like Synovus, who file electronically with the Commission. The
address of that site is http://www.sec.gov. The common stock of Synovus is
listed on the New York Stock Exchange (the "NYSE") and such reports, proxy
statements and other information concerning Synovus can be inspected at the
office of the NYSE, 20 Broad Street, New York, New York 10005.
Synovus has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of Synovus Common Stock to be issued pursuant to the Merger
Agreement. This Proxy Statement/Prospectus does not contain all the information
and undertakings set forth in the Registration Statement and the exhibits
thereto. Such additional information may be obtained from the Commission's
principal office in Washington, D.C.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Proxy Statement/Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. Documents relating to
Synovus, excluding exhibits unless specifically incorporated herein, are
available without charge upon written or oral request to Synovus Financial
Corp., Suite 301, One Arsenal Place, 901 Front Avenue, Columbus, Georgia 31901,
Attention: G. Sanders Griffith, III, Senior Executive Vice President, General
Counsel and Secretary, Telephone Number: (706) 649-2267. In order to ensure
timely delivery of the documents, any request should be made at least five (5)
business days prior to the date of the Special Shareholders' Meeting.
The following documents filed by Synovus with the Commission are hereby
incorporated by reference into this Proxy Statement/Prospectus: (i) Synovus'
Annual Report on Form 10-K for the year ended December 31, 1997; (ii) Synovus'
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998; (iii)
Synovus' Current Reports on Form 8-K dated March 9, 1998, April 23, 1998, May
18, 1998, June 5, 1998 and July 15, 1998; (iv) the description of Synovus Common
Stock contained in Synovus'
1
Registration Statement on Form 8-A filed with the Commission on August 21, 1989;
and (v) the description of the Common Stock Rights of Synovus contained in
Synovus' Registration Statement on Form 8-A filed with the Commission on May 3,
1989.
All documents filed by Synovus pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date hereof and prior to the
Special Meeting are hereby incorporated by reference into this Proxy
Statement/Prospectus and shall be deemed a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein (or in any other
subsequently filed document which also is incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified or
superseded.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement/Prospectus and, if given or
made, such information or representation should not be relied upon as having
been authorized. This Proxy Statement/Prospectus does not constitute an offer to
sell, or a solicitation of an offer to purchase, the securities offered by this
Proxy Statement/Prospectus, or the solicitation of a proxy, in any jurisdiction
to any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Proxy Statement/Prospectus nor any
distribution of the securities to which this Proxy Statement/Prospectus relates
shall, under any circumstances, create any implication that there has been no
change in the affairs of Synovus or Bank of Georgia since the date hereof or
that the information herein is correct as of any time subsequent to the date
hereof.
All information contained in this Proxy Statement/Prospectus with
respect to Synovus and Synovus' subsidiaries has been supplied by Synovus and
all information with respect to Bank of Georgia has been supplied by Bank of
Georgia.
This Proxy Statement/Prospectus does not relate to any resale of
Synovus Common Stock received by any person upon consummation of the Merger and
no person is authorized to make any use of this Proxy Statement/Prospectus in
connection with any such resale.
This Proxy Statement contains certain forward-looking statements with
respect to the financial condition, results of operations, and business of
Synovus following the consummation of the Merger including statements preceded
by, followed by or that include the words "believes," "expects," "anticipates,"
"estimates" or similar expressions. These forward-looking statements involve
certain risks and uncertainties. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include,
among others, the following possibilities: (i) expected cost savings from the
Merger cannot be realized; (ii) deposit attrition, customer loss, or revenue
loss
2
following the Merger is greater than expected; (iii) competitive pressure in the
banking industry increases significantly; (iv) costs or difficulties related to
the integration of the business of Bank of Georgia into Synovus are greater than
expected; (v) changes in the interest rate environment reduces margins; (vi)
general economic conditions, either nationally or regionally, are less favorable
than expected, resulting in, among other things, a deterioration in credit
quality; (vii) changes occur in the regulatory environment; (viii) changes occur
in business conditions and inflation; and (ix) changes occur in the securities
markets. Further information on other factors that could affect the financial
results of Synovus after the Merger is included in the documents filed by
Synovus with the Commission incorporated by reference herein.
3
SUMMARY OF PROXY STATEMENT/PROSPECTUS
The following is a brief summary of certain information contained
elsewhere in or incorporated by reference into this Proxy Statement/Prospectus.
This summary is necessarily incomplete and is qualified in its entirety by
reference to the more detailed information contained elsewhere herein or in the
accompanying exhibits or documents incorporated herein by reference.
The Companies and their Businesses
Synovus
Synovus is a multi-financial services company, organized and existing
as a business corporation under the laws of the State of Georgia. Synovus is
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended ("BHC Act"). As of June 30, 1998, Synovus and its subsidiaries
("Subsidiaries") had total assets of $9.4 billion, total deposits of $7.8
billion, shareholders' equity of $954 million and net loans of $6.6 billion.
Synovus and its 34 commercial banking affiliates presently provide banking
services at approximately 227 offices located in the States of Georgia, Alabama,
Florida and South Carolina. Synovus also owns nonbanking Subsidiaries including
a full service brokerage firm and an 80.7% interest in Total System Services,
Inc. ("Total System"), a bankcard data processing company whose stock is traded
on the NYSE. The principal executive offices of Synovus are located at Suite
301, One Arsenal Place, 901 Front Avenue, Columbus, Georgia 31901 (telephone
number (706) 649-2387).
Synovus continually evaluates acquisition opportunities and frequently
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations frequently take
place and future acquisitions involving cash or equity securities can be
expected. Acquisitions typically involve the payment of a premium over book and
market values, and therefore some dilution of Synovus' book value and/or net
income per common share may occur in connection with any such future
acquisitions.
Additional information about Synovus is included in documents
incorporated by reference in this Proxy Statement/Prospectus. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
Bank of Georgia
Bank of Georgia is a commercial bank, organized and existing under the
laws of the State of Georgia. As of June 30, 1998, Bank of Georgia had total
assets of $54 million, total deposits of $47.4 million, total shareholders'
equity of $5.8 million and net loans of $35.7 million. Bank of Georgia has one
office located at 2100 Experiment Station Road, Watkinsville, Georgia 30677
(telephone number (706) 769-9031).
4
Bank of Georgia Special Shareholders' Meeting
The Special Meeting called to consider the Merger will be held at 7:30
p.m., local time, on _________, 1998 at Bank of Georgia's office at 2100
Experiment Station Road, Watkinsville, Georgia 30677. Only shareholders of
record of Bank of Georgia Common Stock at the close of business on _______,
1998, will be entitled to receive notice of and to vote at the Special Meeting.
See "THE SPECIAL MEETING - General Information" and "- Voting Information."
The Merger
Subject to approval by the shareholders of Bank of Georgia at the
Special Meeting, the receipt of required regulatory approvals, and certain other
conditions, Bank of Georgia will be merged with and into Athens First pursuant
to the Merger Agreement. As a result of the Merger, the former shareholders of
Bank of Georgia will receive from Synovus 6.4181 shares of Synovus Common Stock
for each of their shares of Bank of Georgia Common Stock (the "Per Share
Exchange Ratio").
No fractional shares of Synovus Common Stock will be issued in
connection with the Merger but rather cash (without interest) will be paid in
lieu thereof, with the amount of cash to be paid in lieu of fractional shares to
be determined based upon the closing price per share of Synovus Common Stock on
the NYSE on the fifth business day immediately preceding the effective date of
the Merger ("Effective Date"). See "THE MERGER - The Merger Agreement."
Reasons for the Merger; Recommendation of Board of Directors
The Board of Directors of Bank of Georgia considered a variety of
factors in evaluating the Merger, including: (i) the value of the consideration
to be received by Bank of Georgia shareholders relative to the book value and
earnings per share of Bank of Georgia Common Stock; (ii) certain information
concerning the financial condition, results of operations and business prospects
of Synovus; (iii) the financial terms of recent business combinations in the
financial services industry and a comparison of the multiples of selected
combinations with the terms of the proposed transaction with Synovus; (iv) the
alternatives to the Merger, including remaining an independent institution; (v)
the competitive and regulatory environment for financial institutions generally;
and (vi) the fact that the Merger will enable Bank of Georgia shareholders to
exchange their shares of Bank of Georgia Common Stock, in a tax-free
transaction, for shares of common stock of a regional company, the stock of
which is widely held and actively traded. Based on these factors, the Board of
Directors of Bank of Georgia has determined that the Merger is in the best
interests of the shareholders of Bank of Georgia and has approved the Merger
Agreement. Accordingly, the Board of Directors recommends that the shareholders
of Bank of Georgia vote FOR the Merger Agreement. See "THE MERGER -
Recommendation of Bank of Georgia Board of Directors and Reasons for the
Merger."
The Board of Directors of Synovus, after careful study and evaluation
of relevant
5
factors, believes the Merger will provide Synovus with expanded market
opportunities for profitable long-term growth. The Synovus Board believes that
the Merger will result in the integration of a well-suited and positioned
banking organization into Synovus' existing organization.
Votes Required
The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of Bank of Georgia Common Stock entitled to vote at the
Special Meeting is required to approve the Merger Agreement and to authorize the
Merger. The holders of Bank of Georgia Common Stock are entitled to one vote on
each matter to be considered and voted on at the Bank of Georgia Special
Shareholders' Meeting for each share of Bank of Georgia Common Stock held by
them of record at the close of business on _________, 1998.
As of the record date for the Special Meeting, Bank of Georgia' present
directors, executive officers and their affiliates had the power to vote, or
direct the voting of, approximately 40% of the outstanding shares of Bank of
Georgia Common Stock. It is anticipated that all shares of Bank of Georgia
Common Stock as to which Bank of Georgia's directors, executive officers and
their affiliates control the voting power will be voted to approve the Merger
Agreement and the Merger. Approval of the Merger by the holders of Synovus
Common Stock is not required and will not be sought. See "THE SPECIAL MEETING -
Voting Information."
Dissenters' Rights
The shareholders of Bank of Georgia Common Stock are entitled to
dissenters' rights of appraisal with respect to the Merger under the Georgia
Business Corporation Code. The failure by a shareholder of Bank of Georgia to
precisely follow the statutory procedure for exercising dissenters' rights may
result in the loss of such dissenters' rights. See "DESCRIPTION OF STOCK AND
EFFECT OF MERGER ON RIGHTS OF Bank of Georgia SHAREHOLDERS - Dissenters'
Rights."
Interests of Certain Persons in the Merger
No officer or director of Bank of Georgia, nor any of their
"associates," has any direct or indirect material interest in the Merger, except
insofar as the following might be deemed to create such an interest: (i) the
ownership by such person of Bank of Georgia Common Stock; (ii) the continued
employment by such person with Athens First after consummation of the Merger;
(iii) the potential service by such person as a director of Athens First after
consummation of the Merger; (iv) after the Effective Date, the eligibility of
such persons to participate in the Synovus Financial Corp. Director and/or
Employee Stock Purchase Plans or Synovus' welfare, incentive and benefit plans;
and (v) certain rights to indemnification.
In addition, if the Merger is consummated, Synovus has agreed to enter
into an Employment Agreement with Frank J. Christa, President of Bank of
Georgia, pursuant
6
to which Mr. Christa will be elected as a Group Vice President of Athens First.
The Agreement is for a three-year term and provides that Mr. Christa will be
compensated for his services at an annual rate of base compensation of $123,200
per year. See "THE MERGER - Interests of Certain Persons in the Merger."
Tax Opinion
Synovus and Bank of Georgia have received a tax opinion ("Tax Opinion")
from KPMG Peat Marwick LLP ("KPMG"), Certified Public Accountants, to the effect
that, for federal income tax purposes, the Merger will constitute a
"reorganization" within the meaning of Section 368(a)(1)(A) and 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the "Tax Code"); the basis of
Synovus Common Stock to be received by each Bank of Georgia shareholder will be
the same as the basis of Bank of Georgia Common Stock surrendered in exchange
therefor; the holding period of Synovus Common Stock will include the holding
period of the Bank of Georgia Common Stock exchanged therefor, provided that
such Bank of Georgia Common Stock is held as a capital asset at the Effective
Date of the Merger; and that, for federal income tax purposes, the shareholders
of Bank of Georgia will not recognize gain or loss on the exchange in the Merger
of their Bank of Georgia Common Stock for Synovus Common Stock (except to the
extent of any cash paid in lieu of fractional shares, any cash paid to those
Bank of Georgia shareholders who perfect their statutory dissenters' rights
against the Merger and except to the extent that the Share Purchase Rights,
which are described on pages 26 through 29 of this Proxy Statement/Prospectus,
are determined to be other property within the meaning of Section 356 of the Tax
Code, as described on page 9 of the Tax Opinion which is attached hereto as
Appendix "C").
ALL BANK OF GEORGIA SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM OF THE MERGER UNDER FEDERAL,
STATE, LOCAL AND ANY OTHER APPLICABLE TAX LAWS.
Accounting Treatment
It is a condition precedent to the obligations of Bank of Georgia and
Synovus to consummate the Merger for the Merger to qualify for pooling of
interests accounting treatment. On the Effective Date, Synovus anticipates
receiving a letter from KPMG to the effect that the Merger will qualify for
pooling of interests accounting treatment. See "THE MERGER Accounting Treatment"
; and " - Resales of Synovus Common Stock."
Conditions to the Merger; Regulatory Approvals
Consummation of the Merger is subject to various conditions, including
receipt of the shareholder approval solicited hereby, receipt of the necessary
regulatory approvals, receipt of the opinion of KPMG regarding certain tax
aspects of the Merger (which has been satisfied), receipt of assurances that the
Merger qualifies for pooling of interests accounting treatment and satisfaction
of other customary closing conditions.
7
The regulatory approvals and consents necessary to consummate the
transactions contemplated by the Merger Agreement include the approval of the
Federal Deposit Insurance Corporation ("FDIC") and the Department of Banking and
Finance of the State of Georgia ("Georgia Banking Department"). Applications
have been submitted for such approvals. The Merger has not yet been approved by
the FDIC or the Georgia Banking Department. See "THE MERGER - Conditions to the
Merger; Regulatory Approvals."
Effective Date
The Merger will become effective at the time a Certificate of Merger is
filed with the Secretary of State of Georgia, or on such later date as the
Certificate of Merger may specify ("Effective Date"). Subject to the conditions
specified in the Merger Agreement, the parties currently anticipate that the
Merger will become effective on November 30, 1998, although there can be no
assurances as to whether or when the Merger will occur. See "THE MERGER -
Conditions to the Merger; Regulatory Approvals."
Waiver and Amendment
Prior to the Effective Date, any provision of the Merger Agreement may
be waived by the party entitled to the benefits of such provision or by all
parties, to the extent allowed by law. In addition, the Merger Agreement may be
amended at any time, to the extent allowed by law, by an agreement in writing
between Synovus and Bank of Georgia after approval of their respective Boards of
Directors. See "THE MERGER - Waiver and Amendment."
Termination
The Merger Agreement may be terminated at any time prior to the
Effective Date by the mutual consent of Synovus, Bank of Georgia and Athens
First, if the Board of Directors of each so determines by a vote of a majority
of the members of its entire board, and by any of them individually under
certain specified circumstances, including if the Merger has not become
effective by December 31, 1998. If the Merger Agreement is terminated by Synovus
for reasons other than as specified in the Merger Agreement, Synovus must pay
Bank of Georgia $100,000 or $200,000 in liquidated damages, with the amount of
the liquidated damages payment to be determined based upon the reason for such
termination. If the Merger Agreement is terminated by Bank of Georgia for
reasons other than as specified in the Merger Agreement, Bank of Georgia must
pay Synovus either $100,000 or $200,000 in liquidated damages, with the amount
of the liquidated damages payment to be determined based upon the reason for
such termination. See "THE MERGER - Termination."
Description of Stock and Effect of Merger on Rights of Bank of Georgia
Shareholders
On the Effective Date, shareholders of Bank of Georgia (other than Bank
of Georgia shareholders who exercise and perfect their statutory dissenters'
rights against the Merger) will automatically become shareholders of Synovus and
their rights as
8
shareholders of Synovus will be determined by the Georgia Business Corporation
Code and by Synovus' Articles of Incorporation and bylaws. The rights of
shareholders of Synovus differ from the rights of shareholders of Bank of
Georgia with respect to certain important matters, including the required
shareholder votes as to certain matters, Synovus' Share Purchase Rights Plan and
Synovus' Voting Rights Amendment which entitles certain of its shareholders to
ten votes per share. See "DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF
BANK OF GEORGIA SHAREHOLDERS."
Markets and Market Prices
The following table presents the closing price for Synovus Common Stock
reported on the NYSE on April 21, 1998, the last business day preceding the
public announcement of the Merger, and the closing price for Synovus Common
Stock reported on the NYSE on ______, 1998. On August 1, 1998, there were 241
shareholders of record of Bank of Georgia Common Stock. No established trading
market for Bank of Georgia Common Stock exists. Because transactions in Bank of
Georgia Common Stock are infrequent and are negotiated privately between the
persons involved in these transactions and because such transactions are not
reported on an exchange or other organized trading system, Bank of Georgia does
not have reliable data regarding recent trading activity in Bank of Georgia
Common Stock. To the best knowledge of management of Bank of Georgia, the last
transaction in Bank of Georgia Common Stock took place in October 1997 at a
price of $45.00 per share. The table also sets forth the Bank of Georgia Common
Stock Equivalent which represents the closing price of Synovus on April 21, 1998
and _____, 1998 multiplied by the Per Share Exchange Ratio of 6.4181.
Synovus Common Bank of Georgia Bank of Georgia
Stock Common Stock Common Stock
Equivalent
April 21, 1998 $23.70 $45.00 $152.11
_____, 1998
Shareholders are advised to obtain current market quotations for
Synovus Common Stock. It is expected that the market price of Synovus Common
Stock will fluctuate between the date of the Proxy Statement/Prospectus and the
Effective Date of the Merger and thereafter. No assurances can be given as to
the market price of Synovus Common Stock or Bank of Georgia Common Stock at, or
in the case of Synovus Common Stock after, the Effective Date of the Merger.
COMPARATIVE PER SHARE DATA
The following summary presents selected comparative unaudited per share
information: (1) for Synovus Common Stock, on a historical and pro forma basis
assuming the Merger had been effective during the periods presented and (2) for
Bank
9
of Georgia on a historical basis and on a pro forma equivalent basis. In
presenting the equivalent Bank of Georgia per share amounts, the data reflects
one share of Bank of Georgia Common Stock as 6.4181 shares of Synovus Common
Stock to be exchanged therefor. The pro forma information has been prepared
giving effect to the Merger as a pooling of interests. The pro forma financial
information does not include the effects of other pending immaterial
acquisitions by Synovus. These tables should be read in conjunction with the
consolidated financial statements of Synovus and Bank of Georgia included in
documents included or incorporated herein by reference. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
The following information is presented for informational purposes only
and is not necessarily indicative of the results of operations or combined
financial position that would have resulted had the Merger been consummated at
the beginning of the periods indicated, nor is it necessarily indicative of the
results of operations of future periods or future combined financial position.
[Rest of page intentionally blank]
10
The following table reflects the issuance of 850,399 shares of Synovus Common
Stock pursuant to the Per Share Exchange Ratio of 6.4181 shares of Synovus
Common Stock for each share of Bank of Georgia Common Stock currently
outstanding.
<TABLE>
<CAPTION>
As of and For The
Six Months Years Ended
Ended December 31,
June 30, 1998 1997 1996 1995
(Unaudited) (Unaudited except Synovus and Bank of Georgia Historical)
<S> <C> <C> <C> <C>
Net Income per common share - basic
Historical:
Synovus $ 0.32 0.63 0.53 0.44
Bank of Georgia 3.63 6.04 6.35 5.24
Pro forma combined 0.32 0.63 0.54 0.44
Pro forma equivalent per common
Bank of Georgia share <F1> 2.05 4.04 3.47 2.82
Net income per common share - assuming dilution
Historical:
Synovus 0.32 0.62 0.53 0.44
Bank of Georgia 3.63 6.04 6.35 5.24
Pro forma combined 0.32 0.62 0.54 0.44
Pro forma equivalent per common
Bank of Georgia share <F1> 2.05 4.04 3.47 2.82
Cash dividends declared per common share
Historical:
Synovus 0.15 0.24 0.19 0.16
Bank of Georgia 0.94 1.00 0.90 0.75
Equivalent per common Bank of
Georgia share <F2> 0.96 1.54 1.22 1.03
Book values per common share at period end
Historical:
Synovus 3.63 3.44
Bank of Georgia 44.05 40.95
Pro forma combined 3.64 3.45
Pro forma equivalent per common Bank
of Georgia share <F1> 23.36 22.14
<FN>
<F1>Determined by multiplying the pro forma amounts by the Exchange Ratio of
6.4181:1.
<F2>Determined by multiplying the Synovus historical cash dividends declared per
share by the Exchange Ratio of 6.4181:1.
</FN>
</TABLE>
10.1
SELECTED FINANCIAL DATA
The following tables set forth certain selected historical financial
information for Synovus and Bank of Georgia. The selected historical financial
information is based upon, derived from, and should be read in conjunction with
the historical consolidated financial statements of Synovus and Bank of Georgia
and the related notes therein, set forth in documents included or incorporated
herein by reference. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
Interim unaudited information for Synovus and Bank of Georgia for the
six months ended June 30, 1998, and June 30, 1997, reflect, in the opinion of
management of Synovus and Bank of Georgia, respectively, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such information. Results for the six months ended June 30,
1998, are not necessarily indicative of results which may be expected for the
year as a whole.
[Rest of page intentionally blank]
11
SYNOVUS FINANCIAL CORP.
Selected Financial Data
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
(Unaudited) Years Ended December 31,
1998 1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $ 214,002 200,763 412,389 374,874 341,875 301,231 263,213
Provision for losses on loans $ 14,598 15,280 32,296 31,766 25,787 25,387 24,924
Income before extraordinary item $ 85,425 75,129 165,236 139,604 114,583 89,452 80,379
Net income $ 85,425 75,129 165,236 139,604 114,583 89,452 77,467
Per share data:
Income before extraordinary item - basic $ 0.32 0.29 0.63 0.53 0.44 0.35 0.32
Income before extraordinary item - assuming
dilution $ 0.32 0.28 0.62 0.53 0.44 0.35 0.32
Net income - basic $ 0.32 0.29 0.63 0.53 0.44 0.35 0.31
Net income - assuming dilution $ 0.32 0.28 0.62 0.53 0.44 0.35 0.31
Cash dividends declared $ 0.15 0.12 0.24 0.19 0.16 0.13 0.11
Book value per share $ 3.63 3.17 3.44 2.99 2.66 2.27 2.17
Long-term debt $ 123,484 127,239 126,174 97,283 106,815 139,811 143,481
Average total equity $ 928,801 802,207 834,726 730,541 639,426 566,562 505,027
Average total assets $9,276,934 8,641,807 8,815,423 8,135,587 7,498,299 6,782,659 6,141,794
Ratios:
Return on assets before extraordinary item <F1> 1.86 % 1.75 1.87 1.72 1.53 1.32 1.31
Return on assets after extraordinary item <F1> 1.86 1.75 1.87 1.72 1.53 1.32 1.26
Return on equity before extraordinary item <F1> 18.55 18.89 19.80 19.11 17.92 15.79 15.92
Return on equity after extraordinary item <F1> 18.55 18.89 19.80 19.11 17.92 15.79 15.34
Dividend payout ratio 45.17 41.85 38.10 36.62 36.69 36.90 35.10
Average equity to average assets 10.02 9.29 9.47 8.98 8.53 8.35 8.22
<FN>
<F1> Ratios for the six month periods have been annualized.
</FN>
</TABLE>
11.1
SELECTED HISTORICAL FINANCIAL DATA OF
BANK OF GEORGIA
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
(Dollars in Thousands, Except Per Share Amounts)
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet:
Total assets $53,961 $50,580 $51,528 $48,756 $47,872 $38,338 $36,113
Loans, net 35,679 30,106 31,832 30,022 24,116 23,420 19,643
Securities
available-for-sale 9,563 10,111 12,129 10,330 9,236 8,320 -
Securities
held-to-maturity 2,689 2,215 1,970 2,331 2,780 3,109 10,588
Federal funds sold 1,850 3,540 970 2,100 7,400 - 2,400
Deposits 47,446 44,931 45,425 43,595 43,420 35,214 32,893
Stockholders'
equity 5,836 5,056 5,426 4,636 3,963 2,803 2,995
Operating Data:
Interest income 2,275 2,057 4,230 4,020 3,528 2,973 2,551
Interest expense 1,095 974 2,014 1,911 1,632 1,184 980
Net interest income 1,180 1,083 2,216 2,109 1,896 1,789 1,571
Provision for
loan losses 30 5 5 20 50 45 20
Net interest income
after provision for
loan losses 1,150 1,078 2,211 2,089 1,846 1,744 1,551
Other income 187 155 323 403 292 188 202
Other expenses 644 629 1,300 1,163 1,019 1,022 973
Income tax expense 212 213 434 487 425 346 293
Net income 480 390 801 842 694 564 487
Basic earnings
per share 3.63 2.95 6.04 6.35 5.24 4.26 3.68
Cash dividends
declared per share .94 - 1.00 .90 .75 .60 .50
</TABLE>
[Rest of page intentionally blank]
12
THE SPECIAL MEETING
General Information
This Proxy Statement/Prospectus is being furnished to the shareholders of
Bank of Georgia in connection with the solicitation, by and on behalf of the
Board of Directors of Bank of Georgia, of Proxies for use and to be voted at a
Special Meeting of Shareholders of Bank of Georgia to be held at 7:30 p.m.,
local time, on _________, 1998 at Bank of Georgia's office at 2100 Experiment
Station Road, Watkinsville, Georgia 30677, and at any adjournment thereof, and
is being mailed on _______, 1998 to the Bank of Georgia shareholders entitled to
receive Notice of and to vote at the Special Meeting.
The Special Meeting has been called by the Board of Directors of Bank of
Georgia so that Bank of Georgia shareholders may consider and vote upon a
proposal to merge Bank of Georgia with and into Athens First, a wholly owned
subsidiary of Synovus, with Athens First as the resulting bank of the Merger
pursuant to the Merger Agreement, a copy of which is attached to this Proxy
Statement/Prospectus as Appendix "A," and incorporated herein by reference. Upon
the Effective Date of the Merger, Bank of Georgia shareholders will receive from
Synovus 6.4181 shares of Synovus Common Stock for each of their shares of Bank
of Georgia Common Stock (the "Per Share Exchange Ratio").
No fractional shares of Synovus Common Stock will be issued in connection
with the Merger but rather cash (without interest) will be paid in lieu thereof,
with the amount of cash in lieu of fractional shares to be determined based upon
the closing price per share of Synovus Common Stock on the NYSE on the fifth
business day immediately preceding the Effective Date.
If and when the Merger is consummated, Bank of Georgia will operate as a
branch of Athens First and Bank of Georgia will cease to exist as a separate
banking corporation.
Voting Information
At the close of business on _______, 1998, the record date for determining
shareholders of Bank of Georgia Common Stock eligible to receive Notice of and
to vote at the Special Meeting, 132,500 shares of Bank of Georgia Common Stock
were issued and out standing. With respect to all matters to be considered and
voted upon at the Special Meeting, each shareholder of Bank of Georgia Common
Stock is entitled to one vote for each share of Bank of Georgia Common Stock
held by such shareholder on the record date.
The presence, in person or by proxy, of at least a majority of the total
number of outstanding shares is necessary to constitute a quorum at the Special
Meeting. Some proxies may be broker non-votes (marked to indicate that the
shares are not being voted on the Merger Agreement). Any proxy authorized to be
voted at the meeting (including on routine matters pursuant to the discretionary
authority granted to management's proxy) whether or not the proxy is marked to
"ABSTAIN" or to effect a broker non-vote, will be counted in establishing a
quorum.
13
Approval of the Merger Agreement and the authorization of the Merger
requires the affirmative vote of the holders of two-thirds of the issued and
outstanding shares of Bank of Georgia Common Stock entitled to vote at the
Special Meeting. Consequently, both abstentions and broker non-votes will have
the effect of a vote against the Merger Agreement.
As of the record date for the Special Meeting, Bank of Georgia's directors,
executive officers and their affiliates had the power to vote, or direct the
voting of, approximately 40% of the issued and outstanding shares of Bank of
Georgia Common Stock entitled to be voted at the Special Meeting. It is
anticipated that all shares of Bank of Georgia Common Stock as to which Bank of
Georgia's present directors, executive officers and their affiliates control the
voting power will be voted FOR approval of the Merger Agreement and the
authorization of the Merger.
Shares represented by properly executed Proxies, if such Proxies are
received at or prior to the Special Meeting and not subsequently revoked, will
be voted at the Special Meeting in accordance with the choice specified therein,
or, if no choice is specified therein, will be voted FOR approval of the Merger
Agreement and the authorization of the Merger. A Proxy may be revoked by its
maker at any time before it is exercised by: (i) giving written notice of
revocation to President Christa or Chairman Whitehead or (ii) properly
submitting to Bank of Georgia a duly executed Proxy bearing a later date.
Attendance at the Special Meeting will constitute revocation of the Proxy if the
maker thereof elects to vote in person.
The cost of soliciting proxies from holders of Bank of Georgia Common Stock
will be borne by Bank of Georgia. In addition to use of the mail, Bank of
Georgia shareholders may be solicited by personal contact, or by telephone,
telegraph or other electronic communications, by directors, officers or
employees of Bank of Georgia, who will receive no additional compen sation
therefor. Custodians, nominees and fiduciaries will be reimbursed for reasonable
out-of-pocket expenses incurred by them in connection with this solicitation of
Proxies.
THE MERGER
The following is a description of certain provisions of the Merger
Agreement, the Merger and the consequences thereof. THIS DESCRIPTION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE MERGER AGREEMENT,
A COPY OF WHICH IS ATTACHED AS APPENDIX "A" TO THIS PROXY STATEMENT/PROSPECTUS
AND IS INCORPORATED HEREIN BY REFERENCE. ALL SHAREHOLDERS ARE URGED TO READ
CAREFULLY THE MERGER AGREEMENT, AS WELL AS THE OTHER APPENDICES, IN THEIR
ENTIRETY.
The Merger Agreement
The Board of Directors of Bank of Georgia has approved, executed and
delivered, and the proper officers of Bank of Georgia have executed and
delivered, the Merger Agreement relating to the Merger. The Merger Agreement
sets forth the terms of the Merger and contains: (i) conditions precedent to
each party's obligations to consummate the Merger; (ii) conditions precedent to
Synovus' obligations to consummate the Merger; (iii) conditions precedent to
Bank of Georgia's obligations to consummate the Merger; (iv) provisions relating
14
to Bank of Georgia's and Synovus' operations pending consummation of the Merger;
and (v) certain other provisions.
Terms of the Merger
On the Effective Date of the Merger (which is the date of or to be
specified in the certificate to be issued by the Secretary of State of Georgia
causing the Merger to become effective), the issued and outstanding shares of
Bank of Georgia Common Stock will be converted into shares of Synovus Common
Stock at the Per Share Exchange Ratio, and outstanding certificates representing
shares of Bank of Georgia Common Stock shall thereafter represent shares of
Synovus Common Stock.
Certificates representing shares of Bank of Georgia Common Stock shall be
surrendered to Synovus by the holders thereof on or after the Effective Date of
the Merger for new certificates representing shares of Synovus Common Stock.
Until so surrendered to Synovus, such certificates theretofore representing
shares of Bank of Georgia Common Stock will be deemed for all corporate purposes
to evidence the ownership of the respective number of shares of Synovus Common
Stock which the holders could or would have been entitled to receive upon their
surrender to Synovus (except for the payment of dividends, which shall be
subject to the exchange of stock certificates as provided herein).
UNTIL SUCH STOCK CERTIFICATES NOMINALLY REPRESENTING SHARES OF BANK OF
GEORGIA COMMON STOCK ARE SURRENDERED TO SYNOVUS IN EXCHANGE FOR CERTIFICATES
REPRESENTING SHARES OF SYNOVUS COMMON STOCK, NO DIVIDENDS PAYABLE AS OF ANY DATE
SUBSEQUENT TO THE EFFECTIVE DATE OF THE MERGER ON THE SHARES OF SYNOVUS COMMON
STOCK REPRESENTED BY SUCH BANK OF GEORGIA COMMON STOCK CERTIFICATES WILL BE PAID
TO THE RECORD HOLDERS THEREOF (HOWEVER, FORMS 1099 REPORTING THE PAYMENT OF SUCH
DIVIDENDS WILL BE FILED WITH THE INTERNAL REVENUE SERVICE AND MAILED TO EACH
SHAREHOLDER); BUT UPON THE SURRENDER TO SYNOVUS OF SUCH BANK OF GEORGIA COMMON
STOCK CERTIFICATES, THERE WILL BE PAID TO THE RECORD HOLDERS THEREOF THE AMOUNT
OF DIVIDENDS WHICH THERETOFORE HAD BECOME PAYABLE, WITHOUT INTEREST THEREON,
UPON THE SHARES OF SYNOVUS COMMON STOCK REPRESENTED BY SUCH OUTSTANDING BANK OF
GEORGIA COMMON STOCK CERTIFICATES.
No fractional shares of Synovus Common Stock will be issued in connection
with the Merger, but rather cash (without interest) will be paid in lieu
thereof, with the amount of cash to be paid in lieu of fractional shares to be
determined based upon the closing price per share of Synovus Common Stock on the
NYSE on the fifth day immediately preceding the Effective Date.
The delivery of Synovus stock certificates and other amounts may be subject
to possible forfeiture under applicable escheat laws if Bank of Georgia stock
certificates are not surrendered for exchange within the legally specified
periods of time which vary with the state of residence of the certificate
holder. Therefore, all Bank of Georgia shareholders are urged to surrender their
Bank of Georgia stock certificates at the earliest possible date after
15
consummation of the Merger.
As soon as practicable following consummation of the Merger, Synovus will
send each shareholder of Bank of Georgia Common Stock a Letter of Transmittal
explaining the procedure to be followed in exchanging certificates representing
shares of Bank of Georgia Common Stock for certificates representing shares of
Synovus Common Stock. Until such Letter of Transmittal is received, shareholders
of Bank of Georgia should continue to hold their certificates representing
shares of Bank of Georgia Common Stock.
On the basis of the number of shares of Bank of Georgia Common Stock which
were outstanding on the date of this Proxy Statement/Prospectus, a maximum of
850,399 shares of Synovus Common Stock may be issued to the shareholders of Bank
of Georgia Common Stock pursuant to the terms of the Merger Agreement.
Recommendation of Bank of Georgia Board of Directors; Background of and Reasons
for the Merger
Background of and Reasons for the Merger. During the second quarter of
1997, the Board of Directors of Bank of Georgia began considering strategic
alternatives. Bank of Georgia initially contacted three banks, including Athens
First, to discuss a possible merger. A proposed transaction with Athens First
was attractive since there had been long-standing relationships between members
of the Board of Directors of Bank of Georgia and the executive officers of
Athens First.
The initial negotiations with respect to the proposed Merger took place
between directors of Bank of Georgia and, thereafter, management of Bank of
Georgia, and principals of Athens First. Following the initial discussions,
representatives of Synovus also participated in the negotiations.
On January 30, 1998, Synovus presented a proposed letter of intent to Bank
of Georgia. Bank of Georgia's President reviewed the letter of intent with the
members of Bank of Georgia's Board. Following these discussions, on February 5,
1998, Bank of Georgia's Chairman executed the letter of intent from Synovus.
Thereafter, Bank of Georgia and Synovus conducted due diligence
investigations of each other and proceeded to negotiate the Merger Agreement.
On April 13, 1998, at a regular meeting of the Board of Directors of Bank
of Georgia, the Board of Directors discussed the proposed Merger, and counsel to
Bank of Georgia reviewed various aspects of the proposed Merger with the Board
including the proposed Merger Agreement.
On April 22, 1998, at a special meeting of the Board of Directors of Bank
of Georgia, the Board approved and adopted the proposed Merger Agreement subject
to (i) final negotiation of an employment agreement between Bank of Georgia's
President and Athens First and (ii) mutual agreement as to the disposition of
certain insurance benefit plans for officers and directors of Bank of Georgia.
The Merger Agreement was executed on April 22, 1998.
16
Recommendation of Bank of Georgia Board of Directors. Bank of Georgia's
Board of Directors has approved the Merger Agreement and has determined that the
Merger is in the best interests of Bank of Georgia and its shareholders. The
terms of the Merger were the result of arms'-length negotiations between
representatives of Bank of Georgia and representatives of Synovus. Without
assigning any relative or specific weights to the factors, the Board of
Directors of Bank of Georgia considered the following material factors: (i) the
value of the consideration to be received by Bank of Georgia shareholders
relative to the book value and earnings per share of Bank of Georgia Common
Stock; (ii) certain information concerning the financial condition, results of
operations and business prospects of Synovus; (iii) the financial terms of
recent business combinations in the financial services industry and a comparison
of the multiples of selected combinations with the terms of the proposed
transaction with Synovus; (iv) the alternatives to the Merger, including
remaining an independent institution; (v) the competitive and regulatory
environment for financial institutions generally; and (vi) the fact that the
Merger will enable Bank of Georgia shareholders to exchange their shares of Bank
of Georgia Common Stock, in a tax-free transaction, for shares of common stock
of a regional company, the stock of which is widely held and actively traded.
Each member of the Board of Directors of Bank of Georgia has agreed to vote
such members' shares of Bank of Georgia Common Stock in favor of the Merger.
BANK OF GEORGIA'S BOARD OF DIRECTORS RECOMMENDS THAT BANK OF
GEORGIA SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT.
Management of Synovus believes that the Merger will provide Synovus with
expanded market opportunities for profitable long-term growth. Management of
Synovus also believes that the Merger will result in the integration of a
well-suited and positioned banking organization into Synovus' existing
organization.
Conditions to the Merger
The respective obligations of Synovus and Bank of Georgia to effect the
Merger are subject to the satisfaction prior to the Effective Date of the
following conditions: (i) the Merger Agreement and the transactions contemplated
thereby shall have been approved by the affirmative vote of the holders of
two-thirds of Bank of Georgia Common Stock; (ii) approval of the Merger
Agreement and the transactions contemplated thereby by the FDIC and the Georgia
Banking Department; (iii) receipt of all other regulatory consents and approvals
which are necessary to the consummation of the transactions contemplated by the
Merger Agreement; provided, however, that no approval or consent referred to
therein or in clause (ii) above will be deemed to have been received if it
includes any conditions or requirements (other than conditions or requirements
which are customarily included in such an approval or consent) which would have
such a material adverse impact on the economic or business benefits of the
transactions contemplated by the Merger Agreement as to render inadvisable the
consummation of the Merger in the reasonable opinion of the Board of Directors
of Synovus or Bank of Georgia; (iv) the satisfaction of all other statutory or
regulatory requirements which are necessary to the consummation of the
transactions contemplated by the Merger Agreement; (v) neither Synovus nor Bank
of Georgia shall be subject to any order,
17
decree or injunction or any other action of a United States federal or state
court or a United States federal or state governmental, regulatory or
administrative agency or commission permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by the Merger Agreement;
(vi) the Registration Statement of which this Proxy Statement/Prospectus forms a
part will have become effective and no stop order suspending the effectiveness
of the Registration Statement will have been issued and no proceedings for that
purpose will have been initiated or threatened by the Commission and Synovus
will have received all state securities law and "Blue Sky" permits, approvals,
qualifications or exemptions necessary to consummate the transactions
contemplated by the Merger Agreement; (vii) receipt by Synovus and Bank of
Georgia of an opinion from KPMG to the effect that the Merger will be treated
for federal income tax purposes as a tax-free reorganization within the meaning
of Section 368(a)(1)(A) and 368(a)(2)(D) of the Tax Code; (viii) receipt by
Synovus and Bank of Georgia from each other of a certificate to the effect that
the representations made by management of such party to KPMG in delivery of the
opinion referenced in (vii) above were true, correct and complete when made; and
(ix) receipt by Synovus of a letter dated as of the Effective Date from KPMG to
the effect that Merger will qualify for pooling of interests accounting
treatment.
The obligation of Synovus to effect the Merger is subject to the
satisfaction prior to the Effective Date of the following additional conditions:
(i) there shall not exist inaccuracies in the representations and warranties or
instances of non-compliance with the covenants of Bank of Georgia set forth in
the Merger Agreement such that their aggregate effect has, or is reasonably
likely to have, a material adverse effect on Bank of Georgia, and Synovus will
have received a certificate signed by the Chief Executive Officer of Bank of
Georgia, dated the Effective Date, to such effect; (ii) no litigation or
proceeding is pending which: (a) has been brought against Bank of Georgia by any
governmental agency seeking to prevent consummation of the transactions
contemplated hereby; or (b) in the reasonable judgment of Synovus is likely to
have a Material Adverse Effect (as defined in the Merger Agreement) on Bank of
Georgia; (iii) Synovus will not have learned of any fact or condition with
respect to the business, properties, assets, liabilities, deposit relationships
or earnings of Bank of Georgia which, in the reasonable judgment of Synovus, is
materially and adversely at variance with one or more of the warranties or
representations set forth in the Merger Agreement or which, in the reasonable
judgment of Synovus, has or will have a Material Adverse Effect on Bank of
Georgia; (iv) Frank J. Christa will have entered into an Employment Agreement
with Synovus; (v) Bank of Georgia will have a CAMEL rating of 1 on the Effective
Date and a Community Reinvestment Act Rating of at least Satisfactory; (vi) on
the Effective Date, Bank Georgia will have a loan loss reserve of at least 1.01%
of loans and which will be adequate in all material respects under generally
accepted accounting principles applicable to banks; (vii) Bank of Georgia will
have delivered to Synovus certain environmental reports; (viii) the results of
any regulatory exam of Bank of Georgia shall be reasonably satisfactory to
Synovus; and (ix) a "no claims" letter shall have been delivered to Synovus by
each of Bank of Georgia's officers and directors.
The obligation of Bank of Georgia to effect the Merger is subject to the
satisfaction prior to the Effective Date of the following additional conditions:
(i) there shall not exist inaccuracies in the representations and warranties or
instances of non-compliance with the covenants of
18
Synovus set forth in the Merger Agreement such that their aggregate effect has,
or is reasonably likely to have, a material adverse effect on Synovus, and Bank
of Georgia will have received a certificate signed by the Chief Executive
Officer of Synovus, dated the Effective Date, to such effect; (ii) the listing
for trading of the shares of Synovus Common Stock which shall be issued pursuant
to the terms of the Merger Agreement on the NYSE shall have been approved by the
NYSE subject to official notice of issuance; (iii) no litigation or proceeding
is pending which: (a) has been brought against Synovus by any governmental
agency seeking to prevent consummation of the transactions contemplated hereby;
or (b) in the reasonable judgment of Bank of Georgia is likely to have a
Material Adverse Effect on Synovus; and (iv) Bank of Georgia will not have
learned of any fact or condition with respect to the business, properties,
assets, liabilities, deposit relationships or earnings of Synovus which, in the
reasonable judgment of Bank of Georgia, is materially and adversely at variance
with one or more of the warranties or representations set forth in the Merger
Agreement or which, in the reasonable judgment of Bank of Georgia, has or will
have a Material Adverse Effect on Synovus.
Regulatory Approvals
As indicated above, consummation of the Merger and the transactions
contemplated thereby is subject to, and conditioned upon, receipt of the
approvals from the FDIC and the Georgia Banking Department. Applications in
connection with the Merger were filed with the FDIC and the Georgia Banking
Department on or about June 5, 1998. The Merger has not yet been approved by the
FDIC or the Georgia Banking Department. The Merger cannot be consummated for 30
days after approval thereof by the FDIC, although this period may be shortened
to 15 days by the U.S. Attorney General. During such period, the United States
Justice Department may challenge the Merger on antitrust grounds.
There can be no assurance that the FDIC or the Georgia Banking Department
or any other applicable regulatory authority will approve or take other required
action with respect to the Merger. Synovus and Bank of Georgia are not aware of
any governmental approvals or actions that are required in order to consummate
the Merger except as described above. Should such other approval or action be
required, it is contemplated that Synovus and Bank of Georgia would seek such
approval or action. There can be no assurance as to whether or when any such
other approval or action, if required, could be obtained.
Waiver and Amendment
Prior to the Effective Date, any provision of the Merger Agreement may be
waived by the party entitled to the benefits of such provision or by all
parties, to the extent allowed by law. In addition, the Merger Agreement may be
amended at any time, to the extent allowed by law, by an agreement in writing
between Synovus, Bank of Georgia and Athens First after approval of their
respective Boards of Directors.
Termination
The Merger Agreement may be terminated prior to the Effective Date, either
before or after its approval by the stockholders of Bank of Georgia: (i) by the
mutual consent of Synovus,
19
Bank of Georgia and Athens First, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board; (ii) by
Synovus, Bank of Georgia or Athens First if consummation of the Merger does not
occur by reason of the failure of any of the conditions precedent set forth in
the Merger Agreement; or (iii) by Synovus, Bank of Georgia or Athens First, if
its Board of Directors so determines by vote of a majority of the members of its
entire Board, in the event that the Merger is not consummated by December 31,
1998 unless the failure to so consummate by such time is due to the breach of
the Merger Agreement by the party seeking to terminate. In the event of the
termination of the Merger Agreement by Synovus, Bank of Georgia or Athens First
for the reasons and as provided in this paragraph (except as provided below),
the Merger Agreement will become void.
In the event of the termination of the Merger Agreement by Bank of Georgia
for any other reason (other than as set forth in the paragraph below),
including, but not limited to its willful breach of any covenant or its willful
misrepresentation of any representation contained in the Merger Agreement
leading to a violation of the conditions precedent set forth in the Merger
Agreement, Bank of Georgia will immediately pay Synovus $100,000 in liquidated
damages. In the event of the termination of the Merger Agreement by Synovus for
any other reason, including, but not limited to its willful breach of any
covenant or its willful misrepresentation of any representation contained in the
Merger Agreement leading to a violation of the conditions precedent set forth in
the Merger Agreement, Synovus will immediately pay Bank of Georgia $100,000 in
liquidated damages.
In the event Bank of Georgia terminates the Merger Agreement as a result of
negotiations with a third party concerning a possible business combination with
Bank of Georgia, Bank of Georgia will immediately pay Synovus $200,000 in
liquidated damages or in the event Bank of Georgia terminates the Merger
Agreement as a result of a determination by its Board of Directors that it is in
the best interests of Bank of Georgia and its shareholders to terminate the
Merger Agreement, and Bank of Georgia is not otherwise entitled to terminate the
Merger Agreement, Bank of Georgia will immediately pay Synovus $200,000 in
liquidated damages. In the event Synovus or Athens First terminates the Merger
Agreement as a result of a determination by either of their Boards of Directors
that it is in either of their or their shareholders' best interests to terminate
this Agreement, and neither Synovus nor Athens First otherwise entitled to
terminate the Merger Agreement, Synovus will immediately pay Bank of Georgia
$200,000 in liquidated damages.
Interests of Certain Persons in the Merger
No officer or director of Bank of Georgia, nor any of their "associates,"
has any direct or indirect material interest in the Merger, except insofar as
the following might be deemed to create such an interest: (i) the ownership by
such person of Bank of Georgia Common Stock; (ii) the continued employment by
such person with Athens First after consummation of the Merger; (iii) the
potential service by such person as a director of Athens First after
consummation of the Merger; (iv) after the Effective Date, the eligibility of
such persons to participate in the Synovus Financial Corp. Director and/or
Employee Stock Purchase Plans or Synovus' welfare, incentive and benefit plans;
and (v) certain rights to indemnification. The Bank of Georgia Board was aware
of these interests and considered them, among other matters, in approving the
Merger Agreement and the transactions contemplated thereby.
20
Pursuant to the Merger Agreement, for a period of six years after the
Effective Date, Synovus will indemnify, defend and hold harmless each person
entitled to indemnification from Bank of Georgia against all liabilities arising
out of actions or omissions occurring at or prior to the Effective Date
(including the transactions contemplated by the Merger Agreement) to the fullest
extent permitted under Georgia law and by Bank of Georgia's Articles of
Incorporation and bylaws.
In addition, if the Merger is consummated, Synovus has agreed to enter into
an Employment Agreement with Frank J. Christa, President of Bank of Georgia,
pursuant to which Mr. Christa will be elected a Group Vice President of Athens
First. The Agreement is for a three-year term and provides that Mr. Christa will
be compensated for his services at an annual rate of base compensation of
$123,200 per year.
Employee Benefits
Synovus has agreed in the Merger Agreement that, following the Effective
Date, Synovus will provide generally to officers and employees of Bank of
Georgia employee benefits, including without limitation pension benefits, health
and welfare benefits, life insurance and vacation and severance arrangements on
terms and conditions which, when taken as a whole, are: (i) substantially
similar to those currently provided by Bank of Georgia; or (ii) the same
employee benefits as are provided to employees of Athens First.
Tax Opinion
Synovus and Bank of Georgia have received an opinion from KPMG, to the
effect that: (i) the Merger will constitute a tax-free reorganization under
Section 368(a)(1)(A) and 368(a)(2)(D) of the Tax Code; (ii) the basis of Synovus
Common Stock to be received by each Bank of Georgia shareholder will be the same
as the basis of Bank of Georgia Common Stock surrendered in exchange therefor;
(iii) the holding period of Synovus Common Stock will include the holding period
of the Bank of Georgia Common Stock exchanged therefor, provided that such Bank
of Georgia Common Stock is held as a capital asset at the Effective Date of the
Merger; and (iv) that, upon consummation of the Merger, no gain or loss will be
recognized by the shareholders of Bank of Georgia upon their receipt of shares
of Synovus Common Stock: (a) with the exception of any income or loss that will
be recognized by any Bank of Georgia shareholders with respect to any cash
payments required to be received by them in lieu of their receipt of fractional
shares of Synovus Common Stock; (b) with the exception of any income or loss
that will be recognized by any Bank of Georgia shareholders with respect to any
cash payments received by them by virtue of their exercise of their statutory
dissenters' rights against the Merger; and (c) except to the extent that the
Share Purchase Rights, which are described on pages 26 through 29 of this Proxy
Statement/Prospectus, are determined to be other property within the meaning of
Section 356 of the Tax Code, as described on page 9 of the opinion, which is
attached hereto as Appendix "C." The Tax Opinion was issued on August 5,
1998. The Tax Opinion is based upon certain assumptions and representations by
the managements of Synovus and Bank of Georgia (including, in general, the
absence of any plan or intention of Bank of Georgia's shareholders to sell or
otherwise dispose of any amount of Synovus Common Stock received in the Merger
that would violate certain precedents regarding continuity of interest required
to exist in a reorganization). KPMG
21
serves Synovus as independent auditors.
ALL BANK OF GEORGIA SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM OF THE MERGER UNDER FEDERAL,
STATE, LOCAL AND ANY OTHER APPLICABLE INCOME TAX LAWS.
Accounting Treatment
It is anticipated that the Merger will be accounted for as a pooling of
interests for financial reporting purposes. The Merger Agreement provides that
consummation of the Merger is subject to the receipt by Synovus of an opinion
from KPMG to the effect that the Merger will qualify as a pooling of interests
under generally accepted accounting principles and applicable rules of the
Commission if consummated in accordance with the Merger Agreement.
Expenses
The Merger Agreement provides that Synovus and Bank of Georgia will each
pay its own expenses in connection with the Merger and the transactions
contemplated by the Merger Agreement, including, but not limited to, the fees
and expenses of its own counsel and accountants. In the unlikely event that the
Merger is not consummated, Synovus has agreed to pay up to $25,000 of Bank of
Georgia's legal fees.
Resales of Synovus Common Stock
The shares of Synovus Common Stock issued pursuant to the Merger Agreement
will be freely transferable under the Securities Act except for shares issued to
any shareholder who may be deemed to be an "affiliate" of Bank of Georgia for
purposes of Rule 145 under the Securities Act as of the date of the Bank of
Georgia Special Meeting. Affiliates may not sell their shares of Synovus Common
Stock acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act covering such shares or in
compliance with Rule 145 promulgated under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act.
Persons who may be deemed to be affiliates of Bank of Georgia generally include
individuals or entities that control, are controlled by or are under common
control with Bank of Georgia and may include certain officers and directors of
Bank of Georgia as well as principal shareholders of Bank of Georgia.
Bank of Georgia has agreed in the Merger Agreement to use its best efforts
to cause each director, executive officer and other person who is an affiliate
of Bank of Georgia to enter into an agreement with Synovus providing that such
person will not sell, pledge, transfer or otherwise dispose of shares of Bank of
Georgia Common Stock owned by such person or Synovus Common Stock to be received
by such person in the Merger: (i) in the case of shares of Synovus Common Stock
only, except in compliance with the applicable provisions of the Securities Act
and the rules and regulations thereunder; and (ii) during the periods when any
such sale, pledge, transfer or other disposition would, under generally accepted
accounting principles or the rules, regulations or interpretations of the
Commission, disqualify the Merger for pooling of interests accounting treatment.
Such periods in general encompass the period
22
commencing 30 days prior to the Merger and ending at the time of publication of
financial results covering at least 30 days of combined operations of Synovus
and Bank of Georgia. This Proxy Statement/Prospectus does not cover resales of
Synovus Common Stock following consummation of the Merger, and no person may
make use of this Proxy Statement/Prospectus in connection with any such resale.
NYSE Listing
Synovus Common Stock is listed on the NYSE. The Synovus Common Stock issued
to the shareholders of Bank of Georgia pursuant to the Merger Agreement will be
listed on the NYSE.
DESCRIPTION OF STOCK AND EFFECT OF MERGER
ON RIGHTS OF BANK OF GEORGIA SHAREHOLDERS
If the Merger is consummated, Bank of Georgia shareholders will become
shareholders of Synovus (other than Bank of Georgia shareholders who perfect
their statutory dissenters' rights against the Merger).
The following sets forth, in summary form, a comparison of certain rights
of shareholders owning Synovus Common Stock and shareholders owning Bank of
Georgia Common Stock.
[Rest of page intentionally blank]
23
<TABLE>
<CAPTION>
Synovus Bank of Georgia
<S> <C>
1. Ten votes for each share held, 1. One vote for each share held
except in certain limited
circumstances described below
2. No cumulative voting rights in the 2. No cumulative voting rights in the
election of directors, meaning that election of directors, meaning that
the holders of a plurality of the the holders of a plurality of the
shares elect the entire Board of shares elect the entire Board of
Directors Directors
3. Dividends may be paid from funds 3. Dividends may be paid from funds
legally available, subject to legally available, subject to
contractual and regulatory contractual and regulatory
restrictions restrictions
4. Right to participate pro rata in 4. Right to participate pro rata in
distribution of assets upon distribution of assets upon
liquidation liquidation
5. No pre-emptive or other rights to 5. Shareholders have pre-emptive
subscribe for any additional shares rights to subscribe for any
or securities additional shares of Bank of Georgia Common
Stock if issued for cash
consideration
6. No conversion rights 6. No conversion rights
7. Directors serve staggered 7. Directors serve one-year terms
3-year terms
8. Certain corporate actions, including 8. Corporate actions require the
business combinations, require the affirmative vote of a majority of the
affirmative action or vote of 66-2/3% votes actually cast at the meeting,
of the votes entitled to be unless otherwise required by law, as
cast by the shareholders of all is the case in business combinations
voting stock which require the affirmative vote of
two-thirds of the votes entitled to be
cast at the meeting
9. No preferred stock is authorized 9. No preferred stock is authorized
10. Common Stock Purchase Rights 10. No comparable provision
trade with shares as described
below
</TABLE>
24
Synovus Common Stock
Synovus is incorporated under the Georgia Business Corporation Code,
and Synovus is authorized to issue 600,000,000 shares of Synovus Common Stock,
of which shares 263,412,084 were outstanding on July 31, 1998. Synovus has no
preferred stock authorized. Synovus' Board of Directors may at any time, without
additional approval of the holders of Synovus Common Stock, issue authorized but
unissued shares of Synovus Common Stock.
Synovus' Articles of Incorporation and bylaws presently contain several
provisions which may make Synovus a less attractive target for an acquisition of
control by an outsider who does not have the support of Synovus' Board of
Directors. See "DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF BANK OF
GEORGIA SHAREHOLDERS - Voting Rights - Certain Anti-Takeover Effects - The
Voting Amendment"; " - The Rights Plan"; " Staggered Board of Directors"; and "
- - Evaluation of Business Combinations."
Voting Rights - Certain Anti-Takeover Effects - The Voting Amendment
Pursuant to an amendment to Synovus' Articles of Incorporation and
bylaws which became effective on April 24, 1986 ("Voting Amendment"),
shareholders of Synovus Common Stock are entitled to ten votes on each matter
submitted to a vote at a meeting of shareholders for each share of Synovus
Common Stock which: (i) has had the same beneficial owner since April 24, 1986;
(ii) was acquired by reason of participation in a dividend reinvestment plan
offered by Synovus and is held by the same beneficial owner for whom it was
acquired under such plan; (iii) is held by the same beneficial owner to whom it
was issued as a result of an acquisition of a company or business by Synovus
where the resolutions adopted by Synovus' Board of Directors approving such
issuance specifically reference and grant such rights, including shares of
Synovus Common Stock to be issued to the former shareholders of Bank of Georgia
upon consummation of the Merger; (iv) was acquired under any employee, officer
and/or director benefit plan maintained for one or more employees, officers
and/or directors of Synovus and/or its subsidiaries, and is held by the same
beneficial owner for whom it was acquired under such plan; (v) is held by the
same beneficial owner to whom it was issued by Synovus, or to whom it was
transferred by Synovus from treasury shares, and the resolutions adopted by
Synovus' Board of Directors approving such issuance and/or transfer specifically
reference and grant such rights; (vi) has been beneficially owned continuously
by the same shareholder for a period of 48 consecutive months prior to the
record date of any meeting of shareholders at which the share is eligible to be
voted; (vii) was acquired as a direct result of a stock split, stock dividend or
other type of share distribution if the share as to which it was distributed has
had the same beneficial owner for a period of 48 consecutive months prior to the
record date of any meeting of shareholders at which the share is eligible to be
voted; or (viii) is owned by a holder who, in addition to shares which are
beneficially owned under the provisions of (i)-(vii) above, is the beneficial
owner of less than 1,139,063 shares of Synovus Common Stock (which amount has
been appropriately adjusted to reflect the stock splits which have occurred
subsequent to April 24, 1986 and with such amount to be appropriately adjusted
to properly reflect any other change in Synovus Common Stock by means of a stock
split, a stock dividend, a recapitalization or otherwise occurring after April
24, 1986) ("ten-vote shares"). Shareholders of shares of Synovus Common Stock
not described above are entitled
25
to one vote per share for each such share ("one-vote shares"). A shareholder may
own both ten-vote shares and one-vote shares, in which case he will be entitled
to ten votes for each ten-vote share and one vote for each one-vote share.
In connection with various meetings of Synovus' shareholders,
shareholders are required to submit to Synovus' Board of Directors satisfactory
proof necessary for it to determine whether such shareholders' shares of Synovus
Common Stock are ten-vote shares. If such information is not provided to
Synovus' Board of Directors, shareholders who would, if they had provided such
information, be entitled to ten votes per share, are entitled to only one vote
per share.
As Synovus Common Stock is registered with the Commission and is listed
on the NYSE, Synovus Common Stock is subject to the provisions of an NYSE rule,
which, in general, prohibits a company's common stock and equity securities from
being authorized or remaining authorized for listing on NYSE if the company
issues securities or takes other corporate action that would have the effect of
nullifying, restricting or disparately reducing the voting rights of existing
shareholders of the company. However, such rule contains a "grandfather"
provision, under which Synovus' Voting Amendment falls, which, in general,
permits grandfathered disparate voting rights plans to continue to operate as
adopted. Synovus' management believes that all current shareholders of Synovus
Common Stock are entitled to ten votes per share, and as such, the further
issuance of any ten-vote shares would not disenfranchise any existing
shareholders. In the event it is determined in the future that Synovus cannot
continue to issue ten-vote shares in mergers and acquisitions, Synovus will
consider repealing the Voting Amendment and restoring the principle of one
share/one vote.
If the Merger is approved, present shareholders of Bank of Georgia
Common Stock, as future shareholders of Synovus Common Stock, will, pursuant to
the Voting Amendment described above, be entitled to ten votes per share for
each share of Synovus Common Stock received by them on the Effective Date of the
Merger. Such persons may also acquire by purchase, stock dividend or otherwise,
up to 1,139,063 additional shares of Synovus Common Stock which will also be
entitled to ten votes per share. However, if Bank of Georgia shareholders
acquire by purchase, stock dividend or otherwise, more than 1,139,063 additional
shares of Synovus Common Stock, they will be entitled to only receive one vote
per share for each of such shares in excess of 1,139,063 shares until they have
been held for four years.
Except with respect to voting, ten-vote shares and one-vote shares are
identical in all respects and constitute a single class of stock, i.e., Synovus
Common Stock. Neither the ten-vote shares nor the one-vote shares have a
preference over the other with regard to divi dends or upon liquidation. Synovus
Common Stock does not carry any preemptive rights enabling a holder to subscribe
for or receive shares of Synovus Common Stock.
The Rights Plan
On April 20, 1989, the Board of Directors of Synovus established a
Share Purchase Rights Plan ("Rights Plan") and declared a dividend distribution
of one Common Stock Purchase Right ("Right") for each outstanding share of
Synovus Common Stock. Each Right once it becomes exercisable entitles the
registered holder to purchase from Synovus one
26
share of Synovus Common Stock at a price of $12.84 per share ("Purchase Price").
The description and terms of the Rights are set forth in a Rights Agreement
("Rights Agreement") between Synovus and SunTrust Bank, Atlanta (formerly Trust
Company Bank), as Rights Agent ("Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to shareholders and the Rights will automatically
trade with Synovus Common Stock. Until the close of business on the tenth day
following the earlier to occur of (i) a public announcement that a person or
group of affiliated persons has become an Acquiring Person, which is defined as
a person who has acquired, or obtained the right to acquire, beneficial
ownership of securities of Synovus representing 10% or more of the outstanding
Common Stock of Synovus, or such earlier date as a majority of the Board of
Directors shall become aware of the existence of an Acquiring Person (the "Stock
Acquisition Date"), or (ii) the commencement of, or public announcement of an
intention to commence, a tender or exchange offer the consummation of which
would result in the ownership of 15% or more of the outstanding Synovus Common
Stock (the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced by the Synovus Common Stock certificates. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights Certificates") will be mailed to holders of record of
Synovus Common Stock as of the close of business on the Distribution Date, and
such separate certificates alone will evidence the Rights from and after the
Distribution Date.
Each of the following persons (an "Exempt Person") will not be deemed
to be an Acquiring Person even if they have acquired, or obtained the right to
acquire, beneficial ownership of 10% or more of the outstanding Common Stock of
Synovus: (i) Synovus, any subsidiary of Synovus, any employee benefit plan or
employee stock plan of Synovus or of any subsidiary of Synovus; (ii) any
shareholder who is a descendant of D. Abbott Turner (the "Turner Family"), any
shareholder who is affiliated or associated with the Turner Family and any
person who would otherwise become an Acquiring Person as a result of the receipt
of Common Stock or a beneficial interest in Common Stock from one or more
members of the Turner Family by way of gift, devise, descent or distribution,
but not by way of sale, unless any such person, together with his affiliates and
associates, becomes the beneficial owner of more than 30% of the outstanding
shares of Synovus Common Stock; (iii) any person who would otherwise become an
Acquiring Person solely by virtue of a reduction in the number of outstanding
shares of Synovus Common Stock unless and until such person shall become the
beneficial owner of any additional shares of Synovus Common Stock; and (iv) any
person who is not otherwise an Exempt Person and who as of April 20, 1989 was
the beneficial owner of 10% or more of the outstanding Common Stock unless and
until such person shall become the beneficial owner of any additional shares of
Synovus Common Stock.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on May 4, 1999, unless earlier redeemed by
Synovus as described below.
The Purchase Price payable, and the number of shares of Synovus Common
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Common Stock, (ii) upon the grant to holders of the
27
Common Stock of certain rights or warrants to subscribe for Common Stock or
convertible securities at less than the current market price of the Common Stock
or (iii) upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding dividends payable in Common Stock) or of
subscriber rights or warrants (other than those referred to above).
After the Rights have become exercisable, if Synovus is acquired in a
merger or other business combination (in which any shares of Synovus Common
Stock are changed into or exchanged for other securities or assets) or more than
30% of the assets or earning power of Synovus and its subsidiaries (taken as a
whole) are sold or transferred in one transaction or a series of related
transactions, the Rights Agreement provides that proper provision shall be made
so that each holder of record of a Right will have the right to receive, upon
payment of the Purchase Price, that number of shares of common stock of the
acquiring company having a market value at the time of such transaction equal to
two times the Purchase Price.
In the event (i) any Person (other than an Exempt Person) becomes the
beneficial owner of 15% or more of the then outstanding shares of Synovus Common
Stock or any Exempt Person who is the beneficial owner of 15% or more of the
outstanding shares of Synovus Common Stock fails to continue to qualify as an
Exempt Person (unless, in either case, such Person's failure is inadvertent and,
within 10 days after the date upon which Synovus first becomes aware of the
occurrence of such ownership, the Board of Directors in its sole discretion
approves the beneficial ownership interest then held by such Person or provides
such Person a 30 day period to divest a sufficient number of shares so as to
decrease the beneficial ownership of such Person to less than 15% or to
requalify as an Exempt Person, and such Person does so) or (ii) any Acquiring
Person or any of its affiliates or associates, directly or indirectly, engages
in certain self-dealing transactions with Synovus as more particularly described
in the Rights Agreement, such as entering into a merger with Synovus or engaging
in transactions with Synovus on terms and conditions less favorable to Synovus
than Synovus would be able to obtain in an arm's-length negotiation with an
unaffiliated third party, then, and in each such case, each holder of record of
a Right, other than the Acquiring Person, will thereafter have the right to
receive, upon payment of the Purchase Price, that number of shares of Synovus
Common Stock having a market value at the time of the transaction equal to twice
the Purchase Price. Any Rights that are or were at any time, on or after the
earlier of the Stock Acquisition Date or the Distribution Date, beneficially
owned by an Acquiring Person which is or was involved in or which caused or
facilitated, directly or indirectly, the event or transaction or transactions
described in this paragraph shall become null and void. Each of the above
described events and each of the events described in the previous paragraph is
referred to as a "Triggering Event."
To the extent that sufficient shares of Synovus Common Stock are not
available for the exercise in full of the Rights, holders of Rights will receive
upon exercise shares of Common Stock to the extent available and then cash,
property or other securities of Synovus, in proportions determined by Synovus,
so that the aggregate value received is equal to twice the Purchase Price.
Synovus, however, shall not be required to issue any cash, property or
securities (other than Common Stock) upon exercise of the Rights to the extent
their aggregate value would exceed the amount of cash Synovus would otherwise be
entitled to receive upon exercise in full of the then exercisable Rights.
28
No fractional shares of Synovus Common Stock will be issued upon
exercise of the Rights and, in lieu thereof, a payment in cash will be made to
the holder of such Rights equal to the same fraction of the current market value
of a share of Synovus Common Stock.
At any time until the date of the first Triggering Event (subject to
extension by the Board of Directors), Synovus may redeem the Rights in whole,
but not in part, at a price of $0.01 per Right. Immediately upon the action of
the Board of Directors of Synovus authorizing redemption of the Rights, the
Rights will terminate, and the only right of the holders of Rights will be to
receive the redemption price without any interest thereon.
Until the close of business on the date of the first Triggering Event
(subject to extension) Synovus may, except with respect to the redemption price
or the date of expiration of the Rights, amend the Rights in any manner. After
the date of the first occurrence of a Triggering Event (subject to extension),
Synovus may amend the Rights in any manner that does not adversely affect the
interest of holders of the Rights.
Until a Right is exercised, the holder, as such, will have no rights as
a shareholder of Synovus, including, without limitation, the right to vote or to
receive dividends.
The issuance of the Rights is not taxable to Synovus or to shareholders
under presently existing federal income tax law, and will not change the way in
which shareholders can presently trade Synovus Common Stock. If the Rights
should become exercisable, shareholders, depending on then existing
circumstances, may recognize taxable income.
A copy of the Rights Agreement has been filed with the Commission as an
Exhibit to a Registration Statement on Form 8-A which is incorporated into this
Proxy Statement/Prospectus by reference. A copy of the Rights Agreement is
available free of charge from either SunTrust Bank, Atlanta or Synovus. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement. If the Merger is
approved, Rights will attach to the Synovus Common Stock issued to the present
shareholders of Bank of Georgia.
Staggered Board of Directors; Supermajority Approvals
Pursuant to Synovus' Articles of Incorporation and bylaws, Synovus'
Board of Directors is divided into three classes of directors serving staggered
3-year terms, with the terms of each class of directors to expire each
succeeding year. Also pursuant to Synovus' Articles of Incorporation and bylaws,
the vote or action of shareholders possessing 66-2/3% of the votes entitled to
be cast by the shareholders of all the issued and outstanding shares of Synovus
Common Stock is required to: (i) call a special meeting of Synovus'
shareholders; (ii) fix, from time to time, the number of members of Synovus'
Board of Directors; (iii) remove a member of Synovus' Board of Directors; (iv)
approve any merger or consolidation of Synovus with or into any other
corporation, and the sale, lease, exchange or other disposition of all, or
substantially all, of Synovus' assets to or with any other corporation, person
or entity, with respect to which the approval of Synovus' shareholders is
required by the provisions of the corporate laws of the State of Georgia; and
(v) alter, delete or rescind any provision of Synovus' Articles of
Incorporation.
29
This allows directors to be removed only for cause by 66-2/3% of the
votes entitled to be cast at a shareholders' meeting called for that purpose.
Vacancies or new directorships can only be filled by a majority vote of the
directors then in office. Synovus' staggered Board of Directors, especially when
combined with the Voting Amendment, makes it more difficult for its shareholders
to force an immediate change in the composition of the majority of the Board. A
potential acquiror with shares recently acquired and not entitled to 10 votes
per share under the Voting Amendment may be discouraged or prevented from
soliciting proxies for the purpose of electing directors other than those
nominated by current management for the purpose of changing the policies or
control of Synovus.
Evaluation of Business Combinations
Synovus' Articles of Incorporation also provide that in evaluating any
business combination or other action, Synovus' Board of Directors may consider,
in addition to the amount of consideration involved and the effects on Synovus
and its shareholders, the interests of the employees, customers, suppliers and
creditors of Synovus and its subsidiaries, the communities in which offices of
the corporation or its subsidiaries are located, and any other factors the Board
of Directors deem pertinent.
Bank of Georgia Common Stock
The authorized capital stock of Bank of Georgia consists of 100,000,000
shares of Common Stock, $5.00 par value. As of June 30, 1998, 132,500 shares of
Bank of Georgia Common Stock were issued and outstanding.
Holders of Bank of Georgia Common Stock are entitled to one vote per
share on all matters to be voted on by shareholders.
Holders of shares of Bank of Georgia Common Stock are entitled to share
ratably in such dividends as may be declared by the Board of Directors and paid
by Bank of Georgia out of funds legally available therefor and to share pro rata
in the distribution to shareholders upon dissolution of Bank of Georgia.
Holders of Bank of Georgia Common Stock have pre-emptive rights which
means they are entitled to purchase their pro rata portion of any shares of Bank
of Georgia Common Stock issued by Bank of Georgia for cash consideration.
Holders of Bank of Georgia Common Stock do not have conversion rights, and there
are no redemption provisions with respect to such shares. All outstanding shares
of Bank of Georgia Common Stock are fully paid and nonassessable.
The preceding descriptive information supplied herein concerning
Synovus Common Stock and Bank of Georgia Common Stock outlines certain
provisions of Synovus' Articles of Incorporation and bylaws, Bank of Georgia's
Articles of Incorporation and bylaws and certain statutes regulating the rights
of holders of Synovus and Bank of Georgia Common Stock. The information does not
purport to be complete and is subject in all respects to provisions of the
Articles of Incorporation and bylaws of Synovus and Bank of Georgia and the laws
of the State of Georgia.
30
Dissenters' Rights
Pursuant to Sections 7-1-537 and 14-2-1301 et. seq. of the Official
Code of Georgia Annotated, as amended ("Georgia Law"), any shareholder of record
of Bank of Georgia Common Stock who objects to the Merger, and who fully
complies with all of the provisions of Georgia Law, will be entitled to demand
and receive payment in cash of an amount equal to the fair value of his or her
shares of Bank of Georgia Common Stock if the Merger is consummated. A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his or her name only if the shareholder dissents with respect to
all shares beneficially owned by any one beneficial shareholder and notifies
Bank of Georgia in writing of the names and addresses of each person on whose
behalf he or she asserts dissenters' rights. A beneficial owner must dissent
with respect to all the shares he or she owns. For the purpose of determining
the amount to be received in connection with the exercise of statutory
dissenters' rights under Georgia Law, the fair value of a dissenting
shareholder's Bank of Georgia Common Stock is determined as of the close of the
business on the date prior to the Effective Date of the Merger, excluding any
appreciation or depreciation therein in anticipation of the Merger.
Any Bank of Georgia shareholder desiring to receive payment of the fair
value of his Bank of Georgia Common Stock in accordance with the requirements of
Georgia Law: (i) must file with Bank of Georgia prior to the Special Meeting of
Shareholders of Bank of Georgia at which the vote will be taken on the Merger
Agreement and the Merger, or at the Special Meeting, but before the vote is
taken, a written notice of his intent to demand payment of the fair value of his
shares of Bank of Georgia Common Stock if the Merger Agreement is approved and
the Merger is consummated; (ii) must not vote in favor of the proposal to which
he objects (although he may abstain from voting); and (iii) must, by the date
specified in the dissenters' notice ("Dissenters' Notice") mailed to him by Bank
of Georgia, or Athens First as successor to Bank of Georgia, which date shall
not be fewer than 30 nor more than 60 days from his receipt of the Dissenters'
Notice, demand payment for his shares and deposit his share certificates in
accordance with the terms of the Dissenters' Notice. A filing of the written
notice of intent to demand payment for shares and the demand for payment
pursuant to conditions (i) and (iii) above should be sent to: Bank of Georgia,
2100 Experiment Station Road, Watkinsville, Georgia 30677. A vote against the
Merger Agreement and the Merger alone will not satisfy the requirements for the
separate written notice of intent to demand payment and the payment demand
referred to in conditions (i) and (iii) above; all three conditions must be
separately complied with.
If the Merger Agreement is approved and the Merger is authorized, Bank
of Georgia, or Athens First as successor to Bank of Georgia, will mail within 10
days thereafter to each Bank of Georgia shareholder who has complied with
conditions (i) and (ii) above, a Dissenters' Notice, addressed to the Bank of
Georgia shareholder at such address as he has furnished Bank of Georgia in
writing, or, if none, at the Bank of Georgia shareholder's address as it appears
on the records of Bank of Georgia, which notice will: (i) state where the
payment demand must be sent and where and when certificates for certificated
shares must be deposited; (ii) inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the payment demand is
received, and (iii) set a day by which Bank of Georgia, or Athens First as
successor to Bank of Georgia, must receive the payment demand
31
which date may not be less than 30 nor more than 60 days after the Dissenters'
Notice is delivered. A record shareholder who does not demand payment or deposit
his share certificates where required, each by the date specified in the
Dissenters' Notice, is not entitled to payment for his shares.
If all of the conditions specified in (i), (ii) and (iii) above are
fully complied with, Bank of Georgia, or Athens First as successor to Bank of
Georgia, is required to make a written offer, within 10 days of the later of the
date the Merger is consummated or receipt of the payment demand, to each
dissenting shareholder to purchase all of his shares of Bank of Georgia Common
Stock at a specified price which Synovus considers to be their fair value, plus
accrued interest, as of the close of business on the day prior to the Merger,
excluding any change in value induced by the corporate actions dissented from or
their proposal.
The offer of payment must be accompanied by:
(i) A copy of Bank of Georgia's balance sheet as of the end of a
fiscal year not more than 16 months before the date of payment,
an income statement for that year, a statement of changes in
shareholders' equity for that year, and the latest available
interim financial statements, if any;
(ii) A statement of Bank of Georgia's and/or Athens First's and
Synovus' estimate of the fair value of the shares;
(iii) An explanation of how the interest was calculated;
(iv) A statement of the dissenter's right to demand payment under
Section 14-2-1327 of Georgia Law; and
(v) A copy of Section 14-2-1301 et. seq. of Georgia Law, a copy of
which is attached to this Proxy Statement/Prospectus as Appendix
"B."
Assuming the Merger has been effected, if the shareholder accepts
Athens First's and Synovus' offer by written notice within 30 days after the
offer or is deemed to have accepted the offer by failing to respond within said
30 days, payment for his or her shares shall be made within 60 days after the
making of the offer of or the consummation of the Merger, whichever is later. If
a dissenting shareholder's demand for payment under Section 14-2-1327 of Georgia
Law remains unsettled, Athens First shall commence a proceeding within 60 days
after receiving the payment demand and petition the Superior Court of Clarke
County, Georgia to determine the fair value of the dissenter's shares and
accrued interest, which interest shall be computed from the Effective Date of
the Merger. If Athens First does not commence the proceeding within the 60 day
period, it must pay each dissenter whose demand remains unsettled the amount
demanded.
The foregoing does not purport to be a complete statement of the
provisions of Georgia Law relating to statutory dissenters' rights and is
qualified in its entirety by reference to said provisions, relevant portions of
which are reproduced in full in Appendix "B" to this Proxy Statement/Prospectus,
which is incorporated herein by reference.
32
Conduct of Business of Bank of Georgia and Synovus Pending the Merger
The Merger Agreement provides that prior to the Effective Date of the
Merger, Bank of Georgia shall conduct its banking business only in the ordinary
course and will not, without the prior written consent of Synovus: (i) issue any
options to purchase capital stock or issue any shares of capital stock; (ii)
declare, set aside, or pay any dividend or distribution with respect to the
capital stock of Bank of Georgia other than as set forth in Paragraph C of
Article II the Merger Agreement; (iii) directly or indirectly redeem, purchase
or otherwise acquire any capital stock of Bank of Georgia; (iv) effect a split
or reclassification of the capital stock of Bank of Georgia or a
recapitalization of Bank of Georgia; (v) amend the articles of incorporation or
bylaws of Bank of Georgia; (vi) grant any increase in the salaries payable or to
become payable by Bank of Georgia or to any employee other than normal, annual
salary increases to be made with regard to the employees of Bank of Georgia or
as required by law; (vii) make any change in any bonus, group insurance,
pension, profit sharing, deferred compensation, or other benefit plan, payment
or arrangement made to, for or with respect to any employees or directors of
Bank of Georgia, except to the extent such changes are required by applicable
laws or regulations; (viii) enter into, terminate, modify or amend any contract,
lease or other agreement with any officer or director of Bank of Georgia or any
"associate" of any such officer or director, as such term is defined in
Regulation 14A under the Exchange Act, other than in the ordinary course of its
banking business; (ix) incur or assume any liabilities (in excess of $50,000),
other than in the ordinary course of its business; (x) dispose of any of its
assets or properties having in the aggregate a book value in excess of $25,000,
other than in the ordinary course of its business; (xi) solicit, encourage or
authorize any individual, corporation or other entity, including its directors,
officers and other employees, to solicit from any third party any inquiries or
proposals relating to the disposition of Bank of Georgia's business or assets,
or the acquisition of its voting securities, or the merger of Bank of Georgia
with any bank or other entity other than as provided by the Merger Agreement,
or, subject to the fiduciary obligations of its Board of Directors, provide any
individual, corporation or other entity with information or assistance or
negotiate with any individual, corporation or other entity in furtherance of
such inquiries or to obtain such a proposal (and Bank of Georgia shall promptly
notify Synovus of all of the relevant details relating to all inquiries and
proposals which it may receive relating to any of such matters); (xii) take any
other action not in the ordinary course of its business; or (xiii) directly or
indirectly agree to take any of the foregoing actions.
The Merger Agreement also provides that without the prior written
consent of Bank of Georgia, Synovus will not: (i) declare, set aside or pay any
cash dividend on its Common Stock other than normal and customary cash dividends
in accordance with Synovus' current Dividend Policy; or (ii) take any action
that would: (a) delay or adversely affect the ability of Synovus to obtain any
necessary approvals of regulatory authorities required for the transactions
contemplated by the Merger Agreement; or (b) adversely affect its ability to
perform its covenants and agreements on a timely basis under the Merger
Agreement.
DESCRIPTION OF SYNOVUS
Business
The disclosures made in this Proxy Statement/Prospectus together with
the following
33
information which is specifically incorporated by reference herein describe the
business of Synovus:
1. Synovus' Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (which includes certain portions of Synovus'
1997 Annual Report to Shareholders and its Proxy Statement for
its Annual Meeting of Shareholders held on April 23, 1998).
2. Synovus'Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
3. Synovus' Current Reports on Form 8-K dated March 9, 1998, April
23, 1998, May 18, 1998, June 5, 1998 and July 15, 1998.
Management and Additional Information
Certain information relating to the executive compensation, various
benefit plans, voting securities and the principal holders thereof, certain
relationships and related transactions and other related matters as to Synovus
is incorporated by reference or set forth in Synovus' Annual Report on Form 10-K
for the year ended December 31, 1997 which is incorporated herein by reference.
See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE." Shareholders of Bank of
Georgia desiring copies of such documents may contact Synovus at its address or
phone number indicated under "INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE."
REGULATORY MATTERS
General
Synovus is a registered multi-bank holding company subject to
supervision and regulation by the Federal Reserve under the BHC Act, and by the
Georgia Banking Department under the bank holding company laws of the State of
Georgia (the "Georgia Act"). As a bank holding company, Synovus is required to
furnish the Federal Reserve and the Georgia Banking Department with annual
reports of the financial condition, management and inter-company relationships
of Synovus and its subsidiaries and affiliates at the end of each fiscal year,
and such additional information as the Board and the Georgia Banking Department
may require from time to time. The Board and the Georgia Banking Department also
make examinations of Synovus and certain of its subsidiaries and affiliates.
The BHC Act and the Georgia Act require each bank holding company to
obtain the prior approval of the Federal Reserve and the Georgia Banking
Department before: (i) it may acquire direct or indirect ownership or control of
any voting shares of any bank, if, after such acquisition, such bank holding
company will, directly or indirectly, own or control more than 5% of the voting
shares of such bank; (ii) it or any of its subsidiaries, other than a bank, may
acquire all or substantially all of the assets of a bank; or (iii) it may merge
or consolidate with any other bank holding company. In addition, under the
Georgia Act, it is unlawful for any bank holding company to acquire, direct or
indirect, ownership or control of more than 5% of the voting shares of any
presently operating bank, unless such bank has been in existence
34
and continuously operating as a bank for a period of five years or more prior to
the date of making application to the Georgia Banking Department for approval of
said acquisition.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 ("Interstate Banking Act"), effective September 29, 1995, bank holding
companies were permitted to acquire banks in any state. Under the Interstate
Banking Act, effective June 1, 1997, banks may merge or consolidate across state
lines, unless either of the states involved elected to prohibit such merger or
consolidation prior to May 31, 1997. Finally, under the Interstate Banking Act,
states may authorize banks from other states to engage in branching across state
lines.
In addition, a bank holding company is, with certain exceptions,
prohibited by the BHC Act from engaging in, or acquiring or retaining direct or
indirect control of the voting shares of any company engaged in non-banking
activities. One of the principal exceptions to this prohibition is for
activities found by the Federal Reserve to be so closely related to banking, or
managing or controlling banks, as to be a proper incident thereto.
Because Synovus is a registered multi-bank holding company, its
subsidiary banks are also subject to examination, supervision and regulation by
the Board. The banks which are chartered under the banking laws of the States of
Georgia, Florida and Alabama are subject to examination, supervision and
regulation by the Georgia Banking Department, Florida Banking Department and the
Alabama Banking Department, respectively. The banks which are chartered under
the banking laws of the United States are subject to examination, supervision
and regulation by the Office of the Comptroller of the Currency ("OCC"). In
addition, the deposits of Synovus' subsidiary banks are insured by the FDIC to
the extent provided by law, and are subject to examination, supervision and
regulation by the FDIC.
The Georgia Banking Department, Florida Banking Department, Alabama
Banking Department, OCC and the FDIC regulate all areas of the banks' banking
and trust operations, including, where appropriate, reserves, investments,
loans, mergers, the issuance of securities, payment of dividends, interest
rates, extension of credit to officers and directors, establishment of branches,
maintenance of capital and other aspects of their operations.
Also, the payment of management fees by banking subsidiaries of a bank
holding company is subject to supervision and regulation by the Georgia Banking
Department, Florida Banking Department, Alabama Banking Department, the OCC, the
Federal Reserve and the FDIC. The payment of management fees by non-banking
subsidiaries of a bank holding company is also subject to supervision and
regulation by the Federal Reserve.
Numerous other federal and state laws, as well as regulations
promulgated by the Federal Reserve, the Georgia Banking Department, Florida
Banking Department, Alabama Banking Department, the OCC and the FDIC govern
almost all aspects of the operations of the banks.
Dividends
Under the laws of the State of Georgia, Synovus, as a business
corporation, may
35
declare and pay dividends in cash or property unless the payment or declaration
would be contrary to restrictions contained in its Articles of Incorporation,
and unless, after payment of the dividend, it would not be able to pay its debts
when they become due in the usual course of its businesses or its total assets
would be less than the sum of its total liabilities. Synovus is also subject to
certain contractual and regulatory capital restrictions that limit the amount of
cash dividends that Synovus may pay.
The primary sources of funds for Synovus' payment of dividends to its
shareholders are dividends and fees to Synovus from its banking and nonbanking
affiliates. Various federal and state statutory provisions and regulations limit
the amount of dividends that the subsidiary banks of Synovus and Bank of Georgia
may pay. Pursuant to the regulations of the Georgia Banking Department, a
Georgia bank must have approval of the Georgia Banking Department to pay cash
dividends if, at the time of such payment: (i) the ratio of such banking
affiliate's equity capital (defined to include the aggregate par value of all
outstanding common stock, paid-in surplus, retained earnings, capital resources,
reserves for loan losses, aggregate par value of outstanding preferred stock
which is not redeemable and other outstanding instruments which are required to
be converted into common stock) to its adjusted total assets is less than 6%;
(ii) the aggregate amount of dividends to be declared or anticipated to be
declared during the current calendar year exceeds 50% of its net after-tax
profit for the previous calendar year; or (iii) its total classified assets in
its most recent regulatory examination exceeded 80% of its equity capital (as
defined above) as reflected in such examination. In general, the approval of the
Alabama Banking Department and the Florida Banking Department, as applicable, is
required if the total of all dividends declared by an Alabama or Florida bank,
as the case may be, in any year would exceed the total of its net profits (as
defined) for that year combined with its retained net profits for the preceding
two years less any required transfers to surplus. In addition, the approval of
the OCC is required for a national bank to pay dividends in excess of the bank's
net income for the current year plus retained net income for the preceding two
years, less any required transfers to surplus.
Certain of Synovus' banking affiliates have in the past been required
to secure prior regulatory approval for the payment of dividends to Synovus in
excess of regulatory limits and may be required to seek approval for the payment
of dividends to Synovus in excess of such limits in the future. If such prior
regulatory approvals are sought, there is no assurance that any such regulatory
approvals will be granted.
Federal and state banking regulations applicable to Synovus and its
banking subsidiaries require minimum levels of capital which limit the amounts
available for payment of dividends. Synovus' objective is to pay out
approximately one-third of prior year's earnings in cash dividends to its
shareholders.
Synovus and its predecessors have paid cash dividends on their common
stock in every year since 1891. Under restrictions imposed under federal and
state laws, Synovus' subsidiary banks could declare aggregate dividends to
Synovus of approximately $92.9 million during 1998 without obtaining regulatory
approval.
At June 30, 1998, under restrictions imposed under federal and state
laws, Bank of Georgia could declare aggregate dividends to its shareholders of
approximately $275,450 without obtaining
36
regulatory approval.
Capital Requirements
Synovus is required to comply with the capital adequacy standards
established by the Federal Reserve and its banking subsidiaries must comply with
similar capital adequacy standards established by the OCC and FDIC as
applicable. Bank of Georgia is required to comply with the capital adequacy
standards of the FDIC. There are two basic measures of capital adequacy for bank
holding companies and their banking subsidiaries that have been promulgated by
the Federal Reserve, the FDIC and the OCC: a risk-based measure and a leverage
measure. All applicable capital standards must be satisfied for a bank holding
company or a bank to be considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile 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 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 ("Risk-Based Capital Ratio") of
total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. 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 (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% 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 4.0%. Bank holding companies are expected to maintain higher-
than-minimum capital ratios if they have supervisory, financial, operational, or
managerial weaknesses, or if they are anticipating or experiencing significant
growth. Synovus has not been advised by the Federal Reserve of any specific
minimum Leverage Ratio applicable to it.
At June 30, 1998, Synovus' Total Capital ratio was 13.92%, its Tier 1
Capital ratio was 12.64% and its Tier 1 Leverage Ratio was 10.32%. Assuming the
Merger, and Synovus' other pending acquisitions, had been consummated on June
30, 1998, the Total Capital ratio of Synovus would have been 13.78%, its Tier 1
Capital ratio would have been 12.51% and its Tier 1 Leverage Ratio would have
been 10.71%. Each of these ratios exceeds the current requirements under the
Federal Reserve's capital guidelines. Each of Synovus' subsidiary banks was in
compliance with applicable minimum capital requirements as of June 30, 1998.
37
At June 30, 1998, Bank of Georgia's Total Capital ratio was 11.40%, its
Tier 1 Capital ratio was 10.77% and its Tier 1 Leverage Ratio was 10.69%. Each
of these ratios exceeds the current requirements under the FDIC's capital
guidelines.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business. As described below,
substantial additional restrictions can be imposed upon FDIC- insured depository
institutions that fail to meet applicable capital requirements. See "Prompt
Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the federal banking agencies have amended the risk-based
capital standards that calculate the change in an institution's net economic
value attributable to increases and decreases in market interest rates and
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures.
Commitments to Subsidiary Banks
Under the Federal Reserve's policy, Synovus is expected to act as a
source of financial strength to its subsidiary banks and to commit resources to
support its subsidiary banks in circumstances when it might not do so absent
such policy. In addition, any capital loans by Synovus to any of its subsidiary
banks would also be subordinate in right of payment to depositors and to certain
other indebtedness of such bank.
In the event of Synovus' bankruptcy, any commitment by Synovus 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.
In addition, the Federal Deposit Insurance Act (the "FDIA") provides that any
financial institution whose deposits are insured by the FDIC generally shall be
liable for any loss incurred by the FDIC in connection with the default of, or
any assistance provided by the FDIC to, a commonly controlled financial
institution.
Prompt Corrective Action
The Federal Deposit Insurance Corporation Act of 1991 ("FDICIA")
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system the federal banking regulators
are required to rate supervised institutions on the basis of five capital
categories (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized) and to take
certain mandatory supervisory actions, and are authorized to take other
discretionary actions, with respect to institutions in the three
undercapitalized categories, the severity of which will depend upon the capital
category in which the institution is placed. Generally, subject to a narrow
exception, FDICIA requires the banking regulator to 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.
38
Pursuant to FDICIA, the Federal Reserve, the FDIC, the OCC and the
Office of Thrift Supervision ("OTS") have adopted regulations setting forth a
five-tier scheme for measuring the capital adequacy of the financial
institutions they supervise. Under the regulations, an institution would be
placed in one of the following capital categories: (i) well capitalized (an
institution that has a Total Capital ratio of at least 10%, a Tier 1 Capital
ratio of at least 6% and a Tier 1 Leverage Ratio of at least 5%); (ii)
adequately capitalized (an institution that has a Total Capital ratio of at
least 8%, a Tier 1 Capital ratio of at least 4% and a Tier 1 Leverage Ratio of
at least 4%); (iii) undercapitalized (an institution that has a Total Capital
ratio of under 8%, a Tier 1 Capital ratio of under 4% or a Tier 1 Leverage Ratio
of under 4%); (iv) significantly undercapitalized (an institution that has a
Total Capital ratio of under 6%, a Tier 1 Capital ratio of under 3% or a Tier 1
Leverage Ratio of under 3%); and (v) critically undercapitalized (an institution
whose tangible equity is not greater than 2% of total tangible assets). The
regulations permit the appropriate Federal banking regulator to downgrade an
institution to the next lower category if the regulator determines (i) after
notice and opportunity for hearing or response, that the institution is in an
unsafe or unsound condition or (ii) that the institution has received (and not
corrected) a less-than-satisfactory rating for any of the categories of asset
quality, management, earnings or liquidity in its most recent examination.
Supervisory actions by the appropriate Federal banking regulator depend upon an
institution's classification within the five categories. Synovus' management
believes that Synovus and its bank subsidiaries have the requisite capital
levels to qualify as well capitalized institutions under the FDICIA regulations.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
restrictions on borrowing from the Federal Reserve System. In addition,
undercapitalized depository institutions are subject to growth limitations and
are required to submit capital restoration plans. A depository institution's
holding company must guarantee the capital plan, up to an amount equal to the
lesser of 5% of the depository institution's assets at the time it becomes
undercapitalized or the amount of the capital deficiency when the institution
fails to comply with the plan. Federal banking agencies may not accept a capital
plan without determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the depository
institution's capital. If a depository institution fails to submit an acceptable
plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject
to a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to reduce
total assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator.
Safety and Soundness Standards
The FDIA, as amended by FDICIA and the Riegle Community Development and
Regulatory Improvement Act of 1994, requires the federal bank regulatory
agencies to prescribe standards, by regulations or guidelines, relating to
internal controls, information
39
systems and internal audit systems, loan documentation, credit underwriting,
interest rate risk exposure, asset growth, asset quality, earnings, stock
valuation and compensation, fees and benefits and such other operational and
managerial standards as the agencies deem appropriate. The federal bank
regulatory agencies have adopted a set of guidelines prescribing safety and
soundness standards pursuant to FDICIA. The guidelines establish general
standards relating to internal controls and information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth and compensation, fees and benefits. In general, the guidelines require,
among other things, appropriate systems and practices to identify and manage the
risks and exposures specified in the guidelines. The guidelines prohibit
excessive compensation as an unsafe and unsound practice and describe
compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee,
director or principal stockholders. The federal banking agencies determined that
stock valuation standards were not appropriate. In addition, the agencies
adopted regulations that authorize, but do not require, an agency to order an
institution that has been given notice by an agency that it is not satisfying
any of such safety and soundness standards to submit a compliance plan. If,
after being so notified, an institution fails to submit an acceptable compliance
plan, the agency must issue an order directing action to correct the deficiency
and may issue an order directing other actions of the types to which an
undercapitalized institution is subject under the prompt correction action
provisions of FDICIA. See "Prompt Corrective Action." If an institution fails to
comply with such an order, the agency may seek to enforce such order in judicial
proceedings and to impose civil money penalties.
Depositor Preference Statute
Legislation has been enacted providing that deposits and certain claims
for administrative expenses and employee compensation against an insured
depository institution would be afforded a priority over other general unsecured
claims against such an institution, including federal funds and letters of
credit, in the "liquidation or other resolution" of such an institution by any
receiver.
DESCRIPTION OF BANK OF GEORGIA
Background
Bank of Georgia was chartered on October 19, 1984 and operates one
office in Watkinsville, Georgia.
Business
The principal business of Bank of Georgia is to accept deposits from
the public and to make loans and other investments in and around its primary
service area of Oconee County, Georgia. The principal sources of income for Bank
of Georgia are interest and fees collected on loans, interest and dividends
collected on other investments, and service charges on deposit accounts. The
principal expenses of the Bank of Georgia are interest paid on deposits,
employee compensation, office expenses, and other overhead expenses.
40
Bank of Georgia offers a full range of deposit services that are
typically available from financial institutions, including NOW accounts, demand
accounts, savings accounts, and other time deposit accounts. In addition,
retirement accounts such as Individual Retirement Accounts are available. All
deposit accounts are insured by the FDIC up to the maximum amount currently
permitted by law, which is generally $100,000 per depositor subject to certain
aggregation rules.
Bank of Georgia also provides loans to businesses, including both
secured and unsecured short-term loans for working capital purposes, term loans
for fixed asset and expansion needs such as real estate acquisition and
improvements, real estate construction loans, and other commercial loans
suitable to the needs of its business customers. Loans to individuals which are
offered by Bank of Georgia include second mortgage loans and installment loans
for personal use such as education and personal investment, or for the purchase
of automobiles or other consumer items. Bank of Georgia also acts as a broker
for mortgage loans.
Bank of Georgia's loan portfolio at December 31, 1997, consisted of
approximately 20% real estate construction loans, 44% commercial mortgage loans
(based on the underlying collateral), 29% commercial loans, and 7% consumer and
other installment loans.
Bank of Georgia's marketing plan relies heavily upon local advertising
and promotional activity and upon personal contacts by its directors, officers
and employees to attract business and to acquaint potential customers with Bank
of Georgia's personalized services. Bank of Georgia emphasizes a high degree of
personalized client service to provide for each customer's banking needs. At the
present time, Bank of Georgia does not offer trust or securities services.
Bank of Georgia Common Stock Owned by Management
The following table sets forth as of June 30, 1998, the number and
percentage ownership of shares of Bank of Georgia Common Stock beneficially
owned by each director of Bank of Georgia, by all directors and executive
officers as a group, and by each owner of more than 5% of the outstanding shares
of Bank of Georgia Common Stock. Unless otherwise indicated, each person is the
record owner of and has sole voting and investment powers over his or her
shares.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name of Director Beneficially Owned<F1> of Total
<S> <C> <C>
James A. Bowers 1,525 1.15
Frank J. Christa 8,100 6.11
W. Eugene Higginbotham 13,000 9.81
Robert J. Huff 500 0.37
Donald H. Norris 4,366 3.30
</TABLE>
41
<TABLE>
<CAPTION>
Number of Shares Percentage
Name of Director Beneficially Owned<F1> of Total
<S> <C> <C>
F. Michael Power 13,000 9.81
R. Coleman Whitehead 13,000 9.81
All Directors and Executive
Officers as a
Group (7 persons) 53,491 40.37
Name/Address of Additional 5% Shareholders
Robert E. Mason 13,000 9.81
434 Academy Street
Madison, GA 30650
James E. Thaxton 10,125 7.64
P. O. Box 127
Watkinsville, GA 30067
<FN>
<F1> The information shown above is based upon information furnished by the
named persons. Information relating to beneficial ownership is based
upon "beneficial ownership" concepts set forth in rules promulgated
under the Securities Exchange Act of 1934, as amended. Under such rules
a person is deemed to be a "beneficial owner" of a security if that
person has or shares "voting power," which includes the power to
dispose or to direct the voting of such security, or "investment
power," which includes the power to dispose or to direct the
disposition of such security. A person is also deemed to be a
beneficial owner of any security of which that person has the right to
acquire beneficial ownership within sixty (60) days. Under the rules,
more than one person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner of
securities as to which he or she has no beneficial interest.
</FN>
</TABLE>
42
BANK OF GEORGIA
Management's Discussion and Analysis of Financial Condition and Results of
Operations of Bank of Georgia for the Years Ended December 31, 1997 and 1996 and
the Six Months Ended June 30, 1998 and June 30, 1997
This analysis has been prepared to provide insight into the financial
condition of Bank of Georgia (sometimes referred to as the "Bank") and address
the factors which have affected Bank of Georgia's results of operations. Bank of
Georgia's financial statements and accompanying notes are an integral part of
this discussion and should be read in conjunction with it.
Liquidity. Liquidity management involves the management of assets and
liabilities in such a way to meet customer demands for deposit withdrawals and
fund all prudent loan requests. Bank of Georgia's primary sources of cash flows
are generated from interest and fee income, loan repayments, deposit growth, and
the maturities of securities.
Bank of Georgia manages its assets with the intent to satisfy its liquidity
needs through normal bank operations. It is the target of Bank of Georgia to
maintain a liquidity ratio of 30%. Federal funds sold, which averaged
approximately $3,089,000 during 1997, represent Bank of Georgia's primary
immediate source of liquidity and are generally maintained at a level adequate
to meet the Bank's ongoing needs for liquidity. The Bank maintains Federal funds
purchase lines totaling approximately $2,000,000 with correspondent banks to
further facilitate liquidity needs.
The Bank's liquidity ratio was approximately 34% as of December 31, 1997,
and there were no borrowings outstanding under Federal funds purchase lines. All
assets and liabilities are monitored in an effort to provide for proper balance
between liquidity, safety, and profitability.
The liquidity position of the Bank is significantly affected by the loan to
deposit ratio. Bank of Georgia monitors its loan to deposit ratio on a daily
basis with the target ratio being 80%. At December 31, 1997 and 1996, the loan
to deposit ratio was 70.76% and 69.57%, respectively.
Capital Resources. Bank of Georgia had capital in excess of regulatory
minimums, as shown below. Stockholders' equity of $5,425,946 at December 31,
1997 increased by 17.04% over December 31, 1996. The increase in capital was due
to earnings of $800,598 offset by the Bank's declared dividend of $132,500 or
$1.00 per share. Additionally, stockholders' equity was increased by $121,916 in
unrealized gains on securities available-for-sale, net of tax. As of June 30,
1998, stockholders' equity continued to increase by $410,024 or 7.56% to
$5,835,970. The increase in capital was due to earnings of $480,351 and
unrealized gains of $56,209 in securities available-for-sale, offset by
quarterly declared dividends of $124,550 or $.94 per share for the first two
quarters of 1998.
43
Set forth below are pertinent capital ratios for Bank of Georgia as of June
30, 1998 and December 31, 1997:
<TABLE>
<CAPTION>
Minimum Capital Requirements Actual Capital Ratios
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Tier 1 Capital to Risk-based
Assets: 4% 10.77<F1> 11.68% <F1>
Total Capital to Risk-based
Assets: 8% 11.40<F2> 12.35% <F2>
Leverage Ratio (Tier 1 Capital to
Average Total Assets): 4% 10.69<F3> 10.28% <F3>
<FN>
<F1> Minimum for Well-Capitalized = 6%
<F2> Minimum for Capitalized = 10%
<F3> Minimum for Well-Capitalized = 5%
</FN>
</TABLE>
Capability of Data Processing Software to Accommodate the Year 2000. Like
many financial institutions, the Bank relies upon computers for the daily
conduct of its business and for data processing generally. There is concern
among industry experts that commencing on January 1, 2000, computers will be
unable to read the new year and that there may be widespread computer
malfunctions. Management has assessed the electronic systems, programs,
applications, and other electronic components used in operations and believes
that the Bank' s hardware and software have been programmed to be able to
accurately recognize the year 2000, and that significant additional costs will
not be incurred in connection with the year 2000 issue, although there can be no
assurances in this regard. In addition, the business of the Bank's customers and
vendors may be negatively affected by the year 2000 issue, and any financial
difficulties incurred by the Bank's customers and vendors involving year 2000
issues could negatively affect their ability to perform their agreements with
the Bank. Therefore, even if the Bank does not incur significant direct costs in
connection with responding to the year 2000 issue, there can be no assurance
that the failure or delay of the Bank's customers, vendors or other third
parties in addressing the year 2000 issue or the cost involving such process
will not have a material adverse effect on the Bank's liquidity, capital
resources or operations.
The Bank is not aware of any known trends, events or uncertainties, other
than the effect of events as described above, that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations. The Bank is also not aware of any current recommendations by the
regulatory authorities which, if they were implemented, would have such an
effect.
Financial Condition. Total assets of Bank of Georgia increased to
$51,528,325 at December 31, 1997 from $48,756,115 at December 31, 1996 or a
$2,772,210 increase which approximates a 5.69% growth rate for 1997. As of June
30, 1998, total assets had grown to
44
$53,961,238 or a 4.72% increase over December 31, 1997. The growth has been
funded by increases in deposits of $1,830,358 and $2,021,313 for the year ended
December 31, 1997 and the six months ended June 30, 1998, respectively.
In 1997, earning assets averaged approximately $46,697,000, or a 5.28%
increase from $44,355,000 in 1996. The increase of $2,342,000 is comprised
mainly of a $3,231,000 increase in average loans outstanding offset by decreases
in average securities of $36,000 and average Federal funds sold of $830,000.
Average earning assets totaled approximately $49,722,000 for the first six
months of 1998 which represents a 6.48% increase over 1997. The increase was
comprised mainly in average loan growth which amounted to approximately
$2,594,000 for the first six months of 1998.
Securities Portfolio. Bank of Georgia's securities portfolio constitutes
the second largest component of total earning assets. The securities portfolio
serves the functions of providing a primary source of liquidity for meeting the
Bank's loan demands and periodic deposit outflows; serving as an investment
medium for funds not immediately needed for meeting loan demand or deposit
flows; and providing a supply of collateral for public deposits.
It is generally the intent of Bank of Georgia to hold all securities
purchased to maturity. However, market conditions may from time to time warrant
the sale of securities prior to maturity. Therefore, the Bank has classified 78%
of securities as of June 30, 1998 as available-for-sale in accordance with
Statement of Financial Accounting Standards (SFAS) No. 115.
During 1997, holdings in securities (including overnight Federal funds
sold) increased $307,918 or 2.09%. At December 31, 1997, securities (including
overnight Federal funds sold) represented 31.85% of earning assets as compared
to 32.74% at December 31, 1996. Securities with a carrying value of $10,176,732
and $8,998,643 at December 31, 1997 and 1996, respectively, were pledged for
public deposits and for other purposes. As of June 30, 1998, holdings of
securities and Federal funds sold decreased to $14,102,198 or 6.42% over
December 31, 1997.
Unrealized losses amounted to approximately $59,420 and $259,892 at
December 31, 1997 and 1996, respectively. As of June 30, 1998, the Bank had
$27,026 in unrealized gains in its securities portfolio.
Loan Portfolio. Loans are the single largest component of earning assets,
as well as the highest yielding component. At December 31, 1997 and 1996,
respectively, loans represented 67.94% and 67.26% of total earning assets and
62.38% and 62.20% of total assets. Total loans increased $1,816,511 or 5.99% in
1997, compared to an increase of $5,950,665 or 24.41% in 1996. The increase in
1996 was concentrated in commercial lending which resulted in an increase of
$5,118,000 in commercial loans. The increase in 1996 was funded primarily
through the use of funds previously invested in overnight funds. As a result,
Federal funds sold decreased $5,300,000 during 1996.
Bank of Georgia's loan portfolio also has a concentration in loans secured
by real estate. Real estate loans include real estate mortgages, real estate
construction projects, and
45
consumer home equity lines. The amount of loans outstanding at the indicated
dates are shown in the following table according to the type of loan. The other
concentration is in commercial and financial loans which are made primarily to
businesses in the Oconee County area. The following table presents the major
categories of total loans for each period.
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997 1996
(Dollars in Thousands)
<S> <C> <C> <C>
Real Estate:
Secured by mortgages $ 13,608 $14,292 $11,887
Construction 8,086 6,294 8,607
Consumer and other loans 2,241 2,130 2,831
Commercial and financial 12,083 9,428 7,002
------ ----- -----
$ 36,018 $32,144 $30,327
</TABLE>
Risk Elements. At June 30, 1998, past due loans over 30 days totaled
approximately $63,000 or .17% of loans outstanding compared to $162,000 or .50%
at December 31, 1997 and $280,000 or .92% at December 31, 1996. All loans
reaching a 90 day delinquency are placed on non-accrual status unless fully
secured by marketable collateral. Loans are charged-off when losses are
identified. Loans past due in excess of 90 days and still accruing totaled
approximately $48,000 and $204,000 as of December 31, 1997 and 1996 which
represents .15% and .67% of outstanding loans, respectively. As of June 30,
1998, loans past due 90 days or more and still accruing totaled $9,000 which
represented .02% of the loan portfolio.
Management considers all nonaccrual loans to be impaired in accordance with
SFAS No. 114 and 118. Loans past due greater than 90 days and still accruing
represent those loans which have adequate collateral values, therefore
minimizing the risk of loss of principal. As a result of management's ongoing
review of the loan portfolio, loans are classified as nonaccruing when it is not
reasonable to expect collection of interest or principal under the original
terms of the loan. These loans may be classified as nonaccruing even though the
presence of collateral or the borrower's financial strength may be sufficient to
provide for ultimate repayment of the principal. There were no loans classified
as nonaccrual or restructured as of June 30, 1998 nor as of December 31, 1997
and 1996. Additionally, no properties were held in foreclosure (other real
estate owned) for the same time periods.
In the opinion of management, any loans classified by regulatory
authorities as doubtful, substandard or special mention that have not been
disclosed above do not (i) represent or result from trends or uncertainties
which management reasonably expects will materially impact future operating
results, liquidity or capital resources, or (ii) represent material credits
about which management is aware of any information which causes management to
have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms. Any loans classified by regulatory authorities as loss have
been charged off.
Commitments and Lines of Credit. In the ordinary course of business, the
Bank has granted commitments to extend credit and standby letters of credit to
approved customers. Generally, these commitments to extend credit have been
granted on a temporary basis for
46
seasonal or inventory requirements and have been approved by the Bank's Board of
Directors. These commitments are recorded in the financial statements when funds
are disbursed or the financial instruments become payable. The Bank uses the
same credit policies for these off balance sheet commitments as it does for
financial instruments that are recorded in the financial statements. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitment amounts expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements.
Following is a summary of the commitments outstanding at December 31, 1997
and 1996.
1997 1996
---- ----
Dollars in Thousands
Commitments to extend credit $ 5,011 $ 3,800
Standby letters of credit 57 33
---- ----
$ 5,068 $ 3,833
===== =====
Summary of Loan Loss Experience. The provision for possible loan losses is
created by direct charges to operations. Losses on loans are charged against the
allowance in the period in which such loans, in management's opinion, become
uncollectible. Recoveries during the period are credited to the allowance. The
factors that influence management's judgment in determining the amount charged
to operating expense are past loan loss experience, composition of the loan
portfolio, evaluation of possible future losses, current economic conditions,
and other relevant facts. Bank of Georgia's allowance for loan losses was
approximately $339,000 at June 30, 1998 compared with $312,000 at December 31,
1997. Bank of Georgia's allowance for loan loss was approximately $305,000 at
December 31, 1996. The allowance for loan losses is reviewed regularly based on
management's evaluation of current risk characteristics of the loan portfolio,
as well as the impact of prevailing and expected economic business conditions.
Management considers the allowance for loan loss adequate to cover possible loan
losses on the loans outstanding.
Management has not specifically allocated the Bank's allowance for loan
losses to categories of loans. Based on management's best estimate,
approximately 60% of the allowance should be allocated to real estate loans, 20%
to commercial, financial and agricultural loans and 20% to consumer loans as of
December 31, 1997. The following table summarizes the percentage of loans held
in each category.
47
The following table summarizes the allocation of the allowance for loan
losses compared to the percentage of loans in each category as of the indicated
dates.
<TABLE>
<CAPTION>
June 30, December 31
1998 1997 1996
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Real estate loans $ 203 60% $ 188 64% $ 183 68%
Consumer and other loans 68 6% 62 7% 61 9%
Commercial and financial loans 68 34% 62 29% 61 23%
---- -- ---- ---- --- ----
$ 339 100% $ 312 100% $ 305 100%
=== === === === === ===
</TABLE>
The following table summarizes average loan balances for June 30, 1998 and
for each year ended December 31, 1997 and 1996, changes in the allowance for
loan losses arising from loans charged off, recoveries on loans previously
charged off, additions to the allowance which have been charged to operating
expense, and the rate of net charge-offs during the period to average loans.
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997 1996
(Dollars in Thousands)
<S> <C> <C> <C>
Average amount of loans outstanding $ 35,810 $ 30,921 $ 27,690
====== ====== ======
Balance of allowance for loan losses at
beginning of period $ 312 $ 305 $ 260
------- -------- --------
Charge offs:
Consumer (4) (17) (14)
---------- --------- ---------
Recoveries:
Consumer 1 19 39
-------- -------- --------
Net (charge-offs), recoveries (3) 2 25
---------- ---------- ---------
Additions to allowance charged to operating
expense during year 30 5 20
--------- ---------- ---------
Balance of allowance for loan losses at end of year 339 312 305
======== ======== ========
Ratio of net loans (charged off) recoveries during
the year to average loans outstanding (.01)% .01% $ .09%
==== === ===
</TABLE>
Deposits. Total deposits increased by $1,830,358 or 4.20% in 1997, compared
to an increase of $174,723 or .40% in 1996. Total deposits continued to grow
during the first six months of 1998 to a level of $47,446,448 or an increase of
4.45% over December 31, 1997. Average interest bearing deposits were
approximately $42,632,000 for the year 1997 which reflects a moderate increase
over the 1996 average of $41,280,000.
Results of Operations - June 30, 1998 versus June 30, 1997. Net income for
the six month period ended June 30, 1998 was $480,351 compared to $390,498 for
the same period
48
in 1997. Net interest income increased $97,587 which consisted of an increase in
interest income of $218,119 and an increase in interest expense of $120,532.
The provision for loan losses was $30,000 for the six months ended June 30,
1998 compared to $5,000 for the six months ended June 30, 1997. The increase is
due to the growth in the loan portfolio from June 30, 1997 to June 30, 1998 in
the amount of approximately $5,607,000. Net charge-offs decreased from
approximately $5,000 during the six months ended June 30, 1997 to approximately
$3,000 during the same period in 1998. The allowance for loan loss as a
percentage of total outstanding loans was .94% at June 30, 1998 compared to
1.00% at June 30, 1997.
Following is a comparison of noninterest income for June 30, 1998 and 1997:
1998 1997
---- ----
Service charges on deposit accounts $ 81,265 $ 97,796
Mortgage origination fees 65,931 25,661
Life insurance income (expense) 21,019 16,400
Other income 19,199 14,859
-------- --------
$ 187,414 $ 154,716
======= =======
Non-interest income increased $32,698 for the six months ended June 30,1998
compared to the six months ended June 30, 1997. The change is due to an increase
in mortgage origination fees of $40,270. The increases were offset by a decrease
in service charges on deposits of $16,531. Increases in mortgage origination
fees is the result of increased growth in the residential loan market in the
Oconee County area. Service charges on deposit accounts decreased due to
decreased nonsufficient funds activity.
Following is an analysis of noninterest expense for June 30, 1998 and 1997:
1998 1997
---- ----
Salaries and employee benefits $ 370,032 $ 343,376
Equipment expense 33,580 34,111
Occupancy expense 31,909 33,248
Other expense 208,940 218,078
------- -------
$ 644,461 $ 628,813
======= =======
Noninterest expense increased $15,648 or 2.49% as of June 30, 1998 compared
to June 30, 1997. This change is primarily due to increases in salaries and
employee benefits of $26,656. The increase in salaries and employee benefits is
due to normal salary increases.
Bank of Georgia recognized an income tax provision of $212,496 for the six
months ended June 30, 1998, compared to $212,712 for the same period in 1997.
The provisions resulted in a 31% and 35% effective tax rate for the periods
ended June 30, 1998 and 1997, respectively.
49
Results of Operations - 1997 versus 1996. Net income for 1997 was $800,598
as compared to $841,905 for 1996. Net interest income before provision for loan
losses increased $106,976 or 5.07% from $2,108,870 in 1996 to $2,215,846 in
1997. Yields on interest earning assets remained consistent at 9.06% in 1997 and
1996. The cost of interest bearing liabilities increased from 4.63% in 1996 to
4.72% in 1997. The effect of these changes was to reduce the net interest spread
from 4.43% in 1996 to 4.34% in 1997. The net interest margin did not change from
4.75% for 1996 and 1997. Therefore, net interest income increased due to
increases in the volume of interest-earning assets.
Bank of Georgia decreased its provision for loan losses during 1997 by
$15,000 due to continued net recoveries. Bank of Georgia had net recoveries of
$1,509 during 1997 compared to $24,829 during 1996. The allowance for loan
losses was $311,795 or .97% of total loans outstanding at December 31, 1997,
compared to $305,286 or 1.01% of total loans outstanding at December 31, 1996.
Following is a comparison of non-interest income for 1997 and 1996.
December 31,
1997 1996
Service charges on deposit accounts $ 186,024 $ 231,568
Mortgage origination fees 89,374 86,846
Life insurance income (expense) 31,842 64,482
Other operating income 16,147 20,595
------ --------
$ 323,387 $ 403,491
======= =======
Non-interest income decreased by $80,104 or 19.85% from 1996 to 1997. This
decrease was related to decreases in service charges on deposit accounts of
$45,544 and decreases in life insurance income of $32,640. Service charges on
deposit accounts decreased due to decreased nonsufficient funds activity and
activity charges. Life insurance income decreased due to policy premiums
exceeding the growth in the underlying cash surrender values.
Following is an analysis of non-interest expense for 1997 and 1996.
December 31,
1997 1996
Salaries and employee benefits $ 709,125 $ 656,396
Equipment expense 69,125 66,140
Occupancy expense 61,817 43,251
Other expense 460,034 397,460
------- -------
$ 1,300,101 $1,163,247
========= =========
Non-interest expense increased by $136,854 or 11.76% from 1996 to 1997.
During 1997 salaries and benefits increased $52,729. Normal increases in
salaries are the primary causes of the increase. The increase in occupancy
expense of $18,566 resulted from the expansion of the main office facility
during 1997. Increases in other operating expenses were primarily due to other
professional services of $20,742.
50
Bank of Georgia recognized an income tax provision of $433,534 for 1997,
compared to a provision of $487,209 during 1996, resulting in an effective tax
rate of 35% and 37% for the years ended December 31, 1997 and 1996 respectively.
Results of Operations - 1996 versus 1995. Bank of Georgia's net income for
1996 was $841,905 versus $694,001 during 1995. Net interest income before
provision for loan losses increased $212,639 or 11.21% from $1,896,231 in 1995
to $2,108,870 in 1996. Yields on interest earning assets decreased from 9.07% in
1995 to 9.06% in 1996. The cost of interest bearing liabilities increased from
4.44% in 1995 to 4.63% in 1995 to 4.43% in 1996 and decreased the net interest
margin from 4.87% to 4.75% for the same time period. In summary, net interest
income increased due to the increase in volume of interest-earning assets
outpacing that of interest-bearing liabilities.
The provision for loan losses was $20,000 for the year ended 1996 compared
to $50,000 for 1995. The $30,000 decrease in the provision for loan losses was
due to continued minimal losses in the loan portfolio and management's ongoing
evaluation of the adequacy of the allowance for loan losses. The allowance for
loan losses represented 1.00% and 1.07% of total outstanding loans at December
31, 1996 and December 31, 1995, respectively.
Following is a comparison of non-interest income for 1996 and 1995.
December 31,
1996 1995
Service charges on deposit accounts $ 231,568 204,396
Mortgage origination fees 86,846 90,749
Life insurance income (expense) 64,482 (19,643)
Other operating income 20,595 16,505
------ -------
$ 403,491 292,007
======= =======
Non-interest income increased by $111,484 or 38.18% from 1995 to 1996. This
increase was related to a increase in service charge income of $27,172 and an
increase in life insurance income of $84,125. The increase in life insurance
income was due to growth in cash surrender values of $16,915 and decreases in
life insurance premiums of $67,201.
Following is an analysis of non-interest expense for 1996 and 1995.
December 31,
1996 1995
Salaries and employee benefits $ 656,396 $ 598,131
Equipment expense 66,140 56,322
Occupancy expense 43,251 47,044
Other expense 397,460 317,301
------- --------
$ 1,163,247 $ 1,018,798
========= =========
Non-interest expense increased by $144,449 or 14.18% from 1995 to 1996.
Included in this change is an increase in salaries and employee benefits of
$58,265 due to normal increase in salary and group insurance levels and officer
bonuses. Other operating expenses increased
51
$80,159 due primarily to increases in deferred compensation expense for the
Bank's directors in the amount of $57,424. Other notable increases were to data
processing expenses, audit expenses, and customer supplies in the amounts of
$28,602, $13,605, and $18,528, respectively, which were offset by a decrease in
deposit insurance premiums of $36,798.
Bank of Georgia recognized an income tax provision of $487,209 for 1996,
compared to a provision of $425,439 for 1995 which resulted in effective tax
rates of 37% and 38% for the years ended December 31, 1996 and 1995,
respectively.
Forward Looking Statements
Certain statements contained in this Proxy Statement/Prospectus and the
exhibits hereto which are not statements of historical fact constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act (the "Act"). In addition, certain statements by Bank of
Georgia in oral and written statements made by or with the approval of Bank of
Georgia which are not statements of historical fact constitute forward-looking
statements within the meaning of the Act. Examples of forward-looking statements
include, but are not limited to: (i) projections of revenues, income or loss,
earnings or loss per share, the payment or non-payment of dividends, capital
structure and other financial items; (ii) statements of plans and objectives of
Bank of Georgia or its management or Board of Directors, including those
relating to products or services; (iii) statements of future economic
performance; and (iv) statements of assumptions underlying such statements.
Words such as "believes," "anticipates," "expects," "intends," "targeted," and
similar expressions are intended to identify forward-looking statements but are
not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties which may cause
actual results to differ materially from those in such statements. Facts that
could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to: (i) the strength of the U.S. economy
in general and the strength of the local economies in which operations are
conducted; (ii) the effects of and changes in trade, monetary and fiscal
policies and laws, including interest rate policies of the Federal Reserve;
(iii) inflation, interest rate, market and monetary fluctuations; (iv) the
timely development of and acceptance of new products and services and perceived
overall value of these products and services by users; (v) changes in consumer
spending, borrowing and saving habits; (vi) technological changes; (vii)
acquisitions; (viii) the ability to increase market share and control expenses;
(ix) the effect of changes in laws and regulations (including laws and
regulations concerning taxes, banking, securities and insurance) with which Bank
of Georgia must comply; (x) the effect of changes in accounting policies and
practices, as may be adopted by the regulatory agencies as well as the Financial
Accounting Standards Board; (xi) changes in Bank of Georgia's organization,
compensation and benefit plans; (xii) the costs and effects of litigation and of
unexpected or adverse outcomes in such litigation; and (xiii) the success of
Bank of Georgia at managing the risks involved in the foregoing.
Such forward-looking statements speak only as of the date on which such
statements are made, and Bank of Georgia undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.
52
EXPERTS
Synovus
The consolidated balance sheets of Synovus and its subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, all of which are incorporated by
reference in this Proxy Statement/Prospectus, have been audited by KPMG Peat
Marwick LLP, independent certified public accountants, whose report thereon is
incorporated herein by reference. Such financial statements have been so
incorporated herein by reference in reliance upon the report of KPMG Peat
Marwick LLP and upon their authority as experts in accounting and auditing.
Bank of Georgia
The balance sheets of Bank of Georgia as of December 31, 1997 and 1996, and
the related statements of income, stockholders' equity and cash flows for each
of the years ended December 31, 1997, 1996 and 1995, included in this Proxy
Statement/Prospectus have been audited by Mauldin & Jenkins, LLC, independent
certified public accountants, in reliance upon their report appearing elsewhere
herein, and upon their authority as experts in accounting and auditing.
OTHER MATTERS
Bank of Georgia's Board of Directors does not know of any matters to be
presented at the Special Meeting other than those set forth above. If any other
matters are properly brought before the Special Meeting or any adjournment
thereof, the enclosed proxy will be deemed to confer discretionary authority on
the individuals named as proxies therein to vote the shares represented by the
proxy as to any such matters.
SHAREHOLDER PROPOSALS
Synovus management expects to hold its next annual meeting of shareholders
during April 1999. Under the Commission's rules, proposals of shareholders
intended to be presented at that meeting must have been received by Synovus at
its principal executive offices on or before November 13, 1998 for consideration
by Synovus for possible inclusion in such proxy materials.
If the Merger is not consummated, Bank of Georgia will inform its
shareholders of the date and time of the 1999 annual meeting of shareholders of
Bank of Georgia.
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information reflecting the acquisition of Bank of
Georgia by Synovus is not presented herein since the pro forma effect is not
significant.
On June 5, 1998, Synovus signed an Agreement and Plan of Merger providing
for the acquisition of Community Bank Capital Corporation ("CBCC"). CBCC is
located in Alpharetta,
53
Georgia and has one subsidiary, the Bank of North Georgia. At June 30, 1998,
CBCC had total assets of $345.9 million and shareholders' equity of $22.3
million, and for the six months ended June 30, 1998, reported net income of $1.6
million. On April 20, 1998, Synovus signed a letter of intent providing for the
acquisition of Georgia Bank & Trust which is located in Calhoun, Georgia. At
June 30, 1998, Georgia Bank & Trust had total assets of $173 million and
shareholders' equity of $14 million, and for the six months ended June 30, 1998,
reported net income of $1.3 million. Pro forma financial information reflecting
these two pending acquisitions is not presented herein because such acquisitions
are not significant either individually or in the aggregate, or when combined
with Bank of Georgia.
[Rest of page intentionally blank]
54
INDEX TO FINANCIAL STATEMENTS
Bank of Georgia:
Independent Auditors' Report.................................................F-1
Balance Sheets - December 31, 1997 and 1996..................................F-2
Statements of Income for the Years
ended December 31, 1997, 1996 and 1995..................................F-3
Statements of Stockholders' Equity for the Years
ended December 31, 1997, 1996 and 1995..................................F-4
Statements of Cash Flows for the Years
ended December 31, 1997, 1996 and 1995..................................F-5
Notes to Financial Statements................................................F-7
Unaudited Condensed
Balance Sheets - June 30, 1998 and December 31, 1997...................F-21
Unaudited Condensed Statements of Income and Comprehensive Income
for the Three and Six Months Ended
June 30, 1998 and 1997.................................................F-22
Unaudited Condensed Statements of Cash Flows
for the Six Months Ended
June 30, 1998 and 1997.................................................F-24
Notes to Unaudited Condensed
Financial Statements...................................................F-26
[Rest of page intentionally blank]
55
INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------
To the Board of Directors
Bank of Georgia
Watkinsville, Georgia
We have audited the accompanying balance sheets of Bank of Georgia as of
December 31, 1997 and 1996, and the related statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bank of Georgia as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
/s/Mauldin & Jenkins, LLC
Atlanta, Georgia
April 9, 1998
F-1
BANK OF GEORGIA
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Assets 1997 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and due from banks $ 1,831,457 $ 1,438,519
Interest-bearing deposits in banks 99,000 -
Federal funds sold 970,000 2,100,000
Securities available-for-sale 12,128,598 10,330,457
Securities held-to-maturity 1,970,434 2,330,657
Loans 32,143,646 30,327,135
Less allowance for loan losses 311,795 305,286
- -----------------------------------------------------------------------------------------------------------------
Loans, net 31,831,851 30,021,849
- -----------------------------------------------------------------------------------------------------------------
Premises and equipment 646,690 571,550
Other assets 2,050,295 1,963,083
- -----------------------------------------------------------------------------------------------------------------
Total assets $ 51,528,325 $ 48,756,115
=================================================================================================================
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing demand $ 4,308,136 $ 4,500,457
Interest-bearing demand 9,100,479 8,556,776
Savings 2,398,506 2,500,151
Time, $100,000 and over 9,812,247 9,943,036
Other time 19,805,767 18,094,357
- -----------------------------------------------------------------------------------------------------------------
Total deposits 45,425,135 43,594,777
Other liabilities 677,244 525,406
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 46,102,379 44,120,183
- -----------------------------------------------------------------------------------------------------------------
Commitments and contingent liabilities
Stockholders' equity
Common stock, par value $5; 100,000,000 shares authorized;
132,500 shares issued and outstanding 662,500 662,500
Capital surplus 462,500 462,500
Retained earnings 4,340,163 3,672,065
Unrealized losses on securities available-for-sale, net of tax (39,217) (161,133)
- -----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 5,425,946 4,635,932
- -----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 51,528,325 $ 48,756,115
=================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-2
BANK OF GEORGIA
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Loans $ 3,280,135 $ 3,011,563 $ 2,632,096
Taxable securities 736,380 749,676 768,405
Nontaxable securities 44,302 35,606 -
Deposits in banks - 7,638 13,543
Federal funds sold 168,895 215,617 113,809
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income 4,229,712 4,020,100 3,527,853
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense on deposits 2,013,866 1,911,230 1,631,622
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 2,215,846 2,108,870 1,896,231
Provision for loan losses 5,000 20,000 50,000
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 2,210,846 2,088,870 1,846,231
- -----------------------------------------------------------------------------------------------------------------------------------
Other income
Service charges on deposit accounts 186,024 231,568 204,396
Mortgage origination fees 89,374 86,846 90,749
Life insurance income (expense) 31,842 64,482 (19,643)
Other operating income 16,147 20,595 16,505
- ------------------------------------------------------------------------------------------------------------------------------------
Total other income 323,387 403,491 292,007
- ------------------------------------------------------------------------------------------------------------------------------------
Other expenses
Salaries and employee benefits 709,125 656,396 598,131
Equipment expenses 69,125 66,140 56,322
Occupancy expenses 61,817 43,251 47,044
Data processing expense 99,729 94,298 65,696
Director's deferred compensation expense 56,963 57,424 -
Deposit insurance premiums 6,000 4,333 41,131
Other operating expenses 297,342 241,405 210,474
- ----------------------------------------------------------------------------------------------------------------------------------
Total other expenses 1,300,101 1,163,247 1,018,798
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,234,132 1,329,114 1,119,440
Income tax expense 433,534 487,209 425,439
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 800,598 $ 841,905 $ 694,001
===================================================================================================================================
Earnings per common share $ 6.04 $ 6.35 $ 5.24
====================================================================================================================================
</TABLE>
See Notes to Financial Statement
F-3
BANK OF GEORGIA
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized
Losses on
Securities
Available- Total
Common Stock Capital Retained for-Sale, Stockholders'
-----------------------
Shares Par Value Surplus Earnings Net of Tax Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 132,500 $ 662,500 $ 462,500 $ 2,354,784 $ (676,632) $ 2,803,152
Net income - - - 694,001 - 694,001
Cash dividends declared,
$.75 per share - - - (99,375) - (99,375)
Net change in unrealized
losses on securities available-
for-sale, net of tax - - - - 565,439 565,439
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 132,500 662,500 462,500 2,949,410 (111,193) 3,963,217
Net income - - - 841,905 - 841,905
Cash dividends declared,
$.90 per share - - - (119,250) - (119,250)
Net change in unrealized
losses on securities available-
for-sale, net of tax - - - - (49,940) (49,940)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 132,500 662,500 462,500 3,672,065 (161,133) 4,635,932
Net income - - - 800,598 - 800,598
Cash dividends declared,
$1.00 per share - - - (132,500) - (132,500)
Net change in unrealized
losses on securities available-
for-sale, net of tax - - - - 121,916 121,916
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 132,500 $ 662,500 $ 462,500 $ 4,340,163 $ (39,217) $ 5,425,946
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-4
BANK OF GEORGIA
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 800,598 $ 841,905 $ 694,001
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 63,461 55,504 47,780
Provision for loan losses 5,000 20,000 50,000
Deferred income taxes (29,539) (4,173) (280)
Increase in interest receivable (4,318) (43,343) (18,469)
Increase in interest payable 62,494 70,831 115,991
Increase (decrease) in taxes payable 16,996 (46,587) (14,998)
Other operating activities (72,812) (207,329) (85,689)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 841,880 686,808 788,336
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (2,487,144) (1,920,619) (300,000)
Proceeds from maturities of securities
available-for-sale 889,474 734,609 240,988
Proceeds from maturities of securities
held-to-maturity 360,223 448,928 329,908
Net (increase) decrease in Federal funds sold 1,130,000 5,300,000 (7,400,000)
Net (increase) decrease in interest-bearing
deposits in banks (99,000) 100,000 -
Net increase in loans (1,815,002) (5,862,556) (809,716)
Purchase of premises and equipment (138,601) (280,287) -
Disposals of premises and equipment - 9,520 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (2,160,050) (1,470,405) (7,938,820)
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits 1,830,358 174,723 8,205,784
Dividends paid (119,250) (99,375) (79,500)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,711,108 75,348 8,126,284
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks 392,938 (708,249) 975,800
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks at beginning of year 1,438,519 2,146,768 1,170,968
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks at end of year $ 1,831,457 $ 1,438,519 $ 2,146,768
====================================================================================================================================
</TABLE>
F-5
BANK OF GEORGIA
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest $ 1,951,372 $ 1,840,399 $ 1,515,631
Income taxes $ 446,077 $ 537,969 $ 440,717
NONCASH TRANSACTIONS
Unrealized (gains) losses on securities
available-for-sale $ (200,472) $ 91,418 $ 856,726)
Principal balances on loans transferred to
other real estate $ - $ - $ 63,280
</TABLE>
See Notes to Financial Statements.
F-6
BANK OF GEORGIA
NOTES TO FINANCIAL STATEMENTS
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Bank of Georgia (the Bank) is a commercial bank with operations
in Watkinsville, Oconee County, Georgia. The Bank provides a full
range of banking services to individual and corporate customers
in its primary market area of Oconee County and surrounding
counties.
Basis of Presentation
The accounting and reporting policies of the Bank conform to
generally accepted accounting principles and general practices
within the financial services industry. In preparing the
financial statements, management is required to make estimates
and assumptions that affect the reported amounts and disclosures
of assets and liabilities as of the date of the balance sheet and
revenues and expenses for the period. Actual results could differ
from those estimates.
Cash and Due From Banks
Cash on hand, cash items in process of collection, and amounts
due from banks are included in cash and due from banks.
The Bank maintains amounts due from banks which, at times, may
exceed Federally insured limits. The Bank has not experienced any
losses in such accounts.
Securities
Securities are classified based on management's intention on the
date of purchase. Securities which management has the intent and
ability to hold to maturity are classified as held-to-maturity
and reported at amortized cost. All other debt securities are
classified as available-for-sale and carried at fair value with
net unrealized gains and losses included in stockholders' equity,
net of tax. Equity securities without a readily determinable
market value are classified as available for sale and carried at
cost.
Interest on securities, including amortization of premiums and
accretion of discounts, are included in interest income. Realized
gains and losses from the sales of securities are determined
using the specific identification method.
F-7
NOTES TO FINANCIAL STATEMENTS
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans
Loans are carried at their principal amounts outstanding less
unearned income and the allowance for loan losses. Interest
income on loans is credited to income based on the principal
amount outstanding.
Loan fees on real estate loans are deferred and recognized into
income over the life of the loans as a yield adjustment. Loan
fees charged and costs incurred on other loans are recognized
when the loan is made. Because net loan fees and costs are not
material, the results of operations are not materially different
than the results which would be obtained by accounting for loan
fees and costs in accordance with generally accepted accounting
principles.
The allowance for loan losses is maintained at a level that
management believes to be adequate to absorb potential losses in
the loan portfolio. Management's determination of the adequacy of
the allowance is based on an evaluation of the portfolio, past
loan loss experience, current economic conditions, volume,
growth, composition of the loan portfolio, and other risks
inherent in the portfolio. In addition, regulatory agencies, as
an integral part of their examination process, periodically
review the Bank's allowance for loan losses, and may require the
Bank to record additions to the allowance based on their judgment
about information available to them at the time of their
examinations.
The accrual of interest on impaired loans is discontinued when,
in management's opinion, the borrower may be unable to meet
payments as they become due. Interest income is subsequently
recognized only to the extent cash payments are received.
A loan is impaired when it is probable the Bank will be unable to
collect all principal and interest payments due in accordance
with the terms of the loan agreement. Individually identified
impaired loans are measured based on the present value of
payments expected to be received, using the contractual loan rate
as the discount rate. Alternatively, measurement may be based on
observable market prices or, for loans that are solely dependent
on the collateral for repayment, measurement may be based on the
fair value of the collateral. If the recorded investment in the
impaired loan exceeds the measure of fair value, a valuation
allowance is established as a component of the allowance for loan
losses. Changes to the valuation allowance are recorded as a
component of the provision for loan losses.
F-8
NOTES TO FINANCIAL STATEMENTS
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Premises and Equipment
Premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed principally by the
straight-line method over the estimated useful lives of the
assets.
Other Real Estate Owned
Other real estate owned represents properties acquired through
foreclosure. Other real estate owned is held for sale and is
carried at the lower of the recorded amount of the loan or fair
value of the properties less estimated selling costs. Any
write-down to fair value at the time of transfer to other real
estate owned is charged to the allowance for loan losses.
Subsequent gains or losses on sale and any subsequent adjustment
to the value are recorded as other expenses.
Income Taxes
Income tax expense consists of current and deferred taxes.
Current income tax provisions approximate taxes to be paid or
refunded for the applicable year. Deferred tax assets and
liabilities are recognized for the temporary differences between
the bases of assets and liabilities as measured by tax laws and
their bases as reported in the financial statements. Deferred tax
expense or benefit is then recognized for the change in deferred
tax assets or liabilities between periods.
Recognition of deferred tax balance sheet amounts is based on
management's belief that it is more likely than not that the tax
benefit associated with certain temporary differences, tax
operating loss carryforwards and tax credits will be realized. A
valuation allowance would be recorded for those deferred tax
items for which it is more likely than not that realization would
not occur.
Earnings Per Common Share
Basic earnings per common share are computed by dividing net
income by the weighted average number of shares of common stock
outstanding. Diluted earnings per share would be computed by
dividing net income by the sum of the weighted-average number of
shares of common stock outstanding and potential common shares.
There were no potential common shares outstanding at December 31,
1997 or 1996.
F-9
NOTES TO FINANCIAL STATEMENTS
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Developments
The Financial Accounting Standards Board (FASB) has issued, and
the Bank has adopted, Statement of Financial Accounting Standards
(SFAS) No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities". SFAS No.
125 was amended by SFAS No. 127, which defers the effective date
of certain provisions of SFAS No. 125 until January 1, 1998. This
statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments
of liabilities based on consistent application of a
financial-components approach that focuses on control. It
distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings. The adoption of this
statement did not have a material effect on the Bank's financial
statements.
The FASB has issued, and the Bank has adopted, SFAS No. 128,
"Earnings Per Share". SFAS No. 128 supersedes Accounting
Principles Board Opinion No. 15 "Earnings Per Share" and
specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for entities with
publicly held common stock or potential issuable common stock.
SFAS No. 128 replaces the presentation of primary EPS with a
presentation of basic EPS and fully diluted EPS with diluted EPS.
It also requires dual presentation of basic and diluted EPS on
the face of the statement of income for all entities with complex
capital structures and requires a reconciliation of the numerator
and denominator for the basic EPS computation to the numerator
and denominator of the diluted EPS computation. SFAS No. 128 is
effective for financial statements for both interim and annual
periods ending after December 15, 1997. The adoption of this
statement did not have an effect on the Bank's financial
statement.
The FASB has issued SFAS No. 130, "Reporting Comprehensive
Income". This statement establishes standards for reporting and
display of comprehensive income and its components in the
financial statements. SFAS No. 130 requires all items that are
required to be recognized under accounting standards as
components of comprehensive income to be reported in a financial
statement that is displayed in equal prominence with the other
financial statements. The term "comprehensive income" is used in
the SFAS to describe the total of all components of comprehensive
income including net income. "Other comprehensive income" refers
to revenues, expenses, gains and losses that are included in
comprehensive income but excluded from earnings under current
accounting standards. Currently, "other comprehensive income" for
the Bank consists of items previously recorded directly in equity
under SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". SFAS No. 130 is effective for financial
statements beginning after December 15, 1997.
F-10
NOTES TO FINANCIAL STATEMENTS
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassifications
Certain balance sheet and income statement items for the year
ended December 31, 1995 and 1996 have been reclassified, with no
effect to total assets and net income, to be consistent with
classifications for the year ended December 31, 1997.
NOTE 2. SECURITIES
The amortized cost and fair value of securities are summarized as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities Available-for-Sale
December 31, 1997:
U. S. Government and
agency securities $ 849,988 $ - $ (3,175) $ 846,813
Mortgage-backed securities 9,999,170 32,074 (113,254) 9,917,990
State and municipal securities 1,188,460 24,935 - 1,213,395
Equity securities 150,400 - - 150,400
- -----------------------------------------------------------------------------------------------------------------------------
$ 12,188,018 $ 57,009 $ (116,429) $ 12,128,598
============================================================================================================================
December 31, 1996:
U. S. Government and
agency securities $ 849,988 $ - $ (8,535) $ 841,453
Mortgage-backed securities 8,865,381 5,277 (259,014) 8,611,644
State and municipal securities 874,980 6,034 (3,654) 877,360
- -----------------------------------------------------------------------------------------------------------------------------
$ 10,590,349 $ 11,311 $ (271,203) $ 10,330,457
============================================================================================================================
Securities Held-to-Maturity
December 31, 1997:
Mortgage-backed securities $ 1,970,434 $ 33,663 $ (25,838) $ 1,978,259
=============================================================================================================================
December 31, 1996:
Mortgage-backed securities $ 2,330,657 $ 27,986 $ (47,746) $ 2,310,897
=============================================================================================================================
</TABLE>
F-11
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SECURITIES (Continued)
The amortized cost and fair value of securities as of December
31, 1997 by contractual maturity are shown below. Maturities may
differ from contractual maturities in mortgage-backed securities
because the mortgages underlying the securities may be called or
prepaid without penalty. Therefore, these securities and equity
securities are not included in the maturity categories in the
following maturity summary.
<TABLE>
<CAPTION>
Securities Available-for-Sale Securities Held-to-Maturity
- ----------------------------------------------------------------------------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due within one year or less $ 300,000 $ 300,072 $ - $ -
Due from one to five years 849,988 846,813 - -
Due from five to ten years 538,478 546,355 - -
Due after ten years 349,982 366,968 - -
Mortgage-backed securities 9,999,170 9,917,990 1,970,434 1,978,259
Equity securities 150,400 150,400 - -
- ----------------------------------------------------------------------------------------------------------------------------
$ 12,188,018 $ 12,128,598 $ 1,970,434 $ 1,978,259
============================================================================================================================
</TABLE>
There were no sales of securities during 1997, 1996 or 1995.
Securities with a carrying value of $10,176,732 and $8,998,643 at
December 31, 1997 and 1996, respectively, were pledged to secure
public deposits and for other purposes.
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
December 31,
- ----------------------------------------------------------------------------------------------------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial and agricultural $ 9,428,000 $ 7,002,000
Real estate - construction 6,294,000 8,607,000
Real estate - mortgage 14,330,000 11,909,000
Consumer and other 2,130,118 2,830,779
- ----------------------------------------------------------------------------------------------------------------------------
32,182,118 30,348,779
Unearned income (38,472) (21,644)
Allowance for loan losses (311,795) (305,286)
- ----------------------------------------------------------------------------------------------------------------------------
Loans, net $ 31,831,851 $ 30,021,849
============================================================================================================================
</TABLE>
F-12
NOTES TO FINANCIAL STATEMENTS
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
Changes in the allowance for loan losses for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $ 305,286 $ 260,457 $ 219,372
Provision for loan losses 5,000 20,000 50,000
Loans charged off (17,495) (13,956) (54,628)
Recoveries of loans previously charged off 19,004 38,785 45,713
- ----------------------------------------------------------------------------------------------------------------------------
Balance, end of year $ 311,795 $ 305,286 $ 260,457
============================================================================================================================
At December 31, 1997 and 1996, management had not identified any
loans which were considered impaired loans as determined by
Statement of Financial Accounting Standard No. 114, ("Accounting
by Creditors for Impairment of a Loan").
The Bank has granted loans to certain directors, executive
officers, and their related entities. The interest rates on these
loans were substantially the same as rates prevailing at the time
of the transaction and repayment terms are customary for the type
of loan involved. Changes in related party loans for the year
ended December 31, 1997 are as follows:
Balance, beginning of year $ 1,725,173
Advances 351,793
Repayments (805,703)
- ---------------------------------------------------------------------
Balance, end of year $ 1,271,263
=====================================================================
</TABLE>
NOTE 4. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31,
- ---------------------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 127,000 $ 127,000
Buildings and improvements 654,006 329,966
Equipment 462,075 430,303
Construction in process - 217,211
- ---------------------------------------------------------------------------------------
1,243,081 1,104,480
Accumulated depreciation (596,391) (532,930)
- ---------------------------------------------------------------------------------------
$ 646,690 $ 571,550
=======================================================================================
</TABLE>
F-13
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5. EMPLOYEE BENEFIT PLANS
The Bank has a trusteed contributory profit-sharing plan covering
substantially all of its employees. Contributions to the plan
charged to expenses during 1997, 1996 and 1995 amounted to
$20,904, $17,138 and $14,236, respectively.
The Bank has a defined benefit plan with its directors which
provides benefits payable at age sixty-five or if he or she
becomes totally disabled. Under certain circumstances, benefits
are payable to his or her beneficiary. The present value of the
estimated liability under the agreement is being accrued over the
expected remaining years of service. For the years ended December
31, 1997 and 1996, the Bank had accrued $144,682 and $88,399,
respectively, under the directors' plan.
The Bank also has a retirement plan with its key officers which
provides benefits payable at age sixty-five or if he or she
becomes totally disabled. Under certain circumstances, benefits
are payable to his or her beneficiary.
The Bank has a salary continuation agreement with a key officer
of the Bank which provides for benefits upon retirement at age
sixty-five or for the officer's beneficiary in the case of death.
No amounts have been accrued under this plan, the results of
which are not materially different from generally accepted
accounting principles.
The Bank is also the owner and beneficiary of life insurance
policies on the lives of its directors and key officers. The Bank
intends to use these policies to fund the benefit plans described
above. The carrying value of the policies was $1,336,184 and
$1,208,342 at December 31, 1997 and 1996, respectively.
NOTE 6. INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
December 31,
- -------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current $ 463,073 $ 491,382 $ 425,719
Deferred (29,539) (4,173) (280)
-----------------------------------------------------------------------------------------------------------------------------
Income tax expense $ 433,534 $ 487,209 $ 425,439
==============================================================================================================================
</TABLE>
F-14
NOTES TO FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES (Continued)
The Bank's income tax expense differs from the amounts computed
by applying the Federal income tax statutory rates to income
before income taxes. A reconciliation of the differences is as
follows:
<TABLE>
<CAPTION>
December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income taxes at statutory rate $ 419,605 34 % $ 451,899 34% $ 380,610 34%
Tax-exempt interest (15,063) (1) (12,106) (1) - -
State income taxes 38,139 3 44,095 3 36,140 3
Other items, net (9,147) (1) 3,321 1 8,689 1
- ------------------------------------------------------------------------------------------------------------------------------------
Income tax expense $ 433,534 35 % $ 487,209 37% $ 425,439 38%
====================================================================================================================================
</TABLE>
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------------------------------------------------------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Loan loss reserves $ 84,273 $ 66,051
Deferred loan fees 14,519 9,366
Deferred compensation 54,603 33,362
Securities available-for-sale 20,203 98,759
- -----------------------------------------------------------------------------------------------------------------------------
173,598 207,538
- -----------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation 26,581 26,164
Other 40,162 25,502
- -----------------------------------------------------------------------------------------------------------------------------
66,743 51,666
- -----------------------------------------------------------------------------------------------------------------------------
Net deferred tax assets $ 106,855 $ 155,872
=============================================================================================================================
</TABLE>
F-15
NOTES TO FINANCIAL STATEMENTS
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, the Bank has entered into
off-balance sheet financial instruments which are not reflected
in the financial statements. These financial instruments include
commitments to extend credit and standby letters of credit. Such
financial instruments are included in the financial statements
when funds are disbursed or the instruments become payable. These
instruments involve, to varying degrees, elements of credit risk
in excess of the amount recognized in the balance sheet.
The Bank's exposure to credit loss in the event of nonperformance
by the other party to the financial instrument for commitments to
extend credit and standby letters of credit is represented by the
contractual amount of those instruments. A summary of the Bank's
commitments is as follows:
<TABLE>
<CAPTION>
December 31,
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit $ 5,011,297 $ 3,799,897
Standby letters of credit 57,138 33,200
- ---------------------------------------------------------------------------------------------------------------------------
$ 5,068,435 $ 3,833,097
===========================================================================================================================
</TABLE>
Commitments to extend credit generally have fixed expiration
dates or other termination clauses and may require payment of a
fee. Since many of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The credit risk involved in
issuing these financial instruments is essentially the same as
that involved in extending loans to customers. The Bank evaluates
each customer's creditworthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the Bank
upon extension of credit, is based on management's credit
evaluation of the customer. Collateral held varies but may
include real estate and improvements, crops, marketable
securities, accounts receivable, inventory, equipment and
personal property.
Standby letters of credit are conditional commitments issued by
the Bank to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to support public
and private borrowing arrangements. The credit risk involved in
issuing letters of credit is essentially the same as that
involved in extending loans to customers. Collateral held varies
as specified above and is required in instances which the Bank
deems necessary.
F-16
NOTES TO FINANCIAL STATEMENTS
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
In the normal course of business, the Bank is involved in various
legal proceedings. In the opinion of management of the Bank, any
liability resulting from such proceedings would not have a
material effect on the Bank's financial statements.
NOTE 8. CONCENTRATIONS OF CREDIT
The Bank originates primarily commercial, residential, and
consumer loans to customers in Oconee County and surrounding
counties. The ability of the majority of the Bank's customers to
honor their contractual loan obligations is dependent on the
economy in the Oconee County area.
Sixty-four percent (64%) of the Bank's loan portfolio is
concentrated in loans secured by real estate, of which a
substantial portion is secured by real estate in the Bank's
primary market area. Accordingly, the ultimate collectibility of
the loan portfolio is susceptible to changes in market conditions
in the Bank's primary market area. The other significant
concentrations of credit by type of loan are set forth in Note 3.
The Bank, as a matter of policy, does not generally extend credit
to any single borrower or group of related borrowers in excess of
25% of statutory capital, or approximately $1,200,000.
NOTE 9. REGULATORY MATTERS
The Bank is subject to certain restrictions on the amount of
dividends that may be declared without prior regulatory approval.
At December 31, 1997, approximately $400,000 of retained earnings
were available for dividend declaration without regulatory
approval.
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and
possibly additional discretionary - actions by regulators that,
if undertaken, could have a direct material effect on the
financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must
meet specific capital guidelines that involve quantitative
measures of the assets, liabilities, and certain off-balance
sheet items as calculated under regulatory accounting practices.
The Bank's capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk
weightings, and other factors.
F-17
NOTES TO FINANCIAL STATEMENTS
NOTE 9. REGULATORY MATTERS (Continued)
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios
of total and Tier I capital to risk-weighted assets and of Tier I
capital to average assets. Management believes, as of December
31, 1997, the Bank meets all capital adequacy requirements to
which it is subject.
As of December 31, 1997, the most recent notification from the
FDIC categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be
categorized as well capitalized, the Bank must maintain minimum
total risk-based, Tier I risk-based, and Tier I leverage ratios
as set forth in the following table. There are no conditions or
events since that notification that management believes have
changed the Bank's category.
The Bank's actual capital amounts and ratios are presented in the
following table.
<TABLE>
<CAPTION>
To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
- --------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- --------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997
Total Capital (to Risk Weighted Assets) $ 5,777 12.35% $ 3,742 8.00% $ 4,677 10.00%
Tier I Capital (to Risk Weighted Assets) $ 5,465 11.68% $ 1,871 4.00% $ 2,806 6.00%
Tier I Capital (to Average Assets) $ 5,465 10.28% $ 2,126 4.00% $ 2,658 5.00%
As of December 31, 1996
Total Capital (to Risk Weighted Assets) $ 5,102 11.80% $ 3,458 8.00% $ 4,323 10.00%
Tier I Capital (to Risk Weighted Assets) $ 4,797 11.10% $ 1,729 4.00% $ 2,594 6.00%
Tier I Capital (to Average Assets) $ 4,797 9.60% $ 1,998 4.00% $ 2,498 5.00%
</TABLE>
F-18
NOTES TO FINANCIAL STATEMENTS
NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Bank in
estimating its fair value disclosures for financial instruments.
In cases where quoted market prices are not available, fair
values are based on estimates using discounted cash flow methods.
Those methods are significantly affected by the assumptions used,
including the discount rates and estimates of future cash flows.
In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the
instrument. The use of different methodologies may have a
material effect on the estimated fair value amounts. Also, the
fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1997 and
1996. Such amounts have not been revalued for purposes of these
financial statements since those dates and, therefore, current
estimates of fair value may differ significantly from the amounts
presented herein.
Cash, Due From Banks, Interest-Bearing Deposits in Banks and
Federal Funds Sold:
The carrying amounts of cash, due from banks, interest-bearing
deposits in banks and Federal funds sold approximate their fair
value.
Securities:
Fair values for securities are based on quoted market prices. The
carrying values of equity securities with no readily determinable
fair value approximate fair values.
Loans:
For variable-rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on
carrying values. For other loans, the fair values are estimated
using discounted cash flow methods, using interest rates
currently being offered for loans with similar terms to borrowers
of similar credit quality. Fair values for impaired loans are
estimated using discounted cash flow methods or underlying
collateral values.
Deposits:
The carrying amounts of demand deposits and savings deposits
approximate their fair values. Fair values for fixed-rate
certificates of deposit are estimated using discounted cash flow
methods, using interest rates currently being offered on
certificates.
F-19
NOTES TO FINANCIAL STATEMENTS
NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Accrued Interest:
The carrying amounts of accrued interest approximate their fair
values.
Off-Balance-Sheet Instruments:
Fair values of the Bank's off-balance-sheet financial instruments
are based on fees charged to enter into similar agreements.
However, commitments to extend credit and standby letters of
credit do not represent a significant value to the Bank until
such commitments are funded. The Bank has determined that these
instruments do not have a distinguishable fair value and no fair
value has been assigned.
The estimated fair values of the Bank's financial instruments
were as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash, due from banks, $ 2,900,457 $ 2,900,457 $ 3,538,519 $ 3,538,519
interest-bearing deposits in
banks and Federal funds sold
Securities available-for-sale 12,128,598 12,128,598 10,330,457 10,330,457
Securities held-to-maturity 1,970,434 1,978,259 2,330,657 2,310,897
Loans 31,831,851 32,180,000 30,021,849 30,200,000
Accrued interest receivable 508,453 508,453 504,135 504,135
Financial liabilities:
Deposits 45,425,135 45,607,121 43,594,777 43,557,384
Accrued interest payable 365,734 365,734 303,240 303,240
</TABLE>
F-20
<TABLE>
<CAPTION>
Assets 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and due from banks $ 1,380,512 $ 1,831,457
Interest-bearing deposits in banks - 99,000
Federal funds sold 1,850,000 970,000
Securities available-for-sale 9,563,465 12,128,598
Securities held-to-maturity 2,688,733 1,970,434
Loans 36,017,792 32,143,646
Less allowance for loan losses 339,210 311,795
- --------------------------------------------------------------------------------------------------------------------------
Loans, net 35,678,582 31,831,851
- --------------------------------------------------------------------------------------------------------------------------
Premises and equipment 608,375 646,690
Other assets 2,191,571 2,050,295
- --------------------------------------------------------------------------------------------------------------------------
$ 53,961,238 $ 51,528,325
==========================================================================================================================
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing demand $ 5,264,936 $ 4,308,136
Interest-bearing demand 8,177,130 9,100,479
Savings 2,551,287 2,398,506
Time, $100,000 and over 10,370,505 9,812,247
Other time 21,082,590 19,805,767
- --------------------------------------------------------------------------------------------------------------------------
Total deposits 47,446,448 45,425,135
Other liabilities 678,820 677,244
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 48,125,268 46,102,379
- --------------------------------------------------------------------------------------------------------------------------
Commitments and contingent liabilities
Stockholders' equity
Common stock, par value $5; 100,000,000 shares authorized;
132,500 shares issued and outstanding 662,500 662,500
Capital surplus 462,500 462,500
Retained earnings 4,693,403 4,340,163
Accumulated other comprehensive income (loss), net of taxes 17,567 (39,217)
- --------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 5,835,970 5,425,946
- --------------------------------------------------------------------------------------------------------------------------
$ 53,961,238 $ 51,528,325
==========================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-21
BANK OF GEORGIA
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans $ 949,418 $ 813,532 $ 1,817,172 $ 1,606,764
Taxable securities 191,466 183,085 389,383 370,413
Nontaxable securities 10,957 10,132 21,913 20,263
Federal funds sold 23,200 39,151 46,334 59,243
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,175,041 1,045,900 2,274,802 2,056,683
- ----------------------------------------------------------------------------------------------------------------------------------
Interest expense, deposits 558,300 495,719 1,094,908 974,376
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income 616,741 550,181 1,179,894 1,082,307
Provision for loan losses 25,000 5,000 30,000 5,000
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 591,741 545,181 1,149,894 1,077,307
- ----------------------------------------------------------------------------------------------------------------------------------
Other income
Service charges on deposit accounts 41,985 51,489 81,265 97,796
Mortgage origination fees 27,732 11,003 65,931 25,661
Life insurance income (expense) 14,369 6,650 21,019 16,400
Other operating income 3,952 2,905 19,199 14,859
- ----------------------------------------------------------------------------------------------------------------------------------
88,038 72,047 187,414 154,716
- ----------------------------------------------------------------------------------------------------------------------------------
Other expense
Salaries and employee benefits 172,237 160,728 370,032 343,376
Equipment expense 17,316 16,117 33,580 34,111
Occupancy expense 16,191 19,020 31,909 33,248
Data processing expense 16,911 25,686 41,585 49,662
Director's deferred compensation expense 11,115 15,407 21,720 23,387
Other operating expenses 69,071 76,063 145,635 145,029
- ----------------------------------------------------------------------------------------------------------------------------------
302,841 313,021 644,461 628,813
- ----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 376,938 304,207 692,847 603,210
Income tax expense 111,928 106,472 212,496 212,712
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 265,010 $ 197,735 $ 480,351 $ 390,498
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-22
BANK OF GEORGIA
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Other comprehensive income, net of tax
Unrealized gains on securities available-
for-sale arising during period 22,645 26,413 56,784 37,392
- --------------------------------------------------------------------------------------------------------------------------------
Comprehensive income 287,655 224,148 537,135 427,890
================================================================================================================================
Earnings per common share $ 2.00 $ 1.49 $ 3.63 $ 2.95
================================================================================================================================
Cash dividends per common share $ .47 $ - $ .94 $ -
================================================================================================================================
Weighted average shares outstanding 132,500 132,500 132,500 132,500
================================================================================================================================
</TABLE>
See Notes to Financial Statements.
F-23
BANK OF GEORGIA
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 480,351 $ 390,498
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 30,834 33,072
Provision for loan losses 30,000 5,000
(Increase) decrease in interest receivable (78,472) 9,494
Increase in interest payable 58,208 13,132
Decrease in taxes payable (64,330) (33,369)
Other operating activities (17,134) 19,795
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 439,457 437,622
- ---------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (99,750) -
Proceeds from maturities of securities available-for-sale ,751,359 276,798
Purchases of securities held-to-maturity (961,777) -
Proceeds from maturities of securities held-to-maturity 243,478 115,506
Net decrease in interest-bearing deposits in banks 99,000 -
Net increase in Federal funds sold (880,000) (1,440,000)
Net increase in loans (3,876,731) (89,360)
Purchases of premises and equipment, net - (130,153)
Disposals of premises and equipment, net 7,481 -
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (2,716,940) (1,267,209)
- ---------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits 2,021,313 1,336,231
Dividends paid (194,775) (119,250)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,826,538 1,216,981
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks (450,945) 387,394
Cash and due from banks at beginning of period 1,831,457 1,438,519
- ---------------------------------------------------------------------------------------------------------------------------
Cash and due from banks at end of period $ 1,380,512 $ 1,825,913
===========================================================================================================================
</TABLE>
F-24
BANK OF GEORGIA
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 1,036,701 $ 961,244
Income taxes $ 336,826 $ 246,081
NONCASH INVESTING ACTIVITIES
Unrealized gains on securities available-for-sale $ (86,476) $ (57,526)
</TABLE>
See Notes to Financial Statements.
F-25
BANK OF GEORGIA
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the three and six month periods ended
June 30, 1998 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS
The adoption of the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" that became effective on January 1, 1998 did not have a
material effect on the Bank's financial statements.
The adoption of SFAS No. 130, "Reporting Comprehensive Income", that
became effective on January 1, 1998 required the Bank to report
comprehensive income in the Bank's Statements of Income and
Comprehensive Income.
There are no other recent accounting pronouncements that have had, or
are expected to have, a material effect on the Bank's financial
statements.
F-26
Appendix A
AGREEMENT AND PLAN OF MERGER
This Plan of Merger ("Plan" or "Agreement") is made and entered into as
of April 22, 1998 by and between Bank of Georgia and Athens First Bank & Trust
Company ("Athens First"), both of which are state banks organized and existing
under the laws of the State of Georgia, and joined into by Synovus Financial
Corp., a business corporation organized and existing under the laws of the State
of Georgia which owns all of the outstanding stock of Athens First ("Synovus").
RECITALS:
A. Synovus. Synovus has been duly incorporated and is an existing
corporation in good standing under the laws of Georgia, with its principal
executive offices located in Columbus, Georgia. As of the date hereof, Synovus
has 600,000,000 authorized shares of common stock, par value $1.00 per share
("Synovus Common Stock"), of which 175,371,834 shares are outstanding on the
date hereof. All of the issued and outstanding shares of Synovus Common Stock
are duly and validly issued and outstanding and are fully paid and nonassessable
and not subject to any preemptive rights. Synovus has 34 wholly-owned banking
subsidiaries and other non-banking subsidiaries ("Subsidiaries") as of the date
hereof.
B. Bank of Georgia. Bank of Georgia has been duly incorporated and is
an existing banking corporation in good standing under the laws of Georgia, with
its principal executive offices located in Watkinsville, Georgia. As of the date
hereof, Bank of Georgia has 1,000,000 authorized shares of common stock, par
value $5.00 per share ("Bank of Georgia Common Stock"), of which 132,500 shares
are outstanding on the date hereof. All of the issued and outstanding shares of
Bank of Georgia Common Stock are duly and validly issued and outstanding and are
fully paid and nonassessable and not subject to any preemptive rights.
C. Athens First. Athens First has been duly incorporated and is an
existing banking corporation in good standing under the laws of Georgia, with
its principal executive offices located in Athens, Georgia. As of the date
hereof, Athens First has 10,000,000 authorized shares of common stock, par value
$1.00 per share ("Athens First Common Stock"), of which 1,000 shares are
outstanding on the date hereof. All of the issued and outstanding shares of
Athens First Common Stock are duly and validly issued and outstanding and are
fully paid and nonassessable and not subject to any preemptive rights.
D. Board Approvals. The respective Boards of Directors of Synovus, Bank
of Georgia and Athens First have duly approved the Plan and have duly authorized
its execution.
E. Materiality. Unless the context otherwise requires, any reference in
this Agreement to materiality with respect to Synovus shall be deemed to be with
respect to
Synovus and its Subsidiaries.
In consideration of their mutual promises and obligations hereunder,
and intending to be legally bound hereby, Synovus, Bank of Georgia and Athens
First hereto adopt and make the Plan and prescribe the terms and conditions
hereof and the manner and basis of carrying it into effect, which shall be as
follows:
I. THE MERGER
(A) Structure of the Merger. Subject to the terms and conditions set
forth in this Agreement, on the Effective Date (as defined in Article VII) Bank
of Georgia shall be merged with and into Athens First under the Articles of
Incorporation of Athens First pursuant to the provisions of and with the effect
provided in Section 7-1-530, et seq. of the Official Code of Georgia Annotated,
as amended, ("Merger"). Athens First shall be the surviving bank resulting from
the Merger and shall continue to conduct its business under the name Athens
First Bank & Trust Company. The Merger shall be consummated pursuant to the
terms of this Plan, which has been approved and adopted by the respective Boards
of Directors of Synovus, Bank of Georgia and Athens First, and by Synovus as the
sole shareholder of Athens First.
(B) Effect on Outstanding Shares. By virtue of the Merger,
automatically and without any action on the part of the holder thereof, each
share of Bank of Georgia Common Stock issued and outstanding on the Effective
Date (other than shares as to which dissenters' appraisal rights have been
validly exercised and perfected and for which cash is payable pursuant to the
Georgia Business Corporation Act ("Dissenters' Shares")), shall become and be
converted into 4.2787 shares of Synovus Common Stock ("Per Share Exchange
Ratio"). As of the Effective Date, each share of Bank of Georgia Common Stock
held as treasury stock of Bank of Georgia shall be canceled, retired and cease
to exist, and no payment shall be made in respect thereof.
No fractional shares of Synovus Common Stock shall be issued in
connection with the Merger, but rather cash shall be paid in lieu thereof, with
the amount of cash to be paid in lieu of fractional shares to be determined
based upon the closing price per share of Synovus Common Stock on the New York
Stock Exchange ("NYSE") on the fifth business day immediately preceding the
Effective Date of the Merger.
Each shareholder of Bank of Georgia Common Stock will be entitled to
ten votes for each share of Synovus Common Stock to be received by him/her on
the Effective Date pursuant to a set of resolutions adopted by the Board of
Directors of Synovus on April 22, 1998 in accordance with and subject to those
certain Articles of Amendment to Synovus' Articles of Incorporation, dated April
24, 1986. Synovus shall provide Bank of Georgia with certified copies of such
resolutions.
Upon and after the Effective Date, each issued and outstanding share of
Synovus Common Stock and Athens First Common Stock shall remain unchanged and
shall continue to evidence the same number of shares of Synovus Common Stock and
Athens First Common Stock.
2
Dissenters' Shares shall be purchased and paid for in accordance with
the applicable provisions of Section 14-2-1301, et seq. of the Georgia
Business Corporation Act.
In the event that, subsequent to the date of this Plan but prior to the
Effective Date, the outstanding shares of Synovus Common Stock shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
like changes in Synovus' capitalization, then an appropriate and proportionate
adjustment shall be made to the Per Share Exchange Ratio.
(C) Procedures. Certificates which represent shares of Bank of Georgia
Common Stock that are outstanding on the Effective Date (each, a "Certificate")
and are converted into shares of Synovus Common Stock pursuant to the Plan
shall, after the Effective Date, be deemed to represent shares of the Synovus
Common Stock into which such shares have become converted and shall be
exchangeable by the holders thereof in the manner provided in the transmittal
materials described below for new certificates representing the shares of
Synovus Common Stock into which such shares have been converted.
As promptly as practicable after the Effective Date, Synovus shall send
to each holder of record of shares of Bank of Georgia Common Stock outstanding
on the Effective Date transmittal materials for use in exchanging the
Certificates for such shares for certificates for shares of the Synovus Common
Stock into which such shares of the Bank of Georgia Common Stock have been
converted pursuant to the Plan. Upon surrender of a Certificate, together with a
duly executed stock power and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate for
the number of shares of Synovus Common Stock to which such holder is entitled,
and such Certificate shall forthwith be canceled. No dividend or other
distribution payable after the Effective Date with respect to the Synovus Common
Stock shall be paid to the holder of any unsurrendered Certificate until the
holder thereof surrenders such Certificate, at which time such holder shall
receive all dividends and distributions, without interest thereon, previously
withheld from such holder pursuant hereto. After the Effective Date, there shall
be no transfers on the stock transfer books of Bank of Georgia of shares of Bank
of Georgia Common Stock which were issued and outstanding on the Effective Date
and converted pursuant to the provisions of the Plan. If after the Effective
Date, Certificates are presented for transfer to Bank of Georgia, they shall be
canceled and exchanged for the shares of Synovus Common Stock deliverable in
respect thereof as determined in accordance with the provisions of Paragraph (B)
of Article I and in accordance with the procedures set forth in this Paragraph.
After the Effective Date, holders of Bank of Georgia Common Stock shall
cease to be, and shall have no rights as, stockholders of Bank of Georgia, other
than to receive shares of Synovus Common Stock into which such shares have been
converted or fractional share payments pursuant to the Plan.
3
Notwithstanding the foregoing, neither Synovus nor Bank of Georgia nor
any other person shall be liable to any former holder of shares of Bank of
Georgia Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(D) Business of Athens First. The business of Athens First from and
after the Effective Date shall continue to be that of a state banking
corporation. The business shall be conducted from its main office located in
Athens, Georgia and at its legally established branches, which shall also
include the main office and all branches, whether in operation or approved but
unopened, of Bank of Georgia on the Effective Date.
(E) Assumption of Rights. On the Effective Date, the separate existence
and corporate organization of Bank of Georgia shall be merged into and continued
in Athens First, as the surviving bank of the Merger. All rights, franchises and
interests of Bank of Georgia and Athens First in and to every type of property
(real, personal and mixed), and all choses in action of Bank of Georgia and
Athens First shall be transferred to and vested in Athens First as the surviving
bank by virtue of the Merger without any deed or other transfer. Athens First,
upon consummation of the Merger and without any order or other action on the
part of any court or otherwise, shall hold and enjoy all rights of property,
franchises and interests, including appointments, designations and nominations,
in the same manner and to the same extent as such rights, franchises, and
interests were held or enjoyed by either of Bank of Georgia or by Athens First
on the Effective Date.
(F) Assumption of Liabilities. All liabilities and obligations of both
of Bank of Georgia and of Athens First of every kind and description shall be
assumed by Athens First as the surviving bank by virtue of the Merger, and
Athens First shall be bound thereby in the same manner and to the same extent
that either of Bank of Georgia or Athens First was so bound on the Effective
Date.
(G) Articles of Incorporation. The Articles of Incorporation and bylaws
of Athens First, as in effect on the Effective Date, shall continue in full
force and effect as the Articles of Incorporation and bylaws of Athens First
after the Effective Date.
(H) Directors. The Board of Directors of Athens First immediately
following the Effective Date shall consist of the persons named in Exhibit "A"
to the Plan, each of whom shall serve until his respective successor is elected
and qualified or until a new Board of Directors is elected as provided in the
Articles of Incorporation or bylaws of Athens First or as provided by law.
4
II. ACTIONS PENDING MERGER
(A) Bank of Georgia shall conduct its banking business only in the
ordinary course and shall not prior to the Effective Date, without the prior
written consent of Synovus, which consent will not be unreasonably withheld: (1)
issue any options or warrants to purchase capital stock or issue any shares of
capital stock; (2) declare, set aside, or pay any dividend or distribution with
respect to the capital stock of Bank of Georgia, other than quarterly cash
dividends as set forth in Paragraph (C) below; (3) directly or indirectly
redeem, purchase or otherwise acquire any capital stock of Bank of Georgia; (4)
effect a split or reclassification of Bank of Georgia's capital stock or a
recapitalization of Bank of Georgia; (5) amend the Articles of Incorporation or
bylaws of Bank of Georgia; (6) grant any increase in the compensation payable or
to become payable by Bank of Georgia to any employee other than normal, annual
compensation increases that are desired to be made with regard to Bank of
Georgia's employees or are required by law; (7) make any change in any bonus,
group insurance, pension, profit sharing, deferred compensation, or other
benefit plan, payment or arrangement made to, for or with respect to any
employees or directors of Bank of Georgia, except to the extent such changes are
required by applicable laws or regulations; (8) enter into, terminate, modify or
amend any contract, lease or other agreement with any officer or director of
Bank of Georgia or any "affiliate" of any such officer or director, as such term
is defined in Regulation 14A under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), other than in the ordinary course of its banking
business; (9) incur or assume any liabilities (in excess of an aggregate of
$50,000), other than in the ordinary course of its banking business; (10)
dispose of any of its assets or properties having in the aggregate a book value
in excess of $25,000, other than in the ordinary course of its banking business;
(11) solicit, encourage or authorize any individual, corporation or other
entity, including its directors, officers and other employees, to solicit from
any third party inquiries or proposals relating to the disposition of its
business or assets, or the acquisition of its voting securities, or the merger
of it with any bank or other entity other than as provided by this Agreement, or
subject to the fiduciary obligations of its Board of Directors, provide any
individual, corporation or other entity with information or assistance or
negotiate with any individual, corporation or other entity in furtherance of
such inquiries or to obtain such a proposal (and Bank of Georgia shall promptly
notify Synovus of all of the relevant details relating to all inquiries and
proposals which it may receive relating to any of such matters); (12) take any
other action not in the ordinary course of its business; or (13) directly or
indirectly agree to take any of the foregoing actions.
(B) Without the prior written consent of Bank of Georgia, which consent
will not be unreasonably withheld, Synovus will not declare or pay any
extraordinary or special cash dividend on its Common Stock or take any action
that would: (1) delay or adversely affect the ability of Synovus to obtain any
necessary approvals of regulatory authorities required for the transactions
contemplated hereby; or (2) adversely affect its ability to perform its
covenants and agreements on a timely basis under this Plan.
(C) It is the intention of Synovus and Bank of Georgia to equalize the
dividends of Bank of Georgia and Synovus subsequent to January 30, 1998. Between
January 30,
5
1998 and the Effective Date, Bank of Georgia will pay quarterly cash dividends
to its shareholders consistent with the timing of dividends paid by Synovus to
its shareholders and at a rate equivalent based on the Exchange Ratio to the
cash dividends paid to Synovus shareholders during such period. The record and
payment dates of each cash dividend declared by Bank of Georgia will be the same
as record and payment dates of the Synovus dividend declared for such quarter.
The "equivalency" will be determined as follows:
Dividends Paid Per Bank of Georgia Share = (Exchange Ratio [4.2787 to
1]) (Synovus dividend per share rate [$.11]).
III. REPRESENTATIONS AND WARRANTIES
Synovus, for itself and on behalf of Athens First, hereby represents
and warrants to Bank of Georgia, and Bank of Georgia represents and warrants to
Synovus, that, except as previously disclosed in a letter of Synovus or Bank of
Georgia, respectively, of even date herewith delivered to the other party (all
references to Synovus below shall be deemed to include its Subsidiaries):
(A) the representations set forth in Recitals A through E of the Plan
with respect to it are true and correct;
(B) its outstanding shares of capital stock are duly authorized,
validly issued and outstanding, fully paid and non-assessable, and subject to no
preemptive rights;
(C) it has the power and authority, and is duly qualified in all
jurisdictions (except for such qualifications the absence of which will not as a
whole have a Material Adverse Effect, as hereinafter defined) where such
qualification is required, to carry on its business as it is now being conducted
and to own all its material properties and assets, and it has all federal,
state, local, and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, except for such powers and authorizations the absence of which,
either individually or in the aggregate, would not have a Material Adverse
Effect;
(D) in the case of Synovus, the shares of capital stock of each of its
Subsidiaries are owned (except for director's qualifying shares) free and clear
of all liens, claims, encumbrances and restrictions on transfer;
(E) subject, in the case of Bank of Georgia, to the receipt of any
required shareholder approval of this Plan, the Plan has been authorized by all
necessary corporate action and, subject to receipt of such approval of
shareholders and required regulatory approvals, is a valid and binding agreement
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(F) the execution, delivery and performance of the Plan by it does not,
and the
6
consummation of the transactions contemplated hereby by it will not, constitute:
(1) a breach or violation of, or a default under, any law, rule or regulation or
any judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of it or to which it (or any of its respective
properties) is subject which breach, violation or default would have a material
adverse effect on the financial condition, results of operations or business of
it, and in the case of Synovus, its subsidiaries, taken as a whole (a "Material
Adverse Effect"), or enable any person to enjoin any of the transactions
contemplated hereby; or (2) a breach or violation of, or a default under, its
Articles of Incorporation or bylaws; and the consummation of the transactions
contemplated hereby will not require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license or the
consent or approval of any other party to any such agreement, indenture or
instrument, other than the required approvals of applicable regulatory
authorities and the approval of the shareholders of Bank of Georgia both of
which are referred to in Paragraph (A) of Article V and any consents and
approvals the absence of which will not have a Material Adverse Effect;
(G) in the case of Synovus, as of their respective dates, neither of
its Annual Report on Form 10-K for the fiscal year ended December 31, 1997, nor
any other document filed subsequent to December 31, 1997 under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, each in the form filed with the
Securities and Exchange Commission ("SEC") (collectively, its "Reports"),
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Each of the balance sheets in or incorporated by reference into
Synovus' Reports (including the related notes and schedules) fairly presents the
financial position of the entity or entities to which it relates as of its date
and each of the statements of operations and retained earnings and of cash flows
and changes in financial position or equivalent statements in or incorporated by
reference into Synovus' Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings and cash flows and
changes in financial position, as the case may be, of the entity or entities to
which it relates for the periods set forth therein (subject, in the case of
unaudited interim statements, to normal year-end audit adjustments that are not
material in amount or effect), in each case in accordance with generally
accepted accounting principles applicable to bank holding companies consistently
applied during the periods involved, except as may be noted therein. Synovus has
no material obligations or liabilities (contingent or otherwise) except as
disclosed in the Reports. For purposes of this paragraph, material shall have
the meaning as defined under the Securities Act of 1933, as amended ("Securities
Act"), the Exchange Act and the rules promulgated thereunder;
(H) in the case of Bank of Georgia, it has no material liabilities and
obligations secured or unsecured, whether accrued, absolute, contingent or
otherwise, known or unknown, due or to become due, including, but not limited to
tax liabilities, that should have been but are not reflected in or reserved
against in its audited financial statements as of December 31, 1997;
7
(I) there has not been the occurrence of one or more events,
conditions, actions or states of facts which have caused a Material Adverse
Effect in its business, financial condition or results of operations since
December 31, 1997;
(J) all material federal, state, local, and foreign tax returns
required to be filed by or on behalf of it have been timely filed or requests
for extensions have been timely filed and any such extension shall have been
granted and not have expired; and to the best of its knowledge, all such returns
filed are complete and accurate in all material respects. All taxes shown on
returns filed by it have been paid in full or adequate provision has been made
for any such taxes on its balance sheet (in accordance with generally accepted
accounting principles). As of the date of the Plan, there is no audit
examination, deficiency, or refund litigation with respect to any taxes of it
that would result in a determination that would have a Material Adverse Effect.
All taxes, interest, additions, and penalties due with respect to completed and
settled examinations or con cluded litigation relating to it have been paid in
full or adequate provision has been made for any such taxes on its balance sheet
(in accordance with generally accepted accounting principles). It has not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any material tax due that is currently in effect;
(K)(1) no litigation, proceeding or controversy before any court or
governmental agency is pending, and there is no pending claim, action or
proceeding against it which in the reasonable judgment of its Chief Executive
Officer is likely to have a Material Adverse Effect or prevent consummation of
the transactions contemplated hereby, and, to the best of its knowledge, no such
litigation, proceeding, controversy, claim or action has been threatened or is
contemplated; and (2) it is not subject to any agreement, memorandum of
understanding, commitment letter, board resolution or similar arrangement with,
or transmitted to, any regulatory authority materially restricting its
operations as conducted on the date hereof or requiring that certain actions be
taken which could reasonably be expected to have a Material Adverse Effect;
(L) all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
cover any of its employees, comply in all material respects with all applicable
requirements of ERISA, the Internal Revenue Code, as amended ("Code") and other
applicable laws; it has not engaged in a "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) with respect to any such plan
which is likely to result in any material penalties or taxes under Section
502(i) of ERISA or Section 4975 of the Code; no material liability to the
Pension Benefit Guaranty Corporation has been or is expected by it to be
incurred with respect to any such plan which is subject to Title IV of ERISA
("Pension Plan"), or with respect to any "single-employer plan" (as defined in
Section 4001(a)(15) of ERISA) currently or formerly maintained by it, them or
any entity which is considered one employer with it under Section 4001 of ERISA
or Section 414 of the Code; no Pension Plan had an "accumulated funding
deficiency" (as defined in Section 302 of ERISA) (whether or not waived) as of
the last day of the end of the most recent plan year ending prior to the date
hereof; the fair market value of the assets of each Pension Plan exceeds the
present value of the "benefit liabilities" (as defined in Section
8
4001(a)(16) of ERISA) under such Pension Plan as of the end of the most recent
plan year with respect to the respective Plan ending prior to the date hereof,
calculated on the basis of the actuarial assumptions used in the most recent
actuarial valuation for such Pension Plan as of the date hereof; no notice of a
"reportable event" (as defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Pension Plan within the 12-month period ending on the date hereof; it has not
contributed to a "multi-employer plan", as defined in Section 3(37) of ERISA;
and it does not have any obligations for retiree health and life benefits under
any benefit plan, contract or arrangement, except as required by Section 4980B
of the Code and Part 6 of Subtitle B of Title I of ERISA;
(M) it has good and marketable title to its properties and assets
(other than property as to which it is lessee) that are material to its
business, except as disclosed or reserved against in its financial statements
and except for such defects in title which would not, in the aggregate, have a
Material Adverse Effect;
(N) it knows of no reason why the regulatory approvals referred to in
Paragraphs (A)(2) and (A)(3) of Article V should not be obtained without the
imposition of any condition of the type referred to in the proviso following
such Paragraphs (A)(2) and (A)(3);
(O) it has all material permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings, applications, and
registrations with, federal, state, local, and foreign governmental or
regulatory bodies that are required in order to permit it to carry on its
business as it is presently conducted and the absence of which would have a
Material Adverse Effect; all such permits, licenses, certificates of authority,
orders, and approvals are in full force and effect, and to the best knowledge of
it no suspension or cancellation of any of them is threatened;
(P) in the case of Synovus, the shares of capital stock to be issued
pursuant to the Plan, when issued in accordance with the terms of the Plan, will
be duly authorized, validly issued, fully paid and nonassessable and subject to
no preemptive rights;
(Q) it is not a party to, and is not bound by, any collective
bargaining agreement, contract, or other agreement or understanding with a labor
union or labor organization, nor is it or the subject of a proceeding asserting
that it has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it pending or
threatened;
(R) neither it, nor any of its respective officers, directors, or
employees, has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's fees, and no
broker or finder has acted directly or indirectly for it in connection with the
Plan or the transactions contemplated hereby;
(S) the information to be supplied by it for inclusion in: (1) the
Registration Statement on Form S-4 and/or such other form(s) as may be
appropriate to be filed
9
under the Securities Act with the SEC by Synovus for the purpose of, among other
things, registering the Synovus Common Stock to be issued to the shareholders of
Bank of Georgia in the Merger (the "Registration Statement"); or (2) the proxy
statement to be filed with the SEC under the Exchange Act and distributed in
connection with Bank of Georgia's meeting of its shareholders to vote upon this
Plan (as amended or supplemented from time to time, the "Proxy Statement", and
together with the prospectus included in the Registration Statement, as amended
or supplemented from time to time, the "Proxy Statement/Prospectus") will not at
the time such Registration Statement becomes effective, and in the case of the
Proxy Statement/Prospectus at the time it is mailed and at the time of the
meeting of stockholders contemplated under this Plan, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading;
(T) for purposes of this section, the following terms shall have the
indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to: (1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource); and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Substances. The term
Environmental Law includes without limitation: (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss. 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss. 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss. 7401, et
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251, et
seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss. 9601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss. 11001, et
seq; the Safe Drinking Water Act, 42 U.S.C. ss. 300f, et seq; all accompanying
federal regulations and all comparable state and local laws; and (2) any common
law (including without limitation common law that may impose strict liability)
that may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous
Substance.
"Hazardous Substance" means any substance or waste presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any material containing any such substance as a component.
Hazardous Substances include without limitation petroleum or any derivative or
by-product thereof, asbestos, radioactive material, and polychlorinated
biphenyls.
"Loan Portfolio Properties and Other Properties Owned" means those
properties owned or operated by Synovus or Bank of Georgia.
10
(1) there are no actions, suits, demands, notices, claims,
investigations or proceedings pending or, to its actual knowledge, threatened
against it relating to the Loan Portfolio Properties and Other Properties Owned
by it under any Environmental Law, including without limitation any notices,
demand letters or requests for information from any federal or state
environmental agency relating to any such liabilities under or violations of
Environmental Law, nor, to its actual knowledge, are there any circumstances
which could lead to such actions, suits, demands, notices, claims,
investigations or proceedings, except such which will not have, or result in, a
Material Adverse Effect; and
(2) Bank of Georgia will, within 30 days after the date hereof, engage
a firm satisfactory to Synovus to conduct a phase one environmental audit of the
banking facilities currently owned or leased by Bank of Georgia upon which Bank
of Georgia is conducting a banking business, which audit shall include at a
minimum a site history, on-site inspection, asbestos report, evaluation of
surrounding properties and soil tests in the event any underground storage tanks
are discovered. Synovus has requested such inspection and testing in an effort
to reasonably determine whether or not any violations of Environmental Law
described in this section exist. Delivery of this report to Synovus is an
express condition precedent to the consummation of the Merger. Within 15 days
after receipt of such report, Synovus shall notify Bank of Georgia in writing
whether or not, in the reasonable judgment of Synovus, the results of such
report will have a Material Adverse Effect on Bank of Georgia. In the event that
Synovus determines, in its reasonable judgment, that the results of such report
will have a Material Adverse Effect on Bank of Georgia, such written
notification shall include a statement by Synovus regarding whether or not it
intends to terminate this Agreement based upon the results of such report. The
Parties agree that Synovus has given Bank of Georgia good and valuable
consideration for its agreement to obtain and pay the cost of such inspection
and testing, and Synovus shall be entitled to rely on same;
(U) in the case of Synovus, its reserve for possible loan losses as
shown in its audited financial statements as of December 31, 1997 was, and its
reserve for possible loan losses as shown its Quarterly Reports on Form 10-Q
filed prior to the Effective Date will be, adequate in all material respects
under generally accepted accounting principles applicable to banks and bank
holding companies and, in the case of Bank of Georgia, its reserve for possible
loan losses as shown in its audited financial statements as of December 31, 1997
was, and its reserve for possible loan losses as shown in its unaudited
quarterly financial statements prepared for all quarters ending prior to the
Effective Date will be, adequate in all material respects under generally
accepted accounting principles applicable to banks; and
(V) in the case of Bank of Georgia, there are no outstanding options,
agreements, contracts, calls or commitments which would require the issuance by
Bank of Georgia of any shares of Bank of Georgia Common Stock or securities
convertible into such Common Stock; and
(W) it has adopted and is in the process of implementing policies and
procedures to ensure that it will be in compliance with the Federal Financial
Institution Examination
11
Counsel's May 5, 1997 Interagency Statement on Year 2000 Project Management
Awareness and subsequent regulatory directives with respect to Year 2000 issues.
IV. COVENANTS
Synovus hereby covenants to Bank of Georgia, and Bank of Georgia hereby
covenants to Synovus, that:
(A) it shall take or cause to be taken all action necessary or
desirable under the Plan on its part as promptly as practicable, including the
filing of all necessary applications and the Registration Statement, so as to
permit the consummation of the transactions contemplated by the Plan at the
earliest possible date and cooperate fully with the other party hereto to that
end;
(B) in the case of Bank of Georgia, it shall: (1) take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
shareholders for the purpose of approving, upon the recommendation of its Board
of Directors, the Plan as soon as is reasonably practicable; (2) distribute to
its shareholders the Proxy Statement/Prospectus in accordance with applicable
federal and state law and with its Articles of Incorporation and bylaws; and (3)
cooperate and consult with Synovus with respect to each of the foregoing
matters;
(C) it will cooperate in the preparation and filing of the Proxy
Statement/Prospectus and Registration Statement in order to consummate the
transactions contemplated by the Plan as soon as is reasonably practicable;
(D) in the case of Synovus, it will advise Bank of Georgia, promptly
after Synovus receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been filed, of
the issuance of any stop order or the suspension of the qualification of the
shares of Synovus Common Stock issuable pursuant to the Plan for offering or
sale in any jurisdiction, of the initiation or threat of any proceeding for any
such purpose or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information;
(E) in the case of Synovus, it shall take all actions to obtain, prior
to the effective date of the Registration Statement, all applicable state
securities law or "Blue Sky" permits, approvals, qualifications or exemptions
for the Synovus shares to be issued pursuant to this Plan;
(F) subject to its disclosure obligations imposed by law, unless
reviewed by the other party hereto in advance, it will not issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby;
(G) from and subsequent to the date hereof, it will: (i) give to the
other party hereto and its respective counsel and accountants full access to its
premises and books and records during normal business hours for any reasonable
purpose related to the transactions contemplated hereby; and (ii) cooperate and
instruct its respective counsel
12
and accountants to cooperate with the other party hereto and with its respective
counsel and accountants with regard to the formulation and production of all
necessary information, disclosures, financial statements, registration
statements and regulatory filings with respect to the transactions encompassed
by the Plan. Any nonpublic information regarding either party shall be held
strictly confidential and used solely for the purposes of the transactions
contemplated herein. In the event of termination, each party shall return all
nonpublic information regarding the other party to such other party;
(H) it shall notify the other party hereto as promptly as practicable
of: (1) any breach of any of its representations, warranties or agreements
contained herein; and (2) any material adverse change in its financial
condition, results of operations or business;
(I) it shall cooperate and use its best efforts to promptly prepare and
file all necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to obtain all necessary permits,
consents, approvals and authorizations of all third parties and governmental
bodies or agencies, including, in the case of Synovus, submission of waiver
requests or applications for approval of the Plan and the transactions
contemplated hereby to the Board of Governors of the Federal Reserve System
("Board of Governors") in accordance with the provisions of the Bank Holding
Company Act of 1956, as amended ("BHC Act"), the Georgia Department of Banking
and Finance ("Georgia Department"), the Federal Deposit Insurance Corporation
("FDIC") and to such other regulatory agencies as required by law;
(J) in the case of Synovus, it shall cause the shares of Synovus Common
Stock to be issued pursuant to the terms of this Plan to be approved for listing
on the NYSE, and each such share shall be entitled to ten votes per share in
accordance with and subject to those certain Articles of Amendment to Synovus'
Articles of Incorporation dated April 24, 1986;
(K) in the case of Synovus, following the Effective Date, it shall
provide generally to officers and employees of Bank of Georgia employee
benefits, including without limitation pension benefits, health and welfare
benefits, life insurance and vacation and severance arrangements, on terms and
conditions which, when taken as a whole, are: (1) substantially similar to those
currently provided by Bank of Georgia; or (2) the same employee benefits as are
provided to employees of Athens First;
(L) in the case of Bank of Georgia, it will deliver to Synovus on or
prior to May 15, 1998 audited financial statements of Bank of Georgia as of, and
for the year ended, December 31, 1997;
(M) in the case of Bank of Georgia, it shall have used its best efforts
to obtain written acknowledgments from each executive officer, director and
other person who is an "affiliate" (for purposes of Rule 145 under the
Securities Act) of Bank of Georgia at the time the Merger is submitted to Bank
of Georgia's shareholders for approval, that each such person is receiving any
shares of Synovus Common Stock as a result of the Merger subject to the
provisions of Rule 145, as promulgated under the Securities Act, and the consent
and agreement of each such person that: (1) he or she may be deemed
13
an "underwriter" pursuant to paragraph (c) of such Rule; (2) he or she will make
no disposition of such shares except in compliance with the provisions of
paragraph (d) of such Rule, or pursuant to an effective registration statement
under the Securities Act, unless Synovus shall have received an opinion of
counsel reasonably satisfactory to it that such compliance or registration is
not required; (3) the certificate(s) evidencing the shares of Synovus Common
Stock to be received by him or by her as a result of the Merger will bear an
appropriate legend reflecting clauses (1) through (2) of this paragraph; and (4)
a stop order will be placed upon the transfer of such shares of Synovus Common
Stock with the transfer agent of Synovus;
(N) it will not directly or indirectly take any action or omit to take
any action to cause any of its representations and warranties made in this Plan
to become untrue;
(0) in the case of Synovus, it shall take no action which would cause
the shareholders of Bank of Georgia to recognize gain or loss as a result of the
Merger to the extent such shareholders would not otherwise recognize gain or
loss as described in Paragraph (A)(7) of Article V;
(P) in the case of Synovus, it shall provide: (1) that (a) with respect
to pension plans (within the meaning of ERISA Section 3(2)) which Athens First
maintains or otherwise participates in after the Merger, service by Bank of
Georgia employees prior to the Merger shall be treated as service with Athens
First for eligibility and vesting purposes to the extent required by ERISA and
Section 414 of the Code for those Bank of Georgia employees who become employed
by Athens First in connection with the Merger (collectively, "Former Bank of
Georgia Employees"); and (b) with respect to all other employee benefit
programs, including employee welfare benefit plans (within the meaning of ERISA
Section 3(1)), which Athens First maintains or otherwise participates in after
the Merger, service by Bank of Georgia employees prior to the Merger shall be
treated as service with Athens First for eligibility, vesting and benefit
accrual purposes for Former Bank of Georgia Employees; and (2) for the waiver of
pre-existing condition limitations, if any, as might otherwise be applied
against Former Bank of Georgia Employees respecting participation in any ERISA
welfare benefit plan which Athens First maintains or otherwise participates in
after the Merger;
(Q)(a) in the case of Synovus, subject to the conditions set forth in
paragraph (b) below, for a period of six years after the Effective Time, Athens
First and Synovus shall indemnify, defend and hold harmless each person entitled
to indemnification from Bank of Georgia (each, an "Indemnified Party") against
all liabilities arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement) to
the fullest extent permitted under Georgia law and by Bank of Georgia's Articles
of Incorporation and bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
litigation. Without limiting the foregoing, in any case in which approval by
Athens First and Synovus is required to effectuate any indemnification, Athens
First and Synovus shall direct, at the election of the Indemnified Party, that
the determination of any such approval shall be made by independent counsel
mutually agreed upon between Athens First and Synovus and the Indemnified Party.
14
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) upon learning of any such liability or litigation, shall
promptly notify Athens First and Synovus thereof. In the event of any such
litigation (whether arising before or after the Effective Time), (i) Athens
First and Synovus shall have the right to assume the defense thereof, and Athens
First and Synovus shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Athens First and Synovus elect not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between Athens First and Synovus and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Athens First and Synovus shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided, that Athens First and Synovus shall be obligated pursuant to
this paragraph (b) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such litigation, and (iii) Athens First and Synovus shall not be
liable for any settlement effected without its prior written consent; and
provided further, that Athens First and Synovus shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law; and
(R) in the case of Synovus, it shall cause Athens First to assume the
Indexed Executive Salary Continuation Plan Agreement/Flexible Premium Life
Insurance Endorsement Method Split Dollar Plan Agreement, Executive Shared
Control Insurance Agreement and Director Defined Benefit Plan Agreement
("Insurance Plans") in connection with the Merger. Athens First may amend or
terminate the Insurance Plans, and any split dollar agreements attendant to
each, on such terms and subject to such conditions as are mutually acceptable to
the parties.
V. CONDITIONS TO CONSUMMATION
(A) The respective obligations of Synovus and of Bank of Georgia to
effect the Merger shall be subject to the satisfaction prior to the Effective
Date of the following conditions:
(1) the Plan and the transactions contemplated hereby shall have been
approved by the affirmative vote of the shareholders of Bank of Georgia owning
at least two-thirds of Bank of Georgia Common Stock;
(2) the procurement by Synovus of approval of the Plan and the
transactions contemplated hereby by the Board of Governors (or the acceptance by
the Board of Governors of a waiver request from Synovus), the Georgia Department
and the FDIC;
(3) procurement of all other regulatory consents and approvals which
are necessary to the consummation of the transactions contemplated by the Plan;
provided, however, that no approval or consent in Paragraphs (A)(2) and (A)(3)
of this Article V
15
shall be deemed to have been received if it shall include any conditions or
requirements which would have a Material Adverse Effect on the economic or
business benefits of the transactions contemplated hereby in the reasonable
opinion of the Board of Directors of Synovus or Bank of Georgia;
(4) the satisfaction of all other requirements prescribed by law which
are necessary to the consummation of the transactions contemplated by the Plan;
(5) no statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any governmental
authority which prohibits, restricts or makes illegal consummation of the
Merger;
(6) the Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC and Synovus shall have received all state securities law
and "Blue Sky" permits, approvals, qualifications or exemptions necessary to
consummate the transactions contemplated hereby;
(7) each party shall have received an opinion from KPMG Peat Marwick,
Certified Public Accountants ("KPMG"), updated as of the Effective Date, to the
effect that, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code and that, accordingly: (i) no gain or loss will be recognized by
Synovus or Bank of Georgia as a result of the Merger; and (ii) no gain or loss
will be recognized by the shareholders of Bank of Georgia who exchange their
shares of Bank of Georgia Common Stock solely for shares of Synovus Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Synovus Common Stock or cash received as a result
of the exercise of statutory dissenters' rights against the Merger);
(8) each party shall have delivered to the other party a certificate,
dated as of the Effective Date, signed by its Chairman of the Board, and its
Chief Financial Officer or Controller to the effect that, to the best knowledge
and belief of such officers, the statement of facts and representations made on
behalf of the management of such party, presented to KPMG in delivering the Tax
Opinion, were at the date of such presentation true, correct and complete. Each
party shall have received a copy of the Tax Opinion referred to in Paragraph
(A)(7) of this Article V; and
(9) Synovus shall have received a letter dated as of the Effective Date
from KPMG, its independent certified public accountants, to the effect that the
Merger will qualify for pooling-of-interests accounting treatment.
(B) The obligation of Synovus to effect the Merger shall be subject to
the satisfaction prior to the Effective Date of the following additional
conditions:
(1)(a) For purposes of this Article VB(1), the accuracy of the
representations and warranties of Bank of Georgia set forth in this Agreement
shall be
16
assessed as of the date of this Agreement and as of the Effective Time with the
same effect as though all such representations and warranties had been made on
and as of the Effective Time (provided, that representations and warranties that
are confined to a specific date shall speak only as of that date).
(b) The representations and warranties set forth in Recital B
regarding the number of shares of Bank of Georgia Common Stock outstanding shall
be true and correct (except for inaccuracies that are de minimus in amount).
There shall not exist inaccuracies in the representations and warranties or
instances of non-compliance with the covenants of Bank of Georgia set forth in
this Agreement such that the aggregate effect of such inaccuracies or such
instances of non-compliance has, or is reasonably likely in the opinion of
Synovus to have, a material adverse effect on Bank of Georgia, and Synovus shall
have received a certificate, signed by the Chief Executive Officer of Bank of
Georgia, dated the Effective Date, to such effect. For purposes of this
subsection (b) only, those representations and warranties that are qualified by
references to "Material" or "Material Adverse Effect" shall be deemed not to
include such qualifications;
(2) no litigation or proceeding is pending which: (i) has been brought
against Bank of Georgia by any governmental agency seeking to prevent
consummation of the transactions contemplated hereby; or (ii) in the reasonable
judgment of Synovus is likely to have a Material Adverse Effect on Bank of
Georgia;
(3) Synovus shall not have learned of any fact or condition with
respect to the business, properties, assets, liabilities, deposit relationships
or earnings of Bank of Georgia which is materially adversely at variance with
one or more of the warranties or representations set forth in this Agreement or
which has or, in the reasonable judgment of Synovus, would have a Material
Adverse Effect on such business, properties, assets, liabilities, deposit
relationships or earnings of Bank of Georgia, including, without limitation, the
loan portfolio of Bank of Georgia and the adequacy of the loan loss reserves for
such loan portfolio;
(4) the results of any regulatory examination of Bank of Georgia
occurring between the date hereof and the Effective Date shall be reasonably
satisfactory to Synovus;
(5) Frank J. Christa shall have executed an employment agreement with
Synovus and shall have agreed that he is not entitled to a termination payment
upon the termination of his current employment agreement with Bank of Georgia;
(6) on the Effective Date, Bank of Georgia will have a CAMEL rating of
1 and have a Community Reinvestment Act Rating of at least Satisfactory;
(7) on the Effective Date, Bank of Georgia will have a loan loss
reserve of at least 1.01% of loans and which will be adequate in all material
respects under generally accepted accounting principles applicable to banks;
17
(8) Bank of Georgia shall have delivered to Synovus the environmental
reports referenced in Paragraph (T) of Article III; and
(9) each of the officers and directors of Bank of Georgia shall have
delivered a letter to Synovus to the effect that such person is not aware of any
claims he might have against Bank of Georgia other than routine compensation,
benefits and the like as an employee, or ordinary rights as a customer.
(C) The obligation of Bank of Georgia to effect the Merger shall be
subject to the satisfaction prior to the Effective Date of the following
additional conditions:
(1)(a) For purposes of this Article VC(1), the accuracy of the
representations and warranties of Synovus set forth in this Agreement shall be
assessed as of the date of this Agreement and as of the Effective Time with the
same effect as though all such representations and warranties had been made on
and as of the Effective Time (provided, that representations and warranties that
are confined to a specific date shall speak only as of that date).
(b) The representations and warranties set forth in Recital B
regarding the number of shares of Synovus and Athens First Common Stock
outstanding shall be true and correct (except for inaccuracies that are de
minimus in amount). There shall not exist inaccuracies in the representations
and warranties or instances of non-compliance with the covenants of Synovus set
forth in this Agreement such that the aggregate effect of such inaccuracies or
such instances of non-compliance has, or is reasonably likely in the opinion of
Bank of Georgia to have, a material adverse effect on Synovus, and Bank of
Georgia shall have received a certificate, signed by the Chief Executive Officer
of Synovus, dated the Effective Date, to such effect. For purposes of this
subsection (b) only, those representations and warranties that are qualified by
references to "Material" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
(2) the listing for trading of the shares of Synovus Common Stock which
shall be issued pursuant to the terms of this Plan on the NYSE shall have been
approved by the NYSE subject to official notice of issuance;
(3) no litigation or proceeding is pending which: (i) has been brought
against Synovus or any of its Subsidiaries by any governmental agency seeking to
prevent consummation of the transactions contemplated hereby; or (ii) in the
reasonable judgment of Bank of Georgia is likely to have a Material Adverse
Effect on Synovus; and
(4) Bank of Georgia shall not have learned of any fact or condition
with respect to the business, properties, assets, liabilities, deposit
relationships or earnings of Synovus which is materially adversely at variance
with one or more of the warranties or representations set forth in this
Agreement or which has or, in the reasonable judgment of Bank of Georgia, would
have a Material Adverse Effect on such business, properties, assets,
liabilities, deposit relationships or earnings of Synovus, including without
limitation, the loan portfolio of Synovus and the adequacy of the loan loss
reserves of such loan portfolio.
18
VI. TERMINATION
A. The Plan may be terminated prior to the Effective Date, either
before or after its approval by the stockholders of Bank of Georgia:
(1) by the mutual consent of Synovus, Bank of Georgia and
Athens First, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board;
(2) by Synovus, Bank of Georgia or Athens First if
consummation of the Merger does not occur by reason of the failure of any of the
conditions precedent set forth in Article V hereof; or
(3) by Synovus, Bank of Georgia or Athens First if its Board
of Directors so determines by vote of a majority of the members of its entire
Board in the event that the Merger is not consummated by October 31, 1998 unless
the failure to so consummate by such time is due to the breach of the Plan by
the party seeking to terminate.
B. In the event of the termination of this Plan by Synovus, Athens
First and/or Bank of Georgia for the reasons and as provided in 1, 2 (except as
provided in paragraph C below), or 3 above, this Plan shall thereafter become
void and there shall be no liability on the part of any party hereto or their
respective officers or directors.
C. In the event of the termination of this Plan by Bank of Georgia for
any other reason (other than as set forth in paragraph D below), including, but
not limited to its willful breach of any covenant or its willful
misrepresentation of any representation contained herein leading to a violation
of the conditions precedent set forth in Article V hereof, Bank of Georgia shall
immediately pay Synovus $100,000 in liquidated damages. In the event of the
termination of this Plan by Synovus for any other reason, including, but not
limited to, its willful breach of any covenant or its willful misrepresentation
of any representation contained herein leading to a violation of the conditions
precedent set forth in Article V hereof, Synovus shall immediately pay Bank of
Georgia $100,000 in liquidated damages.
D. (1) Notwithstanding any other provision of this Agreement, in the
event Bank of Georgia terminates this Agreement as a result of negotiations with
a third party concerning a possible business combination with Bank of Georgia,
Bank of Georgia shall immediately pay Synovus $200,000 in liquidated damages.
(2) In the event Bank of Georgia terminates this Agreement as
a result of a determination by its Board of Directors that it is in the best
interests of Bank of Georgia and its shareholders to terminate this Agreement,
and Bank of Georgia is not otherwise entitled to terminate this Agreement
pursuant to the provisions this Article VI, Bank of Georgia shall immediately
pay Synovus $200,000 in liquidated damages.
E. Notwithstanding any other provision of this Agreement, in the event
Synovus or Athens First terminates this Agreement as a result of a determination
by
19
either of their Boards of Directors that it is in either of their or their
shareholders' best interests to terminate this Agreement, and neither Synovus
nor Athens First is otherwise entitled to terminate this Agreement pursuant to
the provisions of this Article VI, Synovus shall immediately pay Bank of Georgia
$200,000 in liquidated damages and will pay up to $25,000 of the legal fees
incurred by Bank of Georgia in connection with the Merger prior to the
termination of this Plan.
VII. EFFECTIVE DATE
The "Effective Date" shall be the date on which the Merger becomes
effective as specified in the Certificate of Merger to be filed with the
Secretary of State of Georgia approving the Merger.
VIII. OTHER MATTERS
(A) The agreements and covenants of the parties which by their terms
apply in whole or in part after the Effective Date shall survive the Effective
Date. Except for Paragraph (P) of Article III, which shall survive the Effective
Date, no other representations, warranties, agreements and covenants shall
survive the Effective Date. If the Plan shall be terminated, the agreements of
the parties in Paragraph (G) of Article IV and Paragraphs (E) and (F) of this
Article shall survive such termination.
(B) Prior to the Effective Date, any provision of the Plan may be: (i)
waived by the party benefitted by the provision or by both parties; or (ii)
amended or modified at any time (including the structure of the transaction) by
an agreement in writing between the parties hereto approved by their respective
Boards of Directors (to the extent allowed by law) or by their respective Boards
of Directors.
(C) This Plan may be executed in multiple and/or facsimile originals,
and each copy of the Plan bearing the manually executed, facsimile transmitted
or photocopied signature of each of the parties hereto shall be deemed to be an
original.
(D) The Plan shall be governed by, and interpreted in accordance with,
the laws of the State of Georgia.
(E) Except as provided in Paragraph (E) of Article VI, each party
hereto will bear all expenses incurred by it in connection with the Plan and the
transactions contemplated hereby, including, but not limited to, the fees and
expenses of its respective counsel and accountants.
(F) Each of the parties and its respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed unless it is advised
by counsel that any such information is required by law to be disclosed.
(G) All notices, requests, acknowledgements and other communications
hereunder to a party shall be in writing and shall be deemed to have been duly
given when
20
delivered by hand, telecopy, telegram or telex (confirmed in writing) to such
party at its address set forth below or such other address as such party may
specify by notice to the other party hereto.
If to Synovus, to Mr. Thomas J. Prescott, Executive Vice President and
Chief Financial Officer of Synovus, Suite 201, 901 Front Avenue, Columbus,
Georgia 31901 (fax (706) 649-2342), with a copy to Ms. Kathleen Moates at the
same address.
If to Bank of Georgia, to Mr. Frank J. Christa, President of Bank of
Georgia, P.O. Box 828, Watkinsville, Georgia 30677 (fax (706) 769-0718), with a
copy to Mr. Walter G. Moeling, IV, Powell, Goldstein, Frazer & Murphy, 16th
Floor, 191 Peachtree Street, N.E., Atlanta, Georgia 30303 (fax (404) 572-6999).
(H) All terms and provisions of the Plan shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Except as expressly provided for herein, nothing in this Plan is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Plan.
(I) The Plan, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made.
(J) This Plan may not be assigned by any party hereto without the
written consent of the other parties.
In Witness Whereof, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the day and year first above
written.
SYNOVUS FINANCIAL CORP.
By /s/Kathleen Moates
Title:Senior Vice President
Attest:/s/Garilou Page
Title:Assistant Secretary
("Synovus")
(Corporate Seal)
21
ATHENS FIRST BANK & TRUST COMPANY
By:/s/James L. LaBoon, Jr.
Title:President
Attest:/s/Mary Ellen Fowler
Title:Secretary
("Athens First")
(Corporate Seal)
BANK OF GEORGIA
By:/s/Frank J. Christa
Title:President
Attest:/s/Tyrone Byrd
Title:Secretary
("Bank of Georgia")
(Corporate Seal)
22
EXHIBIT "A"
Board of Directors of Athens First Bank & Trust Company
Allan W. Barber Ricky Chastain
Lauren M. Coile Vincent J. Dooley
Richard C. Ferguson, Jr. James S. Miller
James L. LaBoon, Jr. Coleman Whitehead
W.H. NeSmith, Jr.
Frances M. Williams
23
AMENDMENT NUMBER ONE TO THE AGREEMENT AND PLAN OF MERGER
This Amendment Number One ("Amendment") dated August 4, 1998, to the
Agreement and Plan of Merger dated April 22, 1998 ("Merger Agreement"), made by
and between Bank of Georgia and Athens First Bank & Trust Company ("Athens
First") and joined by Synovus Financial Corp. ("Synovus"). All defined terms
used in the referenced Merger Agreement have the same definitions for purposes
of this Amendment.
WITNESSETH THAT:
WHEREAS, the parties desire to amend the Merger Agreement as set forth
below.
NOW, THEREFORE, for and upon receipt of good and valuable
consideration, the parties do hereby amend the Merger Agreement as follows:
FIRST
The date "October 31, 1998" contained in paragraph A.(3) of Article VI
of the Merger Agreement shall be deleted and the date "December 31, 1998" shall
be inserted in lieu thereof.
SECOND
This Amendment shall be effective as of August 4, 1998.
THIRD
Except as amended herein in this Amendment, all other remaining
provisions of the Merger Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers as of the day and
year first above year written.
SYNOVUS FINANCIAL CORP.
By: /s/Kathleen Moates
Title: Senior Vice President
Attest: /s/Garilou Page
Title: Vice President
ATHENS FIRST BANK & TRUST COMPANY
By: /s/James L. LaBoon, Jr.
Title: President
Attest: /s/Mary Ellen Fowler
Title: Secretary
BANK OF GEORGIA
By: /s/Frank J. Christa
Title: President
Attest: /s/Tyrone Byrd
Title: Secretary
Appendix B
GEORGIA Business Corporation Code
Article 13. Dissenters' Rights
Part 1. Right to Dissent and Obtain Payment for Shares
14-2-1301 DEFINITIONS. - As used in this article, the term:
(1) "Beneficial Shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Code Section 14-2-1302 and who exercises that right when
and in the manner required by Code Sections 14-2-1320 through 14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(6) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable under all
the circumstances.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(8) "Shareholder" means the record shareholder or the beneficial
shareholder.
14-2-1302 RIGHT TO DISSENT. - (a) A record shareholder of the
corporation is entitled to dissent from, and obtain payment of the fair value of
his shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is required
for the merger by Code Section 14-2-1103 or the articles of incorporation and
the shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its parent
under Code Section 14-2-1104;
(2) Consummation of plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the sale or
exchange pursuant to Code Section 14-2-1202, but not including a sale pursuant
to court order or a sale for cash pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed to the
shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights;
(E) Reduces the number of shares owned by the shareholder to a fraction
of a share if the fractional share so created is to be acquired for cash under
Code Section 14-2- 604; or
(F) Cancels, redeems, or repurchases all or part of the shares of the
class;
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation, bylaws,
or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be
no right of dissent in favor of the holder of shares of any class or series
which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at a meeting at which a plan of merger or share
exchange or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or share
exchange to accept for their shares anything except shares of the surviving
corporation or another publicly held corporation which at the effective date of
the merger or share exchange are either listed on a national securities exchange
or held of record by more than 2,000 shareholders, except for scrip or cash
payments in lieu of fractional shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
14-2-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. - A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf he
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which he dissents and his other
shares were registerd in the names of different shareholders.
Part 2. Procedure for Exercise of Dissenters' Rights
14-2-1320 NOTICE OF DISSENTERS' RIGHTS. - (a) If proposed corporate
action creating dissenters' rights under Code Section 14-2-1302 is submitted to
a vote at a shareholders'
2
meeting, the meeting notice must state that shareholders are or may be entitled
to assert dissenters' rights under this article and be accompanied by a copy of
this article.
(b) If corporate action creating dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322 no later than ten days after the corporate action was taken.
14-2-1321 NOTICE OF INTENT TO DEMAND PAYMENT. - (a) If proposed
corporate action creating dissenters' rights under Code Section 14-2-1302 is
submitted to a vote at a shareholders' meeting, a record shareholder who wishes
to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
14-2-1322 DISSENTERS' NOTICE. - (a) If proposed corporate action
creating dissenters' rights under Code Section 14-2-1302 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of Code Section
14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after
the corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the date
the notice required in subsection (a) of this Code section is delivered; and
(4) Be accompanied by a copy of this article.
14-2-1323 DUTY TO DEMAND PAYMENT. - (a) A record shareholder sent a
dissenters' notice described in Code Section 14-2-1322 must demand payment and
deposit his certificates in accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares
under subsection (a) of this Code section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.
(c) A record shareholder who does not demand payment or deposit his
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his shares under this article.
14-2-1324 SHARE RESTRICTIONS. - (a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
3
14-2-1325 OFFER OF PAYMENT. - (a) Except as provided in Code Section
14- 2-1327, within ten days of the later of the date the proposed corporate
action is taken or receipt of a payment demand, the corporation shall by notice
to each dissenter who complied with Code Section 14-2-1323 offer to pay to such
dissenter the amount the corporation estimates to be the fair value of his or
her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income statement
for that year, a statement of changes in shareholders' equity for that year, and
the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written
notice to the corporation within 30 days after the corporation's offer or is
deemed to have accepted such offer by failure to respond within said 30 days,
payment for his or her shares shall be made within 60 days after the making of
the offer or the taking of the proposed corporate action, whichever is later.
14-2-1326 FAILURE TO TAKE ACTION. - (a) If the corporation does not
take the proposed action within 60 days after the date set for demanding payment
and depositing share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
14-2-1327 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
- - (a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his shares or that the interest due is
incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for demanding
payment.
(b) A dissenter waives his or her right to demand payment under this
Code section and is deemed to have accepted the corporation's offer unless he or
she notifies the corporation of his or her demand in writing under subsection
(a) of this Code section within 30 days after the corporation offered payment
for his or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth
in subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall provide the
information to the shareholder within ten days after receipt of a written demand
for the information; and
4
(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his own estimate of the
fair value of his shares and the amount of interest due and demand payment of
his estimate of the fair value of his shares and interest due.
Part 3. Judicial Appraisal of Shares
14-2-1330 COURT ACTION. - (a) If a demand for payment under Code
Section 14-2-1327 remains unsettled, the corporation shall commence a proceeding
within 60 days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the 60 day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a
nonjury equitable valuation proceeding, in the superior court of the county
where a corporation's registered office is located. If the surviving corporation
is a foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered office
of the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not residents
of this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each
5
<PAGE>
nonresident dissenting shareholder either by registered or certified mail or by
publication, or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title 9, known as the "Georgia Civil
Practice Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount which the court finds to be the fair value of his
shares, plus interest to the date of judgment.
14-2-1331 COURT COSTS AND COUNSEL FEES. - (a) The court in an appraisal
proceeding commenced under Code Section 14-2-1330 shall determine all costs of
the proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court, but not including fees and expenses of attorneys and
experts for the respective parties. The court shall assess the costs against the
corporation, except that the court may assess the costs against all or some of
the dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Code Section 14-2-1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
5
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2- 1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
14-2-1332 LIMITATION OF ACTIONS. - No action by any dissenter to
enforce dissenters' rights shall be brought more than three years after the
corporate action was taken, regardless of whether notice of the corporate action
and of the right to dissent was given by the corporation in compliance with the
provisions of Code Section 14-2-1320 and Code Section 14-2-1322.
6
Appendix C
August 5, 1998
PRIVATE & CONFIDENTIAL
Board of Directors Board of Directors
Synovus Financial Corp. Bank of Georgia
P.O. Box 120 2100 Experiment Station Road
Columbus, GA 31902 Watkinsville, GA 30677
Board Members:
You have requested the opinion of KPMG Peat Marwick LLP (KPMG) regarding certain
Federal income tax consequences relating to the merger of Bank of Georgia with
and into Athens First Bank and Trust Company (Athens First), a wholly owned
subsidiary of Synovus Financial Corp. (Synovus). Specifically, you have
requested us to opine that the form and substance of the merger of Bank of
Georgia with and into Athens First constitutes a tax-free reorganization under
Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code of
1986, as amended (the Code) (hereinafter all section references are to the Code
unless otherwise indicated) and that under the Code no gain or loss will be
recognized by the shareholders of Bank of Georgia upon receipt of the Synovus
common stock in exchange for their Bank of Georgia common stock upon
consummation of the merger.
Our opinion as to the tax-free reorganization treatment of the merger of Bank of
Georgia with and into Athens First does not include: (1) cash payments that are
to be made to Bank of Georgia common shareholders in lieu of their receipt of
fractional shares of Synovus common stock and (2) cash payments that are made to
Bank of Georgia shareholders who exercise their statutory dissenters rights
against the merger and receive cash. All affected Bank of Georgia common
shareholders should consult their own tax advisers on these matters.
Facts
Synovus is a bank holding company organized and existing under the laws of
Georgia and having its principal office in Muscogee County, Georgia. It has
authorized 600,000,000 shares of $1.00 par value common stock of which
263,100,619 were outstanding at June 30, 1998. Synovus common stock is widely
held, is publicly traded and is listed on the New York Stock Exchange.
Athens First, a wholly owned subsidiary of Synovus, is a commercial bank
organized and existing under the laws of Georgia and having its principal office
in Athens, Georgia. Athens First has authorized 10,000,000 shares of $1.00 par
value common stock. As of April 22, 1998, 1,000 shares of Athens First common
stock were issued and outstanding.
Synovus common stock carries ten votes per share unless the shares do not meet
certain ownership tests, in which case each share is entitled to only one vote.
In accordance with the amendment to Synovus Articles of Incorporation which was
adopted by the shareholders of Synovus and became effective on April 24, 1986, a
holder of Synovus common stock will be entitled to ten votes on each matter
submitted to a vote of shareholders for each share of Synovus common stock
beneficially owned on the record date for any meeting of shareholders which: (1)
has had the same beneficial owner since April 24, 1986; (2)
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 2
was acquired by reason of participation in a dividend reinvestment plan offered
by Synovus and is held by the same beneficial owner for whom it was acquired
under such plan; (3) is held by the same beneficial owner to whom it was issued
as a result of an acquisition of a company or business by Synovus where the
resolutions adopted by Synovus Board of Directors approving such issuance
specifically reference and grant such rights; (4) was acquired under any
employee, officer and/or director benefit plan maintained for one or more
employees, officers and/or directors of Synovus and/or its subsidiaries, and is
held by the same beneficial owner for whom it was acquired under any such plan;
(5) is held by the same beneficial owner to whom it was issued by Synovus, or to
whom it was transferred by Synovus from treasury shares, and the resolutions
adopted by Synovus Board of Directors approving such issuance and/or transfer
specifically reference and grant such rights; (6) was acquired as a direct
result of a stock split, stock dividend or other type of share distribution if
the share as to which it was distributed has been held by the same beneficial
owner for a period of 48 consecutive months prior to the record date of any
meeting of shareholders at which the share is eligible to be voted; (7) has been
beneficially owned continuously by the same shareholder for a period of 48
consecutive months prior to the record date of any meeting of shareholders at
which the share is eligible to be voted; or (8) is owned by a holder who, in
addition to shares that are beneficially owned under the provisions of (1)-(7)
above, is the beneficial owner of less than 1,139,063 shares of Synovus common
stock (which amount has been appropriately adjusted to reflect the stock splits
which have occurred subsequent to April 24, 1986, and with such amount to be
appropriately adjusted to properly reflect any other change in Synovus common
stock by means of a stock split, a stock dividend, a recapitalization or
otherwise occurring after April 24, 1986). There are no other classes of stock
authorized. Ten-vote shares will be issued to the Bank of Georgia shareholders
in the proposed transaction.
Effective April 20, 1989, the Board of Directors of Synovus adopted a plan that
provides the common shareholders of Synovus with Common Stock Purchase Rights
(poison pill rights), i.e. rights to acquire the stock of Synovus or its
successor.
Under the terms of the plan, holders of Synovus common stock received a poison
pill right for each share of Synovus common stock held by them. A shareholders
ability to exercise his rights is contingent upon the occurrence of either a
tender offer for 15% or more, or the actual acquisition of 10% or more, of
Synovus common stock by a corporation or individual (the acquiring person)
without the approval of the Synovus Board of Directors.
In general, the rights become exercisable on the earlier of (1) ten days
following a public announcement that, without prior approval of Synovus, a
person or group of affiliated persons has acquired, or obtained the right to
acquire, beneficial ownership of 10% or more of the outstanding common stock of
Synovus, or (2) ten days following the commencement or announcement of an
intention to make a tender offer or exchange offer, without the prior written
consent of Synovus, for 15% or more of the outstanding shares of Synovus common
stock. Until the rights become exercisable, they cannot be transferred
separately from the underlying common stock on which they were distributed, nor
are the rights represented by any certificate other than the underlying stock
certificate itself. Additional, Synovus may redeem the poison pill rights for 1
cent per right until the date that specified events occur. The poison pill
rights expire on May 4, 1999.
Once they become exercisable, the poison pill rights entitle the holder to
purchase from Synovus one share of common stock. No fractional shares of common
stock will be issued upon exercise of the poison pill right. In lieu thereof, a
payment in cash will be made to the holder of such poison pill right equal to
the same fraction of the current market value of a share of common stock.
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 3
If, after the rights become exercisable, a flip-in or flip-over event occurs,
all holders of such rights, except the acquiring person, are entitled to
purchase, at a 50 percent discount, the stock of either Synovus or the acquiring
corporation (whichever is applicable). A flip-in event is either (1) the
acquisition by the acquiring person of 15% or more of the outstanding stock of
Synovus, or (2) the conduct of certain self-dealing transactions between an
acquiring person or any of its affiliates or associates and Synovus. A flip-
over event is either (1) a merger or other business combination in which Synovus
is not the surviving corporation, or (2) a sale or transfer of more than 30% of
the assets or earning power of Synovus and its subsidiaries (taken as a whole)
in one or a series of transactions.
Bank of Georgia is a commercial bank organized and existing under the laws of
Georgia and having its principal office in Watkinsville, Georgia. Bank of
Georgia has authorized 100,000,000 shares of $5.00 par value common stock. As of
April 22, 1998, 132,500 shares of Bank of Georgia common stock were issued and
outstanding. Bank of Georgia shares are not listed on an exchange and are not
publicly traded. There are no outstanding warrants, options, rights, calls, or
other commitments of any nature that would require the issuance by Bank of
Georgia of any additional shares of Bank of Georgia stock. There are no
outstanding securities or debt obligations of Bank of Georgia convertible into
shares of Bank of Georgia common stock.
PROPOSED TRANSACTION
For what has been represented to be valid business purposes, Athens First and
Bank of Georgia want to combine their businesses. In order to reach that result,
the following transaction is proposed:
1. Pursuant to the Agreement and Plan of Merger dated April 22, 1998
(collectively referred to as the Merger Agreement), by and among Synovus,
Athens First, and Bank of Georgia, Bank of Georgia will merge with and into
Athens First in accordance with Georgia state law. Athens First will
survive the merger and the separate corporate existence of Bank of Georgia
will cease.
2. As a result of the Merger and on its effective date, Bank of Georgia
shareholders will be entitled to receive from Synovus 6.4181 shares of
Synovus common stock for each of their shares of Bank of Georgia common
stock with the exact ratio (the Per Share Exchange Ratio). The maximum
number of shares of Synovus common stock to be issued in the merger is
850,399 shares.
3. No fractional shares of Synovus common stock will be issued in the Merger.
Instead, Bank of Georgia shareholders who would otherwise be entitled to a
fractional share of Synovus common stock will be paid in cash for the
fractional shares to be determined based upon the closing price per share
of Synovus common stock on the NYSE on the fifth business day immediately
preceding the effective date of the Merger.
4. Each Bank of Georgia shareholder has the right, pursuant to the state laws
of Georgia, to dissent from the Merger. Each dissenting shareholder will be
entitled to receive from Synovus (as the successor to Bank of Georgia), the
fair value of his or her shares in cash as established by Georgia law.
5. Following the effective date of the Merger, Synovus will enter into an
Employment Agreement with Mr. Frank J. Christa, President of Bank of
Georgia, for three years. The contract will provide for Mr. Christa to
continue to receive substantially the same base salary and benefits which
Mr. Christa presently receives, and certain severance benefits and
participation by Mr. Christa in various Synovus incentive, welfare and
benefit plans.
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 4
The following assumptions of fact have been made in regard to the proposed
merger (and they form an integral part of the opinions contained herein) each of
which you have examined and agree with:
a) The fair market value of the Synovus voting common stock and cash to be
received by each of the Bank of Georgia shareholders as a result of the
merger will be approximately equal, in each instance, to the fair market
value of the Bank of Georgia common stock exchanged therefor.
b) The Bank of Georgia shareholders, as a group, will receive an amount of
Synovus voting common stock in the Merger having, in the agrigate, a fair
market value as of the date of the transaction of not less than 50 percent
of the fair market value of the formerly outstanding stock of the Bank of
Georgia as of the date of the transaction. For purposes of this
representation, shares of Bank of Georgia common stock exchanged for cash
as a result of dissenters rights or in lieu of fractional shares will be
treated as outstanding stock of Bank of Georgia on the date of the
transaction which was disposed of for cash. None of (i) Synovus, (ii) any
member of Synovus affiliated group as defined in Section 1504 of the Code
without regard to Section 1504(b) of the Code (iii) any corporation in
which at least fifty percent (50%) of the total combined voting power of
all classes of stock entitled to vote or at least fifty percent (50%) of
the value of all classes of stock outstanding is owned directly or
indirectly by Synovus, or (iv) any entity that is treated as a partnership
for federal income tax purposes and has as an owner a corporation described
in (i), (ii) or (iii) of this paragraph, has not any Bank of Georgia common
stock prior to the Merger, nor has the intent to, at the time of the
merger, or shall, in a transaction that may be considered in connection
with the merger, acquire or redeem (directly or indirectly) any shares of
Synovus common stock issued in connection with the merger except for
repurchases by Synovus of a small percentage of its stock in the open
market as part of any ongoing stock repurchase program not created or
modified in any way in connection with the merger. For purposes hereof, any
entity described in (ii), (iii), or (iv) shall be referred to as a Synovus
Related Party. An entity will be treated as a Synovus Related Party if the
requisite relationship exists immediately before or immediately after the
acquisition or redemption. In addition, an entity (other than Bank of
Georgia or any Bank of Georgia Related Party) will be treated as a Synovus
Related Party if the requisite relationship is created in connection with
the merger. A Bank of Georgia Related Party means any corporation in which
at least fifty percent (50%) of the total combined voting power of all
classes of stock entitled to vote or at least fifty percent (50%) of the
value of all classes of stock outstanding is owned directly or indirectly
by Bank of Georgia.
c) Athens First will acquire at least 90 percent of the fair market value of
the net assets and at least 70 percent of the fair market value of the
gross assets held by Bank of Georgia immediately prior to the transaction.
For purposes of this representation, amounts paid by Bank of Georgia to
shareholders who receive cash or other property, Bank of Georgia assets
used to pay its reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by Bank of
Georgia immediately preceding the transfer, will be included as assets of
Bank of Georgia held immediately prior to the transaction.
d) Prior to the Merger, Synovus will be in control of Athens First within the
meaning of Section 368(c) of the Code.
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 5
e) Following the Merger, Athens First will not issue additional shares of its
stock that would result in Synovus losing control of Athens First within
the meaning of Section 368(c).
f) Synovus has no plan or intention to liquidate Athens First, to merge Athens
First with and into another corporation, to sell or otherwise dispose of
the stock of Athens First, or to cause to sell or otherwise dispose of any
assets of Bank of Georgia acquired in the transaction, except for
dispositions made in the ordinary course of business or transfers described
in Section 368(a)(2)(C).
g) The liabilities of Bank of Georgia assumed by Athens First and the
liabilities to which the transferred assets of Bank of Georgia are subject
were incurred by Bank of Georgia in the ordinary course of its business.
h) Following the transaction, Athens First will continue the historic business
of Bank of Georgia or use a significant portion of Bank of Georgias
historic assets in a business.
i) Synovus, Athens First, Bank of Georgia, and the shareholders of Bank of
Georgia will each pay their own fees, expenses, and disbursements in
connection with the merger.
j) There is no intercorporate debt existing between Synovus and Bank of
Georgia or between Athens First and Bank of Georgia that was issued,
acquired, settled or will be settled at a discount.
k) No two parties to the merger (i.e. Synovus, Athens First and Bank of
Georgia) are investment companies within the meaning of such term as used
in Section 368 (a)(2)(F)(iii) and (iv).
l) Bank of Georgia is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of 368(a)(3)(A).
m) On the effective date of the Merger, the fair market value of the assets of
Bank of Georgia transferred to Athens First will exceed the sum of the
liabilities assumed by Athens First plus the amount of liabilities to which
the transferred assets are subject.
n) None of the Synovus common stock being issued to the Bank of Georgia
shareholders will represent compensation for past or future services. The
compensation to be paid to Bank of Georgia directors, officers, and
employees who are stockholders of Bank of Georgia and who will be employed
following the Merger will not be part of the consideration paid for their
Bank of Georgia common stock but will be commensurate, in each instance,
with past or future services.
o) All distributions made by Bank of Georgia prior to the merger will be
regular, normal distributions.
p) The maximum amount of cash to be paid in lieu of fractional shares of
Synovus voting common stock will, in the aggregate, be less than one
percent of the total consideration paid to the Bank of Georgia shareholders
in the transaction. The payment of cash in lieu of fractional shares of
Synovus common stock is solely for the purpose of avoiding the expense and
inconvenience of issuing fractional shares and does not represent
separately bargained-for consideration.
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 6
q) No event has occurred which would make the poison pill rights exercisable.
r) No stock of Athens First will be issued in the Merger.
The opinions expressed in this letter are rendered only with respect to the
specific matters discussed herein and we express no opinion with respect to any
other legal, federal, or state income tax aspect of this transaction. Therefore,
no inference should be drawn on any matter not expressly opined on.
The opinions contained herein are based on the facts, circumstances, and
assumptions stated above. If any of the above-stated facts, circumstances or
assumptions are not entirely complete or accurate, it is imperative that we be
informed immediately, as the incompleteness or inaccuracy could have a material
effect on our conclusions and we have not independently verified each of the
above facts or assumptions.
In rendering our opinion, we are relying upon the relevant provisions of the
Internal Revenue Code of 1986, as amended; the regulations thereunder; and
judicial and administrative interpretations thereof, all of which are subject to
change or modification by subsequent legislative, regulatory, administrative or
judicial decisions. Such change could be retroactive in effect and therefore
could have an effect on our conclusions. We undertake no responsibility to
update our opinions in the event of any such change.
DISCUSSION
Merger
Classification as a reorganization
Section 368(a)(1)(A) provides that the term reorganization includes a statutory
merger. The term statutory merger refers to a merger effected pursuant to the
corporate laws of the United States, a state or territory, or the District of
Columbia, Treasury Regulation Section 1.368-2(b).
Section 368(a)(2)(D) provides that a transaction otherwise qualifying as a
statutory merger under Section 368(a)(1)(A) will not be disqualified if the
stock of a corporation (the controlling corporation), which before the merger
was in control of the acquiring corporation, is used to acquire substantially
all of the properties of another corporation if no stock of the acquiring
corporation is used in the transaction.
In order to qualify as a reorganization by operation of Section 368(a)(2)(D),
the acquiring corporation, (i.e., Athens First) must acquire substantially all
of the properties of another corporation (i.e., Bank of Georgia) partly or
entirely for stock of a corporation in control of the acquiring corporation
(i.e., Synovus). Control for this purpose is defined in Section 368(c) as the
direct ownership of stock possessing at least 80 percent of the total combined
voting power and at least 80 percent of the total number of shares of all other
classes of stock.
The term substantially all as used in Section 368(a)(2)(D) has the same meaning
as does the phrase when used in Section 368(a)(1)(C), and in Regulation Section
1.368-2(b)(2). Section 368(a)(1)(C) and the regulations promulgated thereunder
do not define what constitutes substantially all the properties of a
corporation. The Internal Revenue Service (the Service) has established a
quantitative test as to the amount of assets of a corporation that will satisfy
the substantially all properties requirement for purposes of obtaining a private
letter ruling. Under Revenue Procedure 77-37, 1977-2 C.B. 568, the substantially
all requirement is satisfied if the acquiring corporation acquired properties of
the transferor corporation representing at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market value of the
gross assets held by the transferor corporation immediately prior
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 7
to the reorganization. In the case of a forward triangular reorganization under
368(a)(2)(D), the transferor corporation is the disappearing corporation.
The ninety/seventy guidelines are arbitrary percentages selected by the Service
that do not necessarily represent judicial interpretations of the meaning of the
phrase substantially all of the properties under the various subdivisions of
Section 368. See Louis F. Viereck v. United States, 83-2 U.S.T.C. para 9664 (Cl.
Cts.), Ralph C. Wilson, Sr. 46 T.C. 334 (1966), John G. Moffar 42 T.C. 558, 363
F2d 860 (9th Cir. 1966)(Affg T.C.) 66-2 U.S.T.C. para 9498, James Armour, Inc.,
43 T.C. 295 (1964), Smothers v. United States, 642 f. 2d 894 (5th Cir. 1981)
(affg DC), 79-1 U.S.T.C. para 9216 and American Manufacturing Company, Inc. 55
T.C. 204 (1970).
What constitutes substantially all of the properties in a situation other than a
request for a ruling from the Service depends upon the facts and circumstances
in each case rather than upon any particular percentage, Revenue Ruling 57-518,
1957-2 C.B. 253. The Service is of the view that the substantially all
properties requirement applies separately to each trade or business of the
transferor corporation. In this transaction, however, it has been assumed as a
fact that the ninety/seventy test will be met, thus, the substantially all
requirement should clearly be met.
Requisite to all reorganizations under Section 368(a)(1) are (1) valid business
purpose; (2) a continuity of the business enterprise under the modified
corporate form; and (3) a continuity of interest in the corporation surviving
the merger on the part of those persons who directly or indirectly were the
owners of the merged corporation prior to the reorganization, Regulation Section
1.368-1(b). The term reorganization does not embrace the mere purchase by one
corporation of the properties of another, Regulation Section 1.368-2(a). These
regulations reflect well-developed judicial interpretation of the statutory
definition of a reorganization, the purpose of which is to exclude from the
scope of the reorganization provisions those transactions that are in fact
sales.
Continuity of business enterprise requires that the transferee corporation
either continue the transferor corporations historic business or use a
significant portion of the transferor corporations historic business assets,
Regulation Section 1.368-1(d)(2). This will be satisfied in this transaction as
per representation h above.
The regulations under Section 368(a) do not establish the amount of qualifying
consideration necessary to satisfy the continuity of shareholder interest
requirement. However, the Service has promulgated a definite test as to the
requirement for purposes of obtaining a private letter ruling. Under Revenue
Procedure 77- 37, 1977-2 C.B. 568, the continuity of interest requirement of
Regulation section 1.368-1(b) is satisfied if:
[T]here is continuing interest through stock ownership in the acquiring or
transferee corporation.... on the part of the former shareholders of the
acquired or transferor corporation which is equal in value, as of the effective
date of the reorganization, to at least 50 percent of the value of all the
formerly outstanding stock of the acquired or transferor corporation as of the
same date. It is not necessary that each shareholder of the acquired or
transferor corporation receive in the exchange, stock of the acquiring of
transferor corporation... which is equal in value to at least 50 percent of the
value of his former stock interest in the acquired or transferor corporation, so
long as one or more of the shareholders of the acquired or transferor
corporation have a continuing interest through stock ownership in the acquiring
or transferee corporation... which is, in the aggregate, equal in value to at
least 50 percent of the value of all of the formerly outstanding stock of the
acquired or transferor corporation.
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 8
The 50 percent definitive test of this revenue procedure does not as a matter of
law establish the amount of qualifying consideration necessary to meet the
continuity of interest requirement of Regulation Section 1.368-1(b). In other
words, the continuation of a capital stock ownership in the acquiring
corporation equal to less that 50 percent of the value of the stock of the
acquired corporation does not itself mark a discontinuity of interest. The
Supreme Court in John A. Nelson Co. v. Helvering, 296 U.S. 374 (1935), 36-1
U.S.T.C. para 9019, held that there was a reorganization even though the
shareholders of the acquired corporation received less than half of their total
consideration in the form of stock of the acquiring corporation and received
nonvoting preferred stock. It is only necessary that the shareholders continue
to have a definite and substantial equity interest in the assets of the
acquiring corporation, Revenue Ruling 61-156, 1961-2 C.B. 62. This requirement
should be met in this transaction as per representation b above.
In addition to the foregoing, it has been represented as a fact that this
transaction is being undertaken for a bona fide corporate business reason, thus
satisfying the first requirement stated above.
The merger of Bank of Georgia with and into Athens First will constitute a
reorganization within the meaning of Section 368(a)(1)(A) and Section 368
(a)(2)(D) provided that (1) the merger of Bank of Georgia with and into Athens
First qualified as a statutory merger under the applicable federal and state
laws and is undertaken for a valid business purpose as stated in the above
facts; (2) after the transaction Athens First continues the historic business of
Bank of Georgia; and (3) Bank of Georgia shareholders exchange for Synovus
voting common stock an amount of the Bank of Georgia stock meeting the
continuity of shareholder interest test. Synovus, Athens First and Bank of
Georgia will each be a party to a reorganization within the meaning of Section
368(b). As discussed above, each of the foregoing will be complied with in this
transaction.
Federal income tax consequences to exchanging shareholders
Section 354(a)(1) provides that no gain or loss will be recognized if stock of a
corporation which is a party to a reorganization is, pursuant to the plan or
reorganization, exchanged solely for stock of such corporation or of another
corporation which is a party to the reorganization. Section 356(a)(1) in
relevant part provides that if money or other property is received in an
exchange to which section 354 would otherwise apply, then gain, if any, to the
recipient will be recognized to the extent of the sum of the money and fair
market value of the property received. If the exchange has the effect of the
distribution of a dividend, then the amount of gain recognized that is not in
excess of each distributee shareholders ratable share of the undistributed
earnings and profits of the acquired corporation will be treated as a dividend,
Section 356(a)(2). No loss will be recognized on the exchange, Section 356(c).
Section 358 provides that, generally, shareholders are entitled to a carryover
basis for stock received in a reorganization transaction qualifying under
Section 354 or 356.
The Bank of Georgia common shareholders who receive solely Synovus common stock
in exchange for their Bank of Georgia common stock will not recognize any gain
or loss pursuant to Section 354(a)(1). The tax basis which these Bank of Georgia
common shareholders will have in their newly received Synovus common stock will
be the same as their tax basis in the Bank of Georgia common stock immediately
prior to the merger under Section 358(a).
If the property received in an exchange (i.e., Synovus common stock) has the
same (i.e., carryover) basis as the property given up, then Section 1223(1)
applies to determine the holding period for the property received. Section
1223(1) provides that the period during which the taxpayer held the property
surrendered in the exchange is added to the period he or she holds the property
received in the exchange in order to determine the holding period of the
property received.
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 9
This tacking of the previous holding period applies only if the property
exchanged (i.e., Bank of Georgia common stock) was a capital asset in the
taxpayers hands at the time of the exchange, Section 1223(1). The status of the
property as a capital asset is determined under Section 1221, which defines
capital asset as any property of a taxpayer other than property within specified
classifications. As a general rule, stock of a corporation would be treated as a
capital asset under this section. Provided that his or her Bank of Georgia
common stock is a capital asset, then each Bank of Georgia shareholder will be
able to include his or her respective ownership period of the Bank of Georgia
common stock in determining the holding period of the Synovus common stock
received in the proposed transaction.
Poison Pill Rights
The shares of Synovus common stock to be issued to the Bank of Georgia
shareholders entitle such shareholders to receive the poison pill rights which
will become excercisable upon the happening of future events as described above.
An issue with respect to the poison pill rights is whether the rights should be
considered separable from the Synovus common stock and therefore other property
within the meaning of Section 356(a) or rather as an attribute of the Synovus
common stock, that is, a right to a future dividend inseparable from the other
rights inherent in the stock and not personal to the shareholders.
Presently, the Service has not published any direct authoritative position
regarding the treatment of poison pill rights in the context of a corporate
reorganization that can be cited as precedent. Nor are there any judicial
opinions specifically addressing poison pill rights in the context of a
corporate reorganization.
The only available guidance consists of Private Letter Rulings (PLRs) that
address the shareholder tax consequences upon the receipt of capital stock
incorporating a poison pill rights plan in the context of a corporate
reorganization. Under Section 6110(j)(3), PLRs may not be used or cited as
precedent. If the Service issues further authority, such authority could be
prospective only in accordance with the provisions of Section 7805.
In PLR 8808081, the Service ruled that poison pill rights incorporated in the
terms of capital stock issued in a corporate reorganization constituted other
property within the meaning of Section 356(a). Accordingly, the filing held that
the acquired corporations shareholders recognized gain, to the extent of the
fair market value of the poison pill rights, in the exchange for capital stock
of the acquiring corporation.
Subsequently, however, the Service reversed its position and ruled in PLR
8925087, PLR 8925088, PLR 9040069, and PLR 9040042 (among others) that poison
pill rights did not constitute other property within the meaning of Section
356(a).
Indirect support for the proposition that poison pill rights do not constitute
other property can also be found in Revenue Ruling 90-11, 1990-1 C.B. 10.
Although not in the context of a corporate reorganization, the Service concluded
that the initial issuance of poison pill rights is not a distribution of
property which would give rise to current tax to the shareholders. The terms of
the poison pill plan described in the ruling are comparable to the terms of the
Synovus plan. This ruling is a published ruling, and therefore may be cited as
precedent. This published ruling indicates that the more recent private letter
rulings cited immediately above reflect the current thinking of the Service,
i.e., that poison pill rights do not constitute other property when associated
with stock received in a corporate reorganization. Should the Service
successfully maintain that the poison pill rights are other property, then gain,
if any, realized by a Bank of Georgia common shareholder receiving such rights
would be recognized to the extent of the fair market value of such rights.
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 10
CONCLUSION
Based on the foregoing, it is the opinion of KPMG that:
1. The merger of Bank of Georgia with and into Athens First, provided it is in
accordance with Georgia state law, will be treated as a reorganization
under Section 368(a)(1)(A) and Section 368(a)(2)(D), and that Synovus,
Athens First and Bank of Georgia will each be a party to the reorganization
as defined in Section 368(b).
2. No gain or loss will be recognized by the shareholders of Bank of Georgia
who receive solely shares of Synovus voting common stock for their Bank of
Georgia common stock upon consummation of the Merger. The basis of the
Synovus shares received by such Bank of Georgia shareholders (including any
fractional share to which they may be entitled) will be the same as the
basis of the Bank of Georgia common stock surrendered in the exchange.
Provided that the Bank of Georgia common stock was a capital asset in the
shareholders hands, the holding period of the Synovus common stock
(including any fractional share to which they may be entitled) will include
the holding period of the Bank of Georgia stock.
3. The payment by Synovus of cash in lieu of fractional share interests
in its common stock will, for federal income tax purposes, be treated
as if Synovus actually issued the fractional share interests to the
Bank of Georgia common shareholders and then Synovus redeemed such
fractional shares for cash. See Revenue Ruling 66-365, 1966-2 C.B.
116. Each affected Bank of Georgia common shareholder should consult
their own tax advisor for the tax effect to them of such redemption
(i.e. exchange treatment or dividend).
4. Under Sections 357(a) and 361, no gain or loss will be recognized by
Bank of Georgia upon the transfer of substantially all of its assets
to Athens First in exchange for solely shares of Synovus common stock
and the assumption by Athens First of the Bank of Georgia liabilities.
Under Section 361(c), Bank of Georgia will not recognize any gain or
loss upon the distribution of the Synovus common stock to its
shareholders in pursuance of the plan of reorganization.
5. Under Revenue Ruling 57-278, 1957-1 C.B. 124, no gain or loss will be
recognized by either Synovus or Athens First upon the acquisition of
substantially all of the assets of Bank of Georgia in exchange for
solely shares of Synovus common stock and the assumption of the Bank
of Georgia liabilities.
6. Based on the discussion above under Poison Pill Rights, it appears
reasonable to conclude that the Synovus poison pill rights plan
adopted on April 20, 1989, should be treated as an attribute of the
Synovus common stock, a right that is inseparable from other rights
inherent in the stock and does not constitute other property received
by the Bank of Georgia common shareholders in exchange for their Bank
of Georgia common stock. However, in view of the lack of precedent,
there can be no assurance that the Service will agree with this
conclusion. In the event the Service ultimately establishes that such
poison pill rights constitute other property, then the Bank of Georgia
shareholders, who realize gain on the exchange of their shares for
Synovus common stock, will recognize such gain to the extent of the
value of the poison pill rights received.
7. No gain or loss will be recognized by Bank of Georgia upon the
transfer of its assets, subject to its liabilities, to Athens First in
the Merger (Section 357(a) and 361(a)).
Board of Directors
Synovus Financial Corp.
Bank of Georgia
August 5, 1998
Page 11
8. The basis of the assets of Bank of Georgia in the hands of Athens
First will be the same as the basis of such assets in the hands of
Bank of Georgia immediately prior to the Merger (Section 362(b)).
9. The tax attributes enumerated in Section 381(c), including any
earnings and profits or a deficit of earnings and profits, will be
taken into account by Synovus following the Merger.
10. Where a Bank of Georgia shareholder elects to receive cash by
exercising statutory dissenters rights, such cash will be treated as
having been received by the shareholder as a distribution in
redemption of his or her Bank of Georgia stock subject to the
provisions and limitations of Section 302 of the Code.
We are furnishing this opinion to you solely in connection with Article V
paragraph (A)(7) of the Merger Agreement. This opinion is solely for your
benefit and is not to be used, circulated, quoted or otherwise referred to for
any purpose without our express written permission.
We consent to the use of our opinion included herein as Appendix C and to the
reference to our firm under the heading of Tax Opinion in the prospectus of
Synovus Financial Corp. and the proxy statement of Bank of Georgia.
/s/KPMG Peat Marwick, LLP
KPMG Peat Marwick, LLP
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS; UNDERTAKINGS
Item 20. Indemnification of Directors and Officers
Subsection (a) of Section 14-2-851 of the Georgia Business Corporation Code
provides that a corporation may indemnify or obligate itself to indemnify an
individual made a party to a proceeding because he or she is or was a director
against liability incurred in the proceeding if such individual conducted
himself or herself in good faith and such individual reasonably believed, in the
case of conduct in an official capacity, that such conduct was in the best
interests of the corporation and, in all other cases, that such conduct was at
least not opposed to the best interests of the corporation and, in the case of
any criminal proceeding, such individual had no reasonable cause to believe such
conduct was unlawful. Subsection (d) of Section 14-2-851 of the Georgia Business
Corporation Code provides that a corporation may not indemnify a director in
connection with a proceeding by or in the right of the corporation except for
reasonable expenses incurred if it is determined that the director has met the
relevant standard of conduct, or in connection with any proceeding with respect
to conduct under Section 14-2-851 of the Georgia Business Corporation Code for
which he was adjudged liable on the basis that personal benefit was improperly
received by him. Notwithstanding the foregoing, pursuant to Section 14-2-854 of
the Georgia Business Corporation Code a court may order a corporation to
indemnify a director or advance expenses if such court determines that the
director is entitled to indemnification under the Georgia Business Corporation
Code or that the director is fairly and reasonably entitled to indemnification
in view of all the relevant circumstances, whether or not such director met the
standard of conduct set forth in subsections (a) and (b) of Section 14-2-851 of
the Georgia Business Corporation Code, failed to comply with Section 14-2-853 of
the Georgia Business Corporation Code or was adjudged liable as described in
paragraph (1) or (2) of subsection (d) of Section 14-2-851 of the Georgia
Business Corporation Code.
Section 14-2-852 of the Georgia Business Corporation Code provides that to
the extent that a director has been successful, on the merits or otherwise, in
the defense of any proceeding to which he was a party, because he or she is or
was a director of the corporation, the corporation shall indemnify the director
against reasonable expenses incurred by the director in connection therewith.
Section 14-2-857 of the Georgia Business Corporation Code provides that a
corporation may indemnify and advance expenses to an officer of the corporation
who is a party to a proceeding because he or she is an officer of the
corporation to the same extent as a director and if he or she is not a director
to such further extent as may be provided in its articles of incorporation,
bylaws, action of its board of directors or contract except for liability
arising out of conduct specified in Section 14-2-857(a)(2) of the Georgia
Business Corporation Code. Section 14-2-857 of the Georgia Business Corporation
Code also provides that an officer of the corporation who is not a director is
entitled to mandatory indemnification under Section 14-2-852 and is entitled to
apply for court ordered indemnification or advances for expenses under Section
14-2-854, in each case to the same extent as a director. In addition, Section
14-2-857 provides that a corporation may also indemnify and advance expenses to
an employee or agent who is not a director to the extent, consistent with public
policy, that may be provided by its articles of incorporation, bylaws, action of
its board of directors or contract.
In accordance with Article VIII of the Company's Bylaws, every person who
is or was (and the heirs and personal representatives of such person) a
director, officer, employee or agent of the Company shall be indemnified and
held harmless by the Company from and against the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to an
employee benefits plan), and reasonable expenses (including attorneys' fees and
disbursements) that may be imposed upon or incurred by him or her in connection
with or resulting from any threatened, pending, or completed, action, suit, or
proceeding, whether civil, criminal, administrative, investigative, formal or
informal, in which he or she is, or is threatened to be made, a named defendant
or respondent: (a) because he or she is or was a director, officer, employee, or
agent of the Company; (b) because he or she or is or was serving at the request
of the Company as a director, officer, partner, trustee, employee, or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise; or (c) because he or she is or was serving as an employee of
the corporation who was employed to render professional services as a lawyer or
accountant to the corporation; regardless of whether such person is acting in
such a capacity at the time such obligation shall have been imposed or incurred,
if (i) such person acted in a manner he or she believed in good faith to be in
or not opposed to the best interest of such corporation, and, with respect to
any criminal proceeding, if such person had no reasonable cause to believe his
or her conduct was unlawful or (ii), with respect to an employee benefit plan,
such person believed in good faith that his or her conduct was in the interests
of the participants in and beneficiaries of the plan.
Pursuant to Article VIII of the Bylaws of the Company, reasonable expenses
incurred in any proceeding shall be paid by the Company in advance of the final
disposition of such proceeding if authorized by the Board of Directors in the
specific case, or if authorized in accordance with procedures adopted by the
Board of Directors, upon receipt of a written undertaking executed personally by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Company, and a written affirmation of his or her good faith
belief that he or she has met the standard of conduct required for
indemnification.
The foregoing rights of indemnification and advancement of expenses are not
intended to be exclusive of any other right to which those indemnified may be
entitled, and the Company has reserved the right to provide additional indemnity
and rights to its directors, officers, employees or agents to the extent they
are consistent with law.
The Company carries insurance for the purpose of providing indemnification
to its directors and officers. Such policy provides for indemnification of the
Company for losses and expenses it might incur to its directors and officers for
successful defense of claims alleging negligent acts, errors, omissions or
breach of duty while acting in their capacity as directors or officers and
indemnification of its directors and officers for losses and expense upon the
unsuccessful defense of such claims.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 21. Exhibits and Financial Statement Schedules
The following Exhibits are filed as part of this Registration Statement:
Exhibit No. Description
2 Agreement and Plan of Merger is attached as Appendix "A" to
the Proxy Statement/Prospectus included in this Registration
Statement.
4.1 Articles of Incorporation of Synovus Financial Corp., as
amended, incorporated by reference to Exhibit 4(a) of Synovus
Financial Corp.'s Registration Statement on Form S-8 filed
with the Securities and Exchange Commission on July 23, 1990
(File No. 33-35926).
4.2 Bylaws, as amended, of Synovus Financial Corp., incorporated
by reference to Exhibit 3.2 of Synovus Financial Corp.'s
Annual Report on Form 10-K for the fiscal year ended December
31, 1996 filed with the Securities and Exchange Commission on
March 6, 1997.
4.3 Form of Rights Agreement incorporated by reference to Exhibit
1 of Synovus Financial Corp.'s Registration Statementb on Form
8-A dated May 3, 1989 filed with the Securities andb Exchange
Commission on May 3, 1989 pursuant to Section 12 bof the
Securities Exchange Act of 1934, as amended.
5 Legal opinion of the Deputy General Counsel of Synovus
regarding the legality of the Synovus Common Stock being
issued in the Merger.
8 Tax opinion of KPMG Peat Marwick LLP regarding the tax
consequences of the Merger to shareholders of Bank of Georgia
Common Stock is attached as Appendix "C" to the Proxy
Statement/Prospectus included in this Registration Statement.
23.1 The consent of KPMG Peat Marwick LLP re: Consolidated Financial
Statements of Synovus Financial Corp. and Subsidiaries.
23.2 The consent of Mauldin & Jenkins re: Financial Statements of
Bank of Georgia.
23.3 The consent of KPMG Peat Marwick LLP regarding its tax opinion
filed as Appendix "C" to the Proxy Statement/Prospectus
included in this Registration Statement.
23.4 The consent of the Deputy General Counsel of Synovus is
contained in her opinion filed as Exhibit 5 to the
Registration Statement.
24 Powers of Attorney contained on the signature pages of the
Registration Statement.
99 Form of Proxy
The Registrant agrees to provide to the Commission, upon request, copies of
instruments defining the rights of holders of long-term debt of the Registrant.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide public offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other that the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes the information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbus, State of Georgia, on the 6th day of
August, 1998.
SYNOVUS FINANCIAL CORP.
(Registrant)
By:/s/James H. Blanchard
James H. Blanchard,
--------------------------
Chairman of the Board and
Principal Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James H. Blanchard, James D. Yancey and
Stephen L. Burts, Jr., and each of them, his or her true and lawful
attorney(s)-in-fact and agent(s), with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments to this Registration Statement
and to file the same, with all exhibits and schedules thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney(s)-in-fact and agent(s) full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/William B. Turner Date: August 6, 1998
- ---------------------------------------------
William B. Turner,
Director and Chairman of
the Executive Committee
/s/James H. Blanchard Date: August 6, 1998
- ------------------------------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
Date:
John T. Oliver, Jr.,
- ------------------------------------------
Director and Vice Chairman
of the Executive Committee
/s/James D. Yancey Date: August 6, 1998
- ------------------------------------------
James D. Yancey,
President and Director
/s/Richard E. Anthony Date: August 6, 1998
- -------------------------------------------
Richard E. Anthony,
Vice Chairman of the Board
/s/Walter M. Deriso, Jr. Date: August 6, 1998
- ---------------------------------------------
Walter M. Deriso, Jr.,
Vice Chairman of the Board
/s/Stephen L. Burts, Jr. Date: August 6, 1998
- --------------------------------------------
Stephen L. Burts, Jr.,
Vice Chairman of the Board
/s/Thomas J. Prescott Date: August 6, 1998
- --------------------------------------------
Thomas J. Prescott,
Executive Vice President, Treasurer,
Principal Accounting and Financial Officer
- -------------------------------------------- Date:
Joe E. Beverly,
Director
/s/Richard Y. Bradley Date: August 6, 1998
- --------------------------------------------
Richard Y. Bradley,
Director
- -------------------------------------------- Date:
C. Edward Floyd,
Director
- -------------------------------------------- Date:
Gardiner W. Garrard, Jr.,
Director
Date:
- --------------------------------------------
V. Nathaniel Hansford,
Director
/s/John P. Illges, III Date: August 6, 1998
- -----------------------------------------------
John P. Illges, III,
Director
/s/Mason H, Lampton Date: August 6, 1998
- ---------------------------------------------
Mason H. Lampton,
Director
- -------------------------------------------- Date:
Elizabeth C. Ogie,
Director
- -------------------------------------------- Date:
H. Lynn Page,
Director
/s/Robert V. Royall, Jr. Date: August 6, 1998
- --------------------------------------------
Robert V. Royall, Jr.,
Director
- -------------------------------------------- Date:
Melvin T. Stith,
Director
August 6, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street
Washington, D.C. 20549
Ladies and Gentlemen:
As Senior Vice President and Deputy General Counsel of Synovus
Financial Corp. (the "Registrant"), I am familiar with the preparation and
filing of the Registrant's Registration Statement on Form S-4, as filed with the
Securities and Exchange Commission on or about August 6, 1998, pursuant to
which the Registrant proposes to issue up to 850,399 shares of its $1.00 par
value common stock ("Registrant's Common Stock") to certain of the former
shareholders of Bank of Georgia upon the merger of Bank of Georgia with and into
Athens First Bank & Trust Company, a wholly owned subsidiary of Registrant.
I have examined, and am familiar with, the originals or copies,
certified or otherwise, of the documents, corporate records and other
instruments of the Registrant relating to the proposed issuance of Registrant's
Common Stock which I deem relevant and which form the basis of the opinion
hereinafter set forth.
I am of the opinion that under the laws of the State of Georgia, the
jurisdiction in which the Registrant is incorporated and the jurisdiction in
which the Registrant has its principal office, upon the issuance of the shares
of the Registrant's Common Stock pursuant to the aforesaid Registration
Statement, all such shares when so issued will be duly authorized, validly
issued and outstanding, and will be fully paid and non-assessable shares of the
Registrant's Common Stock, and no personal liability will attach to the holders
of any of the shares of the Registrant's Common Stock.
The undersigned counsel to the Registrant hereby consents to the use of
my opinion as Exhibit 5 to the aforesaid Registration Statement.
Sincerely,
/s/Kathleen Moates
Kathleen Moates
KM/bmk
Exhibit 5
Accountants' Consent
The Board of Directors
Synovus Financial Corp:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Proxy
Statement/Prospectus.
Atlanta, Georgia /s/KPMG Peat Marwick LLP
August 6, 1998 KPMG Peat Marwick LLP
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement of our report dated
April 9, 1998, relating to the financial statements of Bank of Georgia, and to
the reference to our Firm under the caption "Experts" in the Prospectus.
/s/Mauldin & Jenkins LLC
Mauldin & Jenkins LLC
Atlanta, Georgia
August 5, 1998
Exhibit 23.2
The Board of Directors
Synovus Financial Corp.
P.O. Box 120
Columbus, GA 31902
We consent to the use of our tax opinion included herein as Appendix C and to
the reference to our firm under the heading of "Experts" and "Tax Opinion" in
the prospectus.
Memphis, Tennessee
August 5, 1998
Exhibit 23.3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbus, State of Georgia, on the 6th day of
August, 1998.
SYNOVUS FINANCIAL CORP.
(Registrant)
By:/s/James H. Blanchard
James H. Blanchard,
--------------------------
Chairman of the Board and
Principal Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James H. Blanchard, James D. Yancey and
Stephen L. Burts, Jr., and each of them, his or her true and lawful
attorney(s)-in-fact and agent(s), with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments to this Registration Statement
and to file the same, with all exhibits and schedules thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney(s)-in-fact and agent(s) full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/William B. Turner Date: August 6, 1998
- ---------------------------------------------
William B. Turner,
Director and Chairman of
the Executive Committee
/s/James H. Blanchard Date: August 6, 1998
- ------------------------------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
Date:
John T. Oliver, Jr.,
- ------------------------------------------
Director and Vice Chairman
of the Executive Committee
/s/James D. Yancey Date: August 6, 1998
- ------------------------------------------
James D. Yancey,
President and Director
/s/Richard E. Anthony Date: August 6, 1998
- -------------------------------------------
Richard E. Anthony,
Vice Chairman of the Board
/s/Walter M. Deriso, Jr. Date: August 6, 1998
- ---------------------------------------------
Walter M. Deriso, Jr.,
Vice Chairman of the Board
/s/Stephen L. Burts, Jr. Date: August 6, 1998
- --------------------------------------------
Stephen L. Burts, Jr.,
Vice Chairman of the Board
/s/Thomas J. Prescott Date: August 6, 1998
- --------------------------------------------
Thomas J. Prescott,
Executive Vice President, Treasurer,
Principal Accounting and Financial Officer
- -------------------------------------------- Date:
Joe E. Beverly,
Director
/s/Richard Y. Bradley Date: August 6, 1998
- --------------------------------------------
Richard Y. Bradley,
Director
- -------------------------------------------- Date:
C. Edward Floyd,
Director
- -------------------------------------------- Date:
Gardiner W. Garrard, Jr.,
Director
Date:
- --------------------------------------------
V. Nathaniel Hansford,
Director
/s/John P. Illges, III Date: August 6, 1998
- -----------------------------------------------
John P. Illges, III,
Director
/s/Mason H, Lampton Date: August 6, 1998
- ---------------------------------------------
Mason H. Lampton,
Director
- -------------------------------------------- Date:
Elizabeth C. Ogie,
Director
- -------------------------------------------- Date:
H. Lynn Page,
Director
/s/Robert V. Royall, Jr. Date: August 6, 1998
- --------------------------------------------
Robert V. Royall, Jr.,
Director
- -------------------------------------------- Date:
Melvin T. Stith,
Director
Exhibit 24
BANK OF GEORGIA
2100 Experiment Station Road
Watkinsville, Georgia 30677
PROXY SOLICITED BY THE BOARD OF
BANK OF GEORGIA
FOR A SPECIAL MEETING OF SHAREHOLDERS
__________, 1998
The undersigned shareholder of Bank of Georgia hereby appoints
______________ and _______________________ each of them, with full power of
substitution, proxies to vote the shares of stock which the undersigned could
vote if personally present at the Special Meeting of Shareholders of Bank of
Georgia to be held at _________, local time, on _________, 1998 at Bank of
Georgia's office at 2100 Experiment Station Road, Watkinsville, Georgia 30677 or
at any adjournment thereof.
(1) PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF MERGER BY AND
BETWEEN BANK OF GEORGIA AND ATHENS FIRST BANK & TRUST COMPANY
AND JOINED INTO BY SYNOVUS FINANCIAL CORP.
FOR______ AGAINST______ ABSTAIN_____
(2) IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE SPECIAL MEETING OF
SHAREHOLDERS.
IF NO DIRECTION TO THE CONTRARY IS INDICATED, THIS PROXY WILL BE VOTED FOR
PROPOSAL (1).
Dated:_______________, 1998 ___________________________________
Signature(s) of Shareholder
Please sign exactly as name appears hereon. If shares are held jointly, each
shareholder should sign. Agents, executors, administrators, guardians, trustees,
etc., should use full title, and if more than one, all should sign. If the
shareholder is a corporation, please sign full corporate name by an authorized
officer.
Please fill in, date and sign the proxy and return it in the enclosed postpaid
envelope.
Exhibit 99.1
