<PAGE> 1
DECEMBER 3, 1993 REGISTRATION NO. 33-72430
-------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
FORM S-4 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST NATIONAL BANCORP
--------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 6711 58-1415138
- ---------------- ------------------ -------------------
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSI- IDENTIFICATION NO.)
INCORPORATION OR FICATION CODE
ORGANIZATION) NUMBER)
303 JESSE JEWELL PARKWAY, SUITE 700
P. O. DRAWER 937
GAINESVILLE, GEORGIA 30503
-------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
(404) 503-2000
----------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
C. TALMADGE GARRISON
SENIOR VICE PRESIDENT,
SECRETARY AND TREASURER
FIRST NATIONAL BANCORP
303 JESSE JEWELL PARKWAY, SUITE 700
P. O. DRAWER 937
GAINESVILLE, GEORGIA 30503
(404) 503-2104
-----------------------------------------
(NAME, ADDRESS, AND PHONE NUMBER OF AGENT FOR SERVICE)
COPIES TO:
T. TREADWELL SYFAN
STEWART, MELVIN & HOUSE
ATTORNEYS AT LAW
HUNT TOWER
200 MAIN STREET
P. O. BOX 430
GAINESVILLE, GEORGIA 30503
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFERING: AS SOON AS PRACTICAL
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT (THE APPROXIMATE DATE
BEING JANUARY 21, 1994).
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. / /
CALCULATION OF REGISTRATION FEE
------------------------------------------
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
BEING BEING PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE* PRICE* FEE
- ---------- ---------- ---------- ---------- ------------
COMMON STOCK 366,382 SHARES $20.50/20.00 $7,499,246 $2,343.51
$1.00 PAR
VALUE
- -------------------------------------------------------------------------------
*AS TO 237,086 SHARES, PURSUANT TO RULE 457(F), BASED ON THE MARKET
VALUE OF METRO BANCORP, INC. COMMON STOCK ($3.50 PER SHARE) THAT WOULD BE
CONVERTED INTO THE FIRST NATIONAL BANCORP COMMON STOCK (THE OFFERED SECURITIES)
PURSUANT TO THE TRANSACTIONS DESCRIBED HEREIN; AS TO 106,126 SHARES, PURSUANT
TO RULE 457(A), BASED ON THE AGREED UPON VALUE OF FIRST NATIONAL BANCORP COMMON
STOCK PURSUANT TO THE TRANSACTIONS DESCRIBED HEREIN ($20.50 PER SHARE); AS TO
23,170 SHARES, PURSUANT TO RULE 457(C), BASED ON THE AVERAGE OF BID AND ASK
PRICE OF FIRST NATIONAL BANCORP COMMON STOCK ON DECEMBER 1, 1993 ($20.00 PER
SHARE).
------------------------------------
(AN INDEX OF ALL EXHIBITS ATTACHED HERETO IS PROVIDED AT SEQUENTIALLY
NUMBERED PAGE ____)
<PAGE> 2
FIRST NATIONAL BANCORP
CROSS REFERENCE SHEET
(Pursuant to Item 501(b) of Reg. S-K)
CAPTION OR LOCATION
ITEM NUMBER OF FORM S-4 IN PROSPECTUS
----------------------- -------------
1. Outside Front Cover Page of Prospectus Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Available Information;
Cover Pages of Prospectus Incorporation by Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings Introduction; Summary of
to Fixed Charges and Reorganization; Per Share
Other Information Information; Market and
Stock Price Information; Metro
Bancorp Selected Financial
Data (Unaudited)
4. Terms of the Transaction Summary of Reorganization; The
Proposed Reorganization; Effect
of Reorganization on Share-
holders; Description of Stock;
Federal Income Tax Consequences
5. Pro Forma Financial Information First Bancorp and Metro Bancorp
Pro Forma Condensed Combined
Balance Sheet Information
(Unaudited); First Bancorp and
Metro Bancorp Pro Forma
Condensed Combined Statements
of Income (Unaudited)
6. Material Contacts with the Negative Answer
Company Being Acquired
7. Additional Information Required Not Applicable
for Reoffering by Persons
and Parties Deemed to be
Underwriters
8. Interests of Named Experts Legal Opinion
and Counsel
9. Commission Position on Indemnification
Indemnification of Securities
Act Liabilities
10. Information with Respect to Not Applicable
S-3 Registrants
11. Incorporation of Certain Not Applicable
Information by Reference
<PAGE> 3
<TABLE>
<S> <C>
12. Information with Respect to Incorporation of Certain
S-2 or S-3 Registrants Documents by Reference
13. Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference; Per Share Information;
Market and Stock Price Information
14. Information with Respect to Not Applicable
Registrants Other Than S-2
or S-3 Registrants
15. Information with Respect Not Applicable
to S-3 Companies
16. Information with Respect Not Applicable
to S-2 or S-3 Companies
17. Information with Respect Introduction; Summary of the Reorganization;
to Companies Other than S-2 Per Share Information; Market and Stock Price
or S-3 Companies Information; Metro Bancorp Selected
Financial Data (Unaudited); Metro Bancorp
Management's Discussion and Analysis
of Financial Condition and Results of
Operations for the Years Ended December 31,
1992, 1991, and 1990; Metro Bancorp
Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three
and Nine Month Periods ended September 30,
1993 and 1992; Metro Bancorp and Subsidiary
Consolidated Financial Statements
18. Information if Proxies, Consents Introduction; Rights of Dissenting Shareholders;
or Authorizations are to be Incorporation of Certain Documents by
Solicited Reference; Metro Bancorp Shareholders;
Management of First National Bancorp;
Summary of Reorganization
19. Information if Proxies, Not Applicable
Consents or Authorizations are
not to be Solicited or in an
Exchange Offer
</TABLE>
<PAGE> 4
January 21, 1994
Dear Common Shareholder:
The enclosed packet contains information about the proposed acquisition
of Metro Bancorp, Inc. by First National Bancorp of Gainesville, Georgia. The
merger has the support of your Board of Directors, and we respectfully request
your vote in its favor.
Enclosed are (1) Notice of Special Shareholders' Meeting; (2) Proxy;
(3) Proxy Statement with appendices; (4) First National Bancorp's 1992 Annual
Report to Shareholders; (5) First National Bancorp's 1993 Annual Meeting Proxy
Statement; (6) First National Bancorp's Quarterly Report on Form 10-Q for the
Quarter ended September 30, 1993; and (7) First National Bancorp's Current
Report on Form 8-K dated June 11, 1993.
The enclosed Proxy Statement contains a great amount of information
concerning Metro Bancorp, Inc., First National Bancorp and the proposed
acquisition. We hope you will take the time to study the Proxy Statement
carefully. Feel free to contact me, or any of our other officers or directors,
if you have any questions or feel we can be of assistance.
It's very important to us that you return your signed Proxy to Metro
Bancorp, Inc. in time for it to be received not later than 4:00 p.m. on Monday,
February 21, 1994, to insure that your shares are represented at the Special
Shareholders' Meeting.
As provided in the Proxy Statement, you may elect to exchange each
share of Metro Bancorp, Inc. common stock held by you for .20 shares of First
National Bancorp stock or for $4.00 in cash, if the acquisition is approved.
According to current quotations on NASDAQ, as of January 12, 1994, the bid
price of First National Bancorp stock was $21.25 per share and the asking price
was $22.00 per share. Of course, First National Bancorp stock is subject to
market price fluctuations the same as any other stock which is bought and sold.
In addition, additional consideration may be payable to you after the
consummation date depending on the outcome of certain asset collection, upgrade
and disposition efforts of The Commercial Bank. See the section entitled "THE
PROPOSED REORGANIZATION - Additional Consideration Payable for Metro Bancorp
Common Stock" in the Proxy Statement.
If possible, please try to attend the Special Shareholders' Meeting to
be held in the O'Neal Community Room at The Commercial Bank, 6636 Church
Street, Douglasville, Georgia, at 3:00 P.M. on Tuesday, February 22, 1994.
For the Board of Directors,
Robert R. Pope, Chairman
<PAGE> 5
January 21, 1994
Dear Holder of Series 1992 Preferred Stock:
The enclosed packet contains information about the proposed acquisition
of Metro Bancorp, Inc. by First National Bancorp of Gainesville, Georgia. The
merger has the support of your Board of Directors, and we respectfully request
your vote in its favor. While your stock is generally nonvoting stock, under
Georgia law you have the right to vote on the merger.
Enclosed are (1) Notice of Special Shareholders' Meeting; (2) Proxy;
(3) Proxy Statement with appendices; (4) First National Bancorp's 1992 Annual
Report to Shareholders; (5) First National Bancorp's 1993 Annual Meeting Proxy
Statement; (6) First National Bancorp's Quarterly Report on Form 10-Q for the
Quarter ended September 30, 1993; and (7) First National Bancorp's Current
Report on Form 8-K dated June 11, 1993.
The enclosed Proxy Statement contains a great amount of information
concerning Metro Bancorp, Inc., First National Bancorp and the proposed
acquisition. We hope you will take the time to study the Proxy Statement
carefully. Feel free to contact me, or any of our other officers or directors,
if you have any questions or feel we can be of assistance.
It's very important to us that you return your signed Proxy to Metro
Bancorp, Inc. in time for it to be received not later than 4:00 p.m. on Monday,
February 21, 1994, to insure that your shares are represented at the Special
Shareholders' Meeting.
As provided in the Proxy Statement, each share of Metro Bancorp, Inc.
preferred stock held by you will be purchased for cash in the amount of $10.00
plus the amount of any accrued but unpaid dividends, if the acquisition is
approved.
If possible, please try to attend the Special Shareholders' Meeting to
be held in the O'Neal Community Room at The Commercial Bank, 6636 Church
Street, Douglasville, Georgia, at 3:00 P.M. on Tuesday, February 22, 1994.
For the Board of Directors,
Robert R. Pope, Chairman
<PAGE> 6
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF METRO BANCORP, INC.,
DOUGLASVILLE, GEORGIA
A special meeting of all shareholders of Metro Bancorp, Inc. has been
called by the board of directors and will be held at 3:00 P.M. on Tuesday,
February 22, 1994, in the O'Neal Community Room at The Commercial Bank, 6636
Church Street, Douglasville, Georgia for the purpose of considering and voting
upon:
(1) the proposed merger of Metro Bancorp, Inc. into First
National Bancorp, as described in the accompanying
Proxy Statement and the Agreement of Reorganization and Plan of
Merger (the "Reorganization Plan") attached to the Proxy
Statement as Appendix A; and
(2) the transaction of such other business as may properly come
before the meeting or any adjournments thereof.
Management at present knows of no other business to be
presented.
The approval of the merger transaction, which has the support of your
board of directors, requires the affirmative vote of a majority (787,939
shares) of the aggregate of the 1,394,627 outstanding shares of Metro Bancorp,
Inc. common stock and the 181,250 outstanding shares of Metro Bancorp, Inc.
Series 1992 preferred stock, and the affirmative vote of a majority of the
416,256 shares of Metro Bancorp, Inc. Series A preferred stock. Bank South,
N.A., which is the holder of all of the Metro Bancorp, Inc. Series A preferred
stock, has agreed to vote said shares in favor of the merger. We respectfully
request your vote in favor of the merger transaction and ask you to register
your vote on the enclosed Proxy. The Proxy should be completed and returned to
Metro Bancorp, Inc. as soon as possible, but in any case no later than 4:00
P.M. on Monday, February 21, 1994, the day before the special meeting of
shareholders.
Please read the enclosed Proxy Statement carefully for a complete
discussion of matters relating to the Reorganization Plan and the Proxy.
AGAIN, PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY PROMPTLY SUCH
THAT IT WILL BE RECEIVED BY METRO BANCORP, INC. NO LATER THAN 4:00 P.M. ON
TUESDAY, FEBRUARY 21, 1994. YOUR PROXY MAY BE REVOKED, IF YOU CHOOSE, AT ANY
TIME PRIOR TO ITS BEING EXERCISED AT THE SPECIAL MEETING OF SHAREHOLDERS.
Douglasville, Georgia For the Board of Directors,
January 21, 1994
Robert R. Pope
Chairman
<PAGE> 7
PROXY STATEMENT FOR
METRO BANCORP, INC.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 22, 1994
FIRST NATIONAL BANCORP
PROSPECTUS
366,382 SHARES OF COMMON STOCK OF FIRST NATIONAL BANCORP WHICH MAY BE
ISSUED IN CONNECTION WITH THE MERGER OF METRO BANCORP, INC. INTO FIRST NATIONAL
BANCORP
===============================================================================
FIRST NATIONAL BANCORP HAS FILED A REGISTRATION STATEMENT WITH THE
SECURITIES AND EXCHANGE COMMISSION COVERING THE MAXIMUM OF 366,382 SHARES OF
COMMON STOCK OF FIRST NATIONAL BANCORP TO BE ISSUED TO SHAREHOLDERS OF METRO
BANCORP, INC. IN CONNECTION WITH THE MERGER OF METRO BANCORP, INC. INTO FIRST
NATIONAL BANCORP. THIS PROXY STATEMENT ALSO CONSTITUTES A PROSPECTUS OF FIRST
NATIONAL BANCORP FILED AS PART OF SUCH REGISTRATION STATEMENT. SEE "THE
PROPOSED REORGANIZATION."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY FIRST NATIONAL BANCORP. THIS PROXY STATEMENT DOES NOT CONSTITUTE
AN OFFER OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROXY STATEMENT AT ANY TIME DOES NOT IMPLY THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THE SHARES OF COMMON STOCK OF FIRST NATIONAL BANCORP TO BE ISSUED IN
CONNECTION WITH THE REORGANIZATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION; NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THIS PROXY STATEMENT DOES NOT RELATE TO ANY RESALES OF COMMON STOCK OF
FIRST NATIONAL BANCORP RECEIVED BY ANY PERSON UPON CONSUMMATION OF THE MERGER
AND NO PERSON IS AUTHORIZED TO MAKE ANY USE OF THIS PROXY STATEMENT IN
CONNECTION WITH ANY SUCH RESALE.
ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT WITH RESPECT TO FIRST
NATIONAL BANCORP AND ITS SUBSIDIARIES WAS SUPPLIED BY THOSE ENTITIES, AND ALL
INFORMATION WITH RESPECT TO METRO BANCORP, INC. AND ITS SUBSIDIARY WAS SUPPLIED
BY METRO BANCORP, INC.
THE DATE OF THIS PROXY STATEMENT IS JANUARY 18, 1994.
<PAGE> 8
AVAILABLE INFORMATION
First National Bancorp is subject to the informational requirements of
the Securities Exchange Act of 1934 and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and information statements
and other information filed by First National Bancorp can be inspected and
copied at the public reference facilities maintained by the Commission at the
Commission's office at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the Commission's Regional Offices in New York (75 Park Place,
14th Floor, New York, New York 10007) and Chicago (Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60621-2511). Copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
Additional information regarding First National Bancorp and the shares
of common stock offered hereby is contained in the Registration Statement and
the exhibits relating thereto filed with the Commission under the Securities
Act of 1933, which may be inspected without charge at the office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies
thereof may be obtained from the Commission at prescribed rates. This Proxy
Statement does not contain all of the information set forth in the Registration
Statement and exhibits thereto which First National Bancorp has filed with the
Commission under the Securities Act of 1933 and to which reference is hereby
made for further information with respect to First National Bancorp and the
securities offered hereby.
The common stock of First National Bancorp, $1.00 par value per share,
is listed on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") and reports and other information concerning First National
Bancorp can be inspected at the offices of NASDAQ at NASDAQ Reports Section,
3rd Floor, 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS OR PARTS OF DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. UPON WRITTEN
OR ORAL REQUEST OF ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, FIRST
NATIONAL BANCORP WILL PROMPTLY FURNISH TO SUCH PERSON, WITHOUT CHARGE, A COPY
OF ANY AND ALL INFORMATION THAT HAS BEEN INCORPORATED BY REFERENCE HEREIN.
SUCH REQUESTS SHOULD BE DIRECTED TO C. TALMADGE GARRISON, SECRETARY-TREASURER,
FIRST NATIONAL BANCORP, P.O. DRAWER 937, GAINESVILLE, GEORGIA 30503
(404-503-2104). IN ORDER TO INSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY MONDAY, FEBRUARY 14, 1994.
<PAGE> 9
PROXY STATEMENT
TABLE OF CONTENTS
INTRODUCTION.............................................................. 1
Recent Mergers and Proposed Merger by First Bancorp.................. 4
SUMMARY OF REORGANIZATION ................................................ 4
Terms of the Agreement of Reorganization
and Plan of Merger................................................. 5
Business of the Parties to the
Reorganization..................................................... 5
Reasons for the Reorganization; Recommendation
of Board of Directors.............................................. 6
Operations of Bank and First
Bancorp after Reorganization....................................... 6
Regulatory Approval Required......................................... 7
Vote Required to Approve Merger...................................... 7
Rights of Dissenting Shareholders.................................... 8
Conversion of Metro Bancorp Stock.................................... 8
Elections by Metro Bancorp Common Shareholders....................... 9
Right of Termination of the Reorganization
Plan............................................................... 9
Effect of Reorganization on Metro Bancorp
Shareholders....................................................... 9
Tax Consequences..................................................... 10
Accounting Treatment................................................. 10
Expenses of Solicitation and Reorganization.......................... 11
Interests of Certain Persons......................................... 11
PER SHARE INFORMATION..................................................... 11
MARKET AND STOCK PRICE INFORMATION........................................ 13
First Bancorp........................................................ 13
Metro Bancorp........................................................ 14
Comparison of Stock Prices........................................... 14
FIRST BANCORP AND METRO BANCORP PRO
FORMA CONDENSED COMBINED BALANCE SHEET INFORMATION
(UNAUDITED)............................................................. 15
FIRST BANCORP AND METRO BANCORP
PRO FORMA CONDENSED COMBINED STATEMENTS OF
INCOME (UNAUDITED)...................................................... 16
METRO BANCORP SELECTED FINANCIAL DATA
(UNAUDITED)............................................................. 18
<PAGE> 10
METRO BANCORP MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1992,
1991 AND 1990........................................................... 19
METRO BANCORP MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE AND NINE MONTH PERIODS
ENDED SEPTEMBER 30, 1993 AND 1992....................................... 28
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 35
METRO BANCORP SHAREHOLDERS................................................ 36
Principal Shareholders............................................. 36
Shares of Management............................................... 38
MANAGEMENT OF FIRST NATIONAL BANCORP...................................... 40
THE PROPOSED REORGANIZATION............................................... 40
The Agreement of Reorganization and Plan
of Merger........................................................ 40
Description of the Reorganization.................................. 41
Additional Consideration Payable for Metro Bancorp Common Stock.... 42
Minimum Stock Payment.............................................. 46
Reasons for the Reorganization; Recommendation
of Board of Directors............................................ 47
Conversion of Metro Bancorp Stock.................................. 49
Elections by Metro Bancorp Common Shareholders..................... 49
Fractional Shares.................................................. 49
Manner of Surrendering Metro
Bancorp Stock.................................................... 50
Issuance of First Bancorp Shares................................... 50
Source of Funds.................................................... 51
Shareholder Approval............................................... 51
Conditions to Certain Obligations of
Metro Bancorp.................................................... 51
Conditions to Certain Obligations of
First Bancorp.................................................... 52
Conditions to Certain Obligations of Both
First Bancorp and Metro Bancorp.................................. 52
Accounting Treatment............................................... 53
Interests of Certain Persons in the Reorganization................. 53
EFFECT OF REORGANIZATION ON
COMMON SHAREHOLDERS....................................................... 53
Preemptive Rights.................................................. 54
Cumulative Voting Rights........................................... 54
Limitations of Liability of Directors;
Indemnification of Directors, Officers
and Employees.................................................... 54
<PAGE> 11
Dividend Restrictions........................................... 57
Shareholder Voting Rights....................................... 58
Right of First Bancorp and Metro Bancorp
to Acquire their own Shares................................... 59
Rights of Dissent and Appraisal................................. 59
State Taxation of Shares of Stock............................... 59
Authorized Capital Stock........................................ 60
Certain Restrictions on Transfer................................ 60
Commitments to Subsidiary Banks by First Bancorp................ 61
Federal Deposit Insurance Corporation Improvement Act of 1991... 62
RIGHTS OF DISSENTING
SHAREHOLDERS............................................................ 62
FEDERAL INCOME TAX
CONSEQUENCES............................................................ 64
DESCRIPTION OF
STOCK................................................................... 68
First Bancorp................................................... 68
Metro Bancorp................................................... 69
EXPERTS................................................................. 70
LEGAL OPINION........................................................... 70
INDEMNIFICATION......................................................... 70
OTHER BUSINESS.......................................................... 71
ADDITIONAL INFORMATION.................................................. 72
METRO BANCORP, INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL
STATEMENTS............................................................. F-1
APPENDIX A -
Agreement of Reorganization and Plan
of Merger and Amendment thereto............................... A-1
APPENDIX B -
Article 13 of the Georgia Business
Corporation Code relating to rights of
dissenting shareholders......................................... B-1
<PAGE> 12
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS OF
METRO BANCORP, INC.
TO BE HELD FEBRUARY 22, 1994
INTRODUCTION
This Proxy Statement is furnished in connection with THE SOLICITATION
BY THE BOARD OF DIRECTORS OF METRO BANCORP, INC. of proxies for use at the
special meeting of the shareholders of the company to be held at 3:00 P.M. on
February 22, 1994, in the O'Neal Community Room at The Commercial Bank, 6636
Church Street, Douglasville, Georgia. The approximate date of the mailing of
this Proxy Statement to shareholders was January 21, 1994.
At the special meeting, all shareholders will vote whether to approve
the Agreement of Reorganization and Plan of Merger, as amended (together with
the amendment thereto, being herein referred to as the "Reorganization Plan").
A copy of the Reorganization Plan (including amendment thereto) is attached
hereto as Appendix A. Under the Reorganization Plan, Metro Bancorp, Inc.
("Metro Bancorp") will be merged with and into First National Bancorp ("First
Bancorp") with First Bancorp being the survivor in the merger and with First
Bancorp thereby acquiring 100% of the outstanding shares of the common stock of
The Commercial Bank ("Bank"), Douglasville, Georgia. In the reorganization,
each outstanding share of common stock of Metro Bancorp will be converted by
exchange into .20 shares of common stock of First Bancorp (.17 shares under the
base exchange ratio plus .03 shares due to additional consideration accrued as
of December 31, 1993) or purchased for cash at $4.00 per share ($3.50 under the
base cash price plus $.50 due to additional consideration accrued as of December
31, 1993). In addition, upon the occurrence of certain conditions regarding
collection, upgrade or disposition of certain loans and other real estate of the
Bank, all as set forth in the Reorganization Plan, additional First Bancorp
stock and/or cash will be paid to Metro Bancorp common shareholders as more
additional consideration for their Metro Bancorp common stock. See "THE
PROPOSED REORGANIZATION - Additional Consideration Payable for Metro Bancorp
Common Stock." No fractional shares will be issued, and, if necessary, a cash
payment in lieu of fractional shares will be made by First Bancorp.
In addition, in the reorganization each outstanding share of Series 1992
adjustable rate cumulative preferred stock (the "Series 1992 preferred stock")
of Metro Bancorp will be converted into cash of $10.00, plus the amount of any
accrued but unpaid dividends as of the date of consummation of the
reorganization.
In addition, in the reorganization all of the outstanding shares of
Series A preferred stock of Metro Bancorp will be converted into a payment (the
"Series A Payment") of $2,475,000 (reduced by any dividend payments by Metro
Bancorp after September 30, 1993 and before the date of consummation of the
reorganization). This represents a discount of approximately $1,900,000. If
the transaction with First Bancorp is not approved by Metro Bancorp
shareholders, the redemption amount will increase to $4,162,560 plus accrued and
unpaid dividends. The Series A Payment may be made in cash, or cash and First
Bancorp common stock, with a minimum of $2,000,000 (reduced by any such dividend
payments) of the Series A Payment being made in cash and the remainder of such
payment being made in cash and/or First Bancorp common stock. The amount that
will be paid in
<PAGE> 13
stock, of the portion of the Series A Payment payable in cash and/or
stock, will be at the election of First Bancorp. The First Bancorp stock to be
issued in satisfaction of such portion of the Series A Payment will be valued
at the average of each day's bid and ask price average during the ten business
day period ending five business days prior to the date of consummation of the
reorganization.
As of September 30, 1993, Metro Bancorp had authorized (i) 10,000,000
shares of common stock, with 1,394,627 shares issued and outstanding to
approximately 241 shareholders; (ii) 1,000,000 shares of Series A preferred
stock, with 416,256 shares issued and outstanding, all of which are held by
Bank South, N.A., and (iii) 5,000,000 shares of preferred stock, with 181,250
shares (designated as Series 1992 adjustable rate cumulative preferred stock)
issued and outstanding to 14 shareholders. Metro Bancorp has no other class of
stock under which shares are issued and outstanding. The common shareholders
and the Series 1992 preferred shareholders will vote as a single voting group,
and the Series A preferred shareholder (Bank South, N.A.) will vote as a
separate voting group. Bank South, N.A. has agreed to vote its shares in favor
of the reorganization. Each outstanding share of Metro Bancorp stock is
entitled to notice of and to one vote at the Metro Bancorp meeting or any
adjournment thereof. Only the Metro Bancorp shareholders of record at the
close of business on January 20, 1994, will be entitled to notice of and to
vote at the special meeting or any adjournment thereof.
As of September 30, 1993, First Bancorp had authorized 30,000,000
shares of common stock, with 15,382,485 shares issued and outstanding to
approximately 4,485 shareholders (approximately 6,050 shareholders if
beneficial ownership of shares held by nominees is taken into account). This
constitutes First Bancorp's only class of stock, with each share entitled to
one vote, except in the case of election of directors, in which event
shareholders have cumulative voting rights.
Any proxy given by shareholders of Metro Bancorp pursuant to this
solicitation may be revoked at any time before it is voted by so notifying the
President of Metro Bancorp in writing prior to the meeting or by appearance at
the 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 Metro Bancorp
shareholder and is not revoked, it will be voted at the meeting in the manner
specified therein. If a shareholder does not specify how the proxy is to be
voted, the proxy will be voted in accordance with the recommendations of
management in favor of the Reorganization Plan.
Metro Bancorp and First Bancorp will each pay its own expenses incurred
in connection with this solicitation, including the fees and expenses of legal
counsel and independent auditors and the printing and filing costs incurred in
connection with this Proxy Statement. In addition to solicitation by mail,
directors, officers and regular employees of Metro Bancorp may solicit proxies
by telephone, telegram or personal interview, for which they will receive no
compensation in addition to their regular salaries.
The principal executive offices of Metro Bancorp are located at 6636
Church Street, Douglasville, Georgia 30134, and the telephone number at that
address is (404) 942-5154. The principal executive offices of First Bancorp
are located at 303 Jesse Jewell Parkway, Suite 700, Post Office Drawer 937,
Gainesville, Georgia 30503, and the telephone number at that address is (404)
503-2000.
First Bancorp, a Georgia corporation, is a multi-bank holding company
formed in 1981 and subject to regulation by the Board of Governors of the
Federal Reserve System, the Georgia Department of Banking and Finance and the
Securities and Exchange Commission. At the time of First Bancorp's formation,
The First National Bank of Gainesville ("FNBG") became a wholly- owned
subsidiary of First Bancorp. FNBG, which was formed in 1889 as a national
banking association, operates a full service
2
<PAGE> 14
banking, mortgage banking and trust business in Hall County, Georgia,
with a main office, five full service branches and two stand- alone automated
teller machine locations. The First National Bank of Habersham ("FNBH") became
a wholly-owned subsidiary of First Bancorp in September, 1982. FNBH, which was
formed in 1909, operates a full service banking business in Habersham County,
Georgia, with a main office and two full service branches. Granite City Bank
("GCB") became a wholly-owned subsidiary of First Bancorp in August 1984. GCB,
which was formed in 1928, operates a full service banking business in Elbert
County, Georgia, with a main office and three full service branches. Bank of
Clayton ("BOC") became a wholly-owned subsidiary of First Bancorp in October
1984. BOC, which was formed in 1904, operates a full service banking business
in Rabun County, Georgia, with a main office and one full service branch.
First National Bank of White County ("FNBW") (formerly The Peoples Bank) in
Cleveland, Georgia, became a wholly-owned subsidiary of First Bancorp in
September, 1985. FNBW, which was formed in 1941 (as The Peoples Bank),
operates a full service banking business in White County, Georgia, with a main
office in Cleveland, Georgia and one full service branch in Helen, Georgia. In
1986, FNBW, formerly a Georgia state banking institution, was converted to a
national bank, and its name was changed to First National Bank of White County.
First National Bank of Jackson County ("FNBJ") in Jefferson, Georgia, became a
wholly-owned subsidiary of First Bancorp in March 1986. FNBJ, which was formed
in 1908, operates a full service banking business in Jackson County, Georgia
with a main office in Jefferson, Georgia and one full service branch in
Commerce, Georgia. The Citizens Bank of Toccoa, Georgia ("CBT") became a
wholly-owned subsidiary of First Bancorp in December, 1986. CBT, which was
formed in 1951, operates a full service banking business in Stephens County,
Georgia with a main office and one full service branch in Toccoa, Georgia. The
Bank of Banks County ("BBC") became a wholly-owned subsidiary of First Bancorp
in June, 1987. BBC, which was formed in 1974, operates a full service banking
business in Banks County, Georgia with the main office in Homer, Georgia and
two full- service branches. First National Bank of Gilmer County ("FNBGC")
(formerly First State Bank of Gilmer County) became a wholly-owned subsidiary
of First Bancorp in December, 1987. FNBGC, which was formed in 1973 (as First
State Bank of Gilmer County), operates a full service banking business in
Gilmer County, Georgia, with a main office in Ellijay, Georgia and one
limited-service branch in East Ellijay, Georgia. On January 1, 1991, FNBGC,
formerly a Georgia state banking institution, was converted to a national bank,
and its name was changed to First National Bank of Gilmer County. On April 12,
1989 The Peoples Bank of Forsyth County ("PBF") became a wholly-owned
subsidiary of First Bancorp. PBF is a state banking association, formed in
December, 1983, which operates a full-service banking business in Forsyth
County, Georgia, with a main office and two full service branches. Pickens
County Bank ("PCB") became a wholly-owned subsidiary of First Bancorp on June
30, 1989. PCB, which was formed in 1976, operates a full service banking
business in Pickens County, Georgia, with its main office located in Jasper,
Georgia. First National Bank of Paulding County ("FNBPC") became a
wholly-owned subsidiary of First Bancorp on January 30, 1992. FNBPC, which was
formed in 1922, operates a full service banking business in Paulding County,
Georgia, with its main office located in Dallas, Georgia with four full service
branches, one limited service branch and one stand alone ATM facility. The
Citizens Bank, Ball Ground, Georgia ("CBBG") became a wholly-owned subsidiary
of First Bancorp on October 20, 1992. CBBG, which was formed in 1926, operates
a full service banking business in Cherokee County, Georgia, with its main
office located in Ball Ground, Georgia and with three full service branches.
The Bank of Villa Rica ("VRB"), Villa Rica, Georgia, became a wholly-owned
subsidiary of First Bancorp on May 31, 1993. VRB, which was formed in 1899,
operates a full service banking business in Carroll County, Georgia, with its
only office located in Villa Rica, Georgia. The Community Bank of Carrollton
("CBC") became a wholly-owned subsidiary of First Bancorp on August 31, 1993.
CBC, which was formed in 1987, operates a full service banking business in
Carroll County, Georgia, with its only office located in Carrollton, Georgia.
Metro Bancorp is a bank holding company incorporated in 1984 to hold
the shares of the Bank, and Metro Bancorp acquired all of the outstanding
shares of the Bank on January 31, 1985. The Bank was chartered as a national
bank in Georgia in 1928 and commenced business that same year for the purpose
of conducting a commercial banking business in Douglas County, Georgia. In
1942, the Bank converted from a national to a state bank and changed its name
from First National Bank of Douglasville
3
<PAGE> 15
to The Commercial Bank. The Bank operates a full-service banking
business in Douglas County, Georgia. The main office of the Bank is located at
6636 Church Street, Douglasville, Georgia, and the building, containing
approximately 30,000 square feet of useable office and banking space, is owned
by the Bank. The Bank also operates four full service branches, four limited
service branches and two automated teller machine locations in Douglas County,
Georgia. From these offices in Douglas County, the Bank carries on a
full-service banking business including making secured and unsecured loans to
finance commercial and personal transactions, accepting deposits, and providing
checking and savings accounts primarily for businesses and residents of Douglas
County. The Bank had approximately 120 employees (14 of which were officers)
as of September 30, 1993. Metro Bancorp and the Bank are presently operating
under a Program of Corrective Action (the "Corrective Program") with their
primary regulatory authorities. See "METRO BANCORP MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE AND
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992 - Corrective Program" and
"METRO BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990 -
Corrective Program."
RECENT MERGERS AND PROPOSED MERGER BY FIRST BANCORP
On May 31, 1993, First Bancorp merged with Villa Rica Bancorp, Inc.
("VRB") and thereby acquired the Bank of Villa Rica, through the exchange of
approximately 314,142 shares of First Bancorp stock for 35,380 shares of VRB
stock. At March 31, 1993, total assets of VRB were $55,422,000, total
stockholders' equity was $3,585,000, and deposits were $50,167,000. VRB had
net income of $46,000 for the quarter ended March 31, 1993 and $225,000 for its
fiscal year ended December 31, 1992.
On August 31, 1993, The Community Bank of Carrollton ("CBC") merged
with Interim Carrollton Corporation, a wholly-owned subsidiary of First
Bancorp, and thereby became a subsidiary of First Bancorp through the exchange
of approximately 331,122 shares of First Bancorp stock for 447,000 shares of
CBC stock. At June 30, 1993, total assets of CBC were $36,855,000, total
stockholders' equity was $4,806,000, and deposits were $31,844,000. CBC had
net income of $170,000 for the quarter ended June 30, 1993 and $316,000 for its
fiscal year ended December 31, 1992.
First Bancorp has signed a letter of intent, dated January 14, 1994, to
merge with Barrow Bancshares, Inc. ("Bancshares") and by such merger to acquire
Barrow Bank & Trust Company, Winder, Georgia, the wholly owned subsidiary of
Bancshares. In the merger, 1.37 shares of First Bancorp stock will be
exchanged for each of the 349,198 outstanding shares of Bancshares stock and
for each of the 29,153 Bancshares shares which are subject to being purchased
under employee stock options, but only if the options are exercised prior to
consummation of the merger. Fractional shares will not be issued, but will be
paid in cash equivalent to $20.50 per First Bancorp share. The proposed merger
is subject to execution of a formal agreement of reorganization by the parties,
the approval of the merger by the shareholders of Bancshares, and the approvals
of the bank regulatory agencies. At December 31, 1993, total assets of
Bancshares were $54,245,000, and total stockholders' equity was $5,456,000.
Bancshares had net income of $743,000 for its fiscal year ended December 31,
1993.
SUMMARY OF REORGANIZATION
The following is a summary of certain features of the proposed
reorganization, which is qualified in its entirety by reference to the
Agreement of Reorganization and Plan of Merger (the "Reorganization Plan")
attached hereto as Appendix A and to the other textual information and
financial data set forth elsewhere in this Proxy Statement.
4
<PAGE> 16
TERMS OF THE AGREEMENT OF REORGANIZATION AND PLAN OF MERGER
Pursuant to the Reorganization Plan, Metro Bancorp will be merged with
and into First Bancorp in a statutory merger, with First Bancorp being the
surviving corporation in the merger under its charter and name. The Bank will
thereafter be operated as a wholly-owned subsidiary of First Bancorp and Metro
Bancorp will cease to exist. As a result of the merger, each outstanding share
of common stock of Metro Bancorp (other than shares held by dissenters) will be
converted, at the shareholder's option (subject to requirements on the minimum
amount of Metro Bancorp stock to be exchanged for First Bancorp stock), into
.20 shares of common stock of First Bancorp (.17 shares under the base exchange
ratio plus .03 shares due to additional consideration accrued as of December
31, 1993), or purchased for $4.00 in cash ($3.50 under the base cash price plus
$.50 due to additional consideration accrued as of December 31, 1993), or a
combination thereof. In addition, upon the occurrence of certain conditions
regarding collection, upgrade or disposition of certain loans and other real
estate of the Bank, as set forth in the Reorganization Plan, additional First
Bancorp stock and/or cash will be paid to Metro Bancorp shareholders as
additional consideration for their Metro Bancorp common stock. See "THE
PROPOSED REORGANIZATION - Additional Consideration Payable for Metro Bancorp
Common Stock."
THE MINIMUM NUMBER OF SHARES OF METRO BANCORP COMMON STOCK FOR WHICH
FIRST BANCORP WILL EXCHANGE FIRST BANCORP STOCK IS 1,338,842 SHARES (ADJUSTED
AS SET FORTH BELOW). UNDER THE REORGANIZATION PLAN, IF METRO BANCORP COMMON
SHAREHOLDERS ELECT TO CONVERT LESS THAN 1,338,842 SHARES (ADJUSTED AS SET FORTH
IN THE FOLLOWING SENTENCE) INTO FIRST BANCORP STOCK, METRO BANCORP COMMON
SHAREHOLDERS ELECTING TO RECEIVE CASH FOR ALL OR A PORTION OF THEIR METRO
BANCORP COMMON STOCK SHALL RECEIVE, ON A PRORATA BASIS, LESS CASH AND MORE
FIRST BANCORP STOCK THAN ELECTED BY THEM, SO THAT THE MINIMUM AGGREGATE NUMBER
OF METRO BANCORP COMMON SHARES EXCHANGED FOR FIRST BANCORP STOCK WILL BE
1,338,842 SHARES (ADJUSTED AS SET FORTH IN THE FOLLOWING SENTENCE). THE
MINIMUM AGGREGATE NUMBER OF SHARES OF METRO BANCORP COMMON STOCK TO BE
EXCHANGED FOR FIRST BANCORP STOCK WILL BE DECREASED BY SUCH NUMBER OF METRO
BANCORP SHARES EQUAL TO THE NUMBER OF FIRST BANCORP SHARES EXCHANGED IN THE
MERGER FOR SERIES A PREFERRED STOCK OF METRO BANCORP DIVIDED BY .17.
In addition, in the reorganization each outstanding share of Series
1992 preferred stock of Metro Bancorp will be converted into cash of $10.00,
plus the amount of any accrued but unpaid dividends as of the date of
consummation of the reorganization.
In addition, in the reorganization all of the outstanding shares of
Series A preferred stock of Metro Bancorp will be converted into a payment (the
"Series A Payment") of $2,475,000 (reduced by any dividend payments by Metro
Bancorp after September 30, 1993 and before the date of consummation of the
reorganization). The Series A Payment may be made in cash, or cash and First
Bancorp common stock, with a minimum of $2,000,000 (reduced by any such
dividend payments) of the Series A Payment being made in cash and the remainder
of such payment being made in cash and/or First Bancorp common stock. The
amount that will be paid in stock of the portion of the Series A Payment
payable in cash and/or stock will be at the election of First Bancorp. The
First Bancorp stock to be issued in satisfaction of such portion of the Series
A Payment will be valued at the average of each day's bid and ask price average
during the ten business day period ending five business days prior to the date
of consummation of the reorganization.
BUSINESS OF THE PARTIES TO THE REORGANIZATION
First Bancorp currently is a multi-bank holding company with its
subsidiaries being The First National Bank of Gainesville, First National Bank
of Habersham, Granite City Bank in Elberton, Georgia, Bank of Clayton, First
National Bank of White County, First National Bank of Jackson County, The
Citizens Bank of Toccoa, Georgia, Bank of Banks County, First National Bank of
Gilmer County, The
5
<PAGE> 17
Peoples Bank of Forsyth County, Pickens County Bank, First National
Bank of Paulding County, The Citizens Bank, Ball Ground, Georgia, The Bank of
Villa Rica, and The Community Bank of Carrollton.
First Bancorp is not engaged in any business other than normal banking
services provided through its subsidiaries.
Through its subsidiaries, First Bancorp operates a full-service banking
business in Hall County, Habersham County, Elbert County, Rabun County, White
County, Jackson County, Stephens County, Banks County, Gilmer County, Forsyth
County, Pickens County, Paulding County, Cherokee County and Carroll County,
Georgia. These First Bancorp subsidiaries provide such customary banking
services as checking and savings accounts, various other types of time
deposits, safe deposit facilities and money transfers. They also finance
commercial and personal transactions by making secured and unsecured loans.
Through The First National Bank of Gainesville, First Bancorp performs
corporate, employee benefit and personal trust services and provides other
financial services to its customers, including permanent residential mortgage
loan financing. The First National Bank of Gainesville engages in various
mortgage banking activities through a division called The Mortgage Source. The
First National Bank of Gainesville also provides data processing services for
banking applications to other banks in the area and services mortgage loans
which are owned by certain outside investors.
Metro Bancorp is a bank holding company with one wholly-owned
subsidiary, the Bank. The Bank operates a full-service banking business in
Douglas County, Georgia. The Bank provides such customary banking services as
checking and savings accounts, various other types of time deposits, safe
deposit facilities and money transfers. It also finances commercial and
personal transactions by making secured and unsecured loans and provides other
financial services to its customers.
REASONS FOR THE REORGANIZATION; RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors of Metro Bancorp has approved the Reorganization
Plan and recommends that the shareholders of Metro Bancorp vote in favor of its
approval.
In deciding to approve and recommend the Reorganization Plan, the Board
of Directors concluded that the Reorganization Plan offered common shareholders
of Metro Bancorp the opportunity to exchange, at an equitable exchange ratio
and on a tax-free basis, their current equity investment for a more liquid
investment in a larger, more geographically diversified company, whose business
philosophy and financial and managerial resources should allow for continued
enhancement of shareholder value. The Board of Directors also concluded that
the Reorganization Plan offered Series 1992 preferred shareholders the
opportunity to liquidate their investment in Metro Bancorp at a fair cash
price. In addition, the Reorganization Plan will provide a means of increasing
the capital of the Bank as required by the Corrective Program applicable to the
Bank. See "THE PROPOSED REORGANIZATION - Reasons for the Reorganization;
Recommendation of Board of Directors" and "METRO BANCORP MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR
THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992 - Corrective
Program" and "METRO BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1992, 1991
AND 1990 - Corrective Program." No independent appraisal or opinion was
obtained by the Board of Directors of Metro Bancorp in determining or assessing
the fairness of the exchange ratio utilized under the Reorganization Plan.
OPERATIONS OF BANK AND FIRST BANCORP AFTER REORGANIZATION
If the reorganization is consummated, Metro Bancorp will no longer
exist as a separate corporation, and the Bank will become a subsidiary of First
Bancorp and will continue to operate as a banking association and to engage in
substantially the same business and activities in which the Bank
6
<PAGE> 18
is presently engaged. It is contemplated that, at the time of
consummation, the officers and directors of the Bank will remain those who are
currently serving except that C. B. Fair, III, currently President and C.E.O.
of The First National Bank of Paulding County, a First Bancorp subsidiary bank,
will be appointed to serve on the Bank Board.
If the Reorganization Plan is consummated, the merger would have the
following effect on the balance sheet, income, and shares outstanding of First
Bancorp. The information presented is provided on a pro forma basis based upon
the September 30, 1993, consolidated financial statements of Metro Bancorp and
of First Bancorp. Total assets of First Bancorp would increase to
approximately $2.2 billion on a pro forma basis due to the addition of the
assets of Metro Bancorp and its subsidiary; the Bank's assets would be
approximately 6.2% of the total assets of First Bancorp after the merger.
Total deposits of subsidiaries of First Bancorp would increase to approximately
$1.83 billion on a pro forma basis due to the addition of the deposits of the
Bank; the Bank's deposits would be approximately 6.8% of the total deposits of
First Bancorp after the merger. The maximum number of First Bancorp shares
outstanding would increase to approximately 15,661,410 shares (based on First
Bancorp shares outstanding as of September 30, 1993) due to the projected
278,925 shares which possibly could be issued to Metro Bancorp shareholders in
the merger; the 278,925 shares would be approximately 1.8% of outstanding
shares of First Bancorp after the merger. The projections of number of shares
assume that Metro Bancorp shareholders elect to exchange 100% of their shares
in Metro Bancorp for First Bancorp common stock and do not take into account
any payment of additional consideration for Metro Bancorp shares. The
projections also assume that no First Bancorp shares will be issued in payment
for Series A preferred stock of Metro Bancorp. See "THE PROPOSED
REORGANIZATION."
It is First Bancorp's intent that the board of directors of the Bank
operate as a board mostly made up of directors who are members of the local
community. First Bancorp will continue to be operated as a bank holding
company under the Federal Bank Holding Company Act of 1956, as amended, and the
bank holding company laws of Georgia, and as a reporting company under the
Federal Securities Exchange Act of 1934.
REGULATORY APPROVAL REQUIRED
The merger is subject to the approval of the Georgia Department of
Banking and Finance and the Board of Governors of the Federal Reserve System.
Applications for those approvals have been filed with these agencies. As of
this time, no formal action has been taken by either of the agencies to approve
or disapprove the transactions. If preliminary approval is granted, final
approval will be subject to, among other things, the approval of the
shareholders of Metro Bancorp.
VOTE REQUIRED TO APPROVE MERGER
The affirmative vote of a majority (787,939 shares) of the holders,
voting as a single group, of the outstanding shares of Metro Bancorp common
stock (1,394,627 shares) and Metro Bancorp Series 1992 preferred stock (181,250
shares) entitled to vote at the special shareholders meeting is required for
approval of the Reorganization Plan. Metro Bancorp directors, executive
officers, and their affiliates own approximately 55.37% (772,186 shares) of the
outstanding common stock of Metro Bancorp and approximately 40% (72,498 shares)
of the outstanding Series 1992 preferred stock of Metro Bancorp. The Board of
Directors of Metro Bancorp has approved the Reorganization Plan by the
unanimous affirmative vote of the directors and recommends that shareholders
vote in favor of approval. The enclosed proxy, if properly executed, duly
returned and not revoked, will be voted in accordance with the instructions
contained therein. If no instructions are given, properly executed and
returned proxies will be voted in favor of the Reorganization Plan.
In addition, the affirmative vote of a majority of the holders of the
outstanding shares of Metro Bancorp Series A preferred stock, voting as a
separate group, is also required for approval of the
7
<PAGE> 19
Reorganization Plan. Bank South, N.A., the sole Series A preferred
shareholder, has agreed to vote in favor of the Reorganization Plan.
No vote is required by the shareholders of First Bancorp to carry out
the merger; First Bancorp directors, executive officers and their affiliates
(in regard to which they do not disclaim beneficial ownership of shares) own
approximately 15% of the outstanding stock of First Bancorp.
RIGHTS OF DISSENTING SHAREHOLDERS
If the reorganization is consummated, shareholders of Metro Bancorp who
dissent are entitled under Article 13 of the Georgia Business Corporation Code,
and upon compliance with the notice provisions referred to therein, to receive
in cash the value of their shares. Any shareholder desiring to dissent must
deliver to Metro Bancorp prior to or at the special shareholders meeting before
the vote is taken a written notice that he intends to demand payment of the
fair value of his shares if the Reorganization Plan is approved. In addition,
a dissenting shareholder must abstain from voting or must vote against the
Reorganization Plan. If the Reorganization Plan is approved, Metro Bancorp
must send a written dissenters' notice to dissenting shareholders no later than
ten (10) days after the merger is effectuated. The dissenters' notice must
state where and when the payment demand required of dissenting shareholders
must be sent and where and when stock certificates must be deposited. The date
by which Metro Bancorp must receive the payment demand may not be fewer than
thirty (30) nor more than sixty (60) days after the date the dissenters' notice
is sent. A dissenting shareholder sent the dissenters' notice must send Metro
Bancorp the written payment demand and deposit his stock certificates with
Metro Bancorp in accordance with the terms of the dissenters' notice. See
"RIGHTS OF DISSENTING SHAREHOLDERS."
CONVERSION OF METRO BANCORP STOCK
As a result of the merger, each outstanding share of common stock of
Metro Bancorp (other than shares held by dissenters) will be converted into .20
shares of common stock of First Bancorp (.17 shares under the base exchange
ratio plus .03 shares due to additional consideration accrued as of December
31, 1993) or purchased for $4.00 in cash ($3.50 under the base cash price plus
$.50 due to additional consideration accrued as of December 31, 1993), or a
combination thereof, depending on the elections by Metro Bancorp common
shareholders and subject to the minimum number of Metro Bancorp common shares
required to be exchanged for First Bancorp stock. In addition, upon the
occurrence of certain conditions regarding collection, upgrade or disposition
of certain loans and other real estate of the Bank, as set forth in the
Reorganization Plan, additional First Bancorp stock and/or cash will be paid to
Metro Bancorp common shareholders as more additional consideration for their
Metro Bancorp stock. See "THE PROPOSED REORGANIZATION - Additional
Consideration Payable for Metro Bancorp Common Stock." Fractional shares of
First Bancorp common stock will not be issued in the merger. Any Metro Bancorp
shareholder who would be entitled to a fraction of a First Bancorp share shall
receive a cash payment in lieu of such fractional share in an amount determined
by multiplying the fraction of a share he would otherwise be entitled to
receive by $20.50.
In addition, in the reorganization each outstanding share of Series
1992 preferred stock of Metro Bancorp will be converted into cash of $10.00,
plus the amount of any accrued but unpaid dividends as of the date of
consummation of the reorganization.
In addition, in the reorganization all of the outstanding shares of
Series A preferred stock of Metro Bancorp will be converted into a payment (the
"Series A Payment") of $2,475,000 (reduced by any dividend payments by Metro
Bancorp after September 30, 1993 and before the date of consummation of the
reorganization). The Series A Payment may be made in cash, or cash and First
Bancorp common stock, with a minimum of $2,000,000 (reduced by any such
dividend payments) of the Series A Payment being made in cash and the remainder
of such payment being made in cash and/or First Bancorp common stock.
8
<PAGE> 20
ELECTIONS BY METRO BANCORP COMMON SHAREHOLDERS
A Form of Election will be mailed to each Metro Bancorp common
shareholder shortly after the special shareholders meeting, if the
Reorganization Plan is approved. This Form of Election will be used by Metro
Bancorp common shareholders to elect to receive First Bancorp stock and/or cash
in exchange for their stock in the reorganization. Metro Bancorp common
shareholders who fail to complete and deliver a Form of Election to First
Bancorp shall be deemed to have elected to convert each share of their common
stock into .20 shares (plus additional shares if the required conditions for
payment of more additional consideration are met) of First Bancorp common stock
if the Reorganization Plan is approved. See "THE PROPOSED REORGANIZATION -
Elections by Metro Bancorp Common Shareholders."
RIGHT OF TERMINATION OF THE REORGANIZATION PLAN
The obligations of First Bancorp to consummate and effect the merger
contemplated by the Reorganization Plan are subject to the satisfaction of
certain conditions. These conditions are fully described in Paragraph 9 of the
Reorganization Plan attached hereto as Appendix A. The conditions include, but
are not necessarily limited to, certain representations of Metro Bancorp being
true; proper proxy preparation; no material adverse financial changes in Metro
Bancorp or its subsidiary; and that the transaction will qualify to be
accounted for using the purchase method of accounting. See the Reorganization
Plan for the full text of these conditions. See also "THE PROPOSED
REORGANIZATION - Conditions to Certain Obligations of First Bancorp."
The obligations of Metro Bancorp to consummate and effect the merger
contemplated by the Reorganization Plan are subject to the satisfaction of
certain conditions. These conditions are fully described in Paragraph 8 of the
Reorganization Plan attached hereto as Appendix A. The conditions include, but
are not necessarily limited to, certain representations of First Bancorp being
true; no material adverse financial changes in First Bancorp; and receipt of an
opinion of Stewart, Melvin & House, attorneys-at-law, regarding certain tax
consequences of the reorganization. "See "THE PROPOSED REORGANIZATION -
Conditions to Certain Obligations of Metro Bancorp."
The obligations of First Bancorp and Metro Bancorp under the
Reorganization Plan are, at the option of either of them, subject to the
satisfaction of certain conditions. These conditions are fully described in
Paragraph 10 of the Reorganization Plan attached as Appendix A. The conditions
include, but are not necessarily limited to, approval by the holders of (i) a
majority of the aggregate outstanding common stock and Series 1992 preferred
stock of Metro Bancorp and (ii) a majority of the outstanding Series A
preferred stock of Metro Bancorp; satisfaction of all laws, regulations and
directives; and the stock of First Bancorp being the subject of an effective
registration statement under the Federal Securities Act of 1933. See "THE
PROPOSED REORGANIZATION-Conditions to Certain Obligations of Both First Bancorp
and Metro Bancorp."
The Reorganization Plan may be terminated based on the failure of the
conditions referred to in the Reorganization Plan, or the failure to consummate
the proposed reorganization due to no fault of the terminating party by March
31, 1994.
EFFECT OF REORGANIZATION ON METRO BANCORP SHAREHOLDERS
If the reorganization is consummated, the holders of the common stock
of Metro Bancorp will become holders of First Bancorp common stock through a
stock exchange in a statutory merger or receive cash in purchase of their
shares, or both, as outlined in the Reorganization Plan. In addition, the
holders of Series 1992 preferred stock of Metro Bancorp will receive cash in
purchase of their shares, and the sole holder of Series A preferred stock of
Metro Bancorp will receive cash, or cash and First Bancorp stock, in exchange
for Series A preferred stock. For a comparison of rights of the shareholders
of Metro Bancorp and First Bancorp and the effect of receiving cash in the
Reorganization,
9
<PAGE> 21
please refer to the sections entitled "EFFECT OF REORGANIZATION ON
SHAREHOLDERS," "FEDERAL INCOME TAX CONSEQUENCES," and "DESCRIPTION OF STOCK."
TAX CONSEQUENCES
Consummation of the merger is conditioned on Metro Bancorp and First
Bancorp receiving an opinion from Stewart, Melvin & House, general counsel to
First Bancorp, to the effect that, 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 Metro Bancorp, First Bancorp, or
the common shareholders of Metro Bancorp from the exchange of their common
stock to the extent they receive only stock of First Bancorp in the exchange of
their common stock (except in connection with any cash received in lieu of a
fractional share and except for interest income deemed to be received under the
original issue discount regulations of the Internal Revenue Service in the
event that any additional consideration becomes payable by First Bancorp after
the date of the merger) and to the effect that the merger qualifies as a
"reorganization" under Section 368 of the Code.
Assuming the merger so qualifies, for Federal income tax purposes, (i)
a Metro Bancorp common shareholder who receives only shares of First Bancorp
common stock (and cash in lieu of a fractional share) in exchange for his Metro
Bancorp common stock will recognize no gain or loss from said exchange (except
in connection with any such cash received in lieu of a fractional share and
except for interest income deemed to be received under the original issue
discount regulations of the Internal Revenue Service in the event that any
additional consideration becomes payable by First Bancorp after the date of the
merger); and (ii) a Metro Bancorp common shareholder who elects to exchange all
or a portion of his common shares for cash or a common shareholder who dissents
and receives only cash in the merger will recognize gain or loss with respect
to Metro Bancorp common shares surrendered, subject to the provisions and
limitations of Section 302 of the Code, including the constructive ownership
rules of Section 318 of the Code; (iii) a Metro Bancorp common shareholder who
receives both shares of First Bancorp common stock and cash in exchange for his
Metro Bancorp common stock will not recognize loss (except in connection with
any cash in lieu of a fractional share) but will recognize gain, if any, but
only to the extent of the amount of cash received; (iv) a Metro Bancorp
shareholder who receives only cash in redemption of his Metro Bancorp shares,
common or preferred, as a result of the merger will in general recognize gain
or loss with respect to the Metro Bancorp shares surrendered; (v) a Metro
Bancorp shareholder who receives only First Bancorp stock for his Metro Bancorp
common stock and cash for his Metro Bancorp preferred stock will not recognize
gain or loss on the exchange of his common stock and will recognize gain or
loss on the exchange of his preferred stock, and (vi) the portion of the cash
payment to a Metro Bancorp shareholder equal to the accrued but unpaid
dividends on his Series 1992 preferred stock will be treated as dividend income
and taxed as ordinary income. Any gain recognized will be taxable either as a
dividend or as capital gain, as discussed herein. The election to exchange
shares for First Bancorp common stock or the election to exchange shares for
cash or the election to dissent and receive cash will affect the tax
consequences of the merger to a Metro Bancorp shareholder. If the merger
qualifies as a Section 368 reorganization, neither First Bancorp nor Metro
Bancorp will recognize gain or loss as a result of the merger. EACH HOLDER OF
METRO BANCORP SHARES SHOULD CONSULT HIS OWN TAX ADVISOR CONCERNING THE TAX
CONSEQUENCES OF THE MERGER TO SUCH HOLDER. SEE "FEDERAL INCOME TAX
CONSEQUENCES."
ACCOUNTING TREATMENT
If the proposed reorganization is consummated, it is contemplated that
the acquisition will be accounted for by First Bancorp using the purchase
method of accounting.
10
<PAGE> 22
EXPENSES OF SOLICITATION AND REORGANIZATION
First Bancorp and Metro Bancorp will each pay its own expenses in
connection with this solicitation and the transactions contemplated by the
Reorganization Plan including all fees and expenses of its respective legal
counsel and independent auditors. Metro Bancorp or the Bank will pay all audit
fees to any independent auditors relating to the audit of their books and
records. See the Reorganization Plan attached hereto as Appendix "A".
INTERESTS OF CERTAIN PERSONS
The Commercial Bank Employee Stock Ownership Plan (the "ESOP") will be
terminated after the merger under the terms of the Reorganization Plan, and the
participants' accounts under the terminated ESOP will be distributed to the
participants. See "THE PROPOSED REORGANIZATION -- Interests of Certain Persons
in the Reorganization."
PER SHARE INFORMATION
The following table sets forth at the dates and for the periods
indicated historical, pro forma, and equivalent per common share information
with respect to book value, net income and cash dividends declared on First
Bancorp and Metro Bancorp common stock. The pro forma and equivalent per
common share information gives effect to the proposed acquisition of Metro
Bancorp under the purchase method of accounting. In presenting pro forma and
equivalent per share amounts, First Bancorp data reflects one share of Metro
Bancorp common stock as .20 shares of First Bancorp common stock for each of
the 1,394,627 shares of Metro Bancorp common stock outstanding. In addition,
the aggregate outstanding shares of Series A preferred stock of Metro Bancorp
and of Series 1992 preferred stock of Metro Bancorp is assumed to be converted
into cash in the amount of $4,287,500 paid by First Bancorp, without any First
Bancorp stock being exchanged for Series A preferred stock. The pro forma and
equivalent share information assumes that Metro Bancorp shareholders elect to
exchange 100% of their common shares for First Bancorp stock and does not take
into account any payment of additional consideration for Metro Bancorp shares
which may become due from First Bancorp after the date of the merger.
Historical information for First Bancorp includes the results of Villa Rica
Bancorp, Inc., which was acquired by First Bancorp on May 31, 1993 and
accounted for as a pooling of interests, and the results of The Community Bank
of Carrollton, which was acquired by First Bancorp on August 31, 1993 and
accounted for as a pooling of interests. Since historical information for
First Bancorp includes the results of Villa Rica Bancorp, Inc. and of The
Community Bank, pro forma and equivalent share information necessarily include
the results of Villa Rica Bancorp, Inc. and of The Community Bank. This table
should be read in conjunction with the financial statements of the
organizations and the pro forma condensed combined balance sheet and statements
of income information appearing elsewhere in this Proxy Statement or
incorporated herein by reference.
[TABLE ON NEXT PAGE]
11
<PAGE> 23
Net Cash
Book Value Income/Loss Dividends
Per Common Per Common Declared Per
Share Share Common Share(1)
HISTORICAL:
FIRST BANCORP
At or for the fiscal year
ended December 31, 1992 $12.44 $1.51 $0.64
At or for the nine-month
period ended September 30, 1993* $13.13 $1.19 $0.525
METRO BANCORP
At or for the fiscal year
ended December 31, 1992 $ 1.47 $(.11) --
At or for the nine-month
period ended September 30, 1993* $ 2.00 $ .50 --
PRO FORMA:
FIRST BANCORP
At or for the fiscal year
ended December 31, 1992 $12.57 $1.49 N/A
At or for the nine-month
period ended September 30, 1993 $13.26 $ .99 N/A
EQUIVALENT SHARE INFORMATION:
METRO BANCORP(2)
At or for the fiscal year
ended December 31, 1992 $ 2.51 $0.30 $.13
At or for the nine-month
period ended September 30, 1993 $ 2.65 $0.20 $.11
________________________________________
(1) The primary source of funds of First Bancorp to pay stockholder
dividends is dividends from its subsidiary banks. The subsidiary banks are
subject to certain statutory and regulatory restrictions regarding the payment
of dividends. For a discussion of such restrictions, see Note 14 to
consolidated financial statements on page 48 of the 1992 Consolidated Financial
Statements section of First Bancorp's 1992 Annual Report to Shareholders. The
primary source of funds of Metro Bancorp to pay stockholder dividends is
dividends received from the Bank. The Bank is subject to certain statutory and
regulatory restrictions regarding the payment of dividends. For a discussion of
such restrictions, see notes 10 and 11 to consolidated financial statements of
Metro Bancorp on pages F-19 and F-20 of this Proxy Statement. See "EFFECT OF
REORGANIZATION ON SHAREHOLDERS - Dividend Restrictions."
(2) Equivalent book value and net income per share data for Metro Bancorp
were determined by multiplying pro forma amounts for First Bancorp by the
exchange ratio of .20. Equivalent dividends per share data for Metro Bancorp
were determined by multiplying historical amounts for First Bancorp by the
exchange ratio of .20.
* Unaudited
12
<PAGE> 24
MARKET AND STOCK PRICE INFORMATION
FIRST BANCORP
The following table sets forth the high and low bid quotations in the
over-the-counter market, where First Bancorp's common stock is traded, for the
period from January 1, 1991 to September 30, 1993. The quotations are based
upon prices quoted electronically through the National Association of
Securities Dealers Automatic Quotation System (NASDAQ) and represent quotations
between dealers, not actual transactions, and do not include retail mark-ups,
mark-downs or commissions. The information regarding First Bancorp has been
adjusted for a three-for-two stock split by First Bancorp effected by the
distribution on November 6, 1992 of a stock dividend of one share of First
Bancorp stock for each two shares outstanding. As of September 30, 1993, there
were approximately 4,485 holders of record of First Bancorp common stock, and
possibly as many as 6,050 beneficial owners if shareholders who own stock in
names of investment firms are considered.
BID PRICES
HIGH LOW
January 12, 1993 $ 22.00 --
1993
3rd Quarter $ 21.75 $ 19.75
2nd Quarter $ 21.00 $ 20.00
1st Quarter $ 21.50 $ 17.50
1992
4th Quarter $ 18.00 $ 16.83
3rd Quarter $ 17.50 $ 15.50
2nd Quarter $ 15.83 $ 15.33
1st Quarter $ 15.83 $ 15.50
1991
4th Quarter $ 16.33 $ 14.00
3rd Quarter $ 17.17 $ 11.67
2nd Quarter $ 12.67 $ 11.67
1st Quarter $ 12.67 $ 11.50
13
<PAGE> 25
METRO BANCORP
There is no established public trading market for the Series 1992
preferred stock, the Series A preferred stock, or the common stock of Metro
Bancorp. Metro Bancorp is aware of isolated transactions in its common stock
which have occurred during the last two years in the $2 to $5 per share range
(as adjusted for the 100% stock dividend declared on June 15, 1993). Metro
Bancorp has also redeemed a portion of the shares held by several employee
stock ownership plan participants at the price of $2 per share (as so
adjusted). However, there can be no assurance that these transactions
reflected bona fide, arm's- length negotiations. There may have been other
trades of which Metro Bancorp is unaware. As of September 30, 1993, there were
approximately 241 holders of record of the common stock, fourteen holders of
record of Series 1992 preferred stock, and one holder of record of the Series A
preferred stock.
COMPARISON OF STOCK PRICES
A Letter of Intent regarding the acquisition of Metro Bancorp by First
Bancorp was signed on August 17, 1993, with public announcement of the merger
proposal being made on August 18, 1993. As of the first business day preceding
public announcement, the closing price of First Bancorp stock was $20.50 per
share. As previously stated, there is no established trading market for Metro
Bancorp common stock, but based on management's best estimate the trading price
for Metro Bancorp common shares on the date preceding public announcement of
the merger proposal would have been $2.00. Provided below is a table comparing
the market values of First Bancorp stock and Metro Bancorp common stock as of
the date preceding public announcement of the proposed merger.
<TABLE>
<CAPTION>
Value of
Metro
Historical Market Historical Bancorp
Value per Market Value Share on
First Bancorp per Metro Equivalent
Share Bancorp per Common
Common Share Share Basis(1)
<S> <C> <C> <C>
As of August 17, 1993 $ 20.50 $2.00 $4.10(1)
</TABLE>
(1) Equivalent per share value was determined by multiplying the
historical market value per First Bancorp share by the exchange ratio of .20,
which does not include any additional consideration in First Bancorp stock or
cash which Metro Bancorp shareholders may receive after the date of the merger
under certain conditions set forth in the Reorganization Plan, as explained in
the section entitled "THE PROPOSED REORGANIZATION - Additional Consideration
Payable for Metro Bancorp Common Stock."
14
<PAGE> 26
FIRST BANCORP AND METRO BANCORP, INC.
Pro Forma Condensed Combined Balance Sheet Information (Unaudited)
First Bancorp has entered into the Reorganization Plan with Metro Bancorp, Inc.
which, if consummated, would result in the Bank becoming a subsidiary of First
Bancorp. Under the Reorganization Plan, the 1,394,627 outstanding shares of
Metro Bancorp, Inc. would be acquired for a price of $4.00 per share in cash
or .20 shares of First Bancorp stock for each Metro Bancorp share, or a
combination thereof. Additionally, the 181,250 outstanding shares of Metrol
Bancorp's Series 1992 redeemable cumulative preferred stock would be acquired
by First Bancorp for a price of $10 per share in cash, and the 416,256
outstanding shares of Metro Bancorp's Series A cumulative prefered stock would
be acquired by First Bancorp for a total of $2,475,000 in cash (up to $475,00
of the total may be issued in First Bancorp stock). This acquisition will be
accounted for using the purchase method of accounting. The following unaudited
pro forma condensed combined balance sheet information of First Bancorp and
subsidiaries at September 30, 1993 gives effect to the proposed acquisition of
Metro Bancorp assuming .20 shares of First Bancorp stock is issued for each of
the 1,394,627 shares of Metro Bancorp stock and all of the Series A and Series
1992 preferred stock is acquired for cash. Additional consideration which may
be paid following consummation of the merger under the Reorganization Plan is
not reflected. The pro forma condensed combined balance sheet should be read
in conjunction with the notes to the pro forma financial statements and the
separate financial statements and related notes of the respective entities
appearing elsewhere or incorporated herein by reference in this Proxy
Statement.
<TABLE>
<CAPTION>
September 30, 1993
-----------------------------------------------------------------
(amounts are presented in thousands) Metro Bancorp
First Metro pro forma pro forma
Bancorp(O) Bancorp adjustments combined
---------- ------- ------------ ---------
<S> <C> <C> <C> <C>
Cash and due from banks 69,052 10,838 (2,475) (H) 75,603
(1,812) (I)
Federal funds sold 11,249 9,680 --- 20,929
Interest bearing deposits with other financial institutions 62,890 693 --- 63,583
Investment securities 507,146 8,883 ( 100) (D) 515,929
Securities available for sale and
marketable equity securities 30,935 961 --- 31,896
Loans, net 1,269,780 88,671 (1,518) (A)
500 (E) 1,357,433
Premises and equipment, net 47,269 6,823 1,000 (F) 55,092
Other assets 65,380 8,654 (2,381) (B)
982 (G)
(2,549) (L) 75,184
--------- -------- -------- ----------
Total assets 2,063,701 135,203 (3,255) 2,195,649
========= ======== ======== ==========
Deposits 1,703,740 124,613 --- 1,828,353
Federal funds purchased, securities sold under agree-
ments to repurchase, and other short term borrowings 76,812 --- --- 76,812
Long-term debt and other liabilities 81,157 1,819 ( 202) (M) 82,774
--------- -------- ------- ----------
Total Liabilities 1,861,709 126,432 ( 202) 1,987,939
--------- -------- -------
Series A cumulative preferred stock 4,163 (4,163) (H) ---
Series 1992 redeemable cumulative preferred stock 1,812 (1,812) (I) ---
Common stock 15,382 3,486 (3,486) (K)
279 (J) 15,661
Additional paid-in capital 52,704 382 ( 382) (K)
5,439 (J) 58,143
Retained earnings (accumulated deficit) 133,906 (831) (831) (K) 133,906
Net unrealized loss on marketable equity securities (39) 39 (C) ---
Guarantee of indebtedness of employee
stock ownership plan --- (202) 202 (M) ---
--------- ---------- ----------- ----------
Total Common Shareholders Equity 201,992 2,796 2,922 207,710
--------- ---------- ----------- ----------
Total liabilities, preferred stock,
and shareholder's equity 2,063,701 135,203 (3,255) 2,195,649
========= ========= =========== ==========
</TABLE>
15
<PAGE> 27
FIRST BANCORP AND METRO BANCORP
Pro Forma Condensed Combined Statements of Income (Unaudited)
The following unaudited pro forma condensed combined statements of income of
First Bancorp and subsidiaries for the year ended December 31, 1992 and for the
nine-month period ended September 30, 1993 give effect to its acquisition of
all issued and outstanding shares of Villa Rica Bancorp, Inc. (Villa Rica
Bancorp) and The Community Bank of Carrollton (Community Bank) common stock,
effective May 31, 1993 and August 31, 1993, respectively, under the
pooling-of-interests method of accounting and the proposed acquisition of all
outstanding shares of Metro Bancorp common and preferred stock, under the
purchase method of accounting. The pro forma condensed combined statements of
income reflect the pro forma results of operations of First Bancorp, as if
Metro Bancorp had been acquired by First Bancorp on January 1, 1992. The pro
forma condensed combined statements of income should be read in conjunction
with the notes to the pro forma financial statements and separate financial
statements and related notes of the respective entities appearing elsewhere or
incorporated herein by reference in this Proxy Statement.
(Amounts are presented in thousands,
except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1992
------------------------------------------------------------------------------------
Restated Metro Bancorp Pro
First Villa Rica Community First Metro pro forma forma
Bancorp* Bancorp Bank Bancorp** Bancorp adjustments combined
-------- ------- ---- --------- ------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 145,593 4,630 3,172 153,395 10,159 (30)(N) 163,524
Interest expense 69,264 2,494 1,398 73,156 4,858 - 78,014
------- ------ ------ ------- ------ -------- -------
Net interest income 76,329 2,136 1,774 80,239 5,301 (30) 85,510
Provision for loan losses 10,403 432 346 11,181 689 - 11,870
Other income 33,936 832 347 35,115 2,721 - 37,836
Other expenses 69,829 2,259 1,346 73,434 6,929 33 (O) 80,566
170 (P)
------- ------ ------ ------- ------ -------- -------
Income (loss) before income
taxes and extraordinary item 30,033 277 429 30,739 404 (233) 30,910
Income tax expense 7,744 52 113 7,909 91 13 (Q) 8,013
------- ------ ------ ------- ------ -------- -------
Income (loss) before
extraordinary item 22,289 225 316 22,830 313 (246) 22,897
Extraordinary item - - - - 91 - 91
Preferred dividend requirement - - - - (562) 562 (H)(I) -
------- ------ ------ ------- ------ -------- -------
Net income $ 22,289 225 316 22,830 (158) 316 22,988
======= ====== ====== ======= ====== ======== =======
Net income per share based
on weighted average shares and
common stock equivalents
outstanding $ 1.54 1.51 1.49
======= ====== =======
Weighted average number of
outstanding common shares
and common share equivalents 14,513,541 15,158,805 15,437,730
========== ========== ==========
NINE MONTHS ENDED SEPTEMBER 30, 1993
------------------------------------------------
Metro
Bancorp pro
First Metro forma Pro forma
Bancorp Bancorp adjustments combined
------- ------- ----------- --------
Interest income 110,321 6,926 (22)(N) 117,225
Interest expense 46,395 2,828 - 49,223
------- ------- --------- --------
Net interest income 63,926 4,098 (22) 68,002
Provision for loan losses 2,650 236 1,518(A) 4,404
Other income 22,006 2,358 - 24,364
Other expenses 58,261 5,036 2,381(B) 65,831
25(O)
128(P)
------- ------- --------- --------
Income (loss) before income
taxes and extraordinary item 25,021 1,184 (4,074) 22,131
Income tax expense 6,968 198 (198)(Q) 6,968
------- ------- --------- --------
Income (loss) before
extraordinary item 18,053 986 (3,876) 15,163
Extraordinary item 160 150 - 310
Preferred dividend requirement - (441) 441(H)(I) -
------- ------- --------- --------
Net income 18,213 695 (3,435) 15,473
======= ======= ========= ========
Net income per share based
on weighted average shares and
common stock equivalents
outstanding 1.19 . 99
======= ========
Weighted average number of
outstanding common shares
and common share equivalents 15,337,221 15,616,146
========== ==========
</TABLE>
*As originally reported
**Restated under the pooling-of-interests method
16
<PAGE> 28
FIRST BANCORP AND METRO BANCORP
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
Information and Statements of Income
The following notes describe the pro forma adjustments necessary to reflect the
proposed acquisition of Metro Bancorp by First Bancorp as if the acqusition had
taken place on January 1, 1992. Prior to its acquisition by First Bancorp,
Metro Bancorp anticipates recording adjustments to increase its allowance for
loan losses and write down the recorded value of other real estate. These
anticipated adjustments have been reflected in the pro forma financial
information in the latest period presented. For purposes of the pro forma
financial information, it has been assumed that all of the 1,394,627 shares
outstanding at September 30, 1993, of Metro Bancorp common stock, will be
purchased by First Bancorp for 278,925 shares of First Bancorp common stock
with an approximate market value of $20.50 per share. Additionally, it has been
assumed that all of the outstanding Series A and Series 1992 preferred stock of
Metro Bancorp will be purchased by First Bancorp for cash. First Bancorp
anticipates using proceeds from anticipated borrowings to acquire a portion of
the preferred stock of Metro Bancorp, however the amount has not yet been
determined. First Bancorp has sufficient cash to acquire the preferred stock
of Metro Bancorp without additional borrowings. For purposes of the pro forma
financial information, it has been assumed that the preferred stock of Metro
Bancorp would be acquired with existing cash of First Bancorp. The effect of
the lost earnings on the cash used to acquire the preferred stock is not
considered significant to the pro forma statements of income. The pro forma
financial information does not include any additional First Bancorp stock or
cash which First Bancorp may be required to distribute as additional
consideration for the Metro Bancorp stock acquired by First Bancorp, as set
forth in the Reorganization Plan. For a further discussion of the additional
consideration, see "Additional Consideration Payable for Metro Bancorp Common
Stock" included under "THE PROPOSED REORGANIZATION" elsewhere in this Proxy
Statement.
(A) Reflects an increase in the allowance for loan losses to be recorded
by Metro Bancorp prior to the acquisition by First Bancorp.
(B) Reflects the write-down of other real estate to the approximate fair
value, less estimated selling costs, to be recorded by Metro
Bancorp prior to the acquisition by First Bancorp.
(C) Reflects the write-down of marketable equity securities.
(D) Reflects the write-down of investment securities to approximate fair
value.
(E) Reflects the write-up of loans to approximate fair value.
(F) Reflects the write-up of premises and equipment to approximate fair
value.
(G) Reflects the net adjustment to deferred taxes for the effect of
adjustments (A) through (F).
(H) Reflects the acquisition, by First
Bancorp, and redemption of all of Metro Bancorp's issued and
outstanding Series A cumulative preferred stock .
(I) Reflects the acquisition, by First Bancorp, and redemption of all of
Metro Bancorp's issued and outstanding Series 1992 cumulative
preferred stock for $10.00 per share.
(J) Reflects the issuance of 278,925 shares of First Bancorp common stock
issued to acquire all of the outstanding common stock of Metro
Bancorp.
(K) Reflects the elimination of the equity accounts of Metro Bancorp.
(L) Reflects the excess of the purchase price over the net assets acquired
of Metro Bancorp after the adjustments in (A) through (H).
(M) Reflects the termination and liquidation of the Employee Stock
Ownership Plan of Metro Bancorp.
(N) Reflects the net amortization of the discounts applied to investment
securities and premiums applied to loans in adjusting them to
approximate fair value, over the estimated average terms of the
related investment securities and loans.
(O) Reflects the increase in depreciation expense for the write-up of
premises and equipment over the estimated average lives of the
related assets.
(P) Reflects the amortization of the excess of the purchase price over the
net assets acquired of Metro Bancorp over a 15 year period.
(Q) Reflects the income tax effect on the adjustments in (N) and (O).
17
<PAGE> 29
METRO BANCORP
Selected Financial Data
(Amounts are presented in thousands, except per share data and ratios)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30, Years ended December 31
------------------- ------------------ -----------------------------------------
1993 1992 1993 1992 1992 1991 1990 1989 1988
-------- -------- -------- -------- ------ ------ ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income $ 1,397 1,240 4,098 3,787 5,301 5,120 5,434 6,425 5,808
======= ======= ======= ======= ======= ======= ======= ======= =======
Provision for loan losses $ 50 172 236 517 689 607 2,473 1,716 1,120
======= ======= ======= ======= ======= ======= ======= ======= =======
Net income (loss) applicable to common $ 92 (27) 695 93 (158) 753 (2,957) (613) 513
shareholders ======= ======= ======= ======= ======= ======= ======= ======= =======
Net income (loss) per common share (1) $ 0.07 (0.02) 0.50 0.07 (0.11) 0.54 (2.12) (0.44) 0.37
======= ======= ======= ======= ======= ======= ======= ======= =======
Cash dividends declared per common share (1) $ - - - - - - - 0.18 0.18
======= ======= ======= ======= ======= ======= ======= ======= =======
Total assets (end of period) $135,203 128,269 135,203 128,269 129,406 129,725 152,801 170,910 149,500
======= ======= ======= ======= ======= ======= ======= ======= =======
Total long-term debt and redeemable pre $ 6,471 6,611 6,471 6,611 6,701 5,542 5,002 4,850 5,869
======= ======= ======= ======= ======= ======= ======= ======= =======
Total average common shareholders' equity $ 2,754 2,333 2,604 2,274 2,161 1,739 2,688 4,568 4,643
======= ======= ======= ======= ======= ======= ======= ======= =======
Total average assets $135,816 126,385 133,434 129,569 131,667 142,075 161,585 161,316 142,500
======= ======= ======= ======= ======= ======= ======= ======= =======
Ratios:
Net income (loss) to average assets 0.27% (0.09)% 0.69% 0.10% (0.12)% 0.53 (1.83)% (0.38)% 0.36%
======= ======= ======= ======= ======= ======= ======= ======= =======
Net income (loss) to average common 13.36% (4.63)% 35.59% 5.45% (7.31)% 43.30% (110.01)% (13.42)% 11.05%
======= ======= ======= ======= ======= ======= ======= ======= =======
Average common shareholders' equity 2.03% 1.85% 1.95% 1.76% 1.64% 1.22% 1.66% 2.83% 3.26%
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(1) Amounts restated for a two-for-one stock split effected in the form of a
100% stock dividend issued to Metro Bancorp common shareholders on June
15, 1993
(2) Ratios for the three-month and nine-month periods ended September 30,1993
and 1992 are annualized.
18
<PAGE> 30
METRO BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1992, 1991 AND 1990
Metro Bancorp organized on May 14, 1984, as a one-bank holding company
whose wholly owned subsidiary is the Bank. The Bank was chartered as a
national bank in Georgia in 1928 and commenced business that same year for the
purpose of conducting a commercial banking business in Douglas County, Georgia.
In 1942, the Bank converted from being a national to a state bank and changed
its name from "First National Bank of Douglasville" to "The Commercial Bank."
As a state nonmember bank, the Bank is regulated by the Federal Deposit Insured
Corporation (the "FDIC") and the Georgia Department of Banking and Finance (the
"Department"). The Bank engages in a general commercial banking business,
emphasizing the banking needs of individuals and small to medium-sized business
and professional concerns in its primary service area, and offers a full range
of deposit services and real estate, commercial and consumer loans, as well as
various related services. The following should be read in conjunction with the
audited consolidated financial statements and the related notes of Metro
Bancorp and its subsidiary and information appearing elsewhere in the Proxy
Statement.
Results of Operations
Metro Bancorp reported net loss applicable to common stockholders of
$158,000 in 1992 compared to net income applicable to common stockholders of
$753,000 in 1991. Total assets of the Company remained stable and decreased
by only .25% from 1991 to 1992.
Deposits and loans remained stable during 1992. Deposits decreased in
1992 by 1.31% while loans decreased 2.42%.
Metro Bancorp's net loss applicable to common stockholders for 1992 is
primarily due to an increase in the preferred stock dividend requirement as
well as expenses incurred to maintain an adequate loan loss reserve. Also in
1992, Metro Bancorp expensed $274,000 in order to account for declines in the
fair value of the Bank's other real estate owned. Metro Bancorp had net income
before the preferred stock dividend requirement of $404,000 in 1992 and
$1,009,000 in 1991.
Total assets declined from 152.8 million in 1990 to 129.7 million in
1991. Loans declined from 101.1 million to 96.3 million, which reflects less
new loan volume as a result of the tightening of the Bank's credit underwriting
during the first half of 1991, coupled with a downturn in the local economy.
Deposits declined from $145 million to $121.1 million as a result of the
maturity of brokered deposits which originated in the late 1980's, management's
efforts to deemphasize a special high rate savings certificate, and
management's efforts to reduce public funds.
19
<PAGE> 31
The following table summarizes the results of operations of Metro
Bancorp on a consolidated basis for the years ended December 31, 1992, 1991,
and 1990
<TABLE>
<CAPTION>
(Amounts in thousands, except percentages)
Year Ended December 31
----------------------
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Net interest income $5,301 $5,119 $5,434
Provision for loan losses 689 607 2,473
Other income 2,721 3,368 2,171
Non-interest expense 6,929 6,871 8,089
Net income (loss) 404 1,009 (2,957)
Preferred stock dividend requirement (562) (256) -----
Net income (loss) applicable
to common shareholders (158) 753 (2,957)
Common stockholders return
on average assets (.12%) .53% (1.83%)
Return on average common
stockholder's equity (7.31%) 43.30% (110.01%)
</TABLE>
Net Interest Income
The Bank's net interest income, the difference between interest income
on interest-earning assets and interest expense on interest-bearing
liabilities, is Metro Bancorp's principal source of earnings. Interest-earning
assets for the Bank include loans, federal funds sold, and investment
securities. Metro Bancorp has no material interest-bearing liabilities other
than the Bank's deposits and long-term debt.
In 1992, net interest income was $5,301,000, representing a small
increase of $181,000, or 3.55% from 1991. This small increase was primarily
due to the maturity of high priced, fixed rate brokered deposits. In 1991, net
interest income was $5,119,000 which represented a decrease of $315,000, or
5.80% from 1990. Although the Bank was in a better position to reprice
liabilities by taking advantage of falling rates, the net interest margin still
decreased due to the high priced, fixed rate brokered deposits coupled with
declining interest rates on loans which decreased loan and investment income.
Allowance for Loan Losses
The Bank provides for loan losses with a monthly expense that
management feels is necessary to maintain the allowance for loan losses at an
adequate level based on consideration of prevailing and anticipated economic
conditions and evaluation of potential losses. The allowance for loan losses
approximated 3.89% of the outstanding loans at December 31, 1992 and 3.82% at
December 31, 1991.
Management believes that the allowance for loan losses is adequate to
provide for potential loan losses, based on information available and
conditions prevailing at the date of determination of the allowance. However,
management's judgment is based upon a number of assumptions about future
events, which are believed to be reasonable, but which may or may not prove
valid. Thus, there can be no assurance that charge-offs in future periods will
not exceed the allowance for loan losses or that additional increases in the
allowance for loan losses will not be required.
20
<PAGE> 32
At December 31, 1992, the Bank had specifically reserved $1,338,000 of
the $3,648,000 allowance for loan losses balance. This specific reserve has
been established for specifically identified problem loans where management
considers losses to be likely. The remaining $2,260,000 represents the Bank's
general reserve as of this same time period. The general reserve has been
established by management to provide for loans considered to be potential
problems, as well as to provide for any future problem loans currently
unidentified.
The following table summarizes loan balances at the end of 1992 and
1991, average loans outstanding during the year, and changes in the allowance
for loan losses arising from loans charged off, recoveries on loans previously
charged off by loan category, and additions to the allowance which have been
charged to operating expense.
<TABLE>
<CAPTION>
Allowance for Loan Losses at December 31
(Amounts in thousands, except percentages)
1992 1991
---- ----
<S> <C> <C>
Total loans outstanding at end of period,
net of unearned income $ 93,821 $ 96,169
======== ========
Daily average amount of loans outstanding,
net of unearned income $ 93,656 $ 93,183
======== ========
Balance of allowance for loan losses at
beginning of year $ 3,674 $ 3,787
--------- ---------
Loan Losses:
Commercial and Other 219 141
Real Estate 408 604
Consumer 155 320
---------- ----------
Total loan losses 782 1,065
---------- ---------
Recoveries of previous loan losses:
Commercial and Other 12 279
Real Estate 10 2
Consumer 45 64
---------- -----------
Total recoveries 67 345
---------- ----------
Net loan losses 715 720
Provision for loan losses 689 607
Balance of allowance for loan losses
at end of period $ 3,648 $ 3,674
======== =========
Ratio of net loans charged off to average
net loans outstanding .76% .77%
==== ====
</TABLE>
Credit reviews of the loan portfolio designed to identify potential
charges to the allowance for loan losses, as well as to determine the adequacy
of the allowance, are made on a monthly basis during the year. These reviews
are conducted by responsible lending officers and a loan committee taking into
account such factors as financial strengths of the borrowers, the value of
applicable collateral, past loss experience, anticipated loan losses, growth in
the loan portfolio, and other factors, including prevailing and anticipated
economic conditions. The conclusions are reviewed and approved by senior
management and the Board of Directors. Management believes that the allowance
for loan losses is adequate to provide for potential loan losses, based on
information available and conditions prevailing at the date of determination of
the allowance. However, management's judgment is based upon a number of
assumptions about future events, which are believed to be reasonable, but which
may or may not prove valid. Thus, there can be no assurance that charge-offs
in future periods will not exceed the allowance for loan losses or that
additional increases in the allowance for loan losses will not be required.
21
<PAGE> 33
Asset Quality
The following table summarizes nonperforming assets and allowances for
loan losses data as of December 31, 1992 and 1991:
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------------
1992 1991
--------------- ----------------
(Amounts in thousands, except percentages)
Amount % of Loans Amount % of Loans
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Non-accrual loans $2,024 2.16% $3,634 3.78%
Restructured loans-Not in
compliance with modified terms 0 0% 0 0%
Other real estate owned 6,980 7.44% 5,503 5.72%
----- ----- ----- -----
Total nonperforming assets $9,004 9.60% $9,137 9.50%
====== ===== ====== =====
Loans past due 90 days or more and $ 280 .30% $ 110 .11%
still accruing interest =========== ==== ======= ====
Allowance for loan losses to period
end loans 3.89% 3.82%
Allowance for loan losses to period
end nonperforming loans 180.24% 101.10%
Allowance for loan losses to
nonperforming assets 40.52% 40.21%
</TABLE>
Other Income
Other income decreased to $2,721,000 in 1992 from $3,368,000 in 1991.
Earnings in 1991 were significantly enhanced by $866,000 of nonrecurring income
generated from the sale of loans, fixed assets, and the bank's credit card
portfolio. Without the nonrecurring income in 1991, other income would have
been $2,502,000. Service charges increased again in 1992 by $268,000 due to
management's decision to increase bank fees.
Other income in 1991 less nonrecurring income was $2,502,000 compared
to $2,171,000 in 1990. The increase in 1991 was primarily due to management's
decision to increase service charges as well as a $183,000 increase in rental
income from other real estate owned. Service charges increased by $268,000 in
1991.
Other Expenses
Other expenses remained stable in 1992, increasing by less than one
percent from 1991. Other expenses totaled $6,871,000 in 1991 compared to
$8,089,000 in 1990. This decrease was primarily the result of a decrease in
salaries expense in 1991 related to a reduction in bank personnel. Also in
1991, legal fees decreased by $100,000 and printing, stationery and supplies
expense decreased by $100,000. Legal fees were higher in 1990 due to costs
associated with the attempted merger between the Company and Bank South, N.A.
Printing, stationery and supplies expense decreased in 1991 due to a reduction
in deposits.
22
<PAGE> 34
Income Taxes
In the last two years, Metro Bancorp's net tax expense was zero due to
the use of net operating loss carryforwards from prior years. The loss
carryforwards are reflected as an extraordinary credit in the amount of $91,428
and $257,116 for the periods 1992 and 1991, respectively. In the last two
years, Metro Bancorp has not had to provide for state income taxes.
Liquidity and Interest Rate Sensitivity
Liquidity management for the Bank involves the matching of cash flow
requirements of customers, either depositors withdrawing funds or borrowers,
and the ability of the Bank to meet those requirements. Liquidity Management
for Metro Bancorp involves other factors such as dividend requirements. Bank
management monitors and maintains appropriate levels of assets and liabilities
so that maturities of assets are such that adequate funds are provided to meet
estimated customer withdrawals and loan requests. The Bank's primary sources
of liquidity are scheduled payments on the Bank's loans and interest on its
investment. The Bank may also utilize its cash due from banks and federal
funds sold to meet liquidity requirements. At December 31, 1992, the Bank's
cash and due from banks was $9,962,000, and its federal funds sold were
$5,204,000. It is Metro Bancorp's intention to hold investment securities to
their maturity. Accordingly, Metro Bancorp does not anticipate any significant
sales, unless the need arises due to liquidity requirements. The parent
company is illiquid since it does not have funds to meet the redemption and
dividend payment requirements on the preferred stock outstanding and also
cannot pay common stock dividends. The Bank is currently prohibited from
paying dividends to the parent company, which creates a serious liquidity
situation for Metro Bancorp. It is anticipated that the proposed merger will
alleviate this liquidity problem.
<TABLE>
<CAPTION>
Loan Maturity Schedule and Sensitivity
to Changes in Interest Rate
At December 31, 1992
(Amounts in thousands)
After One
One Year Through After
or Less Five Years Five Years Total
----------- -------------- -------------- -----
<S> <C> <C> <C> <C>
Loans with:
Fixed interest rates $27,656 $28,658 $11,545 $67,859
Floating interest rates 26,115 0 0 26,115
------ ---------- ----------- ------
Total Loans $53,771 $28,658 $11,545 $93,974
======= ======= ======= =======
</TABLE>
The relative interest rate sensitivity of the Bank's assets and
liabilities indicates the extent to which the Bank's net interest income may be
affected by interest rate movements. The Bank's ability to reprice assets and
liabilities in the same dollar amounts and at the same time minimizes interest
rate risks. One method of measuring the impact of interest rate changes on net
income is to measure, in a number of time frames, the interest sensitivity gap,
by subtracting interest sensitive liabilities from interest sensitive assets.
The difference, the interest sensitivity gap, represents the risk, or
opportunity, in repricing. At December 31, 1992, Metro Bancorp's position was
as follows:
23
<PAGE> 35
Interest Sensitivity Analysis
at December 31, 1992
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
After Three Greater Than
Within Through Within One Year or
Three Months Twelve Months One Year Nonsensitive Total
------------ ------------- -------- ------------ -----
<S> <C> <C> <C> <C> <C>
Earning Assets:
Loans $ 38,559 $ 15,212 $ 53,771 $ 40,203 $ 93,974
Investment securities 1,498 4,859 6,357 1,031 7,388
Interest-bearing deposits with 684
banks 486 198 684 0
Funds sold 5,204 0 5,204 0 5,204
------- ------- ------- ------- -------
Total interest-earning assets $ 45,747 $ 20,269 $ 66,016 $ 41,234 $107,250
======= ======== ======= ======= =======
Interest-Bearing Liabilities:
Interest-bearing deposits,
excluding CD's of $100,000 $ 38,450 $ 19,596 $ 58,046 $ 31,455 $ 89,501
------- ------- ------- ------- -------
CD's of $100,000 or more 1,127 2,502 3,629 1,282 4,911
Capital lease obligation 0 0 0 407 407
--- --- --- --- ---
Total interest-bearing liabilities 39,577 22,098 61,675 33,144 94,819
Interest-free funds 0 0 0 0 0
------- ------- ------- ------- -------
Funds supporting interest
-earning assets $ 39,577 $ 22,098 $ 61,675 $ 33,144 $ 94,819
------- ------- ------- ------- -------
Period gap $ 6,170 ($ 1,829) $ 4,341 $ 8,090 $ 12,431
Cumulative gap $ 6,170 $ 4,341 $ 4,341 $ 12,431 $ 12,431
Ratio of interest-sensitive assets
to interest-sensitive liabilities 1.16 .92 1.07 1.24 1.13
Ratio of cumulative gap to total
earning assets 5.8% 4.0% 4.0% 11.6% 11.6%
</TABLE>
The cumulative difference between rate-sensitive assets and
rate-sensitive liabilities, or the interest rate sensitivity gap is labeled
cumulative gap. Metro Bancorp is asset-sensitive in all periods. This
suggests that if interest rates fall, the net interest margin would decline.
If rates increase, the net interest margin would improve.
24
<PAGE> 36
Capital Resources and Adequacy
There are various measures of capital adequacy for banks and bank
holding companies such as risk-based capital guidelines and the leverage ratio.
At December 31, 1992, the Bank's regulatory capital and the required minimums
under existing regulations and the Corrective Program Agreement under which the
Bank is operating are as follows:
<TABLE>
<CAPTION>
For the Year Ended and as of December 31
----------------------------------------
1992 Minimum 1991
---- ------- ----
<S> <C> <C> <C>
Capital Ratio - Consolidated
Total capital to total assets 9.01% 7.99%
Capital and Liquidity Ratios -- Bank Only
Leverage 6.29% 4.00 5.55%
Tier 1 risk-based 8.10% 4.00 6.78%
Total risk-based 9.35% 8.00 8.03%
Equity as percentage of assets
(exclusive of loan loss allowances) (1) 5.85% 5.04%
Adjusted primary capital as percentage
of adjusted total assets (1) 7.47% 6.76%
</TABLE>
(1) Based on the definitions of "primary capital" and "total assets" provided
in sections 325.2(h) and 325.2(k) of the FDIC Rules and Regulations.
Under the Corrective Program, the Bank must maintain a 6% minimum
equity as a percentage of assets and 8% adjusted primary capital
percentage.
Regulatory authorities have proposed an interest rate risk component
to minimum required regulatory capital which has not yet been finalized. Such
requirement, if implemented, will likely increase the level of minimum required
regulatory capital in the future for which the effects are not presently
determinable.
Inflation
Inflation impacts the growth in total assets in the banking industry
and causes a need to increase equity capital at higher than normal rates to
meet capital adequacy requirements. Metro Bancorp copes with the effects of
inflation through effectively managing its interest rate sensitivity gap
position, by periodically reviewing and adjusting its pricing of services to
consider current costs, and through retainage of net income.
25
<PAGE> 37
Corrective Program
In December 1990, Metro Bancorp and the Bank entered into the
Corrective Program with their primary regulatory authorities resulting from a
regulatory examination conducted during the summer of 1990 while the merger
agreement with Bank South, N.A. was still in effect.
The Corrective Program requires, among other things, that the
Bank:
(i) conduct a review of the effectiveness of its management and staff and
submit a Management Plan to strengthen the operational and lending
functions of the Bank and improve the depth and stability of the
Bank's management;
(ii) develop a written management plan;
(iii) increase its capital level to a minimum of 6% of total assets, and its
adjusted primary capital (equity plus the allowance for loan losses)
to a minimum of 8% of adjusted total assets (total assets plus the
allowance for loan losses);
(iv) maintain the loan loss reserve at a level acceptable to the
Department;
(v) charge off by December 31, 1990, all assets classified "Loss" in the
August 29, 1990 Report of Examination by the Department, provide
reserves for future charge-offs of 50% of the assets classified
"Doubtful", and make no further extensions of credit to borrowers
whose loans were charged off or classified "Loss" or "Doubtful".
(vi) make no further advances to borrowers whose loan or line of credit had
been classified "Substandard" without the prior approval of the Bank's
Board of Directors;
(vii) submit a comprehensive budget and earnings forecast to the FDIC and
the Department;
(viii) correct all violations of laws, rules and regulations cited in the
August 29, 1990 Report of Examination by the Department and adopt
appropriate procedures to ensure future compliance;
(ix) develop, subject to regulatory approval, a plan to reduce the Bank's
level of investment in fixed assets to no more than 60% of its
statutory capital base;
(x) develop, subject to regulatory approval, a comprehensive lending
policy;
(xi) develop procedures to insure proper loan documentation and correct all
deficiencies set forth in the August 29, 1990 Report of Examination by
the Department; and
(xii) not pay dividends and not accept any brokered deposits without prior
approval of the FDIC and the Department.
In addition, the Corrective Program requires that Metro Bancorp:
(i) develop a comprehensive capital plan to increase Metro Bancorp's level
of total capital to 7.0% of total assets;
(ii) correct all violations of law, rules and regulations cited in the
September 26, 1990 Report of Examination by the Department and adopt
appropriate procedures to ensure future compliance;
26
<PAGE> 38
(iii) provide the FDIC and the Department, at the end of each quarter, Metro
Bancorp only financial statements, the Bank's Report of Condition and
Income, and Metro Bancorp's consolidated financial statements; and
(iv) provide the FDIC and the Department progress reports of compliance
with the Corrective Program every 90 days.
Compliance with the Corrective Program
In response to the Corrective Program, management has focused on
improving the Bank's capital adequacy and the quality of its loan portfolio.
Consequently, since the effective date of the Corrective Program, the Bank has
reduced its assets (including adversely classified assets) and overdue loans,
revised its loan documentation procedures, instituted an expense control
program, and adopted a new loan review policy, which included hiring an
independent loan review firm, Banc Financial Group, Inc. to review loans and
the adequacy of appraisals. In addition, the Bank has developed a capital plan
which has been approved by the FDIC and the Department. The capital plan
focuses on four primary objectives: (1) increasing capital, (2) eliminating
classified assets, (3) improving profitability, and (4) developing a viable
marketing plan. In compliance with the Corrective Program, the Bank has
revised the Bank's written loan policy and taken steps to comply with the other
provisions of the Corrective Program. The capital plan required that the Bank
increase its capital by $1,000,000 ($500,000 by September 30, 1993 and an
additional $500,000 by February 1994). In August 1993, Metro Bancorp's Board
of Directors recognized that they would not be able to complete a planned
equity offer by the September 30, 1993 deadline. This was one of the primary
reasons the Board of Directors decided to enter into the merger. At December
31, 1992, both Metro Bancorp and the Bank were in compliance with all but two
of the minimum capital ratio guidelines set forth in the Corrective Program
Agreement. The Bank was not in compliance with the adjusted primary
capital/adjusted total assets ratio achieving only 7.47% as opposed to the
required 8.00%, and the Bank was not in compliance with the equity/total assets
ratio achieving only 5.85% as opposed to the required 6.00%.
Possible Regulatory Actions due to Noncompliance
Although it is not known what actions the regulatory authorities would
take in the event of noncompliance, it is entirely possible that certain
actions taken could include, among other things, limiting the Bank's asset
growth, requiring the disposition by the Bank of certain assets, or requiring
disposition of the Bank by Metro Bancorp.
Bank South, N.A.
At December 31, 1990, Metro Bancorp had a loan with Bank South, N.A.
In June 1991, the loan was converted into 459,773 shares of preferred stock
(hereafter referred to as Series A Preferred Stock). At December 31, 1992, the
Series A balance was $4,051,160 or 405,116 shares.
27
<PAGE> 39
METRO BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE-MONTH AND NINE-
MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
The following is a discussion of Metro Bancorp's unaudited financial
condition as of September 30, 1993 and the results of operations for the
three-month and nine-month periods ended September 30, 1993 and 1992,
respectfully. These comments should be read in conjunction with Metro
Bancorp's unaudited consolidated financial statements and related notes and the
statistical information appearing elsewhere in the Proxy Statement.
Results of Operations
Metro Bancorp reported net earnings applicable to the common
stockholder of $92,000 for the third quarter of 1993 compared to a net loss of
$27,000 for the same period in 1992. Net earnings before the preferred stock
dividend requirement totaled $238,000 for the third quarter of 1993 compared to
$99,000 for the same period in 1992. For the nine-month period ended September
30, 1993 and the nine-month period ended September 30, 1992, Metro Bancorp
reported net earnings applicable to the common stockholder of $695,000 and
$93,000, respectively. Before the preferred stock dividend requirement, net
earnings were $1,136,000 in the first nine months of 1993 compared to $490,000
for the same period in 1992.
Earnings for the first nine months of 1993 were higher than the
corresponding period in 1992 primarily as the result of lower loan loss
provision expense, higher net interest income, and an increase in other income.
For the first nine months ended September 30, 1992, the provision for loan
losses totaled $517,000, while during the same period in 1993 the provision
totaled $236,000. Net interest income increased by $311,000 in the first nine
months of 1993 compared to the same period in 1992. There was an increase in
other income of $209,000 during the first nine months of 1993 compared to the
corresponding period in 1992. Also, due to the implementation of FASB 109
(Statement of Financial Accounting Standards No. 109 Accounting for Income
Taxes), Metro Bancorp benefited from a cumulative effect of change in
accounting principle of $150,000 for the nine month period ended September 30,
1993.
28
<PAGE> 40
The following table summarizes the results of operations of Metro
Bancorp on a consolidated basis for the three-month and nine-month periods
ended September 30, 1993 and 1992.
<TABLE>
<CAPTION>
Summary Financial Information (Consolidated)
(Amounts in thousands, except ratios and per share data)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income Statement Data:
Net interest income $1,397 $1,240 $4,098 $3,787
Provision for loan losses 50 172 236 517
Other income 741 683 2358 2,149
Non-interest expense 1,732 1,652 5,036 4,929
Income before tax and
other items 356 99 1,184 490
Net tax benefit (expense)
net of NOL carryforward (118) 0 (198) 0
Cumulative effect of change
in accounting principle 0 0 150 0
Net income after cumulative
effect of change in
accounting principle 238 99 1,136 490
Preferred stock dividend
requirement 146 126 441 397
Net income (loss) applicable
to common shareholders 92 (27) 695 93
Common stockholders return
on average assets (1) .27% (.09%) .68% .10%
Return on average common equity 13.36% (4.63%) 35.59% 5.45%
-------------------------------------
</TABLE>
(1) Net income (loss) applicable to common shareholders divided by average
total assets.
Net Interest Income
Net interest income for the three-month and nine-month periods ended
September 30, 1993 increased $157,000 and $311,000, respectively, from the same
periods in 1992. Although interest income decreased by $595,000 during the
first nine months of 1993 from the amount in the corresponding period in 1992,
interest expense also decreased during this period by $906,000. Interest
income decreased due to a shrinking loan portfolio and the continued repricing
of both the loan and investment portfolios. Interest expense has decreased due
to the declining interest rate environment and due to the continued maturity of
high priced fixed rate brokered deposits.
29
<PAGE> 41
Allowance for Loan Losses
The allowance for loan losses approximated 4.30% of outstanding loans
at September 30, 1993 compared to 3.89% at December 31, 1992. The allowance
increased to $3,994,000 at September 30, 1993 from $3,648,000 at December,
1992. The increase in the allowance for loan losses account during the
nine-month period ended September 30, 1993 is primarily the result of a
provision expense of $236,000. The percentage increase is also due to a
reduction in total loans outstanding. Management believes that the allowance
for loan losses is adequate to provide for potential loan losses, based on
information available and conditions prevailing at the date of determination of
the allowance. However, management's judgment is based upon a number of
assumptions about future events, which are believed to be reasonable, but which
may or may not prove valid. Thus, there can be no assurance that charge-offs
in future periods will not exceed the allowance for loan losses or that
additional increases in the allowance for loan losses will not be required.
At September 30, 1993, the Bank held in specific reserves $1,959,000
of the $3,994,000 allowance for loan losses account.
The specific reserve has been established for specifically identified
problem loans where management considers losses to be likely. The general
reserve has been established by management to provide for loans considered to
be potential problems as well as for future problem loans which are currently
unidentified.
Asset Quality
The following table summarizes nonperforming assets and allowances for
loan losses data as of September 30, 1993 and December 31, 1992:
<TABLE>
<CAPTION>
September 30, 1993 December 31, 1992
------------------ -----------------
(Amounts in thousands, except percentages)
Amount % of Loans Amount % of Loans
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Non-accrual loans $1,452 1.56% $2,024 2.16%
Restructured loans-Not in
compliance with modified terms 0 0
Other real estate owned 6,717 7.23% 6,980 7.44%
------------ ---------- ----------- ----------
Total nonperforming assets $8,169 8.79% $9,004 9.60%
------ ----- ------ -----
Loans past due 90 days or more and
still accruing interest $ 5 .01% $ 280 .30%
Allowance for loan losses to period
end loans 4.30% 3.89%
Allowance for loan losses to period
end nonperforming loans 275.07% 180.24%
</TABLE>
Non-accrual loans, other real estate and loans past due 90 days or more, all
decreased during the nine month period ended September 30, 1993.
30
<PAGE> 42
Other Income
Other income of $741,000 increased $58,000 or 8.49% in the third
quarter of 1993 from the same period in 1992. Other income totaled $2,358,000
in the nine-month period ended September 30, 1993, an increase of $209,000 or
9.73% from the same period in 1992. These increases are primarily the result
of a $99,000 increase in net securities gains as well as a $55,000 increase in
insufficient check charges. The bank increased the charge per insufficient
check in January of 1993.
Other Expenses
Other expenses of $5,036,00 remained stable in the three-month and
nine-month periods ended September 30, 1993 when compared to the corresponding
periods in 1992. Expenses associated with the FDIC insurance assessment, legal
fees, income tax provision, and nonrecurring losses increased during the first
nine months of 1993. Legal fees increased due to costs associated with the
attempted stock offering. Nonrecurring loss expense totaled $87,000 during the
nine-month period ended September 30, 1993.
Offsetting the above increase in expense is the $229,000 decrease in
salaries and employee benefits expense. This was the result of a Bank staff
reduction in December 1992.
Income Taxes
During the nine-month period ended September 30, 1993, income tax
expense was $198,000; however, Metro Bancorp had a $150,000 benefit from a
cumulative effect of change in accounting principle after implementation of
FASB 109. The net effect on net earnings was an expense of $48,000.
Liquidity and Interest Rate Sensitivity
Liquidity management involves the ability to meet the cash flow
requirements of customers who may be either depositors wanting to withdraw
funds or borrowers needing assurance that sufficient funds will be available to
meet their credit needs and the ability to fund Metro Bancorp commitments.
Interest rate sensitivity management seeks to maintain consistent and
acceptable net interest spreads and to enhance growth of net interest income
through periods of changing interest rates.
Metro Bancorp seeks to meet day-to-day liquidity needs through
management of the cash and federal funds accounts. Short- term liquidity is
maintained by the management of funds invested in short-term instruments such
as federal funds sold. Long-term liquidity is maintained through the
management of investment securities and the loan portfolio in conjunction with
adding to the core deposit base through the procurement of additional funds
from depositors or through money market instruments.
31
<PAGE> 43
Capital Resources and Adequacy
There are various measures of capital adequacy for banks and bank
holding companies such as risk-based capital guidelines and the leverage ratio.
At September 30, 1993, the Bank's regulatory capital and the required minimums
under existing regulations and the Corrective Program Agreement under which the
Bank is operating are as follows:
<TABLE>
<CAPTION>
(Amounts in thousands, except ratios and per share data)
For Nine Months Ended and as of September 30
--------------------------------------------
1993 Minimum 1992
---- ------- ----
<S> <C> <C> <C>
Capital Ratio - Consolidated 9.17% 9.29%
total capital to total assets
Capital and Liquidity Ratios -- Bank Only
Leverage 6.85% 4.00 6.83%
Tier 1 risk-based 9.01% 4.00 8.45%
Total risk-based 10.26% 8.00 9.70%
Equity as percentage of assets
(exclusive of loan loss references) (1) 6.75% 6.71%
Adjusted primary capital as percentage
of adjusted total assets (1) 8.22% 8.42%
</TABLE>
(1) Based on the definitions of "primary capital" and "total assets" provided
in sections 325.2(h) and 325.2(k) of the FDIC Rules and Regulations.
Under the Corrective Program, the Bank must maintain a 6% minimum equity
as a percentage of assets and 8% adjusted primary capital percentage.
Regulatory authorities have proposed an interest rate risk component
to minimum required regulatory capital which has not yet been finalized. Such
requirement, if implemented, will likely increase the level of minimum required
regulatory capital in the future for which the effects are not presently
determinable.
Corrective Program
In December 1990, Metro Bancorp and the Bank entered into the
Corrective Program with their primary regulatory authorities resulting from a
regulatory examination conducted during the summer of 1990 while the merger
agreement with Bank South, N.A. was still in effect. The requirements of the
Corrective Program are discussed above in the section entitled "METRO BANCORP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1992, 1991, AND 1990."
32
<PAGE> 44
Compliance with the Corrective Program
In response to the Corrective Program, management has focused on
improving the Bank's capital adequacy and the quality of its loan portfolio.
Consequently, since the effective date of the Corrective Program, the Bank has
significantly reduced its assets (including adversely classified assets) and
overdue loans, revised its loan documentation procedures, instituted an expense
control program, and adopted a new loan review policy, which included hiring an
independent loan review firm, Banc Financial Group, to review loans and the
adequacy of appraisals. In addition, the Bank has developed a capital plan
which has been approved by the FDIC and the Department. The capital plan
focuses on four primary objectives: (1) increasing capital, (2) eliminating
classified assets, (3) improving profitability, and (4) developing a viable
marketing plan. In compliance with the Corrective Program, the Bank has
revised the Bank's written loan policy and taken steps to comply with the other
provisions of the Corrective Program.
In 1993, the Bank filed a capital plan with the Department to address
these capital issues. See METRO BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER
31, 1992, 1991, AND 1990 for a brief discussion of the Plan. During 1993, the
Bank and its management carefully reviewed the options available to the Bank to
raise additional capital. The management of both Metro Bancorp and the Bank
explored an offering of both preferred stock and common stock of Metro Bancorp.
Management concluded, however, that it was highly unlikely that a prospectus
could be prepared and capital raised by the FDIC imposed deadline of September
30, 1993. Also, Metro Bancorp intended to use a good portion of the proceeds
to redeem the Series A Preferred Stock held by Bank South, N.A. Bank South,
N.A. had agreed to a sizable discount if the stock was redeemed by September
30, 1993. As an alternative, Metro Bancorp and the Bank have pursued the
option of a merger with First Bancorp. First Bancorp has committed to
contribute $1,000,000 in additional capital to the Bank upon consummation of
the merger of Metro Bancorp into First Bancorp.
Possible Regulatory Actions due to Noncompliance
Although it is not known what actions the regulatory authorities would
take in the event of noncompliance, it is entirely possible that certain
actions taken could include, among other things, limiting the Bank's asset
growth, requiring the disposition by the Bank of certain assets, or requiring
disposition of the Bank by Metro Bancorp.
Bank South, N.A.
At December 31, 1990, Metro Bancorp had a loan with Bank South, N.A.
In June 1991, the loan was converted into 459,773 shares of Series A preferred
stock of Metro Bancorp (hereafter referred to as "the Series A preferred
stock"). At December 31, 1992, there were 405,116 shares of Series A
preferred stock outstanding to Bank South, N.A. with a redemption value of
$4,051,160.
As of September 28, 1993, Bank South, N.A. agreed to modify the
redemption agreement referred to above and to extend the redemption date until
such time as the merger is consummated or abandoned, provided that the merger
is consummated on or before March 31, 1994. The merger is expected to be final
on February 28, 1994. Bank South, N.A. also agreed to accept $2,475,000 in
redemption of all of the Series A preferred stock. If any Series A dividends
are paid between September 28, 1993 and February 28, 1994, the full amount will
be applied against the redemption price ($2,475,000).
33
<PAGE> 45
Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued Statement
109 "Accounting for Income Taxes" which supersedes Statement 96 "Accounting for
Income Taxes". Statement 109 is effective for fiscal years beginning after
December 15, 1992 and earlier adoption is permitted. Metro Bancorp implemented
Statement 109 effective the first quarter of 1993. Prior to adoption of
Statement 109, Metro Bancorp accounted for income taxes under Accounting
Principles Board (APB) Opinion No.11, having elected not to adopt Statement 96
prior to its required effective date.
Statement 109 changed Metro Bancorp's method of accounting for income
taxes from the deferred method required under APB 11 to the asset and liability
method. Under the deferred method, annual income tax expense is matched with
pretax accounting income by providing deferred taxes at current rates for
timing differences between the determination of net income for financial
accounting reporting and tax purposes. The objective of the asset and
liability method is to establish deferred tax assets and liabilities for the
temporary differences between financial reporting basis and the tax basis of
Metro Bancorp's assets and liabilities at enacted tax rates expected to be in
effect when such amounts are realized or settled.
As permitted by Statement 109, Metro Bancorp has elected not to
retroactively restate the financial statements for years prior to the 1993
adoption of Statement 109. Instead, Metro Bancorp has adopted Statement 109 by
reporting the effect of initial adoption as a cumulative effect of a change in
accounting principle in the financial statements the first quarter of 1993
(period of adoption). As a result, Metro Bancorp recognized a tax benefit
(cumulative effect of a change in accounting principle) of $150,000 in the
financial statements for the first quarter of 1993.
During May 1993, the Financial Accounting Standards Board ("FASB")
issued FAS 114, "Accounting by Creditors for Impairment of a Loan" and FAS 115,
"Accounting for Certain Investments in Debt and Equity Securities."
FAS 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 in 1995. FAS 114
may be adopted prior to 1995. Metro Bancorp has not yet determined the actual
impact of FAS 114 on its financial statements or made a determination of
whether it will adopt FAS 114 prior to 1995.
FAS 115 requires investments to be classified in three categories;
held-to-maturity securities (reported at amortized cost), trading securities
(reported at fair value) and available-for-sale securities (reported at fair
value). Unrealized gains or losses on trading securities are included in
earnings. Unrealized gains or losses on available-for-sale securities are
excluded from earnings and reported in a separate component of shareholders'
equity. FAS 115 is effective beginning in 1994, but can be adopted as of
December 31, 1993. Metro Bancorp anticipates adopting FAS 115 in the first
quarter of 1994 after a final evaluation of its securities portfolio under the
guidelines contained in FAS 115. Based on the current market value of the
securities portfolio, any impact to the equity accounts from the adoption of
FAS 115 should be favorable.
34
<PAGE> 46
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Proxy Statement the
following documents and information heretofore filed with the Securities and
Exchange Commission:
1. First Bancorp's annual report on Form 10-K for the year ended
December 31, 1992, filed pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act").
2. First Bancorp's quarterly reports on Form 10-Q for the quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993
filed pursuant to the Exchange Act.
3. First Bancorp's current reports on Form 8-K, dated January 13,
1993, February 18, 1993, March 31, 1993, April 22,
1993, April 23, 1993, June 3, 1993, June 11, 1993, June 30,
1993, August 18, 1993, August 31, 1993, October 14, 1993 and
December 30, 1993, and all other reports subsequently filed by
First Bancorp since December 31, 1992 pursuant to the Exchange
Act.
4. Consolidated financial statements (including related notes and
report of independent auditors), set forth at pages 25 through
53 of the 1992 Consolidated Financial Statements section of
First Bancorp's 1992 Annual Report to Shareholders.
5. Market, Stock Price and Dividend Information, Stock Price
Information, and Per Share Dividends and Net Income set forth
at page 22 of the 1992 Consolidated Financial Statements
section of First Bancorp's 1992 Annual Report to Shareholders.
6. Selected Financial Data set forth at page 4 of the 1992
Consolidated Financial Statements section of First Bancorp's
1992 Annual Report to Shareholders.
7. Supplementary Financial Information set forth at Note 17 on
page 51 of the 1992 Consolidated Financial Statements section
of First Bancorp's 1992 Annual Report to Shareholders.
8. Management's Discussion and Analysis of Financial Condition and
Results of Operations and Selected Statistical Information set
forth at pages 2 through 24 of the 1992 Consolidated Financial
Statements section of First Bancorp's 1992 Annual Report to
Shareholders.
9. Information concerning ownership of First Bancorp Stock by
certain beneficial owners and management set forth at Item 12
of First Bancorp's annual report on Form 10-K for the year
ended December 31, 1992 and also set forth on pages 6 and 7 of
First Bancorp's 1993 Annual Meeting Proxy Statement.
10. Information concerning First Bancorp directors and executive
officers set forth at Item 10 of First Bancorp's annual report
on Form 10-K for the year ended December 31, 1992 (and also on
pages 1 through 4 of First Bancorp's 1993 Annual Meeting Proxy
Statement) and set forth in First Bancorp's June 11, 1993
current report.
11. Information concerning First Bancorp executive compensation set
forth at Item 11 of First Bancorp's annual report on Form 10-K
for the year ended December 31, 1992 (and also on pages 8
through 15 of First Bancorp's 1993 Annual Meeting Proxy
Statement) and set forth in First Bancorp's June 11, 1993
current report.
12. Information concerning certain relationships and related
transactions relating to First Bancorp set forth at Item 13 of
First Bancorp's annual report on Form 10-K for the year
ended December 31, 1992 (and also on page 15 of First
Bancorp's 1993 Annual Meeting Proxy Statement) and set forth
in First Bancorp's June 11, 1993 current report.
THIS PROXY STATEMENT IS ACCOMPANIED BY FIRST BANCORP'S 1992 ANNUAL
REPORT TO SHAREHOLDERS, FIRST BANCORP'S QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED SEPTEMBER 30, 1993, FIRST BANCORP'S 1993 ANNUAL MEETING PROXY
STATEMENT, AND FIRST BANCORP'S CURRENT REPORT ON FORM 8-K DATED JUNE 11, 1993.
35
<PAGE> 47
METRO BANCORP SHAREHOLDERS
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial owners of Metro Bancorp's
outstanding common stock, $2.50 par value, and Metro Bancorp's outstanding
Series 1992 preferred stock, $10.00 par value, who to Metro Bancorp's knowledge
own beneficially more than five percent (5%) of shares of stock of Metro
Bancorp, other than Metro Bancorp's Series A preferred stock, as of September
30, 1993. All of the outstanding shares of Series A preferred stock are held
by Bank South, N.A. Bank South's address is 55 Marietta Street, Atlanta,
Georgia 30303. The table also indicates the number and percentage of total
outstanding shares of First Bancorp which such persons that own common stock
would own if they receive .20 First Bancorp shares in the reorganization in
exchange for each share of their Metro Bancorp common stock, assuming 278,925
shares of First Bancorp common stock will be issued, and without including any
additional First Bancorp stock which Metro Bancorp shareholders may receive
after the date of the merger under certain conditions set forth in the
Reorganization Plan, as explained in the section entitled "THE PROPOSED
REORGANIZATION - Additional Consideration Payable for Metro Bancorp Common
Stock," and without including any additional First Bancorp stock which Bank
South, N.A. may receive at the election of First Bancorp under the
Reorganization Plan.
<TABLE>
<CAPTION>
METRO BANCORP
METRO BANCORP SERIES 1992 FIRST BANCORP STOCK
COMMON STOCK PREFERRED STOCK AS A RESULT OF MERGER
Amount & Amount & Amount &
Nature of Nature of Nature of
Beneficial Percent Beneficial Percent Beneficial Percent
NAME AND ADDRESS Ownership of Class Ownership of Class Ownership of Class
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Robert Russell Pope(1) 671,554 48.15% -0- 0% 134,310 .86%
6896 Heritage Parkway
Lithia Springs, GA 30057
The Commercial Bank(2) 172,073 12.34% -0- 0% 34,414 .22%
Employee Stock Ownership
Plan and Trust
c/o Metro Bancorp, Inc.
6636 Church Street
Douglasville, GA 30133
</TABLE>
(TABLE CONTINUED ON NEXT PAGE)
___________________________________
(1) Included in the listing above for Robert R. Pope are 10,218 shares in
his account and 376 shares in his wife's account under the Commercial Bank
Employee Stock Ownership Plan.
(2) Shares listed are all of the shares presently held by the Trust, of
which 100,433 shares are allocated to the accounts of the participants and are
voted by the participants; the remaining 71,640 shares are unallocated and are
voted by the trustee.
36
<PAGE> 48
<TABLE>
<CAPTION>
METRO BANCORP
METRO BANCORP SERIES 1992 FIRST BANCORP STOCK
COMMON STOCK PREFERRED STOCK AS A RESULT OF MERGER
Amount & Amount & Amount &
Nature of Nature of Nature of
Beneficial Percent Beneficial Percent Beneficial Percent
NAME AND ADDRESS Ownership of Class Ownership of Class Ownership of Class
___________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Johnny Lee Blankenship 2,800 .20% 12,083 6.67% 560 .004%
5305 Slater Mill Circle
Douglasville, GA 30135
Larry Boggs -0- 0% 12,083 6.67% -0- 0%
P. O. Box 1767
Douglasville, GA 30135
Robert Cadman -0- 0% 12,083 6.67% -0- 0%
6718 Knollwood Circle
Douglasville, Georgia 30135
Carroll Realty & Insurance -0- 0% 12,083 6.67% -0- 0%
100 College Street
Carrollton, GA 30017
Alfred Bona Craven 52,000 3.73% 12,083 6.67% 10,400 .07%
6787 Florence Drive
Lithia Springs, GA 30057
Alpha Asbury Fowler, Jr.(2) 70,315 5.04% 12,083 6.67% 14,063 .09%
8815 Camplellton Street
Douglasville, GA 30134
Howard Eugene Gray(3) 14,524 1.04% 12,083 6.67% 2,904 .02%
6378 Elizabeth Drive
Douglasville, GA 30134
Howard Kichline -0- 0% 12,083 6.67% -0- 0%
287 The Prado, N.E.
Atlanta, GA 30309
</TABLE>
(TABLE CONTINUED ON NEXT PAGE)
__________________________________
(2) Included in the listing above for Alpha Asbury Fowler, Jr. are 28,235
common shares in the names of his adult sons and daughters-in-law and 29,858
common shares in the names of grandchildren with his sons as custodian to which
Mr. Fowler disclaims any voting or investment power.
(3) Included in the listing above for Howard E. Gray are 12,444 common
shares in his wife's name and 2,080 common shares in his son's name to which he
has shared voting and investment power.
37
<PAGE> 49
<TABLE>
METRO BANCORP
METRO BANCORP SERIES 1992 FIRST BANCORP STOCK
COMMON STOCK PREFERRED STOCK AS A RESULT OF MERGER
Amount & Amount & Amount &
Nature of Nature of Nature of
Beneficial Percent Beneficial Percent Beneficial Percent
NAME AND ADDRESS Ownership of Class Ownership of Class Ownership of Class
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Walter A. Hudson(4) 6,000 .43% 24,166 13.34% 1,200 .01%
Land Sales, Inc.
6712 E. Broad Street
Douglasville, GA 30134
Jerre Albert O'Neal 3,200 .23% 12,083 6.67% 640 .004%
5042 Granada Way
Douglasville, GA 30135
Paul H. Robinson, Jr. -0- 0% 12,083 6.67% -0- 0%
P. O. Box 1859
Douglasville, GA 30133
Keith Rollins and -0- 0% 12,083 6.67% -0- 0%
Sandra Rollins
6782 Broad Street
Douglasville, GA 30134
Tom L. White 2,800 .20% 12,083 6.67% 560 .004%
P. O. Box 105590
Atlanta, GA 30348
John Zellars -0- 0% 12,083 6.67% -0- 0%
3710 Narmore Drive, N.E.
Atlanta, GA 30319
</TABLE>
_____________________________________
(4) Shares listed above for Walter A. Hudson are in the names of his
businesses, Exxell Developers and Land Sales, Inc., both of which he owns
equally with his father.
SHARES OF MANAGEMENT
The directors and officers of Metro Bancorp and the common stock and the
Series 1992 preferred stock of Metro Bancorp beneficially owned by them as of
September 30, 1993, are set forth in the following table. The table also
indicates the number and percentage of total outstanding shares of First Bancorp
which such persons would own if they receive .20 First Bancorp shares in the
reorganization in exchange for each share of their Metro Bancorp common stock,
assuming 278,925 shares of First Bancorp common stock will be issued, and
without including any additional First Bancorp stock which Metro Bancorp
shareholders may receive after the date of the merger under certain conditions
set forth in the Reorganization Plan, as explained in the section entitled "THE
PROPOSED REORGANIZATION - Additional Consideration Payable for Metro Bancorp
Stock," and without including any additional First Bancorp stock which Bank
South, N.A., sole owner of all Series A preferred stock of Metro Bancorp, may
receive at the election of First Bancorp under the Reorganization Plan.
38
<PAGE> 50
<TABLE>
METRO BANCORP FIRST BANCORP
METRO BANCORP SERIES 1992 STOCK AS A RESULT
COMMON STOCK PREFERRED STOCK OF MERGER
Number Number Number
of Shares of Shares of Shares
Beneficially Percent Beneficially Percent Beneficially Percent
NAME AND OFFICE Owned of Class Owned of Class Owned of Class
______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Robert R. Pope(1) 671,554 48.15% -0- 0% 134,310 .86%
Chairman/Director
Janice B. McCravy(2) 9,308 .67% -0- 0% 1,861 .01%
Executive Vice President,
Cashier, and Corporate
Secretary of the Bank
Solon H. Boggus(3) 2,800 .20% -0- 0% 560 .004%
Director
A. B. Craven 52,000 3.73% 12,083 6.67% 10,400 .07%
Director
Howard E. Gray(4) 14,524 1.04% 12,083 6.67% 2,904 .02%
Director
Walter A. Hudson(5) 6,000 .43% 24,166 13.34% 1,200 .01%
Director
</TABLE>
[TABLE CONTINUED ON NEXT PAGE]
__________________________________
(1) Included in the listing above for Robert R. Pope are 10,218 shares in
his account and 376 shares in his wife's account under the Commercial Bank
Employee Stock Ownership Plan.
(2) Included in the listing above for Janice B. McCravy are 3,894 common
shares in her name which are held in the Commercial Bank Employee Stock
Ownership Plan.
(3) Shares listed above for Solon H. Boggus are 2,800 common shares held in
the Boggus Family Trust to which Mr. Boggus has voting and investment power.
(4) Included in the listing above for Howard E. Gray are 12,444 common
shares in his wife's name and 2,080 common shares in his son's name to which Mr.
Gray has shared voting and investment power.
(5) Shares listed above for Walter A. Hudson are in the names of his
businesses, Exxell Developers and Land Sales, Inc., both of which are owned
equally with his father.
39
<PAGE> 51
<TABLE>
<CAPTION>
METRO BANCORP FIRST BANCORP
METRO BANCORP SERIES 1992 STOCK AS A RESULT
COMMON STOCK PREFERRED STOCK OF MERGER
Number Number Number
of Shares of Shares of Shares
Beneficially Percent Beneficially Percent Beneficially Percent
NAME AND OFFICE Owned of Class Owned of Class Owned of Class
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Jerre A. O'Neal 3,200 .23% 12,083 6.67% 640 .004%
Director
A. Clark Robinson 10,000 .72% -0- 0% 2,000 .01%
Director
Johnny L. Blankenship 2,800 .20% 12,083 6.67% 560 .004%
Director
All Executive Officers 772,186 55.37% 72,498 40.00% 154,435 .99%
and Directors as a
group
</TABLE>
MANAGEMENT OF FIRST NATIONAL BANCORP
Information, with respect to each person who will serve as a director or
an executive officer of First Bancorp after the consummation of the
Reorganization Plan, set forth in First Bancorp's Annual Report on Form 10-K for
the year ended December 31, 1992 (and also set forth in First Bancorp's 1993
Annual Meeting Proxy Statement) and set forth in First Bancorp's Current Report
on Form 8-K, dated June 11, 1993, is hereby incorporated herein by reference. A
copy of First Bancorp's 1993 Annual Meeting Proxy Statement and Current Report
dated June 11, 1993 accompanies this Proxy Statement.
THE PROPOSED REORGANIZATION
THE AGREEMENT OF REORGANIZATION AND PLAN OF MERGER
Reference is made to a copy of the Reorganization Plan (including the
amendment thereto) set forth in full as Appendix a Hereto for a complete
statement of terms of the proposed reorganization. the statements contained
herein with respect to the reorganization Plan are qualified in their entirety
by reference to Appendix A.
40
<PAGE> 52
DESCRIPTION OF THE REORGANIZATION
The Boards of Directors of First Bancorp and Metro Bancorp have
determined that it is desirable for First Bancorp and Metro Bancorp to enter
into the Reorganization Plan whereby First Bancorp will acquire all of the
outstanding shares of Metro Bancorp in exchange for First Bancorp shares and
cash in a statutory merger.
If the Reorganization Plan is approved, all of the outstanding shares
of Series A preferred stock of Metro Bancorp will be converted into a payment
(the "Series A Payment") of $2,475,000 (reduced by any dividend payments on the
Series A preferred stock by Metro Bancorp after September 30, 1993 and before
the date of consummation of the reorganization). This represents a discount of
approximately $1,900,000. If Metro Bancorp's Shareholders do not approve the
merger, the redemption price will increase to $4,162,750 plus accrued and
unpaid dividends. The Series A Payment may be made in cash, or cash and First
Bancorp common stock, with a minimum of $2,000,000 (reduced by any such
dividend payments) of the Series A Payment being made in cash and the remainder
of such payment being made in cash and/or First Bancorp common stock. The
amount that will be paid in stock of the portion of the Series A Payment
payable in cash and/or stock will be at the election of First Bancorp. The
First Bancorp stock to be issued in satisfaction of such portion of the Series
A Payment will be valued at the average of each day's bid and ask price average
during the ten business day period ending five business days prior to the date
of consummation of the reorganization.
If the Reorganization Plan is approved, each outstanding share of
common stock of Metro Bancorp (other than shares held by dissenters) will be
converted by exchange into the right to receive .20 shares of common stock of
First Bancorp (.17 shares under the base exchange ratio plus .03 shares due to
additional consideration accrued as of December 31, 1993), $4.00 in cash ($3.50
under the base cash price plus $.50 due to additional consideration accrued as
of December 31, 1993), or a combination thereof, with a minimum of 1,338,842
shares (adjusted as set forth below) of Metro Bancorp common stock being
required to be converted into First Bancorp stock as explained below in the
subsection entitled "Minimum Stock Payment." In addition, upon the occurrence
of certain conditions regarding collection, upgrade or disposition of certain
loans and other real estate of the Bank, as set forth in the Reorganization
Plan, additional First Bancorp stock and/or cash will be paid to Metro Bancorp
common shareholders as more additional consideration for their Metro Bancorp
common stock as explained below in the subsection entitled "Additional
Consideration Payable for Metro Bancorp Common Stock."
Under the Reorganization Plan, First Bancorp has the right to issue
stock splits or stock dividends prior to the consummation of the reorganization
with the approval of Metro Bancorp. The Reorganization Plan provides that in
such event the number of shares to be issued to Metro Bancorp common
shareholders will be adjusted proportionately to give the Metro Bancorp common
shareholders the benefit of any such stock split or stock dividend. First
Bancorp currently has no plans to declare any stock split or stock dividend
prior to consummation of the transactions contemplated by the Reorganization
Plan.
Also, if the Reorganization Plan is approved, each outstanding share of
Series 1992 preferred stock of Metro Bancorp will be converted into cash of
$10.00, plus the amount of any accrued but unpaid dividends as of the date of
consummation of the reorganization.
If the Reorganization Plan is approved by the shareholders of Metro
Bancorp and by all regulatory authorities required to approve the merger, then
upon consummation of the reorganization, Metro Bancorp will be merged with and
into First Bancorp, which will be the surviving corporation. Such merger will
be pursuant to the applicable provisions of the Business Corporation Code of
Georgia (Official Code of Georgia Annotated, Section 14-2-1101. The Articles of
Incorporation of First Bancorp will be the Articles of Incorporation of the
surviving
41
<PAGE> 53
corporation, and the name of the surviving corporation will be "First
National Bancorp." The bylaws of First Bancorp will continue to be the bylaws
of the surviving corporation. The corporate existence of Metro Bancorp will
end when it is merged into First Bancorp as the surviving corporation.
It is contemplated that the established offices and facilities of the
Bank immediately prior to the merger will remain the established offices and
facilities of the Bank, and that the officers, directors, and employees of the
Bank will continue to be the officers, directors, and employees of the Bank,
except that it is anticipated that C. B. Fair, III, President and C.E.O. and a
Director of First National Bank of Paulding County, who also serves on the
Board of Directors of Bank of Villa Rica and The Community Bank of Carrollton,
which are other First Bancorp affiliate banks, will become a director of the
Bank.
All rights, privileges, immunities, powers and franchises of Metro
Bancorp and First Bancorp in and to every type of property, real, personal and
mixed, and chooses in action will be vested in First Bancorp as the surviving
corporation by virtue of the merger without any deed or other transfer. All
property, real, personal and mixed, including all chooses in action, all debts
due on whatever account and all and every other interest or right belonging to
or due to each of the merging corporations including all liens, mortgages,
security interests and properties held as collateral for debts owed such
organizations will be vested in First Bancorp as the surviving corporation
without further act or deed; the title to any real estate, or interest therein,
vested in either of the merging corporations will not revert or be in any way
impaired by reason of the merger; and First Bancorp as the surviving
corporation will, thenceforth, be responsible and liable for all of the
liabilities and obligations of Metro Bancorp and First Bancorp.
In the Reorganization Plan First Bancorp has covenanted to contribute
$1,000,000 in new equity capital to the Bank upon consummation of the merger.
If the Reorganization Plan is approved and consummated, First Bancorp
will have sixteen subsidiary banks: First National Bank of Jackson County;
First National Bank of Habersham; The First National Bank of Gainesville;
Granite City Bank; Bank of Clayton; First National Bank of White County; The
Citizens Bank, Toccoa; Bank of Banks County; First National Bank of Gilmer
County; The Peoples Bank of Forsyth County; Pickens County Bank; First National
Bank of Paulding County; Citizens Bank, Ball Ground, Georgia; Bank of Villa
Rica; The Community Bank of Carrollton; and the Bank.
ADDITIONAL CONSIDERATION PAYABLE FOR METRO BANCORP COMMON STOCK
Generally. Under the Reorganization Plan, First Bancorp is required to
distribute additional First Bancorp stock and pay additional cash as additional
consideration, up to an aggregate limit of $2,091,940.50 in value, for the
Metro Bancorp common stock acquired from Metro Bancorp common shareholders in
the reorganization, if certain conditions are met. As set forth in the
Reorganization Plan, the amount of additional First Bancorp stock and cash to
be received by Metro Bancorp common shareholders will in general be determined
based upon amounts collected by the Bank on, and certain other increases in
First Bancorp's valuation of, an agreed upon list of loans and real estate
still carried on the books of the Bank, during the period beginning on the date
of the Reorganization Plan and ending on the date which is 12 months (18 months
for certain other real estate owned) after the date of consummation of the
merger (the "Test Period"), subject to certain adjustments, all as more fully
described below. The list of loans and other real estate owned of the Bank
which will be used to determine the additional consideration were mutually
agreed upon by Metro Bancorp and First Bancorp as of the date of execution of
the Reorganization Plan.
Calculation of Additional Value. Specifically, the amount of
additional consideration payable by First Bancorp will be determined based on
the "Additional Value" accruing to the Bank over the
42
<PAGE> 54
course of the Test Period. There will be credited to the "Additional
Value" 100% of all "Criticized Asset Recoveries" on "Criticized Assets" by the
Bank during the Test Period. The "Criticized Assets" are a mutually agreed
upon pool of loans and other real estate owned, all of which were currently
reported on the financial statements of the Bank at the date of execution of
the Reorganization Plan. Metro Bancorp and First Bancorp could not agree upon
the value of the Criticized Assets, due primarily to concerns of First Bancorp
as to the collectibility of the loans constituting the major portion of the
Criticized Assets.
As to each Criticized Asset, there will be determined at 90-day
intervals (each a "Sub-Test Period") during the Test Period whether there has
been any recovery or collection on each such Criticized Asset that should be
credited toward the "Additional Value." A "Criticized Asset Recovery" occurs,
as to a Criticized Asset, during a Sub-Test Period when (i) the sum of (a) any
"Criticized Asset Collection" with respect to the Criticized Asset and (b) the
"Adjusted Value" of the Criticized Asset, less (ii) the "Assumed Value" of the
Criticized Asset is a positive amount. "Criticized Asset Collection" means any
payments received by the Bank (whether by way of collections from the borrower
or any guarantor, the sale of the asset or collateral securing the asset, or
otherwise) during the particular Sub-Test Period.
The "Assumed Value" of a Criticized Asset is its book value as of the
beginning of a Sub-Test Period, reduced for the deemed allocation to loan loss
reserve or deemed charge down resulting from the "Deemed Asset Quality Grade"
of the Criticized Asset. The "Adjusted Value" of a Criticized Asset is its
book value as of the end of a Sub-Test Period, reduced for the deemed
allocation to loan loss reserve or deemed charge down resulting from the Deemed
Asset Quality Grade of the Criticized Asset.
The "Deemed Asset Quality Grade" of a Criticized Asset is the asset
quality grade assigned to the Criticized Asset under the grading system used by
The First National Bank of Gainesville and set forth in its loan policy manual.
Each Deemed Asset Quality Grade has associated with it a deemed specific
allocation of the Bank's loan loss reserve based generally on a percentage of
the book value of the Criticized Asset. The applicable grades and the
percentages generally associated with those grades are set forth below:
Percentage of Book Value
Deemed Asset Quality Grade Specifically Allocated
Other Assets Especially
Mentioned (OAEM) 5%
Substandard 10%*
Doubtful 50%*
Loss 100%
______________________________________
*(or the excess of loan principal over collateral value, if greater than
the percentage of book value)
An asset graded as a "Non-earning Asset" generally has been written down
to perceived liquidation value with the asset's reserve allocation being charged
off against the write-down of the book value of the asset. There is no fixed
percentage of Non-earning Assets used to make the deemed specific allocation to
loan loss reserve; however, on a loan-by-loan basis deemed specific allocations
to loan loss reserve are made for Non-earning Assets.
As an example of how credits to Additional Value are calculated, if a
Criticized Asset has a book value of $100,000 at the beginning of a Sub-Test
Period, but has a collectibility grade of "Doubtful," then there would be a
deemed specific allocation of the Bank's loan loss reserve of 50% of its book
value, resulting in an Assumed Value of the Criticized Asset of $50,000. If the
43
<PAGE> 55
Bank had Criticized Asset Collections of $50,000 on this Criticized
Asset during the Sub-Test Period, the Criticized Asset's book value at the end
of the Sub-Test Period would be $50,000. If as a result of such collections or
other factors, the Criticized Asset's Deemed Asset Quality Grade is improved to
"Substandard" at the end of the Sub-Test Period (which would require a deemed
allocation of the Bank's loan loss reserve of only 10% of the book value of the
Criticized Asset), the Criticized Asset's Adjusted Value would be $45,000
($50,000 less $5,000). The resulting Criticized Asset Recovery for this
Criticized Asset for this Sub-Test Period would be $50,000 (the amount of
Criticized Asset Collections) plus $45,000 (the Criticized Asset's Adjusted
Value) less $50,000 (the Criticized Asset's Assumed Value), or $45,000.
Criticized Asset Recoveries are computed separately for each Criticized
Asset and Sub-Test Period, so that a loss on one Criticized Asset will not
offset a recovery on another, and a loss in a subsequent Sub-Test Period with
respect to a Criticized Asset will not offset a recovery with respect to that
Criticized Asset during a prior Sub-Test Period. However, if a loss is
incurred on a Criticized Asset during a prior Sub-Test Period, this loss will
offset any recovery with respect to that Criticized Asset during subsequent
Sub-Test Periods until it is recouped.
Criticized Asset Recoveries will be reduced by an amount equal to the
additional state and federal income tax which would be paid by the Bank if the
recoveries in the tax years in which they occur were treated as additional
income to the Bank to be included (subject to all available exemptions,
deductions and credits) in the actual tax return calculation for the Bank by
the independent public accountants for the Bank. Therefore, there may be
reductions in the credits to Additional Value for certain recoveries and
corresponding reductions in the additional consideration received by Metro
Bancorp shareholders.
In addition, the amount of Additional Value payable to shareholders
will be reduced by any loss sustained or expected to be sustained by the Bank
and/or Metro Bancorp during the Test Period, not otherwise covered by
insurance, from all claims pending as of the date of the Reorganization Plan
and all claims made during the Test Period against the Bank, Metro Bancorp or
any of their officers or directors for whatever reasons, but only if and to the
extent that the claim arose out of actions or omissions occurring prior to the
date of the merger. The Bank and Metro Bancorp are not currently aware of any
pending or overtly threatened claims which would give rise to such a reduction.
If the Additional Value is reduced by an amount of expected loss that
ultimately is not realized in whole or in part, the amount that is not realized
shall be added back to the Additional Value when so determined and promptly
distributed to the Metro Bancorp shareholders as described below at
"Distribution of Additional Value."
The amount of Additional Value accrues interest from time to time at
the published insured "money market" account rate of The First National Bank of
Gainesville, provided that Criticized Assets Recoveries are not deemed to have
occurred for purposes of this calculation until the end of the Sub-Test Period
in which it occurs. As of January 12, 1994, this "money market" rate was 2%
per annum. UNDER THE REORGANIZATION PLAN, THE TOTAL AMOUNT OF THE ADDITIONAL
CONSIDERATION IS LIMITED TO $2,091,940.50 PLUS THE INTEREST INCREMENT.
Shareholders Representative Committee. In the Reorganization Plan,
First Bancorp has agreed to use reasonable and good faith best efforts to
support the Bank in its efforts to maximize the amount of recoveries, which
would then be credited toward the "Additional Value," through the Bank's
pursuit of collection efforts, rework efforts, reevaluations of collateral and
borrower/guarantor payment abilities and otherwise. The Reorganization Plan
provides for a "Shareholders Representative Committee" appointed by the board
of directors of Metro Bancorp to consult with First Bancorp from time to time
concerning such collection, rework, reevaluation and other efforts and to
receive from First Bancorp on behalf of the Metro Bancorp shareholders such
information concerning those matters as the Committee may reasonably request
from time to time. If the Shareholders Representative Committee disagrees with
the determination of "Additional
44
<PAGE> 56
Value" by First Bancorp, the Committee and First Bancorp will attempt to
resolve their disagreement through good faith negotiation. If they still
cannot resolve their disagreement, the disagreement will be resolved by
determination of an independent arbitrator mutually agreed upon by First
Bancorp and the Committee. The present members of the Shareholders
Representative Committee are Robert R. Pope and A. B. Craven.
Description of Criticized Assets. The Criticized Assets consist of
approximately $34,932,439 in principal balances of loans owed the Bank and
approximately $6,347,095 in book value of other real estate owned by the Bank.
The following table sets forth, as of the applicable starting dates
determined pursuant to the Reorganization Plan, the Criticized Assets by
general type, current balance or book value, and Deemed Asset Quality Grade
assigned by First Bancorp. The table also contains a column which sets forth
the aggregate amount of deemed loan loss reserve allocation and capital
writedown attributed to the Criticized Assets, and the amounts in that column
represent the approximate amounts available in effect for recovery and credit
to the Additional Value (subject to the $2,091,940.50 maximum amount of
additional consideration payable), if the Bank collects or is paid an amount
equal to the current balance or book value of the assets shown.
Loss Reserve
Type of Asset/ Number of Current Balance Allocation/Capital
Deemed Asset Grade Relationships or Book Value Writedown
------------------ ------------- --------------- ------------------
"OAEM" Loans 34 $19,788,548 $ 989,427
"Substandard" Loans 22 9,509,830 1,563,291
"Doubtful" Loans -0- -0- -0-
"Loss" Loans 20 227,824 227,824
"Non-Earning Asset"
Loans 26 5,406,237 1,247,802
--- ----------- -----------
Total Relationships 102 $34,932,439 $ 4,028,344
=== =========== ===========
Other Real Estate
Owned 14 $ 6,347,095 $ 2,419,168
=== =========== ===========
The major portion of the Criticized Assets consists of loans for
residential construction or residential development loans to various closely
held corporations. Such loans are generally secured by residential properties.
The Criticized Assets also include a number of loans to individuals secured by
the individuals' personal residences. There are also a number of commercial
loans to light industrial or commercial businesses, which loans are generally
secured by the industrial or commercial real estate being used in the operation
of the businesses.
Additional Value Determination Dates. The aggregate amount of the
Additional Value will be determined, for purposes of payment of the Additional
Value, as of three successive determination dates. The "First Determination
Date" was the last day of the Sub-Test Period which ended at least 35 days prior
to the special meeting of Metro Bancorp shareholders. Consequently, the First
Determination Date was December 31, 1993. The "Second Determination Date" will
be the date which is 12 months after the date of consummation of the merger.
The "Third Determination Date" will be the date which is 18 months after the
date of consummation of the merger. Once the aggregate amount of the Additional
Value is determined on the basis generally described above, as of a
Determination Date, it will be paid, shortly after each such Determination Date,
in First Bancorp stock (based on a value of $20.50 per First Bancorp share) and
cash, with the amount of additional consideration payable to each Metro Bancorp
common shareholder being such shareholder's pro
45
<PAGE> 57
rata share based on the percentage of outstanding Metro Bancorp common shares
owned by such shareholder and transferred to First Bancorp in the
reorganization. Metro Bancorp shareholders that elected to receive First
Bancorp stock in exchange for their Metro Bancorp common stock will receive
their share of the additional consideration in First Bancorp stock at a value
of $20.50 per share, and Metro Bancorp shareholders that elected to receive
cash for their Metro Bancorp common stock will receive their share of the
additional consideration in cash (subject to the same limitation explained in
the subsection below entitled "Minimum Stock Payment").
Distribution of Additional Value. The additional consideration payable
for Additional Value determined as of the First Determination Date will be paid
to Metro Bancorp common shareholders upon consummation of the merger and the
conversion of Metro Bancorp stock. The amount of additional consideration
determined as of the First Determination Date is $.50 per share of Metro
Bancorp common stock. Consequently, upon conversion of Metro Bancorp stock
after approval of the merger, each share of Metro Bancorp common stock will be
converted into .20 shares of First Bancorp stock (.17 shares under the base
exchange ratio plus .03 shares due to accrued additional consideration) or
$4.00 in cash ($3.50 under the base cash price plus $.50 due to accrued
additional consideration). The exchange ratio of .20 shares of First Bancorp
stock for each share of Metro Bancorp common stock results from rounding up the
Additional Value payable in First Bancorp stock from .0244 shares to .03 shares
for each Metro Bancorp share. The Additional Value payable in First Bancorp
stock as of the Second Determination Date will be decreased to account for the
additional First Bancorp shares issued due to rounding up the exchange ratio
for Additional Value as of the First Determination Date. It is anticipated
that the additional consideration determined as of the Second and Third
Determination Dates will be paid on or about March 31, 1995 and September 30,
1995, respectively. See "FEDERAL INCOME TAX CONSEQUENCES."
THE AMOUNT OF THE ADDITIONAL CONSIDERATION PAYABLE BY FIRST BANCORP IS
COMPLETELY CONTINGENT ON THE COLLECTION, ASSET UPGRADE AND DISPOSITION EFFORTS
OF THE BANK DURING THE TEST PERIOD AND IS SUBJECT TO ADJUSTMENTS AND SETOFFS,
THE AMOUNTS OF WHICH CANNOT BE CURRENTLY ESTIMATED. THERE CAN BE NO ASSURANCE
THAT ANY OR ANY PARTICULAR AMOUNT OF ADDITIONAL CONSIDERATION WILL BE PAYABLE
AFTER THE DATE OF THE MERGER. IN MAKING THEIR DECISION WHETHER TO VOTE TO
APPROVE THE MERGER, SHAREHOLDERS OF METRO BANCORP SHOULD CONSIDER THE
SPECULATIVE NATURE OF THE POSSIBILITY OF PAYMENT OF ANY ADDITIONAL
CONSIDERATION AFTER THE DATE OF THE MERGER.
REFERENCE IS MADE TO A COPY OF THE REORGANIZATION PLAN ATTACHED IN FULL
AS APPENDIX A HERETO FOR A COMPLETE STATEMENT OF THE TERMS AND CONDITIONS FOR
PAYMENT OF THE ADDITIONAL CONSIDERATION. THE STATEMENTS CONTAINED HEREIN WITH
RESPECT TO PAYMENT OF THE ADDITIONAL CONSIDERATION ARE QUALIFIED IN THEIR
ENTIRETY BY REFERENCE TO APPENDIX A.
MINIMUM STOCK PAYMENT
Under the Reorganization Plan, in all events First Bancorp will
exchange First Bancorp stock for at least 1,338,842 shares (adjusted as set
forth in the following sentence) (as adjusted as provided below, the "Minimum
Stock Amount") of Metro Bancorp common stock. The minimum aggregate number of
shares of Metro Bancorp common stock to be exchanged for First Bancorp stock
shall be decreased by such number of Metro Bancorp common shares equal to the
number of First Bancorp shares exchanged for Series A preferred stock of Metro
Bancorp in the merger divided by .17. In the event the aggregate amount of
Metro Bancorp common stock otherwise to be exchanged for First Bancorp stock is
less than the Minimum Stock Amount, then those Metro Bancorp shareholders
electing to receive cash for Metro Bancorp common stock shall receive in
satisfaction of their cash election a pro rata amount of cash and First Bancorp
stock, the proration to be made on the basis of the percentage resulting from
dividing the shortfall in Metro Bancorp common stock
46
<PAGE> 58
to be exchanged for First Bancorp stock (the amount by which the Minimum Stock
Amount exceeds the number of Metro Bancorp common shares to be exchanged
for First Bancorp stock pursuant to election by Metro Bancorp common
shareholders) by the total Metro Bancorp common shares to be exchanged for cash
pursuant to election by Metro Bancorp shareholders; the resulting percentage
multiplied times the amount of Metro Bancorp common stock of a Metro Bancorp
shareholder elected to be exchanged for cash shall be exchanged for First
Bancorp stock, with the remainder of such shareholder's Metro Bancorp common
shares being exchanged for cash. UNDER THE REORGANIZATION PLAN, IF METRO
BANCORP SHAREHOLDERS ELECT TO CONVERT LESS THAN 1,338,842 SHARES (ADJUSTED AS
SET FORTH ABOVE) INTO FIRST BANCORP STOCK, METRO BANCORP SHAREHOLDERS ELECTING
TO RECEIVE CASH FOR ALL OR A PORTION OF THEIR METRO BANCORP COMMON STOCK SHALL
RECEIVE, ON A PRORATA BASIS, LESS CASH AND MORE FIRST BANCORP STOCK THAN
ELECTED BY THEM, SO THAT THE MINIMUM AGGREGATE NUMBER OF METRO BANCORP COMMON
SHARES EXCHANGED FOR FIRST BANCORP STOCK WILL BE 1,338,842 SHARES (ADJUSTED AS
SET FORTH ABOVE).
REASONS FOR THE REORGANIZATION; RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors of Metro Bancorp has approved the Reorganization
Plan and recommends that the shareholders of Metro Bancorp vote in favor of its
approval.
In deciding to approve and recommend the Reorganization Plan, the Board
of Directors considered a number of factors. In late August, 1993, Metro
Bancorp's Board of Directors recognized that Metro Bancorp would not meet a
September 30, 1993 deadline to increase the Bank's capital by $500,000. At the
same time the Bank's chief executive officer resigned from his position and
left the Bank without a senior lending officer or chief executive officer. The
Board believed that it was in Metro Bancorp's best interest to merge with a
company who could provide significant capital and management resources. These
resources were needed for the Bank to meet its requirements under the Capital
Plan and the Corrective Program. The Board of Directors considered several
alternatives and decided to approve the Reorganization Plan because of the
fairness of the exchange ratio, the opportunity to continue their investment in
the Bank through the investment in First Bancorp, the enhancement of the
geographic diversity of the stock investment, the financial condition and
performance of First Bancorp, the tax-free nature of the exchange to the common
shareholders of Metro Bancorp electing to receive First Bancorp stock, the
market for First Bancorp stock, the local focus of First Bancorp's management
and business philosophy, and the additional financial and management resources
that would be available for delivery of banking services in Douglas County.
The Board of Directors also considered the requirement under the Corrective
Program that the equity capital of the Bank be increased to a level equal to at
least 6% of total assets and First Bancorp's commitment to contribute
$1,000,000 to the equity capital of the Bank upon consummation of the merger.
All factors were considered important and no relative or specific weights were
assigned to them.
The Board of Directors of Metro Bancorp believes that the proposed
exchange ratio of .17 shares (.20 shares when the accrued additional
consideration is included) of First Bancorp stock for each share of Metro
Bancorp common stock, or the payment of $3.50 in cash ($4.00 when the accrued
additional consideration is included) for each share of outstanding common
stock of Metro Bancorp, plus the possibility of more additional consideration
as discussed above, all of which was negotiated at arms-length, is fair to the
common shareholders of Metro Bancorp. Due to recoveries on the Criticized
Assets as discussed above, the amount of additional consideration payable to
common shareholders of Metro Bancorp as of December 31, 1993 is $.50 per share
of Metro Bancorp common stock. Consequently, upon conversion of Metro Bancorp
common stock if the merger is approved, each share of Metro Bancorp common
stock will be converted into .20 shares of First Bancorp stock (.17 shares
under the base exchange ratio plus .03 shares due to accrued additional
consideration) or $4.00 in cash ($3.50 under the base cash price plus $.50 due
to accrued additional consideration).
47
<PAGE> 59
In assessing the fairness of the exchange ratio, the Board examined the
financial condition and historical performance of First Bancorp and Metro
Bancorp, the historical trading prices of First Bancorp stock (and, to the
extent available, the historical trading prices of Metro Bancorp stock), the
dividend payment history of First Bancorp and Metro Bancorp, and other
information. Based on that information and its analysis, the Board concluded
that the value of the exchange of .17 First Bancorp shares or the payment of
$3.50 in cash for each share of outstanding common stock of Metro Bancorp, plus
the possibility of additional consideration as discussed above, represented a
fair multiple of the book value, market value and earnings per share of Metro
Bancorp common stock. The Board did not obtain an independent appraisal or
opinion concerning the fairness of the exchange ratio. See "PER SHARE
INFORMATION", "MARKET AND STOCK PRICE" and other financial information
appearing elsewhere in this Proxy Statement.
The Board of Directors believes that the proposed reorganization will
offer the common shareholders of Metro Bancorp the opportunity to continue
their investment in the Bank through their investment in First Bancorp, while
enhancing the geographic diversity of that investment. Common shareholders of
Metro Bancorp currently own an equity interest in a $135 million asset one-bank
holding company operating only in Douglas County. Following the proposed
reorganization, those shareholders, if they elect to receive First Bancorp
stock, would own an equity investment in a $2.2 billion asset multi-bank
holding company operating 16 banks across North Georgia.
The proposed Reorganization Plan allows common shareholders of Metro
Bancorp to exchange their current equity interest for common stock of First
Bancorp without recognizing income for federal income tax purposes. Income
would be recognized upon a subsequent sale of the First Bancorp stock received
if the sales price exceeds the shareholder's tax basis in the stock sold. See
"FEDERAL INCOME TAX CONSEQUENCES."
The Board of Directors viewed favorably the enhanced investment
liquidity offered by the proposed Reorganization Plan. Unlike Metro Bancorp
common stock, the common stock of First Bancorp is traded in the
over-the-counter market. Subject to certain restrictions applicable to
affiliates, the stock of First Bancorp should generally be more readily
marketable than the common stock of Metro Bancorp. See "MARKET AND STOCK PRICE
INFORMATION."
The Board of Directors also concluded that the Reorganization Plan
offered Series 1992 preferred shareholders the opportunity to liquidate their
investment in Metro Bancorp at a fair cash price. In addition, the
Reorganization Plan provides the means of redeeming, in effect, all of the
Series A preferred stock, which is held by Bank South, N.A., at a fair price.
First Bancorp's business philosophy emphasizes local management of its
subsidiary banks under the direction of a board of directors comprised
primarily of local citizens. Following the proposed reorganization the Bank
anticipates that no significant changes will be made to the management or board
of directors of the Bank. Banking decisions will continue to be made locally.
Centralization of certain non-retail functions and access to greater financial
and other resources of the First Bancorp organization should allow the Bank to
deliver more efficiently an even greater array of banking services than
currently offered.
THE BOARD OF DIRECTORS OF METRO BANCORP RECOMMENDS THAT METRO BANCORP
SHAREHOLDERS VOTE FOR THE REORGANIZATION PLAN.
48
<PAGE> 60
CONVERSION OF METRO BANCORP STOCK
Upon consummation of the reorganization, each of the outstanding shares
of common stock of Metro Bancorp will be converted into .20 shares of fully
paid and non-assessable common stock of First Bancorp (.17 shares under the
base exchange ratio plus .03 shares due to accrued additional consideration) or
$4.00 in cash ($3.50 under the base cash price plus $.50 due to accrued
additional consideration), or a combination thereof (subject to proportionate
adjustment in the event of a First Bancorp stock split or stock dividend prior
to the consummation of the merger). In addition, Metro Bancorp shareholders
may receive more additional consideration for their Metro Bancorp stock as set
forth above. Please refer to the preceding section entitled "Reasons for the
Reorganization" for a discussion of how stock values and prices were arrived at
for Metro Bancorp and First Bancorp stock. Of course, First Bancorp share
prices are subject to market fluctuations. See "MARKET AND STOCK PRICE
INFORMATION".
Owners of five percent or more of Metro Bancorp common stock or
preferred stock and the Metro Bancorp directors and officers who are
shareholders of Metro Bancorp will receive First Bancorp common stock or cash
on the same basis as other shareholders of Metro Bancorp. Assuming
consummation of the merger, and receipt by Metro Bancorp common shareholders of
.20 First Bancorp shares for each share of Metro Bancorp common stock, Metro
Bancorp common shareholders would receive a maximum of 278,925 First Bancorp
shares, which would be approximately 1.8% of the shares of First Bancorp common
stock outstanding immediately after consummation of the Reorganization Plan.
See "Description of the Reorganization."
IF THE REORGANIZATION PLAN IS APPROVED, EACH SHARE OF METRO BANCORP
COMMON STOCK (OTHER THAN SHARES HELD BY DISSENTERS) WILL BE CONVERTED INTO .20
SHARES OF FIRST BANCORP COMMON STOCK OR $4.00 IN CASH, OR A COMBINATION
THEREOF, AS A RESULT OF THE MERGER. SHAREHOLDERS MAY RECEIVE ADDITIONAL
CONSIDERATION IN FIRST BANCORP STOCK OR CASH AS EXPLAINED ABOVE.
ELECTIONS BY METRO BANCORP COMMON SHAREHOLDERS
A Form of Election will be mailed to each Metro Bancorp common
shareholder upon approval of the Reorganization Plan by the shareholders. Any
Metro Bancorp common shareholder desiring to receive cash in exchange for his
Metro Bancorp common stock may exercise his election to receive cash by so
designating on the Form of Election, and returning such Form to the exchange
agent (First Bancorp). The Form of Election should be completed as provided in
the instructions accompanying the Form. An election to receive cash in
exchange for Metro Bancorp common stock shall be effective only if the Form of
Election, properly completed and signed by the Metro Bancorp common
shareholder, shall have been received by First Bancorp by 5:00 P.M. on the
business day which is 20 days after mailing out the Form of Election. METRO
BANCORP COMMON SHAREHOLDERS WITH RESPECT TO WHOM AN EFFECTIVE FORM OF ELECTION
HAS NOT BEEN RECEIVED BY FIRST BANCORP BY 5:00 P.M. ON THE BUSINESS DAY WHICH
IS 20 DAYS AFTER MAILING OUT THE FORMS OF ELECTION SHALL BE DEEMED TO HAVE
ELECTED TO CONVERT THEIR STOCK INTO .20 SHARES OF FIRST BANCORP COMMON STOCK
FOR EACH METRO BANCORP COMMON SHARE (PLUS RECEIVE FIRST BANCORP STOCK IN
PAYMENT OF ANY ADDITIONAL CONSIDERATION), IF THE REORGANIZATION PLAN IS
APPROVED. YOUR ELECTION ON THE FORM OF ELECTION MAY BE REVOKED OR CHANGED BY
SO NOTIFYING FIRST BANCORP IN WRITING NO LATER THAN 5:00 P.M. ON THE LAST DAY
FOR RECEIPT OF FORMS OF ELECTION. THEREAFTER, YOUR ELECTION MAY NOT BE REVOKED
OR CHANGED.
FRACTIONAL SHARES
No fractional shares will be issued. Any common shareholder who would
be entitled to a fraction of a First Bancorp share will receive a cash payment
in lieu of such fractional share in an
49
<PAGE> 61
amount determined by multiplying the fraction of a share he would otherwise be
entitled to receive by $20.50.
MANNER OF SURRENDERING METRO BANCORP STOCK
After the effective date of the reorganization, each holder of a
certificate or certificates representing shares of common stock of Metro
Bancorp (except holders who have filed notice of their election to dissent from
the merger in accordance with applicable law) will surrender such certificates
to the exchange agent (First Bancorp), and will receive in exchange either (i)
if the shareholder elects to receive First Bancorp stock, a certificate
representing the number of shares of First Bancorp stock into which such Metro
Bancorp shares have been converted at the conversion ratio set forth in this
Proxy Statement and in the Reorganization Plan and a First Bancorp check in
settlement for a fractional share of First Bancorp stock, if any, or (ii) if
the shareholder elects to receive cash, a First Bancorp check payable to such
shareholder in the amount of the cash price payable for such shareholder's
stock as set forth herein and in the Reorganization Plan, or (iii) a
combination of First Bancorp stock and cash. THE AMOUNT OF CASH AND NUMBER OF
FIRST BANCORP SHARES WHICH A METRO BANCORP SHAREHOLDER MAY RECEIVE MAY DIFFER
FROM HIS ELECTION IF THE MINIMUM STOCK PAYMENT REQUIREMENT REFERRED TO ABOVE IS
NOT MET THROUGH SHAREHOLDER ELECTIONS. IN THAT EVENT, THERE WOULD BE A PRO
RATA REDUCTION IN THE CASH PAYMENT AS DESCRIBED ABOVE.
After the effective date, until surrendered, each Metro Bancorp
certificate, except certificates held by persons who have filed notice of their
election to dissent from the merger in accordance with applicable law and
except for certificates of shareholders electing to receive cash, shall be
deemed for all corporate purposes to evidence the number of whole shares of
First Bancorp common stock into which the Metro Bancorp stock represented by
such certificate shall have been converted, and such certificates, as between
the holders and First Bancorp shall evidence the holder's right to receive
First Bancorp stock certificates in accordance with the Reorganization Plan.
After the effective date of the reorganization, each holder of a certificate or
certificates representing shares of Series 1992 preferred stock of Metro
Bancorp (except holders who have filed notice of their election to dissent from
the merger in accordance with applicable law) will surrender such certificates
to the exchange agent (First Bancorp), and will receive in exchange a First
Bancorp check payable to such shareholder in the amount of the cash price
payable for such shareholder's stock as set forth herein and in the
Reorganization Plan.
PLEASE NOTE, HOWEVER, THAT FIRST BANCORP STOCK CERTIFICATES AND CASH
PAYMENTS WILL NOT BE DISTRIBUTED TO METRO BANCORP SHAREHOLDERS UNTIL THEIR
METRO BANCORP CERTIFICATES HAVE BEEN SURRENDERED TO FIRST BANCORP, AND
DIVIDENDS OR OTHER DISTRIBUTIONS PAYABLE TO METRO BANCORP SHAREHOLDERS IN
RESPECT OF FIRST BANCORP STOCK INTO WHICH METRO BANCORP COMMON STOCK HAS BEEN
CONVERTED UNDER THE REORGANIZATION PLAN WILL BE RETAINED, WITHOUT INTEREST, FOR
THE ACCOUNT OF SUCH SHAREHOLDERS AND WILL NOT BE PAID UNTIL THEIR METRO BANCORP
CERTIFICATES HAVE BEEN SURRENDERED IN EXCHANGE FOR FIRST BANCORP CERTIFICATES.
NO INTEREST WILL BE PAYABLE ON CASH PAYMENTS TO WHICH METRO BANCORP
SHAREHOLDERS MAY BE ENTITLED, EITHER BEFORE OR AFTER THE EFFECTIVE DATE UNLESS
SUCH CASH PAYMENTS ARE WITHHELD DUE TO THE NEGLIGENCE OR BAD FAITH OF FIRST
BANCORP.
ISSUANCE OF FIRST BANCORP SHARES
Subject to the terms and conditions of the Reorganization Plan, First
Bancorp will issue and pay to each Metro Bancorp shareholder after the
effective date of the reorganization, upon surrender of his Metro Bancorp stock
certificates to First Bancorp accompanied by properly completed and
50
<PAGE> 62
signed endorsements and transmittal instructions, certificates
representing shares of First Bancorp stock or its checks for cash payments in
accordance with the Reorganization Plan.
SOURCE OF FUNDS
The amount of cash required by First Bancorp in connection with the
reorganization for cash payments to Metro Bancorp shareholders, payments due
dissenters (if any), contribution to capital of the Bank, and payment of debts
of Metro Bancorp will come from funds currently held by First Bancorp and from
a loan to First Bancorp from Trust Company Bank of Atlanta. The loan will be
amortized over a period of between 10 and 15 years, and none of the Metro
Bancorp stock or stock of the Bank will be pledged to secure the loan. Trust
Company Bank has given First Bancorp a firm commitment for a loan in any amount
up to $5,000,000.
SHAREHOLDER APPROVAL
Consummation of the Reorganization Plan requires the affirmative vote
of a majority of the holders, voting as a single group, of the outstanding
shares of Metro Bancorp common stock and Metro Bancorp Series 1992 preferred
stock. In addition, the affirmative vote of a majority of the holders of the
outstanding shares of Metro Bancorp Series A preferred stock, voting as a
separate group, is also required for approval of the Reorganization Plan. Bank
South, N.A., the sole Series A preferred shareholder, has agreed to vote in
favor of the Reorganization Plan. Approval of the shareholders of First
Bancorp is not required.
CONDITIONS TO CERTAIN OBLIGATIONS OF METRO BANCORP
Under the Reorganization Plan, the obligation of Metro Bancorp to
consummate and effect the merger contemplated by the Reorganization Plan is
subject to the satisfaction of certain conditions, including the following:
(a) There shall have been issued an opinion of Stewart, Melvin
& House, counsel to First Bancorp, to the effect that, under
applicable provisions of the Internal Revenue Code of 1986, as
amended, no gain or loss will be recognized for federal income tax
purposes by Metro Bancorp, First Bancorp or the common shareholders
of Metro Bancorp from the exchange of their common stock to the
extent that they receive only stock of First Bancorp in the
exchange. The opinion will not state that cash received in
payment for shares or in exchange for fractional shares or in the
exercise of dissenters' rights will be nontaxable. The opinion
will state that some First Bancorp shares paid to Metro Bancorp
common shareholders as additional consideration will be taxable to
Metro Bancorp common shareholders as interest income deemed to be
received under the original issue discount regulations.
(b) As of the date of the merger, there shall have occurred no
material adverse change in the financial condition or results of
operations of First Bancorp from that represented in the
consolidated financial statements of First Bancorp as of December
31, 1992, and there shall not have occurred any loss or damage to
any of its properties or assets which would materially impair its
ability to conduct its business after the merger as it is now being
conducted.
(c) The representations of First Bancorp contained in the
Reorganization Plan shall be true in all material respects as of
the date of the merger.
51
<PAGE> 63
CONDITIONS TO CERTAIN OBLIGATIONS OF FIRST BANCORP
Under the Reorganization Plan, the obligation of First Bancorp to
consummate and effect the merger contemplated by the Reorganization Plan is
subject to the satisfaction of certain conditions, including the following:
(a) The representations of Metro Bancorp contained in the
Reorganization Plan shall be true in all material respects as of
the date thereof and as of the time of the merger.
(b) Metro Bancorp shall have timely performed all agreements
and covenants required by the Reorganization Plan to be performed
by it at or prior to the merger.
(c) As of the proposed date of the merger, there shall have
occurred no material adverse change in the financial condition or
results of operations of Metro Bancorp and the Bank from that
presented in the financial statements of Metro Bancorp and the Bank
as of December 31, 1992, and there shall not have occurred any loss
or damage to any of their properties or assets which would
materially adversely affect their financial condition or impair
their ability to conduct their businesses after the merger as now
being conducted, except for changes previously disclosed to First
Bancorp, changes contemplated by the Reorganization Plan and
changes in material conformity with expected changes in financial
condition and results of operations discussed before execution of
the Reorganization Plan.
(d) First Bancorp shall have received an opinion of KPMG Peat
Marwick, in form and substance reasonably satisfactory to the Board
of Directors of First Bancorp to the effect that the transactions
contemplated by the Reorganization Plan may be accounted for by
First Bancorp using the purchase method of accounting.
CONDITIONS TO CERTAIN OBLIGATIONS OF BOTH FIRST BANCORP AND METRO BANCORP
Under the Reorganization Plan, the obligations of First Bancorp and
Metro Bancorp to consummate the merger contemplated by the Reorganization Plan
are, at the option of either of them, subject to the following conditions
having been satisfied:
(a) The holders of (i) a majority of the aggregate outstanding
common stock and Series 1992 preferred stock of Metro Bancorp and
(ii) a majority of the outstanding Series A preferred stock of
Metro Bancorp shall have voted in favor of the merger at the
special meeting of the shareholders duly called and held with
respect thereto pursuant to proper notice of such meeting
accompanied by a proper proxy statement.
(b) Any and all orders, permits, approvals, licenses or
qualifications from authorities administering federal laws or laws
of any state or other political subdivision having jurisdiction
required for the consummation of the transaction contemplated by
the Reorganization Plan shall have been obtained. The
Reorganization Plan and the sale or exchange of the shares therein
contemplated must be in compliance with regulations and directives
of all governmental agencies having jurisdiction.
(c) At the time of mailing the Proxy Statements to
shareholders of Metro Bancorp and thereafter through the closing
date, the First Bancorp stock to be received by Metro Bancorp
shareholders upon the conversion of their stock shall be the
subject
52
<PAGE> 64
of an effective registration statement under the Federal
Securities Act of 1933 and shall be duly registered or qualified
under the securities laws of all states in which registration or
qualification is required, or must be exempt therefrom.
ACCOUNTING TREATMENT
First Bancorp will account for the merger under the purchase method of
accounting in accordance with generally accepted accounting principles, which,
among other things, require that the merger be recorded at cost. Under the
purchase method of accounting business combinations are recorded at cost. The
determination of cost is usually based on the fair value of assets acquired and
the fair value of liabilities assumed by allocating the consideration given
(here, First Bancorp stock and cash) to assets received and liabilities
assumed. The identifiable assets and liabilities should be assigned a portion
of the total cost (here, First Bancorp stock and cash) based on fair value at
the date of acquisition. Any excess of cost or purchase price over the amount
assigned to identifiable assets less liabilities should be recorded as
goodwill. Alternatively, any excess of the assigned value of the net assets
acquired over the purchase price should be recorded as a reduction of the
assigned value of buildings and equipment acquired. It is anticipated that the
purchase price will exceed the assigned value of the net assets acquired.
INTERESTS OF CERTAIN PERSONS IN THE REORGANIZATION
The Commercial Bank Employee Stock Ownership Plan (the "ESOP"), a
qualified retirement plan which owns common stock of Metro Bancorp, will be
terminated after the merger, under the terms of the Reorganization Plan. Each
participant with an account under the ESOP will be fully vested in amounts
allocated to his or her account(s) under the ESOP as of the date of termination
of the ESOP. If the merger is approved by the shareholders of Metro Bancorp,
the trustee of the ESOP will either exchange the ESOP's Metro Bancorp stock in
the merger for cash or exchange it for First Bancorp stock, as determined by
the trustee. The participants' accounts under the terminated ESOP will be
distributed to the participants after the plan sponsor obtains a determination
letter from the Internal Revenue Service that the ESOP is qualified at its
termination.
EFFECT OF REORGANIZATION ON COMMON SHAREHOLDERS
If the proposed reorganization is consummated, the holders of the common
stock of Metro Bancorp will receive at their option common stock of First
Bancorp, cash, or a combination thereof. As has been the case with Metro
Bancorp common stock, the rights of holders of common stock of First Bancorp
will be governed by the provisions of the Georgia Business Corporation Code and
Federal and State laws regulating bank holding companies.
If a shareholder has shares of Metro Bancorp common stock converted by
the merger into First Bancorp stock, the shareholder's percentage of equity
ownership in First Bancorp will be substantially less than his or her present
percentage of equity ownership in Metro Bancorp. Shareholders will receive
dividend distributions in the form of cash, stock or other property on each
share of Metro Bancorp common stock converted into shares of First Bancorp stock
if, when and in the form that such dividends are declared by the Board of
Directors of First Bancorp.
After the merger, the former common shareholders of Metro Bancorp will
have no continuing interest in the assets or business of the Bank except as
shareholders of First Bancorp.
53
<PAGE> 65
PREEMPTIVE RIGHTS
FIRST BANCORP COMMON STOCK
Shareholders of First Bancorp do not have the preemptive right to
subscribe for additional shares in proportion to the number of shares of
capital stock owned at the time any increase is authorized. Consequently, an
offering of First Bancorp stock, after the reorganization, could result in an
existing shareholder's percentage of ownership being reduced by an increase in
the number of outstanding shares. In addition, shares of First Bancorp can be
issued by authorization of the Board of Directors of First Bancorp without any
approval of the shareholders, except in certain instances prescribed by the
Georgia Business Corporation Code.
METRO BANCORP COMMON STOCK
The Georgia Business Corporation Code generally provides Metro Bancorp
common shareholders with preemptive rights on the issuance of additional shares
of stock. Each shareholder is entitled to subscribe for such shares in
proportion to the number of shares owned at the time the increase is authorized
by the shareholders. Metro Bancorp common shareholders have no preemptive
rights with respect to Metro Bancorp shares issued as a share dividend,
fractional shares, shares issued to effect a merger or share exchange, shares
issued as compensation to directors, officers or employees upon terms approved
by the shareholders, or shares sold otherwise than for money and deemed
advantageous to the corporation by the board of directors.
CUMULATIVE VOTING RIGHTS
FIRST BANCORP COMMON STOCK
The shareholders of First Bancorp have cumulative voting rights in the
election of directors, that is, the right to vote the number of shares owned by
them for as many persons as there are directors to be elected, or to accumulate
such shares and give one candidate as many votes as the number of directors to
be elected multiplied by the number of their shares shall equal, or to
distribute them on the same principle among as many candidates as they shall
think fit. The purpose of cumulative voting is to allow minority shareholders
a better chance to elect representation on the Board of Directors which is
closer in proportion to their stock ownership. The voting upon other
transactions by the shareholders of First Bancorp is on the basis of one vote
for each share without any cumulative voting rights.
METRO BANCORP COMMON STOCK
Common shareholders of Metro Bancorp have no cumulative voting rights
in the election of directors; for all purposes each holder of record of shares
of common stock of Metro Bancorp is entitled to one vote for each share of
common stock outstanding in his name on the books of the corporation.
LIMITATIONS OF LIABILITY OF DIRECTORS; INDEMNIFICATION OF DIRECTORS, OFFICERS
AND EMPLOYEES
FIRST BANCORP
The bylaws of First Bancorp provide for the indemnification of
directors and officers of the corporation. The provisions allow
indemnification of such persons for reasonable expenses and damages incurred in
connection with any action, suit or proceeding, civil or criminal, to which
they
54
<PAGE> 66
shall be made a party by reason of their being or having been a
director, officer or employee. However, no person shall be indemnified or
reimbursed in relation to any matter in such action, suit or proceeding as to
which he shall be finally adjudged to have been guilty of or liable for gross
negligence, willful misconduct, or criminal acts. First Bancorp's bylaws also
provide for the purchase of insurance for the purpose of such indemnification.
First Bancorp currently provides this insurance coverage. These
indemnification provisions are in addition to indemnification otherwise
provided under the Georgia Business Corporation Code (O.C.G.A. Section
14-2-851), which is hereinafter described. The Georgia Business Corporation
Code (O.C.G.A. Section 14-2-851), provides that an officer or director may be
indemnified (1) in the case of actions by third persons, if he acted in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, in regard to criminal actions, he had no reasonable cause
to believe that his conduct was unlawful and (2) in the case of actions by or
on behalf of the corporation, if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation unless he
has been adjudged liable for negligence or misconduct in the performance of his
duty to the corporation and the court in which such action is brought has not
determined that he should, nevertheless, be indemnified.
In addition to the above-described indemnification provisions, the
articles of incorporation of First Bancorp have provisions limiting the
liability of directors.
In response to increasing concern over liability exposure of corporate
officers, directors and employees, the Georgia legislature, in 1987, following
a trend begun by Delaware and followed by several other states, passed
legislation broadening the ability of corporations to relieve corporate
directors of exposure to liability.
As permitted by Georgia law, the articles of incorporation of First
Bancorp were amended in 1990 to limit the standards of conduct required of
directors by providing that no director shall be personally liable to the
corporation or its shareholders for monetary damages for breach of duty of care
or other duty as a director; provided, however, that this provision does not
eliminate or limit the liability of a director:
(a) For any appropriation, in violation of his duties, of any
business opportunity of the corporation;
(b) For acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(c) For the types of liabilities set forth in Official Code of
Georgia Annotated Section 14-2-832 (relating primarily to improper
dividends or other distributions by the corporation);
(d) For any transaction from which the director derives an
improper personal benefit; or
(e) For any liability or expenses related to any action or
omission by a director occurring prior to the adoption of the
amendment.
Further, the right of First Bancorp or its shareholders to seek
injunctive or other equitable relief not involving monetary damages is not
limited by the above provisions.
METRO BANCORP
The bylaws of Metro Bancorp provide for the indemnification of
directors and officers of the corporation. The provisions require
indemnification of such persons for expenses (including
55
<PAGE> 67
attorney's fees) incurred in connection with any action, suit or
proceeding, civil or criminal, to which they shall be made a party by reason of
their being or having been a director, officer or employee, if such persons
have been successful on the merits in defense of any such action, suit or
proceeding and if such persons acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation. In addition, the provisions allow indemnification of such persons
for expenses (including attorney's fees), judgments, fines and amounts paid in
settlement in connection with any such action, suit or proceeding referred to
above, if such persons acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation and
had no reasonable cause to believe their conduct was unlawful and if
indemnification is authorized in the specific case by the Board of Directors of
Metro Bancorp. Metro Bancorp's bylaws also provide for the purchase of
insurance for the purpose of such indemnification. Metro Bancorp currently
provides this insurance coverage.
In addition, under the Georgia Business Corporation Code Metro Bancorp
is permitted to indemnify by specific action by its board of directors, a
director or officer made a party to a proceeding because he is or was a
director or officer against liability incurred in the proceeding if he acted in
a manner he believed in good faith to be in or not opposed to the best
interests of Metro Bancorp and, in the case of any criminal proceeding, he had
no reasonable cause to believe his conduct was unlawful. Metro Bancorp is not
permitted to indemnify a director or officer in connection with a proceeding by
or in the right of Metro Bancorp in which the director or officer was adjudged
liable to Metro Bancorp, or in connection with any other proceeding in which he
was adjudged liable on the basis that personal benefit was improperly received
by him. Indemnification in connection with a proceeding by or in the right of
the corporation is limited to reasonable expenses incurred in connection with
the proceeding.
In addition, to the above-described indemnification provisions, the
articles of incorporation of Metro Bancorp have provisions limiting the
liability of directors. The provisions are the same as those contained in the
articles of incorporation of First Bancorp, which are discussed above in the
immediately preceding subsection.
The bylaws of the Bank provide that any person may be indemnified or
reimbursed by the Bank for reasonable expenses actually incurred in connection
with any action, suit or proceeding, civil or criminal, to which he shall be
made a party by reason of the fact that he is or was a director, trustee,
officer, employee, or agent of the Bank, or that he is or was serving, at the
request of the Bank, as a director, trustee, officer, employee or agent of
another firm, corporation trust or other organization or enterprise. However,
no person shall be so indemnified or reimbursed in relation to any matter in
such action, suit or proceeding as to which he shall finally be adjudged to
have been guilty of or liable for gross negligence, willful misconduct or
criminal acts in the performance of his duties to the Bank, or to such other
firm, corporation, trust, organization, or enterprise. In addition, no person
shall be so indemnified or reimbursed in relation to any matter in such action,
suit, or proceeding which has been the subject of a compromise settlement,
except with the approval of (i) a court of competent jurisdiction, (ii) the
holders of record of a majority of the outstanding shares of capital stock of
the Bank, or (iii) a majority of the members of the board of directors then
holding office, excluding the votes of any directors who are parties to the
same or substantially the same action, suit or proceeding.
Expenses incurred in defending any action, suit or proceeding referred
to above may be paid by the Bank in advance of the final disposition of such
action, suit or proceeding as authorized by the board of directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
trustee, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the Bank as
provided above.
The Bank's bylaws also provide that the corporation, upon the
affirmative vote of a majority of its board of directors, may purchase and
maintain insurance on behalf of any person who is or
56
<PAGE> 68
was a director, trustee, officer, employee or agent of the Bank or is
or was serving, at the request of the Bank, as a director, trustee, officer,
employee, or agent of another firm, corporation, trust, or other organization
or enterprise, against liability asserted against him and incurred by him in
such capacity or arising out of his status as such, whether or not the Bank
would have the power to indemnify him against such liability under the
provisions of the bylaws. The Bank currently provides this insurance coverage.
The Bank's bylaws provide that the foregoing rights of indemnification
or reimbursement shall not be exclusive of other rights to which the persons
referred to above, or their heirs, executors, or administrators, may be
entitled as a matter of law and the Bank may indemnify such persons to the
extent permitted by the Financial Institutions Code of Georgia and the Georgia
Business Corporation Code, as such laws may be amended from time to time.
DIVIDEND RESTRICTIONS
FIRST BANCORP
Under the Georgia Business Corporation Code, dividends may be declared
and distributed by First Bancorp so long as:
(a) such distribution would not render First Bancorp unable to
pay its debts as they become due in the usual course of business; or
(b) such distribution would not cause First Bancorp's total
assets to be less than the sum of its total liabilities plus the
amount that would be needed, if First Bancorp were to be dissolved at
the time of the distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to
those receiving the distribution (no preferential rights presently
exist).
The source for payment of dividends by First Bancorp generally is
dividends to First Bancorp from its bank subsidiaries. Dividends to First
Bancorp from its bank subsidiaries are subject to applicable banking law
dividend restrictions, which in the case of its national bank subsidiaries,
would include those restrictions applicable to national banks. Upon receipt of
dividends from its bank subsidiaries, First Bancorp would then decide upon the
issuance of dividends to its shareholders (including those shareholders
receiving First Bancorp stock pursuant to the Reorganization Plan) based upon
the earnings of all of its subsidiaries and based upon any decision by the
First Bancorp Board that certain earnings should be retained at the holding
company level.
METRO BANCORP
Being a Georgia corporation, dividend restrictions applicable to Metro
Bancorp are the same as those applicable to First Bancorp. In addition,
dividends on the Series 1992 preferred stock and on the Series A preferred
stock are payable prior and in preference to any dividends payable on Metro
Bancorp common stock. The source of payment of dividends by Metro Bancorp
generally is dividends from the Bank, which are restricted by statute,
regulation and the Bank's Corrective Program. See notes 10 and 11 of the
consolidated financial statements of Metro Bancorp on pages F-19 and F-20 of
this Proxy Statement. However, assuming the proposed Reorganization Plan is
approved, the merger would affect dividend payments of the Bank in that
allowable dividends declared by its board from time to time would be paid to
First Bancorp along with dividends of First Bancorp's other subsidiaries which
declare dividends.
57
<PAGE> 69
SHAREHOLDER VOTING RIGHTS
FIRST BANCORP
A majority vote of the shareholders is required under the Georgia
Business Corporation Code for the approval of certain mergers and
consolidations, for the sale, exchange or lease of substantially all the
assets, or for the dissolution of First Bancorp. A majority vote of the
shareholders is also required to increase the amount of authorized capital
stock of First Bancorp. However, First Bancorp may enter into merger
transactions without shareholder approval pursuant to Section 14-2-1103 of the
Georgia Business Corporation Code if (i) First Bancorp is the surviving
corporation, (ii) the merger will not effect any change in or amendment to its
articles of incorporation, (iii) each share of First Bancorp outstanding
immediately prior to the effectiveness of the merger is to remain outstanding
and unchanged after the merger, and (iv) either no new shares of First Bancorp
are to be issued or any new shares of First Bancorp to be issued under the plan
of merger may be issued by the Board of Directors without further authorization
by the shareholders of First Bancorp.
Shares of First Bancorp stock may be issued by authorization of the
Board of Directors of First Bancorp without any approval of the shareholders,
except in certain instances prescribed by the Georgia Business Corporation
Code. Therefore, in most cases the Board of Directors will be able to issue
shares of First Bancorp stock for any lawful corporate purpose without the
approval of the shareholders, and the shareholders will not have any preemptive
right to acquire such shares in proportion to their ownership interest in First
Bancorp.
As stated above, shareholders of First Bancorp have cumulative voting
rights in the election of directors; otherwise each share is entitled to one
vote on all corporate matters.
METRO BANCORP
Unlike First Bancorp, a majority vote of the common shareholders voting
as a separate group and a majority vote of the Series A preferred shareholders
voting as a separate group are required under the Georgia Business Corporation
Code and the Metro Bancorp articles of incorporation for the sale, exchange or
lease of substantially all the assets, to increase the amount of authorized
capital of Metro Bancorp, or for the approval of certain mergers, a
consolidation or a voluntary dissolution of Metro Bancorp. The holders of
Series 1992 preferred stock are not entitled to vote on any corporate matters,
except under certain circumstances prescribed by the Georgia Business
Corporation Code (such as a merger where the Series 1992 preferred stock is
being purchased for cash).
Like First Bancorp, the articles of incorporation of Metro Bancorp may
be amended, altered, or repealed from time to time to the extent, and in the
manner prescribed by the laws of the State of Georgia.
Unlike First Bancorp, Metro Bancorp common shareholders do not have
cumulative rights in the election of directors. The holders of Series A
preferred stock are generally not entitled to vote in the election of
directors, except the holders of Series A preferred stock have the right,
voting as a separate series, to elect a majority of the directors of Metro
Bancorp in the event that Bank South, N.A. (the sole Series A preferred
shareholder) declares an event of default under the stock purchase agreement
relating to the issuance of the Series A preferred stock to Bank South, N.A.
58
<PAGE> 70
Each share of Metro Bancorp common stock is entitled to one vote on all
corporate matters requiring shareholder vote. Each share of Series A preferred
stock is entitled to one vote on all matters on which said preferred stock is
entitled to vote.
RIGHT OF FIRST BANCORP AND METRO BANCORP TO ACQUIRE THEIR OWN SHARES
Under the Georgia Business Corporation Code, both First Bancorp and
Metro Bancorp have the right to acquire their own shares by gift, bequest,
merger, consolidation, or exchange of its shares, and by purchase if purchased
out of unreserved and unrestricted earned surplus available therefor.
RIGHTS OF DISSENT AND APPRAISAL
Under the Georgia Business Corporation Code, the shareholders of First
Bancorp have the right to dissent from certain (but not all) mergers or
consolidations to which First Bancorp is a party, any sale or other disposition
of all or substantially all of the property and assets of First Bancorp, any
amendment of the Articles of Incorporation which would generally adversely
affect a shareholder regarding his voting rights, dividend rights and rights
upon redemption or liquidation, and any amendment of the Articles of
Incorporation which would result in the payment of cash for a shareholder's
shares, such as a redemption of a class of stock. The right of dissent of a
shareholder of First Bancorp who votes against any of the above actions and
otherwise complies with applicable legal requirements entitles him to be paid
the fair value of his shares in cash. First Bancorp is required to make an
offer to the dissenting shareholder of what the corporation believes is the
fair value of his shares. If agreement cannot be reached as to the price to be
paid, then First Bancorp is required to petition the Superior Court of the
county where First Bancorp is located for a determination of the fair value of
the shares. The determination by the Superior Court is final.
Under the Georgia Business Corporation Code, Metro Bancorp shareholders
have the right to dissent from the same corporate events as described above
regarding First Bancorp. The dissent process is described in the section
titled "RIGHTS OF DISSENTING SHAREHOLDERS." This dissent process for Metro
Bancorp shareholders is the same as the dissent process for shareholders of
First Bancorp.
Certain merger transactions, such as that contemplated by the
Reorganization Plan, do not require the consent of shareholders of First
Bancorp and do not trigger dissenters rights of First Bancorp shareholders.
STATE TAXATION OF SHARES OF STOCK
Shares of common stock and preferred stock of Metro Bancorp, being
stock of a corporation organized under the laws of Georgia, are generally
exempt from personal property taxes in Georgia; shares of common stock of First
Bancorp will generally be exempt from such taxes in Georgia for the same
reason. Under the laws of other jurisdictions, the shares of common or
preferred stock of Metro Bancorp and/or the shares of common stock of First
Bancorp may not be so exempt. It is suggested that in connection with voting
on the proposed Reorganization Plan, shareholders may wish to determine whether
their status under local law or state law as applicable to them will be
changed.
59
<PAGE> 71
AUTHORIZED CAPITAL STOCK
The authorized capital stock of First Bancorp consists of 30,000,000
shares of common stock, $1.00 par value per share, of which 15,382,485 shares
were issued and outstanding as of September 30, 1993. The authorized capital
stock of Metro Bancorp consists of (i) 10,000,000 shares of authorized common
stock, $2.50 par value per share, with 1,394,627 shares issued and outstanding
as of September 30, 1993, (ii) 1,000,000 shares of Series A preferred stock,
with 416,256 shares issued and outstanding as of September 30, 1993, all of
which are held by Bank South, N.A., and (iii) 5,000,000 shares of preferred
stock, with 181,250 shares (designated as Series 1992 adjustable rate
cumulative preferred stock) issued and outstanding as of September 30, 1993.
CERTAIN RESTRICTIONS ON TRANSFER
FIRST BANCORP
The First Bancorp stock which is being offered to Metro Bancorp
shareholders pursuant to the Reorganization Plan is being registered pursuant
to the Federal Securities Act of 1933, subject to Securities and Exchange
Commission Rule 145 (Reg. Section 230.145). Subparagraphs (c) and (d) of Rule
145 provide limitations on the ability of certain persons to re-offer or
re-sell shares acquired in a business combination transaction unless those
securities are subsequently registered under the Securities Act of 1933 or an
exemption from registration is available for the proposed offer and sale.
Under Rule 145(c) any person who is an "affiliate" of Metro Bancorp at the time
the Reorganization Plan is submitted to the shareholders who offers the
securities of First Bancorp which are acquired pursuant to the Reorganization
Plan will be deemed to be an underwriter within the meaning of Section 2(11)
of the Securities Act of 1933 and, therefore, subject to the registration
provisions of the 1933 Act. However, notwithstanding the provisions of Rule
145(c), Rule 145(d) provides that such person shall not be deemed to be an
underwriter if (1) the securities are sold by such person in accordance with
the provisions of paragraphs (c), (e), (f) and (g) of Rule 144; or (2) such
person is not an affiliate of the issuer of the securities (First Bancorp), has
been the beneficial owner of the securities for at least two (2) years and
meets the requirements of paragraph (c) of Rule 144; or (3) such person has not
been an affiliate of the issuer of the securities for at least three (3) months
and has been the beneficial owner of the securities for at least three (3)
years. Beneficial ownership of the First Bancorp stock will be deemed to
commence upon acquisition of the shares pursuant to the Reorganization Plan
(not at the time of acquisition of the Metro Bancorp stock) and is subject to
certain tolling provisions.
Apart from Rule 145, Rule 144 more generally provides that shares held
by "affiliates" of an issuer (First Bancorp) will be subject to resale
restrictions as provided in Rule 144.
An "affiliate" of a corporation is a person that directly or indirectly
controls or is controlled by or is under common control with the corporation.
The term "control" does not require majority voting control of common stock but
rather means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, by contracts or otherwise. Subject to the
above guidelines, the determination of who is an "affiliate" is inherently a
factual question determined on a case-by-case basis. Any shareholder holding a
significant block of shares, any director of a company or its subsidiaries or
any officer engaged in significant policy-making functions may be deemed an
affiliate under these rules and should
60
<PAGE> 72
seek the advice of counsel on this issue prior to engaging in a transaction
potentially subject to these rules.
Paragraphs (c), (e), (f) and (g) of Rule 144 provide the following
conditions to the ability of an affiliate to resell his shares:
(1) Rule 144(c) requires that there shall be available
adequate current public information with respect to First Bancorp
(First Bancorp has agreed in the Reorganization Plan that this
requirement will be met);
(2) The amount of the securities sold within any three (3)
month period may not exceed the greater of (i) one percent (1%) of
the shares of Bancorp outstanding or (ii) the average weekly
reported volume of trading in such securities on all national
exchanges and/or reported through the automated quotation system of
a registered securities association during the four (4) calendar
weeks preceding the filing of the notice required by Rule 144 to be
filed or, if no such notice is required, the date of the order to
execute the transaction by the broker or market maker; (As a result
of the reorganization, no Metro Bancorp shareholder will receive
more than 1% of the outstanding shares of First Bancorp common
stock following the proposed reorganization); and
(3) The securities must be sold in "brokers' transactions"
within the meaning of Section 4(4) of the Securities Act of 1933,
or in transactions directly with the "market maker" as that term
is defined in Section 3(a)(38) of the Securities Exchange Act of
1934, and the person selling the securities must not solicit or
arrange for the solicitation of orders to buy the securities or
make any payment in connection with the offer or sale of the
securities to any person other than the broker who executes the
order to sell the securities.
COMMITMENTS TO SUBSIDIARY BANKS BY FIRST BANCORP
Under the Federal Reserve's policy, First Bancorp is expected to act as
a source of financial strength to its subsidiary banks and to commit resources
to support its subsidiary banks in circumstances when it might not do so absent
such policy. In addition, any capital loans by First Bancorp to any of its
subsidiary banks would also be subordinate in right of payment to depositors
and to certain other indebtedness of such bank.
As a result of the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA"), a depository institution by
the FDIC can be held liable for any loss incurred by, or reasonably expected to
be incurred by, the FDIC after August 9, 1989 in connection with (i) the
default of a commonly controlled, FDIC-insured depository institution or (ii)
any assistance provided by the FDIC to a commonly controlled, FDIC-insured
depository institution in danger of default. "Default" is defined as
appointment of a conservator or receiver, and "in danger of default" is defined
generally as the existence of certain conditions indicating that a "default" is
likely to occur in the absence of regulatory assistance. All of First
Bancorp's subsidiary depository institutions are FDIC-insured depository
institutions within the meaning of FIRREA.
61
<PAGE> 73
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
Section 302 of the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA) requires the FDIC to establish a risk-based assessment
system by July 1, 1993 and to implement it by January 1, 1994. The FDIC has
chosen to implement a transitional risk-based assessment system effective
January 1, 1993 which will provide the FDIC with the opportunity to evaluate
the impact and effectiveness of various components of the risk-based system
prior to implementation of the permanent regulations.
Under the final rule, the risk-based assessment system is designed as a
matrix system under which each insured depository institution would pay an
assessment rate based on the combination of its capital and supervisory
condition. Each institution is assigned to one of three capital categories
based on its call report filed for the period ending six months prior to each
semiannual period (semiannual periods being every January 1 and July 1). The
capital categories are defined in the same way as the capital categories
established to determine if prompt corrective action is needed to improve the
capital of a depository institution.
Each institution is also assigned to one of three supervisory
categories based on supervisory evaluations by the institution's primary
federal regulator and supplemented by other information including call report
data and debt ratings.
FDICIA also provides for the payment of deposit insurance premiums
based on the specific risk category to which each bank is assigned.
RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to Article 13 of the Georgia Business Corporation Code, any
holder of record of Metro Bancorp common stock or Series 1992 preferred stock
who objects to the proposed reorganization and who fully complies with all of
the provisions of Article 13 (but not otherwise) shall be entitled to demand and
receive payment of an amount equal to the "fair value" of all (but not less than
all) of his shares of Metro Bancorp stock if the proposed reorganization is
consummated.
Any shareholder of Metro Bancorp desiring to receive payment for the
"fair value" of his stock:
(1) must deliver to Metro Bancorp prior to the special meeting
of shareholders of Metro Bancorp at which the vote will be taken on
the Reorganization Plan, or at the meeting but before the vote is
taken, written notice that he intends to demand payment of the "fair
value" of his shares if the Reorganization Plan is effectuated; and
(2) must abstain from voting or must vote against the
Reorganization Plan; and
(3) must, within the period set forth in the dissenters' notice
to him from Metro Bancorp of the approval of the Reorganization
Plan, send written payment demand to Metro Bancorp and deposit his
stock certificates
62
<PAGE> 74
with Metro Bancorp in accordance with the terms of the
dissenters' notice.
A VOTE AGAINST THE REORGANIZATION PLAN ALONE WILL NOT CONSTITUTE THE
SEPARATE WRITTEN NOTICE AND SEPARATE WRITTEN PAYMENT DEMAND REFERRED TO IN THE
PRECEDING PARAGRAPH; ALL THREE CONDITIONS SET FORTH IN THE PRECEDING PARAGRAPH
MUST BE SEPARATELY COMPLIED WITH. FAILURE TO COMPLY WITH ANY ONE OF THE
CONDITIONS WILL CAUSE A DISSENTING SHAREHOLDER TO LOSE HIS DISSENTER'S RIGHTS.
Any notice required to be given to Metro Bancorp must be forwarded to
Metro Bancorp, Inc., 6636 Church Street, Douglasville, Georgia 30134 Attention:
Chairman.
If the Reorganization Plan is approved and effectuated, Metro Bancorp
will promptly send by registered mail to each shareholder who shall have
complied with conditions (1) and (2) above, written dissenters' notice
addressed to the shareholder at such address as he has furnished Metro Bancorp
in writing, or, if none, at the shareholder's address as it appears on the
records of Metro Bancorp. The dissenters' notice will be sent no later than
ten days after the merger is effectuated and will:
(1) state where the payment demand required of the dissenting
shareholder must be sent and where and when Metro Bancorp stock
certificates must be deposited; and
(2) set a date by which Metro Bancorp must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days
after the date the dissenters' notice is delivered to the
dissenting shareholder; and
(3) be accompanied by a copy of Article 13 (entitled
"Dissenters' Rights") of the Georgia Business Corporation Code.
A shareholder sent the dissenters' notice must send the written payment
demand and deposit his Metro Bancorp stock certificates in accordance with the
terms of the dissenters' notice.
If conditions (1), (2) and (3) above required of a dissenting
shareholder are fully complied with, Metro Bancorp is required to make a
written offer, within ten (10) days after the receipt of a payment demand, or
within ten (10) days after the consummation of the transaction, whichever is
later, to the dissenting shareholder to purchase all of his shares of Metro
Bancorp stock at a price which Metro Bancorp estimates to be the fair value of
his shares, plus accrued interest.
A dissenter may notify Metro Bancorp 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 the dissenter
believes that the amount offered by Metro Bancorp is less than the fair value
of his shares or that the interest due is incorrectly calculated. A dissenter
waives his right to make this demand for payment unless he notifies Metro
Bancorp of his demand in writing within 30 days after Metro Bancorp offered
payment for his shares.
If Metro Bancorp and any dissenting shareholder are unable to agree on
the fair value of the shares within sixty (60) days after receipt of the
payment demand by Metro Bancorp, the corporation must file a petition for a
special proceeding in the Superior Court of Douglas County, Georgia to
determine the fair value of the shares and accrued interest. If Metro Bancorp
does not commence the proceeding within the 60 day period, it must pay each
dissenter whose demand remains unsettled the amount demanded.
63
<PAGE> 75
THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE
PROVISIONS OF ARTICLE 13 OF THE GEORGIA BUSINESS CORPORATION CODE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THAT ARTICLE, WHICH IS REPRODUCED IN
FULL AS APPENDIX "B" TO THIS PROXY STATEMENT
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the merger is conditioned on First Bancorp and Metro
Bancorp receiving an opinion from Stewart, Melvin & House, general counsel to
First Bancorp, that the merger will be a "reorganization" within the meaning of
Section 368 of the Internal Revenue Code of 1986 (the "Code"), and as to
certain other tax consequences of the reorganization. Such opinion shall be in
form and substance satisfactory to the Boards of Directors of Metro Bancorp and
First Bancorp.
Assuming that the merger will qualify as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code, it will have the following federal
income tax consequences:
1. A Metro Bancorp common shareholder who receives only
shares of First Bancorp common stock (and, if applicable, cash in
lieu of a fractional share of First Bancorp common stock) on the
conversion of his Metro Bancorp common shares in the merger will
recognize no gain or loss, except in connection with any cash
received in lieu of a fractional share of First Bancorp common
stock and except for interest income deemed to be received under
the original issue discount regulations of the Internal Revenue
Service in the event that any additional consideration becomes
payable by First Bancorp after the date of the merger. The tax
consequences relating to the receipt of additional consideration
are discussed in Paragraph 8 below. The tax basis of the shares of
First Bancorp stock received upon the conversion will be the same
as the tax basis of the Metro Bancorp common shares converted in
the merger, except for possible adjustment due to any cash received
in lieu of a fractional share, and except for Bancorp shares
received as additional consideration which represent interest under
the original issue discount regulations. If the Metro Bancorp
common shares were held as capital assets, the holding period of
the shares of First Bancorp common stock received, except First
Bancorp shares received as additional consideration which represent
interest under the original issue discount regulations, will
include the holding period of the Metro Bancorp shares converted.
See Paragraph 8 below for a discussion of tax basis and holding
period for First Bancorp shares received as additional
consideration which represent interest under the original issue
discount regulations.
2. A Metro Bancorp shareholder who receives only cash in
exchange for his Metro Bancorp shares, common or preferred, as a
result of the merger will recognize gain or loss measured by the
difference between the amount of the cash received and the tax
basis of Metro Bancorp shares converted, except as described below
in Paragraph 6 in the case of dividend treatment, and except to the
extent cash received as additional consideration is deemed to be
interest under the original issue discount regulations as described
below in Paragraph 8. In addition, a Metro Bancorp shareholder who
receives only First Bancorp stock for his Metro Bancorp common
stock and cash for his Metro Bancorp preferred stock will not
recognize gain or loss on the exchange of his common stock and will
recognize gain or loss on the exchange of his preferred stock. The
exchange of Metro Bancorp common stock and the redemption of Metro
Bancorp
64
<PAGE> 76
preferred stock will be treated as separate transactions for
tax purposes. See Paragraph 12 below. Such gain or loss will,
in general, be treated as capital gain or loss if the Metro Bancorp
shares were held as capital assets. However, a Metro Bancorp
shareholder must take into account the effects of Sections 302 and
318 of the Code in determining the consequences of the transaction
if he receives only cash. The effects of Sections 302 and 318 are
discussed in Paragraph 6 below.
3. A Metro Bancorp shareholder who receives shares of First
Bancorp common stock and cash (other than for a fractional share)
on conversion of his Metro Bancorp common shares in the merger will
not recognize loss on said exchange (except in connection with any
cash received in lieu of a fractional share of First Bancorp common
stock). However, the shareholder will recognize gain (measured by
the sum of the fair market value of the shares of First Bancorp
stock plus the amount of any cash received in payment for shares
and in lieu of a fractional share of First Bancorp common stock
minus the tax basis of the Metro Bancorp common shares converted),
if any, but only to the extent of the amount of any cash received
in payment for shares and in lieu of a fractional share of First
Bancorp common stock. Any recognized gain will be treated either
as capital gain (if the Metro Bancorp common shares were held as
capital assets) or as a dividend as discussed below. Shares of
First Bancorp which are received as additional consideration after
the date of the merger and which are deemed to be interest under
the original issue discount regulations will not be included in the
calculation of gain but will be taxable as described in Paragraph
8. The tax basis of the shares of First Bancorp common stock
received (exclusive of shares which are deemed to be interest under
the original issue discount regulations) will be the same as the
tax basis of the Metro Bancorp common shares converted into shares
of First Bancorp common stock in the merger, decreased by the
amount of cash received and increased by the amount of any gain
recognized on the conversion. The holding period of the shares of
First Bancorp common stock (exclusive of shares which are deemed to
be interest under the original issue discount regulations) will
include the holding period of the Metro Bancorp common shares
converted, if the Metro Bancorp common shares were held as capital
assets. See Paragraph 8 below for a discussion of tax basis and
holding period for First Bancorp shares received as additional
consideration which represent interest under the original issue
discount regulations.
4. If a Metro Bancorp common shareholder receives only shares
of First Bancorp common stock and cash in lieu of a fractional
share of First Bancorp common stock in the merger, the cash will,
in general, be treated as received in exchange for such fractional
share and not as a dividend. Gain or loss recognized as a result
of that exchange will be capital gain or loss if the fractional
share would have been a capital asset if it had been received by
the Metro Bancorp common shareholder.
5. Neither Metro Bancorp nor First Bancorp will recognize
gain or loss as a result of the merger.
6. Any Metro Bancorp common shareholder who receives only
cash in the merger for the Metro Bancorp shares which he actually
owns, but who is considered under the constructive ownership rules
of Section 318 of the Code to own other Metro Bancorp common shares
that are converted into shares of First Bancorp common stock in the
merger, must take into account the provisions of Section 302 of the
Code, particularly, the "80% test" described below, to determine if
the distribution of cash in redemption of his Metro Bancorp common
shares as a result of the merger is to be taxed as a dividend.
Under Section 318 of the Code, a shareholder is, for example,
considered to
65
<PAGE> 77
own shares that are directly or indirectly owned by certain
members of his family or by certain related entities and to own
shares with respect to which he holds options. In general, under the
80% test of Section 302, the receipt of cash in redemption of
Metro Bancorp common shares as a result of the merger will not be
treated as a dividend for federal income tax purposes if, (1)
immediately after the merger, the holder's percentage ownership
(considering common shares owned actually and constructively under
Section 318 of the Code) of the total number of shares of First
Bancorp common stock issued to holders of Metro Bancorp common
shares in the merger is less than 80% of such shareholder's percentage
ownership of Metro Bancorp common shares immediately before the
merger and (2) if the holder owns immediately after the merger
(actually and constructively under Section 318 of the Code) less than
50% of the total number of shares of First Bancorp common stock issued
to holders of Metro Bancorp common shares in the merger. Hence, the
receipt of cash in redemption of stock from a Metro Bancorp common
shareholder who qualifies under the 80% test will be treated as
received in a sale or exchange which results in capital gain or loss if
the Metro Bancorp common shares were held as capital assets. A Metro
Bancorp common shareholder may fail to qualify under the 80% test
described above as a result of making an election to dissent and
receive cash for all his Metro Bancorp common shares actually
owned, if an election to receive First Bancorp stock is made by other
persons whose Metro Bancorp common shares are considered to be
constructively owned by the shareholder under Section 318 of
the Code. Even if a Metro Bancorp common shareholder fails to meet the
80% test described above, other exceptions from dividend treatment may
be available under Section 302 of the Code, depending on the facts and
circumstances of the particular case. In the event of dividend
treatment, a taxpayer's basis in his common shares does not reduce the
amount of ordinary income attributable to the transaction.
7. In the case of a corporate shareholder of Metro Bancorp,
the tax consequences described in Paragraphs 1 through 6 are generally
applicable, except that if a corporate shareholder dissents and
receives only cash as a result of the merger and is treated as having
received a dividend, there is a dividends-received deduction available
for 70% or 80% (depending upon the percentage of Metro Bancorp shares
owned by the corporate shareholder) of the dividend amount. Any
portion of the cash received which is deemed to be interest under the
original issue discount regulations, as described in Paragraph 8 below,
would not be eligible for the dividends received deduction.
8. A Metro Bancorp shareholder who receives any additional
consideration in the merger after the date of consummation of the
merger, whether as cash or additional shares of First Bancorp stock,
will be required, under the proposed original issue discount
regulations of the Internal Revenue Service, to treat a portion of the
additional consideration received after the date of the merger as
interest. "All rights to deferred payments under a contract, whether
or not evidenced by a formal instrument." are treated under the
proposed regulations as a "debt instrument" subject to the original
issue discount rules. Thus, the provisions for payment of contingent
additional consideration after the date of consummation of the merger
would, under the proposed regulations, be treated as a "debt
instrument" subject to the original issue discount rules. The portion
of the additional consideration which will be treated as principal
(that is, not as deemed interest) will be determined by discounting to
present value as of the date of the merger all of the additional
consideration (including any contingent interest paid as part of the
additional consideration) which becomes payable after the date of the
merger under the merger agreement as of the date such additional
consideration becomes fixed under the terms of the merger agreement.
The interest rate used for calculating the discount to present value
will be 100% of the short term
66
<PAGE> 78
applicable federal rate as of the date of the merger. The
applicable federal rate is published by the Internal Revenue Service
each month. The portion of the additional consideration which will be
treated as interest under the original issue discount regulations will
be the total additional consideration payable after the date of the
merger (including any contingent interest paid as part of the
additional consideration) minus the portion treated as principal, as
determined above. The interest portion of the additional consideration
payable after the date of the merger will be reported as interest by
First Bancorp to the Metro Bancorp shareholders and the Internal
Revenue Service for the calendar year in which the additional
consideration payable after the date of the merger is fixed under the
terms of the merger agreement. A Metro Bancorp shareholder who elects
to receive any First Bancorp stock in the merger, if additional
consideration is payable after the date of the merger, will receive
First Bancorp stock of which a portion is deemed to be interest under
the original issue discount rules and of which a portion is principal,
on the same basis that principal and interest are determined under the
original issue discount rules, as described above. A Metro Bancorp
shareholder who elects to receive any cash in the merger, if additional
consideration is payable after the date of the merger, will receive
cash of which a portion is deemed to be interest under the original
issue discount rules and of which a portion is principal, on the same
basis that principal and interest are determined under the original
issue discount rules, as described above.
9. Based on Internal Revenue Service published rulings, a
Metro Bancorp shareholder who receives any First Bancorp stock as
additional consideration after the date of the merger should have, with
respect to the portion of the First Bancorp stock which is deemed to be
interest under the original issue discount regulations, tax basis in
such portion of the First Bancorp stock equal to the deemed interest
attributable to such portion reported to the shareholder by First
Bancorp, and the holding period of such portion of the First Bancorp
stock should begin on the date the First Bancorp stock is received as
additional consideration under the terms of the merger agreement. It
is anticipated that separate share certificates may be issued by First
Bancorp for shares that are deemed to be interest under the original
issue discount regulations, to facilitate a shareholder's record
keeping for tax basis and holding period purposes.
10. The Internal Revenue Service takes the position that for
purposes of determining the gain or loss on a sale of First Bancorp
shares prior to the time that the First Bancorp shares to be received
as additional consideration after the date of the merger are
determined, the basis to a Metro Bancorp shareholder in each of the
First Bancorp shares issued at the merger date is to be calculated by
dividing such shareholder's aggregate basis in his Metro Bancorp shares
by the maximum number of First Bancorp shares that he may become
entitled to receive, including shares which the shareholder may receive
as additional consideration. The Internal Revenue Service's position
would require that shares that have not yet been received and to which
the taxpayer may never become entitled be taken into account in
calculating the basis of shares sold. If a Metro Bancorp shareholder
sells the First Bancorp shares received prior to the time the First
Bancorp shares to be received as additional consideration are
determined, the shareholder should consult his own tax advisor with
respect to the amount of gain or loss to be reported.
11. If First Bancorp elects to issue shares of First Bancorp
common stock to the Series A preferred shareholder of Metro Bancorp,
gain, if any, will be recognized in the merger by the Series A
preferred shareholder of Metro Bancorp but will be limited to the
amount of cash received by the Series A preferred shareholder in the
merger. However, loss, if any, on the exchange of the Series A
preferred shares for shares of First Bancorp and cash will not be
recognized by the Series A preferred shareholder. If
67
<PAGE> 79
the Series A preferred shareholder receives only cash in
exchange for the Series A preferred shares, the Series A preferred
shareholder will recognize its gain or loss from the exchange. The
basis of the shares of First Bancorp voting common stock (if any)
received by the Series A preferred shareholder will be the same as the
basis of the shares of the Metro Bancorp Series A preferred stock
surrendered in exchange therefor, decreased by the amount of cash
received by the shareholder and increased by the amount of capital gain
recognized and the amount treated as a dividend.
12. In the case of a Metro Bancorp shareholder who owns both
Metro Bancorp common stock and Series 1992 preferred stock and who
exchanges Metro Bancorp common stock for First Bancorp stock, the
exchange of Metro Bancorp common stock for First Bancorp stock will be
treated as a separate exchange from the exchange of such Metro Bancorp
shareholder's Series 1992 preferred stock for cash in the merger, under
published rulings by the Internal Revenue Service. The exchange of
Metro Bancorp common stock solely in exchange for First Bancorp stock
will have the tax consequences as described in Paragraph 1 above.
Under published rulings of the Internal Revenue Service, any gain or
loss on the exchange of Metro Bancorp Series 1992 preferred stock for
cash will generally be taxed as capital gain or loss, and not as
essentially equivalent to a dividend, if the cash distribution is
disproportionate and bears no relationship to the common stockholdings
of the Metro Bancorp shareholders. Under the particular facts and
circumstances of the merger of Metro Bancorp into First Bancorp, based
upon the above-referenced published rulings of the Internal Revenue
Service, any gain or loss on the exchange of Metro Bancorp Series A
preferred stock for cash by a Metro Bancorp shareholder who owns both
common stock and Series A preferred stock should be taxed as capital
gain or loss.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY. EACH HOLDER OF METRO BANCORP SHARES SHOULD CONSULT
HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE MERGER
TO SUCH HOLDER, INCLUDING THE EFFECT OF STATE AND LOCAL TAXES.
DESCRIPTION OF STOCK
FIRST BANCORP
Under First Bancorp's Articles of Incorporation, it is authorized to
issue up to 30,000,000 shares of common stock, $1.00 par value per share. As
of September 30, 1993, there were 15,382,485 shares of common stock issued and
outstanding, all of which shares were duly authorized, validly issued, fully
paid and non-assessable. The shares of common stock which will be issued in
connection with the Reorganization Plan will be validly issued, fully paid and
non-assessable.
Holders of First Bancorp common stock are entitled to dividends when,
as, and if declared by the corporation's Board of Directors out of funds
legally available therefor.
All voting rights are vested in the holders of First Bancorp common
stock, each share being entitled to one vote except in the election of
directors. The shares of common stock of First Bancorp have cumulative voting
rights in the election of directors. The cumulative voting rights for the
election of directors of First Bancorp were derived from the articles of
incorporation and bylaws
68
<PAGE> 80
of The First National Bank of Gainesville, when First Bancorp was
formed as a one-bank holding company. Cumulative voting rights have the effect
of giving minority interests a greater chance to elect a director to the board
of directors of First Bancorp and might help preclude a takeover by spreading
control of the board among a greater number of shareholders. There are no
other provisions in First Bancorp's Articles of Incorporation or bylaws which
have an anti-takeover effect.
In the event of liquidation, the holders of the common stock of First
Bancorp will be entitled to receive pro rata any assets distributable to
shareholders in respect of shares held by them.
Holders of the common stock of First Bancorp do not have preemptive
rights to subscribe for additional shares of common stock issued by First
Bancorp. First Bancorp shareholders voted to eliminate preemptive rights at
the annual shareholders' meeting on March 13, 1985. The common stock has no
redemption, sinking fund or right of conversion provisions applicable thereto.
For additional information see "EFFECT OF REORGANIZATION ON SHAREHOLDERS."
METRO BANCORP
Metro Bancorp is authorized by its articles of incorporation to issue
up to 10,000,000 shares of common stock, $2.50 par value per share. As of
September 30, 1993, there were 1,394,627 shares validly issued and outstanding.
Metro Bancorp also has authorized, 1,000,000 shares of Series A preferred
stock, with 416,256 shares issued and outstanding as of September 30, 1993, all
of which are held by Bank South, N.A., and 5,000,000 shares of preferred stock,
with 181,250 shares (designated as Series 1992 adjustable rate cumulative
preferred stock) issued and outstanding as of September 30, 1993. The
outstanding shares of stock are fully paid and non-assessable.
Holders of Metro Bancorp common stock are entitled to dividends when,
as, and if, declared by the corporation's Board of Directors out of funds
legally available therefor.
Voting rights are vested in the holders of Metro Bancorp common stock,
each share being entitled to one vote; in addition, the holders of Series A
preferred stock have votinrg rights as outlined above in the subsection entitled
"EFFECT OF REORGANIZATION ON SHAREHOLDERS -- Shareholder Voting Rights." The
common shares do not have cumulative voting rights in the election of
directors.
In the event of liquidation, the holders of the common stock of Metro
Bancorp will be entitled to receive pro rata any assets distributable to
shareholders in respect of shares held by them, subject to the preferential
rights in liquidation of the holders of Series A and Series 1992 preferred
stock.
Holders of common stock of Metro Bancorp have preemptive rights under
Georgia law to subscribe for additional shares of common stock issued by Metro
Bancorp.
There are no provisions in Metro Bancorp's articles of incorporation or
bylaws which are intended to have an anti-takeover effect.
The common stock has no redemption, sinking fund or right of conversion
provisions applicable thereto.
For additional information see "EFFECT OF REORGANIZATION ON
SHAREHOLDERS."
69
<PAGE> 81
EXPERTS
The consolidated financial statements of First National Bancorp and
subsidiaries as of December 31, 1992 and 1991, and for each of the years in the
three-year period ended December 31, 1992, incorporated by reference herein,
have been so incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick, independent auditors, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Metro Bancorp, Inc. and
subsidiary as of December 31, 1992 and 1991, and for each of the years in the
three-year period ended December 31, 1992, included herein have been so
included in reliance upon the report of Evans Porter Bryan & Co., independent
auditors, included herein, and upon the authority of said firm as experts in
accounting and auditing.
LEGAL OPINION
The legality of the shares of common stock of First Bancorp to be
issued in the reorganization and certain other legal matters in connection with
the reorganization will be passed upon by Stewart, Melvin & House,
Attorneys-at-Law, Sixth Floor, Hunt Tower, 200 Main Street, Gainesville,
Georgia 30501. W. Woodrow Stewart is a partner in the firm and is a
stockholder and director of First Bancorp and a director of The First National
Bank of Gainesville. In addition, certain partners and associates of Stewart,
Melvin & House, including those attorneys in the firm who have participated in
this matter, own substantial shares in First Bancorp. Stewart, Melvin & House
serves as general counsel to First Bancorp and The First National Bank of
Gainesville.
INDEMNIFICATION
The bylaws of First Bancorp provide that any person may be indemnified
or reimbursed by First Bancorp for reasonable expenses actually incurred in
connection with any action, suit, or proceeding, civil or criminal, to which he
shall be made a party by reason of his being or having been a director,
officer, or employee of First Bancorp or of any firm, corporation, or
organization which he served in any such capacity at the request of First
Bancorp. However, under the bylaws no person may be indemnified or reimbursed
in relation to any matter in such action, suit, or proceedings as to which he
is finally adjudged to have been guilty of or liable for gross negligence,
willful misconduct or criminal acts in the performance of his duties for First
Bancorp. In addition, the by-laws provide that no person shall be indemnified
or reimbursed in relation to any matter in such action, suit or proceeding
which has been made the subject of a compromise settlement except with the
approval of a court of competent jurisdiction, or the holders of record of a
majority
70
<PAGE> 82
of the outstanding shares of First Bancorp, or the Board of Directors,
acting by vote of directors not parties to the same or substantially the same
action, suit, or proceeding, constituting a majority of the whole number of
directors. The foregoing right of indemnification or reimbursement is not
exclusive of other rights to which such person may be entitled as a matter of
law.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
FIRST BANCORP PURSUANT TO THE FOREGOING PROVISIONS, FIRST BANCORP HAS BEEN
INFORMED 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 ADDITION, GEORGIA LAW PROVIDES BROAD DISCRETION TO DIRECTORS AND
SHAREHOLDERS OF CORPORATIONS TO INDEMNIFY OFFICERS, DIRECTORS AND EMPLOYEES
AGAINST LIABILITIES AND EXPENSES OF DEFENDING CIVIL (AND IN SOME CASES
CRIMINAL) MATTERS. SEE O.C.G.A. Section 14-2-851 AND Section 14-2-857. SEE
"EFFECT OF REORGANIZATION ON SHAREHOLDERS -- LIMITATIONS OF LIABILITY AND
INDEMNIFICATION OF OFFICERS, DIRECTORS AND EMPLOYEES."
OTHER BUSINESS
Action will be taken on whatever other business may properly come
before the special meeting of Metro Bancorp shareholders. Management is not
aware of any other business matters to be considered at the special meeting.
If any other matters properly come before the meeting, the persons named in the
enclosed form of proxy will have discretionary authority to vote all proxies
with respect to such matters and in accordance with the recommendations of
management.
71
<PAGE> 83
ADDITIONAL INFORMATION
First Bancorp has filed a Registration Statement (herein together with
all amendments thereto called the "Registration Statement") with the Securities
and Exchange Commission, Washington, D.C., under the Securities Act of 1933, as
amended, with respect to First Bancorp common stock to be issued in the
reorganization. This document does not contain all of the information set
forth in the Registration Statement. For further information, reference is made
to the Registration Statement including the exhibits filed or incorporated by
reference as a part thereof. The Registration Statement is available for
inspection at no fee at the Commission's public reference room in Washington,
D.C. Copies of the material contained in the Registration Statement may be
obtained from the Commission upon payment of the fees prescribed in its rules
and regulations.
METRO BANCORP, INC.
Douglasville, Georgia By:
January 18, 1994 Robert R. Pope,
Chairman
FIRST NATIONAL BANCORP
Gainesville, Georgia By:
January 18, 1994 Peter D. Miller, President,
C.A.O. and C.F.O.
72
<PAGE> 84
METRO BANCORP, INC. AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1992, 1991 and 1990
(with Independent Accountants' Report thereon)
<PAGE> 85
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Metro Bancorp, Inc.
Douglasville, Georgia:
We have audited the accompanying consolidated balance sheets of Metro Bancorp,
Inc. and subsidiary as of December 31, 1992 and 1991, and the related
statements of operations, changes in common stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1992. 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 consolidated 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 Metro Bancorp, Inc.
and subsidiary as of December 31, 1992 and 1991, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1992, in conformity with generally accepted accounting principles.
As discussed in note 2 to the consolidated financial statements, certain errors
contained in the 1991 consolidated financial statements were discovered by
management in 1992. Accordingly, the 1991 consolidated financial statements
have been restated to correct the errors.
As discussed in note 3, the Company's subsidiary was not in compliance with
certain provisions of its program of corrective action which could subject the
Company to additional legal or administrative actions by its regulatory
authorities. The Company believes that its lack of compliance will not result
in additional legal or administrative actions as it strives for satisfaction of
all provisions of the program of corrective action. The effects on the Company
of these potential actions are not presently determinable.
As discussed in note 3, the Company was not in compliance with certain
provisions of the risk-based capital computation which could subject the
Company to additional legal or administrative actions by its regulatory
authorities. The Company believes that its lack of compliance will not result
in additional legal or administrative actions as it strives for satisfaction of
the regulatory minimum capital. The effects on the Company of these potential
actions are not presently determinable.
As discussed in note 3, the Company was not in compliance with certain
covenants relating to the Series A cumulative preferred stock which could
subject the Company to additional action by the holder of the stock. The
Company believes that its lack of compliance will not result in any action, as
it currently attempts to redeem the Series A cumulative preferred stock. The
effects on the Company of this potential action are not presently determinable.
Atlanta, Georgia
April 9, 1993, except for note 17 as to which
the date is June 15, 1993
F-1
<PAGE> 86
METRO BANCORP, INC. AND SUBSIDIARY
Balance Sheets
December 31, 1992 and 1991
<TABLE>
<CAPTION>
Assets
------
Restated
(Note 2)
1992 1991
-------- --------
<S> <C> <C>
Cash and due from banks, including reserve
requirements of approximately $977,000
and $633,000 $ 9,961,752 9,196,885
Federal funds sold 5,204,000 6,150,000
----------- ----------
Cash and cash equivalents 15,165,752 15,346,885
---------- ----------
Interest-bearing deposits with other banks 684,581 372,359
Investment securities (market value of $6,544,266
and $5,139,986) (note 4) 6,431,698 5,226,365
Marketable equity securities at aggregate market
(aggregate cost of $1,000,000) 956,683 966,020
Loans (note 5) 93,973,913 96,307,283
Less: Unearned interest 153,214 138,448
Allowance for loan losses 3,647,711 3,673,654
--------- ----------
Loans, net 90,172,988 92,495,181
Premises and equipment (notes 6 and 9) 7,393,626 8,013,402
Accrued interest receivable 715,651 899,862
Other real estate (note 7) 6,979,961 5,503,560
Other assets 905,481 901,412
---------- ---------
$129,406,421 129,725,046
============ ===========
</TABLE>
See accompanying accountants' report and notes to
consolidated financial statements.
F-2
(Continued)
<PAGE> 87
Balance Sheets (continued)
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
- ------------------------------------
Restated
(Note 2)
1992 1991
-------- --------
<S> <C> <C>
Deposits:
Demand $ 25,124,859 21,368,676
Interest-bearing demand 27,149,299 22,423,000
Savings 20,342,171 23,254,694
Time 44,141,354 45,905,255
Time, in excess of $100,000 2,780,083 8,176,617
------------- -------------
Total deposits 119,537,766 121,128,242
Accrued interest payable and other liabilities 990,400 927,253
Note payable (notes 8 and 11) 243,000 270,000
Deferred gains on sales of other real estate 120,952 131,118
Obligations under capital leases (note 9) 407,317 547,657
------------- -------------
Total liabilities 121,299,435 123,004,270
------------- -------------
Commitments and contingencies (note 9)
Series A cumulative preferred stock, $10 par value, 1,000,000
shares authorized, 405,116 and 472,416 shares issued
and outstanding (note 3) 4,051,160 4,724,160
------------- -------------
Redeemable cumulative preferred stock, $10 par value; 5,000,000
shares authorized, 200,000 limited life shares of adjustable
cumulative (Series 1992) issued and outstanding, liquidation
and redemption value of $10 per share proportionately over
32 quarters (note 11) 2,000,000 --
-------------- -------------
Common stockholders' equity (notes 3, 8, 10, 12 an 17):
Common stock, $2.50 par value, 10,000,000 shares authorized:
1,394,627 shares issued and outstanding 3,486,568 3,486,568
Capital surplus 381,639 181,639
Accumulated deficit (1,526,064) (1,367,611)
Net unrealized loss on marketable equity securities (43,317) 33,980)
-------------- -------------
2,298,826 2,266,616
Less: Guarantee of indebtedness of Employee
Stock Ownership Plan (ESOP) 243,000 270,000
-------------- -------------
Total common stockholders' equity 2,055,826 1,996,616
-------------- -------------
$129,406,421 129,725,046
============== =============
</TABLE>
F-3
<PAGE> 88
METRO BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Years Ended December 31, 1992, 1991 and 1990
<TABLE>
<CAPTION>
Restated
(Note 2)
1992 1991 1990
---- ----- -----
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 9,577,597 11,351,822 13,233,252
Interest on deposits with other banks 20,767 70,869 21,871
Interest on federal funds sold 254,419 635,661 1,238,561
Interest on investment securities:
U.S. Treasury and U.S. Government agencies 173,774 508,209 929,990
State, county and municipal 39,165 74,450 310,736
Other 93,079 89,341 90,872
----------- ---------- ----------
Total interest income 10,158,801 12,730,352 15,825,282
----------- ---------- ----------
Interest expense:
Interest on deposits:
Demand 834,215 1,046,679 1,407,671
Savings 851,948 1,391,147 1,746,064
Time 3,121,192 4,882,738 6,813,988
--------- ---------- ----------
4,807,355 7,320,564 9,967,723
Interest on notes payable - 214,730 360,341
Other interest expense 50,167 75,478 63,017
---------- ---------- ----------
Total interest expense 4,857,522 7,610,772 10,391,081
---------- ---------- ----------
Net interest income 5,301,279 5,119,580 5,434,201
Provision for loan losses (note 5) 689,161 607,364 2,472,828
---------- ---------- ----------
Net interest income after provision for loan losses 4,612,118 4,512,216 2,961,373
---------- ---------- ----------
Other income:
Service charges and fees 2,304,356 2,035,967 1,768,414
Securities gains, net 7,154 4,577 138,517
Miscellaneous (note 15) 409,302 1,327,286 263,981
--------- ---------- ----------
Total other income 2,720,812 3,367,830 2,170,912
--------- ---------- ----------
Other expenses:
Salaries and employee benefits 2,857,907 2,866,216 3,661,177
Occupancy 1,454,750 1,494,481 1,433,999
Other operating (note 15) 2,616,234 2,510,476 2,993,916
---------- ---------- ----------
Total other expenses 6,928,891 6,871,173 8,089,092
---------- ---------- ----------
Earnings (loss) before income taxes and
extraordinary credit 404,039 1,008,873 (2,956,807)
Income tax expense (note 13) 91,428 251,116 -
---------- --------- ----------
Earnings (loss) before extraordinary credit 312,611 757,757 (2,956,807)
Extraordinary credit (note 13) 91,428 251,116 -
---------- --------- ----------
Net earnings (loss) 404,039 1,008,873 (2,956,807)
Preferred dividend requirement (notes 3 and 11) (562,492) (256,352) -
---------- --------- ----------
Net earnings (loss) applicable to common stockholders $ (158,453) 752,521 (2,956,807)
========== ========== ==========
</TABLE>
F-4
<PAGE> 89
METRO BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations, continued
For the Years Ended December 31, 1992, 1991 and 1990
<TABLE>
<CAPTION>
Restated
(Note 2)
1992 1991 1990
---- -------- ----
<S> <C> <C> <C>
Net earnings (loss) per common share:
Earnings (loss) before extraordinary credit $ (.18) .36 (2.12)
Extraordinary credit .07 .18 -
------- ----- -----
Net earnings (loss) $ (.11) .54 (2.12)
======= ==== =====
Weighted average number of common shares outstanding 1,394,627 1,394,627 1,394,627
========= ========= =========
</TABLE>
See accompanying accountants' report and notes to
consolidated financial statements.
F-5
<PAGE> 90
METRO BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1992, 1991 and 1990
<TABLE>
<CAPTION>
Restated
(Note 2)
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 404,039 1,008,873 (2,956,807)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation, amortization and accretion 606,136 615,552 615,477
Provision for loan losses 689,161 607,364 2,472,828
Provision for estimated losses on other real estate 273,873 - -
Provision for deferred taxes (30,078) 203,983 59,425
Extraordinary credit (91,428) (251,116) -
Net gains on sales of investment securities (7,154) (4,577) (138,517)
Gain on sale of credit card portfolio - (318,274) -
Gain on sale of bank premises and equipment - (260,034) -
Net (gains) losses on sales of other real estate (6,317) 64,768 -
Recognition of deferred gains on sales of other real estate (10,166) (287,601) -
Change in:
Interest receivable 184,211 688,434 697,786
Interest payable (44,860) 15,631 238,821
Other assets 87,359 (189,067) 974,772
Other liabilities 102,460 143,032 (309,989)
----------- ------------ -------------
Net cash provided by operating activities 2,157,236 2,036,968 1,653,796
----------- ------------ -------------
Cash flows from investing activities:
Net change in interest-bearing deposits with other banks (312,222) (19,728) (21,871)
Purchases of investment securities (19,345,535) (13,675,795) -
Proceeds from sales of investment securities 2,411,480 103,000 4,480,068
Proceeds from maturities of investment securities 15,749,512 19,299,432 3,808,127
Proceeds from sale of credit card portfolio - 3,501,002 -
Net change in loans (216,613) (610,539) 11,052,454
Purchase of bank premises and equipment - - (764,745)
Proceeds from sale of bank premises and equipment - 398,450 -
Payments for and improvements to other real estate (103,832) (714,372) (54,209)
Proceeds from the sale of other real estate 209,676 376,739 290,811
----------- ------------ -------------
Net cash provided (used) by investing activities (1,607,534) 8,658,189 18,790,635
----------- ------------ -------------
Cash flows from financing activities:
Net change in demand and savings deposits 5,569,959 (11,468,915) 2,380,219
Net change in certificates of deposit (7,160,435) (12,470,934) (16,813,037)
Repayment of capital lease obligations (140,340) (133,783) (98,441)
Issuance of Series 1992 preferred stock 2,000,000 - -
Redemption of Series A preferred stock (1,000,000) - -
Dividends paid in lieu of fractional shares (19) (8) -
----------- ------------ -------------
Net cash used by financing activities (730,835) (24,073,640) (14,531,259)
----------- ------------ -------------
Net increase (decrease) in cash and cash equivalents (181,133) (13,378,483) 5,913,172
Cash and cash equivalents at beginning of year 15,346,885 28,725,368 22,812,196
----------- ------------ -------------
Cash and cash equivalents at end of year $ 15,165,752 15,346,885 28,725,368
=========== ============ =============
</TABLE>
F-6
<PAGE> 91
METRO BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows, continued
For the Years Ended December 31, 1992, 1991 and 1990
<TABLE>
<CAPTION>
Restated
(Note 2)
1992 1991 1990
---- -------- ----
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes (refunds received) $ 131,158 (21,892) (315,155)
Interest $ 4,917,166 7,610,533 9,933,113
Supplemental schedule of noncash investing and financing activities:
Financed sales of other real estate, net of deferred gain $ 2,028,462 3,984,375 904,300
Transfer of loans to other real estate $ 3,878,107 5,492,323 4,828,193
Deferred gain on sale of other real estate and bank
premises and equipment $ - 131,118 -
Change in unrealized loss on marketable equity securities $ (9,337) 33,321 2,665
Principal reduction on ESOP indebtedness $ 27,000 - -
Interest financed on behalf of ESOP $ - - 12,268
Interest financed on notes payable $ - - 238,732
Conversion of notes payable and related accrued interest
payable to Series A cumulative preferred stock $ - 4,597,730 -
Series A cumulative preferred stock issued as dividend in kind $ 527,000 126,430 -
Series A cumulative preferred stock dividend declared $ 111,409 129,914 -
Series 1992 preferred stock dividend declared $ 53,978 - -
Discount relating to retirement of $1,000,000
of Series A cumulative preferred stock $ 200,000 - -
</TABLE>
See accompanying accountants' report and notes to
consolidated financial statements.
F-7
<PAGE> 92
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
The accounting and reporting policies of Metro Bancorp, Inc.
and subsidiary 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.
Basis of Presentation
The consolidated financial statements of Metro Bancorp, Inc.
(the Company) include the accounts of the Company and its wholly-owned
subsidiary, The Commercial Bank (the Bank). All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Investment Securities
Investment securities are carried at cost, adjusted for
amortization of premiums and accretion of discounts. The Company has
the ability to hold these securities to maturity and the intent to hold
them for the foreseeable future. From time to time, the Company may
decide to sell certain securities prior to maturity for liquidity, tax
planning, and other valid business purposes. Gains and losses are
determined using the specific identification method when securities are
sold.
Marketable Equity Securities
Investments in marketable equity securities are carried at the
lower of aggregate cost or market. Changes in the market value are
charged or credited directly to stockholders' equity. Realized gains
and losses are determined using the specific identification method.
Loans and Allowance for Loan Losses
Loans are stated at principal amount outstanding, net of
unearned interest and the allowance for loan losses. Interest on loans
is primarily 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 and business conditions and
collection efforts, that the borrower's financial condition is such that
collection of interest is doubtful. When a loan is placed on nonaccrual
status, previously accrued and uncollected interest is charged to
interest income on loans.
The allowance for loan losses is established through a provision
for loan losses charged to expense. 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.
Management believes that the allowance for loan losses is
adequate. While management uses available information to recognize
losses on loans and other real estate, 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 their judgements of information available to them at
the time of their examination.
F-8
<PAGE> 93
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(1) Summary of Significant Accounting Policies, continued
Premises and Equipment Premises and equipment are recorded at
cost less accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives of the related
assets. Costs incurred for maintenance and repairs are expensed
currently.
Other Real Estate
Other real estate, including properties deemed in-substance
foreclosures, is originally recorded at its fair value net of estimated
costs to dispose. The estimate of fair value is based on appraisals
performed by both Company personnel and independent appraisers. These
estimates are critical to the financial statements and changes in such
estimates, appraisals and evaluations might be required due to changing
economic conditions and economic prospects of borrowers.
In-substance foreclosures occur on collateralized loans in which
the debtor has little or no equity, the proceeds for repayment of the
loan can come only from operation or sale of the collateral, and the
debtor has formally or effectively abandoned control or it is doubtful
that the debtor will be able to rebuild equity in the collateral or
otherwise repay the loan in the foreseeable future.
Sales of other real estate are accounted for in accordance with
Financial Accounting Standards Board Statement No. 66 "Accounting for
Sales of Real Estate". Accordingly, profits may be deferred or
recognized currently depending on the terms of the sale. Losses are
charged to operations as incurred.
Income Taxes
The income tax effects of transactions are recognized for
financial reporting purposes in the year in which they enter into the
determination of recorded income, regardless of when they are
recognized for income tax purposes. Accordingly, applicable income
taxes in the consolidated statements of operations include charges or
credits for deferred income taxes relating to timing differences.
Net Earnings (Loss) Per Common Share
Net earnings (loss) per common share are based on the weighted
average number of common shares outstanding during each period. All per
share amounts have been retroactively restated to give effect to the
100% stock dividend more fully described in note 17.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement
of Financial Accounting Standards No. 109 (SFAS 109) "Accounting for
Income Taxes", which the Company has not been required to adopt in
1992. SFAS 109 requires that deferred income taxes be recorded using
the liability method and restricts the conditions under which 8a
deferred tax asset may be recorded. The Company will be required to
adopt this standard in 1993, but has not yet determined the impact of
the standard on the consolidated financial statements.
(2) Restatement of 1991 Consolidated Financial Statements
The consolidated financial statements and accompanying notes
presented herein for the year 1991 have been restated to reflect the
correction of an error in an appraisal relating to a certain piece of
real property acquired in 1991 through foreclosure. The original
appraisal valued all of the property acquired through foreclosure as
commercially zoned property. A subsequent appraisal in late 1992
performed by a different independent appraiser discovered that in fact
a portion of the property was zoned residential. At December 31, 1992,
the estimated value of this real property was significantly lower than
was originally determined at actual foreclosure in 1991. This valuation
reduction is related to the estimated fair value at the time of
foreclosure (1991) due to the error in the preparation of the appraisal
at foreclosure, rather than a subsequent decline related to market
conditions. Generally accepted accounting principles consider the
oversight or misuse of facts that existed at the time financial
statements are prepared as errors, and require these to be reported as
adjustments, if material, to prior period financial statements.
Therefore, the 1991 consolidated financial statements have been
restated to reflect an additional write-down to the property at the
date of foreclosure.
F-9
<PAGE> 94
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(2) Restatement of 1991 Consolidated Financial Statements, continued
The following is a summary of the consolidated financial statement
amounts affected by the restatement:
<TABLE>
<CAPTION>
As
Previously As
Reported Change Restated
------------- --------- -----------
<S> <C> <C> <C>
Consolidated Balance Sheet
--------------------------
Other real estate $ 6,110,924 (607,364) 5,503,560
Total assets 130,332,410 (607,364) 129,725,046
Accumulated deficit (760,247) (607,364) (1,367,611)
Common stockholders' equity 2,603,980 (607,364) 1,996,616
Consolidated Statement of Operations
------------------------------------
Provision for loan losses $ - 607,364 607,364
Earnings before income taxes and
extraordinary item 1,616,237 (607,364) 1,008,873
Income tax expense 457,620 (206,504) 251,116
Earnings before extraordinary credit 1,158,617 (400,860) 757,757
Extraordinary credit 457,620 (206,504) 251,116
Net earnings 1,616,237 (607,364) 1,008,873
Net earnings applicable to common
stockholders 1,359,885 (607,364) 752,521
========= ======= =========
Net earnings per common share:
Earnings before extraordinary credit $ .65 (.29) .36
Extraordinary credit .33 (.15) .18
--------- ----------- ---------
Net earnings $ .98 (.44) .54
========= =========== =========
</TABLE>
(3) Regulatory Communications
In December, 1990, the Company and the Bank entered into a
program of corrective action with their primary regulatory authorities
resulting from a regulatory examination conducted during the summer of
1990 while the Agreement with Bank South Corporation (as more completely
described below) was still in effect. This program requires Board of
Director and management attention to be focused on several areas,
including effectiveness and adequacy of management, development of a
comprehensive asset management plan, development of a capital plan to
increase the level of capital to a satisfactory level, timely review and
monitoring of the adequacy of the allowance for loan losses, preparation
of a comprehensive budget and forecast, correction of any violations of
laws, rules and regulations previously cited, and other actions deemed
necessary by the regulators.
Additional supervisory powers and regulations mandated by the
Federal Deposit Insurance Corporation Improvement Act of 1991 include a
"prompt corrective action" program which creates five regulatory zones
in which all banks would be placed, largely based on their capital
positions. Regulators are permitted to take increasingly harsh action as
a bank's financial condition declines. Continued noncompliance with the
provisions of the program of corrective action could subject the Bank to
these harsh regulatory actions.
At December 31, 1992, the Bank was not in compliance with
several of the requirements of the program of corrective action.
Management does not believe its noncompliance will create additional
legal or administrative actions as, in concert with continued
forbearance from its regulatory authorities, it strives for satisfaction
of all provisions of the program of corrective action.
F-10
<PAGE> 95
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(3) Regulatory Communications, continued
The Company and the Bank are required to maintain minimum
capital requirements (consolidated and bank only) as defined by and in
accordance with various regulatory authorities. Based on the program of
corrective action, the Company is required to have consolidated total
capital (consisting of equity capital and the allowance for loan
losses) equal to seven (7%) percent of consolidated total assets. At
December 31, 1992, the Company's capital was in compliance with this
requirement. The Company is also subject to the risk-based rules for
assessing capital adequacy. These regulations establish minimum capital
standards in relation to assets and off-balance sheet exposures, as
adjusted for credit risks. At December 31, 1992, due to limitations
which allow only a certain amount of the preferred stock to be included
as components of the Company's risk-based capital, the Company was
deficient by approximately $2,000,000 from the minimum risk-based
requirement.
Regulatory authorities in the program of corrective action also
require the bank level capital (stockholder's equity) to equal six (6%)
percent of total assets and its adjusted primary capital (equity plus
the allowance for loan losses) to equal eight (8%) percent of its
adjusted total assets (total assets plus the allowance for loan
losses). At December 31, 1992, the Bank's capital was in compliance
with these requirements.
As the Company has failed to maintain compliance with its
capital requirements, it may be subject to legal or administrative
actions that may be taken by the various regulatory authorities. The
Company intends to raise sufficient capital through an offering of
preferred and common stock. The proceeds from the offering are
anticipated to be used to retire the Series A preferred stock, to
infuse certain amounts of equity into the Bank, and to provide
additional liquidity to the Company as it continues to strive to meet
its obligations. Management believes that additional regulatory action
will not be taken as it implements its plans for curing this capital
deficiency.
On January 10, 1990, the Company signed a Letter of Intent to
be acquired by Bank South Corporation through a merger. On April 30,
1990, a definitive agreement (the Agreement) was executed which
provided, among other terms and conditions, that the Agreement would
terminate if regulatory approval was not obtained by October 31, 1990.
Bank South Corporation was unable to obtain regulatory approval by
October 31, 1990, and did not extend the Agreement. On May 1, 1990, an
officer of Bank South, N.A., a subsidiary of Bank South Corporation,
who had resigned his position with Bank South, N.A., became the chief
executive officer of The Commercial Bank. He served in that position
until shortly after the October 31, 1990 termination date of the
Agreement.
F-11
<PAGE> 96
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(3) Regulatory Communications, continued
At December 31, 1990, the Company had a loan with Bank South,
N.A. which was used to finance its operations by infusing additional
paid-in capital to its Bank subsidiary. In June 1991, the Company
executed certain agreements with Bank South, N.A. which resulted in the
conversion of notes payable of $3,800,000 and $251,000 and related
accrued interest payable of $546,730 into 459,773 shares of Series A
preferred stock in the Company. In connection with this transaction,
the Company amended its Articles of Incorporation to include the
authorization of 1,000,000 shares of Series A preferred stock with a
par value of $10 per share. The Series A preferred stock is non-voting
and contains no conversion features. In the event of liquidation, the
Series A preferred stockholders are entitled to $10 per share plus any
unpaid dividends. The Series A preferred stock requires quarterly
dividend payments (as amended August 1992) at an annual rate of eleven
(11%) percent from July 1, 1991 through July 1, 1994, and fifteen (15%)
percent thereafter. Such dividends are payable in cash or shares of
Series A preferred stock, at the option of the Company, until March 31,
1993, at which time dividends are required to be paid only in cash. In
1991, the Company issued 12,643 shares in the form of Series A
preferred stock dividends in kind. On December 17, 1991 the Board
declared 12,991 shares of Series A preferred stock dividends in kind
and $4 in cash dividends in lieu of fractional shares; these dividends
were paid January 1, 1992. During 1992, the Board declared and issued
39,709 shares of Series A preferred stock dividends in kind and $15 in
cash dividends in lieu of fractional shares. On December 15, 1992 the
Board declared 11,140 shares of Series A preferred stock dividends in
kind and $9 in cash dividends in lieu of fractional shares payable
January 3, 1993. The Company may, at its option, redeem all of the
outstanding Series A preferred stock at par value plus unpaid
dividends. Partial redemption may be made upon consent and agreement
between the Company and Bank South, N.A. In August 1992, 120,000 shares
of the Series A preferred stock were redeemed for $1,000,000 cash. The
$200,000 of excess par value relating to the redeemed Series A
preferred stock was credited to the Company's capital surplus. The
Company has accepted an offer by Bank South N.A. to fully redeem the
balance of the Series A preferred stock for $3,000,000 inclusive of
cash dividend payments on the stock. The offer is subject to all
redemption funds being received by Bank South N.A. by September 30,
1993. The ability of the Company to redeem the stock in accordance with
the terms of the offer is subject to the success of the aforementioned
offering of additional preferred and common stock.
The Company has agreed to comply with certain covenants in
relation to the issuance of the Series A preferred stock to Bank South,
N.A. Among other items, the Company shall not incur additional
indebtedness, not declare dividends to common shareholders, furnish
financial information in a timely manner, and maintain certain
financial ratios. At December 31, 1992, the Company was not in
compliance with all covenants of the Series A preferred stock and had
not sought waivers.
The following summarizes activity relating to the Series A
preferred stock for the years ended December 31, 1992 and 1991:
<TABLE>
<S> <C>
Issuance of Series A preferred stock $ 4,597,730
Series A preferred stock dividend 126,430
---------
Balance, December 31, 1991 4,724,160
Series A preferred stock redemption (1,200,000)
Series A preferred stock issued for 1991 dividends 129,910
Series A preferred stock dividend 397,090
---------
Balance, December 31, 1992 $ 4,051,160
=========
</TABLE>
F-12
<PAGE> 97
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(4) Investment Securities
The carrying value and estimated market value of investment
securities at December 31, 1992 and 1991 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Carrying Unrealized Unrealized Market
1992 Value Gains Losses Value
---- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Government agencies $ 5,857,638 - - 5,857,638
State and municipals 399,060 9,128 26,560 381,628
Other investments 175,000 130,000 - 305,000
--------- ------- ------- ---------
$ 6,431,698 139,128 26,560 6,544,266
========= ======= ====== =========
<CAPTION>
1991
----
<S> <C> <C> <C> <C>
U.S. Government agencies $ 2,227,058 630 - 2,227,688
State and municipals 998,983 17,125 82,075 934,033
Mortgage-backed securities 1,825,324 - 22,059 1,803,265
Other investments 175,000 - - 175,000
--------- -------- --------- ---------
$ 5,226,365 17,755 104,134 5,139,986
========= ======== ========= =========
</TABLE>
Other investments consist principally of stock held in Community
Financial Services, Inc., which was sold on March 5, 1993 resulting in a
gain of approximately $130,000.
The carrying value and estimated market value of investment
securities at December 31, 1992, 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>
Estimated
Carrying Market
Value Value
-------- ---------
<S> <C> <C>
Due in one year or less $ 6,357,638 6,496,766
Due after ten years 74,060 47,500
--------- ---------
$ 6,431,698 6,544,266
========= =========
</TABLE>
Proceeds from sales of investments in debt securities during
1992, 1991 and 1990 were $2,411,480, $103,000 and $4,480,068,
respectively. Gross gains of $65,491, $4,577 and $138,517 were realized
on sales during 1992, 1991 and 1990, respectively. A gross loss of
$58,337 was realized on the 1992 disposal.
Securities with a carrying value of approximately $6,207,000 and
$5,052,000 at December 31, 1992 and 1991, respectively, were pledged to
secure public deposits as required by law.
F-13
<PAGE> 98
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(5) Loans
Major classifications of loans are summarized as follows:
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Commercial, financial and agricultural $ 12,484,299 14,111,914
Real estate - construction 9,479,468 9,822,459
Real estate - mortgage 61,454,710 62,398,507
Consumer 10,555,436 9,974,403
---------- ----------
Total loans 93,973,913 96,307,283
Less: Unearned interest 153,214 138,448
Allowance for loan losses 3,647,711 3,673,654
---------- ----------
Total net loans $ 90,172,988 92,495,181
========== ==========
</TABLE>
The Bank grants loans and extensions of credit to individuals
and a variety of firms and corporations located in and around its trade
area of Douglasville and Douglas County, Georgia. 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.
The Bank discontinues accruing interest on loans when, in the
opinion of management, there is a reasonable doubt of collectibility of
interest on a timely basis. At December 31, 1992, 1991 and 1990,
nonaccrual loans totalled approximately $2,024,000, $3,634,300 and
$4,855,000, respectively. Interest income would have been approximately
$98,000, $226,300 and $312,000 higher in 1992, 1991 and 1990,
respectively, had interest on these nonaccrual loans been accrued in
accordance with the original terms of the loans.
Changes in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 3,673,654 3,786,524 2,200,000
Amounts charged off (782,245) (1,065,500) (1,593,988)
Recoveries on amounts previously charged off 67,141 345,266 707,684
Provision charged to operating expense 689,161 607,364 2,472,828
--------- --------- ---------
Balance at end of year $ 3,647,711 3,673,654 3,786,524
=========== ========= =========
</TABLE>
(6) Premises and Equipment
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Land $ 625,207 625,207
Buildings and improvements 6,324,491 6,324,491
Furniture and equipment 4,162,889 4,162,889
---------- ----------
11,112,587 11,112,587
Less: Accumulated depreciation 3,718,961 3,099,185
---------- ----------
$ 7,393,626 8,013,402
========== ==========
</TABLE>
Depreciation expense was approximately $620,000, $615,000 and $614,600
for the years ended December 31, 1992, 1991 and 1990, respectively.
F-14
<PAGE> 99
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(7) Other Real Estate Owned
Effective for the year ended December 31, 1992, the Company
changed its method of accounting for other real estate. In accordance
with the American Institute of Certified Public Accountants' Statement
of Position 92-3 "Accounting for Foreclosed Assets" (SOP 92-3), the
Company has adjusted all properties (including those deemed
in-substance foreclosures) to their fair value and has established a
valuation allowance for the estimated costs to sell these assets. The
adoption of SOP 92-3 results in a new cost basis for these assets,
defined as the estimated fair value of the assets at the date of
adoption of the pronouncement. Subsequent to the adoption of SOP 92-3,
the carrying amount of each property is adjusted to the lower of the
then fair value less costs to sell, or cost as defined herein. The
change in accounting to adopt SOP 92-3 did not have a significant
effect on the results of operations for 1992. The estimated fair value
of other real estate at December 31, 1992 is $7,314,871 and the
valuation allowance is $334,910, with a net balance of $6,979,961.
In 1991, real estate acquired through foreclosure as well as
loans deemed in-substance foreclosures were carried at the lower of the
Company's investment or net realizable value based on appraised values.
Losses arising from the acquisition of such property were charged
against the allowance for loan losses. Subsequent write-downs were
provided by a charge to income in the period in which the need arose.
Other real estate amounted to $5,503,560 at December 31, 1991.
(8) Note Payable
Note payable at December 31, 1992 and 1991 consists of the following:
1992 1991
-------- ---------
Borrowings of Employee Stock Ownership Plan,
guaranteed by the Company, due in annual
payments through January 1995 ranging from
$40,500 to $148,500, with interest payable
monthly at prime
$243,000 270,000
========= =========
(9) Commitments and Contingencies The Bank leases, from
both affiliated and unaffiliated parties, various
equipment, facilities and real estate under capital
and operating lease arrangements. Future minimum
payments on these leases at December 31, 1992 are
summarized as follows:
<TABLE>
<CAPTION>
Total Operating Capital
Commitments Leases Leases
----------- --------- -------
<S> <C> <C> <C>
1993 $ 365,193 181,973 183,220
1994 187,414 141,538 45,876
1995 141,583 119,983 21,600
1996 142,000 120,400 21,600
1997 152,000 130,400 21,600
Thereafter 3,376,333 2,497,933 878,400
--------- --------- ---------
Total minimum lease payments $ 4,364,523 3,192,227 1,172,296
========= =========
Amounts representing interest (764,979)
---------
Present value of net minimum lease payments $ 407,317
=========
</TABLE>
Rental expense under operating leases for 1992, 1991 and
1990 was approximately $196,000 ($50,400 to affiliated parties),
$401,500 ($87,600 to affiliated parties) and $374,700 ($88,800 to
affiliated parties), respectively.
F-15
<PAGE> 100
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(9) Commitments and Contingencies, continued
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 these instruments reflect the extent of
involvement the Bank has in particular classes of financial
instruments.
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 these instruments. The same
credit policies are used in making commitments and conditional
obligations as for on-balance-sheet instruments.
In most cases collateral or other security is required to
support financial instruments with credit risk:
<TABLE>
<CAPTION>
December 31,
Approximate
Contractual Amount
1992 1991
---- ----
<S> <C> <C>
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $ 6,596,000 6,081,000
Standby letters of credit and financial
guarantees written $ 811,000 79,000
</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, 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 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
local businesses. The credit risk involved in extending letters of
credit is essentially the same as that involved in extending loan
facilities to customers. The Bank holds real estate and automobiles as
collateral supporting those commitments for which collateral is deemed
necessary. The extent of collateral held for those commitments varies.
The average amount collateralized is 90 and 100 percent for December 31,
1992 and 1991, respectively.
The Bank has been notified by another financial institution of a
potential claim for reimbursement of an SBA loan made by the other
institution. The eventual outcome is uncertain. Management, after
consultation with counsel, believes that it has significant meritorious
defenses relating to this matter.
(10) Stockholders' Equity
Dividends paid by the Bank are the primary source of funds
available to the Company. Banking regulations limit the amount of
dividends that may be paid without prior approval of the Bank's
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. The Bank is presently not
allowed to impair capital by the payment of dividends without regulatory
approval.
F-16
<PAGE> 101
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(11) Redeemable Cumulative Preferred Stock
In December 1991, the Company amended its Articles of
Incorporation to increase the number of shares authorized of its
preferred stock from 500,000 to 5,000,000. Shares of preferred stock
may be issued from time to time in one or more series, as may be
established by resolution of the Board of Directors of the Company.
Each resolution shall include the number of shares issued, distinctive
designation or title, voting powers, preferences, special rights and
restrictions as determined by the Board. The Board is also further
authorized to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series.
In August 1992, the Company issued 200,000 shares of $10 par
value adjustable rate cumulative preferred stock ("Series 1992
preferred stock"). The Series 1992 preferred stock is non-voting and
contains no conversion features. The Series 1992 preferred stock is
considered limited life preferred stock since it contains a partial
redemption feature that requires quarterly cash redemptions of $62,500
beginning December 31, 1992 through September 30, 2000, at which time
this preferred stock will be completely redeemed. The Company may, at
its option with regulatory approval, redeem all of the outstanding
Series 1992 preferred stock at par value plus unpaid dividends at any
time. Such liquidation of the Series 1992 preferred stock ranks junior
to liquidation of the Series A preferred stock. No dividends may be
paid or declared on the Company's common stock until all dividends
accrued and payable on preferred stock has been paid off. The Series
1992 preferred stock also requires quarterly cash dividend payments at
the prime interest rate plus 1%. The cash dividends, subject to
regulatory approval, are cumulative and rank junior to dividends for
Series A preferred stock. The $2,000,000 cash received for issuance of
the Series 1992 preferred stock was used as follows: $1,000,000 to
redeem 120,000 shares of $10 par value Series A preferred stock (as
described above), $500,000 to provide a capital infusion into its Bank
subsidiary, and $500,000 to be reserved for future preferred stock cash
dividends and redemptions. On December 15, 1992, the Board declared a
$53,978 cash dividend and a partial redemption of $62,500 for holders
of the Series 1992 preferred stock, payable January 3, 1993.
Redemption requirements relating to the Series 1992 preferred stock
are as follows:
<TABLE>
<CAPTION>
<S> <C>
1993 $ 250,000
1994 250,000
1995 250,000
1996 250,000
1997 250,000
Thereafter 750,000
---------
$ 2,000,000
=========
</TABLE>
(12) Employee Stock Ownership Plan
The Company has established an Employee Stock Ownership Plan
(ESOP) covering substantially all employees who meet certain minimum
age and length of service requirements. Contributions to the Plan are
determined annually by the Board of Directors and shall not exceed 15%
of the aggregate compensation of the participants. Contributions to the
Plan amounted to approximately $16,650 and $27,300 for the years ended
December 31, 1992 and 1991, respectively. There were no contributions
during 1990.
At December 31, 1992, 86,212 shares of the Company's stock are
held by the Employee Stock Ownership Trust, which was established to
fund the Plan. The trust purchased 89,564 shares of the Company's stock
with the proceeds of a $500,000 bank loan. The Company has guaranteed
repayment of the bank loan. Under the agreement, the Company is
obligated to make annual contributions of $40,500 in 1993, $54,000 in
1994 and $148,500 in 1995, plus interest due monthly at prime. At
December 31, 1992, the bank loan was secured by 42,984 shares of the
Company's stock. Generally accepted accounting principles require plan
sponsors to record ESOP indebtedness in their financial statements.
Accordingly, the accompanying financial statements reflect the ESOP
indebtedness as a component of notes payable, and a corresponding
reduction in stockholders' equity.
F-17
<PAGE> 102
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(13) Income Taxes
The following is an analysis of income tax expense for the years
ended December 31, 1992, 1991 and 1990:
<TABLE>
<CAPTION>
1992 1991 1990
---- -------- ----
<S> <C> <C> <C>
Currently payable (refundable) $ 121,506 47,133 (59,425)
Deferred (30,078) 203,983 59,425
------- ------- -------
$ 91,428 251,116 -
======= ======= =======
</TABLE>
Income tax expense differs from the amounts computed by applying
the Federal corporate statutory income tax rate of 34% in 1992, 1991 and
1990 to earnings (loss) before income taxes, as follows:
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Expected income tax expense (benefit) $ 137,373 343,017 (1,005,314)
Tax-exempt interest income (46,330) (140,271) (240,414)
Non-deductible interest expense 4,681 19,643 36,635
Net operating loss not recognizable - - 1,209,093
Surtax exemption and other, net (4,296) 28,727 -
------- ------- -----------
$ 91,428 251,116 -
======= ======= ===========
</TABLE>
The sources of deferred income taxes and the tax effects are as
follows:
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Accelerated depreciation $ (17,109) 29,470 71,240
Provision for loan losses 27,037 - (170,227)
Accounting change for tax purposes from
cash basis to accrual basis - - (80,492)
Unearned origination fees (16,180) 17,304 28,324
Deferred gains on sale of real estate - 53,204 28,254
Utilization of net operating loss carryforward 152,492 139,439 -
Benefit of net operating loss not recognizable - - 191,540
Provision for losses on OREO (93,117) 25,500 -
Nonaccrual loan interest 41,186 (41,230) -
Alternative minimum tax (121,506) (47,133) -
Other (2,881) 27,429 (9,214)
-------- ------- -------
$ (30,078) 203,983 59,425
======== ======= =======
</TABLE>
Approximately $278,000 and $745,000 of the Company's net
operating loss carryforward was utilized to reduce federal income tax
expense for the years ended December 31, 1992 and 1991, respectively.
The utilization has been reported as an extraordinary credit in the
consolidated statements of operations. At December 31, 1992, there are
remaining loss carryforwards for federal income tax and financial
reporting purposes totalling approximately $1,250,000 and $3,500,000,
respectively, for which no benefit has been provided. The recognition of
this benefit is dependent upon future taxable income. The loss
carryforwards are scheduled to expire beginning in 2004. Additionally,
the Company has unused AMT credit carryforwards of $189,000 for income
tax purposes. The credit carryforwards will be recognized as reductions
in income tax payable upon the generation of future regular taxable
income.
F-18
<PAGE> 103
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(14) Related Party Transactions
Directors, executive officers and principal stockholders of the Company
and certain business organizations and individuals associated with them
were customers of and had other transactions with the Bank in the
ordinary course of business during 1992 and 1991. It is the policy of
the Company that loans to these related parties be made on
substantially the same terms as those prevailing at the time made for
comparable loans to other Bank customers. The following is a summary of
activity for related party loans for 1992:
<TABLE>
<S> <C>
Beginning balance $ 4,501,000
New loans 346,000
Repayments (2,504,500)
---------
Ending balance $ 2,342,500
=========
</TABLE>
(15) Miscellaneous Other Income and Other Operating Expenses
Components of miscellaneous other income and other operating expenses
in excess of 1% of total interest and other income for the respective
periods are as follows:
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Miscellaneous Other Income
--------------------------
Rental income from other real estate owned $ 191,142 182,512 -
Recognition of deferred gain
on sale of other real estate $ 10,166 287,601 -
Gain on sale of premises and equipment $ - 260,034 -
Gain on sale of credit card portfolio $ - 318,274 -
Other Operating Expenses
------------------------
FDIC insurance premiums $ 271,468 294,179 194,061
Printing, stationary and supplies $ 176,878 186,214 286,629
Legal fees $ 132,776 197,269 304,271
Postage $ 181,858 184,384 209,454
Credit card merchant expense $ 197,675 176,248 210,034
Other real estate expenses, net $ 166,627 157,003 93,121
Protection/collection of loans $ 136,418 107,406 90,075
Telephone $ 135,845 131,523 150,097
</TABLE>
F-19
<PAGE> 104
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(16) Metro Bancorp, Inc. (Parent Company Only) Financial Information
Balance Sheets
December 31, 1992 and 1991
Assets
<TABLE> ------
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Cash, substantially restricted $ 534,660 164,860
Investment in The Commercial Bank 8,135,254 7,193,878
Other assets 43,884 56,152
--------- ---------
$ 8,713,798 7,414,890
========= =========
Liabilities and Stockholders' Equity
------------------------------------
Accrued interest payable and other liabilities $ 363,812 424,114
Notes payable 243,000 270,000
Series A cumulative preferred stock 4,051,160 4,724,160
Redeemable cumulative preferred stock 2,000,000 -
Common stockholders' equity 2,055,826 1,996,616
--------- ---------
$ 8,713,798 7,414,890
========= =========
</TABLE>
Statements of Operations
For the Years Ended December 31, 1992, 1991 and 1990
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Income:
Interest income $ 6,752 - -
Recognition of deferred gain on sale of
other real estate - - 341,387
-------- ----------- ---------
6,752 - 341,387
------- ----------- ---------
Expenses:
Interest on notes payable - 214,730 360,341
Other 53,426 102,537 11,088
------- --------- ---------
53,426 317,267 371,429
------- --------- ---------
Loss before equity in undistributed earnings
(loss) of bank subsidiary (46,674) (317,267) (30,042)
Equity in undistributed earnings (loss) of bank subsidiary 450,713 1,326,140 (2,926,765)
------- --------- ---------
Net earnings (loss) 404,039 1,008,873 (2,956,807)
referred dividend requirement (562,492) (256,352) -
------- -------- ---------
Net earnings (loss) applicable to common stockholders $ (158,453) 752,521 (2,956,807)
======== ======== =========
</TABLE>
F-20
<PAGE> 105
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(16) Metro Bancorp, Inc. (Parent Company Only) Financial Information,
continued
Statements of Cash Flows
For the Years Ended December 31, 1992, 1991 and 1990
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 404,039 1,008,873 (2,956,807)
Adjustments to reconcile net earnings (loss) to net cash
used by operating activities:
Equity in undistributed (earnings) loss of subsidiary (450,713) (1,326,140) 2,926,765
Recognition of deferred gain on sale of other real
estate - - (341,387)
Amortization - - 881
Change in:
Other assets 12,268 (9,971) 2,132
Interest payable - - 355,732
Other liabilities - 132,641 -
---------- --------- ---------
Net cash used by operating activities (34,406) (194,597) (12,684)
---------- --------- ---------
Cash flows from investing activities:
Capital infusion into subsidiary (500,000) - -
Change in due from (to) subsidiary (95,775) - 282,613
---------- ----------- ---------
Net cash provided (used) by investing activities (595,775) - 282,613
--------- ----------- --------
Cash flows from financing activities:
Issuance of Series 1992 preferred stock 2,000,000 - -
Redemption of Series A preferred stock (1,000,000) - -
Dividends paid in lieu of fractional shares (19) (8) -
---------- ---------- --------
Net cash provided (used) by financing activities 999,981 (8) -
--------- ---------- --------
Net increase (decrease) in cash 369,800 (194,605) 269,929
Cash at beginning of year 164,860 359,465 89,536
--------- --------- --------
Cash at end of year $ 534,660 164,860 359,465
========= ========= ==========
</TABLE>
F-21
<PAGE> 106
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(16) Metro Bancorp, Inc. (Parent Company Only) Financial Information, continued
Statements of Cash Flows, continued
For the Years Ended December 31, 1992, 1991 and 1990
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ - - 4,609
Supplemental schedule of noncash investing and
financing activities:
Deferred gain on sale of other real estate $ - - (624,000)
Change in unrealized loss on marketable equity
securities $ (9,337) 33,321 2,665
Principal reduction on ESOP indebtedness $ 27,000 - -
Interest financed on behalf of ESOP $ - - 12,268
Interest financed on notes payable $ - - 238,732
Conversion of notes payable and related accrued
interest payable to Series A preferred
stock $ - 4,597,730 -
Series A preferred stock issued as dividend
in kind $ 527,000 126,430 -
Series A preferred stock dividend declared $ 111,409 129,914 -
Series 1992 preferred stock dividend declared $ 53,978 - -
Discount relating to retirement of $1,000,000
of Series A preferred stock $ 200,000 - -
</TABLE>
The Company's cash of $534,660 is restricted in its available use based
on the results of the most recent regulatory examination. Regulatory approval is
required prior to the outlay of cash.
F-22
<PAGE> 107
METRO BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(17) Subsequent Event
On June 15, 1993, the Board of Directors authorized a 100%
stock dividend of the Company's $2.50 par value common stock. As a
result, 697,313.6 additional shares were issued and capital surplus was
reduced by $1,743,283. Capital surplus was charged for the stock
dividend instead of retained earnings due to the fact that retained
earnings reflected a negative balance at the date of transfer. As a
result of this transaction, common stock and capital surplus were given
retroactive effect and all references in the accompanying financial
statements to the number of common shares and per share amounts have
been adjusted to give effect to this stock dividend.
Additionally, the Board of Directors authorized an offering for
the sale of a new series of preferred stock (to be known as the Series
1993 Adjustable Rate Cumulative Preferred Stock), consisting of 340,000
shares at a price of $10 per share, as well as the offering of 200,000
shares of its common stock at a price of $5 per share. Proceeds of the
offering will be used to make an infusion of equity into the Bank
subsidiary, to retire the Series A preferred stock, and for general
corporate purposes.
F-23
<PAGE> 108
METRO BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 1993 AND 1992
(DOLLARS IN THOUSANDS)
Assets
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Cash and due from banks $ 10,838 11,711
Federal funds sold 9,680 1,571
--------- -------
Cash and cash equivalents 20,518 13,282
--------- -------
Interest-bearing deposits with other banks 693 682
Investment securities (market value $8,863 and $5,078 8,883 5,261
at September 30, 1993 and 1992, respectively)
Marketable equity securities at aggregate market value
(aggregate cost of $1,000,000) 961 967
Loans 92,909 97,838
Less: Unearned interest 244 208
Allowance for loan losses 3,994 3,840
--------- -------
Loans, net 88,671 93,790
Premises and equipment 6,823 7,273
Accrued interest receivable 755 783
Other real estate 6,717 4,586
Other assets 1,182 1,038
--------- -------
Total Assets $135,203 127,662
======== =======
</TABLE>
(continued)
F-24
<PAGE> 109
Consolidated Balance Sheets (continued)
Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Deposits:
Demand $ 25,712 24,487
Interest-bearing demand 25,589 24,831
Savings 36,607 20,559
Time 33,503 42,455
Time, in excess of $100,000 3,202 5,227
------------ --------
Total deposits 124,613 117,559
Accrued interest payable and other liabilities 1,202 926
Note payable 202 243
Deferred gains on sales of other real estate 121 121
Obligations under capital leases 294 443
------------ ---------
Total liabilities 126,432 119,292
------------ ---------
Series A cumulative preferred stock, $10 par value, 1,000,000
shares authorized, 416,256 and 498,755 shares issued
and outstanding 4,163 3,925
----------- --------
Redeemable cumulative preferred stock, $10 par value; 5,000,000
shares authorized, 200,000 limited life shares of adjustable
cumulative (Series 1992) issued, 181,250 and 200,000 shares
outstanding, liquidation and redemption value of $10 per
share proportionately over 30 remaining quarters 1,812 2,000
----------- ---------
Common stockholders' equity:
Common stock, $2.50 par value, 10,000,000 shares authorized:
1,394,627 shares issued and outstanding 3,486 3,486
Capital surplus 382 382
Accumulated deficit (831) (1,147)
Net unrealized loss on marketable equity securities (39) (33)
------------ ----------
2,998 2,688
Less:
Guarantee of indebtedness of Employee Stock Ownership Plan (ESOP) 202 243
----------- ---------
Total common stockholders' equity 2,796 2,445
----------- ---------
Total liabilities and common
stockholders' equity $ 135,203 127,662
=========== =========
</TABLE>
F-25
<PAGE> 110
METRO BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Earnings
(dollars in thousands except per share information)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 2,182 2,221 6,490 7,105
Interest on deposits with other banks 6 7 19 15
Interest on federal funds sold 58 26 155 165
Interest on investment securities:
U.S. Treasury and U.S. Government 70 42 194 136
agencies
State, county and municipal 4 9 12 33
Other 18 19 56 67
-------------- -------------- ------------- --------------
Total interest income 2,338 2,324 6,926 7,521
-------------- -------------- ------------- --------------
Interest expense:
Interest on deposits:
Demand 157 198 494 593
Savings 294 202 674 673
Time 483 677 1,640 2,443
-------------- -------------- ------------- --------------
Total interest expense on deposits 934 1,077 2,808 3,709
Other interest expense 7 7 20 25
-------------- -------------- ------------- --------------
Total interest expense 941 1,084 2,828 3,734
-------------- -------------- ------------- --------------
Net interest income 1,397 1,240 4,098 3,787
Provision for loan losses 50 172 236 517
-------------- -------------- ------------- --------------
Net interest income after
provision for loan losses 1,347 1,068 3,862 3,270
-------------- -------------- ------------- --------------
Other income:
Service charges and fees 668 637 1,988 1,935
Securities gains, net (25) (58) 106 7
Miscellaneous 98 104 264 207
-------------- -------------- ------------- --------------
Total other income 741 683 2,358 2,149
-------------- -------------- ------------- --------------
Other expenses:
Salaries and employee benefits 654 716 1,915 2,144
Occupancy 391 356 1,113 1,075
Other Operating 687 580 2,008 1,710
-------------- -------------- ------------- --------------
Total other expenses $ 1,732 1,652 5,036 4,929
-------------- -------------- ------------- --------------
(Continued)
</TABLE>
F-26
<PAGE> 111
Consolidated Statements of Income (Continued)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings before income taxes, extraordinary credit
and cumulative effect of change in accounting
principle $ 356 99 1,184 490
Income tax expense 118 28 198 138
------- ------- ------- -------
Earnings before extraordinary credit and cumulative
effect of change in accounting principle 238 71 986 352
Extraordinary credit (utilization of NOL carry forward) 0 28 0 138
------- ------- ------- -------
Earnings before cumulative effect of change in
accounting principle 238 99 986 490
Cumulative effect of change in accounting principle
(implementation of FASB 109) 0 0 150 0
------- ------- ------- -------
Net earnings 238 99 1,136 490
Preferred dividend requirement 146 126 441 397
Net earnings applicable to common stockholders $ 92 (27) 695 93
======= ======= ======= =======
Net earnings per common share:
Earnings (loss) before extraordinary credit and
cumulative effect of change in accounting principle $ 0.07 (0.04) 0.39 (0.03)
Extraordinary credit 0.02 0.10
Cumulative effect of change in accounting principle 0.00 0.11
------- ------- ------- -------
Net earnings $ 0.07 (0.02) 0.50 0.07
======= ======= ======= =======
Weighted average number of common shares outstanding 1,395 1,395 1,395 1,395
======= ======= ======= =======
</TABLE>
F-27
<PAGE> 112
METRO BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,136 490
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, amortization and accretion 454 467
Provision for loan losses 236 517
Provision for estimated losses on other real estate 128 35
Extraordinary credit - (138)
Net gains on sales of investment securities (106) (7)
Cumulative effect of change in accounting principle (150) -
Net losses on sales of other real estate 19 2
Change in:
Interest receivable 40 (117)
Interest payable 56 (38)
Other assets 150 232
Other liabilities 370 754
------- -------
Net cash provided by operating activities 2,333 2,197
Cash flows from investing activities:
Net change in interest-bearing deposits with other banks (9) (310)
Purchases of investment securities (13,583) (13,335)
Proceeds from sales of investment securities 150 2,413
Proceeds from maturities of investment securities 10,981 10,887
Net change in loans 1,065 (1,531)
Payments for and improvements to other real estate (212) (23)
Proceeds from the sale of other real estate 323 311
Purchase of premises and equipment (10) -
------- -------
Net cash used in investing activities (1,295) (1,588)
------- -------
Cash flows from financing activities:
Net change in demand and savings deposits 15,292 2,830
Net change in certificates of deposit (10,218) (6,400)
Repayment of capital lease obligations (113) (104)
Redemption of Series 1992 preferred stock (188) -
Issuance of Series 1992 preferred stock - 2,000
Redemption of Series A preferred stock - (1,000)
Series A preferred stock cash dividends (339) -
Series 1992 preferred stock cash dividends (120) -
------- -------
Net cash provided by (used in) financing activities 4,314 (2,674)
------- -------
Net increase (decrease) in cash and cash equivalents 5,352 (2,065)
Cash and cash equivalents at beginning of year 15,166 15,347
------- -------
Cash and cash equivalents at end of period $ 20,518 13,282
======= =======
</TABLE>
F-28
<PAGE> 113
METRO BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), CONTINUED
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 160 95
Interest $ 2,491 3,262
Supplemental schedule of noncash investing and financing activities:
Financed sales of other real estate, net of deferred gain $ 1,017 2,018
Transfer of loans to other real estate $ 993 2,030
Change in unrealized loss on marketable equity securities $ 4 1
Principal reduction on ESOP indebtedness $ 41 27
Series A cumulative preferred stock issued as
dividend in kind $ 112 397
Series A cumulative preferred stock dividend declared $ - 114
Series 1992 preferred stock dividend declared $ 33 -
</TABLE>
See accompanying accountants' compilation report.
UNAUDITED INTERIM FINANCIAL DATA
F-29
<PAGE> 114
METRO BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 1993 and 1992
(Unaudited)
(1) Management's Opinion
The accompanying consolidated balance sheet as of September 30, 1993
and 1992, the statements of operations for the three months and nine
months ended September 30, 1993 and 1992, and the statements of cash
flows for the nine months ended September 30, 1993 and 1992, are
unaudited; however, in the opinion of management, all adjustments,
consisting of normal accruals, necessary for a fair presentation of
the financial position, results of operations, and cash flows as of
and for the periods then ended have been included. All significant
intercompany items and transactions have been eliminated in
consolidation. Results of operations for interim periods are not
necessarily indicative of results for the entire year.
(2) Proposed Merger
On September 28, 1993, Metro Bancorp, Inc. signed an Agreement of
Reorganization and Plan of Merger with First National Bancorp whereby
First National Bancorp would acquire 100% of the 1,394,627 outstanding
shares of common stock of Metro Bancorp, Inc. for a price of from
$3.50 per common share up to a maximum of $5.00 per common share or,
from .17 to a maximum of .244 First National Bancorp common shares for
each Metro Bancorp, Inc. common share with the exact amount to be
determined based on recoveries and asset quality upgrades by Metro
Bancorp, Inc. over an eighteen (18) month period. The purchase price
is to be paid in cash (up to a maximum of 49% of the fair market value
of the common and preferred stock outstanding), First National Bancorp
common stock based on a value of $20.50 per share, or a combination
thereof. Under the circumstances described, up to $2,092,000 of
aggregate additional consideration from the base of $3.50 or exchange
of stock of .17 may be payable to the Metro Bancorp, Inc. shareholders
at or following consummation of the proposed merger. The proposed
transaction is subject to approval of regulatory authorities and
stockholders of Metro Bancorp, Inc. If approval is granted,
consummation of the merger is not anticipated until the first quarter
of 1994. Upon consummation, the subsidiary Bank would become a wholly
owned subsidiary of First National Bancorp.
(3) Income Taxes
During the first quarter of 1993, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 109 (FAS 109),
"Accounting for income Taxes". Under FAS 109, deferred tax assets and
liabilities are established for temporary differences between the
financial reporting basis and the tax basis of the Company's assets
and liabilities at enacted tax rates expected to be in effect when
such amounts are realized or settled. The Company elected to adopt
FAS 109 as of January 1, 1993 as a cumulative effect of a change in
accounting principle and did not restate any prior periods. The
cumulative effect of this change in accounting for income taxes is
reported separately in the income statement for the nine months ended
September 30, 1993. The effect was a positive impact $150,000 on 1993
earnings.
F-30
<PAGE> 115
(4) Recent Accounting Pronouncements
During May 1993, the Financial Accounting standards Board ("FASB")
issued FAS 114, "Accounting by Creditors for Impairment of a Loan" and
FAS 115, "Accounting for Certain Investments in Debt and Equity
Securities".
FAS 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 in 1995. FAS 114 may be adopted prior to 1995. The Company
has not yet determined the actual impact of FAS 114 on its financial
statements or made a determination of whether it will adopt FAS 114
prior to 1995.
FAS 115 requires investments to be classified in three categories;
held-to-maturity securities (reported at amortized cost), trading
securities (reported at fair value) and available-for-sale securities
(reported at fair value). Unrealized gains or losses on trading
securities are included in earnings. Unrealized gains or losses on
available-for-sale securities are excluded from earnings and reported
in a separate component of shareholders' equity. FAS 115 is effective
beginning in 1994, but can be adopted as of December 31, 1993. The
Company anticipates adopting FAS 115 in the first quarter of 1994
after a final evaluation of its securities portfolio under the
guidelines contained in FAS 115. Based on the current market value of
the securities portfolio, any impact to the equity accounts from the
adoption of FAS 115 should not be material.
F-31
<PAGE> 116
APPENDIX A
A copy of the Agreement of Reorganization and Plan of Merger between
First National Bancorp and Metro Bancorp, Inc. and a copy of the Amendment
thereto, which documents constitute Appendix A, were previously filed with the
Commission as Exhibits 2.1 and 2.2 to the original registration statement
(S.E.C. File No. 33-72430) amended by this Amendment No. 1 and are not being
refiled with this Amendment No. 1 since there have been no changes to those
documents.
A-1
<PAGE> 117
APPENDIX B
ARTICLE 13
DISSENTERS' RIGHTS
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. DEFINITIONS.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the
record shareholder.
(2) "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.
(3) "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.
(4) "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.
(5) "Interest" means interest from the effective date of the
corporation action until the date of payment, at a rate that
is fair and equitable under all the circumstances.
(6) "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 corporation.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
14-2-1302. RIGHT TO DISSENT
(a) A record shareholder of the corporation is entitled to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If the 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-1
<PAGE> 118
(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 share will be
acquired, if the shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all
of the property of the corporation if a shareholder vote is
required on the sale or exchange pursuant to Code Section
14-2-1202, but not including a sale pursuant to court order or
a sale for cash pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date
of sale;
(4) An amendment of the articles of incorporation that materially
and adversely affects rights in respect of a dissenter's
shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be
acquired for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class; or
(5) Any corporate action taken pursuant to a share-holder 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:
B-2
<PAGE> 119
(1) In the case of a plan of merger or share exchange, the
holders of shares of the class or series are required under
the plan of merger or share exchange to accept for their
shares anything except shares of the surviving corporation
or another publicly held corporation which at the effective
date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than
2,000 shareholders, except for scrip or cash payments in
lieu of fractional shares; or
(2) The articles of incorporation or a resolution of the board
of directors approving the transaction provides otherwise.
14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose
behalf he asserts dissenters' rights. The rights of a partial dissenter
under this Code section are determined as if the shares as to which he
dissents and his other shares were registered in the names of different
shareholders.
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
RESEARCH REFERENCES
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.
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 dissenter's 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-3
<PAGE> 120
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his
shares under this article.
14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under
Code Section 14-2-1302 is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenters' notice to all shareholders
who satisfied the requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after
the corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated share must be deposited;
(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment
demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60
days after the date the notice required in subsection (a) of
this Code section is delivered; and
(4) Be accompanied by a copy of this article.
14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his certificates in
accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares
under subsection (a) of this Code section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.
(c) A record shareholder who does not demand payment or deposit his
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his shares under this article.
14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions released under Code Section
14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate
action.
B-4
<PAGE> 121
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 offer to pay each dissenter who
complied with Code Section 14-2-1323 the amount the corporation estimates to
be the fair value of his shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an
income statement for that year, a statement of changes in
shareholders' equity for that year, and the latest available
interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of
the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under
Code Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written
notice to the corporation within 30 days after the corporation's offer,
payment for his shares shall be made within 60 days after the making of the
offer or the taking of the proposed corporate action, whichever is later.
14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60
days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment
demand procedure.
14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and
demand payment of his estimate of the fair value of his shares and interest
due, if:
(1) The dissenter believes that the amount offered under Code
Section 14-2-1325 is less than the fair value of his shares
or that the interest due is incorrectly calculated; or
B-5
<PAGE> 122
(2) The corporation, having failed to take the proposed action,
does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated share within
60 day after the date set for demanding payment.
(b) A dissenter waives his right to demand payment under this Code
section unless he notifies the corporation of his demand in writing under
subsection (a) of this Code section within 30 days after the corporation
offered payment for his 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 corporation of his
own estimate of the fair value of his shares and the amount of
interest due and demand payment of his estimate of the fair
value of his shares and interest due.
PART 3
JUDICIAL APPRAISAL OF SHARES
14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains
unsettled, the corporation shall commence a proceeding within 60 days after
receiving the payment demand and petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not
commence the proceeding within the 60 day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a
nonjury equitable valuation proceeding, in the superior court of the county
where a corporation's registered office is located. If the surviving
corporation is a foreign corporation without a registered office in this
state, it shall commence the proceeding in the county in this state where
the registered office os the domestic corporation merged with or whose
shares were acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unsettled parties to the
proceeding, which shall have the effect of an action quasi in rem against
their shares. The corporation shall serve a copy of the petition in the
proceeding upon each dissenting shareholder who is a resident of this state
in the manner provided by law for the service of a summons and complaint,
and upon each nonresident dissenting shareholder either by registered or
certified mail and 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
B-6
<PAGE> 123
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' right under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount which the court finds to be the fair value of his
shares, plus interest to the date of judgment.
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section
14-2-1330 shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the court,
but not including fees and expenses of attorneys and experts for the
respective parties. The court shall assess the costs against the
corporation, except that the court may assess the costs against all or some
of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously, or not in good
faith in demanding payment under Code Section 14-2-1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
(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 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
benefitted.
14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be
brought more than three years after the corporate action was taken,
regardless of whether notice of the corporate action and of the right to
dissent was given by the corporation in compliance with the provisions of
Code Section 14-2-1320 and Code Section 14-2-1322.
B-7
<PAGE> 124
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The bylaws of First Bancorp provide that any person may be indemnified
or reimbursed by First Bancorp for reasonable expenses actually incurred in
connection with any action, suit or proceeding, civil or criminal, to which he
shall be made a party by reason of his being or having been a director, officer
or employee of First Bancorp or of any firm, corporation or organization which
he served in any such capacity at the request of First Bancorp. However, under
the bylaws, no person may be indemnified or reimbursed in relation to any
matter in such action, suit or proceeding as to which he is finally adjudged to
have been guilty of or liable for gross negligence, willful misconduct or
criminal acts in the performance of his duties for First Bancorp. In addition,
the bylaws provide that no person shall be indemnified or reimbursed in
relation to any matter in such action, suit or proceeding which has been made
the subject of a compromise settlement except with the approval of a court of
competent jurisdiction, or the holders of record of a majority of the
outstanding shares of First Bancorp, or the Board of Directors, acting by vote
of directors not parties to the same or substantially the same action, suit or
proceeding, constituting a majority of the whole number of directors. The
foregoing right of indemnification or reimbursement is not exclusive of other
rights to which such person may be entitled as a matter of law.
In addition, Georgia law provides broad authority to directors and
shareholders of corporations to indemnify officers, directors and employees
against liabilities and expenses of defending civil (and in some cases
criminal) matters. See Official Code of Georgia Annotated Section 14-2-851,
et seq.
In addition to the above-described indemnification provisions, the
articles of incorporation of First Bancorp have provisions limiting the
liability of directors.
In response to increasing concern over liability exposure of corporate
officers, directors and employees, the Georgia Legislature, in 1987, following
a trend begun by Delaware and followed by several other states, passed
legislation broadening the ability of corporations to relieve corporate
directors of exposure to liability.
As permitted by Georgia law, the articles of incorporation of First
Bancorp were amended in 1990 to limit the standards of conduct required of
directors by providing that no director shall be personally liable to the
corporation or its shareholders for monetary damages for breach of duty of care
or other duty as a director; provided, however, that this provision does not
eliminate or limit the liability of a director:
(a) For any appropriation, in violation of his duties, of any business
opportunity of the corporation;
(b) For acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(c) For the types of liabilities set forth in Official Code of Georgia
Annotated Section 14-2-832 (relating primarily to improper dividends or
other distributions by the corporation);
II-1
<PAGE> 125
(d) For any transaction from which the director derives an improper
personal benefit; or
(e) For any liability or expenses related to any action or omission by
a director occurring prior to the adoption of the amendment.
Further, the right of First Bancorp or its shareholders to seek injunctive or
other equitable relief not involving monetary damages is not limited by the
above provisions.
In general, the effect of the above-referenced statute, the Articles of
First Bancorp and of the bylaws of First Bancorp is that First Bancorp will
indemnify its directors, officers and employees for reasonable expenses and
damages actually incurred in connection with any action, suit or proceeding,
civil or criminal, to which they shall be made a party by reason of their being
or having been directors, officers, or employees of the corporation, provided
that such persons are not finally adjudged to have been guilty of or liable for
gross negligence, willful misconduct or criminal acts in the performance of
their duties for First Bancorp. The bylaws also provide that First Bancorp may
purchase insurance for the purpose of indemnifying its directors, officers and
other employees to the extent that such indemnification is allowed under the
bylaws. Pursuant to the bylaws, the corporation has purchased insurance to
indemnify its officers and directors.
ITEM 21. EXHIBITS FILED.
See Index of Exhibits at sequentially numbered page ____ and Exhibits
immediately following the index.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby further undertakes as follows:
(a) That prior to any public reoffering of the securities hereunder
through the use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the registrant undertakes that such
reoffering prospectus will contain the information called for by Item 7
of Form S-4 with respect to the securities to be so offered, in
addition to the information called for by the other items of Form S-4.
(b) That every prospectus (i) that is filed pursuant to paragraph (a)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering
of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating
to the securities offered therein,
II-2
<PAGE> 126
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one (1) 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.
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.
II-3
<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Gainesville, State of Georgia, this 14th day of January, 1994.
FIRST NATIONAL BANCORP
By: s/Richard A. McNeece
---------------------------------
Richard A. McNeece, Chairman
and C.E.O.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE
1. Principal Executive Officer
s/Richard A. McNeece Director, Chairman and C.E.O.
---------------------------------
Richard A. McNeece
1/14/94
---------------------------------
Date
2. Principal Financial Officer
s/Peter D. Miller Director, President, C.A.O.
--------------------------------- and C.F.O.
Peter D. Miller
1/14/94
---------------------------------
Date
3. Principal Accounting Officer
s/C. Talmadge Garrison Senior Vice President,
--------------------------------- Secretary and Treasurer
C. Talmadge Garrison
1/14/94
---------------------------------
Date
II-4
<PAGE> 128
4. Other Directors
s/J. M. McRae Director and Chairman Emeritus
- ------------------------------------ of the Board
J. M. McRae
1/14/94
- ------------------------------------
Date
s/Richard L. Shockley Director and Vice Chairman
- ------------------------------------ of the Board
Richard L. Shockley
1/14/94
- ------------------------------------
Date
s/Jane Wood Banks Director
- ------------------------------------
Jane Wood Banks
1/14/94
- ------------------------------------
Date
Director
- ------------------------------------
Thomas S. Cheek
- ------------------------------------
Date
s/James H. Harris, Jr. Director
- ------------------------------------
James H. Harris, Jr.
1/14/94
- ------------------------------------
Date
Director
- ------------------------------------
John H. Henderson
- ------------------------------------
Date
s/Ray C. Jones Director
- ------------------------------------
Ray C. Jones
1/14/94
- ------------------------------------
Date
s/Arthur J. Kunzer, Jr. Director
- ------------------------------------
Arthur J. Kunzer, Jr.
1/14/94
- ------------------------------------
Date
Director
- ------------------------------------
J. B. McKibbon, Jr.
- ------------------------------------
Date
Director
- ------------------------------------
Loy D. Mullinax
- ------------------------------------
Date
II-5
<PAGE> 129
Director
- --------------------------------
J. L. Nix
- --------------------------------
Date
Director
- --------------------------------
Edwin C. Poss
- --------------------------------
Date
Director
- --------------------------------
W. Harold Prather
- --------------------------------
Date
s/Paul J. Reeves Director
- --------------------------------
Paul J. Reeves
1/14/94
- --------------------------------
Date
Director
- --------------------------------
A. Roy Roberts, Jr.
- --------------------------------
Date
s/Harold L. Smith Director
- --------------------------------
Harold L. Smith
1/14/94
- --------------------------------
Date
s/W. Woodrow Stewart Director
- --------------------------------
W. Woodrow Stewart
1/14/94
- --------------------------------
Date
Director
- --------------------------------
Bobby M. Thomas
- --------------------------------
Date
Director
- --------------------------------
M. G. West
- --------------------------------
Date
s/Joe Wood, Jr. Director
- --------------------------------
Joe Wood, Jr.
1/14/94
- --------------------------------
Date
II-6
<PAGE> 130
(This is the Exhibit Index included in the original registration statement
(S.E.C. File No. 33-72430) amended by this Amendment No. 1 thereto. None of
these exhibits are being refiled with this Amendment No. 1 since there have
been no changes to any of these exhibits.)
EXHIBIT INDEX
SEQUENTIAL
PAGE
NUMBER
------
2.1 Agreement of Reorganization and Plan of
Merger between First National Bancorp
and Metro Bancorp, Inc. (included
herein as Appendix A to the Proxy
Statement and incorporated
by reference)..................................... Incorporated
by Reference
2.2 Amendment to Agreement of Reorganization
between First National Bancorp and
Metro Bancorp, Inc. (included herein
as Appendix A to the Proxy Statement and
incorporated by reference)........................ Incorporated
by Reference
2.3 Agreement regarding "Criticized Assets"
between First National Bancorp and
Metro Bancorp, Inc................................
2.4 Series A Preferred Stock Redemption Agreement
between Metro Bancorp, Inc. and Bank South, N.A.
to be assigned by Metro Bancorp, Inc. to
First National Bancorp............................
3.1. Articles of Incorporation of First National
Bancorp, as amended (incorporated by reference
in this Registration Statement from Exhibit
3.1 of First National Bancorp's Registration
Statement No. 33-64590 on Form S-4)............... Incorporated
by Reference
3.2. Bylaws of First National Bancorp
currently in effect (incorporated by
reference in this Registration Statement
from Exhibit 3.2 of First National Bancorp's
Registration Statement No. 33-64590 on
Form S-4)......................................... Incorporated
by Reference
5. Opinion of Messrs. Stewart, Melvin &
House, Attorneys re: Validity of
Securities........................................
8. Opinion of Messrs. Stewart, Melvin &
House, Attorneys, re: Tax Aspects of
Reorganization....................................
<PAGE> 131
(This is the Exhibit Index included in the original registration statement
(S.E.C. File No. 33-72430) amended by this Amendment No. 1 thereto. None of
these exhibits are being refiled with this Amendment No. 1 since there have
been no changes to any of these exhibits.)
SEQUENTIAL
PAGE
NUMBER
------
10.1 Short Term Line-of-Credit Note dated
June 3, 1993, by and between First
National Bancorp and Trust Company Bank
(incorporated by reference in this
Registration Statement from Exhibit 10.4 of
First National Bancorp's Registration Statement
No. 33-64590 on Form S-4)......................... Incorporated
by Reference
10.2 Term Loan Agreement, dated August 31,
1992, by and between First National
Bancorp and Trust Company Bank
(incorporated by reference in this
Registration Statement from such document
filed as Exhibit 10.5 to First National Bancorp's
Annual Report on Form 10-K for the year
ended December 31, 1992, SEC File No.
0-10657).......................................... Incorporated
by Reference
10.3 Promissory Term Note, dated October 28,
1992, by and between First National
Bancorp and Trust Company Bank
(incorporated by reference in this
Registration Statement from such document
filed as Exhibit 10.6 to First National Bancorp's
Annual Report on Form 10-K for the year
ended December 31, 1992, SEC File
No. 0-10657)...................................... Incorporated
by Reference
10.4 1988 Employee Stock Option Plan of First
National Bancorp (incorporated by
reference in this Registration Statement
from such document filed on October 14, 1988
as part of First National Bancorp's Registration
Statement No. 33-24985 on Form S-8)............... Incorporated
by Reference
10.5 1990 Employee Stock Option Plan of First
National Bancorp and Amendment thereto
dated July 17, 1991 (incorporated by reference
in this Registration Statement from Exhibit
10.3 of First National Bancorp's Registration
Statement No. 33-64590 on Form S-4)............... Incorporated
by Reference
<PAGE> 132
(This the Exhibit Index included in the original registration statement
(S.E.C. File No. 33-72430) amended by this Amendment No. 1 thereto. None of
these exhibits are being refiled with this Amendment No. 1 since there have
been no changes to any of these exhibits.)
SEQUENTIAL
PAGE
NUMBER
------
10.6 Industrial development revenue bond financing
assumed January 31, 1990, maturing July 1, 2008,
by and between First National Bancorp and the
trustee for the bondholders (incorporated by
reference in this Registration Statement from
such document filed as Exhibit 4.5 of
First National Bancorp's annual report on
Form 10-K for the year ended December 31, 1990)... Incorporated
by Reference
10.7 Change of Control Agreement, dated June 23,
1993, between First National Bancorp and
Richard A. McNeece (incorporated herein by
reference to such document filed as Exhibit 10.7
of First National Bancorp's Registration
Statement No. 33-50422 on Form S-4)............... Incorporated
by Reference
10.8 Change of Control Agreement, dated June 16,
1993, between First National Bancorp and Peter D.
Miller (incorporated herein by reference to
such document filed as Exhibit 10.8 of First
National Bancorp's Registration Statement
No. 33-50422 on Form S-4)......................... Incorporated
by Reference
10.9 Change of Control Agreement, dated June 16,
1993, between First National Bancorp and
C. Talmadge Garrison (incorporated herein by
reference to such document filed as Exhibit 10.9
of First National Bancorp's Registration
Statement No. 33-50422 on Form S-4)............... Incorporated
by Reference
10.10 Change of Control Agreement, dated June 24,
1993, between First National Bancorp and Richard D.
White (incorporated herein by reference to
such document filed as Exhibit 10.10 of First
National Bancorp's Registration Statement
No. 33-50422 on Form S-4)......................... Incorporated
by Reference
10.11 1993 Employee Stock Option Plan of First
National Bancorp (incorporated by reference
in this Registration Statement from such
document filed as Exhibit 10.11 of First National
Bancorp's Registration Statement No. 33-64590
on Form S-4)...................................... Incorporated
by Reference
<PAGE> 133
(This is the Exhibit Index included in the original registration statement
(S.E.C. File No. 33-72430) amended by this Amendment No. 1 thereto. None of
these exhibits are being refiled with this Amendment No. 1 since there have
been no changes to any of these exhibits.)
SEQUENTIAL
PAGE
NUMBER
------
10.12 First National Bancorp Incentive Compensation Plan
(incorporated by reference in this Registration
Statement from such document filed as Exhibit 10.12
of First National Bancorp's Registration Statement
No. 33-64590 on Form S-4)........................... Incorporated
by Reference
13.1 1992 Annual Report to Security Holders..............
13.2 First National Bancorp's Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1993..................................
21. Subsidiaries of the Registrant......................
23.1 Consent of KPMG Peat Marwick .......................
23.2 Consent of Evans, Porter, Bryan & Company...........
23.3 Consent of Stewart, Melvin & House..................
99.1 First National Bancorp's Annual Report
on Form 10-K for the year ended
December 31, 1992...................................
99.2 First National Bancorp 1993 Annual
Meeting Proxy Statement ...........................
99.3 First National Bancorp Current Report
on Form 8-K, dated June 11, 1993....................
<PAGE> 134
METRO BANCORP, INC.
6636 CHURCH STREET
DOUGLASVILLE, GEORGIA 30134
COMMON STOCK PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints _________________, _______________,
_____________, or any of them (with full power to act alone and to appoint a
substitute), as Proxies, and hereby authorizes them to represent and to vote,
as designated below, all the shares of common stock of Metro Bancorp, Inc. held
of record by the undersigned on January 20, 1994, at the special meeting of
shareholders to be held on February 22, 1994, or any adjournment thereof.
1. To vote as indicated below on the proposal to merge Metro Bancorp,
Inc. into First National Bancorp as outlined in the Proxy Statement dated the
18th day of January, 1994.
FOR / / AGAINST / / ABSTAIN / /
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
Please sign exactly as name appears below. When shares are held by joint
___________________________ tenants both should sign. When
signing as attorney, as executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated: ________________ ---------------------------------
Signature
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY, ---------------------------------
USING THE ENCLOSED ENVELOPE Signature if held jointly
<PAGE> 135
METRO BANCORP, INC.
6636 CHURCH STREET
DOUGLASVILLE, GEORGIA 30134
PREFERRED STOCK PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints _________________, _______________,
_____________, or any of them (with full power to act alone and to appoint a
substitute), as Proxies, and hereby authorizes them to represent and to vote,
as designated below, all the shares of Series 1992 preferred stock of Metro
Bancorp, Inc. held of record by the undersigned on January 20, 1994, at the
special meeting of shareholders to be held on February 22, 1994, or any
adjournment thereof.
1. To vote as indicated below on the proposal to merge Metro Bancorp,
Inc. into First National Bancorp as outlined in the Proxy Statement dated the
18th day of January, 1994.
FOR / / AGAINST / / ABSTAIN / /
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
Please sign exactly as name appears below. When shares are held by joint
tenants both should sign. When
signing as attorney, as executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated: ________________ ---------------------------------
Signature
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY, ---------------------------------
USING THE ENCLOSED ENVELOPE Signature if held jointly
