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File No. 33-65071
As filed with the Securities and Exchange Commission on January 30, 1996.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BANK CORPORATION OF GEORGIA
(Exact name of issuer as specified in its charter)
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<S> <C> <C>
GEORGIA 6712 58-1406233
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
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4951 Forsyth Road, Macon, Georgia 31210
(912) 477-4428
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Mr. Joseph W. Evans
President and CEO
BANK CORPORATION OF GEORGIA
4951 Forsyth Road, Macon, Georgia 31210
(912) 477-4428
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
----------
Richard R. Cheatham
Kilpatrick & Cody
Suite 2800, 1100 Peachtree St., Atlanta, Georgia 30309-4530
(404) 815-6500
----------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: The exchange of the Registrant's shares of Common Stock for shares of
Common Stock of Americorp, Inc. will take place upon consummation of the merger
of Americorp, Inc. into the Registrant.
----------------
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. [ ]
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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BANK CORPORATION OF GEORGIA
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K, showing the location in the Proxy
Statement/Prospectus of the information required by Part I of Form S-4.
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Item Number and Caption in Form S-4 Location or Caption in Proxy Statement/Prospectus
- ----------------------------------- -------------------------------------------------
A. INFORMATION ABOUT THE TRANSACTION.
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1 Forepart of the Registration Statement Cover Page of Registration Statement; Cross Reference
Outside Front Cover Page of Prospectus...... Sheet; Outside Front Cover Page
2 Inside Front and Outside Back Cover Pages Inside Front Cover Page; Available Information;
of Prospectus............................... Incorporation of Certain Documents by Reference;
Table of Contents
3 Risk Factors, Ratio of Earnings to Fixed Prospectus Summary; Outside Front Cover Page;
Charges and Other Information............... Comparative Share Data; Pro Forma Statements
of Income; Pro Forma Balance Sheet; The
Proposed Americorp Merger -- Shareholder
Approval and -- Effect of the Americorp Merger
on Americorp Shareholders
4 Terms of the Transaction.................... Prospectus Summary; Introduction; The Proposed
Americorp Merger; Bank Corporation of Georgia --
Description of Capital Stock of BCG
5 Pro Forma Financial Information............. Pro Forma Statements of Income; Pro Forma Balance Sheet
6 Material Contacts with the Company being The Americorp Merger -- Interest of Management
Acquired.................................... in the Transaction; Reasons for the Americorp Merger
7 Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................. Not Applicable
8 Interests of Named Experts and Counsel...... Not Applicable
9 Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................. Not Applicable
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B. INFORMATION ABOUT THE REGISTRANT.
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10 Information With Respect to S-3 Registrants...... Not Applicable
11 Incorporation of Certain Information by
Reference........................................ Not Applicable
12 Information With Respect to S-2 or S-3
Registrants...................................... Not Applicable
13 Incorporation of Certain Information by
Reference........................................ Not Applicable
14 Information With Respect to Registrants Other
Than S-2 or S-3 Registrants...................... Prospectus Summary; The Americorp Merger;
Bank Corporation of Georgia -- Selected
Statistical and Other Data and-- Management's
Discussion and Analysis of Financial
Condition and Results of Operations and --
Consolidated Financial Statements
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED.
15 Information With Respect to S-3 Companies........ Not Applicable
16 Information With Respect to S-2 or S-3
Companies........................................ Not Applicable
17 Information With respect to Companies Other Than Prospectus Summary; The Americorp Merger;
S-2 or S-3 Companies............................. Introduction; Americorp, Inc. --Management's
Discussion and Analysis of Financial Condition
and Results of Operations and -- Selected
Statistical Financial Data and -- Consolidated
Financial Statements
D. VOTING AND MANAGEMENT INFORMATION.
18 Information if Proxies, Consents or Prospectus Summary; Introduction; The
Other Authorizations are to be Solicited......... Americorp Merger; Americorp, Inc.
19 Information if Proxies, Consents or Other
Authorizations are not to be Solicited or in
an Exchange Offer................................ Not Applicable
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AMERICORP, INC.
7393 Hodgson Memorial Drive
Savannah, Georgia 31406
Dear Shareholder:
This booklet contains the Notice of Meeting and Proxy Statement for a
Special Meeting of the Shareholders (the "SPECIAL MEETING") of Americorp,
Inc. ("Americorp") to be held on ___________________, 1996, commencing at
__________ ____.m., at ________________________, Savannah, Georgia.
The purpose of the meeting is to consider and vote upon the Agreement
and Plan of Merger (the "AMERICORP MERGER AGREEMENT") described in the
accompanying Proxy Statement pursuant to which Americorp would be merged
with and into Bank Corporation of Georgia, a Georgia corporation ("BCG"),
with BCG being the surviving entity (the "AMERICORP MERGER"). If the
Americorp Merger Agreement is approved, each holder of Common Stock of
Americorp, $.01 par value per share ("AMERICORP COMMON STOCK"), other than
BCG, will be entitled to receive .084615 shares of common stock of BCG,
$1.00 par value per share (the "BCG COMMON STOCK"), for each share of
Americorp Common Stock outstanding on the effective date of the Americorp
Merger. In lieu of the issuance of fractional shares of the BCG Common
Stock, there will be paid in cash an amount (computed to the nearest cent)
equal to the fraction multiplied by $13.00.
The accompanying Proxy Statement includes a description of the terms
and conditions of the proposed merger, a description of the business of
Americorp, information regarding the business and management of BCG and
certain other information, including a description of the rights of
dissenting Americorp Shareholders. A copy of the Americorp Merger
Agreement is attached as APPENDIX A to the Proxy Statement.
Section 14-2-1301 et seq. of the Official Code of Georgia Annotated,
-- ---
reproduced as APPENDIX B to the attached Proxy Statement, sets forth the
rights of shareholders who dissent from the Americorp Merger. Any
Americorp shareholder desiring to dissent from the Americorp Merger and
receive payment of the fair value of the shareholder's Americorp Common
Stock must, among other things, deliver to Americorp prior to the time of
the shareholder vote on the Americorp Merger a written notice of intent to
demand payment for his shares of Americorp Common Stock if the Americorp
Merger is consummated. An Americorp shareholder who fails to submit such
written notice to Americorp prior to the shareholder vote will lose the
right to dissent from the Americorp Merger and demand payment for the
shareholder's shares of Americorp Common Stock.
YOUR BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED MERGER IS IN THE
BEST INTEREST OF AMERICORP AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE FOR
THE ADOPTION OF THE AMERICORP MERGER AGREEMENT.
The affirmative vote of the holders of a majority of the outstanding
Americorp Common Stock represented at the Special Meeting and entitled to
vote is required to approve
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the Americorp Merger Agreement. In addition, the affirmative vote of at least
two-thirds of the outstanding shares of preferred stock of Americorp, $100 par
value per share (the "AMERICORP PREFERRED STOCK"), is required for approval of
the Americorp Merger Agreement. BCG currently owns 3,649,261 shares or 66.67% of
the outstanding Americorp Common Stock and 37,875 shares or 100% of the
outstanding Americorp Preferred Stock. BCG has indicated that it will vote the
shares of Americorp Common and Preferred Stock held by it in favor of the
Americorp Merger. Therefore, approval of the Americorp Merger is assured.
A form of proxy is enclosed, and you are urged to complete, sign and
return it to Americorp as soon as possible in the enclosed stamped
envelope. If you attend the Special Meeting you may revoke your proxy at
that time simply by requesting the right to vote in person.
Sincerely,
Joseph W. Evans
President and CEO
Americorp, Inc.
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AMERICORP, INC.
7393 Hodgson Memorial Drive
Savannah, Georgia 31406
________________________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _______________, 1996
_____________________________________________________
Notice is hereby given that a Special Meeting of Shareholders of
Americorp, Inc., a Georgia corporation ("AMERICORP"), will be held on
______________, 1996, commencing at _______ __m. (the "SPECIAL MEETING"), at
______________________________________________________, Savannah, Georgia 31406,
for the purpose of considering and voting upon:
(1) An Agreement and Plan of Merger, a copy of which is attached as
APPENDIX A to the Proxy Statement accompanying this Notice,
providing for the merger (the "AMERICORP MERGER") of Americorp
into Bank Corporation of Georgia ("BCG"), a Georgia corporation
and multibank holding company, with BCG being the surviving
entity; and
(2) Such other business as may lawfully come before the Special
Meeting or any adjournments thereof.
In connection with the Americorp Merger, each holder of Americorp
common stock, $.01 par value per share ("AMERICORP COMMON STOCK"), other than
BCG will be entitled to receive .084615 shares of common stock of BCG, $1.00 par
value per share (the "BCG COMMON STOCK"), for each of such shareholder's shares
of Americorp Common Stock outstanding on the effective date of the Americorp
Merger. Each outstanding share of preferred stock, $100 par value per share, of
Americorp (the "AMERICORP PREFERRED STOCK"), all of which is owned by BCG, will
be cancelled as a result of the Americorp Merger. In lieu of the issuance of
fractional shares of the BCG Common Stock, there will be paid in cash an amount
(computed to the nearest cent) equal to the fraction multiplied by $13.00.
If the Americorp Merger is consummated, shareholders dissenting from the
transaction will be entitled to be paid the "fair value" of their shares in
cash, provided that they shall have filed a written notice of intent to demand
payment for their shares before the vote of shareholders is taken on the
Americorp Merger, have not voted their shares in favor of the Americorp Merger
and have complied with the provisions of Section 14-2-1301 et seq. of the
-- ---
Official Code of Georgia Annotated regarding the rights of dissenting
shareholders, all as more fully set forth under "THE AMERICORP MERGER
- -- RIGHTS OF DISSENTING SHAREHOLDERS" and in APPENDIX B to the attached Proxy
Statement.
Only shareholders of record at the close of business on ____________,
1996 will be entitled to notice of and to vote at the Special Meeting or any
adjournments thereof.
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A form of proxy and a Proxy Statement are enclosed. The approval
of the Americorp Merger requires the affirmative vote of the holders of at
least a majority of the outstanding Americorp Common Stock present and
entitled to vote at the Special Meeting and two-thirds of the holders of
the outstanding Americorp Preferred Stock. Because BCG currently owns
3,649,261 shares, or 66.67%, of the outstanding Americorp Common Stock and
37,875 shares, or 100% of the outstanding Americorp Preferred Stock,
approval of the Americorp Merger is assured.
To assure representation at the Special Meeting, you are requested
to sign, date and return the proxy promptly in the enclosed stamped
envelope. If you attend the Special Meeting you may revoke your proxy at
that time simply by requesting the right to vote in person. Prior to the
Special Meeting, you may withdraw a previously submitted proxy by notifying
the Secretary of Americorp in writing or submitting an executed, later-
dated proxy to Americorp, as more fully described under "INTRODUCTION" in
the Proxy Statement.
By Order of the Board of Directors,
Joseph W. Evans
President and CEO
___________, 1996 Americorp, Inc.
Savannah, Georgia
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AMERICORP, INC.
PROXY STATEMENT
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Special Meeting of Shareholders to be held on ______________, 1996
BANK CORPORATION OF GEORGIA
PROSPECTUS
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154,390 shares of common stock of Bank Corporation of Georgia which may be
issued in connection with the merger of Americorp, Inc. with and into Bank
Corporation of Georgia.
BANK CORPORATION OF GEORGIA HAS FILED A REGISTRATION STATEMENT WITH THE
SECURITIES AND EXCHANGE COMMISSION COVERING THE SHARES OF ITS COMMON STOCK TO
BE ISSUED IN CONNECTION WITH THE MERGER OF AMERICORP, INC., A MAJORITY-OWNED
SUBSIDIARY OF BANK CORPORATION OF GEORGIA, WITH AND INTO BANK CORPORATION OF
GEORGIA. THIS PROXY STATEMENT ALSO CONSTITUTES A PROSPECTUS OF BANK
CORPORATION OF GEORGIA FILED AS PART OF SUCH REGISTRATION STATEMENT.
_____________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
_____________________
THE SHARES OF COMMON STOCK OF BANK CORPORATION OF GEORGIA TO BE ISSUED IN
CONNECTION WITH THE AMERICORP MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS, AND ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________
SHARES OF THE COMMON STOCK OF BANK CORPORATION OF GEORGIA ARE EQUITY
SECURITIES AND ARE NOT SAVINGS ACCOUNTS OR DEPOSITS. INVESTMENT IN SUCH
SHARES IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY.
The date of this Proxy Statement/Prospectus is ____________, 1996.
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TABLE OF CONTENTS
Page
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AVAILABLE INFORMATION...................................... 1
REPORTS TO SECURITY HOLDERS................................ 1
AVAILABILITY OF CERTAIN DOCUMENTS.......................... 1
INTRODUCTION............................................... 1
PROSPECTUS SUMMARY 3
Business of Americorp and BCG........................... 3
Terms of the Americorp Merger...........................
Negotiation of Exchange Ratio........................... 5
The Special Meeting of Shareholders; Vote Required...... 5
Summary Historical and Pro Forma Financial Information.. 6
Rights of Dissenting Shareholders....................... 7
Federal Income Tax Consequences......................... 8
Accounting Treatment.................................... 8
Markets for Capital Stock............................... 8
Dividends............................................... 9
Conditions, Termination and Effective Date.............. 11
COMPARATIVE SHARE DATA..................................... 12
Net Income (Loss) Per Common Share...................... 12
Cash Dividends Per Common Share......................... 12
Book Value Per Common Share............................. 12
THE AMERICORP MERGER....................................... 13
Reasons for the Americorp Merger........................ 13
The Agreement and Plan of Merger........................ 15
Opinion of the Financial Advisor........................ 17
Shareholder Approval.................................... 22
Material Contacts; Interest of Management in the
Transaction; Conduct of Business After the Americorp
Merger.................................................. 22
Effect of the Americorp Merger on Americorp
Shareholders and Comparison of Securities of BCG
and Americorp........................................... 23
Markets for Capital Stock............................... 24
Resales of BCG Common Stock............................. 25
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Regulatory Approvals........................................ 26
Rights of Dissenting Shareholders........................... 26
Certain Federal Income Tax Consequences of the
Americorp Merger........................................... 27
AMERICORP, INC................................................ 28
Description of Business..................................... 28
Management's Discussion and Analysis of Financial Condition
and Results of Operation for the Years Ended December 31,
1994 and 1993.............................................. 33
Management's Discussion and Analysis of Financial Condition
and Results of Operation for the Six Months Ended June 30,
1995 and 1994.............................................. 41
Selected Statistical Financial Data......................... 45
BANK CORPORATION OF GEORGIA................................... 56
Description of Business..................................... 56
Management's Discussion and Analysis of Financial Condition
and Results of Operation for the Years Ended December 31,
1994 and 1993.............................................. 61
Management's Discussion And Analysis of Financial Condition
and Results of Operations for the Six Months Ended June 30,
1995 and 1994.............................................. 70
Selected Statistical Financial Data......................... 74
Description of BCG Common Stock............................. 85
Management.................................................. 87
Ownership of the BCG Common Stock........................... 88
Executive Compensation...................................... 90
Certain Transactions........................................ 92
SUPERVISION AND REGULATION.................................... 92
LEGAL OPINIONS................................................ 97
EXPERTS....................................................... 98
OTHER MATTERS................................................. 98
INDEX TO FINANCIAL STATEMENTS................................. F-1
Agreement and Plan of Merger.......................... Appendix A
Georgia Dissenters' Rights Statutes (O.C.G.A. (S)
14-2-1301 et seq.)................................... Appendix B
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Opinion of Alex Sheshunoff & Co. Investment Bankers... Appendix C
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AVAILABLE INFORMATION
Bank Corporation of Georgia, a Georgia corporation ("BCG"), is not
currently subject to the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and does not currently file
reports, proxy statements or other information with the Securities and
Exchange Commission ("SEC").
REPORTS TO SECURITY HOLDERS
Although BCG is not currently required to deliver an annual report to
security holders, BCG has registered its Common Stock, $1.00 par value
per share (the "BCG Common Stock") with the SEC under the Exchange Act
contemporaneously with the registration of the securities to be issued
hereunder under the Securities Act of 1933 (the "Securities Act"). As a
company registered under the Exchange Act, BCG will be required to
deliver annual proxy statements and reports to its shareholders
containing audited financial statements, as well as file certain periodic
reports with the SEC, including annual reports on Form 10-K and quarterly
reports on Form 10-Q. BCG has voluntarily delivered annual reports to
its shareholders in the past, and regardless of whether its securities
are registered under the Exchange Act, BCG intends to continue to send
reports to security holders annually, which will include audited
financial statements of BCG and its subsidiaries.
AVAILABILITY OF CERTAIN DOCUMENTS
The Agreement and Plan of Merger, dated as of November 15, 1995 (the
"Americorp Merger Agreement") by and between BCG and Americorp was filed
with the SEC on ___________, 1995 as an exhibit to BCG's Registration
Statement on Form S-4 with respect to the Americorp Merger, as defined
below, Commission File No. 33-____________. The Americorp Merger
Agreement is attached to this Proxy Statement/Prospectus as Appendix A.
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Americorp of proxies for use at special
meeting of shareholders of Americorp (the "Special Meeting") at the time,
date and place set forth in the Notice of Special Meeting, and at any
adjournments thereof. The Special Meeting has been called for the
purposes of considering and acting upon the proposed merger of Americorp
with and into BCG (the "Americorp Merger") pursuant to the Americorp
Merger Agreement, which is incorporated herein by reference. If the
Americorp Merger is consummated, the holders of common stock of
Americorp, $.01 par value per share (the "Americorp Common Stock"), would
receive .084615 shares of BCG Common Stock in exchange for each share of
Americorp Common Stock owned. In addition, all of the outstanding shares
of preferred stock of Americorp, $100.00 par value per share (the
"Americorp Preferred Stock"), would be cancelled. BCG is the only holder
of Americorp Preferred Stock.
HOLDERS OF COMMON STOCK OF AMERICORP ARE REQUESTED TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO AMERICORP IN
THE POSTAGE-PAID ENVELOPE PROVIDED.
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Any proxy given pursuant to this solicitation may be revoked at any
time before it is voted by so notifying James R. McLemore, Jr.,
Secretary, in writing or by submitting an executed, later-dated proxy to
Americorp, 7393 Hodgson Memorial Drive, Savannah, Georgia 31406,
Attention: James R. McLemore, Jr., Secretary, prior to the Special
Meeting or by appearing at the Special Meeting and requesting the right
to vote in person, without compliance with any other formalities. If the
proxy is properly signed and returned by a shareholder and is not
revoked, it will be voted at the Special Meeting in the manner specified
therein. If no instructions are indicated, such proxies will be voted
FOR the approval of the Americorp Merger Agreement, and in the discretion
of the proxy holder as to any other matter which may properly come before
the Special Meeting. If necessary, the proxy holder may vote in favor of
a proposal to adjourn such Special Meeting in order to permit further
solicitation of proxies in the event there are not sufficient votes to
approve the proposals regarding the Americorp Merger Agreement at the
time of the Special Meeting.
All of the expenses incurred by BCG in connection with the
authorization, preparation, execution and performance of the Americorp
Merger Agreement, including, without limitation, all fees and expenses of
its agents, representatives, counsel and accountants and the fees and
expenses related to filing regulatory applications with state and federal
authorities in connection with the transactions contemplated thereby,
will be paid by BCG. All expenses incurred by Americorp in connection
with the authorization, preparation, execution and performance of the
Americorp Merger Agreement, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants for
Americorp and the cost of reproducing and mailing this Proxy
Statement/Prospectus, will be paid by Americorp.
As of September 30, 1995, Americorp had issued and outstanding
5,473,889 shares of Americorp Common Stock and 37,875 shares of Americorp
Preferred Stock. Each holder of Americorp Common Stock is entitled to
one vote per share of Americorp Common Stock owned. Although the
Americorp Preferred Stock generally has no voting rights, the approval of
two-thirds of the holders of the outstanding Americorp Preferred Stock is
required to approve any change in the Americorp Articles of
Incorporation, as amended (the "Americorp Articles"), that would
materially and adversely alter the preferences, privileges, rights or
powers of the holders of Americorp Preferred Stock. Because the
Americorp Preferred Stock will be cancelled as a result of the Americorp
Merger, approval of the Americorp Merger by BCG, the sole holder of
Americorp Preferred Stock, is required. Only holders of record of
Americorp Common Stock and Americorp Preferred Stock at the close of
business on ____________________, 1996 are entitled to notice of and to
vote at the Special Meeting or any adjournments thereof.
Statements contained in this Proxy Statement/Prospectus as to the
contents of any agreement or other document, or similar statements as to
the content of any agreement or other document contained in any document
incorporated by reference herein, are in each such instance qualified in
their entirety by reference to each such agreement or other document.
This Proxy Statement/Prospectus and the enclosed form of proxy are
first being sent to the shareholders of Americorp on or about
__________________, 1996.
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PROSPECTUS SUMMARY
The following is a summary of certain features of, and information
relating to, the proposed Americorp Merger, and is qualified in its
entirety by reference to the Americorp Merger Agreement and the other
more detailed textual information and financial data set forth elsewhere
in this Proxy Statement/Prospectus.
Business of Americorp and BCG
Americorp is a one-bank holding company. All of Americorp's
activities are currently conducted by its wholly-owned subsidiary
Ameribank, National Association, Savannah, Georgia ("Ameribank"). BCG
owns 3,649,261 shares or approximately 66.67% of the Americorp Common
Stock and 37,875 shares, or 100% of the outstanding Americorp Preferred
Stock.
Ameribank is a full-service commercial bank with its main office
located in Savannah, Georgia and one branch located in Garden City,
Georgia. Ameribank provides customary types of banking services such as
checking accounts, savings accounts and time deposits. It also engages
in commercial and consumer lending, makes secured and unsecured loans and
provides other financial services.
On October 18, 1995, Ameribank entered into a Branch Purchase and
Assumption Agreement with Bank South (the "Purchase and Assumption
Agreement") pursuant to which Ameribank agreed to purchase certain
assets, including, approximately $4.7 million in loans as of September
30, 1995, and assume certain liabilities, including approximately $16.8
million in deposit liabilities as of September 30, 1995, of Bank South
related to the Bank South banking office located at 1976 East Victory
Drive in Savannah, Georgia (the "Purchase and Assumption"). Bank South
has also agreed to assign the lease of the Bank South Center located at 7
East Congress Street, Savannah, Georgia to Ameribank when the location is
vacated by Bank South in the third quarter of 1996, subject to the
receipt of the landlord's consent. Ameribank will not assume any of the
Bank South deposits or other liabilities related to the East Congress
Street facility. Consummation of the Purchase and Assumption is subject
to the receipt of approval of the OCC and consummation of the proposed
merger of Bank South Corporation with and into NationsBank Corporation,
among other conditions.
As of September 30, 1995, Americorp had total assets of approximately
$69.5 million, total deposits of approximately $58.8 million, net loans
of approximately $45.6 million and shareholders' equity of approximately
$7.7 million. The principal executive office of Americorp is located at
7393 Hodgson Memorial Drive, Savannah, Georgia, and its telephone number
at that address is (912) 921-7100. See "AMERICORP, INC."
BCG is a bank holding company operating four community banks in
Georgia, including Ameribank. All of BCG's activities are currently
conducted by its wholly-owned subsidiaries, First South Bank, National
Association, Fort Valley, Georgia ("FSB"), First South Bank of Middle
Georgia, National Association, Macon, Georgia ("Middle Georgia"), and
First
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South Bank of Coweta County, National Association, Newnan, Georgia
("Coweta"), all of which are national banks organized under the laws of
the United States (collectively, the "Banks"). Following the Americorp
Merger, Ameribank will also be a wholly-owned subsidiary of BCG. The
Banks are community-oriented, with an emphasis on lending to small
businesses and professionals and other customary banking services.
In addition to the Americorp Merger, BCG has entered into an agreement
(the "Effingham Reorganization Agreement") with Effingham Bank & Trust
("Effingham"), a Georgia State-chartered bank with one office in Rincon,
Effingham County, Georgia, pursuant to which Effingham Interim
Corporation ("Interim"), a wholly owned subsidiary of BCG will be merged
with and into Effingham (the "Effingham Merger"). If the Effingham
Merger is consummated, each shareholder of Effingham other than BCG will
receive .53 shares of BCG Common Stock for each share of common stock of
Effingham ("Effingham Stock") held by them. BCG has filed a Registration
Statement on Form S-4 under the Securities Act with the Securities and
Exchange Commission with respect to the shares of BCG Common Stock to be
issued to the holders of Effingham Stock upon consummation of the
Effingham Merger.
BCG also has entered into an agreement with certain shareholders of
Effingham to purchase 76,850 shares (23.51% of the outstanding stock of
Effingham) for $12.00 a share (the "Effingham Stock Purchase Agreement").
The Effingham Stock Purchase Agreement will be consummated immediately
prior to the Effingham Reorganization Agreement. If the Effingham
Reorganization Agreement is terminated, the Effingham Stock Purchase
Agreement will not be consummated. It is anticipated by management of
BCG that following consummation of the Effingham and Americorp Mergers,
Ameribank and Effingham will be merged, with the surviving bank being
operated as a national bank. As of September 30, 1995, Effingham had
total assets of approximately $24.9 million.
At September 30, 1995, BCG (including Americorp) had total assets of
approximately $227.1 million, net loans of approximately $155.6 million,
total deposits of approximately $196.4 million and shareholders' equity
of approximately $19.2 million. The principal executive office of BCG is
located at 4951 Forsyth Road, Macon, Georgia 31210, and its telephone
number at that address is (912) 757-2000. See "BANK CORPORATION OF
GEORGIA."
Terms of the Americorp Merger
Pursuant to the Americorp Merger Agreement, Americorp will be merged
with and into BCG, with BCG being the surviving entity. As a result of
the Americorp Merger, each share of Americorp Common Stock outstanding on
the effective date of the Americorp Merger will be converted into .084615
shares of the BCG Common Stock, except for those shares of Americorp
Common Stock held by BCG, which will be cancelled. Each share of
Americorp Preferred Stock (all of which are owned by BCG) will be
cancelled upon consummation of the Americorp Merger. No changes in the
management of BCG are anticipated as a result of the Americorp Merger.
-4-
<PAGE>
<PAGE>
In lieu of the issuance of fractional shares of BCG Common Stock,
there will be paid in cash an amount (computed to the nearest cent) equal
to such fraction multiplied by $13.00. The number of shares of BCG
Common Stock to be received pursuant to the Americorp Merger is subject
to appropriate adjustment in the event of any stock dividend, stock
split, recapitalization or reclassification.
Management of BCG believes that a price of $12.00 per share is the
best estimate of the current fair value of the BCG Common Stock.
Although the BCG Common Stock has traded at prices higher than $12.00
per share recently, the market for the BCG Common Stock is not currently
highly liquid, and management believes the BCG Common Stock could be
sold at $12.00 per share even in an illiquid market. Accordingly,
using a $12.00 per share price, the shareholders of Americorp who
will receive .084615 shares of BCG Common Stock for their Americorp
Common Stock will effectively be receiving the equivalent of $1.01538
for each share of Americorp Common Stock.
Negotiation of Exchange Ratio
Because Americorp is 66-2/3% owned by BCG and all the directors of
Americorp are officers and/or directors of BCG, in June 1995, J. Thomas
Wiley, Jr., Executive Vice President of BCG and Vice President and
Director of Americorp, approached Hugh W. Tracy, former Chairman of
Americorp and Americorp's largest minority shareholder with 4.1% of
the total shares of outstanding Americorp Common Stock, to negotiate
an exchange ratio on behalf of the shareholders of Americorp other
than BCG. Mr. Tracy is not currently a member of the board of directors
of either Americorp or BCG. During the negotiations, Mr. Tracy also
regularly consulted Richard Barrow, Clark Honnold, Carl Graham, Richard
Moore, Jules D. Paderewski and Mark Silvers, who along with Mr. Tracy
collectively beneficially own or control 535,868 shares of Americorp
Common Stock or 29.37% of the shares held by minority shareholders
or 9.9% of the total shares of Americorp Common Stock. Mr. Tracy also
employed legal counsel to review the terms of the transaction.
BCG initially offered an exchange ratio of .058 shares of BCG Common
Stock for each share of Americorp which it developed based on a
valuation of the Americorp Common Stock provided by Hoefer & Arnett, an
investment banking firm specializing in financial institutions. Hoefer
& Arnett applied a minority discount to the minority block of Americorp
Common Stock in performing its valuation of the block. Mr. Tracy
rejected the initial offer because he did not think the minority
discount applied by Hoefer & Arnett in arriving at the valuation
underlying the exchange ratio proposed by BCG was appropriate. The
parties continued negotiations on and off for the next several months
while Mr. Tracy performed his own due diligence evaluation of the
appropriate exchange ratio. BCG ultimately agreed that a minority
discount was inappropriate under the circumstances. Therefore, in
October 1995, BCG and Americorp agreed that Alex Sheshunoff & Co.
Investment Banking, which had a more widely recognized national
reputation than Hoefer & Arnett, should be hired to provide a third-
party fairness opinion and to establish an exchange ratio as of
September 30, 1995 based on the fair market values for 33.33% of the
outstanding Americorp Common Stock and a minority block of the out-
standing BCG Common Stock, which minority blocks of stock would be
valued from a minority perspective using the standard fair market
value methodoligies. At that time, Sheshunoff concluded that an
exchange ratio of .06923 was fair from a financial perspective to
the Americorp shareholders other than BCG. See "Opinion of the
Financial Advisor." The parties continued negotiations using that
opinion and negotiated the final exchange ratio of .084615 shares
of BCG Common Stock for each share of Americorp Common Stock other
that the shares held by BCG. The final exchange ratio was based
on assumed values of $13.00 and $1.10 assigned to the BCG Common
Stock and Americorp Common Stock, respectively. Sheshunoff was again
consulted regarding the final negotiated exchange ratio, which
it concluded was fair, from a financial perspective to the Americorp
shareholders other than BCG. See "Opinion of the Financial Advisor."
The Special Meeting of Shareholders; Vote Required
The Special Meeting of Americorp shareholders will be held on
____________, 1995, commencing at ____________ __.m., at
___________________________, Savannah, Georgia for the purpose of voting
on the Americorp Merger. Only Americorp shareholders of record at the
close of business on ____________, 1996 will be entitled to notice of and
to vote at the Special Meeting or any adjournments thereof. The
Americorp Articles of Incorporation (the "Americorp Articles") require
that any merger or consolidation involving Americorp be approved by the
holders of at least 70% of the outstanding shares of Americorp stock
entitled to be voted thereon, unless such merger or consolidation is
-5-<PAGE>
<PAGE>
approved in a resolution adopted by at least 70% of the members of the
Americorp Board of Directors. Because the Americorp Board unanimously
approved the Americorp Merger, the supermajority voting provisions of the
Americorp Articles are not relevant to the transaction, and the approval
of the Americorp Merger requires the affirmative vote of the holders of a
majority of the outstanding Americorp Common Stock present and entitled
to vote at the Special Meeting. Although the holders of Americorp
Preferred Stock generally have no voting rights, any change in the
Americorp Articles that would materially and adversely alter the
preferences, privileges, rights or powers of the holders of Americorp
Preferred Stock requires the approval of the holders of two-thirds the
outstanding shares of Americorp Preferred Stock.
Because the Americorp Preferred Stock will be cancelled as a result of
the Americorp Merger, approval of the Americorp Merger by BCG, the sole
holder of Americorp Preferred Stock, is required. Directors and executive
officers of Americorp, all of whom are all also directors and executive
officers of BCG, control the 3,649,261 shares (approximately 66.67% of
the outstanding shares) of Americorp Common Stock held by BCG, and the
37,875 shares (100% of the outstanding shares) of Americorp Preferred
Stock held by BCG, but do not otherwise own or control any shares of
Americorp Common or Preferred Stock. BCG has indicated that it will vote
the 3,649,261 shares of Americorp Common Stock and the 37,875 shares of
Americorp Preferred Stock held by it in favor of the Americorp Merger.
Therefore, approval of the Americorp Merger is assured. The shareholders
of BCG are not required to approve the Americorp Merger.
-6-
<PAGE>
<PAGE>
Rights of Dissenting Shareholders
If the Americorp Merger is consummated, the Americorp Shareholders
dissenting therefrom will be entitled to be paid the "fair value" of all
of their shares in cash, provided that they fully comply with certain
statutory provisions regarding the rights of dissenting shareholders.
In order to dissent from the Americorp Merger, an Americorp
shareholder must (i) deliver written notice of such shareholder's intent
to demand payment prior to the shareholder vote on the Americorp Merger
and (ii) not vote his shares of Americorp Common Stock in favor of the
Americorp Merger. If the Americorp Merger is approved, an Americorp
shareholder who has complied with the foregoing steps may demand payment
and deposit his certificates of Americorp Common Stock in accordance with
the terms of a notice that will be sent to the shareholder by Americorp
no later than ten (10) days after consummation of the Americorp Merger.
Americorp must offer to pay a shareholder who complies with these steps
the amount that Americorp estimates to be the fair value of the
shareholder's stock and interest thereon within ten (10) days of the
later of consummation of the Americorp Merger or the Effective Date (the
"Date"). If the dissenting shareholder accepts Americorp's determination
of the fair value of the shares and the interest thereon or is deemed to
have accepted such determination because of a failure to respond in a
timely fashion, Americorp must pay the shareholder such amount within
sixty (60) days of the Date. A shareholder who does not accept
Americorp's estimate of the fair value must demand payment based on the
shareholder's own estimate within thirty (30) days after the Americorp
offer. Americorp must file an action in a court of competent
jurisdiction in Chatham County, Georgia within sixty (60) days after
receiving the payment demand to request that the fair value of the shares
be determined, if it fails to file such an action, or pay each dissenting
shareholder whose demand remains unsettled the amount demanded by such
dissenting shareholder. For a more complete description of the rights of
a dissenting Americorp shareholder, see "THE AMERICORP MERGER -- Rights
of Dissenting Shareholders."
Federal Income Tax Consequences
Americorp has received an opinion from Kilpatrick & Cody to the effect
that, assuming the Americorp Merger is consummated in accordance with the
terms of the Americorp Merger Agreement, under applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), no gain or
loss will be recognized for Federal income tax purposes by Americorp or
the Americorp shareholders who receive BCG Common Stock in connection
with the Americorp Merger. No ruling to that effect will be requested
from the Internal Revenue Service. Cash received by holders of Americorp
Common Stock exercising their dissenter's rights will be treated as
amounts distributed in redemption of their Americorp Common Stock and
will be taxable under the provisions of section 302 of the Code as either
ordinary income or capital gain or loss, depending upon the circumstances
of the individual shareholders. See "THE AMERICORP MERGER -- Certain
Federal Income Tax Consequences of the Americorp Merger."
-7-
<PAGE>
<PAGE>
Accounting Treatment
BCG will account for the Americorp Merger as a "purchase" transaction
in accordance with generally accepted accounting principles. Pursuant to
such treatment, the total price will be allocated to Americorp's assets
and liabilities based on estimated fair values at the time of
acquisition, with any excess portion allocated to goodwill. Any portion
of the total price allocated to goodwill will be amortized for financial
statement purposes over a period not to exceed 15 years, resulting in a
decrease in net income.
Markets for Capital Stock
The BCG Common Stock is not currently traded on an established public
market. As of January 12, 1996, there were 1,910,454 shares of the BCG
Common Stock outstanding and 272 record holders of such shares. BCG has
granted employees of BCG and its subsidiaries outstanding options to
acquire a total of 208,539 shares of BCG Common Stock. Currently, the
BCG Common Stock is thinly traded. Accordingly, there is no guarantee
that former Americorp shareholders will be able to sell significant
blocks of the BCG Common Stock received by them in the Americorp Merger
in a timely manner at the most recently quoted price. It is antici-
pated by management of BCG that prior to the closing of the Americorp
Merger or immediately thereafter, the BCG Common Stock will be
registered under the Securities Exchange Act of 1934 and immediately
following the closing of the Americorp Merger and the Effingham Merger,
application will be made for trading the BCG Common Stock on the
Nasdaq Stock Market, which management anticipates will enhance the
liquidity of the BCG Common Stock. Nonetheless, there can be no
assurances that such steps will significantly improve the liquidity
of the BCG Common Stock, particularly in the short term.
During 1995, management of BCG is aware of trades of BCG
Common Stock aggregating 53,500 shares at prices ranging from $8.28 per
share to $15.00 per share. During 1994, management of BCG is aware of
trades of BCG Common Stock aggregating 88,100 shares at prices ranging
from $8.14 per share to $9.23 per share. Management of BCG is aware of
trades of BCG Common Stock during 1993 aggregating 9,200 shares and at
prices from $5.14 per share to $6.03 per share. The last sales price
of BCG Common Stock known to BCG's management prior to the public
announcement of the Americorp Merger on November 3, 1995 was $13-7/8 on
November 1, 1995. On ____________, 1996, [latest practicable date],
management of BCG is aware of a trade of ____ shares of BCG Common Stock
at a price of $_______ per share. Because the BCG Common Stock is
thinly traded and not very liquid, management believes that $12.00 per
share is the best estimate of the current fair value of the BCG Common
Stock.
Americorp Common Stock is not traded on an established public trading
market. As of September 30, 1995, there were 5,473,889 shares of
Americorp Common Stock outstanding and 426 record holders of such shares,
and 37,875 shares of Americorp Preferred Stock outstanding and one record
holder of such shares. As of September 30, 1995, there were 2,000 shares
of Americorp Common Stock that were subject to outstanding options
granted to employees of Americorp pursuant to Americorp's 1986 Incentive
Stock Option Plan.
During 1995, management of Americorp is aware of two trades
of Americorp Common Stock aggregating 143,000 shares at $.28 per share.
Management of Americorp is aware of no trades of Americorp Common Stock
during 1994. The only trade known to management of Americorp during 1993
was the sale of 2,721,090 shares of Americorp Common Stock at $.29 per
share on December 10, 1993 by Americorp to BCG. See "THE AMERICORP
MERGER -- Reasons for the Proposed Americorp Merger."
-8-
<PAGE>
<PAGE>
The last sales price of the Americorp Common Stock known to management
of Americorp prior to the public announcement of the Americorp Merger on
November 3, 1995 was $.28 per share on March 3, 1995. On _________, 1996
[latest practicable date], management of Americorp is aware of a trade of
_____ shares of Americorp Common Stock at $_____ per share.
Dividends
In 1995, BCG paid one cash dividend of $.10 per share to
its shareholders of record as of September 15, 1995. In addition, BCG
paid one 75% BCG Common Stock dividend to its common shareholders of
record in March of 1995. BCG paid one cash dividend of $.10 per share of
BCG Common Stock to its shareholders of record in 1994 ($.0571 restated
for the 1995 BCG Common Stock dividend) and one cash dividend of $.05 per
share of BCG Common Stock to shareholders of record in 1993 ($.0285
restated for the 1995 BCG Common Stock dividend). Although BCG intends
to continue paying cash dividends, the amount and frequency of cash
dividends will be determined by BCG's Board of Directors after
consideration of earnings, capital requirements and the financial
condition of BCG. No assurances can be given that cash dividends will be
declared in the future. Additionally, BCG's ability to pay cash
dividends will be dependent on cash dividends paid to it by the Banks and
Americorp. The ability of the Banks to pay dividends to BCG and the
ability of Ameribank to pay dividends to Americorp are restricted by
applicable regulatory requirements. See "SUPERVISION AND REGULATION --
Payment of Dividends."
Americorp has never paid any cash dividends on the Americorp Common
Stock. Currently, management of Americorp intends to retain all of its
earnings, if any, to increase shareholders' equity. Payments of
dividends in the future to holders of Americorp Common Stock will depend,
among other factors, on earnings, capital requirements and the operating
and financial condition of Americorp, and no assurances can be given that
any cash dividends can or will be declared on the Americorp Common Stock
in the future. In addition, Americorp's ability to pay cash dividends
will be dependent on cash dividends paid to it by Ameribank. Management
of Ameribank currently intends to retain all of Ameribank's earnings, if
any, to increase shareholders' equity. Additionally, the ability of
Ameribank to pay dividends to Americorp is restricted by applicable
regulatory requirements and requirements related to the Americorp
Preferred Stock. See "SUPERVISION AND REGULATION -- Payment of
Dividends."
Whether or not the Americorp Merger Agreement is approved by the
shareholders of Americorp and the transactions contemplated thereby
consummated, future dividend policy for BCG and Americorp will depend
upon each company's earnings, financial condition, appropriate legal
restrictions and other factors relevant at the time the respective Boards
consider such dividends. See "SUPERVISION AND REGULATION -- Payment of
Dividends" for a description of regulatory restrictions on the payment of
dividends.
-9-
<PAGE>
<PAGE>
Conditions, Termination and Effective Date
The Americorp Merger is subject to a number of conditions and may be
terminated at any time by either Americorp or BCG but not later than the
Effective Date (as defined below). See "THE AMERICORP MERGER -- The
Agreement and Plan of Merger." The Americorp Merger is subject to
approval by the Americorp Shareholders, and the receipt of required
approval by the Department of Banking and Finance of the State of Georgia
(the "DBF"). The Board of Governors of the Federal Reserve System (the
"Federal Reserve") has indicated that its approval of the Americorp
Merger is not required because BCG currently owns 66.67% of the Americorp
Common Stock and 100% of the Americorp Preferred Stock. See "THE
AMERICORP MERGER -- Regulatory Approvals."
The closing of the Americorp Merger (the "Effective Date") will occur
following approval of the Americorp Merger Agreement by the Americorp
shareholders, approval of the transaction by the regulators referenced
above and the expiration of any waiting or similar period required by
applicable law, or at such other time as BCG and Americorp may mutually
agree. If the Americorp Merger is not consummated, BCG will continue to
own 66.67% of the Americorp Common Stock and 100% of the Americorp
Preferred Stock, and the other shareholders of Americorp will retain
their shares of Americorp Common Stock.
-10-
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<PAGE>
Summary Historical and Pro Forma Financial Information.
The following unaudited summary historical financial information and
summary pro forma financial information should be read in conjunction
with the financial statements and notes thereto of BCG, Americorp and
Effingham and with the pro forma financial information regarding the
Americorp Merger, Effingham Merger and the acquisition of the Bank South
branch.
SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL INFORMATION OF BANK
CORPORATION OF GEORGIA
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Consolidated
As Adjusted (3)
---------------
Year Nine Months Nine Months
Ended Ended Ended
December 31, September 30, September 30,
------------ ------------- -------------
1994 1995 1995
---- ---- ----
<S> <C> <C> <C>
Balance Sheet Data
Total assets $216,253 227,146 270,352
Loans, gross 143,426 157,928 180,503
Deposits 189,323 196,438 234,787
Long term debt 2,500 2,500 3,422
Stockholders' equity 16,322 19,229 22,834
<CAPTION>
Pro Forma Pro Forma
Consolidated Consolidated
As Adjusted (3) As Adjusted (3)
--------------- ---------------
Year Nine Months Nine Months Year
Ended Ended Ended Ended
December 31, September 30, September 30, December 31,
------------ ------------- ------------- -------------
1994 1995 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statement of Earnings Data
Net interest income $ 9,575 8,786 10,060 10,926
Provision for loan losses 447 335 335 447
Noninterest income 2,528 1,686 2,063 3,150
Net earnings 2,229 2,299 2,684 3,154
Per Share Data
Book value (period end) (1) $ 8.69 9.77 10.07 8.69
Net earnings 1.19 1.17 1.18 1.19
Weighted average outstanding 1,872 1,966 2,267 2,267
shares
Dividends $ 0.0571 $ 0.1000 $ 0.0828 $0.0473
<CAPTION>
Year Nine Months
Ended Ended
December 31, September 30,
------------ -------------
1994 1995
---- ----
<S> <C> <C>
Ratios
Return on average assets 1.09% 1.40%
Return on average stockholders' 14.54% 16.95%
equity
Net interest margin (2) 5.06% 5.87%
Average stockholders' equity to 7.49% 8.24%
average assets
</TABLE>
(1) Represents stockholders' equity divided by the weighted average number of
shares outstanding for purposes of calculating primary earnings per share.
(2) Represents net interest income as a percentage of average interest-earning
assets.
(3) Gives effect to the exchanges of stock for Effingham, Americorp and branch
acquisition.
-11-<PAGE>
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF
AMERICORP, INC.
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended
December 31, September 30,
------------ -------------
1994 1995
---- ----
<S> <C> <C>
Balance Sheet Data
Total assets $ 64,299 69,481
Loans, gross 40,180 46,338
Deposits 57,473 58,763
Stockholders' equity
common 2,708 3,816
preferred 3,642 3,864
<CAPTION>
Year Nine Months
Ended Ended
December 31, September 30,
------------ -------------
1994 1995
---- ----
<S> <C> <C>
Statement of Earnings Data
Net interest income $ 2,403 2,394
Provision for loan losses 19 45
Noninterest income 597 443
Net earnings 1,955 791
Per Common Share Data
Book value (period end) (1) $ .49 .70
Net earnings .36 .14
Weighted average outstanding 5,474 5,474
shares
Dividends -- --
<CAPTION>
Year Nine Months
Ended Ended
December 31, September 30,
------------ -------------
1994 1995
---- ----
<S> <C> <C>
Ratios
Return on average assets 3.41% 1.58%
Return on average stockholders' 41.45% 14.96%
equity
Net interest margin (2) 4.57% 5.47%
Average stockholders' equity to 8.23% 10.49%
average assets
</TABLE>
(1) Represents common stockholders' equity divided by the weighted average
number of shares outstanding for purposes of calculating primary
earnings per share.
(2) Represents net interest income as a percentage of average interest-earning
assets.
-12-<PAGE>
COMPARATIVE SHARE DATA
The following table sets forth selected comparative unaudited per-
share data for BCG on a historical basis (the "BCG Historical"), for
Americorp on a historical basis (the "Americorp Historical"), for BCG and
Americorp on a pro forma basis assuming the Americorp Merger had been
effective for the periods indicated (the "BCG and Americorp Combined Pro
Forma"), for BCG, Effingham and Americorp on a pro forma basis assuming
all transactions had been effective for the periods indicated (the "Total
Combined Pro Forma"), and for Americorp on a pro forma equivalent basis
(the "Americorp Pro Forma Equivalent"). The Americorp Merger will be
accounted for as a purchase transaction in accordance with generally
accepted accounting principles.
Equivalent earnings per share for Americorp have been calculated by
multiplying the pro forma combined earnings per share by the Americorp
Exchange Ratio (.084615 shares of BCG Common Stock for each share of
Americorp Common Stock). The Americorp pro forma equivalent cash
dividends per common share represent historical dividends declared by BCG
multiplied by the Americorp Exchange Ratio. The purpose of the pro forma
equivalent per-share amounts is to show the pro forma net earnings that
would have been earned for each share of Americorp had the Americorp
Merger been consummated for the periods indicated. This data should be
read in conjunction with the historical financial statements of
Effingham, Americorp and BCG included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, 1994 September 30, 1995
----------------- ------------------
<S> <C> <C>
Net Income (Loss) Per Common Share
BCG Historical $ 1.19 1.17
Americorp Historical .36 .14
BCG and Americorp Combined Pro Forma/(a)/ 1.35 1.20
Total Combined Pro Forma/(b)/ 1.37 1.15
Americorp Pro Forma Equivalent - This .11 .10
Acquisition Only/(c)/
Americorp Pro Forma Equivalent - All .12 .10
Acquisitions/(c)/
<CAPTION>
Year Ended Nine Months Ended
December 31, 1994 September 30, 1995
----------------- ------------------
<S> <C> <C>
Cash Dividends Per Common Share
BCG Historical $.0571 .10
Americorp Historical -- --
BCG and Americorp Combined Pro Forma/(a)/(d) .0571 .10
Total Combined Pro Forma/(b)/(d) .0571 .10
Americorp Pro Forma Equivalent .0571 .10
- This Acquisition Only/(c)/
Americorp Pro Forma Equivalent - All .0571 .10
Acquisitions/(c)/
<CAPTION>
As of As of
December 31, 1994 September 30, 1995
----------------- ------------------
<S> <C> <C>
Book Value Per Common Share
BCG Historical $ 8.69 9.77
Americorp Historical .49 .70
BCG and Americorp Combined Pro Forma/(a)/ 8.40 9.94
Total Combined Pro Forma/(b)/ 9.16 10.07
Americorp Pro Forma Equivalent - This
Acquisition Only .71 .84
Americorp Pro Forma Equivalent - All .78 .85
Acquisitions/(c)/
</TABLE>
(a) Computed giving effect to the Americorp Merger only.
(b) Computed giving effect to the Effingham and Americorp Mergers and the
Bank South Branch Acquisition.
(c) Computed based on the Americorp Exchange Ratio of .084615 shares of
BCG Common Stock for each share of Americorp Common Stock.
(d) Computed based on management's anticipated dividend policy to be
followed subsequent to the Mergers.
-13-
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<PAGE>
THE AMERICORP MERGER
Reasons for and Background of the Americorp Merger
Relationship of Americorp and BCG. On April 20, 1989, following a
regular examination by the Office of the Comptroller of the Currency (the
"OCC") that began in July of 1988, Ameribank entered into an agreement
with the OCC pursuant to which Ameribank agreed to change certain
operating procedures, engage an outside consultant, maintain a ratio of
primary capital to assets of 7%, improve the overall quality of the loan
portfolio and provide for adequate sources of liquidity to improve its
financial condition. Following the execution of the agreement, Americorp
retained a consulting firm and began implementing procedures to comply
with the operating requirements.
As a part of this compliance, Americorp submitted a strategic plan to
the OCC for 1992 through 1994. This plan called for a continued emphasis
on asset quality and minimization of asset growth, aggressive reduction
in Ameribank's level of non-performing assets and maintenance of adequate
levels of capital.
On November 16, 1990, to infuse capital into Americorp, BCG purchased
608,200 newly-issued shares of Americorp Common Stock for $1.14 per share
(25% of the then-outstanding Americorp Common Stock), pursuant to an
Agreement for the Purchase of Shares of Common Stock and Preferred Stock
of Americorp, Inc. dated May 10, 1990, as amended on June 14, 1990 and
August 23, 1990 (the "Americorp Stock Purchase Agreement"). BCG also
purchased from Americorp 8,500 shares of Americorp Preferred Stock at
the price of $100 per share pursuant to the Americorp Stock Purchase
Agreement. Management is not aware of any other trades of the Americorp
Common Stock in 1990 or for several years thereafter. The Americorp
Stock Purchase Agreement granted BCG the option until December 31, 1992
to purchase up to 12,000 additional shares of Americorp Preferred Stock
at $100 per share and 608,200 additional shares of Americorp Common
Stock at $1.14 per share. BCG immediately partially exercised the
option and purchased an additional 9,500 shares of the Americorp
Preferred Stock.
Following execution of the Americorp Stock Purchase Agreement, J.
Thomas Wiley, Jr., an Executive Vice President of BCG, was appointed
President of Ameribank. On November 15, 1990, Joseph W. Evans, Director,
President and CEO of BCG, was elected Director, President and CEO of
Americorp, and Stephen W. Doughty, Executive Vice President of BCG, was
elected Director of Americorp. Americorp also entered into an agreement
with BCG on November 15, 1990 (the "Management Agreement") pursuant to
which BCG agreed to provide auditing, loan review and other credit
analysis services for a fee of $21,000 a month.
On December 31, 1991, Americorp borrowed $500,000 from BCG to invest
in Ameribank in the form of additional equity capital. Interest on the
loan was calculated at the prime rate plus two percent adjusted
quarterly. The initial rate on the loan was 91/2% at December 31, 1991.
Principal and accrued interest were due on December 31, 1993, but the
loan was cancelled on December 10, 1993 pursuant to the Exchange
Agreement described below.
-14-
<PAGE>
<PAGE>
On December 30, 1992, BCG partially exercised the option granted in
the Americorp Stock Purchase Agreement to purchase 319,971 shares of
Americorp Common Stock. The exercise price of the option was paid by
forgiveness of accrued management fees and accrued interest payable to
BCG, resulting in an effective per-share exercise price of $1.14 per
share, which was the exercise price pursuant to the option granted in
the Americorp Stock Purchase Agreement. After exercising this option,
BCG's ownership of the outstanding Americorp Common Stock increased
to 33.7%. The option to purchase the remaining 288,229 shares of
Americorp Common Stock expired on December 31, 1992.
BCG received an additional $286,000 of Americorp Preferred Stock as
dividends in 1992. At December 31, 1992, Americorp stockholders' equity
consisted almost entirely of preferred equity. Net losses experienced by
Americorp of $452,000 for 1992 and $1,430,000 for 1991 eliminated all
common stockholders' equity.
On December 10, 1993 BCG entered into an agreement (the "Exchange
Agreement") with Americorp pursuant to which Americorp agreed to issue
BCG 2,721,090 shares of Americorp Common Stock in exchange for the
$797,652 owed to BCG pursuant to (i) the $500,000 note dated December 31,
1991, (ii) the accrued interest thereon and (iii) accrued management fees
owed to BCG pursuant to a Management Agreement between BCG and Americorp
dated January 1, 1992. The effective per-share price of the Americorp
Common Stock purchased pursuant to the Exchange Agreement was $.29314
per share. BCG obtained a fairness opinion by an independent third
party with respect to such price. The Exchange Agreement also provided
that the Americorp Preferred Stock held by BCG would accrue interest at
the rate of 8% for three years until December 10, 1996, at which time the
Americorp Preferred Stock would revert to accruing interest in accordance
with its terms. Immediately prior to the Exchange Agreement, the
Americorp Preferred Stock was accruing interest, payable in cash or in
additional shares of Americorp Preferred Stock, at a rate of prime plus
3% through July 1, 1995, at which time the rate was scheduled to increase
to the prime rate plus 5%.
Following its Report of Examination dated November 2, 1993, the OCC
terminated Ameribank's troubled condition status and Ameribank was
released from the agreement with the OCC based on the improved condition
of Ameribank. On December 10, 1993, Americorp and BCG entered into a new
three-year Management Agreement which reduced the management fees payable
to BCG from $21,000 to $10,000 per month due to the significant reduction
in time being spent by BCG for audit and loan review services as
Ameribank's condition improved.
Reasons for the Merger; Negotiation of Exchange Ratio. Because
Americorp is 66-2/3% owned by BCG and all the directors of Americorp are
officers and/or directors of BCG, in June 1995, J. Thomas Wiley, Jr.,
Executive Vice President of BCG and Vice President and Director of
Americorp, approached Hugh W. Tracy, former Chairman of Americorp and
Americorp's largest minority shareholder with 4.1% of the total shares
of outstanding Americorp Common Stock, to negotiate an exchange ratio
on behalf of the shareholders of Americorp other than BCG. Mr. Tracy
is not currently a director of either BCG or Americorp. During the
negotiations, Mr. Tracy also regularly consulted Richard Barrow, Clark
Honnold, Carl Graham, Richard Moore, Jules Paderewski and Mark Silvers,
who along with Mr. Tracy collectively beneficially own or control
535,868 shares of Americorp Common Stock, or 29.37% of the shares held
by shareholders other than BCG or 9.9% of the total shares. Mr. Tracy
also employed legal counsel to review the terms of the transaction.
BCG initially offered an exchange ratio of .058 shares of BCG Common
Stock for each share of Americorp, which it developed based on a
valuation of the Americorp Common Stock provided by Hoefer & Arnett,
an investment banking firm specializing in financial institutions.
Hoefer & Arnett had applied a minority discount to the minority block
of Americorp Common Stock in performing its valuation of the minority
block. Mr. Tracy rejected the initial offer because he did not think
the minority discount applied by Hoefer & Arnett in arriving at the
valuation underlying the exchange ratio was appropriate. The parties
continued negotiations on and off for the next several months while
Mr. Tracy performed his own due diligence evaluation of the appropriate
exchange ratio. BCG ultimately agreed that a minority discount was
inappropriate under the circumstances. Therefore, in October 1995,
BCG and Americorp agreed
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that Alex Sheshunoff & Co. Investment Banking, which had a more widely
recognized national reputation than Hoefer & Arnett, should be hired to
provide a third-party fairness opinion and to establish an exchange ratio
as of September 30, 1995 based on the fair market values for 33.33% of
the outstanding Americorp Common Stock and a minority block of the out-
standing BCG Common Stock, which minority blocks of stock would be
valued from a minority perspective using the standard fair market
value methodoligies. At that time Sheshunoff concluded that an
exchange ratio of .06923 was fair from a financial perspective to
the Americorp shareholders other than BCG. See "Opinion of the
Financial Advisor." The parties continued negotiations using the
Sheshunoff opinion and negotiated the final exchange ratio of .084615
shares of BCG Common Stock for each share of Americorp Common Stock
other than the shares held by BCG. The final exchange ratio was
based on assumed values of $13.00 and $1.10 assigned to the BCG Common
Stock and the Americorp Common Stock, respectively. Sheshunoff was
again consulted regarding the final negotiated exchange ratio, which
it concluded was fair, from a financial perspective to the Americorp
Shareholders other than BCG.
The Board of Directors of Americorp believes the Americorp Merger is
in the best interest of its shareholders because the Americorp Merger
will permit the Americorp shareholders to exchange their ownership
interest in Americorp for an equity interest in BCG, which has greater
financial resources than Americorp. Additionally, given the
concentration of ownership of the outstanding Americorp Common Stock
held by BCG (66.67%), it is the opinion of the board of Directors of
Americorp that prospects for a market in Americorp Common Stock now or in
the future are minimal. The Board of Directors of Americorp also
believes that the terms of the Americorp Merger, including the Americorp
Exchange Ratio of .084615 shares of BCG Common Stock for each share of
Americorp Common Stock, is fair and equitable and takes into account the
relative earning power of BCG and Americorp, historic and anticipated
operations, the relative book values of the stocks of the respective
companies and other pertinent factors. The Americorp Exchange Ratio of
.084615 shares of BCG Common Stock for each share of Americorp Common
Stock was derived from the book value of Americorp in comparison to the
book value of BCG. Furthermore, the firm of Alex Sheshunoff & Co.
Investment Banking has issued an opinion stating that such exchange ratio
is fair and equitable, from a financial perspective, to holders of
Americorp Common Stock other than BCG. See "THE AMERICORP MERGER --
Opinion of the Financial Analyst."
The Board of Directors of Americorp believes that the size of the
combined organization is sufficiently large to take advantage over time
of significant economies of scale, but is still small enough to maintain
the competitive advantages management believes are afforded community-
oriented banks over the larger regional and super-regional banks. It has
become increasingly apparent to the management of Americorp that in the
current regulatory and competitive environment, larger organizations with
their greater economies of scale, including their ability to spread
largely fixed regulatory compliance costs over a larger gross income base
and their ability to attract management who are able to compete in a more
sophisticated financial-services environment, will be more successful
than smaller organizations such as Americorp. Management of BCG and
Americorp believe that there is a future for community banks in the
banking industry, but that community banks will be required to achieve a
critical size to maintain satisfactory economic performance.
The Agreement and Plan of Merger
The material features of the Americorp Merger Agreement are
summarized below. This summary does not purport to be complete
and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Americorp Merger Agreement which
is incorporated herein and attached as Appendix A hereto.
Effective Date. The Americorp Merger Agreement provides that the
Americorp Merger will be effective on the first business day following
the receipt of all required approvals
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from any governmental authorities and following the expiration of any
waiting period required by law or at such other time as the parties may
mutually agree. The Americorp Merger is subject to approval by the DBF.
See "THE AMERICORP MERGER -- Regulatory Approvals." It is anticipated
that the Americorp Merger will become effective during the third quarter
of 1996.
Terms of the Americorp Merger. On the Effective Date each outstanding
share of Americorp Common Stock, other than those shares of Americorp
Common Stock owned by BCG, will be converted into and exchanged for
.084615 shares of BCG Common Stock, and each outstanding share of
Americorp Preferred Stock (all of which are owned by BCG) will be
cancelled pursuant to the Americorp Merger Agreement. Those shares of
Americorp Common Stock held by BCG will also be cancelled on the
Effective Date.
Management of BCG believes that a price of $12.00 per share is the
best estimate of the current fair value of the BCG Common Stock.
Although the BCG Common Stock has traded at prices higher than $12.00
per share recently, the market for the BCG Common Stock is not currently
highly liquid, and management believes the BCG Common Stock could be
sold at $12.00 per share even in an illiquid market. Accordingly,
using a $12.00 per share price, the shareholders of Americorp who
will receive .08615 shares of BCG Common Stock for their Americorp
Common Stock will effectively be receiving the equivalent of $1.01538
for each share of Americorp Common Stock.
If, prior to the Effective Date, the outstanding shares of the
Americorp Common Stock or BCG Common Stock are increased by means of any
stock dividend, stock split, subdivision, recapitalization or
reclassification of shares, or are combined into a lesser number of
shares by reclassification, recapitalization or reduction of capital, or
the record date that any such action occurs, the number of shares of BCG
Common Stock to be delivered pursuant to the Americorp Merger in exchange
for a share of Americorp Common Stock will be proportionately adjusted.
No scrip or fractional share certificate of BCG Common Stock will be
issued in connection with the Americorp Merger, and an outstanding
fractional share interest will not entitle the owner of such interest to
vote, to receive dividends or to any rights of a shareholder of BCG with
respect to such fractional interest. All outstanding shares of Americorp
Preferred Stock, which are all owned by BCG, will be cancelled as a
result of the Americorp Merger. In lieu of the issuance of any
fractional shares of BCG Common Stock, there shall be paid in cash an
amount (computed to the nearest cent) equal to such fraction multiplied
by $13.00 per share.
If the Americorp Merger is consummated, shareholders of Americorp will
become shareholders of BCG. The Articles of Incorporation, Bylaws,
corporate identity and existence of BCG will not be changed as a result
of the Americorp Merger.
Regardless of whether the Americorp Merger is consummated, BCG will
continue to own approximately 66.67% of the outstanding Americorp Common
Stock and 100% of the outstanding Americorp Preferred Stock. If the
Americorp Merger is not consummated, the shareholders of Americorp,
including BCG, will retain their interests in Americorp.
Termination and Conditions of Closing. The Americorp Merger
Agreement may be terminated by the Board of Directors of Americorp or
BCG, and the Americorp Merger abandoned at any time either before or
after approval of the Americorp Merger Agreement by the shareholders of
Americorp, but not later than the Effective Date.
Among the required conditions of closing are:
(i) approval of the Americorp Merger by the vote of the holders
of a majority of the Americorp Common Stock present and entitled to
vote at the Special Meeting;
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(ii) the obtaining from any and all governmental authorities,
bodies or agencies having jurisdiction over the transactions
contemplated in the Americorp Merger Agreement, including, but not
limited to the DBF, of such consents, authorizations and approvals as
are necessary of the consummation thereof and the expiration of all
applicable waiting or similar periods required by law;
(iii) the issuance of a certificate of merger by the Secretary
of State of Georgia with respect to the Americorp Merger in accordance
with the provisions of Georgia law;
(iv) the declaration by the Securities and Exchange Commission of
the effectiveness of the registration statement of BCG, of which this
Proxy Statement is a part, and the absence of any stop order entered
with respect thereto; and
(v) the receipt by Americorp of the tax opinion of Kilpatrick &
Cody as described in the Americorp Merger Agreement set forth as
Exhibit A to this Proxy Statement.
Surrender of Certificates. As soon as practicable after the
Effective Date, each holder as of the Effective Date of any shares of
Americorp Common Stock will, upon presentation and surrender of the
certificates representing such shares to BCG, be entitled to receive in
exchange therefor a certificate or certificates representing the number
of whole shares of BCG Common Stock to which such holder shall be
entitled based upon the above-described basis of exchange, together with
the amount of cash payable in lieu of a fractional interest in BCG Common
Stock. Until so surrendered, the certificates representing shares of
Americorp Common Stock will be deemed to represent the number of shares
of BCG Common Stock into which the same shall have been converted. A
SHAREHOLDER OF AMERICORP WHO IS ENTITLED TO RECEIVE BCG COMMON STOCK IN
EXCHANGE FOR SUCH SHAREHOLDER'S AMERICORP COMMON STOCK WILL NOT BE
ENTITLED TO RECEIVE PAYMENT OF ANY DIVIDENDS OR OTHER DISTRIBUTIONS ON
SHARES OF BCG COMMON STOCK INTO WHICH SUCH SHAREHOLDER'S SHARES OF
AMERICORP COMMON STOCK HAVE BEEN CONVERTED OR TO RECEIVE ANY NOTICES SENT
BY BCG TO ITS SHAREHOLDERS WITH RESPECT TO, OR TO VOTE, SUCH SHARES,
UNTIL THE CERTIFICATES REPRESENTING SUCH SHAREHOLDER'S SHARES OF
AMERICORP COMMON STOCK HAVE BEEN SURRENDERED TO BCG. Upon surrender of
any certificate which prior to the Americorp Merger represented shares of
Americorp Common Stock, the holder thereof shall be entitled to receive
any dividends or other distributions (without interest) which shall have
become payable after the Americorp Merger but prior to the surrender of
the such shares and which shall not have been paid with respect to the
number of shares of BCG Common Stock represented by the certificate
issued upon such surrender.
Opinion of the Financial Advisor
General. In October 1995, BCG retained Alex Sheshunoff & Co.
------
Investment Banking ("Sheshunoff"), an investment banking firm based
in Austin, Texas, on the basis of its experience, to perform a fair
market evaluation of 1,824,628 shares (33.33%) of the outstanding common
stock of Americorp, and of a minority block of the outstanding
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common stock of BCG, both as of September 30, 1995, such values to
be used to recommend a fair and equitable exchange ratio of BCG Common
Stock to be issued to minority shareholders of Americorp. Initially
BCG had hired Hoefer & Arnett, an investment banking firm, to perform
a valuation of the minority block of Americorp Common Stock which
BCG used to develop an exchange ratio of 0.58 that it initially
proposed to Hugh Tracy as representatives of the Minority Shareholders
of Americorp. In performing this valuation Hoefer & Arnett
applied a minority discount to the minority block. Mr. Tracy rejected
the initially proposed exchange ratio because he did not believe it was
appropriate to apply the minority discount. BCG ultimately agreed, and
at that point Sheshunoff was hired, because of its more widely recognized
national reputation, to perform a valuation from a minority perspective
using the standard fair market value methodologies and to render a
written fairness opinion. Sheshunoff has been in the business of
consulting for the banking industry for twenty years, including the
appraisal and valuation of banking institutions and their securities
in connection with mergers and acquisitions and equity offerings.
Sheshunoff has a long history of familiarity and involvement with the
banking industry nationwide, as well as familiarity with the Georgia
market and recent transactions in this market. Except as described
herein, Sheshunoff is not affiliated in any way with BCG or Americorp
or their respective affiliates.
Sheshunoff's Initial Opinion. On October 24, 1995, Sheshunoff issued
----------------------------
its Opinion (the "Opinion") to the Board of Directors of Americorp
that, in its opinion as investment bankers, a fair and equitable
exchange ratio, from a financial perspective, equals 0.06923 shares
of BCG Common Stock for each share of Americorp Common Stock. This
Opinion is based upon conditions as they existed on September 30, 1995.
Sheshunoff's written opinion does not constitute an endorsement of the
transaction or a recommendation to any shareholder as to whether or
not to exchange their shares for BCG shares. The following discussion
relates exclusively to the Opinion related to the exchange ratio of
0.06923, and not to the subsequent Fairness Opinion (as defined below)
delivered by Sheshunoff to the Boards of Directors of BCG and Americorp.
In rendering its written Opinion, Sheshunoff reviewed certain publicly
available information concerning BCG and Americorp. Sheshunoff
considered many factors in making its evaluation. In arriving at its
Opinion regarding a fair and equitable exchange ratio, Sheshunoff
reviewed: (i) the most recent external auditor's reports to the Boards of
Directors of BCG and Americorp; (ii) the September 30, 1995 balance sheet
and income statement for BCG and Americorp and the audited December 31,
1994 balance sheet and income statement for BCG and Americorp; (iii) the
Rate Sensitivity Analysis reports for BCG and Americorp; (iv) BCG's and
Americorp's listing of marketable securities showing rate, maturity and
market value as compared to book value; (v) BCG's and Americorp's
internal loan classification list; (vi) a listing of other real estate
owned for BCG and Americorp; (vii) the budget and long range operating
plan of BCG and Americorp; (viii) a listing of unfunded letters of credit
and any other off-balance sheet risks for BCG and Americorp; (ix) the
Minutes of the Board of Directors meetings of BCG and Americorp; (x) the
most recent Board report for BCG and Americorp; (xi) the listing and
description of significant real properties for BCG and Americorp; (xii)
material leases on real and personal property of BCG and Americorp;
(xiii) the directors and officers liability and blanket bond insurance
policies for BCG and Americorp; and (xiv) market conditions and current
trading levels of outstanding equity securities of BCG and Americorp.
Sheshunoff conducted an on-site review of BCG's and Americorp's
historical performance, current financial condition and performed a
market area analysis.
In addition, Sheshunoff discussed with management of BCG and Americorp
the relative operating performance and future prospects of BCG and
Americorp, primarily with respect to the current level of their earnings
and future expected operating results, giving weight to Sheshunoff's
assessment of the future of the banking industry and BCG's and
Americorp's performance within the industry. Sheshunoff compared the
results of operations of BCG with 132 regional bank holding companies
with total assets of $150 to $299 million. Sheshunoff compared the
results of operations of Americorp with 121 Georgia banks with total
assets of $50 to $99 million.
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Methodology for Determining Exchange Ratio Recommendation. The
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exchange ratio is based on the fair market values for BCG and Americorp.
The fair market values of BCG and Americorp were used to determine the
appropriate exchange ratio to be used in connection with the potential
merger. Given that the fair market values of the organizations involved
represent an important part of the exchange ratio determination, it is
essential to perform a thorough and defendable fair market evaluation
of each organization.
Many variables affect the value of banks, not the least of which is
the uncertainty of future events, so that the relative importance of the
valuation variables differs in different situations, with the result that
appraisal theorists argue about which variables are the most appropriate
ones on which to focus. Most appraisers agree that the primary financial
variables to be considered are earnings, equity, dividends or dividend-
paying capacity, asset quality and cash flow. In addition, in most
instances, if not all, value is further tempered by non-financial factors
such as marketability, voting rights or block size, history of past sales
of the banking company's stock, nature and relationship of the other
shareholdings in the bank, and special ownership or management
considerations.
Net asset value is the value of the net equity of a bank, including
---------------
every kind of property and value. This approach normally assumes
liquidation on the date of appraisal with the recognition of securities
gains or losses, real estate appreciation or depreciation and any
adjustments to the loan loss reserve, discounts to the loan portfolio or
changes in the net value of other assets. As such, it is not the best
approach to use when valuing a going concern, because it is based on
historical costs and varying accounting methods. Even if the assets and
liabilities are adjusted to reflect prevailing prices and yields (which
is often of limited accuracy because readily available data is often
lacking), it still results in a liquidation value for the concern.
Furthermore, since this method does not take into account the values
attributable to the going concern such as the interrelationship among the
company's assets, liabilities, customer relations, market presence, image
and reputation, and staff expertise and depth, little weight is given by
Sheshunoff to the net asset value method of valuation.
Market value is generally defined as the price, established on an
------------
"arms-length" basis, at which knowledgeable, unrelated buyers and sellers
would agree. The market value is frequently used to determine the price
of a minority block of stock when both the quantity and the quality of
the "comparable" data are deemed sufficient. However, the relative
thinness of the specific market for the stock of the banking company
being appraised may result in the need to review alternative markets for
comparative pricing purposes. The "hypothetical" market value for a
small bank with a thin market for its stock is normally determined by
comparison to the average price to earnings, price to equity and dividend
yield of local or regional publicly-traded bank issues, adjusting for
significant differences in financial performance criteria and for any
lack of marketability or liquidity. The market value in connection with
the evaluation of control of a bank is determined by the previous sales
of banking companies in the state or region. In valuing a business
enterprise, when sufficient comparable trade data is available, the
market value deserves greater weighing than the net asset value and
similar emphasis as the investment value as discussed below.
Sheshunoff maintains substantial files concerning the average price to
earnings, price to equity and dividend yield of local or regional
publicly-traded bank issues nationwide. The database provides comparable
pricing and financial performance data for publicly-traded banking
companies. The data present averages of financial performance and price
levels of stocks, thereby facilitating a valid comparative analysis. In
analyzing the fair market values of BCG and Americorp, Sheshunoff has
considered the market approach and has evaluated price to equity and
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price to earnings multiples of publicly-traded Georgia banking
organizations as of September 30, 1995.
Sheshunoff calculated an "Adjusted Book Value" of $1.32 per share
based on Americorp's September 30, 1995 common equity and the average
price to equity ratio for publicly-traded Georgia banking organizations
as of September 30, 1995. Sheshunoff calculated an "Adjusted Earnings
Value" of $1.87 per share based on Americorp's estimated 1995 earnings
and the average price to earnings ratio for publicly-traded Georgia
banking organizations as of September 30, 1995. Sheshunoff calculated an
"Adjusted Book Value" of $19.31 per share based on BCG's September 30,
1995 common equity and the average price to equity ratio for publicly-
traded Georgia banking organizations as of September 30, 1995.
Sheshunoff calculated an "Adjusted Earnings Value" of $21.28 per share
based on BCG's estimated 1995 earnings and the average price to earnings
ratio for publicly-traded Georgia banking organizations as of September
30, 1995. The market for the Georgia publicly-traded banking
organizations' common stocks is more liquid than that for Americorp's or
BCG's common stock. Accordingly, if any value adjustment is considered
necessary to reflect this situation, we would expect to see a discount
for these values relative to the values otherwise computed with the
average price multiples for publicly-traded organization. The financial
performance characteristics of the large publicly-traded banking
organizations vary, sometimes substantially, from those of Americorp and
BCG. When the variance is significant for relevant performance factors,
adjustments to the price multiples is appropriate when comparing them to
the transaction value. Both Americorp's and BCG's "Adjusted Book
Values" and "Adjusted Earnings Values" exceed their respective fair
market values per share. However, given that the market for the
publicly-traded Georgia banking organizations with which Americorp
and BCG are being compared is more liquid than that for Americorp
and BCG, Sheshunoff would expect the "Adjusted Earnings Values" and the
"Adjusted Book Values" to be higher than the fair market values.
Thus, the "Adjusted Earnings Values" and "Adjusted Book Values"
support the fair market values used to determine the exchange ratio.
Investment value is sometimes referred to as the income value or
----------------
earnings value. The investment value is frequently defined as an
estimate of the present value of its future earnings or cash flow. In
addition, another popular investment value method is to determine the
level of current annual benefits (earnings, cash flow, dividends, etc.),
and then capitalize one or more of the benefit types using an appropriate
capitalization rate such as an earnings or dividend yield. Yet another
method of calculating investment value is a capitalization of dividends
approach. Additionally, a determination of the return on investment that
would accrue to a shareholder at the fair market value is calculated.
The investment or earnings value of any bank's stock is an estimate of
the present value of the future benefits, usually earnings, cash flow or
dividends, which will accrue to the stock. An earnings value is
calculated using an annual future earnings stream over a period of time
of not less than ten years and an appropriate capitalization rate (the
net present value discount rate). Sheshunoff's computations were based
on the analysis of the banking industry, the economic and competitive
situations in BCG's and Americorp's market areas, and BCG's and
Americorp's current financial condition and historical levels of growth
and earnings. Using a net present value discount rate of 12%, an
acceptable discount rate considering the risk-return relationship most
investors would demand for an investment of this type as of the valuation
date, the "Net Present Value of Future Earnings," equaled $0.75 per share
for Americorp and $19.25 per share for BCG. The net present value is
one method used by Sheshunoff to determine the fair market values for
BCG and Americorp and is considered appropriate based on the performance
characteristics of each organization.
Another method of valuing a minority block of stock is the
capitalization of dividends method. Where the capitalization of
dividends method is used as an element in the valuation determination, it
usually is by reference to dividend yields on publicly-traded companies
in the same industry. In valuing a minority interest, the actual
dividend the company has paid or
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intends to pay is divided by the average dividend yield on comparable
publicly-traded companies. Using this method Sheshunoff arrived at a
value of $4.88 per share for BCG. Due to BCG's low dividend payout
ratio, this value approach is of limited usefulness in determining
a fair market value for BCG. Americorp is not projected to pay
common dividends, which prevents us from utilizing this valuation
technique for Americorp.
As discussed above, theoretically, an earnings stream may be valued
through the use of a net present value analysis. One test of the
appropriateness of the fair market value of a minority block of stock is
the net present value-to-fair market value ratio. In Sheshunoff's
extensive work with minority community banking organization stock
valuations, it has identified that a relationship does indeed exist
between the net present value of an "average" community banking
organization and the fair market value of a minority block of the banking
organization's stock. The net present value-to-fair market value ratio
equaled 83.33% for Americorp. The net present value-to-fair market value
ratio equaled 148.08% for BCG. There are many other factors to consider
when valuing a going concern which do not directly impact the earnings
stream and the net present value but which do exert a degree of influence
over the fair market value of a minority block of stock of a going
concern. These factors include, but are not limited to, the general
condition of the industry, the economic and competitive situations in the
market area, and the expertise of the management of the organization
being valued. Based on Sheshunoff's experience and judgment and the
individual performance characteristics of each organization, the
resulting net present value to fair market value ratios support the
fair market values used to determine the exchange ratio.
The return on investment ("ROI") analysis provides another benchmark
for assessing the validity of the fair market value of a minority block
of stock. To compute the ROI, we assume an investment is made at fair
market value and then liquidated at book value in 2004, giving
consideration to any common dividends projected to be paid during this
time frame. The ROI analysis is another approach to valuing a going
concern, and is directly impacted by the earnings stream, dividend payout
levels and levels of debt, if any. Other financial and nonfinancial
factors indirectly affect the ROI; however, these factors more directly
influence the level of ROI an investor would demand from an investment in
a minority block of stock of a specific banking organization at a certain
point in time. The ROI based upon a $0.90 per share fair market value
for Americorp equals 13.51%. The ROI based upon a $13.00 per share fair
market value for BCG equals 13.46%. The resulting ROIs for Americorp
and BCG fall within a range Sheshunoff would expect investors to demand
and therefore support the fair market values used to determine the
exchange ratio in the Opinion.
Finally, a price level indicator, the fair market value as a
percentage of total assets, may be used to confirm the validity of the
fair market value. The fair market value as a percentage of total assets
facilitates a price level comparison with comparable banking
organizations, regardless of the differing levels of equity capital. The
fair market value as a percentage of total assets is derived by dividing
the fair market value per share by the total assets per share. In this
instance, Americorp's $0.90 per share fair market value results in a fair
market value as a percentage of total assets of 7.09% and BCG's $13.00
per share fair market value results in a fair market value as a
percentage of total assets of 10.65%. Both fair market values as a
percentage of total assets fall within expected ranges for minority
blocks of stock and support the fair market values.
When the net asset value, market value and investment value methods
are appropriately considered, using the appraiser's experience and
judgment, it is Sheshunoff's opinion that the fair market value of
33.33% of the outstanding common stock of Americorp equals $0.90
per share and the fair market value of a minority block of the
outstanding common stock of BCG equals $13.00 per share. Based
upon the fair market values it is Sheshunoff's opinion that a fair
and equitable exchange ratio equals 0.06923 shares of BCG Common
Stock for each share of Americorp Common Stock.
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The Fairness Opinion. Subsequently, Americorp and BCG used
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Sheshunoff's recommendation of a fair and equitable exchange ratio
and negotiated a final exchange ratio of 0.084615 shares of BCG
Common Stock for each share of Americorp Common Stock other than
the shares held by BCG. On November 2, 1995, Sheshunoff issued
another opinion (the "Fairness Opinion") to the Boards of Directors of
Americorp and BCG that the negotiated exchange ratio of 0.084615 is fair
and equitable. The Fairness Opinion is included in this Proxy/
Statement Prospectus as Appendix C and should be read in its entirety
by the Americorp shareholders.
BCG and Americorp did not impose any limitations upon the scope of the
investigation to be performed by Sheshunoff in formulating such Opinions.
In rendering its Opinions, Sheshunoff did not independently verify the
asset quality and financial condition of BCG and Americorp, but instead
relied upon the data provided by or on behalf of BCG and Americorp to be
true and accurate in all material respects.
For its services as independent financial analyst for the transaction,
including the rendering of its Opinions referred to above, BCG has agreed
to pay Sheshunoff aggregate fees of $12,000. Prior to being retained for
this assignment, Sheshunoff has provided professional services and
products to BCG and Americorp. The revenues derived from such services
and products are insignificant when compared to the firm's total gross
revenues.
Shareholder Approval
The Americorp Articles require that any merger or consolidation
involving Americorp be approved by the holders of at least 70% of the
outstanding shares of Americorp stock entitled to be voted thereon,
unless such merger or consolidation is approved in a resolution adopted
by at least 70% of the members of the Americorp Board of Directors.
Because the Americorp Board unanimously approved the Americorp Merger,
the supermajority voting provisions of the Americorp Articles are not
relevant to the transaction, and the affirmative vote of the holders of
at least a majority of the outstanding shares of Americorp Common Stock
present and entitled to vote at the Special Meeting is required for
approval of the Americorp Merger. Approval of the Americorp Merger by
two-thirds of the outstanding shares of Americorp Preferred Stock is also
required. Abstentions from voting and broker non-votes will be included
in determining whether a quorum is present and will have the effect of a
vote against the Americorp Merger Agreement.
On __________________, 1996, the record date for the determination of
shareholders entitled to notice of, and to vote at, the Special Meeting,
the outstanding voting securities of Americorp consisted of 5,473,889
shares of Americorp Common Stock with the registered holders thereof
being entitled to one vote per share. Certain executive officers and
members of Americorp's Board of Directors, who are also directors and/or
executive officers of BCG, control the voting of 3,649,261 shares
(approximately 66.67%) of the outstanding shares of Americorp Common
Stock and 37,875 shares (100%) of the outstanding shares of Americorp
Preferred Stock held by BCG. Management of BCG intends to vote all of
the shares of Americorp Common and Preferred Stock controlled by BCG in
favor of the Americorp Merger Agreement. Approval of the Americorp Merger
Agreement is therefore assured.
Material Contacts; Interest of Management in the Transaction; Conduct of
Business After the Americorp Merger
BCG currently owns 3,649,261 shares, or 66.67%, of the outstanding
Americorp Common Stock and 37,875 shares, or 100%, of the outstanding
Americorp Preferred Stock. In addition, BCG has entered into a
Management Fee Agreement with Ameribank dated January 1, 1994 pursuant to
which BCG provides data processing, internal audit and loan review
services for Ameribank in exchange for a total monthly fee of $10,000,
which management of BCG and Ameribank believe to be the fair market value
for the services provided by BCG. The Management
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Fee Agreement will continue until terminated by either BCG or Ameribank.
Management of BCG and Ameribank anticipate that the Management Fee
Agreement will continue in effect following consummation of the Americorp
Merger.
Each of the directors and executive officers of Americorp is also a
director and/or executive officer of BCG. Also, each of the directors
and executive officers of Americorp owns shares of BCG Common Stock. In
particular, Joseph W. Evans, Director and President of Americorp, is also
the Chief Executive Officer of BCG and beneficially owns approximately
30.19% of the outstanding BCG Common Stock, including 318,164 shares
owned by the BCG Employee Stock Ownership Plan over which Mr. Evans,
James R. McLemore, Jr., Vice President, Treasurer and Secretary of BCG,
and James A. Faulkner, Director of BCG, exercise voting control.
Otherwise, no director or officer of Americorp or any of their associates
has any direct or indirect material interest in the Americorp Merger.
The directors of BCG currently anticipate that after the Americorp
Merger, the current directors of Americorp will continue in their present
capacities with BCG. It is not anticipated that the Americorp Merger will
result in any material change in compensation to employees of Americorp.
Effect of the Americorp Merger on Americorp Shareholders and Comparison
of Securities of BCG and Americorp
If the Americorp Merger Agreement is consummated, holders of Americorp
Common Stock will exchange their interests in Americorp, a Georgia
corporation, for an interest in BCG, also a Georgia corporation. The
rights of such former Americorp Shareholders will generally be governed
by the Georgia Business Corporation Code, the BCG Articles of
Incorporation, as amended (the "BCG Articles"), and the BCG Bylaws. Like
Americorp, BCG is subject to regulation by the Department of Banking and
the Federal Reserve. As described below, the rights of former Americorp
Shareholders under the BCG Articles and BCG Bylaws will differ in certain
respects from the rights of Americorp Shareholders under the Americorp
Articles, as amended, and the Americorp Bylaws.
An Americorp shareholder's percentage of equity ownership in BCG will
be less than his or her present percentage of equity ownership in
Americorp. After the Americorp Merger, the former shareholders of
Americorp will have no continuing interest in the assets or business of
Americorp, except to the extent that they become shareholders of BCG.
Under the Georgia Business Corporation Code, any merger of a Georgia
business corporation in which the shareholders of the business
corporation are entitled to vote requires only the approval of the
holders of a majority of the outstanding shares of stock of the business
corporation entitled to vote thereon, unless the articles of
incorporation of the business corporation require a greater vote. The
BCG Articles do not give BCG shareholders any special or supermajority
voting rights with respect to any mergers or other business combinations
involving BCG. Accordingly, the voting requirements for such
transactions are generally governed by the Georgia Business Corporation
Code.
Any merger or consolidation of Americorp or any of its subsidiaries
with or into any other corporation or any sale, lease, exchange or
disposition of all or substantially all of the
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assets of Americorp or any of its subsidiaries to or with any other
corporation, person or other entity requires approval by the affirmative
vote of the holders of at least 70% of the outstanding shares of stock of
Americorp entitled to vote thereon. However, the 70% voting requirement
is not applicable if the Board of Directors of Americorp approves any
such transaction by resolution adopted by at least 70% of the members of
the Board. The foregoing provisions of the Americorp Articles cannot be
amended without the affirmative vote of 70% of the outstanding shares of
Americorp entitled to vote on such matter.
As both BCG and Americorp are Georgia business corporations with
substantially similar Articles of Incorporation and Bylaws, except as
discussed above, the rights of Americorp shareholders currently are
substantially similar to the rights of BCG shareholders.
Markets for Capital Stock
The BCG Common Stock is not currently traded on an established public
market. As of January 12, 1996, there were 1,910,454 shares of the BCG
Common Stock outstanding and 272 record holders of such shares. BCG has
granted employees of BCG and its subsidiaries outstanding options to
acquire a total of 208,539 shares of BCG Common Stock. Currently, the
BCG Common Stock is thinly traded. Accordingly, there is no guarantee
that former Americorp shareholders will be able to sell significant
blocks of the BCG Common Stock received by them in the Americorp Merger
in a timely manner at the most recently quoted price. It is anticipated
by management of BCG that prior to the closing of the Americorp Merger
or immediately thereafter, the BCG Common Stock will be registered under
the Securities Exchange Act of 1934 and immediately following the
closing of the Americorp Merger and the Effingham Merger application
will be made for trading the BCG Common Stock on the Nasdaq Stock
Market, which management anticipates will enhance the liquidity of
the BCG Common Stock. Nonetheless, there can be no assurances
that such steps will significantly improve the liquidity of the
BCG Common Stock, particularly in the short term.
During 1995, management of BCG is aware of trades of BCG
Common Stock aggregating 53,500 shares at prices ranging from $8.28 per
share to $15.00 per share. During 1994, management of BCG is aware of
trades of BCG Common Stock aggregating 88,100 shares at prices ranging
from $8.14 per share to $9.23 per share. Management of BCG is aware of
trades of BCG Common Stock during 1993 aggregating 9,200 shares and at
prices ranging from $5.14 per share to $6.03 per share. The last sales
price of BCG Common Stock known to BCG's management prior to the public
announcement of the Americorp Merger on November 3, 1995 was $13-7/8 on
November 1, 1995. On ____________, 1996, [latest practicable date],
Management of BCG is aware of a trade of ____ shares of BCG Common Stock
at a price of $_______ per share. Because the BCG Common Stock is thinly
traded and not very liquid, management believes that $12.00 per share is
the best estimate of the current fair market value of the BCG Common
Stock.
Americorp Common Stock is not traded on an established public trading
market. As of September 30, 1995, there were 5,473,889 shares of
Americorp Common Stock outstanding and 426 record holders of such shares,
and 37,875 shares of Americorp Preferred Stock outstanding and one record
holder of such shares. As of September 30, 1995, there were 2,000 shares
of Americorp Common Stock that were subject to outstanding options
granted to employee of Americorp pursuant to Americorp's 1986 Incentive
Stock Option Plan.
During 1995, management of Americorp is aware of two trades
of Americorp Common Stock aggregating 143,000 shares at a price of $.28
per share. Management of Americorp is aware of no trades of Americorp
Common Stock during 1994. The only trade known to management of
Americorp during 1993 was the sale of 2,721,090 shares of Americorp
Common Stock at $.29 per share on December 10, 1993 by Americorp to BCG.
See "THE AMERICORP MERGER -- Reasons for the Proposed Americorp Merger."
The last sales price of the Americorp Common Stock known to management
of Americorp prior to the public announcement of the Americorp Merger on
November 3, 1995 was $.28 per share on March 3, 1995. On _________, 1996
[latest practicable date], management of Americorp is aware of a trade of
_____ shares of Americorp Common Stock at $_____ per share.
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Accounting Treatment
BCG will account for the Americorp Merger as "purchase" transaction in
accordance with generally accepted accounting principles. Pursuant to
such treatment, the total price will be allocated to Americorp's assets
and liabilities based on estimated fair values at the time of
acquisition.
The purchase price for Americorp based on values of September 30, 1995
is allocated as follows:
<TABLE>
<S> <C>
Total shares of Americorp Common Stock outstanding 5,473,889
Shares of Americorp Common Stock to be exchanged for BCG Common Stock 1,824,628
Exchange Ratio (shares of BCG Common Stock to be received for
each share of Americorp Common Stock exchanged for BCG Common Stock) .084615
New shares of BCG Common Stock to be issued 154,390
Price per share of BCG Common Stock $ 12
Total value of newly-issued BCG Common Stock $1,852,680
Book value at September 30, 1995 of shares of Americorp Common Stock to be
exchanged for BCG Common Stock $1,270,925
</TABLE>
Resales of BCG Common Stock
If the directors, officers or five percent or greater shareholders of
Americorp who are deemed to be affiliates of Americorp receive any shares
of BCG Common Stock upon consummation of the Americorp Merger, such
affiliates cannot resell the BCG Common Stock received by them unless
such sales are made pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144 promulgated under the
Securities Act or another exemption from registration under such Act,
even though the BCG Common Stock to be issued upon consummation of the
Americorp Merger has been registered under the Securities Act. Rule 144
limits the amount of BCG Common Stock or other equity securities of BCG
that such persons may sell during any three-month period, requires that
there be available certain current public information with respect to BCG
and that the BCG Common Stock be sold in a broker's transaction or
directly to a market marker in the BCG Common Stock. Because the BCG
Common Stock is not currently publicly traded and is not currently listed
on a stock exchange or quoted in the over-the-counter market, affiliates
of Americorp would not be able to sell any BCG Common Stock received by
them in the Americorp Merger pursuant to Rule 144. No directors or
officers of Americorp who are deemed to be affiliates of Americorp will
receive any shares of BCG Common Stock as a result of the Americorp
Merger, and no shareholder of Americorp owns or controls more than five
percent of the outstanding shares of Americorp Common Stock.
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Regulatory Approvals
The Americorp Merger is subject to the approval of the DBF. The DBF
considers the effect on the financial and managerial resources and future
prospects of the companies and banks concerned and the convenience and
needs of the communities served. The Federal Reserve has indicated that
its approval of the Americorp Merger is not required because BCG
currently owns 66.67% of the outstanding Americorp Common Stock and 100%
of the outstanding Americorp Preferred Stock.
Rights of Dissenting Shareholders
Any shareholder of record of Americorp Common Stock who objects to the
Americorp Merger and who fully complies with Section 14-2-1301 et seq. of
-- ---
the Georgia Business Corporation Code will be entitled to demand and
receive payment in cash of an amount equal to the fair value of all, but
not less than all, of such shareholder's shares of Americorp Common Stock
if the Americorp Merger is consummated. A shareholder of record may
assert dissenters' rights as to fewer than the shares registered in such
shareholder's name only if such shareholder dissents with respect to all
shares beneficially owned by any one beneficial owner and notifies
Americorp in writing of the name and address of each person on whose
behalf such shareholder is asserting dissenters' rights. For the purpose
of determining the amount to be received in connection with the exercise
of statutory dissenters' rights under the Georgia Business Corporation
Code, the fair value of a dissenting shareholder's Americorp Common Stock
equals the value of the shares immediately before the Effective Date of
the Americorp Merger, excluding any appreciation or depreciation in
anticipation of the Americorp Merger.
Any Americorp shareholder desiring to receive payment of the fair
value of such shareholder's Americorp Common Stock in accordance with the
requirements of the Georgia Business Corporation Code: (a) must deliver
to Americorp prior to the time the shareholder vote on the Americorp
Merger Agreement is taken a written notice of such shareholder's intent
to demand payment for such shareholder's shares if the Americorp Merger
is consummated; (b) must not vote these shares in favor of the Americorp
Merger Agreement; and (c) must demand payment and deposit stock
certificates representing Americorp Common Stock in accordance with the
terms of a notice which will be sent to the shareholder by Americorp no
later than 10 days after the Americorp Merger Agreement is consummated.
A filing of the written notice of intent to dissent with respect to the
Americorp Merger Agreement should be sent to: James R. McLemore, Jr.,
Secretary, Americorp, Inc., 7393 Hodgson Memorial Drive, Savannah,
Georgia, 31406. A vote against the Americorp Merger Agreement alone will
not satisfy the requirements for the separate written notice of intent to
dissent to the Americorp Merger, the separate written demand for payment
of the fair value of shares of Americorp Common Stock and the deposit of
the stock certificates, which are referred to in conditions (a) and (c)
above. Rather, a dissenting shareholder must separately comply with all
---
of those conditions.
Within 10 days of the later of the Effective Date or receipt of a
payment demand by a shareholder who deposits stock certificates in
accordance with the dissenters' notice sent to those shareholders who
notified Americorp of their intent to dissent, described in (c) above,
Americorp must offer to pay to each dissenting shareholder the amount
Americorp estimates to be the fair
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value of the dissenting shareholder's shares, plus accrued interest. Such
notice and offer must be accompanied by: (a) Americorp's balance sheet as
of the end of a fiscal year ending not more than 16 months before the
date of making an offer, 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; (b) an explanation of how
the interest was calculated; (c) a statement of the dissenting
shareholder's right to demand payment of a different amount under Section
14-2-1327 of the Georgia Business Corporation Code; and (d) a copy of the
dissenters' rights provisions of the Georgia Business Corporation Code.
If the dissenting shareholder accepts Americorp's offer by written
notice to Americorp within 30 days following Americorp's offer, or is
deemed to have accepted the offer by reason of failing to respond to such
offer, Americorp must make payment for such shareholder's shares within
60 days after the making of the offer or the Effective Date, whichever is
later. Upon payment of the agreed value, the dissenting shareholder will
cease to have any interest in such shareholder's shares of Americorp
Common Stock.
If, within 30 days after Americorp offers payment for the shares of a
dissenting shareholder, such dissenting shareholder does not accept
Americorp's estimate of the fair value of the shares and interest due
thereon and demands payment based on such shareholder's own estimate of
the fair value of the shares and interest due thereon, then Americorp
within 60 days after receiving the payment demand of a different amount
from a dissenting shareholder, must file an action in a court of
competent jurisdiction in Chatham County, Georgia, requesting that the
fair value of such shares be found and determined. Americorp must make
all dissenting shareholders whose demands remain unsettled parties to the
proceeding. If Americorp does not commence the proceeding within such
60-day period, it shall be required to pay each dissenting shareholder
whose demand remains unsettled the amount demanded by the dissenting
shareholder.
The foregoing does not purport to be a complete statement of the
provisions of the Georgia Business Corporation Code relating to statutory
dissenters' rights and is qualified in its entirety by reference to the
Dissenters' Rights provisions of the Georgia Business Corporation Code,
which are reproduced in full in Appendix B to this Proxy Statement and
which are incorporated herein by reference.
Certain Federal Income Tax Consequences of the Americorp Merger
---------------------------------------------------------------
and Opinion of Tax Counsel
--------------------------
Americorp has received an opinion from Kilpatrick & Cody, Atlanta,
Georgia (the "Tax Opinion"), to the effect that, assuming the
Americorp Merger is consummated in accordance with the terms of the
Americorp Merger Agreement:
1. The Americorp Merger and the issuance of shares of BCG Common
Stock in connection therewith, as described in the Americorp Merger
Agreement, will constitute a tax-free reorganization under section
368(a)(1)(A) of the Code.
2. Except for the recognition of gain as required by section 302 of
the Code with respect to the receipt by holders of Americorp Common Stock
of cash in lieu of fractional shares, no gain of loss will be recognized
for Federal income tax purposes by the holders of
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Americorp Common Stock upon the exchange of such stock solely for BCG
Common Stock as a result of the Americorp Merger.
3. The aggregate tax basis of the BCG Common Stock received by an
Americorp shareholder pursuant to the Americorp Merger will be the same
as the aggregate tax basis of the shares of Americorp Common Stock
exchanged therefor, (a) decreased by (i) any portion of such tax basis
allocated to fractional shares of BCG Common Stock that are treated as
redeemed by BCG.
4. The holding period of the shares of BCG Common Stock received by
an Americorp shareholder as part of the Americorp Merger will include the
holding period of the shares of Americorp Common Stock exchange
therefore, provided that the Americorp Common Stock is held as a capital
asset on the date of the consummation of the Americorp Merger.
No ruling will be requested from the Internal Revenue Service with
respect to any Federal income tax consequences of the Americorp Merger.
In general, cash received by holders of Americorp Common Stock
exercising their dissenters' rights will be treated as amounts
distributed in redemption of their shares of Americorp Common Stock and
will be taxable under the provisions of section 302 of the Code.
The Tax Opinion and the preceding discussion relate to the material
federal income tax consequences of the Americorp Merger to Americorp
shareholders. The Americorp shareholders are advised to consult their
own tax advisors as to any state, local or other tax consequences of the
Americorp Merger.
AMERICORP, INC.
Description of Business
General. Americorp was organized as a Georgia corporation on August
16, 1983 for purposes of becoming a bank holding company. Americorp
received approval on December 21, 1984 from the Federal Reserve Board to
become a bank holding company through the formation of Ameribank. Unless
otherwise indicated by context, the term Americorp shall refer to
Americorp and Ameribank. Ameribank was granted a national bank charter
by the Comptroller of the Currency on April 30, 1985 and thereafter
commenced operations. As of September 30, 1995, Americorp had total
assets of approximately $69.5 million and total deposits of approximately
$58.8 million.
In 1985, Americorp became publicly held through a $3,000,000 public
offering consisting of shares of common stock and warrants to purchase
shares of common stock registered under the Securities Act of 1933.
Americorp's public offering was made on its behalf by its directors and
officers and was concluded on November 26, 1985. BCG currently owns
66.67% of the outstanding shares of Americorp Common Stock and 100% of
the outstanding shares of Americorp Preferred Stock. For a description
and history of the relationship between BCG and Americorp, see "THE
AMERICORP MERGER -- Reasons for the Americorp Merger."
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Ameribank. Ameribank was organized as a national banking
association for the purpose of engaging in commercial banking. Ameribank
is located in Savannah in Chatham County, Georgia's fourth most populous
county with approximately 250,000 residents in the metropolitan area. In
addition, Ameribank operates one office in Garden City, Georgia, which is
also located in Chatham County. The primary industries in the Savannah
area are manufacturing, tourism, military, industrial, and import/export.
As a national banking association, Ameribank is subject to regulation,
supervision and examination by the OCC, a bureau of the Treasury
Department that performs its functions through national bank examiners
who regularly examine reserves, loans, investments, management practices,
and other aspects of banking operations. These examinations are designed
specifically for the protection of depositors, and not for the
stockholders of a national bank (or a bank holding company). The
Comptroller of the Currency has the authority to issue cease and desist
orders to prevent a national bank from engaging in any activities which
would constitute unsafe and unsound banking practices.
Ameribank's operations are affected by a variety of local and
national economic trends. For example, the rates that Ameribank pays to
attract deposits are determined by many factors, including monetary
policies of the Federal Reserve, inflation, the burden of the federal
debt, loan demand, and competition from non-banking institutions such as
money market and mutual funds. Consumer confidence, which is affected
by, among other things, local and national unemployment levels and
political leadership, affects the level of consumer loan demand and
indirectly the needs of local retail businesses for working capital.
Declining asset values adversely affect Ameribank's ability to realize
upon defaulted secured loans, and, therefore, can adversely affect
Ameribank's credit quality, loan charge-offs, and willingness to make
commercial real estate loans or commercial loans secured by real estate.
Pending Acquisition of Additional Offices. On October 18, 1995,
Ameribank entered into the Purchase and Assumption Agreement with Bank
South pursuant to which Ameribank agreed to assume certain liabilities of
Bank South related to the Bank South banking office located at 1976 East
Victory Drive in Savannah, Georgia, including approximately $16.8 million
in deposit liabilities as of September 30, 1995. In addition, Ameribank
agreed to purchase certain assets related to the East Victory Drive
branch, including the banking office and property, and approximately $4.7
million in loans (as of September 30, 1995). Under the Purchase and
Assumption Agreement, Ameribank will pay a purchase price equal to the
sum of the net book value of the personal property and real property
purchased, a deposit premium equal to 1.3% of the assumed deposit
liabilities, the net book value of the purchased loans, the face value of
any coins and currency purchased and the net book value of the automated
teller located at the East Victory Drive branch. Bank South has also
agreed to assign the lease of its office located at 7 East Congress
Street, Savannah, Georgia to Ameribank, subject to the receipt of the
landlord's consent. Ameribank will not assume any of the Bank South
deposits or other liabilities related to the East Congress Street
facility. Consummation of the Purchase and Assumption is subject to the
receipt of approval of the OCC and the consummation of the proposed
merger of Bank South Corporation and NationsBank Corporation, among other
conditions. It is anticipated that the Purchase and Assumption will
close in the first quarter of 1996.
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Markets. Ameribank's primary service area, from which it
attracts 90% or more of its business, extends throughout Chatham County.
Savannah and the municipalities of Bloomingdale, Garden City, Pooler,
Port Wentworth, Thunderbolt, Tybee Island and Vernonberg are located in
Chatham County.
Competition. Within the primary service area, in addition to
Ameribank, eight commercial banks operate a total of 60 offices.
NationsBank of Georgia, N.A., Bank South (which it is currently
anticipated will merge with NationsBank), First Union National Bank of
Georgia, Wachovia Bank of Georgia, N.A. and Trust Company Bank of
Savannah, N. A. operate in the primary service area. In addition, three
other independent banks operate in the Ameribank service area. One
thrift institution also operates a total of 10 office facilities in
Chatham County.
Deposits. Ameribank offers a full range of deposit accounts
which include interest-bearing checking accounts for non-profit and
individual customers, non-interest-bearing checking accounts for
commercial and individual customers, statement savings, individual
retirement accounts, and fixed-rate, fixed-term certificates of deposit.
At September 30, 1995, Ameribank's deposits totaled $58,763,197,
consisting of $8,295,874 in non-interest-bearing deposits (14.11% of
total deposits); $17,673,919 in interest-bearing demand deposits
(including money market accounts) (30.08% of total deposits); $576,808 in
savings deposits (.98% of total deposits); approximately $24,739,000 in
time deposits in amounts less than $100,000 (42.11% of total deposits);
and approximately $7,477,000 in time deposits of $100,000 or more (12.72%
of total deposits). None of Ameribank's deposits of $100,000 or more are
"brokered deposits."
Loans. Ameribank makes and services secured loans to individuals,
firms, and corporations, and Ameribank's commercial lending operations
provide various types of credit for their customers. Ameribank also makes
unsecured loans in a limited number of situations. The majority of
Ameribank's loans are to individuals, firms and corporations in
Ameribank's immediate trade area. However, approximately 10% and 13% of
Ameribank's loan portfolio at December 31, 1994 and 1993, respectively,
consisted of loans outside the area that were originated by BCG and
purchased by Ameribank. Ameribank's commercial lending program is
primarily designed for small businesses for whom Ameribank may serve as
the primary provider of financial services. Risk elements associated with
commercial lending include industry concentrations, Ameribank's inability
to monitor the condition of collateral such as inventory or accounts
receivable and lack of management expertise in borrowers. Ameribank also
lends money to both developers/construction companies and to individuals
for the purpose of building residences. Most of Ameribank's construction
lending is to commercial customers with whom Ameribank has a pre-existing
relationship and for which Ameribank has arranged permanent financing
upon completion of construction. Thus, such lending, though secured, is
not asset based but is based upon the credit-worthiness of the commercial
entity. Nonetheless, to some extent, the quality of the loan portfolio is
dependent upon the quality of the underlying collateral and the stability
of the real estate values in the Ameribank market.
Ameribank also makes purchase money mortgages on real estate.
Substantially all of these loans are variable rate and/or balloon loans
to eliminate the interest-rate risk inherent in long-term mortgages.
Installment loans made for the purchase of consumer goods are made to
customers with more than one banking relationship, are normally of
relatively short duration, are
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usually secured by the purchased items, and provide a slight interest
rate premium due to a higher cost of handling than other forms of
lending. The quality of such loans is subject to changes in the local
economy and in the financial conditions of individual borrowers.
Lending Policy. Ameribank is primarily a secured lender but does
not normally lend solely on the basis of collateral. Unsecured loans are
considered only when fully justifiable by the financial position of the
borrower. Ameribank has defined its primary trade area as Chatham County
and the contiguous counties, but will lend beyond its primary trade area
provided its policies are satisfied.
Ameribank requires a loan-to-value ratio not to exceed 80% when
the collateral is improved real estate. Other forms of collateral
dictate a lower loan-to-value ratio. Ameribank accepts both first and
second lien positions on real estate, depending on the nature of the
credit. Second liens are usually accepted only for small consumer
transactions or to supplement a larger collateral package for business
loans.
Ameribank provides each lending officer with written guidelines
for lending activities, and the Board of Directors delegates lending
authority to each officer, in terms of the aggregate secured and
unsecured loans which he can make to a borrower. All loans over $700,000
require approval of the Board of Directors.
Loan Review and Non-Performing Assets. Ameribank regularly
reviews its loan portfolio to determine deficiencies and corrective
action to be taken. Independent loan review officers periodically review
borrowers with total direct and indirect indebtedness of $100,000 or
more. Past due loans are reviewed at least weekly by senior lending
officers and a summary report is reviewed monthly by the Board of
Directors.
Americorp holds certain non-performing assets which were acquired
through foreclosure. At December 31, 1994, real property valued at
approximately $404,000 was being held for resale.
Asset/Liability Management. A committee of five bank officers is
charged with managing the assets and liabilities of Ameribank by
directing Ameribank's overall acquisitions and allocation of funds. The
committee's goal is to provide a reasonable asset growth rate, earnings
growth rate and stable net interest margin and return on equity capital,
while maintaining adequate liquidity and capital. At its monthly
meetings, the committee, in conjunction with its review of the general
performance of Ameribank and the economy, reviews and discusses such
matters as the monthly asset and liability funds budget in relation to
the actual flow of funds; the ratio of rate sensitive assets to rate
sensitive liabilities; the ratio of the loan loss reserve to outstanding
loans; and other variables such as expected loan demand, investment
opportunities, and core deposit growth within specified categories.
Ameribank intends to keep the gap between rate-sensitive assets and rate-
sensitive liabilities at a minimum and prefers to increase the spread
between matched assets and liabilities rather than place earnings at risk
by attempting to predict the frequency, direction and degree of interest-
rate fluctuations.
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In the short term, declining interest rates will generally result
in an increase in net income for Americorp as there are more interest-
bearing liabilities which are subject to repricing within one year than
interest-earning assets.
Liquidity Management. At December 31, 1994 and 1993, Ameribank's
ratio of loans to deposits was 69.9% and 73.1%, respectively. Management
believes that an optimal rate is approximately 75%.
Ameribank meets its liquidity needs primarily through short-term
investments, including federal funds sold, short-term securities,
investments in certificates of deposit of other federally-insured
financial institutions, and the maturing of loans. Maturities in
Ameribank's loan and investment portfolios are monitored to avoid
matching short-term deposits with long-term loans and investments.
Investment Policy. Americorp's investment portfolio policy is to
maximize income consistent with liquidity, asset quality and regulatory
constraints and to maintain assets which can be pledged to secure
government deposits. Individual transactions, portfolio composition and
performance are reviewed and approved monthly by the Board of Directors.
The Chief Financial Officer of Americorp implements investment policy,
reports to the Board of Directors quarterly changes in the portfolio
during the prior quarter and periodically provides the Board detailed
information as to the composition of the portfolio.
Employees. On November 17, 1995, Ameribank had thirty-two
employees, all of which were employed full-time. Neither Americorp nor
Ameribank is a party to any collective bargaining agreement, and
Americorp believes that its employee relations are satisfactory.
Property. Americorp's offices are located within Ameribank's office
at 7393 Hodgson Memorial Drive, Savannah, Georgia 31406. The office,
which is owned by Ameribank, has approximately 30,000 square feet.
Americorp also owns a branch, opened during 1995, which is located at 115
Main Street, Garden City, Georgia, and has approximately 2,500 square
feet. If the Purchase and Assumption is consummated, Ameribank will also
purchase the Bank South branch at 1976 East Victory Drive in Savannah,
which has approximately 4,500 square feet. Ameribank will also assume
the lease of the Bank South headquarters at 7 East Congress Street in
Savannah, which has approximately 11,500 square feet. The lease of the 7
East Congress Street facility expires in 2007.
Management believes that the Americorp physical facilities are
suitable for its needs. The real property currently owned by Americorp is
not subject to any encumbrance.
Litigation. Neither Americorp nor Ameribank is a party to any pending
legal proceedings which management believes would have a material effect
upon the operation or financial condition of Americorp.
Ownership of Americorp Common Stock
The following table provides the number of shares and percentage of
outstanding shares of Americorp Common Stock which were beneficially
owned as of September 30, 1995, by
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<PAGE>
<PAGE>
(i) "persons" who are known to Americorp to be the beneficial owners (as
that term is defined by the SEC) of more than 5% of Americorp Stock, (ii)
the present directors of Americorp; (iii) the executive officers of
Americorp; and (iv) all directors and executive officers of Americorp as
a group. The percentage of ownership of Americorp Common Stock is based
on 5,473,889 shares outstanding. BCG owns 100% of the shares of Americorp
Preferred Stock, Americorp's only other class of securities. All of the
Americorp Preferred Stock will be cancelled upon consummation of the
Americorp Merger. For information regarding ownership of BCG Common Stock
by the executive officers and directors of Americorp, see "BANK
CORPORATION OF GEORGIA -- Ownership of BCG Common Stock."
<TABLE>
<CAPTION>
Shares of Americorp
Common Stock Percent
Name of Beneficial Owner Beneficially Owned of Class
------------------------ ------------------ --------
<S> <C> <C>
Bank Corporation of Georgia /(1)/ 3,649,261 66.67%
Stephen W. Doughty -0- -0-
Joseph W. Evans /(2)(3)/ 3,649,261 66.67%
J. Thomas Wiley, Jr. -0- -0-
All Directors & Executive Officers
as a group (3 persons) /(2)/ 3,649,261 66.67%
</TABLE>
__________________________
/(1)/ BCG's mailing address is 4951 Forsyth Road, Macon, Georgia 31210.
/(2)/ Includes 3,649,261 shares held by BCG over which Mr. Evans,
Chief Executive Officer of BCG, has voting power.
/(3)/ Mr. Evans' mailing address is P.O. Box 353, Smarr, Georgia 31086.
Management's Discussion and Analysis of Financial Condition and Results
of Operation for the Years Ended December 31, 1994 and 1993
This analysis has been prepared to provide insight into the
consolidated financial condition of Americorp and addresses the factors
which have affected the Americorp's results of operations. Americorp's
consolidated financial statements and accompanying notes included with
this Proxy Statement/Prospectus are an integral part of this review and
should be read in conjunction with it.
General Overview. Net income for 1994 was $1,954,906 as compared
to net income of $115,374 in 1993. The increase of $1,839,532 was due
principally to improved operating results of $579,577 as compared to 1993
and the recognition of a deferred tax benefit of $1,543,169 in 1994 as
compared to $292,565 recognized in 1993.
The $1,543,169 of deferred tax benefit was recognized through a
reduction of the valuation allowance established for the deferred tax
asset recorded upon adoption of SFAS 109, "Accounting for Income Taxes".
The statement requires that companies provide an allowance against any
deferred tax asset when it is more likely than not that the asset will
not be realized. At
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<PAGE>
<PAGE>
December 31, 1993, Americorp did not recognize a significant asset
because 1993 was the first year in which Americorp had taxable earnings.
Taxable earnings for 1993 were approximately $100,000. At December 31,
1993, Americorp reduced its valuation in an amount resulting in a
deferred tax asset of $292,565. For 1994, Americorp had approximately
$700,000 of federal taxable income and has projected to earn at least
that amount in 1995 and for each year thereafter. Management believes
that the positive earning trends during 1993, 1994 and thus far in 1995
will continue and as a result, management believes it is more likely than
not that a significant portion of the deferred tax asset at December 31,
1994 would be utilized.
Net earnings before income taxes increased by $579,577. This
increase was primarily the result of an increase in net interest income
of $489,327. In addition, net interest income as a percentage of total
interest income increased from 53.1% in 1993 to 57.2% in 1994. Also
contributing to the improvement from operations were the decrease in the
1994 provision for loan losses of $32,000 over 1993, and a reduction of
other expenses consisting primarily of reductions in salaries and
employee benefits of $64,000 and other operating expenses of $87,000.
These amounts were offset by a decrease in non-interest income resulting
from $51,000 in securities sale losses. There were no securities losses
in 1993.
The following table sets out certain ratios of Americorp for the
years indicated:
<TABLE>
<CAPTION>
1994 1993 1992
------ ----- --------
<S> <C> <C> <C>
Net income (loss)/(1)/ to:
Average stockholders' equity 41.45% 3.83% (16.55%)
Average assets 3.41% .22% (.90%)
Average common equity to
average assets/(2)/ 8.23% 5.91% (5.44%)
</TABLE>
/(1)/ After preferred stock requirements
/(2)/ At December 31, 1992, Americorp also had approximately $3,000,000
of preferred equity
Asset Quality. The allowance for loan losses represents an
estimate of potential losses in the loan portfolio. The adequacy of the
allowance for loan losses is evaluated monthly based on a regular review
of Ameribank's loan portfolio, with particular emphasis on non-accruing
loans, past due loans, and other loans that management believes require
attention.
There was a favorable trend in the amount of loans past due by 90
days or more over the last year. The percentage of these past dues to the
total loan portfolio was .18% at December 31, 1994, as compared to .55%
at December 31, 1993. Ameribank's level of non-performing assets
decreased from $833,000 at December 31, 1993 to $475,000 at December 31,
1994, primarily due to continued net liquidation of foreclosed assets.
Non-performing assets are composed of non-accrual loans (loans on which
interest income is no longer being accrued), and foreclosed assets
(assets acquired in full or partial satisfaction of debt).
As a result of management's ongoing review of the loan portfolio,
loans are classified as non-accruing when it is not reasonable to expect
collection of interest under the original terms.
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<PAGE>
<PAGE>
These loans may be classified as non-accruing even though the presence of
collateral or the borrower's financial strength may be sufficient to
provide for ultimate repayment of principal.
The following table provides data on Ameribank's level of past due
loans as of December 31, 1994 and 1993.
Loans Past Due
(in thousands)
<TABLE>
<CAPTION>
As of December 31,
1994 1993
-------------------- --------------------
% of % of
Amount Total Loans Amount Total Loans
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Days Past Due
- -------------
Accruing Loans:
30-90 $140 .35% $551 1.51%
Over 90 -- -- -- --
---- --- ---- ----
Total $140 .35% $551 1.51%
---- --- ---- ----
Non-Accruals:
30-90 -- -- -- --
Over 90 71 .18 201 .55%
---- --- ---- ----
Total $ 71 .18% $201 .55%
---- --- ---- ----
Total Loans:
30-90 $140 .35% $551 1.51%
Over 90 71 .18 201 .55
---- --- ---- ----
Total $211 .53% $752 2.06%
==== === ==== ====
</TABLE>
Loans past due as to interest and/or principal payments decreased
in total dollars by 64.7% between year end 1993 and 1994. Commercial and
commercial real estate loans 90 days or more past due as to principal or
interest are transferred to non-accruing status unless fully secured by
collateral. In addition, loans past due less than 90 days, which in the
opinion of management present significant uncertainty as to collectability
of interest, are also placed on non-accrual status. Installment loans and
credit card advances are charged off when losses become apparent, and in no
event later than 120 days after the date on which the balance became past
due.
The allowance for loan losses is based upon management's judgment
concerning factors affecting loan quality and its assumptions regarding the
economy. Based upon its ongoing review of the loan portfolio, management
considers the 1994 year-end allowance for loan losses to be adequate to
cover potential losses in Ameribank's loan portfolio. The following table
provides a reconciliation of the allowance for loan losses for 1994 and
1993.
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<PAGE>
<PAGE>
Summary of Loan Loss Experience
(In thousands)
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Balance at beginning of period $ 684 $ 673
----- -----
Charge-offs:
Commercial, financial and agricultural 129 57
Real estate 38 112
Consumer 0 17
----- -----
Total 167 186
----- -----
Recoveries:
Commercial, financial & agricultural 47 102
Real estate 80 19
Consumer 5 25
----- -----
Total 132 146
----- -----
Net Charge-offs 35 40
Additions charged to operations 19 51
----- -----
Balance at end of period $ 668 $ 684
----- -----
Ratio of net charge-offs during the
period to average loans
outstanding during the period .089% .113%
===== =====
</TABLE>
The current levels of loans on non-accrual status and the
portfolio of other real estate owned impacts earnings as interest is not
earned and additional costs are incurred in the disposition of these
assets. In order to manage the non-performing assets, management of
Ameribank has established specific goals for the resolution of all loans on
non-accrual status and all other real estate owned.
Earning Assets. In 1994, earning assets averaged $52.5 million,
a 14.6% increase from $45.8 million in 1993. During 1994, average total
deposits increased $5.4 million. The proceeds of those deposits were used
to fund loans, the average balance of which increased $4.1 million during
1994 and Federal Home Loan Bank deposits, the average balance of which
increased $2.7 million during 1994.
Loans. Loans are the largest component of earning assets, as
well as the highest-yielding component. Because of their importance, most
other assets and liabilities are managed to accommodate the needs of the
loan portfolio. At December 31, 1994 and 1993, loans represented 70.3% and
76.2% of interest-earning assets and 62.5% and 67.1%, respectively, of
total assets.
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<PAGE>
<PAGE>
Net loans increased $3,741,000, or 10.5% in 1994 as compared to
year end 1993 balances. This followed a 2.9% increase in 1993. The loan
growth in both years is the result of management's emphasizing loan
production.
Americorp had 29.3% of its loans classified as "Real Estate-
Other" at December 31, 1994 as opposed to 32.8% at December 31, 1993.
Total "Real Estate-Other" loans decreased by approximately $189,000, or
1.6%, during 1994. This was the result of a conscious effort by
Ameribank's management to reduce Ameribank's exposure to real estate
lending and increase its emphasis on commercial business loans, as stated
below.
Americorp's primary lending emphasis is on commercial business
loans as it attempts to define its market niche and decrease credit risk
exposure. Ameribank believes that the credit needs of small business
owners seeking loans under $1 million are often not handled professionally
by smaller banks and are not attractive to larger banks which typically
pursue larger loans. This provides an opportunity to Ameribank within its
market. Ameribank's credit standards require that prospective commercial
borrowers provide a high probability of adequate cash flow for debt
service, as well as commercial real estate collateral and personal
guarantees providing secondary loss protection for Ameribank. Management
believes this emphasis should bolster the quality of the loan portfolio in
the future. In connection with this policy, Ameribank increased its
commercial, financial and agricultural loan portfolio by $3,588,000 during
1994, an increase of 19.2% over 1993.
Investments. Americorp's investment portfolio constitutes the
second-largest component of total earning assets. The portfolio serves
several functions such as providing a vehicle for the investment of
available funds at relatively attractive rates, furnishing liquidity to
meet increased loan demand and supplying securities to pledge as collateral
for public funds.
During 1994, holdings in investment securities increased
$2,482,000 or 27.3%. At December 31, 1994, investment securities
represented 20.2% of interest-earning assets as compared to 19.0% at
December 31, 1993. Americorp owns no tax-exempt securities because its tax
loss carryforwards negate their benefit. No securities were pledged as
collateral for public funds as of December 31, 1994.
With the adoption of SFAS No. 115, Americorp has reported the
effect of the change in the method of accounting for investment securities
as a separate component of equity, net of income taxes which resulted in a
net unrealized gain on investment securities available for sale, net of
tax, of $11,000 as of January 1, 1994, the date of the adoption of the
accounting change. The net unrealized loss on investment securities
available for sale, net of tax, amounted to $52,000 at December 31, 1994.
In conjunction with the adoption of SFAS No. 115, Americorp
transferred securities previously accounted for at amortized cost totaling
$9,094,000 to available for sale at January 1, 1994.
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<PAGE>
<PAGE>
Deposits. Total deposits increased by approximately $7,631,000
or 15.3% in 1994, compared with an increase of $3,747,000 or 8.1% during
1993.
Non-interest-bearing deposits constituted 13.3% of total deposits
at December 31, 1994 versus 9.5% at December 31, 1993. The increase of
$2,923,000 from December 31, 1993 to December 31, 1994 is the result of
management's marketing effort to attract non-interest bearing, fee-
generating transaction accounts.
Interest Rate Sensitivity. Interest rate sensitivity management
seeks to maximize net interest income as a result of changing interest
rates, without subjecting the interest margin to an imprudent degree of
risk. Americorp attempts to do this by structuring the balance sheet so
that repricing opportunities exist for both assets and liabilities in
roughly equivalent amounts at approximately the same time intervals.
Imbalances in these repricing opportunities at any point in time
constitutes a bank's interest rate sensitivity.
An indicator of the interest rate sensitivity structure of a
financial institution's balance sheet is the difference between its
interest rate sensitive assets and interest rate sensitive liabilities,
which is referred to as the "gap". Americorp attempts to keep the gap
between rate sensitive assets and rate sensitive liabilities at a minimum,
preferring to increase the spread between matched assets and liabilities
rather than place earnings at risk by attempting to predict the frequency,
direction and magnitude of interest rate fluctuations.
The schedule below reflects the gap positions of Americorp's
consolidated balance sheet as of December 31, 1994 and 1993.
Interest Rate Sensitivity
(In Thousands)
<TABLE>
<CAPTION>
December 31, 1994
----------------------------------
0-90 91-180 181-365 1 Year
Days Days Days Total
----------------------------------
<S> <C> <C> <C> <C>
Interest Sensitive Assets $39,917 4,725 3,214 47,856
Interest Sensitive Liabilities 37,363 5,859 5,068 48,290
------- ----- ----- ------
Cumulative Interest Sensitivity Gap $ 2,554 1,420 (434) (434)
------- ----- ----- ------
<CAPTION>
December 31, 1994
----------------------------------
0-90 91-180 181-365 1 Year
Days Days Days Total
----------------------------------
<S> <C> <C> <C> <C>
Interest Sensitive Assets $25,564 2,665 11,539 39,768
Interest Sensitive Liabilities 34,958 8,592 4,026 47,576
------- ------- ------ ------
Cumulative Interest Sensitivity Gap $(9,394) (15,321) (7,808) (7,808)
------- ------- ------ ------
</TABLE>
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<PAGE>
<PAGE>
At December 31, 1994, the gap analysis reflects a negative gap at
the one year interval equivalent to 1% of earning assets, as compared to
17% at December 31, 1993. At December 31, 1994, Americorp has increased
its rate sensitive assets between 0-90 days with an increase in the
purchase of Federal Home Loan Bank overnight deposits which are essentially
equivalent to federal funds sold. In addition, Americorp had approximately
$4,000,000 of investment securities which matured in the 0-90 day category.
This situation resulted in a reduced "gap" in both the 0-90 day category as
well as the cumulative one year category.
Since all interest rates and yields do not adjust at the same
velocity, the interest sensitivity gap is only an indicator of the
potential effects of interest rate changes on net interest income.
Liquidity. Liquidity management involves the ability to meet
cash flow requirements of customers who may be depositors making
withdrawals or borrowers needing credit funding. Americorp's cash flows are
generated from interest and fee income, as well as from loan repayments,
deposit acquisition, and maturities or sales of investments. Americorp's
liquidity needs are provided for primarily through short-term securities,
and the maturing of loans. Federal funds sold, which averaged approximately
$5,407,000 in 1993 as well as interest-bearing deposits with the Federal
Home Loan Bank which averaged $2,713,000 in 1994 represent Americorp 's
primary source of immediate liquidity and were maintained at a level
adequate to meet immediate needs. Maturities in Americorp's loan and
investment portfolios are monitored regularly to avoid matching short-term
deposits with long-term loans and investments. Other assets and
liabilities are also monitored in an effort to provide the proper balance
between liquidity, safety and profitability.
Americorp experienced a increase of $2,187,000 in cash and cash
equivalents during 1994, Operating activities provided $779,000. Income
from operations amounting to $2,238,000 was offset by the provision for
deferred taxes of $1,543,000.
Investing activities used $6,223,000 in cash and cash
equivalents, the most significant uses being the net increase in investment
securities of $2,608,000 and net increase in loans of $3,824,000.
Financing activities provided $7,631,000 of cash and cash
equivalents during 1994 due to the net increase in deposits during the
year.
Capital Resources and Dividends. At December 31, 1994, Americorp
had capital in excess of regulatory minimums, as measured by its ending
equity to assets ratio of 9.96%, compared to 7.66% at December 31, 1993.
The increase was the result of the net income before preferred stock
requirements of $2,237,797.
The ability of Americorp to pay cash dividends to its
stockholders is generally limited by the ability of Ameribank to pay
dividends to Americorp. Because of the losses sustained by Ameribank, it
has been unable to pay dividends to Americorp; as a result, no cash
dividends have been paid to holders of Americorp Common Stock, and none are
anticipated in the near future.
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<PAGE>
<PAGE>
The Americorp Preferred Stock, all of which is issued to BCG,
accrues dividends at the rate of 8%. Americorp has the option of paying the
preferred dividend in either cash or additional shares of Americorp
Preferred Stock. Because of the cash restrictions discussed above, these
dividends were paid in additional shares of Americorp Preferred Stock in
1994. The amount of dividends paid in additional Americorp Preferred Stock
in 1994 was $285,600. Dividends in the amount of $72,805 were accrued as
of December 31, 1994, and were paid in the first quarter of 1995 through
the issuance of 728 shares of Americorp Preferred Stock. At the Americorp
shareholders' meeting on June 6, 1992, the shareholders approved an
amendment to the of Americorp Articles increasing the number of authorized
shares of Americorp Preferred Stock from 30,000 shares to 40,000 shares in
order to permit Americorp to continue to pay dividends in additional shares
of Americorp Preferred Stock.
Debt. On December 31, 1991, Americorp borrowed $500,000 from
BCG, the proceeds of which were invested in Ameribank in the form of
additional equity capital. The note was repaid on December 10, 1993, as
part of a restructuring of Americorp's capital structure. See "THE
AMERICORP MERGER -- Reasons for the Americorp Merger."
Results of Operations - 1994 Versus 1993
Americorp's net income after Americorp Preferred Stock
requirements for 1994 was $1,954,906 versus $115,374 for 1993, an increase
of $1,839,532. The 1994 income was $.36 per common share versus $.04 per
common share for 1993. The increase in the income resulted primarily from
the recognition of additional net deferred tax benefit of $1,250,604 and an
increase in earnings before income taxes of $579,577 for 1994 as compared
to 1993.
Net interest income increased $489,000 or 25.6% from $1,914,000
in 1993 to $2,403,000 in 1994. The volume changes increased net interest
income by $419,000, and rate changes increased net interest income by
$70,000. Non-interest income declined by $74,000 or 11.1% from 1994 to
1993, primarily the result of a decline in the gains on sales of Small
Business Administration loans of $39,000, losses on sales of investment
securities in 1994 amounting to $51,000 offset by an increase in service
charges on deposit accounts of $50,000.
The provision for loan losses of Americorp for 1994 was $19,000
compared to a provision in 1993 of $51,000. Net charge-offs for 1994 were
$35,000 compared to net charge-offs of $39,000 in 1993. The allowance for
loan losses at December 31, 1994 and 1993 was $668,000 and $684,000
respectively. The allowance for loan losses represented 941% and 340%
of nonperforming loans at December 31, 1994 and 1993, respectively. The
allowance as a percent of non-performing loans increased primarily as a
result of the decline in non-performing loans. The allowance for loan
losses represented 1.66% and 1.88% of gross outstanding loans at
December 31, 1994 and 1993, respectively. The decline in the allowance
for loan losses as a percent of loans was primarily the result of
declines in nonaccrual loans and other past due loans. Nonaccrual
loans at December 31, 1994 and 1993 amounted to $71,000 and $201,000,
respectively.
Results of Operations - 1993 Versus 1992
The net income after Americorp Preferred Stock requirements for
1993 was $115,000 versus a loss for 1992 of $452,000, an increase in income
of $567,000. The 1993 income was $.04 per common share versus a loss of
$.19 per common share for 1992. The increased income resulted primarily
from adoption of FASB 109, "Accounting for Income Taxes," increased fee
income and reduced expenses related to other real estate owned.
Net interest income increased $174,000 or 10% from $1,740,000 in
1992 to $1,914,000 in 1993. Volume changes increased net interest income
by $63,000, and rate changes which increased net interest income by
$111,000. Non-interest income increased by $220,000 or 48.8% from 1992 to
1993, primarily the result of increases in SBA loan fees and mortgage
origination fees.
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<PAGE>
<PAGE>
The provision for loan losses of Americorp for 1993 was $51,000
compared to a provision in 1992 of $163,000. The increase in 1993 is
primarily attributable to the fact that Americorp made significant net
recoveries during 1992 (amounting to $67,000), and those recoveries,
coupled with significant past provision charges and resolution of
problem loans with less losses than originally anticipated resulted
in the provision credit. The allowance for loan losses at December 31,
1993 and 1992 was $684,000 and $673,000, respectively. The allowance
for loan losses represents 1.88% and 1.90% of gross outstanding loans
and 340% and 195% of non-performing loans at December 31, 1993 and
1992, respectively. Non-accrual loans at December 31, 1993 and 1992
amounted to $201,000 and $344,000 respectively.
Non-interest expenses decreased by $109,000 or 4.3% from 1992 to
1993. The decrease was due primarily to a reduction of $178,000 or 79% in
expenses related to other real estate owned and a $54,000 decrease in legal
and professional fees offset by an increase in salaries and employee
benefits of $88,000.
Non-interest expense decreased by $133,000 or 5.5% from 1993 to
1994. The decrease was due primarily to a decrease in professional and
management fees of $172,000 offset by an increase in other real estate
provisions of $44,000.
Inflation. Although inflation affects net income and the growth
of total assets, it is difficult to measure its impact precisely. Interest
rates and operating expense, in particular, are significantly affected by
inflation, but neither the timing nor the magnitude of interest rate
changes coincide with changes in the Consumer Price Index.
Due to the complexities of measuring the effects of inflation on
Americorp's consolidated financial statements, management feels that it
would be misleading to attempt to quantify those effects.
Management's Discussion and Analysis of Financial Condition and Results of
Operation for the Nine Months Ended September 30, 1995 and 1994.
Earnings Summary. Net income for the first nine months of 1995 was
$791,245, an increase of $134,261 over the same period in 1994. The net
income per share for these two periods was $.14 and $.12, respectively.
Before payment of preferred stock dividends, Americorp had net earnings of
$1,012,911 and $867,038 for the first nine months of 1995 and 1994,
respectively.
Net interest income for the nine months ended September 30, 1995
increased $674,234 or 39.2% over the same period in 1994. This increase is
primarily due to an increase in net earning assets over the same period in
1994, and asset yields increasing at a faster pace than the increase in
funding costs.
The net interest margin, as a percentage of earning assets, increased
to 5.47% for the first nine months of 1995, as compared to 4.43% for the
same period in 1994. This rise can be explained by the same factors
mentioned above.
Non-interest income for the nine month period decreased $68,673 or
13.4% from 1994 to 1995. This decrease was primarily the result of
decreases in the gain on the sale of SBA loans.
The provision for loan losses for the nine months ended September 30,
1995 was $45,000 versus $4,000 for the nine months ended September 30,
1994. The increase was primarily the result of one large loan recovery
of approximately $40,000 during 1994. The allowance for the loan losses
at September 30, 1995 and 1994 was $698,000 and $641,000, respectively.
The allowance for loan losses represented 1.51% and 1.52% of gross loans
at September 30, 1995 and 1994, respectively. The allowance for loan
losses was _____% of nonperforming loans at September 30, 1994. There
were no nonperforming loans at September 30, 1995 as compared to $70,000
at September 30, 1994.
Non-interest expense increased by $118,688 in the first nine months of
1995 from the same period in 1994, an increase of 7.1%. The increase was
primarily due to an increase in salaries and employee benefits over the
same period in 1994, principally as a result of the opening of a new branch
location in 1995.
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<PAGE>
<PAGE>
For the first nine months of 1995, return on equity was 14.96% on an
annualized basis versus 20.09% for the same period a year earlier. The
decline was primarily the result of a decrease in the tax benefits
associated with the utilization of net operating loss carry-forwards.
Earnings before taxes actually increased by $445,873 over the nine-month
period a year earlier, primarily as a result of the increase in net
interest income. Preferred stock requirements were $221,666 for the nine-
month period ended September 30, 1995 and $210,054 for the same period in
1994.
Accounting for Impairment of a Loan. As of January 1, 1995, BCG
adopted SFAS 114, "Accounting by Creditors for Impairment of a Loan." SFAS
114 requires that impaired loans be measured based on the present value of
expected future cash flows discounted at the loan's effective interest
rate, which is the contractual interest rate adjusted for any deferred loan
fees or costs, premium or discount, existing at the inception or
acquisition of the loan, or at the loan's observable market price, or at
the fair value of the collateral of the loan if the loan is collateral
dependent. As of January 1, 1995, BCG adopted SFAS 118, "Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosures,"
which amends SFAS 114 to require information about the recorded investment
in certain impaired loans and eliminates the provisions of SFAS 114
regarding how a creditor should report income on an impaired loan. SFAS
118 allows creditors to use existing methods for recognizing income on
impaired loans, including methods used by certain industry regulators. As
of the date of adoption, and as of September 30, 1995, the impact of SFAS
114 and SFAS 118 is not material to BCG's consolidated financial
statements.
Risk Elements. The allowance for loan losses at September 30, 1995
was $697,872 or 4.5% and 8.8% higher than at December 31, 1994 and
September 30, 1994, respectively. At September 30, 1995 the allowance
represented 1.51% of total loans as compared with 1.66% at December 31,
1994 and 1.52% at September 30, 1994. The decrease in the loss reserve as
a percentage of loans was due to a decrease in non-performing loans
(nonaccrual loans and loans past due 90 days or more and still accruing) in
the amount of $71,000 during the nine months ended September 30, 1995.
At September 30, 1995 there were no non-performing loans. At December
31, 1994 and September 30, 1994, nonperforming loans represented .18% and
.17% of total loans, respectively.
Capital Resources. Shareholders' equity of $7,680,460 at September
30, 1995 increased 52.8% over the same period in 1994, resulting in book
value (exclusive of preferred stock equity) per common share of $.70
compared to $.27 at September 30, 1994. The increase is the result of
earnings retained over this period. Earnings over this period included
recognition of deferred tax assets of $1,648,118. Capital for Americorp is
above regulatory requirements, with GAAP equity of 11.05% of total assets
at September 30, 1995.
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<PAGE>
<PAGE>
Set forth below are pertinent capital ratios for Ameribank as of
September 30, 1995:
<TABLE>
<CAPTION>
Minimum Capital Requirement Ameribank
--------------------------- ---------
<S> <C>
Tier 1 Capital to Risk-based 11.42%/(1)/
Assets: 4.00%
Total Capital to Risk-based 12.67%/(2)/
Assets: 8.00%
Leverage Ratio (Tier 1 Capital 9.01%/(3)/
to Total Assets): 3.00%
</TABLE>
/(1)/ Minimum for "Well Capitalized" Banks = 6%
/(2)/ Minimum for "Well Capitalized" Banks = 10%
/(3)/ Minimum for "Well Capitalized" Banks = 5%
Americorp's capital is regulated on a tiered holding company
basis with BCG, which owns 66.67% of the outstanding Americorp Common
Stock. BCG's consolidated Tier 1 capital to risk-based assets, total
capital to risk-based assets and leverage ratio for BCG at September 30,
1995 were 10.58%, 11.78%, and 7.94%. See "BANK CORPORATION OF GEORGIA --
Management's Discussion and Analysis of Financial Condition and Results of
Operation for the Nine Months Ended September 30, 1995 and 1994."
Liquidity and Interest Rate Sensitivity. Federal funds sold
represent Americorp's primary source of immediate liquidity and were
maintained at a level adequate to meet immediate needs. Federal funds
averaged approximately $2,418,000 and $2,126,680 for the nine months ended
September 30, 1995 and 1994, respectively. The average balances for the
quarters ended September 30, 1995 and 1994 were approximately $2,281,000
and $2,106,570, respectively. Maturities in Americorp's loan and
investment portfolios are monitored regularly to avoid matching short-term
deposits with long-term loans and investments. Other assets and
liabilities are also monitored to provide the proper balance between
liquidity, safety, and profitability. This monitoring process must be
continuous due to the constant flow of cash which is inherent in a
financial institution.
Americorp actively manages its interest rate sensitive assets and
liabilities to reduce the impact of interest rate fluctuations. At
September 30, 1995, Americorp's rate sensitive liabilities exceeded rate
sensitive assets due within one year by $8,191,000.
Americorp manages its liquidity through the volatility of its deposits
and patterns in loan demand, its current liquidity position, its ability to
control funding needs and potential sources of funds. As part of managing
liquidity, Americorp monitors its loan to deposit ratio on a daily basis.
The target ratio is 80%. At September 30, 1995 the ratio was 78.9%.
Americorp experienced a net decrease in cash and cash equivalents, its
primary source of liquidity, of $3,283,542 during the first nine months of
1995. Operating activities provided $1,393,787 of funds. Adjustments to
net income for non-cash expenses of depreciation, amortization, and
provision for loan losses of $165,499 are included in this amount as a net
provision of funds. Investing activities used $7,966,737 of funds,
primarily due to an increase in loans and purchases of
-44-
<PAGE>
<PAGE>
investment securities during the nine month period. Financing activities
provided net cash of $3,289,408 due to an increase in deposit accounts and
an increase in federal funds purchased during the nine months ended
September 30, 1995.
FASB Statements. The Financial Accounting Standards Board (the
"FASB") recently issued Statement No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS
121 establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS 121 is effective for
financial statements for fiscal years beginning after December 15, 1995
with early adoption permitted. Presently, BCG is unable to determine the
impact that adoption of SFAS 121 will have on the consolidated financial
statements, but management anticipates that the impact will not be
material.
-45-
<PAGE>
<PAGE>
Selected Statistical Financial Data
The following tables set forth certain selected statistical
information and should be read in conjunction with the consolidated
financial statements of Americorp. Averages referred to in the following
statistical information are generally average monthly balances.
Americorp has no foreign operations and, accordingly, there are no
assets or liabilities attributable to foreign operations.
Average Balance Sheets
Condensed average balance sheets for the years indicated are presented
below:
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
1994 1993 1992
---- ---- ----
(amounts are presented in thousands)
<S> <C> <C> <C>
Assets
------
Cash and due from banks $ 1,521 1,352 1,311
------- ------ ------
Interest-earning assets:
Loans, net/(a)/ 39,397 35,279 34,902
Interest-bearing deposits with
financial institutions 0 8 2,846
Taxable investment securities -- held to maturity 1,344 5,085 4,197
Taxable Investment Securities -- available for sale 9,043 --- ---
Federal funds sold --- 5,407 3,214
FHLB deposits 2,713 --- ---
------- ------ ------
Total interest-earning assets 52,497 45,779 44,349
------- ------ ------
Premises and equipment, net 2,798 2,531 2,653
Other assets 491 1,261 1,907
------- ------ ------
Total Assets $57,307 50,923 50,220
======= ====== ======
Liabilities And Shareholders' Equity
------------------------------------
Non-interest-bearing demand deposits $ 5,404 3,479 3,095
------- ------ ------
Interest-bearing liabilities:
Notes Payable --- 499 500
Savings and interest-bearing demand
deposits 23,455 25,078 20,563
Time deposits 23,525 18,379 22,816
------- ------ ------
Total interest-bearing liabilities 46,980 43,956 43,879
Other liabilities 209 479 513
------- ------ ------
Total liabilities 52,593 47,914 47,487
------- ------ ------
Shareholders' equity:
Shareholders' equity 4,714 3,009 2,733
------- ------ ------
Total Liabilities and Shareholders'
Equity $57,307 50,923 50,220
======= ====== ======
</TABLE>
-46-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
1994 1993 1992
---- ---- ----
(amounts are presented in thousands)
<S> <C> <C> <C>
Total interest-earning assets $52,497 $45,779 $44,349
Total interest-bearing liabilities 46,980 43,956 43,879
------- ------- -------
Excess of interest-earning assets over
interest-bearing liabilities $ 5,517 $ 1,823 $ 470
------- ------- -------
INTEREST EARNED ON:
Loans, net/(b)/ $ 3,632 $ 3,241 $ 3,482
Interest-bearing deposits with financial
institutions -- 138 --
Taxable investment securities -- held to maturity 86 210 234
Taxable investment securities -- available for sale 366 -- --
Federal funds sold -- 156 104
FHLB deposits 119 --- ---
------- ------- -------
Total interest income $ 4,203 $ 3,607 $ 3,958
------- ------- -------
INTEREST PAID ON:
Savings and interest-bearing demand
deposits $ 745 $ 777 $ 792
Time deposits 1,055 87 1,382
Notes Payable --- 38 44
------- ------- -------
Total interest expense 1,800 1,693 2,218
------- ------- -------
NET INTEREST EARNED $ 2,403 $ 1,914 $ 1,740
======= ======= =======
AVERAGE PERCENTAGE EARNED ON:
Loans, net (b) 9.22% 9.19% 10.21%
Interest-bearing deposits with financial
institutions -- -- 4.85%
Taxable investment securities -- held to maturity 6.40% 4.13% 5.58%
Taxable investment securities -- available for sale/(c)/ 4.05% -- --
Federal funds sold -- 2.89% 3.24%
FHLB deposits 4.39% -- --
------- ------- -------
TOTAL INTEREST-EARNING ASSETS 8.01% 7.88% 8.92%
------- ------- -------
AVERAGE PERCENTAGE PAID ON:
Savings and interest-bearing demand
deposits 3.18% 3.10% 3.85%
Time deposits 4.48% 4.77% 6.06%
Notes Payable -- 7.62% 8.80%
------- ------- -------
TOTAL INTEREST-BEARING LIABILITIES 3.83% 3.85% 5.50%
------- ------- -------
SPREAD RATE ON INTEREST-EARNING ASSETS 4.18% 4.03% 3.42%
======= ======= =======
NET YIELD ON INTEREST-EARNING ASSETS 4.58% 4.18% 3.92%
======= ======= =======
</TABLE>
/(a)/ Average loans are shown net of unearned income and the allowance for
loan losses. Non-performing loans are included.
/(b)/ Included in interest-earned on loans are fees of approximately
$198,000 in 1994 and $153,000 in 1993 and $138,000 in 1992.
/(c)/ The average yield on available for sale securities represents
interest income on available for sale securities divided by average
available for sale securities, net of adjustments for market gains or
losses.
-47-
<PAGE>
<PAGE>
Interest Differential
The following tables sets forth, for the years ended December 31,
1994 and December 31, 1993, a summary of the changes in interest earned and
interest paid resulting from changes in volume and changes in rates:
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Due to
Changes in/(a)/
Increase ----------
1994 1993 (decrease) Volume Rate
---- ---- ---------- ------ ----
(amounts are presented in thousands)
<S> <C> <C> <C> <C> <C>
INTEREST EARNED ON:
Loans, net $3,632 3,241 391 380 11
Interest-bearing deposits with
financial institutions -- -- -- -- --
Taxable investment securities -- held to maturity 86 210 (124) (155) 31
Taxable investment securities -- available for sale 366 -- 366 366 --
Federal funds sold -- 156 (156) (156) --
FHLB deposits 119 -- 119 119 --
------ ----- ---- ---- ----
TOTAL INTEREST INCOME 4,203 3,607 596 554 42
------ ----- ---- ---- ----
INTEREST PAID ON:
Notes Payable -- 39 (39) (39) --
Savings and interest-bearing
demand deposits 745 777 (32) (53) 21
Time deposits 1,055 877 178 227 (49)
------ ----- ---- ---- ----
TOTAL INTEREST EXPENSE 1,800 1,693 107 135 (28)
------ ----- ---- ---- ----
NET INTEREST EARNED $2,403 1,914 489 419 70
====== ===== ==== ==== ====
<CAPTION>
Year Ended December 31, 1993
Due to
Changes in/(a)/
Increase ----------
1994 1993 (decrease) Volume Rate
---- ---- ---------- ------ ----
(amounts are presented in thousands)
<S> <C> <C> <C> <C> <C>
INTEREST EARNED ON:
Loans, net $3,241 3,482 (241) 29 (270)
Interest-bearing deposits with
financial institutions -- 138 (138) (138) --
Taxable investment securities -- held to maturity 210 234 (24) 37 (61)
Federal funds sold 156 104 52 63 (11)
------ ----- ---- ---- ----
TOTAL INTEREST INCOME 3,607 3,958 (351) (9) (342)
------ ----- ---- ---- ----
INTEREST PAID ON:
Notes Payable 39 44 (5) -- (5)
Savings and interest-bearing
demand deposits 777 792 (15) 139 (154)
Time deposits 877 1,382 (505) (211) (294)
------ ----- ---- ---- ----
TOTAL INTEREST EXPENSE 1,693 2,218 (525) (72) (453)
------ ----- ---- ---- ----
NET INTEREST EARNED $1,914 1,740 174 63 111
====== ===== ==== ==== ====
</TABLE>
(a) The change in interest due to both rate and volume has been allocated to
the volume and rate components in proportion to the relationship of the dollar
amounts of the change in each.
-48-
<PAGE>
<PAGE>
Investment Securities
The carrying value and related estimated market value of investment
securities at December 31, 1994 and 1993 is summarized below. At December 31,
1994 all investment securities were classified as available for sale, and at
December 31, 1993 all investment securities were classified as held to
maturity.
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
----------------- -----------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
---- ---------- ---- ----------
<S> <C> <C> <C> <C>
U.S. Treasury and U.S. Government Agencies $11,654,174 $11,575,876 $9,093,528 $9,110,000
=========== =========== ========== ==========
</TABLE>
The following table shows the maturities and repricing opportunities
of investment securities at amortized cost at December 31, 1994 and the average
yields of such securities:
<TABLE>
<CAPTION>
MATURING/REPRICING
After 1 but After 5 but
----------------------------------------------------------------------------
Within 1 Year Within 5 Years Within 10 Years After 10 Years
------------- -------------- --------------- --------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and U.S. Government
Agencies $5,945 5.35% $ 5,709 7.60% -- -- -- --
</TABLE>
Loans
The amount of loans outstanding at the indicated dates are shown in
the following table according to type:
<TABLE>
<CAPTION>
1994 1993
---- ----
(Amounts in Thousands)
<S> <C> <C>
Commercial, Financial, and Agricultural $22,300 $18,712
Real Estate - Construction 4,404 4,243
Real Estate - Other 11,761 11,950
Consumer 1,715 1,551
-------- --------
$40,180 $36,456
======== ========
</TABLE>
For loans maturing after one year, approximately $4,280,000 have
predetermined interest rates and approximately $18,036,000 have variable rates.
The maturity of the real estate construction, commercial, financial, and
agricultural loans outstanding at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Commercial
Real Estate Financial
Construction and Agricultural
------------ ----------------
<S> <C> <C>
In One Year or Less $3,743 $ 6,913
After One Year But Within Five Years 661 13,603
After Five Years -- 1,784
------ -------
$4,404 $22,300
====== =======
</TABLE>
-49-
<PAGE>
<PAGE>
Americorp had no loans which were past due greater than 90 days and
still accruing at December 31, 1994 and 1993. There were no loans which
were "troubled debt restructurings" as defined by Statement of Financial
Accounting Standards No. 15 as of that date.
Americorp discontinues accruing interest on loans when, in the opinion
of management, the collection of interest is doubtful. At December 31,
1994 and 1993, non-accruing loans amounted to approximately $71,000 and
$201,000, respectively. Interest income that would have been recorded on
these loans in accordance with their original terms was $6,000 and $14,000
respectively, compared with actual income recorded of $0 and $5,000
respectively, in 1994 and 1993. Americorp has no knowledge of other
possible credit problems which would cause additional loans to be
classified as non-accrual. At December 31, 1994, Americorp had loans
outstanding to real estate developers, included in "Real estate-
construction" and "Real estate-other" which, in aggregate, exceed 10% of
total loans.
Allocation of Reserve for Possible Loan Losses
Americorp has allocated the reserve for possible loan losses
according to the amount deemed to be reasonably necessary at each year-end
to provide for the possibility of losses being incurred within the
categories of loans set forth in the table below based on the previous
year's gross charge-offs in each category as a percentage of total charge-
offs. The amount of such components of the reserve for loan losses at
December 31, 1994, 1993 and 1992 are presented below. Amounts are
presented in thousands.
-50-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Commercial, Installment
financial, and single
and payment Real
agricultural individual estate
loans loans loans Total
------------ ----------- ------ -----
<S> <C> <C> <C> <C>
December 31, 1994:
Reserve amount $517.0 $ -- $151.0 $668.0
====== ===== ====== ======
Percent of loans
in each category
to total loans 77.4% --% 22.6% 100.0%
====== ===== ====== ======
December 31, 1993:
Reserve amount $210.0 $62.0 $412.0 $684.0
====== ===== ====== ======
Percent of loans
in each category
to total loans 30.7% 9.1% 60.2% 100.0%
====== ===== ====== ======
December 31, 1992:
Reserve amount $498.0 $48.0 $127.0 $673.0
====== ===== ====== ======
Percent of loans
in each category
to total loans 74.0% 7.1% 18.9% 100.0%
====== ===== ====== ======
<CAPTION>
Deposits
The average amount of and average rate paid on deposits by category for the
last three years are presented below:
Years ended December 31,
------------------------
1994 1993 1992
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
(Amounts are presented in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-interest-bearing demand deposits $ 5,404 -- % $ 3,479 -- % $ 3,095 -- %
Interest-bearing demand deposits 22,946 3.18 24,687 3.15 20,294 3.90
Savings deposits 509 2.47 391 2.81 269 3.72
Time deposits 23,525 4.48 18,379 4.77 18,379 6.06
------- ----- ------- ---- -------- ----
Total average deposits $52,384 3.44% $46,936 3.52% $46,474 4.68%
======= ===== ======= ==== ======== ====
</TABLE>
The maturities of certificates of deposit of $100,000 or more as of
December 31, 1994 are presented below. Amounts are presented in
thousands.
<TABLE>
<CAPTION>
December 31, 1994
-----------------
<S> <C>
3 months or less $ 1,805
Over 3 months through 6 months 2,445
Over 6 months through 12 months 1,801
Over 12 months --
-------
Total outstanding $ 6,051
=======
</TABLE>
-51-
<PAGE>
<PAGE>
Rate Sensitivity Analysis
<TABLE>
<CAPTION>
DECEMBER 31, 1994
RATE SENSITIVE
IMMEDIATELY 181 OVER
RATE TWO TO 91 TO DAYS TO ONE
SENSITIVE 90 DAYS 180 DAYS ONE YEAR YEAR TOTAL
-----------------------------------------------------------------------
EARNING ASSETS
--------------
<S> <C> <C> <C> <C> <C> <C>
LOANS $14,905 $14,948 $ 2,761 $ 3,214 $3,685 $39,513
INVESTMENT
SECURITIES 2,000 1,981 1,964 --- 5,709 11,654
INTEREST-
BEARING
DEPOSITS --- --- --- --- --- ---
FEDERAL HOME
LOAN BANK DEPOSITS 6,083 --- --- --- --- 6,083
-----------------------------------------------------------------------
TOTAL EARNING
ASSETS $22,988 $16,929 $ 4,725 $ 3,214 $9,394 $57,250
-----------------------------------------------------------------------
SUPPORTING SOURCES
OF FUNDS
--------
NOW AND MONEY
MARKET ACCOUNTS $21,487 $ --- $ --- $ --- $ --- $21,487
TIME CERTIFICATES
OF DEPOSIT --- 7,701 5,859 5,068 9,184 27,812
DEMAND DEPOSIT
ACCOUNTS 7,657 --- --- --- --- 7,657
SAVINGS ACCOUNTS 518 --- --- --- --- 518
LONG-TERM DEBT --- --- --- --- --- ---
TOTAL RATE -----------------------------------------------------------------------
SENSITIVE
LIABILITIES $29,662 $ 7,701 $ 5,859 $ 5,068 $9,184 $57,474
-----------------------------------------------------------------------
PERIODIC GAP -
INTEREST EARNING
ASSETS (INTEREST
BEARING LIABILITIES) $(6,674) $ 9,228 $(1,134) $(1,854) $ 210
-----------------------------------------------------------------------
CUMULATIVE GAP -
INTEREST EARNING
ASSETS (INTEREST
BEARING LIABILITIES) $(6,674) $ 2,554 $ 1,420 $ (434) $ (224) $ (224)
CUMULATIVE RATIO
OF INTEREST EARNING
ASSETS TO INTEREST
BEARING LIABILITIES 77% 107% 103% 99% 100%
</TABLE>
-52-
<PAGE>
<PAGE>
The rate sensitivity analysis table is designed to demonstrate
Americorp's sensitivity to changes in interest rates by setting forth in
comparative form the repricing maturities of Americorp's assets and
liabilities for the period shown. A ratio of interest earning assets to
interest bearing liabilities (more interest earnings assets repricing in a
given period than interest bearing liabilities) greater than 100% indicates
that an increase in interest rates will generally result in an increase in
net income for Americorp and a decrease in interest rates will result in a
decrease in net income. A ratio of earning assets to interest-bearing
liabilities less than 100% indicates that a decrease in interest rates will
generally result in an increase in net income for Americorp and an increase
in interest rates will result in a decrease in net income.
Types of Loans
The amount of loans outstanding at the indicated dates are shown in
the following table according to the type of loan.
<TABLE>
<CAPTION>
September 30, 1995
-------------------------------
(Dollar Amounts in Thousands)
<S> <C>
Commercial, financial, and
agricultural $23,527
Real estate - construction 6,109
Real estate - other 15,363
Consumer 1,334
-------
$46,333
=======
</TABLE>
-53-
<PAGE>
<PAGE>
Maturities and Sensitivity to Changes in Interest Rates
Total loans at September 30, 1995 are shown in the following table
according to maturity classifications (1) year or less, (2) after one year
through five years and (3) after five years:
<TABLE>
<CAPTION>
September 30, 1995
-------------------------------
(Dollar Amounts in Thousands)
<S> <C>
Maturity:
One year or less:
Commercial and financial $ 7,764
Real estate-Construction 5,559
All other loans 5,343
-------
$18,666
-------
After one year through five years:
$12,705
Commercial and financial 305
Real estate construction 9,016
-------
All other loans $22,026
-------
After five years:
Commercial and financial $ 3,059
Real estate-construction 244
All other loans 2,338
-------
$ 5,640
-------
$46,333
=======
</TABLE>
The following table summarizes loans at September 30, 1995 with due
dates after one year and which have predetermined and floating or
adjustable interest rates.
<TABLE>
<CAPTION>
September 30, 1995
-------------------------------
(Dollar Amounts in Thousands)
<S> <C>
Predetermined interest rates $ 6,640
Floating or adjustable interest rates 21,026
-------
$27,666
=======
</TABLE>
-54-
<PAGE>
<PAGE>
Non-Performing Loans
Information with respect to non-accrual past due and restructured
loans is as follows:
<TABLE>
<CAPTION>
September 30, 1995
-------------------------------
(Dollar Amounts in Thousands)
<S> <C>
Non-accrual loans 0
Loans contractually past due 0
ninety days or more as to
interest or principal
payments and still accruing
</TABLE>
The reduction in interest income associated with non-accrual and
renegotiated loans as of September 30, 1995 is as follows:
<TABLE>
<CAPTION>
September 30, 1995
-------------------------------
(Dollar Amounts in Thousands)
<S> <C>
Interest income that would
have been recorded on
non-accrual and restructured $1,898
loans under original terms
Interest income that was 0
recorded on non-accrual and
restructured loans
</TABLE>
The amount of loan commitments and letters of credit at September 30,
1995, was $5,664,000.
The following table presents a history of amounts of other real
owned by Americorp including write downs and sales at year end for the
years ended December 31, 1994 and 1993 and for the nine months ended
September 30, 1995.
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
------------ -------------
1994 1993 1995
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Balance of other
real estate owned $404 $632 $219
Writedowns of other
real estate included
in results of
operations 50 5 --
---- ---- ----
Proceeds of sales of
other real estate $273 52 79
==== ==== ====
</TABLE>
The decline in other real estate owned from 1993 has been primarily the
result of efforts to wind up the liquidation of other real estate owned
resulting from Americorp's asset quality problems when BCG acquired an
interest in Americorp in 1990.
-55-
<PAGE>
<PAGE>
Summary of Loan Loss Experience
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1995
-------------------------------
(Dollar Amounts in Thousands)
<S> <C>
Average amount of loans outstanding $42,591
=======
Balance of allowance for loan 668
losses at beginning of period -------
Loans charged off
Commercial (46)
Real estate mortgage 0
Installment (1)
-------
(47)
-------
Loans recovered
Commercial 12
Real estate mortgage 14
Installment 6
-------
32
-------
Net charge-offs (15)
-------
Additions to allowance charged to
operating expense during period 45
-------
Balance of allowance for loan
losses at end of period $ 698
=======
Ratio of net loans charged off
during the period to average
loans outstanding 0.05%
=======
</TABLE>
-56-
<PAGE>
<PAGE>
Allowance for Loan Losses
The allocation of the allowance for loan losses for September 30, 1995
is summarized below:
<TABLE>
<CAPTION>
Allocation of allowance for loan losses
-----------------------------------------
(Dollar Amounts in Thousands)
Balance at end of period September 30, 1995
applicable to:
<S> <C>
Commercial and financial $354
Real estate 323
Installment 20
----
$698
====
<CAPTION>
Percent of loans
in each category to total loans
-----------------------------------------
(Dollar Amounts in Thousands)
Balance at end of period September 30, 1995
applicable to:
<S> <C>
Commercial and financial 51%
Real estate 46%
Installment 3%
-----
100%
=====
</TABLE>
BANK CORPORATION OF GEORGIA
Description of Business
General. BCG was incorporated under the laws of Georgia in 1980 and
commenced operations that year by acquiring 100% of the outstanding shares
of Bank of Fort Valley. All of BCG's activities are currently conducted by
its wholly-owned community banking subsidiaries, FSB, Middle Georgia and
Coweta County, and its majority-owned bank holding company subsidiary,
Americorp. All of Americorp's activities are conducted through its wholly-
owned bank subsidiary, Ameribank. If the Americorp Merger is consummated,
Ameribank will become a wholly-owned subsidiary of BCG. For a description
of the business of Americorp, including a discussion of Ameribank, see
"AMERICORP, INC. -- Description of Business."
The strategy of the Banks and Ameribank is to target specific customer
groups within their markets and strive to meet the wide variety of
financial needs of their customers while maintaining their identities as
local community banks. The objective of BCG has been to target
-57-
<PAGE>
<PAGE>
primarily urban markets with significant growth potential in which the
primary competitors are large regional institutions and in which a BCG
subsidiary can develop a significant local presence. As a consequence, the
Banks are primarily centered in growing urban markets in which large
regional institutions dominate. If the proposed acquisitions of Effingham
and Americorp by BCG, and the proposed acquisition of deposits and
liabilities of the Bank South branch located at East Victory Drive and the
assumption of the lease for the Bank South headquarters located at East
Congress Street by Ameribank, are consummated, BCG will increase and
solidify its presence in the Savannah, Georgia area, one of the fastest-
growing areas in Georgia.
In March 1994, FSB sold substantially all of the assets and
liabilities of its Ashburn, Georgia branch to Ashburn Bank. In connection
with the sale, FSB transferred deposit liabilities totaling approximately
$7,369,000 and assets, consisting primarily of loans, of $4,787,000 and
cash of approximately $2,404,000. FSB recognized a gain of approximately
$178,000 from the sale. In September of 1994, BCG sold substantially all
of the assets and liabilities of First South Bank of Ben Hill County,
Fitzgerald, Georgia to Bankers First, FSB. BCG transferred approximately
$14,540,000 in deposit liabilities and $3,791,000 in assets, primarily
loans, and approximately $10,114,000 in cash to Bankers First, FSB. The
gain on the sale of the First South Bank of Ben Hill County assets and
liabilities amounted to approximately $636,000 before related income tax
expense. The disposition of the Ashburn and Fitzgerald assets and
liabilities was part of BCG's overall strategy of concentrating its
resources in growing urban markets in which it is able to establish a
significant local presence and compete primarily with large regional
institutions.
Pending Acquisition of Effingham Bank & Trust. On July 11, 1995, BCG
entered into the Effingham Stock Purchase Agreement with five shareholders
of Effingham to purchase a total of 76,850 shares (23.51%) of the
outstanding stock of Effingham (the "Purchased Shares") for $12.50 per
share and a total purchase price of $960,625. On July 13, 1995 BCG and
Effingham entered into the Effingham Reorganization Agreement pursuant to
which BCG agreed to acquire the remaining 76.49% of the outstanding stock
of Effingham by merger of Effingham and a wholly-owned subsidiary of BCG.
Pursuant to the Effingham Reorganization Agreement, each shareholder of
Effingham would have been entitled to receive .60 shares of BCG Common
Stock for each share of Effingham Stock owned (the "Effingham Exchange
Ratio"). Subsequently, during BCG's due diligence investigation of
Effingham, Effingham disclosed certain information to BCG concerning
potential liabilities which resulted in the renegotiation of the price for
the Purchased Shares and the Effingham Exchange Ratio. Accordingly, on
August 28, 1995 BCG and the Selling Shareholders agreed that BCG would pay
the Selling Shareholders $12.00 for each Purchased Share for total
consideration of $922,200. In addition, Effingham and BCG amended the
Effingham Reorganization Agreement to reduce the Effingham Exchange Ratio
to .53 shares of BCG Common Stock for each of share of Effingham Stock
exchanged therefore. BCG has filed a Registration Statement on Form S-4
with the Securities and Exchange Commission with respect to the shares of
BCG Common Stock to be issued to the Effingham shareholders on consummation
of the Effingham Merger. Management of BCG anticipates that following
consummation of the Effingham and Americorp Mergers, Ameribank and
Effingham will be merged, with the surviving bank being operated as a
national bank.
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<PAGE>
<PAGE>
Effingham is a full-service commercial bank based in Rincon, Effingham
County, Georgia with two offices. As of September 30, 1995, Effingham had
total assets of $24.9 million, total deposits of $21.6 million, net loans
of $17.6 million and shareholders' equity of $1.96 million. The
acquisition of Effingham will allow BCG to expand its market share in the
Savannah, Georgia area, one of the fastest growing areas of Georgia. It is
anticipated that the Effingham Merger will close in the first quarter of
1996.
For a discussion of Ameribank's pending acquisition of additional
banking offices and deposit liabilities, see "AMERICORP, INC. --
Description of Business."
Services. The Banks are community-oriented, with an emphasis on
lending to small businesses and professionals and other customary banking
services, such as consumer and commercial checking accounts, NOW accounts,
savings accounts, certificates of deposit, lines of credit, Mastercard and
VISA accounts, money transfers and trust services. The Banks finance
commercial and consumer transactions, make secured and unsecured loans,
including residential mortgage loans, and provide a variety of other
banking services.
Markets. The primary markets for FSB are Johnson, Macon and Peach
Counties, Georgia. The primary market for Middle Georgia is Bibb County,
Georgia, and the primary market for Coweta is Coweta County, Georgia.
Deposits. The Banks offer a full range of depository accounts and
services to both consumers and businesses. At September 30, 1995, BCG's
deposit base, totaling approximately $196.4 million (which includes
deposits of Ameribank), consisted of approximately $28.8 million in non-
interest-bearing demand deposits (14.67% of total deposits), approximately
$52.6 million in interest-bearing demand deposits (including money market
accounts) (26.77% of total deposits), approximately $7.3 million in savings
deposits (3.7% of total deposits), approximately $79.3 million in time
deposits in amounts less than $100,000 (40.4% of total deposits), and
approximately $28.4 million in time deposits of $100,000 or more (14.5% of
total deposits).
Loans. The Banks make both secured and unsecured loans to
individuals, firms and corporations, and both consumer and commercial
lending operations include various types of credit for their customers.
Secured loans include first and second real estate mortgage loans. The
Banks also make direct installment loans to consumers on both a secured and
unsecured basis. At September 30, 1995, consumer, real estate (including
mortgage and construction loans) and commercial loans represented
approximately 7%, 66%, and 27%, respectively, of BCG's total loan
portfolio. The Banks make a variety of real estate loans, including loans
for residential real estate construction, acquisition and development
loans, as well as loans for other purposes that are secured by real estate.
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<PAGE>
<PAGE>
Specific risk elements associated with each of the Banks' lending
categories are as follows:
Commercial, financial and agricultural Industry concentrations, inability
to monitor the condition of
collateral (inventory, accounts
receivable and vehicles), lack of
borrower management expertise,
increased competition, and
specialized or obsolete equipment
as collateral
Real estate - construction Inadequate collateral and long-term
financing agreements
Real estate - mortgage Changes in local economy and caps
on variable rate loans
Installment loans to individuals Loss of borrower's employment,
changes is local economy, the
inability to monitor collateral
(vehicle, boats and mobile homes)
Lending Policy. The current lending strategy of each of the Banks is
to offer consumer, real estate and commercial credit services to
individuals and entities that meet the particular Bank's credit standards.
Each Bank provides its lending officers with written guidelines for lending
activities. Lending authority is delegated by the Board of Directors of
the particular Bank to loan officers, each of whom is limited in the amount
of secured and unsecured loans which he or she can make to a single
borrower or related group of borrowers.
Loan Review and Non-Performing Assets. Each Bank reviews its loan
portfolio to determine deficiencies and corrective action to be taken.
Periodic reviews are conducted of borrowers with total direct and indirect
indebtedness of $100,000 or more and of all past-due loans. Past-due loans
are reviewed at least monthly by lending officers and a summary report is
reviewed monthly by senior management and quarterly by the particular
Bank's Board of Directors. The loan review function reviews all
relationships over $100,000, whether current or past due, at least
annually. The loan review function reviews significant findings with the
Board quarterly. In addition, each Bank maintains internal classifications
of problem and potential problem loans.
Asset/Liability Management. Each Bank's Board of Directors is charged
with establishing policies to manage the assets and liabilities of the
particular Bank. Each Board's task is to manage asset growth, net interest
margin, liquidity and capital. The Board directs the Bank's overall
acquisition and allocation of funds. At its monthly meetings, the Board of
each Bank receives a report from the President of such Bank with regard to
the monthly asset and liability funds budget and income and expense budget
in relation to the actual composition and flow of funds, the ratio of the
amount of rate-sensitive assets to the amount of rate-sensitive
liabilities, the ratio of loan loss reserves to outstanding loans, and
other variables, such as expected loan
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<PAGE>
<PAGE>
demand, investment opportunities, core deposit growth within specified
categories, regulatory changes, monetary policy adjustments and the overall
condition of the local, state and national economy.
Investment Policy. Each Bank's investment portfolio policy is to
maximize income consistent with liquidity, asset quality and regulatory
constraints. The policy is reviewed from time to time by the particular
Bank's Board of Directors. Individual transactions, portfolio composition
and performance are reviewed and approved by the particular Bank's Board of
Directors or a committee thereof. The Treasurer of each Bank implements
the policy and reports to the Bank's full Board of Directors on a quarterly
basis information concerning sales, purchases, resultant gains or losses,
average maturity, federal taxable equivalent yields, and appreciation or
depreciation by investment categories.
Employees. As of November 17, 1995, the Banks had an aggregate of 101
full-time employees, Ameribank had a total of 32 employees and BCG had a
total of six employees. Neither BCG, nor any of the Banks or Ameribank is a
party to any collective bargaining agreement, and BCG, the Banks and
Ameribank believe that their employee relations are good.
Competition. The banking business is highly competitive. FSB
competes with two other banks in Peach County, two other banks in Macon
County and one other bank in Johnson County. Middle Georgia competes with
eight other banks in Bibb County, and Coweta competes with five other banks
in Coweta County. The Banks also compete with other financial service
organizations, including thrifts, finance companies, credit unions and
certain governmental agencies. To the extent that banks must maintain non-
interest-earning reserves against deposits, they may be at a competitive
disadvantage when compared with other financial service organizations that
are not required to maintain reserves against substantially equivalent
sources of funds.
Properties. FSB's main office is located at 110 North Camellia
Boulevard, Fort Valley, Georgia. Middle Georgia's main office is located
at 4961 Forsyth Road, Macon, Georgia adjacent to BCG's headquarters and
operations center located at 4951 Forsyth Road, Macon, Georgia. Coweta's
main office is located at 232 Bullsboro Drive, Newnan, Georgia. Each Bank
owns it's main office. Middle Georgia subleases loan production office
space from FSB, which leases the space from William H. Anderson, II,
Chairman of the BCG Board of Directors. In addition, FSB leases the space
in which the BCG operations center is located from Mr. Anderson. See "BANK
CORPORATION OF GEORGIA--Certain Transactions." FSB operates one branch in
each of Macon County and Johnson County, both of which branches are owned
by it.
Litigation. BCG is not a party to, nor is any of its property the
subject of, any material pending legal proceedings.
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<PAGE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operation for the Years Ended December 31, 1994 and 1993
This analysis has been prepared to provide insight into the
consolidated financial condition of BCG and addresses the factors which
have affected BCG's results of operations. Unless otherwise noted, the
financial and other information presented with respect to BCG in this
discussion and elsewhere in this Proxy Statement/Prospectus generally
includes the accounts of the Banks as well as that of Americorp and its
wholly-owned subsidiary, Ameribank. Although BCG did not have a majority
ownership interest in Americorp until December 1993, the accounts of
Americorp have generally been included in the information presented herein
due to BCG's operating control of Americorp arising from representation on
the Americorp Board of Directors and a management contract between BCG and
Americorp. See "BANK CORPORATION OF GEORGIA -- Description of Business."
BCG's consolidated financial statements and accompanying notes which follow
are an integral part of this review and should be read in conjunction with
it.
General Overview of BCG. Net income for 1994 was $2,229,400 as
compared to $1,829,990 for 1993. Pretax earnings increased $520,000 over
1993, primarily due to an increase in net interest income of $533,000,
reductions in salaries and benefits of $472,000, offset by reductions in
loan sale gains of $431,000 and securities losses of $321,000.
Earnings in 1994 included approximately $1,127,000 of tax
benefits related to net operating losses of Americorp. The comparable
benefit for 1993 was $313,000. The benefit was recognized under provisions
of SFAS 109 "Accounting for Income Taxes". The statement requires that
companies provide an allowance against any deferred tax assets when it is
more likely than not that the asset will not be realized. At December 31,
1993, BCG did not recognize a significant deferred tax asset of Americorp
and its wholly owned subsidiary Ameribank, which are consolidated,
partially-owned subsidiaries of BCG. Americorp and Ameribank file income
tax returns as a separate consolidated group, and their consolidated losses
have not been available to BCG in its consolidated income tax returns.
Through 1992, Americorp had cumulative Federal tax loss carryforwards
approximating $6,000,000, and generated taxable earnings for 1993 of
approximately $100,000. At December 31, 1993, BCG reduced its valuation
allowance in an amount resulting in a deferred tax asset of $292,565. For
1994, the Americorp consolidated group had approximately $700,000 of
taxable income, and management has projected to earn at least that amount
in 1995 and for each year thereafter. Management then assessed the
Americorp consolidated group's ability to utilize its tax attributes and
further reduced in 1994 the valuation allowance resulting in the 1994 net
income tax benefit of $1,127,000.
The following table sets out certain ratios of BCG for the years
indicated:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -----
<S> <C> <C> <C>
Net income (loss) to:
Average stockholders' equity 14.54% 13.88% 9.44%
Average assets 1.09% .96% .59%
Average equity to average assets 7.49% 6.92% 6.25%
</TABLE>
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<PAGE>
<PAGE>
Asset Quality. The allowance for loan losses represents an
estimate of potential losses in the loan portfolio. The adequacy of the
allowance for loan losses is evaluated monthly based on a regular review of
the Banks' loan portfolios, with particular emphasis on non-accruing loans,
past due loans, and other loans that management believes require attention.
There was a favorable trend in the amount of loans past due by 90
days or more over the last year. The percentage of these past dues to the
total loan portfolio was .32% at December 31, 1994, as compared to 1.09% at
December 31, 1993. The Banks' levels of non-performing assets have
decreased from $1,711,000 at December 31, 1993 to $961,000 at December 31,
1994, primarily due to continued net liquidation of foreclosed assets.
Non-performing assets are composed of non-accrual loans (loans on which
interest income is no longer being accrued), and foreclosed assets (assets
acquired in full or partial satisfaction of debt).
As a result of management's ongoing review of the loan portfolio,
loans are classified as non-accruing when it is not reasonable to expect
collection of interest under the original terms. These loans may be
classified as non-accruing even though the presence of collateral or the
borrower's financial strength may be sufficient to provide for ultimate
repayment of principal.
The following table provides data on the Banks' levels of past due
loans as of December 31, 1994 and 1993.
<TABLE>
<CAPTION>
Loans Past Due
(in thousands)
As of December 31,
1994 1993
---------------------- --------------------------
% of % of
Amount Total Loans Amount Total Loans
--------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Days Past Due
-------------
Accruing Loans:
30-90 $1,049 .73% $2,154 1.50%
Over 90 64 .04 735 .51
------ ---- ------ ----
Total 1,113 .77 2,889 2.01%
------ ---- ------ ----
Non-Accruals:
30-90 -- -- -- --
Over 90 402 .28% 827 .58%
------ ---- ------ ----
Total 402 .28% 827 .58%
------ ---- ------ ----
Total Loans:
30-90 1,049 .73% 2,154 1.50%
Over 90 466 .32 1,562 1.09
------ ---- ------ ----
Total $1,515 1.05% 3,716 2.59%
====== ==== ====== ====
</TABLE>
Loans past due on interest and/or principal payments have
decreased in dollar terms by 59.23% between year end 1993 and 1994.
Commercial and commercial real estate loans 90 days
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<PAGE>
<PAGE>
or more past due as to principal or interest are transferred to non-
accruing status unless fully secured by collateral. In addition, loans
past due less than 90 days, which in the opinion of management present
significant uncertainty as to collectability of interest, are also
placed on non-accrual status. Installment loans and credit lines are
charged off when losses become apparent, and in no event later than 120
days after the date on which the balance became past due. See "BANK
CORPORATION OF GEORGIA -- Selected Statistical Financial Data."
The allowance for loan losses represents an estimate of potential
losses in the loan portfolio. Management determines the allowance level
and its allocation based upon its judgment concerning factors affecting
loan quality and its assumptions regarding the economy. Based upon its
extensive ongoing review of the loan portfolio, management considers the
1994 year-end allowance for loan losses to be adequate to cover
potential losses in the Bank's loan portfolio.
The following table provides a reconciliation of the allowance
for loan losses for the years 1994 and 1993.
<TABLE>
<CAPTION>
Summary of Loan Loss Experience
(In thousands)
1994 1993
---------- ----------
<S> <C> <C>
Balance at beginning of period $2,061,117 $1,886,838
--------- --------
Charge offs:
Commercial, financial and agricultural 247,873 114,847
Real estate 86,377 180,736
Consumer 100,463 129,778
--------- ---------
Total 434,713 425,361
--------- ---------
Recoveries:
Commercial, financial & agricultural 56,653 147,433
Real estate 90,989 35,862
Consumer 31,753 65,748
--------- ---------
Total 179,395 249,043
--------- ---------
Net Charge-offs 255,318 176,318
Sales of Banking Units (166,000) --
Additions charged to operations 447,003 350,597
--------- ---------
Balance at end of period $2,086,802 $2,061,117
--------- ---------
Ratio of net charge-offs during the
period to average loans
outstanding during the period .178% .129%
========= =========
</TABLE>
The current levels of loans on non-accrual status and the
portfolio of other real estate owned impacts earnings as interest is not
earned and additional costs are incurred in the disposition of
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<PAGE>
these assets. In order to manage the non-performing assets, management of
the Banks have established specific goals for the resolution of all loans on
non-accrual status and all other real estate owned.
Earning Assets. In 1994, earning assets averaged $189.2 million,
a 7.7% increase from $175.7 million in 1993. During 1994, average total
deposits increased $11.4 million. The proceeds of those deposits were used
to fund loans, the average balance of which increased $6.8 million during
1994 and Federal Home Loan Bank deposits, the average balance of which
decreased $37,000 during 1994.
Loans. Loans are the single-largest component of earning assets,
as well as the highest yielding component. Because of their importance,
most other assets and liabilities are managed to accommodate the needs of
the loan portfolio. At December 31, 1994 and 1993, loans represented 76.2%
and 80.1% of interest-earning assets and 67.0% and 72.8%, respectively, of
total assets.
Net loans decreased $358,497, or .25% in 1994 as compared to year
end 1993 balances. This followed an 8.5% increase in 1993.
BCG's primary emphasis in terms of lending is on commercial
business loans, as it attempts to define its market niche and decrease its
credit risk exposure. From a marketing perspective, the Banks believe that
the credit needs of small business owners, seeking credits under $1 million,
are often not handled professionally by smaller banks and are not attractive
to larger banks which typically pursue larger credits. This provides an
opportunity to the Banks within their markets. From a perspective of credit
risk reduction, the Banks' credit standards require that prospective
commercial borrower's provide a high probability of adequate cash flow for
debt service, as well as commercial real estate collateral and personal
guarantees providing secondary loss protection for the Banks. Management
believes this shift in emphasis should bolster the quality of the loan
portfolio in the future. In connection with this increased emphasis on
commercial business lending, the Banks increased their commercial, financial
and agricultural loan portfolios by $2,597,240 during 1994, for an increase
of 6.2% over 1993.
Investments. BCG's investment portfolio constitutes the second-
largest component of total earning assets. The portfolio serves several
functions such as providing a vehicle for the investment of available funds
at relatively attractive rates, furnishing liquidity to meet increased loan
demand and supplying securities to pledge as collateral for public funds.
During 1994, holdings in investment securities increased
$7,215,303 or 23.5%. At December 31, 1994, investment securities
represented 19.9% of interest-earning assets as compared to 17% at December
31, 1993. Securities with a carrying value of approximately $7,900,000 were
pledged as collateral for public funds as of December 31, 1994.
With the adoption of SFAS No. 115, BCG has reported the effect of
the change in the method of accounting for investment securities as a
separate component of equity, net of income taxes which resulted in a net
unrealized loss on investment securities available for sale, net of tax, of
$19,937 as of January 1, 1994, the date of the adoption of the accounting
change. The net unrealized loss on investment securities available for sale,
net of tax, amounted to $124,990 at December 31, 1994.
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<PAGE>
<PAGE>
In conjunction with the adoption of SFAS No. 115, BCG transferred
securities previously accounted for at amortized cost totaling $30,720,853
to available for sale at January 1, 1994.
Deposits. Total deposits increased by approximately $13,579,000
or 7.7%, in 1994 as opposed to an increase of $9,091,000 or 5.5%, during
1993.
Non-interest-bearing deposits constituted 13.2% of total deposits
at December 31, 1994 versus 11.8% at December 31, 1993. The increase of
$4,281,000 from December 31, 1993 to December 31, 1994 is the result of
management's marketing efforts to attract non-interest-bearing, fee-
generating transaction accounts.
Interest Rate Sensitivity. Interest rate sensitivity management
seeks to maximize net interest income as a result of changing interest
rates, but to do so without subjecting the interest margin to an imprudent
degree of risk. BCG attempts to do this by structuring the balance sheet so
that repricing opportunities exist for both assets and liabilities in
roughly equivalent amounts at approximately the same time intervals.
Imbalances in these repricing opportunities at any point in time constitutes
a bank's interest rate sensitivity.
An indicator of the interest rate sensitivity structure of a
financial institution's balance sheet is the difference between its interest
rate sensitive assets and interest rate sensitive liabilities, which is
referred to as the "gap". BCG attempts to keep the gap between rate-
sensitive assets and rate-sensitive liabilities at a minimum, preferring to
increase the spread between matched assets and liabilities rather than place
earnings at risk by attempting to predict the frequency, direction and
magnitude of interest rate fluctuations.
The schedule below reflects the gap positions of BCG's
consolidated balance sheet as of December 31, 1994 and 1993.
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<PAGE>
<PAGE>
Rate Sensitivity Analysis
DECEMBER 31, 1994
RATE SENSITIVE
<TABLE>
<CAPTION>
IMMEDIATELY 181 OVER
RATE TWO TO 91 TO DAYS TO ONE
SENSITIVE 90 DAYS 180 DAYS ONE YEAR YEAR TOTAL
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
-------------
LOANS $ 25,524 41,677 16,207 20,258 39,490 143,426
INVESTMENT
SECURITIES 3,500 6,520 6,000 4,254 17,447 37,721
INTEREST-
BEARING
DEPOSITS --- --- --- --- --- ---
FEDERAL HOME
LOAN BANK DEPOSITS 15,495 --- --- --- --- 15,495
INTEREST RATE SWAPS --- 5,000 5,000 --- --- 10,000
-----------------------------------------------------------
TOTAL EARNING
ASSETS 44,519 53,197 27,207 24,782 56,937 206,642
-----------------------------------------------------------
SUPPORTING SOURCES
OF FUNDS
--------------------
NOW AND MONEY
MARKET ACCOUNTS 56,898 --- --- --- --- 56,898
TIME CERTIFICATES
OF DEPOSIT --- 22,805 21,098 21,243 34,836 99,982
DEMAND DEPOSIT
ACCOUNTS 25,022 --- --- --- --- 25,022
SAVINGS ACCOUNTS 7,420 --- --- --- --- 7,420
LONG-TERM DEBT/
BORROWED MONEY 2,801 --- --- --- --- 2,801
INTEREST RATE SWAP --- --- 5,000 5,000 --- 10,000
-----------------------------------------------------------
TOTAL RATE
SENSITIVE
LIABILITIES 92,141 22,805 26,098 26,243 34,836 202,123
-----------------------------------------------------------
PERIODIC GAP -
INTEREST EARNING
ASSETS (INTEREST
BEARING LIABILITIES) (47,622) 30,392 1,109 (1,461) 22,101
-----------------------------------------------------------
CUMULATIVE GAP -
INTEREST EARNING
ASSETS (INTEREST
BEARING LIABILITIES) $(47,622) (17,230) (16,121) (17,582) 4,519 4,519
CUMULATIVE RATIO
OF INTEREST EARNING
ASSETS TO INTEREST
BEARING LIABILITIES 48% 85% 89% 89% 102%
</TABLE>
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<PAGE>
<PAGE>
The rate sensitivity analysis table is designed to demonstrate
BCG's sensitivity to changes in interest rates by setting forth in
comparative form the repricing maturities of BCG's assets and
liabilities for the period shown. A ratio of interest earning assets to
interest bearing liabilities (more interest earnings assets repricing in
a given period than interest bearing liabilities) greater than 100%
indicates that an increase in interest rates will generally result in an
increase in net income for BCG and a decrease in interest rates will
result in a decrease in net income. A ratio of earning assets to
interest-bearing liabilities less than 100% indicates that a decrease in
interest rates will generally result in an increase in net income for
BCG and an increase in interest rates will result in a decrease in net
income.
At December 31, 1994, the gap analysis reflects a negative gap at
the one-year interval equivalent to 11% of earning assets, as compared
to 16.6% at December 31, 1993.
Since all interest rates and yields do not adjust at the same
velocity, the interest sensitivity gap is only an indicator of the
potential effects of interest rate changes on net interest income.
Liquidity. Liquidity management involves the ability to meet
cash flow requirements of customers who may be depositors making
withdrawals or borrowers who require credit funding. BCG's cash flows
are generated from interest and fee income, as well as from loan
repayments, deposit acquisition, and maturities or sales of investments.
BCG's liquidity needs are provided for primarily through short-term
securities, and the maturing of loans. Federal funds sold, which
averaged approximately $5,407,000 in 1993, as well as interest-bearing
deposits with the Federal Home Loan Bank which averaged $12,704,000 in
1994, represent BCG's primary source of immediate liquidity and were
maintained at a level adequate to meet immediate needs. Maturities in
BCG's loan and investment portfolios are monitored regularly to avoid
matching short-term deposits with long-term loans and investments.
Other assets and liabilities are also monitored in an effort to provide
the proper balance between liquidity, safety and profitability. This
monitoring process must be continuous due to the constant flow of cash
which is inherent in a financial institution.
Americorp borrowed $500,000 from BCG on December 31, 1991.
Principal and any accrued interest were due on December 31, 1993.
Repayment of the note was accomplished on December 10, 1993 as part of a
restructuring of Americorp's capital. See "THE AMERICORP MERGER--
Reasons For The Americorp Merger."
BCG experienced an increase of $7,818,920 in cash and cash
equivalents during 1994, and operating activities provided $2,337,379 of
cash primarily from income from operations.
Investing activities used $29,319,352 in cash and cash
equivalents, the most significant uses being the cash transferred upon
the sale of Ashburn Bank of $12,517,604 and the cash used to fund a net
increase in loans of $8,222,820.
Financing activities provided $34,800,893 of cash and cash
equivalents during 1994 due to the net increase in deposits during the
year.
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<PAGE>
<PAGE>
Capital Resources And Dividends. At December 31, 1994, BCG had
capital in excess of regulatory minimums, as measured by its ending
equity to assets ratio of 7.55%, compared to 7.09% at December 31, 1993.
The increase was the result of net earnings of $2,229,400.
Debt. On December 31, 1991, Americorp borrowed $500,000 from
BCG, the proceeds of which were invested in Ameribank in the form of
additional equity capital.
Results of Operations - 1994 Versus 1993
BCG's net income after minority interest in earnings of Americorp
for 1994 was $2,229,400 versus $1,829,990 for 1993, an increase of
$399,410. 1994 income was $1.19 common share versus income of $1.02 per
common share for 1993. The increase in net income resulted primarily
from the recognition of a net deferred tax benefit of $1,127,000.
Earnings before income taxes increased $519,528 for 1994 over 1993.
Net interest income increased $532,920 or 5.9% from $9,042,404 in
1993 to $9,575,324 in 1994. The effect of volume changes was to
increase net interest income by $664,767, and the effect of rate changes
decreased net interest income by $131,847. Yields on interest earning
assets declined from 8.60% to 8.52% from 1993 to 1994. The cost of
interest bearing liabilities increased from 3.88% to 3.95% over the same
period. The effect of these charges was to decrease the net interest
margin from 5.15% in 1993 to 5.06% in 1994. Net interest income
increased despite the decline in the net interest margin because
interest earning assets increased more than interest bearing liabilities
by $4.6 million.
BCG has entered into interest rate swap contracts to hedge fixed
rate loans on its balance sheet. The national amount of these
contracts, which were entered into in 1992, was $10,000,000 at December
31, 1994. The effect on the results of operations for 1994 was to
increase interest expense by $160,000 for 1994 versus $264,000 for 1993.
Changes in the amount of interest expense were due to changes in the
underlying rates on the interest rate swap contracts.
The provision for loan losses of BCG for 1994 was $447,000
compared to a provision in 1993 of $351,000. Net charge-offs for 1994
were $256,000 compared to net charge-offs of $176,000 in 1993. The
allowance for loan losses at December 31, 1994 and 1993 was $2,086,802
and $2,061,117, respectively. The allowance for loan losses represented
1.43% and 1.44% of gross outstanding loans at December 31, 1994 and
1993, respectively. Nonaccrual loans at December 31, 1994 and 1993
amounted to $409,000 and $827,000, respectively.
Non-interest income declined by $439,181 or 14.8% from 1993 to
1994. This was the result of a decline on the gains on loan sales of
$430,872, securities losses of $320,560 for 1994 compared to securities
gains of $27,790 in 1993, a reduction in the gain on SBA loan sales of
$222,225, and a reduction in deposit account service charges of $98,324
offset by gains on the sale of the Ashburn and Ben Hill Banking Units of
$814,035.
Non-interest expense decreased by $522,195 or 5.6% from 1993 to
1994. The decrease was due primarily to a decrease in salaries and
employee benefits of $472,035. The decline in
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<PAGE>
salaries and benefits was primarily due to the reduction in expenses
resulting from the sale of two bank branches in 1994.
BCG recognized an income tax benefit of $81,637 in 1994 compared
to a tax provision of $343,735 in 1993. The significant changes between
periods were the result of the recognition of deferred tax assets
(through reduction of the valuation allowance) of Americorp. Americorp
had significant unrecognized tax benefits in the form of Federal and
State operating loss carryforwards that were the result of significant
operating losses through 1992. In 1993, Americorp made approximately
$115,000 before income taxes, and BCG recognized approximately $312,000
in deferred tax assets through a reduction of valuation allowance. Upon
adoption of SFAS No. 109, BCG recognized $601,000 of deferred tax assets
related to Americorp that was used entirely to eliminate goodwill
recorded from early transactions. In 1994, after the improvements in
earnings and positive earnings prospects for Americorp, BCG reduced the
deferred tax asset valuation allowance for them by $1,127,000. BCG has
a $557,000 valuation allowance at December 31, 1994 which is expected to
be fully utilized during 1995.
Results Of Operations - 1993 Versus 1992
The net income after minority interest in earnings of subsidiary
for 1993 was $1,829,990 versus 1,115,400 for 1992, an increase of
$714,590. 1993 income was $1.02 per common share versus $.62 per common
share for 1992. The increased income resulted primarily from adoption
of FASB 109, "Accounting for Income Taxes", increased fee income and
reduced expenses related to other real estate owned.
Net interest income increased $269,490 or 3.1% from $8,772,914 in
1992 to $9,042,404 in 1993. The effect of volume changes was to
increase net interest income by $739,613, combined with the effect of
rate changes which decreased net interest income by $407,122. Yields on
interest earning assets declined from 9.49% in 1992 to 8.60% in 1993.
The cost of interest bearing liabilities declined from 4.80% in 1992 to
3.88% in 1993. The effect of these changes was to increase the net
interest margin from 5.09% in 1992 to 5.15% in 1993.
BCG's results of operations include interest expense related to
interest rate swap contracts of $264,000 for 1993 versus $117,000 for
1992. The interest expense related to these contracts increased from
1992 to 1993 primarily as a result of these contracts being entered into
in April and October of 1992.
The provision for loan losses of BCG for 1993 was $351,000
compared to a provision in 1992 of $195,000. The increase in 1993 is
primarily attributable to the fact that Americorp (through its
subsidiary, Ameribank) recognized a provision of $163,000 which credited
to operations during 1992. Americorp made significant recoveries during
1992 (amounting to $67,000), and those recoveries, coupled with
significant past provision charges and resolution of problem loans with
less losses than originally anticipated resulted in the provision
credit. The allowance for loan losses at December 31, 1993 and 1992 was
$2,061,117 and $1,886,838, respectively. The allowance for loan losses
represents 1.44% and 1.41% of gross outstanding loans at December 31,
1993 and 1992,
-70-
<PAGE>
<PAGE>
respectively. Non-accrual loans at December 31, 1993 and 1992 amounted
to $827,000 and $844,000, respectively.
Non-interest income increased by $1,180,798 or 66.1% from 1992 to
1993. This was primarily a result of increases in SBA loan fees and
loan sale gains and mortgage origination fees.
Non-interest expenses increased by $319,768 or 3.5% from 1992 to
1993. The increase was due primarily to an increase in salaries and
employee benefits of $638,428 offset by a decrease in other operating
expenses of $296,350. The decline in other operating expenses was
primarily due to reductions in expenses associated with other real
estate owned of $148,000 and the reduction of amortization expense due
to the write-off of non-compete agreements in 1992 amounting to
$174,000.
BCG recognized an income tax provision of $431,200 on $1,304,822
of pretax book income in 1993, versus a tax provision of $343,735 on
pretax book income of $2,279,804 in 1992. The primary difference
between the two periods is that in 1992 the tax benefits related to
BCG's subsidiary, Americorp, had not been recognized. In 1993, after
Americorp's first year of earnings, $312,000 of deferred tax benefits
were recognized through a reduction of valuation allowance. Upon
adoption of SFAS No. 109, $601,000 of deferred tax assets were
recognized and used entirely to eliminate goodwill previously recorded
upon the acquisition of Americorp by BCG.
Inflation. Although inflation affects the growth of total
assets, it is difficult to measure its impact precisely. Net income is
also affected by inflation, but again there is no simple way to measure
its effect on the various types of income and expense. Interest rates
and operating expense, in particular, are significantly affected by
inflation, but neither the timing nor the magnitude of interest-rate
changes coincide with changes in the Consumer Price Index.
Due to the complexities of measuring the effects of inflation on
BCG's consolidated financial statements, management believes that it
would be misleading to attempt to quantify those effects.
Management's Discussion And Analysis of Financial Condition and Results
of Operations for the Nine Months Ended September 30, 1995 and 1994
Earnings Summary. Net income for the first nine months of 1995
was $2,299,045, an increase of $417,457 over the same period in 1994.
The income per share for these two periods was $1.17 and $.97,
respectively. Before minority interests, BCG had earnings of $2,561,511
and $2,100,559 for the first nine months of 1995 and 1994, respectively.
Net interest income for the nine months ended September 30, 1995
increased $1,760,371 or 25.1% over the same period in 1994. This
increase is primarily due to an increase in net interest earning assets
over the same period in 1994, increased loan fee income, and deposit
costs increasing by less than yields on assets.
-71-
<PAGE>
<PAGE>
The net interest margin, as a percentage of earning assets,
increased to 5.87% for the first nine months of 1995 as compared to
5.05% for the same period in 1994. This rise can be explained by the
same factors discussed above.
Non-interest income for the nine-month period decreased $645,980,
or 27.7% from 1994 to 1995. This decrease was primarily the result of a
gain on the sale of a bank branch which occurred during the third
quarter of 1994.
Non-interest expense increased by $263,835 in the first nine
months of 1995 from the same period in 1994, an increase of 4.0%. The
increase was primarily due to an increase in salaries and employee
benefits over the same period in 1994. The increase in salaries and
benefits was primarily the result of the opening of a new bank branch in
late 1994.
For the first nine months of 1995, return on average equity was
16.95% on an annualized basis versus 16.52% for the same period a year
earlier. The improvement was primarily due to an increase in earnings
before income taxes of $460,952 over the comparable period in the
previous year.
Accounting for Impairment of a Loan. As of January 1, 1995, BCG
adopted SFAS 114, "Accounting by Creditors for Impairment of a Loan."
SFAS 114 requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, which is the contractual interest rate adjusted for any
deferred loan fees or costs, premium or discount, existing at the
inception or acquisition of the loan, or at the loan's observable market
price, or at the fair value of the collateral of the loan if the loan is
collateral dependent. As of January 1, 1995, BCG adopted SFAS 118,
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures" which amends SFAS 114 to require information about the
recorded investment in certain impaired loans and eliminates the
provisions of SFAS 114 regarding how a creditor should report income on
a impaired loan. SFAS 118 allows creditors to use existing methods for
recognizing income on impaired loans, including methods used by certain
industry regulators. As of the date of adoption, and as of September
30, 1995, the impact of SFAS 114 and SFAS 118 is not material to the
BCG's consolidated financial statements.
Risk Elements. The allowance for loan losses at September 30,
1995 was $2,375,227 or 13.82% and 15.46% higher than at December 31,
1994 and September 30, 1994, respectively. At September 30, 1995 the
allowance represented 1.50% of total loans as compared with 1.47% at
December 31, 1994 and 1.43% at September 30, 1994. At September 30, 1995
non-performing loans represented .12% of total loans as compared with
.33% at December 31, 1994 and .40% at September 30, 1994. The allowance
for loan losses as a percentage of non-performing loans was 1200% at
September 30, 1995 as compared with 448% at December 31, 1994 and 357%
at September 30, 1994.
Capital Resources. Shareholders' equity of $19,280,232 at
September 30, 1995 increased 19.5% over the same period in 1994
resulting in book value per outstanding common share of $10.24 compared
to $8.59 at September 30, 1994. Capital for BCG is above regulatory
requirements, with GAAP equity of 8.46% of total assets at September 30,
1995.
-72-
<PAGE>
<PAGE>
Set forth below are pertinent capital ratios for BCG as of
September 30, 1995:
<TABLE>
<CAPTION>
Minimum Capital Requirement BCG
--------------------------- ---
<S> <C>
Consolidated Tier 1 Capital to Risk-based 10.58%/(1)/
Assets: 4.00%
Total Capital to Risk-based 11.78%/(2)/
Assets: 8.00%
Leverage Ratio (Tier 1 Capital 7.94%/(3)/
to Total Assets): 3.00%
</TABLE>
/(1)/ Minimum for "Well-Capitalized Banks" = 6%.
/(2)/ Minimum for "Well-Capitalized Banks" = 10%
/(3)/ Minimum for "Well-Capitalized Banks" = 5%.
For a discussion of the capital ratios for each of the Banks as
of September 30, 1995, see "SUPERVISION AND REGULATION--Capital
Adequacy."
Liquidity and Interest Rate Sensitivity. Liquidity management
involves the ability to meet cash flow requirements of customers who may
be depositors making withdrawals or borrowers needing credit funding.
BCG's cash flows are generated from interest and fee income, as well as
from loan repayments, deposit acquisition, and maturities or sales of
investments. BCG's liquidity needs are provided for primarily through
short-term securities, and the maturing of loans. Federal funds sold
represent BCG's primary source of immediate liquidity and were
maintained at a level adequate to meet immediate needs. Federal funds
averaged approximately $9,845,995 and $12,443,495 for the nine months
ended September 30, 1995 and 1994, respectively. Maturities in BCG's
loan and investment portfolios are monitored regularly to avoid matching
short-term deposits with long-term loans and investments. Other assets
and liabilities are also monitored to provide the proper balance between
liquidity, safety, and profitability. This monitoring process must be
continuous due to the constant flow of cash which is inherent in a
financial institution.
BCG actively manages its interest rate sensitive assets and
liabilities to reduce the impact of interest rate fluctuations. At
September 30, 1995, BCG's rate sensitive liabilities exceeded rate
sensitive assets due within one year by $45,873,000.
BCG manages its liquidity through the volatility of its deposits
and patterns in loan demand, its current liquidity position, its ability
to control funding needs and potential sources of funds. As part of
managing liquidity, BCG monitors its loan to deposit ratio on a daily
basis. The target ratio is 85%. At September 30, 1995 the ratio was
80.7%.
BCG experienced a net decrease in cash and cash equivalents, its
primary source of liquidity, of $5,155,015 during the first nine months
of 1995. Operating activities provided $3,084,330 of funds.
Adjustments to net income for non-cash expenses of depreciation,
amortization, and provision for loan losses of $676,912 are included in
this amount as a net provision of funds. Investing
-73-
<PAGE>
<PAGE>
activities used $15,163,166 of funds, primarily due to an increase in
loans and purchases of investment securities during the nine-month
period. Financing activities provided net cash of $6,923,821 due to
increases in deposit accounts during the nine-months ended September 30,
1995.
FASB Statements. The Financial Accounting Standards Board (the
"FASB") recently issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." SFAS 121 establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of. SFAS 121 is
effective for financial statements for fiscal years beginning after
December 15, 1995 with early adoption permitted. Presently, BCG is
unable to determine the impact that adoption of SFAS 121 will have on
the consolidated financial statements, but management anticipates that
the impact will not be material.
-74-
<PAGE>
<PAGE>
Selected Statistical Financial Data
The following tables set forth certain statistical information
and should be read in conjunction with the consolidated financial
statements of BCG. Averages referred to in the following statistical
information are generally average daily balances.
Average Balance Sheets
Condensed average balance sheets for the periods indicated are
presented below.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
ASSETS
Interest earning assets:
Interest-bearing deposits in banks $ 12,704,322 7,667,305 13,511,687
Taxable investment securities -- held to 6,995,261 19,921,227 21,388,847
maturity
Taxable investment securities -- available 25,627,985 -- --
for sale
Nontaxable investment securities -- held to 516,409 1,068,187 2,052,126
maturity
Federal funds sold -- 10,480,959 7,622,510
Loans 143,366,192 136,601,771 127,702,023
------------ ----------- -----------
Total interest-earning assets 189,210,169 175,739,449 172,277,193
============ =========== ===========
Allowance for loan losses (2,063,487) (1,995,453) (1,957,653)
Cash and due from banks 5,848,573 5,325,846 6,429,398
Other assets 11,605,316 11,325,576 12,353,504
------------ ----------- -----------
Total Assets $204,600,571 190,395,418 189,102,442
============ =========== ===========
LIABILITIES & SHAREHOLDER'S EQUITY
Interest-bearing liabilities:
Deposits:
Interest-bearing demand $ 60,322,956 67,781,344 67,458,353
Savings 8,774,613 10,785,816 9,405,027
Time 87,741,445 69,712,760 73,758,721
Other borrowings 8,697,269 8,386,160 7,369,271
Total interest-bearing liabilities 165,536,283 156,666,080 157,989,372
============ =========== ===========
Non-interest-bearing demand deposits 21,999,246 19,156,441 17,699,992
Other liabilities 1,733,042 1,392,897 1,594,078
------------ ----------- -----------
Total liabilities 189,268,571 177,215,418 177,283,442
Shareholder's equity 15,332,000 13,180,000 11,819,000
------------ ----------- -----------
Total liabilities and shareholder's equity $204,600,571 190,395,418 189,102,442
============ =========== ===========
</TABLE>
-75-
<PAGE>
<PAGE>
Interest Income and Interest Expense
The following table sets forth the amount of interest income and
interest expense for each category of interest-earning assets and interest-
bearing liabilities and the average interest rate for total interest-
earning assets and total interest-bearing liabilities, net interest spread
and net yield on average interest-earning assets.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------
1994 1993 1992
----------------------- -------------------- -------------------
Total Average Total Average Total Average
Interest Yield/ Interest Yield/ Interest Yield/
Rate Rate Rate
----------------------- -------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest on fees and loans/(1)/ $14,001,609 9.77% 13,694,388 10.03% 14,153,379 11.08%
Interest on taxable securities 470,704 6.73% 779,564 3.91% 1,196,104 5.59%
-- held to maturity
Interest on taxable securities 1,044,007 4.07% -- -- -- --
-- available for sale/(2)/
Interest on nontaxable 53,068 10.28% 113,037 10.58% 186,746 9.10%
securities -- held to maturity
Interest on Federal Funds sold -- -- 304,189 2.90% 254,504 3.34%
Interest on deposits in banks 544,223 4.28% 226,662 2.96% 565,714 4.19%
----------- ----------- -----------
Total interest income 16,113,611 8.52% 15,117,840 8.60% 16,356,446 9.49%
----------- ----------- -----------
INTEREST EXPENSE
Interest on interest-bearing
demand deposits 1,864,290 3.09% 2,052,980 3.03% 2,518,911 3.73%
Interest on savings deposits 245,135 2.79% 319,411 2.96% 356,285 3.79%
Interest on time deposits 3,804,132 4.34% 2,991,067 4.29% 4,214,241 5.71%
Interest on other borrowings 624,730 7.18% 711,978 8.49% 494,095 6.70%
----------- ----------- -----------
Total interest expense 6,538,287 3.95% 6,075,436 3.88% 7,583,532 4.80%
----------- ----------- -----------
NET INTEREST INCOME $ 9,575,324 9,042,404 8,772,914
=========== =========== ===========
Net interest spread 4.57% 4.72% 4.69%
===== ===== =====
Net yield on avg. interest-
earning assets 5.06% 5.15% 5.09%
===== ===== =====
</TABLE>
/(1)/Interest and fees on loans include $696,206, $704,479 and $953,507 of
loan fee income for the years ended December 1994, 1993 and 1992,
respectively. Interest income recognized during 1994, 1993 and 1992 on
non-accrual loans was $11,000, $15,000 and $15,000, respectively.
/(2)/The average yield on available for sale securities represents income
on available for sale securities on an historical basis.
-76-
<PAGE>
<PAGE>
Rate and Volume Analysis
The following table describes the extent to which changes in interest
rates and changes in volume of interest-earning assets and interest-bearing
liabilities have affected interest income and expense during the year indicated.
For each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume (change
in volumes multiplied by old rate); (ii) changes in rates (change in rate
multiplied by old volume); and (iii) a combination of changes in rate and
changes in volume. The changes in interest income and interest expense
attributable to both volume and rate have been allocated proportionately to the
change due to volume and the change due to rate.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 vs. 1993
Changes Due To:
Increase
Rate Volume (Decrease)
-----------------------------------
<S> <C> <C> <C>
Increase (decrease) in:
Income from interest-earning
assets:
Interest and fees on loans $(359,410) 666,631 307,221
Interest on taxable securities -- 196,545 (505,405) (308,860)
held to maturity
Interest on taxable securities -- -- 1,044,007 1,044,007
available for sale
Interest on nontaxable securities (3,177) (56,792) (59,969)
Interest on Federal funds sold (152,094) (152,095) (304,189)
Interest on deposits in banks 128,936 188,625 317,561
-----------------------------------
Total interest income (189,200) 1,184,971 995,771
-----------------------------------
Expense from interest-bearing
liabilities:
Interest on interest-bearing 41,094 (229,784) (188,690)
deposits
Interest on savings deposits (17,303) (56,973) (74,276)
Interest on time deposits 31,727 781,338 813,065
Interest on other borrowings (112,871) 25,623 (87,248)
-----------------------------------
Total interest expense (57,353) 520,204 462,851
-----------------------------------
Net interest income $(131,847) 664,767 532,920
===================================
</TABLE>
-77-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 vs. 1992
Changes Due To:
Increase
Rate Volume (Decrease)
----------------------------------------
<S> <C> <C> <C>
Increase (decrease) in:
Income from interest-earning
assets:
Interest and fees on loans $(1,405,623) 946,632 (458,991)
Interest on taxable securities -- (339,051) (77,489) (416,540)
held to maturity
Interest on nontaxable securities 26,716 (100,425) (73,709)
Interest on Federal funds sold 36,501 86,187 122,688
Interest on deposits in banks (137,180) (201,872) (339,052)
----------------------------------------
Total interest income (1,818,637) 653,033 (1,165,604)
----------------------------------------
Expense from interest-bearing
liabilities:
Interest on interest-bearing (477,936) 12,005 (465,931)
deposits
Interest on savings deposits (84,593) 47,718 (36,875)
Interest on time deposits (1,002,495) (220,679) (1,223,174)
Interest on other borrowings 143,507 74,377 217,884
----------------------------------------
Total interest expense (1,421,517) (86,579) (1,508,096)
----------------------------------------
Net interest income $ (397,120) 739,612 342,492
========================================
</TABLE>
INVESTMENT PORTFOLIO
Types of Investments
The carrying amounts of investment securities at the dates indicated
are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
=====================================
1994 1993 1992
-------------------------------------
<S> <C> <C> <C>
U.S. Treasury and other U.S.
Government agencies and $37,535,403 29,935,595 16,548,114
corporations
Municipal securities 400,753 785,258 1,865,448
-------------------------------------
Total $37,936,156 30,720,853 18,413,562
=====================================
</TABLE>
-78-
<PAGE>
<PAGE>
Maturities
The amounts of investment securities in each category as of December
31, 1994 are shown in the following table according to contractual maturity
classifications (i) one year or less, (ii) after one year through five
years, (iii) after five years through ten years, and (iv) after ten years.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------------------------------
U.S. TREASURY AND
OTHER
U.S. GOVERNMENT MUNICIPAL
AGENCIES
AND CORPORATIONS SECURITIES
-------------------------------------------
Amount Yield Amount Yield
-------------------------------------------
<S> <C> <C> <C> <C>
One year or less $19,806,951 5.37% 69,270 7.33%
After one year through five
years 15,914,104 7.72 132,477 10.39
After five years through ten 1,814,348 7.67 0 0.00
years
After ten years 0 0.00 199,006 9.10
------------- ---------
Total $37,535,403 6.48% 400,753 9.24%
============= =========
</TABLE>
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<PAGE>
<PAGE>
LOAN PORTFOLIO
Types of Loans
The amount of loans outstanding at the indicated dates are shown in
the following table according to the type of loan.
<TABLE>
<CAPTION>
SEPT. 30, DECEMBER 31,
-------------- ----------------------------------------------------------------
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and $ 43,084,963 $ 44,528,083 41,930,843 35,349,932 30,382,438 30,733,681
agricultural
Real-estate construction 16,986,985 18,162,800 10,889,559 4,426,925 5,122,360 7,026,506
Real-estate mortgage 87,649,924 72,932,558 80,228,323 81,006,262 76,847,750 73,054,524
Consumer installment loans
and other 10,898,990 8,667,683 11,582,382 12,814,219 13,702,165 14,072,455
-------------- ----------------------------------------------------------------
158,620,862 144,291,124 144,631,107 133,597,338 126,054,713 124,887,166
Less:
Unearned discount 688,396 858,568 855,502 1,089,893 856,443 0
Unearned interest 4,213 5,609 15,846 32,017 50,070 82,787
Allowance for loan losses 2,375,227 2,086,802 2,061,117 1,886,838 1,893,578 2,569,582
-------------- ----------------------------------------------------------------
$155,553,026 $141,340,145 141,698,642 130,588,590 123,254,622 122,234,797
============== ================================================================
</TABLE>
-80-
<PAGE>
<PAGE>
Maturities and Sensitivity to Changes in Interest Rates
Total loans as of the indicated dates are shown in the following table
according to maturity classifications (i) one year or less, (ii) after one
year through five years and (iii) after five years.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
Maturity:
One year or less:
Commercial and financial $ 15,079,737 $ 15,584,829
Real estate-construction 14,608,807 15,620,008
All other loans 29,564,674 24,480,072
------------- ------------
59,253,218 55,684,909
------------- ------------
After one year through five years:
Commercial and financial 18,095,684 18,701,795
Real estate-construction 1,358,959 1,453,024
All other loans 45,332,500 37,536,111
------------- ------------
64,787,144 57,690,930
------------- ------------
After five years:
Commercial and financial 9,909,541 10,241,459
Real estate-construction 1,019,219 1,089,768
All other loans 23,651,739 19,584,058
------------- ------------
34,580,500 30,915,285
------------- ------------
$158,620,862 $144,291,124
============= ============
</TABLE>
-81-
<PAGE>
<PAGE>
The following table summarizes loans at the indicated dates with due
dates after one year and which have predetermined and floating or
adjustable interest rates:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
---------------------------------
<S> <C> <C>
Predetermined interest rates $45,669,369 $40,723,416
Floating or adjustable
interest rates 53,698,274 47,882,798
---------------------------------
$99,367,643 $88,606,215
=================================
</TABLE>
Non-performing Loans
Information with respect to non-accrual, past-due and restructured
loans at the indicated date is as follows:
<TABLE>
<CAPTION>
Sept. 30, DECEMBER 31,
1995 1994 1993 1992 1991 1990
--------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans $193,000 $402,000 827,000 885,000 802,000 3,066,000
Loans contractually past due ninety
days or more as to interest or 3,000 64,000 735,000 159,000 265,000 324,000
principal payments and still accruing
Loans, the terms of which have been
renegotiated to provide a reduction or
deferral of interest or principal
because of deterioration in the 0 0 0 0 0 0
financial position of the borrower
Loans, now current about which there
are serious doubts as to the ability of
the borrower to comply with present 0 0 0 0 0 0
loan repayment terms
</TABLE>
The reduction in interest income associated with non-accrual and
renegotiated loans as of September 30, 1995 and December 31, 1994 is as
follows:
<TABLE>
<S> <C> <C> <C>
Interest income that would
have been recorded on $ 19,617 $ 77,000 $ 76,000
non-accrual and restructured
loans under original terms
Interest income that was
recorded on non-accrual and 0 15,000 15,000
restructured loans
Outstanding loan commitments 14,544,000 12,798,000 11,081,000
and letters of credit =========== =========== ===========
</TABLE>
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<PAGE>
<PAGE>
For a discussion of the policy of the Banks for placing past-due loans
on a non-accrual status, see "BANK CORPORATION OF GEORGIA -- Management's
Discussion and Analysis of Financial Condition and Results of Operation for
the Years Ended December 31, 1994 and 1993."
Nonperforming Assets. The following table presents a history of BCG's
nonperforming assets for the past five years and at September 30, 1995.
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended
September 30,
($ in thousands) 1994 1993 1992 1991 1990 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans $ 402 827 885 802 3,066 193
Loans past due 90 days
or more 64 735 159 265 324 3
------ ----- ----- ----- ----- ---
Total nonperforming
loans 466 1,582 1,044 1,067 3,390 196
Other real estate owned 559 884 931 2,595 2,024 312
------ ----- ----- ----- ----- ---
Total nonperforming
assets $1,025 2,446 1,975 3,662 5,414 508
====== ===== ===== ===== ===== ===
</TABLE>
Beginning in 1990, the consolidated financial statements of BCG
included the accounts of Americorp. At the time of BCG's acquisition of
Americorp in 1990, Americorp had significant asset quality problems. See
"THE AMERICORP MERGER -- Reasons For and background of the Americorp
Merger." The decline in nonperforming assets from 1990 to 1994 was
primarily the result of the cleanup of the nonperforming assets of
Americorp.
The following table presents a history of amounts of other real estate
owned by BCG that are attributable to write downs and sales at year end for
the past five years and for the nine months ended September 30, 1995.
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended
September 30,
1994 1993 1992 1991 1990 1995
----- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Writedowns of other real
estate included in
results of operations $ 61 92 177 208 -- --
----- --- ----- --- --- ---
Proceeds of sales of other
real estate $ 455 197 1,053 401 96 131
===== === ===== === === ===
</TABLE>
-83-
<PAGE>
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes average loan balances for each year
determined by using the daily average balances during the year; changes in
the reserve for possible loan losses arising from loans charged off and
recoveries on loans previously charged off; additions to the reserve which
have been charged to operating expense; and the ratio of net charge-offs
during the period to average loans.
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1995 1994 1993 1992 1991 1990
--------------- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average amount of loans outstanding $150,368,070 $143,366,192 136,601,771 127,702,024 124,735,000 124,300,000
=============== =====================================================================
Balance of allowance for loan
losses at beginning of period 2,086,082 2,061,117 1,886,838 1,893,578 2,569,582 1,066,525
--------------- ---------------------------------------------------------------------
Loans charged off
Commercial (64,227) (247,873) (114,847) (422,481) (1,447,351) (124,210)
Real estate (2,007) (86,377) (180,736) (87,521) (551,489) (240,407)
Installment (63,223) (100,463) (129,778) (242,547) (247,553) (182,308)
--------------- ---------------------------------------------------------------------
(129,457) (434,713) (425,361) (752,549) (2,246,393) (546,925)
--------------- ---------------------------------------------------------------------
Loans recovered
Commercial 24,621 56,653 147,433 420,553 224,573 24,063
Real estate 22,627 90,989 35,862 48,686 80,719 83,225
Installment 36,400 31,753 65,748 81,511 97,097 26,072
--------------- ---------------------------------------------------------------------
83,648 179,395 249,043 550,750 402,389 133,360
--------------- ---------------------------------------------------------------------
Net charge offs (45,809) (255,318) (176,318) (201,799) (1,844,004) (413,565)
--------------- ---------------------------------------------------------------------
Sales of banking units -- (166,000) -- -- -- --
Allowance of subsidiary acquired
-- -- -- -- -- 1,642,915
--------------- ---------------------------------------------------------------------
Additions to allowance
charged to operating expense
during period 335,004 447,003 350,597 195,059 1,168,000 273,707
--------------- ---------------------------------------------------------------------
Balance of allowance for loan
losses at end of period $ 2,375,277 $ 2,086,802 2,061,117 1,886,838 1,893,578 2,569,582
=============== =====================================================================
Ratio of net loans charged
off during the period to
average loans outstanding 0.04% 0.18% 0.13% 0.16% 1.48% 0.33%
=============== =====================================================================
</TABLE>
-84-
<PAGE>
<PAGE>
Percent of Loans in Each Category to Total Loans
The following table shows the percentage that the loans in the
commercial, real estate installment categories bear to the total amount of
all loans for the period indicated.
<TABLE>
<CAPTION>
SEPT. 30, DECEMBER 31,
1995 1994 1993 1992 1991 1990
----------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial 27% 31% 29% 26% 24% 25%
and agricultural
Real Estate 66% 63% 63% 64% 65% 64%
Installment 7% 6% 8% 10% 11% 11%
----------- ---------------------------------
100% 100% 100% 100% 100% 100%
</TABLE>
Allocation of Allowance for Loan Losses
The following table shows the allocation of allowance for loan losses
among commercial and financial loans, real estate loans and installment
loans for the periods indicated.
<TABLE>
<CAPTION>
SEPT. 30, DECEMBER 31,
1995 1994 1993 1992 1991 1990
----------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and $1,178,437 $1,189,893 556,499 1,059,271 1,220,032 583,568
agricultural
Real estate 36,824 414,645 875,769 219,348 464,873 1,129,489
Installment 1,160,016 482,264 628,849 608,129 208,673 856,526
----------- ------------------------------------------------------
$2,375,277 $2,086,802 2,061,117 1,886,838 1,893,578 2,569,582
=========== ======================================================
</TABLE>
DEPOSITS
Average amounts of deposits and average rates paid thereon, classified
as to non-interest-bearing demand deposits, interest-bearing demand and
savings deposits and time deposits, for the years indicated are presented
below.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1994 1993 1992
Amount Rate Amount Rate Amount Rate
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing demand deposits $ 21,999,246 0.00% 19,156,441 0.00% 17,699,992 0.00%
Interest-bearing demand deposits 60,322,956 3.09% 67,781,344 3.03% 67,458,353 3.73%
Savings deposits 8,774,613 2.79% 10,785,816 2.96% 9,405,027 3.79%
Time deposits 87,741,445 4.34% 69,712,760 4.29% 73,756,721 5.71%
------------ ----------- -----------
Total deposits $178,838,260 167,436,361 168,320,093
============ =========== ===========
</TABLE>
-85-
<PAGE>
<PAGE>
Amounts of time certificates of deposit issued in amounts of $100,000
or more as of December 31, 1994 are shown in the table below based on time
to maturity:
<TABLE>
<S> <C>
Three months or less $ 5,606,657
Over three through six months 5,811,279
Over six months through twelve months 8,343,141
Over twelve months 7,521,923
----------
$27,283,000
==========
</TABLE>
RETURN ON ASSETS AND SHAREHOLDERS' EQUITY
Rate of return information for the years indicated is presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
------------------------
<S> <C> <C> <C>
Return on average assets 1.09% 0.96% 0.59%
Return on average equity 14.54% 13.88% 9.44%
Dividend payout ratio 4.81% 2.81% 4.59%
Equity to assets ratio 7.49% 6.92% 6.25%
</TABLE>
Description of BCG Capital Stock.
The summary of certain terms and provisions of the BCG capital stock
contained in this Proxy Statement/Prospectus does not purport to be
complete and is subject to and qualified in its entirety by reference to
the terms and provisions of the BCG Articles, as amended, and the BCG
Bylaws, as amended, copies of which are filed as exhibits to the
Registration Statement.
The BCG Articles authorize the issuance of up to 3,000,000 shares of
BCG Common Stock, $1.00 par value per share. BCG also has authorized
500,000 shares of preferred stock, $1.00 par value per share (the "BCG
Preferred Stock"). On January 12, 1996, BCG had issued and outstanding
1,910,454 shares of BCG's Common Stock held by 272 record holders. There
are no shares of BCG Preferred Stock outstanding.
BCG Common Stock. The authorized but unissued BCG Common Stock and
BCG Preferred Stock may be issued by the Board of Directors of BCG without
further action or authorization by the shareholders of BCG unless such
action is required in a particular case by applicable laws and regulations
or the BCG Articles. The Board of Directors of BCG believes it is
desirable and in the best interest of BCG to have such authorized but
unissued BCG Common Stock and BCG Preferred Stock available should the need
arise. The additional authorized BCG Common Stock and BCG Preferred Stock
can be issued in connection with acquisitions, benefit plans, stock splits
or financings, where seeking shareholder approval would be cumbersome and
inefficient.
-86-
<PAGE>
<PAGE>
Subject to the rights of any holder of BCG Preferred Stock, all shares
of BCG Common Stock are entitled to share equally in dividends from funds
legally available therefore, when, as and if declared by the Board of
Directors, and upon liquidation or dissolution of BCG, whether voluntary or
involuntary, to share equally in the assets of BCG available for
distribution to the shareholders. Each holder of BCG Common Stock is
entitled to one vote for each share held on all matters submitted to the
shareholders.
There are no cumulative voting, redemption rights, sinking fund
provisions, or rights of conversion in existence with respect to the BCG
Common Stock. The holders of the BCG Common Stock have no preemptive
rights to require additional shares of the BCG Common Stock.
BCG Preferred Stock. The BCG Preferred Stock may be issued from time
to time in one or more series, without shareholder approval, with such
voting powers (full or limited), designations, preferences and relative,
participating, optional or other special rights and qualifications having
limitations or restrictions thereof as may be established by the Board of
Directors. No dividends may be declared on the shares of BCG Common Stock
(other than in shares of BCG Common Stock) until all dividend and sinking
fund requirements (if any) with respect to each series of BCG Preferred
Stock have been satisfied. In addition, no holders of BCG Common Stock may
receive any payments upon liquidation, dissolution or winding up of BCG
until after payment has been made to the holders of shares of BCG Preferred
Stock of the full amount to which any series of the BCG Preferred Stock is
entitled, as set forth in the authorizing resolutions of the Board of
Directors.
Availability of Authorized but Unissued Common and Preferred Shares.
As of September 30, 1995, BCG had approximately 1.1 million shares of
authorized but unissued BCG Common Stock and 500,000 shares of authorized
but unissued BCG Preferred Stock. It is possible that the unissued shares
of BCG Common Stock of BCG Preferred Stock could be used in the future by
the Board of Directors in such a manner as to discourage the acquisition of
control or some other transaction that some, or a majority, of the
shareholders of BCG might believe to be in their best interests, or in
which the BCG shareholders might receive a premium for their stock over the
market price of such stock. In addition, authorized but unissued shares of
BCG Preferred Stock could be issued with such rights, privileges and
preferences as would deter a future tender or exchange offer. To the
extent that any series of BCG Preferred Stock had conversion rights, the
exercise of such conversion rights could have the effect of diluting the
voting power of persons attempting to gain control of BCG. The Board of
Directors of BCG has no present intention to issue shares of BCG Common
Stock or BCG Preferred Stock to implement defensive or anti-takeover
measures in the present environment. Other than the existence of
authorized but unissued shares of BCG Common Stock and BCG Preferred Stock,
the BCG Articles or the BCG Bylaws do not contain any defensive or anti-
takeover measures.
Transfer Agent and Registrar. BCG serves as the Transfer Agent and
Registrar for the BCG Common Stock
-87-
<PAGE>
<PAGE>
Management
Executive officers of BCG are elected by the Board of Directors
annually at the first meeting of the Board following the annual meeting of
BCG shareholders and hold office until such officer's successors is chosen
and qualified, unless they sooner resign or are removed from office by the
Board of Directors.
Information is set forth below with respect to the age, positions with
BCG and its subsidiaries, and business experience of the directors and
executive officers of BCG as of September 30, 1995. There are no family
relationships among any directors and/or executive officers of BCG, except
that Halstead T. Anderson, II, director of BCG, is the son of William T.
Anderson, II, Chairman of the BCG Board of Directors.
<TABLE>
<CAPTION>
Name (Age) Principal Position and Business Experience
- ---------- ------------------------------------------
<S> <C>
William H. Anderson, II (58) Mr. Anderson has been Chairman of the Board of
Directors of BCG since 1980 and a director of FSB
since 1964 and of Middle Georgia and Coweta since
1992. He has also been President and CEO of
Southern Trust Insurance Company since June,
1968.
Charles B. Evans, Jr. (44) Mr. Evans has been a director of BCG since 1985,
of FSB since 1983, and of Middle Georgia, and
Coweta since 1992. Mr. Evans is President of
Evans Packing Company and Evangelen Farms, both
agricultural-related businesses.
W. Carl Joiner, Sr. (53) Mr. Joiner has been a director of FSB, Middle
Georgia, Coweta and BCG since April, 1993. He
has served as Dean of the School of Business and
Economics at Mercer University since September,
1974.
James A. Faulkner (50) Mr. Faulkner has been a director of FSB, Middle
Georgia, Coweta and BCG since April, 1993. He has
served as President and CEO of Century South
Banks, Inc. since May, 1980.
Halstead T. Anderson, II (30) Mr. Anderson has been a director of FSB, Middle
Georgia, Coweta and BCG since April, 1993. He has
served as Vice President of Southern Trust
Insurance Company since March, 1994 and as
Treasurer since June, 1987.
Kenneth D. Sams (44) Mr. Sams has been a director of FSB, Middle
Georgia, Coweta and BCG since April, 1993. He has
been employed by Cherokee Brick and Tile Company
since 1978, where he has served as President
since 1989.
John W. Ramsey (52) Mr. Ramsey has been a director of FSB, Middle
Georgia, Coweta and BCG since November 1994. He
has served as Chairman and CEO of Group Financial
Southeast since April, 1985, Chairman and CEO of
Rams Head Ltd. since October, 1981 and Chairman
and CEO of Rams Four Ltd. since November, 1984,
all of which are engaged in making real estate
loans and in real estate development.
</TABLE>
-88-
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Joseph W. Evans (46) Mr. Evans has been President of BCG since 1980,
and was President of FSB until 1991, when he
became Chairman of FSB. He has also been
President of Americorp since 1990. He is currently
a director of BCG, FSB, Middle Georgia, Coweta,
Americorp and Ameribank.
Stephen W. Doughty (44) Mr. Doughty has been a director of FSB since 1985,
an executive officer of FSB since 1987, and became
President of FSB in 1991. Mr. Doughty has been
Executive Vice President of BCG since August 29,
1988. During his 23 years of banking experience,
he has served as President and CEO of First South
Bank of Camden County and First South Bank of
Turner County. He is also a director of Middle
Georgia, Coweta, Americorp and Ameribank.
J. Thomas Wiley, Jr. (42) Mr. Wiley has served as President, CEO and a
director of Ameribank since May, 1990. He is also
a director of Americorp. Mr. Wiley is a director
of FSB, Middle Georgia, and Coweta. Mr. Wiley has
served as Executive Vice President for FSB, and a
member of its Executive Committee and Board of
Directors. He has been an Executive Vice President
of BCG since January 1, 1990.
James R. McLemore, Jr. (35) Mr. McLemore has served as Vice President,
Treasurer and Secretary of BCG since 1990. A
certified public accountant, Mr. McLemore was a
manager with Mauldin & Jenkins, Certified Public
Accountants, from 1983 to 1989.
</TABLE>
Committees of the Board. The Board of Directors of BCG has a standing
personnel/compensation committee, audit committee, credit committee and
asset/liability management committee.
Ownership of the BCG Common Stock
The following table lists information concerning the beneficial
ownership of the BCG Common Stock at January 12, 1996 by (i) each person
known to BCG to beneficially own more than 5% of the BCG Common Stock, (ii)
each director and Named Executive Officer, as defined below, and (iii) all
directors and executive officers as a group. Except as set forth on the
following page, the stockholders named below have sole voting and
investment power with respect to all shares of BCG Common Stock shown as
beneficially owned by them.
-89-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BCG Common Stock
Name of Beneficial Owner Beneficially Owned Percent of Class
------------------------ ------------------ ----------------
<S> <C> <C>
William H. Anderson, II 481,558/(1)(2)(3)(4)(14)/ 25.21%
Charles B. Evans, Jr. 22,715/(5)/ 1.19%
W. Carl Joiner, Sr. 175 *
James A. Faulkner 319,864/(6)(7)(16)/ 16.74%
Halstead T. Anderson, II 32,921/(8)/ 1.72%
Kenneth D. Sams 26,375 1.38%
John W. Ramsey 5,600 *
Joseph W. Evans 577,517/(7)(9)(10)(15)/ 29.69%
Stephen W. Doughty 70,916/(11)/ 3.62%
J. Thomas Wiley 65,916/(12)/ 3.36%
James R. McLemore, Jr. 318,164/(7)(13)/ 16.65%
Southern Trust Insurance Company 274,057/(17)/ 14.35%
Southern Trust Corporation 127,137/(18)/ 6.65%
Bank Corporation of Georgia Employee
Stock Ownership Plan 318,164/(19)/ 16.65%
All Directors and
Executive Officers as a
Group (11 Persons) 1,284,693/(7)(10)(11)(12)/ 62.80%
</TABLE>
/*/Less than one percent.
/(1)/ Includes 274,057 shares owned by Southern Trust Insurance Company
over which Mr. Anderson has voting power.
/(2)/ Includes 127,137 shares owned by Southern Trust Corporation over
which Mr. Anderson has voting power.
/(3)/ Includes 21,187 shares owned by RamBay Corporation over which Mr.
Anderson has voting power.
/(4)/ Includes 15,013 shares owned by Vivian H. Anderson, Mr. Anderson's
mother, over which Mr. Anderson has voting power.
/(5)/ Includes 14,000 shares in his children's name over which Mr. Evans
has voting power.
/(6)/ Includes 1,000 shares owned jointly by Mr. Faulkner and his wife
over which Mr. Faulkner has voting power.
/(7)/ Includes 318,164 shares of common stock owned by the BCG Employee
Stock Ownership Plan (the "ESOP"), over which Messrs. Evans,
Faulkner and McLemore exercise voting power.
/(8)/ Includes 20,773 shares in a trust over which Mr. Anderson and his
grandmother are co-trustees and share voting power.
/(9)/ Includes 44,702 shares owned by Howell D. Evans, Mr. Evans' father,
over which Mr. Evans has voting power.
/(10)/ Includes presently exercisable options to acquire 35,000 shares of
BCG Common Stock.
/(11)/ Includes presently exercisable options to acquire 50,166 shares of
BCG Common Stock.
/(12)/ Includes presently exercisable options to acquire 50,166 shares of
BCG Common Stock.
/(13)/ Mr. McLemore's mailing address is 4967 Rivoli Drive, Macon, Georgia,
31210.
/(14)/ Mr. Anderson's mailing address is 682 Cherry Street, Macon, Georgia,
31201.
/(15)/ Mr. Evans' mailing address is P.O. Box 353, Smarr, Georgia, 31086.
/(16)/ Mr. Faulkner's mailing address is 1310 Deer Run Drive, Dahlonega,
Georgia, 30533.
/(17)/ The address of Southern Trust Insurance Company is 682 Cherry
Street, Macon, Georgia, 31201.
/(18)/ The address of Southern Trust Corporation is 682 Cherry Street,
Macon, Georgia, 31201.
/(19)/ The address of the BCG ESOP is 4951 Forsyth Road, Macon, Georgia,
31210.
-90-
<PAGE>
<PAGE>
Executive Compensation
The following table sets forth the annual and other compensation paid
by BCG, Ameribank and the Banks during the 1992, 1993 and 1994 fiscal years
to Joseph W. Evans, President and Chief Executive Officer of BCG, J. Thomas
Wiley, President and Chief Executive Officer of Ameribank, and Stephen W.
Doughty, President and Chief Executive Officer of FSB (each, a "Named
Executive Officer").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------ ----------------------
Awards
------
Name and Securities Underlying All Other
Principal Position Year Salary/(1)/ Bonus Other Options/SARs Compensation
------------------ ---- ------ ----- ----- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Evans
President, Chief Executive 1994 $184,000 $92,411 /(2)/ 0 $ 9,555/(3)/
Officer and Director of BCG, 1993 $180,000 $75,046 /(2)/ 0 $ 5,403
Director of FSB, Americorp and 1992 $156,000 $36,000 /(2)/ 35,000 $14,453
Ameribank
J. Thomas Wiley 1994 $116,000 $62,609 /(2)/ 0 $20,431/(4)/
President and Chief Executive 1993 $112,500 $50,938 /(2)/ 0 $15,013
Officer of Ameribank, 1992 $103,000 $30,505 /(2)/ 17,500 $ 8,018
Director of Americorp
Stephen W. Doughty 1994 $116,000 $64,500 /(2)/ 0 $22,456/(5)/
President, Chief Executive Officer 1993 $112,500 $47,065 /(2)/ 0 $16,374
and Director of FSB, 1992 $103,000 $22,076 /(2)/ 17,500 $ 8,509
Director of Ameribank and Americorp
</TABLE>
---------------------------------------
/(1)/ Includes director's fees.
/(2)/ Does not meet the SEC threshold for disclosure.
/(3)/ Includes ESOP contributions by BCG totaling $2,886 and matching
contributions to the BCG 401(k) plan totaling $6,689.
/(4)/ Includes ESOP contributions by BCG totaling $2,886, matching
contributions to the BCG 401(k) plan totaling $4,905 and deferred
compensation totaling $12,640.
/(5)/ Includes ESOP contributions by BCG totaling $2,886, matching
contributions to the BCG 401(k) plan totaling $6,930 and deferred
compensation totaling $12,640.
Director Compensation. Directors of BCG other than William H.
Anderson, II, Chairman of the Board, received $750 per Board meeting
attended during 1994 and $750 per committee meeting attended during 1994.
Members of BCG's Board of Directors who also serve as members of one or
more of the Boards of Directors of the Banks or Ameribank do not receive
any additional compensation. Mr. Anderson received monthly payments of
$3,333.33 from BCG during 1994 for his service as Chairman of the BCG Board
of Directors and director of FSB.
BCG did not grant restricted stock or similar awards to any of its
executive officers during 1994, 1993 or 1992, except for the grant of
options to purchase BCG Common Stock granted under the BCG Stock Option
Plan. The BCG Stock Option Plan contains certain stock appreciation rights
whereby BCG will pay in cash or stock an amount of up to 200% of the fair
market value of the BCG Common Stock at the exercise date over the fair
market value of the BCG Common Stock at the grant date. Exercise of
either the stock options or the stock appreciation rights would preclude
exercise of the other.
-91-
<PAGE>
<PAGE>
Stock Option and Stock Appreciation Right Fiscal Year-End Values. The
following table includes information with respect to unexercised options to
purchase the BCG Common Stock and unexercised stock appreciation rights
granted under the BCG Stock Option Plan to the Named Executive Officers and
held by them at December 31, 1994. No options or stock appreciation rights
were granted to any Named Executive Officer during 1994. Prior to 1994,
BCG granted stock appreciation rights in tandem with option grants pursuant
to which grantees are eligible to receive cash or BCG Common Stock in an
amount equal to the number of options granted multiplied by the difference
between the fair market value of the BCG Common Stock at the date of grant
and the fair market value of the BCG Common Stock at the date of exercise,
up to a maximum of twice the fair market value at the date of grant
multiplied by the number of options granted. Exercise of either the
options or the stock appreciation rights precludes exercise of the other.
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the- Value of Unexercised In-the-
Options/SARs at FY-End(#) Money Options at FY-End ($) Money SARs at FY-End ($)
-------------------------- ---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Evans 35,000 0 $ 74,935 0 $ 74,935 0
J. Thomas Wiley, Jr. 64,166 0 $240,870 0 $204,890 0
Stephen W. Doughty 64,166 0 $240,870 0 $204,890 0
</TABLE>
Deferred Compensation Plan Awards. The following table includes
information with respect to awards made to the Named Executive Officers
under deferred compensation agreements.
Long-Term Incentive Plan
Awards In Last Fiscal Year
--------------------------
<TABLE>
<CAPTION>
Performance Estimated Future Payouts
or Other -----------------------------
Period Until Future Payouts
Number of Maturation or Threshold Target Maximum
Name Rights Payout ($ or #) ($ or #) ($ or #)
---- ------ ------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
Joseph W. Evans -- -- -- -- --
J. Thomas Wiley, Jr. $12,640/(1)/ 1996 $12,640 $12,640 $12,640
Stephen W. Doughty $12,640/(1)/ 1996 $12,640 $12,640 $12,640
</TABLE>
------------------------------
/(1)/ Represents incentive compensation deferred pursuant to the terms of
an Incentive Compensation Agreement between the Named Executive Officer and
BCG. Mr. Evans is not a party to a similar deferred Incentive Compensation
Agreement. Pursuant to the terms of the Agreement, the Named Executive
Officer is eligible to receive deferred compensation awarded during fiscal
1994 in 1996. Both Mr. Wiley and Mr. Doughty are eligible to receive a
base amount of $10,000 in deferred incentive compensation under their
respective Incentive Compensation Agreements; however, that amount may be
increased or decreased at the Board's discretion. No earnings are credited
to the Named Executive Officer on the amount awarded.
-92-
<PAGE>
<PAGE>
Termination of Employment and Change-in-Control Arrangements. BCG has
entered into Agreements with each of J. Thomas Wiley, Jr. and Stephen W.
Doughty (each an "Executive") providing that in the event of the
Executive's voluntary or involuntary termination (as defined in the
Agreement) following or immediately preceding a change in control of BCG
(as defined in the Agreement), the Executive will be paid his then-current
salary for thirty-six months, or, at his election, receive a lump sum
payment equal to the present value of such amount. The initial term of
each Agreement is for three years, subject to annual renewal thereafter at
the discretion of the Compensation Committee of BCG. Both Agreements are
dated May 1, 1993.
Certain Transactions
On November 16, 1988, FSB entered into a Lease Agreement, as amended
on March 12, 1992 (the "Lease"), with William H. Anderson, II, Chairman of
the Board of Directors of BCG, pursuant to which Mr. Anderson rents to FSB
the office at which BCG's operations center is located and the office at
which the Middle Georgia loan servicing office is located. The initial
term of the Lease expires on January 31, 1996. Currently, Mr. Anderson
receives monthly rental payments of $7,544.17. During the 1994 fiscal
year, rental payments by FSB totaled approximately $90,530 under the Lease.
BCG's bank subsidiaries have had, and expect to have in the future,
banking transactions in the ordinary course of business with directors and
officers of BCG and their associates, including corporations in which such
officers or directors are shareholders, directors and/or officers, on the
same terms (interest rates and collateral) as those prevailing at the time
for comparable transactions with other persons. Such transactions have not
involved more than the normal risk of collectability or presented other
unfavorable features.
SUPERVISION AND REGULATION
General. BCG is a registered bank holding company subject to
regulation by the Federal Reserve under the Bank Holding Company Act of
1956, as amended (the "Bank Holding Act"). BCG is required to file
financial information with the Federal Reserve periodically and is subject
to periodic examination by the Federal Reserve.
The Bank Holding Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before (i) it may acquire direct or
indirect ownership or control of more than 5% of the voting shares of any
bank that it does not already control; (ii) it or any of its subsidiaries,
other than a bank, may acquire all or substantially all of the assets of a
bank; and (iii) it may merge or consolidate with any other bank holding
company. In addition, a bank holding company is generally prohibited from
engaging in, or acquiring, direct or indirect control of the voting shares
of any company engaged in non-banking activities. This prohibition does
not apply to activities found by the Federal Reserve, by order or
regulation, to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. Some of the activities that the
Federal Reserve has determined by
-93-
<PAGE>
<PAGE>
regulation or order to be closely related to banking are: making or
servicing loans and certain types of leases; performing certain data
processing services; acting as fiduciary or investment or financial
advisor; providing discount brokerage services; underwriting bank eligible
securities; underwriting debt and equity securities on a limited basis
through separately capitalized subsidiaries; and making investments in
corporations or projects designed primarily to promote community welfare.
BCG must also register with the DBF and file periodic information with
the DBF. As part of such registration, the DBF requires information with
respect to the financial condition, operations, management and intercompany
relationships of BCG and the Banks and related matters. The DBF may also
require such other information as is necessary to keep itself informed as
to whether the provisions of Georgia law and the regulations and orders
issued thereunder by the DBF have been complied with, and the DBF may
examine BCG.
BCG is an "affiliate" of the Banks under the Federal Reserve Act,
which imposes certain restrictions on (i) loans by the Banks to BCG, (ii)
investments in the stock or securities of BCG by the Banks, (iii) the
Bank's taking the stock or securities of an "affiliate" as collateral for
loans by the Banks to a borrower and (iv) the purchase of assets from BCG
by the Banks. Further, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with
any extension of credit, lease or sale of property or furnishing of
services.
The Banks are National Banks chartered under the National Bank Act and
are subject to examination by the OCC. The OCC regulates or monitors all
areas of the Banks' operations and activities, including reserves, loans,
mergers, issuance of securities, payments of dividends, interest rates and
establishment of branches.
Payment of Dividends. BCG is a legal entity separate and distinct
from the Banks. Most of the revenues of BCG result from dividends paid to
it by the Banks and Americorp. There are statutory and regulatory
requirements applicable to the payment of dividends by the Banks, as well
as by BCG to its shareholders. The amount of dividends payable to
Americorp by the Ameribank and by Americorp to BCG is also subject to
statutory and regulatory restrictions.
Under the regulations of the OCC, the Banks may declare dividends out
of their net profits. The approval of OCC is required if the total of all
dividends declared by a national banking association exceed the total of
its net profits for the year combined with its retained net profits for the
preceding two years.
The payment of dividends by BCG, Americorp, Ameribank and the Banks
may also be affected or limited by other factors, such as the requirement
to maintain adequate capital above regulatory guidelines. In addition, if,
in the opinion of the applicable regulatory authority, a bank under its
jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending upon the financial condition of the Banks, could
include
-94-
<PAGE>
<PAGE>
the payment of dividends), such authority may require, after notice and
hearing, that such bank cease and desist from such practice. The FDIC has
issued a policy statement providing that insured banks should generally
only pay dividends out of current operating earnings. At December 31, 1994,
retained earnings available from the Banks to pay dividends totaled
approximately $14.5 million. For 1994, BCG's cash dividend payout to
stockholders was 4.81% of net income.
Monetary Policy. The results of operations of the Banks are affected
by credit policies of monetary authorities, particularly the Federal
Reserve. The instruments of monetary policy employed by the Federal
Reserve include open market operations in U.S. government securities,
changes in the discount rate on bank borrowings and changes in reserve
requirements against bank deposits. In view of changing conditions in the
national economy and in the money markets, as well as the effect of actions
by monetary and fiscal authorities, including the Federal Reserve, no
prediction can be made as to possible future changes in interest rates,
deposit levels, loan demand or the business and earnings of the Banks.
Capital Adequacy. The Federal Reserve, the FDIC and the OCC have
implemented substantially identical risk-based rules for assessing bank and
bank holding company capital adequacy. These regulations establish minimum
capital standards in relation to assets and off-balance sheet exposures as
adjusted for credit risk. Banks and bank holding companies are required to
have (1) a minimum level of total capital (as defined) to risk-weighted
assets of eight percent (8%); (2) a minimum Tier One Capital (as defined)
to risk-weighted assets of four percent (4%); and (3) a minimum
stockholders' equity to risk-weighted assets of four percent (4%). In
addition, the Federal Reserve, OCC and the FDIC have established a minimum
three percent (3%) leverage ratio of Tier One Capital to total assets for
the most highly-rated banks and bank holding companies. "Tier One Capital"
generally consists of common equity not including unrecognized gains and
losses on securities, minority interests in equity accounts of consolidated
subsidiaries and certain perpetual preferred stock less certain
intangibles. The Federal Reserve, the FDIC and the OCC will require a bank
holding company and a bank, respectively, to maintain a leverage ratio
greater than three percent (3%) if either is experiencing or anticipating
significant growth or is operating with less than well-diversified risks in
the opinion of the Federal Reserve. The Federal Reserve, the FDIC and the
OCC use the leverage ratio in tandem with the risk-based ratio to assess
the capital adequacy of banks and bank holding companies.
The FDIC, the OCC and the Federal Reserve have proposed amending the
capital adequacy standards to provide for the consideration of interest
rate risk in the overall determination of a bank's capital ratio, requiring
banks with greater interest rate risk to maintain adequate capital for the
risk. The proposed revisions are not expected to have a significant effect
on BCG's capital requirements, if adopted in their current form.
In addition, effective December 19, 1992, a new Section 38 to the
Federal Deposit Insurance Act implemented the prompt corrective action
provisions that Congress enacted as a part of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (the
-95-
<PAGE>
<PAGE>
"1991 Act"). The "prompt corrective action" provisions set forth five
regulatory zones in which all banks are placed largely based on their
capital positions. Regulators are permitted to take increasingly harsh
action as a bank's financial condition declines. Regulators are also
empowered to place in receivership or require the sale of a bank to another
depository institution when a bank's capital leverage ratio reaches two
percent. Better capitalized institutions are generally subject to less
onerous regulation and supervision than banks with lesser amounts of
capital.
The FDIC has adopted regulations implementing the prompt corrective
action provisions of the 1991 Act, which place financial institutions in
the following five categories based upon capitalization ratios: (1) a "well
capitalized" institution has a total risk-based capital ratio of at least
10%, a Tier One risk-based ratio of at least 6% and a leverage ratio of at
least 5%; (2) an "adequately capitalized" institution has a total risk-
based capital ratio of at least 8%, a Tier One risk-based ratio of at least
4% and a leverage ratio of at least 4%; (3) an "undercapitalized"
institution has a total risk-based capital ratio of under 8%, a Tier One
risk-based ratio of under 4% or a leverage ratio of under 4%; (4) a
"significantly undercapitalized" institution has a total risk-based capital
ratio of under 6%, a Tier One risk-based ratio of under 3% or a leverage
ratio of under 3%; and (5) a "critically undercapitalized" institution has
a leverage ratio of 2% or less. Institutions in any of the three
undercapitalized categories would be prohibited from declaring dividends or
making capital distributions. The FDIC regulations also establish
procedures for "downgrading" an institution to a lower capital category
based on supervisory factors other than capital. Under the FDIC's
regulations, all of the Banks are "well capitalized" institutions.
Set forth below are pertinent capital ratios for each of the Banks,
Ameribank, Effingham and BCG as of September 30, 1995.
<TABLE>
<CAPTION>
Minimum Capital Middle BCG
Requirement FSB Coweta Georgia Ameribank Effingham BCG Pro Forma
- --------------- --- ------ ------- --------- --------- --- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Tier One Capital to
Risk-based 11.31% 13.64% 12.57% 11.42% 10.94% 10.58% 9.94%
Assets: 4.00% (1)
Total Capital to
Risk-based 12.56% 14.80% 13.64% 12.67% 12.19% 11.78% 11.13%
Assets: 8.00% (2)
Leverage Ratio (Tier One
Capital to Total 7.09% 10.34% 9.33% 9.01% 9.01% 7.94% 7.15%
Assets): 3.00% (3)
</TABLE>
-----------------------
/(1)/ Minimum required ratio for "well capitalized" banks is 6%
/(2)/ Minimum required ratio for "well capitalized" banks is 10%
/(3)/ Minimum required ratio for "well capitalized" banks is 5%
-96-
<PAGE>
<PAGE>
Recent Legislative and Regulatory Action. On April 19, 1995, the four
federal bank regulatory agencies adopted revisions to the regulations
promulgated pursuant to the Community Reinvestment Act (the "CRA"), which
are intended to set distinct assessment standards for financial
institutions. The revised regulation contains three evaluation tests: (i)
a lending test which will compare the institution's market share of loans
in low- and moderate-income areas to its market share of loans in its
entire service area and the percentage of a bank's outstanding loans to
low- and moderate-income areas or individuals, (ii) a services test which
will evaluate the provisions of services that promote the availability of
credit to low- and moderate-income areas, and (iii) an investment test,
which will evaluate an institution's record of investments in organizations
designed to foster community development, small- and minority-owned
businesses and affordable housing lending, including state and local
government housing or revenue bonds. The regulation is designed to reduce
some paperwork requirements of the current regulations and provide
regulators, institutions and community groups with a more objective and
predictable manner with which to evaluate the CRA performance of financial
institutions. The rule will be effective on January 1, 1996 at which time
evaluation under streamlined procedures will begin for institutions with
assets of less than $250 million that are owned by a holding company with
total assets of less than $1 billion. Until the regulators release
guidelines for examiners that interpret the rules, it is unclear what
effect, if any, these regulations will have on BCG and the Banks.
Congress and various federal agencies (including, in addition to the
Bank regulatory agencies, the Department of Housing and Urban Development,
the Federal Trade Commission and the Department of Justice) (collectively
the "Federal Agencies") responsible for implementing the nation's fair
lending laws have been increasingly concerned that prospective home buyers
and other borrowers are experiencing discrimination in their efforts to
obtain loans. In recent years, the Department of Justice has filed suit
against financial institutions, which it determined had discriminated,
seeking fines and restitution for borrowers who allegedly suffered from
discriminatory practices. Most, if not all, of these suits have been
settled (some for substantial sums) without a full adjudication on the
merits.
On March 8, 1994, the Federal Agencies, in an effort to clarify what
constitutes lending discrimination and specify the factors the agencies
will consider in determining if lending discrimination exists, announced a
joint policy statement detailing specific discriminatory practices
prohibited under the Equal Opportunity Act and the Fair Housing Act. In the
policy statement, three methods of proving lending discrimination were
identified: (1) overt evidence of discrimination, when a lender blatantly
discriminates on a prohibited basis, (2) evidence of disparate treatment,
when a lender treats applicants differently based on a prohibited factor
even where there is no showing that the treatment was motivated by
prejudice or a conscious intention to discriminate against a person, and
(3) evidence of disparate impact, when a lender applies a practice
uniformly to all applicants, but the practice has a discriminatory effect,
even where such practices are neutral on their face and are applied
equally, unless the practice can be justified on the basis of business
necessity.
-97-
<PAGE>
<PAGE>
On September 23, 1994, President Clinton signed the Reigle Community
Development and Regulatory Improvement Act of 1994 (the "Regulatory
Improvement Act"). The Regulatory Improvement Act contains funding for
community development projects through banks and community development
financial institutions and also numerous regulatory relief provisions
designed to eliminate certain duplicative regulations and paperwork
requirements.
On September 29, 1994, President Clinton signed the Reigle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Federal
Interstate Bill") which amended federal law to permit bank holding
companies to acquire existing banks in any state effective September 29,
1995, and any interstate bank holding company is permitted to merge its
various bank subsidiaries into a single bank with interstate branches after
May 31, 1997. States have the authority to authorize interstate branching
prior to June 1, 1997, or alternatively, to opt out of interstate branching
prior to that date. The Georgia Financial Institutions Code was amended in
1994 to permit the acquisition of a Georgia bank or bank holding company by
out-of-state bank holding companies beginning July 1, 1995. On September
29, 1995, the interstate banking provisions of the Georgia Financial
Institutions Code were superseded by the Federal Interstate Bill.
On January 26, 1996, the Georgia legislature adopted a bill (the
"Georgia Intrastate Bill") to permit, effective July 1, 1996, any Georgia
bank or group of affiliated banks under one holding company to establish
up to three new or additional branch banks anywhere within the State of
Georgia. After July 1, 1998, all restrictions on state-wide branching
would be removed. Prior to adoption of the Georgia Intrastate Bill,
Georgia only permitted branching via merger or consolidation with an
existing bank or in certain other limited circumstances. Although
Governor Miller has not yet signed the Georgia Intrastate Bill into
law as of the date of this Proxy Statement/Prospectus, he is expected
to do so.
FDIC Insurance Assessments for the Banks. The Banks are subject to
FDIC deposit insurance assessments for the Bank Insurance Fund (the "BIF").
Since 1989 the annual FDIC deposit insurance assessments increased from
$.083 per $100 of deposits to a minimum level of $.23 per $100, an increase
of 177 percent. The FDIC implemented a risk-based assessment system
whereby banks are assessed on a sliding scale depending on their placement
in nine separate supervisory categories, from $.23 per $100 of deposits for
the healthiest banks (those with the highest capital, best management and
best overall condition) to as much as $.31 per $100 of deposits for the
less-healthy institutions, for an average $.259 per $100 of deposits. As
of December 31, 1994, each of the Banks are paying BIF assessments of $.23
per $100 of deposits.
On August 8, 1995, the FDIC lowered the BIF premium for healthy banks
83% from $.23 per $100 in deposits to $.04 per $100 in deposits, while
retaining the $.31 level for the riskiest banks. The average assessment
rate was therefore reduced from $.232 to $.044 per $100 of deposits. The
new rate took effect on September 29, 1995. On September 15, 1995, the
FDIC refunded $119,908 to the Banks for premium overpayments in the second
and third quarter of 1995. On November 14, 1995, the FDIC again lowered
the BIF premium for healthy banks from $.04 per $100 of deposits to zero
for the highest rated institutions (92% of the industry). As a result, the
Banks will pay only the legally required annual minimum payment of $2,000
per year for insurance beginning in January 1996.
LEGAL OPINIONS
The legality of the BCG Common Stock to be issued in connection with
the Americorp Merger will be passed on by Kilpatrick & Cody, Suite 2800,
1100 Peachtree Street, Atlanta, Georgia 30309-4530, counsel to BCG.
-98-
<PAGE>
<PAGE>
EXPERTS
The audited consolidated financial statements of BCG and its
subsidiaries included or incorporated by reference in this Proxy
Statement/Prospectus and elsewhere in the registration statement have been
audited by Evans, Porter, Bryan & Co., independent certified public
accountants, as indicated in their reports with respect thereto, and are
included herein upon the authority of said firm as experts in giving said
reports.
The audited consolidated financial statements of Americorp included or
incorporated by reference in this Proxy Statement/Prospectus and elsewhere
in the registration statement have been audited by Evans, Porter, Bryan &
Co., independent certified public accountants, as indicated in their
reports with respect thereto, and are included herein upon the authority of
said firm as experts in giving said reports.
The audited financial statements of Effingham for the year ended
December 31, 1994 included or incorporated by reference in this Proxy
Statement/Prospectus and elsewhere in the registration statement have been
audited by Evans, Porter, Bryan & Co., independent certified public
accountants, as indicated in their reports with respect thereto, and are
included herein upon the authority of said firm as experts in giving said
reports, and the audited financial statements of Effingham for the year
ended December 31, 1993 included or incorporated by reference in this Proxy
Statement/Prospectus and elsewhere in the registration statement have been
audited by Wilson, Corbitt & Kessler, independent certified public
accountants, as indicated in their reports with respect thereto, and are
included herein upon the authority of said firm as experts in giving said
reports.
OTHER MATTERS
Management of Americorp knows of no other matters which may be brought
before the Special Meeting. If any matter other than the proposed
Americorp Merger or matters incident thereto should properly come before
such Special Meeting, however, the persons named in the enclosed proxies
will vote such proxy in accordance with their judgment on such matters.
Savannah, Georgia By Order of the Board of Directors,
________________, 1996
Joseph W. Evans
President and CEO
-98-
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Historical Financial Statements: Page
- ------------------------------- ----
Bank Corporation of Georgia and Subsidiaries
Report of Independent Certified Public Accountants............. F-1
Consolidated Balance Sheets For the Years Ended
December 31, 1994 and 1993.................................. F-1
Consolidated Statements of Earnings For the Years Ended
December 31, 1994, 1993 and 1992............................. F-1
Consolidated Statements of Changes in Shareholders'Equity
For the Years Ended December 31, 1994, 1993 and 1992......... F-1
Consolidated Statements of Cash Flows For the Years
Ended December 31, 1994, 1993 and 1992....................... F-2
Notes to Consolidated Financial Statements..................... F-4
Consolidated Balance Sheets For the Nine Months Ended
September 30, 1995 and 1994 (Unaudited)....................... F-18
Consolidated Statements of Cash Flows For the Nine
Months Ended September 30, 1995 and 1994 (Unaudited)......... F-19
Consolidated Statements of Earnings For the Nine Months
Ended September 30, 1995 and 1994 (Unaudited)................ F-20
Notes to Unaudited Financial Statements........................ F-21
Effingham Bank & Trust
Report of Independent Certified Public Accountants............. F-22
Balance Sheets For the Years Ended
December 31, 1994 and 1993................................... F-23
Statements of Operations For the Years Ended
December 31, 1994 and 1993................................... F-24
Statements of Changes in Stockholders Equity For the
Years Ended December 31, 1994 and 1993....................... F-25
Statements of Cash Flows For the Years Ended
December 31, 1994 and 1993................................... F-26
Notes to Financial Statements.................................. F-28
Compilation Report of Independent Certified
Public Accounts.............................................. F-37
Balance Sheets For the Nine Months Ended September 30,
1995 and 1994 (Unaudited).................................... F-38
Statements of Operations For the Nine Months Ended
September 30, 1995 and 1994 (Unaudited)...................... F-39
Statements of Changes in Stockholder's Equity For the
Nine Months Ended September 30, 1995 and 1994
(Unaudited).................................................. F-40
Statements of Cash Flows For the Nine Months Ended
September 30, 1995 and 1994 (Unaudited)....................... F-41
Notes to Financial Statements (Unaudited)...................... F-42
F-1
<PAGE>
Americorp, Inc. and Subsidiary
Report of Independent Certified Public Accountant.............. F-43
Consolidated Balance Sheet For The Years Ended
December 31, 1994 and 1993................................... F-44
Consolidated Statements of Operations
For the Years Ended December 31, 1994, 1993 and 1992......... F-44
Consolidated Statements of Changes in Shareholders'
Equity For the Years Ended December 31, 1994,
1993 and 1992................................................ F-45
Consolidated Statements of Cash Flows For the Years
Ended December 31, 1994, 1993 and 1992....................... F-46
Notes to Consolidated Financial Statements..................... F-48
Consolidated Balance Sheets For the Nine Months Ended
September 30, 1995 and 1994 (Unaudited)....................... F-55
Consolidated Statements of Cash Flows For the Nine
Months Ended September 30, 1995 and 1994 (Unaudited)......... F-56
Consolidated Statements of Earnings For the Nine Months
Ended September 30, 1995 and 1994 (Unaudited)................ F-57
Notes to Unaudited Financial Statements........................ F-59
Unaudited Pro Forma Financial Statements
Pro Forma Balance Sheet - September 30, 1995................... F-60
Pro Forma Statement of Income For the Year
Ended December 31, 1994...................................... F-61
Pro Forma Statement of Income For the
Nine Months Ended September 30, 1995......................... F-62
Explanatory Notes to Pro Forma Financial Statements F-63
F-2
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(with Independent Accountants' Report thereon)<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
Bank Corporation of Georgia
Macon, Georgia
We have audited the accompanying consolidated balance sheets of Bank
Corporation of Georgia and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of earnings, changes
in shareholders' equity, and cash flows for each of the three years
in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Bank Corporation of Georgia and subsidiaries as of
December 31, 1994 and 1993, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in note 1 to the financial statements, the Company
changed its method of accounting for investment securities during
1994.
EVANS, PORTER, BRYAN & CO.
/s/ Evans, Porter, Bryan & Co.
Atlanta, Georgia
March 3, 1995, except for note 13 as to which the date is
November 15, 1995
-1-<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1994 and 1993
Assets
------
1994 1993
---- ----
<S> <C> <C>
Cash and due from banks $ 23,647,958 12,879,038
Federal funds sold - 2,950,000
----------- ----------
Cash and cash equivalents 23,647,958 15,829,038
Investment securities available for sale 37,319,930 -
Investment securities 400,753 30,720,853
Loans, net 141,340,145 141,698,642
Premises and equipment, net 6,452,445 6,055,874
Accrued interest receivable 1,669,080 1,322,232
Other assets 5,423,006 4,549,139
------------ -----------
$216,253,317 200,175,778
============ ===========
Liabilities and Shareholders' Equity
------------------------------------
Deposits:
Demand $ 25,022,341 20,741,173
NOW and money-market accounts 56,898,007 69,600,245
Savings 7,420,234 10,099,582
Time 99,982,113 75,302,651
------------ -----------
Total deposits 189,322,695 175,743,651
Accrued expenses and other liabilities 1,904,944 1,457,778
Notes payable 2,800,899 3,520,904
Federal Home Loan Bank advances 5,000,000 5,000,000
------------ -----------
Total liabilities 199,028,538 185,722,333
------------ -----------
Minority interests 902,770 268,424
------------ -----------
Shareholders' equity:
Common stock, $1 par value; 3,000,000 shares authorized;
1,082,833 and 1,081,500 shares issued, respectively 1,082,833 1,081,500
Additional paid-in capital 1,281,772 1,269,608
Retained earnings 14,494,833 12,372,757
Net unrealized loss on investment securities
available for sale, net of tax (124,990) -
------------ -----------
16,734,448 14,723,865
Unearned employee stock ownership plan shares (300,899) (520,904)
Common stock in treasury at cost; 9,581 and
1,781 shares, respectively (111,540) (17,940)
------------ -----------
Total shareholders' equity 16,322,009 14,185,021
------------ -----------
$216,253,317 200,175,778
</TABLE>
See accompanying notes to consolidated financial statements.
-2-<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $14,001,609 13,694,388 14,153,379
Interest on deposits with other banks - 9,797 440,572
Interest on Federal Home Loan Bank deposits 544,223 365,213 275,455
Interest on federal funds sold - 155,841 104,190
Interest on investment securities:
U.S. Treasury and Government agencies 1,425,481 707,256 1,089,443
State and municipal 53,068 113,037 186,746
Other 89,230 72,308 106,661
----------- ---------- ----------
Total interest income 16,113,611 15,117,840 16,356,446
Interest expense 6,538,287 6,075,436 7,583,532
Net interest income 9,575,324 9,042,404 8,772,914
Provision for loan losses 447,003 350,597 195,059
----------- ---------- ----------
Net interest income after provision
for loan losses 9,128,321 8,691,807 8,577,855
Other income:
Fee income 79,435 340,236 223,866
Service charges 1,023,178 1,071,009 880,203
Securities gains (losses), net (320,560) 27,790 12,803
Gains on sales of loans 81,702 512,574 72,618
Miscellaneous 849,930 1,015,292 596,613
Gains on sales of banking units 814,035 - -
----------- ---------- -----------
Total other income 2,527,720 2,966,901 1,786,103
----------- ---------- -----------
Other expenses:
Salaries and employee benefits 4,868,473 5,340,508 4,702,080
Occupancy 705,872 767,338 746,430
Equipment 576,293 609,714 652,932
Other operating 2,706,071 2,661,344 2,957,694
----------- ---------- -----------
Total other expenses 8,856,709 9,378,904 9,059,136
----------- ---------- -----------
Earnings before income taxes and
minority interest in (earnings)
loss of subsidiary 2,799,332 2,279,804 1,304,822
Income taxes (benefit) (81,637) 343,735 431,200
----------- ---------- -----------
Earnings before minority interest
in (earnings) loss of subsidiary 2,880,969 1,936,069 873,622
Minority interest in (earnings) loss of
subsidiary (651,569) (106,079) 241,778
----------- ---------- -----------
Net earnings $ 2,229,400 1,829,990 1,115,400
=========== ========== ===========
</TABLE>
-3-<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Consolidated Statements of Earnings, continued
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net earnings per share:
Primary $ 2.08 1.78 1.09
Fully diluted $ 2.06 1.78 1.09
Weighted average number of shares outstanding:
Primary 1,069,877 1,029,174 1,022,634
Fully diluted 1,084,794 1,029,174 1,022,634
</TABLE>
See accompanying notes to consolidated financial statements.
-4-<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
For the Years Ended December 31, 1994, 1993 and 1992
Net
Unrealized
Gain (Loss)
on Investment
Securities
Additional Available
Common Paid-in Retained for Sale, Unearned Treasury
Stock Capital Earnings Net of Tax ESOP Shares Stock Total
------ ------- --------- ----------- ----------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $991,500 1,157,108 9,530,941 - (300,000) - 11,379,549
Issuance of common stock 11,111 13,889 - - - - 25,000
Unearned ESOP shares acquired - - - - (212,532) - (212,532)
Cash dividends paid - - (49,576) - - - (49,576)
Net earnings - - 1,115,400 - - - 1,115,400
-------- --------- --------- -------- --------- -------- ----------
Balance, December 31, 1992 1,002,611 1,170,997 10,596,765 - (512,532) - 12,257,841
Issuance of common stock 78,889 98,611 - - - - 177,500
Unearned ESOP shares acquired - - - - (8,372) - (8,372)
Cash dividends paid - - (53,998) - - - (53,998)
Purchase of treasury stock,
2,581 shares - - - - - (25,940) (25,940)
Sale of treasury stock, 800 shares - - - - - 8,000 8,000
Net earnings - - 1,829,990 - - - 1,829,990
--------- --------- ---------- ------- -------- -------- ----------
Balance, December 31, 1993 1,081,500 1,269,608 12,372,757 - (520,904) (17,940) 14,185,021
Cumulative effect of accounting
change for investment
securities, net of tax - - - 19,937 - - 19,937
Issuance of common stock 1,333 12,164 - - - - 13,497
Release of unearned ESOP shares - - - - 220,005 - 220,005
Cash dividends paid (107,324) (107,324)
Purchase of treasury stock,
7,800 shares - - - - - (93,600) (93,600)
Net earnings 2,229,400 - 2,229,400
Change in unrealized loss on
investment securities available
for sale, net of tax - - - (162,150) - - (162,150)
Minority interest in unrealized
loss on available for sale
securities at AmeriCorp - - - 17,223 - - 17,223
--------- --------- ---------- -------- -------- ------- ----------
Balance, December 31, 1994 $ 1,082,833 1,281,772 14,494,833 (124,990) (300,899) (111,540) 16,322,009
============ ========= ========== ======== ======== ======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities (net of
effect of bank sales)
Net earnings $2,229,400 1,829,990 1,115,400
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 510,592 556,132 569,145
Amortization and accretion, net 98,056 237,484 371,286
Minority interests in earnings (loss)
of subsidiary 651,569 106,079 (241,778)
Provision for loan losses 447,003 350,597 195,059
Provision for losses on other real
estate owned 60,782 91,853 176,579
Provision for deferred taxes (898,104) (342,850) (40,800)
Loss (gain) on sale of securities, net 320,560 (27,790) (12,803)
Loss (gain) on sale of other real
estate, net (4,643) 698 64,943
Gains on sales of banking units (814,035) - -
Gain on sale of premises and equipment - (37,610) -
Change in assets and liabilities:
Interest receivable and other assets (828,308) 130,518 380,003
Interest payable 403,459 (105,463) (496,535)
Accrued expenses and other
liabilities 161,048 287,550 (85,234)
----------- ---------- ---------
Net cash provided by operating
activities 2,337,379 3,077,188 1,995,265
----------- ---------- ---------
Cash flows from investing activities
(net of effects of bank sales):
Change in interest-bearing deposits with
other banks - 2,481,155 6,250,000
Proceeds from sales of investment securities - 4,625,783 6,229,566
Proceeds from sales of investment securities
available for sale 18,443,377 - -
Proceeds from calls and maturities of
investment securities 393,229 29,448,080 20,923,331
Proceeds from calls and maturities of
investment securities available for sale 24,576,058 - -
Purchase of investment securities - (46,728,908) (17,921,498)
Purchase of investment securities available
for sale (50,918,195) - -
Proceeds from sale of other real estate
owned 454,998 196,799 1,053,871
Improvements to other real estate owned (28,187) (48,477) (1,650)
Proceeds from sales of premises and equipment - 156,028 32,382
Purchase of premises and equipment (1,500,208) (458,800) (762,620)
Net increase in loans (8,222,820) (11,604,205) (7,208,747)
Cash paid upon the sales of banking units (12,517,604) - -
Other - 114,593 56,272
----------- ---------- -----------
Net cash provided (used) by
investing activities (29,319,352) (21,817,952) 8,650,907
----------- ----------- -----------
</TABLE>
-6-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Consolidated Statements of Cash Flows, continued
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities (net of
effects of bank sales):
Net increase (decrease) in deposits $35,488,320 9,091,150 (2,525,635)
Securities sold under repurchase agreements - - (2,000,000)
Proceeds (repayment) of notes payable (500,000) 500,000 (500,000)
Proceeds from FHLB advances - - 5,000,000
Dividends paid (107,324) (53,998) (49,576)
Proceeds from issuance of common stock 13,497 177,500 25,000
Purchase of treasury stock (93,600) (25,940) -
Sale of treasury stock - 8,000 -
----------- --------- -----------
Net cash provided (used) by financing
activities 34,800,893 9,696,712 (50,211)
----------- --------- -----------
Net increase (decrease) in cash and cash
equivalents 7,818,920 (9,044,052) 10,595,961
Cash and cash equivalents at beginning of year 15,829,038 24,873,090 14,277,129
----------- ---------- -----------
Cash and cash equivalents at end of year $23,647,958 15,829,038 24,873,090
=========== ========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ 6,134,828 6,181,438 8,080,067
Income taxes $ 990,000 502,000 602,000
Supplemental schedule of noncash investing
and financing activities:
Change in unrealized loss on investment
securities available for sale,
net of tax $ 124,990 - -
Transfers of loans to other real estate
owned $ 623,862 528,461 678,973
Financed sales of other real estate owned $ 465,609 384,905 999,253
Increase (decrease) in unearned ESOP Shares $ (220,005) 8,372 212,532
Deposit liabilities disposed in sale of
banking units $ 21,909,276 - -
Assets disposed in sale of banking units,
other than cash $ 8,577,637 - -
</TABLE>
See accompanying notes to consolidated financial statements.
-7-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
The consolidated financial statements are presented in accordance with
generally accepted accounting principles and conform to general practices
within the banking industry. The more significant accounting policies are
described in this summary.
Consolidation
-------------
The consolidated financial statements include the accounts of Bank
Corporation of Georgia (the "Company") and its wholly-owned bank
subsidiaries, First South Bank, N.A. ("FSB"), First South Bank of Coweta
County, N.A., First South Bank of Middle Georgia, N.A. and First South Bank
of Ben Hill County, N.A. ("Ben Hill"). During 1994, the Company sold Ben
Hill and the Ashburn, Georgia branch of FSB as more fully described in note
2.
As described more fully in note 2, the financial statements also include the
accounts of AmeriCorp, Inc. ("AmeriCorp") and its wholly-owned bank
subsidiary AmeriBank, N.A. ("AmeriBank"). While the Company did not have a
majority ownership interest until a December 1993 purchase of additional
AmeriCorp common shares, the accounts of AmeriCorp have been included in
consolidation in all years due to the Company's operating control resulting
from Board of Directors representation and a management contract.
In consolidation, all significant intercompany accounts and transactions
have been eliminated.
Cash and Cash Equivalents
-------------------------
Cash equivalents include amounts due from banks, interest-bearing deposits
with other banks due within three months, federal funds sold and overnight
investments with the Federal Home Loan Bank. Generally, federal funds are
sold for one-day periods.
Included in cash and due from banks are interest bearing deposits with the
Federal Home Loan Bank amounting to $15,494,679 and $8,194,926 at December
31, 1994 and 1993, respectively.
Investment Securities and Investment Securities Available for Sale
------------------------------------------------------------------
Effective January 1, 1994 the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Under SFAS No. 115, the Company
classifies its securities in one of three categories: trading, available for
sale, or held to maturity. Trading securities are bought and held
principally for the purpose of selling them in the near term. Held to
maturity securities ("Investment Securities") are those securities for
which the Company has the ability and intent to hold until maturity. All
other securities not included in trading or held to maturity are classified
as available for sale ("Securities AFS"). At December 31, 1994, the Company
has no trading securities.
Securities AFS are recorded at fair value. Investment securities are
recorded at cost, adjusted for the amortization of premiums or accretion of
discounts. Unrealized holding gains and losses, net of the related tax
effect, on Securities AFS are excluded from earnings and are reported as a
separate component of shareholders' equity until realized. Transfers of
securities between categories are recorded at fair value at the date of
transfer. Unrealized holding gains or losses associated with transfers
from Investment Securities to Securities AFS are recorded as a separate
component of shareholders' equity. The unrealized holding gains or losses
included in the separate component of shareholders' equity for securities
transferred from Securities AFS to Investment Securities are maintained
and amortized into earnings over the remaining life of the security as
an adjustment to yield in a manner consistent with the amortization or
accretion of premium or discount on the associated security.
A decline in the market value of any Investment Security or Security AFS
below cost that is deemed other than temporary is charged to earnings and
establishes a new cost basis for the security.
-8-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(1) Summary of Significant Accounting Policies, continued
------------------------------------------
Investment Securities and Investment Securities Available for Sale,
------------------------------------------------------------------
continued
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to the yield. Realized gains and losses
for securities classified as available for sale and held to maturity are
included in earnings and are derived using the specific identification
method for determining the cost of securities sold.
In 1993, all investment securities were carried at amortized cost.
Loans
-----
Interest income on loans is recognized on the effective yield method.
Nonrefundable loan fees and certain direct loan origination costs are
accounted for in accordance with SFAS No. 91, "Accounting for Nonrefundable
Fees and Costs Associated with Originating or Acquiring Loans and Initial
Direct Cost of Leases." SFAS No. 91 requires recognition of loan origination
fees, net of direct costs, over the life of the related loan as an
adjustment to yield.
Unearned Discount
-----------------
The unearned discount on loans purchased is recognized over the remaining
lives of the loans using the effective yield method.
Allowance for Loan Losses
-------------------------
The allowance for loan losses is established through a provision for loan
losses charged to expense. The allowance represents an amount which, in
management's judgment, will be adequate to absorb losses on existing loans
that may become uncollectible. Management's judgement in determining the
adequacy of the allowance is based on evaluations of the collectibility of
loans. These evaluations take into consideration such factors as changes in
the nature and volume of the loan portfolio, current economic conditions
that may affect the borrower's ability to pay, overall portfolio quality,
and review of specific problem loans.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for
loan losses. Such agencies may require the Company to recognize additions to
the allowance based on judgements different than those of management.
Premises and Equipment
----------------------
Premises and equipment are stated at cost, less accumulated depreciation.
Major additions and improvements are charged to the property accounts while
replacements, maintenance and repairs, which do not improve or extend the
life of respective assets, are expensed currently. When property is retired
or otherwise disposed of, the cost and related accumulated depreciation are
removed from the accounts and the resulting gain or loss, if any, is
recognized. Depreciation expense is computed principally on the straight-
line method over the estimated useful lives of the assets.
Intangible Assets
-----------------
The unamortized cost in excess of fair value of net assets acquired in bank
acquisitions ("goodwill") amounted to approximately $418,000 and $546,000 at
December 31, 1994 and 1993, respectively. Goodwill arising before September
30, 1982 is being amortized on a straight-line basis over 40 years, whereas
goodwill acquired after that date is being amortized on a straight-line
basis over 25 years.
-9-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(1) Summary of Significant Accounting Policies, continued
------------------------------------------
401(K) Plan
-----------
The Company has a retirement plan qualified pursuant to Internal Revenue
Code Section 401(k) ("401(k) Plan"). The 401(k) Plan covers substantially
all employees subject to certain minimum age and service requirements.
Contributions to the plan by employees is voluntary; however, the
Company will match 25% of the employee's contributions. Contributions
to the plan charged to expense for the year ended December 31,
1994, 1993 and 1992 amounted to $112,767, $34,971 and $19,183,
respectively.
Employee Stock Ownership Plan
-----------------------------
The Company sponsors a leveraged employee stock ownership plan (ESOP) that
covers substantially all employees subject to certain minimum age and
service requirements. The Company makes contributions to the ESOP which the
plan trustee is required to use to make loan principal and interest
payments. The ESOP also sells unearned ESOP shares to the Company and
other parties to provide funds to meet debt and other obligations. All
dividends received by the ESOP are used to pay debt service. The ESOP
shares initially were pledged as collateral for its debt. As the debt
is repaid, shares are released from collateral and allocated to active
employees, based on the proportion of debt service paid in the year. The
Company accounts for its ESOP in accordance with Statement of Position
93-6. Accordingly, the debt of the ESOP is recorded as debt and the
shares pledged as collateral are reported as unearned ESOP shares in
the statement of financial position. As shares are released from
collateral, the Company reports compensation expense equal to
the current market price of the shares, and the shares become outstanding
for earnings per share computations. Dividends on allocated ESOP shares are
recorded as a reduction of retained earnings; dividends on unallocated ESOP
shares are recorded as a reduction of debt and accrued interest. ESOP
compensation expense was $64,600, $185,374 and $172,530 for years ended
December 31, 1994, 1993 and 1992, respectively. The ESOP shares as of
December 31 were as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Allocated shares 109,617 152,324
Unreleased shares 31,203 44,971
------- -------
Total ESOP shares 140,820 197,295
======= =======
Fair value of unreleased shares $483,647 584,623
======== =======
</TABLE>
Income Taxes
------------
Effective January 1, 1993, the Bank changed its method of accounting for
income taxes from Statement of Financial Accounting Standards (SFAS) No. 96
which required an asset and liability approach that gave no recognition to
future events other than the recovery of assets and settlement of
liabilities at their carrying amount to the asset and liability method
required by SFAS No. 109. SFAS No. 109 requires the recognition of
deferred tax assets and liabilities for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Additionally, the accounting standard requires the recognition
of future tax benefits, such as net operating loss carryforwards, to
the extent that realization of such benefits is more likely than not.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which the assets and
liabilities are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income tax expense in the period that includes the enactment
date.
-10-<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(1) Summary of Significant Accounting Policies, continued
------------------------------------------
Income Taxes, continued
------------
In the event the future tax consequences of differences between the
financial reporting bases and the tax bases of the Company's assets and
liabilities results in deferred tax assets, the standard requires an
evaluation of the probability of being able to realize the future
benefits indicated by such asset. A valuation allowance is provided for
the portion of the deferred tax asset when it is more likely than not
that some portion or all of the deferred tax asset will not be realized.
In assessing the realizability of the deferred tax assets, management
considers the scheduled reversals of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment.
Recent Accounting Pronouncements
--------------------------------
During May 1993, SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan" was issued. SFAS No. 114 requires impaired loans to be measured based
on the present value of expected future cash flows, discounted at the loan's
effective interest rate, or at the loan's observable market price, or the
fair value of the collateral if the loan is collateral dependent, beginning
January 1, 1995. Based on the Bank's current accounting policies related to
providing for losses on problem loans, management does not believe that the
impact of SFAS No. 114 will be significant to the financial statements.
Interest Rate Swaps
-------------------
As part of the Company's overall interest rate risk management, the Company
uses interest rate swaps. Interest income or expense related to interest
rate swaps is recorded over the life of the agreement as an adjustment to
net interest expense.
Net Earnings Per Share
----------------------
Net earnings per share are based on the weighted average number of shares
outstanding during each year including consideration of stock options, which
represent common stock equivalents. It is assumed that all dilutive stock
options are exercised at the beginning of the year and that the proceeds are
used to purchase shares of the Company's common stock. The average market
price during each year is used to compute equivalent shares assumed to be
acquired for primary earnings per share, whereas year-end prices are used
for fully diluted per-share amounts. Unearned ESOP shares are not considered
outstanding for purposes of earnings per share.
Disclosures about Fair Value of Financial Instruments
-----------------------------------------------------
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments",
requires that the Company disclose estimated fair values for its financial
instruments. Fair value estimates, methods, and assumptions are set forth
below and in the respective section of each applicable footnote for the
Company's financial instruments.
Cash and Cash Equivalents
-------------------------
For cash, due from banks, federal funds sold and interest-bearing
deposits with other banks due within three months, the carrying amount
is a reasonable estimate of fair value.
Investment Securities and Investment Securities Available for Sale
------------------------------------------------------------------
For securities held for investment purposes, fair values are based on
quoted market prices.
-11-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(1) Summary of Significant Accounting Policies, continued
------------------------------------------
Disclosures about Fair Value of Financial Instruments, continued
-----------------------------------------------------
Loans
-----
The fair value of fixed rate loans is estimated by discounting the future
cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings. For variable rate loans, the
carrying amount is a reasonable estimate of fair value.
Deposit Liabilities
-------------------
The fair value of demand deposits, savings accounts, and certain money
market deposits is the amount payable on demand at the reporting date.
The fair value of fixed maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining
maturities.
Notes Payable
-------------
Because the Company's notes payable carry a variable rate, the carrying
amount is a reasonable estimate of fair value.
FHLB Advances
-------------
The fair value of FHLB Advances is estimated by discounting the future
cash flows using the current rates at which advances of like maturity
would be made.
Commitments to Extend Credit, Standby Letters of Credit and Financial
Guarantees Written
----------------------------------------------------------------------
Because commitments to extend credit and standby letters of credit are
made using variable rates and are for terms less than one year, the
contract value is a reasonable estimate of fair value.
Interest Rate Swaps
-------------------
The fair value of interest rate swaps is obtained from dealer quotes.
These values represent the estimated amount the Company would receive or
pay to terminate the contracts or agreements, taking into account current
interest rates and when appropriate, the current creditworthiness of the
counterparties.
Limitations
-----------
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instrument. These estimates do not reflect any premium or discount that
could result from offering for sale at one time the Company's entire
holdings of a particular financial instrument. Because no market exists
for a significant portion of the Company's financial instruments, fair
value estimates are based on many judgements. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgement and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that
are not considered financial instruments. Significant assets and
liabilities that are not considered financial instruments include
deferred income taxes, premises and equipment, and goodwill. In
addition, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on fair
value estimates and have not been considered in the estimates.
Reclassifications
-----------------
Certain 1993 and 1992 amounts have been reclassified to conform with 1994
presentation.
12-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(2) Acquisitions and Sales
----------------------
In November 1990, the Company acquired a twenty-five (25%) percent interest
in the common stock of AmeriCorp through the purchase of newly issued shares
of AmeriCorp. During 1992, the Company increased its ownership interest to
thirty-four (34%) percent and in December 1993, further increased its
ownership to sixty-seven (67%) percent. The investments in AmeriCorp
resulted from cash invested by the Company in the subsidiary and stock
issued by AmeriCorp for management fees and accrued interest payable to
the Company.
The Company also owns $3,641,900 of preferred stock of AmeriCorp. The
preferred stock, which is not convertible into common stock, requires the
payment of dividends in cash or additional shares of preferred stock at a
fixed rate of eight (8%) percent. It is redeemable at the option of
AmeriCorp beginning in 1994 and contains liquidation preferences at par
value.
The recorded purchase price for Americorp was based on the fair market value
of the assets acquired and liabilities assumed as of the closing dates, and
the results of all operations have been included in the consolidated
financial statements since the initial 1990 acquisition.
In March 1994, FSB sold substantially all the assets and liabilities of its
Ashburn banking unit to Ashburn Bank. The sale resulted in a cash payment to
Ashburn Bank of approximately $2,404,000 and a transfer of deposit
liabilities of $7,369,000 and assets, consisting primarily of loans, of
$4,787,000. FSB recognized a gain of approximately $178,000 as a result of
this sale.
In September 1994, the Company sold substantially all the assets and
liabilities of Ben Hill to Bankers First. The sale resulted in a cash
payment to Bankers First of approximately $10,114,000 and a transfer of
deposit liabilities of $14,540,000 and assets, primarily consisting of
loans, of $3,791,000. The gain on this sale amounted to $636,000.
(3) Investment Securities
---------------------
As more fully described in note 1, the Company changed its method of
accounting for investment securities. Investment Securities and Securities
AFS at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES:
December 31, 1994:
State, county and municipal $ 400,753 19,616 - 420,369
============ ====== ======= =======
December 31, 1993:
U.S. Treasury and
U.S. Government agencies $ 29,935,595 42,035 11,830 29,965,800
State, county and municipal 785,258 54,142 - 839,400
------------ ------ ------- ----------
Total $30,720,853 96,177 11,830 30,805,200
============ ====== ====== ==========
SECURITIES AFS:
December 31, 1994:
U.S. Treasury and
U.S. Government agencies $ 37,535,403 779 216,252 37,319,930
============ ====== ======= ==========
</TABLE>
-13-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(3) Investment Securities, continued
---------------------
The amortized cost and fair value of Investment Securities and Securities
AFS at December 31, 1994, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because
borrowers have the right to call or prepay obligations with or without
call or prepayment penalties.
<TABLE>
<CAPTION>
Investment Securities Securities AFS
December 31, 1994 December 31, 1994
----------------------- ----------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. Government agencies:
Within 1 year $ - - 19,806,951 19,707,318
1 to 5 years - - 15,914,104 15,813,999
5 to 10 years - - 1,814,348 1,798,613
------- ------ ---------- ----------
$ - - 37,535,403 37,319,930
======= ====== ========== ==========
State and municipal:
Within 1 year $ 69,270 70,619 - -
1 to 5 years 132,477 143,350 - -
5 to 10 years - - - -
More than 10 years 199,006 206,400 - -
-------- -------- ---------- -----------
$ 400,753 420,369 - -
========= ======== ========== ===========
Total securities:
Within 1 year $ 69,270 70,619 19,806,951 19,707,318
1 to 5 years 132,477 143,350 15,914,104 15,813,999
5 to 10 years - - 1,814,348 1,798,613
More than 10 years 199,006 206,400 - -
---------- ------- ---------- ----------
$ 400,753 420,369 37,535,403 38,319,930
========== ======= ========== ==========
</TABLE>
Proceeds from sales of Investment Securities during 1993 and 1992 were
$4,625,783 and $6,229,566, respectively. Gross gains of $28,238 and $19,626
were realized on those sales in 1993 and 1992, respectively. Gross losses
of $448 and $6,823 were realized on 1993 and 1992 sales, respectively.
Proceeds from sales of Securities AFS during 1994 were $18,443,377. Gross
gains of $1,635 were realized on those sales. Gross losses of $322,195 were
realized on those sales.
Securities AFS with a carrying value of approximately $7,900,000 and
$12,960,000 at December 31, 1994 and 1993, respectively, were pledged to
secure public deposits or for other purposes.
-14-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(4) Loans
-----
Major classifications of loans at December 31, 1994 and 1993 are summarized
as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial, financial and agricultural $ 44,528,083 41,930,843
Loans secured primarily by real estate 72,932,558 80,228,323
Construction 18,162,800 10,889,559
Consumer 8,667,683 11,582,382
------------ -----------
144,291,124 144,631,107
Less: Unearned discount 858,568 855,502
Unearned interest 5,609 15,846
Allowance for loan losses 2,086,802 2,061,117
------------ -----------
$141,340,145 141,698,642
============ ===========
</TABLE>
The loan portfolio is comprised of loans originated throughout Georgia
and participations purchased.
The Banks discontinue accruing interest on loans when, in the opinion
of management, the collection of interest is doubtful. At December 31,
1994 and 1993, nonaccruing loans amounted to approximately $409,000
and $827,000, respectively.
Changes in the allowance for loan losses for the years ended December 31,
1994, 1993 and 1992 are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year $ 2,061,117 1,886,838 1,893,578
Provisions charged to operating expense 447,003 350,597 195,059
Loan charge-offs (434,713) (425,361) (752,549)
Recoveries 179,395 249,043 550,750
Sales of banking units (166,000) - -
------------- --------- ---------
Balance, end of year $ 2,086,802 2,061,117 1,886,838
============= ========= =========
</TABLE>
The fair value estimates of net loans as of December 31, 1994 and 1993 are
$138,371,000 and $143,039,000, respectively. Included in the fair value
estimates at December 31, 1994 and 1993, are variable rate loans totalling
$77,144,000 and $60,672,000, respectively. Management has made estimates of
the fair value based on assumptions that it believes to be reasonable.
However, because there is no market for many of these loans, management has
no basis to determine whether the fair value computed would be indicative of
the value negotiated in an actual sale.
-15-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(5) Deposits
-------
The carrying amounts and estimated fair values of deposits consisted of the
following at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
Deposits with no defined
maturities $ 89,340,582 89,340,582 100,440,954 100,440,954
Deposits with fixed maturities 99,982,113 99,054,000 75,302,697 75,596,000
------------ ---------- ----------- -----------
Total deposits $189,322,695 188,394,582 175,743,651 176,036,954
============ =========== =========== ===========
</TABLE>
SFAS 107 defines the fair value of deposits with no defined maturities as
the amount payable on demand, and prohibits adjusting fair value for any
value derived from retaining those deposits for an expected future period
of time. That component, commonly referred to as a deposit base
intangible, is neither considered in the above fair value amounts nor is it
recorded as an intangible asset in the consolidated balance sheets.
(6) Notes Payable
-------------
Notes payable at December 31, 1994 and 1993 are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Borrowings of the ESOP trust from a bank guaranteed by the
Company, payable in annual installments of $150,000
beginning January, 1993 with interest payable quarterly
at the prime rate. The ESOP may borrow a maximum of
$600,000 on this note. $ 300,899 520,904
Note payable to a bank in annual installments of $300,000
with interest payable quarterly at the prime rate and
secured by the common stock of all wholly-owned bank
subsidiaries. 2,500,000 3,000,000
---------- ----------
$2,800,899 3,520,904
========== =========
</TABLE>
The note payable to a bank allows for additional borrowings up to $500,000
with the same repayment terms as described above. The loan agreement
contains covenants and restrictions pertaining to the maintenance of
certain financial ratios, limitations on the incurrence of additional
debt, and declaration of dividends or other capital transactions.
(7) Advances From Federal Home Loan Bank of Atlanta
-----------------------------------------------
At December 31, 1994 and 1993, FSB had advances outstanding from the Federal
Home Loan Bank (FHLB) of Atlanta amounting to $5,000,000. The advances
require monthly interest payments at an interest rate of 4.59% and are
due in November 1995. The FHLB advances are secured by FSB's stock in the
FHLB and their 1-4 family first mortgage loans. FSB may draw additional
advances up to 75% of the outstanding balance of these residential loans
based on an agreement with the FHLB.
The fair values of the FHLB advances at December 31, 1994 and 1993 are
$4,868,000 and $5,018,000, respectively.
-16-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(8) Shareholders' Equity
--------------------
The Company has a Stock Option Plan under which a maximum of 231,295 shares
of common stock have been reserved. The Company granted stock options for
the purchase of 20,000, 5,000 and 54,168 shares of common stock during
1994, 1993 and 1992, respectively. The 1994 options were granted to key
employees at a price of $13 which approximated market value at the grant
date. In addition, 1,333 and 78,889 shares under option were exercised in
1994 and 1993, respectively, at exercise prices of $10.13 and $2.25 per
share. At December 31, 1994, options on 139,165 shares were outstanding,
with an average exercise price of $10.45. The Plan contains certain stock
appreciation rights whereby the Company would pay in cash or stock an
amount up to 200% of the fair market value at the date of exercise over
the fair market value at the grant date. Exercise of either the stock
options or the stock appreciation rights precludes exercise of the other.
Included in salaries and employee benefits expense for 1994 and 1992 was
approximately $4,000 and $9,000, respectively, related to the exercise of
stock appreciation rights by officers of the Company. There were no stock
appreciation rights exercised in 1993. Compensation expense is not being
recorded on the unexercised stock appreciation rights since, in management's
opinion, there is a higher probability that the stock options will be
exercised.
Dividends to be paid by bank subsidiaries are the primary source of funds
available to the Company for payment of dividends to its shareholders and
for other working capital needs. Statutes and limitations impose
restrictions on the amount of dividends that may be declared by each of
the bank subsidiaries. These restrictions are based on the level of
regulatory capital and retained net earnings in prior years.
The loan agreement covering the Company's $2,500,000 note payable restricts
the payment of dividends by bank subsidiaries to the amount as permitted by
the regulators and requires that the subsidiaries remain in compliance with
certain capital levels specified in the loan agreement. The loan agreement
further restricts the payment of cash dividends by the Company to its
stockholders. In any year, the Company may not, without advance approval by
the lender, pay dividends which together with the dividends paid in the
preceding two years, exceed 25% of consolidated net earnings for the three
year period.
(9) Interest Expense
----------------
Interest expense for December 31, 1994, 1993 and 1992 is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest-bearing demand deposits $1,864,291 2,052,980 2,518,911
Savings deposits 245,136 319,411 356,285
Time deposits 3,804,132 2,991,067 4,214,241
Notes payable 211,187 175,861 152,244
Other 413,541 536,117 341,851
--------- --------- ---------
$6,538,287 6,075,436 7,583,532
========= ========= =========
</TABLE>
-17-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(10) Income Taxes
------------
The Company changed its method of accounting for income taxes effective
January 1, 1993. The adoption of SFAS 109 resulted in a cumulative effect
of $601,000 primarily from the recognition of a portion of the
consolidated net deferred tax asset of AmeriCorp and subsidiary. The
entire cumulative effect adjustment was used to eliminate goodwill in
1993. The components of income tax expense for the years ended
December 31, 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current $ 816,467 686,585 472,000
Deferred (37,440) (50,285) (40,800)
Utilization of net operating loss carryforwards 266,000 20,000 -
Change in valuation allowance (1,126,664) (312,565) -
---------- -------- -------
$ (81,637) 343,735 431,200
========== ======== =======
</TABLE>
The differences between the provision for income taxes and the amount
computed by applying the statutory federal income tax rate to earnings
before taxes and minority interest in (earnings) loss of subsidiary are as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current "expected" tax expense $ 951,000 775,000 444,000
Reduction in deferred tax asset
valuation allowance (1,126,664) (312,565) -
Tax-exempt interest (47,000) (57,000) (80,500)
Other 141,027 (61,700) (67,700)
---------- -------- -------
$ (81,637) 343,735 431,200
========== ======== =======
</TABLE>
-18-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(10) Income Taxes, continued
-----------
The following summarizes the sources and expected tax consequences of future
taxable deductions (income) which comprise the net deferred tax assets as of
December 31, 1994 and 1993, as well as the changes in the valuation
allowance account during 1994. The net deferred tax assets are included
as components of other assets within the consolidated balance sheets.
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C> <C>
Gross deferred income tax assets:
Allowance for loan losses $ 286,500 203,100
Unrealized losses on investment securities
available for sale 73,260 -
Other real estate 72,000 71,200
State tax credits 77,268 123,501
Net operating losses 2,341,900 2,607,900
Other 40,622 69,788
---------- ---------
Total gross deferred income tax assets 2,891,550 3,075,489
Less valuation allowance (556,759) (1,683,423)
---------- ----------
Net deferred income tax assets 2,334,791 1,392,066
Gross deferred income tax liabilities:
Premises and equipment (221,000) (233,000)
Accumulated accretion (18,000) (34,600)
---------- ---------
Total gross deferred income tax liabilities (239,000) (267,600)
---------- ---------
Net deferred tax asset $2,095,791 1,124,466
========== =========
</TABLE>
AmeriCorp and AmeriBank file separate consolidated Federal and State of
Georgia income tax returns. AmeriCorp has consolidated Federal and Georgia
tax net operating losses approximating $6,100,000 and $9,000,000 at December
31, 1994, which begin to expire in 2002.
The deferred tax asset valuation allowance reflects management's estimate of
future tax benefits from consolidated AmeriCorp operating loss carryforwards
and State of Georgia credits, included in the total deferred tax asset,
which are more likely than not to be realized based on the weight of
available evidence.
(11)Commitments and Contingencies
-----------------------------
The Banks are parties to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of their
customers. These financial instruments include commitments to extend
credit and standby letters of credit. Those instruments involve, to
varying degrees, elements of credit risk in excess of the amount recognized
in the balance sheet. The contractual amounts of those instruments reflect
the extent of involvement the Banks have in particular classes of
financial instruments.
The Banks' exposure to credit loss in the event of non-performance 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. The Banks use the same credit policies in making commitments
and conditional obligations as they do for on-balance-sheet instruments.
-19-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(11)Commitments and Contingencies, continued
-----------------------------
In most cases, the Banks require collateral or other security to support
financial instruments with credit risk.
<TABLE>
<CAPTION>
Approximate
Contractual Amount
------------------
1994 1993
---- ----
<S> <C> <C>
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $ 10,936,000 10,969,000
Standby letters of credit 1,782,000 131,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments may
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Banks evaluate each
customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary, upon extension of credit is
based on management's credit evaluation. Collateral held varies but may
include unimproved and improved real estate, certificates of deposit, or
personal property.
Standby letters of credit are conditional commitments issued by the Banks to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers. The extent of collateral
held for those commitments at December 31, 1994 varies.
During 1992, the Company entered into two three (3) year interest rate swap
agreements with a bank to manage its exposure to short-term interest rate
fluctuations. The swap agreements are used to fix the interest margins on
certain fixed-rate loans. Interest rate swap agreements involve the
exchange of interest obligations on fixed and floating interest rate debt
without the exchange of the underlying principal amounts. The notional
amounts of the two agreements aggregate $10,000,000. Notional amounts are
used to express the volume of these transactions, however, they do not
represent cash flows and the amounts subject to credit risk are much
smaller. This arrangement effectively fixes a portion of the Company's
interest-bearing liabilities at rates of 6.56% and 5.59%, respectively.
The fair value (the amount the Company would pay to terminate the
agreements) of interest rate swaps at December 31, 1993 approximates
$287,000. At December 31, 1994, the fair value (the amount the Company
would receive upon termination of the agreements) approximates $51,000.
The Company leases its administrative office under an operating lease
arrangement. Approximate future minimum lease payments required for all
operating leases having a remaining term in excess of one year at December
31, 1994, are as follows:
<TABLE>
<S> <C>
1995 $ 82,000
1996 7,000
---------
$ 89,000
=========
</TABLE>
Rental expense was approximately $109,000, $109,000 and $102,000 for 1994,
1993 and 1992, respectively.
-20-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(12)Related Party Transactions
--------------------------
In the normal course of business, executive officers and directors of the
Company and certain business organizations and individuals associated with
them, maintain a variety of banking relationships with the Banks.
Transactions with executive officers and directors are made on terms
comparable to those available to other bank customers. The following table
summarizes related party loan activity during 1994:
<TABLE>
<S> <C>
Beginning balance $ 672,000
New loans 1,520,000
Repayments (282,000)
----------
Ending balance $1,910,000
==========
</TABLE>
The operating lease described in note 11 is with the Company's Chairman of
the Board. The lease term extends through January, 1996 and is renewable
for eight (8) years at that time. Rental expense under this agreement
approximated $82,000 in 1994 and will amount to approximately $82,000
annually thereafter.
(13)Subsequent Event
----------------
The Company entered into an agreement with certain shareholders of Effingham
Bank & Trust ("Effingham"), effective August 28, 1995, to purchase 76,850
Effingham common shares for $922,200, contingent upon certain events.
Effective September 8, 1995, the Company and Effingham entered into an
agreement whereby the Company agreed to purchase the remaining outstanding
Effingham common shares in exchange for approximately 146,044 shares of
Company common stock. In order for the merger to be effected, the Effingham
shareholders and the regulators must approve the transaction and the Company
must complete a public registration of its shares to be tendered.
Management expects the merger to occur during the first quarter of 1996;
however, there is no certainty that the transaction will be consummated
within that time frame.
The Company entered into an agreement with AmeriCorp's Board of Directors,
effective November 15, 1995, to purchase the remaining outstanding AmeriCorp
common shares in exchange for approximately 154,391 shares of Company common
stock. In order for the agreement to be effected, the AmeriCorp
shareholders and the regulators must approve the transaction and the
Company must complete a public registration of its shares to be tendered.
Management expects the merger to occur during the first quarter of 1996;
however, there is no certainty that the transaction will be consummated
within that time frame.
-21-<PAGE>
(14) Bank Corporation of Georgia (Parent Company Only) Financial Information
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
Balance Sheets
December 31, 1994 and 1993
Assets
------
1994 1993
---- ----
<S> <C> <C>
Cash $ 186,209 404,921
Accrued dividend receivable 72,837 75,517
Investments in common stock of subsidiaries 14,831,321 12,584,667
Investment in preferred stock of subsidiary 3,641,900 3,356,300
Other assets 891,007 1,579,312
----------- ----------
$19,623,274 18,000,717
=========== ==========
Liabilities and Shareholders' Equity
------------------------------------
Accrued expenses and other liabilities $ 500,366 294,792
Notes payable 2,800,899 3,520,904
--------- ---------
Total liabilities 3,301,265 3,815,696
Shareholders' equity 16,322,009 14,185,021
---------- ----------
$ 19,623,274 18,000,717
========== ==========
</TABLE>
-22-<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(14)Bank Corporation of Georgia (Parent Company Only) Financial Information,
-----------------------------------------------------------------------
continued
Statements of Earnings
For the Years Ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Income:
Dividends from subsidiaries $3,473,425 662,242 4,627,845
Management fees 420,000 677,652 627,600
Interest 843 39,432 46,599
Other - 3,689 2,911
--------- --------- ---------
Total income 3,894,268 1,383,015 5,304,955
--------- --------- ---------
Expenses:
Interest 211,187 175,861 152,244
Salaries and employee benefits 575,516 459,840 403,942
Other 398,944 320,102 519,816
--------- --------- ---------
Total expenses 1,185,647 955,803 1,076,002
--------- --------- ---------
Earnings before income tax
benefit and equity in undistributed
earnings of subsidiaries 2,708,621 427,212 4,228,953
Income tax benefit 300 104,300 119,900
--------- --------- ---------
Earnings before equity in
undistributed earnings of subsidiaries 2,708,921 531,512 4,348,853
Dividends received in excess
of earnings of subsidiaries (479,521) - (3,233,453)
Equity in undistributed
earnings of subsidiaries - 1,298,478 -
--------- --------- ----------
Net earnings $2,229,400 1,829,990 1,115,400
========= ========= =========
</TABLE>
-23-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(14)Bank Corporation of Georgia (Parent Company Only) Financial Information,
------------------------------------------------------------------------
continued
<TABLE>
<CAPTION>
Statements of Cash Flows
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $2,229,400 1,829,990 1,115,400
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Equity in undistributed earnings of subsidiaries - (1,298,478) -
Dividends received in excess of earnings of
subsidiaries 479,521 - 3,233,453
Change in accrued dividend receivable 2,680 (6,062) 7,749
Preferred stock dividends in kind (285,600) (286,200) (285,600)
Amortization 128,387 68,541 221,882
Investment in common stock of Americorp, Inc.,
including deferred tax asset of $162,345
for 1993 and goodwill of $241,778 for 1992,
received in satisfaction of management fee
and interest income - (295,351) (329,715)
Change in accrued expenses and other liabilities 205,574 265,925 (91,775)
--------- ---------- ---------
Net cash provided by operating
activities 2,759,962 278,365 3,871,394
--------- --------- ---------
Cash flows from investing activities:
Proceeds from sale of premises and equipment - 100,000 -
Investment in bank subsidiaries (2,087,533) (502,301) (3,500,000)
Other (203,714) (85,403) 33,678
--------- --------- ----------
Net cash used by investing activities (2,291,247) (487,704) (3,466,322)
Cash flows from financing activities:
Proceeds from (repayment of) notes payable (500,000) 500,000 (500,000)
Proceeds from issuance of common stock 13,497 177,500 25,000
Purchase of treasury stock (93,600) (25,940) -
Sale of treasury stock - 8,000 -
Dividends paid (107,324) (53,998) (49,576)
--------- -------- --------
Net cash provided (used) by financing
activities (687,427) 605,562 (524,576)
--------- -------- ---------
</TABLE>
-24-
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(14)Bank Corporation of Georgia (Parent Company Only) Financial Information,
-----------------------------------------------------------------------
continued
Statements of Cash Flows, continued
For the Years Ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net increase (decrease) in cash $ (218,712) 396,223 (119,504)
Cash at beginning of year 404,921 8,698 128,202
--------- ------- -------
Cash at end of year $ 186,209 404,921 8,698
========= ======= =======
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ 153,753 181,417 177,818
Income taxes $ 990,000 502,000 602,000
Supplemental schedule of noncash investing and
financing activities:
Investment in common stock of AmeriCorp, Inc.
received in satisfaction of management
fee and accrued interest receivable $ - - 35,052
Investment in common stock of AmeriCorp, Inc.
received in satisfaction of note receivable $ - 500,000 -
Investment in Middle Georgia in exchange for land $ - 50,000 -
Change in AmeriCorp deferred tax asset valuation
allowance applied to reduce goodwill $ 763,632 - -
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED BALANCE SHEETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994
ASSETS
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ -------------------
<S> <C> <C>
Cash and due from banks $7,586,272 $6,826,820
Interest bearing deposits with banks --- ---
Federal funds sold 10,906,671 12,379,801
Investment securities: Available for sale 38,733,285 13,753,669
Held to maturity 134,706 11,144,213
------------------ -------------------
38,867,991 24,897,882
------------------ -------------------
Loans: 158,620,862 146,291,891
Less: Unearned discount (692,609) (825,774)
Allowance for possible loan losses (2,375,227) (2,057,222)
------------------ -------------------
Loans, net 155,553,026 143,408,895
Bank premises and equipment 6,924,674 6,147,624
Accrued interest receivable 2,024,873 1,533,126
Goodwill 400,327 423,875
Other assets 4,882,514 4,885,516
------------------ -------------------
$227,146,348 $200,503,539
================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
Demand $28,824,976 $22,606,160
Interest bearing demand 52,593,257 55,540,429
Savings 7,328,338 7,855,482
Time 107,691,106 86,816,623
------------------ -------------------
Total deposits 196,437,677 172,818,694
Accounts payable and accrued expense 2,438,286 1,448,100
Other borrowed money 5,270,809 7,120,904
Long-term debt 2,500,000 2,500,000
------------------ -------------------
Total liabilities 206,646,772 183,887,698
Minority interests in subsidiary 1,270,925 485,702
Stockholders' equity:
Common stock 1,894,846 1,082,833
Capital surplus 12,649,954 1,281,772
Retained earnings 4,683,851 13,765,534
------------------ -------------------
Total stockholders' equity 19,228,651 16,130,139
------------------ -------------------
$227,146,348 $200,503,539
================== ====================
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ -------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $2,299,045 $1,881,588
Adjustments to reconcile net earnings to net cash
provided from operating activities:
Depreciation 433,404 417,032
Amortization and accretion, net (91,496) 262,233
Minority interests in earnings (loss) of subsidiary 368,155 217,278
Provision for loan and real estate owned losses 335,004 357,000
Loss(gain) on sale of investment securities (1,477) (13,099)
Gain on sale of banking unit --- (178,544)
Change in:
Other assets (791,647) (1,153,295)
Other liabilities 533,342 (8,783)
------------------ -------------------
Net cash provided by operating activities 3,084,330 1,781,410
------------------ -------------------
Cash flows from investing activities:
Proceeds from maturities of investment securities 18,026,777 19,579,651
Proceeds from sales of investment securities 1,944,318 6,500,000
Purchase of investment securities (19,680,743) (20,395,524)
Net increase in loans (14,547,885) (6,418,533)
Purchases of premises and equipment (905,633) (880,238)
Cash paid upon sale of banking unit --- (2,403,458)
------------------ -------------------
Net cash provided (used) by investing activities (15,163,166) (4,018,102)
------------------ -------------------
Cash flows from financing activities:
Net increase in deposits 7,114,982 4,444,378
Net increase in Federal funds purchased --- 1,750,000
Repayment of notes payable --- (500,000)
Dividends paid (191,161) ---
Proceeds from issuance of common stock --- 13,497
Purchase of treasury stock --- (93,600)
------------------ -------------------
Net cash provided (used) by financing activities 6,923,821 5,614,275
------------------ -------------------
Net increase in cash and cash equivalents (5,155,015) 3,377,583
Cash and cash equivalents at beginning of period 23,647,958 15,829,038
------------------ -------------------
Cash and cash equivalents at end of period $18,492,943 $19,206,621
================== ===================
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ ------------------
<S> <C> <C>
Interest income:
Interest and fees on loans $12,319,323 $10,314,405
Interest on federal funds sold 432,946 355,714
Interest on investment securities: 2,248,606 1,084,998
------------------ ------------------
Total interest income 15,000,875 11,755,117
------------------ ------------------
Interest expense:
Interest on NOW and money market
accounts 1,339,096 1,382,879
Interest on savings and time deposits 4,599,971 2,868,636
Other borrowings 275,583 477,748
------------------ ------------------
Total interest expense 6,214,650 4,729,263
------------------ ------------------
Net interest income 8,786,225 7,025,854
Provision for possible loan losses 335,004 357,000
------------------ ------------------
Net interest income after provision
for possible loan losses 8,451,221 6,668,854
------------------ ------------------
Other operating income:
Service charge on deposit accounts 795,367 786,305
Securities gains (losses) 1,477 (14,389)
Gain on sale of SBA loans 17,016 64,757
Other 871,747 1,494,914
------------------ ------------------
Total other operating income 1,685,607 2,331,587
------------------ ------------------
Other operating expense:
Salaries and employee benefits 3,951,768 3,532,577
Occupancy 520,382 549,994
Equipment 493,063 453,209
Other operating expense 1,861,804 2,027,402
------------------ ------------------
Total other operating expense 6,827,017 6,563,182
------------------ ------------------
Earnings before income taxes & minority 3,309,811 2,437,259
interests
Income tax expense (benefit) 748,300 336,700
------------------ ------------------
Earnings before minority interests 2,561,511 2,100,559
Minority interests 262,466 218,971
------------------ ------------------
Net earnings $2,299,045 $1,881,588
================== ===================
</TABLE>
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
Notes to Financial Statements
(Unaudited)
(1) Basis of Presentation
The financial information furnished herein reflects all
adjustments which are, in the opinion of management,
necessary to present a fair statement of the results of
operations and financial position for the periods covered
herein. All such adjustments are of a normal, recurring
nature.
(2) Dividends
On March 31, 1995, Bank Corporation of Georgia ("BCG") paid
a 75% stock dividend to its stockholders of record as of
February 28, 1995.
In addition, BCG declared a cash dividend of $.10 per share
for stockholders of record as of September 15, 1995. The
dividend was recorded as a reduction of stockholders' equity
at September 30, 1995.
(3) Acquisitions
In July, 1995 BCG entered into definitive agreements to
purchase all of the outstanding stock of Effingham Bank &
Trust ("Effingham"). The transaction will include the
payment of cash to certain shareholders, and the remainder
of the shareholders of Effingham will receive BCG stock in
exchange for their current shares. The transaction is
subject to regulatory approval and approval of the
shareholders of Effingham.
On November 15, 1995, BCG entered into a definitive
agreement to purchase the remaining shares of Americorp,
Inc. ("Americorp") that BCG does not already own, or
approximately 33.3% of the outstanding shares of Americorp.
The transaction would exchange BCG stock for Americorp
stock. The transaction is subject to regulatory approval
and approval of the shareholders of Americorp in addition to
BCG.
On October 18, 1995, Ameribank, N.A., a wholly owned
subsidiary of Americorp, entered into an agreement to
purchase substantially all of the assets and assume
substantially all of the liabilities of a branch of another
financial institution. The transaction is subject to
regulatory approval and consummation of another transaction
involving the financial institution.<PAGE>
(4) Impaired Loans
--------------
As of January 1, 1995, BCG adopted, and accounts for impaired loans
in accordance with, Statement of Financial Accounting Standards (SFAS) No.
114, "Accounting by Creditors for Impairment of a Loan", amended for SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure." A loan is impaired when, based on current
information and events, it is probably that all amounts due according to
the contractual terms of the loan agreement will not be collected. SFAS
No. 114 requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, which is the contractual interest rate adjusted for any
deferred loan fees or cost, premium or discount existing at the inception
or acquisition of the loan, or at the loan's observable market price, or
at the fair value of the collateral of the loan if the loan is collateral
dependent. SFAS No. 118 amends SFAS No. 114 to require information about
the recorded investment in certain impaired loans and eliminates its
provisions regarding how a creditor should report income on an impaired
loan. SFAS No. 118 allows creditors to use existing methods for recognizing
income in impaired loans, including methods used by certain industry
regulators. As of the date of adoption, and as of September 30, 1995,
the impact of SFAS 114 and SFAW 118 is not material to BCG's
financial statement.
(5) Recent Accounting Pronouncements
--------------------------------
The Financial Accounting Standards Board (the "FASB")
recently issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." SFAS 121 establishes accounting standards
for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and
certain indentifiable intangibles to be disposed of. SFAS
121 is effective for financial statements for fiscal years
beginning after December 15, 1995 with early adoption
permitted. Presently, BCG is unable to determine the impact
that adoption of SFAS 121 will have on the consolidated
financial statements, but management anticipates that the
impact will not be material.<PAGE>
EFFINGHAM BANK & TRUST
Financial Statements
December 31, 1994 and 1993
(with Independent Accountants' Report thereon)
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Effingham Bank & Trust:
We have audited the accompanying balance sheet of Effingham Bank & Trust as of
December 31, 1994, and the related statements of operations, changes in
stockholders' equity and cash flows for the year then ended. 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 audit. The
financial statements as of December 31, 1993 and for the year then ended were
audited by other auditors whose report dated March 5, 1994 expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Effingham Bank & Trust as of
December 31, 1994, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
As discussed in note 1 of the financial statements, the Bank changed its method
of accounting for investment securities during 1994.
EVANS, PORTER, BRYAN & CO.
/s/ Evans, Porter, Bryan & Co.
Atlanta, Georgia
April 11, 1995, except for note 10 as to
which the date is September 8, 1995
-1-
<PAGE>
<PAGE>
Independent Auditor's Report
-----------------------------
The Board of Directors
Effingham Bank & Trust
Post Office Box 1370
Rincon, Georgia 31326
We have audited the accompanying statements of condition of
Effingham Bank & Trust as of December 31, 1993, and the related
statements of income, changes in shareholders' equity, and cash
flows for the year then ended. 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
audit. The financial statements of Effingham Bank & Trust as of
December 31, 1992, were audited by other auditors whose report
dated February 5, 1993 expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Effingham Bank & Trust at December 31, 1993, and the results of
their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.
/s/ Wilson, Corbit & Kessler
March 5, 1994<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Balance Sheets
December 31, 1994 and 1993
Assets
------
1994 1993
---- ----
<S> <C> <C>
Cash and due from banks $ 1,552,438 2,939,881
Federal funds sold 890,000 2,520,000
----------- ---------
Cash and cash equivalents 2,442,438 5,459,881
Securities available for sale (amortized cost
$3,304,826) (note 2) 3,159,285 -
Securities held to maturity (market value $1,371,406
and $5,326,934) (note 2) 1,499,216 5,312,310
Other investments 129,836 -
Loans, net (note 3) 15,633,788 9,868,686
Premises and equipment, net (note 4) 1,309,016 1,210,928
Accrued interest receivable 131,412 117,246
Other assets 173,171 224,533
------------ ----------
$ 24,478,162 22,193,584
============ ==========
Liabilities and Stockholders' Equity
------------------------------------
Deposits:
Demand $ 3,023,335 3,553,626
Interest-bearing demand 4,830,049 6,568,943
Savings 1,731,159 1,797,698
Time 12,784,869 8,128,035
------------ ----------
Total deposits 22,369,412 20,048,302
Accrued interest payable 73,306 15,354
Other liabilities 57,337 135,645
------------ ----------
Total liabilities 22,500,055 20,199,301
------------ ----------
Commitments (note 7)
Stockholders' equity (notes 8 and 9):
Common stock, par value $5, authorized
10,000,000 shares, issued and outstanding
324,905 shares 1,624,525 1,624,525
Additional paid-in capital 1,604,298 1,604,298
Accumulated deficit (1,154,660) (1,234,540)
Unrealized loss on securities available for
sale, net of tax (96,056) -
----------- -----------
Total stockholders' equity 1,978,107 1,994,283
----------- -----------
$24,478,162 22,193,584
=========== ==========
See accompanying notes to financial statements.
</TABLE>
-2-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Statements of Operations
For the Years Ended December 31, 1994 and 1993
1994 1993
---- ----
<S> <C> <C>
Interest income:
Interest and fees on loans $ 1,455,290 1,210,588
Interest on federal funds sold 26,973 104,032
Interest on investment securities 273,571 165,339
---------- ---------
Total interest income 1,755,834 1,479,959
---------- ---------
Interest expense:
Interest-bearing demand deposits 120,167 167,612
Savings deposits 46,211 58,605
Time deposits 486,454 487,035
Federal funds purchased 55,766 -
---------- ----------
Total interest expense 708,598 713,252
---------- ----------
Net interest income 1,047,236 766,707
Provision for loan losses (note 3) - 173,000
---------- ----------
Net interest income after provision for
loan losses 1,047,236 593,707
---------- ----------
Other income:
Service charges 327,529 198,521
Securities gains, net 4,984 -
Miscellaneous 20,880 10,911
---------- ----------
Total other income 353,393 209,432
----------- ----------
Other expenses:
Salaries and employee benefits 624,326 621,765
Occupancy 219,263 158,920
Other operating 546,844 496,400
---------- ----------
Total other expenses 1,390,433 1,277,085
----------- ----------
Earnings (loss) before income taxes 10,196 (473,946)
Income tax benefit (note 5) 69,684 -
----------- ---------
Net earnings (loss) $ 79,880 (473,946)
=========== =========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 1994 and 1993
Unrealized
Gain (Loss)
on Securities
Additional Available
Common Paid-In Accumulated for Sale,
Stock Capital Deficit Net of Tax Total
----- --------- ----------- -------------- ------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $ 1,614,525 1,598,298 (760,594) - 2,452,229
Stock bonus (note 9) 10,000 6,000 - - 16,000
Net loss - - (473,946) - (473,946)
----------- --------- ----------- ----------- ---------
Balance, December 31, 1993 1,624,525 1,604,298 (1,234,540) - 1,994,283
Cumulative effect of accounting
change for securities (note 1) - - - 15,272 15,272
Net earnings - - 79,880 - 79,880
Change in unrealized gain (loss)
on securities available for
sale, net of tax - - - (111,328) (111,328)
------------ ----------- ---------- --------- ---------
Balance, December 31, 1994 $ 1,624,525 1,604,298 (1,154,660) (96,056) 1,978,107
=========== ========= ========== ========== =========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Statements of Cash Flows
For the Years Ended December 31, 1994 and 1993
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 79,880 (473,946)
Adjustments to reconcile net earnings (loss) to net
cash provided (used) by operating activities:
Depreciation, amortization and accretion 100,790 71,736
Provision for loan losses - 173,000
Provision for estimated losses on other real estate - 23,029
Provision for deferred tax benefit (69,684) -
Gain on sale of investment securities (4,984) -
Loss on disposal of premises and equipment 4,099 -
Change in:
Accrued interest receivable (14,166) 45,149
Accrued interest payable 57,952 (7,772)
Other assets 530 (2,428)
Other liabilities (78,308) 129,203
--------- --------
Net cash provided (used) by operating activities 76,109 (42,029)
--------- --------
Cash flows from investing activities:
Purchases of securities available for sale (1,248,692) -
Purchases of securities held to maturity - (4,800,542)
Proceeds from sales of securities available for sale 719,742 -
Proceeds from maturities of securities available for sale 1,048,000 -
Proceeds from maturities of securities held to maturity - 2,407,000
Purchases of other investments (129,836) -
Net change in loans (5,595,102) 2,460,723
Purchases of premises and equipment (212,976) (80,820)
Proceeds from sales of premises and equipment 4,202 139,779
---------- ----------
Net cash provided (used) by investing activities (5,414,662) 126,140
---------- ----------
Cash flows from financing activities:
Net change in demand and savings (2,335,724) 3,359,688
Net change in time deposits 4,656,834 (3,001,001)
Proceeds from issuance of common stock - 16,000
---------- ----------
Net cash provided by financing activities 2,321,110 374,687
---------- ----------
Net increase (decrease) in cash and cash equivalents (3,017,443) 458,798
Cash and cash equivalents at beginning of year 5,459,881 5,001,083
---------- ----------
Cash and cash equivalents at end of year $2,442,438 5,459,881
========= =========
</TABLE>
-5-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Statements of Cash Flows, continued
For the Years Ended December 31, 1994 and 1993
1994 1993
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 650,646 721,024
Noncash investing and financing activities:
Transfer of loans to other real estate $ 13,750 182,516
Financed portion of sales of other real estate $ 170,000 -
Change in unrealized loss on securities
available for sale, net of tax $ 96,056 -
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
The accounting and reporting policies of Effingham Bank & Trust
(the Bank) conform with generally accepted accounting principles
and with general practice within the banking industry. The following
is a summary of the significant policies and procedures.
Investment Securities
---------------------
Effective January 1, 1994 the Bank adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Under SFAS No. 115, the Bank
classifies its securities in one of three categories: trading, available
for sale, or held to maturity. Trading securities are bought and held
principally for sale in the near term. Held to maturity securities are
those securities for which the Bank has the ability and intent to hold
the securities until maturity. All other securities not included in
trading or held to maturity are classified as available for sale. At
December 31, 1994, the Bank has no trading securities.
Available for sale securities are recorded at fair value. Held to maturity
securities are recorded at cost, adjusted for the amortization or accretion
of premiums or discounts. Unrealized holding gains and losses, net of the
related tax effect, on securities available for sale are excluded from
earnings and are reported as a separate component of stockholders' equity
until realized. Transfers of securities between categories are recorded at
fair value at the date of transfer. Unrealized holding gains or losses
associated with transfers of securities from held to maturity to available
for sale are recorded as a separate component of stockholders' equity. The
unrealized holding gains or losses included in the separate component of
stockholders' equity for securities transferred from available for sale to
held to maturity are maintained and amortized into earnings over the
remaining life of the security as an adjustment to yield in a manner
consistent with the amortization or accretion of premium or discount on the
associated security.
A decline in the market value of any available for sale or held to maturity
investment below cost that is deemed other than temporary is charged to
earnings and establishes a new cost basis for the security.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to the yield. Realized gains and losses
for securities classified as available for sale and held to maturity are
included in earnings and are derived using the specific identification
method for determining the cost of securities sold.
In 1993, all investment securities were carried at cost, adjusted for
amortization of premiums and accretion of discounts.
Other Investments
-----------------
Other investments include equity securities with no readily determinable
fair value. These investment securities are carried at cost.
Loans and Allowance for Loan Losses
-----------------------------------
Loans are stated at principal amount outstanding, net of the allowance for
loan losses. Interest on loans is calculated by using the simple interest
method on daily balances of the principal amount outstanding.
Accrual of interest is discontinued on a loan when management believes,
after considering economic conditions and collection efforts, that the
borrower's financial condition is such that collection of interest is
doubtful. Interest previously accrued but not collected is reversed
against current period earnings when such loans are placed on non-accrual
status.
-7-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(1) Summary of Significant Accounting Policies, continued
------------------------------------------
Loans and Allowance for Loan Losses, continued
-----------------------------------
The allowance for loan losses is established through a provision for loan
losses charged to earnings. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the
principal is unlikely. The allowance represents an amount which, in
management's judgement, will be adequate to absorb probable losses on
existing loans that may become uncollectible.
Management's judgement in determining the adequacy of the allowance
is based on evaluations of the collectibility of loans. These evaluations
take into consideration such factors as changes in the nature and volume
of the loan portfolio, current economic conditions that may affect the
borrower's ability to pay, overall portfolio quality, and review of
specific problem loans.
While management uses available information to recognize losses on loans,
future additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the Bank's
allowance for loan losses. Such agencies may require the Bank to recognize
additions to the allowance based on judgements different than those of
management.
Premises and Equipment
----------------------
Premises and equipment are carried at depreciated cost. Depreciation is
computed using the straight-line method over the estimated useful lives of
the assets. When assets are retired or otherwise disposed, the cost and
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is reflected in income for the period. The cost of
maintenance and repairs is charged to income as incurred, whereas
significant renewals and betterments are capitalized.
Income Taxes
------------
Effective January 1, 1993, the Bank changed its method of accounting for
income taxes from the deferred method required under Accounting Principles
Board Opinion No. 11 to the asset and liability method required by SFAS No.
109. SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. Additionally, the accounting
standard requires the recognition of future tax benefits, such as net
operating loss carryforwards, to the extent that realization of such
benefits is more likely than not. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in
the years in which the assets and liabilities are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income tax expense in the period that
includes the enactment date.
In the event the future tax consequences of differences between the
financial reporting basis and the tax basis of the Bank's assets and
liabilities results in deferred tax assets, the standard requires an
evaluation of the probability of being able to realize the future benefits
indicated by such asset. A valuation allowance is provided for the portion
of the deferred tax asset when it is more likely than not that some portion
or all of the deferred tax asset will not be realized. In assessing the
realizability of the deferred tax assets, management considers the
scheduled reversals of deferred tax liabilities, projected future taxable
income, and tax planning strategies.
-8-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(1) Summary of Significant Accounting Policies, continued
------------------------------------------
Profit Sharing Plan
-------------------
The Bank has a contributory profit sharing plan which is available to
substantially all employees subject to certain age and service
requirements. Contributions to this plan by employees are voluntary;
however, the Company will match a percentage of the employee's contri-
butions. Contributions to this plan charged to expense for the years ended
December 31, 1994 and 1993 amounted to $11,001 and $10,905, respectively.
Reclassifications
-----------------
Certain 1993 amounts have been reclassified to conform with 1994
presentation.
(2) Investment Securities
---------------------
As more fully described in note 1, the Bank changed its method of
accounting for investment securities effective January 1, 1994. Investment
securities at December 31, 1994 and 1993 are as follows:
Securities Held to Maturity:
<TABLE>
<CAPTION>
December 31, 1994
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <S> <C> <C>
U.S. Treasury $ 499,343 - 12,937 486,406
U.S. Government Agency 999,873 - 114,873 885,000
---------- ------- ------- ---------
Total $1,499,216 - 127,810 1,371,406
========== ======= ======= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury $ 1,708,795 10,798 4,168 1,715,425
U.S. Government agency 1,797,282 10,022 - 1,807,304
Mortgage-backed securities 1,806,233 2,882 4,910 1,804,205
----------- -------- ------ ----------
Total $ 5,312,310 23,702 9,078 5,326,934
========= ====== ===== =========
</TABLE>
-9-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(2) Investment Securities, continued
--------------------
Securities Available for Sale:
<TABLE>
<CAPTION>
December 31, 1994
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Government agencies $1,048,679 - 45,773 1,002,906
Mortgage-backed securities 2,256,147 - 99,768 2,156,379
---------- --------- -------- -----------
Total $3,304,826 - 145,541 3,159,285
========= ========= ======== ===========
</TABLE>
The amortized cost and fair value of investment securities at December 31,
1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Securities Held Securities Available
to Maturity for Sale
December 31, 1994 December 31, 1994
------------------------ -----------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Total U.S. Treasury and
U.S. Government agencies:
Within 1 year $ 499,343 486,406 - -
1 to 5 years 500,000 451,719 1,048,679 1,002,906
5 to 10 years 499,873 433,281 - -
--------- -------- --------- ---------
$1,499,216 1,371,406 1,048,679 1,002,906
Mortgage-backed securities - - 2,256,147 2,156,379
--------- --------- --------- ---------
$1,499,216 1,371,406 3,304,826 3,159,285
========= ========= ========= =========
</TABLE>
Proceeds from sales of securities available for sale during 1994 were
$719,742. Gross gains of $6,479 and gross losses of $1,495 were realized on
those sales. There were no sales of investment securities during 1993.
Securities with a carrying value of approximately $1,650,000 and $1,700,000
at December 31, 1994 and 1993, respectively, were pledged to secure public
deposits or for other purposes.
-10-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(3) Loans
-----
Major classifications of loans at December 31, 1994 and 1993 are summarized
as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial $ 3,974,987 1,612,291
Real estate - mortgage 7,692,621 5,501,170
Real estate - construction 2,347,088 863,085
Consumer 1,848,344 2,085,791
---------- ----------
Total loans 15,863,040 10,062,337
Less allowance for loan losses 229,252 193,651
---------- ----------
Total net loans $15,633,788 9,868,686
========== ==========
</TABLE>
The Bank grants loans and extensions of credit primarily to individuals and
a variety of firms and corporations located in certain Georgia counties
including Effingham and Chatham. Although the Bank has a diversified loan
portfolio, a substantial portion of the loan portfolio is collateralized by
improved and unimproved real estate and is affected by the real estate
market.
Loans on which the accrual of interest has been discontinued or reduced
amounted to $127,000 at December 31, 1994. There were no nonaccrual loans at
December 31, 1993.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Balance at beginning of year $ 193,651 262,664
Amounts charged off (76,247) (274,941)
Recoveries on amounts previously charged off 111,848 32,928
Provision for loan losses - 173,000
-------- --------
Balance at end of year $ 229,252 193,651
======== ========
</TABLE>
(4) Premises and Equipment
----------------------
Major classifications of premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Land $ 342,194 342,194
Buildings and improvements 820,720 797,052
Furniture and equipment 548,544 368,815
--------- ---------
1,711,458 1,508,061
Less accumulated depreciation 402,442 297,133
--------- ---------
$1,309,016 1,210,928
========= =========
</TABLE>
Depreciation expense was $106,587 and $69,431 for the years ended December 31,
1994 and 1993.
-11-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(5) Income Taxes
------------
As discussed in note 1, the Bank changed its method of accounting for
income taxes effective January 1, 1993.
The components of income tax expense for the years ended December 31, 1994
and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Current $ - -
Deferred 571 (185,770)
Change in valuation allowance (70,255) 185,770
------- --------
Total income tax expense $(69,684) -
======= ========
</TABLE>
The differences between the provision for income taxes and the amount
computed by applying the statutory federal income tax rate to earnings before
income taxes for the year ended December 31, 1994 relate primarily to the
changes in the valuation allowance.
The following summarizes the sources and expected tax consequences of future
taxable deductions (income) which comprise the net deferred tax asset. The
deferred tax asset is included as a component of other assets at December 31,
1994 and 1993.
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred income tax assets:
Allowance for loan losses $ 23,054 30,602
Contribution carryforward 5,696 3,318
Unrealized loss on securities available
for sale 49,485 -
Federal tax loss carryforward 440,972 435,361
State tax loss carryforward 77,957 72,220
State tax credit carryforward 11,906 13,032
Other - 1,757
------- ------
Total gross deferred income tax assets 609,070 556,290
Less valuation allowance 434,491 504,746
------- -------
Net deferred income tax assets 174,579 51,544
------- -------
Deferred income tax liabilities:
Premises and equipment (55,411) (51,544)
Net deferred income tax asset $119,168 -
======== =======
</TABLE>
-12-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(5) Income Taxes, continued
------------
The valuation allowance of $434,491 at December 31, 1994 relates primarily to
the uncertainty regarding the future utilization of the Bank's operating loss
carryforwards. These remaining benefits will be recognized for financial
reporting purposes when the realization of such benefits is determined to be
more likely than not.
The Bank has federal and state tax loss carryforwards of approximately
$1,300,000 and $1,950,000 that may be used to offset future taxable income
and state tax credits of approximately $18,000 that can be used to offset
future state taxes payable. If not used, the carryforwards will expire as
follows:
<TABLE>
<CAPTION>
State Tax State Loss Federal Loss
Credits Carryforwards Carryforwards
--------- ------------- -------------
<C> <C> <C> <C>
1995 $ 2,946 - -
1996 3,951 - -
1997 5,268 - -
1998 4,107 - -
1999 1,767 - -
2000 - - -
2001 - - -
2002 - - -
2003 - 358,811 198,269
2004 - 227,875 120,131
2005 - 190,796 61,460
2006 - 486,346 358,941
2007 - - -
2008 - 541,673 541,673
2009 - 143,432 16,501
------- ---------- ---------
Totals $ 18,039 1,948,933 1,296,975
====== ========= =========
</TABLE>
(6) Related Party Transactions
--------------------------
The Bank conducts transactions with directors and executive officers,
including companies in which they have beneficial interests, in the normal
course of business. It is the policy of the Bank that loan transactions with
directors and officers be made on substantially the same terms as those
prevailing at the time made for comparable loans to other persons. The
following is a summary of activity for related party loans for 1994:
<TABLE>
<CAPTION>
<S> <C>
Beginning balance $ 578,000
New loans 180,000
Repayments (424,000)
---------
Ending balance $ 334,000
=======
</TABLE>
-13-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(7) Commitments
-----------
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, standby
letters of credit and financial guarantees. Those instruments involve, to
varying degrees, elements of credit risk in excess of the amount recognized
in the balance sheet. The contract amounts of those instruments reflect the
extent of involvement the Bank has in particular classes of financial
instruments.
Standby letters of credit and financial guarantees written are conditional
commitments issued by the Bank to guarantee the performance of a customer
to a third party. Those guarantees are primarily issued to businesses in the
Bank's delineated trade area. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities
to customers. The Bank holds real estate, equipment, automobiles and
customer deposits as collateral supporting those commitments for which
collateral is deemed necessary.
The 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 and financial guarantees written is represented
by the contractual amount of those instruments. The Bank uses the same
credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments.
In most cases, the Bank does require collateral or other security to support
financial instruments with credit risk.
<TABLE>
<CAPTION>
December 31,
Approximate
Contract Amount
----------------
1994 1993
---- ----
<S> <C> <C>
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $1,240,000 1,112,000
Standby letters of credit and
financial guarantees written $ 10,000 84,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments may
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. 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. Collateral held varies
but may include unimproved and improved real estate, certificates of
deposit, or personal property.
As of December 31, 1994, the Bank had a commitment for $195,000 relating
to a future branch site.
-14-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements, continued
(8) Stockholders' Equity
--------------------
During 1993, the Bank paid a bonus to certain employees in the form of
common stock. These employees received 2,000 shares of the Bank's common
stock which was previously authorized but unissued. Compensation expense was
charged for the estimated market value of the stock at the time the bonus
was approved. Common stock was increased by an amount equal to the par
value of the stock, and the difference was recorded as an increase in
additional paid-in capital.
Pursuant to their employment contracts, certain officers have been granted
options to acquire shares of common stock at option prices at least equal to
the fair value of the shares. A total of 22,500 shares are subject to these
options, at prices ranging from $6.50 to $15.00. These options expire after
ten years.
Banking regulations limit the amount of dividends that may be paid without
prior approval of the regulatory authorities. These restrictions are based
on the level of regulatory classified assets, the prior year's net
earnings, and the ratio of equity capital to total assets. Currently, the
Bank is not allowed to impair capital by the payment of dividends.
(9) Convertible Subordinated Debentures
-----------------------------------
The Bank's Board of Directors has approved an offering of a maximum of
$2,000,000 in aggregate principal amount of 7% fixed rate convertible
subordinated debentures. The debentures pay interest monthly, commencing on
the six month anniversary of the issue date, and have a maturity date seven
years after issuance. The holders of the debentures may convert at any time
into common stock of the Bank at a conversion price of the book value of the
Bank as of the quarter-end prior to the issue date of the debenture plus
$.05.
The proceeds of the offering will be used to increase the capitalization of
the Bank.
(10)Subsequent Event
----------------
On September 8, 1995, the Bank's board of directors approved a merger
agreement whereby the Bank would be merged into and become a subsidiary of
Bank Corporation of Georgia ("BCG"), headquartered in Macon, Georgia. The
merger would be effected through the exchange of the Bank's common stock for
cash or common stock of BCG. For the merger to be effected, the Bank's
stockholders and regulators must approve the transaction, and BCG must
complete a public registration of its shares to be tendered with the merger.
Management expects the merger to occur during the fourth quarter of 1995;
however, there is no certainty that the transaction will be consummated
within that time frame or at all.
-15-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Balance Sheets
September 30, 1995 and 1994
(Unaudited)
Assets
------
1995 1994
---- ----
<S> <C> <C>
Cash and due from banks $ 1,401,793 2,117,725
Federal funds sold - 280,000
---------- ----------
Cash and cash equivalents 1,401,793 2,397,725
Securities available for sale 2,781,296 3,745,283
Securities held to maturity 1,498,996 997,526
Other investments 149,436 57,436
Loans, net 17,644,289 15,213,919
Premises and equipment, net 1,115,464 1,346,196
Accrued interest receivable 134,625 119,110
Other assets 116,487 257,776
---------- ----------
$ 24,842,386 24,134,971
========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Deposits:
Demand $ 3,648,026 3,258,960
Interest-bearing demand 3,213,574 3,838,123
Savings 1,653,345 1,788,778
Time 13,079,956 12,168,305
---------- ----------
Total deposits 21,594,901 21,054,166
Accrued interest payable 166,827 55,780
Other borrowings 1,100,000 1,000,000
Other liabilities 73,012 30,967
---------- ----------
Total liabilities 22,934,740 22,140,913
---------- ----------
Stockholders' equity:
Common stock, par value $5, authorized 10,000,000 shares,
issued and outstanding 326,905 and 324,905 shares 1,634,525 1,624,525
Additional paid-in capital 1,607,298 1,604,298
Accumulated deficit (1,285,302) (1,193,823)
Unrealized loss on securities available for sale, net of tax (48,875) (40,942)
---------- ----------
Total stockholders' equity 1,907,646 1,994,058
$ 24,842,386 24,134,971
========== ==========
</TABLE>
See accompanying accountants' compilation report.
-2-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Statements of Operations
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
1995 1994
---- ----
<S> <C> <C>
Interest income:
Interest and fees on loans $ 1,460,364 1,017,833
Interest on federal funds sold 26,813 15,253
Interest on investment securities 201,924 207,176
---------- ----------
Total interest income 1,689,101 1,240,262
---------- ----------
Interest expense:
Interest-bearing demand deposits 92,796 88,984
Savings deposits 35,797 34,723
Time deposits 577,694 320,990
Federal funds purchased 25,502 50,477
---------- ---------
Total interest expense 731,789 495,174
---------- ---------
Net interest income 957,312 745,088
Provision for loan losses 20,000 -
---------- ---------
Net interest income after provision for loan losses 937,312 745,088
---------- ---------
Other income:
Service charges 208,106 208,568
Securities gains (losses), net (12,243) 5,562
Miscellaneous 36,540 49,500
---------- ---------
Total other income 232,403 263,630
---------- ---------
Other expenses:
Salaries and employee benefits 563,282 423,139
Occupancy 175,663 149,360
Loss on disposition of fixed assets 57,701 -
Other operating 503,711 395,502
---------- ---------
Total other expenses 1,300,357 968,001
---------- ---------
Net earnings (loss) $ (130,642) 40,717
========== =========
Net earnings (loss) per share $ (.40) .13
========== =========
Weighted average number of shares outstanding 325,905 324,905
</TABLE>
See accompanying accountants' compilation report.
-3-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Statements of Changes in Stockholders' Equity
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Unrealized
Gain (Loss)
on Securities
Additional Available
Common Paid-In Accumulated for Sale,
Stock Capital Deficit Net of Tax Total
------- --------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $ 1,624,525 1,604,298 (1,234,540) - 1,994,283
Cumulative effect of accounting
change for securities - - - 15,272 15,272
Change in unrealized gain (loss)
on securities available for
sale, net of tax - - - (56,214) (56,214)
Net earnings - - 40,717 - 40,717
---------- ---------- ---------- -------- ---------
Balance, September 30, 1994 1,624,525 1,604,298 (1,193,823) (40,942) 1,994,058
========== ========== ========== ======== =========
Balance, December 31, 1994 1,624,525 1,604,298 (1,154,660) (96,056) 1,978,107
Stock bonus 10,000 3,000 - - 13,000
Change in unrealized gain (loss)
on securities available for
sale, net of tax - - - 47,181 47,181
Net earnings - - (130,642) - (130,642)
---------- ---------- ---------- -------- ---------
Balance, September 30, 1995 $1,634,525 1,607,298 (1,285,302) (48,875) 1,907,646
========== ========== ========== ======== =========
</TABLE>
See accompanying accountants' compilation report.
-4-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EFFINGHAM BANK & TRUST
Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $(130,642) 40,717
Adjustments to reconcile net earnings to net
cash used by operating activities:
Depreciation, amortization and accretion 85,446 60,627
Provision for loan losses 20,000 -
Gain on sale of investment securities 12,243 (5,562)
Loss on disposal of premises and equipment 57,701 4,099
Change in:
Accrued interest receivable (3,213) (1,864)
Accrued interest payable 93,521 40,426
Other assets 32,377 (5,950)
Other liabilities 15,675 (104,678)
------- --------
Net cash provided by operating activities 183,108 27,815
-------- --------
Cash flows from investing activities:
Purchases of securities - (1,248,692)
Proceeds from sales/maturities of securities 438,063 1,762,305
Purchases of other investments (19,600) (57,436)
Net change in loans (2,030,501) (5,345,233)
Purchases of premises and equipment (31,345) (210,981)
Proceeds from sales of premises and equipment 81,141 4,202
---------- ----------
Net cash used by investing activities (1,562,242) (5,095,835)
---------- ----------
Cash flows from financing activities:
Net change in deposits (774,511) 1,005,864
Net change in other borrowings 1,100,000 1,000,000
Proceeds from issuance of common stock 13,000 -
---------- ---------
Net cash provided by financing activities 338,489 2,005,864
---------- ----------
Net decrease in cash and cash equivalents (1,040,645) (3,062,156)
Cash and cash equivalents at beginning of period 2,442,438 5,459,881
---------- ----------
Cash and cash equivalents at end of period $1,401,793 2,397,725
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 638,268 454,748
</TABLE>
See accompanying accountants' compilation report.
-5-
<PAGE>
<PAGE>
EFFINGHAM BANK & TRUST
Notes to Financial Statements
(Unaudited)
(1) Basis of Presentation
---------------------
The financial information furnished herein reflects all adjustments which
are, in the opinion of management, necessary to present a fair statement
of the results of operations and financial position for the periods
covered herein. All such adjustments are of a normal recurring nature.
(2) Acquisition
-----------
On June 15, 1995, the Board of Directors approved entering into a letter
of intent with Bank Corporation of Georgia (BCG), a multi-bank holding
company headquartered in Macon, Georgia. The transaction, as currently
contemplated, will include the payment of cash to certain shareholders and
the remainder will receive BCG stock in exchange for their current Bank
shares. The transaction is subject to regulatory and shareholder approval.
(3) Convertible Subordinated Debentures
-----------------------------------
The Board of Directors had previously approved an offering of up to
$2,000,000 in aggregate principal amount of 7% fixed rate convertible
subordinated debentures. As the pending acquisition discussed above will
satisfy the capital needs contemplated by the Board in their approval of
this debenture offering, the debentures will not be pursued subject to the
consummation of this transaction.
(4) Impaired Loans
--------------
As of January 1, 1995, Effingham adopted, and accounts for impaired loans
in accordance with, Statement of Financial Accounting Standards (SFAS) No.
114, "Accounting by Creditors for Impairment of a Loan", amended for SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure." A loan is impaired when, based on current
information and events, it is probably that all amounts due according to
the contractual terms of the loan agreement will not be collected. SFAS
No. 114 requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, which is the contractual interest rate adjusted for any
deferred loan fees or cost, premium or discount existing at the inception
or acquisition of the loan, or at the loan's observable market price, or
at the fair value of the collateral of the loan if the loan is collateral
dependent. SFAS No. 118 amends SFAS No. 114 to require information about
the recorded investment in certain impaired loans and eliminates its
provisions regarding how a creditor should report income on an impaired
loan. SFAS No. 118 allows creditors to use existing methods for recognizing
income on impaired loans, including methods used by certain industry
regulators. As of the date of adoption, and as of September 30, 1995,
the impact of SFAS 114 and SFAS 118 is not material to Effingham's
financial statements.
(5) Recent Accounting Pronouncements
--------------------------------
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" was issued in March 1995. SFAS No.
121 establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. This Statement is effective
for financial statements for fiscal years beginning after December 15,
1995. The Bank anticipates the adoption of SFAS No. 121 will not have a
material effect.
In May 1995 SFAS No. 122, "Accounting for Mortgage Servicing Rights" was
issued. SFAS No. 122 amends SFAS No. 65 to require that a mortgage banking
enterprise recognize as separate assets rights to service mortgage loans
for others, however those servicing rights are acquired. SFAS No. 122
applies prospectively in fiscal years beginning after December 15, 1995,
but is not expected to have a material effect on the Bank.
-6-<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(with Independent Accountants' Report thereon)
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
AmeriCorp, Inc.
Savannah, Georgia:
We have audited the accompanying consolidated balance sheets of
AmeriCorp, Inc. and subsidiary as of December 31, 1994 and 1993,
and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
AmeriCorp, Inc. and subsidiary as of December 31, 1994 and 1993 and
the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
As discussed in note 1 to the financial statements, the Company changed
its method of accounting for investment securities during 1994.
EVANS, PORTER, BRYAN & CO.
/s/ Evans, Porter, Bryan & Co.
Atlanta, Georgia
February 16, 1995, except for note 13 as to which the date is
November 15, 1995
-1-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1994 and 1993
Assets
------
1994 1993
---- ----
<S> <C> <C>
Cash and due from banks, including reserve
requirements of $153,000 and $158,000 $ 7,522,907 2,385,796
Federal funds sold - 2,950,000
----------- ----------
Cash and cash equivalents 7,522,907 5,335,796
Investment securities available for sale (note 3) 11,575,876 -
Investment securities held to maturity (market
value of $9,110,000) (note 3) - 9,093,528
Loans, net (note 4) 39,512,554 35,771,768
Premises and equipment (note 5) 2,370,675 2,510,966
Accrued interest receivable 418,980 248,458
Other real estate owned (note 6) 404,315 631,686
Deferred income taxes (note 8) 1,862,355 292,565
Other assets 631,003 479,918
----------- ----------
$ 64,298,665 54,364,685
========== ==========
Liabilities and Shareholders' Equity
------------------------------------
Deposits:
Demand $ 7,656,372 4,732,799
NOW and money-market accounts 21,486,848 24,492,615
Savings 518,168 432,427
Time 27,812,401 20,184,873
----------- -----------
Total deposits 57,473,789 49,842,714
----------- ----------
Accrued interest payable and other liabilities 474,394 360,318
----------- ----------
Total liabilities 57,948,183 50,203,032
----------- ----------
Commitments (note 9)
Shareholders' equity (notes 2 and 11):
Preferred stock, $100 par value, 40,000 shares
authorized;
36,419 and 33,563 shares issued and outstanding 3,641,900 3,356,300
Common stock, $.01 par value, 10,000,000 shares
authorized;
5,473,889 shares issued and outstanding 54,739 54,739
Surplus 8,864,333 8,864,333
Accumulated deficit (6,158,813) (8,113,719)
Net unrealized loss on investment securities
available for sale,
net of tax (51,677) -
----------- -----------
Total shareholders' equity 6,350,482 4,161,653
$ 64,298,665 54,364,685
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-2-<PAGE>
<TABLE>
<CAPTION>
AMERICORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 3,631,687 3,241,470 3,481,701
Interest on investment securities 429,619 190,750 233,999
Interest on federal funds sold - 155,841 104,190
Interest on deposits with other banks - - 137,818
Other interest income 142,056 18,784 -
--------- --------- ---------
Total interest income 4,203,362 3,606,845 3,957,708
--------- --------- ---------
Interest expense:
Interest on NOW and money-market accounts 732,222 766,975 791,978
Interest on savings and time deposits 1,067,879 887,593 1,382,251
Other - borrowings - 38,343 43,388
--------- --------- ---------
Total interest expense 1,800,101 1,692,911 2,217,617
--------- --------- ---------
Net interest income 2,403,261 1,913,934 1,740,091
Provision for loan losses (note 4) 19,000 50,597 (163,398)
--------- --------- ---------
Net interest income after provision for loan
losses 2,384,261 1,863,337 1,903,489
--------- --------- ---------
Other income:
Service charges on deposit accounts 235,601 185,109 214,765
Fee income 70,616 109,190 60,842
Securities gains (losses) (51,348) - 802
Other 342,065 377,077 174,439
---------- --------- ---------
Total other income 596,934 671,376 450,848
---------- --------- ---------
Other expenses:
Salaries and employee benefits 1,031,605 1,096,316 1,007,852
Occupancy 224,119 209,914 194,341
Equipment 180,753 176,465 174,773
Other operating expenses (note 12) 850,090 936,967 1,151,902
--------- --------- ---------
Total other expenses 2,286,567 2,419,662 2,528,868
--------- --------- ---------
Earnings (loss) before income taxes 694,628 115,051 (174,531)
Income tax benefit (note 8) 1,543,169 292,565 -
--------- --------- --------
Net income (loss) 2,237,797 407,616 (174,531)
Preferred dividend requirements (note 2) (282,891) (292,242) (277,845)
--------- --------- --------
Net income (loss) applicable to common shareholders $ 1,954,906 115,374 (452,376)
========= ========= ========
Income (loss) per common share $ .36 .04 (.19)
=========== ========= =======
Weighted average number of common shares outstanding 5,473,889 2,907,486 2,433,702
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders' Equity
For the Years Ended December 31, 1994, 1993 and 1992
Net
Unrealized
Gain (Loss)
On Investment
Securities
Available
Preferred Common Accumulated for Sale,
Stock Stock Surplus Deficit Net of Tax Total
--------- ------ ------- ----------- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $ 2,784,500 24,329 7,732,324 (7,776,717) - 2,764,436
Net loss - - - (174,531) - (174,531)
Issuance of preferred stock (note 2) 285,600 - - - - 285,600
Issuance of common stock (note 2) - 3,199 361,568 - - 364,767
Preferred stock dividends (note 2) - - - (277,845) - (277,845)
--------- ------ --------- ---------- ------- ---------
Balance, December 31, 1992 3,070,100 27,528 8,093,892 (8,229,093) - 2,962,427
Net income - - - 407,616 - 407,616
Issuance of preferred stock (note 2) 286,200 - - - - 286,200
Issuance of common stock (note 2) - 27,211 770,441 - - 797,652
Preferred stock dividends (note 2) - - - (292,242) - (292,242)
--------- ------ --------- ---------- ------- ---------
Balance, December 31, 1993 3,356,300 54,739 8,864,333 (8,113,719) - 4,161,653
Cumulative effect of accounting
change for investment securities,
net of tax (note 1) - - - - 10,872 10,872
Net income - - - 2,237,797 - 2,237,797
Issuance of preferred stock (note 2) 285,600 - - - - 285,600
Preferred stock dividends (note 2) - - - (282,891) - (282,891)
Change in unrealized loss on
investment securities available
for sale, net of tax (note 1) - - - - (62,549) (62,549)
--------- ------ -------- ---------- -------- ---------
Balance, December 31, 1994 $ 3,641,900 54,739 8,864,333 (6,158,813) (51,677) 6,350,482
========= ====== ========= ========== ======= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
-4-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,237,797 407,616 (174,531)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, amortization and accretion 172,065 212,072 237,527
Provision for loan losses 19,000 50,597 (163,398)
Provision for deferred taxes (1,543,169) (292,565) -
Provision for losses on other
real estate owned 49,582 5,000 164,115
Loss (gain) on sale of other real estate (2,348) 9,680 13,031
Gain on disposition of premises and equipment - (11,035) (1,276)
Loss (gain) on sale of investment securities 51,348 - (802)
Common stock issued in satisfaction of management
fee and interest expense - 295,351 329,715
Change in:
Interest receivable (170,522) 55,403 74,920
Interest payable 72,180 (64,617) (127,208)
Other assets (151,085) 61,337 (99,003)
Other liabilities 44,605 36,819 (708)
--------- -------- --------
Net cash provided by operating activities 779,453 765,658 252,382
--------- -------- --------
Cash flows from investing activities:
Net change in interest-bearing deposits with banks - 99,000 3,176,000
Proceeds from maturities of investment securities 5,255,973 8,402,304 1,543,515
Proceeds from sale of investment securities 4,721,110 - 1,001,094
Purchase of investment securities (12,585,430) (13,102,400) (3,030,045)
Net change in loans (3,824,334) (1,062,725) 328,647
Improvements to other real estate owned (28,187) (33,713) (1,650)
Proceeds from sale of other real estate owned 272,872 52,357 671,433
Proceeds from sale of premises and equipment - 12,200 3,150
Purchase of premises and equipment (35,421) (118,308) (28,789)
----------- ----------- ----------
Net cash provided (used) by investing
activities (6,223,417) (5,751,285) 3,663,355
----------- ----------- ----------
Cash flows from financing activities:
Net change in demand and savings 3,547 1,399,763 8,573,355
Net change in time deposits 7,627,528 2,346,967 (9,539,569)
Proceeds from issuance of common stock - 2,301 -
----------- ---------- ----------
Net cash provided (used) by financing
activities 7,631,075 3,749,031 (966,214)
----------- ---------- ---------
Increase (decrease) in cash and cash equivalents 2,187,111 (1,236,596) 2,949,523
Cash and cash equivalents at beginning of year 5,335,796 6,572,392 3,622,869
----------- ---------- ---------
Cash and cash equivalents at end of year $ 7,522,907 5,335,796 6,572,392
========= ========= =========
</TABLE>
-5-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows, continued
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Interest paid during year $1,727,921 1,719,829 2,344,825
Noncash investing and financing activities:
Transfer of investment securities to available for
sale upon adoption of SFAS 115 (note 1) $9,093,528 - -
Change in net unrealized losses on investment
securities available for sale, net of tax $ (51,677) - -
Loans transferred to other real estate owned $ 309,904 250,155 321,000
Refinancing of other real estate $ 245,356 261,725 792,000
Increase (decrease) in preferred stock dividend payable $ (2,709) 6,042 (7,755)
Preferred stock issued as dividend in kind $ 285,600 286,200 285,600
Common stock issued in satisfaction of
management fee and accrued interest payable $ - - 35,052
Common stock issued in satisfaction of note payable $ - 500,000 -
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are presented in accordance with
generally accepted accounting principles and conform to general practices
within the banking industry. The more significant accounting policies are
described in this summary.
Consolidation
-------------
The consolidated financial statements include the accounts of AmeriCorp,
Inc. (the "Company") and its wholly-owned subsidiary, AmeriBank, N.A. (the
"Bank"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Federal Home Loan Bank Deposits
-------------------------------
Included in cash and due from banks are interest-bearing deposits with the
Federal Home Loan Bank amounting to $6,083,324 at December 31, 1994.
Investment Securities
---------------------
Effective January 1, 1994 the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". Under SFAS No. 115,
the Company classifies its securities in one of three categories:
trading, available for sale, or held to maturity. Trading securities
are bought and held principally for the purpose of selling them in the
near term. Held to maturity securities are those securities for which
the Company has the ability and intent to hold the security until
maturity. All other securities not included in trading or held to
maturity are classified as available for sale. At December 31, 1994,
all the Company's securities are classified as available for sale.
Available for sale securities are recorded at fair value. Held to maturity
securities are recorded at amortized cost, adjusted for the amortization or
accretion of premiums or discounts. Unrealized holding gains and losses,
net of the related tax effect, on securities available for sale are
excluded from earnings and are reported as a separate component of
stockholders' equity until realized. Transfers of securities between
categories are recorded at fair value at the date of transfer. Unrealized
holding gains or losses associated with transfers of securities from held
to maturity to available for sale are recorded as a separate component of
stockholders' equity.
A decline in the market value of any available for sale or held to maturity
investment below cost that is deemed other than temporary is charged to
earnings and establishes a new cost basis for the security.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to the yield. Realized gains and losses
for securities classified as available for sale and held to maturity are
included in earnings and are derived using the specific identification
method for determining the cost of securities sold.
In 1993, all investment securities were carried at cost, adjusted for
amortization of premiums and accretion of discounts.
Loans
-----
Interest income on loans is recognized on the effective yield method.
Nonrefundable loan fees and certain direct loan origination costs are
accounted for in accordance with Statement of Financial Accounting
Standards No. 91, "Accounting for Nonrefundable Fees and Costs
Associated with Originating or Acquiring Loans and Initial Direct Cost
of Leases". SFAS No. 91 requires recognition of loan origination
fees, net of direct costs, over the life of the related loan as an
adjustment to yield.
Loans are placed on a nonaccrual basis when management considers the
collection of interest, but not necessarily principal, to be doubtful.
Interest income previously accrued, but not collected, is reversed against
current period income when such loans are placed on nonaccrual status.
Generally, payments on nonaccrual loans are applied to principal.
-7-
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Allowance for Loan Losses
-------------------------
The allowance for loan losses is established through a provision for loan
losses charged to expense. The allowance represents an amount which, in
management's judgement, will be adequate to absorb probable losses on
existing loans that may become uncollectible. Management's judgement in
determining the adequacy of the allowance is based on continuing
evaluations of the collectibility of loans. These evaluations take into
consideration such factors as changes in the nature and volume of the
loan portfolio, current economic conditions that may affect the
borrower's ability to pay, overall portfolio quality, and review of
specific problem loans.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Bank's
allowance for loan losses. Such agencies may require the Bank to
recognize additions to the allowance based on judgements different
than those of management.
Premises and Equipment
----------------------
Premises and equipment are stated at cost less accumulated depreciation.
Major additions and improvements are charged to the property accounts while
replacements, maintenance and repairs which do not improve or extend the
life of the respective assets are expensed currently. When property is
retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts and the resulting gain or loss,
if any, is recognized. Depreciation expense is computed principally on the
straight-line method over the estimated useful lives of the assets.
Other Real Estate
-----------------
Properties acquired through foreclosure are carried at the lower of cost
(defined as fair value at foreclosure) or fair value less estimated costs
to dispose. Generally accepted accounting principles define fair value as
the amount that is expected to be received in a current sale between a
willing buyer and seller other than a forced or liquidation sale. Fair
values at foreclosure are based on appraisals. Losses arising from the
acquisition of foreclosed properties are charged against the allowance
for loan losses. The Bank has established a valuation allowance for
other real estate which represents an amount which, in management's
judgement, will be adequate to absorb the estimated cost to dispose of
the properties. Subsequent writedowns are provided by a charge to income
through the allowance for losses on other real estate in the period in
which the need arises.
Income Taxes
------------
Effective January 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method required under Accounting
Principles Board Opinion No. 11 to the asset and liability method
required by SFAS No. 109. SFAS 109 requires the recognition of deferred
tax assets and liabilities for the future tax consequences attributable
to differences between the financial statement carrying amount of
existing assets and liabilities and their respective tax bases.
Additionally, the accounting standard requires the recognition of
future tax benefits, such as net operating loss carryforwards, to the
extent that realization of such benefits is more likely than not.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which the
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which the assets and
liabilities are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income tax expense in the period that includes the
enactment date.
In the event the future tax consequences of differences between the
financial reporting bases and the tax bases of the Company's assets and
liabilities results in deferred tax assets, the standard requires an
evaluation of the probability of being able to realize the future benefits
indicated by such asset. A valuation allowance is provided for the portion
of the deferred tax asset when it is more likely than not that some portion
or all of the deferred tax asset will not be realized. In assessing the
realizability of the deferred tax assets, management considers the
scheduled reversals of deferred tax liabilities, projected future
taxable income, and tax planning strategies.
-8- <PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Employee Benefits
-----------------
The employees of the Company are eligible to participate in the Employee
Stock Ownership Plan ("ESOP") of Bank Corporation of Georgia ("BCG"). This
is a stock bonus plan qualified under Internal Revenue Code Section 401(a),
and covers substantially all employees subject to certain minimum age and
service requirements. Under the plan, employer contributions may be paid to
the trustee in cash or in shares of stock. Contributions to this plan
charged to expense for the year ended December 31, 1994 and 1993
amounted to $12,983 and $46,007, respectively.
The employees of the Company are also eligible to participate in BCG's
401(k) plan which was established during 1992. The plan covers
substantially all employees subject to certain minimum age and service
requirements. Contributions to this plan by employees are voluntary;
however, the Company will match a percentage of the employees'
contributions. This percentage is determined annually by the Company.
Contributions to this plan charged to expense for the year ended
December 31, 1994 and 1993 amounted to $32,250 and $9,362, respectively.
Income (Loss) Per Share
-----------------------
Net income (loss) per common share is computed on the basis of weighted
average number of common shares actually outstanding. Outstanding options
and warrants (common stock equivalents) are anti-dilutive.
Reclassifications
-----------------
Certain 1993 and 1992 amounts have been reclassified to conform with the
1994 presentation.
(2) Transactions with Bank Corporation of Georgia
---------------------------------------------
In November 1990, the Company executed certain agreements with BCG which
resulted in a twenty-five (25%) percent ownership in the common stock of
the Company by BCG. The Company also granted an option to BCG, expiring in
December 1992, which enabled BCG to increase its ownership interest up to
forty (40%) percent. In December 1992, the Company issued 319,971 shares to
BCG in satisfaction of amounts payable for management fees and accrued
interest payable. Following this transaction, BCG owned approximately
thirty-four (34%) percent of the outstanding shares.
In December 1993, the Company executed an agreement with BCG which resulted
in an increase in ownership of the common stock of the Company by BCG to
approximately 67%. The Company issued 2,721,090 shares of its previously
unissued shares of common stock to BCG in exchange for $500,000 owed to BCG
pursuant to a note payable, $37,699 of accrued interest on the
aforementioned note payable, accrued management fees of $257,652 and cash
consideration of $2,301.
In connection with the 1990 transactions, BCG acquired 20,500 shares of
preferred stock. The preferred stock required quarterly dividend payments
at the rate of prime plus three (3%) percent, commencing January 1, 1991
and extending through June 30, 1995, at which date the dividend rate would
increase to prime plus five (5%) percent. Pursuant to a new agreement
executed December 10, 1993, the preferred stock requires quarterly
dividends at the rate of 8% fixed, commencing December 1993 and extending
through December 10, 1996, at which date the dividend rate will increase
to prime plus 5%. Such dividends are payable in cash or shares of
preferred stock, at the option of the Company. The preferred stock is
non-voting and contains no conversion features. In the event of
liquidation, the preferred stockholders are entitled to $100 per share
plus any unpaid dividends. The Company may, at its option, redeem all of
the outstanding preferred stock at par value on or after January 1,
1994. During 1991, BCG purchased 5,000 shares of preferred stock for
$100 per share and received 2,345 shares in the form of preferred
stock dividends in kind. During 1994, 1993 and 1992, 2,856, 2,862
and 2,856 shares, respectively, were issued to BCG in the form
of preferred stock dividends in kind.
-9- <PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(2) TRANSACTIONS WITH BANK CORPORATION OF GEORGIA, CONTINUED
In addition to the above, the Company provides compensation to BCG for
management, data processing and other services. The cost for these services
amounted to approximately $120,000, $258,000 and $286,000 for 1994, 1993
and 1992, respectively.
(3) INVESTMENT SECURITIES
As more fully described in note 1, the Company changed its method of
accounting for investment securities. Investment securities at December 31,
1994 and 1993 are as follows:
SECURITIES AVAILABLE FOR SALE:
<TABLE>
<CAPTION>
December 31, 1994
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury & Agencies $11,654,174 335 78,633 11,575,876
========== === ====== ==========
SECURITIES HELD TO MATURITY:
December 31, 1993
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ----------
U.S. Treasury & Agencies $ 9,093,528 20,527 4,055 9,110,000
========= ====== ===== =========
</TABLE>
The amortized cost and fair value of investment securities at December 31,
1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Securities Available
for Sale
------------------------
Estimated
Amortized Fair
Cost Value
--------- ---------
<S> <C> <C>
Due in one year or less $ 5,945,172 5,918,523
1 to 5 years 5,709,002 5,657,353
----------- ---------
$ 11,654,174 11,575,876
========== ==========
</TABLE>
Proceeds from sales of securities held to maturity during 1992 were
$1,001,094. Gross gains of $802 were realized on these sales in 1992. There
were no securities sold in 1993.
Proceeds from sales of securities available for sale during 1994 were
$4,721,110. Gross gains of $443 and gross losses of $51,791 were realized on
those sales.
There were no pledged securities at December 31, 1994 and 1993.
-10- <PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(4) Loans
-----
Major classifications of loans at December 31, 1994 and 1993 are
summarized as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial, financial and agricultural $ 22,300,154 18,711,928
Loans secured primarily by real estate 11,760,820 11,950,572
Construction loans 4,403,778 4,243,583
Consumer 1,715,705 1,549,418
----------- ----------
40,180,457 36,455,501
Less: Allowance for loan losses 667,903 683,733
----------- ----------
$ 39,512,554 35,771,768
========== ==========
</TABLE>
The Bank grants loans and extensions of credit to individuals and a variety
of businesses and corporations located principally in Chatham County, Georgia
and surrounding communities. Although the Bank has a diversified loan
portfolio, a substantial portion of the loan portfolio is collateralized by
improved and unimproved real estate and is dependent upon the real estate
market. Loans outstanding at December 31, 1994 and 1993 include
approximately $4,139,000 and $4,900,000, respectively, of loans originated by
BCG which the Bank acquired.
Loans on which the accrual of interest has been discontinued or reduced
amounted to $71,000 and $201,000 at December 31, 1994 and 1993, respectively.
Changes in the allowance for loan losses for the years ended December 31,
1994, 1993 and 1992 are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year $ 683,733 672,566 767,750
Provisions charged (credited) to
operating expense 19,000 50,597 (163,398)
Loan charge-offs (166,995) (185,870) (345,592)
Recoveries 132,165 146,440 413,806
-------- -------- --------
Net loan recoveries (charge-offs) (34,830) (39,430) 68,214
-------- -------- --------
Balance, end of year $ 667,903 683,733 672,566
======= ======= =======
</TABLE>
As a result of events occurring within 1992, the Company credited operations
for $163,398 in adjusting its allowance for loan losses to the balance deemed
necessary to absorb future losses. The credit was the result of a combination
of factors, including the lack of significant loan growth, charge-offs of
loans in amounts less than amounts previously reserved, recoveries of loans
previously charged-off and improvements in the borrowers' ability to repay
existing loans.
-11-
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(5) PREMISES AND EQUIPMENT
Premises and equipment at December 31, 1994 and 1993 are summarized as
follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Land $ 502,500 502,500
Buildings 2,056,433 2,045,348
Furniture and equipment 1,066,648 1,042,311
---------- ---------
3,625,581 3,590,159
Less accumulated depreciation 1,254,906 1,079,193
--------- ---------
$ 2,370,675 2,510,966
========= =========
</TABLE>
Depreciation expense of approximately $176,000, $175,000 and $177,000 was
recorded in 1994, 1993 and 1992, respectively.
(6) OTHER REAL ESTATE OWNED
The following is a summary of the changes in other real estate and the
related valuation allowance on other real estate for the years ended
December 31, 1994 and 1993.
<TABLE>
<CAPTION>
Other Real
Estate Allowance Total
---------- --------- -----
<S> <C> <C> <C>
Balance, December 31, 1992 $ 766,100 (89,520) 676,580
Foreclosures - additions 262,663 (12,508) 250,155
Improvements 33,713 - 33,713
Sales - disposals (339,950) 16,188 (323,762)
Provision for losses (5,000) - (5,000)
-------- ------- --------
Balance, December 31, 1993 717,526 (85,840) 631,686
Foreclosures - additions 325,399 (15,495) 309,904
Improvements 28,187 - 28,187
Sales - disposals (541,675) 25,795 (515,880)
Provision for losses (49,582) - (49,582)
-------- ------- --------
Balance, December 31, 1994 $ 479,855 (75,540) 404,315
======= ======= =======
</TABLE>
-12-
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(7) FEDERAL HOME LOAN BANK
During 1994, the Bank entered into an agreement with the Federal Home Loan
Bank ("FHLB") whereby, for the purchase of $170,100 of FHLB stock, the FHLB
agreed to provide the Bank credit facilities under an Agreement for Advances
and Security Agreement. Any amounts advanced by the FHLB are secured under a
Blanket Floating Lien covered by all of the Bank's 1-4 family first mortgage
loans. The Bank may draw advances up to $7 million based on the agreement
with the FHLB. The Bank has not received any borrowings from the FHLB as of
December 31, 1994.
(8) INCOME TAXES
As more fully described in note 1, the Company changed its method of
accounting for income taxes effective January 1, 1993. A valuation allowance
was established for all of the net deferred tax asset, as of January 1,
1993, and accordingly, the initial adoption of SFAS 109 had no effect on
the 1993 financial statements. The components of income tax benefit for
the years ended December 31, 1994, 1993 and 1992 are as follows:
<TABLE>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current $ - - -
Deferred-primarily net operating
loss utilization 266,000 20,000 -
Change in valuation allowance (1,809,169) (312,565) -
---------- -------- ------
Income tax benefit $(1,543,169) (292,565) -
========== ======== ======
</TABLE>
The differences between the income tax benefit and the amount computed using
the statutory federal income tax rate to earnings before taxes relate
primarily to the change in the valuation allowance.
The following summarizes the sources and expected tax consequences of future
taxable deductions (income) which comprise the net deferred tax asset
(liability):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred income tax assets:
Net unrealized losses in investment securities $ 26,621 -
Writedowns of other real estate 44,000 40,000
Operating loss carryforwards 2,341,900 2,607,900
Other 119,000 126,800
--------- ---------
Total gross deferred income tax assets 2,531,521 2,774,700
Less: Valuation allowance (552,166) (2,361,335)
--------- ----------
Net deferred income tax asset 1,979,355 413,365
--------- ----------
Deferred income tax liabilities:
Premises and equipment (64,000) (55,100)
Allowance for loan losses (53,000) (65,700)
Total gross deferred income tax liabilities (117,000) (120,800)
--------- ----------
Net deferred income tax asset $ 1,862,355 292,565
========= ==========
</TABLE>
At December 31, 1994, the Company has remaining loss carryforwards of
approximately $6,100,000 and $9,000,000 for federal and state income tax
purposes, respectively, which begin to expire in 2002. The use of these
carryforwards is limited to future taxable earnings of the Company.
-13-
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(9) COMMITMENTS
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements
of credit risk in excess of the amount recognized in the balance sheet. The
contractual amounts of those instruments reflect the extent of involvement
the Bank has in particular classes of financial instruments.
The Bank's exposure to credit loss in the event of non-performance 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. The Bank uses the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet instruments.
In most cases, the Bank does require collateral or other security to support
financial instruments with credit risk.
<TABLE>
<CAPTION>
Approximate
Contractual Amount
------------------
1994 1993
---- ----
<S> <C> <C>
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $ 3,629,000 3,432,000
Standby letters of credit $ 376,000 131,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments may expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's credit worthiness 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.
Collateral held varies but may include unimproved and improved real
estate, certificates of deposit, or personal property.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.
(10) RELATED PARTY TRANSACTIONS
In the normal course of business, officers and directors of the Bank, and
certain business organizations and individuals associated with them,
maintain a variety of banking relationships with the Bank. Transactions
with officers and directors are made on terms comparable to those
available to other Bank customers. The following table summarizes related
party loan activity during 1994:
<TABLE>
<CAPTION>
<S> <C>
Beginning balance $ 359,000
Advances -
Repayments 243,000
-------
Ending balance $ 116,000
=======
</TABLE>
The Company leases land from a related party under an arrangement with an
expiration date of 1997. Lease payments under the operating lease are
$12,000 per year.
-14-
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(11) SHAREHOLDERS' EQUITY
Dividends paid by its bank subsidiary are the primary source of funds
available to the Company. All of the assets of the Company's bank
subsidiary are considered restricted and cannot be transferred to the
Company in the form of loans, advances or cash dividends without consent
of bank regulatory agencies.
The Company has an Incentive Stock Option Plan whereby employees may be
granted options to purchase the Company's common stock. A total of 150,000
shares were reserved under this plan and the options are to be granted
at an amount established by the Board of Directors. At December 31,
1994, 2,000 options were outstanding and are exercisable at $4.10 per
share through 1999.
The Company has a non-qualified stock option plan whereby 18,000 shares of
common stock of the Company have been reserved under this plan. Options are
issued by the Board of Directors at prices determined by the Board. The
options may be granted to directors of the Company or the Bank and expire
ten years from the date of grant or the date which the optionee ceases to
serve in a director capacity, if earlier. There were no options outstanding
at December 31, 1994.
(12) OTHER OPERATING EXPENSES
Components of other operating expenses in excess of 1% of total interest
and other income for the respective periods are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Professional and management fees $ 213,618 386,741 440,655
FDIC assessment $ 120,003 125,524 105,925
Provision for losses on repossessed property $ 49,582 5,000 104,115
</TABLE>
(13) SUBSEQUENT EVENT
Effective November 15, 1995, the Company entered into an agreement whereby
BCG has agreed to purchase the remaining outstanding Company common shares
in exchange for approximately 154,391 shares of BCG. In order for the
Agreement to be effected, the Company's shareholders and the regulators
must approve the transaction and BCG must complete a public registration.
Management expects the merger to occur during the first quarter of 1996;
however, there is no certainty that the transaction will be consummated
within that time frame.
-15- <PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(13) AMERICORP, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
Balance Sheets
December 31, 1994 and 1993
ASSETS
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Cash $ 3,667 5,167
Other assets 40,650 40,650
Investment in subsidiary 6,378,970 4,191,350
--------- ---------
$6,423,287 4,237,167
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Preferred dividends payable $ 72,805 75,514
--------- ---------
Total liabilities 72,805 75,514
--------- ---------
Shareholders' equity 6,350,482 4,161,653
--------- ---------
$6,423,287 4,237,167
========= =========
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest expense $ - 37,699 43,363
Other expense 1,500 260,952 299,598
--------- --------- --------
Total expense 1,500 298,651 342,961
--------- --------- --------
Loss before equity in earnings of subsidiary (1,500) (298,651) (342,961)
Equity in earnings of subsidiary 2,239,297 706,267 168,430
--------- --------- --------
Net income (loss) 2,237,797 407,616 (174,531)
Preferred dividend requirement (282,891) (292,242) (277,845)
--------- --------- --------
Net income (loss) applicable to common
shareholders $1,954,906 115,374 (452,376)
========= ======== ========
</TABLE>
-16-
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(13) AMERICORP, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION, CONTINUED
<TABLE>
<CAPTION>
Statements of Cash Flows
For the Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,237,797 407,616 (174,531)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Equity in earnings of subsidiary (2,239,297) (706,267) (168,430)
Common stock issued in satisfaction of
management fee and interest expense - 295,351 329,715
Change in:
Other assets - 1,050 10,800
Net cash used by operating activities (1,500) (2,250) (2,446)
Cash flows from financing activities:
Proceeds from sale of common stock - 2,301 -
Net cash provided by financing activities - 2,301 -
Net increase (decrease) in cash (1,500) 51 (2,446)
Cash at beginning of year 5,167 5,116 7,562
Cash at end of year $ 3,667 5,167 5,116
Supplemental schedule of non-cash
financing activities:
Net unrealized loss on investment securities
available for sale of bank subsidiary,
net of tax $ (51,677) - -
Increase (decrease) in preferred stock dividend
payable $ (2,709) 6,042 (7,755)
Preferred stock issued as dividend in kind $ 285,600 286,200 285,600
Common stock issued in satisfaction of accrued
expenses $ - - 35,052
Common stock issued in satisfaction of note
payable $ - 500,000 -
</TABLE>
-17-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICORP, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994
ASSETS
------
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------ --------------
<S> <C> <C>
Cash and due from banks $1,965,410 $1,473,986
Federal funds sold 2,273,955 1,574,902
Investment securities: Available for sale 13,508,624 8,788,275
Held to maturity ---- ----
----------- ----------
13,508,624 8,788,275
----------- ----------
Loans: 46,338,275 42,088,683
Less: Allowance for possible loan losses (697,872) (641,369)
----------- -----------
Loans, net 45,640,403 41,447,314
Bank premises and equipment 2,591,244 2,412,084
Accrued interest receivable 536,891 372,820
Other assets 2,964,283 1,235,424
----------- -----------
$69,480,810 $57,304,805
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
Demand $8,295,874 $6,219,340
Interest bearing demand 17,673,919 21,699,168
Savings 576,808 519,437
Time 32,216,596 23,488,305
----------- -----------
Total deposits 58,763,197 51,926,250
Accounts payable and accrued expense 964,316 279,435
Accrued preferred stock dividends 72,837 71,409
Borrowed money 2,000,000 ----
----------- ----------
Total liabilities 61,800,350 52,277,094
Stockholders' equity:
Preferred stock 3,863,534 3,570,459
Common stock 54,739 54,739
Capital surplus 8,846,167 8,864,333
Retained earnings (5,083,980) (7,461,820)
----------- ------------
Total stockholders' equity 7,680,460 5,027,711
----------- ------------
$69,480,810 $57,304,805
=========== ============
</TABLE>
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $1,012,911 $867,038
Adjustments to reconcile net earnings to net cash
provided from operating activities:
Depreciation, amortization and accretion 120,499 158,888
Provision for loan losses 45,000 4,000
Loss on sale of investment securities 523 645
Change in:
Other assets (347,873) (266,108)
Other liabilities 562,727 (5,366)
-------------- --------------
Net cash provided by operating activities 1,393,787 759,097
-------------- --------------
Cash flows from investing activities:
Proceeds from maturities of investment securities 4,000,000 1,228,734
Proceeds from sales of investment securities 1,944,318 2,999,941
Purchase of investment securities (7,379,343) (3,644,919)
Net change in loans (6,172,849) (5,679,546)
Purchases of premises and equipment (358,863) (33,751)
-------------- --------------
Net cash provided (used) by investing activities (7,966,737) (5,129,541)
-------------- --------------
Cash flows from financing activities:
Net change in deposits 1,289,408 2,083,536
Net change in federal funds purchased 2,000,000 ----
-------------- --------------
Net cash provided by financing activities 3,289,408 2,083,536
Net (decrease) in cash and cash equivalents (3,283,542) (2,286,908)
Cash and cash equivalents at beginning of period 7,522,907 5,335,796
-------------- --------------
Cash and cash equivalents at end of period $4,239,365 $3,048,888
============== ==============
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICORP, INC.
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------ -------------
<S> <C> <C>
Interest income:
Interest and fees on loans $3,402,295 $2,618,620
Interest on investment securities 764,852 316,993
Interest on federal funds 105,983 58,622
------------ -------------
Total interest income 4,273,130 2,994,235
------------ -------------
Interest expense:
Interest on NOW and money market 507,613 538,681
accounts
Interest on savings and time deposits 1,358,312 735,647
Other borrowings 13,064 ----
------------ -------------
Total interest expense 1,878,989 1,274,328
------------ -------------
Net interest income 2,394,141 1,719,907
Provision for possible loan losses 45,000 4,000
------------ -------------
Net interest income after provision
for possible loan losses 2,349,141 1,715,907
------------ -------------
Other operating income:
Service charge on deposit accounts 172,181 182,789
Gain on sale of SBA loans 100 56,741
Other 271,065 272,489
------------ -------------
Total other operating income 443,346 512,019
------------ -------------
Other operating expense:
Salaries and employee benefits 865,056 726,600
Occupancy 123,322 169,555
Equipment 160,886 136,676
Other operating expense 630,312 628,057
------------ -------------
Total other operating expense 1,779,576 1,660,888
------------ -------------
Earnings before income taxes 1,012,911 567,038
Income tax expense (benefit) ---- (300,000)
------------ -------------
Net income 1,012,911 867,038
Preferred dividend requirements 221,666 210,054
------------ -------------
Net income after preferred stock
requirements $791,245 $656,984
============ =============
</TABLE>
<PAGE>
<PAGE>
AMERICORP, INC. AND SUBSIDIARY
Notes to Financial Statements
(Unaudited)
(1) Basis of Presentation
The financial information furnished herein reflects all
adjustments which are, in the opinion of management, necessary
to present a fair statement of the results of operations and
financial position for the periods covered herein. All such
adjustments are of a normal, recurring nature.
(2) Acquisitions
On November 15, 1995, Americorp entered into a definitive
agreement with Bank Corporation of Georgia ("BCG") which owns
66.67% of the Americorp Common Stock and 100% of the Americorp
Preferred Stock, pursuant to which BCG will acquire the
remaining shares of Americorp that BCG does not already own,
or approximately 33.3% of the outstanding common shares of
Americorp. The transaction would exchange BCG stock for
Americorp stock. The transaction is subject to regulatory
approval and approval of the shareholders of Americorp in
addition to BCG.
On October 18, 1995, Ameribank, N.A., a wholly owned
subsidiary of Americorp, entered into an agreement to purchase
substantially all of the assets and assume substantially all
of the liabilities of a branch of another financial
institution. The transaction is subject to regulatory
approval and consummation of another transaction involving the
financial institution.
(3) Impaired Loans
--------------
As of January 1, 1995, Americorp adopted, and accounts for impaired
loans in accordance with, Statement of Financial Accounting Standards
(SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan", amended
for SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure." A loan is impaired when, based on current
information and events, it is probable that all amounts due according to
the contractual terms of the loan agreement will not be collected. SFAS
No. 114 requires that impaired loans be measured based on the present value
of expected future cash flows discounted at the loan's effective interest
rate, which is the contractual interest rate adjusted for any deferred loan
fees or cost, premium or discount existing at the inception or acquisition
of the loan, or at the loan's observable market price, or at the fair
value of the collateral of the loan if the loan is collateral dependent.
SFAS No. 118 amends SFAS No. 114 to require information about the recorded
investment in certain impaired loans and eliminates its provisions
regarding how a creditor should report income on an impaired loan.
SFAS No. 118 allows creditors to use existing methods for recognizing
income on an impaired loan, including methods used by certain industry
regulators. As of the date of adoption, and as of September 30, 1995,
the impact of SFAS 114 and SFAS 118 is not material to Americorp's
consolidated financial statements.
(4) Recent Accounting Pronouncements
--------------------------------
The Financial Accounting Standards Board (the "FASB") recently
issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." SFAS 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held
and used and for long-lived assets and certain indentifiable
intangibles to be disposed of. SFAS 121 is effective for
financial statements for fiscal years beginning after December
15, 1995 with early adoption permitted. Presently, Americorp
is unable to determine the impact that adoption of SFAS 121
will have on the consolidated financial statements, but
management anticipates that the impact will not be material.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1995
(unaudited)
EFFINGHAM BANK SOUTH - PROFORMA
AS BANK SAVANNAH ACCOUNTING PRO
REPORTED & TRUST BRANCH ADJUSTMENTS (B) FORMA
-------- --------- ------------ ----------- -----
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks, $ 7,586,272 1,401,793 -- -- (61,875) 8,926,190
Federal funds sold 10,906,671 0 11,310,000 22,216,671
Investment securities:
Available for sale (at market value) 38,733,285 2,780,292 -- -- 41,513,577
Held to maturity 134,706 1,500,000 -- -- (35,000) 1,599,706
------------ --------- ----------- --------- -----------
38,867,991 4,280,292 -- -- (35,000) 43,113,283
------------ --------- ----------- --------- -----------
Loans, net of unearned income 157,928,253 17,874,397 4,700,000 180,502,650
Less: Allowance for loan losses (2,375,227) (230,108) -- -- (2,605,335)
------------ --------- ----------- --------- -----------
Net loans 155,553,026 17,644,289 4,700,000 0 177,897,315
------------ --------- ----------- --------- -----------
Premises and equipment 6,924,674 1,115,464 753,000 8,793,138
Accrued interest receivable 2,024,873 134,625 -- -- 2,159,498
Goodwill 400,327 -- -- -- -- 1,025,698 1,426,025
Other assets 4,882,514 265,924 -- -- 671,600 5,820,038
------------ ---------- ----------- --------- -----------
$227,146,348 24,842,387 16,763,000 1,600,423 270,352,158
============ ========== =========== ========= ===========
LIABILITIES
Deposits:
Demand $ 28,824,976 3,635,151 $ 2,009,000 34,469,127
NOW and money market 52,593,257 3,213,574 1,944,000 57,750,831
Savings 7,328,338 1,653,345 993,000 9,974,683
Time 107,691,106 13,084,176 11,817,000 132,592,282
------------ ---------- ----------- --------- -----------
Total deposits 196,437,677 21,586,246 16,763,000 0 234,786,923
------------ ---------- ----------- --------- -----------
Accounts payable and other liabilities 2,438,286 248,495 -- -- 251,574 2,938,355
Accrued preferred stock dividend -- -- -- -- -- -- 0
Borrowed money 5,270,809 1,100,000 -- -- 6,370,809
Long-term debt 2,500,000 -- -- -- -- 922,200 3,422,200
-- --
Minority interest in subsidiary 1,270,925 -- -- -- -- (1,270,925) 0
------------ ---------- ----------- --------- -----------
Total liabilities 207,917,697 22,934,741 16,763,000 (97,151) 247,518,287
------------ ---------- ----------- --------- -----------
SHAREHOLDERS' EQUITY
Shareholders' equity:
Common stock 1,894,846 1,634,525 -- -- (1,334,090) 2,195,281
Surplus 12,649,954 1,607,298 -- -- 1,697,487 15,954,739
Retained earnings (deficit) 5,066,200 (1,334,177) -- -- 1,334,177 5,066,200
Unearned ESOP shares (270,809) -- -- (270,809)
Treasury shares, at cost (111,540) -- -- (111,540)
------------ ---------- ----------- --------- -----------
Total shareholders' equity 19,228,651 1,907,646 0 1,697,574 22,833,871
------------ ---------- ----------- --------- -----------
$227,146,348 24,842,387 $16,763,000 1,600,423 270,352,158
============ ========== =========== ========== ============
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(unaudited)
EFFINGHAM BANK SOUTH - PROFORMA
AS BANK SAVANNAH ACCOUNTING PRO
REPORTED & TRUST BRANCH ADJUSTMENTS FORMA
-------- --------- ------------ ----------- -----
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $14,001,609 1,455,290 345,228 15,802,127
Interest on investment securities 1,567,779 273,571 -- -- 1,841,350
Interest on federal funds sold 544,223 26,973 -- -- 571,196
Other interest income -- -- -- -- 480,765 (2,062) 478,703
----------- --------- --------- --------- ----------
Total interest income 16,113,611 1,755,834 825,993 (2,062) 18,693,376
INTEREST EXPENSE
Interest on NOW and money market accounts 1,864,291 120,167 45,140 2,029,598
Interest on savings and time deposits 4,049,268 532,665 394,827 4,976,760
Other borrowings 624,728 55,766 80,693 761,187
----------- --------- --------- --------- ----------
Total interest expense 6,538,287 708,598 439,967 80,693 7,767,545
----------- --------- --------- --------- ----------
Net interest income 9,575,324 1,047,236 386,026 (82,755) 10,925,831
Provision for loan losses 447,003 -- -- -- -- 447,003
----------- --------- --------- --------- ----------
Net interest income after provision
for loan losses 9,128,321 1,047,236 386,026 (82,755) 10,478,828
----------- --------- --------- --------- ----------
OTHER INCOME:
Service charge on deposit accounts 1,023,178 327,529 254,345 1,605,052
Gain (loss) on sale of investment
securities (320,560) 4,984 -- -- (315,576)
Gain on sale of SBA loans 79,435 -- -- -- -- 79,435
Gain on sale of loans 81,702 -- -- -- -- 81,702
Gain on sale of banking unit 814,035 -- -- -- -- 814,035
Other 849,930 20,880 14,130 884,940
----------- --------- --------- --------- -----------
Total other income 2,527,720 353,393 268,475 0 3,149,588
----------- --------- --------- --------- -----------
OTHER EXPENSES:
Salaries and employee benefits 4,868,473 624,326 121,788 5,614,587
Occupancy 705,872 219,263 43,177 968,312
Equipment 576,293 -- -- 26,283 602,576
Other operating expenses 2,706,071 546,844 35,812 68,379 3,357,106
----------- --------- --------- --------- ----------
Total other expenses 8,856,709 1,390,433 227,060 68,379 10,542,581
----------- --------- --------- --------- ---------
Income before provision for income taxes 2,799,332 10,196 427,441 (151,134) 3,085,835
Income tax (expense) benefit 81,637 69,684 (149,603) 28,137 29,855
----------- --------- --------- --------- ---------
Income before minority interests 2,880,969 79,880 277,838 (122,997) 3,115,690
Minority interests (651,569) -- -- -- -- 651,569 0
----------- --------- -------- --------- ----------
Net income $ 2,229,400 79,880 277,838 528,572 3,115,690
=========== ========== ========= ========= ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
BANK CORPORATION OF GEORGIA AND SUBSIDIARIES
PRO FORMA STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(unaudited)
EFFINGHAM BANK SOUTH - PROFORMA
AS BANK SAVANNAH ACCOUNTING PRO
REPORTED & TRUST BRANCH ADJUSTMENTS FORMA
-------- --------- ------------ ----------- -----
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $12,319,323 1,460,364 343,356 14,123,043
Interest on investment securities 2,148,606 201,924 -- -- 3,054,306
Interest on federal funds sold 432,946 26,813 -- -- (1,547) 458,212
----------- --------- --------- --------- ----------
Total interest income 15,000,875 1,689,101 947,132 (1,547) 17,635,561
INTEREST EXPENSE
Interest on NOW and money market accounts 1,339,096 92,796 58,320 1,490,212
Interest on savings and time deposits 4,599,971 613,491 509,689 5,723,151
Other borrowings 275,583 25,502 60,519 361,604
----------- --------- --------- --------- ----------
Total interest expense 6,214,650 731,789 568,009 60,519 7,574,967
----------- --------- --------- --------- ----------
Net interest income 8,786,225 957,312 379,123 (62,066) 10,060,594
Provision for loan losses 335,004 20,000 -- -- 355,004
----------- --------- --------- --------- ----------
Net interest income after provision
for loan losses 8,451,221 937,312 379,123 (62,066) 9,705,590
----------- --------- --------- --------- ----------
OTHER INCOME:
Service charge on deposit accounts 795,367 208,106 188,345 1,192,287
Gain (loss) on sale of investment
securities 1,477 (12,243) -- -- (10,766)
Gain on sale of SBA loans 17,016 -- -- -- -- 17,016
Gain on sale of loans 119,306 -- -- -- -- 119,306
Other 752,441 36,540 13,912 802,893
----------- --------- --------- --------- -----------
Total other income 1,685,607 232,403 202,726 0 2,120,736
----------- --------- --------- --------- -----------
OTHER EXPENSES:
Salaries and employee benefits 3,951,768 563,282 108,113 4,623,163
Occupancy 520,382 69,953 32,958 623,293
Equipment 493,063 105,710 19,340 618,113
Loss on disposition of fixed assets -- 57,701 -- -- 57,701
Other operating expenses 1,681,804 503,711 17,494 51,285 2,434,294
----------- --------- --------- --------- ----------
Total other expenses 6,827,017 1,300,357 177,905 51,285 8,356,564
----------- --------- --------- --------- ---------
Income before provision for income taxes 3,309,811 (130,642) 403,944 (113,351) 3,469,762
Income tax (expense) benefit (748,300) -- (141,381) 21,102 (868,579)
----------- --------- --------- --------- ---------
Income before minority interests 2,561,511 (130,642) 262,563 (92,249) 2,601,183
Minority interests (262,466) -- -- -- -- 262,466 0
----------- --------- -------- --------- ----------
Net income $ 2,229,045 (130,642) 262,563 170,217 2,604,183
=========== ========== ========= ========= ==========
</TABLE>
<PAGE>
<PAGE>
BANK CORPORATION OF GEORGIA
NOTES AND ASSUMPTIONS TO UNAUDITED PROFORMA FINANCIAL STATEMENTS
The accompanying pro forma financial statements have been
prepared to give effect to the transactions listed below, any
related purchase accounting adjustments, reductions of existing
liquidity to effect the acquisitions, and other expenses as if
such transactions had occurred as of January 1, 1994 in the case
of income statement information and as of the balance sheet date
in the case of the balance sheet information.
(a) Bank Corporation of Georgia's proposed transactions are
summarized as follows:
<TABLE>
<CAPTION>
BANK CORP ACCOUNTING
CASH SHARES METHOD
-------- ---------- ----------
<S> <C> <C> <S>
Americorp, Inc. $ -- 154,391 Purchase
Effingham Bank & Trust $ 922,200 146,044 Purchase
Bank South - Savannah branch
acquisition $ 225,000 -- Purchase
</TABLE>
(b) Represents the following adjustments to reflect consideration
paid and purchase accountingadjustments from the anticipated transactions.
<TABLE>
<CAPTION>
EFFINGHAM BRANCH
TOTAL BANK & TRUST AMERICORP ACQUISTION NOTES
------- ------------ --------- ---------- -----
<S> <C> <C> <C> <C> <C>
PRO FORMA BALANCE SHEET ADJUSTMENTS
Assets
Fed funds sold $
Proceeds of option exercise 163,125 163,125 1
Branch acquisition purchase premium (225,000) (225,000) 2
Held to maturity securities fair value
adjustment (35,000) (35,000) 3
Goodwill 1,025,698 443,931 581,767 4
Other Assets
Deferred Tax Assets 484,600 484,600 5
Adjustment for purchase of OREO (38,000) (38,000) 6
Branch acquisition purchase premium 225,000 0 225,000 2
---------- --------- ------- --------
Total Assets $1,600,423 1,018,656 581,767 0
========== ========= ======= ========
Liabilities
Other Liabilities
Liability for cancellation of data
processing contract $ 87,500 87,500 7
Present value of interest payments to
Effingham stockholder 164,074 164,074 8
Elimination of minority interests (1,270,925) (1,270,925) 9
Long-term debt incurred to purchase stock 922,200 922,200 10
---------- --------- ----------- --------
Total Liabilities (97,151) 1,173,774 (1,270,925) 0
========== ========= =========== ========
Stockholders' Equity
Common Stock
Eliminate Existing Stock (1,634,525) (1,634,525) 11
Issue New Stock 300,435 146,044 154,391 9,11
---------- --------- --------- --------
Total Common Stock (1,334,090) (1,488,481) 154,391 0
========== ========= ========= ========
Paid In Capital
Eliminate Existing Capital (1,607,298) (1,607,298) 11
Issue New Stock 3,304,785 1,606,484 1,698,301 9,11
---------- --------- --------- --------
1,697,487 (814) 1,698,301 0
========== ========= ========= ========
Retained Earnings
Eliminate Existing Capital 1,334,177 1,334,177 11
---------- --------- --------- --------
Total Retained Earnings 1,334,177 1,334,177 0 0
---------- --------- --------- --------
---------- --------- --------- --------
Total Stockholders' Equity 1,697,574 (155,118) 1,852,692 0
---------- --------- --------- --------
Total Liabilities and Stockholders'
Equity $1,600,423 1,018,656 581,767 0
========== ========= ========= ========<PAGE>
<CAPTION>
EFFINGHAM BRANCH
TOTAL BANK & TRUST AMERICORP ACQUISTION NOTES
------- ------------ --------- ---------- -----
PRO FORMA STATEMENT OF INCOME
ADJUSTMENTS
Nine Months Ended September 30, 1995
Interest paid on long term debt $ (60,519) (60,519) 12
used to finance cash purchase
of shares
Foregone interest income on branch
purchase premium (11,250) (11,250) 13
Interest income from proceeds of
option exercise 9,703 9,703 13
Amortization of goodwill (51,285) (22,197) (29,088) 4
Elimination of minority interests
in income 262,466 262,466 9
Tax Benefit of above items 21,102 17,277 0 3,825
---------- --------- --------- --------
Increase in Net income $ 170,217 (55,736) 233,378 (7,425)
========== ========= ========= ========
For the Year Ended December 31, 1994
Interest paid on long term debt
used to finance cash purchase $ (80,693) (80,693) 12
of shares
Foregone interest income on branch
purchase premium (15,000) (15,000) 13
Interest income from proceeds of
exercise option 12,938 12,938 13
Amortization of goodwill (68,379) (29,595) (38,784) 4
Elimination of minority interests
in income 651,569 651,569 9
Tax Benefit of above items 28,137 23,037 0 5,100
---------- --------- -------- --------
Increase in Net income $ 528,572 (74,313) 612,785 (9,900)
========== ========= ========= ========
</TABLE>
EXPLANATORY NOTES TO PROFORMA FINANCIAL STATEMENTS:
(1) Represents the proceeds of options to be exercised by
current option holders of Effingham.
(2) Purchase premium for branch acquisition equal to
approximately 1.25% of deposits. Amortized on 15 yr
straight-line method.
(3) Represents the adjustment to Effingham's Held to Maturity
investment portfolio to adjust to market value.
(4) Represents goodwill calculated as follows:
<TABLE>
<CAPTION>
Total Effingham Americorp, Inc.
<S> <C> <C> <C>
Value of stock issued 3,605,220 1,752,528 1,852,692
Cash paid for shares 922,200 922,200 --
--------- --------- ---------
Total purchase price 4,527,420 2,674,728 1,852,692
--------- --------- ---------
Recorded book value 3,178,571 1,907,646 1,270,925
Net adjustments to book value 160,026 160,026 --
Exercise of option proceeds 163,125 163,125
--------- --------- ---------
Adjusted book value 3,338,597 2,067,672 1,270,925
--------- --------- ---------
Excess purchase price 1,188,823 607,056 581,767
over adjusted book value ========= ========= =========
</TABLE>
Excess Purchase price (Goodwill) to be amortized over 15
year straight line method. Americorp goodwill is non-deductible
for tax purposes.<PAGE>
The net adjustments to the book value of Effingham are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Held to maturity securities fair value adjustment (35,000)
Deferred tax assets 484,600
Adjustment for purchase of OREO (38,000)
Liability for cancellation of data processing (87,500)
contract
Present value of interest payments to (164,074)
Effingham stockholder --------
Total net adjustments to book value 160,026
========
</TABLE>
No adjustments were made to the book value of Americorp because
the net adjustments to fair value (and any related income
statement effect) of such adjustments were not deemed material
for the 33.33% interest in Americorp being purchased.
The recorded book value of Americorp represents the proportionate
share (33.33%) of the net assets of Americorp owned by its
minority stockholders.
(5) Represents the tax benefits related to adjustments to
Effingham's book value,including approximately $430,000 related
to tax benefits of net operating losses.
(6) Represents the approximate loss on Effingham's other real
estate owned presently under contract.
(7) Represents the exit penalty on Effingham's data processing
contract.
(8) Represents the present value of interest payments to be made
on behalf of Ron Van Den Heuvel on personal debt.
(9) Upon consummation of the Americorp exchange, the minority
interests on BCG's books will be debited and common stock and
paid in capital will be credited.
(10) The cash to be paid to certain Effingham stockholders will
be from the proceeds of long term borrowings.
(11) Upon consummation of the Effingham exchange, the capital
accounts of Effingham will be debited and the capital accounts of
BCG will be credited.
(12) Interest on long term debt calculated on $922,200 at 8.75%,
the contractual rate under the Company's existing credit
facility.
(13) Interest on branch purchase premium and proceeds of option
exercise calculated at 5.75%, the current federal funds sold
rate.
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<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
By and Between
BANK CORPORATION OF GEORGIA
And
AMERICORP, INC.
THIS AGREEMENT AND PLAN OF MERGER (the "Merger
Agreement"), is made and entered into this 15th day of November,
1995, by and between BANK CORPORATION OF GEORGIA, a Georgia
corporation ("BCG"), and AMERICORP, INC., a Georgia corporation
("Americorp") (BCG and Americorp are sometimes hereinafter
referred to collectively as the "Constituent Corporations");
W I T N E S S E T H:
WHEREAS, the authorized capital stock of BCG consists
of 3,000,000 shares of Common Stock, par value $1.00 per share
("BCG Stock"), of which 1,878,079 shares are issued and
outstanding as of the date hereof; and
WHEREAS, the authorized capital stock of Americorp
consists of 10,000,000 shares of Common Stock, par value $.01 per
share ("Americorp Common Stock"), of which 5,473,889 shares are
issued and outstanding as of the date hereof and 40,000 shares of
Preferred Stock, $100 par value per share ("Americorp Preferred
Stock"), of which 37,875 shares are issued and outstanding as of
the date hereof; and
WHEREAS, the Constituent Corporations are both
corporations duly organized and validly existing under the laws
of the State of Georgia; and
WHEREAS, the Board of Directors of each of the
Constituent Corporations deems it advisable and for the benefit
of each of said Constituent Corporations and their respective
shareholders that Americorp merge with and into BCG, with BCG
being the surviving corporation (the "Merger"); and
WHEREAS, the Board of Directors of each of the
Constituent Corporations has, by resolutions duly adopted,
approved and adopted this Merger Agreement and directed that it
be submitted to the shareholders of Americorp for their approval;
and
WHEREAS, BCG has agreed to issue shares of BCG Stock,
according to the terms and conditions contained herein, on or
after the Effective Date (as hereinafter defined) of the Merger;
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<PAGE>
NOW, THEREFORE, for and in consideration of the
premises and the mutual agreements hereinafter contained, and for
the purpose of stating the method, terms and conditions of the
Merger, the mode of carrying the same into effect and the manner
and basis of converting and exchanging all shares of Americorp
Common Stock outstanding at the Effective Date into and for
shares of BCG Stock, it is hereby agreed by and between the
parties hereto that:
1. MERGER.
Pursuant to and with the effects provided in the applicable
provisions of the Georgia Business Corporation Code, as amended,
Americorp shall be merged with and into BCG, the corporate
existence of which shall continue under the name of Bank
Corporation of Georgia (hereinafter referred to as the "Surviving
Corporation"), and thereafter the individual existence of
Americorp shall cease.
2. ACTIONS TO BE TAKEN.
The acts required to be done by the Georgia Business
Corporation Code, as amended, in order to make this Merger
Agreement effective, including, but not by way of limitation, the
submission of this Merger Agreement to the shareholders of
Americorp and the filing of Articles of Merger or a Certificate
of Merger to the extent required by and in the manner provided in
Sections 14-2-1103, 14-2-1105 and 14-2-1105.1 of the Georgia
Business Corporation Code, shall be attended to and done by the
proper officers of the Constituent Corporations as soon as
practicable after the Effective Date.
3. EFFECTIVE DATE.
The transactions contemplated herein shall be consummated
(the "Closing") at the offices of Kilpatrick & Cody, Atlanta,
Georgia on the first business day after the receipt of all
necessary approvals of the transactions contemplated by this
Agreement, or at such other place and on such other date as the
parties hereto may mutually agree (such date being the "Effective
Date").
4. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION.
The Articles of Incorporation of BCG shall be, on the
Effective Date, the Articles of Incorporation of the Surviving
Corporation. Until altered, amended or repealed as therein
provided, the Bylaws of BCG, as in effect on the Effective Date,
shall be the Bylaws of the Surviving Corporation.
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<PAGE>
5. MANNER AND BASIS OF CONVERTING SHARES OF CAPITAL STOCK;
CAPITAL STRUCTURE OF THE SURVIVING CORPORATION.
The manner and basis of converting and exchanging the shares
of capital stock of Americorp shall be as follows:
(a) Conversion of Shares of Americorp Common Stock.
Upon the Effective Date, each of the outstanding shares
of Americorp Common Stock, other than those shares of
Americorp Common Stock held by BCG, which shall be
canceled, shall, by virtue of the Merger and without
any further action on the part of the holder thereof,
be converted into fully-paid and non-assessable shares
of BCG Stock at the rate of .084615 shares of BCG Stock
for each share of Americorp Common Stock, subject to
any adjustments occurring after the date hereof as
contemplated by Article 5(c) below (the "Conversion
Rate").
(b) Cancellation of Shares of Americorp Preferred
Stock. Upon the Effective Date, each share of
Americorp Preferred Stock outstanding immediately prior
to the Effective Date shall, by virtue of the Merger
and without any further action on the part of the
holder thereof, be canceled.
(c) Proportionate Adjustments to the Conversion Rate.
If, prior to the Effective Date, the outstanding shares
of BCG Stock or Americorp Common Stock shall be
increased by any stock dividend, stock split,
subdivision, recapitalization or reclassification of
shares or shall be combined into a lesser number of
shares by reclassification, recapitalization, or
reduction of capital, the number of shares of BCG Stock
that may be delivered hereunder for each share of
Americorp Common Stock shall be proportionately
adjusted.
(d) Fractional Shares. No scrip or fractional share
certificates of BCG Stock shall be issued in connection
with the Merger, and any outstanding fractional share
interest will not entitle the owner thereof to vote, to
receive dividends or to any rights of a shareholder
with respect to such fractional interest. In lieu of
any fractional interest, there shall be paid in cash an
amount (computed to the nearest cent) equal to such
fraction multiplied by $13.00 per share of BCG Stock.
(f) Stock Certificates. As soon as practicable after
the Effective Date, each holder of any of the shares of
Americorp Common Stock to be converted shall be
entitled, upon presentation and surrender of the
certificate or certificates representing such shares
(or, in the case of certificates claimed by the holder
thereof to have been lost, stolen or destroyed, an
affidavit or affirmation of this claim in such a manner
as BCG may reasonably require and, if BCG reasonably
requires, a bond of indemnity in form and amount and
with one or more sureties reasonably satisfactory to
BCG) to the transfer agent or agents designated by BCG,
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<PAGE>
to receive in exchange therefor a certificate or
certificates representing the number of whole shares of
BCG Stock to which such holder shall be entitled under
the Conversion Rate, including any cash payable in lieu
of a fractional interest. Upon the surrender of the
certificate or certificates which prior to the Merger
represented shares of Americorp Common Stock, the
holder thereof shall be entitled to receive any
dividends or other distributions (without interest)
made after the Effective Date which shall not have been
paid with respect to the number of shares of BCG Stock
represented by the certificate or certificates issued
upon surrender.
(g) BCG Stock. On the Effective Date, each share of
BCG Stock issued and outstanding immediately prior to
the Effective Date shall continue to evidence a share
of Common Stock of the Surviving Corporation.
6. TERMINATION OF SEPARATE EXISTENCE.
Upon the Effective Date, the separate existence of Americorp
shall cease, and the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each
of the Constituent Corporations; and all property, real, personal
and mixed, and all debts due on whatever account, and each and
every other interest of or belonging to or due to each of the
Constituent Corporations shall be taken and deemed to be
transferred to and invested in the Surviving Corporation without
further act or deed; and the title to any real estate, or any
interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason
of the Merger. The Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of
each of the Constituent Corporations; and any claims existing or
action or proceeding pending by or against either of the
Constituent Corporations may be prosecuted as if such Merger had
not taken place, or the Surviving Corporation may be substituted
in its place. Neither the rights of creditors nor any liens upon
the property of either of the Constituent Corporations shall be
impaired by the Merger.
7. FURTHER ASSIGNMENTS.
If at any time the Surviving Corporation shall consider or
be advised that any further assignments or assurances in law or
any other actions necessary or desirable to vest in said
Surviving Corporation, according to the terms thereof, the title
to any property or rights of Americorp, the proper officers and
directors of Americorp shall execute and make all such proper
assignments and assurances and do all things necessary and proper
to vest title in such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes of this
Merger Agreement.
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<PAGE>
<PAGE>
8. CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.
This Agreement is subject to, and consummation of the Merger
is conditioned upon, the fulfillment as of the Effective Date of
each of the following conditions:
(a) Approval of this Agreement by the affirmative vote
of the holders of a majority of the outstanding voting
shares of Americorp.
(b) Receipt of such consents, authorizations and
approvals from any and all governmental authorities,
bodies or agencies having jurisdiction over the
transactions contemplated by this Agreement, including,
but not limited to the Department of Banking and
Finance of the State of Georgia, and the expiration of
all applicable waiting or similar periods required by
law.
(c) Americorp shall have received from Kilpatrick &
Cody their opinion, in form and substance reasonably
satisfactory to Americorp, to the effect that:
(i) The merger of Americorp with and into BCG and
the issuance of shares of BCG Stock in connection
therewith, as described herein, will constitute a
tax-free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended.
(ii) No gain or loss will be recognized by holders
of Americorp Common Stock upon the exchange of
such stock for BCG Stock as a result of the
Merger.
(iii) The tax basis of the BCG Stock received
by shareholders of Americorp pursuant to the
Merger will be the same as the tax basis of the
shares of Americorp Common Stock exchanged
therefor.
(iv) The holding period of the shares of BCG Stock
received by the Americorp shareholders will
include the holding period of the shares of
Americorp Common Stock exchanged therefor,
provided that such Americorp Common Stock is held
as a capital asset on the date of consummation of
the Merger.
(d) The Secretary of State of Georgia shall have
issued a Certificate of Merger with respect to the
Merger.
(e) BCG shall have filed with the Securities and
Exchange Commission a registration statement (the BCG
Registration Statement ) under the Securities Act of
1933, as amended, on Form S-4 or some other appropriate
form covering the issuance of shares of BCG Stock to
the shareholders of Americorp pursuant to this
Agreement, and the BCG Registration Statement shall
have been declared effective, and all applicable
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<PAGE>
<PAGE>
waiting or similar periods required by law shall have
expired.
(f) All consents to the Merger that are required to be
secured from any party pursuant to any agreement with
BCG, Americorp or any of their respective subsidiaries
shall have been received.
9. TERMINATION.
This Merger Agreement may be terminated and the Merger
abandoned at any time before or after adoption of this Merger
Agreement by the Board of Directors of BCG or Americorp,
notwithstanding favorable action on the Merger by the
shareholders of Americorp, but not later than the Effective Date.
Notwithstanding anything to the contrary herein, BCG may
terminate this Agreement if greater than five percent of the
holders of Americorp Common Stock dissent from the Merger
provided for herein.
10. EXPENSES.
All of the expenses incurred by BCG in connection with the
authorization, preparation, execution and performance of this
Agreement, including, without limitation, all fees and expenses
of its agents, representatives, counsel and accountants and the
fees and expenses related to filing regulatory applications and
registration statements with state and federal authorities in
connection with the transactions contemplated hereby, shall be
paid by BCG. All expenses incurred by Americorp in connection
with the authorization, preparation, execution and performance of
this Agreement, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants for
Americorp, and the cost of reproducing and mailing the Notice of
Special Meeting, Proxy Statement and Proxy in connection with a
special meeting of the Americorp shareholders called for purposes
of submitting this Agreement for the approval of Americorp
shareholders, shall be paid by Americorp.
11. COUNTERPARTS; TITLE; HEADINGS.
This Merger Agreement may be executed in counterparts, each
of which when so executed shall be deemed to be an original, and
such counterparts shall together constitute one and the same
instrument. The title of this Merger Agreement and the headings
herein set out are for the convenience of reference only and
shall not be deemed a part hereof.
12. AMENDMENTS; ADDITIONAL AGREEMENTS.
At any time before or after approval and adoption by the
shareholders of Americorp, this Merger Agreement may be modified,
amended or supplemented by additional agreements, articles or
certificates as may be determined in the judgment of the
respective Boards of Directors of the Constituent Corporations to
be necessary, desirable or expedient to further the purposes of
this Merger Agreement, to clarify the intentions of the parties,
to add to or modify the covenants, terms or conditions contained
herein or to effectuate or facilitate any governmental approvals
of the Merger or this Merger Agreement, or otherwise to
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<PAGE>
<PAGE>
effectuate or facilitate the transactions contemplated thereby;
provided, however, that the Conversion Rate shall not be amended
following approval of this Merger Agreement by the Boards of
Directors of the Constituent Corporations and the shareholders of
Americorp unless such amendment shall be adopted and approved by
such Boards and such shareholders.
IN WITNESS WHEREOF, the Constituent Corporations have caused
this Agreement and Plan of Merger to be executed on their
respective behalves and their respective corporate seals affixed
hereto on the day and year above written.
(CORPORATE SEAL) BANK CORPORATION OF GEORGIA
Attest: /s/ James R. McLemore, Jr. By: /s/ Joseph W. Evans
James R. McLemore, Jr. Joseph W. Evans
Secretary President and CEO
(CORPORATE SEAL) AMERICORP, INC.
Attest: /s/ James R. McLemore, Jr. By: /s/ Joseph W. Evans
James R. McLemore, Jr. Joseph W. Evans
Secretary President and CEO
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<PAGE>
<PAGE>
APPENDIX B
GEORGIA DISSENTERS' RIGHTS STATUTES
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. (Code 1981, Section 14-2-1301, enacted by Ga. L. 1988, p.
1070, Section 1; Ga. L. 1993, p. 1231, Section 6.)
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 a 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;
<PAGE>
(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; or
(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. (Code
1981, Section 14-2-1302, enacted by Ga. L. 1988, p. 1070, Section 1;
Ga. L. 1989, p. 946, Section 58.)
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
registered in the names of different shareholders. (Code 1981, Section
14-2-1303, enacted by Ga. L. 1988, p. 1070, Section 1.)
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' 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. (Code 1981, Section 14-2-
1320, enacted by Ga. L. 1988, p. 1070, Section 1; Ga. L. 1993, p. 1231,
Section 17.)
<PAGE>
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. (Code 1981, Section 14-2-1321, enacted by Ga.
L. 1988, p. 1070, Section 1.)
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. (Code 1981,
Section 14-2-1322, enacted by Ga. L. 1988, p. 1070, Section 1.)
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 cancelled 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. (Code 1981, Section 14-2-1323, enacted by Ga. L. 1988, p. 1070,
Section 1.)
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 cancelled or modified by the taking of the proposed
corporate action. (Code 1981, Section 14-2-1324, enacted by Ga. L. 1988,
p. 1070, Section 1.)
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.
<PAGE>
(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. (Code 1981, Section 14-2-1325, enacted by Ga. L.
1988, p. 1070, Section 1; Ga. L. 1989, p. 946, Section 59; Ga. L. 1993,
p. 1231, Section 18.)
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. (Code 1981, Section 14-2-1326, enacted by Ga.
L. 1988, p. 1070, Section 1; Ga. L. 1990, p. 257, Section 20.)
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
(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. (Code 1981, Section 14-2-1327,
enacted by Ga. L. 1988, p. 1070, Section 1; Ga. L. 1989, p. 946,
Section 60; Ga. L. 1990, p. 257, Section 21; Ga. L. 1993, p. 1231,
Section 19.)<PAGE>
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 will commence the proceeding, which shall be a
non-jury 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 will 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 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. (Code 1981, Section 14-2-
1330, enacted by Ga. L. 1988, p. 1070, Section 1; Ga. L. 1989, p. 946,
Section 61; Ga. L. 1993, p. 1231, Section 20.)
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code
Section 14-2-1330 will 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;
(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. (Code 1981, Section 14-2-1331, enacted by Ga. L. 1988, p.
1070, Section 1.)<PAGE>
14-2-1332. Limitation of actions.
No action by any dissenter to enforce dissenters' rights will
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. (Code 1981, Section
14-2-1332, enacted by Ga. L. 1988, p. 1070, Section 1.)
<PAGE>
<PAGE>
Appendix C
November 2, 1995
Board of Directors
AmeriCorp, Inc.
7393 Hodgson Memorial Drive
Savannah, Georgia 31406
Board of Directors
Bank Corporation of Georgia
4951 Forsyth Road
Macon, Georgia 31210
Members of the Boards:
You have requested our opinion, as an independent financial
analyst to the common shareholders of AmeriCorp, Inc., Macon,
Georgia, ("AmeriCorp") and to the common shareholders of Bank
Corporation of Georgia, Macon, Georgia, ("BCG") as to the fair
market values of 1,824,628 shares (33.33%) of the outstanding
common stock of AmeriCorp and of a minority block of the
outstanding common stock of BCG, both as of September 30,
1995, such values to be used to recommend a fair and equitable
exchange ratio of BCG common stock to be issued to minority
shareholders of AmeriCorp.
As part of its banking analysis business, Alex Sheshunoff & Co.
Investment Banking is continually engaged in the valuation of
bank, bank holding company and thrift securities in connection
with mergers and acquisitions nationwide. Prior to being
retained for this assignment, Alex Sheshunoff & Co. Investment
Banking has provided professional services and products to BCG
and AmeriCorp. The revenues derived from such services and
products are insignificant when compared to the firm's total
gross revenues.
In connection with this assignment, we reviewed (i) the most
recent external auditor's reports to the Boards of Directors of
each organization; (ii) the September 30, 1995 Balance Sheet and
Income Statement for each organization and the audited December
31, 1994 Balance Sheet and Income Statement for each
organization; (iii) the Rate Sensitivity Analysis reports for
each organization; (iv) each organization's listing of marketable
securities showing rate, maturity and market value as compared to
book value; (v) each organization's internal loan classification
list; (vi) a listing of other real estate owned for each
organization; (vii) the budget and long range operating plan of
each organization; (viii) a listing of unfunded letters of credit
and any other off-balance sheet risks for each organization; (ix)
the Minutes of the Board of Directors of each organization; (x)
the most recent Board report for each organization; (xi) the
listing and description of significant real properties for each
organization; (xii) material leases on real and personal
property; (xiii) the directors and officers liability and blanket
bond insurance policies for each organization; and (xiv) market
conditions and current trading levels of outstanding equity
securities of both organizations.<PAGE>
Board of Directors
AmeriCorp, Inc.
Bank Corporation of Georgia
November 2, 1995
Page 2
We have also had discussions with the management of BCG and
AmeriCorp regarding their respective financial results and have
analyzed the most current financial data available on BCG and
AmeriCorp. We also considered such other information, financial
studies, analyses and investigations, and economic and market
criteria which we deemed relevant. We have met with the
management of BCG and AmeriCorp to discuss the foregoing
information with them.
We have not independently verified any of the information
reviewed by us and have relied on its being complete and accurate
in all material respects. In addition, we have not made an
independent evaluation of the assets of BCG or AmeriCorp.
In reaching our opinion we took into consideration the financial
benefits of the proposed transaction to all AmeriCorp and BCG
shareholders. Based on all factors that we deem relevant and
assuming the accuracy and completeness of the information and
data provided to us by BCG and AmeriCorp, it is our opinion as of
November 2, 1995, that a fair and equitable exchange ratio equals
0.084615 shares of Bank Corporation of Georgia common stock for
each share of AmeriCorp common stock.
Our opinion is directed to the Board of Directors of AmeriCorp and BCG
and does not constitute a recommendation to any stockholder of
AmeriCorp as to whether or not to exchange their shares for BCG
shares.
We hereby consent to the reference to our firm in the proxy
statement or prospectus related to the transaction and to the
inclusion of our opinion as an exhibit to the proxy statement or
prospectus related to the transaction.
Respectfully submitted,
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
AUSTIN, TEXAS
By: /s/ Wade Schussler
Wade Schuessler
Vice President
HWS/kac
<PAGE>
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 7 of the Bylaws of BCG authorizes indemnification of BCG's
officers and directors for any liability and expense incurred by them in
connection with or resulting from any threatened, pending or completed
legal action or other proceeding. An officer or director may only be
indemnified if such officer or director acted in good faith and in a manner
such officer or director reasonably believed to be in, or not opposed to,
the best interest of BCG, and, with respect to a criminal matter, such
officer or director did not have reasonable cause to believe that his
conduct was unlawful. No officer or director who has been adjudged liable
for negligence or misconduct in the performance of his corporate duties is
entitled to indemnification, unless and except to the extent that the court
reaching such a determination of liability, in view of all the relevant
circumstances, will also determine that despite such liability such person
is fairly and reasonably entitled to indemnification.
Any officer or director who has been wholly successful on the merits
or otherwise in an action or proceeding in his official capacity is
entitled to indemnification by BCG as of right. All other determinations
in respect of indemnification will be made by either: (i) a majority vote
of a quorum of disinterested directors; (ii) independent legal counsel
selected in accordance with the Bylaws and at the request of either the
corporation or the person seeking indemnification; or (iii) the holders of
a majority of BCG's stock who at such time are entitled to vote for the
election of directors.
Expenses with respect to an indemnification action may be advanced by
BCG upon receipt of an undertaking to repay such amount unless it is
determined that the recipient is entitled to indemnification. In the event
any payments are made to an officer or director by way of indemnity, other
than by court order, action of the shareholders or by an insurance carrier,
BCG must notify its shareholders of such payment and all relevant details
in a timely manner.
The rights of indemnification provided for in Article 7 are in
addition to any rights to which the direct or officer may otherwise be
entitled.
The provisions of the BCG's Bylaws on indemnification are consistent
in all material respects with the laws of the State of Georgia, which
authorize indemnification of corporate officers and directors.
BCG's directors and officers are insured against losses arising from
any claim against them as such for wrongful acts or omissions, subject to
certain limitations.
<PAGE>
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. Description of Exhibit
--------- ----------------------
2.1 Agreement and Plan of Merger by and between BCG and
Americorp, dated November 15, 1995.**
2.2 -- Stock Purchase Agreement by and among BCG and Patricia
Van Den Heuvel, Timothy Van Den Heuvel, Raymond Van Den
Heuvel, VHC, Inc. and David Van Den Heuvel dated July
11, 1995, filed as Exhibit 2.5 to the Registrant's
Registration Statement on Form S-4, filed with the SEC
as of October 16, 1995, which Exhibit is by this
reference herein incorporated.
2.3 -- Amendment No. One to Stock Purchase Agreement by and
among BCG and Patricia Van Den Heuvel, Timothy Van Den
Heuvel, Raymond Van Den Heuvel, VHC, Inc. and David
Van Den Heuvel dated August 28, 1995, filed as Exhibit
2.6 to the Registrant's Registration Statement on
Form S-4, filed with the SEC as of October 16, 1995,
which Exhibit is by this reference herein incorporated.
2.4 -- Agreement and Plan of Reorganization by and between BCG and
Effingham, dated July 13, 1995, filed as Exhibit 2.1 to the
Registrant's Registration Statement on Form S-4, filed with the
SEC as of October 16, 1995, which Exhibit is by this reference
herein incorporated.
2.5 -- Amendment No. One to Agreement and Plan of Reorganization
between BCG and Effingham, dated September 8, 1995,
filed as Exhibit 2.2 to the Registrant's Registration Statement
on Form S-4, filed with the SEC as of October 16, 1995, which
Exhibit is by this reference herein incorporated.
2.6 -- Amendment No. Two to Agreement and Plan of Reorganization by and
between BCG and Effingham, dated October 2, 1995, filed as
Exhibit 2.3 to the Registrant's Registration Statement on Form S
S-4, which Exhibit is by this reference herein incorporated.
2.7 -- Agreement and Plan of Merger between Effingham Interim
Corporation and Effingham, dated September 8, 1995, filed as
Exhibit 2.4 to the Registrant's Registration Statement on Form
S-4, filed with the SEC as of October 16, 1995, which Exhibit is
by this reference herein incorporated.
2.8 -- Amendment No. One to Agreement and Plan of Merger between
Effingham Interim Corporation and Effingham, dated November 6,
1995.**
3.1 -- Articles of Incorporation of BCG, as amended, filed as Exhibit
3.1 to the Registrant's Registration Statement on Form S-4,
filed with the SEC as of October 16, 1995, which Exhibit is by
this reference herein incorporated.
3.2 -- By-laws of BCG, as amended, filed as Exhibit 3.2 to the
Registrant's Registration Statement on Form S-4, filed with the
SEC as of
<PAGE>
<PAGE>
October 16, 1995, which Exhibit is by this reference herein
incorporated.
4.1 -- See exhibits 3.1 and 3.2 for provisions of Articles of
Incorporation and By-laws, as amended, which define the rights
of the holders of Common Stock of BCG.
5 -- Opinion of Kilpatrick & Cody as to the legality of the shares
offered hereunder.**
8 -- Opinion of Kilpatrick & Cody as to the federal tax consequences
to the Americorp shareholders with respect to the Americorp
Merger.
10.1 -- Consulting Agreement by and between Ronald Van Den Heuvel and
BCG, dated September 8, 1995, filed as Exhibit 10.1 to the
Registrant's Registration Statement on Form S-4, filed with the
SEC as of October 16, 1995, which Exhibit is by this reference
herein incorporated.
10.2 -- Management Fee Agreement dated January 1, 1994 by and between
Ameribank and BCG, filed as Exhibit 10.3 to the Registrant's
Registration Statement on Form S-4, filed with the SEC as of
October 16, 1995, which Exhibit is by this reference herein
incorporated.
10.3 -- Agreement dated December 10, 1993 by and between Americorp and
BCG, filed as Exhibit 10.4 to the Registrant's Registration
Statement on Form S-4, filed with the SEC as of October 16,
1995, which Exhibit is by this reference herein incorporated.
10.4 -- Lease Agreement dated November 16, 1988 by and among Michael A.
Angle and W.H. Anderson, II as Lessors and FSB as Lessee, filed
as Exhibit 10.5 to the Registrant's Registration Statement on
Form S-4, filed with the SEC as of October 16, 1995, which
Exhibit is by this reference herein incorporated.
10.5 -- Lease Addendum dated March 12, 1992 by and among Michael A.
Angle and W. H. Anderson, II as Lessors and FSB as Lessee, filed
as Exhibit 10.6 to the Registrant's Registration Statement on
Form S-4, filed with the SEC as of October 16, 1995, which
Exhibit is by this reference herein incorporated.
10.6 -- Sublease dated April 1, 1993 by and between FSB as Sublessor and
Middle Georgia as Sublessee, filed as Exhibit 10.7 to the
Registrant's Registration Statement on Form S-4, filed with the
SEC as of October 16, 1995, which Exhibit is by this reference
herein incorporated.
10.7 -- Agreement dated May 1, 1993 by and between BCG and Stephen W.
Doughty, filed as Exhibit 10.8 to the Registrant's Registration
Statement on Form S-4, filed with the SEC as of October 16,
1995, which Exhibit is by this reference herein incorporated.*
10.8 -- Agreement dated May 1, 1993 by and between BCG and J. Thomas
Wiley, Jr., filed as Exhibit 10.9 to the Registrant's
Registration Statement on Form S-4, filed with the SEC as of
October 16, 1995, which Exhibit is by this reference herein
incorporated *
<PAGE>
<PAGE>
10.9 -- Agreement dated September 8, 1995 by and between BCG and Ronald
Van Den Heuvel, filed as Exhibit 10.2 to the Registrant's
Registration Statement on Form S-4, filed with the SEC as of
October 16, 1995, which Exhibit is by this reference herein
incorporated.
10.10 -- Incentive Compensation Agreement dated January 1, 1993 by and
between BCG and Stephen W. Doughty, filed as Exhibit 10.10 to
the Registrant's Registration Statement on Form S-4, filed with
the SEC as of October 16, 1995, which Exhibit is by this
reference herein incorporated.*
10.11 -- Incentive Compensation Agreement dated January 1, 1993 by and
between BCG and J. Thomas Wiley, Jr., filed as Exhibit 10.11 to
the Registrant's Registration Statement on Form S-4, filed with
the SEC as of October 16, 1995, which Exhibit is by this
reference herein incorporated.*
10.12 -- BCG Key Employee Stock Option Plan filed as Exhibit 10.12 to the
Registrant's Registration Statement on Form S-4, filed with the
SEC as of October 16, 1995, which Exhibit is by this reference
herein incorporated.
10.13 -- Revolving Credit and Term Loan Agreement by and between BCG and
Liberty Savings Bank, FSB dated December 18, 1992, filed as
Exhibit 10.13 to the Registrant's Registration Statement on Form
S-4, filed with the SEC as of October 16, 1995, which Exhibit is
by this reference herein incorporated.
10.14 -- Loan Commitment Letter from First Liberty Bank to BCG dated
October 15, 1995, filed as Exhibit 10.14 to the Registrant's
Registration Statement on Form S-4, filed with the SEC as of
October 16, 1995, which Exhibit is by this reference herein
incorporated.
10.15 -- Stock Redemption Agreement by and between BCG and Joseph W.
Evans, dated April 26, 1995, filed as Exhibit 10.15 to the
Registrant's Registration Statement on Form S-4, filed with the
SEC as of October 16, 1995, which Exhibit is by this reference
herein incorporated.
10.16 -- Branch Purchase and Assumption Agreement dated October 18, 1995
by and between Bank South and Ameribank, N.A.**
21 -- Subsidiaries of BCG, filed as Exhibit 21 to the Registrant's
Registration Statement on Form S-4, filed with the SEC as of
October 16, 1995, which Exhibit is by this reference herein
incorporated.
23.1 -- Consent of Kilpatrick & Cody (included as part of Exhibit 5).
23.2 -- Consents of Evans, Porter, Bryan & Co.
23.3 -- Consent of Wilson, Corbitt & Kessler.
24 -- Power of Attorney (included on the signature page to the
Registration Statement).
99(a) -- Form of Proxy (included in Part II of the Registration
Statement).
* Compensatory Plan or Arrangement.
** Previously Filed
<PAGE>
<PAGE>
(b) Financial Statement Schedules.
-----------------------------
No financial statements schedules are required to be filed as part of
this Registration Statement.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose 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 offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4, 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
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.
(c) 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.
<PAGE>
<PAGE>
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "ACT") may be permitted to directors, officers
and controlling persons of BCG pursuant to the foregoing provisions, or
otherwise, BCG 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 BCG of expenses incurred or paid by a director, officer or controlling
person of BCG 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, BCG will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
<PAGE>
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BANK
CORPORATION OF GEORGIA HAS DULY CAUSED THIS AMENDMENT NO. ONE TO
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF MACON, STATE OF GEORGIA,
ON JANUARY 26, 1996.
BANK CORPORATION OF GEORGIA
By: /s/ Joseph W. Evans
---------------------------------
Joseph W. Evans
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THIS AMENDMENT NO. ONE TO REGISTRATION STATEMENT HAS BEEN SIGNED
BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON JANUARY 26, 1996.
Signature Title
--------- -----
/s/ Joseph W. Evans President, CEO and Director
- ---------------------------
Joseph W. Evans (Principal Executive Officer)
* Chairman of the Board of Directors
- ---------------------------
William H. Anderson, II
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE>
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
* Chief Financial Officer (Principal Accounting
- ---------------------------- and Financial Officer)
James R. McLemore, Jr.
* Director
- ----------------------------
Halstead T. Anderson, II
* Director
- ----------------------------
Charles B. Evans, Jr.
* Director
- ----------------------------
James A. Faulkner
* Director
- ----------------------------
W. Carl Joiner, Sr.
Director
- ----------------------------
John W. Ramsey
* Director
- ----------------------------
Kenneth D. Sams
* By: /s/ Joseph A. Evans
Joseph A. Evans as
Attorney-in-Fact
<PAGE>
<PAGE>
Exhibit Index
Exhibits Description of Exhibit
- -------- ----------------------
8 -- Opinion of Kilpatrick & Cody as to the federal tax
consequences to the Americorp shareholders with
respect to the Americorp Merger.
23.1 -- Consent of Kilpatrick & Cody (included as part of
Exhibit 8).
23.2 -- Consents of Evans, Porter, Bryan & Co.
23.3 -- Consent of Wilson, Corbitt & Kessler.
99(a) -- Form of Proxy (included in Part II of the
Registration Statement).
<PAGE>
<PAGE>
January 26, 1995
404 815-6480
Americorp, Inc.
7393 Hodgson Memorial Drive
Savannah, Georgia 31406
Ladies and Gentlemen:
We have been requested to render our opinion expressed below
in connection with the proposed merger (the "Merger") of
Americorp, Inc. ("Americorp") with and into Bank Corporation of
Georgia ("BCG"), pursuant to the terms and conditions of that
certain Agreement and Plan of Reorganization, as amended (the
"Agreement"), by and between Americorp and BCG described in that
certain Registration Statement on Form S-4 related to shares of
BCG common stock to be issued in connection with the merger of
Americorp and BCG, to be filed by BCG with the Securities and
Exchange Commission (the "Registration Statement"). Unless
otherwise indicated, terms used herein shall have the same
meaning as defined in the Registration Statement.
In rendering our opinion, we have examined the Agreement and
Plan of Merger (the "Merger Agreement"), applicable law,
regulations, rulings and decisions. Our opinion is based upon
our understanding and belief that the facts set forth in the
Registration Statement are true and correct.
We have also assumed (with your permission) that (a) there
is no plan or intention by the shareholders of Americorp (other
than BCG) to sell or otherwise dispose of the BCG Common Stock to
be received by them in the Americorp Merger which would reduce
their ownership of BCG Common Stock to a number of shares having,
in the aggregate, a fair market value, as of the date of the
consummation of the Americorp Merger, of less than fifty percent
(50%) of the fair market value of the Americorp Common Stock
owned prior to the Americorp Merger by such stockholders of
Americorp, (b) BCG has no plan or intention to redeem or
otherwise reacquire any of the BCG Common Stock exchanged for the
<PAGE>
<PAGE>
stock of Americorp in the Americorp Merger, and (c) BCG will
continue Americorp s historic business or use a significant
portion of Americorp s historic business assets in a business.
Whenever our opinion herein as to the existence or absence
of any fact is qualified by the phrase "to the best of our
knowledge," "based on our knowledge," "known to us" or other
similar phrases, it is intended to signify that during the course
of our representation of BCG no information has come to the
attention of the attorneys presently in this firm which would
give them actual knowledge of the existence or absence of such
facts. Except as may be expressly described herein, we have not
undertaken any independent investigation to determine the
existence or absence of such facts and no inference as to our
knowledge of the existence or absence of such facts should be
drawn from our serving as counsel for BCG.
Based on and in reliance on the foregoing and the further
qualifications set forth below, and provided that the Americorp
Merger is consummated in accordance with the Merger Agreement, it
is our opinion that:
(1) The merger of Americorp into BCG and the issuance of
shares of BCG Common Stock in connection therewith, as
described in the Merger Agreement, will constitute a
tax-free reorganization under Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the
"Code").
(2) Except for the recognition of gain as required by
Section 302 of the Code with respect to the receipt by
holders of Americorp Common Stock of cash in lieu of
fractional shares, no gain or loss will be recognized
for Federal income tax purposes by the holders of
Americorp Common Stock upon the exchange of such stock
solely for BCG Common Stock as a result of the
Americorp Merger.
(3) The aggregate tax basis of the BCG Common Stock
received by an Americorp shareholder pursuant to the
Americorp Merger will be the same as the aggregate tax
basis of the shares of Americorp Common Stock exchanged
therefor, decreased by any portion of such tax basis
allocated to the fractional shares of BCG Common Stock
that are treated as redeemed by BCG.
(4) The holding period of the shares of BCG Common Stock
received by an Americorp shareholder as part of the
Americorp Merger will include the holding period of the<PAGE>
shares of Americorp Common Stock exchanged therefor,
provided that the Americorp Common Stock is held as a
capital asset on the date of the consummation of the
Americorp Merger.
In general, cash received by holders of Americorp Common
Stock exercising their dissenters rights will be treated as
amounts distributed in redemption of their shares of Americorp
Common Stock and will be taxable under the provisions of Section
302 of the Code.
This letter is solely for the information and use of you
and the shareholders of Americorp, and, except to the extent
that such may be referred to in the Registration Statement,
it is not to be used, circulated, quoted, or referred to
for any other purpose or relied upon by any other person
for whatever reason without our prior written consent.
KILPATRICK & CODY
By: /s/ R. Alexander Bransford, Jr.
R. Alexander Bransford, Jr.
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated February 16, 1995, except for
note 13 as to which the date is November 15, 1995, accompanying
the financial statements of AmeriCorp, Inc. contained in the Form
S-4 Registration Statement to be filed with the Securities and
Exchange Commission. We consent to the use of the aforementioned
reports in the Form S-4, and to the use of our name as it appears
under the caption "Experts".
EVANS, PORTER, BRYAN & CO.
/s/ Evans, Porter, Bryan & Co.
Atlanta, Georgia
____________, 1996
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated March 3, 1995, except for
note 13 as to which the date is November 15, 1995, accompanying
the financial statements of Bank Corporation of Georgia contained
in the Form S-4 Registration Statement to be filed with the Securities
and Exchange Commission. We consent to the use of the aforementioned
reports in the Form S-4, and to the use of our name as it appears
under the caption "Experts".
EVANS, PORTER, BRYAN & CO.
/s/ Evans, Porter, Bryan & Co.
Atlanta, Georgia
___________, 1996
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated April 11, 1995, except for
note 10 as to which the date is September 8, 1995, accompanying
the financial statements of Effingham Bank & Trust contained
in the Form S-4 Registration Statement to be filed with the Securities
and Exchange Commission. We consent to the use of the aforementioned
reports in the Form S-4, and to the use of our name as it appears
under the caption "Experts".
EVANS, PORTER, BRYAN & CO.
/s/ Evans, Porter, Bryan & Co.
Atlanta, Georgia
___________, 1996
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
We have issued our report dated March 11, 1994, based on our audit
of the financial statements of Effingham Bank & Trust for the year
ended December 31, 1993. As independent public accountants, we
hereby consent to the use of our report and to all references to
our firm included in or made a part of the S-4 Registration
Statement of Bank Corporation of Georgia and related Proxy
Statement/Prospectus of Americorp, Inc. Further, be advised that
there were no disagreements between our firm and Effingham Bank &
Trust of the nature described in item 304(b) of Regulation S-K of
the Securities and Exchange Commission.
WILSON, CORBITT & KESSLER
January 26, 1996
Springfield, Georgia
<PAGE>
<PAGE>
PROXY
AMERICORP, INC.
SAVANNAH, GEORGIA
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED, AND NOT REVOKED,
THE SHARES OF COMMON STOCK IT REPRESENTS WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE CHOICE SPECIFIED BELOW, AND IF NO CHOICE IS SPECIFIED,
IT WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND PLAN OF MERGER (THE
"AMERICORP MERGER AGREEMENT").
The undersigned shareholder of Americorp, Inc. ("AMERICORP") hereby
appoints Joseph W. Evans or J. Thomas Wiley, Jr. or either of them, with
full power of substitution to each, the proxies of the undersigned to vote,
as designated below, the shares of the undersigned at the Special Meeting
of Shareholders of Americorp to be held on __________________, 1996 and at
any adjournments thereof:
(a) PROPOSAL TO APPROVE THE AMERICORP MERGER AGREEMENT, providing for
the merger of Americorp with and into Bank Corporation of Georgia, pursuant
to which each share of Common Stock of Americorp outstanding on the
effective date of the merger (other than those shares of Americorp Common
Stock owned by BCG, which will be cancelled) will be exchanged for .084615
shares of common stock of Bank Corporation of Georgia, $1.00 par value per
share, and each share of Preferred Stock of Americorp issued and
outstanding on the effective date of the merger will be cancelled.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(b) IN ACCORDANCE WITH THEIR BEST JUDGMENT with respect to any other
matters which may properly come before the meeting and any adjournment
thereof.
Please date and sign this Proxy exactly as your name appears below:
Dated: _______________________, 1996
____________________________________
____________________________________
NOTE: When signing as attorney, trustee, administrator, executor or
guardian, please give your full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. In
the case of joint tenants, each joint owner must sign.
