As filed with the Securities and Exchange Commission on January __, 2001
Registration No. 333-_____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------
CAPITAL CITY BANK GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 6022 59-2273542
------------------------------- ---------------------------- -----------------
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
217 North Monroe Street
Tallahassee, Florida 32301
(850) 671-0300
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
J. Kimbrough Davis
Executive Vice President
Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 32301
(850) 671-0300
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
--------------------
Robert B. Lamm Walter G. Moeling, IV
Gunster, Yoakley & Stewart, P.A. Powell, Goldstein, Frazer & Murphy LLP
777 South Flagler Drive, Suite 500 East 191 Peachtree Street, N.E., Suite 1600
West Palm Beach, Florida 33401 Atlanta, Georgia 30303
Telephone: (561) 655-0731 Telephone: (404) 572-6600
--------------------
Approximate date of commencement of proposed sale of securities to
the public: As soon as practicable after this Registration Statement
becomes effective.
If the securities being registered on this form are being offered
in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. |_|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
|_| _____________________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
_____________________
----------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities to be Amount to be Offering Price Per Aggregate Offering Registration
Registered Registered(1) Share Price(2) Fee(2)
--------------------------------------- -------------- ------------------ ------------------- ------------
<S> <C> <C> <C> <C>
Common stock, par value $.01 per share 701,000 shares N/A $12,853,473 $3,213
(1) This Registration Statement covers the maximum number of shares of
the common stock of the Registrant which is expected to be issued in
connection with the merger.
(2) Pursuant to Rule 457(f), the proposed maximum aggregate offering
price and the amount of the registration fee were computed based on the
aggregate book value of the common stock of First Bankshares of West
Point, Inc. being exchanged in the merger. On October 31, 2000, the
book value of First Bankshares common stock was $84.53 per share and
First Bankshares had 192,481 shares of common stock issued and
outstanding. In addition, the proposed maximum aggregate offering
price and the amount of the registration fee were reduced in accordance
with Rule 457(f) due to the cash component of the merger consideration,
which is fixed at $17.7543 in cash per share of First Bankshares common
stock.
</TABLE>
--------------------
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
FIRST BANKSHARES OF WEST POINT, INC.
3rd Avenue and West 10th Street
West Point, Georgia 31833
To the shareowners of ____________, 2001
First Bankshares of West Point, Inc.
I am pleased to invite you to attend a Special Meeting of the
shareowners of First Bankshares of West Point, Inc. to be held at the
Riverside Country Club, 2001 Country Club Road, Lanett, Alabama, on
____________________________, 2001, at 10:00 a.m., EST.
At the Special Meeting, you will be asked to approve the Agreement
and Plan of Merger between First Bankshares and Capital City Bank
Group, Inc., whereby First Bankshares will merge with Capital City.
When the merger is completed, each outstanding share of First
Bankshares common stock (except for shares held by First Bankshares,
Capital City or their subsidiaries, and shares held by shareowners of
First Bankshares who exercise their dissenters' rights) will be
exchanged for 3.6419 shares of Capital City common stock and $17.7543
in cash. Capital City will pay First Bankshares shareowners cash
instead of issuing any fractional shares in the merger.
Your Board believes that the merger will have many benefits. We
believe that the combined company will have greater financial strength
and greater opportunity and flexibility to expand and diversify. Your
Board of Directors unanimously approved the Agreement and Plan of
Merger and recommends that you approve it. The merger is subject to
certain conditions, including approval of the Agreement and Plan of
Merger by the affirmative vote of holders of a majority of the
outstanding common stock of First Bankshares represented, in person or
by proxy, at the Special Meeting, and approval of the merger by various
regulatory agencies.
This Proxy Statement/Prospectus provides detailed information
about the merger. We urge you to read this entire document carefully,
including the risk factors considered by Capital City's and First
Bankshares' Boards of Directors beginning on page 18. You can also get
information about Capital City from the SEC. Capital City's common
stock is traded on the Nasdaq National Market under the symbol "CCBG."
Whether or not you plan to attend the Special Meeting, you are
urged to complete, sign, and promptly return the enclosed proxy card.
If you attend the Special Meeting, you may vote in person if you wish,
even if you have previously returned your proxy card. The merger is a
significant step for First Bankshares and your vote on this matter is
of great importance.
On behalf of the Board of Directors, I strongly urge you to vote
FOR approval of the Agreement and Plan of Merger by marking the
enclosed proxy card "FOR" item one.
We look forward to seeing you at the Special Meeting.
Sincerely,
Scott A. Huguley
Chairman of the Board
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Neither the Securities and Exchange Commission nor any state securities
regulatory body has approved or disapproved of the securities to be
issued under this Proxy Statement/Prospectus or determined if this
Proxy Statement/Prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
The securities offered hereby are not savings accounts or deposit
accounts or other obligations of any bank or savings association and
they are not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund, the Savings Association Insurance Fund, or any
other government agency.
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This Proxy Statement/Prospectus is dated ______________, 2001, and
was first mailed to shareowners on _______________, 2001.
PROPOSED MERGER OF FIRST BANKSHARES OF WEST POINT, INC.
WITH CAPITAL CITY BANK GROUP, INC.
NOTICE OF SPECIAL MEETING OF SHAREOWNERS
TO BE HELD ____________________, 2001
A special meeting of the shareowners (the "Special Meeting") of
First Bankshares of West Point, Inc. will be held at the Riverside
Country Club, located at 2001 Country Club Road, Lanett, Alabama, on
_________________, 2001, at 10:00 a.m., EST, for the following
purposes:
* To vote on an Agreement and Plan of Merger, pursuant to which,
among other matters, First Bankshares of West Point, Inc., a Georgia
corporation, will merge with and into Capital City Bank Group, Inc., a
Florida corporation.
* To transact any other business that properly comes before the
special meeting, or any adjournments or postponements of the Special
Meeting.
In connection with the merger, each share of First Bankshares
common stock outstanding at the effective time of the merger will be
exchanged for 3.6419 shares of Capital City common stock and $17.7543
in cash, as more fully described in the accompanying Proxy
Statement/Prospectus. A copy of the Agreement and Plan of Merger is
attached to the Proxy Statement/Prospectus as Appendix A.
The Board of Directors of First Bankshares is not aware of any
other business to be presented to a vote at the special meeting.
Only shareowners of record at the close of business on
________________, 2001, will be entitled to notice of and to vote at
the special meeting or any adjournments. Approval of the Agreement and
Plan of Merger requires the affirmative vote of a majority of the
issued and outstanding shares of First Bankshares common stock on that
record date represented, in person or by proxy, at the Special Meeting.
The Board of Directors of First Bankshares unanimously recommends
that shareowners vote FOR approval of the Agreement and Plan of Merger.
BY ORDER OF THE BOARD OF DIRECTORS
Scott A. Huguley
Chairman of the Board
West Point, Georgia
_______________, 2001
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Whether or not you plan to attend the special meeting, please complete,
date, and sign the enclosed form of proxy and promptly return it in the
enclosed postage paid return envelope in order to ensure that your
shares will be represented at the special meeting.
Title 14, Chapter 2, Article 13 of the Georgia Business Corporation
Code provides that each First Bankshares shareowner may dissent from
the Agreement and Plan of Merger and demand payment of the fair value
of his or her shares in cash if the merger is consummated. The right
of any shareowner to receive such payment is contingent upon strict
compliance with the provisions of Title 14, Chapter 2, Article 13 of
the Georgia Code. We have included for your review the full text of
Title 14, Chapter 2, Article 13 of the Georgia Code in Appendix D to
the accompanying Proxy Statement/Prospectus. See "DESCRIPTION OF THE
MERGER--Dissenters' Rights" in the accompanying Proxy
Statement/Prospectus, page 37.
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TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION ABOUT CAPITAL CITY 1
A WARNING ABOUT FORWARD-LOOKING STATEMENTS 2
QUESTIONS AND ANSWERS ABOUT THE MEETING 4
SUMMARY 5
The Companies 5
The Merger 6
Our Reasons for the Merger 6
Recommendation to First Bankshares Shareowners 8
Fairness Opinion 8
First Bankshares Special Shareowner Meeting 8
Record Date for Special Shareowner Meeting 8
Vote Required 8
What First Bankshares Shareowners will Receive 9
Regulatory Approvals 9
Conditions to the Merger 9
Interests of Officers and Directors in the Merger that are Different
from Yours 10
Important Federal Income Tax Consequences of the Merger 11
Accounting Treatment of the Merger 11
Stock Option Agreement 11
Certain Differences in Shareowners' Rights 12
Comparative Market Prices of Common Stock 12
Listing of Capital City Common Stock 12
Risk Factors 12
Recent Developments in Capital City's Business 13
Historical and Pro Forma Comparative Per Share Data 14
Selected Financial Data 15
RISK FACTORS 18
There are Restrictions on Capital City's Ability to Pay Dividends 19
MEETING OF FIRST BANKSHARES SHAREOWNERS 20
Date, Place, Time, and Purpose 20
Record Date, Voting Rights, Required Vote, and Revocability of
Proxies 20
DESCRIPTION OF THE MERGER 22
General 22
Background of And Reasons for the Merger 23
First Bankshares' Reasons for the Merger and Recommendation of
Directors 24
Fairness Opinion Of First Bankshares' Financial Adviser 25
Capital City's Reasons For The Merger 29
Effective Time of the Merger 30
Distribution of Capital City Stock Certificates 31
Conditions to Consummation of the Merger 32
Foster Loan 34
Regulatory Approvals 34
Waiver, Amendment, and Termination 35
Dissenters' Rights 37
Conduct of Business Pending the Merger 40
Management and Operations after the Merger; Interests of Certain
Persons in the Merger 44
Stock Option Agreement 46
Certain Federal Income Tax Consequences 48
Accounting Treatment 50
Expenses and Fees 51
Resales of Capital City Common Stock 51
DESCRIPTION OF CAPITAL CITY CAPITAL STOCK 53
EFFECT OF THE MERGER ON RIGHTS OF SHAREOWNERS 53
Anti-Takeover Provisions Generally 53
Authorized Capital Stock 54
Amendment Of Articles Of Incorporation And Bylaws 56
Classified Board Of Directors And Absence Of Cumulative Voting 57
Director Removal And Vacancies 58
Indemnification 58
Special Meetings Of Shareowners 61
Ability Of Directors To Consider Interests Other Than Shareowners'
Interests 62
Actions By Shareowners Without A Meeting 63
Shareowner Nominations 63
Shareowner Votes Required For Certain Actions 63
Dissenters' Rights Of Appraisal 66
Shareowners' Rights To Examine Books And Records 67
Dividends 67
COMPARATIVE MARKET PRICES AND DIVIDENDS 67
Price Range of Common Stock 67
Stock Purchase Program 69
Comparative Dividends 69
BUSINESS OF FIRST BANKSHARES 72
General 72
Management Stock Ownership 72
Beneficial Owner 72
Voting Securities and Principal Shareowners of First Bankshares 73
Management's Discussion and Analysis of Financial Condition and
Results of Operations 73
BUSINESS OF CAPITAL CITY 107
General 107
Banking Services 107
Data Processing Services 108
Trust Services 108
Brokerage Services 108
Directors and Executive Officers 109
FINANCIAL INFORMATION 111
Pro Forma Consolidated Statements of Income 111
Pro Forma Consolidated Statements of Income 112
Pro Forma Consolidated Balance Sheet 114
CAPITAL CITY BANK GROUP, INC. & FIRST BANKSHARES OF WEST POINT, INC.
MARKET VALUE OF SECURITIES AS OF SEPTEMBER 30, 2000 117
First Bankshares of West Point, Inc. and Subsidiaries 119
Supplemental Financial Information 119
SHAREOWNER PROPOSALS 123
EXPERTS 123
LEGAL MATTERS 123
OTHER MATTERS 123
Appendix A - AGREEMENT AND PLAN OF MEGER BY AND BETWEEN CAPITAL CITY
BANK GROUP, INC. AND FIRST BANKSHARES OF WEST POINT,
INC., DATED AS OF SEPTEMBER 25, 2000 A-1
Appendix B - BANK PLAN OF MERGER B-1
Appendix C - STOCK OPTION AGREEMENT C-1
Appendix D - DISSENTERS' RIGHTS D-1
Appendix E - FAIRNESS OPINION OF BROWN, BURKE CAPITAL PARTNERS, INC. E-1
Appendix F - CAPITAL CITY 1999 FORM 10-K F-1
WHERE YOU CAN FIND MORE INFORMATION ABOUT CAPITAL CITY
Capital City files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy
any materials Capital City files with the SEC at the SEC's Public
Reference Room at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You should call the SEC at 1-800-SEC-0330 for
further information on the operation of the Public Reference Room. The
SEC also maintains a Web site that contains reports, proxy and
information statements and other information about Capital City. The
address of the SEC Web site is http://www.sec.gov.
Capital City filed a Registration Statement on Form S-4 to
register with the SEC the shares that Capital City will issue to First
Bankshares shareowners in the merger. This Proxy Statement/Prospectus
is a part of the Registration Statement but does not include all of the
information contained in the Registration Statement. For further
information about Capital City and the securities offered in this Proxy
Statement/Prospectus, you should review the Registration Statement at
the SEC's Public Reference Room or on its Web site.
The SEC allows Capital City to "incorporate by reference"
information into the Proxy Statement/Prospectus, which means that
Capital City can disclose important information to you by referring you
to another document filed separately with the SEC. The information
incorporated by reference is considered part of this Proxy
Statement/Prospectus, except when superseded by information contained
in this Proxy Statement/Prospectus or in later filed documents
incorporated by reference in this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus incorporates by reference the
documents listed below that Capital City previously filed with the SEC.
These documents contain important information about Capital City and
its finances. Some filings have been amended by later filings, which
are also listed.
* Annual Report on Form 10-K for the fiscal year ended December 31,
1999; and
* Quarterly Report on Form 10-Q for the quarter ended September 30,
2000.
Capital City also incorporates by reference additional documents
that it may file with the SEC between the date of this Proxy
Statement/Prospectus and the completion of the merger or the
termination of the Agreement and Plan of Merger. These additional
documents include periodic reports, such as Annual Reports on Form 10-
K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
We are providing you with a copy of Capital City's Annual Report
to Shareowners for the fiscal year ended December 31, 1999 and a copy
of Capital City's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000. These documents provide more information about
Capital City and its finances.
You may obtain other documents incorporated by reference in this
Proxy Statement/Prospectus by requesting them from:
J. Kimbrough Davis
Executive Vice President and Chief Financial Officer
Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 32301
Telephone: (850) 671-0300
In order to ensure timely delivery of the documents, you should
request them no later than __________, 2001.
PLEASE NOTE
Neither Capital City nor First Bankshares has authorized anyone to
give any information or make any statement about the merger or either
companies that differ from, or adds to, the information in the Proxy
Statement/Prospectus or in other documents filed with the SEC.
Therefore, if anyone gives you different or additional information, you
should not rely on it.
If you reside in a jurisdiction where it is unlawful to offer to
exchange or sell, or to ask for offers to exchange or buy, the
securities offered by this Proxy Statement/Prospectus or to ask for
proxies, or if you are a person to whom it is unlawful to direct such
activities, then the offer presented by this Proxy Statement/Prospectus
does not extend to you.
The information contained in this Proxy Statement/Prospectus
speaks only as of its date unless the information specifically
indicates that another date applies.
Information in this Proxy Statement/Prospectus about Capital City
has been supplied by Capital City, and information about First
Bankshares has been supplied by First Bankshares.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this Proxy
Statement/Prospectus (and in other documents filed with the SEC) that
are subject to risks and uncertainties. These statements are based on
the beliefs and assumptions of Capital City's and First Bankshares'
managements and on information currently available to members of
management. These forward-looking statements include information about
possible or assumed future results of operations or the performance of
Capital City after the merger. Many possible events or factors could
cause results or performance to differ materially from those expressed
in our forward-looking statements.
You should consider the following possible events or factors when
you vote on the merger:
* the restructuring costs are higher than we expect or the operating
costs after the merger are greater than expected;
* we lose more deposits, customers, or business than we expect;
* competition in the banking industry increases significantly;
* the cost savings from the merger are less than we expect, or we
are unable to raise those cost savings as soon as we expect;
* technological changes and systems integration are harder to make
or more expensive than we expect;
* changes in the interest rate environment reduce margins;
* legislative or regulatory changes adversely affect our business;
* we have more trouble obtaining regulatory approvals for the merger
than we expect.
See also "RISK FACTORS" in this Proxy Statement/Prospectus, on page 18.
QUESTIONS AND ANSWERS ABOUT THE MEETING
Q(1): WHAT AM I BEING ASKED TO Example: If you own 1,000
APPROVE? shares of First Bankshares
common stock, upon completion
A: You are being asked to approve of the merger, you will
the Agreement and Plan of receive 3,641 shares of
Merger providing for the Capital City common stock and
merger of First Bankshares a check for $17,754.30 plus
into Capital City. the amount due you for a
fraction share discussed
Q(2): WHY IS FIRST BANKSHARES above.
MERGING WITH CAPITAL CITY?
Q(4): WHAT HAPPENS AS THE
A: The merger will enable First MARKET PRICE OF CAPITAL CITY
Bankshares shareowners to hold COMMON STOCK FLUCTUATES?
stock in a larger and more
diversified entity whose A: The exchange ratio is not
shares are more widely held based on the market price of
and more actively traded. Capital City common stock and
Capital City's common stock is is not expected to change.
traded on the Nasdaq stock Since the market value of
market under the symbol Capital City common stock will
"CCBG." The merger will also fluctuate before and after the
enable First Bankshares to closing date of the merger,
better serve our customers the value of the stock you
with more products and will receive in the merger
services. Based upon these will fluctuate as well and
and other factors, we believe could decrease.
that the merger is in the best
interest of the First Q(5): WHEN DO YOU EXPECT THE
Bankshares shareowners. We MERGER TO BE COMPLETED?
provide the background and
reasons for the merger, A: We expect to complete the
starting on page 23. merger on or before the end of
the first quarter of 2001.
Q(3): AS A FIRST BANKSHARES The merger must be approved by
SHAREOWNER, WHAT WILL I the First Bankshares
RECEIVE IN THE MERGER? shareowners and by certain
regulatory agencies, including
A: Capital City will pay you a the Federal Reserve Board, the
combination of 3.6419 shares Florida Department of Banking
of Capital City common stock and Finance and the Georgia
and $17.7543 in cash for each Department of Banking and
share of First Bankshares Finance. Additional approvals
common stock you own. by or notices to other Georgia
However, Capital City will not and Florida state authorities
issue any fractional shares. may be necessary.
Instead, Capital City will pay
you cash for any fraction of a Q(6): WHAT ARE THE TAX
Capital City share based upon CONSEQUENCES OF THE MERGER TO
the average closing price of ME?
Capital City common stock for
the 10 trading days A: We expect that for U.S.
immediately prior to the federal income tax purposes,
merger. your exchange of First
<PAGE>
Bankshares common stock for your proxy will be voted in
Capital City common stock in favor of the proposal to
the merger generally will not approve the merger. If you do
cause you to recognize any not sign and send in your
gain or loss. You will, proxy or attend and vote in
however, have to recognize favor of the merger at the
gain in connection with any Special Meeting, your failure
cash received in the merger. to vote will not count as a
In addition, shareowners who vote either for or against the
exercise dissenters' rights merger. The meeting is
may recognize gain or loss in scheduled for _______, 2001.
the exchange of their shares You are invited to the meeting
for cash. to vote your shares in person
rather than signing and
We provide a more detailed mailing your proxy card. If
review of the U.S. federal you do sign your card, you can
income tax consequences of the take back your proxy up to and
merger at page 48 of this including the time of the vote
Proxy Statement/Prospectus. at the meeting and either
change your vote or attend the
Q(7): AS A FIRST BANKSHARES meeting and vote in person.
SHAREOWNER, DO I HAVE TO We provide more detailed
ACCEPT CAPITAL CITY COMMON instructions about voting
STOCK IN EXCHANGE FOR MY starting on page 20.
SHARES IF THE MERGER IS
APPROVED? Q(9): SHOULD I SEND IN MY STOCK
CERTIFICATES NOW?
A: No. If you are a First
Bankshares shareowner and you A: No. After the merger is
follow the procedures completed, you will be sent
prescribed by Georgia law, you written instructions
may dissent from the merger explaining how to exchange
and receive the fair value of your First Bankshares common
your stock. If you follow stock certificates for Capital
those procedures, you won't City common stock certificates
receive Capital City common and the cash portion of the
stock. Instead, the fair consideration.
value of your First Bankshares
stock, determined in the Q(10): WHO CAN HELP ANSWER MY
manner prescribed by Georgia QUESTIONS?
law, will be paid to you in
cash. A: If you want additional copies
of this document, or if you
Q(8): WHAT SHOULD I DO NOW? want to ask any questions
about the merger, you should
A: Just indicate on your proxy contact:
card how you want to vote,
sign it and mail it in the Scott A. Huguley
enclosed envelope as soon as First Bankshares of West Point, Inc.
possible, so that your shares 3rd Avenue and West 10th Street
will be represented at your West Point, Georgia 31833
meeting. If you sign and send (706) 645-2944
in your proxy and do not
indicate how you want to vote,
SUMMARY
This summary highlights selected information contained
elsewhere in this Proxy Statement/Prospectus. Because this is a
summary, it does not contain all of the information that may be
important to you. You should read the entire Proxy
Statement/Prospectus and its appendices carefully before you
decide to vote. We have included page references in this summary
to direct you to other places in this Proxy Statement/Prospectus
where you can find a more complete description of the topics we
have summarized.
The Companies
(See Page 72 for First Bankshares, Page 107 for Capital City)
First Bankshares of West Point, Inc.
3rd Avenue and West 10th Street
West Point, Georgia 31833
(706) 645-2944
First Bankshares is a Georgia bank holding company
headquartered in West Point, Georgia. First Bankshares is the
sole shareowner of First National Bank of West Point, which has
its main banking office in West Point, Georgia, and two (2)
branches in Valley, Alabama. First National is a community-based
financial institution that offers a broad range of banking and
banking-related products and services, including deposit
accounts, retail and commercial banking services, small business
lending and residential and commercial real estate lending. As
of September 30, 2000, First Bankshares had total consolidated
assets of approximately $156.5 million, total consolidated
deposits of approximately $114.4 million, and total consolidated
shareowners' equity of approximately $15.6 million.
Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 32301
(850) 671-0300
Capital City is a $1.5 billion financial services company
headquartered in Tallahassee, Florida providing traditional
deposit and credit services, asset management, trust, mortgage
banking, credit cards, data processing, securities brokerage
services, and electronic home and business banking products.
Founded in 1895, Capital City has 47 banking offices, 51 ATMs,
and 9 Bank 'N Shop locations in 19 Florida and Georgia counties.
The Merger
(See Page 22)
The Agreement and Plan of Merger, provides for Capital
City's acquisition of First Bankshares by the merger of First
Bankshares with and into Capital City. A copy of the Agreement
and Plan of Merger is included as Appendix A to this Proxy
Statement/Prospectus. We encourage you to read the Agreement and
Plan of Merger because it is the legal document that governs the
merger.
Our Reasons for the Merger
(See Page 23)
The First Bankshares Board of Directors believes that the
merger is in the best interest of First Bankshares and its
shareowners. The First Bankshares Board of Directors has
unanimously approved the Agreement and Plan of Merger. In
deciding to approve the Agreement and Plan of Merger, the First
Bankshares Board of Directors considered a number of factors,
including:
* the value of the consideration to be received by First
Bankshares shareowners relative to the book value and earnings
per share of First Bankshares common stock;
* certain information concerning the financial condition,
results of operations and business prospects of Capital City;
* the financial terms of recent business combinations in the
financial services industry and a comparison of the multiples of
selected combinations with the proposed transaction with Capital City;
* the alternatives to the merger, including remaining an independent
institution;
* the competitive and regulatory environment for financial
institutions generally;
* the fact that the merger will enable First Bankshares
shareowners to exchange their shares of First Bankshares common
stock, in a partially tax-free transaction, for cash and shares
of common stock of a larger company, the stock of which is more
widely held and more liquid than that of First Bankshares; and
* the opinion of Brown, Burke Capital Partners, Inc. that the
considerations to be received by First Bankshares shareowners as
a result of the merger is fair from a financial point of view.
The Capital City Board of Directors believes that the merger
is in the best interests of Capital City and its shareowners.
The Capital City Board of Directors has unanimously approved the
Agreement and Plan of Merger. In deciding to approve the
Agreement and Plan of Merger, the Capital City Board of Directors
considered a number of factors, including:
* a review, based in part on a presentation by Capital City's
management, of
- the business, operations, earnings, and financial
condition, including the capital levels and asset
quality, of First Bankshares on an historical,
prospective, and pro forma bases and in comparison
to other financial institutions in the area,
- the demographic, economic, and financial
characteristics of the markets in which First
Bankshares operates, including existing
competition, history of the market areas with
respect to financial institutions, and average
demand for credit, on an historical and
prospective bases, and
- the results of Capital City's due diligence review
of First Bankshares; and
* the likelihood of regulators approving the merger without
undue conditions or delay;
* the compatibility and the community bank orientation of both
Capital City and its subsidiaries and First Bankshares and its
subsidiaries; and
* a variety of factors affecting and relating to the overall
strategic focus of Capital City.
The Boards of Directors of First Bankshares and Capital City
believe that the merger will result in a company with expanded
opportunities for profitable growth and that the combined
resources and capital of First Bankshares and Capital City will
provide the combined company with greater ability to compete in
the changing and competitive financial services industry.
Recommendation to First Bankshares Shareowners
(See Page 24)
The First Bankshares Board believes that the merger of First
Bankshares with and into Capital City is in the best interests of
First Bankshares and First Bankshares' shareowners. The First
Bankshares Board unanimously recommends that you vote FOR the
merger.
Fairness Opinion
(See Page 25)
In deciding to approve the merger, we have considered an
opinion from our financial adviser, Brown, Burke Capital
Partners, Inc., that the price to be paid to First Bankshares
shareowners is fair, from a financial point of view. The full
text of this opinion is attached to this Proxy
Statement/Prospectus as Appendix E. We encourage you to read
this opinion.
First Bankshares Special Shareowner Meeting
(See Page 20)
The Special Meeting will be held at Riverside Country Club,
located at 2001 Country Club Road, Lanett, Alabama, on
_______________, _________________________, 2001, at 10:00 a.m.,
EST. The First Bankshares Board of Directors is soliciting
proxies for use at the Special Meeting. At the Special Meeting,
the First Bankshares Board of Directors will ask the First
Bankshares shareowners to vote on a proposal to approve the
Agreement and Plan of Merger.
Record Date for Special Shareowner Meeting
(See Page 20)
You may vote at the Special Meeting if you owned shares of
First Bankshares common stock of record as of the close of
business on _______________, _______________________, 2001. You
will have one vote for each share of First Bankshares common
stock you owned as of that date. You may revoke your proxy at
any time prior to the vote at the Special Meeting.
Vote Required
(See Page 20)
Shareowners holding a majority of the outstanding shares of
First Bankshares common stock entitled to vote at the Special
Meeting must be present in person or by proxy at the Special
Meeting.
In order to approve the merger, shareowners holding a
majority of the outstanding shares of First Bankshares common
stock represented in person or by proxy at the Special Meeting
must approve the Agreement and Plan of Merger. At the Record
Date, all directors and executive officers of First Bankshares as
a group (10 persons) could vote approximately 32,491 shares of
First Bankshares common stock, constituting approximately 16.88%
of the total number of shares of First Bankshares common stock
outstanding at that date. The First Bankshares directors and
executive officers have committed to vote their shares of First
Bankshares common stock in favor of the merger.
What First Bankshares Shareowners will Receive
(See Page 31)
Under the Agreement and Plan of Merger, Capital City will
pay First Bankshares shareowners 3.6419 shares of Capital City
common stock and $17.7543 in cash for each share of First
Bankshares common stock that they own. First Bankshares
shareowners will not receive fractional shares of Capital City
common stock. Instead, they will receive a payment for any
fractional shares based on the market value of Capital City
common stock. The payment will be determined by multiplying the
fractional share by the average closing price of one share of
Capital City common stock on the Nasdaq National Market during
the 10 trading days before the merger is completed.
Once the merger is complete, Capital City's transfer agent
will mail you materials and instructions for exchanging your
First Bankshares stock certificates for Capital City stock
certificates and the cash portion of the consideration. You
should not send in your First Bankshares stock certificates until
you receive the transmittal materials and instructions from
Capital City's transfer agent.
Regulatory Approvals
(See Page 35)
We cannot complete the merger until we receive the approval
of the Federal Reserve Bank of Atlanta, the Georgia Department of
Banking and Finance and the Florida Department of Banking and
Finance. Capital City and First Bankshares have filed
applications with the Federal Reserve, the Georgia Department and
the Florida Department seeking approval of the merger. The
approvals of the bank regulators may impose conditions or
restrictions that, in the opinion of Capital City and/or First
Bankshares, would have a material adverse effect on the economic
or business benefits of the merger. In that event, Capital City
and First Bankshares may terminate the Agreement and Plan of
Merger by mutual consent.
Conditions to the Merger
(See Page 32)
The completion of the merger depends upon Capital City and
First Bankshares satisfying a number of conditions, including:
* the holders of a majority of First Bankshares common stock
entitled to vote at the Special Meeting must be represented in
person or by proxy at the Special Meeting;
* the holders of a majority of the outstanding First
Bankshares common stock represented in person or by proxy at the
Special Meeting must approve the Agreement and Plan of Merger;
* Capital City and First Bankshares must receive all required
regulatory approvals and any waiting periods required by law must
have passed; and
* Capital City and First Bankshares must receive a legal
opinion confirming the tax-free nature of the merger.
Termination of the Agreement and Plan of Merger (See Page 35)
Either Capital City or First Bankshares may terminate the
Agreement and Plan of Merger without completing the merger if,
among other things, any of the following occurs:
* the merger is not completed by March 31, 2001;
* the holders of a majority of First Bankshares common stock
do not approve the Agreement and Plan of Merger; or
* the other party breaches or materially fails to comply with
any of its representations or warranties or obligations under the
Agreement and Plan of Merger.
Dissenters' Rights (See Page 37 and Appendix D)
Each holder of First Bankshares common stock who perfects
his or her rights is entitled to the rights and remedies of a
dissenting shareowner under Title 14, Chapter 2, Article 13 of
the Georgia Business Corporation Code, subject to compliance with
the procedures set forth in this Appraisal Statute. A dissenting
shareowner who has perfected his dissenter's rights is entitled
to receive an amount in cash equal to the "fair value" of his
holder's shares. A copy of Appraisal Statute is set forth in
Appendix D to this Proxy Statement/Prospectus and a summary is
included under "DESCRIPTION OF THE MERGER--Dissenters' Rights."
To perfect dissenters' rights, a shareowner must comply with the
provisions of the Appraisal Statute which require, among other
things, that the shareowner deliver to First Bankshares, prior to
the vote at the Special Meeting, written notice of his intention
to demand payment for his shares if the merger is effectuated and
that such shareowner not vote his shares in favor of the
Agreement and Plan of Merger. Any First Bankshares shareowner
who returns a signed proxy but fails either to provide
instructions as to the manner in which his shares are to be
voted, or to revoke such proxy, will be deemed to have voted in
favor of the Agreement and Plan of Merger and thus will not be
entitled to assert dissenters' rights.
Interests of Officers and Directors in the Merger that are
Different from Yours
(See Page 44)
Certain members of First Bankshares' management and Board of
Directors have interests in the merger that are in addition to
their interests as shareowners of First Bankshares.
The Agreement and Plan of Merger contains provisions for the
indemnification of First Bankshares directors and officers by
Capital City, and provisions for the officers and employees of
First Bankshares to receive certain employee benefits that
Capital City already provides to its officers and employees.
The Capital City and First Bankshares Boards of Directors
were aware of these interests and took them into account in
approving the Agreement and Plan of Merger.
Important Federal Income Tax Consequences of the Merger
(See Page 48)
We expect that Capital City, First Bankshares and their
shareowners will not recognize any gain or loss for U.S. federal
income tax purposes from the merger, except for the cash portion
of the consideration paid to First Bankshares shareowners for
their First Bankshares common stock and where First Bankshares
shareowners receive cash instead of fractional shares. Both
parties have received a legal opinion that this will be the case.
This legal opinion is filed as an exhibit to the Registration
Statement of which this Proxy Statement/Prospectus is a part.
However, the opinion does not bind the Internal Revenue Service,
which could take a different view. In addition, this tax
treatment will not apply to any First Bankshares shareowner who
receives cash for his shares due to the exercise of dissenters'
rights. Determining the actual tax consequences of the merger to
you as an individual taxpayer can be complicated. The tax
treatment also may depend upon facts that are unique to your
specific situation. Accordingly, you should consult your own tax
adviser for a full understanding of the tax consequences of the
merger.
Accounting Treatment of the Merger
(See Page 19)
The merger will be accounted for as a "purchase," as that
term is used under generally accepted accounting principles, for
accounting and financial reporting purposes. Under purchase
accounting, the assets and liabilities of First Bankshares as of
the effective time of the merger will be recorded at their
respective fair values and added to those of Capital City. Any
excess of purchase price over the fair values is recorded as
goodwill. Financial statements of Capital City issued after the
merger would reflect such fair values and would not be restated
retroactively to reflect the historical financial position or
results of operations of First Bankshares.
Stock Option Agreement
(See Page 46)
Execution of the Stock Option Agreement, dated as of
September 25, 2000, by and between Capital City and First
Bankshares was a condition to Capital City's merger proposal.
Pursuant to the Stock Option Agreement, First Bankshares granted
Capital City an option (the "Option") to purchase up to 38,304
shares of First Bankshares common stock, representing
approximately 19.9% of the issued and outstanding shares of First
Bankshares common stock without giving effect to the shares
issuable upon exercise of the Option, at an exercise price of
$80.42, subject to the terms and conditions set forth in the
Stock Option Agreement. The Option may only be exercised upon the
occurrence of certain events (none of which have occurred). The
Stock Option Agreement is attached as Appendix C to this Joint
Proxy Statement/ Prospectus. See also "DESCRIPTION OF THE MERGER-
-Stock Option Agreement," on page 46.
The Stock Option Agreement is intended to increase the
likelihood that the merger will be consummated in accordance with
the terms of the Agreement and Plan of Merger. The Stock Option
Agreement may have the effect of discouraging persons who might
now or prior to the effective time of the merger be interested in
acquiring all or a significant interest in First Bankshares from
considering or proposing such an acquisition, even if such
persons were prepared to pay a higher price per share for First
Bankshares common stock than the price per share implicit in the
exchange ratio in the Agreement and Plan of Merger.
Certain Differences in Shareowners' Rights
(See Page 53)
When the merger is consummated, First Bankshares
shareowners, whose rights are governed by First Bankshares'
Articles of Incorporation and Bylaws and by the Georgia Code,
will automatically become Capital City shareowners, and their
rights as Capital City shareowners will be determined by Capital
City's Articles of Incorporation and Bylaws and by the Florida
Business Corporations Act. The rights of Capital City
shareowners differ from the rights of First Bankshares
shareowners in certain important respects. For example, Capital
City's governing documents contain certain anti-takeover
provisions.
Comparative Market Prices of Common Stock
(See Page 67)
Capital City common stock is traded on the Nasdaq National
Market under the symbol "CCBG." First Bankshares common stock is
not traded in any established market. On September 25, 2000, the
last day prior to public announcement of the merger, the last
reported sale price per share of Capital City common stock on the
Nasdaq National Market was $19.25. The resulting equivalent pro
forma price per share of First Bankshares common stock (based on
the combined total of the 3.6419 exchange ratio and $17.7543 in
cash, without factoring in any withholdings) was $87.861.
To the knowledge of First Bankshares, the most recent trade
of First Bankshares common stock prior to September 25, 2000, the
last day prior to public announcement of the merger between
Capital City and First Bankshares, was on April 18, 2000, which
was a sale of 220 shares for a purchase price of $85.00 per
share. To the knowledge of First Bankshares, there have been no
trades since the announcement of the merger. There can be no
assurance as to what the market price of the Capital City common
stock will be if and when the merger is consummated.
Listing of Capital City Common Stock
(See Page 53)
Capital City will list the shares of Capital City common
stock to be issued in connection with the merger on the Nasdaq
National Market.
Risk Factors
(See Page 18)
In determining whether to approve the Agreement and Plan of
Merger, you should consider the various risks associated with an
investment in Capital City common stock. These risks include the
following:
* Capital City may have difficulties integrating First
National's operations into Capital City's operations;
* The market value of the Capital City common stock you will
receive in the merger will fluctuate;
* There is a limited market for shares of Capital City common stock;
* Capital City is subject to statutory and regulatory
restrictions on its ability to pay dividends;
* Capital City and its subsidiaries must comply with extensive
governmental regulations;
* The financial institution industry is very competitive;
* Before the merger, Capital City's management controlled
about 39.47% of Capital City common stock; and
* Capital City's Articles of Incorporation and Bylaws contain
provisions that will make it difficult for another company to
obtain control of Capital City.
Recent Developments in Capital City's Business
On October 5, 2000, Capital City announced that its wholly-
owned affiliate, Capital City Bank, had signed a definitive
agreement to purchase six Georgia offices from First Union
National Bank. The offices serve the communities of Macon (4
offices) and Waynesboro (2 offices). Under the terms of the
agreement, Capital City will purchase the office facilities and
assume approximately $109 million in deposits and $23 million in
consumer loans. Subject to regulatory approval, the transaction
is scheduled to close during the first quarter of 2001,
subsequent to the merger.
Historical and Pro Forma Comparative Per Share Data
Nine Months Twelve Months
Ended Ended
September 30, December 31,
2000 1999
NET INCOME:
Capital City
Basic $1.32 $1.50
Diluted $1.32 $1.50
First Bankshares
Basic $.57 $5.70
Diluted $.57 $5.70
Pro Forma (Capital City and First Bankshares)
Basic $1.22 $1.47
Diluted $1.22 $1.47
First Bankshares equivalent pro forma (1)
Basic $4.44 $5.35
Diluted $4.44 $5.35
CASH DIVIDENDS PER SHARE
Capital City $0.3975 $0.5525
First Bankshares 1.30 3.15
Pro Forma (Capital City and First Bankshares) .4276 .5727
First Bankshares equivalent pro forma (1) 1.56 2.09
BOOK VALUE PER DILUTED COMMON SHARE
Capital City $14.08 $12.97
First Bankshares 81.29 82.98
Pro Forma (Capital City and First Bankshares) 14.37 13.38
First Bankshares equivalent pro forma (1) 52.34 48.73
(1) The equivalent pro forma per share data for First Bankshares
was computed by multiplying pro forma information by an exchange
ratio of 3.642.
Selected Financial Data
The following tables present for Capital City and for First
Bankshares, selected consolidated financial data for the nine-
month periods ended September 30, 1999 and 2000, and for the five-
year period ended December 31, 1999. The information is based on
the consolidated financial statements contained in reports
Capital City filed with the SEC, including its September 30, 2000
Quarterly Report on Form 10-Q. All of these documents are
incorporated by reference in this Proxy Statement/Prospectus.
See "WHERE YOU CAN FIND MORE INFORMATION," on page 1.
You should read the following tables in conjunction with the
consolidated financial statements of Capital City and First
Bankshares described above with the notes to them.
Historical results are not necessarily indicative of results
to be expected for any future period. In the opinion of the
respective managements of Capital City and First Bankshares, all
adjustments (which include only normal recurring adjustments)
necessary to arrive at a fair statement of interim results of
operations of Capital City and First Bankshares, respectively,
have been included. With respect to Capital City and First
Bankshares, results for the nine-month period ended September 30,
2000 are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole.
<TABLE>
First Bankshares of West Point, Inc. and Subsidiaries
<CAPTION>
At or for the nine At or for the year
months ended September 30, ended December 31,
-------------------------- --------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income $ 7,881,774 $ 7,017,950 $ 9,498,850 $ 9,786,279 $ 10,378,946 $ 9,937,568 $ 9,939,946
Net Interest Income 4,305,074 3,962,119 5,326,109 5,015,996 5,455,066 4,977,412 5,147,282
Provision for Loan Losses 1,580,000 0 100,000 10,000 120,000 120,000 120,000
Net Income 109,746 980,134 1,098,038 747,109 23,134 1,232,866 1,752,023
Per Common Share:
Basic and Diluted Net Income $ 0.57 $ 5.09 $ 5.70 $ 3.87 $ 0.12 $ 6.38 $ 9.02
Cash Dividends Declared 1.30 1.30 3.15 3.15 3.15 3.15 3.15
Book Value 81.29 85.36 82.98 82.05 81.00 73.61 73.61
Based on Net Income
Return on Average Assets 0.10% 0.95% 0.78% 0.53% 0.02% 0.88% 1.32%
Return on Average Equity 1.05% 9.24% 6.79% 4.70% 0.15% 8.82% 13.24%
Dividend Payout Ratio 228.00% 25.53% 55.22% 81.40% 2628.78% 49.33% 34.73%
Averages for the Period:
Loans, Net $ 75,783,465 $ 74,846,428 $ 75,740,161 $ 74,431,532 $ 68,904,905 $ 56,319,880 $ 56,249,982
Earning Assets 133,140,871 126,374,202 129,458,438 129,068,215 129,372,121 132,152,705 124,099,721
Assets 145,238,200 137,305,122 141,157,892 140,060,307 137,727,256 140,456,695 132,324,129
Deposits 104,524,818 98,312,797 98,304,617 96,817,333 94,182,998 84,932,174 78,143,997
Other Borrowings 25,350,286 25,440,989 25,429,587 25,520,572 25,611,801 25,700,099 25,237,190
Stockholders' Equity 13,961,712 14,139,675 16,182,483 15,891,204 15,739,690 13,978,046 13,228,431
Period-End Balances:
Loans, Net $ 73,702,441 $ 77,036,478 $ 75,039,222 $ 71,555,428 $ 75,545,472 $ 64,091,869 $ 52,096,760
Earning Assets 125,341,248 125,334,529 139,612,893 117,557,337 131,555,607 132,430,022 127,853,091
Assets 156,544,893 138,197,717 152,375,840 130,130,473 146,826,830 142,711,805 137,591,421
Deposits 114,410,446 93,642,299 109,569,639 87,411,159 94,699,596 90,482,604 81,447,315
Other Borrowings 25,317,059 25,407,647 25,385,000 25,475,588 25,566,176 25,656,765 25,747,353
Stockholders' Equity 15,645,821 16,429,715 15,971,607 15,841,295 15,638,084 14,210,383 13,745,708
</TABLE>
<TABLE>
Capital City Bank Group, Inc. and Subsidiaries
<CAPTION>
At or for the nine At or for the year
months ended September 30, ended December 31,
------------------------- -----------------------------------------------------------------
(Dollars in Thousands, 2000 1999 1999 1998 1997 1996 1995
Except Per Share Data) ----------- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income $ 80,618 $ 74,319 $ 99,685 $ 89,010 $ 84,981 $ 74,406 $ 62,117
Net Interest Income 47,332 43,243 58,438 53,762 52,293 45,846 38,763
Provision for Loan Losses 2,295 1,930 2,440 2,439 2,328 1,863 556
Net Income 13,501 10,933 15,252 15,294 14,401 13,219 11,181
Per Common Share:
Basic Net Income $ 1.32 $ 1.07 $ 1.50 $ 1.51 $ 1.44 $ 1.33 $ 1.13
Diluted Net Income 1.32 1.07 1.50 1.50 1.43 1.33 1.13
Cash Dividends Declared .3975 0.42 0.55 0.45 0.37 0.34 0.29
Book Value 14.08 12.78 12.97 12.69 11.54 10.39 9.42
Based on Net Income:
Return of Average Assets 1.24% 1.01% 1.06% 1.30% 1.30% 1.31% 1.31%
Return of Average Equity 13.11% 11.08% 11.64% 12.37% 13.10% 13.52% 12.72%
Dividend Payout Ratio 30.11% 39.96% 32.86% 28.20% 26.10% 25.45% 25.38%
Averages for the Period
Loans, Net $ 984,813 $ 873,920 $ 884,323 $ 824,197 $ 770,416 $ 631,437 $ 493,654
Earning Assets 1,300,143 1,294,805 1,291,262 1,065,677 1,000,466 908,137 764,259
Assets 1,450,114 1,443,143 1,444,069 1,180,785 1,108,088 1,012,480 855,894
Deposits 1,201,550 1,238,215 1,237,405 985,119 924,891 856,540 735,966
Long-Term Debt 13,612 18,255 17,274 18,041 19,412 10,895 71
Shareowners' Equity 137,582 130,762 131,058 123,647 109,948 97,738 87,878
Period-End Balances:
Loans, Net $ 1,060,369 $ 899,960 $ 928,486 $ 844,217 $ 775,451 $ 745,126 $ 510,168
Earning Assets 1,346,624 1,290,630 1,263,296 1,288,439 998,401 996,827 799,243
Assets 1,492,136 1,437,083 1,430,520 1,443,675 1,116,651 1,123,221 905,856
Deposits 1,229,960 1,223,338 1,202,658 1,253,553 922,841 952,744 778,161
Long-Term Debt 11,408 14,448 14,258 18,746 18,106 18,847 1,982
Shareowners' Equity 143,692 130,293 132,216 128,862 115,807 103,009 93,058
Equity to Assets Ratio 9.63% 9.07% 9.24% 8.93% 10.37% 9.17% 10.27%
Other Data:
Basic Average Shares
Outstanding $10,194,294 $10,173,490 $10,174,945 $10,146,393 $10,031,116 $9,908,762 $9,869,267
Shareowners of Record 1,308 1,373 1,362 1,334 1,234 1,045 973
Banking Locations 47 48 48 46 39 38 32
Full-Time Equivalent Associates 673 678 678 677 637 617 544
</TABLE>
RISK FACTORS
In deciding whether to approve the Agreement and Plan of
Merger, you should consider the various risks associated with an
investment in Capital City common stock, including, but not
limited to the following:
Capital City May Have Difficulties Integrating First National's
Operations Into Capital City's Operations
The merger involves the integration of two companies that
have previously operated independently of each other. Successful
integration of First National's operations will depend primarily
on Capital City's ability to consolidate operations, systems and
procedures and to eliminate redundancies and costs. We may not
be able to integrate our operations without encountering
difficulties including, without limitation:
* the loss of key employees and customers;
* possible inconsistencies in standards, control procedures
and policies; and
* unexpected problems with costs, operations, personnel,
technology or credit.
Further, although we anticipate cost savings as a result of
the merger to be meaningful, we may be unable to fully realize
any of the potential cost savings expected. Finally, any costs
savings that are realized may be offset by losses in revenues or
other changes to earnings.
You Will Not Know the Market Value of the Capital City Common
Stock You Will Receive in the Merger Until We Complete the Merger
The precise value of the merger consideration to be paid to
First Bankshares stockholders will not be known at the time of
the Special Meeting. The Agreement and Plan of Merger provides
that each share of First Bankshares common stock will be
exchanged for 3.6419 shares of Capital City common stock and
$17.7543 in cash. The value of Capital City's common stock will
fluctuate prior to the Effective Time of the merger and may be
either higher or lower than on the date of the Agreement and Plan
of Merger or the date of the Special Meeting.
There is a Limited Market for Shares of Capital City Common Stock
While Capital City common stock is listed and traded on the
Nasdaq National Market, there has been limited trading activity
in Capital City common stock. The average daily trading volume
of Capital City common stock over the three-month period ending
September 30, 2000 was approximately 2,632 shares, and on some
days there has been no trading in shares of Capital City common
stock. Capital City does not anticipate that the merger will
cause any significant improvements in the trading of Capital City
common stock.
There are Restrictions on Capital City's Ability to Pay Dividends
Capital City must comply with Florida corporate law and
rules and regulations of bank regulators before it may pay any
dividends. The Board of Directors of Capital City must authorize
Capital City to pay any dividends and Capital City must have
sufficient funds to pay dividends. Capital City's only sources
of income are dividends and other payments that Capital City
Bank, First National Bank of Grady County, and any other
subsidiaries of Capital City make to Capital City. Certain
statutes and regulations restrict the ability of Capital City's
subsidiaries to pay dividends to Capital City.
Capital City is Subject to Extensive Governmental Regulation
Capital City and its subsidiaries are subject to extensive
governmental regulation. Capital City, as a bank holding
company, is regulated primarily by the Federal Reserve. Capital
City Bank is a commercial bank chartered by the State of Florida
and regulated by the FDIC and the Florida Department of Banking
and Finance. Grady is a national bank regulated by the Office of
the Comptroller of the Currency. The federal and state bank
regulators of these entities have the ability, should the
situation require, to place significant regulatory and
operational restrictions upon Capital City and its subsidiaries.
Any such restrictions imposed by federal and state bank
regulators could affect the profitability of Capital City and its
subsidiaries.
The Financial Institution Industry is Very Competitive
Capital City and its subsidiaries compete directly with
financial institutions that are well established and have
significantly greater resources and lending limits than Capital
City and its subsidiaries. As a result of those greater
resources, the large financial institutions may be able to
provide a broader range of services to their customers than
Capital City and may be able to afford newer and more
sophisticated technology than Capital City. The long-term
success of Capital City will be dependent on the ability of
Capital City's subsidiaries to compete successfully with other
financial institutions in their service areas.
Management of Capital City Holds a Large Portion of Capital City
Common Stock
The directors and executive officers of Capital City
beneficially own about 4,052,637 shares of Capital City common
stock, or 39.47%, of the total outstanding shares of Capital
City. As a result, Capital City's management has significant
control of Capital City.
Capital City's Articles of Incorporation and Bylaws May Prevent
Takeover by Another Company
Capital City's Articles of Incorporation permit the Board of
Directors of Capital City to issue preferred stock without
shareowner action. The ability to issue preferred stock could
discourage a company from attempting to obtain control of Capital
City by means of a tender offer, merger, proxy contest or
otherwise. Additionally, Capital City's Articles of
Incorporation and Bylaws divide the Board of Directors of Capital
City into three classes, as nearly equal in size as possible,
with staggered three-year terms. One class is elected each year.
The classification of the Board of Directors could make it more
difficult for a company to acquire control of Capital City.
Capital City is also subject to certain provisions of the Florida
Business Corporations Act and the Capital City Articles of
Incorporation which relate to business combinations with
interested shareowners.
MEETING OF FIRST BANKSHARES SHAREOWNERS
Date, Place, Time, and Purpose
The First Bankshares Board of Directors is sending you this
Proxy Statement/Prospectus in connection with the solicitation by
the First Bankshares Board of Directors of proxies for use at the
Special Meeting. At the Special Meeting, the First Bankshares
Board of Directors will ask you to vote on a proposal to approve
the Agreement and Plan of Merger. First Bankshares will pay the
costs associated with the solicitation of proxies for the Special
Meeting. The Special Meeting will be held at the Riverside
Country Club, located at 2001 Country Club Road, Lanett, Alabama,
on __________________, __________________, 2001, at 10:00 a.m.,
EST.
Record Date, Voting Rights, Required Vote, and Revocability of
Proxies
First Bankshares has set the close of business on
__________________, __________________, 2001, as the Record Date
for determining the holders of First Bankshares common stock
entitled to notice of and to vote at the Special Meeting. Only
holders of First Bankshares common stock of record on the books
of First Bankshares at the close of business on the Record Date
are entitled to notice of and to vote at the Special Meeting. As
of the Record Date, there were 192,481 shares of First Bankshares
common stock entitled to vote at the Special Meeting. The
executive officers and directors of First Bankshares have
committed to vote their shares in favor of the merger. Capital
City holds no shares of First Bankshares common stock.
You are entitled to one vote for each share of First
Bankshares common stock you own on the Record Date. Shareowners
holding a majority of the outstanding shares of First Bankshares
common stock entitled to vote at the Special Meeting must be
present, in person or by proxy, at the Special Meeting. In order
to approve the merger, shareowners holding a majority of the
issued and outstanding shares of First Bankshares common stock
represented, in person or by proxy, at the Special Meeting must
approve the Agreement and Plan of Merger. Consequently,
abstentions and broker non-votes, as well as instructions to
withhold authority to vote, will have the same effect as a vote
"against" the Agreement and Plan of Merger.
Persons named as proxies will vote shares of First
Bankshares common stock in accordance with the instructions on
the proxies if such proxies are properly executed, received in
time, and not revoked. If the proxy does not contain
instructions on how to vote, persons named as proxies will vote
for approval of the Agreement and Plan of Merger. If any other
matters properly come before the Special Meeting, the persons
named as proxies will vote upon such matters according to their
judgment. If necessary, such persons may vote in favor of a
proposal to adjourn the Special Meeting in order to permit
further solicitation of proxies in the event there are not
sufficient votes to approve the Agreement and Plan of Merger at
the time of the Special Meeting. However, no proxy that is voted
against the approval of the Agreement and Plan of Merger will be
voted in favor of an adjournment of the Special Meeting in order
to permit further solicitation of proxies.
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Failure either to vote by proxy or in person at the Special
Meeting will not be counted as a vote cast for nor as a vote cast
against approval of the Agreement and Plan of Merger and the
transactions contemplated therein.
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A First Bankshares shareowner who has given a proxy may
revoke it at any time prior to its exercise at the Special
Meeting by:
* giving written notice of revocation to the Secretary of
First Bankshares;
* properly submitting to First Bankshares a duly executed
proxy bearing a later date; or
* attending the Special Meeting and voting in person.
All written notices of revocation and other communications
with respect to revocation of proxies should be addressed as
follows: First Bankshares of West Point, Inc., 3rd Avenue and
West 10th Street, West Point, Georgia 31833, Attention: A. Drew
Ferguson, III, President.
At the Record Date, all directors and executive officers of
First Bankshares as a group (10 persons) were entitled to vote
approximately 32,491 shares of First Bankshares common stock,
constituting approximately 16.88% of the total number of shares
of First Bankshares common stock outstanding at that date. The
First Bankshares directors and executive officers have committed
to vote their shares of First Bankshares common stock in favor of
the Agreement and Plan of Merger. See "BUSINESS OF FIRST
BANKSHARES - Management Stock Ownership," on page 72.
DESCRIPTION OF THE MERGER
The following information describes certain aspects of the
merger. However, the Agreement and Plan of Merger is attached as
Appendix A to this Proxy Statement/Prospectus, and you are urged
to read the Agreement and Plan of Merger carefully.
General
Upon consummation of the merger, First Bankshares will merge
with and into Capital City. Capital City will survive the merger
and the separate existence of First Bankshares will cease.
Subsequent to the merger, First National will merge with and into
Capital City Bank in accordance with the provisions of and with
the effect provided in Section 658.41 of the Florida Statutes on
terms of the Bank Plan of Merger attached as Appendix B to this
Proxy Statement/Prospectus. At the effective time of the merger,
each share of First Bankshares common stock then issued and
outstanding will be converted into and exchanged for the right to
receive 3.6419 shares of Capital City common stock and $17.7543
in cash. Shares held by First Bankshares, Capital City, or their
subsidiaries, other than shares held in a fiduciary capacity or
in satisfaction of debts previously contracted, will not be
converted to Capital City common stock. Shares held by First
Bankshares shareowners who perfect their dissenters' rights will
not be converted to Capital City common stock.
Capital City will not adjust the exchange ratio based on
changes in the market value of Capital City common stock before
the effective time of the merger. The market value of the
Capital City common stock that shareowners of First Bankshares
will receive may therefore vary significantly between the date of
this Proxy Statement/Prospectus and the effective time of the
merger. Further, because Capital City and First Bankshares must
satisfy various conditions, including receipt of necessary
regulatory approvals, the merger may not be consummated until a
substantial period of time following the Special Meeting. During
the time between the date of the Special Meeting and the
effective time of the merger, shareowners of First Bankshares who
do not properly perfect their dissenters' rights, or who do not
sell their shares of First Bankshares common stock, will be
subject to the risk of a decline in the market value of Capital
City common stock.
Capital City will not issue fractional shares. Instead of
issuing any fractional share to which any First Bankshares
shareowner would otherwise be entitled upon consummation of the
merger, Capital City will pay such shareowner cash equal to the
fractional part of a share of Capital City common stock
multiplied by the average market value of one share of Capital
City common stock (i.e., the average of the last sale price of
Capital City common stock on the Nasdaq National Market as
reported by The Wall Street Journal or, if not so reported, any
other authoritative source selected by Capital City) during each
of the 10 trading days preceding the effective time of the
merger.
At the Record Date, First Bankshares had 192,481 shares of
common stock issued and outstanding. Based on the number of
shares of First Bankshares common stock outstanding on the Record
Date and the exchange ratio of 3.6419, Capital City anticipates
that it will issue approximately 701,000 shares of Capital City
common stock to holders of First Bankshares common stock once the
merger is complete. Accordingly, Capital City would then have
issued and outstanding approximately 10,892,848 shares of Capital
City common stock based on the number of shares of Capital City
common stock issued and outstanding on the Record Date.
Following the merger, and assuming no exercise of dissenters'
rights, the current shareowners of First Bankshares will
beneficially own approximately 6.4% of the outstanding Capital
City common stock.
Background of And Reasons for the Merger
In the summer of 1999, First Bankshares embarked upon a
detailed strategic planning process to determine the best course
of conduct for the company in the future. The strategic planning
process examined ways to provide increased liquidity, earnings,
and return on equity to shareowners. As a result of this
process, the Board of Directors decided that it was in the best
interests of the shareowners to look at the possibility of
merger.
In December 1999, the Board of Directors engaged Brown,
Burke Capital Partners, Inc. to assist First Bankshares in
identifying suitable partners. Brown Burke identified potential
candidates which could provide liquidity, enhanced earnings
growth, and outstanding service to the communities in which First
Bankshares operates. Four of those institutions expressed
interest and three conducted due diligence. First Bankshares
received offers from two of these. Based on the aggregate price
offered, as well as other factors identified by the Board of
Directors, in July 2000, First Bankshares entered into
negotiations with Capital City.
The Board of Directors of First Bankshares met on
September 25, 2000, to discuss the Agreement and Plan of Merger
and the merger. After review of the matters before the Board of
Directors, the Board of Directors of First Bankshares unanimously
approved the Agreement and Plan of Merger and authorized the
President and Chief Executive Officer of First Bankshares to take
the appropriate actions necessary to execute the Agreement and
Plan of Merger.
The Board of Directors of Capital City met on September 20,
2000, to discuss the Agreement and Plan of Merger. After review
of the matters before the Directors of Capital City, the Board of
Directors of Capital City unanimously approved the Agreement and
Plan of Merger and authorized the President and Chief Executive
Officer of Capital City to take the appropriate actions necessary
to execute the Agreement and Plan of Merger in substantially the
form approved by the Board.
On September 25, 2000, Capital City and First Bankshares
executed the Agreement and Plan of Merger. Capital City and
First Bankshares each conducted a due diligence review of the
material financial, operating and legal information relating to
the other party.
First Bankshares' Reasons for the Merger and Recommendation of
Directors
First Bankshares' Board of Directors, with the assistance of
outside advisers, evaluated the financial and market
considerations bearing on the decision to recommend the merger to
the shareowners of First Bankshares. In reaching its conclusion
that the Agreement and Plan of Merger is in the best interests of
First Bankshares and its shareowners, the First Bankshares Board
of Directors considered the following factors:
* the value of the consideration to be received by First
Bankshares shareowners relative to the book value and earnings
per share of First Bankshares common stock;
* certain information concerning the financial condition,
results of operations and business prospects of Capital City;
* the financial terms of recent business combinations in the
financial services industry and a comparison of the multiples of
selected combinations with the terms of the proposed transaction
with Capital City;
* the alternatives to the merger, including remaining an
independent institution;
* the competitive and regulatory environment for financial
institutions generally;
* the fact that the merger will enable First Bankshares
shareowners to exchange their shares of First Bankshares common
stock, in a partially tax-free transaction, for cash and shares
of common stock of a larger company, the stock of which is more
widely held and more liquid than that of First Bankshares; and
* the opinion of Brown, Burke Capital Partners, Inc. that the
considerations to be received by First Bankshares shareowners as
a result of the merger is fair from a financial point of view.
While each member of First Bankshares' Board of Directors
considered the foregoing and other factors, the First Bankshares
Board of Directors did not assign any specific or relative
weights to the factors considered and did not make any
determination with respect to any individual factor. First
Bankshares' Board of Directors collectively made its
determination with respect to the merger based on the unanimous
conclusion reached by its members, in light of the factors that
each of them considered as appropriate, that the merger is in the
best interests of First Bankshares' shareowners.
The terms of the merger, including the exchange ratio, were
the result of arm's-length negotiations between representatives
of First Bankshares and representatives of Capital City. Based
upon its consideration of the foregoing factors, the Board of
Directors of First Bankshares approved the Agreement and Plan of
Merger and the merger as being in the best interests of First
Bankshares and its shareowners.
First Bankshares' Board of Directors unanimously recommends
that First Bankshares shareowners vote "FOR" approval of the
Agreement and Plan of Merger.
Fairness Opinion Of First Bankshares' Financial Adviser
First Bankshares has retained Brown, Burke Capital Partners,
Inc. to act as its financial advisor in connection with the
merger. Representatives of Brown, Burke participated in numerous
meetings of the First Bankshares Board including the meeting held
on September 25, 2000. At that meeting, subject to the Agreement
and Plan of Merger, Brown, Burke rendered its oral opinion to the
effect that, as of such date, conversion of each share of First
Bankshares common stock into the right to receive 3.6419 shares
of Capital City common stock and $17.7543 in cash (the "Exchange
Ratio"), and the additional terms to be provided by the Agreement
and Plan of Merger (the "Per Share Purchase Price and Terms")
were fair to the shareowners of First Bankshares from a financial
point of view. Brown, Burke has also rendered a written opinion
to the First Bankshares Board that, on the date of this Proxy
Statement/Prospectus, based on the information set forth therein,
the Per Share Purchase Price and Terms were fair, from a
financial point of view, to the First Bankshares shareowners.
The full text of Brown, Burke's written opinion is attached
as Appendix E to this Proxy Statement/Prospectus and is
incorporated herein by reference. The description of the opinion
set forth herein is qualified in its entirety by reference to
Appendix E. First Bankshares shareowners are urged to read the
opinion in its entirety for a description of the procedures
followed, assumptions made, matters considered, and
qualifications and limitations on the review undertaken by Brown,
Burke in connection therewith.
Brown, Burke's opinion is directed to the First Bankshares
Board only and is directed only to the Per Share Purchase Price
and Terms and does not constitute a recommendation to any First
Bankshares shareowner regarding how such shareowner should vote
at the special meeting.
In arriving at its written opinion, Brown, Burke, among
other things: (i) analyzed certain audited and unaudited
financial statements and other information of First Bankshares
and Capital City; (ii) reviewed and discussed with appropriate
management personnel of First Bankshares and Capital City the
past and current business activities and financial results and
the business and financial outlook of First Bankshares and
Capital City; (iii) reviewed the historical price and trading
activity of the common stock of Capital City; (iv) compared
certain financial and stock market data relating to Capital City
with similar data of other publicly held banking institutions
considered to be potential alternative affiliation candidates to
Capital City for First Bankshares; (v) performed an analysis
comparing the pro forma consequences of the merger to First
Bankshares shareowners with respect to earnings per share, book
value per share and dividends per share represented by the
Capital City common stock they will receive in the merger to
those same measures represented by the First Bankshares common
stock they currently hold; (vi) reviewed the prices paid in
certain comparable acquisition transactions of community banking
institutions and the multiples of earnings and book value and the
level of deposit base premium received by the selling
institutions; (vii) reviewed the Agreement and Plan of Merger and
certain related documents; (viii) considered the financial
implications of certain other strategic alternatives available to
First Bankshares; and (ix) performed such other analyses as
Brown, Burke deemed appropriate.
In conducting its analysis and arriving at its opinion,
Brown, Burke assumed and relied upon, without independent
verification, the accuracy and completeness of the information it
reviewed for the purposes of the opinion. Brown, Burke also
relied upon the management of First Bankshares with respect to
the reasonableness and achievability of the financial forecast
(and the assumptions and bases underlying such forecast) provided
to it. First Bankshares instructed Brown, Burke that, for the
purposes of its opinion, Brown, Burke should assume that such
forecast will be realized in the amounts and in the time periods
currently estimated by the management of First Bankshares.
Brown, Burke also assumed, with First Bankshares' consent, that
the aggregate allowances for loan losses for each of First
Bankshares and Capital City are adequate to cover such losses.
Brown, Burke is not an expert in the evaluation of allowances for
loan losses and has not reviewed any individual credit files.
Brown, Burke did not make, nor was it furnished with, independent
valuations or appraisals of the assets or liabilities of either
First Bankshares or Capital City or any of their subsidiaries.
Brown, Burke did not, and was not asked to, express any opinion
about what the value of Capital City common stock actually will
be when issued to the holders of First Bankshares common stock
pursuant to the merger or the price at which Capital City common
stock will trade subsequent to the merger.
No limitations were imposed by First Bankshares or the First
Bankshares Board on the scope of Brown, Burke's investigation or
the procedures to be followed by Brown, Burke in rendering its
opinion. As part of its procedures, Brown, Burke solicited
regional bank holding companies for their indications of
acquisition interest in First Bankshares. The opinion is
necessarily based on economic, market and other conditions as in
effect on, and the information made available to Brown, Burke as
of, the date of its analysis.
In arriving at the fairness, from a financial point of view,
of the consideration to be received by the shareowners of First
Bankshares, Brown, Burke developed an opinion of the value of
First Bankshares common stock should the institution remain
independent and analyzed such value in light of the premium
represented by the Per Share Purchase Price and Terms. In
connection with rendering its opinion to the First Bankshares
Board, Brown, Burke also reviewed a variety of generally
recognized valuation methodologies and merger analyses and
performed those which it believed were most appropriate for
developing its opinion of fairness, from a financial point of
view.
The preparation of a fairness opinion involves various
determinations of the most appropriate and relevant methods of
financial analysis and the application of those methods to the
particular circumstances, and, therefore, such an opinion is not
readily susceptible to summary description. In arriving at its
fairness opinion, Brown, Burke did not attribute any particular
weight to any analysis or factor considered by it, but rather
made qualitative judgments about the significance and relevancy
of each analysis and factor. None of the analyses performed by
Brown, Burke were assigned a greater significance by Brown, Burke
than any other. Accordingly, Brown, Burke believes that its
analyses must be considered as a whole and that a review of
selected portions of such analyses and the factors considered
therein, without considering all analyses and factors, could
create a misleading or incomplete view of the processes
underlying its opinion and any conclusions reached therein. In
its analyses, Brown, Burke made numerous assumptions with respect
to industry performance, general business and economic
conditions, and other matters, many of which are beyond First
Bankshares' and Capital City's control. Any estimates contained
in Brown, Burke's analyses are not necessarily indicative of
actual values or predictive of future results or values that may
be significantly more or less favorable than such estimates.
Estimates of values of companies do not purport to be appraisals
or necessarily reflect the prices at which companies or their
securities actually may be sold. In addition, as described
above, Brown, Burke's opinion and presentation to the First
Bankshares Board was one of many factors taken into consideration
by the First Bankshares Board in making its determination to
approve the Agreement and Plan of Merger.
The following is a brief summary of analyses performed by
Brown, Burke in connection with its oral opinion delivered to the
First Bankshares Board on September 25, 2000:
Summary of Proposal. Brown, Burke reviewed the terms of the
proposed transaction as reflected in the Agreement and Plan of
Merger, including the calculation of the Exchange Ratio. Brown,
Burke stated that based upon the recent price of Capital City
common stock of $19.50, an Exchange Ratio of 3.6419 shares of
Capital City common stock per share of First Bankshares common
stock as well as $17.7543 in cash per First Bankshares common
stock would provide First Bankshares shareowners a per share
value of $88.77 (the "Per Share Purchase Price") or a total
transaction value of $17.1 million.
Based on Capital City's stock price as of December 26, 2000
of $23.50, the per share purchase price was $103.34 for a total
transaction value of $19.9 million ("Most Recent Valuation").
Indicated Value of First Bankshares as an Independent Bank.
Brown, Burke undertook an analysis addressing the range of
potential values which would be implied if First Bankshares were
to remain an independent bank. Brown, Burke computed this range
of values based on price/forecasted 2000 earnings and price/book
multiples using 90% of the average for southeastern banks with
assets greater than $1 billion and a discounted cash flow
analysis, relying on projections extrapolated from First
Bankshares' 2000 budget and its historical performance. In this
analysis methodology, Brown, Burke assumed shareowners received,
in addition to the projected dividend stream, a terminal
valuation at December 31, 2002, based upon a 1.52 times multiple
of December 31, 2002, stated book value and a 9.9 times multiple
of earnings for such year. These amounts were discounted at
rates ranging from 12% to 16%. After applying a 15% illiquidity
discount, the mean valuation of First Bankshares as an
independent entity using the price/forecasted 2000 earnings
multiple, the price/book multiple and the discounted cash flow
analysis was $14.9 million. Brown, Burke noted that the
transaction value of $17.1 million represented a 14.81% premium
to the independent valuation. Additionally, the Most Recent
Valuation of $19.9 million represents a 33.56% premium to the
independent valuation.
Per Share Merger Consequences Analysis. Based upon the
Exchange Ratio and using the earnings estimates for First
Bankshares prepared by First Bankshares management and earnings
estimates for Capital City prepared by independent securities
analysts, Brown, Burke compared the estimated 2000 and 2001 fully
diluted earnings per share of First Bankshares common stock on a
stand-alone basis to the equivalent pro forma earnings per share
of Capital City common stock which would be received in the
Merger. Brown, Burke concluded that the Merger would result in
an earnings increase of 5.0% in 2000 and an increase of 6.9% in
2001 for First Bankshares shareowners in the combined company.
Brown, Burke also analyzed the impact of the Merger on the
amount of fully diluted book value represented by a share of
First Bankshares common stock. Brown, Burke assumed consummation
of the merger as of December 31, 2000 and utilized the above
described earnings estimates for First Bankshares and Capital
City. Brown, Burke concluded that the merger would result in a
decrease of 21.6% in fully diluted book value on an equivalent
per share basis for First Bankshares shareowners projected as of
December 31, 2000. A contributor to the decrease in pro forma
book value is First Bankshares' capitalization. The average
equity/assets for southeastern banks with assets less than $1
billion is 8.76% versus First Bankshares' capital ratio of
10.60%.
Finally, Brown, Burke compared the amount of dividends
expected to be paid on a share of First Bankshares common stock
before the merger to the level expected to be paid on a pro forma
basis reflecting the merger. Brown, Burke concluded that the
merger would result in a decrease of 24.6% in 2000 in dividends
per share for First Bankshares common shareowners. As a private
company, First Bankshares maintained a dividend payout ratio
above most publicly traded banks which is a contributor to the
pro forma dividend decline.
Analysis of Selected Other Bank Mergers Involving
Southeastern Community Banks. Brown, Burke reviewed forty-four
mergers involving community banks and bank holding companies
announced since January 1, 2000, in which the seller had
equity/assets greater than 10% and assets less than $500 million.
Brown, Burke noted in particular the prices paid in these mergers
as a multiple of earnings and book values and the transaction
premiums paid in excess of tangible book value as a percentage of
core deposits. Brown, Burke also reviewed other data in
connection with each of these mergers, including the amount of
total assets and the capital level of the acquired institutions
and the return on equity and the return on assets of the acquired
institutions. Brown, Burke then compared this data to that of
First Bankshares and to the value to be received by First
Bankshares shareowners in the merger.
This comparison yielded a range of transaction values as
multiples of latest twelve-months earnings per share of a low of
13.6 times and a high of 55.8 times and a median value of 18.9
times. The First Bankshares multiple of trailing earnings was
32.1 times. The calculations yielded a range of transaction
values as multiples of book value per share of a low of 1.14
times to a high of 2.72 times and a median value of 1.78 times.
The First Bankshares multiple of June 30, 2000 book value was
1.10 times. Finally, the calculations yielded a range of deposit
base premiums paid from a low of (1.3%) to a high of 27.3%, with
a median value of 13.9%. The equivalent premium on First
Bankshares deposits represented by the Per Share Purchase Price
and Terms was 2.2%. The Most Recent Valuation results in the
following multiples: (a) multiple to trailing earnings of 37.3
times, (b) multiple of book value of 1.29 times, and (c) premium
on deposits of 5.0%.
No company or transaction used in the above analyses as a
comparison is identical to First Bankshares, Capital City, or the
merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments
concerning differences in Brown, Burke and operating
characteristics of the companies and other factors that could
affect the public trading value of the companies to which they
are being compared. Mathematical analysis (such as determining
the average or median) is not, in itself, a meaningful method of
using comparable company data.
In connection with its opinion dated the date of this Proxy
Statement/Prospectus, Brown, Burke confirmed the appropriateness
of its reliance on the analyses used to render its September 25,
2000, oral opinion by performing procedures to update certain of
such analyses and by reviewing the assumptions on which such
analyses were based and the factors considered in connection
therewith.
Brown, Burke is continually engaged in the valuation of
businesses and their securities in connection with mergers and
acquisitions, private placements, and valuations for estate, tax,
corporate and other purposes. First Bankshares has paid Brown,
Burke a fee of $50,000 in connection with its engagement. An
additional fee, excluding $35,000 received upon execution of the
Agreement and Plan of Merger, of 0.9% of the aggregate market
value of the consideration received by the First Bankshares
shareowners will be paid to Brown, Burke upon consummation of the
merger. Based on an assumed market price and value of a share of
Capital City common stock at the Effective Time of the merger of
$23.50 (the closing price of Capital City common stock on
December 26, 2000), this additional fee would be approximately
$144,000. No compensation payable to Brown, Burke is contingent
on the conclusions reached in the opinion of Brown, Burke. First
Bankshares has also agreed to reimburse Brown, Burke for
reasonable out-of-pocket-expenses and to indemnify Brown, Burke
and certain related persons against certain liabilities relating
to or arising out of its engagement.
Capital City's Reasons For The Merger
The Capital City Board of Directors believes that the
merger is in the best interests of Capital City and its
shareowners. The Capital City Board of Directors has unanimously
approved the Agreement and Plan of Merger. In deciding to
approve the Agreement and Plan of Merger, the Capital City Board
of Directors considered a number of factors, including:
* a review, based in part on a presentation by Capital City's
management, of
- the business, operations, earnings, and financial
condition, including the capital levels and asset
quality, of First Bankshares on an historical,
prospective, and pro forma bases and in comparison
to other financial institutions in the area,
- the demographic, economic, and financial
characteristics of the markets in which First
Bankshares operates, including existing
competition, history of the market areas with
respect to financial institutions, and average
demand for credit, on an historical and
prospective bases, and
- the results of Capital City's due diligence review
of First Bankshares; and
* the likelihood of regulators approving the merger without
undue conditions or delay;
* the compatibility and the community bank orientation of both
Capital City and its subsidiaries and First Bankshares and its
subsidiaries; and
* a variety of factors affecting and in relating to the
overall strategic focus of Capital City.
While Capital City's Board of Directors considered the
foregoing and other factors, the Board of Directors did not
assign any specific or relative weights to the factors considered
and did not make any determination with respect to any individual
factor. Capital City's Board of Directors collectively made its
determination with respect to the merger based on the unanimous
conclusion reached by its members, in light of the factors that
each of them considers as appropriate, that the merger is in the
best interests of Capital City's shareowners.
The terms of the merger, including the exchange ratio, were
the result of arm's-length negotiations between representatives
of Capital City and representatives of First Bankshares. Based
upon its consideration of the foregoing factors, the Board of
Directors of Capital City approved the Agreement and Plan of
Merger and the merger as being in the best interests of Capital
City and its shareowners.
Effective Time of the Merger
The effective time of the merger will occur on the date and
at the time that the Articles of Merger are approved by the
Secretary of State of Georgia or the Secretary of State of
Florida, whichever is later. Unless First Bankshares and Capital
City otherwise agree in writing, and subject to the conditions to
the obligations of Capital City and First Bankshares to effect
the merger, the parties will use their reasonable efforts to
cause the effective time of the merger to occur within 60 days
after the last to occur of:
* the effective date (including expiration of any applicable
waiting period) of the last required consent of any regulatory
authority having authority over and approving or exempting the
merger, and
* the date on which the shareowners of First Bankshares
approve the Agreement and Plan of Merger.
Capital City and First Bankshares cannot assure that they
can obtain the necessary shareowner and regulatory approvals or
that they can or will satisfy the other conditions to the merger.
Capital City and First Bankshares anticipate that they will
satisfy all conditions to consummation of the merger so that the
merger can be completed during the first quarter of 2001.
However, delays in the consummation of the merger could occur.
The Board of Directors of either Capital City or First
Bankshares may terminate the Agreement and Plan of Merger if the
merger is not consummated by March 31, 2001, unless the failure
to consummate the merger by that date is the result of a breach
of the Agreement and Plan of Merger by the party seeking
termination. See "-- Conditions to Consummation of the Merger,"
on page 32 and "-- Waiver, Amendment, and Termination," on page 35.
Distribution of Capital City Stock Certificates
Promptly after the effective time of the merger, Capital
City's exchange agent will mail to each holder of record of First
Bankshares common stock appropriate transmittal materials and
instructions for the exchange of First Bankshares stock
certificates for Capital City stock certificates and the cash
portion of the consideration.
Holders of First Bankshares common stock should NOT send in
their First Bankshares stock certificates until they receive the
transmittal materials and instructions.
After Capital City's exchange agent receives your First
Bankshares stock certificates and properly completed transmittal
materials, the Exchange Agent will issue and mail to you a
certificate representing the number of shares of Capital City
common stock to which you are entitled. The Exchange Agent will
also send First Bankshares shareowners a check for the amount to
be paid, without interest for the cash portion of the
consideration, for any fractional shares and for all undelivered
dividends or distributions in respect of such shares.
After the effective time of the merger, to the extent
permitted by law, holders of First Bankshares common stock of
record as of the effective time of the merger will be entitled to
vote at any meeting of Capital City shareowners the number of
whole shares of Capital City common stock they will receive in
the merger, regardless of whether such shareowners have
surrendered their First Bankshares stock certificates. Whenever
Capital City declares a dividend or other distribution on Capital
City common stock, the record date for which is at or after the
effective time of the merger, the declaration will include
dividends or other distributions on all shares issuable pursuant
to the Agreement and Plan of Merger. However, Capital City will
not pay any dividend or other distribution payable after the
effective time of the merger with respect to Capital City common
stock to the holder of any unsurrendered First Bankshares stock
certificate until the holder duly surrenders such First
Bankshares stock certificate. In no event will the holder of any
surrendered First Bankshares stock certificate(s) be entitled to
receive interest on any cash to be issued to such holder, except
to the extent required in connection with dissenters' rights. In
no event will Capital City or the Exchange Agent be liable to any
holder of First Bankshares common stock for any amounts paid or
property delivered in good faith to a public official pursuant to
any applicable abandoned property, escheat, or similar law.
After the effective time of the merger, no transfers of
shares of First Bankshares common stock on First Bankshares'
stock transfer books will be recognized. If First Bankshares
stock certificates are presented for transfer after the effective
time of the merger, they will be canceled and exchanged for
shares of Capital City common stock and a check for the amount
due in lieu of a fractional share, if any.
After the effective time of the merger, holders of First
Bankshares stock certificates will have no rights with respect to
the shares of First Bankshares common stock other than the right
to surrender such First Bankshares stock certificates and receive
in exchange the shares of Capital City common stock to which such
holders are entitled. After the effective time of the merger,
holders of First Bankshares stock certificates who have complied
with the provisions of the Appraisal Statute Title, which sets
forth the right to dissent, may be entitled to receive in cash
the fair value of such shareowner's shares of First Bankshares
common stock determined immediately prior to the merger,
excluding any appreciation or depreciation in anticipation of the
merger. Failure to comply with the procedures prescribed by
applicable law will result in the loss of dissenters' rights.
See Appendix D to this Proxy Statement/Prospectus.
Conditions to Consummation of the Merger
Consummation of the merger is subject to various conditions,
including:
* the approval of the Agreement and Plan of Merger by the
holders of a majority of the outstanding First Bankshares common
stock represented in person or by proxy at the Special Meeting;
* the receipt of all regulatory approvals required for
consummation of the merger (see "-- Regulatory Approvals," on
page 34);
* receipt of all consents required for consummation of the
merger or for the preventing of any default under any contract or
permit which consent, if not obtained, is reasonably likely to
have, individually or in the aggregate, a material adverse
effect;
* the absence of any law or order, whether temporary,
preliminary or permanent, or any action taken by any court,
governmental, or regulatory authority of competent jurisdiction
prohibiting, restricting, or making illegal the consummation of
the transactions contemplated by the Agreement and Plan of Merger;
* the Registration Statement of which this Proxy
Statement/Prospectus forms a part being declared effective by the
SEC and the receipt of all necessary SEC and state approvals
relating to the issuance or trading of the shares of Capital City
common stock issuable pursuant to the Agreement and Plan of Merger;
* the approval of the Capital City common stock issuable
pursuant to the Agreement and Plan of Merger for listing on the
Nasdaq National Market;
* the receipt of a written opinion of Gunster, Yoakley &
Stewart, P.A. as to the tax aspects of the merger, including that
the merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code;
* the accuracy, in all material respects, as of the date of
the Agreement and Plan of Merger and as of the effective time of
the merger, of the representations and warranties of First
Bankshares and Capital City as set forth in the Agreement and
Plan of Merger;
* the performance of all agreements and the compliance with
all covenants of First Bankshares and Capital City as set forth
in the Agreement and Plan of Merger;
* the receipt by Capital City and First Bankshares of certain
required written opinions of counsel;
* the receipt by Capital City of agreements from each person
First Bankshares reasonably believes may be deemed an affiliate
of First Bankshares with respect to certain matters;
* First Bankshares must have, immediately prior to the date
the merger becomes effective, a consolidated minimum net worth
equal to $15,500,000, provided that "net worth" shall not be
reduced by fees, costs and expenses (a) incurred or paid at the
request of Capital City, except for adjustments requested by
Capital City for purposes of complying with generally accepted
accounting principles, or (b) incurred and paid by First
Bankshares in connection with the execution and performance of
the Agreement and Plan of Merger, not to exceed $400,000;
* the delivery to Capital City by each First Bankshares
director of a Director's Agreement;
* the receipt by Capital City of letters from each of the
directors and executive officers of First Bankshares releasing
any claims they may have against First Bankshares;
* the performance of all agreements and the compliance with
all covenants of First Bankshares and Capital City as set forth
in the Agreement and Plan of Merger;
* the receipt by Capital City of certain employment
agreements; and
* the delivery to Capital City by First Bankshares of any
required clearance certificate or similar document required by
any state taxing authority in order to relieve Capital City of
any obligation to withhold any portion of the consideration under
the Agreement and Plan of Merger.
Capital City and First Bankshares cannot assure you when or
if all of the conditions to the merger can or will be satisfied.
In the event the merger is not completed by March 31, 2001, the
Agreement and Plan of Merger may be terminated and the merger
abandoned by either First Bankshares or Capital City, unless the
failure to consummate the merger by that date is the result of a
breach of the Agreement and Plan of Merger by the party seeking
termination. See "-- Waiver, Amendment, and Termination," on
page 35.
Foster Loan
In connection with two USDA Rural Development Authority (the
"USDA") loan guarantees, the Agreement and Plan of Merger
provides for the establishment of an escrow to withhold a portion
of the cash consideration payable in the merger unless, among
other conditions, the USDA makes significant guarantee payments
to First National and First Peoples Bank prior to the closing
date. The USDA loan guarantees originated from a loan to the
Foster Lumber Company in the principal amount of $5,000,000.
First National and First Peoples Bank each participated in this
loan. Due to certain hardships, the Foster Lumber Company
eventually defaulted on these loan obligations. In December
2000, the USDA paid $1,482,763.03 to First National and
$741,381.52 to First Peoples Bank in partial satisfaction of the
USDA loan guarantees. These payments along with the satisfaction
of the other relevant conditions were sufficient to avoid having
to establish an escrow related to the USDA loan guarantees. See
Section 3.6 of the Agreement and Plan of Merger, which attached
as Appendix A.
Regulatory Approvals
Capital City and First Bankshares cannot complete the merger
until they receive regulatory approvals from the Federal Reserve,
the Georgia Department of Banking and Finance and the Florida
Department of Banking and Finance. These regulators will
evaluate financial, managerial and competitive criteria, as well
as the supervisory history of the parties and the public benefits
of the merger. Capital City and First Bankshares have filed all
required regulatory applications relating to the merger. Capital
City and First Bankshares cannot assure when or whether they will
receive the required regulatory approvals. Additionally, the
parties cannot assure that the regulatory approvals will impose
no conditions or restrictions that in the judgment of their
Boards of Directors would so adversely impact the economic or
business benefits of the merger that, had such conditions or
restrictions been known, the parties would not have entered into
the Agreement and Plan of Merger.
Capital City and First Bankshares are not aware of any other
material governmental approvals or actions that are required for
consummation of the merger.
Waiver, Amendment, and Termination
To the extent permitted by applicable law, First Bankshares
and Capital City may amend the Agreement and Plan of Merger by
written agreement at any time, whether before or after approval
of the Agreement and Plan of Merger by the First Bankshares
shareowners. After the First Bankshares shareowners approve the
Agreement and Plan of Merger, no amendment shall be made to the
Agreement and Plan of Merger which reduces or modifies the
consideration to be received by the holders of First Bankshares
common stock without further approval of such shareowners. In
addition, the provisions of the Agreement and Plan of Merger
relating to the manner or basis in which shares of First
Bankshares common stock will be exchanged for shares of Capital
City common stock shall not be amended after the First Bankshares
shareowners approve the Agreement and Plan of Merger in a manner
adverse to the holders of Capital City common stock without any
requisite approval of Capital City shareowners entitled to vote
thereon. In addition, prior to or at the effective time of the
merger, either First Bankshares or Capital City, or both, acting
through their respective Boards of Directors, chief executive
officers or other authorized officers, may waive any default in
the performance of any term of the Agreement and Plan of Merger
by the other party, may waive or extend the time for the
compliance or fulfillment by the other party of any and all of
its obligations under the Agreement and Plan of Merger, and may
waive any of the conditions precedent to the obligations of such
party under the Agreement and Plan of Merger, except any
condition that, if not satisfied, would result in the violation
of any applicable law or governmental regulation. No such waiver
will be effective unless written and unless signed by a duly
authorized officer of First Bankshares or Capital City, as the
case may be.
The Agreement and Plan of Merger may be terminated at any
time prior to the effective time of the merger:
* by the mutual agreement of Capital City and First Bankshares;
* by Capital City or First Bankshares:
- in the event of any material breach of any
representation or warranty of the other party contained
in the Agreement and Plan of Merger which cannot be or
has not been cured within 30 days after written notice
to the breaching party and which breach is reasonably
likely, in the opinion of the non-breaching party, to
have, individually or in the aggregate, a material
adverse effect on the breaching party (provided that
the terminating party is not then in material breach of
any representation, warranty, covenant, or other
agreement contained in the Agreement and Plan of Merger),
- in the event of a material breach by the other party of any
covenant or agreement contained in the Agreement and Plan of
Merger which cannot be or has not been cured within 30 days after
written notice to the breaching party of such breach (provided
that the terminating party is not then in material breach of any
representation, warranty, covenant, or other agreement contained
in the Agreement and Plan of Merger),
- if any approval of any regulatory authority required for
consummation of the merger has been denied by final nonappealable
action, or if any action taken by such authority is not appealed
within the time limit for appeal,
- if the shareowners of First Bankshares fail to approve the
Agreement and Plan of Merger at the Special Meeting,
if the merger is not consummated by March 31, 2001,
provided that the failure to consummate is not due to a
breach by the party electing to terminate, or
- in the event that any of the conditions precedent to the
obligations of such party to consummate the merger cannot be
satisfied or fulfilled by March 31, 2001, provided that the
terminating party is not then in material breach of any
representation, warranty, covenant, or other agreement contained
in the Agreement and Plan of Merger; and
* by Capital City, in the event that the Board of Directors of
First Bankshares does not reaffirm its approval of the Agreement
and Plan of Merger (excluding any other acquisition proposal from
a third party), or shall have resolved not to reaffirm the
merger, or shall have affirmed, recommended or authorized
entering into any acquisition proposal or other transaction
involving a merger, share exchange or transfer of substantially
all of the assets of First Bankshares.
In addition to any other payments required by the Agreement
and Plan of Merger, in the event that the Agreement and Plan of
Merger is terminated as a result of First Bankshares or the
holders of at least a majority of the shares of First Bankshares
common stock entering into an agreement with respect to the
merger of First Bankshares with a party other than Capital City
or the acquisition of a majority of the outstanding shares of
First Bankshares common stock by any party other than Capital
City, or is terminated in anticipation of any such agreement or
acquisition, then, in either event, First Bankshares shall
immediately pay Capital City, by wire transfer, $350,000 in full
satisfaction of Capital City's losses and damages resulting from
such termination.
If Capital City and/or First Bankshares terminate the merger
as described in this section, the Agreement and Plan of Merger
will become void and have no effect, except that certain
provisions of the Agreement and Plan of Merger will survive,
including those relating to the obligations to maintain the
confidentiality of certain information. In addition, termination
of the Agreement and Plan of Merger will not relieve any
breaching party from liability for any uncured willful breach of
a representation, warranty, covenant, or agreement giving rise to
such termination.
Dissenters' Rights
If the merger is consummated, any shareowner of First
Bankshares who properly dissents from the merger may be entitled
to receive in cash the fair value of such shareowner's First
Bankshares common stock, determined immediately prior to the
merger, excluding any appreciation or depreciation in
anticipation of the merger. Failure to comply with the
procedures prescribed by applicable law will result in the loss
of dissenters' rights.
Any shareowner of First Bankshares entitled to vote on the
Agreement and Plan of Merger has the right to receive payment of
the fair value of his shares of First Bankshares common stock
upon compliance with the applicable provisions of the Georgia
Business Corporation Code (the "Georgia Code"). A record
shareowner may assert dissenters' rights as to fewer than all of
the shares registered in his name only if he dissents with
respect to all shares beneficially owned by any one beneficial
shareowner 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 Section 14-2-
1303 of the Georgia Code are determined as if the shares as to
which he dissents and his other shares were registered in the
names of different shareowners. Any First Bankshares shareowner
intending to enforce the right to dissent:
* may not vote in favor of the Agreement and Plan of Merger,
and
* must file a written notice of intent to demand payment for
his shares if the merger becomes effective (the "Objection
Notice").
A First Bankshares shareowner should send the Objection
Notice to: First Bankshares of West Point, Inc., 3rd Avenue and
West 10th Street, West Point, Georgia 31833 (telephone: (706) 645-
2944), Attention: Scott A. Huguley, Chairman of the Board, before
the vote on the proposal to approve the Agreement and Plan of
Merger is taken at the Special Meeting. The Objection Notice
must state that the shareowner intends to demand payment for his
shares of First Bankshares common stock if the merger is
effected. A vote against the Agreement and Plan of Merger, in
and of itself, will not constitute an Objection Notice satisfying
the requirements of the Georgia Code.
If the Agreement and Plan of Merger is approved by First
Bankshares' shareowners at the Special Meeting, each shareowner
who has properly filed an Objection Notice and who has not voted
in favor of the Agreement and Plan of Merger will be notified by
First Bankshares of such approval within ten days of the Special
Meeting ("Dissenters' Notice"). The Dissenters' Notice shall
contain the following information:
* where the payment demand must be sent and where and when the
Certificates representing the First Bankshares common stock must
be deposited;
* the extent to which the transfer of uncertificated shares
will be restricted after the payment demand is received;
* the 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 Dissenters' Notice is delivered); and
* a copy of Title 14, Chapter 2, Article 13 of the Georgia
Code (relating to dissenters' rights) (the "Appraisal Statute").
Following the receipt of the Dissenters' Notice, any shareowner
electing to dissent must demand payment of the fair value of the
shares and deposit the certificates representing his First
Bankshares common stock in accordance with the terms of, and by
the date set out in, the Dissenters' Notice. Such shareowner
will retain all other rights of a shareowner until those rights
are canceled or modified by the consummation of the merger. A
record shareowner who does not demand payment or deposit his
certificates where required, each by the date set out in the
Dissenters' Notice, is not entitled to payment for such holder's
shares under the Appraisal Statute.
Except as described below, within ten days after the later
of the effective time, or the date of receipt of a payment
demand, First Bankshares must, by written notice, offer to each
shareowner who has properly filed a payment demand, and who has
deposited his First Bankshares certificates representing First
Bankshares common stock, to pay an amount First Bankshares
estimates to be a fair value for the shareowner's shares, plus
accrued interest from the effective time. Such offer of payment
must be accompanied by:
* certain of First Bankshares' recent financial statements;
* a statement of First Bankshares' estimate of the fair value
of the shares involved;
* an explanation of how the interest was calculated;
* a statement of the dissenter's right to demand payment under
Section 14-2-1327 of the Georgia Code; and
* a copy of the Appraisal Statute.
Any shareowner who accepts such offer by written notice to
First Bankshares within 30 days after the offer, or who is deemed
to have accepted such offer due to his failure to respond to such
offer within 30 days, shall receive payment for his shares within
60 days after such offer to pay or consummation of the merger,
whichever is later. If the merger is not consummated within 60
days following the date set for demanding payment and depositing
share certificates, First Bankshares must return the deposited
certificates and release the transfer restrictions imposed on
uncertified shares. If First Bankshares then consummates the
merger, it must send a new Dissenters' Notice and repeat the
payment demand procedure.
In the event that First Bankshares fails to make any payment
offer within ten days after the later of the date the proposed
corporate action is taken or the date of receipt of a payment
demand, First Bankshares must provide certain information to the
shareowner (the financial statements and other information
required to accompany First Bankshares' payment offer) within ten
days after receipt of a written demand from such dissenting
shareowner for such information. Additionally, such dissenting
shareowner may, at any time within the three years following the
consummation of the merger, notify First Bankshares of his own
estimate of the fair value of his shares and the interest due
thereon, and demand payment of such amounts, if:
* a dissenting shareowner is dissatisfied with an offer for
payment made by First Bankshares within the time period set forth
above, or
* First Bankshares, having failed to effect the merger, does
not return the deposited First Bankshares certificates or release
the transfer restrictions imposed on uncertificated shares within
60 days after the date set for demanding payment.
A dissenting shareowner waives the right to demand payment
under section 14-2-1327 of the Georgia Code unless he notifies
First Bankshares of his demand in writing within 30 days after
First Bankshares makes or offers payment for such holder's
shares.
If such a demand for payment from any dissenting shareowner
remains unsettled, within 60 days following the receipt by First
Bankshares of such demand for payment, First Bankshares must
institute proceedings in the superior court of the county where
First Bankshares' registered office is located (the "Court")
requesting a nonjury equitable determination of the fair value of
such dissenting shareowner's shares and the accrued interest owed
to such dissenting shareowner. If First Bankshares fails to file
such action within the 60-day period, First Bankshares must pay
each dissenting shareowner whose demand remains unsettled the
amount demanded by such dissenting shareowner. First Bankshares
is required to make all dissenting shareowners whose demands
remain unsettled parties to the proceeding and to serve a copy of
the petition upon each such dissenting shareowner. The Court
may, in its discretion, appoint an appraiser to receive evidence
and recommend a decision on the question of fair value. Each
dissenting shareowner made a party to the proceeding will be
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.
The Court will determine and assess the costs and expenses
of such proceeding (including reasonable compensation for and the
expenses of the appraiser, but excluding fees and expenses of
counsel and experts) against First Bankshares, except that the
Court may assess such costs and expenses as it deems appropriate
against any or all of the dissenting shareowners if it finds that
their demand for additional payment was arbitrary, vexatious or
otherwise not in good faith. The Court may award fees and
expenses of counsel and experts in amounts the Court finds
equitable:
* against First Bankshares, if First Bankshares did not
substantially comply with the requirements of the corporation as
set out in the Appraisal Statute;
* against either First Bankshares or the dissenting
shareowner(s), if the Court finds that either party's actions
were arbitrary, vexatious or otherwise not in good faith; or
* if the Court finds that the services of attorneys for any
dissenting shareowner were of substantial benefit to other
dissenting shareowners similarly situated, and that the fees for
those services should not be assessed against First Bankshares,
the court may award those attorneys reasonable fees out of the
amounts awarded the dissenting shareowners who were benefited.
No action by any dissenting shareowner to enforce
dissenters' rights may 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 First
Bankshares in compliance with the Dissenters' Notice and payment
offer requirements of Sections 14-2-1320 and 14-2-1322 of the
Georgia Code.
The foregoing summary of the applicable provisions of the
Appraisal Statute is not intended to be a complete statement of
such provisions, and is qualified in its entirety by reference to
such sections, which are included as Appendix D to this Proxy
Statement/Prospectus. The provisions of the statutes are
technical and complex. It is suggested that any First Bankshares
shareowner who desires to exercise the right to object to the
Agreement and Plan of Merger consult counsel. Failure to comply
with the provisions of the statute may defeat a shareowner's
right to dissent. No further notice of the events giving rise to
dissenters' rights or any steps associated therewith will be
furnished to First Bankshares shareowners, except as indicated
above or as otherwise required by law.
Any dissenting First Bankshares shareowner who perfects the
right to be paid the value of such holder's shares will recognize
taxable gain or loss upon receipt of cash for such shares for
federal income tax purposes. See "-- Certain Federal Income Tax
Consequences," on page 48.
Conduct of Business Pending the Merger
Capital City and First Bankshares have agreed in the
Agreement and Plan of Merger that unless the other party gives
prior written consent, and except as otherwise expressly
contemplated in the Agreement and Plan of Merger, each of Capital
City and First Bankshares will, and will cause its respective
subsidiaries to:
* operate its business only in the usual, regular, and
ordinary course;
* preserve intact its business organization and assets and
maintain its rights and franchises; and
* take no action which would:
- adversely affect the ability of any party to obtain any
consents required for the transactions contemplated by the
Agreement and Plan of Merger without the imposition of certain
conditions or restrictions referred to in the Agreement and Plan
of Merger, or
- adversely affect the ability of any party to perform its
covenants and agreements under the Agreement and Plan of Merger.
In addition, First Bankshares has agreed that, from the date
of the Agreement and Plan of Merger until the earlier of the
effective time of the merger or the termination of the Agreement
and Plan of Merger, unless Capital City has given prior written
consent, and except as otherwise expressly contemplated by the
Agreement and Plan of Merger, First Bankshares will not do or
agree or commit to do, or permit any of its subsidiaries to do or
agree or commit to do, any of the following:
* amend its Articles of Incorporation, Bylaws or other
governing instruments;
* incur any additional debt obligation or other obligation for
borrowed money in excess of an aggregate of $50,000 except in the
ordinary course of the business of First Bankshares or its
subsidiaries consistent with past practices (which shall include
creation of deposit liabilities, purchases of federal funds,
renewals of advances from the Federal Home Loan Bank which
advances are outstanding on the date of the Agreement and Plan of
Merger, and entry into repurchase agreements fully secured by
U.S. government or agency securities), or impose, or suffer the
imposition, on any asset of First Bankshares of any lien or
permit any such lien to exist (other than in connection with
deposits, repurchase agreements, bankers acceptances, "treasury
tax and loan" accounts established in the ordinary course of
business, the satisfaction of legal requirements in the exercise
of trust powers, and liens in effect as of the date of the
Agreement and Plan of Merger that were previously disclosed to
Capital City by First Bankshares);
* repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of First
Bankshares or, except as consistent with past practice, declare
or pay any dividend or make any other distribution in respect of
First Bankshares' capital stock, except that First Bankshares
shall be allowed to pay to its shareowners First Bankshares'
regular dividend of $1.85 per share of First Bankshares common
stock for the second half of 2000. However, if the merger is
consummated prior to the record date for Capital City's fourth
quarter 2000 dividend, the First Bankshares dividend payable to
each First Bankshares shareowner shall be reduced by the Capital
City fourth quarter 2000 dividend payable to each First
Bankshares shareowner;
* except for the Agreement and Plan of Merger, or as
previously disclosed to Capital City by First Bankshares, issue,
sell, pledge, encumber, authorize the issuance of, enter into any
contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any
additional shares of First Bankshares common stock, or any stock
appreciation rights, or any option, warrant, or other equity right;
* adjust, split, combine or reclassify any capital stock of
First Bankshares or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of First
Bankshares common stock, or sell, lease, mortgage or otherwise
dispose of or otherwise encumber any shares of capital stock of
First Bankshares or any asset having a book value in excess of
$50,000 (other than in the ordinary course of business for
reasonable and adequate consideration);
* except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have
maturities of one year or less, purchase any securities or make
any material investment, either by purchase of stock or
securities, contributions to capital, asset transfer, or purchase
of any assets, in any entity other than a wholly owned First
Bankshares subsidiary, or otherwise acquire direct or indirect
control over any entity, other than in connection with:
- foreclosures in the ordinary course of business,
- acquisitions of control by a depository institution
subsidiary in its fiduciary capacity, or
- the creation of new wholly owned subsidiaries organized to
conduct or continue activities otherwise permitted by the
Agreement and Plan of Merger;
* any of the following:
- make any new loans or extensions of credit or renew, extend
or renegotiate any existing loans or extensions of credit:
(1) with respect to properties or businesses outside of Lee and
Chambers Counties, Alabama, and Troup and Harris Counties,
Georgia, or to borrowers whose principal residence is outside
such counties unless such loans or extensions of credit are to
existing borrowers of First National that are borrowers on the
date of the Agreement and Plan of Merger,
(2) that are unsecured in excess of $100,000, or
(3) that are secured in excess of $250,000.
- purchase or sell (except for sales of single-family
residential first mortgage loans in the ordinary course of First
Bankshares' business for fair market value) any whole loans,
leases, mortgages or any loan participations or agented credits
or other interest therein, or
- renew or renegotiate any loans or credits that are on any
watch list and/or are classified or special mentioned or take any
similar actions with respect to collateral held with respect to
debts previously contracted or other real estate owned, except
pursuant to safe and sound banking practices and with prior
disclosure to Capital City Bank;
First Bankshares may, however, without the prior
notice to or written consent of Capital City, renew
or extend existing credits on substantially similar
terms and conditions as present at the time such
credit was made or last extended, renewed or
modified, for a period not to exceed one year and at
rates not less than market rates for comparable
credits and transactions and without any release of
any collateral except as First Bankshares is
presently obligated under existing written agreements
kept as part of First Bankshares' official records.
If First Bankshares makes, extends, renews,
renegotiates, compromises or settles any loans or
extensions of credit or releases any collateral
therefor that are subject to the prior disclosure to
Capital City hereunder and Capital City has objected
thereto, the exchange ratio shall be proportionally
reduced by an amount equal to all outstanding
principal of, and all accrued but unpaid interest and
other charges on, the loan(s) as of the effective time.
* grant any increase in compensation or benefits to the
employees or officers of First Bankshares, except in accordance
with past practice previously disclosed to Capital City by First
Bankshares or as required by law, pay any severance or
termination pay or any bonus other than pursuant to written
policies or written contracts in effect on the date of the
Agreement and Plan of Merger and previously disclosed to Capital
City by First Bankshares; enter into or amend any severance
agreements with officers of First Bankshares; grant any increase
in fees or other increases in compensation or other benefits to
directors of First Bankshares except in accordance with past
practice previously disclosed to Capital City by First
Bankshares; or voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits or
other equity rights;
* enter into or amend any employment contract between First
Bankshares and any person (unless such amendment is required by
law) that First Bankshares does not have the unconditional right
to terminate without liability (other than liability for services
already rendered) at any time on or after the effective time of
the merger;
* adopt any new employee benefit plan of First Bankshares or
terminate or withdraw from, or make any material change in or to,
any existing employee benefit plans of First Bankshares other
than any such change that is required by law or that, in the
opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan, or make any distributions from
such employee benefit plans, except as required by law, the terms
of such plans or consistent with past practice;
* make any significant change in any tax or accounting methods
or systems of internal accounting controls, except as may be
appropriate to conform to changes in tax laws or regulatory
accounting requirements or generally accepted accounting
principles;
* commence any litigation other than in accordance with past
practice, or settle any litigation involving any liability of
First Bankshares for material money damages or restrictions upon
the operations of First Bankshares; or
* except in the ordinary course of business, enter into,
modify, amend or terminate any material contract calling for
payments exceeding $50,000 or waive, release, compromise or
assign any material rights or claims.
The Agreement and Plan of Merger also provides that from the
date of the Agreement and Plan of Merger until the earlier of the
effective time of the merger or the termination of the Agreement
and Plan of Merger, unless First Bankshares has given prior
written consent, and except as otherwise expressly contemplated
by the Agreement and Plan of Merger, Capital City will not amend
the Articles of Incorporation or Bylaws of Capital City in any
manner adverse to the holders of First Bankshares common stock.
Management and Operations after the Merger; Interests of Certain
Persons in the Merger
Following the merger, First National will be merged with and
into Capital City Bank. Certain members of First Bankshares'
management and the First Bankshares Board of Directors have
interests in the merger in addition to their interests as
shareowners of First Bankshares generally. These include, among
other things, provisions in the Agreement and Plan of Merger
relating to indemnification of directors and officers and
eligibility for certain Capital City employee benefits.
Indemnification and Advancement of Expenses. With respect
to all claims brought during the period of four years after the
effective time of the merger, the Agreement and Plan of Merger
provides that Capital City will indemnify, defend and hold
harmless the present and former directors, officers and employees
of the First Bankshares entities against all liabilities arising
out of actions or omissions arising out of the Indemnified
Party's service as a director, officer or employee of First
Bankshares or, at First Bankshares' request, of another
corporation, partnership, joint venture, trust or other
enterprise occurring at or prior to the effective time of the
merger (including the transactions contemplated by the Agreement
and Plan of Merger) to the fullest extent permitted under Florida
law. Without limiting the foregoing, in any case in which
approval by Capital City is required to effectuate any
indemnification, Capital City shall direct, at the election of
the indemnified party, that the determination of any such
approval will be made by independent counsel mutually agreed upon
between Capital City and the indemnified party.
Capital City shall, to the extent available (and First
Bankshares shall cooperate prior to the effective time of the
merger in these efforts), maintain in effect for a period of two
years after the effective time of the merger First Bankshares'
existing directors' and officers' liability insurance policy
provided that Capital City may substitute therefor:
* policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less
advantageous, or
* with the consent of First Bankshares given prior to the
effective time of the merger, any other policy with respect to
claims arising from facts or events that occurred prior to the
effective time of the merger and covering persons who are
currently covered by such insurance;
provided that Capital City will not be obligated to make
aggregate premium payments for such two-year period in respect of
such policy (or coverage replacing such policy) which exceed, for
the portion related to First Bankshares' directors and officers,
150% of the annual premium payments on First Bankshares' current
policy in effect as of the date of the Agreement and Plan of
Merger.
Other Matters Relating to Employee Benefit Plans. The
Agreement and Plan of Merger also provides that, following the
effective time of the merger, Capital City will provide generally
to officers and employees of the First Bankshares entities
employee benefits under employee benefit and welfare plans (other
than stock option or other plans involving the potential issuance
of Capital City common stock), on terms and conditions which when
taken as a whole are substantially similar to those currently
provided by the Capital City entities to their similarly situated
officers and employees. Capital City, however, will provide
generally to officers and employees of First Bankshares entities
benefits in accordance with the policies of Capital City.
Capital City will waive any pre-existing condition exclusion
under any employee health plan for which any employees and/or
officers and dependents covered by First Bankshares plans as of
the effective time of the merger of the First Bankshares entities
will become eligible by virtue of the preceding sentence, to the
extent:
* the pre-existing condition was covered under the
corresponding plan maintained by the First Bankshares entity, and
* the individual affected by the pre-existing condition was
covered by the First Bankshares entity's corresponding plan on
the date which immediately precedes the effective time.
For purposes of participation, vesting and (except in the
case of Capital City retirement plans) benefit accrual under
Capital City's employee benefit plans, the service of the
employees of the First Bankshares entities prior to the effective
time of the merger will be treated as service with a Capital City
entity participating in such employee benefits plans. Capital
City and its subsidiaries will honor in accordance with their
terms all employment, consulting and other compensation contracts
disclosed by First Bankshares to Capital City between any First
Bankshares entity and any current or former director, officer, or
employee thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the effective time of
the merger under the First Bankshares benefit plans.
Subject to compliance with applicable laws and the absence
of any material adverse effects upon Capital City or any First
Bankshares benefit plans and/or Capital City benefit plans,
Capital City intends to merge the First Bankshares 401(k) Plan
with the Capital City 401(k) Plan.
Employment Agreements. A. Drew Ferguson, III, Scott A.
Huguley, Gerald B. Andrews, Jr., and Karen Meadows will each
enter into an employment agreement with Capital City or Capital
City Bank which will be effective as of the effective time of the
merger. These employment agreements will contain standard
provisions for terminating any existing employment arrangements
between these individuals and any of the First Bankshares
entities.
Stock Option Agreement
Execution of the Stock Option Agreement, dated as of
September 25, 2000, by and between Capital City and First
Bankshares was a condition to Capital City's merger proposal.
Pursuant to the Stock Option Agreement, First Bankshares granted
Capital City an option (the "Option") to purchase up to 38,304
shares of First Bankshares common stock, representing
approximately 19.9% of the issued and outstanding shares of First
Bankshares common stock without giving effect to the shares
issuable upon exercise of the Option, at an exercise price of
$80.42, subject to the terms and conditions set forth in the
Stock Option Agreement. The Option may only be exercised upon the
occurrence of certain events (none of which have occurred). The
Stock Option Agreement is attached as Appendix C to this Joint
Proxy Statement/ Prospectus.
The Stock Option Agreement is intended to increase the
likelihood that the merger will be consummated in accordance with
the terms of the Agreement and Plan of Merger. The Stock Option
Agreement may have the effect of discouraging persons who might
now or prior to the effective time of the merger be interested in
acquiring all or a significant interest in First Bankshares from
considering or proposing such an acquisition, even if such
persons were prepared to pay a higher price per share for First
Bankshares common stock than the price per share implicit in the
exchange ratio in the Agreement and Plan of Merger. The
acquisition of First Bankshares (other than pursuant to the
Agreement and Plan of Merger) could cause the Option to become
exercisable. The existence of the Option could significantly
increase the cost to a potential acquiror of acquiring First
Bankshares compared to its cost had the Stock Option Agreement
and the Agreement and Plan of Merger not been entered into. Such
increased cost might discourage a potential acquiror from
considering or proposing an acquisition or might result in a
potential acquiror proposing to pay a lower per share price to
acquire First Bankshares than it might otherwise have proposed to
pay. First Bankshares and Capital City believe that the exercise
or repurchase of the Option is likely to prohibit any other
acquiror of First Bankshares from accounting for an acquisition
thereof using the "pooling-of-interests" accounting method for a
period of two years. Accordingly, the existence of the Stock
Option Agreement may deter significantly or completely preclude
an acquisition of First Bankshares by certain other financial
services organizations.
Under the terms of the Stock Option Agreement, the exercise
price is $80.42 per share and payable in cash. The number of
shares of First Bankshares common stock issuable under the Stock
Option Agreement, and the exercise price, are subject to
adjustment in the event of certain changes in First Bankshares'
capitalization.
Subject to certain limitations, the option is exercisable,
in whole or in part, at any time or from time to time after the
occurrence of both an Extension Event (as defined in the Stock
Option Agreement) and a Purchase Event (as defined in the Stock
Option Agreement) prior to the occurrence of an Exercise
Termination Event (as defined in the Stock Option Agreement),
provided that Capital City has sent written notice of such
exercise within 90 days following such Purchase Event. Extension
Events and Purchase Events are events which primarily involve
attempts by (i) First Bankshares to merge, consolidate or
otherwise sell substantially all of its common stock or assets to
an entity other than Capital City, or (ii) another entity to
acquire 20% or more of the voting power of First Bankshares or
any of its subsidiaries.
The Stock Option Agreement also contains a provision
allowing Capital City to require First Bankshares upon the
occurrence of a Repurchase Event (as defined below) to repurchase
the Option as well as all shares of First Bankshares common stock
previously purchased pursuant to the Stock Option Agreement, at
such prices as are set forth in the Stock Option Agreement. The
Stock Option Agreement also provides First Bankshares the right
after the termination of the Option to repurchase First
Bankshares common stock acquired pursuant to the Stock Option
Agreement, subject to certain conditions and limitations.
A Repurchase Event will deemed to have occurred (i) upon the
consummation of any merger, consolidation or similar transaction
involving First Bankshares or any purchase, lease or other
acquisition of all or a substantial portion of the assets of
First Bankshares, other than any such transaction which would not
constitute an Acquisition Transaction (as defined in the Stock
Option Agreement) or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding
shares of First Bankshares common stock, provided that no such
event shall constitute a Repurchase Event unless an Extension
Event shall have occurred prior to an Exercise Termination Event.
Except to the extent that Capital City has previously
exercised its rights to require repurchase of the Option or
shares purchased pursuant to the Option, during the six-month
period commencing after the first occurrence of an Exercise
Termination Event, First Bankshares may repurchase from Capital
City at a price set forth in the Stock Option Agreement all (but
not less than all, subject to certain conditions set forth in the
Stock Option Agreement) of the First Bankshares common stock
acquired by Capital City pursuant to the Stock Option Agreement
and with respect to which Capital City has beneficial ownership
at the time of such repurchase. The repurchase price takes into
account such factors as interest on the price paid for the shares
of First Bankshares common stock repurchased and Capital City's
out-of-pocket expenses incurred in connection with the
transactions contemplated by the Agreement and Plan of Merger.
Neither First Bankshares nor Capital City may assign any of
its rights and obligations under the Stock Option Agreement or
the Option to any other person without the express written
consent of the other party, except that if a Purchase Event
occurs prior to an Exercise Termination Event, Capital City,
subject to the terms of the Stock Option Agreement, may sell,
assign, transfer or otherwise dispose of the Option or all or any
of the shares of First Bankshares common stock acquired by it
pursuant to the Option if it gives First Bankshares written
notice of the proposed transaction setting forth the terms of the
proposed transaction. This notice will be deemed an offer to
purchase such Option by Capital City to First Bankshares, which
may be accepted within 10 business days of the receipt of such
notice, on the same terms and conditions and at the same price at
which Capital City is proposing to transfer the Option or such
shares to a third party. In the event of the failure or refusal
of the Company to purchase the Option or all the shares covered
by notice or if any governmental entity disapproves First
Bankshares' proposed purchase of the Option or such shares,
Capital City may, within 60 days from the date of notice, sell
all, but not less than all, of the Option or such shares to such
third party at no less than the price specified in the prior
notice and on terms no more favorable to the purchaser than those
set forth in the notice. The restrictions on the sale of the
Option or any of the shares of First Bankshares common stock
acquired pursuant to the Option do not apply to (i) any
disposition as a result of which such proposed transferee would
beneficially own not more than 2% of the voting power of First
Bankshares, (ii) any disposition of First Bankshares common
stock by a person to whom First Bankshares has sold shares of
First Bankshares common stock issued upon exercise of the Option
or (iii) any sale by means of a public offering registered under
the Securities Act of 1933, as amended.
Certain Federal Income Tax Consequences
This section summarizes the material anticipated federal
income tax consequences of the merger. This summary is based on
the federal income tax laws now in effect. It does not take into
account possible changes in these laws or interpretations,
including amendments to applicable statutes or regulations or
changes in judicial decisions or administrative rulings, some of
which may have retroactive effect. This summary does not purport
to address all aspects of the possible federal income tax
consequences of the merger and is not intended as tax advice to
any person. This summary does not address the federal income tax
consequences of the merger to shareowners in light of their
particular circumstances or status (for example, as foreign
persons, tax-exempt entities, dealers in securities, and
insurance companies, among others), nor does this summary address
any consequences of the merger under any state, local, estate, or
foreign tax laws. You are urged to consult your own tax advisers
as to the specific tax consequences of the merger to you,
including tax return reporting requirements, the application and
effect of federal, foreign, state, local, and other tax laws, and
the implications of any proposed changes in the tax laws.
The parties to the merger have not required, and will not
request, a federal income tax ruling from the Internal Revenue
Service ("IRS") as to the tax consequences of the merger.
Instead, Gunster, Yoakley & Stewart, P.A., counsel to Capital
City, will render an opinion to Capital City and First Bankshares
concerning the material federal income tax consequences of the
proposed merger under federal income tax law. It is such firm's
opinion, based upon the assumption that the merger is consummated
in accordance with the Agreement and Plan of Merger and the
representations made by the management of Capital City and First
Bankshares, that the merger will constitute a reorganization
within the meaning of Section 368(a) of the Code.
Assuming the merger qualifies as a reorganization pursuant
to Section 368(a) of the Code, the shareowners of First
Bankshares will have the following federal income tax
consequences:
* First Bankshares shareowners will recognize gain (but not
loss) from the exchange, but not in excess of the cash received;
the computation of gain and loss is made on a share by share
basis;
* the basis of the Capital City common stock received by the
First Bankshares shareowners in the merger will, in each
instance, be the same as the basis of the First Bankshares common
stock surrendered in exchange therefor, (i) decreased by the cash
received from such stock and (ii) increased by the gain
recognized in the merger exchange;
* the holding period of the Capital City common stock received
by the First Bankshares shareowners will, in each instance,
include the period during which the First Bankshares common stock
surrendered in exchange therefor was held, provided that the
First Bankshares common stock was held as a capital asset on the
date of the exchange;
* the payment of cash to First Bankshares shareowners in lieu
of fractional shares of Capital City common stock will be treated
for federal income tax purposes as if the fractional shares were
distributed as part of the exchange and then were redeemed by
Capital City; it is anticipated that any gain or loss recognized
upon such exchange will be capital gain or loss, provided the
fractional share constitutes a capital asset in the hands of the
exchanging shareowner; and
* where, pursuant to the exercise of dissenters' rights, a
shareowner receives cash in exchange for First Bankshares common
stock, the former First Bankshares shareowner will be subject to
federal income tax as a result of such transaction. It is
anticipated that the cash will be treated as having been received
as a redemption in exchange for such holder's First Bankshares
common stock.
Each First Bankshares shareowner who receives Capital City
common stock in the merger will be required to attach a statement
to such shareowner's federal income tax return for the year of
the merger which describes the facts of the merger, including the
shareowner's basis in the First Bankshares common stock
exchanged, and the number of shares of Capital City common stock
received in exchange for First Bankshares common stock. Each
shareowner should also keep as part of such shareowner's
permanent records information necessary to establish such
shareowner's basis in, and holding period for, the Capital City
common stock received in the merger.
If the merger fails to qualify as a tax-free reorganization
for any reason, the principal federal income tax consequences,
under currently applicable law, would be as follows:
* gain or loss would be recognized by the holders of First
Bankshares common stock upon the exchange of such shares in the
merger for shares of Capital City common stock, the amount of
such gain or loss will be equal to the difference between the
fair market value of the shares of Capital City common stock
received in the merger, plus the cash portion of the
consideration and any cash in lieu of fractional shares, and such
shareowner's basis in the First Bankshares common stock
surrendered in the merger;
* the tax basis of the Capital City common stock to be
received by the holders of First Bankshares common stock in the
merger would be the fair market value of such shares of Capital
City common stock at the effective time of the merger;
* the holding period of such shares of Capital City common
stock to be received by First Bankshares shareowners pursuant to
the merger would begin the day after the effective time of the
merger; and
* First Bankshares will be deemed to have sold all of its
assets to Capital City in a taxable exchange as a result of the
merger. As a result, First Bankshares would recognize gain or
loss equal to the difference between the sum of the fair market
value of the Capital City common stock issued to the First
Bankshares shareowners in the merger plus the liabilities of
First Bankshares assumed by Capital City (or to which First
Bankshares' assets are taken subject) at the time of the merger
and First Bankshares' basis in its assets. First Bankshares
would be liable for (and Capital City would assume as a result of
the merger) any tax due with respect to any net gain recognized
as a result of the deemed sale of assets by First Bankshares.
If the condition of receiving the tax opinion is waived by
First Bankshares, First Bankshares will resolicit its shareowners
prior to proceeding with the merger.
Accounting Treatment
The merger will be accounted for as a "purchase," as that
term is used under generally accepted accounting principles, for
accounting and financial reporting purposes. Under purchase
accounting, the assets and liabilities of First Bankshares as of
the effective time of the merger will be recorded at their
respective fair values and added to those of Capital City. Any
excess of purchase price over the fair values is recorded as
goodwill. Financial statements of Capital City issued after the
merger would reflect such fair values and would not be restated
retroactively to reflect the historical financial position or
results of operations of First Bankshares.
There are certain conditions on the exchange of First
Bankshares common stock for Capital City common stock by
affiliates of First Bankshares, and there are certain
restrictions on the transferability of the Capital City common
stock received by those affiliates. See "-- Resales of Capital
City Common Stock," on page 51.
Expenses and Fees
The Agreement and Plan of Merger provides that each of the
parties will bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions
contemplated by the Agreement and Plan of Merger, including
filing, registration and application fees, printing fees, and
fees and expenses of financial or other consultants, investment
bankers, accountants, and counsel.
In the event that First Bankshares terminates the Agreement
and Plan of Merger by entering into a definitive agreement with
respect to the sale of First Bankshares to any person or entity
who or which has made a proposal to acquire First Bankshares,
First Bankshares will pay Capital City $350,000 for losses and
damages of Capital City incurred in connection with the merger.
Resales of Capital City Common Stock
The Capital City common stock issued to shareowners of First
Bankshares in connection with the merger will be registered under
the Securities Act and will be freely transferable by those
shareowners of First Bankshares and Capital City not considered
to be "Affiliates" of First Bankshares or Capital City.
"Affiliates" generally are defined as persons or entities who
control, are controlled by, or are under common control with
First Bankshares or Capital City (generally, directors, executive
officers and 10% shareowners).
Rules 144 and 145 under the Securities Act of 1933, as
amended (the "Securities Act") restrict the sale of Capital City
common stock received in the merger by Affiliates and certain of
their family members and related interests. Generally speaking,
during the one-year period following the effective time of the
merger, Affiliates of First Bankshares or Capital City may resell
publicly the Capital City common stock received by them in the
merger within certain limitations as to the amount of Capital
City common stock sold in any three-month period and as to the
manner of sale. After this one-year period, Affiliates of First
Bankshares who are not Affiliates of Capital City may resell
their shares without restriction. The ability of Affiliates to
resell shares of Capital City common stock received in the merger
under Rule 144 or 145 as summarized in this Proxy
Statement/Prospectus generally will be subject to Capital City's
having satisfied its reporting requirements under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act") for
specified periods prior to the time of sale. Affiliates also
would be permitted to resell Capital City common stock received
in the merger pursuant to an effective registration statement
under the Securities Act or an available exemption from the
Securities Act registration requirements. This Proxy
Statement/Prospectus does not cover any resales of Capital City
common stock received by persons who may be deemed to be
Affiliates of First Bankshares or Capital City.
First Bankshares has agreed to cause each person First
Bankshares reasonably believes to be an Affiliate of First
Bankshares to sign and deliver to Capital City an agreement
providing that such Affiliate will not sell, pledge, transfer, or
otherwise dispose of any Capital City common stock obtained as a
result of the merger except in compliance with the Securities Act
and the rules and regulations of the SEC. The certificates
representing Capital City common stock issued to Affiliates in
the merger may bear a legend summarizing these restrictions. See
"-- Conditions to Consummation of the Merger," on page 32.
The receipt of the First Bankshares Affiliate Agreements by
Capital City is a condition to Capital City's obligations to
consummate the merger.
DESCRIPTION OF CAPITAL CITY CAPITAL STOCK
Capital City is authorized to issue 90,000,000 shares of
Capital City common stock ($.01 par value per share), of which
10,191,848 shares were issued and outstanding as of the Record
Date. Capital City is also authorized to issue 3,000,000 shares
of Capital City preferred stock ($.01 par value per share), none
of which is issued and outstanding.
Holders of Capital City common stock are entitled to receive
such dividends as may be declared by the Board of Directors out
of funds legally available therefor. The ability of Capital City
to pay dividends is affected by the ability of its subsidiary
depository institution to pay dividends. The approval of the
Florida Department of Banking and Finance is required if the
total of all dividends declared by Capital City's subsidiary
bank, Capital City Bank, in any calendar year exceeds Capital
City Bank's net profits (as defined in the Florida Statutes) for
that year combined with its retained net profits for the
preceding two calendar years. In 2001, Capital City Bank may
declare dividends without regulatory approval of $17.2 million
plus an additional amount equal to the net profits of Capital
City Bank for 2001 up to the date of any such dividend
declaration. See "BUSINESS - Supervision and Regulation - The
Bank - Dividends" and "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- Note 14 - Dividend Restrictions" in Capital City's 1999 Form 10-
K attached hereto as Appendix F.
For a further description of Capital City capital stock, See
"EFFECT OF THE MERGER ON RIGHTS OF SHAREOWNERS - Authorized
Capital Stock," on page 55.
EFFECT OF THE MERGER ON RIGHTS OF SHAREOWNERS
In the merger, shareowners of First Bankshares will exchange
their shares of First Bankshares for shares of Capital City.
First Bankshares is a registered bank holding company
headquartered in West Point, Georgia and is governed by Georgia
law and First Bankshares' Articles of Incorporation and Bylaws.
Capital City is a registered bank holding company headquartered
in Tallahassee, Florida and is governed by Florida law and
Capital City's Articles of Incorporation and Bylaws. There are
significant differences between the rights of First Bankshares
shareowners and Capital City shareowners. The following is a
summary of the principal differences between the current rights
of First Bankshares shareowners and those of Capital City's
shareowners.
The following summary is not intended to be complete and is
qualified in its entirety by reference to the Georgia Code and
the Florida Act, as well as the Articles of Incorporation and
Bylaws of First Bankshares and Capital City.
Anti-Takeover Provisions Generally
Capital City's Articles of Incorporation and Bylaws contain
certain provisions designed to assist the Capital City Board of
Directors in playing a role if any group or person attempts to
acquire control of Capital City so that the Capital City Board of
Directors can protect the interests of Capital City and its
shareowners under the circumstances. These provisions may help
the Capital City Board of Directors determine that a sale of
control is in the best interests of Capital City's shareowners,
or enhance the Capital City Board of Directors' ability to
maximize the value to be received by the shareowners upon a sale
of control of Capital City. In addition, at September 30, 2000,
William G. Smith, Jr., President and Chief Executive Officer of
Capital City, and his brother, Robert Hill Smith, Vice President
of Capital City, together beneficially owned approximately 34.96%
of Capital City's outstanding common stock. Such ownership could
also have the effect of deterring takeover proposals.
Although Capital City's management believes that these
provisions are beneficial to Capital City's shareowners, they
also may tend to discourage some takeover bids. As a result,
Capital City's shareowners may be deprived of opportunities to
sell some or all of their shares at prices that represent a
premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive
and time-consuming process. To the extent that these provisions
discourage undesirable proposals, Capital City may be able to
avoid those expenditures of time and money.
These provisions also may discourage open market purchases
by a company that may desire to acquire Capital City. Those
purchases may increase the market price of Capital City common
stock temporarily, and enable shareowners to sell their shares at
a price higher than that they might otherwise obtain. In
addition, these provisions may decrease the market price of
Capital City common stock by making the stock less attractive to
persons who invest in securities in anticipation of price
increases from potential acquisition attempts. The provisions
also may make it more difficult and time consuming for a
potential acquiror to obtain control of Capital City through
replacing the Board of Directors and management. Furthermore,
the provisions may make it more difficult for Capital City's
shareowners to replace the Board of Directors or management, even
if a majority of the shareowners believe that replacing the Board
of Directors or management is in the best interests of Capital
City. Because of these factors, these provisions may tend to
perpetuate the incumbent Board of Directors and management. For
more information about these provisions, see "--Authorized
Capital Stock," on page 54, "-- Amendment of Articles of
Incorporation and Bylaws," on page 56, "-- Classified Board of
Directors and Absence of Cumulative Voting," on page 57, "--
Director Removal and Vacancies," on page 58, "--
Indemnification," on page 58, "-- Ability of Directors to
Consider Interests Other than Shareowner Interests" on page 62, "-
- Actions by Shareowners Without a Meeting," on page 63, "--
Shareowner Nominations," on page 63.
Authorized Capital Stock
Capital City. Capital City's Articles of Incorporation
authorize the issuance of up to (1) 90,000,000 shares of Capital
City $.01 par value common stock, of which 10,191,848 shares were
issued and outstanding as of the Record Date, and (2) 3,000,000
shares of $.01 par value preferred stock, of which no shares are
issued. Capital City's Board of Directors may authorize the
issuance of additional shares of Capital City common stock
without further action by Capital City's shareowners, unless such
action is required in a particular case by applicable laws or
regulations or by any stock exchange upon which Capital City's
capital stock may be listed. Capital City's shareowners do not
have the preemptive right to purchase or subscribe to any
unissued authorized shares of Capital City common stock or any
option or warrant for the purchase thereof.
Capital City's Board of Directors may issue, without any
further action by the shareowners, shares of Capital City
preferred stock, in one or more classes or series, with such
voting, conversion, dividend, redemption and liquidation rights
as the Board may specify. In establishing and issuing shares of
Capital City preferred stock, Capital City's Board of Directors
may designate that Capital City preferred stock will vote as a
separate class on any or all matters, thus diluting the voting
power of the Capital City common stock. The existence of this
ability could render more difficult or discourage an attempt to
gain control of Capital City by means of a tender offer, merger,
proxy contest or otherwise. The Board also may designate that
Capital City preferred stock will have dividend rights that are
cumulative and that receive preferential treatment compared to
Capital City common stock, and that Capital City preferred stock
will have liquidation rights with priority over Capital City
common stock in the event of Capital City's liquidation. The
Board also may designate whether or not Capital City preferred
stock shall be subject to the operation of retirement or sinking
funds to be applied to the purchase or redemption of such
preferred shares, and the terms and provisions relative to the
operation thereof.
Subject to the payment of cash in lieu of fractional shares
and payments made to dissenting shareowners, Capital City will
issue an estimated 701,000 shares of Capital City common stock in
the merger. Based on the number of shares of Capital City common
stock outstanding on the record date, it is anticipated that,
following the consummation of the merger, a total of
approximately 10,892,848 shares of Capital City common stock will
be outstanding.
The authority to issue additional shares of Capital City
common stock provides Capital City with the flexibility necessary
to meet its future needs without the delay resulting from seeking
shareowner approval. The authorized but unissued shares of
Capital City common stock will be issuable from time to time for
any corporate purpose, including, without limitation, stock
splits, stock dividends, employee benefit and compensation plans,
acquisitions, and public or private sales for cash as a means of
raising capital. Such shares could be used to dilute the stock
ownership of persons seeking to obtain control of Capital City.
In addition, the sale of a substantial number of shares of
Capital City common stock to persons who have an understanding
with Capital City concerning the voting of such shares, or the
distribution or declaration of a dividend of shares of Capital
City common stock (or the right to receive Capital City common
stock) to Capital City shareowners, may have the effect of
discouraging or increasing the cost of unsolicited attempts to
acquire control of Capital City.
First Bankshares. First Bankshares is currently authorized
to issue 1,000,000 shares of First Bankshares $1.25 par value
common stock, of which 192,481 are outstanding as of the record
date. First Bankshares has no other classes of authorized
capital stock. First Bankshares shareowners do not have the
preemptive right to purchase or subscribe to any unissued
authorized shares of First Bankshares common stock.
Amendment Of Articles Of Incorporation And Bylaws
Capital City. Capital City's Articles of Incorporation
provide that the affirmative vote of the holders of at least two-
thirds of all the issued and outstanding voting shares of capital
stock is required to amend them. However, if such amendment has
received the prior approval by an affirmative vote of a majority
of "Disinterested Directors," as defined therein, then the
affirmative vote of the holders of a majority of all the shares
of capital stock of Capital City issued and outstanding and
entitled to vote, or such greater percentage approval as is
required by Florida law, is sufficient to amend the articles. A
"Disinterested Director" is defined in Section 607.0901(1)(h),
Florida Statutes, as:
* any member of the Board of Directors who was a member of the
Board of Directors before the later of January 1, 1987, or the
date on which an interested shareowner became an interested
shareowner; and
* any member of the Board of Directors who was recommended for
election by, or was elected to fill a vacancy and received the
affirmative vote of, a majority of the Disinterested Directors
then on the Board.
Subject to certain restrictions set forth below, either the
Board of Directors or the shareowners of Capital City may amend
Capital City's Bylaws by majority vote. The Board of Directors
may amend the Bylaws and adopt new Bylaws provided that:
* the Board of Directors may not alter, amend or repeal any
bylaw adopted by shareowners if the shareowners specifically
provide that such bylaw is not subject to amendment or repeal by
the Board; and
* in the case of any shareowner action, two-thirds of the
shareowners, acting only by voting at a special meeting, is
required to amend any bylaw provision pertaining to:
- meetings of shareowners,
- directors,
- indemnification of directors, officers and employees, and
- amendments.
First Bankshares. The First Bankshares Articles of
Incorporation contain no provision governing their amendment and
thus the Georgia Code dictates the requirements for such an
amendment. The Georgia Code provides that other than in the case
of certain routine amendments which may be made by a
corporation's Board of Directors without shareowner action (such
as changing the corporate name), and other amendments which the
Georgia Code specifically allows without shareowner action, the
corporation's Board of Directors must recommend any amendment of
the Articles of Incorporation to the shareowners (unless the
Board elects to make no such recommendation because of a conflict
of interest or other special circumstances and communicates the
reasons for its election to the shareowners) and the affirmative
vote of a majority of the votes entitled to be cast on the
amendment by each voting group entitled to vote on the amendment
(unless the Georgia Code, the Articles of Incorporation, or the
Board of Directors require a greater vote or a vote by voting
groups) is required to amend a corporation's Articles of
Incorporation.
The First Bankshares Bylaws may be amended by the
affirmative vote of a majority of all shares entitled to elect
directors or, alternatively, the Board of Directors by the
affirmative vote of a majority of all directors then holding
office, is required to amend them; provided, however, that, if
such action is to be taken at a meeting of the shareowners,
notice of the general nature of the proposed change in the Bylaws
shall be given in the notice of meeting. Any Bylaw adopted by
the Board of Directors may be altered, amended or repealed, and
new Bylaws adopted, by the shareowners. Any bylaw adopted by the
shareowners may be altered, amended or repealed by the Board of
Directors unless the shareowners prescribe that the bylaw may not
be altered, amended or repealed by the Board of Directors.
Classified Board Of Directors And Absence Of Cumulative Voting
Capital City. Capital City's Articles of Incorporation
provide that Capital City's Board of Directors is divided into
three classes, with each class to be as nearly equal in number as
possible. The term of the Class I directors terminates on the
date of the 2001 annual meeting of shareowners, the term of the
Class II directors terminates on the date of the 2002 annual
meeting of shareowners and the term of the Class III directors
terminates on the date of the 2003 annual meeting of shareowners.
At each annual meeting of shareowners, successors to the class of
directors whose term expires at that annual meeting are to be
elected for a three year term. The effect of Capital City having
a classified Board of Directors is that only approximately one-
third of the members of the Board is elected each year, which
effectively requires two annual meetings for Capital City's
shareowners to change a majority of the members of the Board of
Directors. The purpose of dividing Capital City's Board of
Directors into classes is to facilitate continuity and stability
of leadership of Capital City by ensuring that experienced
personnel familiar with Capital City will be represented on
Capital City's Board of Directors at all times, and to permit
Capital City's management to plan for the future for a reasonable
time. However, by potentially delaying the time within which an
acquiror could obtain working control of the Board of Directors,
this provision may discourage some potential mergers, tender
offers, or takeover attempts.
Pursuant to the Capital City Bylaws, each shareowner is
entitled to one vote for each share of Capital City common stock
held and is not entitled to cumulative voting rights in the
election of directors. With cumulative voting, a shareowner has
the right to cast a number of votes equal to the total number of
such holder's shares multiplied by the number of directors to be
elected. The shareowner has the right to distribute all of his
or her votes in any manner among any number of candidates or to
accumulate such shares in favor of one candidate. Directors are
elected by a plurality of the total votes cast by the shares
entitled to vote in the election. With cumulative voting, it may
be possible for minority shareowners to obtain representation on
the Board of Directors. Without cumulative voting, the holders
of more than 50% of the shares of Capital City common stock
generally have the ability to elect 100% of the directors. As a
result, the holders of the remaining Capital City common stock
effectively may not be able to elect any person to the Board of
Directors. The absence of cumulative voting thus could make it
more difficult for a shareowner who acquires less than a majority
of the shares of Capital City common stock to obtain
representation on Capital City's Board of Directors.
First Bankshares. First Bankshares' Articles of
Incorporation do not provide for a classified Board of Directors.
Thus, all First Bankshares directors are elected annually. In
addition, pursuant to First Bankshares' Bylaws, First Bankshares
shareowners do not have cumulative voting rights.
Director Removal And Vacancies
Capital City. Capital City's Articles of Incorporation
provide that:
* a director may be removed by the shareowners upon the
affirmative vote of the holders of two-thirds of the voting power
of all shares of capital stock entitled to vote generally in the
election of directors; and
* subject to the rights of the holders of any series of
preferred stock, then outstanding vacancies on the Board of
Directors may be filled only by the affirmative vote of a
majority of the remaining directors.
The purpose of this provision is to prevent a majority
shareowner from circumventing the classified board system by
removing directors and filling the vacancies with new individuals
selected by that shareowner. Accordingly, the provision may have
the effect of impeding efforts to gain control of the Board of
Directors by anyone who obtains a controlling interest in Capital
City common stock. The term of a director appointed to fill a
vacancy shall coincide with the term of the class of which such
director shall have been elected.
First Bankshares. First Bankshares' Bylaws provide that at
any shareowners meeting with respect to which notice of such
purpose has been given, the entire Board of Directors or any
individual director may be removed, with or without cause, by the
affirmative vote of the holders of a majority of the shares
entitled to vote at an election of directors.
First Bankshares' Bylaws also provide that if any vacancy
shall occur among the directors by reason of death, resignation,
incapacity to serve, increase in the number of directors, or
otherwise, the remaining directors shall continue to act, and
such vacancies may be filled by the shareowners of First
Bankshares in accordance with the Bylaws.
Indemnification
Capital City. The Florida Act provides that a director,
officer, employee or other agent of a Florida corporation:
* shall be indemnified by the corporation for all expenses of
such litigation actually and reasonably incurred when he or she
is successful on the merits on any legal proceeding;
* may be indemnified by the corporation for liability incurred
in connection with such legal proceedings (other than a
derivative suit), even if he or she is not successful on the
merits, if he or she acted in good faith and in a manner
reasonably believed to be in the best interest of the corporation
(and in the case of a criminal preceding, he or she had no
reasonable cause to believe that such conduct was unlawful); and
* may be indemnified by the corporation for expenses of a
derivative suit (a suit by a shareowner alleging a breach by a
director or officer of a duty owed to the corporation) and
amounts paid in settlement not to exceed, in the judgment of the
Board of Directors, the estimated costs and expenses of
litigating the proceeding to conclusion, even if he or she is not
successful on the merits, if he or she acted in good faith and in
a manner he or she reasonably believed to be in the best interest
of the corporation and the shareowners. If he or she is adjudged
liable in the performance of his or her duties to the
corporation, indemnification may be made in accordance with this
paragraph unless and only to the extent that a court determines
that in view of all of the circumstances, he or she is fairly and
reasonably entitled to indemnification for expenses to the extent
permitted by such court.
The indemnification described in the second and third bullet-
points above will be made only upon a determination by:
* a majority of a quorum of disinterested directors;
* if a quorum of disinterested directors is not obtainable, or
even if obtainable, by majority vote of a committee duly
designated by the Board of Directors (in which directors who are
parties may participate) consisting solely of two or more
directors who are not at the time parties to the proceeding;
* independent legal counsel in a written opinion;
* the shareowners (excluding the shares owned by the person
seeking indemnification); or
* the court in which the proceeding is or was pending, if
indemnification is proper under the circumstances because the
applicable standard of conduct has been met.
The Board of Directors may authorize the advancement of
litigation expenses to a director or officer upon receipt of an
undertaking by the director or officer to repay such expenses if
it is ultimately determined that he is not entitled to be
indemnified for them.
The Florida Act's statutory scheme of indemnification is not
exclusive and allows expanded indemnification by bylaw,
agreement, vote of shareowners or disinterested directors, or
otherwise if the Articles of Incorporation are amended to permit
expanded indemnification. Notwithstanding the expansion of
indemnification rights, the Florida Act does not permit
indemnification for:
* acts or omissions that involve a violation of the criminal
law, unless the director, officer employee or agent had
reasonable cause to believe his or her conduct was lawful or had
no reasonable cause to believe his or her conduct was unlawful;
* any transaction from which a director, officer or agent
derived an improper personal benefit;
* willful misconduct that shows a conscious disregard for the
best interest of the corporation in a proceeding by or in the
right of the corporation to procure a judgment in its favor or in
a proceeding by or in the right of a shareowner; or
* approving an improper distribution to shareowners.
Capital City's Bylaws provide for the mandatory
indemnification of any of its officers and directors for costs
and expenses actually and reasonably incurred in connection with
a legal proceeding, including amounts paid in settlement of such
a proceeding, to the fullest extent permitted by the Florida Act,
and requires advancement of such costs and other expenses during
pending proceedings. The Board of Directors has discretionary
ability to provide indemnification with respect to other persons,
such as agents and employees.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, or
persons controlling Capital City pursuant to the foregoing
provisions, Capital City has been informed that, in the opinion
of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
First Bankshares. First Bankshares' Bylaws provide that a
director, officer, employee or other agent of First Bankshares
shall be indemnified by the corporation for:
* expenses of litigation actually and reasonably incurred when
he or she is successful on the merits on any legal proceeding;
* liability incurred in connection with legal proceedings
(other than a derivative suit), even if he or she is not
successful on the merits, if he or she acted in a manner
reasonably believed to be in the best interests of First
Bankshares (and in the case of a criminal preceding, if he or she
had no reasonable cause to believe that such conduct was
unlawful); and
* expenses of a derivative suit (a suit by a shareowner
alleging a breach by a director or officer of a duty owed to the
corporation) and amounts paid in settlement, even if he or she is
not successful on the merits, if he or she acted in good faith
and in a manner he or she reasonably believed to be in the best
interests of First Bankshares, provided, however, that no
indemnification may be made in accordance with this clause if he
or she is adjudged liable for negligence or misconduct in the
performance of his or her duties to First Bankshares unless and
only to the extent that a court determines that in view of all of
the circumstances, he or she is fairly and reasonably entitled to
indemnification for expenses to the extent permitted by such court.
The indemnification described in the second and third bullet
points above shall be made only upon a determination by:
* a majority of a quorum of disinterested directors; or
* if a quorum of disinterested directors is not obtainable, or
even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion.
The Board of Directors may authorize the advancement of
litigation expenses to a director or officer upon receipt of an
undertaking by such director or officer to repay such expenses if
it is ultimately determined that he or she is not entitled to be
indemnified for them.
First Bankshares' bylaw provisions providing for
indemnification are not exclusive and allows expanded
indemnification.
Special Meetings Of Shareowners
Capital City. Capital City's Bylaws provide that special
meetings of the shareowners shall be held:
* when directed by the Board of Directors through a resolution
adopted by a majority of the total number of directors (whether
or not any vacancies of previously authorized directorships exist
at the time the Board is presented with such resolution); or
* when requested in writing and upon appropriate notice by the
holders of not less than 50% of all the shares entitled to vote
on any issue at the meeting.
As a result, this provision, taken together with the
restriction on the removal of directors, would prevent a
substantial shareowner who held less than 50% of Capital City's
common stock from compelling shareowner consideration of any
proposal (such as a proposal for a merger) over the opposition of
Capital City's Board of Directors by calling a special meeting of
shareowners at which such shareowner could replace the entire
Board of Directors with nominees who were in favor of such
proposal.
First Bankshares. First Bankshares' Bylaws provide that
special meetings of the shareowners may be called at any time by
the president, by a majority of the incumbent Board of Directors,
or by the holders of not less than 25% of the outstanding First
Bankshares voting shares.
Ability Of Directors To Consider Interests Other Than
Shareowners' Interests
Capital City. Capital City's Articles of Incorporation
expressly require the Board of Directors to consider all factors
it deems relevant in evaluating a proposed share exchange, tender
offer, merger, consolidation, or other similar transaction,
including:
* the best interests of the shareowners;
* the social, legal and economic effects on employees,
customers, depositors and communities served by Capital City and
its subsidiaries;
* the consideration offered in relation to the then current
market value of Capital City or its subsidiaries in a freely
negotiated transaction;
* estimations of future value of the stock of Capital City or
any subsidiary as an independent entity; and
* any other factor deemed relevant by the Board of Directors.
This gives the Board the ability to consider factors other
than shareowner value in considering acquisition overtures and
places such considerations within the duty of the Board of
Directors. This requires the Board to evaluate all factors in
considering a potential future acquisition offer, including the
long-term value of Capital City as a going concern versus the
short-term benefit to shareowners, in order to maximize
shareowner value.
This provision might have the effect of discouraging some
tender offers which are above market price or which might
otherwise be favorable to shareowners in the short run. A
decrease in the likelihood of tender or acquisition offers could
lower shareowner value by minimizing or eliminating acquisition
market premiums associated with Capital City's capital stock.
This constituency provision of Capital City's Articles of
Incorporation may discourage or make more difficult certain
acquisition proposals or business combinations and, therefore,
may adversely affect the ability of shareowners to benefit from
certain transactions opposed by the Capital City Board of
Directors. The constituency provision would allow the Capital
City Board of Directors to take into account the effects of an
acquisition proposal on a broad number of constituencies and to
consider any potential adverse effects in determining whether to
accept or reject such proposal.
First Bankshares. First Bankshares' Articles of
Incorporation and Bylaws do not contain provisions allowing the
directors to consider the effect of potential transactions on any
constituency other than the First Bankshares shareowners.
Actions By Shareowners Without A Meeting
Capital City. Capital City's Bylaws provide that any action
required or permitted to be taken at a meeting of shareowners may
not be effected by the written consent of the shareowners
entitled to vote on the action.
First Bankshares. First Bankshares' Bylaws provide that any
action required or permitted to be taken at a meeting of
shareowners may be taken without a meeting if written consent
setting forth the action so taken is signed by all shareowners
entitled to vote on the action.
Shareowner Nominations
Capital City. Capital City's Articles of Incorporation and
Bylaws provide that nominations of persons for election to the
Board of Directors at an annual or special meeting of shareowners
may be made:
* by or at the direction of the Board of Directors by any
nominating committee of or person appointed by the Board of
Directors, or
* by any shareowner of Capital City entitled to vote for the
election of directors at the meeting who complies with the
applicable notice procedures set forth in the Articles of
Incorporation and the Bylaws.
Despite these provisions, nominations for Board of Directors
positions at special meetings may be made only if the election of
directors is one of the purposes described in the special meeting
notice.
Nominations of individuals for election at annual meetings,
other than nominations made by or at the direction of the Board
of Directors, including by any nominating committee, shall be
made according to the notice procedures set forth in the Articles
of Incorporation and Bylaws.
First Bankshares. The Georgia Code and First Bankshares'
Articles of Incorporation and Bylaws do not provide for
nominations of persons for election to the Board of Directors.
Shareowner Votes Required For Certain Actions
Capital City. The Florida Act provides that a corporation
may merge into another corporation if a plan of merger is:
* adopted by the Board of Directors, and
* approved by a majority of the votes entitled to be cast on
the plan, unless the Florida Act, the Articles of Incorporation,
or the Board of Directors (acting pursuant to the Florida Act)
requires a greater vote.
Affiliated Transactions. Section 607.0901 of the Florida
Act provides a super-majority requirement for certain proposed
transactions ("Section 607.0901") which applies to all Florida
corporations unless a corporation expressly chooses to "opt out"
of the applicability of such law or the corporation falls under
one of the exemptions from the statute's application. Under the
Florida Act, any merger, share exchange, dissolution or sale of
all or substantially all of the assets of a corporation other
than in the usual and regular course of business must be approved
by the affirmative vote of the holders of a majority of the
shares of stock entitled to vote on the matter. Section 607.0901
requires that, in addition to any vote required by the Florida
Act and subject to the exceptions described below, any
"Affiliated Transaction" between Capital City and any beneficial
owner of 10% or more of Capital City's voting shares, including
shares held by any associate or affiliate of such a person (an
"Interested Shareowner"), be approved by the affirmative vote of
the holders of two-thirds of the voting shares of Capital City's
stock, excluding for such purposes any shares held by the
Interested Shareowner.
An "Affiliated Transaction" includes, among other
transactions:
* any merger or consolidation of Capital City or any of its
subsidiaries with an Interested Shareowner or an associate or
affiliate of an Interested Shareowner,
* any sale, exchange or other disposition of assets of Capital
City to an Interested Shareowner or an associate or affiliate of
an Interested Shareowner, having an aggregate market value of 5%
or more of the outstanding shares of Capital City, or
representing 5% or more of the earning power or net income of
Capital City, and
* the issuance or transfer to the Interested Shareowner or an
associate or affiliate of the Interested Shareowner, by Capital
City, of the shares of Capital City or any of its subsidiaries
which have an aggregate market value equal to 5% or more of the
aggregate market value of all of the outstanding shares of
Capital City.
However, the voting requirements of Section 607.0901 do not
apply to an Affiliated Transaction if, among other things:
* the Affiliated Transaction has been approved by a majority
of Capital City's disinterested directors,
* the Interested Shareowner has been the beneficial owner of
at least 80% of Capital City's outstanding voting shares for at
least five years,
* certain fair price requirements have been met, or
* Capital City has not had more than 300 shareowners of record
at any time during the three years preceding the date of the
first general public announcement of a proposed Affiliated
Transaction.
Capital City may also "opt out" entirely from the applicability
of Section 607.0901 through a provision in Capital City's
original Articles of Incorporation or through an amendment to its
Articles of Incorporation or Bylaws. However, any such amendment
to its Articles of Incorporation or Bylaws to expressly exclude
Capital City from the applicability of Section 607.0901 must be
approved by the affirmative vote of the holders, other than
Interested Shareowners, of a majority of the outstanding voting
shares of Capital City and such amendment will not be effective
until 18 months following such a vote. The opt out provision
shall not apply to any Affiliated Transaction with an Interested
Shareowner who became an Interested Shareowner on or prior to the
effective time of such amendment.
Capital City is subject to Section 607.0901, thus any
Affiliated Transaction would be subject to a two-thirds vote of
the holders of the outstanding shares of Capital City entitled to
vote, unless otherwise exempt. Section 607.0901 protects
shareowners of Capital City because it increases the difficulty
and expense for a potential acquiror seeking to gain control of
Capital City by freezing out certain minority shareowners in a
"two-step" merger transaction. Thus, Section 607.0901 serves to
protect shareowners from the inequitable results of certain
transactions between a corporation and an Interested Shareowner.
Control Share Acquisitions. The control share acquisition
provisions of the Florida Act ("Section 607.0902") impose
conditions and restrictions on "control share acquisitions."
These provisions provide that any "control shares" (shares which
represent at least 20% of the outstanding stock of a Florida
corporation) that are acquired in a "control share acquisition"
have no voting rights except to the extent approved by the
affirmative vote of a majority of all votes entitled to be cast
on the matter, excluding all "interested shares," which are
shares which may be voted directly or indirectly by the person
proposing to make the "control share acquisition," by any officer
of the corporation or by any employee who is also a director of
the corporation. Section 607.0902 also exempts from its
application shares acquired:
* by gift, will, or intestacy;
* in satisfaction of a security interest;
* as a result of a merger or share exchange which the issuer
is a party to such transaction;
* by participating in a savings, employee stock or other
benefit plans of the corporation or any of its subsidiaries; or
* by a group of two or more persons acting together with
respect to the voting of shares provided that such persons are
- related by blood or marriage, and
- have been shareowners of the company since July 1, 1987.
These provisions are inapplicable if a Florida corporation's
charter or bylaws are amended to "opt out" of Section 607.0902 in
order to permit the acquisition of shares prior to the acquiring
person's acquisition thereof.
The purpose of Section 607.0902 is to protect shareowners of
Florida corporations by providing them with an opportunity to
decide whether a change in corporate control is desirable. This
statute effectively places Capital City's shareowners on equal
ground with a potential acquiror by nullifying the voting power
of "control shares" acquired by those who may seek to acquire
Capital City without first approaching the Board of Directors.
The application of Section 607.0902 to Capital City by virtue of
the Florida Act has the effect of limiting the voting power of
any Capital City shareowner, even those who are not intent on
soliciting a change in control of Capital City without first
conferring with management, upon such shareowner's acquisition of
a threshold amount of Capital City voting stock.
First Bankshares. The Georgia Code generally requires a
corporation's Board of Directors to adopt, and the holders of
more than a majority of all the votes entitled to be cast by each
voting group entitled to vote to authorize and approve, any plan
of merger or consolidation, or plan of share exchange under the
Georgia Code, unless the corporation's Articles of Incorporation
or Bylaws or the Board of Directors (acting pursuant to the
Georgia Code) requires a greater vote.
Georgia's "Business Combination Statute" contained in
Sections 14-2-1131 through 14-2-1133 of the Georgia Code and
"Fair Price Statute" contained in Sections 14-2-1110 through 14-2-
1113 of the Georgia Code are only applicable to Georgia
corporations that have adopted Bylaws specifically evidencing a
desire to be governed by these statutes. The First Bankshares
Bylaws are silent with respect to these provisions and they are
therefore inapplicable to First Bankshares.
Dissenters' Rights Of Appraisal
Capital City. The Florida Act generally gives shareowners
of a Florida corporation the right to dissent from, and obtain
payment of the fair value of their shares in the event of, a
merger, share exchange, sale or exchange of property and certain
other corporate transactions. The rights contained in the
Florida Act do not apply, however, with respect to a plan of
merger or share exchange or a proposed sale or exchange of
property, to the holders of securities registered on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders as of the record date for determining
shareowners entitled to vote on the proposed action. First
Bankshares shareowners are to receive shares of Capital City
common stock in the merger, and Capital City common stock is
traded on the Nasdaq National Market. Therefore, subsequent to
this merger, shareowners of First Bankshares that receive Capital
City common stock in the merger will not have dissenters' rights
with respect to the Capital City common stock.
First Bankshares. The Georgia Code generally gives
shareowners of a Georgia corporation the right to dissent from,
and obtain payment of the fair value of their shares in the event
of, a merger, share exchange, sale or exchange of property and
certain other corporation transactions. To do this, shareowners
must follow certain procedures, including filing certain notices
and refraining from voting their shares in favor of the
transaction. The applicable provisions of the Georgia Code are
attached in their entirety to this Proxy Statement/Prospectus as
Appendix D.
For a more detailed discussion of Dissenters' Rights, see
"DESCRIPTION OF THE MERGER - Dissenters' Rights," on page 37.
Shareowners' Rights To Examine Books And Records
Capital City. The Florida Act gives a shareowner of a
Florida corporation the right to inspect and copy books and
records of the corporation during regular business hours, if he
or she gives the corporation written notice of his or her demand
at least five business days before the date of the inspection.
In order to inspect certain records, written demand must also be
made in good faith and for a proper purpose and must describe
with reasonable particularity the purpose of the request and the
records the shareowner desires to inspect.
First Bankshares. The Georgia Code gives shareowners the
same type of rights to inspect and copy books and records as the
Florida Act.
Dividends
Capital City. Capital City's ability to pay dividends on
its common stock is governed by Florida corporate law. Under
Florida corporate law, dividends may be paid so long as the
corporation would be able to pay its debts as they become due in
the usual course of business and the corporation's total assets
would not be less than the sum of its total liabilities plus the
amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution to shareowners whose
preferential rights are superior to those receiving the
distribution.
There are various statutory limitations on the ability of
Capital City's banking subsidiaries, Capital City Bank and First
National Bank of Grady County, to pay dividends to Capital City.
See "BUSINESS -- Regulatory Considerations -- Dividends" in
Capital City's 1999 Form 10-K attached hereto as Appendix F.
First Bankshares. The Georgia Code gives Georgia
corporations the ability to pay dividends on the same basis as
Florida law.
The First Bankshares Bylaws provide that, subject to
limitations imposed by the Georgia Code, dividends may be
declared at such time or times, and in such amounts, as the First
Bankshares Board of Directors shall from time to time determine.
The First Bankshares Board of Directors in declaring a dividend
has the right to fix a record date as of which the holders of
record of shares entitled to receive the dividend shall be
determined, provided that the record date may not be prior to the
date on which the dividend is declared, nor more than 30 days
before the date on which the dividend is to be paid.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Price Range of Common Stock
Capital City common stock is traded on the Nasdaq National
Market under the symbol "CCBG." First Bankshares common stock is
not publicly traded. The following table sets forth, for the
indicated periods, the high and low closing sale prices for
Capital City common stock as reported by the Nasdaq National
Market. The stock prices do not include retail mark-ups, mark-
downs or commissions. Effective June 2, 1998, Capital City
declared a 3-for-2 stock split. Effective April 7, 1997, Capital
City declared a 2-for-1 stock split. The amounts below have been
adjusted to reflect these stock splits.
Capital City
---------------------------
Price Range
---------------------------
High Low
---------- ----------
2000
Fourth Quarter $______ $______
Third Quarter 20.50 18.75
Second Quarter 20.50 18.00
First Quarter 23.00 15.00
1999
Fourth Quarter 25.00 20.19
Third Quarter 30.00 21.00
Second Quarter 25.00 20.25
First Quarter 27.63 22.00
1998
Fourth Quarter 31.00 24.13
Third Quarter 33.13 19.00
Second Quarter 32.67 29.75
First Quarter 32.67 29.25
1997
Fourth Quarter 27.33 23.00
Third Quarter 23.50 20.83
Second Quarter 21.50 19.33
First Quarter 21.33 14.00
On September 25, 2000, the last day prior to the public
announcement of Capital City's proposed acquisition of First
Bankshares, the last reported sale price per share of Capital
City common stock on the Nasdaq National Market was $19.25, and
the resulting equivalent pro forma price per share of First
Bankshares common stock, including the cash portion of the
consideration, was $87.861. On _____________, 2001, the latest
practicable date prior to the mailing of this Proxy
Statement/Prospectus, the last reported sale price per share of
Capital City common stock on the Nasdaq National Market was
$______, and the resulting equivalent pro forma price per share
of First Bankshares common stock was $_____. The equivalent per
share price of a share of First Bankshares common stock at each
specified date represents the last reported sale price of a share
of Capital City common stock on such date multiplied by the
combined total of the 3.6419 exchange ratio and $17.7543 in cash
(exclusive of any withholdings). The market price of Capital
City common stock on the effective time of the merger may be
higher or lower than the market price at the time the merger
proposal was announced, at the time the Agreement and Plan of
Merger was executed, at the time of mailing of this Proxy
Statement/Prospectus, or at the time of the Special Meeting.
Holders of First Bankshares common stock are not assured of
receiving any specific market value of Capital City common stock
on the effective time of the merger, and such value may be
substantially more or less than the current value of Capital City
common stock.
There is no established public trading market for the First
Bankshares common stock. To the knowledge of First Bankshares,
the most recent trade of First Bankshares common stock prior to
September 25, 2000, the last day prior to the public announcement
of the proposed merger between Capital City and First Bankshares,
was the sale of 220 shares on April 18, 2000, at $85.00 per
share. To the knowledge of First Bankshares, there have been no
trades of First Bankshares common stock since the announcement of
the merger.
First Bankshares' practice is to declare and pay dividends
to its shareowners semi-annually, and First Bankshares intends to
continue this policy through the consummation of the merger
(subject to such approvals as may be required). In the fourth
quarter of 1999, the Board of Directors for First Bankshares
declared a cash dividend of $1.85 per share (which was paid in
January 2000), and the total dividend paid by First Bankshares
was $356,090. Other than the regular semi-annual dividends
planned for First Bankshares as discussed above, First Bankshares
has no current plans to pay any additional dividends prior to the
consummation of the merger.
The information regarding First Bankshares common stock is
provided for informational purposes only and, due to the absence
of an active market for First Bankshares' shares, you should not
view it as indicative of the actual or market value of First
Bankshares common stock.
Stock Purchase Program
Capital City has been engaged in an ongoing program to
purchase shares of its common stock on the open market from time
to time, depending upon market conditions and other factors. The
following table sets forth the number of shares purchased during
each calendar quarter during the past fiscal year and the average
price per share paid by Capital City in such transactions.
Capital City
----------------------------
Stock Purchases
Avg. Price per
No. Shares Share
---------- --------------
2000
Fourth Quarter ______ $______
Third Quarter 0 N/A
Second Quarter 17,000 19.224
First Quarter 0 N/A
Comparative Dividends
The holders of Capital City common stock are entitled to
receive dividends when and if declared by the Board of Directors
out of funds legally available therefor. Although Capital City
currently intends to continue to pay quarterly cash dividends on
the Capital City common stock, there can be no assurance that
Capital City's dividend policy will remain unchanged after
completion of the merger. The declaration and payment of
dividends thereafter will depend upon business conditions,
operating results, capital and reserve requirements, and the
Capital City Board of Directors' consideration of other relevant
factors.
Capital City and First Bankshares are each legal entities
separate and distinct from their subsidiaries and their revenues
depend in significant part on the payment of dividends from their
respective subsidiary institutions. Capital City's and First
Bankshares' subsidiary depository institutions are subject to
certain legal restrictions on the amount of dividends they are
permitted to pay. See "BUSINESS -- Supervision and Regulation"
in Capital City's 1999 Form 10-K Attached hereto as Appendix F,
and "BUSINESS OF FIRST BANKSHARES," on page 72.
The following table sets forth cash dividends declared per
share of Capital City common stock and First Bankshares common
stock for the periods indicated.
Capital City First
Quarterly Bankshares
Cash Semi-Annual
Dividends Dividends
Declared Declared
Per Share Per Share
YEAR ENDED DECEMBER 31, 2000
Fourth Quarter $.1475 $1.85
Third Quarter .1325
Second Quarter .1325 1.30
First Quarter .1325
------ -----
Total $.5450 $3.15
====== =====
YEAR ENDED DECEMBER 31, 1999:
Fourth Quarter $.1325 $1.85
Third Quarter .12
Second Quarter .12 1.30
First Quarter .18
------ -----
Total $.5525 $3.15
====== =====
YEAR ENDED DECEMBER 31, 1998:
Fourth Quarter $.12 $1.85
Third Quarter .11
Second Quarter .11 1.30
First Quarter .11
---- -----
Total $.45 $3.15
==== =====
YEAR ENDED DECEMBER 31, 1997:
Fourth Quarter $.11 $1.85
Third Quarter .10
Second Quarter .10 1.30
First Quarter .10
---- -----
Total $.41 $3.15
==== =====
First Bankshares is restricted under the Agreement and Plan
of Merger from paying dividends except that First Bankshares
shall be allowed to pay to its shareowners First Bankshares'
regular dividend of $1.85 per share of First Bankshares common
stock for the second half of 2000. However, if the merger is
consummated prior to the record date for Capital City's fourth
quarter 2000 dividend, the First Bankshares dividend payable to
each First Bankshares shareowner shall be reduced by the Capital
City fourth quarter 2000 dividend payable to each First
Bankshares shareowner.
BUSINESS OF FIRST BANKSHARES
General
First Bankshares is a bank holding company headquartered in
West Point, Georgia. First Bankshares' wholly-owned subsidiary,
First National, operates one banking office in Georgia, and two
banking offices in Alabama. First National is a community based
financial institution that offers a broad range of banking and
banking-related products and services. As of September 30, 2000,
First Bankshares had total consolidated assets of approximately
$156.5 million, total consolidated deposits of approximately
$114.4 million, and total consolidated shareowners' equity of
approximately $15.6 million.
Management Stock Ownership
The following table presents information about the amount of
First Bankshares common stock beneficially owned by each of the
directors and executive officers of First Bankshares and all
executive officers and directors as a group as of the Record
Date. Unless otherwise indicated, each person has sole voting
and investment power over the indicated shares. Information
relating to beneficial ownership of the First Bankshares common
stock is based upon "beneficial ownership" concepts set forth in
rules promulgated under the Exchange Act. Under those rules, a
person is considered to be a beneficial owner of a security if
that person has or shares "voting power," which includes the
power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose or to
direct the disposition of such security. Under the rules, more
than one person may be deemed to be a beneficial owner of the
same securities.
Position with First Number of Shares Percentage
Beneficial Owner Bankshares
-----------------------------------------------------------------------------
Robert F. Cook, Jr. Director 800(1) .42%
A. Drew Ferguson Director and President 27(2) .01%
Edmund C. Glover Director 1,085 .56%
Scott A. Huguley Director and Chairman 23,306(3) 12.11%
Robert J. Humphrey Director 13 .01%
Willis A. Johnson Director 1,752(4) .91%
Bruce N. Lanier, Jr. Director 3,277(5) 1.70%
William L. Nix Director 1,151 .60%
Faye B. Williams Secretary and Treasurer 650(6) .34%
Gerald B. Andrews Vice President 190(7) .10%
All directors and executive officers as a group 32,491 16.88%
(1) Includes 100 shares owned of record by Mr. Cook's spouse.
(2) Includes seven shares owned of record by Mr. Ferguson's spouse.
(3) Includes (a) 604 shares owned of record by Mr. Huguley's
spouse; (b) eight shares owned of record by Mr. Huguley's
son and daughter; (c) 3,008 shares owned of record by The
Huguley Family Limited Partnership; and (d) 8,768 shares
owned of record by Mr. Huguley's father, over which
Mr. Huguley holds power of attorney.
(4) Includes 342 shares held of record by the Johnson Family Trust.
(5) Includes 144 shares held of record by Mr. Lanier's son.
(6) Includes 65 shares held of record by Ms. Williams' spouse.
(7) Includes 65 shares held of record by Mr. Andrews' two daughters.
The First Bankshares directors and executive officers have
committed to vote their shares of First Bankshares common stock
in favor of the Agreement and Plan of Merger.
Voting Securities and Principal Shareowners of First Bankshares
The following lists each shareowner of record that directly
or indirectly owned, controlled, or held with power to vote 5% or
more of the 192,481 outstanding shares of First Bankshares common
stock as of the Record Date. Unless otherwise indicated, each
person has sole voting and investment powers over the indicated
shares. Information relating to beneficial ownership of the
First Bankshares common stock is based upon "beneficial
ownership" concepts set forth in rules under the Exchange Act
(discussed above).
Number of Shares
Beneficially Owned Percent of Class
Name and Address at Record Date (%)
-------------------------------------------------------------------------
Scott A. Huguley 23,306* 12.11%
109 Hillcrest Road
West Point, Georgia 31833
*See Footnote 3 above.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
First Bankshares provides retail banking services, with an
emphasis on one-to four-family residential mortgage loans and
consumer loans as well as certificates of deposit, checking
accounts and savings accounts. In addition, First Bankshares
originates commercial real estate loans and other credit
facilities and offers checking accounts to individuals and to
businesses within its market area which is West Point, Georgia
and the surrounding area.
Forward Looking Statements. First Bankshares may, from time-
to-time, make written or oral forward-looking statements,
including statements contained in its reports to shareholders and
herein. Statements made in such documents, other than those
concerning historical information, should be considered forward-
looking and subject to various risks and uncertainties. Such
forward-looking statements are made based upon management's
belief as well as assumptions made by, and information currently
available to, management pursuant to "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. First
Bankshares' actual results may differ materially from the results
anticipated in forward-looking statements due to a variety of
factors, including governmental monetary and fiscal policies,
deposit levels, loan demand, loan collateral values, securities
portfolio values, and interest rate risk management; the effects
of competition in the banking business from other commercial
banks, savings and loan associations, mortgage banking firms,
consumer finance companies, credit unions, securities brokerage
firms, insurance companies, money market mutual funds and other
financial institutions operating in First Bankshares' market area
and elsewhere, including institutions operating through the
Internet; changes in governmental regulation relating to the
banking industry, including regulations relating to branching and
acquisitions; failure of assumptions underlying the establishment
of allowances for loan losses, including the value of collateral
underlying delinquent loans, and other factors. First Bankshares
cautions that such factors are not exclusive. First Bankshares
does not undertake to update any forward-looking statement that
may be made from time to time by, or on behalf of, First
Bankshares.
Comparison of Financial Condition at September 30, 2000 and
December 31, 1999. Total assets of $156.5 million at September
30, 2000 was an increase of $4.1 million, or 2.7% from December
31, 1999. The asset growth was primarily concentrated in
investment securities available for sale which increased $1.9
million, or 4.8%, from December 31, 1999 as well as cash and due
from banks which increased $3.1 million, or 14.8%. The increase
in cash and due from banks and investment securities was directly
related to the increase in deposits noted below. Loans declined
slightly from December 31, 1999 due to the charge-off of a
$1,375,000 credit relationship which is discussed below.
The growth in First Bankshares' total assets in 2000 was
funded by an increase in deposits, primarily interest-bearing
deposits which increased by $3.1 million, or 3.5% from December
31, 1999. Non interest-bearing deposits increased $1.8 million,
or 8.3% from December 31, 1999. The growth in deposits was due
to a focus on deposit growth as well as competitive pricing on
interest-bearing deposits.
Stockholders' equity decreased $326,000, from December 31,
1999 due to a decrease in net income as well as an increase in
accumulated other comprehensive loss. The increase in
accumulated other comprehensive loss relates to the increasing
level of interest rates during the year. Increasing rates reduce
the fair values of certain available for sale investments that
have longer average lives.
Comparison of Financial Condition at December 31, 1999 and
1998. Total assets of $152.4 million at December 31, 1999 was an
increase of $22.2 million, or 17.1% from December 31, 1998. The
increase in assets was primarily due to an increase in cash and
due from banks in anticipation of additional cash needs due to
the Year 2000 date change. Increases in deposits funded both
loan and investment growth. Investment securities available for
sale increased $3.8 million, or 10.2% from December 31, 1998 and
loans increased $3.4 million, or 4.9% from December 31, 1998.
Total liabilities of $136.4 million at December 31, 1999 was
an increase of $22.1 million, or 19.4% from December 31, 1998.
The increase was directly attributable to the growth in deposits.
Total deposits of $109.6 million at December 31, 1999 was an
increase of $22.2 million, or 25.3% from December 31, 1998.
Increases in deposits were attributable to marketing campaigns,
such as free checking, to increase First Bankshares' deposit
base.
Total stockholders' equity remained relatively unchanged as
the increase in retained earnings of $492,000 was offset by
purchases of treasury stock by First Bankshares and an increase
in accumulated other comprehensive loss related to increasing
interest rates noted above.
Loan Portfolio. First Bankshares experienced no growth in
the loan portfolio during the period from December 31, 1999
through September 30, 2000. Loan growth during 2000 has been
stagnated by the rising interest rate environment as well as by
economic and competitive conditions in First Bankshares' market
area.
Overall loan growth was strong in 1999 compared to 1998.
Net loans increased 4.9% to $75,039,000 at December 31, 1999 from
$71,555,000 at December 31, 1998. The increase was attributable
to a focus on loan growth by management.
<TABLE>
The following table presents the composition of First
Bankshares' loan portfolio at September 30, 2000 and December 31,
1999 and 1998.
<CAPTION>
At September 30, At December 31,
-------------------- --------------------------------------------
2000 1999 1998
-------------------- -------------------- --------------------
Amount Percent Amount Percent Amount Percent
----------- ------- ----------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Types of Loans:
Commercial, financial, and agricultural $ 6,453,442 8.62% $ 8,135,772 10.69% $10,207,255 14.07%
Real estate - construction and development 668,110 0.89% 441,625 0.58% 2,455,280 3.38%
Real estate mortgage 46,568,430 62.19% 48,610,677 63.90% 41,314,330 56.94%
Installment and single payment individual 20,944,585 27.97% 18,638,593 24.50% 18,188,710 25.07%
Tax-exempt 246,566 0.33% 243,170 0.32% 378,143 0.52%
Other - 0.00% 7,445 0.01% 7,757 0.02%
----------- ------- ----------- ------- ----------- -------
Total loans 74,881,133 100.00% 76,077,282 100.00% 72,551,475 100.00%
Less:
Unearned discounts on installment loans (3,197) (10,315) (31,786)
Net deferred loan costs 49,667 42,471 63,020
Allowance for loan losses (1,225,162) (1,070,216) (1,027,281)
----------- ----------- -----------
Total loans, net $73,702,441 $75,039,222 $71,555,428
=========== =========== ============
The following table presents a summary of maturities of
First Bankshares' loan portfolio segregated between loans with
predetermined interest rates and loans with floating or
adjustable rates at September 30, 2000 and December 31, 1999.
</TABLE>
<TABLE>
September 30, 2000 Loans Maturing
Within 1-5 After 5
1 year Years Years Total
Loans with: ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Predetermined interest rates $13,836,186 $36,807,003 $8,734,300 $59,377,489
Floating and adjustable rates 14,263,628 653,828 586,188 15,503,644
----------- ----------- ---------- -----------
Total loans $28,099,814 $37,460,831 $9,320,488 $74,881,133
=========== =========== ========== ===========
December 31, 1999 Loans Maturing
Within 1-5 After 5
1 year Years Years Total
Loans with: ----------- ----------- ---------- -----------
Predetermined interest rates $14,541,610 $38,080,056 $9,683,110 $62,304,776
Floating and adjustable rates 12,352,766 817,562 602,178 13,772,506
----------- ----------- ----------- -----------
Total loans $26,894,376 $38,897,618 $10,285,288 $76,077,282
=========== =========== =========== ===========
</TABLE>
Allowance and Provision for Loan Losses. The allowance for
loan losses represents a reserve for losses in the loan
portfolio. The adequacy of the allowance for loan losses is
evaluated periodically based on a review of all significant
loans, with particular emphasis on impaired, non-accruing, past
due and other loans that management believes require special
attention.
First Bankshares follows a consistent methodology in
determining its allowance for loan losses. All loans are rated
by management based on characteristics of the loan which include,
but are not limited to, the financial condition and strengths of
the borrower, loan payment history, related collateral, cash
flows available for debt repayment, and known and expected
economic trends. Loss percentages used to calculate the general
allowances are based on historical loss percentages as well as
regulatory guidelines. Specific allowances for impaired problem
loans are provided in the event that the specific collateral
analysis or other estimates of repayments indicates that the
probable loss would be in excess of the general allocation
percentage. In addition to First Bankshares' internal review
process, First Bankshares also utilizes an independent loan
review service in assessing the overall adequacy of the allowance
for loan losses.
The provision for loan losses is the charge to income
necessary to replenish the allowance for loan losses and maintain
it at a level that management has determined to be adequate based
on the methodology described above. First Bankshares' provision
for loan losses for the nine months ended September 30, 2000 was
$1,580,000. The increase in the provision for loan losses over
that in the comparable period during 1999 was due to two reasons.
First, during the first quarter of 2000, $1,375,000 of a large
credit relationship totaling $2,975,000 was charged off. The
remaining $1,600,000 of the credit relationship is guaranteed by
the USDA. The credit relationship had begun to deteriorate in
late 1999; however, management believed that viable workout
options were available which would allow the borrower to continue
operations, including but not limited to, obtaining additional
guarantees by the USDA. Near the end of the first quarter of
2000, the borrower filed for bankruptcy after learning that the
potential workout options were no longer viable, and First
Bankshares proceeded with a plan to liquidate the collateral and
charged off the total amount due from the borrower, exclusive of
the amount guaranteed by the USDA. First Bankshares has not yet
received the proceeds from the USDA guarantee but has been
informed that the amount is forthcoming. It is currently
uncertain as to the amount, if any, of the charge-off that may be
recovered through collateral liquidation.
Secondly, during the third quarter of 2000, management
evaluated the credit worthiness of several large credit
relationships. As a result of such review, loans totaling
$5,198,000 were downgraded to the Special Mention classification
and loans totaling $890,000 were downgraded to the Substandard
classification. The above downgrades resulted in an additional
charge of $341,000 to the provision for loan losses. In
addition, First Bankshares has identified one loan as impaired
resulting in a $159,000 provision and similar increase in the
allowance.
The provision for loan losses for the year ended December
31, 1999 was $100,000 compared to $10,000 for the year ended
December 31, 1998. The increase in 1999 was attributable to the
4.9% loan growth as well as the deterioration in the large credit
relationship mentioned above.
Net charge-offs for the nine months ended September 30, 2000
were 2.51% of average net loans outstanding. The increase from
the year ended December 31, 1999 is related to the charge-off of
the credit relationship mentioned above. Net charge-offs for the
year ended December 31, 1999 increased only slightly to 0.08% of
average net loans outstanding from 0.01% for the year ended
December 31, 1998. The charge-offs for 1999 were split between
commercial and consumer loans. The charge-offs for 1998 were all
consumer loans of which none were individually significant.
The allowance for loan losses represented 1.64%, 1.41% and
1.42% of total loans at September 30, 2000 and December 31, 1999
and 1998, respectively. The determination of the allowance for
loan losses is based upon management's judgment about factors
affecting loan quality, assumptions about the economy, and other
factors; 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 additional provisions
will not be required. In addition, various regulatory agencies,
as an integral part of their examination process, periodically
review First Bankshares' allowance for loan losses. Such
agencies may require First Bankshares to recognize additions to
the allowance based on their judgments about information
available to them at the time of their examination.
The following table represents an analysis of First
Bankshares' allowance for loan losses including the provision for
loan losses and net loan charge-offs for the nine months ended
September 30, 2000 and for the years ended December 31, 1999 and 1998.
<TABLE>
At or for the nine At or for the
months ended years ended
September 30, December 31,
------------------- ----------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Allowance balance (at beginning of period) $ 1,070,216 $ 1,027,281 $ 1,114,366
----------- ----------- -----------
Provision for loan losses 1,580,000 100,000 10,000
----------- ----------- -----------
Charge-offs:
Commercial, financial, and agricultural (186,202) (39,380) -
Real estate - construction and development (1,225,000) - -
Real estate mortgage - - -
Installment and single payment individual (25,302) (34,391) (42,067)
Tax-exempt - - -
Other - - -
---------- ----------- -----------
Total charge-offs (1,436,504) (73,771) (42,067)
Recoveries:
Commercial, financial, and agricultural 1,862 50 1,091
Real estate - construction and development - - -
Real estate mortgage - - -
Installment and single payment individual 9,588 16,656 30,482
Tax-exempt - - -
Other - - -
----------- ---------- -----------
Total recoveries 11,450 16,706 31,573
Net charge-offs (1,425,054) (57,065) (10,494)
Allowance related to loans of sold branch - - (86,591)
----------- ----------- -----------
Allowance balance (at end of period) $ 1,225,162 $ 1,070,216 $ 1,027,281
=========== =========== ===========
Total loans outstanding $74,881,133 $76,077,282 $72,551,475
=========== =========== ===========
Allowance for loan losses to total loans outstanding 1.64% 1.41% 1.42%
=========== =========== ===========
</TABLE>
The amounts and percentages of the components of the
allowance for loan losses at September 30, 2000 and December 31,
1999 and 1998, and the percentage of loans in each category to
total loans are presented in the table below.
<TABLE>
At September 30, At December 31,
---------------------- ---------------------------------------------
2000 1999 1998
---------------------- --------------------- -----------------------
Percent of Percent of Percent of
Loans to Loans to Loans to
Amount Total Loans Amount Total Loans Amount Total Loans
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
At end of period allocated to:
Commercial, financial, and agricultural $ 611,929 8.62% $ 685,146 10.69% $ 497,134 14.07%
Real estate - construction and development 3,314 0.89% 1,803 0.58% 12,876 3.38%
Real estate mortgage 398,186 62.19% 278,061 63.90% 309,539 56.94%
Installment and single payment individual 177,741 27.97% 78,303 24.50% 60,835 25.07%
Tax-exempt 1,223 0.33% 993 0.32% 1,983 0.52%
Other - - - 0.01% - 0.02%
Unallocated 32,769 - 25,910 - 144,914 -
---------- ------- ---------- ------- ---------- -------
Total allowance for loan losses $1,225,162 100.00% $1,070,216 100.00% $1,027,281 100.00%
========== ======= ========== ======= ========== =======
</TABLE>
Non-performing Assets. As a result of management's ongoing
review of the loan portfolio, loans are classified as non-accrual
when reasonable doubt exists as to the full or timely collection
of interest or principal or when a loan becomes contractually
past due by 90 days or more with respect to interest or
principal. These loans are classified as non-accrual, even
though the presence of collateral or the borrower's financial
strength may be sufficient to provide for ultimate repayment.
When a loan is placed on non-accrual status, all interest
previously accrued but not collected is reversed against current
period interest income. Interest on non-accrual loans is
recognized only when received. The additional amount of interest
that would have been recorded during the nine months ended
September 30, 2000 and the years ended December 31, 1999 and
1998, had such loans classified as non-accrual been current in
accordance with their original terms was not considered material.
Non-performing assets are defined as non-accrual and
renegotiated loans, accruing loans which are contractually past
due 90 days or more and real estate owned acquired by
foreclosure. First Bankshares' non-performing assets as a
percentage of net loans at September 30, 2000 was 2.26%. At
September 30, 2000, First Bankshares had one non-accruing loan
which represented the guaranteed portion of the aforementioned
large loan whose non-guaranteed portion had been previously
charged off. At December 31, 1999, the same loan had been in a
non-accruing status. First Bankshares' non-performing assets at
December 31, 1998 were minimal.
First Bankshares' non-performing assets at September 30,
2000 and December 31, 1999 and 1998 are as follows:
<TABLE>
At September 30, At December 31,
2000 1999 1998
---------- ---------- ------
<S> <C> <C> <C>
Loans accounted for on a non-accrual basis $1,664,364 $2,975,765 $ -
Accruing loans which are contractually past due 90 days or more $ - $ 952 $4,971
--------- ---------- ------
Total non-performing loans $1,664,364 $2,976,717 $4,971
========== ========== ======
Real estate owned - - -
========== ========== ======
Total non-performing assets $1,664,364 $2,976,717 $4,971
========== ========== ======
Total non-performing loans to net loans 2.26% 3.97% 0.01%
===== ===== =====
Total non-performing loans to total assets 1.06% 1.95% 0.00%
===== ===== =====
Total non-performing assets to total assets 1.06% 1.95% 0.00%
</TABLE>
=====
===== =====
Management is not aware of any loans classified for
regulatory purposes as loss, doubtful, substandard, or special
mention that have not been disclosed which 1) represent or result
from trends or uncertainties, which management reasonably expects
will materially impact future operating results, liquidity or
capital resources, or 2) represent material credits about which
management is aware of any information which causes management to
have serious doubts as to the ability of such borrowers to comply
with the loan repayment terms. At September 30, 2000 and
December 31, 1999 and 1998, loans classified as special mention
totaled $7,356,418, $1,034,243 and $1,360,851, respectively. At
September 30, 2000 and December 31, 1999 and 1998, loans
classified as substandard totaled $2,644,670, $2,634,210 and
$1,360,851, respectively.
Liquidity and Capital Resources. Liquidity management
involves the matching of the cash flow requirements of customers,
either depositors withdrawing funds or borrowers needing loans,
and the ability of First Bankshares to meet those requirements.
First Bankshares' liquidity program is designed and intended to
provide guidance in funding the credit and investment activities
of First Bankshares while at the same time ensuring that the
deposit obligations of First Bankshares are met on a timely
basis. In order to permit active and timely management of assets
and liabilities, these accounts are monitored regularly in regard
to volume, mix, and maturity. First Bankshares' liquidity
position depends primarily upon the liquidity of its assets
relative to its need to respond to short-term demand for funds
caused by withdrawals from deposit accounts and loan funding
commitments. Primary sources of liquidity are scheduled
repayments on First Bankshares' loans and interest on and
maturities of its investment securities. Sales of investment
securities available for sale represent another source of
liquidity to First Bankshares. First Bankshares may also utilize
its cash and due from banks and federal funds sold to meet
liquidity requirements as needed.
First Bankshares also has the ability, on a short-term
basis, to purchase federal funds from other financial
institutions up to $11,500,000. Presently, First Bankshares has
made arrangements with commercial banks for short-term advances
up to $2,000,000 under a repurchase agreement line of credit, in
addition to an additional line of $8,000,000 which is available
to First Bankshares, subject to available collateral, from the
Federal Home Loan Bank. Management monitors and assesses the
adequacy of First Bankshares' liquidity position on a monthly
basis to ensure sufficient sources of liquidity are maintained
and available. The liquidity of First Bankshares is monitored on
a periodic basis by state and federal regulatory authorities. As
determined under their guidelines, First Bankshares' liquidity is
considered adequate.
At September 30, 2000, First Bankshares' loan to deposit
ratio was 64.4% compared to a ratio of 68.5% at December 31,
1999.
At September 30, 2000, First Bankshares and First National
were required to have minimum Tier 1 and total capital ratios of
4% and 8%, respectively. Additionally, First Bankshares and
First National are required to maintain a leverage ratio (Tier 1
capital to average assets) of at least 4%. First Bankshares' and
First National's ratios at September 30, 2000 follow:
First National Bank FirstBankshares of
of West Point West Point,Inc.
------------------- -------------------
Tier 1 capital 16.1% 18.3%
Total capital 17.3% 19.6%
Leverage ratio 9.2% 10.5%
Management is not aware of any known trends, events or
uncertainties that will have or are reasonably likely to have a
material effect on First Bankshares' liquidity, capital or
operations nor is management aware of any current recommendations
by regulatory authorities, which if implemented, would have such
an effect.
Analysis of Net Interest Income. Net interest income, the
primary source of revenue for First Bankshares, is a function of
the yield earned on average interest-earning assets and the rate
paid on average interest-bearing liabilities. Changes in net
interest income from period to period reflect the increases or
decreases in average interest-earning assets, average interest-
bearing liabilities and the interest rate spread which is
affected by the degree of mismatch in maturity and repricing
characteristics of First Bankshares' interest-earning assets and
interest-bearing liabilities.
Average Balance Sheet. The following tables set forth
certain information relating to First Bankshares for the periods
indicated. The average yields and costs are derived by dividing
income or expense by the average balance of assets or
liabilities, respectively for the periods presented. Average
balances for the nine months ended September 30, 2000 and 1999
and the years ended December 31, 1999 and 1998 are derived from
month-end balances. Management does not believe that the use of
month-end balances instead of daily balances has caused any
material differences in the information presented.
<TABLE>
Nine months ended September 30,
------------------------------------ ------------------------------------
2000 1999
------------------------------------ ------------------------------------
Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense Yield/Cost
------------ ---------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans, net (1) $ 75,783,465 $4,881,670 8.59% $ 74,846,428 $4,784,487 8.52%
Investment securities-taxable 49,702,628 2,650,591 7.11% 39,727,379 1,791,727 6.01%
Federal funds sold 7,026 301 5.71% - - -
Interest bearing deposits in
other banks 5,939,446 272,814 6.12% 10,110,471 367,647 4.85%
Other (2) 1,708,306 76,398 5.96% 1,689,924 74,089 5.85%
------------ ---------- ------------ ----------
Total interest-earning assets 133,140,871 7,881,774 7.89% 126,374,202 7,017,950 7.40%
---------- ----------
Non-interest earning assets 12,097,329 10,930,920
------------ ------------
Total assets $145,238,200 $137,305,122
============ ============
Interest-bearing liabilities:
NOW and savings accounts $ 47,453,335 1,102,005 3.10% $ 44,344,951 904,903 2.72%
Certificates of deposit 31,900,340 1,231,187 5.15% 31,796,703 1,177,592 4.94%
------------ ---------- ------------ ----------
Total interest-bearing deposits 79,353,675 2,333,192 3.92% 76,141,654 2,082,495 3.65%
Federal Home Loan Bank advances 25,350,286 1,221,796 6.43% 25,440,989 971,887 5.09%
Federal funds purchased 415,876 21,712 6.96% 36,225 1,449 5.33%
------------ ---------- ------------ ----------
Total interest-bearing liabilities 105,119,837 3,576,700 4.54% 101,618,868 3,055,831 4.01%
---------- ----------
Non-interest bearing liabilities 26,156,651 21,546,579
------------ ------------
Total liabilities 131,276,488 123,165,447
Stockholders' equity 13,961,712 14,139,675
------------ ------------
Total liabilities and
stockholders' equity $145,238,200 $137,305,122
============ ============
Net interest income $4,305,074 $3,962,119
========== ==========
Interest rate spread (3) 3.35% 3.39%
==== =====
Net interest margin on
earning assets (4) 4.31% 4.18%
===== =====
(1) Average balances include non-accrual loans.
(2) Average balances reflect investments in Federal Home Loan Bank stock and
Federal Reserve Bank stock. Income reflects dividends received on such investments.
(3) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net margin on interest-earning assets represents net interest income as a
percentage of average earning assets.
</TABLE>
<TABLE>
Year ended December 31,
------------------------------------ ------------------------------------
1999 1998
------------------------------------ ------------------------------------
Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense Yield/Cost
------------ ---------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans, net (1) $ 75,740,161 $6,397,301 8.45% $ 74,431,532 $6,576,855 8.84%
Investment securities - taxable 41,741,281 2,545,506 6.10% 48,590,429 2,930,944 6.03%
Federal funds sold 19,726 1,056 5.35% 285,471 16,569 5.80%
Interest bearing deposits in
other banks 9,272,880 456,272 4.92% 3,105,823 165,484 5.33%
Other (2) 2,684,390 98,715 3.68% 2,654,960 96,427 3.63%
------------ ---------- ------------- ----------
Total interest-earning assets 129,458,438 9,498,850 7.34% 129,068,215 9,786,279 7.58%
---------- ----------
Non-interest earning assets 11,699,454 10,992,092
------------ ------------
Total assets $141,157,892 $140,060,307
============ ============
Interest-bearing liabilities:
NOW and savings accounts $ 45,888,510 1,281,418 2.79% $ 45,190,735 1,549,182 3.43%
Certificates of deposit 31,870,875 1,540,345 4.83% 31,631,829 1,708,734 5.40%
------------ ---------- ------------ ----------
Total deposits 77,759,385 2,821,763 3.63% 76,822,564 3,257,916 4.24%
Federal Home Loan Bank advances 25,429,587 1,349,529 5.31% 25,520,572 1,456,068 5.71%
US treasury demand notes - - 235,537 13,626 5.79%
Securities sold under agreements
to repurchase - - 490,959 29,543 6.02%
Federal funds purchased 27,056 1,449 5.36% 213,105 13,130 6.16%
------------ ---------- ------------ ----------
Total interest-bearing liabilities 103,216,028 4,172,741 4.04% 103,282,737 4,770,283 4.62%
---------- ----------
Non-interest bearing liabilities 21,759,381 20,886,366
------------ ------------
Total liabilities 124,975,409 124,169,103
Stockholders' equity 16,182,483 15,891,204
------------ ------------
Total liabilities and
stockholders' equity $141,157,892 $140,060,307
============ ============
Net interest income $5,326,109 $5,015,996
========== ==========
Interest rate spread (3) 3.30% 2.96%
===== =====
Net interest margin on earning assets (4) 4.11% 3.89%
===== =====
(1) Average balances include non-accrual loans.
(2) Average balances reflect investments in Federal Home Loan Bank stock and
Federal Reserve Bank Stock. Income reflects dividends received on such investments.
(3) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net margin on interest-earning assets represents net interest income as a
percentage of average earning assets.
</TABLE>
Rate/Volume Analysis. The relationship between the volume
and rates of First Bankshares' interest-earning assets and
interest bearing liabilities affects its net interest income.
The following table reflects the sensitivity of First Bankshares'
interest income and interest expense to changes in volume and in
prevailing interest rates during the periods indicated. Each
category reflects the: (1) changes due to volume (changes in
volume multiplied by old rate); (2) changes in rate (changes in
rate multiplied by old volume); and (net change). The net change
attributable to the combined impact of volume and rate has been
allocated proportionally to the absolute dollar amounts of change
in each.
<TABLE>
Year ended December 31, Year ended December 31,
1999 vs. 1998 1998 vs. 1997
Increase (Decrease) Increase (Decrease)
Due to Due to
Average Average Average Average
Volume Rate Net Volume Rate Net
--------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans 118,965 (298,519) (179,554) 173,581 58,096 231,657
Investment securities (420,030) 34,592 (385,438) (614,485) (188,063) (802,548)
Federal funds sold (14,319) (1,194) (15,513) (5,749) 3,540 (2,209)
Interest-bearing deposits
in other banks 302,507 (11,719) 290,788 14,161 (6,558) 7,603
Other 1,020 1,268 2,288 (96,147) 68,977 (27,170)
-------- -------- -------- --------- -------- --------
Total interest-earning assets (11,857) (275,572) (287,429) (528,859) (64,008) (592,667)
======== ======== ======== ========= ======== ========
Interest Expense:
NOW and savings accounts 24,157 (291,921) (267,764) (964) (823) (1,807)
Certificates of deposit 12,985 (181,374) (168,389) 29,632 24,938 54,570
FHLB advances (5,159) (101,380) (106,539) 17,715 (35,084) (17,369)
US treasury demand notes (13,826) 0 (13,626) (14,477) 1,912 (12,565)
Federal funds purchased (10,168) (1,543) (11,681) (23,473) 3,678 (19,797)
Securities sold under
agreements to repurchase (29,543) 0 (29,543) (218,441) 61,812 (156,629)
-------- -------- -------- --------- -------- --------
Total interest-bearing liabilities (21,354) (576,188) (597,542) (210,028) 56,431 (153,597)
======== ======== ======== ========= ======== ========
Change in net interest income 9,497 300,616 310,113 (318,631) (120,439) (439,070)
======== ======== ======== ========= ======== ========
</TABLE>
Comparison of Operating Results for the Three and Nine Months
Ended September 30, 2000 and September 30, 1999
Net Income. First Bankshares' net income for the third
quarter of 2000 was $51,000, which was a decrease of $305,000, or
85.6%, compared to net income of $357,000 for the third quarter
of 1999. Income per share for the three months ended September
30, 2000 was $0.27 compared to $1.85 for the three months ended
September 30, 1999. The decrease was due to an increase in the
provision for loan losses discussed previously.
Net income for the first nine months of 2000 was $110,000, a
decrease of $870,000, or 88.8%, when compared to net income of
$980,000 for the first nine months of 1999. Income per share for
the nine months ended September 30, 2000 was $0.57 compared to
$5.09 for the nine months ended September 30, 1999. The decrease
was primarily attributable to a higher provision for loan losses
discussed previously.
The annualized return on average assets for First Bankshares
was 0.10% for the nine months ended September 30, 2000, compared
to 0.95% for the same period last year. The annualized return on
average stockholders' equity was 1.05% for the nine months ended
September 30, 2000 compared to 9.24% for the comparable period in
1999.
Interest Income. Interest income increased $337,000, or
14.1% for the three months ended September 30, 2000 compared to
the three months ended September 30, 1999. This increase was
primarily due to an increase in interest income on investment
securities which was attributable to First Bankshares investing
in higher yielding investment securities during 2000.
Interest income increased $864,000, or 12.3% for the nine
months ended September 30, 2000 compared to the nine months ended
September 30, 1999. The increase is attributable to the increase
in interest income on investment securities as noted above.
First Bankshares' yield on investment securities increased
from 6.01% for the nine months ended September 30, 1999 to 7.11%
for the nine months ended September 30, 2000. First Bankshares'
yield on loans increased from 8.52% for the nine months ended
September 30, 1999 to 8.59% for the nine months ended September
30, 2000.
Interest Expense. Interest expense for the three months
ended September 30, 2000 was $1,303,000 compared to $1,033,000
for the three months ended September 30, 1999 representing a
$270,000, or 26.1% increase. The increase was due to a higher
cost of funds paid on First Bankshares' deposit accounts and
borrowings attributable to the rising interest rate environment
during 2000.
Interest expense for the nine months ended September 30,
2000 was $3,577,000 compared to $3,056,000 for the nine months
ended September 30, 1999 representing a $521,000, or 17.0%
increase. The increase was due to a higher cost of funds paid on
First Bankshares' deposit accounts and borrowings as noted above.
First Bankshares' average cost on deposits increased from
3.65% for the nine months ended September 30, 1999 to 3.92% for
the nine months ended September 30, 2000.
Provision for Loan Losses. The provision for loan losses is
charged to income to bring the allowance for loan losses to an
amount that represents management's best estimate of the losses
inherent in the loan portfolio. This estimate is based on
historical experience, volume and type of lending conducted by
First Bankshares, the level and status of past due and non-
performing loans, the general economic conditions in its lending
area and other factors affecting the collectibility of the loans
in the portfolio.
The provision for loan losses for the three months ended
September 30, 2000 was $530,000 compared to $0 for the three
months ended September 30, 1999. The provision for loan losses
for the nine months ended September 30, 2000 was $1,580,000
compared to $0 for the nine months ended September 30, 1999. The
increase in 2000 compared to 1999 for the three-month period was
due to downgrades of several loans discussed previously. The
increase in the nine-month period was also due to the charge-off
of one credit relationship totaling $1,375,000 also discussed
previously.
Noninterest Income Noninterest income for the three months
ended September 30, 2000 increased $26,000, or 11.6%, compared to
the three months ended September 30, 1999. The increase was
primarily attributable to an increase in service charges and fees
on deposits due to the increase in deposit accounts mentioned
earlier as well as an increase in miscellaneous income. The
increase in miscellaneous income is due to an increase in the
earnings of First Bankshares' equity investment for the three
month period.
Noninterest income for the nine months ended September 30,
2000 increased $16,000, or 2.3%, compared to the nine months
ended September 30, 1999. The increase is attributable to the
increase in service charges mentioned above offset by the loss on
sale of investments and decrease in miscellaneous income. The
decrease in miscellaneous income was attributable to a decrease
in trust operations income for the nine months ended
September 30, 2000 resulting from a lower customer base during
2000.
Noninterest Expense. Noninterest expense for the three
months ended September 30, 2000 increased $14,000, or 1.3%,
compared to the three months ended September 30, 1999. The
increase was due primarily to an increase in other operating
expense attributable to the continued growth of First Bankshares
offset by a decrease in salaries and benefits due to a decrease
in personnel.
Noninterest expense for the nine months ended September 30,
2000 increased $91,000, or 2.9%, compared to the nine months
ended September 30, 1999. The increase was due primarily to the
increase in other operating expense of $94,000. Other operating
expense increased due to an increase in fees paid to directors
resulting from increased meetings regarding the proposed merger
as well as an increase in data processing fees attributable to
the growth in First Bankshares.
Income Taxes. The effective tax rates for the three months
ended September 30, 2000 and 1999 were 37.0% and 33.0%,
respectively. The effective tax rates for the nine months ended
September 30, 2000 and 1999 were 38.5% and 34.3%, respectively.
Income taxes are provided in the interim periods based on the
estimated effective tax rate expected to be applicable for the
full fiscal year.
Comparison of Operating Results for Years Ended December 31, 1999
and December 31, 1998
Net Income. First Bankshares' net income for the year ended
December 31, 1999 was $1,098,000, which was an increase of
$351,000, or 47.0%, compared to net income of $747,000 for the
year ended December 31, 1998. Income per share for the year
ended December 31, 1999 was $5.70 compared to $3.87 for the year
ended December 31, 1998. The increase was primarily due to
increased net interest margin and lower personnel costs, offset
by increased loan loss provisions.
The annualized return on average assets for First Bankshares
was 0.78% for the year ended December 31, 1999 compared to 0.53%
for the year ended December 31, 1998. The annualized return on
average stockholders' equity was 6.79% for the year ended
December 31, 1999 compared to 4.70% for the year ended December
31, 1998.
Interest Income. Interest income decreased $287,000, or
2.9% for the year ended December 31, 1999 compared to the year
ended December 31, 1998. The decrease was due to a decrease in
the yield earned on loans offset by an increase in the yield on
investment securities.
First Bankshares' yield on loans decreased from 8.84% for
the year ended December 31, 1998 to 8.45% for the year ended
December 31, 1999. First Bankshares' yield on investment
securities increased from 6.03% for the year ended December 31,
1998 to 6.10% for the year ended December 31, 1999. See
"Analysis of Net Interest Income" included elsewhere herein.
Interest Expense. Interest expense for the year ended
December 31, 1999 was $4,173,000 compared to $4,770,000 for the
year ended December 31, 1998 representing a $597,000, or 12.5%
decrease. The decrease was primarily due to lower rates paid on
deposits as higher priced certificates matured and were repriced
with lower rates.
First Bankshares' average cost of deposits decreased from
4.24% for the year ended December 31, 1998 to 3.63% for the year
ended December 31, 1999. See "Analysis of Net Interest Income"
included elsewhere herein.
Provision for Loan Losses. The provision for loan losses is
charged to income to bring the allowance for loan losses to an
amount that represents management's best estimate of the losses
inherent in the loan portfolio. This estimate is based on
historical experience, volume and type of lending conducted by
First Bankshares, the level and status of past due and non-
performing loans, the general economic conditions in its lending
area and other factors affecting the collectibility of the loans
in the portfolio.
The provision for loan losses for the year ended December
31, 1999 was $100,000 compared to $10,000 for the year ended
December 31, 1998. The increase in the provision for loan losses
for the year ended December 31, 1999 was attributable to the loan
growth of 4.9% experienced by First Bankshares during 1999 and to
the deterioration of a large credit relationship that began in
1999.
Noninterest Income. Noninterest income for the year ended
December 31, 1999 decreased $29,000, or 3.6%, compared to the
year ended December 31, 1998. The increase in service charges
and fees on deposits was offset by a decrease in other
miscellaneous income due to a decrease in earnings from First
Bankshares' equity investment in First Peoples Bankshares, Inc.,
the bank holding company for First Peoples Bank, resulting from
its increased loan loss provisions. The increase in the
provision for loan losses was due to a deterioration of a large
credit relationship during 1999.
Noninterest Expense. Noninterest expense for the year ended
December 31, 1999 decreased $336,000, or 7.2%, compared to the
year ended December 31, 1998. The decrease in noninterest
expenses were primarily due to a decrease in salaries and
employee benefits attributable to a decrease in First Bankshares'
personnel.
Income Taxes. Income taxes for the year ended December 31,
1999 totaled $615,000, an increase of $176,000 over the same
period in 1998. The effective tax rates for the years ended
December 31, 1999 and 1998 were 35.9% and 37.1%, respectively.
The decrease in the effective rate for the year ended December
31, 1999 was attributable to higher tax-exempt income.
Comparison of Operating Results for Years Ended December 31, 1998
and December 31, 1997
Net Income. First Bankshares' net income for the year ended
December 31, 1998 was $747,000, which was an increase of
$724,000, compared to net income of $23,000 for the year ended
December 31, 1997. Income per share for the year ended December
31, 1998 was $3.87 compared to $0.12 for the year ended December
31, 1997. The increase was primarily due to losses on the sale
of investment securities of $1,509,000 which were recognized
during 1997.
The annualized return on average assets for First Bankshares
was 0.53% for the year ended December 31, 1998, compared to 0.02%
for the year ended December 31, 1997. The annualized return on
average stockholders' equity was 4.70% for the year ended
December 31, 1998 compared to 0.15% for the year ended December
31, 1997.
Interest Income. Interest income decreased $593,000, or
5.7% for the year ended December 31, 1998 compared to the year
ended December 31, 1997. The decrease was attributable to a
declining interest rate environment during 1998 reducing the
yields on First Bankshares' earning assets. Average earning
assets of $129,068,000 for the year ended December 31, 1998
remained relatively unchanged compared to $129,372,000 for the
year ended December 31, 1997.
Interest Expense. Interest expense for the year ended
December 31, 1998 was $4,770,000 compared to $4,924,000 for the
year ended December 31, 1997 representing a $154,000, or 3.2%
decrease. As noted above, the decrease was attributable to the
falling interest rate environment during 1998.
Average interest-bearing liabilities remained relatively
unchanged during 1998 as compared to 1997. First Bankshares'
cost of deposits decreased from 4.40% for the year ended
December 31, 1997 to 4.24% for the year ended December 31, 1998.
First Bankshares' cost of other borrowings increased from 5.31%
for the year ended December 31, 1997 to 5.71% for the year ended
December 31, 1998.
Provision for Loan Losses. The provision for loan losses is
charged to income to bring the allowance for loan losses to an
amount that represents management's best estimate of the losses
inherent in the loan portfolio. This estimate is based on
historical experience, volume and type of lending conducted by
First Bankshares, the level and status of past due and non-
performing loans, the general economic conditions in its lending
area and other factors affecting the collectibility of the loans
in the portfolio.
The provision for loan losses for the year ended December
31, 1998 was $10,000 compared to $120,000 for the year ended
December 31, 1997. The decrease in the provision for loan losses
for the year ended December 31, 1998 was attributable to improved
credit quality and lower net charge-offs during 1998.
Noninterest Income. Noninterest income for the year
ended December 31, 1998 was $823,000 and comparable to
noninterest income, exclusive of investment securities losses,
for the year ended December 31, 1997. During 1997, First
Bankshares recognized losses of $1,509,000 on the sale of
investment securities. No investment securities were sold during
1998.
Noninterest Expense. Noninterest expense for the year ended
December 31, 1998 was comparable to noninterest expense for the
year ended December 31, 1997. Increases in salaries and employee
benefit costs attributable to normal salary adjustments as well
as increases in occupancy expense and furniture, fixtures and
equipment expense resulting from the acquisition of Canebrake
Bankshares, Inc. were offset by a decrease in other operating
expense. Other operating expense was higher for the year ended
December 31, 1997 as the bank incurred legal fees and other
expenses in connection with the acquisition of Canebrake
Bankshares, Inc.
Income Taxes. Income taxes for the year ended December 31,
1998 totaled $440,000, an increase of $433,000 over the same
period in 1997. The effective tax rates for the years ended
December 31, 1999 and 1998 were 37.1% and 21.5%, respectively.
The increase in the effective tax rate for the year ended
December 31, 1998 was due to a higher income before income taxes.
Inflation. Inflation has an important impact on the growth
of total assets in the banking industry and causes a need to
increase equity capital at higher than normal rates in order to
maintain an appropriate equity to assets ratio. First Bankshares
has been able to maintain an adequate level of equity, and though
inflation has not been a material factor in recent years,
management will address any future effects of inflation by
managing its interest rate sensitivity gap position through its
asset/liability management program, and by periodically adjusting
its pricing of services and banking products to take into
consideration current costs.
Selected Financial Information and Statistical Data. The
tables and schedules on the following pages set forth certain
significant financial information and statistical data with
respect to: the investment portfolio of First Bankshares,
including types of investments, maturities, and weighted average
yields; and the types of deposits of First Bankshares.
Investment Portfolio. The following table presents maturity
distributions and yields of investment securities available for
sale and held to maturity.
<TABLE>
At September 30, At December 31,
-------------------------------- --------------------------------------------------------
2000 1999 1998
-------------------------------- ------------------------------ ------------------------
Year-end Year-end
Weighted Weighted
Amortized Average Amortized Average Amortized
Cost Fair Value Yield Cost Fair Value Yield Cost Fair Value
---------- ----------- ------- ---------- ---------- ------- ---------- -----------
Investment securities
available for sale:
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage-backed securities
One year or less $6,842,359 $6,805,981 7.32% $9,876,789 $9,831,456 6.49% $21,565,324 $21,705,002
Over one through 5 years 5,074,067 5,074,067 6.87% 499,800 500,000 6.85% - -
Over 5 through 10 years 30,484,877 30,085,343 7.19% 29,691,056 29,575,678 7.16% 13,921,001 14,112,035
Over 10 years 703,841 679,581 7.00% 791,244 791,219 7.16% 1,110,471 1,110,097
----------- ----------- ----------- ----------- ----------- -----------
Total mortgage-backed
securities $43,105,144 $42,644,972 7.19% $40,858,889 $40,698,353 6.72% $36,596,796 $36,927,134
=========== =========== =========== =========== =========== ===========
Investment securities held to maturity:
US government agencies:
One year or less - - - - - -
Over one through 5 years $3,979,352 $3,539,543 4.03% $4,007,894 $3,674,375 4.86% $4,009,942 $3,863,750
Over 5 through 10 years - - - - - -
Over 10 years 2,285,483 1,794,482 7.66% 2,239,907 1,651,175 9.84% 2,214,750 2,370,275
----------- ---------- ---------- ---------- ---------- ----------
Total US government
agencies $ 6,264,835 $5,334,025 5.85% $6,247,801 $5,325,550 7.35% $6,224,692 $6,234,025
=========== ========== ========== ========== ========== ==========
</TABLE>
Deposits. The following table presents the average amount
outstanding and the average rate paid on deposits by First
Bankshares for the nine months ended September 30, 2000 and for
the years ended December 31, 1999 and 1998.
<TABLE>
For the Nine Months Ended For the Years Ended December 31,
------------------------------- --------------------------------------------------------------
September 30, 2000 1999 1998
------------------------------- ------------------------------ ------------------------------
Average Interest Average Average Interest Average Average Interest Average
Balance Paid Rate Balance Paid Rate Balance Paid Rate
------------------------------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest bearing deposits $ 25,171,143 $20,545,233 $19,994,769
Interest-bearing deposits:
Now and savings accounts 47,453,335 $1,102,005 3.10% 45,888,510 $1,281,418 2.79% 45,190,735 $1,549,182 3.43%
Certificates of deposits 31,900,340 1,231,187 5.15% 31,870,875 1,540,345 4.83% 31,631,829 1,708,734 5.40%
------------ ---------- ----------- ---------- ----------- ----------
Total deposits $104,524,818 $2,333,192 2.98% $98,304,617 $2,821,763 2.87% $96,817,333 $3,257,916 3.37%
============ ========== =========== ========== =========== ==========
</TABLE>
Time Deposits. The following table presents the maturity of
First Bankshares' time deposits of $100,000 and over at September
30, 2000 and December 31, 1999.
At September 30, At December 31,
2000 1999
Maturity period ---------------- ---------------
---------------
Within three months $3,686,556 $5,202,458
Over three months through twelve months 3,100,609 1,910,564
Over twelve months 225,871 225,871
---------- ----------
$7,013,036 $7,338,893
========== ==========
BUSINESS OF CAPITAL CITY
General
Capital City is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended. At September 30,
2000, Capital City had consolidated total assets of approximately
$1.5 billion and shareowners' equity of approximately $143.7
million. Its principal assets are the capital stock of Capital
City Bank and First National Bank of Grady County (collectively
the "Banks"). Capital City Bank accounted for approximately 93%
of the consolidated assets at September 30, 2000 and
approximately 93% of consolidated net income of Capital City for
the year ended December 31, 1999. In addition to its banking
subsidiaries, Capital City has five other indirect subsidiaries,
Capital City Trust Company, Capital City Securities, Inc.,
Capital City Mortgage Company (inactive) and Capital City
Services Company, all of which are wholly-owned subsidiaries of
Capital City Bank, and First Insurance Agency of Grady County,
which is a wholly-owned subsidiary of First National Bank of
Grady County.
On May 7, 1999, Capital City completed its acquisition of
Grady Holding Company and its subsidiary First National Bank of
Grady County. First National Bank of Grady County is a $114
million asset institution with offices in Cairo and Whigham,
Georgia. Capital City issued 21.50 shares for each of the 60,910
shares of Grady Holding Company. The consolidated financial
statements of Capital City give effect to the merger which has
been accounted for as a pooling-of-interests. Accordingly,
financial statements for the prior periods have been restated to
reflect the results of operations of these entities on a combined
basis from the earliest period presented.
On December 4, 1998, Capital City completed its purchase and
assumption transaction with First Union National Bank ("First
Union") and acquired eight of First Union's branch offices which
included deposits. Capital City paid a premium of $16.9 million,
and assumed approximately $219 million in deposits and acquired
certain real estate. The premium is being amortized over ten
years.
On January 31, 1998, Capital City completed its purchase and
assumption transaction with First Federal Savings & Loan
Association of Lakeland, Florida ("First Federal-Florida") and
acquired five of First Federal-Florida's branch offices, which
included loans and deposits. Capital City paid a deposit premium
of $3.6 million, or 6.33%, and assumed $55 million in deposits
and purchased loans equal to $44 million. Four of the five
offices were merged into existing offices of Capital City Bank.
The deposit premium is being amortized over fifteen years.
Banking Services
Capital City Bank is a Florida chartered bank and First
National Bank of Grady County is a national bank. The banks are
full service banks, engaged in the commercial and retail banking
business, including accepting demand, savings and time deposits,
extending credit, originating residential mortgage loans,
providing data processing services, asset management services,
trust services, retail brokerage services and a broad range of
other financial services to corporate and individual customers,
governmental entities and correspondent banks. The banks are
members of the "Star" system which enables customers to utilize
their "QuickBucks" or "QuickCheck" cards to access cash at
automatic teller machines ("ATMs") or point of sale merchants
located throughout the state of Florida. Additionally, customers
may access their cash outside Florida through various
interconnected ATM networks and merchant locations.
Data Processing Services
Capital City Services Company provides data processing
services to financial institutions (including Capital City Bank),
government agencies and commercial customers located throughout
North Florida and South Georgia. As of September 30, 2000, the
services company is providing computer services to correspondent
banks which have relationships with Capital City Bank.
Trust Services
Capital City Trust Company is the investment management arm
of Capital City Bank. The Trust Company provides asset
management for individuals through agency, personal trust and IRA
accounts personal investment management. Pension, profit sharing
and 401(k) Plans administration are significant product lines.
Associations, endowments and other non-profit entities hire the
Trust Company to manage their long-term investment portfolios.
Individuals requiring the services of a trustee, personal
representative, or a guardian are served by a staff of well
trained professionals. The market value of trust assets under
discretionary management exceeded $328 million as of September
30, 2000, with total assets under administration exceeding $375
million.
Brokerage Services
Capital City offers access to retail investment products through
Capital City Securities, Inc., a wholly-owned subsidiary of
Capital City Bank. These products are offered through INVEST
Financial Corporation, member NASD and SIPC. Non-deposit
investment and insurance products are: not FDIC insured; not
deposits, obligations, or guaranteed by any bank, and; are
subject to investment risk, including the possible loss of
principal amount invested. Capital City Securities, Inc.'s
brokers are licensed through INVEST Financial Corporation, and
offer a full line of retail securities products, including U.S.
Government bonds, tax-free municipal bonds, stocks, mutual funds,
unit investment trusts, annuities, life insurance and long-term
health care. Capital City and its subsidiaries are not affiliated
with INVEST Financial Corporation.
As a routine part of its business, Capital City evaluates
opportunities to acquire bank holding companies, banks and other
financial institutions. Thus, at any particular point in time,
including the date of this Proxy Statement/Prospectus,
discussions and, in some cases, negotiations and due diligence
activities looking toward or culminating in the execution of
preliminary or definitive documents respecting potential mergers
may occur or be in progress. These transactions may involve
Capital City acquiring such financial institutions in exchange
for cash or capital stock, and depending upon the terms of these
transactions, they may have a dilutive effect upon the Capital
City common stock to be issued to holders of First Bankshares
common stock in the merger.
Directors and Executive Officers
The directors of Capital City after the merger will be:
CLASS I DIRECTORS
-----------------
Cader B. Cox, III
William G. Smith, Jr.
John B. Wight, Jr.
CLASS II DIRECTORS
------------------
Thomas A. Barron
Lina S. Knox
John R. Lewis
CLASS III DIRECTORS
-------------------
Dubose Ausley
John K. Humphress
The executive officers of Capital City after the merger will be:
Dubose Ausley Chairman of the Board
William G. Smith, Jr. President and Chief Executive Officer
J. Kimbrough Davis Executive Vice President and Chief Financial Officer
Thomas A. Barron President of Capital City Bank
The following section sets forth certain information
regarding each of the persons who, after the consummation of the
merger, will be a director or executive officer of Capital City.
Except as otherwise indicated, each of the named persons has been
engaged in his or her present principal occupation for more than
five years.
CLASS I DIRECTORS:
(Term Expiring in 2001)
CADER B. COX, III
Mr. Cox, 50, has been a director since October 1994. Since June
1976, he has served as President of Riverview Plantation, Inc., a
resort and agricultural company.
WILLIAM G. SMITH, JR.
Mr. Smith, 47, has been a director since 1982. In January 1995,
he was elected President and Chief Executive Officer of Capital
City and Chairman of Capital City Bank. Mr. Smith served as
Executive Vice President and Chief Operating Officer of the
Company from 1987 to 1995 and President and Chief Executive
Officer of Capital City First National Bank of Tallahassee from
1989 to 1995. Mr. Smith is the first cousin of Lina S. Knox.
JOHN B. WIGHT, JR.
Mr. Wight, 71, has been a Class I director since May 1999. He
was Chairman of Grady Holding Company and remains Chairman of its
subsidiary, First National Bank of Grady County, which entities
were recently acquired by Capital City. He is an owner of Wight
Nurseries, Inc., an ornamental plant grower in Cairo, Georgia.
From 1980 to 1981, he was President of the American Association
of Nurserymen.
CLASS II DIRECTORS:
(Term Expiring in 2002)
THOMAS A. BARRON
Mr. Barron, 48, has been a director since 1982. He is Treasurer
of Capital City and was elected President of Capital City Bank in
January 1995. He served as President of Capital City Second
National Bank from 1979 to 1995 and President of Industrial
National Bank from 1982 to 1995.
LINA S. KNOX
Ms. Knox, 56, has been a director since January 1998. She is a
dedicated community volunteer. Ms. Knox is the first cousin of
William G. Smith, Jr.
JOHN R. LEWIS
Mr. Lewis, 58, has been a Class II director since December 1999.
He is President and Chief Executive Officer of Super-Lube, Inc.,
Tallahassee, Florida which he founded in 1979. From 1997 to
1998, he was the chairman of Tallahassee Memorial Health Care and
currently serves as a board member of this organization.
CLASS III DIRECTORS:
(Term Expiring in 2003)
DUBOSE AUSLEY
Mr. Ausley, 63, has been a director since 1982. He is the
Chairman of the Board of Capital City and is also Chairman of the
law firm of Ausley & McMullen. Since 1992, he has served as a
director of TECO Energy, Inc. Since March of 1993, Mr. Ausley
has served as a director of Sprint Corporation. From 1982 to
1993, he served as a director of Centel Corporation.
JOHN K. HUMPHRESS
Mr. Humphress, 51, has been a director since October 1994. Since
1973, he has been a shareowner of Krause Humphress Pace &
Wadsworth, Chartered CPA's.
OTHER EXECUTIVE OFFICERS:
J. KIMBROUGH DAVIS
Mr. Davis, 46, was elected Executive Vice President and Chief
Financial Officer of Capital City in January 1997. He served as
Senior Vice President and Chief Financial Officer from 1991 to
1997. In January 1997, he was elected Executive Vice President
and Chief Financial Officer of Capital City Bank.
FINANCIAL INFORMATION
Pro Forma Consolidated Statements of Income
The following unaudited pro forma consolidated statements of
income have been prepared for (i) the nine months ended
September 30, 2000, and give effect to the merger, assuming the
merger is accounted for as a purchase and occurred at the
beginning of the period and (ii) for the year ended December 31,
1999 and give effect to the merger, assuming the merger is
accounted for as a purchase and occurred at the beginning of the
period. The unaudited pro forma consolidated statements of
income should be read in conjunction with the notes thereto and
the historical consolidated financial statements of Capital City,
including the respective notes thereto, which are incorporated by
reference in this Proxy Statement/Prospectus. See "WHERE YOU CAN
FIND MORE INFORMATION ABOUT CAPITAL CITY," on page 1, "SUMMARY --
Historical and Pro Forma Comparative Per Share Data," on page 14,
and "-- Selected Financial Data," on page 15. The pro forma
combined condensed statements of income are not necessarily
indicative of the results that actually would have occurred if
the merger had been consummated at the dates indicated or which
may be obtained in the future.
<TABLE>
Pro Forma Consolidated Statements of Income
<CAPTION>
(Dollars in thousands, except per share data)
Nine Months Ended For the Year Ended
September 30, 2000 December 31, 1999
------------------------------------- -------------------------------------
Capital First Pro Forma Consol- Capital First Pro Forma Consol-
City Bankshares ADJ's idated City Bankshares ADJ's idated
------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $67,765 $4,882 $0 $72,647 $78,527 $6,397 $0 $84,924
Investment Securities 11,983 3,000 0 14,983 17,600 3,101 0 20,701
Funds Sold 870 0 0 870 3,558 1 0 3,559
------- ------ ---- ------- ------- ------ ---- --------
Total Interest Income $80,618 $7,882 $0 $88,500 $99,685 $9,499 $0 $109,184
INTEREST EXPENSE
Deposits $29,274 $2,333 $0 $31,607 $38,315 $2,823 $0 $41,138
Short-Term Borrowings 3,380 1,244 0 4,624 1,816 1,350 0 3,166
Long-Term Debt 632 0 179(1) 811 1,116 0 239(1) 1,355
------- ------ ---- ------- ------- ------ ---- --------
Total Interest Expense $33,286 $3,577 $179 $37,042 $41,247 $4,173 $239 $45,659
------- ------ ---- ------- ------- ------ ---- --------
NET INTEREST INCOME 47,332 4,305 (179) 51,458 58,438 5,326 (239) 63,525
Provision for Loan Losses 2,295 1,580 0 3,875 2,440 100 0 2,540
------- ------ ---- ------- ------- ------ ---- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES $45,037 $2,725 ($179) $47,583 $55,998 $5,226 ($239) $60,985
NONINTEREST INCOME
Service Charges on Deposit Accounts 7,017 421 0 7,438 9,973 500 0 10,473
Data Processing Revenue 1,960 0 0 1,960 2,861 0 0 2,861
Income from Fiduciary Activities 1,785 0 0 1,785 2,227 0 0 2,227
Securities Transactions 2 (12) 0 (10) (12) 0 0 (12)
Other 8,959 313 0 9,272 9,712 294 0 10,006
------- ------ ---- ------- ------- ---- ---- --------
Total Noninterest Income $19,723 $722 $0 $20,445 $24,761 $794 $0 $25,555
NONINTEREST EXPENSE
Salaries and Associate Benefits $22,605 $1,763 $0 $24,368 $28,969 $2,349 $0 $31,318
Occupancy, Net 3,377 210 0 3,587 4,466 275 0 4,741
Furniture and Equipment 4,355 360 0 4,715 5,647 482 0 6,129
Merger Expense 749 0 0 749 1,361 0 0 1,361
Other 13,202 936 184(2) 14,322 17,585 1,201 245(2) 19,031
------- ------ ---- ------- ------- ------ ---- --------
Total Noninterest Expense $44,288 $3,269 $184 $47,741 $58,028 $4,307 $245 $62,580
INCOME BEFORE TAXES 20,472 178 (363) 20,287 22,731 1,713 (484) 23,960
Income Taxes 6,971 68 (79) 6,960 7,479 615 (98) 7,996
------- ------ ---- ------- ------- ------ ---- --------
NET INCOME $13,501 $110 ($284) $13,327 $15,252 $1,098 ($386) $15,964
======= ====== ==== ======= ======= ====== ===== =======
Net Income Per Basic Shares $1.32 $.57 $1.22 $1.50 $5.70 $1.47
Net Income Per Diluted Share $1.32 $.57 $1.22 $1.50 $5.70 $1.47
Cash Dividends Per Share $0.3975 $1.30 $0.4276 $0.5525 $3.15 $0.5727
(1) Interest expense calculated at 7% on Pro Forma Long-Term Debt.
(2) Amortization of Intangible Assets over 15 years.
</TABLE>
Pro Forma Consolidated Balance Sheet
The following unaudited pro forma consolidated balance sheet
presents the historical unaudited consolidated balance sheets of
Capital City and First Bankshares at September 30, 2000, giving
effect to the merger, assuming the merger is accounted for as a
purchase and had occurred on September 30, 2000. The unaudited
pro forma consolidated balance sheet should be read in
conjunction with the notes thereto and the historical
consolidated financial statements of Capital City, including the
respective notes thereto, which are incorporated by reference in
this Proxy Statement/Prospectus. See "WHERE YOU CAN FIND MORE
INFORMATION ABOUT CAPITAL CITY," on page 1, "SUMMARY --
Historical and Pro Forma Comparative Per Share Data," on page 14,
and "-- Selected Financial Data," on page 15. The pro forma
consolidated balance sheet is not necessarily indicative of the
consolidated financial position that actually would have occurred
if the merger had been consummated at the date indicated or which
may be obtained in the future.
<TABLE>
PRO FORMA BALANCE SHEET
<CAPTION>
(Dollars in thousands, except per share data)
September 30, 2000
----------------------------------------------------
Capital First Pro Forma
City Bankshares ADJ's Consolidated
---------- ----------- --------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and Due From Banks $ 60,774 $ 24,047 ($800)(1) $ 84,021
Funds Sold 3,809 0 0 3,809
Investment Securities
Available-for-Sale 282,446 45,374 0 327,820
Held-to-Maturity 0 6,265 (931)(2) 5,334
---------- -------- ------ ----------
Total Investment Securities $ 282,446 $ 51,639 ($931) $ 333,154
Loans, Net of Unearned Interest 1,060,369 74,927 0 1,135,296
Allowance for Loan Loss (10,653) (1,225) 0 (11,878)
---------- -------- ------ ----------
Loans, Net $1,049,716 $ 73,702 0 $1,123,418
Premises and Equipment 36,827 4,447 0 41,274
Intangibles 22,994 582 3,518(3) 27,094
Other Assets 35,570 2,128 (346)(4) 37,352
---------- -------- ------ ----------
Total Assets $1,492,136 $156,545 $1,441 $1,650,122
========== ======== ====== ==========
LIABILITIES:
Deposits
Noninterest Bearing Deposits $ 287,295 $ 23,169 $0 $ 310,464
Interest Bearing Deposits 942,665 91,241 0 1,033,906
---------- -------- ------ ----------
Total Deposits $1,229,960 $114,410 $0 $1,344,370
Short-Term Borrowings 88,633 25,317 0 113,950
Long-Term Debt 11,408 0 3,417(5) 14,825
Other Liabilities(6) 18,443 1,172 0 19,615
---------- -------- ------ ----------
Total Liabilities $1,348,444 $140,899 $3,417 $1,492,760
SHAREOWNERS' EQUITY
Common Stock $102 ($380) $387(5)(7) $109
Additional Paid-in Capital 9,363 250 13,413(5)(7) 23,026
Retained Earnings 138,503 16,239 (16,239)(7) 138,503
Other Comprehensive Loss (4,276) (463) 463(7) (4,276)
---------- -------- ------ ----------
Total Shareowners' Equity $143,692 $15,646 ($1,976) $157,362
Total Liabilities and
Shareowners' Equity $1,492,136 $156,545 $1,441 $1,650,122
========== ======== ====== ==========
(1) Merger related transaction costs.
(2) Fair value adjustment of investment securities held-to-maturity.
(3) Intangible assets recorded from the transaction.
(4) To record deferred taxes and an adjustment to prepaid pension.
(5) At closing, First Bankshares Shareowners will receive 3.6419 shares of
Capital City common stock and $17.75 of cash for each of the 192,481 outstanding
shares. It is expected that the cash payment will be financed through long-term debt.
(6) $600,000 of conversion costs have been accrued to convert First Bankshares
to Capital City operating systems.
(7) To reflect the issuance of 701,000 shares of Capital City stock @ $19.50 per
share and eliminate First Bankshares equity accounts.
</TABLE>
<TABLE>
CAPITAL CITY BANK GROUP, INC. & FIRST BANKSHARES OF WEST POINT,
INC. MARKET VALUE OF SECURITIES AS OF SEPTEMBER 30, 2000
<CAPTION>
Capital City Bank Group, Inc. First Bankshares of West Point, Inc.
-----------------------------------------------------------------------
Amortized Unrealized Market Amortized Unrealized Market
(Dollars in thousands) Costs Gain Loss Value Costs Gain Loss Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-For-Sale
U.S. Treasury $10,020 $0 $48 $9,972 $0 $0 $0 $0
U.S. Government Agencies & Corporations 72,061 2 1,617 70,446 0 0 0 0
State & Political Subdivisions 90,490 60 1,441 89,109 0 0 0 0
Mortgage-Backed Securities 76,419 60 2,823 73,656 43,105 99 559 42,645
Other Securities 40,207 0 944 39,263 2,729 0 0 2,729
-------- ---- ------ -------- ------- --- ------ -------
Total Available-For-Sale $289,197 $122 $6,873 $282,446 $45,834 $99 $559 $45,374
Held-To-Maturity
U.S. Treasury $0 $0 $0 $0 $0 $0 $0 $0
U.S. Government Agencies & Corporations 0 0 0 0 6,265 0 931 5,334
State & Political Subdivisions 0 0 0 0 0 0 0 0
Mortgage-Backed Securities 0 0 0 0 0 0 0 0
Other Securities 0 0 0 0 0 0 0 0
-------- ---- ------ -------- ------- --- ------ -------
Total Held-To-Maturity $0 $0 $0 $0 $6,265 $0 $931 $5,334
Investment Securities
U.S. Treasury $10,020 $0 $48 $9,972 $0 $0 $0 $0
U.S. Government Agencies & Corporations 72,061 2 1,617 70,446 6,265 0 931 5,334
State & Political Subdivisions 90,490 60 1,441 89,109 0 0 0 0
Mortgage-Backed Securities 76,419 60 2,823 73,656 43,105 99 559 42,645
Other Securities 40,207 0 944 39,263 2,729 0 0 2,729
-------- ---- ------ -------- ------- --- ------ -------
Total Investment Securities $289,197 $122 $6,873 $282,446 $52,099 $99 $1,490 $50,708
</TABLE>
Capital City Bank Group, Inc. and First Bankshares of West Point, Inc
Amortized Unrealized Market
(Dollars in thousands) Costs Gain Loss Value
Available-For-Sale
U.S. Treasury $10,020 $0 $48 $9,972
U.S. Government Agencies & Corporations 72,061 2 1,617 70,446
State & Political Subdivisions 90,490 60 1,441 89,109
Mortgage-Backed Securities 119,524 159 3,382 116,301
Other Securities 42,936 0 944 41,992
-------- ---- ------ ---------
Total Available-For-Sale $335,031 $221 $7,432 $327,820
Held-To-Maturity
U.S. Treasury $0 $0 $0 $0
U.S. Government Agencies & Corporations 6,265 0 931 5,334
State & Political Subdivisions 0 0 0 0
Mortgage-Backed Securities 0 0 0 0
Other Securities 0 0 0 0
-------- ---- ------ --------
Total Held-To-Maturity $6,265 $0 $931 $5,334
Investment Securities
U.S. Treasury $10,020 $0 $48 $9,972
U.S. Government Agencies & Corporations 78,326 2 2,548 75,780
State & Political Subdivisions 90,490 60 1,441 89,109
Mortgage-Backed Securities 119,524 159 3,382 116,301
Other Securities 42,936 0 944 41,992
-------- ---- ------ --------
Total Investment Securities $341,296 $221 $8,363 $333,154
<TABLE>
First Bankshares of West Point, Inc. and Subsidiaries
Supplemental Financial Information
Quarterly Financial Data
<CAPTION>
2000 1999
--------------------------------------- ------------------------------------------------------
Third Second First Fourth Third Second First
-------------------------------------------------------------------------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest Income $ 2,728,186 $ 2,639,939 $ 2,513,649 $ 2,480,900 $ 2,391,398 $ 2,366,600 $ 2,259,952
Interest Expense 1,302,934 1,176,411 1,097,355 1,116,910 1,033,458 1,020,702 1,001,671
Net Interest Income 1,425,252 1,463,528 1,416,294 1,363,990 1,357,940 1,345,898 1,258,281
Provision for Loan Loss 530,000 105,000 945,000 100,000 - - -
Net Interest Income
After Provisions for Loan Loss 895,252 1,358,528 471,294 1,263,990 1,357,940 1,345,898 1,258,281
Noninterest Income 250,912 258,610 212,571 87,972 224,841 263,927 217,242
Merger Expense - - - 15,000 - - -
Noninterest Expense 1,064,588 1,131,095 1,073,145 1,114,453 1,050,496 1,075,530 1,051,322
Income Before
Provision for Income Taxes 81,576 486,043 (389,280) 222,509 532,285 534,295 424,201
Provision for Income Taxes (30,202) (165,336) 126,945 (104,605) (175,601) (188,972) (146,074)
Net Income $ 51,374 $ 320,707 $ (262,335) $ 117,904 $ 356,684 $ 345,323 $ 278,127
Per Common Share:
Net Income Basic $ 0.27 $ 1.66 $ (1.36) $ 0.62 $ 1.85 $ 1.79 $ 1.44
Net Income Diluted 0.27 1.66 (1.36) 0.62 1.85 1.79 1.44
Dividends Declared - 1.30 - 1.85 - 1.30 -
Book Value 81.62 80.90 83.30 84.99 84.58 83.61 82.63
Selected Average Balances:
Total Assets $149,341,206 $144,720,482 $147,426,793 $136,627,133 $139,125,134 $140,095,936 $136,627,133
Earning Assets 135,398,668 132,505,469 131,219,521 132,531,243 126,389,567 128,146,130 124,266,026
Loans 75,338,687 76,359,702 75,656,893 78,392,215 77,149,458 75,724,844 71,604,044
Total Deposits 107,518,560 103,998,999 102,300,400 103,767,905 96,778,230 98,978,284 94,652,184
Total Shareowners'Equity 15,709,977 15,571,226 16,033,254 16,358,528 16,280,463 16,093,186 15,911,377
Common Equivalent Shares:
Basic 192,481 192,481 192,481 192,481 192,481 192,481 192,561
Diluted 192,481 192,481 192,481 192,481 192,481 192,481 192,561
Ratios:
ROA 0.14% 0.89% -0.71% 0.35% 1.03% 0.99% 0.81%
ROE 1.31% 8.24% -6.54% 2.88% 8.76% 8.58% 6.99%
Net Interest Margin 4.09% 4.43% 4.27% 4.21% 4.36% 4.24% 4.04%
Efficiency Ratio 55.51% 62.66% 64.55% 66.74% 65.89% 65.17% 64.95%
</TABLE>
<TABLE>
First Bankshares of West Point, Inc., and Subsidiaries
Supplemental Financial Information
Quarterly Financial Data
<CAPTION>
1998
------------------------------------------------------
Fourth Third Second First
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Summary of Operations:
Interest Income $ 2,313,974 $ 2,395,064 $ 2,524,252 $ 2,552,989
Interest Expense 1,038,768 1,187,903 1,254,096 1,289,516
Net Interest Income 1,275,206 1,207,161 1,270,156 1,263,473
Provision for Loan Loss - - - 10,000
Net Interest Income
After Provisions for Loan Loss 1,275,206 1,207,161 1,270,156 1,253,473
Noninterest Income 186,162 230,311 221,035 185,729
Merger Expense - - - -
Noninterest Expense 1,059,067 1,083,934 1,288,014 1,211,381
Income Before
Provision for Income Taxes 402,301 353,538 203,177 227,821
Provision for Income Taxes (114,508) (114,896) (118,206) (92,118)
Net Income $ 287,793 $ 238,642 $ 84,971 $ 135,703
Per Common Share:
Net Income Basic $ 1.49 $ 1.24 $ 0.44 $ 0.70
Net Income Diluted 1.49 1.24 0.44 0.70
Dividends Declared 1.85 - 1.30 -
Book Value 82.53 81.93 82.59 81.55
Selected Average Balances:
Total Assets $135,527,902 $135,952,001 $144,682,193 $145,839,246
Earning Assets 122,762,713 124,612,250 132,454,544 133,713,412
Loans 71,675,419 72,811,114 76,929,875 76,379,216
Total Deposits 92,932,268 94,709,973 102,730,060 100,926,171
Total Shareowners' Equity 15,933,763 15,817,460 15,945,458 15,744,938
Common Equivalent Shares:
Basic 193,061 193,061 193,061 193,061
Diluted 193,061 193,061 193,061 193,061
Ratios:
ROA 0.85% 0.70% 0.23% 0.37%
ROE 7.22% 6.03% 2.13% 3.45%
Net Interest Margin 4.02% 3.90% 3.60% 3.85%
Efficiency Ratio 67.57% 73.14% 81.86% 80.93%
SHAREOWNER PROPOSALS
Proposals of shareowners of Capital City intended to be
presented at the 2001 annual meeting of shareowners must be
received by Capital City at its principal executive offices on or
before the date that is 120 calendar days in advance of the date
of Capital City's release of its 2001 proxy statement to security
holders, in order to be included in Capital City's proxy
statement and proxy relating to the 2001 annual meeting of
shareowners. As of the date of the mailing of this Proxy
Statement/Prospectus, Capital City's 2001 proxy statement has not
been completed. The specific date by which proposals of
shareowners of Capital City intended to be represented at the
2001 annual meeting of shareowners must be received by Capital
City in order to be included in Capital City's 2001 proxy
statement is December 8, 2000. Shareowner proposals for the 2001
meeting are not intended to be included in the proxy statement
for that meeting.
EXPERTS
The audited consolidated financial statements of Capital
City Bank Group, Inc. and subsidiaries included in its annual
report on Form 10-K for the year ended December 31, 1999
incorporated by reference in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP,
independent certified public accountants, as indicated in their
report with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving said
reports.
LEGAL MATTERS
The legality of the shares of Capital City common stock to
be issued in the merger and certain tax consequences of the
merger will be passed upon by Gunster, Yoakley & Stewart P.A.,
West Palm Beach, Florida.
OTHER MATTERS
Management of First Bankshares does not know of any matters
to be brought before the Special Meeting other than those
described above. If any other matters properly come before the
Special Meeting, the persons designated as Proxies will vote on
such matters in accordance with their best judgment.
WPB/Word/528330.7
Appendix A -- AGREEMENT AND PLAN OF MERGER BY AND BETWEEN CAPITAL
CITY BANK GROUP, INC. AND FIRST BANKSHARES OF WEST POINT, INC.,
DATED AS OF SEPTEMBER 25, 2000
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST BANKSHARES OF WEST POINT, INC.
AND
CAPITAL CITY BANK GROUP, INC.
Dated as of September 25, 2000
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER 1
PREAMBLE 1
1.1 HOLDING COMPANY MERGER 1
1.2 BANK MERGER 1
1.3 TIME AND PLACE OF CLOSING 2
1.4 EFFECTIVE TIME 2
ARTICLE 2
TERMS OF MERGER 2
2.1 CHARTER 2
2.2 BYLAWS 2
2.3 DIRECTORS AND OFFICERS 2
ARTICLE 3
MANNER OF CONVERTING SHARES 2
3.1 CONVERSION OF SHARES 2
3.2 ANTI-DILUTION PROVISIONS 3
3.3 SHARES HELD BY FBWP OR CCBG 3
3.4 DISSENTING SHAREHOLDERS 3
3.5 FRACTIONAL SHARES 4
ARTICLE 4
EXCHANGE OF SHARES 5
4.1 EXCHANGE PROCEDURES 5
4.2 RIGHTS OF FORMER FBWP SHAREHOLDERS 5
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FBWP 6
5.1 ORGANIZATION, STANDING, AND POWER 6
5.2 AUTHORITY OF FBWP; NO BREACH BY AGREEMENT 6
5.3 CAPITAL STOCK 7
5.4 FBWP SUBSIDIARIES 8
5.5 FINANCIAL STATEMENTS 8
5.6 ABSENCE OF UNDISCLOSED LIABILITIES 9
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS 9
5.8 TAX MATTERS 9
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES 12
5.10 ASSETS 12
5.11 INTELLECTUAL PROPERTY 13
5.12 ENVIRONMENTAL MATTERS 13
5.13 COMPLIANCE WITH LAWS 14
5.14 LABOR RELATIONS 14
5.15 EMPLOYEE BENEFIT PLANS 15
5.16 MATERIAL CONTRACTS 16
5.17 LEGAL PROCEEDINGS 17
5.18 REPORTS 17
5.19 STATEMENTS TRUE AND CORRECT 18
5.20 ACCOUNTING, TAX AND REGULATORY MATTERS 18
5.21 STATE TAKEOVER LAWS 18
5.22 CHARTER PROVISIONS 18
5.23 OPINION OF FINANCIAL ADVISOR 19
5.24 BOARD RECOMMENDATION 19
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CCBG 19
6.1 ORGANIZATION, STANDING, AND POWER 19
6.2 AUTHORITY OF CCBG; NO BREACH BY AGREEMENT 19
6.3 CAPITAL STOCK 20
6.4 CCBG SUBSIDIARIES 20
6.5 SEC FILINGS; FINANCIAL STATEMENTS 21
6.6 ABSENCE OF UNDISCLOSED LIABILITIES 21
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS 21
6.8 CERTAIN ENVIRONMENTAL AND EMPLOYEE BENEFIT MATTERS
21
6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES 22
6.10 INTELLECTUAL PROPERTY 22
6.11 COMPLIANCE WITH LAWS 22
6.12 LEGAL PROCEEDINGS 23
6.13 REPORTS 23
6.14 STATEMENTS TRUE AND CORRECT 23
6.15 ACCOUNTING, TAX AND REGULATORY MATTERS 24
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION 25
7.1 AFFIRMATIVE COVENANTS OF FBWP 25
7.2 NEGATIVE COVENANTS OF FBWP 25
7.3 COVENANTS OF CCBG 27
7.4 ADVERSE CHANGES IN CONDITION 28
7.5 REPORTS 28
ARTICLE 8
ADDITIONAL AGREEMENTS 28
8.1 REGISTRATION STATEMENT; PROXY STATEMENT;
SHAREHOLDER
APPROVAL 28
8.2 NASDAQ LISTING 29
8.3 APPLICATIONS 29
8.4 FILINGS WITH STATE OFFICES 29
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE 29
8.6 INVESTIGATION AND CONFIDENTIALITY 29
8.7 PRESS RELEASES 30
8.8 CERTAIN ACTIONS 31
8.9 ACCOUNTING AND TAX TREATMENT 31
8.10 STATE TAKEOVER LAWS 31
8.11 CHARTER PROVISIONS 31
8.12 FBWP MEETINGS 31
8.13 AGREEMENT OF AFFILIATES 32
8.14 EMPLOYEE BENEFITS AND CONTRACTS 32
8.15 INDEMNIFICATION 33
8.16 CERTAIN POLICIES OF FBWP 34
8.17 STOCK OPTION AGREEMENT 34
8.18 DIRECTOR'S AGREEMENTS 34
8.19 TAXES. 34
8.20 FAIRNESS OPINION 35
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE 35
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY 35
9.2 CONDITIONS TO OBLIGATIONS OF CCBG 36
9.3 CONDITIONS TO OBLIGATIONS OF FBWP 38
ARTICLE 10
TERMINATION 39
10.1 TERMINATION 39
10.2 EFFECT OF TERMINATION 40
10.3 ALTERNATE TRANSACTION 40
10.4 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS 40
ARTICLE 11
MISCELLANEOUS 40
11.1 DEFINITIONS 40
11.2 EXPENSES 49
11.3 BROKERS AND FINDERS 49
11.4 ENTIRE AGREEMENT 49
11.5 AMENDMENTS 49
11.6 WAIVERS 50
11.7 ASSIGNMENT 50
11.8 NOTICES 50
11.9 GOVERNING LAW 51
11.10 COUNTERPARTS 51
11.11 CAPTIONS; ARTICLES AND SECTIONS 51
11.12 INTERPRETATIONS 51
11.13 ENFORCEMENT OF AGREEMENT 51
11.14 SEVERABILITY 52
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of September 25, 2000, by and between CAPITAL
CITY BANK GROUP, INC., a Florida corporation ("CCBG"), and FIRST
BANKSHARES OF WEST POINT, INC., a Georgia corporation ("FBWP").
PREAMBLE
The respective Boards of Directors of FBWP and CCBG are of
the opinion that the transactions described herein are in the
best interests of the parties to this Agreement and their
respective shareholders. This Agreement provides for the
acquisition of FBWP by CCBG pursuant to the merger of (i) FBWP
with and into CCBG (the "Holding Company Merger") and (ii) First
National with and into a Florida chartered bank subsidiary of
CCBG, Capital City Bank ("CCB") (the "Bank Merger")
(collectively, the "Mergers"). At the effective time of the
Holding Company Merger, the outstanding shares of the capital
stock of FBWP shall be converted into the right to receive a
combination of shares of the common stock of CCBG and cash as
described in this Agreement. As a result, shareholders of FBWP
shall become shareholders of CCBG and CCBG shall conduct the
business and operations of FBWP. The transactions described in
this Agreement are subject to the approvals of the shareholders
of FBWP, the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the Georgia
Department of Banking and Finance, and the satisfaction of
certain other conditions described in this Agreement. It is the
intention of the parties to this Agreement that each of the
Mergers, for federal income tax purposes, shall qualify as a
"reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code.
Certain terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth
herein, the parties, intending to be legally bound, agree as
follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
ARTICLE 1.1 HOLDING COMPANY MERGER . Subject to the
terms and conditions of this Agreement, at the Effective Time,
FBWP shall be merged with and into CCBG in accordance with the
provisions of, and with the effect provided in, Sections 14-2-
1106 and 14-2-1107 of the GBCC and Sections 607.1101, 607.1103,
607.1105, 607.1106 and 607.1107 of the FBCA. CCBG shall be the
Surviving Corporation resulting from the Holding Company Merger
and shall continue to be governed by the Laws of the State of
Florida. The Holding Company Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved
and adopted by the respective Boards of Directors of FBWP and
CCBG.
ARTICLE 1.2 BANK MERGER . Subsequent to the consummation
of the Holding Company Merger, First National shall be merged
with and into CCB in accordance with the provisions of and with
the effect provided in Section 658.41 of the Florida Statutes on
terms and subject to the provisions of the Bank Plan of Merger
("Bank Plan"), attached hereto as Exhibit 1. FBWP shall vote the
shares of capital stock of First National in favor of the Bank
Plan and the Bank Merger provided therein.
ARTICLE 1.3 TIME AND PLACE OF CLOSING . The closing of
the transactions contemplated hereby (the "Closing") will take
place at 9:00 A.M. on the date that the Effective Time occurs (or
the immediately preceding day if the Effective Time is earlier
than 9:00 A.M.), or at such other time as the Parties, acting
through their authorized officers, may mutually agree. The
Closing shall be held at such location as may be mutually agreed
upon by the Parties or may be conducted by mail or telefax as may
be mutually agreed upon by the Parties.
ARTICLE 1.4 EFFECTIVE TIME . The Holding Company Merger
and other transactions contemplated by this Agreement shall
become effective on the date and at the time the Articles of
Merger reflecting the Holding Company Merger shall become
effective with the Secretary of State of the State of Florida or
the Secretary of State of the State of Georgia, whichever is
later (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in
writing by the authorized officers of each Party, the Parties
shall use their reasonable efforts to cause the Effective Time to
occur within 60 days after the last to occur of (i) the effective
date (including expiration of any applicable waiting period) of
the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Mergers, and (ii)
the date on which the shareholders of FBWP and CCBG approve this
Agreement to the extent such approval is required by applicable
Law. The actual Effective Time within the 60-day period shall be
mutually agreed upon by CCBG and FBWP.
ARTICLE 2 TERMS OF MERGER
ARTICLE 2.1 CHARTER . The Articles of Incorporation of
CCBG in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation until
duly amended or repealed.
ARTICLE 2.2 BYLAWS . The Bylaws of CCBG in effect
immediately prior to the Effective Time shall be the Bylaws of
the Surviving Corporation until duly amended or repealed.
ARTICLE 2.3 DIRECTORS AND OFFICERS . The directors of
CCBG in office immediately prior to the Effective Time shall
serve as the directors of the Surviving Corporation from and
after the Effective Time in accordance with the Bylaws of the
Surviving Corporation. The officers of CCBG in office
immediately prior to the Effective Time, together with such
additional persons as may thereafter be elected, shall serve as
the officers of the Surviving Corporation from and after the
Effective Time in accordance with the Bylaws of the Surviving
Corporation.
ARTICLE 3 MANNER OF CONVERTING SHARES
ARTICLE 3.1 CONVERSION OF SHARES . Subject to the
provisions of this Article 3, at the Effective Time, by virtue of
the Holding Company Merger and without any action on the part of
CCBG, FBWP, First National or CCB or the shareholders of the
foregoing, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of capital stock of CCBG issued and
outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
(b) Subject to Section 3.6, each share of FBWP Common
Stock, excluding shares held by any FBWP Entity or any CCBG
Entity, in each case other than in a fiduciary capacity or as a
result of debts previously contracted, and excluding shares held
by shareholders who perfect their statutory dissenters' rights as
provided in Section 3.4 issued and outstanding immediately prior
to the Effective Time shall cease to be outstanding and shall be
converted into and exchanged for the right to receive 3.6419
shares of CCBG Common Stock (the "Share Exchange Ratio") and
$17.7543 in cash (the "Cash Exchange Ratio") (collectively, the
"Exchange Ratio").
(c) Each share of capital stock of CCB issued and
outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
(d) Each share of capital stock of First National issued
and outstanding immediately prior to the Effective Time shall
cease to be outstanding and shall be extinguished from and after
the consummation of the Bank Merger.
ARTICLE 3.2 ANTI-DILUTION PROVISIONS . In the event CCBG
changes the number of shares of CCBG Common Stock issued and
outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization with respect
to such stock and the record date therefor (in the case of a
stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date
is not established) shall be prior to the Effective Time, the
Exchange Ratio shall be proportionately adjusted.
ARTICLE 3.3 SHARES HELD BY FBWP OR CCBG . Each of the
shares of FBWP Common Stock held by any FBWP Entity or by any
CCBG Entity, in each case other than in a fiduciary capacity or
as a result of debts previously contracted, shall be canceled and
retired at the Effective Time and no consideration shall be
issued in exchange therefor.
ARTICLE 3.4 DISSENTING SHAREHOLDERS . Any holder of
shares of FBWP Common Stock who perfects his or her dissenters'
rights in accordance with and as contemplated by Section 14-2-
1302 of the GBCC shall be entitled to receive the value of such
shares in cash as determined pursuant to such provision of Law;
provided, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the GBCC and
surrendered to FBWP the certificate or certificates representing
the shares for which payment is being made. In the event that
after the Effective Time a dissenting shareholder of FBWP fails
to perfect, or effectively withdraws or loses, his or her right
to appraisal and of payment for his or her shares, subject to
CCBG's consent in its sole discretion, CCBG shall issue and
deliver the consideration to which such holder of shares of FBWP
Common Stock is entitled under this Article 3 (without interest)
upon surrender by such holder of the certificate or certificates
representing shares of FBWP Common Stock held by him or her.
ARTICLE 3.5 FRACTIONAL SHARES . Notwithstanding any
other provision of this Agreement, each holder of shares of FBWP
Common Stock exchanged pursuant to the Holding Company Merger who
would otherwise have been entitled to receive a fraction of a
share of CCBG Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such
fractional part of a share of CCBG Common Stock multiplied by the
average market value of one share of CCBG Common Stock at the
Effective Time (i.e., the average of the last sale price of CCBG
Common Stock on the Nasdaq National Market (as reported by The
Wall Street Journal or, if not reported thereby, any other
authoritative source selected by CCBG) during each of the 10
trading days prior to the Effective Time). No such holder will
be entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.
ARTICLE 3.6 FOSTER LOAN. Notwithstanding any other
provision of this Agreement, CCBG shall at the Effective Date
withhold from the Cash Exchange Ratio portion of the
consideration payable under Section 3.1(b), an aggregate amount
(the "Withholding Amount") equal to (i) $1,600,000 minus any
amount paid prior to the Effective Time by the USDA to First
National with respect to the Foster Loan and any amount collected
prior to the Effective Time by First National with respect to the
sale of any of the collateral securing the Foster Loan, and
(ii) $166,000 minus 20.75% of any amount paid prior to the
Effective Time by the USDA to First Peoples Bank of Pine Mountain
("First Peoples") with respect to the Foster Loan and 20.75% of
any amount collected prior to the Effective Time by First Peoples
with respect to the sale of any of the collateral securing the
Foster Loan. The receipt of any payments and the collection of
any amounts upon the sale of collateral referred to in this
Section shall be confirmed in writing to CCBG's satisfaction. The
Withholding Amount shall be held in escrow by Capital City Trust
Company (the "Escrow Agent"). The Withholding Amount shall be
held in escrow for a period of six months from the Effective
Time. During this six-month period, any amounts received by
First National, First Peoples or their successors with respect to
the USDA Guarantee or from the sale of any collateral securing
the Foster Loan shall be communicated to the Escrow Agent in
writing by CCBG and the Escrow Agent shall pay promptly after the
expiration of such six-month period a per share amount of the
Withholding Amount to the shareholders of FBWP Common Stock that
owned shares immediately prior to the Effective Time. In such
event, the amount per share of FBWP Common Stock paid by the
Escrow Agent to such shareholders shall equal (y) with respect to
payments or amounts received that are attributable to the First
National portion of the Foster Loan, the amount of the USDA
payment and/or the amount received in the sale of collateral
(plus interest from the Effective Time but less any costs, fees
and expenses of the Escrow Agent) divided by the number of shares
of FBWP Common Stock issued and outstanding immediately prior to
the Effective Time, or (z) with respect to payments or amounts
received that are attributable to the First Peoples portion of
the Foster Loan, 20.75% of the amount of the USDA payment or the
amount received in the sale of collateral each (plus interest
from the Effective Time but less any costs, fees and expenses of
the Escrow Agent) divided by the number of shares of FBWP Common
Stock issued and outstanding immediately prior to the Effective
Time. On the date which is six months after the Effective Time,
any remaining portion of the Withholding Amount and any remaining
accrued interest thereon held by the Escrow Agent shall be
promptly paid to CCBG. Notwithstanding the foregoing, the
Withholding Amount shall not be placed in escrow with the Escrow
Agent if, prior to the Effective Time, (w) First National has
received at least $1,250,000 of the USDA Guarantee amount,
(x) First Peoples has received funds from the USDA equal to at
least 75% of the USDA Guarantee amount attributable to First
Peoples, (y) CCBG has received written confirmation from FBWP of
both of these payments by the USDA, and (z) FBWP shall have
delivered to CCBG written confirmation from a representative of
the USDA that the USDA liquidation plan for the Foster Loan has
been approved, as submitted and without modification, by the USDA
at the national level.
ARTICLE 4 EXCHANGE OF SHARES
ARTICLE 4.1 EXCHANGE PROCEDURES . Promptly after the
Effective Time, CCBG and FBWP shall cause the exchange agent
selected by CCBG (the "Exchange Agent") to mail to each holder of
record of a certificate or certificates which represented shares
of FBWP Common Stock immediately prior to the Effective Time (the
"Certificates") appropriate transmittal materials and
instructions (which shall specify that delivery shall be
effected, and risk of loss and title to such Certificates shall
pass, only upon proper delivery of such Certificates to the
Exchange Agent). The Certificate or Certificates of FBWP Common
Stock so delivered shall be duly endorsed as the Exchange Agent
may require. In the event of a transfer of ownership of shares
of FBWP Common Stock represented by Certificates that are not
registered in the transfer records of FBWP, the consideration
provided in Section 3.1 may be issued to a transferee if the
Certificates representing such shares are delivered to the
Exchange Agent, accompanied by all documents required to evidence
such transfer and by evidence satisfactory to the Exchange Agent
that any applicable stock transfer taxes have been paid. If any
Certificate shall have been lost, stolen, mislaid or destroyed,
upon receipt of (i) an affidavit of that fact from the holder
claiming such Certificate to be lost, mislaid, stolen or
destroyed, (ii) such bond, security or indemnity as CCBG and the
Exchange Agent may reasonably require and (iii) any other
documents necessary to evidence and effect the bona fide exchange
thereof, the Exchange Agent shall issue to such holder the
consideration into which the shares represented by such lost,
stolen, mislaid or destroyed Certificate shall have been
converted. The Exchange Agent may establish such other
reasonable and customary rules and procedures in connection with
its duties as it may deem appropriate. After the Effective Time,
each holder of shares of FBWP Common Stock (other than shares to
be canceled pursuant to Section 3.3 or as to which statutory
dissenters' rights have been perfected as provided in Section
3.4) issued and outstanding at the Effective Time shall surrender
the Certificate or Certificates representing such shares to the
Exchange Agent and shall promptly upon surrender thereof receive
in exchange therefor the consideration provided in Section 3.1,
together with all undelivered dividends or distributions in
respect of such shares (without interest thereon) pursuant to
Section 4.2. To the extent required by Section 3.5, each holder
of shares of FBWP Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the
Certificate or Certificates, cash in lieu of any fractional share
of CCBG Common Stock to which such holder may be otherwise
entitled (without interest). CCBG shall not be obligated to
deliver the consideration to which any former holder of FBWP
Common Stock is entitled as a result of the Holding Company
Merger until such holder surrenders such holder's Certificate or
Certificates for exchange as provided in this Section 4.1. Any
other provision of this Agreement notwithstanding, neither CCBG
nor the Exchange Agent shall be liable to a holder of FBWP Common
Stock for any amounts paid or property delivered in good faith to
a public official pursuant to any applicable abandoned property,
escheat or similar Law. Adoption of this Agreement by the
shareholders of FBWP shall constitute ratification of the
appointment of the Exchange Agent.
ARTICLE 4.2 RIGHTS OF FORMER FBWP SHAREHOLDERS . At the
Effective Time, the stock transfer books of FBWP shall be closed
as to holders of FBWP Common Stock immediately prior to the
Effective Time and no transfer of FBWP Common Stock by any such
holder shall thereafter be made or recognized. Until surrendered
for exchange in accordance with the provisions of Section 4.1,
each Certificate theretofore representing shares of FBWP Common
Stock (other than shares to be canceled pursuant to Sections 3.3
and 3.4) shall from and after the Effective Time represent for
all purposes only the right to receive the consideration provided
in Sections 3.1 and 3.5 in exchange therefor, subject, however,
to the Surviving Corporation's obligation to pay any dividends or
make any other distributions with a record date prior to the
Effective Time which have been declared or made by FBWP in
respect of such shares of FBWP Common Stock in accordance with
the terms of this Agreement and which remain unpaid at the
Effective Time. Whenever a dividend or other distribution is
declared by CCBG on the CCBG Common Stock, the record date for
which is at or after the Effective Time, the declaration shall
include dividends or other distributions on all shares of CCBG
Common Stock issuable pursuant to this Agreement. No dividend or
other distribution payable to the holders of record of CCBG
Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any Certificate until such
holder surrenders such Certificate for exchange as provided in
Section 4.1. However, upon surrender of such Certificate, both
the CCBG Common Stock certificate (together with all such
undelivered dividends or other distributions, without interest)
and any undelivered dividends and cash payments payable hereunder
(without interest) shall be delivered and paid with respect to
each share represented by such Certificate.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF FBWP
FBWP hereby represents and warrants to CCBG as follows:
ARTICLE 5.1 ORGANIZATION, STANDING, AND POWER . FBWP is
a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Georgia, and has the
corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. FBWP is duly
qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States
and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not reasonably likely
to have, individually or in the aggregate, a FBWP Material
Adverse Effect. The minute books and other organizational
documents and corporate records for FBWP have been made available
to CCBG for its review and, except as disclosed in Section 5.1 of
the FBWP Disclosure Memorandum, are true and complete in all
material respects as in effect as of the date of this Agreement
and accurately reflect in all material respects all amendments
thereto and all proceedings of the Board of Directors and
shareholders thereof.
ARTICLE 5.2 AUTHORITY OF FBWP; NO BREACH BY AGREEMENT .
(a) FBWP has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.
The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated herein,
including the Mergers, have been duly and validly authorized by
all necessary corporate action in respect thereof on the part of
FBWP, subject to the approval of this Agreement by the holders of
a majority of the outstanding shares of FBWP Common Stock, which
is the only shareholder vote required for approval of this
Agreement and consummation of the Mergers by FBWP. Subject to
such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of FBWP, enforceable against
FBWP in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
FBWP, nor the consummation by FBWP of the transactions
contemplated hereby, nor compliance by FBWP with any of the
provisions hereof, will (i) conflict with or result in a breach
of any provision of FBWP's Articles of Incorporation or Bylaws or
the certificate or articles of incorporation or bylaws of any
FBWP Subsidiary or any resolution adopted by the board of
directors or the shareholders of any FBWP Entity, or (ii) except
as disclosed in Section 5.2 of the FBWP Disclosure Memorandum,
constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset
of any FBWP Entity under, any Contract or Permit of any FBWP
Entity, where such Default or Lien, or any failure to obtain such
Consent, is reasonably likely to have, individually or in the
aggregate, a FBWP Material Adverse Effect or where such event
would cause a breach hereof or a Default hereunder, or (iii)
subject to receipt of the requisite Consents referred to in
Section 9.1(b), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to
any FBWP Entity or any of their respective material Assets
(including any CCBG Entity or any FBWP Entity becoming subject to
or liable for the payment of any Tax on any of the Assets owned
by any CCBG Entity or any FBWP Entity being reassessed or
revalued by any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and
securities Laws, and rules of the NASD, and other than Consents
required from Regulatory Authorities, and other than notices to
or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect to any employee benefit
plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a FBWP Material
Adverse Effect, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by
FBWP of the Mergers and the other transactions contemplated in
this Agreement.
ARTICLE 5.3 CAPITAL STOCK .
(a) The authorized capital stock of FBWP consists of
(i) 1,000,000 shares of FBWP Common Stock, of which 192,481
shares are issued and outstanding as of the date of this
Agreement and not more than 192,481 shares will be issued and
outstanding at the Effective Time, and (ii) no shares of
preferred stock are authorized, issued or outstanding. All of
the issued and outstanding shares of capital stock of FBWP are
duly and validly issued and outstanding and are fully paid and
nonassessable under the GBCC. None of the outstanding shares of
capital stock of FBWP has been issued in violation of any
preemptive rights of the current or past shareholders of FBWP.
(b) Except as set forth in Section 5.3(a), or as disclosed
in Section 5.3(b) of the FBWP Disclosure Memorandum, there are no
shares of capital stock or other equity securities of FBWP
outstanding and no outstanding Equity Rights relating to the
capital stock of FBWP.
ARTICLE 5.4 FBWP SUBSIDIARIES . FBWP has disclosed in
Section 5.4 of the FBWP Disclosure Memorandum all of the FBWP
Subsidiaries that are corporations (identifying its jurisdiction
of incorporation, each jurisdiction in which it is qualified
and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share
ownership) and all of the FBWP Subsidiaries that are general or
limited partnerships, limited liability companies, trusts or
other non-corporate entities (identifying the Law under which
such entity is organized, each jurisdiction in which it is
qualified and/or licensed to transact business, the type of
entity and the amount and nature of the ownership interest
therein). Except as disclosed in Section 5.4 of the FBWP
Disclosure Memorandum, FBWP or one of its wholly-owned
Subsidiaries owns all of the issued and outstanding shares of
capital stock (or other equity interests) of each FBWP
Subsidiary. No capital stock (or other equity interest) of any
FBWP Subsidiary is or may become required to be issued (other
than to another FBWP Entity) by reason of any Equity Rights, and
there are no Contracts by which any FBWP Subsidiary is bound to
issue (other than to another FBWP Entity) additional shares of
its capital stock (or other equity interests) or Equity Rights or
by which any FBWP Entity is or may be bound to transfer any
shares of the capital stock (or other equity interests) of any
FBWP Subsidiary (other than to another FBWP Entity). There are
no Contracts relating to the rights of any FBWP Entity to vote or
to dispose of any shares of the capital stock (or other equity
interests) of any FBWP Subsidiary. All of the shares of capital
stock (or other equity interests) of each FBWP Subsidiary held by
a FBWP Entity are fully paid and (except pursuant to 12 USC
Section 55 in the case of national banks and comparable,
applicable state Law, if any, in the case of state depository
institutions) nonassessable under the applicable corporation Law
of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the FBWP Entity free and clear of any
Lien. Except as disclosed in Section 5.4 of the FBWP Disclosure
Memorandum, each FBWP Subsidiary is either a bank, a savings
association, or a corporation, and each such Subsidiary is duly
organized, validly existing, and (as to corporations) in good
standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and
authority necessary for it to own, lease, and operate its Assets
and to carry on its business as now conducted. Each FBWP
Subsidiary is duly qualified or licensed to transact business as
a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it
to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a
FBWP Material Adverse Effect. Each FBWP Subsidiary that is a
depository institution is an "insured institution" as defined in
the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured by the Bank
Insurance Fund. The minute books, and other organizational and
corporate documents for each FBWP Subsidiary have been made
available to CCBG for its review, and, except as disclosed in
Section 5.4 of the FBWP Disclosure Memorandum, are true and
complete in all material respects as in effect as of the date of
this Agreement and accurately reflect in all material respects
all amendments thereto and all proceedings of the Board of
Directors, all committees of the Board of Directors and
shareholders thereof.
ARTICLE 5.5 FINANCIAL STATEMENTS . Each of the FBWP
Financial Statements (including, in each case, any related notes)
was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated
in the notes to such financial statements), and fairly presents
in all material respects the consolidated financial position of
FBWP and its Subsidiaries as at the respective dates and the
consolidated results of operations and cash flows for the periods
indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount or
effect.
ARTICLE 5.6 ABSENCE OF UNDISCLOSED LIABILITIES . No FBWP
Entity has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a FBWP Material Adverse Effect,
except Liabilities which are accrued or reserved against in the
consolidated balance sheets of FBWP as of December 31, 1999,
included in the FBWP Financial Statements delivered prior to the
date of this Agreement or reflected in the notes thereto. Except
as set forth in Section 5.6 of the FBWP Disclosure Memorandum, no
FBWP Entity has incurred or paid any Liability since December 31,
1999, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business
practice and which are not reasonably likely to have,
individually or in the aggregate, a FBWP Material Adverse Effect
or (ii) in connection with the transactions contemplated by this
Agreement.
ARTICLE 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS . Since
December 31, 1999, except as disclosed in the FBWP Financial
Statements delivered prior to the date of this Agreement or as
disclosed in Section 5.7 of the FBWP Disclosure Memorandum, (i)
there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the
aggregate, a FBWP Material Adverse Effect, and (ii) the FBWP
Entities have not taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if
taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and
agreements of FBWP provided in Article 7.
ARTICLE 5.8 TAX MATTERS .
(a) All Tax Returns required to be filed by or on behalf of
any of the FBWP Entities have been timely filed or requests for
extensions have been timely filed, granted, and have not expired
for periods ended on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the
extent that all such failures to file, taken together, are not
reasonably likely to have a FBWP Material Adverse Effect, and all
Tax Returns filed are complete and accurate in all material
respects. In particular, and without in any manner limiting the
foregoing, none of the foregoing Tax Returns contains any
position which is or would be subject to penalties under section
6662 of the Internal Revenue Code (or any corresponding provision
of state, local or foreign Tax law). An extension of time within
which to file any Tax Return which has not been filed has not
been requested or granted. With respect to all amounts in
respect of Taxes imposed upon FBWP, or for which FBWP is or could
be liable, whether to taxing authorities (as, for example, under
law) or to other persons or entities (as, for example, under tax
allocation agreements), with respect to all taxable periods (or
portions thereof) ending on or before the Effective Time, all
applicable Tax laws and agreements have been fully complied with,
and all such amounts required to be paid by FBWP to taxing
authorities or others on or before the date hereof have been
paid. As of the date of this Agreement, there is no audit
examination, deficiency, or refund Litigation with respect to any
Taxes, except as reserved against in the FBWP Financial
Statements delivered prior to the date of this Agreement or as
disclosed in Section 5.8 of the FBWP Disclosure Memorandum. No
issues have been raised (and are currently pending) by any taxing
authority in connection with any Tax Returns of FBWP. FBWP's
federal income Tax Returns have not been audited by the IRS. All
Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.
There are no Liens with respect to Taxes upon any of the Assets
of the FBWP Entities, except for any such Liens which are not
reasonably likely to have a FBWP Material Adverse Effect.
(b) None of the FBWP Entities has executed an extension or
waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to
years currently under examination by the Internal Revenue Service
or other applicable taxing authorities) that is currently in
effect. Section 5.8 of the FBWP Disclosure Schedule sets forth
(1) the taxable years of FBWP as to which the respective statutes
of limitations with respect to Taxes have not expired, and (2)
with respect to such taxable years, sets forth those years for
which examinations have been completed, those years for which
examinations are presently being conducted, those years for which
examinations have not been initiated, and those years for which
required Tax Returns have not yet been filed.
(c) As of December 31, 1999, the provision for any Taxes
due or to become due for any of the FBWP Entities for the period
or periods through and including the date of the respective FBWP
Financial Statements that has been made and is reflected on such
FBWP Financial Statements is sufficient to cover all such Taxes
in accordance with GAAP. The unpaid Taxes of FBWP do not exceed
the reserve for Tax liability (including any reserve for deferred
Taxes established to reflect timing differences between book and
Tax income) set forth or included in FBWP's most recent balance
sheet as adjusted for the passage of time through the Effective
Time in accordance with the past custom and practice of FBWP.
(d) Deferred Taxes of the FBWP Entities have been provided
for in accordance with GAAP.
(e) None of the FBWP Entities is a party to any Tax
allocation or Tax sharing agreement and none of the FBWP Entities
has been a member of an affiliated group filing a consolidated
federal income Tax Return (other than a group the common parent
of which was FBWP) or has any Liability for Taxes of any Person
(other than FBWP and its Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or
foreign Law) as a transferee or successor or by Contract or
otherwise.
(f) Each of the FBWP Entities is in compliance with, and
its records contain all information and documents (including
properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements
under federal, state, and local Tax Laws, and such records
identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code,
except for such instances of noncompliance and such omissions as
are not reasonably likely to have, individually or in the
aggregate, a FBWP Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the FBWP
Disclosure Memorandum, none of the FBWP Entities has made any
payments, is obligated to make any payments, or is a party to any
Contract that could obligate it to make any payments that would
be disallowed as a deduction under Section 280G or 162(m) of the
Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the FBWP Entities that
occurred during or after any Taxable Period in which the FBWP
Entities incurred a net operating loss that carries over to any
Taxable Period ending after December 31, 1999.
(i) No FBWP Entity has or has had in any foreign country a
permanent establishment, as defined in any applicable tax treaty
or convention between the United States and such foreign country.
(j) All material elections with respect to Taxes affecting
FBWP as of the date hereof are set forth in Section 5.8 of the
FBWP Disclosure Schedule. After the date hereof, no election
with respect to Taxes will be made without the written consent of
CCBG.
(k) None of the assets of FBWP is property which FBWP is
required to treat as being owned by any other person pursuant to
the so-called "safe harbor lease" provisions of former section
168(f)(8) of the Internal Revenue Code.
(l) None of the assets of FBWP directly or indirectly
secures any debt the interest on which is tax exempt under
section 103(a) of the Internal Revenue Code.
(m) None of the assets of FBWP is "tax-exempt use property"
within the meaning of section 168(h) of the Internal Revenue
Code.
(n) FBWP is not, and has not been, a United States real
property holding corporation (as defined in section 897(c)(2) of
the Internal Revenue Code) during the applicable period specified
in section 897(c)(1)(A)(ii) of the Internal Revenue Code.
(o) FBWP is not a party to any joint venture, partnership,
or other arrangement or contract which could be treated as a
partnership for federal income tax purposes.
(p) Section 5.8 of the FBWP Disclosure Schedule sets forth
as of the date hereof (i) the basis of FBWP in its assets, (ii)
as of June 30, 2000, the current and accumulated earnings and
profits of FBWP, (iii) the amount of any net operating loss, net
capital loss, unused investment credit or other credit, unused
foreign tax, or excess charitable contribution allocable to FBWP,
and (iv) the amount of any deferred gain or loss allocable to
FBWP arising out of any intercompany transactions.
(q) Each asset with respect to which FBWP claims
depreciation, amortization or similar expense for Tax purposes is
owned for Tax purposes by FBWP.
(r) Except as disclosed in the FBWP Financial Statements or
FBWP's Tax Returns, no item of income or gain reported by FBWP
for financial accounting purposes in any pre-closing period is
required to be included in taxable income for a post-closing
period.
(s) FBWP has not made nor is bound by any election under
Section 197 of the Internal Revenue Code.
(t) Neither FBWP nor any FBWP Subsidiary has any excess
loss account (as defined in Treasury Regulation Section 1.1502-
19) with respect to the stock of any FBWP Subsidiary.
(u) There are no outstanding rulings of, or requests for
rulings with, any Tax authority addressed to FBWP that are, or if
issued would be, binding on FBWP.
ARTICLE 5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES . In the
opinion of management of FBWP, the allowances for possible loan
and lease credit losses (collectively, the "Allowance") shown on
the consolidated balance sheets of FBWP immediately prior to the
Effective Time will be, as of the date thereof, adequate (within
the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known or reasonably anticipated
losses relating to or inherent in the loan and lease portfolio
(including accrued interest receivables) of the FBWP Entities and
other extensions of credit (including letters of credit) by the
FBWP Entities as of the dates thereof.
ARTICLE 5.10 ASSETS .
(a) Except as disclosed in Section 5.10 of the FBWP
Disclosure Memorandum or as disclosed or reserved against in the
FBWP Financial Statements delivered prior to the date of this
Agreement, the FBWP Entities have good and marketable title, free
and clear of all Liens, to all of their respective Assets, except
for any such Liens or other defects of title which are not
reasonably likely to have a FBWP Material Adverse Effect. All
tangible properties used in the businesses of the FBWP Entities
are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with FBWP's
past practices.
(b) All Assets which are material to FBWP's business on a
consolidated basis, held under leases or subleases by any of the
FBWP Entities, are held under valid Contracts enforceable by the
FBWP Entity and to the Knowledge of FBWP as to the counter-party
to such Contracts in accordance with their respective terms
(except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of
the court before which any proceedings may be brought), and each
such Contract is in full force and effect.
(c) The FBWP Entities currently maintain insurance similar
in amounts, scope, and coverage to that maintained by other peer
banking organizations. None of the FBWP Entities has received
notice from any insurance carrier that (i) any policy of
insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such
policies of insurance will be substantially increased. There are
presently no claims for amounts exceeding in any individual case
$5,000, or in the aggregate $100,000, pending under such policies
of insurance and no notices of claims in excess of such amounts
have been given by any FBWP Entity under such policies.
(d) The Assets of the FBWP Entities include all Assets
required to operate the business of the FBWP Entities as
presently conducted.
(e) Except as disclosed and described in detail in Section
5.10(e) of the FBWP Disclosure Memorandum, neither FBWP nor any
FBWP Subsidiary holds any deposits or has made any loans to any
individuals or related group of individuals which (i) in the case
of deposits, individually or in the aggregate exceed 5% of the
total consolidated deposits of FBWP as of June 30, 2000, or
(ii) in the case of loans, individually or in the aggregate
exceed 5% of the total consolidated loans of FBWP as of June 30,
2000.
ARTICLE 5.11 INTELLECTUAL PROPERTY . Each FBWP Entity
owns or has a license to use all of the Intellectual Property
used by such FBWP Entity in the course of its business. Each
FBWP Entity is the owner of or has a license to any Intellectual
Property sold or licensed to a third party by such FBWP Entity in
connection with such FBWP Entity's business operations, and such
FBWP Entity has the right to convey by sale or license any
Intellectual Property so conveyed. No FBWP Entity is in Default
under any of its Intellectual Property licenses. No proceedings
have been instituted, or are pending or to the Knowledge of FBWP
threatened, which challenge the rights of any FBWP Entity with
respect to Intellectual Property used, sold or licensed by such
FBWP Entity in the course of its business, nor has any person
claimed or alleged any rights to such Intellectual Property. The
conduct of the business of the FBWP Entities does not infringe
any Intellectual Property of any other person. Except as
disclosed in Section 5.11 of the FBWP Disclosure Memorandum, no
FBWP Entity is obligated to pay any recurring royalties to any
Person with respect to any such Intellectual Property. Except as
disclosed in Section 5.11 of the FBWP Disclosure Memorandum,
every officer, director, or employee of any FBWP Entity is a
party to a Contract which requires such officer, director or
employee to assign any interest in any Intellectual Property to a
FBWP Entity and to keep confidential any trade secrets,
proprietary data, customer information, or other business
information of a FBWP Entity, and no such officer, director or
employee is party to any Contract with any Person other than a
FBWP Entity which requires such officer, director or employee to
assign any interest in any Intellectual Property to any Person
other than a FBWP Entity or to keep confidential any trade
secrets, proprietary data, customer information, or other
business information of any Person other than a FBWP Entity.
Except as disclosed in Section 5.11 of the FBWP Disclosure
Memorandum, no officer, director or, to the Knowledge of FBWP,
any employee of any FBWP Entity is party to any Contract which
restricts or prohibits such officer, director or employee from
engaging in activities competitive with any Person, including any
FBWP Entity.
ARTICLE 5.12 ENVIRONMENTAL MATTERS .
(a) To the Knowledge of FBWP, each FBWP Entity, its
Participation Facilities, and its Operating Properties are, and
have been, in compliance with all Environmental Laws, except for
violations which are not reasonably likely to have, individually
or in the aggregate, a FBWP Material Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of
FBWP, threatened before any court, governmental agency, or
authority or other forum in which any FBWP Entity or any of its
Operating Properties or Participation Facilities (or FBWP in
respect of such Operating Property or Participation Facility) has
been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the
release, discharge, spillage, or disposal into the environment of
any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any FBWP Entity or any of its
Operating Properties or Participation Facilities, nor is there
any reasonable basis for any Litigation of a type described in
this sentence.
(c) During the period of (i) any FBWP Entity's ownership or
operation of any of their respective current properties, (ii) any
FBWP Entity's participation in the management of any
Participation Facility, or (iii) any FBWP Entity's holding of a
security interest in a Operating Property, there have been no
releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, or affecting (or potentially affecting)
such properties; provided that with respect to the period set
forth in (iii) above, this representation shall be made to the
Knowledge of FBWP. Prior to the period of (i) any FBWP Entity's
ownership or operation of any of their respective current
properties, (ii) any FBWP Entity's participation in the
management of any Participation Facility, or (iii) any FBWP
Entity's holding of a security interest in a Operating Property,
to the Knowledge of FBWP, there were no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, or
affecting any such property, Participation Facility or Operating
Property.
ARTICLE 5.13 COMPLIANCE WITH LAWS . FBWP is duly
registered as a bank holding company under the BHC Act. Each
FBWP Entity has in effect all Permits necessary for it to own,
lease, or operate its material Assets and to carry on its
business as now conducted, except for those Permits the absence
of which are not reasonably likely to have, individually or in
the aggregate, a FBWP Material Adverse Effect, and there has
occurred no Default under any such Permit, other than Defaults
which are not reasonably likely to have, individually or in the
aggregate, a FBWP Material Adverse Effect. Except as disclosed
in Section 5.13 of the FBWP Disclosure Memorandum, none of the
FBWP Entities:
(a) is in Default under any of the provisions of its
Articles of Incorporation or Bylaws (or other governing
instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business,
except for Defaults which are not reasonably likely to have,
individually or in the aggregate, a FBWP Material Adverse Effect;
or
(c) since January 1, 1997, has received any notification or
communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof
(i) asserting that any FBWP Entity is not in compliance with any
of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, (ii) threatening to revoke any
Permits, or (iii) requiring any FBWP Entity to enter into or
consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding,
or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business or in any manner
relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
Copies of all material reports, correspondence, notices and
other documents relating to any inspection, audit, monitoring or
other form of review or enforcement action by a Regulatory
Authority have been made available to CCBG.
ARTICLE 5.14 LABOR RELATIONS . No FBWP Entity is the
subject of any Litigation asserting that it or any other FBWP
Entity has committed an unfair labor practice (within the meaning
of the National Labor Relations Act or comparable state law) or
seeking to compel it or any other FBWP Entity to bargain with any
labor organization as to wages or conditions of employment, nor
is any FBWP Entity party to any collective bargaining agreement,
nor is there any strike or other labor dispute involving any FBWP
Entity, pending or threatened, or to the Knowledge of FBWP is
there any activity involving any FBWP Entity's employees seeking
to certify a collective bargaining unit or engaging in any other
organization activity.
ARTICLE 5.15 EMPLOYEE BENEFIT PLANS .
(a) FBWP has disclosed in Section 5.15 of the FBWP
Disclosure Memorandum, and has delivered or made available to
CCBG prior to the execution of this Agreement copies in each case
of, all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance
pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical,
vision, dental, or other health plans, all life insurance plans,
and all other employee benefit plans or fringe benefit plans,
including "employee benefit plans" as that term is defined in
Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any FBWP
Entity or ERISA Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate
(collectively, the "FBWP Benefit Plans"). Any of the FBWP
Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to
herein as a "FBWP ERISA Plan." Each FBWP ERISA Plan which is
also subject to Section 412 of the Internal Revenue Code is
referred to herein as a "FBWP Pension Plan." No FBWP Pension Plan
is or has been a multiemployer plan within the meaning of Section
3(37) of ERISA.
(b) All FBWP Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any
other applicable Laws the breach or violation of which are
reasonably likely to have, individually or in the aggregate, a
FBWP Material Adverse Effect. Each FBWP ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal
Revenue Code has received a favorable determination letter from
the Internal Revenue Service, and FBWP is not aware of any
circumstances likely to result in revocation of any such
favorable determination letter. To the Knowledge of FBWP, no
FBWP Entity has engaged in a transaction with respect to any FBWP
Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject any FBWP
Entity to a Tax imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA.
(c) Except as disclosed in Section 5.15 of the FBWP
Disclosure Memorandum, no FBWP Pension Plan has any "unfunded
current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the fair market value of the assets of
any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined
under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements. Since the
date of the most recent actuarial valuation, there has been (i)
no material change in the financial position of any FBWP Pension
Plan, (ii) no change in the actuarial assumptions with respect to
any FBWP Pension Plan, and (iii) no increase in benefits under
any FBWP Pension Plan as a result of plan amendments or changes
in applicable Law which is reasonably likely to have,
individually or in the aggregate, a FBWP Material Adverse Effect
or materially adversely affect the funding status of any such
plan. Neither any FBWP Pension Plan nor any "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any FBWP Entity, or the
single-employer plan of any entity which is considered one
employer with FBWP under Section 4001 of ERISA or Section 414 of
the Internal Revenue Code or Section 302 of ERISA (whether or not
waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal
Revenue Code or Section 302 of ERISA. No FBWP Entity has
provided, or is required to provide, security to a FBWP Pension
Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective
Time, no Liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any FBWP Entity with
respect to any ongoing, frozen, or terminated single-employer
plan or the single-employer plan of any ERISA Affiliate. No FBWP
Entity has incurred any withdrawal Liability with respect to a
multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA
Affiliate. No notice of a "reportable event," within the meaning
of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed
for any FBWP Pension Plan or by any ERISA Affiliate within the 12-
month period ending on the date hereof.
(e) Except as disclosed in Section 5.15 of the FBWP
Disclosure Memorandum, no FBWP Entity has any Liability for
retiree health and life benefits under any of the FBWP Benefit
Plans, other than health coverage continuation rights mandated by
applicable law, and there are no restrictions on the rights of
such FBWP Entity to amend or terminate any such retiree health or
benefit Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.15 of the FBWP
Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including severance,
unemployment compensation, golden parachute, or otherwise)
becoming due to any director or any employee of any FBWP Entity
from any FBWP Entity under any FBWP Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any FBWP
Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any
executive compensation, supplemental retirement, or employment
agreement) of employees and former employees of any FBWP Entity
and their respective beneficiaries, other than entitlements
accrued pursuant to funded retirement plans subject to the
provisions of Section 401(a) and/or 412 of the Internal Revenue
Code or Section 302 of ERISA, have been fully reflected on the
FBWP Financial Statements to the extent required by and in
accordance with GAAP.
ARTICLE 5.16 MATERIAL CONTRACTS . Except as disclosed in
Section 5.16 of the FBWP Disclosure Memorandum or otherwise
reflected in the FBWP Financial Statements, none of the FBWP
Entities, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for
aggregate payments to any Person in any calendar year in excess
of $25,000, (ii) any Contract relating to the borrowing of money
by any FBWP Entity or the guarantee by any FBWP Entity of any
such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase
agreements, and Federal Home Loan Bank advances of depository
institution Subsidiaries, trade payables and Contracts relating
to borrowings or guarantees made in the ordinary course of
business), (iii) any Contract which prohibits or restricts any
FBWP Entity from engaging in any business activities in any
geographic area, line of business or otherwise in competition
with any other Person, (iv) any Contract between or among FBWP
Entities, (v) any Contract involving Intellectual Property (other
than Contracts entered into in the ordinary course with customers
and commercial "shrink-wrap" software licenses), (vi) any
Contract relating to the provision of data processing, network
communication, or other technical services to or by any FBWP
Entity, (vii) any Contract relating to the purchase or sale of
any goods or services (other than Contracts entered into in the
ordinary course of business and involving payments under any
individual Contract of less than $25,000), (viii) any exchange-
traded or over-the-counter swap, forward, future, option, cap,
floor, or collar financial Contract, or any other interest rate
or foreign currency protection Contract not included on its
balance sheet which is a financial derivative Contract, and (ix)
any other Contract or amendment thereto that would be required to
be filed with any relevant Regulatory Authority as of the date of
this Agreement (together with all Contracts referred to in
Sections 5.10 and 5.15(a), the "FBWP Contracts"). With respect
to each FBWP Contract and except as disclosed in Section 5.16 of
the FBWP Disclosure Memorandum: (i) the Contract is in full force
and effect; (ii) no FBWP Entity is in Default thereunder or would
be in Default thereunder as a result of this Agreement or the
transaction contemplated herein; (iii) no FBWP Entity has
repudiated or waived any material provision of any such Contract;
and (iv) no other party to any such Contract is, to the Knowledge
of FBWP, in Default in any respect or has repudiated or waived
any material provision thereunder. All of the indebtedness of
any FBWP Entity for money borrowed is prepayable at any time by
such FBWP Entity without penalty or premium. Except as disclosed
in Section 5.16 of the FBWP Disclosure Memorandum, none of FBWP
nor any of the FBWP Entities has any obligation or liability to
any wholesale mortgage business ("Wholesale Mortgage Business")
or to any Affiliate of such Persons to purchase, fund or extend
credit with respect to any loans, extensions of credit,
mortgages, or any participation or other interest therein
originated, brokered or referred by or through such Persons.
Except as described in Section 5.16 of the FBWP Disclosure
Memorandum, all Contracts to which FBWP and/or its Subsidiaries
are parties may be terminated by such FBWP Entity and its
successors and assigns without penalty, charge, liability or
further obligation.
ARTICLE 5.17 LEGAL PROCEEDINGS . There is no Litigation
instituted or pending, or, to the Knowledge of FBWP, threatened
(or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an
unfavorable outcome) against any FBWP Entity or any employee
benefit plan of any FBWP Entity, or against any director or
employee of any FBWP Entity, in their capacity as such, or
against any Asset, interest, or right of any of them, nor are
there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any
FBWP Entity. Section 5.17 of the FBWP Disclosure Memorandum
contains a summary of all Litigation as of the date of this
Agreement to which any FBWP Entity is a party and which names a
FBWP Entity as a defendant or cross-defendant or for which any
FBWP Entity has any potential Liability.
ARTICLE 5.18 REPORTS . Except as set forth in Section
5.18 of the FBWP Disclosure Memorandum, since January 1, 1997, or
the date of organization if later, each FBWP Entity has timely
filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except, in the case of state
securities authorities, failures to file which are not reasonably
likely to have, individually or in the aggregate, a FBWP Material
Adverse Effect). As of their respective dates, each of such
reports and documents, including the financial statements,
exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date,
each such report and document did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE 5.19 STATEMENTS TRUE AND CORRECT . No statement,
certificate, instrument, or other writing furnished or to be
furnished by any FBWP Entity or any Affiliate thereof to CCBG
pursuant to this Agreement or any other document, agreement, or
instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None
of the information supplied or to be supplied by any FBWP Entity
or any Affiliate thereof for inclusion in the Registration
Statement to be filed by CCBG with the SEC will, when the
Registration Statement becomes effective, be false or misleading
with respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any FBWP
Entity or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to FBWP's shareholders in connection with
the Shareholders' Meeting, and any other documents to be filed by
a FBWP Entity or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first
mailed to the shareholders of FBWP, be false or misleading with
respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that any FBWP
Entity or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
ARTICLE 5.20 ACCOUNTING, TAX AND REGULATORY MATTERS . No
FBWP Entity or any Affiliate thereof has taken or agreed to take
any action or has any Knowledge of any fact or circumstance that
is reasonably likely to (i) prevent the Mergers from qualifying
as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section
9.1(b) or result in the imposition of a condition or restriction
of the type referred to in the last sentence of such Section.
ARTICLE 5.21 STATE TAKEOVER LAWS . Each FBWP Entity has
taken all necessary action to exempt the transactions
contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable "moratorium,"
"fair price," "business combination," "control share," or other
anti-takeover Laws (collectively, "Takeover Laws"), including
Sections 14-2-1111 and 14-2-1131 of the GBCC.
ARTICLE 5.22 CHARTER PROVISIONS . Each FBWP Entity has
taken all action so that the entering into of this Agreement and
the consummation of the Mergers and the other transactions
contemplated by this Agreement do not and will not result in the
grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any FBWP
Entity or restrict or impair the ability of CCBG or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any FBWP Entity that may
be directly or indirectly acquired or controlled by them. This
Agreement and the transactions contemplated herein will not
trigger any supermajority voting provisions under the Articles of
Incorporation, Bylaws, or other governing instruments of any FBWP
Entity.
ARTICLE 5.23 OPINION OF FINANCIAL ADVISOR . FBWP has
received the verbal opinion of Brown, Burke Capital Partners,
Inc., as of the date of this Agreement, to the effect that the
consideration to be received in the Holding Company Merger by the
holders of FBWP Common Stock is fair, from a financial point of
view, to such holders.
ARTICLE 5.24 BOARD RECOMMENDATION . The Board of
Directors of FBWP, at a meeting duly called and held, has by
unanimous vote of the directors present (who constituted all of
the directors then in office) (i) determined that this Agreement
and the transactions contemplated hereby, including the Mergers,
taken together, are fair to and in the best interests of the
shareholders and (ii) resolved to recommend that the holders of
the shares of FBWP Common Stock approve this Agreement.
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF CCBG
CCBG hereby represents and warrants to FBWP as follows:
ARTICLE 6.1 ORGANIZATION, STANDING, AND POWER . CCBG is
a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Florida, and has the
corporate power and authority to carry on its business as now
conducted and to own, lease and operate its material Assets.
CCBG is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be
so qualified or licensed, except for such jurisdictions in which
the failure to be so qualified or licensed is not reasonably
likely to have, individually or in the aggregate, a CCBG Material
Adverse Effect.
ARTICLE 6.2 AUTHORITY OF CCBG; NO BREACH BY AGREEMENT .
(a) CCBG has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including
the Mergers, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of
CCBG, subject to receipt of the requisite Consents referred to in
Section 9.1(b). This Agreement represents a legal, valid, and
binding obligation of CCBG, enforceable against CCBG in
accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
CCBG, nor the consummation by CCBG of the transactions
contemplated hereby, nor compliance by CCBG with any of the
provisions hereof, will (i) conflict with or result in a breach
of any provision of CCBG's Articles of Incorporation or Bylaws,
or (ii) subject to receipt of the requisite Consents referred to
Section 9.1(b), constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any
Lien on any Asset of any CCBG Entity under, any Contract or
Permit of any CCBG Entity, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a CCBG Material Adverse Effect,
or, (iii) subject to receipt of the requisite Consents referred
to in Section 9.1(b), constitute or result in a Default under, or
require any Consent pursuant to, any Law or Order applicable to
any CCBG Entity or any of their respective material Assets
(including any CCBG Entity or any FBWP Entity becoming subject to
or liable for the payment of any Tax or any of the Assets owned
by any CCBG Entity or any FBWP Entity being reassessed or
revalued by any Taxing authority).
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and
securities Laws, and rules of the NASD, and other than Consents
required from Regulatory Authorities, and other than notices to
or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect to any employee benefit
plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a CCBG Material
Adverse Effect, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by
CCBG of the Mergers and the other transactions contemplated in
this Agreement.
ARTICLE 6.3 CAPITAL STOCK .
(a) The authorized capital stock of CCBG consists of (i)
90,000,000 shares of CCBG Common Stock, of which 10,191,848
shares are issued and outstanding as of the date of this
Agreement, and (ii) 3,000,000 shares of CCBG Preferred Stock,
none of which are issued and outstanding. All of the issued and
outstanding shares of CCBG Capital Stock are, and all of the
shares of CCBG Common Stock to be issued in exchange for shares
of FBWP Common Stock upon consummation of the Mergers, when
issued in accordance with the terms of this Agreement, will be,
duly and validly issued and outstanding and fully paid and
nonassessable under the FBCA. None of the outstanding shares of
CCBG Capital Stock has been, and none of the shares of CCBG
Common Stock to be issued in exchange for shares of FBWP Common
Stock upon consummation of the Holding Company Merger will be,
issued in violation of any preemptive rights of the current or
past shareholders of CCBG.
(b) Except as set forth in Section 6.3(a), or as provided
pursuant to the CCBG Stock Plans, or as disclosed in Section 6.3
of the CCBG Disclosure Memorandum, there are no shares of capital
stock or other equity securities outstanding and no outstanding
Equity Rights relating to the capital stock of CCBG.
ARTICLE 6.4 CCBG SUBSIDIARIES . CCBG has disclosed in
Section 6.4 of the CCBG Disclosure Memorandum all of its
Significant Subsidiaries as of the date of this Agreement that
are corporations and all of the CCBG Subsidiaries that are
general or limited partnerships or other non-corporate entities.
Each CCBG Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance
Act and applicable regulations thereunder.
ARTICLE 6.5 SEC FILINGS; FINANCIAL STATEMENTS .
(a) CCBG has timely filed and made available to FBWP all
SEC Documents required to be filed by CCBG since December 31,
1997 (the "CCBG SEC Reports"). The CCBG SEC Reports (i) at the
time filed, complied in all material respects with the applicable
requirements of the Securities Laws and other applicable Laws and
(ii) did not, at the time they were filed (or, if amended or
superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be
stated in such CCBG SEC Reports or necessary in order to make the
statements in such CCBG SEC Reports, in light of the
circumstances under which they were made, not misleading.
(b) Each of the CCBG Financial Statements (including, in
each case, any related notes) contained in the CCBG SEC Reports,
including any CCBG SEC Reports filed after the date of this
Agreement until the Effective Time, complied as to form in all
material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited interim
statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial
position of CCBG and its Subsidiaries as at the respective dates
and the consolidated results of operations and cash flows for the
periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount or effect.
ARTICLE 6.6 ABSENCE OF UNDISCLOSED LIABILITIES . Except
as disclosed in the CCBG Disclosure Memorandum, no CCBG Entity
has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a CCBG Material Adverse Effect,
except Liabilities which are accrued or reserved against in the
consolidated balance sheets of CCBG as of December 31, 1999,
included in the CCBG Financial Statements delivered prior to the
date of this Agreement or reflected in the notes thereto. No
CCBG Entity has incurred or paid any Liability since December 31,
1999, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business
practice and which are not reasonably likely to have,
individually or in the aggregate, a CCBG Material Adverse Effect
or (ii) in connection with the transactions contemplated by this
Agreement.
ARTICLE 6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS . Since
December 31, 1999, except as disclosed in the CCBG Financial
Statements delivered prior to the date of this Agreement or as
disclosed in Section 6.7 of the CCBG Disclosure Memorandum, (i)
there have been no events, changes or occurrences which have had,
or are reasonably likely to have, individually or in the
aggregate, a CCBG Material Adverse Effect, and (ii) the CCBG
Entities have not taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if
taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and
agreements of CCBG provided in Article 7.
ARTICLE 6.8 CERTAIN ENVIRONMENTAL AND EMPLOYEE BENEFIT
MATTERS . To the Knowledge of CCBG, each CCBG Entity, its
Participation Facilities and its Operating Properties are, and
have been, in compliance with all Environmental Laws, except for
violations which are not reasonably likely to have, individually
or in the aggregate, a CCBG Material Adverse Effect.
ARTICLE 6.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES . In the
opinion of management of CCBG, the Allowance shown on the
consolidated balance sheets of CCBG included in the most recent
CCBG Financial Statements dated prior to the date of this
Agreement was, and the Allowance shown on the consolidated
balance sheets of CCBG included in the CCBG Financial Statements
as of dates subsequent to the execution of this Agreement will
be, as of the dates thereof, adequate (within the meaning of GAAP
and applicable regulatory requirements or guidelines) to provide
for all known or reasonably anticipated losses relating to or
inherent in the loan and lease portfolios (including accrued
interest receivables) of the CCBG Entities and other extensions
of credit (including letters of credit) by the CCBG Entities as
of the dates thereof.
ARTICLE 6.10 INTELLECTUAL PROPERTY . Each CCBG Entity
owns or has a license to use all of the Intellectual Property
used by such CCBG Entity in the course of its business. Each
CCBG Entity is the owner of or has a license to any Intellectual
Property sold or licensed to a third party by such CCBG Entity in
connection with such CCBG Entity's business operations, and such
CCBG Entity has the right to convey by sale or license any
Intellectual Property so conveyed. No CCBG Entity is in Default
under any of its Intellectual Property licenses. No proceedings
have been instituted, or are pending or to the Knowledge of CCBG
threatened, which challenge the rights of any CCBG Entity with
respect to Intellectual Property used, sold or licensed by such
CCBG Entity in the course of its business, nor has any person
claimed or alleged any rights to such Intellectual Property. The
conduct of the business of the CCBG Entities does not infringe
any Intellectual Property of any other person. Except as
disclosed in Section 6.10 of the CCBG Disclosure Memorandum, no
CCBG Entity is obligated to pay any recurring royalties to any
Person with respect to any such Intellectual Property. Except as
disclosed in Section 6.10 of the CCBG Disclosure Memorandum,
every officer, director, or employee of any CCBG Entity is a
party to a Contract which requires such officer, director or
employee to assign any interest in any Intellectual Property to a
CCBG Entity and to keep confidential any trade secrets,
proprietary data, customer information, or other business
information of a CCBG Entity, and, to the Knowledge of CCBG, no
such officer, director or employee is party to any Contract with
any Person other than a CCBG Entity which requires such officer,
director or employee to assign any interest in any Intellectual
Property to any Person other than a CCBG Entity or to keep
confidential any trade secrets, proprietary data, customer
information, or other business information of any Person other
than a CCBG Entity. Except as disclosed in Section 6.10 of the
CCBG Disclosure Memorandum, no officer, director or employee of
any CCBG Entity is party to any Contract which restricts or
prohibits such officer, director or employee from engaging in
activities competitive with any Person, including any CCBG
Entity.
ARTICLE 6.11 COMPLIANCE WITH LAWS . CCBG is duly
registered as a bank holding company under the BHC Act. Each
CCBG Entity has in effect all Permits necessary for it to own,
lease or operate its material Assets and to carry on its business
as now conducted, except for those Permits the absence of which
are not reasonably likely to have, individually or in the
aggregate, a CCBG Material Adverse Effect, and there has occurred
no Default under any such Permit, other than Defaults which are
not reasonably likely to have, individually or in the aggregate,
a CCBG Material Adverse Effect. Except as disclosed in Section
6.11 of the CCBG Disclosure Memorandum, none of the CCBG
Entities:
(a) is in Default under its Articles of Incorporation or
Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits
applicable to its business or employees conducting its business,
except for Defaults which are not reasonably likely to have,
individually or in the aggregate, a CCBG Material Adverse Effect;
or
(c) since January 1, 1997, has received any notification or
communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof
(i) asserting that any CCBG Entity is not in compliance with any
of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a
CCBG Material Adverse Effect, (ii) threatening to revoke any
Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a CCBG Material Adverse Effect,
or (iii) requiring any CCBG Entity to enter into or consent to
the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to adopt
any Board resolution or similar undertaking, which restricts
materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
ARTICLE 6.12 LEGAL PROCEEDINGS . Except as disclosed in
Section 6.12 of the CCBG Disclosure Memorandum, there is no
Litigation instituted or pending, or, to the Knowledge of CCBG,
threatened (or unasserted but considered probable of assertion
and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any CCBG Entity or
employee benefit plan of any CCBG Entity, or against any director
or employee of any CCBG Entity, in their capacity as such, or
against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a
CCBG Material Adverse Effect, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any CCBG Entity, that are
reasonably likely to have, individually or in the aggregate, a
CCBG Material Adverse Effect.
ARTICLE 6.13 REPORTS . Since January 1, 1997, or the date
of organization if later, each CCBG Entity has filed all reports
and statements, together with any amendments required to be made
with respect thereto, that it was required to file with
Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to
have, individually or in the aggregate, a CCBG Material Adverse
Effect).
As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all
applicable Laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE 6.14 STATEMENTS TRUE AND CORRECT . No statement,
certificate, instrument or other writing furnished or to be
furnished by any CCBG Entity or any Affiliate thereof to FBWP
pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None
of the information supplied or to be supplied by any CCBG Entity
or any Affiliate thereof for inclusion in the Registration
Statement to be filed by CCBG with the SEC, will, when the
Registration Statement becomes effective, be false or misleading
with respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any CCBG
Entity or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to FBWP's shareholders in connection with
the Shareholders' Meeting, and any other documents to be filed by
any CCBG Entity or any Affiliate thereof with the SEC or any
other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first
mailed to the shareholders of FBWP, be false or misleading with
respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that any CCBG
Entity or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
ARTICLE 6.15 ACCOUNTING, TAX AND REGULATORY MATTERS . No
CCBG Entity or any Affiliate thereof has taken or agreed to take
any action or has any Knowledge of any fact or circumstance that
is reasonably likely to (i) prevent the Mergers from qualifying
as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section
9.1(b) or result in the imposition of a condition or restriction
of the type referred to in the last sentence of such Section.
All Tax Returns required to be filed by or on behalf of any of
the CCBG Entities have been timely filed or requests for
extensions have been timely filed, granted and have not expired
for periods ended on or before December 31, 1998, and on or
before the day of the most recent fiscal year end immediately
preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to
have a CCBG Material Adverse Effect and all such Tax Returns
filed are complete and accurate in all material respects. All
Taxes shown on Tax Returns have been paid. As of the date of
this Agreement, there is no audit examination, deficiency, or
refund Litigation with respect to any Taxes, except as reserved
against any CCBG Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 6.15 of the CCBG
Disclosure Memorandum. The provision for Taxes due or to become
due for any of the CCBG Entities for the period or periods
through and including the day of the respective CCBG Financial
Statements has been made and is reflected on such CCBG Financial
Statements is, to the Knowledge of CCBG, sufficient to cover all
such Taxes.
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION
ARTICLE 7.1 AFFIRMATIVE COVENANTS OF FBWP . From the
date of this Agreement until the earlier of the Effective Time or
the termination of this Agreement, unless the prior written
consent of CCBG shall have been obtained, and except as otherwise
expressly contemplated herein, FBWP shall and shall cause each of
its Subsidiaries to operate its business only in the usual,
regular, and ordinary course, and in a manner designed to
preserve intact its business organization and Assets and maintain
its rights and franchises, and shall take no action which would
(i) adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type
referred to in the last sentences of Section 9.1(b) or 9.1(c), or
(ii) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
ARTICLE 7.2 NEGATIVE COVENANTS OF FBWP . From the date
of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, unless the prior written consent
of CCBG shall have been obtained, and except as otherwise
expressly contemplated herein, FBWP covenants and agrees that it
will not do or agree or commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any FBWP Entity; or
(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a FBWP
Entity to another FBWP Entity) in excess of an aggregate of
$50,000 (for the FBWP Entities on a consolidated basis) except in
the ordinary course of the business of FBWP Subsidiaries
consistent with past practices (which shall include, for FBWP
Subsidiaries that are depository institutions, creation of
deposit liabilities, purchases of federal funds, renewals of
advances from the Federal Home Loan Bank which advances are
outstanding on the date of this Agreement and entry into
repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any Asset of
any FBWP Entity of any Lien or permit any such Lien to exist
(other than in connection with deposits, repurchase agreements,
bankers acceptances, "treasury tax and loan" accounts established
in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect
as of the date hereof that are disclosed in the FBWP Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee
benefit plans), directly or indirectly, any shares, or any
securities convertible into any shares, of the capital stock of
any FBWP Entity, or except as consistent with past practice,
declare or pay any dividend or make any other distribution in
respect of FBWP's capital stock, except that FBWP shall be
allowed to pay to its shareholders FBWP's regular dividend of
$1.85 per share of FBWP Common Stock for the second half of 2000;
provided, however, if the Holding Company Merger is consummated
prior to the record date for CCBG's fourth quarter 2000 dividend,
the FBWP dividend payable to each FBWP shareholder shall be
reduced by the CCBG fourth quarter 2000 dividend payable to each
FBWP shareholder; or
(d) except for this Agreement or as disclosed in Section
7.2(d) of the FBWP Disclosure Memorandum, issue, sell, pledge,
encumber, authorize the issuance of, enter into any Contract to
issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of
FBWP Common Stock or any other capital stock of any FBWP Entity,
or any stock appreciation rights, or any option, warrant, or
other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock
of any FBWP Entity or issue or authorize the issuance of any
other securities in respect of or in substitution for shares of
FBWP Common Stock, or sell, lease, mortgage or otherwise dispose
of or otherwise encumber (x) any shares of capital stock of any
FBWP Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another FBWP Entity) or (y) any Asset
having a book value in excess of $50,000 other than in the
ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or
U.S. Government agency securities, which in either case have
maturities of one year or less, purchase any securities or make
any material investment, either by purchase of stock or
securities, contributions to capital, Asset transfers, or
purchase of any Assets, in any Person other than a wholly owned
FBWP Subsidiary, or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures
in the ordinary course of business, (ii) acquisitions of control
by a depository Subsidiary solely in its fiduciary capacity, or
(iii) the creation of new wholly owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this
Agreement; or
(g) (1) make any new loans or extensions of credit or
renew, extend or renegotiate any existing loans or extensions of
credit (i) with respect to properties or businesses outside of
Lee and Chambers Counties, Alabama, and Troup and Harris
Counties, Georgia, or to borrowers whose principal residence is
outside such counties unless such loans or extensions of credit
are to existing borrowers of First National that are borrowers on
the date of this Agreement, (ii) that are unsecured in excess of
$100,000, or (iii) that are secured in excess of $250,000; (2)
purchase or sell (except for sales of single family residential
first mortgage loans in the ordinary course of FBWP's business
for fair market value) any whole loans, leases, mortgages or any
loan participations or agented credits or other interest therein,
or (3) renew or renegotiate any loans or credits that are on any
watch list and/or are classified or special mentioned or take any
similar actions with respect to collateral held with respect to
debts previously contracted or other real estate owned, except
pursuant to safe and sound banking practices and with prior
disclosure to CCB; provided, however, that FBWP may, without the
prior notice to or written consent of CCB, renew or extend
existing credits on substantially similar terms and conditions as
present at the time such credit was made or last extended,
renewed or modified, for a period not to exceed one year and at
rates not less than market rates for comparable credits and
transactions and without any release of any collateral except as
any FBWP Entity is presently obligated under existing written
agreements kept as part of such FBWP Entity's official records.
If any FBWP Entity makes, extends, renews, renegotiates,
compromises or settles any loans or extensions of credit or
releases any collateral therefor that are subject to the prior
disclosure to CCB hereunder and CCB has objected thereto, the
Exchange Ratio shall be proportionally reduced by an amount equal
to all outstanding principal of, and all accrued but unpaid
interest and other charges on, such loan(s) as of the Effective
Time; or
(h) grant any increase in compensation or benefits to the
employees or officers of any FBWP Entity, except in accordance
with past practice as disclosed in Section 7.2(h) of the FBWP
Disclosure Memorandum or as required by Law; pay any severance or
termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this
Agreement as disclosed in Section 7.2(h) of the FBWP Disclosure
Memorandum; enter into or amend any severance agreements with
officers of any FBWP Entity; grant any increase in fees or other
increases in compensation or other benefits to directors of any
FBWP Entity except in accordance with past practice disclosed in
Section 7.2(h) of the FBWP Disclosure Memorandum; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits or other Equity Rights; or
(i) enter into or amend any employment Contract between any
FBWP Entity and any Person (unless such amendment is required by
Law) that the FBWP Entity does not have the unconditional right
to terminate without Liability (other than Liability for services
already rendered), at any time on or after the Effective Time; or
(j) adopt any new employee benefit plan of any FBWP Entity
or terminate or withdraw from, or make any material change in or
to, any existing employee benefit plans of any FBWP Entity other
than any such change that is required by Law or that, in the
opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan, or make any distributions from
such employee benefit plans, except as required by Law, the terms
of such plans or consistent with past practice; or
(k) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may
be appropriate to conform to changes in Tax Laws or regulatory
accounting requirements or GAAP; or
(l) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of
any FBWP Entity for material money damages or restrictions upon
the operations of any FBWP Entity; or
(m) except in the ordinary course of business and as
expressly permitted in Section 7.2(g), enter into, modify, amend
or terminate any material Contract calling for payments exceeding
$50,000 or waive, release, compromise or assign any material
rights or claims.
ARTICLE 7.3 COVENANTS OF CCBG . From the date of this
Agreement until the earlier of the Effective Time or the
termination of this Agreement, unless the prior written consent
of FBWP shall have been obtained, and except as otherwise
expressly contemplated herein, CCBG covenants and agrees that it
shall (a) continue to conduct its business and the business of
its Subsidiaries in a manner designed in its reasonable judgment,
to enhance the long-term value of the CCBG Capital Stock and the
business prospects of the CCBG Entities and to the extent
consistent therewith use all reasonable efforts to preserve
intact the CCBG Entities' core businesses and goodwill with their
respective employees and the communities they serve, and (b) take
no action which would (i) materially adversely affect the ability
of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c), or (ii) materially adversely affect the
ability of any Party to perform its covenants and agreements
under this Agreement; provided, that the foregoing shall not
prevent any CCBG Entity from acquiring any Assets or other
businesses or from discontinuing or disposing of any of its
Assets or business if such action is, in the judgment of CCBG,
desirable in the conduct of the business of CCBG and its
Subsidiaries. CCBG further covenants and agrees that it will not
amend or agree or commit to amend or permit any of its
Subsidiaries to amend or agree or commit to amend, without the
prior written consent of FBWP, which consent shall not be
unreasonably withheld, the Articles of Incorporation or Bylaws of
CCBG, in each case, in any manner adverse to the holders of FBWP
Common Stock as compared to the rights of holders of CCBG Common
Stock generally as of the date of this Agreement.
ARTICLE 7.4 ADVERSE CHANGES IN CONDITION . Each Party
agrees to give written notice promptly to the other Party upon
becoming aware of the occurrence or impending occurrence of any
event or circumstance relating to it or any of its Subsidiaries
which (i) is reasonably likely to have, individually or in the
aggregate, a FBWP Material Adverse Effect or a CCBG Material
Adverse Effect, as applicable, or (ii) would cause or constitute
a breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
ARTICLE 7.5 REPORTS . Each Party and its Subsidiaries
shall file all reports required to be filed by it with Regulatory
Authorities between the date of this Agreement and the Effective
Time and shall deliver to the other Party copies of all such
reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC,
such financial statements will fairly present in all material
respects the consolidated financial position of the entity filing
such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash
flows for the periods then ended in accordance with GAAP (subject
in the case of interim financial statements to normal recurring
year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in
all material respects with the Securities Laws and will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any
financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws
applicable to such reports.
ARTICLE 8 ADDITIONAL AGREEMENTS
ARTICLE 8.1 REGISTRATION STATEMENT; PROXY STATEMENT;
SHAREHOLDER APPROVAL . As soon as reasonably practicable after
execution of this Agreement, at a date determined by CCBG in its
sole discretion, CCBG shall prepare and file the Registration
Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the
1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with
the issuance of the shares of CCBG Common Stock upon consummation
of the Mergers. FBWP shall cooperate in the preparation and
filing of the Registration Statement and shall furnish all
information concerning it and the holders of its capital stock as
CCBG may reasonably request in connection with such action. FBWP
shall call a Shareholders' Meeting, to be held as soon as
reasonably practicable after the Registration Statement is
declared effective by the SEC, for the purpose of voting upon
approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meeting,
(i) CCBG shall prepare and file with the SEC the Registration
Statement which shall contain the Proxy Statement and FBWP shall
mail such Proxy Statement to the FBWP shareholders, (ii) FBWP
shall furnish to CCBG all information concerning FBWP that CCBG
may reasonably request in connection with such Proxy Statement,
(iii) the Board of Directors of FBWP shall recommend to FBWP's
shareholders the approval of the matters submitted for approval,
and (iv) the Board of Directors and officers of FBWP shall use
their reasonable efforts to obtain such shareholders' approval.
CCBG and FBWP shall make all necessary filings with respect to
the Mergers under the Securities Laws.
ARTICLE 8.2 NASDAQ LISTING . CCBG shall use its
reasonable efforts to list, prior to the Effective Time, on the
Nasdaq National Market the shares of CCBG Common Stock to be
issued to the holders of FBWP Common Stock pursuant to the
Holding Company Merger, and CCBG shall give all notices and make
all filings with the NASD required in connection with the
transactions contemplated herein.
ARTICLE 8.3 APPLICATIONS . CCBG shall promptly prepare
and file, and FBWP shall cooperate in the preparation and, where
appropriate, filing of, applications with all Regulatory
Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this
Agreement. The Parties shall deliver to each other copies of all
filings, correspondence and orders to and from all Regulatory
Authorities in connection with the transactions contemplated
hereby.
ARTICLE 8.4 FILINGS WITH STATE OFFICES . Upon the terms
and subject to the conditions of this Agreement, CCBG shall
execute and file the Articles of Merger with the Secretary of
State of the States of Florida and Georgia in connection with the
Closing.
ARTICLE 8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE .
Subject to the terms and conditions of this Agreement, each Party
agrees to use, and to cause its Subsidiaries to use, its
reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective,
as soon as reasonably practicable after the date of this
Agreement, the transactions contemplated by this Agreement,
including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the
conditions referred to in Article 9; provided, that nothing
herein shall preclude either Party from exercising its rights
under this Agreement. Each Party shall use, and shall cause each
of its Subsidiaries to use, its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
ARTICLE 8.6 INVESTIGATION AND CONFIDENTIALITY .
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its
business and to consummation of the Holding Company Merger and
shall permit the other Party to make or cause to be made such
investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal
conditions as the other Party reasonably requests, provided that
such investigation shall be reasonably related to the
transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a
Party shall affect the representations and warranties of the
other Party.
(b) In addition to the Parties' respective obligations
under the Confidentiality Agreement, which are hereby reaffirmed
and adopted, and incorporated by reference herein each Party
shall, and shall cause its advisers and agents to, maintain the
confidentiality of all confidential information furnished to it
by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use
such information for any purpose except in furtherance of the
transactions contemplated by this Agreement. In the event that a
Party is required by applicable law or valid court process to
disclose any such confidential information, then such Party shall
provide the other Party with prompt written notice of any such
requirement so that the other Party may seek a protective order
or other appropriate remedy and/or waive compliance with this
Section 8.6. If in the absence of a protective order or other
remedy or the receipt of a waiver by the other Party, a Party is
nonetheless, in the written opinion of counsel, legally compelled
to disclose any such confidential information to any tribunal or
else stand liable for contempt or suffer other censure or
penalty, a Party may, without liability hereunder, disclose to
such tribunal only that portion of the confidential information
which such counsel advises such Party is legally required to be
disclosed, provided that such disclosing Party use its best
efforts to preserve the confidentiality of such confidential
information, including without limitation, by cooperating with
the other Party to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be
accorded such confidential information by such tribunal. If this
Agreement is terminated prior to the Effective Time, upon written
request of the other Party, each Party shall promptly return or
certify the destruction of all documents and copies thereof, and
all work papers containing confidential information received from
the other Party.
(c) FBWP shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with
Persons, if any, which were considering an Acquisition Proposal
with respect to FBWP to preserve the confidentiality of the
information relating to the FBWP Entities provided to such
Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as
soon as practicable after any determination by it of any fact or
occurrence relating to the other Party which it has discovered
through the course of its investigation and which represents, or
is reasonably likely to represent, either a breach of any
representation, warranty, covenant or agreement of the other
Party or which has had or is reasonably likely to have a FBWP
Material Adverse Effect or a CCBG Material Adverse Effect, as
applicable.
(e) Upon request of CCBG, FBWP shall request within 10 days
of the date thereof, that all third parties that received
confidential information regarding FBWP or any of its
Subsidiaries within the last 12 months in connection with a
possible sale or merger transaction involving FBWP or any of its
Subsidiaries promptly return such confidential information to
FBWP.
ARTICLE 8.7 PRESS RELEASES . Prior to the Effective
Time, FBWP and CCBG shall consult with each other as to the form
and substance of any press release or other public disclosure
materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary or advisable in order to
satisfy such Party's disclosure obligations imposed by Law.
ARTICLE 8.8 CERTAIN ACTIONS . Except with respect to
this Agreement and the transactions contemplated hereby, no FBWP
Entity nor any Affiliate thereof nor any Representatives thereof
retained by any FBWP Entity shall directly or indirectly solicit
any Acquisition Proposal by any Person. Except to the extent the
Board of Directors of FBWP reasonably determines in good faith,
based and relying upon a written opinion from its outside
counsel, that the failure to take such actions would constitute a
breach of fiduciary duties of the members of such Board of
Directors to FBWP's shareholder under applicable law, no FBWP
Entity or any Affiliate or Representative thereof shall furnish
any non-public information that it is not legally obligated to
furnish, negotiate with respect to, or enter into any discussions
or Contract with respect to, any Acquisition Proposal, but FBWP
may communicate information about such an Acquisition Proposal to
its shareholders if and to the extent that it is required to do
so in order to comply with its legal obligations. FBWP shall
promptly advise CCBG following the receipt of any Acquisition
Proposal and the details thereof, and advise CCBG of any
developments with respect to such Acquisition Proposal promptly
upon the occurrence thereof. FBWP shall (i) immediately cease
and cause to be terminated any existing activities, discussions
or negotiations with any Persons conducted heretofore with
respect to any of the foregoing, (ii) direct and use its
reasonable best efforts to cause all of its Affiliates and
Representatives not to engage in any of the foregoing, and (iii)
use its reasonable best efforts to enforce any confidentiality or
similar agreement relating to any such activities, discussions,
negotiations or Acquisition Proposal. FBWP will take all actions
necessary or advisable to inform the appropriate individuals or
entities referred to in the first sentence of this Section 8.8 of
the obligations undertaken in this Section 8.8.
ARTICLE 8.9 ACCOUNTING AND TAX TREATMENT . Each of the
Parties undertakes and agrees to use its reasonable efforts to
cause the Mergers, and to use its reasonable efforts to take no
action which would cause the Mergers not, to qualify as a
"reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code for federal income tax purposes.
ARTICLE 8.10 STATE TAKEOVER LAWS . Each FBWP Entity and
each FBWP shareholder shall take the necessary steps to exempt
the transactions contemplated by this Agreement from, or if
necessary to challenge the validity or applicability of, any
applicable Takeover Law, including Sections 14-2-1111 and 14-2-
1132 of the GBCC.
ARTICLE 8.11 CHARTER PROVISIONS . Each FBWP Entity shall
take all necessary action to ensure that the entering into of
this Agreement and the consummation of the Mergers and the other
transactions contemplated hereby do not and will not result in
the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any FBWP
Entity or restrict or impair the ability of CCBG or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any FBWP Entity that may
be directly or indirectly acquired or controlled by them.
ARTICLE 8.12 FBWP MEETINGS . Each FBWP Entity shall give
prior notice of each meeting or proposed action by any of their
respective Boards of Directors and/or committees, including a
description of any matters to be discussed and/or acted upon, and
shall permit a representative of CCBG to attend each such
meeting, except during discussions relating to the transactions
contemplated herein that present conflict of interest and/or
confidentiality issues.
ARTICLE 8.13 AGREEMENT OF AFFILIATES . FBWP has disclosed
in Section 8.13 of the FBWP Disclosure Memorandum all Persons
whom it reasonably believes is an "affiliate" of FBWP for
purposes of Rule 145 under the 1933 Act. FBWP shall cause each
such Person to deliver to CCBG upon the execution of this
Agreement a written agreement, substantially in the form of
Exhibit 2, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of FBWP Common Stock
held by such Person except as contemplated by such agreement or
by this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of CCBG Common Stock to be
received by such Person upon consummation of the Mergers except
in compliance with applicable provisions of the 1933 Act and the
rules and regulations thereunder. CCBG shall be entitled to place
restrictive legends upon certificates for shares of CCBG Common
Stock issued to affiliates of FBWP pursuant to this Agreement to
enforce the provisions of this Section 8.13; provided that CCBG
removes such legends at the appropriate time. CCBG shall not be
required to maintain the effectiveness of the Registration
Statement under the 1933 Act for the purposes of resale of CCBG
Common Stock by such affiliates.
ARTICLE 8.14 EMPLOYEE BENEFITS AND CONTRACTS .
(a) Following the Effective Time, CCBG shall provide
generally to officers and employees of the FBWP Entities employee
benefits under employee benefit and welfare plans (other than
stock option or other plans involving the potential issuance of
CCBG Common Stock), on terms and conditions which when taken as a
whole are substantially similar to those currently provided by
the CCBG Entities to their similarly situated officers and
employees; provided, that CCBG shall provide generally to
officers and employees of FBWP Entities benefits in accordance
with the policies of CCBG. CCBG shall waive any pre-existing
condition exclusion under any employee health plan for which any
employees and/or officers and dependents covered by FBWP plans as
of Closing of the FBWP Entities shall become eligible by virtue
of the preceding sentence, to the extent (i) such pre-existing
condition was covered under the corresponding plan maintained by
the FBWP Entity and (ii) the individual affected by the pre-
existing condition was covered by the FBWP Entity's corresponding
plan on the date which immediately precedes the Effective Time.
For purposes of participation, vesting and (except in the case of
CCBG retirement plans) benefit accrual under CCBG's employee
benefit plans, the service of the employees of the FBWP Entities
prior to the Effective Time shall be treated as service with a
CCBG Entity participating in such employee benefit plans. CCBG
also shall cause the Surviving Corporation and its Subsidiaries
to honor in accordance with their terms all employment,
consulting and other compensation Contracts disclosed in Section
8.14 of the FBWP Disclosure Memorandum to CCBG between any FBWP
Entity and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested
amounts earned or accrued through the Effective Time under the
FBWP Benefit Plans.
(b) A. Drew Ferguson, III, Scott A. Huguley, Gerald B.
Andrews, Jr., and Karen Meadows shall each enter into an
employment agreement with CCBG or CCB that is satisfactory to
CCBG which shall be effective as of the Effective Time (the
"Employment Agreements"). The Employment Agreements shall
contain standard provisions for terminating any existing
employment arrangements between these individuals and any of the
FBWP Entities.
(c) Subject to compliance with applicable Laws and the
absence of any Material Adverse Effects upon CCBG or any FBWP
Benefit Plans and/or CCBG Benefit Plans, CCBG intends to merge
the FBWP 401(k) Plan with the CCBG 401(k) Plan.
ARTICLE 8.15 INDEMNIFICATION .
(a) With respect to all claims brought during the period of
four (4) years after the Effective Time, CCBG shall indemnify,
defend and hold harmless the present and former directors,
officers and employees of the FBWP Entities (each, an
"Indemnified Party") against all Liabilities arising out of
actions or omissions arising out of the Indemnified Party's
service or services as directors, officers or employees of FBWP
or, at FBWP's request, of another corporation, partnership, joint
venture, trust or other enterprise occurring at or prior to the
Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under Florida Law.
Without limiting the foregoing, in any case in which approval by
the Surviving Corporation is required to effectuate any
indemnification, the Surviving Corporation shall direct, at the
election of the Indemnified Party, that the determination of any
such approval shall be made by independent counsel mutually
agreed upon between CCBG and the Indemnified Party
(b) CCBG shall, to the extent available, (and FBWP shall
cooperate prior to the Effective Time in these efforts) maintain
in effect for a period of two years after the Effective Time
FBWP's existing directors' and officers' liability insurance
policy (provided that CCBG may substitute therefor (i) policies
of at least the same coverage and amounts containing terms and
conditions which are substantially no less advantageous or (ii)
with the consent of FBWP given prior to the Effective Time, any
other policy) with respect to claims arising from facts or events
which occurred prior to the Effective Time and covering persons
who are currently covered by such insurance; provided, that CCBG
shall not be obligated to make aggregate premium payments for
such two-year period in respect of such policy (or coverage
replacing such policy) which exceed, for the portion related to
FBWP's directors and officers, 150% of the annual premium
payments on FBWP's current policy in effect as of the date of
this Agreement (the "Maximum Amount").
(c) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 8.15, upon learning of any
such Liability or Litigation, shall promptly notify CCBG thereof.
In the event of any such Litigation (whether arising before or
after the Effective Time), (i) the Surviving Corporation shall
have the right to assume the defense thereof and the Surviving
Corporation shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if the Surviving
Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues
which raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and the Surviving
Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that (i) the Surviving
Corporation shall be obligated pursuant to this paragraph (c) to
pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction, (ii) the Indemnified Parties will cooperate in
the defense of any such Litigation, and (iii) the Surviving
Corporation shall not be liable for any settlement effected
without its prior written consent; and provided further that the
Surviving Corporation shall not have any obligation hereunder to
any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have
become final, that the indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable
Law.
ARTICLE 8.16 CERTAIN POLICIES OF FBWP . CCBG and FBWP
shall consult with respect to their respective major policies and
practices and FBWP shall make such modification or changes to its
policies and practices, if any, prior to the Effective Time as
may be mutually agreed upon. CCBG and FBWP also shall consult
with respect to the character, amount and timing of restructuring
and Merger-related expense charges to be taken by each of the
Parties in connection with the transactions contemplated by this
Agreement and shall take such charges in accordance with GAAP,
prior to the Effective Time, as may be mutually agreed upon by
the Parties. Neither Party's representations, warranties,
covenants or agreements contained in this Agreement shall be
deemed to be inaccurate or breached in any respect as a
consequence of any modifications or charges undertaken solely on
account of this Section 8.16.
ARTICLE 8.17 STOCK OPTION AGREEMENT . Concurrently with
the execution and delivery of this Agreement, CCBG and FBWP agree
to execute and deliver the Stock Option Agreement in the form
attached hereto as Exhibit 3.
ARTICLE 8.18 DIRECTOR'S AGREEMENTS . Concurrently with
the execution and delivery of this Agreement, FBWP agrees to
cause each of its directors to execute and deliver a Director's
Agreement in the form attached hereto as Exhibit 5.
ARTICLE 8.19 TAXES.
(a) PRE-CLOSING PREPARATION AND FILING OF TAX RETURNS;
PAYMENT OF TAXES. Between the date hereof and the Effective
Time, FBWP shall cause FBWP to prepare and file on or before the
due date therefor all Tax Returns required to be filed by FBWP
(except for any Tax Return for which an extension has been
granted as permitted hereunder) on or before the Effective Time,
and shall pay, or cause FBWP to pay, all Taxes (including
estimated Taxes) due on such Tax Return (or due with respect to
Tax Returns for which an extension has been granted as permitted
hereunder) or which are otherwise required to be paid at any time
prior to or during such period. Such Tax Returns shall be
prepared in accordance with the most recent Tax practices as to
elections and accounting methods except for new elections that
may be made therein that were not previously available, subject
to CCBG's consent (not to be unreasonably withheld or delayed).
(b) NOTIFICATION OF TAX PROCEEDINGS. Between the date
hereof and the Effective Time, to the extent FBWP has knowledge
of the commencement or scheduling of any Tax audit, the
assessment of any Tax, the issuance of any notice of Tax due or
any bill for collection of any Tax due for Taxes, or the
commencement or scheduling of any other administrative or
judicial proceeding with respect to the determination, assessment
or collection of any Tax of FBWP, FBWP shall provide prompt
notice to CCBG of such matter, setting forth information (to the
extent known) describing any asserted Tax liability in reasonable
detail and including copies of any notice or other documentation
received from the applicable Tax authority with respect to such
matter.
(c) TAX ELECTIONS, WAIVERS AND SETTLEMENTS. FBWP shall not
take any of the following actions:
(i) make, revoke or amend any Tax election;
(ii) execute any waiver of restrictions on assessment or
collection of any Tax; or
(iii) enter into or amend any agreement or settlement
with any Tax authority.
(d) TERMINATION OF EXISTING TAX-SHARING AGREEMENTS. All
tax-sharing agreements or similar arrangements with respect to or
involving FBWP shall be terminated with respect to FBWP prior to
the Effective Time, and, after the Effective Time, neither the
FBWP and its affiliates, on the one hand, or FBWP, on the other,
shall be bound thereby or have any liability thereunder to the
other party for amounts due in respect of periods prior to the
Effective Time.
ARTICLE 8.20 FAIRNESS OPINION . FBWP shall obtain from
Brown, Burke Capital Partners, Inc., a letter, dated not more
than five business days prior to the date of the Proxy Statement,
to the effect that, in the opinion of such firm, the
consideration to be received by FBWP shareholders in connection
with the Holding Company Merger is fair, from a financial point
of view, to such shareholders, a signed copy of which shall be
immediately delivered to CCBG.
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
ARTICLE 9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY .
The respective obligations of each Party to perform this
Agreement and consummate the Mergers and the other transactions
contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to
Section 11.6:
(a) SHAREHOLDER APPROVAL. The shareholders of FBWP shall
have approved this Agreement, and the consummation of the
transactions contemplated hereby, including the Mergers, as and
to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD. The shareholders of
CCBG shall have approved the issuance of shares of CCBG Common
Stock pursuant to the Holding Company Merger, as and to the
extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory
Authorities required for consummation of the Holding Company
Merger shall have been obtained or made and shall be in full
force and effect and all waiting periods required by Law shall
have expired. No Consent obtained from any Regulatory Authority
which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the
Board of Directors of CCBG would so materially adversely affect
the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable
judgment, have entered into this Agreement.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained
any and all Consents required for consummation of the Mergers
(other than those referred to in Section 9.1(b)) or for the
preventing of any Default under any Contract or Permit of such
Party which, if not obtained or made, is reasonably likely to
have, individually or in the aggregate, a FBWP Material Adverse
Effect or a CCBG Material Adverse Effect, as applicable. No
Consent so obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable judgment of the
Board of Directors of CCBG would so materially adversely affect
the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable
judgment, have entered into this Agreement.
(d) LEGAL PROCEEDINGS. No court or governmental or
regulatory authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law or
Order (whether temporary, preliminary or permanent) or taken any
other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending
the effectiveness of the Registration Statement shall have been
issued, no action, suit, proceeding or investigation by the SEC
to suspend the effectiveness thereof shall have been initiated
and be continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to the
issuance or trading of the shares of CCBG Common Stock issuable
pursuant to the Holding Company Merger shall have been received.
(f) SHARE LISTING. The shares of CCBG Common Stock
issuable pursuant to the Holding Company Merger shall have been
approved for listing on the Nasdaq National Market.
(g) TAX MATTERS. Each Party shall have received a written
opinion of counsel from Gunster, Yoakley & Stewart, P.A., in form
reasonably satisfactory to such Parties (the "Tax Opinion"), to
the effect that (i) the Holding Company Merger will constitute a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Holding Company
Merger of FBWP Common Stock for CCBG Common Stock will not give
rise to gain or loss to the shareholders of FBWP with respect to
such exchange (except to the extent of any cash received), and
(iii) none of FBWP or CCBG will recognize gain or loss as a
consequence of the Holding Company Merger (except for amounts
resulting from any required change in accounting methods and any
income and deferred gain recognized pursuant to Treasury
regulations issued under Section 1502 of the Internal Revenue
Code). In rendering such Tax Opinion, such counsel shall be
entitled to rely upon representations of officers of FBWP and
CCBG reasonably satisfactory in form and substance to such
counsel.
ARTICLE 9.2 CONDITIONS TO OBLIGATIONS OF CCBG . The
obligations of CCBG to perform this Agreement and consummate the
Mergers and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions, unless
waived by CCBG pursuant to Section 11.6(a):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and
warranties of FBWP set forth in this Agreement shall be assessed
as of the date of this Agreement and as of the Effective Time
with the same effect as though all such representations and
warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined
to a specified date shall speak only as of such date). There
shall not exist inaccuracies in the representations and
warranties of FBWP set forth in this Agreement (including,
without limitation, the representations and warranties set forth
in Sections 5.3, 5.20, 5.21, and 5.22) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have,
a FBWP Material Adverse Effect; provided that, for purposes of
this sentence only, those representations and warranties which
are qualified by references to "material" or "Material Adverse
Effect" or to the "Knowledge" of any Person shall be deemed not
to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all
of the agreements and covenants of FBWP to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been
duly performed and complied with.
(c) CERTIFICATES. FBWP shall have delivered to CCBG (i) a
certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial
officer, to the effect that the conditions set forth in Section
9.1 as relates to FBWP and in Section 9.2(a) and 9.2(b) have been
satisfied, and (ii) certified copies of resolutions duly adopted
by FBWP's Board of Directors and shareholders evidencing the
taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as CCBG and its counsel shall request.
(d) OPINION OF COUNSEL. CCBG shall have received an
opinion of Powell, Goldstein, Frazer & Murphy LLP, counsel to
FBWP, dated as of the Closing, in form reasonably satisfactory to
CCBG, as to the matters set forth in Exhibit 4.
(e) AFFILIATES' AGREEMENTS. CCBG shall have received from
each affiliate of FBWP the affiliates letter referred to in
Section 8.13.
(f) NET WORTH AND CAPITAL REQUIREMENTS. Immediately prior
to the Effective Time, FBWP shall have a consolidated minimum net
worth of at least $15,500,000; provided that, "net worth" shall
be deemed to not be reduced by fees, costs and expenses
(i) incurred or paid at the request of CCBG, except for
adjustments requested by CCBG for purposes of complying with
GAAP, or (ii) incurred and paid by FBWP in connection with the
execution and performance of this Agreement which amounts shall
not exceed $400,000. For purposes of this Section 9.2(g), "net
worth" shall mean the sum of the amounts set forth on the balance
sheet as stockholders' equity (including the par or stated value
of all outstanding capital stock, additional paid-in surplus,
retained earnings, treasury stock and unrealized gain or loss on
securities available for sale) determined in accordance with
GAAP.
(g) DIRECTOR'S AGREEMENTS. CCBG shall have received from
each director of FBWP the Director's Agreement set forth hereto
at Exhibit 5.
(h) CLAIMS LETTER. CCBG shall have received from each
director and officer of FBWP the Claims Letter set forth hereto
at Exhibit 6.
(i) CLEARANCE CERTIFICATE. FBWP shall provide CCBG with a
clearance certificate or similar document(s) which may be
required by any state taxing authority in order to relieve CCBG
of any obligation to withhold any portion of the consideration
under this Agreement.
(j) EMPLOYMENT AGREEMENTS. CCBG shall have received from
each of the individuals listed in Section 8.14(b) an executed
Employment Agreement.
ARTICLE 9.3 CONDITIONS TO OBLIGATIONS OF FBWP . The
obligations of FBWP to perform this Agreement and consummate the
Mergers and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions, unless
waived by FBWP pursuant to Section 11.6(b):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and
warranties of CCBG set forth in this Agreement shall be assessed
as of the date of this Agreement and as of the Effective Time
with the same effect as though all such representations and
warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined
to a specified date shall speak only as of such date). There
shall not exist inaccuracies in the representations and
warranties of CCBG set forth in this Agreement such that the
aggregate effect of such inaccuracies has, or is reasonably
likely to have, a CCBG Material Adverse Effect; provided that,
for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or
"Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all
of the agreements and covenants of CCBG to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been
duly performed and complied with in all material respects.
(c) CERTIFICATES. CCBG shall have delivered to FBWP (i) a
certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial
officer, to the effect that the conditions set forth in Section
9.1 as relates to CCBG and in Section 9.3(a) and 9.3(b) have been
satisfied, and (ii) certified copies of resolutions duly adopted
by CCBG's Board of Directors and shareholders evidencing the
taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as FBWP and its counsel shall request.
(d) OPINION OF COUNSEL. FBWP shall have received an
opinion of Gunster, Yoakley & Stewart, P.A., counsel to CCBG,
dated as of the Effective Time, in form reasonably acceptable to
FBWP, as to the matters set forth in Exhibit 7.
ARTICLE 10 TERMINATION
ARTICLE 10.1 TERMINATION . Notwithstanding any other
provision of this Agreement, and notwithstanding the approval of
this Agreement by the shareholders of FBWP, this Agreement may be
terminated and the Mergers abandoned at any time prior to the
Effective Time:
(a) By mutual consent of CCBG and FBWP; or
(b) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty,
covenant, or other agreement contained in this Agreement) in the
event of a breach by the other Party of any representation or
warranty contained in this Agreement which cannot be or has not
been cured within 30 days after the giving of written notice to
the breaching Party of such breach and which breach is reasonably
likely, in the opinion of the non-breaching Party, to have,
individually or in the aggregate, a FBWP Material Adverse Effect
or a CCBG Material Adverse Effect, as applicable, on the
breaching Party; or
(c) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty,
covenant, or other agreement contained in this Agreement) in the
event of a material breach by the other Party of any covenant or
agreement contained in this Agreement which cannot be or has not
been cured within 30 days after the giving of written notice to
the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty,
covenant, or other agreement contained in this Agreement) in the
event (i) any Consent of any Regulatory Authority required for
consummation of the Mergers and the other transactions
contemplated hereby shall have been denied by final nonappealable
action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the
shareholders of FBWP fail to vote their approval of the matters
relating to this Agreement and the transactions contemplated
hereby at the Shareholders' Meetings where such matters were
presented to such shareholders for approval and voted upon; or
(e) By either Party in the event that the Holding Company
Merger shall not have been consummated by March 31, 2001, which
date may be extended by the mutual consent of the Parties, if the
failure to consummate the transactions contemplated hereby on or
before such date is not caused by any breach of this Agreement by
the Party electing to terminate pursuant to this Section 10.1(e);
or
(f) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty,
covenant, or other agreement contained in this Agreement) in the
event that any of the conditions precedent to the obligations of
such Party to consummate the Holding Company Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(e);
or
(g) By CCBG, in the event that the Board of Directors of
FBWP shall have failed to reaffirm its approval of the Mergers
and the transactions contemplated by this Agreement (to the
exclusion of any other Acquisition Proposal), or shall have
resolved not to reaffirm the Mergers, or shall have affirmed,
recommended or authorized entering into any other Acquisition
Proposal or other transaction involving a merger, share exchange,
consolidation or transfer of substantially all of the Assets of
FBWP.
ARTICLE 10.2 EFFECT OF TERMINATION . In the event of the
termination and abandonment of this Agreement pursuant to Section
10.1, this Agreement shall become void and have no effect, except
that (i) the provisions of this Section 10.2 and Article 11 and
Sections 8.6(b) and 8.7 shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b),
10.1(c) or 10.1(f) shall not relieve the breaching Party from
Liability for an uncured willful breach of a representation,
warranty, covenant, or agreement giving rise to such termination.
ARTICLE 10.3 ALTERNATE TRANSACTION . Nothing contained in
this Agreement shall be deemed to prohibit any director or
officer of FBWP from fulfilling his or her fiduciary duties to
FBWP shareholders or from taking any action required by law.
However, in addition to any other payments required by this
Agreement, in the event that this Agreement is terminated as a
result of FBWP or the holders of at least a majority of the
shares of FBWP Common Stock entering into an agreement with
respect to the merger of FBWP with a party other than CCBG or
the acquisition of a majority of the outstanding shares of FBWP
Common Stock by any party other than CCBG, or is terminated in
anticipation of any such agreement or acquisition, then, in
either event, FBWP shall immediately pay CCBG, by wire transfer,
$350,000 in full satisfaction of CCBG's losses and damages
resulting from such termination. FBWP agrees that $350,000 is
reasonable under the circumstances, that it would be impossible
to exactly determine CCBG's actual damages as a result of such a
termination and that CCBG's actual damages resulting from the
loss of the transaction are in excess of $350,000.
ARTICLE 10.4 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS .
The respective representations, warranties, obligations,
covenants, and agreements of the Parties shall not survive the
Effective Time except this Section 10.4 and Articles 1, 2, 3, 4
and 11 and Sections 8.7, 8.13, 8.14, 8.15 and 10.3.
ARTICLE 11 MISCELLANEOUS
ARTICLE 11.1 DEFINITIONS .
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as
amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"ACQUISITION PROPOSAL" with respect to a Party shall mean
any tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving the acquisition of such Party or any of its
Subsidiaries or the acquisition of a substantial equity interest
in, or a substantial portion of the assets of, such Party or any
of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such
Person; (ii) any executive officer, director, partner, employer,
or direct or indirect beneficial owner of any 10% or greater
equity or voting interest of such Person; or (iii) any other
Person for which a Person described in clause (ii) acts in any
such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by CCBG and filed with the Secretary of State of the
States of Florida and Georgia relating to the Holding Company
Merger as contemplated by Section 1.1.
"ASSETS" of a Person shall mean all of the assets,
properties, businesses and rights of such Person of every kind,
nature, character and description, whether real, personal or
mixed, tangible or intangible, accrued or contingent, or
otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not
carried on the books and records of such Person, and whether or
not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.
"CCB" shall mean Capital City Bank, a Florida chartered
commercial bank and a CCBG Subsidiary.
"CCBG CAPITAL STOCK" shall mean, collectively, the CCBG
Common Stock, the CCBG Preferred Stock and any other class or
series of capital stock of CCBG.
"CCBG COMMON STOCK" shall mean the common stock of CCBG,
$0.01 par value per share.
"CCBG DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Capital City Bank Group, Inc. Disclosure
Memorandum" delivered prior to the date of this Agreement to FBWP
describing in reasonable detail the matters contained therein
and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of
any other Section not specifically referenced with respect
thereto.
"CCBG ENTITIES" shall mean, collectively, CCBG and all CCBG
Subsidiaries.
"CCBG FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules,
if any) of CCBG as of June 30, 2000, and as of December 31, 1999
and 1998, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) for the six months ended June 30, 2000, and
for each of the three fiscal years ended December 31, 1999, 1998
and 1997, as filed by CCBG in SEC Documents, and (ii) the
consolidated statements of condition and balance sheets of CCBG
(including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in
SEC Documents filed with respect to periods ended subsequent to
December 31, 1999.
"CCBG MATERIAL ADVERSE EFFECT" shall mean an event, change
or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i)
the financial position, business, or results of operations of
CCBG and its Subsidiaries, taken as a whole, or (ii) the ability
of CCBG to perform its obligations under this Agreement or to
consummate the Mergers or the other transactions contemplated by
this Agreement, including without limitation the tax-free
reorganization status of the Mergers; provided that "Material
Adverse Effect" shall not be deemed to include the impact of (a)
changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or
regulatory accounting principles generally applicable to banks
and their holding companies, (c) actions and omissions of CCBG
(or any of its Subsidiaries) taken with the prior informed
written Consent of FBWP in contemplation of the transactions
contemplated hereby, and (d) the direct effects of compliance
with this Agreement on the operating performance of CCBG,
including expenses incurred by CCBG in consummating the
transactions contemplated by this Agreement.
"CCBG PREFERRED STOCK" shall mean the preferred stock of
CCBG, $0.01 par value per share.
"CCBG STOCK PLANS" shall mean the existing stock-based plans
of CCBG designated as follows: (i) 1996 Associate Incentive
Plan, (ii) Associate Stock Purchase Plan, (iii) Director Stock
Purchase Plan and (iv) Dividend Reinvestment Plan.
"CCBG SUBSIDIARIES" shall mean the Subsidiaries of CCBG,
which shall include the CCBG Subsidiaries described in Section
6.4 and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of CCBG in the future and
held as a Subsidiary by CCBG at the Effective Time.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement, dated January 25, 2000, between FBWP
and CCBG.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any
Person pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law,
Order, or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute
a breach or violation of, default under, contravention of, or
conflict with, any Contract, Law, Order, or Permit, or (iii) any
occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right of any Person
to exercise any remedy or obtain any relief under, terminate or
revoke, suspend, cancel, or modify or change the current terms
of, or renegotiate, or to accelerate the maturity or performance
of, or to increase or impose any Liability under, any Contract,
Law, Order, or Permit.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to
pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered,
interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction
over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et
seq. ("RCRA"), and other Laws relating to emissions, discharges,
releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of any
Hazardous Material.
"EQUITY RIGHTS" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip,
understandings, warrants, or other binding obligations of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"EXHIBITS" 1 through 7, inclusive, shall mean the Exhibits
so marked, copies of which are attached to this Agreement. Such
Exhibits are hereby incorporated by reference herein and made a
part hereof, and may be referred to in this Agreement and any
other related instrument or document without being attached
hereto.
"FBCA" shall mean the Florida Business Corporation Act.
"FBWP COMMON STOCK" shall mean the common stock of FBWP,
$1.25 par value per share.
"FBWP DISCLOSURE MEMORANDUM" shall mean the written
information entitled "First Bankshares of West Point, Inc.
Disclosure Memorandum" delivered prior to the date of this
Agreement to CCBG describing in reasonable detail the matters
contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed
with respect to one Section shall not be deemed to be disclosed
for purposes of any other Section not specifically referenced
with respect thereto.
"FBWP ENTITIES" shall mean, collectively, FBWP and all FBWP
Subsidiaries.
"FBWP FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules,
if any) of FBWP as of June 30, 2000, and as of December 31, 1999,
1998 and 1997, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) for the six months ended June 30, 2000, and
for each of the three fiscal years ended December 31, 1999, 1998
and 1997, and (ii) the consolidated statements of condition of
FBWP (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) that are
delivered to CCBG with respect to periods ended subsequent to
December 31, 1999.
"FBWP MATERIAL ADVERSE EFFECT" shall mean an event, change
or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i)
the financial position, business, or results of operations of
FBWP and its Subsidiaries, taken as a whole, or (ii) the ability
of FBWP to perform its obligations under this Agreement or to
consummate the Mergers or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not
be deemed to include the impact of (a) changes in banking and
similar Laws of general applicability or interpretations thereof
by courts or governmental authorities, (b) changes in generally
accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding
companies, (c) actions and omissions of FBWP (or any of its
Subsidiaries) taken with the prior informed written Consent of
CCBG in contemplation of the transactions contemplated hereby,
and (d) the direct effects of compliance with this Agreement on
the operating performance of FBWP, including expenses incurred by
FBWP in consummating the transactions contemplated by this
Agreement, subject to 9.2(f).
"FBWP STOCK PLANS" shall mean all stock-based plans of FBWP.
"FBWP SUBSIDIARIES" shall mean the Subsidiaries of FBWP,
which shall include the FBWP Subsidiaries described in Section
5.4 and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of FBWP in the future and
held as a Subsidiary by FBWP at the Effective Time.
"FHLMC" shall mean the Federal Home Loan Mortgage
Corporation
"FIRST NATIONAL" shall mean The First National Bank of West
Point, a national banking association and a FBWP Subsidiary.
"FNMA" shall mean the Federal National Mortgage Association.
"FOSTER LOAN" shall mean that certain loan made by First
Peoples to the Foster Lumber Company and participated out to
First National which was made as of March 2, 1999, in the
original principal amount of $5,000,000.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or
toxic substance (as those terms are defined by any applicable
Environmental Laws) and (ii) any chemicals, pollutants,
contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal,
or encapsulation pursuant to the requirements of governmental
authorities and any polychlorinated biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated
thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents,
trademarks, service marks, service names, trade names,
applications therefor, technology rights and licenses, computer
software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-
how, inventions, and other intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter)
shall mean those facts that are known or should reasonably have
been known after due inquiry by the chairman, president, chief
financial officer, chief accounting officer, chief operating
officer, chief credit officer, general counsel, any assistant or
deputy general counsel, or any senior, executive or other vice
president of such Person and the knowledge of any such persons
obtained or which would have been obtained from a reasonable
investigation.
"LAW" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule,
or statute applicable to a Person or its Assets, Liabilities, or
business, including those promulgated, interpreted or enforced by
any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection and
defense), claim, deficiency, guaranty or endorsement of or by any
Person (other than endorsements of notes, bills, checks, and
drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or
otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention or other security arrangement,
or any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet
due and payable, (ii) for depository institution Subsidiaries of
a Party, pledges to secure deposits and other Liens incurred in
the ordinary course of the banking business, (iii) Liens which do
not materially impair the use of or title to the Assets subject
to such Lien, and which are disclosed in Section 11.1 of the FBWP
Disclosure Memorandum or the CCBG Disclosure Memorandum, as
applicable.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or
other examination or investigation, hearing, administrative or
other proceeding relating to or affecting a Party, its business,
its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not
include regular, periodic examinations of depository institutions
and their Affiliates by Regulatory Authorities.
"MATERIAL" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter
in question; provided that any specific monetary amount stated in
this Agreement shall determine materiality in that instance.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market
System of the National Association of Securities Dealers
Automated Quotations System.
"OCC" shall mean the Office of the Comptroller of the
Currency.
"OPERATING PROPERTY" shall mean any property owned, leased,
or operated by the Party in question or by any of its
Subsidiaries or in which such Party or Subsidiary holds a
security interest or other interest (including an interest in a
fiduciary capacity), and, where required by the context, includes
the owner or operator of such property, but only with respect to
such property.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi- judicial decision or
award, ruling, or writ of any federal, state, local or foreign or
other court, arbitrator, mediator, tribunal, administrative
agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries
participates in the management and, where required by the
context, said term means the owner or operator of such facility
or property, but only with respect to such facility or property.
"PARTY" shall mean either FBWP or CCBG, and "PARTIES" shall
mean both FBWP and CCBG.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right to which any
Person is a party or that is or may be binding upon or inure to
the benefit of any Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal,
commercial or governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture, limited
partnership, limited liability company, trust, business
association, group acting in concert, or any person acting in a
representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by
FBWP to solicit the approval of its shareholders of the
transactions contemplated by this Agreement, which shall include
the prospectus of CCBG relating to the issuance of the CCBG
Common Stock to holders of FBWP Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration
Statement on Form S-4, or other appropriate form, including any
pre-effective or post-effective amendments or supplements
thereto, filed with the SEC by CCBG under the 1933 Act with
respect to the shares of CCBG Common Stock to be issued to the
shareholders of FBWP in connection with the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC,
the NASD, the Federal Trade Commission, the United States
Department of Justice, the Board of the Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, Georgia Department of
Banking and Finance and all other federal, state, county, local
or other governmental or regulatory agencies, authorities
(including self- regulatory authorities), instrumentalities,
commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other
representative engaged by a Person.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its
Subsidiaries with any Regulatory Authority pursuant to the
Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment
Advisors Act of 1940, as amended, the Trust Indenture Act of
1939, as amended, and the rules and regulations of any Regulatory
Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of FBWP to be held pursuant to Section 8.1,
including any adjournment or adjournments thereof.
"SIGNIFICANT SUBSIDIARY" shall mean any present or future
consolidated Subsidiary of the Party in question, the assets of
which constitute ten percent (10%) or more of the consolidated
assets of such Party as reflected on such Party's consolidated
statement of condition prepared in accordance with GAAP.
"SUBSIDIARIES" shall mean all those corporations,
associations, or other business entities of which the entity in
question either (i) owns or controls 50% or more of the
outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by
its parent (provided, there shall not be included any such entity
the equity securities of which are owned or controlled in a
fiduciary capacity), (ii) in the case of partnerships, serves as
a general partner, (iii) in the case of a limited liability
company, serves as a managing member, or (iv) otherwise has the
ability to elect a majority of the directors, trustees or
managing members thereof.
"SURVIVING CORPORATION" shall mean CCBG as the surviving
corporation resulting from the Holding Company Merger.
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an
affiliated or combined or unitary group that includes a Party or
its Subsidiaries.
"TAX" or "TAXES" shall mean any federal, state, county,
local, or foreign taxes, charges, fees, levies, imposts, duties,
or other assessments, including income, gross receipts, excise,
employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental,
federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security,
single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added,
alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposed or required to
be withheld by the United States or any state, county, local or
foreign government or subdivision or agency thereof, including
any interest, penalties, and additions imposed thereon or with
respect thereto.
"USDA GUARANTEE" shall mean the guarantee by the USDA of
payment of the Foster Loan.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
Allowance Section 5.9
Bank Merger Preamble
Bank Plan Section 1.2
Cash Exchange Ratio Section 3.1(b)
CCBG Benefit Plans Section 6.15
CCBG Contracts Section 6.16
CCBG ERISA Plan Section 6.15
CCBG Pension Plan Section 6.15
CCBG SEC Reports Section 6.5(a)
Closing Section 1.2
Deficient Amount Section 3.1(b)
Effective Time Section 1.3
Employment Agreements Section 8.14(b)
ERISA Affiliate Section 5.15(b)
Escrow Agent Section 3.6
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(b)
FBWP Benefit Plans Section 5.15
FBWP Contracts Section 5.16
FBWP ERISA Plan Section 5.15
FBWP Options Section 3.6
FBWP Pension Plan Section 5.15
First Peoples Section 3.1(b)
Holding Company Merger Preamble
Maximum Amount Section 8.15
Mergers Preamble
Share Exchange Ratio Section 3.1(b)
Takeover Laws Section 5.21
Tax Opinion Section 9.1(h)
Wholesale Mortgage Business Section 5.16
Withholding Amount Section 3.6
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever
the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed followed by the words "without
limitation."
ARTICLE 11.2 EXPENSES . Except as otherwise provided in
this Section 11.2, each of the Parties shall bear and pay all
direct costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing
fees, and fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except
that each of the Parties shall bear and pay one-half of the
filing fees payable in connection with the Registration Statement
and the Proxy Statement and printing costs incurred in connection
with the printing of the Registration Statement and the Proxy
Statement.
ARTICLE 11.3 BROKERS AND FINDERS . Except for Brown,
Burke Capital Partners, Inc. as to FBWP and except for McConnell,
Budd & Downes, Inc. as to CCBG, each of the Parties represents
and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any
broker or finder based upon his or its representing or being
retained by or allegedly representing or being retained by FBWP
or by CCBG, each of FBWP and CCBG, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
ARTICLE 11.4 ENTIRE AGREEMENT . Except as otherwise
expressly provided herein, this Agreement (including the
documents and instruments referred to herein) constitutes the
entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or
oral (except, as to Section 8.6(b), for the Confidentiality
Agreement). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, other than
as provided in Sections 8.14 and 8.15.
ARTICLE 11.5 AMENDMENTS . To the extent permitted by Law,
this Agreement may be amended by a subsequent writing signed by
each of the Parties upon the approval of each of the Parties,
whether before or after shareholder approval of this Agreement
has been obtained; provided, that after any such approval by the
holders of FBWP Common Stock, there shall be made no amendment
that reduces or modifies in any material adverse respect the
consideration to be received by holders of FBWP Common Stock; and
further provided, that the provisions of this Agreement relating
to the manner or basis in which shares of FBWP Common Stock will
be exchanged for shares of CCBG Common Stock shall not be amended
after the Shareholders' Meeting in a manner adverse to the
holders of CCBG Common Stock without any requisite approval of
the holders of the issued and outstanding shares of CCBG Common
Stock entitled to vote thereon.
ARTICLE 11.6 WAIVERS .
(a) Prior to or at the Effective Time, CCBG, acting through
its Board of Directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in
the performance of any term of this Agreement by FBWP, to waive
or extend the time for the compliance or fulfillment by FBWP of
any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of CCBG
under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such
waiver shall be effective unless in writing signed by a duly
authorized officer of CCBG.
(b) Prior to or at the Effective Time, FBWP, acting through
its Board of Directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in
the performance of any term of this Agreement by CCBG, to waive
or extend the time for the compliance or fulfillment by CCBG of
any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of FBWP
under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such
waiver shall be effective unless in writing signed by a duly
authorized officer of FBWP.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner
affect the right of such Party at a later time to enforce the
same or any other provision of this Agreement. No waiver of any
condition or of the breach of any term contained in this
Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or
breach or a waiver of any other condition or of the breach of any
other term of this Agreement.
ARTICLE 11.7 ASSIGNMENT . Except as expressly
contemplated hereby, neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to
the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the Parties and
their respective successors and assigns.
ARTICLE 11.8 NOTICES . All notices or other
communications which are required or permitted hereunder shall be
in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid,
or by courier or overnight carrier, to the persons at the
addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered
as of the date so delivered:
FBWP: First Bankshares of West Point,Inc.
3rd Avenue and West 10th Street
West Point, Georgia 31833
Telecopy Number: (706) 645-6245
Attention: Scott A. Huguley
Copy to Counsel: Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E., Sixteenth Floor
Atlanta, Georgia 30303
Telecopy Number: (404) 572-6999
Attention: Walter G. Moeling IV,Esq.
CCBG: Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 33301
Telecopy Number: (850) 878-9150
Attention: J. Kimbrough Davis
Copy to Counsel: Gunster, Yoakley & Stewart, P.A.
777 South Flagler Drive, Suite 500 East
West Palm Beach, Florida 33401-6194
Telecopy Number: (561) 655-5677
Attention: Michael V. Mitrione, Esq.
ARTICLE 11.9 GOVERNING LAW . This Agreement shall be
governed by and construed in accordance with the Laws of the
State of Florida, without regard to any applicable conflicts of
Laws.
ARTICLE 11.10 COUNTERPARTS . This Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one and the same instrument.
ARTICLE 11.11 CAPTIONS; ARTICLES AND SECTIONS . The
captions contained in this Agreement are for reference purposes
only and are not part of this Agreement. Unless otherwise
indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of
this Agreement.
ARTICLE 11.12 INTERPRETATIONS . Neither this Agreement nor
any uncertainty or ambiguity herein shall be construed or
resolved against any party, whether under any rule of
construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that
this Agreement has been reviewed, negotiated, and accepted by all
parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all
parties hereto.
ARTICLE 11.13 ENFORCEMENT OF AGREEMENT . The Parties
hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed
in accordance with its specific terms or were otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction,
this being in addition to any other remedy to which they are
entitled at law or in equity.
ARTICLE 11.14 SEVERABILITY . Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf by its duly authorized
officers as of the day and year first above written.
CAPITAL CITY BANK GROUP, INC.
By: /s/ William G. Smith, Jr.
William G. Smith, Jr.
President and CEO
FIRST BANKSHARES OF WEST POINT, INC.
By: /s/ Scott A. Huguley
Name: Scott A. Huguley
Its: Chairman
WPB/WP/513425.11
LIST OF EXHIBITS
Exhibit
Number Description
1. Bank Plan of Merger. (Section 1.4).
2. Form of agreement of affiliates of FBWP. (Sections 8.13 and 9.2(g)).
3. Form of Stock Option Agreement. (Section 8.17).
4. Matters as to which Powell, Goldstein, Frazer & Murphy LLP will
opine. (Section 9.2(d)).
5. Form of Director's Agreement. (Sections 8.18 and 9.2(g)).
6. Claims Letter. (Section 9.2(h)).
7. Matters as to which Gunster, Yoakley & Stewart, P.A. will opine.
(Section 9.3(d)).
WPB/WP/513425.11
Appendix B - BANK PLAN OF MERGER
PLAN OF MERGER
AND MERGER AGREEMENT
Pursuant to the provisions of Section 658.42 of the Florida
Statutes, the undersigned banks do hereby adopt and enter into this
Plan of Merger and Merger Agreement (this "Agreement") for the purpose
of merging (the "Merger") First National Bank of West Point, a national
bank ("First National"), with and into Capital City Bank, a Florida
chartered commercial bank ("Capital City Bank"):
(a) The name of each constituent bank and the specific location
of its main office are as follows:
1. Capital City Bank
217 North Monroe Street
Tallahassee, Florida 32301
The specific location of each of its branch offices is
set forth on Schedule 1.1 attached hereto.
2. First National Bank of West Point
3rd Avenue and West 10 Street
West Point, Georgia 31833
The specific location of each of its branch offices is
set forth on Schedule 1.2 attached hereto.
(b) With respect to the resulting state bank:
1. The name and the specific location of the proposed main
office are:
Capital City Bank
217 North Monroe Street
Tallahassee, Florida 32301
The name of each of its branch offices will be Capital
City Bank. The specific location of each of its branch
offices is set forth on Schedules 1.1 and 1.2 attached
hereto.
2. The name and address of each director who is to serve
until the next meeting of the shareholders at which
directors are elected are set forth on Schedule 2.1
attached hereto.
3. The name and address of each executive officer are set
forth on Schedule 2.2 attached hereto.
4. The resulting bank will have a single class of common
stock, par value $_____ per share ("CCB Common Stock"),
consisting of __________ authorized shares, of which
____________ will be outstanding. The amount of the
surplus fund will be $____________ and the amount of
retained earnings will be $___________.
5. The resulting bank shall have trust powers.
6. The complete articles of incorporation under which the
resulting bank will operate are attached hereto as
Schedule 2.3.
(c) The terms for the exchange of shares of First National for
shares of Capital City Bank, are as follows:
1. At the Effective Time (as defined below), each issued
and outstanding share of the common stock of First
National, par value $1.00 per share ("First National
Common Stock"), shall, by virtue of the Merger and
without any action by the holder thereof, be converted
into _______ share of CCB Common Stock. At the
Effective Time, each issued and outstanding share of CCB
Common Stock shall remain issued and outstanding and
unaffected by the Merger. In the event that prior to
the Effective Time, CCB Common Stock shall be changed to
a different number of shares, or a different class of
shares by reason of any recapitalization or
reclassification, stock dividend, combination, stock
split or reverse stock split, an appropriate and
proportionate adjustment shall be made in the number of
shares of CCB Common Stock into which First National
Common Stock shall be converted.
2. The "Effective Time" shall mean 3:00 pm on the
date requested by Capital City Bank, as soon as
practicable after the delivery of this Agreement and
certified resolutions to the Florida Department of
Banking and Finance (the "Department").
(d) This Agreement is subject to approval by the Department and
by the shareholders of First National and Capital City Bank.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of ____________, 2000.
CAPITAL CITY BANK
By:
Name:
Title:
FIRST NATIONAL BANK OF WEST POINT
By:
Name:
Title:
WPB/WP/#528330 v5 - 11221.00012 Capital City-West Point - Form S-4
Appendix C - STOCK OPTION AGREEMENT
THE TRANSFER OF THE RIGHTS UNDER THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED HEREIN
AND TO RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Option Agreement"), is made as
of September 25, 2000, by and between CAPITAL CITY BANK GROUP, INC., a
Florida corporation ("CCBG"), and FIRST BANKSHARES OF WEST POINT, INC.,
a Georgia corporation ("FBWP").
W I T N E S S E T H:
WHEREAS, the Board of Directors of CCBG and the Board of Directors
of FBWP have approved an Agreement and Plan of Merger dated as of even
date herewith (the "Merger Agreement") providing, among other things,
for the merger of FBWP with and into CCBG; and
WHEREAS, as a condition and inducement to CCBG's entering into the
Merger Agreement, CCBG has required that FBWP agree, and FBWP has
agreed, to grant to CCBG the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises contained herein
and in the Merger Agreement, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein shall
have the same meanings as in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, FBWP hereby grants to CCBG an option (the "Option") to purchase
up to 38,304 fully paid and nonassessable, authorized and unissued
shares of FBWP's common stock ("FBWP Common Stock") at a price of
$80.42 per share (the "Purchase Price") payable in cash as provided in
Section 4 hereof; PROVIDED, HOWEVER, that in no event shall the number
of shares of FBWP Common Stock for which this Option is exercisable
exceed 19.9% of the number of shares of FBWP Common Stock issued and
outstanding immediately prior to the exercise of the Options. The
number of shares of FBWP Common Stock that may be received upon the
exercise of the Option and the Purchase Price are subject to adjustment
as herein set forth.
3. EXERCISE OF OPTION.
(a) CCBG may exercise the Option, in whole or in part, at any time and
from time to time, if, but only if, both an Extension Event (as
hereinafter defined) and a Purchase Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined), provided that CCBG shall have sent the
written notice of such exercise (as provided in subsection (e) of this
Section 3) within 90 days following such Purchase Event. Each of the
following shall be an "Exercise Termination Event": (i) the Effective
Time of the Merger; (ii) termination of the Merger Agreement in
accordance with the provisions thereof, except a termination by CCBG
pursuant to Section 10.1(g) of the Merger Agreement (unless the breach
by FBWP giving rise to such right of termination is non-volitional); or
(iii) the passage of 12 months after termination of the Merger
Agreement if such termination follows the occurrence of an Extension
Event or is a termination by CCBG pursuant to Section 10.1(g) of the
Merger Agreement (unless the breach by FBWP giving rise to such right
of termination is non-volitional). Notwithstanding the foregoing, if
the Option cannot be exercised because of any injunction, order or
similar restraint issued by a Governmental Entity of competent
jurisdiction, the Option shall expire on the 10th business day after
such injunction, order or restraint shall have been dissolved or when
such injunction, order or restraint shall have become permanent and no
longer subject to appeal, as the case may be. Any exercise of the
Option shall be subject to compliance with applicable law.
(b) As used herein, a "Purchase Event" shall mean any of the following
events:
(i) FBWP or any FBWP Subsidiary, without having received prior written
consent from CCBG, shall have entered into, authorized, recommended,
proposed or publicly announced its intention to enter into, authorize,
recommend, or propose, an agreement, arrangement or understanding with
any Person (other than CCBG or any CCBG Subsidiary) to (A) effect a
merger or consolidation or similar transaction involving FBWP or any
FBWP Subsidiary (other than mergers, reorganizing actions,
consolidations or dissolutions involving only existing FBWP
Subsidiaries), (B) purchase, lease or otherwise acquire all or a
substantial portion of the assets of FBWP or any FBWP Subsidiary or (C)
purchase or otherwise acquire (including by way of merger,
consolidation, share exchange or similar transaction) beneficial
ownership of securities representing 20% or more of the voting power of
FBWP or any FBWP Subsidiary (any such transaction in clause (A), (B) or
(C) hereof, an "Acquisition Transaction"); PROVIDED, HOWEVER, that in
no event shall any of the following be deemed to be an Acquisition
Transaction: (i) any merger, consolidation, purchase or similar
transaction involving only FBWP and one or more of its Subsidiaries, or
involving only any two or more of such Subsidiaries, or (ii) any
merger, consolidation or similar transaction as to which the holders of
FBWP Common Stock immediately prior thereto own in the aggregate at
least 60% of the common stock of the surviving corporation or its
parent corporation immediately following consummation thereof, in
either case provided that any such transaction is not entered into in
violation of the terms of the Merger Agreement; or
(ii) any Person (other than CCBG or any CCBG Subsidiary or any Person
acting in concert with CCBG, or FBWP or any FBWP Subsidiary acting in a
fiduciary capacity) shall have acquired Beneficial Ownership of 20% or
more of the voting power of FBWP or any FBWP Subsidiary.
(c) As used herein, the term "Extension Event" shall mean any of the
following events:
(i) a Purchase Event of the type specified in clauses (b)(i) and (b)(ii)
above;
(ii) any Person (other than CCBG or any CCBG Subsidiary) shall have
"commenced" (as such term is used in Rule 14d-2 under the 1934 Act), or
shall have filed a registration statement under the Securities Act with
respect to, a tender offer or exchange offer to purchase shares of FBWP
Common Stock such that, upon consummation of such offer, such Person
would have Beneficial Ownership (as defined below) or the right to
acquire Beneficial Ownership of 20% or more of the voting power of FBWP
or any FBWP Subsidiary;
(iii) any Person (other than CCBG or any CCBG Subsidiary; or FBWP
or any FBWP Subsidiary in a fiduciary capacity) shall have publicly
announced its willingness, or shall have publicly announced a bona fide
proposal, or publicly disclosed an intention to make a bona fide
proposal, (x) to make an offer described in clause (ii) above or (y) to
engage in an Acquisition Transaction; or
(iv) FBWP's Board of Directors shall have withdrawn, modified or
changed in a manner adverse to CCBG the recommendation of FBWP's Board
of Directors with respect to the Mergers, the Merger Agreement or the
transactions contemplated thereby.
(d) As used herein, the terms "Beneficial Ownership," "Beneficially
Own" and "Beneficial Owner" shall have the meanings ascribed to them in
Rule 13d-3 under the 1934 Act.
(e) In the event that CCBG wishes to exercise the Option, it shall
deliver to FBWP a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of
shares it intends to purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60
calendar days following the Notice Date for the closing of such
purchase (each a "Closing Date").
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At each closing referred to in Section 3 hereof, CCBG shall (i)
pay to FBWP the aggregate Purchase Price for the shares of FBWP Common
Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by FBWP
and (ii) present and surrender this Agreement to FBWP at its principal
executive offices.
(b) At each closing, simultaneously with the delivery of cash as
provided in Section 4(a), FBWP shall deliver to CCBG a certificate or
certificates representing the number of shares of FBWP Common Stock
purchased by CCBG, registered in the name of CCBG or a nominee
designated in writing by CCBG and, if the Option should be exercised in
part only, a new Option evidencing the rights of the holder thereof to
purchase the balance of the shares purchasable hereunder, and CCBG
shall deliver to FBWP a letter agreeing that CCBG shall not offer to
sell, pledge or otherwise dispose of any shares of FBWP Common Stock
acquired under this Option Agreement in violation of applicable law or
the provisions of this Option Agreement.
(c) If at the time of issuance of any FBWP Common Stock pursuant to
any exercise of the Option, FBWP shall have issued any share purchase
or other rights or similar securities to holders of FBWP Common Stock
generally, then each such share of FBWP Common Stock shall also
represent such rights or securities with terms substantially the same
as and at least as favorable to CCBG as those issued to other holders
of FBWP Common Stock.
(d) Certificates for FBWP Common Stock delivered at any closing
hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
_____________________, a copy of which is on file
at the principal office of
_________________________, and to resale
restrictions arising under the Securities Act of
1933 and any applicable state securities laws. A
copy of such agreement will be provided to the
holder hereof without charge upon receipt by
__________________ of a written request therefor.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if CCBG shall
have delivered to FBWP an opinion of counsel, in form and substance
reasonably satisfactory to FBWP and its counsel, to the effect that
such legend is not required for purposes of the 1933 Act and any
applicable state securities laws.
5. AUTHORIZATION, ETC.
(a) FBWP hereby represents and warrants to CCBG that:
(i) FBWP has full corporate authority to execute and deliver this
Option Agreement and, subject to Section 11(i), to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been authorized by
the Board of Directors of FBWP, and no other corporate proceedings are
necessary therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered; and
(iv) FBWP has taken all necessary corporate action to authorize and
reserve and, subject to Section 11(i), permit it to issue and, at all
times from the date hereof through the date of the exercise in full or
the expiration or termination of the Option, shall have reserved for
issuance upon exercise of the Option, that number of shares of FBWP
Common Stock equal to the maximum number of shares of FBWP Common Stock
at any time and from time to time issuable hereunder, all of which,
upon issuance pursuant hereto, shall be duly authorized, validly
issued, fully paid and nonassessable, and shall be delivered free and
clear of all claims, liens, encumbrances, restrictions (other than
federal and state securities restrictions and other than as set forth
in FBWP's Articles of Incorporation) and security interests and not
subject to any preemptive rights.
(b) CCBG hereby represents and warrants to FBWP that:
(i) CCBG has full corporate authority to execute and deliver this
Option Agreement and, subject to Section 11(i), to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been authorized by
all requisite corporate action by CCBG and no other corporate
proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered; and
(iv) any FBWP Common Stock or other securities acquired by CCBG upon
exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed
of except in compliance with the 1933 Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any
change in FBWP Common Stock by reason of stock dividends, split-ups,
recapitalizations or the like, the type and number of shares subject to
the Option, and the Purchase Price per share, as the case may be, shall
be adjusted appropriately. In the event that any additional shares of
FBWP Common Stock are issued or delivered from Treasury after the date
of this Option Agreement (other than pursuant to an event described in
the preceding sentence or pursuant to this Option Agreement), the
number of shares of FBWP Common Stock subject to the Option shall be
adjusted so that, after such issuance, it equals at least 19.9% of the
number of shares of FBWP Common Stock then issued and outstanding
(without considering any shares subject to or issued pursuant to the
Option).
7. REPURCHASE.
(a) Subject to Section 11(i), at the request of CCBG given prior to an
Exercise Termination Event, at any time commencing upon the occurrence
of a Repurchase Event (as defined below), FBWP (or any successor entity
thereof) shall repurchase the Option from CCBG together with all (but
not less than all, subject to Section 10) shares of FBWP Common Stock
purchased by CCBG pursuant thereto with respect to which CCBG then has
Beneficial Ownership, at a price (on a per share basis, the "Per Share
Repurchase Price") equal to the sum of:
(i) The aggregate Purchase Price paid by CCBG for any shares of FBWP
Common Stock acquired pursuant to the Option;
(ii) The difference between (A) the "Market/Tender Offer Price" for
shares of FBWP Common Stock (defined as the highest price per share at
which a tender or exchange offer has been made for shares of FBWP
Common Stock) and (B) the Purchase Price as determined pursuant to
Section 2 hereof (subject to adjustment as provided in Section 6),
multiplied by the number of shares of FBWP Common Stock with respect to
which the Option has not been exercised, but only if the Market/Tender
Offer Price is greater than such Purchase Price; and
(iii) The difference between the Market/Tender Offer Price and the
Purchase Price paid by CCBG for any shares of FBWP Common Stock
purchased pursuant to the exercise of the Option, multiplied by the
number of shares so purchased, but only if the Market/Tender Offer
Price is greater than such Purchase Price.
(b) In the event CCBG exercises its rights under this Section 7, FBWP
shall, within 10 business days thereafter, pay the required amount to
CCBG by wire transfer of immediately available funds to an account
designated by CCBG and CCBG shall surrender to FBWP the Option and the
certificates evidencing the shares of FBWP Common Stock purchased
thereunder with respect to which CCBG then has Beneficial Ownership,
and CCBG shall warrant that it has sole record ownership and Beneficial
Ownership of such shares and that the same are free and clear of all
liens, claims, charges, restrictions and encumbrances of any kind
whatsoever.
(c) In determining the Market/Tender Offer Price, the value of any
consideration other than cash shall be determined by an independent
nationally recognized investment banking firm selected by CCBG and
reasonably acceptable to FBWP.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed
to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving FBWP or any purchase, lease or other
acquisition of all or a substantial portion of the assets of FBWP,
other than any such transaction which would not constitute an
Acquisition Transaction pursuant to the provisos to Section 3(b)(i)
hereof or (ii) upon the acquisition by any person of beneficial
ownership of 50% or more of the then outstanding shares of FBWP Common
Stock, provided that no such event shall constitute a Repurchase Event
unless an Extension Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that FBWP's obligations to
repurchase the Option or Option Shares under this Section 7 shall not
terminate upon the occurrence of an Exercise Termination Event unless
no Extension Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
8. REPURCHASE AT OPTION OF FBWP AND RIGHT OF FIRST REFUSAL.
(a) Except to the extent that CCBG shall have previously exercised its
rights under Section 7, at the request of FBWP during the six-month
period commencing upon the first occurrence of an Exercise Termination
Event, FBWP may repurchase from CCBG and CCBG shall sell to FBWP all
(but not less than all, subject to Section 10) of FBWP Common Stock
acquired by CCBG pursuant hereto and with respect to which CCBG has
Beneficial Ownership at the time of such repurchase at a price per
share equal to the greater of (i) 110% of the Market/Tender Offer
Price, (ii) the Per Share Repurchase Price or (iii) the quotient
obtained by dividing (x) the sum of (A) the aggregate Purchase Price
paid for the shares so repurchased plus (B) interest on the aggregate
Purchase Price paid for the shares so repurchased from the date of
purchase to the date of repurchase at the highest rate of interest
announced by CCBG as its prime or base lending or reference rate during
such period, less any dividends received on the shares so repurchased,
plus (C) CCBG's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by the Merger Agreement,
including, without limitation, legal, accounting and investment banking
fees by (y) the number of shares so repurchased. Any repurchase under
this Section 8(a) shall be consummated in accordance with Section 7(b).
(b) If at any time after the occurrence of a Purchase Event and prior
to the expiration of the Option CCBG shall desire to sell, assign,
transfer or otherwise dispose of the Option or all or any of the shares
of FBWP Common Stock acquired by it pursuant to the Option, it shall
give FBWP written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, and setting forth the
terms of the proposed transaction. An Offeror's Notice shall be deemed
an offer by CCBG to FBWP, which may be accepted within 10 business days
of the receipt of such Offeror's Notice, on the same terms and
conditions and at the same price at which CCBG is proposing to transfer
the Option or such shares to a third party. The purchase of the Option
or any such shares by FBWP shall be closed within 10 business days of
the date of the acceptance of the offer and the purchase price shall be
paid to CCBG by wire transfer of immediately available funds to an
account designated by CCBG. In the event of the failure or refusal of
FBWP to purchase the Option or all the shares covered by the Offeror's
Notice or if any Governmental Entity disapproves FBWP's proposed
purchase of the Option or such shares, CCBG may, within 60 days from
the date of the Offeror's Notice, sell all, but not less than all, of
the Option or such shares to such third party at no less than the price
specified and on terms no more favorable to the purchaser than those
set forth in the Offeror's Notice. The requirements of this Section
8(b) shall not apply to (A) any disposition as a result of which the
proposed transferee would Beneficially Own not more than 2% of the
voting power of FBWP, (B) any disposition of FBWP Common Stock by a
Person to whom CCBG has sold shares of FBWP Common Stock issued upon
exercise of the Option or (C) any sale by means of a public offering
registered under the 1933 Act.
9. REGISTRATION RIGHTS. If FBWP shall at any time determine to
proceed with the actual preparation and filing of a registration
statement under the 1933 Act in connection with the proposed offer and
sale for cash of any of its securities by it or any of its security
holders, FBWP will give written notice of its determination to CCBG and
any permitted assignee of CCBG. Subsequent to the date such notice is
required to be delivered and upon the occurrence of a Purchase Event
that occurs prior to an Exercise Termination Event, FBWP shall, if
requested by any holder or Beneficial Owner of shares of FBWP Common
Stock issued upon exercise of the Option (except any Beneficial Owner
or holder who acquired all of such Beneficial Owner's or holder's
shares in a transaction exempt from the requirements of Section 8(b) by
reason of clause (A) thereof) (each a "Holder"), delivered within six
months of such Purchase Event, as expeditiously as possible file a
registration statement on a form for general use under the 1933 Act if
necessary in order to permit the sale or other disposition of the
shares of FBWP Common Stock that have been acquired upon exercise of
the Option in accordance with the intended method of sale or other
disposition requested by any such Holder (it being understood and
agreed that any such sale or other disposition shall be effected on a
widely distributed basis so that, upon consummation thereof, no
purchaser or transferee shall Beneficially Own more than 2% of the
shares of FBWP Common Stock then outstanding). Each such Holder shall
provide all information reasonably requested by FBWP for inclusion in
any registration statement to be filed hereunder. FBWP shall use its
best efforts to cause such registration statement first to become
effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. The registration effected under this Section 9 shall be
at FBWP's expense except for underwriting commissions and the fees and
disbursements of such Holders' counsel attributable to the registration
of such FBWP Common Stock. In no event shall FBWP be required to
effect more than two registrations hereunder. The filing of the
registration statement hereunder may be delayed for such period of time
as may reasonably be required to facilitate any public distribution by
FBWP of FBWP Common Stock or if a special audit of FBWP would otherwise
be required in connection therewith. The foregoing notwithstanding, if
at the time of any request by any Holder for registration of Option
Shares as provided above FBWP is in registration with respect to an
underwritten public offering by FBWP of shares of Common Stock, and if
in the good faith judgment of the managing underwriter or managing
underwriters or, if none, the sole underwriter or underwriters, of such
offering the offer and sale of the Option Shares would interfere with
the successful marketing of the shares of Common Stock offered by FBWP,
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; PROVIDED, HOWEVER, that
after any such required reduction the number of Option Shares to be
included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the
Holder and FBWP in the aggregate; and PROVIDED FURTHER, HOWEVER, that
if such reduction occurs, then FBWP shall file a registration statement
for the balance as promptly as practicable thereafter as to which no
reduction pursuant to this Section 9 shall be permitted or occur and
the Holder shall thereafter be entitled to one additional registration
and the six-month period referred to in the first sentence of this
Section 9 shall be increased to 12 months. If requested by any such
Holder in connection with such registration, FBWP shall become a party
to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in
such underwriting agreements for parties similarly situated. Upon
receiving any request for registration under this Section 9 from any
Holder, FBWP agrees to send a copy thereof to any other Person known to
FBWP to be entitled to registration rights under this Section 9, in
each case by promptly mailing the same, postage prepaid, to the address
of record of the Persons entitled to receive such copies, and each such
other Person, whether or not known by FBWP to be entitled thereto,
shall be permitted to include shares of FBWP Common Stock with respect
to which such Person is entitled to such registration rights in such
registration requested by such Holder, to the extent reasonably
practicable.
10. SEVERABILITY. Any term, provision, covenant or restriction
contained in this Option Agreement held by a Governmental Entity of
competent jurisdiction to be invalid, void or unenforceable, shall be
ineffective to the extent of such invalidity, voidness or
unenforceability, but neither the remaining terms, provisions,
covenants or restrictions contained in this Option Agreement nor the
validity or enforceability thereof in any other jurisdiction shall be
affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Option Agreement that is found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable. If for any reason such Governmental Entity determines
that applicable law will not permit CCBG or any other Person to
acquire, or FBWP to repurchase or purchase, the full number of shares
of FBWP Common Stock provided in Section 2 hereof (as adjusted pursuant
to Section 6 hereof), it is the express intention of the parties hereto
to allow CCBG or such other Person to acquire, or FBWP to repurchase or
purchase, such lesser number of shares as may be permissible, without
any amendment or modification hereof.
11. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto shall pay all costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel,
except as otherwise provided herein.
(b) ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Option Agreement and the Merger Agreement contain the entire
agreement between the parties with respect to the transactions
contemplated hereunder and supersede all prior arrangements or
understandings with respect thereto, written or oral.
(c) SUCCESSORS; NO THIRD-PARTY BENEFICIARIES. The terms and
conditions of this Option Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Option Agreement, expressed or
implied, is intended to confer upon any party, other than the parties
hereto, and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Option
Agreement, except as expressly provided herein.
(d) ASSIGNMENT. Other than as provided in Sections 8 and 9 hereof,
neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Option Agreement
or the Option created hereunder to any other Person (whether by
operation of law or otherwise), without the express written consent of
the other party.
(e) NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered
in accordance with Section 11.8 of the Merger Agreement (which is
incorporated herein by reference).
(f) COUNTERPARTS. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall
constitute but one agreement.
(g) SPECIFIC PERFORMANCE. The parties hereto agree that if for any
reason CCBG or FBWP shall have failed to perform its obligations under
this Option Agreement, then either party hereto seeking to enforce this
Option Agreement against such non-performing party shall be entitled to
specific performance and injunctive and other equitable relief, and the
parties hereto further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief. This provision is without
prejudice to any other rights that either party hereto may have against
the other party hereto for any failure to perform its obligations under
this Option Agreement.
(h) GOVERNING LAW. This Agreement and all transactions contemplated
by this Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Florida without
regard to principles of conflicts of laws.
(i) REGULATORY APPROVALS; SECTION 16(B). If, in connection with (A)
the exercise of the Option under Section 3 or a sale by CCBG to a third
party under Section 8, (B) a repurchase by FBWP under Section 7 or a
repurchase or purchase by FBWP under Section 8, prior notification to
or approval of any Governmental Entity is required, then the required
notice or application for approval shall be promptly filed and
expeditiously processed and periods of time that otherwise would run
pursuant to such Sections shall run instead from the date on which any
such required notification period has expired or been terminated or
such approval has been obtained, and in either event, any requisite
waiting period shall have passed. In the case of clause (A) of this
subsection (i), such filing shall be made by CCBG and in the case of
clause (B) of this subsection (i), such filing shall be made by FBWP
provided that each of CCBG and FBWP shall use its best efforts to make
all filings with, and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the
transactions contemplated hereby. Periods of time that otherwise would
run pursuant to Sections 3, 7 or 8 shall also be extended to the extent
necessary to avoid liability, if any, under Section 16(b) of the 1934
Act.
(j) NO BREACH OF MERGER AGREEMENT. Nothing contained in this Option
Agreement shall, and performance by any party hereto of any of its
obligations under this Option Agreement in accordance with their terms
shall not, constitute a breach of any of the provisions of the Merger
Agreement.
(k) WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of
such provision, but only by delivery of a written instrument executed
by such party. This Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Option Agreement as of the date first written above.
CAPITAL CITY BANK GROUP, INC.
By: /s/ William G. Smith, Jr.
William G. Smith, Jr.
Chief Executive Officer
FIRST BANKSHARES OF WEST POINT, INC.
By: /s/ Scott A. Huguley
Scott A. Huguley
Chairman
WPB/WP/#528330 v5 - 11221.00012 Capital City-West Point - Form S-4
Appendix D - DISSENTERS' RIGHTS
EXCERPTS FROM THE GEORGIA BUSINESS CORPORATION CODE
RELATING TO DISSENTING SHAREHOLDERS
TITLE 14, CHAPTER 2, ARTICLE 13
DISSENTERS' RIGHTS
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. DEFINITIONS.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who
is a beneficial owner of shares held in a voting trust
or by a nominee as the record shareholder.
(2) "Corporate action" means the transaction or
other action by the corporation that creates dissenters'
rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held
by a dissenter before the corporate action, or the
surviving or acquiring corporation by merger or share
exchange of that issuer.
(4) "Dissenter" means a shareholder who is
entitled to dissent from corporate action under Code
Section 14-2-1302 and who exercises that right when and
in the manner required by Code Sections 14-2-1320
through 14-2-1327.
(5) "Fair value," with respect to a dissenter's
shares, means the value of the shares immediately before
the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action.
(6) "Interest" means interest from the effective
date of the corporate action until the date of payment,
at a rate that is fair and equitable under all the
circumstances.
(7) "Record shareholder" means the person in whose
name shares are registered in the records of a
corporation or the beneficial owner of shares to the
extent of the rights granted by a nominee certificate on
file with a corporation.
(8) "Shareholder" means the record shareholder or
the beneficial shareholder.
14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation is entitled to
dissent from, and obtain payment of the fair value of his shares in the
event off any of the following corporate actions:
(1) Consummation of a plan of merger to which the
corporation is a party:
(A) If approval of the shareholders of
the corporation is required for the merger by Code
Section 14-2-1103 or the articles of incorporation
and the shareholder is entitled to vote on the
merger; or
(B) If the corporation is a subsidiary
that is merged with its parent under Code Section
14-2-1104;
(2) Consummation of a plan of share exchange to
which the corporation is a party as the corporation
whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or
substantially all of the property of the corporation if
a shareholder vote is required on the sale or exchange
pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order or a sale for cash pursuant
to a plan by which all or substantially all of the net
proceeds of the sale will be distributed to the
shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation
that materially and adversely affects rights in respect
of a dissenter's shares because it:
(A) Alters or abolishes a preferential
right of the shares;
(B) Creates, alters, or abolishes a
right in respect of redemption, including a
provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive
right of the holder of the shares to acquire shares
or other securities;
(D) Excludes or limits the right of the
shares to vote on any matter, or to cumulate votes,
other than a limitation by dilution through
issuance of shares or other securities with similar
voting rights;
(E) Reduces the number of shares owned
by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for
cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases
all or part of the shares of the class; or
(5) Any corporate action taken pursuant to a
shareholder vote to the extent that Article 9 of this
chapter, the articles of incorporation, bylaws, or a
resolution of the board of directors provides that
voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his
shares under this article may not challenge the corporate action
creating his entitlement unless the corporate action fails to comply
with procedural requirements of this chapter or the articles of
incorporation or bylaws of the corporation or the vote required to
obtain approval of the corporate action was obtained by fraudulent and
deceptive means, regardless of whether the shareholder has exercised
dissenter's rights.
(c) Notwithstanding any other provision of this article, there
shall be no right of dissent in favor of the holder of shares of any
class or series which, at the record date fixed to determine the
shareholders entitled to receive notice of and to vote at a meeting at
which a plan of merger or share exchange or a sale or exchange of
property or an amendment of the articles of incorporation is to be
acted on, were either listed on a national securities exchange or held
of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share
exchange, the holders of shares of the class or series
are required under the plan of merger or share exchange
to accept for their shares anything except shares of the
surviving corporation or another publicly held
corporation which at the effective date of the merger or
share exchange are either listed on a national
securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu
of fractional shares; or
(2) The articles of incorporation or a resolution
of the board of directors approving the transaction
provides otherwise.
714-2-1303. 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
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 will notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the
dissenters' notice described in Code Section 14-2-1322 no later than
ten days after the corporate action was taken.
14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights
under Code Section 14-2-1302 is submitted to a vote at a shareholders'
meeting, a record shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the
vote is taken written notice of his intent to demand
payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the
proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his
shares under this article.
14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights
under Code Section 14-2-1302 is authorized at a shareholders' meeting,
the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days
after the corporate action was taken and must:
(1) State where the payment demand must be sent
and where and when certificates for certificated shares
must be deposited;
(2) Inform holders of uncertificated shares to
what extent transfer of the shares will be restricted
after the payment demand is received;
(3) Set a date by which the corporation must
receive the payment demand, which date may not be fewer
than 30 nor more than 60 days after the date the notice
required in subsection (a) of this Code section is
delivered; and
(4) Be accompanied by a copy of this article.
14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in
Code Section 14-2-1322 must demand payment and deposit his certificates
in accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his
shares under subsection (a) of this Code section retains all other
rights of a shareholder until these rights are canceled or modified by
the taking of the proposed corporate action.
(c) A record shareholder who does not demand payment or deposit
his share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for his shares under
this article.
14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated
shares from the date the demand for their payment is received until the
proposed corporate action is taken or the restrictions released under
Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until
these rights are canceled or modified by the taking of the proposed
corporate action.
14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days
of the later of the date the proposed corporate action is taken or
receipt of a payment demand, the corporation shall by notice to each
dissenter who complied with Code Section 14-2-1323 offer to pay to such
dissenter the amount the corporation estimates to be the fair value of
his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end
of a fiscal year ending not more than 16 months before
the date of payment, an income statement for that year,
a statement of changes in shareholders' equity for that
year, and the latest available interim financial
statements, if any;
(2) A statement of the corporation's estimate of
the fair value of the shares;
(3) An explanation of how the interest was
calculated;
(4) A statement of the dissenter's right to demand
payment under Code Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written
notice to the corporation within 30 days after the corporation's offer
or is deemed to have accepted such offer by failure to respond within
said 30 days, payment for his or her shares shall be made within 60
days after the making of the offer or the taking of the proposed
corporate action, whichever is later.
14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within
60 days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates
and release the transfer restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action, it
must send a new dissenters' notice under Code Section 14-2-1322 and
repeat the payment demand procedure.
14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due,
and demand payment of his estimate of the fair value of his shares and
interest due, if:
(1) The dissenter believes that the amount offered
under Code Section 14-2-1325 is less than the fair value
of his shares or that the interest due is incorrectly
calculated; or
(2) The corporation, having failed to take the
proposed action, does not return the deposited
certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after
the date set for demanding payment.
(b) A dissenter waives his or her right to demand payment under
this Code section and is deemed to have accepted the corporation's
offer unless he or she notifies the corporation of his or her demand in
writing under subsection (a) of this Code section within 30 days after
the corporation offered payment for his or her shares, as provided in
Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set
forth in subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information
required under subsection (b) of Code Section 14-2-1325,
and the corporation shall provide the information to the
shareholder within ten days after receipt of a written
demand for the information; and
(2) The shareholder may at any time, subject to
the limitations period of Code Section 14-2-1332, notify
the corporation of his own estimate of the fair value of
his shares and the amount of interest due and demand
payment of his estimate of the fair value of his shares
and interest due.
PART 3
JUDICIAL APPRAISAL OF SHARES
14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains
unsettled, the corporation shall commence a proceeding within 60 days
after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the 60 day period, it shall pay
each dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall be
a nonjury equitable valuation proceeding, in the superior court of the
county where a corporation's registered office is located. If the
surviving corporation is a foreign corporation without a registered
office in this state, it shall commence the proceeding in the county in
this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation
was located.
(c) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unsettled parties to the
proceeding, which shall have the effect of an action quasi in rem
against their shares. The corporation shall serve a copy of the
petition in the proceeding upon each dissenting shareholder who is a
resident of this state in the manner provided by law for the service of
a summons and complaint, and upon each nonresident dissenting
shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is
commenced under subsection (b) of this Code section is plenary and
exclusive. The court may appoint one or more persons as appraisers to
receive evidence and recommend decision on the question of fair value.
The appraisers have the powers described in the order appointing them
or in any amendment to it. Except as otherwise provided in this
chapter, Chapter 11 of Title 9, known as the "Georgia Civil Practice
Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount which the court finds to be the fair value of
his shares, plus interest to the date of judgment.
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code
Section 14-2-1330 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court, but not including fees and expenses of
attorneys and experts for the respective parties. The court shall
assess the costs against the corporation, except that the court may
assess the costs against all or some of the dissenters, in amounts the
court finds equitable, to the extent the court finds the dissenters
acted arbitrarily, vexatiously, or not in good faith in demanding
payment under Code Section 14-2-1327.
(b) The court may also assess the fees and expenses of attorneys
and experts for the respective parties, in amounts the court finds
equitable:
(1) Against the corporation and in favor of any or
all dissenters if the court finds the corporation did
not substantially comply with the requirements of Code
Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter,
in favor of any other party, if the court finds that the
party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed
against the corporation, the court may award to these attorneys
reasonable fees to be paid out of the amounts awarded the dissenters
who were benefited.
14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be
brought more than three years after the corporate action was taken,
regardless of whether notice of the corporate action and of the right
to dissent was given by the corporation in compliance with the
provisions of Code Section 14-2-1320 and Code Section 14-2-1322.
Appendix E - FAIRNESS OPINION OF
BROWN, BURKE CAPITAL PARTNERS, INC.
(LETTERHEAD OF BROWN, BURKE CAPITAL PARTNERS, INC.)
January 4, 2001
Board of Directors
First Bankshares of West Point, Inc.
410 West 10th Street
West Point, GA 31833-0350
Dear Members of the Board:
You have asked us to advise you with respect to the fairness to the
shareowners of First Bankshares of West Point, Inc. (the "Company"),
from a financial point of view, of the per share purchase price and
terms (the "Per Share Purchase Price and Terms") provided for in the
Agreement and Plan of Merger (the "Merger Agreement") dated September
25, 2000 between the Company and Capital City Bank Group, Inc.
("Capital City"). The Merger Agreement provides for a merger (the
"Merger") of the Company and Capital City pursuant to which the common
shareowners of the Company will receive 3.6419 shares of Capital City
common stock and $17.7543 in cash for each share of the Company's
common stock.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to Capital City and the
Company. We have also reviewed certain other information, including
financial forecasts and budgets, provided to us by Capital City and the
Company, and have discussed with the Company's management the business
and prospects of the Company.
We have also considered certain financial and stock market data of
Capital City and the Company and we have compared that data with
similar data for other publicly held bank holding companies and we have
considered the financial terms of certain other comparable transactions
which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and
financial, economic and market criteria which we deemed relevant. In
connection with our review, we have not independently verified any of
the foregoing information and have relied on its being complete and
accurate in all material respects. With respect to the financial
forecasts and budgets, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of Capital City's and the Company's managements as to the
future financial performance of Capital City and the Company. In
addition, we have not made an independent evaluation or appraisal of
the assets of Capital City or the Company and we have assumed that the
aggregate allowances for loan losses for Capital City and the Company
are adequate to cover such losses.
It should be noted that this opinion is based on market conditions and
other circumstances existing on the date hereof and this opinion does
not represent our view as to what the value of the Capital City common
stock necessarily will be when the Capital City common stock is issued
to the shareowners of the Company upon consummation of the Merger.
We have acted as financial advisor to the Company in connection with
the Merger and will receive a fee for our services, a significant
portion of which is contingent upon the consummation of the Merger.
We agree to the inclusion of this opinion letter in the Proxy
Statement/Prospectus relating to the Merger. The opinion may not,
however, be summarized, excerpted from or otherwise publicly referred
to without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that as of
the date hereof, the Per Share Purchase Price and Terms of the Merger
are fair to the common shareowners of the Company from a financial
point of view.
Very truly yours,
/s/ Brown, Burke Capital Partners, Inc.
BROWN, BURKE CAPITAL PARTNERS, INC.
Appendix F - CAPITAL CITY 1999 FORM 10-K
Form 10-K
Securities and Exchange Commission
Washington, D.C. 20549
Annual Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act
Of 1934
For the Fiscal Year Ended December 31, 1999
Commission File Number 0-13358
CAPITAL CITY BANK GROUP, INC.
Incorporated in the State of Florida
I.R.S. Employer Identification Number 59-2273542
Address: 217 North Monroe Street, Tallahassee, Florida 32301
Telephone: (850) 671-0610
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock - $.01 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 1, 2000, there were issued and outstanding 10,197,712
shares of the registrant's common stock. The registrant's voting
stock is listed on the National Association of Securities Dealers
Automated Quotation ("Nasdaq") National Market under the symbol
"CCBG." The aggregate market value of the voting stock held by
nonaffiliates of the registrant, based on the average of the bid
and asked prices of the registrant's common stock as quoted on
Nasdaq on March 1, 2000, was $91.3 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement (pursuant
to Regulation 14A), to be filed not more than 120 days after the
end of the fiscal year covered by this report, are incorporated
by reference into Part III.
CAPITAL CITY BANK GROUP, INC.
ANNUAL REPORT FOR 1999 ON FORM 10-K
TABLE OF CONTENTS
PART I PAGE
Item 1. Business 3
Item 2. Properties 16
Item 3. Legal Proceedings 16
Item 4. Submission of Matters to a Vote of Security Holders 16
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareowner Matters 16
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
Item 7A. Quantitative and Qualitative Disclosure About Market Risk 44
Item 8. Financial Statements and Supplementary Data 46
Item 9. Changes in and Disagreement with Accountants on
Accounting and Financial Disclosure 72
PART III
Item 10. Directors and Executive Officers of the Registrant 72
Item 11. Executive Compensation 72
Item 12. Security Ownership of Certain Beneficial Owners and
Management 72
Item 13. Certain Relationships and Related Transactions 72
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 72
PART I
Item 1. Business
General
Capital City Bank Group, Inc. ("CCBG" or "Company"), is a bank
holding company registered under the Bank Holding Company Act of
1956, as amended. At December 31, 1999, the Company had
consolidated total assets of $1.4 billion and shareowners' equity
of $132.2 million. Its principal asset is the capital stock of
Capital City Bank ("CCB") and First National Bank of Grady County
("FNBGC") (collectively the "Banks"). CCB accounted for approximately
92% of the consolidated assets at December 31, 1999 and approximately
93% of consolidated net income of the Company for the year ended
December 31, 1999. In addition to its banking subsidiaries, the
Company has five other indirect subsidiaries, Capital City Trust
Company, Capital City Securities, Inc., Capital City Mortgage
Company (inactive) and Capital City Services Company, all of
which are wholly-owned subsidiaries of Capital City Bank, and
First Insurance Agency of Grady County, which is a wholly-owned
subsidiary of First National Bank of Grady County.
On May 7, 1999, the Company completed its acquisition of Grady
Holding Company and its subsidiary First National Bank of Grady County.
FNBGC is a $114 million asset institution with offices
in Cairo and Whigham, Georgia. The Company issued 21.50 shares for
each if the 60,910 shares of FNBGC. The consolidated financial
statements of the Company give effect to the merger which has been
accounted for as a pooling-of-interests. Accordingly, financial
statements for the prior periods have been restated to reflect the
results of operations of these entities on a combined basis from
the earliest period presented.
On December 4, 1998, the Company completed its purchase and
assumption transaction with First Union National Bank ("First
Union") and acquired eight of First Union's branch offices which
included deposits. The Company paid a premium of $16.9 million,
and assumed approximately $219 million in deposits and acquired certain
real estate. The premium is being amortized over ten years.
On January 31, 1998, the Company completed its purchase and
assumption transaction with First Federal Savings & Loan
Association of Lakeland, Florida ("First Federal-Florida") and
acquired five of First Federal-Florida's branch offices which
included loans and deposits. The Company paid a deposit premium
of $3.6 million, or 6.33%, and assumed $55 million in deposits
and purchased loans equal to $44 million. Four of the five
offices were merged into existing offices of Capital City Bank.
The deposit premium is being amortized over fifteen years.
On October 18, 1997, the Company consolidated its three remaining
bank affiliates, Levy County State Bank, Farmers & Merchants Bank
of Trenton and Branford State Bank into Capital City Bank. The
consolidation enabled the Company to present a consistent image
to a broader market and to better serve its clients through the
use of a common name with multiple, convenient locations.
Dividends and management fees received from the Banks are the
Company's only source of income. Dividend payments by the
subsidiaries to CCBG depend on the capitalization, earnings and
projected growth of the subsidiaries, and are limited by various
regulatory restrictions. See the section entitled "Regulation
and Supervision" and Note 4 in the Notes to Consolidated
Financial Statements for additional information.
The Company had a total of 678 (full-time equivalent) associates
at March 1, 2000. Page 18 contains other financial and
statistical information about the Company.
Banking Services
CCB is a Florida chartered bank and FNBGC is a national bank.
The Banks are full service banks, engaged in the commercial and
retail banking business, including accepting demand, savings and
time deposits, extending credit, originating residential mortgage
loans, providing data processing services, asset management services,
trust services, retail brokerage services and a broad range of other
financial services to corporate and individual customers, governmental
entities and correspondent banks.
The Banks are members of the "Star" system which enables customers
to utilize their "QuickBucks" or "QuickCheck" cards to access
cash at automatic teller machines ("ATMs") or point of sale
merchants located throughout the state of Florida. Additionally,
customers may access their cash outside Florida through various
interconnected ATM networks and merchant locations.
Data Processing Services
Capital City Services Company provides data processing services
to financial institutions (including CCB), government agencies
and commercial customers located throughout North Florida and
South Georgia. As of March 1, 2000, the services company is
providing computer services to correspondent banks which have
relationships with Capital City Bank.
Trust Services
Capital City Trust Company is the investment management arm of
Capital City Bank. The Trust Company provides asset management
for individuals through agency, personal trust and IRA accounts
personal investment management. Pension, profit sharing and
401(k) Plans administration are significant product lines.
Associations, endowments and other non-profit entities hire the
Trust Company to manage their long-term investment portfolios.
Individuals requiring the services of a trustee, personal
representative, or a guardian are served by a staff of well
trained professionals. The market value of trust assets under
discretionary management exceeded $307 million as of December 31,
1999, with total assets under administration exceeding $360
million.
Brokerage Services
The Company offers access to retail investment products through
Capital City Securities, Inc., a wholly-owned subsidiary of
Capital City Bank. These products are offered through INVEST
Financial Corporation, member NASD and SIPC. Non-deposit
investment and insurance products are: not FDIC insured; not
deposits, obligations, or guaranteed by any bank, and; are
subject to investment risk, including the possible loss of
prinicpal amount invested. Capital City Securities, Inc.'s
brokers are licensed through INVEST Financial Corporation, and
offer a full line of retail securities products, including U.S.
Government bonds, tax-free municipal bonds, stocks, mutual funds,
unit investment trusts, annuities, life insurance and long-term
health care. Capital City Bank Group and its subsidiaries are
not affiliated with INVEST Financial Corporation.
Competition
The banking business is rapidly changing and CCBG and
its subsidiaries operate in a highly competitive environment,
especially with respect to services and pricing. Recent
consolidation of the industry significantly alters the
competitive environment within the State of Florida and,
management believes, further enhances the Company's competitive
position and opportunities in many of its markets. CCBG's
primary market area is eightteen counties in Florida and one
county in Georgia. In these markets, the Banks compete
against a wide range of banking and nonbanking institutions
including savings and loan associations, credit unions,
money market funds, mutual fund advisory companies, mortgage
banking companies, investment banking companies, finance
companies and other types of financial institutions.
All of Florida's major banking concerns have a presence in Leon
County. Capital City Bank's Leon County deposits totaled $456
million, or 37.9%, of the Company's consolidated deposits at
December 31, 1999.
The following table depicts CCBG's market share percentage within
each respective county, based on total commercial bank deposits
within the county.
Market Share
as of September 30(1)(2)
1999 1998 1997
----------------------------
Capital City Bank:
Bradford County(4) 46.1% 53.3% --
Citrus County 4.2% 4.3% 4.4%
Clay County(4) 4.6% 5.8% --
Dixie County(3) 15.2% 15.7% --
Gadsden County 29.0% 28.0% 29.8%
Gilchrist County 50.0% 50.5% 45.1%
Gulf County(4) 39.8% 48.6% --
Hernando County 2.2% 2.0% 2.0%
Jefferson County 24.7% 27.1% 28.2%
Leon County 21.6% 23.4% 22.8%
Levy County 37.4% 37.7% 25.6%
Madison County 21.5% 20.6% 22.6%
Pasco County 1.6% 1.2% 1.3%
Putnam County(4) 24.2% 30.3% --
Suwannee County 20.5% 18.7% 16.6%
Taylor County 33.6% 32.7% 36.0%
Washington County(4) 23.9% 30.0% --
First National Bank of Grady County
Grady County(5) 44.5% 49.0% 42.5%
(1) Obtained from the September 30 Office Level Report published
by the Florida Bankers Association for each year.
(2) Does not include Alachua county where Capital City Bank
maintains a residential mortgage lending office.
(3) Entered the market in January 1998.
(4) Entered the market in December 1998.
(5) Obtained from the June 30 FDIC/OTS Summary of Deposits Report.
The following table sets forth the number of commercial banks and
offices, including the Company and its competitors, within each
of the respective counties as of September 30, 1999.
Number of Number of Commercial
County Commercial Banks Bank Offices
---------------------------------------------------------------
Florida:
Bradford 3 3
Citrus 10 37
Clay 8 24
Dixie 3 4
Gadsden 4 9
Gilchrist 2 4
Gulf 2 4
Hernando 10 30
Jefferson 2 2
Leon 13 61
Levy 4 13
Madison 5 5
Pasco 17 84
Putnam 5 11
Suwannee 4 5
Taylor 3 4
Washington 3 3
Georgia:
Grady(1) 5 9
(1) Obtained from the June 30 FDIC/OTS Summary of Deposits Report.
REGULATORY CONSIDERATIONS
The Company and the Banks must comply with state and federal
banking laws and regulations that control virtually all aspects
of operations. These laws and regulations generally aim to
protect depositors, not shareowners. Particular references to
statutes or regulations in this document qualify and supersede
any summaries or descriptions of the particular statues or
regulations. Any changes in applicable laws or regulations may
materially affect the business and prospects of the Company.
Such legislative changes or changes in regulator policies may
also affect the operations of the Company and the Banks. The
Company cannot predict the nature or extent of effects on
business or earnings caused by future fiscal or monetary
policies, economic control or new federal or state legislation.
Recent Legislation
On November 12, 1999, President Clinton signed into law the Gramm-
Leach-Bliley Act of 1999 (the "Financial Services Modernization
Act"). The Financial Services Modernization Act repeals the two
affiliation provisions of the Glass-Steagall Act: Section 20,
which restricted the affiliation of Federal Reserve Member Banks
with firms "engaged principally" in specified securities
activities; and Section 32, which restricted officer, director,
or associate interlocks between a member bank and any company or
person "primarily engaged" in specified securities activities.
In addition, the Financial Services Modernization Act contains
provisions that expressly preempt most state laws restricting
state banks from owning or acquiring interests in financial
affiliates, such as insurance companies. The general effect of
the law is to establish a comprehensive framework to permit
affiliations among commercial banks, insurance companies,
securities firms, and other financial service providers. A bank
holding company may now engage in a full range of financial
activities by electing to become a "Financial Holding Company."
"Financial activities" are broadly defined to include not only
banking, insurance, and securities activities, but also merchant
banking and additional activities that the Board of Governors of
the Federal Reserve System ("FRB"), in consultation with the
Secretary of the Treasury, determines to be financial in nature,
incidental to such financial activities, or complementary
activities that do not pose a substantial risk to the safety and
soundness of depository institutions or the financial system
generally.
The Financial Services Modernization Act also permits national
banks to engage in expanded activities through the formation of
financial subsidiaries. A national bank may have a subsidiary
engaged in any activity authorized for national banks directly or
any financial activity, except for insurance underwriting,
insurance investments, real estate investment or development, or
merchant banking, which may only be conducted through a
subsidiary of a Financial Holding Company. Financial activities
include all activities permitted under new sections of the Bank
Holding Company Act of 1956, as amended ("BHCA"), or permitted by
regulation.
The Company and the Banks do not believe that the Financial
Services Modernization Act will have a material adverse effect on
the operations of the Company and the Banks in the near-term.
However, to the extent that the act permits banks, securities
firms, and insurance companies to affiliate, the financial
services industry may experience further consolidation. The
Financial Services Modernization Act is intended to grant to
community banks certain powers as a matter of right that larger
institutions have accumulated on an ad hoc basis. Nevertheless,
this act may have the result of increasing the amount of
competition that the Company and the Banks face from larger
institutions and other types of companies offering financial
products, many of which may have substantially more financial
resources than the Company and the Banks.
The Company
General
As a result of its ownership of the Banks, the Company is
registered as a bank holding company under BHCA, and is regulated by
the
FRB. Under the BHCA, the Company is subject to periodic
examination by the FRB and is required to file periodic reports
of its operations and such additional information as the FRB may
require. The Company has not elected to become a financial
holding company under the Financial Services Modernization Act.
If the Company elects to become a financial holding company in
the future, many of the restrictions and notice requirements
mentioned below would not apply.
Bank Holding Companies
Permitted Activities. The BHCA limits the Company's activities
to managing or controlling banks, furnishing services to or
performing services for its subsidiaries, and engaging in other
activities that the FRB determines to be so closely related to
banking or managing or controlling banks as to be a proper
incident thereto. In determining whether a particular activity
is permissible, the FRB must consider whether the performance of
such an activity reasonably can be expected to produce benefits
to the public that outweigh possible adverse effects. Possible
benefits include greater convenience, increased competition and
gains in efficiency. Possible adverse effects include undue
concentration of resources, decreased or unfair competition,
conflicts of interest and unsound banking practices. The FRB has
determined the following activities, among others, to be
permissible for bank holding companies:
Factoring accounts receivable;
Acquiring or servicing loans;
Leasing personal property;
Conducting discount securities brokerage activities;
Performing certain data processing services;
Acting as agent or broker and selling credit
life insurance and certain other types of insurance
in connection with credit transactions; and
Performing certain insurance underwriting activities.
There are no territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval,
the FRB may order a holding company or its subsidiaries to
terminate any activity or to terminate ownership or control of
any subsidiary when the FRB has reasonable cause to believe that
a serious risk to the financial safety, soundness or stability of
any bank subsidiary of that bank holding company may result from
such an activity.
Changes in Control. In addition, and subject to certain
exceptions, the BHCA and the Change in Bank Control Act, together
with regulations thereunder, require FRB approval (or, depending
on the circumstances, no notice of disapproval) prior to any
person or company acquiring "control" of a bank holding company,
such as the Company. A conclusive presumption of control exists
if an individual or company acquires 25% or more of any class of
voting securities of the bank holding company. A rebuttable
presumption of control exists if a person acquires 10% or more
but less than 25% of any class of voting securities and either
the Company has registered securities under Section 12 of the
Securities Exchange Act of 1934, as amended, or no other person
will own a greater percentage of that class of voting securities
immediately after the transaction.
The BHCA requires, among other things, the prior approval of the
FRB in any case where a bank holding company proposes to (i)
acquire all or substantially all of the assets of a bank, (ii)
acquire direct or indirect ownership or control of more than 5%
of the outstanding voting stock of any bank (unless it owns a
majority of such bank's voting shares), or (iii) merge or
consolidate with any other bank holding company. Additionally,
the BHCA prohibits a bank holding company, with certain limited
exceptions, from (i) acquiring or retaining direct or indirect
ownership or control of more than 5% of the outstanding voting
stock of any company which is not a bank or bank holding company,
or (ii) engaging directly or indirectly in activities other than
those of banking, managing or controlling banks, or performing
services for its subsidiaries unless such non-banking business is
determined by the FRB to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.
Under Florida law, a person proposing to directly or indirectly
acquire control of a Florida bank must first obtain permission
from the State of Florida. Florida statutes define "control" as
either (a) indirectly or directly owning, controlling or having
power to vote 25 percent or more of the voting securities of a
bank; (b) controlling the election of a majority of directors of
a bank; (c) owning, controlling or having power to vote 10
percent or more of the voting securities as well as directly or
indirectly exercising a controlling influence over management or
policies of a bank; or (d) as determined by the Florida
Department of Banking and Finance (the "FDBF"). These
requirements will effect the Company because CCB is
chartered under Florida law and changes in control of the Company
are indirect changes in control of CCB. Similar change in control
provisions apply to FNBGC under Federal law.
Tying. The BHCA also prohibits bank holding companies and their
affiliates from tying the provision of certain services, such as
extending credit, to other services offered by the bank holding
company or its affiliates.
Capital; Dividends; Source of Strength. The FRB imposes certain
capital requirements on the Company under the BHCA, including a
minimum leverage ratio and a minimum ratio of "qualifying"
capital to risk-weighted assets. These requirements are
described below under "Capital Regulations." Subject to its
capital requirements and certain other restrictions, the Company
is able to borrow money to make a capital contribution to either
Bank, and such loans may be repaid from dividends paid from the
bank to the Company. The ability of the bank to pay
dividends will be subject to regulatory restrictions as described
below under "Dividends". The Company is also able to
raise capital for contributions to the Banks by issuing securities
without having to receive regulatory approval, subject to
compliance with federal and state securities laws.
In accordance with FRB policy, the Company is expected to act as
a source of financial strength to the Banks and to commit
resources to support the Banks in circumstances in which the
Company might not otherwise do so. Under the BHCA, the FRB may
require a bank holding company to terminate any activity or
relinquish control of a nonbank subsidiary (other than a nonbank
subsidiary of a bank) upon the FRB's determination that such
activity or control constitutes a serious risk to the financial
soundness or stability of any subsidiary depository institution
of the bank holding company. Further, federal bank regulatory
authorities have additional discretion to require a bank holding
company to divest itself of any bank or nonbank subsidiary if the
agency determines that divestiture may aid the depository
institution's financial condition.
Financial Institutions Reform, Recovery and Enforcement Act of 1989
The Financial Institutions Reform, Recovery and Enforcement Act
of 1989 ("FIRREA") was enacted in August 1989. FIRREA contains
major regulatory reforms which include stronger civil and
criminal enforcement provisions applicable to all financial
institutions. FIRREA allows the acquisition of healthy and
failed savings and loans by bank holding companies, and removes
all interstate barriers on these bank holding company
acquisitions. With certain qualifications, FIRREA also allows
bank holding companies to merge acquired savings and loans into
their existing commercial bank subsidiaries.
The FRB, the FDBF and the Federal Deposit Insurance Corporation
("FDIC") collectively have extensive enforcement authority over
depository institutions and their holding companies, and this
authority has been enhanced substantially by FIRREA. This
enforcement authority includes, among other things, the ability
to assess civil money penalties, to issue cease-and-desist or
removal orders, to initiate injunctive actions, and, in extreme
cases, to terminate deposit insurance. In general, these
enforcement actions may be initiated for violations of laws and
regulations and unsafe or unsound practices. Other actions or
inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with the federal banking
agencies. FIRREA significantly increased the amount of and
grounds for civil money penalties and generally requires public
disclosure of final enforcement actions.
FIRREA further requires a depository institution or holding
company thereof to give 30 days' prior written notice to its
primary federal regulator of the appointment of any proposed
director or senior executive officer if the institution (i) has
been chartered less than two years; (ii) has undergone a change
in control within the preceding two years; or (iii) is not in
compliance with the minimum capital requirements or otherwise is
in a "troubled condition." The regulator would have the
opportunity to disapprove any such appointment.
Economic Growth and Regulatory Paperwork Reduction Act of 1996
The enactment of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 ("EGRPRA") streamlined the non-banking
activities application process for well-capitalized and
well-managed bank holding companies. Under EGRPRA, qualified
bank holding companies may commence a regulatory approved non-
banking activity without prior notice to the FRB; written notice
is merely required within 10 days after commencing the activity.
Also, under EGRPRA, the prior notice period is reduced to 12
business days in the event of any non-banking acquisition or
share purchase, assuming the size of the acquisition does not
exceed 10% of risk-weighted assets of the acquiring bank holding
company and the consideration does not exceed 15% in Tier I
capital. This prior notice requirement also applies to
commencing a non-banking activity de novo which has been
previously approved by order of the FRB, but not yet implemented
by regulations.
CAPITAL CITY BANK
CCB is a banking institution which is chartered by and
operated in the State of Florida, and it is subject to
supervision and regulation by the FDBF. CCB is a member
bank of the Federal Reserve System and its operations are also
subject to broad federal regulation and oversight by the FRB.
The deposit accounts of CCB are insured by the FDIC which
gives the FDIC certain enforcement powers over CCB. Various
consumer laws and regulations also affect the operations of
CCB, including state usury laws, laws relating to fiduciaries,
consumer credit and equal credit laws, and fair credit reporting.
The FDBF supervises and regulates all areas of CCB's
operations including, without limitation, making of loans, the
issuance of securities, the conduct of CCB's corporate
affairs, capital adequacy requirements, the payment of dividends
and the establishment or closing of branches.
In addition, the Federal Deposit Insurance Corporation
Improvement Act of 1991 prohibits insured state chartered
institutions from conducting activities as principal that are not
permitted for national banks. A bank may, however, engage in an
otherwise prohibited activity if it meets its minimum capital
requirements and the FDIC determines that the activity does not
present a significant risk to the deposit insurance funds.
As a state chartered banking institution in the State of Florida,
CCB is empowered by statute, subject to the limitations
contained in those statutes, to take savings and time deposits
and pay interest on them, to accept checking accounts, to make
loans on residential and other real estate, to make consumer and
commercial loans, to invest, with certain limitations, in equity
securities and in debt obligations of banks and corporations and
to provide various other banking services on behalf of CCB's
customers.
FIRST NATIONAL BANK OF GRADY COUNTY
FNBGC is a national bank which is chartered by the Office of the
Comptroller of the Currency ("OCC") and operates in Sounthern
Georgia. FNBGC is subject to supervision, regulation and
examination by the OCC, which monitors all areas of the operations
of FNBGC, including reserves, loans, mortgages, issuances of
securities, payment of dividends, establishment of branches,
capital adequacy, and compliance with laws. FNBGC is a member
of the FDIC and, as such, its deposits are insured by the FDIC
to the maximum extent permitted by law.
RESERVES
The FRB requires all depository institutions to maintain reserves
against their transaction accounts (primarily NOW and Super NOW
checking accounts) and non-personal time deposits. The balances
maintained to meet the reserve requirements imposed by the FRB
may be used to satisfy liquidity requirements.
Institutions are authorized to borrow from the Federal Reserve
Bank "discount window," but FRB regulations require institutions
to exhaust other reasonable alternative sources of funds before
borrowing from the Federal Reserve Bank.
DIVIDENDS
CCB and FNBGC are subject to legal limitations on the frequency and
amount of dividends that can be paid to the Company. The FRB may
restrict the ability of CCB and the OCC may restrict the ability of
FNBGC to pay dividends if such payments would constitute an unsafe
or unsound banking practice. These regulations and restrictions may
limit the Company's ability to obtain funds from CCB and FNBGC for
its cash needs, including funds for acquisitions and the payment of
dividends, interest and operating expenses.
In addition, Florida law also places certain restrictions on the
declaration of dividends from state chartered banks to their
holding companies. Pursuant to Section 658.37 of the Florida
Banking Code, the board of directors of state chartered banks,
after charging off bad debts, depreciation and other worthless
assets, if any, and making provisions for reasonably anticipated
future losses on loans and other assets, may quarterly,
semi-annually or annually declare a dividend of up to the
aggregate net profits of that period combined with the bank's
retained net profits for the preceding two years and, with the
approval of the FDBF, declare a dividend from retained net
profits which accrued prior to the preceding two years. Before
declaring such dividends, 20% of the net profits for the
preceding period as is covered by the dividend must be
transferred to the surplus fund of the bank until this fund
becomes equal to the amount of the bank's common stock then
issued and outstanding. A state chartered bank may not declare
any dividend if (i) its net income from the current year combined
with the retained net income for the preceding two years is a
loss or (ii) the payment of such dividend would cause the capital
account of the bank to fall below the minimum amount required by
law, regulation, order or any written agreement with the FDBF or
a federal regulatory agency.
INSURANCE OF ACCOUNTS AND OTHER ASSESSMENTS
The Banks' deposit accounts are insured by the Bank Insurance
Fund ("BIF") of the FDIC to a maximum of $100,000 for each
insured depositor. The federal banking agencies require an
annual audit by independent accountants of the Banks and make
their own periodic examinations of the Banks. They may revalue
assets of an insured institution based upon appraisals, and
require establishment of specific reserves in amounts equal to
the difference between such revaluation and the book value of the
assets, as well as require specific charge-offs relating to such
assets. The federal banking agencies may prohibit any FDIC-
insured institution from engaging in any activity they determine
by regulation or order poses a serious threat to the insurance
fund.
Under federal law, BIF and the Savings Association Insurance Fund
("SAIF") are each statutorily required to be recapitalized to a
1.25% of insured reserve deposits ratio. In view of the BIF's
achieving the 1.25% ratio during 1995, the FDIC reduced the
assessments for most banks by adopting a new assessment rate
schedule of 4 to 31 basis points for BIF deposits. The FDIC
further reduced the BIF assessment schedule by an additional four
basis points for the 1996 calendar year so that most BIF members
paid only the statutory minimum semiannual assessment of $1,000.
During this same period, the FDIC retained the existing
assessment rate schedule applicable to SAIF deposits of 23 cents
to 31 cents per $100 of domestic deposits, depending on the
institution's risk classification.
On September 30, 1996, the Deposit Insurance Funds Act of 1996
("DIFA") was enacted and signed into law. DIFA was intended to
reduce the amount of semi-annual FDIC insurance premiums for
savings association deposits acquired by banks to the same levels
assessed for deposits insured by BIF. To accomplish this
reduction, DIFA provided for a special one-time assessment
imposed on deposits insured by SAIF to recapitalize SAIF and
bring it up to statutory required levels. This one-time
assessment accrued in the third quarter of 1996. As a result,
since early 1997, both BIF and SAIF deposits have been assessed
at the same rate of 0 to 27 basis points depending on risk
classification.
Effective January 1, 1997, DIFA also separated from the SAIF
assessments the Financing Corporation ("FICO") assessments which
service the interest on its bond obligations. According to the
FDIC's risk-related assessment rate schedules, the amount
assessed on individual institutions by the FICO will be in
addition to the amount paid for deposit insurance.
TRANSACTIONS WITH AFFILIATES
The authority of the Banks to engage in transactions with related
parties or "affiliates" or to make loans to insiders is limited
by certain provisions of law and regulations. Commercial banks,
such as the Banks, are prohibited from making extensions of credit
to any affiliate that engages in an activity not permissible
under the regulations of the FRB for a bank holding company.
Pursuant to Sections 23A and 23B of the Federal Reserve Act
("FRA"), member banks and national banks are subject to restrictions
regarding transactions with affiliates ("Covered Transactions").
With respect to any Covered Transaction, the term "affiliate"
includes any company that controls or is controlled by a company
that controls the Banks, a bank or savings association subsidiary
of the Banks, any persons who own, control or vote more than 25%
of any class of stock of the Banks or the Company and any persons
who the Board of Directors determines exercises a controlling
influence over the management of the Banks or the Company. The
term "affiliate" also includes any company controlled by
controlling shareowners of the Banks or the Company and any
company sponsored and advised on a contractual basis by the Banks
or any subsidiary or affiliate of the Banks. Such transactions
between the Banks and their respective affiliates are subject to
certain requirements and limitations, including limitations on
the amounts of such Covered Transactions that may be undertaken
with any one affiliate and with all affiliates in the aggregate.
The federal banking agencies may further restrict such
transactions with affiliates in the interest of safety and
soundness.
Section 23A of the FRA limits Covered Transactions with any one
affiliate to 10% of an institution's capital stock and surplus
and limits aggregate affiliate transactions to 20% of the Banks'
capital stock and surplus. Sections 23A and 23B of the FRA
provide that a loan transaction with an affiliate generally must
be collateralized (but may not be collateralized by a low quality
asset or securities issued by an affiliate) and that all Covered
Transactions, as well as the sale of assets, the payment of money
or the provision of services by the Banks to affiliates, must be
on terms and conditions that are substantially the same, or at
least as favorable to the bank, as those prevailing for
comparable nonaffiliated transactions. A Covered Transaction
generally is defined as a loan to an affiliate, the purchase of
securities issued by an affiliate, the purchase of assets from an
affiliate, the acceptance of securities issued by an affiliate as
collateral for a loan, or the issuance of a guarantee, acceptance
or letter of credit on behalf of an affiliate. In addition, the Banks
generally may not purchase securities issued or underwritten
by affiliates.
Loans to executive officers, directors or to any person who
directly or indirectly, or acting through or in concert with one
or more persons, owns, controls or has the power to vote more
than 10% of any class of voting securities of a bank ("Principal
Shareowners") and their related interests (i.e., any company
controlled by such executive officer, director, or Principal
Shareowners), or to any political or campaign committee the funds
or services of which will benefit such executive officers,
directors, or Principal Shareowners or which is controlled by
such executive officers, directors or Principal Shareowners, are
subject to Sections 22(g) and 22(h) of the FRA and the
regulations promulgated thereunder (Regulation O).
Among other things, these loans must be made on terms
substantially the same as those prevailing on transactions made
to unaffiliated individuals and certain extensions of credit to
such persons must first be approved in advance by a disinterested
majority of the entire board of directors. Section 22(h) of the
FRA prohibits loans to any such individuals where the aggregate
amount exceeds an amount equal to 15% of an institution's
unimpaired capital and surplus plus an additional 10% of
unimpaired capital and surplus in the case of loans that are
fully secured by readily marketable collateral, or when the
aggregate amount on all such extensions of credit outstanding to
all such persons would exceed the banks unimpaired capital and
unimpaired surplus. Section 22(g) identifies limited
circumstances in which the Banks are permitted to extend credit to
executive officers.
COMMUNITY REINVESTMENT ACT
The Community Reinvestment Act of 1977 ("CRA") requires a
financial institution to help meet the credit needs of its entire
community, including low-income and moderate-income areas. On
May 3, 1995, the federal banking agencies issued final
regulations which change the manner in which the regulators
measure a bank's compliance with the CRA obligations. The final
regulations adopt a performance-based evaluation system which
bases CRA ratings on an institution's actual lending, service and
investment performance, rather than the extent to which the
institution conducts needs assessments, documents community
outreach or complies with other procedural requirements. Federal
banking agencies may take CRA compliance into account when
regulating and supervising bank and holding company activities;
for example, CRA performance may be considered in approving
proposed bank acquisitions.
CAPITAL REGULATIONS
The FRB has adopted risk-based, capital adequacy guidelines for
bank holding companies and their subsidiary state-chartered banks
that are members of the Federal Reserve System. The OCC has also
adopted substantially similar risk-based, capital adequacy guidelines
for national banks. The risk-based capital guidelines are designed
to make regulatory capital requirements more sensitive to differences
in risk profiles among banks and bank holding companies, to account
for off-balance sheet exposure, to minimize disincentives for holding
liquid assets and to achieve greater consistency in evaluating the
capital adequacy of major banks throughout the world. Under
these guidelines assets and off-balance sheet items are assigned
to broad risk categories each with designated weights. The
resulting capital ratios represent capital as a percentage of
total risk-weighted assets and off-balance sheet items.
The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total
capital ratio equal to 8%, of which at least 4% must be Tier I
Capital. Tier I Capital, which includes common shareowners'
equity, noncumulative perpetual preferred stock, and a limited
amount of cumulative perpetual preferred stock, less certain
goodwill items and other intangible assets, is required to equal
at least 4% of risk-weighted assets. The remainder ("Tier II
Capital") may consist of (i) an allowance for loan losses of up
to 1.25% of risk-weighted assets, (ii) excess of qualifying
perpetual preferred stock, (iii) hybrid capital instruments, (iv)
perpetual debt, (v) mandatory convertible securities, and (vi)
subordinated debt and intermediate-term preferred stock up to 50%
of Tier I Capital. Total capital is the sum of Tier I and Tier
II Capital less reciprocal holdings of other banking
organizations' capital instruments, investments in unconsolidated
subsidiaries and any other deductions as determined by the appropriate
regulator (determined on a case by case basis or as a matter of policy
after formal rule making).
In computing total risk-weighted assets, bank and bank holding
company assets are given risk-weights of 0%, 20%, 50% and 100%.
In addition, certain off-balance sheet items are given similar
credit conversion factors to convert them to asset equivalent
amounts to which an appropriate risk-weight will apply. Most
loans will be assigned to the 100% risk category, except for
performing first mortgage loans fully secured by residential
property, which carry a 50% risk rating. Most investment
securities (including, primarily, general obligation claims on
states or other political subdivisions of the United States) will
be assigned to the 20% category, except for municipal or state
revenue bonds, which have a 50% risk-weight, and direct
obligations of the U.S. Treasury or obligations backed by the
full faith and credit of the U.S. Government, which have a 0%
risk-weight. In covering off-balance sheet items, direct credit
substitutes, including general guarantees and standby letters of
credit backing financial obligations, are given a 100% conversion
factor. Transaction-related contingencies such as bid bonds,
standby letters of credit backing non-financial obligations, and
undrawn commitments (including commercial credit lines with an
initial maturity of more than one year) have a 50% conversion
factor. Short-term commercial letters of credit are converted at
20% and certain short-term unconditionally cancelable commitments
have a 0% factor.
The federal bank regulatory authorities have also adopted
regulations which supplement the risk-based guideline. These
regulations generally require banks and bank holding companies to
maintain a minimum level of Tier I Capital to total assets less
goodwill of 4% (the "leverage ratio"). The FRB permits a bank to
maintain a minimum 3% leverage ratio if the bank achieves a 1
rating under the CAMELS rating system in its most recent
examination, as long as the bank is not experiencing or
anticipating significant growth. The CAMELS rating is a non-
public system used by bank regulators to rate the strength and
weaknesses of financial institutions. The CAMELS rating is
comprised of six categories: capital, asset quality, management,
earnings, liquidity, and interest rate sensitivity.
Banking organizations experiencing or anticipating significant
growth, as well as those organizations which do not satisfy the
criteria described above, will be required to maintain a minimum
leverage ratio ranging generally from 4% to 5%. The bank regulators
also continue to consider a "tangible Tier I leverage ratio" in
evaluating proposals for expansion or new activities. The
tangible Tier I leverage ratio is the ratio of a banking
organization's Tier I Capital, less deductions for intangibles
otherwise includable in Tier I Capital, to total tangible assets.
Federal law and regulations establish a capital-based regulatory
scheme designed to promote early intervention for troubled banks
and require the FDIC to choose the least expensive resolution of
bank failures. The capital-based regulatory framework contains
five categories of compliance with regulatory capital
requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." To qualify
as a "well capitalized" institution, a bank must have a leverage
ratio of no less than 5%, a Tier I risk-based ratio of no less
than 6%, and a total risk-based capital ratio of no less than
10%, and the bank must not be under any order or directive from
the appropriate regulatory agency to meet and maintain a specific
capital level.
Under the regulations, the applicable agency can treat an
institution as if it were in the next lower category if the
agency determines (after notice and an opportunity for hearing)
that the institution is in an unsafe or unsound condition or is
engaging in an unsafe or unsound practice. The degree of
regulatory scrutiny of a financial institution will increase, and
the permissible activities of the institution will decrease, as
it moves downward through the capital categories. Institutions
that fall into one of the three undercapitalized categories may
be required to (i) submit a capital restoration plan; (ii) raise
additional capital; (iii) restrict their growth, deposit interest
rates, and other activities; (iv) improve their management; (v)
eliminate management fees; or (vi) divest themselves of all or a
part of their operations. Bank holding companies controlling
financial institutions can be called upon to boost the
institutions' capital and to partially guarantee the
institutions' performance under their capital restoration plans.
It should be noted that the minimum ratios referred to above are
merely guidelines and the Banks' regulators possess the discretionary
authority to require higher ratios with respect to bank holding
companies and state-member banks.
The Company and the Banks currently exceed the requirements
contained in the applicable regulations, policies and directives
pertaining to capital adequacy, and management of the Company and
the Banks is unaware of any violation or alleged violation of these
regulations, policies or directives.
INTERSTATE BANKING AND BRANCHING
The BHCA was amended in September 1994 by the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"). The Interstate Banking Act provides
that adequately capitalized and managed bank holding companies
are permitted to acquire banks in any state. State laws
prohibiting interstate banking or discriminating against out-of-
state banks are preempted. States were not permitted to enact
laws opting out of this provision; however, states were allowed
to adopt a minimum age restriction requiring that target banks
located within the state be in existence for a period of years,
up to a maximum of five years, before such bank may be subject to
the Interstate Banking Act. The Interstate Banking Act
establishes deposit caps which prohibit acquisitions that result
in the acquiring company controlling 30 percent or more of the
deposits of insured banks and thrift institutions held in the
state in which the target maintains a branch or 10 percent or
more of the deposits nationwide. States have the authority to
waive the 30 percent deposit cap. State-level deposit caps are
not preempted as long as they do not discriminate against out-of-
state companies, and the federal deposit caps apply only to
initial entry acquisitions.
The Interstate Banking Act also provides that adequately
capitalized and managed banks are able to engage in interstate
branching by merging with banks in different states. States were
permitted to enact legislation authorizing interstate mergers
earlier than June 1, 1997, or, unlike the interstate banking
provision discussed above, states were permitted to opt out of
the application of the interstate merger provision by enacting
specific legislation before June 1, 1997.
Florida responded to the enactment of the Interstate Banking Act
by enacting the Florida Interstate Branching Act (the "Florida
Branching Act"). The purpose of the Florida Branching Act was to
permit interstate branching through merger transactions under the
Interstate Banking Act. Under the Florida Branching Act, with
the prior approval of the FDBF, a Florida bank may establish,
maintain and operate one or more branches in a state other than
the State of Florida pursuant to a merger transaction in which
the Florida bank is the resulting bank. In addition, the Florida
Branching Act provides that one or more Florida banks may enter
into a merger transaction with one or more out-of-state banks,
and an out-of-state bank resulting from such transaction may
maintain and operate the branches of the Florida bank that
participated in such merger. An out-of-state bank, however, is
not permitted to acquire a Florida bank in a merger transaction
unless the Florida bank has been in existence and continuously
operated for more than three years.
FUTURE LEGISLATIVE DEVELOPMENTS
Certain portions of the Financial Services Modernization Act
dealing with customer privacy will go into effect in 2000. These
measures will change the ways in which financial institutions may
transmit nonpublic personal information about their customers to
affiliates of the institution as well as to third parties. Also,
the Financial Services Modernization Act will preempt many state
laws regarding the activities of state-chartered banks. It is
likely that the Florida legislature will enact new statutes and
rules conforming Florida law to the Financial Services
Modernization Act. It cannot be predicted whether or in what
form these proposals or any others will be adopted or the extent
to which the business of the Company may be affected.
EFFECT OF GOVERNMENTAL MONETARY POLICIES
The commercial banking business in which the Banks engage is
affected not only by general economic conditions, but also by the
monetary policies of the FRB. Changes in the discount rate on
member bank borrowing, availability of borrowing at the "discount
window," open market operations, the imposition of changes in
reserve requirements against member banks' deposits and assets of
foreign branches and the imposition of and changes in reserve
requirements against certain borrowings by banks and their
affiliates are some of the instruments of monetary policy
available to the FRB. These monetary policies are used in
varying combinations to influence overall growth and
distributions of bank loans, investments and deposits, and this
use may affect interest rates charged on loans or paid on
deposits. The monetary policies of the FRB have had a
significant effect on the operating results of commercial banks
and are expected to do so in the future. The monetary policies
of the FRB are influenced by various factors, including
inflation, unemployment, short-term and long-term changes in the
international trade balance and in the fiscal policies of the
U.S. Government. Future monetary policies and the effect of such
policies on the future business and earnings of the Banks cannot
be predicted.
Item 2. Properties
Capital City Bank Group, Inc., is headquartered in Tallahassee,
Florida. The Company's executive office is in the Capital City
Bank building located on the corner of Tennessee and Monroe
Streets in downtown Tallahassee. The building is owned by
Capital City Bank but is located, in part, on land leased under a
long-term agreement.
Capital City Bank's Parkway Office is located on land leased from
the Smith Interests General Partnership L.L.P. in which several
directors and officers have an interest. Lease payments during
1999 totaled approximately $81,000.
As of March 1, 2000 the Company had forty-eight banking
locations. Of the forty-eight locations, the Company leases
either the land or buildings (or both) at six locations and owns
the land and buildings at the remaining forty-two.
Item 3. Legal Proceedings
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareowner Matters
The Company's common stock trades on the Nasdaq National Market
under the symbol "CCBG". "The Nasdaq National Market" or
"Nasdaq" is a highly-regulated electronic securities market
comprised of competing market makers whose trading is supported
by a communications network linking them to quotation
dissemination, trade reporting, and order execution. This market
also provides specialized automation services for screen-based
negotiations of transactions, on-line comparison of transactions,
and a range of informational services tailored to the needs of
the security industry, investors and issuers. The Nasdaq
National Market is operated by The Nasdaq Stock Market, Inc., a
wholly-owned subsidiary of the National Association of Securities
Dealers, Inc.
</TABLE>
<TABLE>
The following table presents the range of high and low closing
sales prices reported on the Nasdaq National Market and cash
dividends declared for each quarter during the past two years.
The Company had a total of 1,362 shareowners of record at March 1,
2000.
<CAPTION>
1999 (1) 1998 (1)
------------------------------ -------------------------------
Fourth Third Second First Fourth Third Second First
Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
------------------------------ -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock price:
High $25.00 $31.00 $25.00 $27.63 $31.00 $33.13 $32.67 $32.67
Low 20.19 21.00 20.25 22.00 24.13 19.00 29.75 29.25
Close 21.50 22.75 25.00 23.31 27.63 29.13 31.38 31.67
Cash dividends
declared per share(2) .1325 .12 .12 .18 .12 .11 .11 .11
Future payment of dividends will be subject to determination and
declaration by the Board of Directors.
(1) All share and per share information have been adjusted to reflect
a three-for-two stock split effective June 1, 1998.
(2) 1999 first quarter dividend amount includes a special one-time
distribution paid to Grady Holding Company Shareowners of
approximately $563,000.
</TABLE>
<TABLE>
Selected Financial & Other Data (Dollars in Thousands, Except Per Share
Data)(1)
<CAPTION>
For the Years Ended December 31,
1999 1998 1997 1996 1995
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest Income $ 99,685 $ 89,010 $ 84,981 $ 74,406 $ 62,117
Net Interest Income 58,438 53,762 52,293 45,846 38,763
Provision for Loan Losses 2,440 2,439 2,328 1,863 556
Net Income 15,252 15,294 14,401 13,219 11,181
Per Common Share:
Basic Net Income 1.50 1.51 1.44 1.33 1.13
Diluted Net Income 1.50 1.50 1.43 1.33 1.13
Cash Dividends Declared(2) .5525 .45 .37 .34 .29
Book Value 12.97 12.69 11.54 10.39 9.42
Based on Net Income:
Return on Average Assets 1.06 1.30 1.30 1.31 1.31
Return on Average Equity 11.64 12.37 13.10 13.52 12.72
Dividend Pay-out Ratio(2) 32.86 28.20 26.10 25.45 25.38
Averages for the Year:
Loans, Net of Unearned
Interest $ 884,323 $ 824,197 $ 770,416 $ 631,437 $493,654
Earning Assets 1,291,262 1,065,677 1,000,466 908,137 764,259
Assets 1,444,069 1,180,785 1,108,088 1,012,480 855,894
Deposits 1,237,405 985,119 924,891 856,540 735,966
Long-Term Debt 17,274 18,041 19,412 10,895 71
Shareowners' Equity 131,058 123,647 109,948 97,738 87,878
Year-End Balances:
Loans, Net of Unearned
Interest $ 928,486 $ 844,217 $ 775,451 $ 745,126 $510,168
Earning Assets 1,263,296 1,288,439 998,401 996,827 799,243
Assets 1,430,520 1,443,675 1,116,651 1,123,221 905,856
Deposits 1,202,658 1,253,553 922,841 952,744 778,161
Long-Term Debt 14,258 18,746 18,106 18,847 1,982
Shareowners' Equity 132,216 128,862 115,807 103,009 93,058
Equity to Assets Ratio 9.24% 8.93% 10.37% 9.17% 10.27%
Other Data:
Basic Average Shares
Outstanding 10,174,945 10,146,393 10,031,116 9,908,762 9,869,267
Shareowners of Record(3) 1,362 1,334 1,234 1,045 973
Banking Locations(3) 48 46 39 38 32
Full-Time Equivalent Associates(3) 678 677 637 617 544
(1) All share and per share data have been restated to reflect the
pooling-of-interests of Grady Holding Company and its subsidiaries
and adjusted to reflect the 2-for-1 stock split effective April, 1,
1997, and the 3-for-2 stock split effective June 1, 1998.
(2) 1999 dividend amount includes a special one-time distribution paid to
Grady Holding Company shareowners of approximately $563,000.
(3) As of March 1st of the following year.
</TABLE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL REVIEW
The following analysis reviews important factors affecting the
financial condition and results of operations of Capital City
Bank Group, Inc., for the periods shown below. The Company has
made, and may continue to make, various forward-looking
statements with respect to financial and business matters that
involve numerous assumptions, risks and uncertainties. The
following is a list of factors, among others, that could cause
actual results to differ materially from the forward-looking
statements: general and local economic conditions, competition
for the Company's customers from other banking and financial
institutions, government legislation and regulation, changes in
interest rates, the impact of rapid growth, significant changes
in the loan portfolio composition, and other risks described in
the Company's filings with the Securities and Exchange
Commission, all of which are difficult to predict and many of
which are beyond the control of the Company.
This section provides supplemental information which should be
read in conjunction with the consolidated financial statements
and related notes. The Financial Review is divided into three
subsections entitled Earnings Analysis, Financial Condition, and
Liquidity and Capital Resources. Information therein should
facilitate a better understanding of the major factors and trends
which affect the Company's earnings performance and financial
condition, and how the Company's performance during 1999 compares
with prior years. Throughout this section, Capital City Bank
Group, Inc., and its subsidiaries, collectively, are referred to
as "CCBG" or the "Company." The subsidiary banks are referred to
as the "Banks", "CCB", or "FNBGC".
The year-to-date averages used in this report are based on daily
balances for each respective year. In certain circumstances,
comparing average balances for the fourth quarter of consecutive
years may be more meaningful than simply analyzing year-to-date
averages. Therefore, where appropriate, quarterly averages have
been presented for analysis and have been noted as such. See
Table 2 for annual averages and Table 14 for financial
information presented on a quarterly basis.
All prior period share and per share data have been restated to
reflect a three-for-two stock split effective June 1, 1998, a two-
for-one stock split effective April 1, 1997, and the acquisition
of Grady Holding Company, which was accounted for under the
pooling-of-interests method of accounting.
On May 7, 1999, the Company completed its acquisition of Grady
Holding Company and its subsidiary, First National Bank of Grady
County in Cairo, Georgia. First National Bank of Grady County is
a $114 million asset institution with offices in Cairo and
Whigham, Georgia. The Company issued 21.50 shares for each of the
60,910 shares of First National Bank of Grady County.
On December 4, 1998, the Company completed its purchase and
assumption transaction with First Union National Bank ("First
Union") and acquired eight of First Union's branch offices which
included deposits. The Company paid a deposit premium of $16.9
million, and assumed $219 million in deposits and acquired
certain real estate. The deposit premium is being amortized over
ten years. Average balances and earnings of the Company for 1998
were not significantly impacted by the acquisition.
On January 31, 1998, the Company completed its purchase and
assumption transaction with First Federal Savings & Loan
Association of Lakeland, Florida ("First Federal-Florida") and
acquired five of First Federal-Florida's branch offices which
included loans and deposits. The Company paid a premium of $3.6
million, or 6.33%, and assumed $55 million in deposits and
purchased loans equal to $44 million. Four of the five offices
were merged into existing offices of Capital City Bank. The
premium is being amortized over fifteen years.
On October 18, 1997, the Company consolidated its three remaining
bank affiliates into Capital City Bank. See Note 20 in the Notes
to Consolidated Financial Statements for further information.
The bank is headquartered in Tallahassee and, as of December 31,
1999, had forty-seven offices covering seventeen counties in
Florida and one county in Georgia.
EARNINGS ANALYSIS
Earnings, including the effects of merger-related expenses and
intangible amortization, were $15.3 million in 1999 and 1998, or
$1.50 per diluted share. This compares to $14.4 million, or
$1.43 per diluted share in 1997. During 1999, merger-related
expenses, net of taxes, totaled $1.2 million, or $.12 per diluted
share, compared to $75,000, or $.01 per diluted share in 1998 and
$403,000, or $.04 per diluted share in 1997. Amortization of
intangible assets, net of taxes, in 1999 totaled $1.9 million, or
$.19 per diluted share, compared to $928,000, or $.09 per diluted
share in 1998 or $731,000, or $.07 per diluted share in 1997.
In 1999, excluding merger-related expenses, earnings increased
$1.1 million, or 7.0%, due primarily to revenue growth.
Operating revenues (defined as taxable equivalent net interest
income) grew $7.2 million, or 9.3%, over 1998. This and other
factors are discussed throughout the Financial Review. A
condensed earnings summary is presented in Table 1.
Table 1
CONDENSED SUMMARY OF EARNINGS
(Dollars in Thousands, Except Per Share Data)(1)
For the Years Ended December 31,
1999 1998 1997
---------------------------------
Interest Income $ 99,685 $89,010 $84,981
Taxable Equivalent Adjustments 1,761 1,402 1,610
-------- ------- -------
Total Interest Income (FTE) 101,446 90,412 86,591
Interest Expense 41,247 35,248 32,688
-------- ------- -------
Net Interest Income (FTE) 60,199 55,164 53,903
Provision for Loan Losses 2,440 2,439 2,328
Taxable Equivalent Adjustments 1,761 1,402 1,610
-------- ------- -------
Net Interest Income After Provision
for Loan Losses 55,998 51,323 49,965
Noninterest Income 24,761 22,584 19,484
Noninterest Expense 58,028 50,444 47,836
-------- ------- -------
Income Before Income Taxes 22,731 23,463 21,613
Income Taxes 7,479 8,169 7,212
-------- ------- -------
Net Income $ 15,252 $15,294 $14,401
======== ======= =======
Basic Net Income Per Share $ 1.50 $ 1.51 $ 1.44
======== ======= =======
Diluted Net Income Per Share $ 1.50 $ 1.50 $ 1.43
======== ======= =======
(1) All share and per share data have been restated to reflect
the pooling-of-interests of Grady Holding Company and its
subsidiaries and adjusted to reflect the 2-for-1 stock split
effective April 1, 1997, and the 3-for-2 stock split effective
June 1, 1998.
Net Interest Income
Net interest income represents the Company's single largest
source of earnings and is equal to interest income and fees
generated by earning assets,less interest expense paid on
interest bearing liabilities. An analysis of the Company's net
interest income, including average yields and rates, is presented
in Tables 2 and 3. This information is presented on a "taxable
equivalent" basis to reflect the tax-exempt status of income
earned on certain loans and investments, the majority of which
are state and local government debt obligations.
In 1999, taxable equivalent net interest income increased $5.0
million, or 9.1%. This follows an increase of $1.3 million, or
2.4% in 1998, and $6.3 million, or 13.2%, in 1997. The increase
in taxable equivalent net interest income during 1999 is due to
growth in earning assets attributable to the assumption of
deposits from First Union. The favorable impact of asset growth
was partially offset by declining yields reflecting the overall
change in the earning asset mix.
<TABLE>
Table 2
AVERAGE BALANCES AND INTEREST RATES(Taxable Equivalent Basis - Dollars
in Thousands)
<CAPTION>
1999 1998 1997
----------------------------------------------------------------------------------------------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Loans, Net of Unearned
Interest(1)(2) $ 884,323 $ 78,646 8.89% $ 824,197 $76,104 9.23% $ 770,416 $72,365 9.39%
Taxable Investment
Securities 232,085 13,229 5.70 107,484 6,417 5.97 124,576 7,919 6.36
Tax-Exempt Investment
Securities(2) 101,994 6,013 5.89 67,297 4,315 6.41 69,956 4,693 6.71
Funds Sold 72,860 3,558 4.88 66,699 3,576 5.36 35,518 1,614 4.54
---------- -------- ---- --------- ------- ---- ---------- ------- ----
Total Earning Assets 1,291,262 101,446 7.86 1,065,677 90,412 8.48 1,000,466 86,591 8.66
Cash & Due From Banks 67,410 53,293 53,255
Allowance For Loan Losses (10,132) (10,056) (9,736)
Other Assets 95,529 71,871 64,103
---------- ---------- ----------
TOTAL ASSETS $1,444,069 $1,180,785 $1,108,088
========== ========== ==========
Liabilities:
NOW Accounts $ 155,584 $ 3,134 2.01% $ 119,134 $ 2,223 1.87% $ 115,663 $ 1,978 1.71%
Money Market Accounts 155,594 5,766 3.71 86,244 2,562 2.97 83,684 2,510 3.00
Savings Accounts 115,789 2,453 2.12 101,007 2,243 2.22 95,323 2,008 2.11
Other Time Deposits 546,433 26,962 4.93 469,087 25,091 5.35 433,300 22,934 5.29
---------- -------- ---- ---------- ------- ---- ---------- ------- ----
Total Interest
Bearing Deposits 973,400 38,315 3.94 775,472 32,119 4.14 727,970 29,430 4.04
Funds Purchased 40,920 1,756 4.29 37,797 1,842 4.87 31,518 1,659 5.26
Other Short-Term Borrowings 1,397 60 4.30 1,190 62 5.21 5,976 315 5.27
Long-Term Debt 17,274 1,116 6.46 18,041 1,225 6.79 19,412 1,284 6.61
---------- -------- ---- ---------- ------- ---- ---------- ------- ----
Total Interest Bearing
Liabilities 1,032,991 41,247 3.99 832,500 35,248 4.23 784,876 32,688 4.16
Noninterest Bearing Deposits 264,005 -------- ---- 209,647 ------- ---- 196,921 ------- ----
Other Liabilities 16,015 14,991 16,343
---------- ---------- ----------
TOTAL LIABILITIES 1,313,011 1,057,138 998,140
Shareowners' Equity:
Common Stock 102 102 100
Additional Paid-In Capital 8,882 8,040 5,831
Retained Earnings 122,074 115,505 104,017
---------- ---------- ----------
TOTAL SHAREOWNERS' EQUITY 131,058 123,647 109,948
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREOWNERS' EQUITY $1,444,069 $1,180,785 $1,108,088
========== ========== ==========
Interest Rate Spread 3.87% 4.25% 4.50%
==== ==== ====
Net Interest Income $ 60,199 $55,164 $53,903
======== ======= =======
Net Interest Margin(3) 4.67% 5.18% 5.39%
==== ==== ====
(1) Average balances include nonaccrual loans. Interest income includes fees on
loans of approximately $3.5 million, $3.2 million and $3.0 million in 1999,
1998, and 1997, respectively.
(2) Interest income includes the effects of taxable equivalent adjustments
using a 35% tax rate to adjust interest on tax-exempt loans and securities to a
taxable equivalent basis.
(3) Taxable equivalent net interest income divided by earning assets.
</TABLE>
<TABLE>
Table 3
RATE/VOLUME ANALYSIS(1)
(Taxable Equivalent Basis - Dollars in Thousands)
<CAPTION>
1999 Changes from 1998 1998 Changes from 1997
------------------------------- -------------------------------
Due To Due To
Average Average
-------------------- -------------------
Total Volume Rate Total Volume Rate
------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS:
Loans, Net of Unearned Interest(2) $ 2,542 $ 5,550 $(3,008) $3,739 $5,050 $(1,311)
Investment Securities
Taxable 6,812 7,439 (627) (1,502) (1,087) (415)
Tax-Exempt 1,698 2,224 (526) (378) (178) (200)
Funds Sold and Interest
Bearing Deposits (18) 330 (348) 1,962 1,416 546
------- ------- ------- ------ ------ -------
Total 11,034 15,543 (4,509) 3,821 5,201 (1,380)
------- ------- ------- ------ ------ -------
Interest Bearing Liabilities:
NOW Accounts 911 682 229 245 (59) 186
Money Market Accounts 3,204 2,060 1,144 52 (77) (25)
Savings Accounts 210 328 (118) 235 (120) 115
Other Time Deposits 1,871 4,138 (2,267) 2,157 (1,893) 264
Short-Term Borrowings (88) 163 (251) (70) 78 (148)
Long-Term Debt (109) (52) (57) (59) (91) 32
------- ------- ------- ------ ------ -------
Total 5,999 7,319 (1,320) 2,560 (2,136) 424
------- ------- ------- ------ ------ -------
Changes in Net Interest Income $ 5,035 $ 8,224 $(3,189) $1,261 $3,065 $(1,804)
======= ======= ======= ====== ====== =======
(1) This table shows the change in net interest income for comparative periods
based on either changes in average volume or changes in average rates for
earning assets and interest bearing liabilities. Changes which are not solely
due to volume changes or solely due to rate changes have been attributed to rate changes.
(2) Interest income includes the effects of taxable equivalent adjustments
using a 35% tax rate to adjust interest on tax-exempt loans and securities to a
taxable equivalent basis.
</TABLE>
For the year 1999, taxable equivalent interest income increased
$11.0 million, or 12.2%, over 1998, compared to an increase of
$3.8 million, or 4.4%, in 1998 over 1997. The Company's taxable
equivalent yield on average earning assets of 7.86% represents a
62 basis point decrease from 1998, compared to a 18 basis point
decline in 1998 over 1997. During 1999, interest income was
positively impacted by purchase of approximately $200 million in
investment securities in the fourth quarter of 1998 and continued
loan growth. This was partially offset by lower yields on
earning assets resulting from the change in the earning asset mix
and increased competition. The loan portfolio, which is the
largest and highest yielding component of average earning assets,
decreased from 81.3% in the fourth quarter of 1998, to 68.5% in
the comparable quarter of 1999, reflecting the acquisition of
$219 million in deposits from First Union.
Interest expense increased $6.0 million, or 17.0%, over 1998,
compared to an increase of $2.6 million, or 7.8%, in 1998 over
1997. The higher level of interest expense in 1999 is
attributable to the assumption of deposits from First Union. The
average rate paid on interest-bearing liabilities was 3.99% in
1999, compared to 4.23% and 4.16%, in 1998 and 1997,
respectively. The decrease in the average rate during 1999 is a
direct result of a shift in the mix of deposits. As a percent of
average deposits, Certificates of Deposit (a higher cost deposit
product) declined to 44.1% in 1999, from 47.6% in 1998, and 46.9%
in 1997. The reduction in interest expense attributable to the
shift in mix was partially offset by an increase in the average
rate paid on money market accounts.
The Company's interest rate spread (defined as the taxable
equivalent yield on average earning assets less the average rate
paid on interest bearing liabilities) decreased 38 and 25 basis
points in 1999 and 1998, respectively. The decrease in 1999 is
attributable to the change in earning asset mix resulting from
the assumption as discussed above. The decrease in 1998 is
attributable to the lower yield on earning assets resulting from
the lower rate environment.
The Company's net interest margin (defined as taxable equivalent
interest income less interest expense divided by average earning
assets) was 4.67% in 1999, compared to 5.18% in 1998 and 5.39% in
1997. In 1999, the shift in the earning asset mix resulted in a
51 basis point decline in the margin.
A further discussion of the Company's earning assets and funding
sources can be found in the section entitled "Financial
Condition."
Provision for Loan Losses
The provision for loan losses was $2.4 million in 1999 and 1998,
compared to $2.3 million in 1997. The provision approximates
total net charge-offs for 1999 and 1998. The Company's credit
quality measures improved with a nonperforming assets ratio of
.42% compared to .79% at year-end 1998, and a net charge-off
ratio of .26% versus .28% in 1998.
At December 31, 1999, the allowance for loan losses totaled $9.9
million compared to $9.8 million in 1998. At year-end 1999, the
allowance represented 1.07% of total loans and 332% of
nonperforming loans. Management considers the allowance to be
adequate based on the current level of nonperforming loans and
the estimate of losses inherent in the portfolio at year-end.
See the section entitled "Financial Condition" for further
information regarding the allowance for loan losses. Selected
loss coverage ratios are presented below:
1999 1998 1997
---------------------------
Provision for Loan Losses as a
Multiple of Net Charge-offs 1.0x 1.1x 1.1x
Pre-tax Income Plus Provision
for Loan Losses as a Multiple
of Net Charge-offs 10.8x 11.4x 11.3x
Noninterest Income
In 1999, noninterest income increased $2.2 million, or 9.6%, and
represented 29.1% of taxable equivalent operating revenue,
compared to $3.1 million, or 15.9%, and 29.0% in 1998. The
increase in the level of noninterest income is attributable to
all major categories with the exception of data processing
revenues and gains on the sale of 1-4 family loans. Factors
affecting noninterest income are discussed below.
Service charges on deposit accounts increased $1.4 million, or
16.8%, in 1999, compared to a decrease of $453,000, or 5.0%, in
1998. Service charge revenues in any one year are dependent on
the number of accounts, primarily transaction accounts, the level
of activity subject to service charges and the collection rate.
The increase in 1999 reflects a fee increase implemented in
November 1998 and an increase in the number of accounts. The
decrease in 1998 is primarily attributable to higher compensating
balances and an increase in charged-off deposit accounts.
Data processing revenues decreased $662,000, or 18.8%, in 1999
versus an increase of $363,000, or 11.5%, in 1998. The data
processing center provides computer services to both financial
and non-financial clients in North Florida and South Georgia. In
1999, the decrease reflects lower processing revenues with
government agencies. In 1999, processing revenues for non-
financial entities represented approximately 33% of the total
processing revenues, down from 45% in 1998, reflecting growth in
processing revenues for financial entities and a decline in
revenues for non-financial entities. In 1998, the Company
changed its method of income recognition on data processing
revenues from the cash to the accrual method. This resulted in a
one-time adjustment which increased revenues by $225,000.
In 1999, trust fees increased $466,000, or 26.5%, compared to
$559,000, or 46.5% in 1998. Increases in both years were
attributable to growth in assets under management. At year-end
1999, assets under management totaled $307.5 million, reflecting
growth of $46.3 million, or 17.7%. For the comparable period in
1998, assets under management totaled $261.2 million, reflecting
growth of $75.5 million, or 40.6%.
Other noninterest income increased $1.0 million, or 12.0%, in
1999 versus an increase of $2.5 million, or 41.2% in 1998. The
increase in 1999 was attributable to ATM fees, brokerage
revenues, business manager fees, interchange commission fees and
gains on the sale of bank assets. The increase in other
noninterest income in 1998 was attributable to ATM fees,
brokerage revenues, and gains recognized on the sale of real
estate loans.
Noninterest income as a percent of average assets was 1.71% in
1999, compared to 1.91% in 1998 and 1.76% in 1997.
Noninterest Expense
Noninterest expense for 1999 was $58.0 million, an increase of
$7.6 million, or 15.0%, over 1998, compared with an increase of
$2.6 million, or 5.5%, in 1998 over 1997. Factors impacting the
Company's noninterest expense during 1999 and 1998 are discussed
below.
The Company's aggregate compensation expense in 1999 totaled
$29.0 million, an increase of $2.4 million, or 8.9%, over 1998.
The increase was primarily in salaries to the addition of nine
offices and normal raises. In 1998, total compensation increased
$678,000, or 2.6%, over 1997. Salaries increased $1.5 million
due to normal raises and staff additions. In addition to
acquisitions, the Company added staff to capitalize on
competitive opportunities arising as a result of mergers of other
commercial banks within its market. Offsetting the increase in
salaries were reductions in pension expense and stock incentives.
Occupancy expense (including furniture, fixtures & equipment)
increased by $1.3 million, or 14.8%, in 1999, compared to
$566,000, or 6.9%, in 1998. The addition of eight offices
acquired from First Union resulted in higher costs in all
occupancy categories. The most significant increases occurred in
premises rental, utilities, and maintenance costs. The increase
in 1998 was attributable to higher cost for maintenance and
repair which increased $502,000, or 18.7%.
Merger-related expenses totaled $1.4 million, $115,000 and
$655,000, in 1999, 1998 and 1997 respectively. The costs for
1999 and 1998 were attributable to the acquisition of Grady
Holding Company and its subsidiaries. In 1997, merger-related
expenses represent restructuring changes associated with the
consolidation of three subsidiary banks into Capital City Bank.
Other noninterest expense increased $2.6 million and $1.43
million in 1999 and 1998, or 17.0% and 10.0%, respectively. The
increase in 1999 was attributable to: (1) an increase in
amortization expense of approximately $1.6 million due to the
acquisition of First Union offices; (2) an increase in telephone
expense of $281,000, as a result of implementing a wide-area
network; (3) an increase in postage costs of $383,000 due to
postal rate increase and higher volume with the addition of the
new offices; and (4) YEAR 2000 expenses. The increase in 1998
was attributable to: (1) an increase in amortization expense of
approximately $335,000 due to the acquisitions of First Federal-
Florida and First Union offices; (2) an increase in advertising
costs of $463,000 due to greater product and market development;
and (3) an increase in printing and supplies costs of $143,000.
Net noninterest expense ratio (defined as noninterest income
minus noninterest expense, net of intangible amortization, as a
percent of average assets) was 2.01% in 1999 compared to 2.25% in
1998 and 2.42% in 1997. The Company's efficiency ratio
(expressed as noninterest expense, net of intangible amortization
and special charges, as a percent of taxable equivalent operating
revenues) was 63.4%, 63.3%, and 63.1% in 1999, 1998, and 1997,
respectively.
Income Taxes
The consolidated provision for federal and state income taxes was
$7.5 million in 1999 compared to $8.2 million in 1998 and $7.2
million in 1997. The decrease in the 1999 tax provision from
1998 is primarily attributable to the higher level of tax-exempt
income.
The effective tax rate was 32.9% in 1999, 34.8% in 1998, and
33.4% in 1997. These rates differ from the statutory tax rates
due primarily to tax-exempt income. The decrease in the
effective tax rate for 1999 is primarily attributable to the
increasing level of tax-exempt income relative to pre-tax income.
Tax-exempt income (net of the adjustment for disallowed interest)
as a percent of pre-tax income was 26.5% in 1999, 18.0% in 1998,
and 21.7% in 1997.
FINANCIAL CONDITION
Average assets increased $263.3 million, or 22.3%, from $1.2
billion in 1998 to $1.4 billion in 1999. Average earning assets
increased to $1.3 billion in 1999, a $225.6 million, or 21.2%,
increase over 1998. Average investment securities and average
loans increased $159.3 million and $60.0 million, or 91.1% and
7.3%, respectively, and accounted for 70.6% and 27.7% of the
total growth in average earning assets. Loan growth in 1999 was
funded primarily through deposits acquired through acquisitions
and maturities in the investment portfolio.
Table 2 provides information on average balances while Table 4
highlights the changing mix of the Company's earning assets over
the last three years.
Loans
Local markets were generally improved during 1999. Loan growth
was strong throughout the year with the residential portfolio
representing a significant portion of the growth. The First
Union acquisition completed in the fourth quarter of 1998
increased the number of markets served and enhanced the Company's
line of products and services. Price and product competition
remained strong during 1999. There has been demand for both
fixed and variable rate, longer-term financing.
Although management is continually evaluating alternative sources
of revenue, lending is a major component of the Company's
business and is key to profitability. While management strives
to grow the Company's loan portfolio, it can do so only by
adhering to sound lending principles applied in a prudent and
consistent manner. Management consistently strives to identify
opportunities to increase loans outstanding and enhance the
portfolio's overall contribution to earnings.
<TABLE>
Table 4
SOURCES OF EARNING ASSET GROWTH
(Average Balances - Dollars in Thousands)
<CAPTION>
1998 to Percentage Components
1999 of Total of Average Earning Assets
Change Change 1999 1998 1997
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans:
Commercial, Financial
and Agricultural $ 8,167 3.6% 7.2% 8.0% 8.3%
Real Estate - Construction 7,392 3.3 4.3 4.5 4.5
Real Estate - Mortgage 37,445 16.6 44.2 49.9 49.1
Consumer 7,122 3.2 12.8 14.9 15.1
-------- ----- ----- ----- -----
Total Loans 60,126 26.7 68.5 77.3 77.0
-------- ----- ----- ----- -----
Securities:
Taxable 124,601 55.2 18.0 10.1 12.4
Tax-Exempt 34,697 15.4 7.9 6.3 7.0
-------- ----- ----- ----- -----
Total Securities 159,298 70.6 25.9 16.4 19.4
-------- ----- ----- ----- -----
Funds Sold 6,161 2.7 5.6 6.3 3.6
-------- ----- ----- ----- -----
Total Earning Assets $225,585 100.0% 100.0% 100.0% 100.0%
======== ===== ===== ===== =====
</TABLE>
The Company's average loan-to-deposit ratio decreased from 83.7%
in 1998 to 71.5% in 1999. This compares to an average loan-to-
deposit ratio in 1997 of 83.3%. The lower average loan-to-
deposit ratio reflects the assumption of deposits from First
Union. The generation of loans during 1999 increased the fourth
quarter loan-to-deposit ratio to 74.1%.
Real estate loans, combined, represented 71.1% of total loans in
1999 versus 70.3% in 1998. See the section entitled "Risk
Element Assets" for a discussion concerning loan concentrations.
The composition of the Company's loan portfolio at December 31,
for each of the past five years is shown in Table 5. Table 6
arrays the Company's total loan portfolio as of December 31,
1999, based upon maturities. Demand loans and overdrafts are
reported in the category of one year or less. As a percent of
the total portfolio, loans with fixed interest rates have
decreased from 41.6% in 1998, to 33.0% in 1999.
Allowance for Loan Losses
Management attempts to maintain the allowance for loan losses at
a level sufficient to provide for estimated losses inherent in
the loan portfolio. The allowance for loan losses is established
through a provision charged to expense. Loans are charged
against the allowance when management believes collection of the
principal is unlikely.
Management evaluates the adequacy of the allowance for loan
losses on a quarterly basis. The evaluations are based on the
collectibility of loans and take into consideration such factors
as growth and composition of the loan portfolio, evaluation of
potential losses, past loss experience and general economic
conditions. As part of these evaluations, management reviews all
loans which have been classified internally or through regulatory
examination and, if appropriate, allocates a specific reserve to
each of these individual loans. Further, management establishes
a general reserve to provide for losses inherent in the loan
portfolio which are not specifically identified. The general
reserve is based upon management's evaluation of the current and
forecasted operating and economic environment coupled with
historical experience. The allowance for loan losses is compared
against the sum of the specific reserves plus the general reserve
and adjustments are made, as appropriate. Table 7 analyzes the
activity in the allowance over the past five years.
<TABLE>
Table 5
LOANS BY CATEGORY
(Dollars in Thousands)
<CAPTION>
As of December 31,
----------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial, Financial and
Agricultural $ 98,894 $ 91,246 $ 82,641 $ 82,724 $ 67,975
Real Estate - Construction 62,166 51,790 51,098 46,415 32,848
Real Estate - Mortgage 214,036 542,044 492,778 472,052 288,716
Real Estate - Residential(1) 383,536 - - - -
Consumer 169,854 159,137 148,934 143,935 120,629
-------- -------- -------- -------- --------
Total Loans, Net of
Unearned Interest $928,486 $844,217 $775,451 $745,126 $510,168
======== ======== ======== ======== ========
(1) Real Estate - Residential loan information included in Real
Estate - Mortgage category for 1998, 1997, 1996 and 1995.
</TABLE>
Table 6
LOAN MATURITIES
(Dollars in Thousands)
Maturity Periods
----------------------------------------------
Over One Over
One Year Through Five
Or Less Five Years Years Total
----------------------------------------------
Commercial, Financial and
Agricultural $ 32,367 $ 55,892 $ 10,635 $ 98,894
Real Estate 104,335 68,149 487,254 659,738
Consumer 42,862 122,876 4,116 169,854
-------- -------- -------- --------
Total $179,564 $246,917 $502,005 $928,486
======== ======== ======== ========
Loans with Fixed Rates $ 73,132 $153,327 $ 79,966 $306,425
Loans with Floating or
Adjustable Rates 106,432 93,590 422,039 622,061
-------- -------- -------- --------
Total $179,564 $246,917 $502,005 $928,486
======== ======== ======== ========
The allowance for loan losses at December 31, 1999 of $9.9
million compares to $9.8 million at year-end 1998. The allowance
as a percent of total loans was 1.07% in 1999 versus 1.16% in
1998. There can be no assurance that in particular periods the
Company will not sustain loan losses which are substantial in
relation to the size of the allowance. When establishing the
allowance, management makes various estimates regarding the value
of collateral and future economic events. Actual experience may
differ from these estimates. It is management's opinion that the
allowance at December 31, 1999, is adequate to absorb losses from
loans in the portfolio as of year-end.
Table 8 provides an allocation of the allowance for loan losses
to specific loan categories for each of the past five years. The
allocation of the allowance is developed using management's best
estimates based upon available information such as regulatory
examinations, internal loan reviews and historical data and
trends. The allocation by loan category reflects a base level
allocation derived primarily by analyzing the level of problem
loans, specific reserves and historical charge-off data. Current
and forecasted economic conditions, and other judgmental factors
which cannot be easily quantified (e.g. concentrations), are not
presumed to be included in the base level allocations, but
instead are covered by the unallocated portion of the reserve.
The Company faces a geographic concentration as well as a
concentration in real estate lending. Both risks are cyclical in
nature and must be considered in establishing the overall
allowance for loan losses. Reserves in excess of the base level
reserves are maintained in order to properly reserve for the
losses inherent in the Company's portfolio due to these
concentrations and anticipated periods of economic difficulties.
As part of its YEAR 2000 contingency plan (discussed on page 41),
the Company has reviewed its significant borrowers and allocated
reserves to address the impact of the YEAR 2000 issue.
Table 7
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(Dollars in Thousands)
For the Years Ended December 31,
---------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------
Balance at Beginning of Year $9,827 $9,662 $9,450 $7,522 $8,412
Acquired Reserves - - - 1,769 -
Charge-Offs:
Commercial, Financial
and Agricultural 480 127 568 594 601
Real Estate - Construction - 15 31 - -
Real Estate - Mortgage 354 1,011 485 119 139
Real Estate - Residential(1) 251 - - - -
Consumer 2,113 2,004 1,978 1,691 1,310
------ ------ ------ ------ ------
Total Charge-Offs 3,198 3,157 3,062 2,404 2,050
------ ------ ------ ------ ------
Recoveries:
Commercial, Financial
and Agricultural 142 72 378 235 204
Real Estate - Construction - 142 - 3 -
Real Estate - Mortgage 84 176 83 - 10
Real Estate - Residential(1) 11 - - - -
Consumer 623 493 485 462 413
------ ------ ------ ------ ------
Total Recoveries 860 883 946 700 627
------ ------ ------ ------ ------
Net Charge-Offs 2,338 2,274 2,116 1,704 1,423
------ ------ ------ ------ ------
Provision for Loan Losses 2,440 2,439 2,328 1,863 533
------ ------ ------ ------ ------
Balance at End of Year $9,929 $9,827 $9,662 $9,450 $7,522
====== ====== ====== ====== ======
Ratio of Net Charge-Offs
to Average Loans Outstanding .26% .28% .28% .27% .29%
====== ====== ====== ====== ======
Allowance for Loan Losses as a
Percent of Loans at End of Year 1.07% 1.16% 1.25% 1.27% 1.47%
====== ====== ====== ====== ======
Allowance for Loan Losses as a
Multiple of Net Charge-Offs 4.25x 4.32x 4.57x 5.55x 5.29x
====== ====== ====== ====== ======
(1) Real Estate - Residential Charge-off and recovery information included
in Real Estate - Mortgage category for 1998, 1997, 1996 and 1995.
Risk Element Assets
Risk element assets consist of nonaccrual loans, renegotiated
loans, other real estate, loans past due 90 days or more,
potential problem loans and loan concentrations. Table 9 depicts
certain categories of the Company's risk element assets as of
December 31, for each of the last five years. Potential problem
loans and loan concentrations are discussed within the narrative
portion of this section.
The Company's nonperforming loans decreased $2.2 million, or
42.3%, from a level of $5.2 million at December 31, 1998 to $3.0
million at December 31, 1999. During 1999, loans totaling
approximately $4.0 million were added, while loans totaling $6.2
million were removed from nonaccruing status. Of the $6.2
million removed from the nonaccrual category, $3.5 million
consisted of principal reductions, $780,000 represented loans
transferred to ORE, $1.2 million consisted of loans brought
current and returned to an accrual status and loans refinanced,
and $727,000 was charged off. Where appropriate, management has
allocated specific reserves to absorb anticipated losses. A
majority of the Company's charge-offs in 1999 were in the
consumer portfolio where loans are charged off based on past due
status and are not recorded as nonaccruing loans.
<TABLE>
Table 8
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
(Dollars in Thousands)
<CAPTION>
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------
Percent Percent Percent Percent Percent
of Loans of Loans of Loans of Loans of Loans
in Each in Each in Each in Each in Each
Allow- Category Allow- Category Allow- Category Allow- Category Allow- Category
ance To Total ance To Total ance To Total ance To Total ance To Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, Financial
and Agricultural $1,648 10.7% $1,330 10.8% $ 665 10.7% $ 605 11.1% $ 708 13.3%
Real Estate:
Construction 379 6.7 468 6.1 382 6.6 274 6.2 177 6.4
Mortgage 2,340 23.0 2,664 64.2 2,078 63.5 3,282 63.4 2,886 56.6
Residential(1) 160 41.3 - - - - - - - -
Consumer 2,301 18.3 2,175 18.9 2,137 19.2 1,875 19.3 1,213 23.7
Not Allocated 3,101 - 3,190 - 4,400 - 3,414 - 2,538 -
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total $9,929 100.0% $9,827 100.0% $9,662 100.0% $9,450 100.0% $7,522 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
(1) Real Estate - Residential allowance for loan losses information
included in
Real Estate - Mortgage category for 1998, 1997, 1996 and 1995.
</TABLE>
Table 9
RISK ELEMENT ASSETS
(Dollars in Thousands)
As of December 31,
-------------------------------------------
1999 1998 1997 1996 1995
-------------------------------------------
Nonaccruing Loans $2,965 $4,996 $1,403 $2,811 $3,151
Restructured 26 195 224 262 1,686
------ ------ ------ ------ ------
Total Nonperforming Loans 2,991 5,191 1,627 3,073 4,837
Other Real Estate 934 1,468 1,244 1,489 1,001
------ ------ ------ ------ ------
Total Nonperforming Assets $3,925 $6,659 $2,871 $4,562 $5,838
====== ====== ====== ====== ======
Past Due 90 Days or More $ 781 $1,124 $ 994 $ 638 $ 317
====== ====== ====== ====== ======
Nonperforming Loans to Loans .32% .61% .21% .41% .95%
====== ====== ====== ====== ======
Nonperforming Assets to Loans,
Plus Other Real Estate .42% .79% .37% .61% 1.14%
====== ====== ====== ====== ======
Nonperforming Assets to Capital(1) 2.76% 4.80% 2.28% 4.06% 5.81%
====== ====== ====== ====== ======
Reserve to Nonperforming Loans 331.96% 189.31% 593.85% 307.52% 155.51%
======= ======= ======= ======= =======
(1) For computation of this percentage, "capital" refers to
shareowners' equity plus the allowance for loan losses.
The majority of nonaccrual loans are collateralized with real
estate. Management continually reviews these loans and believes
specific reserve allocations are sufficient to cover the loss
exposure associated with these loans.
Interest on nonaccrual loans is generally recognized only when
received. Cash collected on nonaccrual loans is applied against
the principal balance or recognized as interest income based upon
management's expectations as to the ultimate collectibility of
principal and interest in full. If interest on nonaccruing loans
had been recognized on a fully accruing basis, interest income
recorded would have been $317,000 higher for the year ended
December 31, 1999.
Restructured loans are those with reduced interest rates or
deferred payment terms due to deterioration in the financial
position of the borrower.
Other real estate totaled $934,000 at December 31, 1999 versus
$1.5 million at December 31, 1998. This category includes
property owned by Capital City Bank which was acquired either
through foreclosure procedures or by receiving a deed in lieu of
foreclosure. During 1999, the Company added properties totaling
$1.4 million (including parcels of bank premises) and partially
or completely liquidated properties totaling $2.0 million,
resulting in a net decrease in other real estate of approximately
$600,000. Management does not anticipate any significant losses
associated with other real estate.
Potential problem loans are defined as those loans which are now
current but where management has doubt as to the borrower's
ability to comply with present loan repayment terms. Potential
problem loans totaled $5.8 million at December 31, 1999.
Loan concentrations are considered to exist when there are
amounts loaned to a multiple number of borrowers engaged in
similar activities which cause them to be similarly impacted by
economic or other conditions and such amounts exceed 10% of total
loans. Due to the lack of diversified industry within the
markets served by the Bank and the relatively close proximity of
the markets, the Company has both geographic concentrations as
well as concentrations in the types of loans funded. Further, due
to the nature of the Company's markets, a significant portion of
the portfolio is associated either directly or indirectly with
real estate. At December 31, 1999, approximately 71% of the
portfolio consisted of real estate loans. Residential properties
comprise approximately 58.1% of the real estate portfolio.
Management is continually analyzing its loan portfolio in an
effort to identify and resolve its problem assets as quickly and
efficiently as possible. As of December 31, 1999, management
believes it has identified and adequately reserved for such
problem assets. However, management recognizes that many factors
can adversely impact various segments of its markets, creating
financial difficulties for certain borrowers. As such,
management continues to focus its attention on promptly
identifying and providing for potential losses as they arise.
Investment Securities
In 1999, the Company's average investment portfolio increased
$159.3 million, or 91.1%, compared to a decrease of $19.8
million, or 10.2% in 1998. As a percentage of average earning
assets, the investment portfolio represented 25.5% in 1999,
compared to 16.4% in 1998. The increase in the portfolio was
attributable to the purchase of approximately $200.0 million in
investment securities in December 1998, as a result of the
assumption of deposits from First Union.
In 1999, average taxable investments increased $124.6 million, or
115.9%, while tax-exempt investments increased $34.7 million, or
51.6%. Since the enactment of the Tax Reform Act of 1986, which
significantly reduced the tax benefits associated with tax-exempt
investments, management has monitored the level of tax-exempt
investments. The tax-exempt portfolio, as a percent of average
earning assets, has declined from 18.9% in 1986 to 7.9% in 1999.
Management continues to purchase "bank qualified" municipal
issues when it considers the yield to be attractive and the
Company can do so without adversely impacting its tax position.
The investment portfolio is a significant component of the
Company's operations and, as such, it functions as a key element
of liquidity and asset/liability management. Securities may be
classified as held-to-maturity, available-for-sale or trading.
As of December 31, 1999, all securities are classified as
available-for-sale. Classifying securities as available-for-sale
offers management full flexibility in managing its liquidity and
interest rate sensitivity without adversely impacting its
regulatory capital levels. Securities in the available-for-sale
portfolio are recorded at fair value and unrealized gains and
losses associated with these securities are recorded, net of tax,
in the accumulated other comprehensive income component of
shareowners' equity. At December 31, 1999, shareowners' equity
included a net unrealized loss of $6.2 million, compared to a
gain of $678,000 at December 31, 1998. It is neither
management's intent nor practice to participate in the trading of
investment securities for the purpose of recognizing gains and
therefore the Company does not maintain a trading portfolio.
The average maturity of the total portfolio at December 31, 1999
and 1998, was 3.38 and 2.98 years, respectively. See Table 10
for a breakdown of maturities by portfolio.
The weighted average taxable-equivalent yield of the investment
portfolio at December 31, 1999, was 5.74% versus 5.75% in 1998.
The quality of the municipal portfolio at such date is depicted
in the chart below. There were no investments in obligations,
other than U.S. Governments, of any one state, municipality,
political subdivision or any other issuer that exceeded 10% of
the Company's shareowners' equity at December 31, 1999.
Table 10 and Note 3 in Notes to Consolidated Financial Statements
present a detailed analysis of the Company's investment
securities as to type, maturity and yield.
MUNICIPAL PORTFOLIO QUALITY
(Dollars in Thousands)
Moody's Rating Amortized Cost Percentage
----------------------------------------------
AAA $ 65,439 63.9%
AA-1 3,904 3.8
AA-2 3,936 3.8
AA-3 2,286 2.2
AA 301 .3
A-1 2,746 2.7
A-2 2,135 2.1
A-3 196 .2
A 1,009 1.0
BAA 418 .4
Not Rated(1) 20,003 19.6
-------- -----
Total $102,373 100.0%
======== =====
(1) Of the securities not rated by Moody's, $13.7 million are
rated "A" or higher by S&P.
Table 10
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
As of December 31, 1999
------------------------------------------------
Weighted
(Dollars in Thousands) Amortized Cost Market Value Average Yield(1)
--------------------------------------------------------------------------------
U. S. GOVERNMENTS
Due in 1 year or less $ 23,388 $ 23,197 5.33%
Due over 1 year thru 5 years 75 840 73,408 5.46
Due over 5 years thru 10 years - - -
Due over 10 years - - -
-------- -------- ----
TOTAL 99,228 96,605 5.43
STATE & POLITICAL SUBDIVISIONS
Due in 1 year or less 19,217 19,227 6.57
Due over 1 year thru 5 years 47,147 46,546 6.18
Due over 5 years thru 10 years 37,373 36,190 6.09
Due over 10 years 575 528 -
-------- -------- ----
TOTAL 104,312 102,491 6.19
MORTGAGE-BACKED SECURITIES(2)
Due in 1 year or less 146 143 6.17
Due over 1 year thru 5 years 78,436 75,106 5.71
Due over 5 years thru 10 years 6,458 6,151 6.32
Due over 10 years - - -
-------- -------- ----
TOTAL 85,040 81,400 5.75
OTHER SECURITIES
Due in 1 Year or less 2,000 1,998 5.25
Due over 1 year thru 5 years 34,584 32,597 5.72
Due over 5 years thru 10 years 500 496 6.12
Due over 10 years(3) 5,288 5,605 6.90
-------- -------- ----
TOTAL 42,372 40,696 5.58
-------- -------- ----
Total Investment Securities $330,952 $321,192 5.81%
======== ======== ====
(1) Weighted average yields are calculated on the basis of the
amortized cost of the security. The weighted average yields on tax-
exempt obligations are computed on a taxable equivalent basis using a
35% tax rate.
(2) Based on weighted average life.
(3) Federal Home Loan Bank Stock and Federal Reserve Bank Stock do
not have stated maturities.
AVERAGE MATURITY (In Years)
AS OF DECEMBER 31, 1999
U.S. Governments 2.75
State and Political Subdivisions 3.62
Mortgage-Backed Securities 4.14
Other Securities 2.72
----
TOTAL 3.38
====
Deposits and Funds Purchased
Average total deposits increased from $1.0 billion in 1998 to
$1.2 billion in 1999, representing an increase of $252.3 million,
or 25.6%, compared with an increase of $60.2 million, or 6.5%, in
1998. In 1999, the annual average increase is attributable to a
full year impact of the assumption of deposits from First Union
and the continued success of the CashPower Money Market Account.
The increase was partially offset by declines in Certificates of
Deposit, attributable to the maturities of high yielding,
promotional certificates and a more competitive deposit market.
In 1998, the increase is attributable to the acquisition of First
Federal-Florida and internal growth.
The Company continues to experience a notable increase in
competition for deposits, in terms of both rate and product. The
Company introduced CashPower, a higher yielding money market
product in the fourth quarter of 1998. The new CashPower product
has doubled from 1998 levels and represents 42.4% of the money
market balance at year-end 1999.
Table 2 provides an analysis of the Company's average deposits,
by category, and average rates paid thereon for each of the last
three years. Table 11 reflects the shift in the Company's
deposit mix over the last three years and Table 12 provides a
maturity distribution of time deposits in denominations of
$100,000 and over.
Average short-term borrowings, which include federal funds
purchased, securities sold under agreements to repurchase and
other borrowings, increased $3.3 million, or 8.5%. See Note 8 in
the Notes to Consolidated Financial Statements for further
information.
Table 11
SOURCES OF DEPOSIT GROWTH
(Average Balances - Dollars in Thousands)
1998 to Percentage
1999 of Total Components of Total Deposits
Change Change 1999 1998 1997
--------------------------------------------------------
Noninterest Bearing
Deposits $ 54,358 21.5% 21.3% 21.3% 21.1%
NOW Accounts 36,450 14.4 12.6 12.1 12.5
Money Market Accounts 69,350 27.5 12.6 8.8 9.2
Savings 14,782 5.9 9.4 10.2 10.3
Other Time Deposits 77,346 30.7 44.1 47.6 46.9
-------- ----- ----- ----- -----
Total Deposits $252,286 100.0% 100.0% 100.0% 100.0%
======== ===== ===== ===== =====
Table 12
MATURITY DISTRIBUTION OF CERTIFICATES OF DEPOSIT $100,000 OR OVER
(Dollars in Thousands)
December 31, 1999
-----------------------------------------
Time Certificates of Deposit Percent
-----------------------------------------
Three months or less $ 48,199 47.4%
Over three through six months 46,838 46.0
Over six through twelve months 4,392 4.3
Over twelve months 2,313 2.3
-------- -----
Total $101,742 100.0%
======== =====
LIQUIDITY AND CAPITAL RESOURCES
Liquidity for a banking institution is the availability of funds
to meet increased loan demand and/or excessive deposit
withdrawals. Management monitors the Company's financial
position to ensure it has ready access to sufficient liquid funds
to meet normal transaction requirements, take advantage of
investment opportunities and cover unforeseen liquidity demands.
In addition to core deposit growth, sources of funds available to
meet liquidity demands include cash received through ordinary
business activities (i.e. collection of interest and fees),
federal funds sold, loan and investment maturities, bank lines of
credit for the Company and approved lines for the purchase of
federal funds by CCB.
As of December 31, 1999, the Company had a $25.0 million credit
facility under which $22 million was currently available. The
facility offers the Company an unsecured, revolving line of
credit for a period of three years which matures in November
2001. Upon expiration of the revolving line of credit, the
outstanding balance may be converted to a term loan and repaid
over a period of seven years. The term loan is to be secured by
stock of a subsidiary bank equal to at least 125% of the
principal balance of the term loan. The Company, at its option,
may select from various loan rates including Prime, LIBOR or the
lenders' Cost of Funds rate ("COF"), plus or minus increments
thereof. The LIBOR or COF rates may be fixed for a period of up
to six months. The Company also has the option to select fixed
rates for periods of one through five years. On July 1, 1996,
the Company borrowed $15.0 million in connection with the
acquisition of First Financial. In 1999, the Company reduced the
amount of debt to $3.0 million. The average interest rate during
1999 was 7.06%.
The Company's credit facility imposes certain limitations on the
level of the Company's equity capital, and federal and state
regulatory agencies have established regulations which govern the
payment of dividends to a bank holding company by its bank
subsidiaries. As of year-end 1999, the Company was in compliance
with all contractual and/or regulatory requirements.
At December 31, 1999, the Company had $11.3 million in long-term
debt outstanding to the Federal Home Loan Bank of Atlanta. The
debt consists of twelve loans. The interest rates are fixed and
the weighted average rate at December 31, 1999 was 6.01%.
Required annual principal reductions approximate $600,000, with
the remaining balances due at maturity ranging from 2001 to 2018.
The debt was used to match-fund selected lending activities and
is secured by investment securities and first mortgage
residential real estate loans which are included in the Company's
loan portfolio. See Note 9 in the Notes to Consolidated Financial
Statements for additional information as to the Company's long-
term debt.
The Company is a party to financial instruments with off-balance-
sheet risks in the normal course of business to meet the
financing needs of its customers. At December 31, 1999, the
Company had $307.1 million in commitments to extend credit and
$2.6 million in standby letters of credit. Commitments to extend
credit are agreements to lend to a customer so 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 are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent
future cash requirements. Standby letters of credit are
conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. The Company uses the
same credit policies in establishing commitments and issuing
letters of credit as it does for on-balance-sheet instruments.
If commitments arising from these financial instruments continue
to require funding at historical levels, management does not
anticipate that such funding will adversely impact its ability to
meet on-going obligations.
It is anticipated capital expenditures will approximate $4.0 to
$5.0 million over the next twelve months. Management believes
these capital expenditures can be funded internally without
impairing the Company's ability to meet its on-going obligations.
Shareowners' equity as of December 31, for each of the last three years
is presented below.
Shareowners' Equity
(Dollars in Thousands)
1999 1998 1997
------------------------------
Common Stock $ 102 $ 102 $ 101
Additional Paid-in Capital 9,249 8,561 6,544
Retained Earnings 129,055 119,521 108,555
-------- -------- --------
Subtotal 138,406 128,184 115,200
-------- -------- --------
Accumulated Other Comprehensive
Income, Net of Tax (6,190) 678 607
-------- -------- --------
Total Shareowners' Equity $132,216 $128,862 $115,807
======== ======== ========
The Company continues to maintain a strong capital position. The
ratio of shareowners' equity to total assets at year-end was
9.24%, 8.93% and 10.37%, in 1999, 1998 and 1997, respectively.
The Company is subject to risk-based capital guidelines that
measure capital relative to risk weighted assets and off-balance-
sheet financial instruments. Capital guidelines issued by the
Federal Reserve Board require bank holding companies to have a
minimum total risk-based capital ratio of 8.00%, with at least
half of the total capital in the form of Tier 1 capital. Capital
City Bank Group, Inc., exceeded these capital guidelines, with a
total risk-based capital ratio of 12.27% and a Tier 1 ratio of
11.23%, compared to 11.11% and 10.14%, respectively, in 1998.
In addition, a tangible leverage ratio is now being used in
connection with the risk-based capital standards and is defined
as Tier 1 capital divided by average assets. The minimum
leverage ratio under this standard is 3% for the highest-rated
bank holding companies which are not undertaking significant
expansion programs. An additional 1% to 2% may be required for
other companies, depending upon their regulatory ratings and
expansion plans. On December 31, 1999, the Company had a
leverage ratio of 7.92% compared to 7.84% in 1998. See Note 13
in the Notes to Consolidated Financial Statements for additional
information as to the Company's capital adequacy.
Dividends declared and paid totaled $.5525 per share in 1999.
Included in this amount, was approximately $563,000 of a one-time
special distribution paid to Grady Holding Company shareowners.
During the fourth quarter of 1999 the quarterly dividend was
raised 10.4% from $.12 per share to $.1325 per share. The
Company declared dividends of $.43 per share in 1998 and $.37 per
share in 1997. The dividend payout ratio was 32.9%, 28.2%, and
26.1% for 1999, 1998 and 1997, respectively. Dividends declared
per share in 1999 represented a 28.5% increase over 1998.
At December 31, 1999, the Company's common stock had a book value
of $12.97 per share compared to $12.69 in 1998. Beginning in
1994, book value has been impacted by the net unrealized gains
and losses on investment securities available-for-sale. At
December 31, 1999, the net unrealized loss was $6.2 million. At
December 31, 1998, the Company had a net unrealized gain of
$678,000 and thus the net impact on equity for the year was a
decrease in book value of approximately $6.9 million.
The Company began a stock repurchase plan in 1989, which remains
in effect and provides for the repurchase of up to 900,000
shares. As of December 31, 1998, the Company had repurchased
790,740 shares under the plan. No shares were repurchased during 1999.
The Company offers an Associate Incentive Plan under which
certain associates are eligible to earn shares of CCBG stock
based upon achieving established performance goals. The Company
issued 5,706 shares in 1999 under this plan.
The Company also offers stock purchase plans to its associates
and directors. In 1999, 20,409 shares were issued under these plans.
The Board of Directors approved a Dividend Reinvestment and
Optional Stock Purchase Plan for the Company in December 1996.
In 1999 and 1998, shares for this plan were purchased in the open
market, and thus there were no newly issued shares under this plan.
The Company offers a 401(k) Plan which enables associates to
defer a portion of their salary on a pre-tax basis. The plan
covers substantially all of the Company associates who meet the
minimum age requirement. The Plan is designed to enable
participants to elect to have an amount withheld from their
compensation in any plan year and placed in the 401(k) Plan trust
account. Matching contributions from the Company can be made up
to 6% of the participant's compensation. During 1999 and 1998,
no contributions were made by the Company. The participants may
choose to invest their contributions into seven investment funds,
including CCBG common stock.
Inflation
The impact of inflation on the banking industry differs
significantly from that of other industries in which a large
portion of total resources are invested in fixed assets such as
property, plant and equipment.
Assets and liabilities of financial institutions are virtually
all monetary in nature, and therefore are primarily impacted by
interest rates rather than changing prices. While the general
level of inflation underlies most interest rates, interest rates
react more to change in the expected rate of inflation and to
changes in monetary and fiscal policy. Net interest income and
the interest rate spread are good measures of the Company's
ability to react to changing interest rates and are discussed in
further detail in the section entitled "Earnings Analysis."
YEAR 2000 COMPLIANCE
Introduction
The YEAR 2000 issue created challenges with respect to the
automated systems used by financial institutions and other
companies. Many programs and systems were not able to recognize
the year 2000, or that the new millennium is a leap year. The
problem was not limited to computer systems. YEAR 2000 issues
could have potentially affected every system that has an embedded
microchip containing this flaw.
The YEAR 2000 challenge impacts the Company, as many of its
transactions are date sensitive. The Company also is effected by
the ability of its vendors, suppliers, customers and other third
parties to be YEAR 2000 compliant.
State of Readiness
The Company addressed the YEAR 2000 challenges in a prompt and
responsible manner and dedicated significant resources to do so.
An assessment of the Company's automated systems and third party
operations was completed and a plan was implemented. The
Company's YEAR 2000 compliance plan ("Y2K Plan") had nine phases.
These phases are (1) project management, (2) awareness, (3)
assessment, (4) renovation, (5) testing and implementation, (6)
risk assessment, (7) customer awareness, (8) contingency
planning, and (9) verification. The Company has completed
phases one through eight and the last section of Phase 9
pertaining to leap year will be completed in February 2000.
(1) Project Management: The Company assigned primary
responsibility for the YEAR 2000 project to the President of
Capital City Services Company, a wholly owned subsidiary of
Capital City Bank Group, Inc. Also, the Company hired an outside
consultant to assist in project administration. Monthly updates
were provided to senior management and quarterly updates were
provided to the Board of Directors in order to assist them in
overseeing the Company's readiness.
(2) Awareness: The Company defined the YEAR 2000 problem and
gained executive level support for allocation of the resources
necessary to renovate and/or upgrade all systems. A YEAR 2000
team was established and met regularly. The strategy developed
for YEAR 2000 compliance covered in-house systems, service
bureaus for systems that are outsourced, vendors, auditors,
customers, and suppliers.
(3) Assessment: Information Technology "IT" and non-IT systems
were assessed and mission critical applications that could
potentially be affected were identified. Mission critical was
defined as anything that may have a material adverse effect on
the Company if not YEAR 2000 compliant.
(4) Renovation: The Company upgraded and replaced IT and non-IT
systems where appropriate, and all such replacements were
complete by June 30, 1999.
(5) Testing and Implementation: The Company's testing and
implementation of Mission Critical systems is complete.
(6) Risk Assessment: Lending officers were trained on YEAR 2000
issues and have documented YEAR 2000 readiness of borrowers.
Significant borrowers were mailed a questionnaire and were
assigned a YEAR 2000 risk rating by the Company. Appropriate
responses to credit requests took YEAR 2000 into consideration.
A similar assessment was conducted of deposit customers relative
to liquidity risk. Investment and funding strategies were
planned to ameliorate any potential risk in this area.
(7) Customer Awareness: During the fourth quarter of 1999, the
Company continued its comprehensive plan to increase customer
awareness of the YEAR 2000 issue and to inform customers of the
bank's efforts to become compliant. This plan included posting
information on the Company's web site, distribution of quarterly
press releases, statement stuffers and lobby brochures.
Associate training was conducted to assure that customers were
provided with accurate information about the Company's Y2K
readiness. Company officials participated in a community
question and answer program.
(8) Contingency Planning: The Company completed a Business
Resumption/Contingency Plan for the YEAR 2000. This plan
incorporated back-up systems and procedures for core business
processes, should any unforeseen disruptions occur. This plan
was substantially completed by September 30, 1999.
(9) Verification: The Verification process was completed during
the actual Century Date Change, with the exception of leap year
due February, 2000. This involved verifying successful transition
to the YEAR 2000 of all systems and applications, at all critical
dates and functions to the YEAR 2000. Monitoring and reporting
protocol were established for this phase.
Estimated Costs to Address the Company's YEAR 2000 Issues
Costs directly related to YEAR 2000 issues are estimated to be
$780,000 from 1998 to 2000, of which approximately 95% has been
spent as of December 31, 1999. Approximately 75% of the total
spending represent costs to modify existing systems. Costs
incurred by the Company prior to 1998 were immaterial. This
estimate assumes that the Company will not incur significant YEAR
2000 related costs on behalf of its vendors, suppliers, customers
and other third parties.
Risks of the Company's YEAR 2000 Issues
The YEAR 2000 presents certain risks to the Company and its
operations. Some risks are present because the Company purchased
technology applications from other parties who face YEAR 2000
challenges and additional risks that are inherent in the business
of banking. Management identified the following potential risks
that could have had a material adverse effect on the Company's
business.
1. The Company's subsidiary banks may have experienced a
liquidity problem if there were any significant amount of
deposits withdrawn by customers who have uncertainties associated
with the YEAR 2000. This did not occur. The Company implemented
a contingency plan to ensure there were appropriate levels of
funding available.
2. The Company's operations could be materially affected by the
failure of third parties who provide mission critical IT and non-
IT systems. The Company identified its mission critical third
parties and monitored their Y2K Plan progress. In response to
this concern, the Company identified and contacted the third
parties who provide mission critical applications. The Company
received YEAR 2000 compliance assurances from third parties who
provide mission critical applications and monitored and tested
their efforts for YEAR 2000 compliance. The Company currently
knows of no material liability due to this risk.
3. The Company's ability to operate effectively in the YEAR 2000
could be adversely affected by the ability to communicate and to
access utilities. The Company established a contingency plan to
address this situation. Currently, no problems have materialized
due to this risk.
4. The Company's subsidiary banks lend significant amounts to
businesses and contractors in our market area. If the businesses
are adversely affected by the YEAR 2000 issues, their ability to
repay loans could be impaired and increased credit risk could
affect the Company's financial performance. As part of the
Company's Y2K Plan, the Company identified its significant
borrowers and documented their YEAR 2000 readiness and risk to
the Company. Currently, no businesses or contractors have been
identified that are affected by this risk.
5. Sanctions could be imposed against the Company if it does not
meet deadlines or follow timetables established by the federal
and state governmental agencies, which regulate the Company and
its subsidiaries. The Company has incorporated the regulatory
guidelines for YEAR 2000 into its Y2K Plan. No sanctions were
imposed.
Contingency Plan
Contingency plans for YEAR 2000 related interruptions have been
developed and include, but are not limited to, the development of
emergency backup and recovery procedures, remediation of existing
systems parallel with installation of new systems, replacing
electronic applications with manual processes, and identification
of alternate suppliers. All plans were substantially completed
by September 30, 1999.
Year 2000
The company experienced no known Year 2000 problems that were
material.
Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board "FASB"
issued Statement of Financial Accounting Standards "SFAS" No. 133
"Accounting for Derivative Instruments of Hedging Activities" as
amended. The statement establishes accounting and reporting
standards for derivative instruments (including certain
derivative instruments imbedded in other contracts). The
statement is effective for fiscal years beginning after June 15,
2000. The adoption of this standard is not expected to have a
material impact on reported results of operations of the Company.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Overview
Market risk management arises from changes in interest rates,
exchange rates, commodity prices and equity prices. The Company
has risk management policies to monitor and limit exposure to
market risk. Capital City Bank Group does not actively
participate in exchange rates, commodities or equities. In asset
and liability management activities, policies are in place that
are designed to minimize structural interest rate risk.
Interest Rate Risk Management
The normal course of business activity exposes Capital City Bank
Group to interest rate risk. Fluctuations in interest rate risk
may result in changes in the fair market value of the Company's
financial instruments, cash flows and net interest income.
Capital City Bank Group's asset/liability management process
manages the Company's interest rate risk.
The financial assets and liabilities of the Company are
classified as other-than-trading. An analysis of the other-than-
trading financial components, including the fair values, are
presented in Table 13. This table presents the Company's
consolidated interest rate sensitivity position as of year-end
1999 based upon certain assumptions as set forth in the Notes to
the Table. The objective of interest rate sensitivity analysis
is to measure the impact on the Company's net interest income due
to fluctuations in interest rates. The asset and liability
values presented in Table 13 may not necessarily be indicative of
the Company's interest rate sensitivity over an extended period
of time.
The Company is currently liability sensitive which generally
indicates that in a period of rising interest rates the net
interest margin will be adversely impacted as the velocity and/or
volume of liabilities being repriced exceeds assets. However, as
general interest rates rise or fall, other factors such as
current market conditions and competition may impact how the
Company responds to changing rates and thus impact the magnitude
of change in net interest income.
<TABLE>
Table 13
FINANCIAL ASSETS AND LIABILITITES MARKET RISK ANALYSIS(1)
December 31, 1999
Other Than Trading Portfolio
<CAPTION>
December 31,
--------------------------------------------------------
(Dollars in Thousands) 2000 2001 2002 2003 2004 Beyond Total Fair Value
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans
Fixed Rate $ 63,254 $ 26,201 $ 40,831 $ 45,912 $ 40,385 $ 89,842 $ 306,425 $ 303,194
Average Interest Rate 9.27% 9.91% 8.99% 8.49% 8.06% 7.01% 8.97%
Floating Rate(2) 398,744 28,515 54,419 23,785 42,189 74,409 622,061 615,501
Average Interest Rate 8.82% 8.32% 8.34% 8.38% 8.24% 7.54% 8.53%
Investment Securities(3)
Fixed Rate 84,178 49,348 31,821 21,836 21,230 103,428 311,841 311,841
Average Interest Rate 5.75% 5.78% 5.57% 5.57% 5.79% 6.36% 5.94%
Floating Rate - - 8,846 - - 505 9,351 9,351
Average Interest Rate - - 5.93% - - 6.29% 5.95%
Other Earning Assets
Fixed Rates - - - - - - - -
Average Interest Rates - - - - - - -
Floating Rates 13,618 - - - - - 13,618 13,618
Average Interest Rates 5.43% - - - - - 5.43%
Total Financial Assets $559,794 $104,064 $135,917 $ 91,533 $103,804 $268,184 $1,263,296 $1,253,505
Average Interest Rates 8.33% 7.52% 7.73% 7.77% 7.67% 6.90% 7.95%
Deposits(4)
Fixed Rate Deposits $442,360 $ 43,326 $ 11,049 $ 4,158 $ 2,459 $ 50 $ 503,402 $501,618
Average Interest Rates 4.76% 5.03% 5.08% 5.10% 4.78% 4.90% 4.79%
Floating Rate Deposits 446,116 - - - - - 446,116 446,116
Average Interest Rates 2.77% - - - - - 2.77%
Other Interest Bearing
Liabilities
Fixed Rate Debt 822 647 662 678 698 7,751 11,258 11,226
Average Interest Rate 5.94% 6.10% 6.10% 6.10% 6.09% 5.98% 6.00%
Floating Rate Debt 69,275 - - - - - 69,275 69,080
Average Interest Rate 4.68% - - - - - 4.66%
Total Financial Liabilities $958,573 $ 43,973 $ 11,711 $ 4,836 $ 3,157 $ 7,801 $1,030,051 $1,028,040
Average interest Rate 3.88% 5.05% 5.14% 5.24% 5.07% 5.97% 3.92%
(1) Based upon expected cash flows, unless otherwise indicated.
(2) Based upon a combination of expected maturities and repricing opportunities.
(3) Based upon contractual maturity, except for callable and floating rate securities,
which are based on expected maturity and weighted average life, respectively.
(4) Savings, NOW and money market accounts can be repriced at any time,
therefore, all such balances are included as floating rates deposits in 1999.
Other time deposits balances are classified according to maturity.
</TABLE>
Item 8. Financial Statements and Supplementary Data
<TABLE>
Table 14
QUARTERLY FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)(1)
<CAPTION>
1999 1998
------------------------------------------- ----------------------------------------------
Fourth Third Second First Fourth Third Second First
---------- ---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest Income $ 25,366 $ 25,236 $ 24,816 $ 24,267 $ 22,904 $ 21,974 $ 22,402 $ 21,730
Interest Expense 10,171 10,287 10,476 10,313 9,224 8,673 8,822 8,529
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Interest Income 15,195 14,949 14,340 13,954 13,680 13,301 13,580 13,201
Provision for
Loan Loss 510 610 580 740 657 618 618 546
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest Income
After Provision
for Loan Loss 14,685 14,339 13,760 13,214 13,023 12,683 12,962 12,655
Noninterest Income 6,204 6,269 6,185 6,103 6,260 5,271 5,847 5,206
Merger Expense 10 74 1,277 - 115 - - -
Noninterest Expense 14,012 14,072 14,591 13,992 13,150 12,090 12,747 12,342
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Income Before
Provision for
Income Taxes 6,867 6,462 4,077 5,325 6,018 5,864 6,062 5,519
Provision for
Income Taxes 2,548 2,089 1,182 1,660 2,146 2,057 2,065 1,901
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income $ 4,319 $ 4,373 $ 2,895 $ 3,665 $ 3,872 $ 3,807 $ 3,997 $ 3,618
========== ========== ========== ========== ========== ========== ========== ==========
Net Interest
Income (FTE) $ 15,521 $ 15,435 $ 14,822 $ 14,420 $ 14,046 $ 13,640 $ 13,922 $ 13,557
Per Common Share:
Net Income Basic $ .42 $ .43 $ .28 $ .36 $ .39 $ .37 $ .39 $ .36
Net Income Diluted .42 .43 .28 .36 .39 .37 .39 .36
Dividends Declared(2) .1325 .12 .12 .18 .12 .11 .11 .11
Book Value 12.97 12.85 12.59 12.82 12.69 12.43 12.10 11.80
Market Price:
High 25.00 30.00 25.00 27.63 31.00 33.13 32.67 32.67
Low 20.19 21.00 20.25 22.00 24.13 19.00 29.75 29.25
Close 21.50 22.75 25.00 23.31 27.63 29.13 31.38 31.67
Selected Average
Balances:
Total Assets $1,446,815 $1,446,505 $1,452,215 $1,430,533 $1,257,934 $1,148,404 $1,156,186 $1,147,054
Earning Assets 1,280,746 1,297,481 1,304,093 1,282,679 1,131,933 1,038,981 1,043,578 1,035,971
Loans, Net of Unearned 915,194 892,161 878,976 850,161 834,315 819,755 823,432 809,949
Total Deposits 1,235,002 1,234,360 1,247,452 1,232,816 1,059,192 954,652 962,719 952,511
Total Shareowners'
Equity 131,932 130,134 131,234 130,929 128,250 123,728 121,686 119,455
Common Equivalent
Shares:
Basic 10,179 10,179 10,172 10,170 10,158 10,158 10,140 10,123
Diluted 10,201 10,195 10,187 10,185 10,179 10,158 10,140 10,123
Ratios:
ROA 1.18% 1.20% .80% 1.04% 1.22% 1.32% 1.39% 1.28%
ROE 12.99% 13.33% 8.85% 11.35% 11.98% 12.20% 13.18% 12.28%
Net Interest
Margin (FTE) 4.82% 4.73% 4.56% 4.56% 4.92% 5.21% 5.35% 5.31%
(1) All share and per share data have been restated to reflect the pooling-
of-interests of Grady Holding Company and its subsidiaries and adjusted to
reflect the 3-for-2 stock split effective June 1, 1998.
(2) First quarter 1999 dividend amount includes a special one-time
distribution paid to Grady Holding Company shareowners of approximately
$563,000.
</TABLE>
CONSOLIDATED FINANCIAL STATEMENTS
48 Report of Independent Certified Public Accountants
49 Consolidated Statements of Income
50 Consolidated Statements of Financial Condition
51 Consolidated Statements of Changes in Shareowners' Equity
52 Consolidated Statements of Cash Flows
53 Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)(1)
For the Years Ended December 31,
1999 1998 1997
INTEREST INCOME ----------------------------------
Interest and Fees on Loans $78,527 $75,989 $72,213
Investment Securities:
U.S. Treasury 1,430 1,889 1,943
U.S. Government Agencies/Corp. 9,313 3,879 5,590
States and Political Subdivisions 4,371 3,028 3,235
Other Securities 2,486 649 386
Funds Sold & Interest Bearing Deposits 3,558 3,576 1,614
------- ------- -------
Total Interest Income 99,685 89,010 84,981
INTEREST EXPENSE
Deposits 38,315 32,119 29,430
Short-Term Borrowings 1,816 1,904 1,974
Long-Term Debt 1,116 1,225 1,284
------- ------- -------
Total Interest Expense 41,247 35,248 32,688
------- ------- -------
Net Interest Income 58,438 53,762 52,293
Provision for Loan Losses 2,440 2,439 2,328
------- ------- -------
Net Interest Income After Provision for
Loan Losses 55,998 51,323 49,965
------- ------- -------
NONINTEREST INCOME
Service Charges on Deposit Accounts 9,973 8,541 8,994
Data Processing 2,861 3,523 3,160
Income from Fiduciary Activities 2,227 1,761 1,202
Securities Transactions (12) 87 (15)
Other 9,712 8,672 6,143
------- ------- -------
Total Noninterest Income 24,761 22,584 19,484
------- ------- -------
NONINTEREST EXPENSE
Salaries and Associate Benefits 28,969 26,597 25,602
Occupancy, Net 4,466 3,530 3,214
Furniture and Equipment 5,647 5,280 5,030
Merger Expense 1,361 115 655
Other 17,585 14,922 13,335
------- ------- -------
Total Noninterest Expense 58,028 50,444 47,836
------- ------- -------
Income Before Income Taxes 22,731 23,463 21,613
Income Taxes 7,479 8,169 7,212
------- ------- -------
NET INCOME $15,252 $15,294 $14,401
======= ======= =======
BASIC NET INCOME PER SHARE $ 1.50 $ 1.51 $ 1.44
======= ======= =======
DILUTED NET INCOME PER SHARE $ 1.50 $ 1.50 $ 1.43
======= ======= =======
Basic Average Common Shares Outstanding 10,175 10,146 10,031
======= ======= =======
Diluted Average Common Shares Outstanding 10,196 10,168 10,061
======= ======= =======
(1) All share and per share data have been restated to reflect
the pooling-of-interests of Grady Holding Company and its
subsidiaries and adjusted to reflect the 3-for-2 stock split
effective June 1, 1998.
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Per Share Data)(1)
As of December 31,
1999 1998
ASSETS -----------------------------
Cash and Due From Banks $ 79,454 $ 68,398
Funds Sold 13,618 72,625
Investment Securities, Available-for-Sale 321,192 371,597
Loans, Net of Unearned Interest 928,486 844,217
Allowance for Loan Losses (9,929) (9,827)
---------- ----------
Loans, Net 918,557 834,390
Premises and Equipment 37,834 37,171
Intangibles 25,149 28,772
Other Assets 34,716 30,722
---------- ----------
Total Assets $1,430,520 $1,443,675
========== ==========
LIABILITIES
Deposits:
Noninterest Bearing Deposits $ 253,140 $ 287,904
Interest Bearing Deposits 949,518 965,649
---------- ----------
Total Deposits 1,202,658 1,253,553
Short-Term Borrowings 66,275 25,199
Long-Term Debt 14,258 18,746
Other Liabilities 15,113 17,315
---------- ----------
Total Liabilities 1,298,304 1,314,813
SHAREOWNERS' EQUITY
Preferred Stock; $.01 par value, 3,000,000 shares
authorized; no shares issued and outstanding - -
Common Stock, $.01 par value; 90,000,000 shares
authorized; 10,190,069 and 10,163,919 shares
issued and outstanding 102 102
Additional Paid-In Capital 9,249 8,561
Retained Earnings 129,055 119,521
Accumulated Other Comprehensive
Income, Net of Tax (6,190) 678
---------- ----------
Total Shareowners' Equity 132,216 128,862
---------- ----------
Total Liabilities and
Shareowners' Equity $1,430,520 $1,443,675
========== ==========
(1) All share and per share data have been restated to reflect the
pooling-of-interests of Grady Holding Company and its subsidiaries and
adjusted to reflect the 3-for-2 stock split effective June 1,1998.
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
(Dollars in Thousands, Except per Share Data)(1)
<CAPTION>
Accumulated Other
Additional Comprehensive
Common Paid-In Retained (Loss) Income,
Stock Capital Earnings Net of Taxes Total
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $100 $4,942 $ 97,881 $ 86 $103,009
Net Income 14,401 14,401
Cash Dividends ($.37 per share) (3,727) (3,727)
Issuance of Common Stock 1 1,602 1,603
Net Change in Unrealized Gain (Loss)
On Marketable Securities 521 521
---- ------ -------- ------- --------
Balance, December 31, 1997 101 6,544 108,555 607 115,807
Net Income 15,294 15,294
Cash Dividends($.45 per share) (4,328) (4,328)
Issuance of Common Stock 1 2,017 2,018
Net Change in Unrealized Gain (Loss)
On Marketable Securities 71 71
---- ------ -------- ------- --------
Balance, December 31, 1998 102 8,561 119,521 678 128,862
Net Income 15,252 15,252
Cash Dividends($.5525 per share)(2) (5,718) (5,718)
Issuance of Common Stock 688 688
Net Change in Unrealized Gain (Loss)
On Marketable Securities (6,868) (6,868)
---- ------ -------- ------- --------
Balance, December 31, 1999 $102 $9,249 $129,055 $(6,190) $132,216
==== ====== ======== ======= ========
(1) All share and per share data have been restated to reflect the pooling-of-interests
of Grady Holding Company and its subsidiaries and adjusted to reflect the 3-for-2
stock split effective June 1, 1998
(2) Dividend amount includes a special one-time distribution paid to Grady
Holding Company shareowners of approximately $563,000.
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
For the Years Ended December 31,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES: -------- -------- --------
Net Income $ 15,252 $ 15,294 $ 14,401
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 2,440 2,439 2,328
Depreciation 3,708 3,565 3,404
Net Securities Amortization 1,417 758 695
Amortization of Intangible Assets 2,833 1,191 856
(Gain) on Sale of Investment Securities 12 (87) 15
Non-Cash Compensation 260 869 563
Deferred Income Taxes (225) 133 213
Net (Increase) in Other Assets (230) (11,019) (1,710)
Net (Decrease) Increase in Other Liabilities (1,000) 3,125 1,572
-------- -------- --------
Net Cash Provided by Operating Activities 24,467 16,268 22,337
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITES:
Proceeds from Payments/Maturities of
Investment Securities Available-for-Sale 104,189 84,524 69,569
Purchase of Investment Securities
Available-for-Sale (66,031) (123,537) (10,488)
Net Increase in Loans (86,608) (26,388) (34,812)
Net Cash Received From (Used In) Acquisitions - 36,726 -
Purchase of Premises & Equipment (4,471) (4,323) (2,192)
Sales of Premises & Equipment 100 407 1,379
-------- -------- --------
Net Cash (Used in) Provided By
Investing Activities (52,821) (32,591) 23,456
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITES:
Net (Decrease) Increase in Deposits (50,895) 55,082 (30,011)
Net Increase (Decrease) in Short-Term Borrowings 41,076 (20,914) 10,156
Borrowing from Long-Term Debt 2,262 8,241 2,210
Repayment of Long-Term Debt (6,750) (7,600) (2,951)
Dividends Paid(1) (5,718) (4,281) (3,726)
Issuance of Common Stock 428 1,148 1,126
-------- -------- --------
Net Cash (Used in) Provided By
Financing Activities (19,597) 31,676 (23,197)
-------- -------- --------
Net (Decrease) Increase in Cash
and Cash Equivalents (47,951) 15,353 22,596
Cash and Cash Equivalents at Beginning
of Year 141,023 125,670 103,074
-------- -------- --------
Cash and Cash Equivalents at End
of Year $ 93,072 $141,023 $125,670
======== ======== ========
Supplemental Disclosures:
Interest Paid on Deposits $ 38,822 $ 31,179 $ 31,147
======== ======== ========
Interest Paid on Debt $ 2,849 $ 3,128 $ 3,258
======== ======== ========
Taxes Paid $ 6,137 $ 8,470 $ 7,308
======== ======== ========
Loans Transferred To Other Real Estate $ 1,344 $ 2,011 $ 2,701
======== ======== ========
(1) Dividend amount includes a special one-time distribution paid to
Grady Holding Company shareowners of approximately $563,000.
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
Notes to Consolidated Financial Statements
Note 1
SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of
Capital City Bank Group, Inc., and its subsidiaries (the
"Company"), all of which are wholly-owned. The historical
financial statements have been restated for the acquisition of
Grady Holding Company and its subsidiaries which were accounted
for as a pooling-of-interests (see Note 2). All material
intercompany transactions and accounts have been eliminated.
The Company follows generally accepted accounting principles and
reporting practices applicable to the banking industry. Prior
year financial statements and other information have been
reclassified to conform to the current year presentation and to
reflect a two-for-one stock split effective April 1, 1997, and a
three-for-two stock split effective June 1, 1998. The principles
which materially affect the financial position, results of
operations and cash flows are summarized below.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could vary from these estimates; however,
in the opinion of management, such variances would not be
material.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks,
interest-bearing deposits in other banks, and federal funds sold.
Generally, federal funds are purchased and sold for one-day
periods and all items have an initial maturity of ninety days or
less.
Investment Securities
Investment securities available-for-sale are carried at fair
value and represent securities that are available to meet
liquidity and/or other needs of the Company. Gains and losses
are recognized and reported separately in the Consolidated
Statements of Income upon realization or when impairment of
values is deemed to be other than temporary. Gains or losses are
recognized using the specific identification method. Unrealized
holding gains and losses for securities available-for-sale are
excluded from the Consolidated Statements of Income and reported
net of taxes in the accumulated other comprehensive income
component of shareowners' equity until realized.
Loans
Loans are stated at the principal amount outstanding, net of
unearned income. Interest income is generally accrued based on
outstanding balances. Fees charged to originate loans and loan
origination costs are deferred and amortized over the life of the
loan as a yield adjustment.
Allowance for Loan Losses
The reserve is that amount considered adequate to absorb losses
inherent in the portfolio based on management's evaluations of
the size and current risk characteristics of the loan portfolio.
Such evaluations consider the balance of impaired loans (which
are defined as all nonperforming loans except residential
mortgages and groups of small homogeneous loans), prior loan loss
experience as well as the impact of current economic conditions.
Specific provision for loan losses is made for impaired loans
based on a comparison of the recorded carrying value in the loan
to either the present value of the loan's expected cash flow, the
loan's estimated market price or the estimated fair value of the
underlying collateral. Specific and general provisions for loan
losses are also made based on other considerations.
Loans are placed on a nonaccrual status when management believes
the borrower's financial condition, after giving consideration to
economic conditions and collection efforts, is such that
collection of interest is doubtful. Generally, loans are placed
on nonaccrual status when interest becomes past due 90 days or
more, or management deems the ultimate collection of principal
and interest is in doubt.
Long-Lived Assets
Premises and equipment are stated at cost less accumulated
depreciation, computed on the straight-line method over the
estimated useful lives for each type of asset. Additions and
major facilities are capitalized and depreciated in the same
manner. Repairs and maintenance are charged to operating expense
as incurred.
Intangible assets consist primarily of goodwill and core deposit
assets that were recognized in connection with the various
acquisitions. All intangible assets are being amortized on the
straight-line method over various periods ranging from five to 25
years with the majority being written off over an average life of
approximately 15 years. The amortization of all intangible assets
was approximately $2.8 million in 1999, $1.2 million in 1998, and
$856,000 in 1997.
Long-lived assets are evaluated regularly for other-than-
temporary impairment. If circumstances suggest that their value
may be impaired and the write-down would be material, an
assessment of recoverability is performed prior to any write-down
of the asset.
Income Taxes
The Company files consolidated federal and state income tax
returns. In general, the parent company and its subsidiaries
compute their tax provisions as separate entities prior to
recognition of any tax expense benefits which may accrue from
filing a consolidated return.
Deferred income tax assets and liabilities result from temporary
differences between the tax bases of assets and liabilities and
their reported amounts in the financial statements that will
result in taxable or deductible amounts in future years.
Note 2
ACQUISITIONS
On May 7, 1999, the Company completed its acquisition of Grady
Holding Company and its subsidiary, First National Bank of Grady
County in Cairo, Georgia. First National Bank of Grady County is
a $114 million asset institution with offices in Cairo and
Whigham, Georgia. The Company issued 21.50 shares for each of the
60,910 shares of First National Bank of Grady County.
The consolidated financial statements of the Company give effect
to the merger which has been accounted for as a pooling-of-
interests. Accordingly, financial statements for the prior
periods have been restated to reflect the results of operations
of these entities on a combined basis from the earliest period
presented. Separate results of operations of the combined
entities for the three years ended December 31, 1998 are as
follows:
(Dollars in thousands)
1999(1) 1998 1997
------- ------- -------
Net Interest Income:
CCBG $16,784 $47,911 $46,524
GHC 1,906 5,851 5,769
------- ------- -------
Combined $18,690 $53,762 $52,293
Net Income:
CCBG $ 4,034 $13,188 $12,438
GHC 609 2,106 1,963
------- ------- -------
Combined $ 4,643 $15,294 $14,401
(1) For the period January 1, 1999 through May 7, 1999.
On December 4 1998, the Company completed its purchase and
assumption transaction with First Union National Bank ("First
Union") and acquired eight of First Union's branch offices which
included deposits. The Company paid a premium of approximately
$16.9 million, and assumed approximately $219 million in deposits
and acquired certain real estate. The premium is being amortized
over ten years.
On January 31, 1998, the Company completed its purchase and
assumption transaction with First Federal Savings & Loan
Association of Lakeland, Florida ("First Federal-Florida") and
acquired five of First Federal-Florida's offices which included
loans and deposits. The Company paid a deposit premium of $3.6
million, or 6.33%, and assumed $55 million in deposits and
purchased loans equal to $44 million. Four of the five offices
were merged into existing offices of Capital City Bank. The
deposit premium is being amortized over fifteen years.
Note 3
INVESTMENT SECURITIES
The amortized cost and related market value of investment securities
available-for-sale at December 31, were as follows:
1999
Amortized Unrealized Unrealized Market
(Dollars in Thousands) Cost Gains Losses Value
-----------------------------------------------------------------------------
U.S. Treasury $ 20,047 $ 4 $ 70 $ 19,981
U.S. Government Agencies
and Corporations 79,181 - 2,557 76,624
States and Political
Subdivisions 104,312 74 1,895 102,491
Mortgage-Backed Securities 85,040 88 3,728 81,400
Other Securities 42,372 - 1,676 40,696
-------- ---- ------ --------
Total Investment
Securities $330,952 $166 $9,926 $321,192
1998
Amortized Unrealized Unrealized Market
(Dollars in Thousands) Cost Gains Losses Value
-----------------------------------------------------------------------------
U.S. Treasury $ 30,618 $ 203 $ - $ 30,821
U.S. Government Agencies
and Corporations 74,035 247 319 73,963
States and Political
Subdivisions 94,917 1,159 24 96,052
Mortgage-Backed Securities 93,183 205 443 92,945
Other Securities 77,770 159 113 77,816
-------- ------ ---- --------
Total Investment
Securities $370,523 $1,973 $899 $371,597
======== ====== ==== ========
The total proceeds from the sale of investment securities and the
gross realized gains and losses from the sale of such securities for
each of the last three years is as follows:
(Dollars in Thousands)
Total Gross Gross
Year Proceeds Realized Gains Realized Losses
---------------------------------------------------------------
1999 $86,213 $ 1 $13
1998 $46,861 $117 $30
1997 $37,964 $ 18 $33
Total proceeds include principal reductions in mortgage-backed
securities and proceeds from securities which were called of
$17,992,000, $27,236,000, and $29,091,000 in 1999, 1998, and 1997,
respectively.
As of December 31, 1998, the Company's investment securities had the
following maturity distribution based on contractual maturities:
(Dollars in Thousands) Amortized Cost Market Value
-----------------------------------------------------------------
Due in one year or less $ 44,605 $ 44,422
Due after one through five years 157,571 152,551
Due after five through ten years 37,873 36,686
Over ten years 5,863 6,133
Mortgage-Backed Securities 85,040 81,400
-------- --------
Total Investment Securities $330,952 $321,192
======== ========
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
Securities with an amortized cost of $139,672,000 and $66,934,000 at
December 31, 1999, and 1998, respectively, were pledged to secure
public deposits and for other purposes.
Note 4
LOANS
At December 31, the composition of the Company's loan portfolio was as
follows:
(Dollars in Thousands) 1999 1998
-------------------------------------------------------------
Commercial, Financial and
Agricultural $ 98,894 $ 91,246
Real Estate - Construction 62,166 51,790
Real Estate - Mortgage 214,036 542,044
Real Estate - Residential(1) 383,536 -
Consumer 169,854 159,137
-------- --------
Total Loans,
Net of Unearned Interest $928,486 $844,217
======== ========
(1) Real Estate - Residential loan information included in Real
Estate - Mortgage category for 1998.
Nonaccruing loans amounted to $2,965,000 and $4,996,000 at December
31, 1999 and 1998, respectively. Restructured loans amounted to
$26,000 and $195,000 at December 31, 1999 and 1998, respectively. If
such nonaccruing and restructured loans had been on a fully accruing
basis, interest income would have been $317,000 higher in 1999 and
$384,000 higher in 1998.
Note 5
ALLOWANCE FOR LOAN LOSSES
An analysis of the changes in the allowance for loan losses for the
years ended December 31, is as follows:
(Dollars in Thousands) 1999 1998 1997
----------------------------------------------------------------
Balance, Beginning of Year $9,827 $9,662 $9,450
Provision for Loan Losses 2,440 2,439 2,328
Recoveries on Loans
Previously Charged-Off 860 883 946
Loans Charged-Off (3,198) (3,157) (3,062)
------ ------ ------
Balance, End of Year $9,929 $9,827 $9,662
====== ====== ======
Selected information pertaining to impaired loans, at December 31, is
as follows:
1999 1998
Valuation Valuation
(Dollars in Thousands) Balance Allowance Balance Allowance
--------------------------------------------------------------------------
With Related Credit Allowance $ 25 $3 $2,433 $427
Without Related Credit Allowance 1,238 - 1,347 -
Average Recorded Investment for
the Period 1,871 - 4,985 -
The Company recognizes income on impaired loans primarily on the cash
basis. Any change in the present value of expected cash flows is
recognized through the allowance for loan losses. For the years ended
December 31, 1999, 1998 and 1997, the Company recognized $74,000,
$84,000, and $140,000, in interest income on impaired loans, of which
$57,000, $31,000, and $138,000 and was collected in cash,
respectively.
Note 6
PREMISES AND EQUIPMENT
The composition of the Company's premises and equipment at December 31,
was as follows:
(Dollars in Thousands) 1999 1998
--------------------------------------------------------
Land $ 9,289 $ 9,259
Buildings 33,948 32,399
Fixtures and Equipment 30,229 27,522
------- -------
Total 73,466 69,180
Accumulated Depreciation (35,632) (32,009)
------- -------
Premises and Equipment, Net $37,834 $37,171
======= =======
Note 7
DEPOSITS
Interest bearing deposits, by category, as of December 31, were as
follows:
(Dollars in Thousands) 1999 1998
----------------------------------------------------
NOW Accounts $182,794 $154,069
Money Market Accounts 157,825 124,691
Savings Accounts 105,498 118,570
Other Time Deposits 503,401 568,319
-------- --------
Total $949,518 $965,649
======== ========
Time deposits in denominations of $100,000 or more totaled
$101,742,000 and $103,791,000 at December 31, 1999 and 1998,
respectively.
At December 31, 1998, the scheduled maturities of other time deposits
were as follows:
2000 $442,360
2001 43,326
2002 11,049
2003 4,158
2004 and thereafter 2,508
--------
$503,401
========
The average balances maintained on deposit with the Federal Reserve
Bank for the years ended December 31, 1999 and 1998, were $34,402,000
and $27,187,000 respectively.
Interest expense on deposits for the three years ended December 31,
was as follows:
(Dollars in Thousands) 1999 1998 1997
----------------------------------------------------------------
NOW Accounts $ 3,134 $ 2,223 $ 1,978
Money Market Accounts 5,766 2,562 2,510
Savings Accounts 2,453 2,243 2,008
Other Time Deposits 26,962 25,091 22,934
------- ------- -------
Total $38,315 $32,119 $29,430
======= ======= =======
Note 8
SHORT-TERM BORROWINGS
Short-term borrowings included the following at December 31:
Securities
Federal Sold Under Other
Funds Repurchase Short-Term
(Dollars in Thousands) Purchased Agreements Borrowings
--------------------------------------------------------------------------------
1999
Balance $28,050 $36,439 $1,786
Maximum indebtedness at any month end 28,050 41,114 1,786
Daily average indebtedness outstanding 12,997 27,923 1,397
Average rate paid for the year 4.87% 4.02% 4.31%
Average rate paid on period-end borrowings 4.20% 3.53% 4.22%
1998
Balance $ 6,120 $17,042 $2,037
Maximum indebtedness at any month end 29,255 18,770 2,037
Daily average indebtedness outstanding 22,159 15,635 1,190
Average rate paid for the year 5.19% 4.43% 5.23%
Average rate paid on period-end borrowings 3.79% 6.15% 3.88%
Note 9
LONG-TERM DEBT
Long-term debt included the following at December 31:
(Dollars in Thousands) 1999 1998
-----------------------------------------------------------------------------
Federal Home Loan Bank Note
Due on December 19, 2005, fixed rate of 6.04% $ 1,542 $ 1,652
Due on December 13, 2006, fixed rate of 6.20% 1,002 1,068
Due on March 14, 2013, fixed rate of 6.13% 938 975
Due on September 20, 2013, fixed rate of 5.64% 1,334 1,387
Due on December 17, 2018, fixed rate of 6.33% 1,949 2,000
Due on December 24, 2018, fixed rate of 5.34% 857 875
Due on January 26, 2014, fixed rate of 5.75% 1,499 -
Due on May 27, 2014, fixed rate of 5.92% 720 -
Due on December 16, 2004, fixed rate of 6.52% 313 1,000
Due on December 16, 2004, fixed rate of 6.52% 172 361
Due on April 24, 2007, fixed rate of 7.30% 419 581
Due on October 10, 2001, fixed rate of 5.00% 324 475
IBM Note Payable
Due on December 31, 2000, fixed rate of 3.77% 189 372
Revolving credit note,
Due on November 16, 2001, current rate of 6.50% 3,000 8,000
------- -------
Total outstanding $14,258 $18,746
======= =======
The contractual maturites of long-term debt for the five years
succeeding December 31, 1999, are as follows:
2000 $ 3,189
2001 324
2002 -
2003 -
2004 and thereafter 10,745
-------
$14,258
=======
The Federal Home Loan Bank advances are collateralized with U.S.
Treasury Securities and 1-4 family mortgages. Interest on the
Federal Home Loan Bank advances is paid on a monthly basis.
The IBM note payable is being paid over 36 monthly installments
which includes principal and interest.
Upon expiration of the revolving credit, the outstanding balance
may be converted to a term loan and repaid over a period of seven
years. The Company, at its option, may select from various loan
rates including the following: Prime, LIBOR, or the lender's
cost of funds rate, plus or minus increments thereof. The LIBOR
or cost of funds rates may be fixed for a period up to six
months. The revolving credit is unsecured, but upon conversion
is to be collateralized by common stock of the subsidiary bank
equal to 125% of the principal balance of the loan. The existing
loan agreement places certain restrictions on the amount of
capital which must be maintained by the Company. At December 31,
1999, the Company was in compliance with all of the terms of the
agreement and had $22 million available under a $25 million line
of credit facility.
Note 10
INCOME TAXES
The provision for income taxes reflected in the statement of
income is comprised of the following components:
(Dollars in Thousands) 1999 1998 1997
-------------------------------------------------------------
Current:
Federal $6,880 $7,185 $6,076
State 824 851 923
Deferred:
Federal (189) 117 182
State (36) 16 31
------ ------ ------
Total $7,479 $8,169 $7,212
====== ====== ======
The net deferred tax asset and the temporary differences comprising
that balance at December 31, 1999 and 1998, are as follows:
(Dollars in Thousands) 1999 1998
--------------------------------------------------------------------
Deferred Tax Asset attributable to:
Allowance for Loan Losses $2,909 $2,806
Unrealized Losses on Investment Securities 2,892 -
Stock Incentive Plan 682 491
Interest on Nonperforming Loans 169 144
Acquired Deposits 76 -
Other 306 95
------ ------
Total Deferred Tax Asset $7,034 $3,536
Deferred Tax Liability attributable to:
Associate Benefits $1,291 $1,298
Premises and Equipment 1,189 888
Deferred Loan Fees 370 336
Unrealized Gains on Investment Securities - 395
Acquired Deposits - 127
Securities Accretion 249 89
Other 104 84
------ ------
Total Deferred Tax Liability 3,203 3,217
------ ------
Net Deferred Tax Asset $3,831 $ 319
====== ======
Income taxes provided were less than the tax expense computed by
applying the statutory federal income tax rates to income. The
primary differences are as follows:
(Dollars in Thousands) 1999 1998 1997
---------------------------------------------------------------------
Computed Tax Expense $7,956 $8,212 $7,565
Increases (Decreases)
Resulting From:
Tax-Exempt Interest Income (1,409) (972) (1,065)
State Income Taxes,
Net of Federal Income
Tax Benefit 468 544 393
Other 464 385 319
------ ------ ------
Actual Tax Expense $7,479 $8,169 $7,212
====== ====== ======
Note 11
ASSOCIATE BENEFITS
The Company sponsors a noncontributory pension plan covering
substantially all of its associates. Benefits under this plan
generally are based on the associate's years of service and
compensation during the years immediately preceding retirement.
The Company's general funding policy is to contribute amounts
deductible for federal income tax purposes.
<TABLE>
The following table details the components of pension expense,
the funded status of the plan, amounts recognized in the
Company's consolidated statements of financial condition, and
major assumptions used to determine these amounts.
<CAPTION>
(Dollars in Thousands) 1999 1998 1997
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Change in Benefit Obligation:
Benefit Obligation at Beginning of Year $22,211 $21,159 $17,551
Service Cost 2,015 1,678 1,517
Interest Cost 1,477 1,478 1,331
Actuarial (Gain)/Loss (5,052) 1,181 1,342
Remeasurement Loss 641 169 324
Benefits Paid (2,021) (3,186) (671)
Expenses Paid (291) (268) (235)
------- ------- -------
Benefit Obligation at End of Year $18,980 $22,211 $21,159
------- ------- -------
Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year $29,248 $25,826 $20,041
Actual Return on Plan Assets 4,824 5,382 4,918
Employer Contribution 761 1,494 1,773
Benefits Paid (2,021) (3,186) (671)
Expenses Paid (291) (268) (235)
------- ------- -------
Fair Value of Plan Assets at End of Year $32,521 $29,248 $25,826
------- ------- -------
Funded Status $13,541 $ 7,037 $ 4,667
Unrecognized Net Actuarial (Gain) Loss (9,675) (2,919) (957)
Unrecognized Prior Service Cost (468) (704) (940)
------- ------- -------
Prepaid Benefit Cost $ 3,398 $ 3,413 $ 2,770
======= ======= =======
Weighted-Average Assumptions:
Discount Rate 7.75% 6.50% 7.00%
Expected Return on Plan Assets 8.25% 8.25% 8.25%
Rate of Compensation Increase 5.50% 5.50% 5.50%
Components of Net Periodic Benefit Costs:
Service Cost $ 2,015 $ 1,678 $ 1,517
Interest Cost 1,477 1,478 1,331
Expected Return on Plan Assets (2,401) (2,103) (1,630)
Amortization of Prior Service Cost 164 164 164
Transition Asset Recognition (236) (236) (236)
Recognized Net Actuarial (Gain) Loss (242) (131) 24
------- ------- -------
Net Periodic Benefit Cost $ 777 $ 850 $ 1,170
======= ======= =======
</TABLE>
The Company has a Supplemental Employee Retirement Plan covering
selected executives. Benefits under this plan generally are
based on the associate's years of service and compensation during
the years immediately preceding retirement. The Company
recognized expense during 1999, 1998 and 1997 of $266,000,
$193,000 and $201,000 respectively, and a minimum liability
adjusted to $0, $0 and $19,148 at December 31, 1999, 1998 and
1997 respectively.
The Company has an Associate Incentive Plan under which shares of
the Company's stock are issued as incentive awards to selected
participants. Seven hundred fifty thousand shares of common
stock are reserved for issuance under this plan. The expense
recorded related to this plan was approximately $432,000,
$735,000 and $1,210,000 in 1999, 1998 and 1997, respectively.
The Company issued 5,706 shares under the plan in 1999.
The Company has an Associate Stock Purchase Plan under which
associates may elect to make a monthly contribution towards the
purchase of Company stock on a semi-annual basis. Four hundred
fifty thousand shares of common stock are reserved for issuance
under the Stock Purchase Plan. The Company issued 18,444 shares
under the plan in 1999.
The Company has a Director Stock Purchase Plan. One hundred
fifty thousand shares have been reserved for issuance. In 1999,
the Company issued 1,965 shares under this plan.
The Company has a 401(k) Plan which enables associates to defer a
portion of their salary on a pre-tax basis. The plan covers
substantially all associates of the Company who meet minimum age
requirements. The plan is designed to enable participants to
elect to have an amount from 1% to 15% of their compensation
withheld in any plan year placed in the 401(k) Plan trust
account. Matching contributions from the Company can be made up
to 6% of the participant's compensation at the discretion of the
Company. During 1999, no contributions were made by the Company.
The participant may choose to invest their contributions into
seven investment funds available to CCBG participants, including
the Company's common stock.
The Company has a Dividend Reinvestment and Optional Stock
Purchase Plan. Seven hundred fifty thousand shares have been
reserved for issuance. The Company did not issue any shares
under this plan in 1999.
Note 12
EARNINGS PER SHARE
<TABLE>
The following table sets forth the computation of basic and diluted
earnings per share:
<CAPTION>
(Dollars in Thousands, Except Per share Data)(1)
1999 1998 1997
------------------------------------
<S> <C> <C> <C>
Numerator:
Net Income $ 15,252 $ 15,294 $ 14,401
Preferred Stock Dividends - - -
---------- ---------- ----------
Numerator for Basic Earnings Per Share
Income to Common Shareowners' 15,252 15,294 14,401
Effect of Dilutive securities:
Preferred stock dividends - - -
---------- ---------- ----------
Numerator for Diluted Earnings Per Share
Income Available to Common Shareowners'
After Assumed Conversions $ 15,252 $ 15,294 $ 14,401
========== ========== ==========
Denominator:
Denominator for Basic Earnings Per Share
Weighted-Average Shares 10,174,945 10,146,393 10,031,116
Effects of Dilutive Securities:
Associate Stock Incentive Plan 21,288 21,237 32,736
---------- ---------- ----------
Dilutive Potential Common Shares 21,288 21,237 32,736
---------- ---------- -----------
Denominator for Diluted Earnings Per Share
Adjusted Weighted-Average Shares and
Assumed Conversions 10,196,233 10,167,630 10,060,852
========== ========== ==========
Basic Earnings Per Share $ 1.50 $ 1.51 $ 1.44
========== ========== ==========
Diluted Earnings per Share $ 1.50 $ 1.50 $ 1.43
========== ========== ==========
(1) All share and per share data have been restated to reflect the
pooling-of-interests of Grady Holding Company and its subsidiaries and
adjusted to reflect the 3-for-2 stock split effective June 1, 1998.
</TABLE>
Note 13
CAPITAL
The Company is subject to various regulatory capital requirements
which involve quantitative measures of the Company's assets,
liabilities and certain off-balance sheet items. The Company's
capital amounts and classification are subject to qualitative
judgments by the regulators about components, risk weightings,
and other factors. Quantitative measures established by
regulation to ensure capital adequacy require that the Company
maintain amounts and ratios (set forth in the table below) of
total and Tier I capital to risk-weighed assets, and of Tier I
capital to average assets. As of December 31, 1999, the Company
meets all capital adequacy requirements to which it is subject.
A summary of actual, required, and capital levels necessary to be
considered well-capitalized for Capital City Bank Group, Inc.
("CCBG, Inc.") consolidated and its banking subsidiaries, Capital
City Bank ("CCB") and First National Bank of Grady County
("FNB"),as of December 31, 1999 and December 31, 1998 are shown
below:
(Dollars in Thousands)
To Be Well-
Required Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
------------------------------------------------------------
As of December 31, 1999:
Tier I Capital:
CCBG, Inc. $107,076 11.23% $38,138 4.00% $ 57,207 6.00%
CCB 91,832 10.65% 34,490 4.00% 51,736 6.00%
Total Capital:
CCBG, Inc. 117,005 12.27% 76,276 8.00% 95,345 10.00%
CCB 100,351 11.64% 68,981 8.00% 86,226 10.00%
Tier I Leverage:
CCBG, Inc. - 7.92% - 3.00% - 5.00%
CCB - 7.39% - 3.00% - 5.00%
As of December 31, 1998:
Tier I Capital:
CCBG, Inc. $ 99,473 10.14% $41,262 4.00% $ 61,893 6.00%
CCB 87,355 9.73% 35,929 4.00% 53,894 6.00%
Total Capital:
CCBG, Inc. 108,977 11.11% 82,525 8.00% 103,156 10.00%
CCB 95,814 10.67% 71,859 8.00% 89,823 10.00%
Tier I Leverage:
CCBG, Inc. - 7.84% - 3.00% - 5.00%
CCB - 7.62% - 3.00% - 5.00%
Note 14
DIVIDEND RESTRICTIONS
Substantially all the Company's retained earnings are
undistributed earnings of its banking subsidiary, which are
restricted by various regulations administered by Federal and
state bank regulatory authorities.
The approval of the appropriate regulatory authority is required
if the total of all dividends declared by a subsidiary bank in
any calendar year exceeds the bank's net profits (as defined) for
that year combined with its retained net profits for the
preceding two calendar years. In 2000, the bank subsidiaries may
declare dividends without regulatory approval of $17.2 million
plus an additional amount equal to the net profits of the
Company's subsidiary banks for 2000 up to the date of any such
dividend declaration.
Note 15
RELATED PARTY INFORMATION
The Chairman of the Board of Capital City Bank Group, Inc., is
chairman of the law firm which serves as general counsel to the
Company and its subsidiaries. Fees paid by the Company and its
subsidiaries for these services, in aggregate, approximated
$320,000, $340,000, and $295,000 during 1999, 1998, and 1997,
respectively.
Under a lease agreement expiring in 2024, a bank subsidiary
leases land from a partnership in which several directors and
officers have an interest. The lease agreement provides for
annual lease payments of approximately $81,000, to be adjusted
for inflation in future years.
At December 31, 1999 and 1998, certain officers and directors
were indebted to the Company's bank subsidiaries in the aggregate
amount of $8,615,000 and $8,831,000, respectively. During 1999,
$12,300,000 in new loans were made and repayments totaled
$12,545,000. These loans were made on similar terms as loans to
other individuals of comparable creditworthiness.
Note 16
SUPPLEMENTARY INFORMATION
Components of noninterest income in excess of 1% of total
interest income and noninterest expense in excess of 1% of total
interest income and noninterest income, which are not disclosed
separately elsewhere, are presented below for each of the
respective years.
(Dollars in Thousands) 1999 1998 1997
------------------------------------------------------------------
Noninterest Income:
Merchant Fee Income $1,193 $1,184 $1,126
Interchange Commission Fees 1,269 1,004 621*
Gains on the Sale of
Real Estate Loans 1,607 1,625 853
Noninterest Expense:
Associate Insurance 1,653 1,448 1,357
Payroll Taxes 1,647 1,485 1,352
Maintenance and Repairs 3,106 2,773 2,306
Professional Fees 1,173 1,337 1,341
Printing & Supplies 1,720 1,811 1,646
Commission/Service Fees 1,307 1,336 1,078
Telephone 1,440 1,158 942*
*Less than 1% of the appropriate threshold.
Note 17
FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISKS
The Company is a party to financial instruments with off-balance-
sheet risks in the normal course of business to meet the
financing needs of its customers. These financial instruments
include commitments to extend credit and standby letters of
credit.
The Company's maximum exposure to credit loss under standby
letters of credit and commitments to extend credit is represented
by the contractual amount of those instruments. The Company uses
the same credit policies in establishing commitments and issuing
letters of credit as it does for on-balance-sheet instruments.
As of December 31, 1999, the amounts associated with the
Company's off-balance-sheet obligations were as follows:
(Dollars in Thousands) Amount
--------------------------------------------------
Commitments to Extend Credit(1) $307,073
Standby Letters of Credit $ 2,573
(1) Commitments include unfunded loans, revolving lines of
credit (including credit card lines) and other unused
commitments.
Commitments to extend credit are agreements to lend to a customer
so 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 are expected to expire without
being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.
Standby letters of credit are conditional commitments issued by
the Company to guarantee the performance of a customer to a third
party. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan
facilities. In general, management does not anticipate any
material losses as a result of participating in these types of
transactions. However, any potential losses arising from such
transactions are reserved for in the same manner as management
reserves for its other credit facilities.
For both on- and off-balance-sheet financial instruments, the
Company requires collateral to support such instruments when it
is deemed necessary. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of
collateral obtained upon extension of credit is based on
management's credit evaluation of the counterpart. Collateral
held varies, but may include deposits held in financial
institutions; U.S. Treasury securities; other marketable
securities; real estate; accounts receivable; property, plant and
equipment; and inventory.
Note 18
FAIR VALUE OF FINANCIAL INSTRUMENTS
Many of the Company's assets and liabilities are short-term
financial instruments whose carrying values approximate fair
value. These items include Cash and Due From Banks, Interest
Bearing Deposits with Other Banks, Federal Funds Sold, Federal
Funds Purchased and Securities Sold Under Repurchase Agreements,
and Short-Term Borrowings. In cases where quoted market prices
are not available, fair values are based on estimates using
present value or other valuation techniques. The resulting fair
values may be significantly affected by the assumptions used,
including the discount rates and estimates of future cash flows.
The methods and assumptions used to estimate the fair value of
the Company's other financial instruments are as follows:
Investment Securities - Fair values for investment securities are
based on quoted market prices. If a quoted market price is not
available, fair value is estimated using market prices for
similar securities.
Loans - The loan portfolio is segregated into categories and the
fair value of each loan category is calculated using present
value techniques based upon projected cash flows and estimated
discount rates. The calculated present values are then reduced
by an allocation of the allowance for loan losses against each
respective loan category.
Deposits - The fair value of Noninterest Bearing Deposits, NOW
Accounts, Money Market Accounts and Savings Accounts are the
amounts payable on demand at the reporting date. The fair value
of fixed maturity certificates of deposit is estimated using the
rates currently offered for deposits of similar remaining
maturities.
Long-Term Debt - The carrying value of the Company's long-term
debt approximates fair value as the current rate approximates the
market rate.
Commitments to Extend Credit and Standby Letters of Credit - The
fair value of commitments to extend credit is estimated using the
fees currently charged to enter into similar agreements, taking
into account the present creditworthiness of the counterparts.
Fair value of these fees is not material.
The Company's financial instruments which have estimated fair
values differing from their respective carrying values are
presented below:
At December 31,
(Dollars in Thousands) 1999 1998
--------------------------------------------------------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
--------------------------------------------------------------------------
Financial Assets:
Loans, Net of Allowance
for Loan Losses $ 918,557 $ 908,766 $ 834,390 $ 855,574
Financial Liabilities
Deposits $1,202,658 $1,200,875 $1,253,553 $1,233,623
Certain financial instruments and all nonfinancial instruments
are excluded from the disclosure requirements. The disclosures
also do not include certain intangible assets such as customer
relationships, deposit base intangibles and goodwill.
Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
Note 19
PARENT COMPANY FINANCIAL INFORMATION
The operating results of the parent company for the three years ended
December 31, are shown below:
Parent Company Statements of Income
(Dollars in Thousands) 1999 1998 1997
------------------------------------------------------------------------------
OPERATING INCOME
Income Received from Subsidiary Banks:
Dividends $ 7,285 $ 7,190 $ 6,870
Overhead Fees 2,595 4,007 3,868
------- ------- -------
Total Operating Income 9,880 11,197 10,738
------- ------- -------
OPERATING EXPENSE
Salaries and Associate Benefits 1,926 2,171 2,445
Interest on Debt 430 832 988
Professional Fees 232 527 617
Advertising 109 711 597
Restructuring Charge - - 338
Legal Fees 77 115 126
Other 257 696 526
------- ------- -------
Total Operating Expense 3,031 5,052 5,637
------- ------- -------
Income Before Income Taxes and Equity
in Undistributed Earnings of Subsidiary Banks 6,849 6,145 5,101
Income Tax Benefit (198) (394) (670)
------- ------- -------
Income Before Equity in Undistributed
Earnings of Subsidiary Banks 7,047 6,539 5,771
Equity in Undistributed Earnings
of Subsidiary Banks 8,205 8,755 8,630
------- ------- -------
Net Income $15,252 $15,294 $14,401
======= ======= =======
The following are condensed statements of financial condition of the
parent company at December 31:
Parent Company Statements of Financial Condition
(Dollars in Thousands) 1999 1998
--------------------------------------------------------------------
ASSETS
Cash and Due From Group Banks $ 2,020 $ 4,749
Investment in Subsidiary Banks 134,105 132,727
Other Assets 520 512
-------- --------
Total Assets $136,645 $137,988
======== ========
LIABILITIES
Long-Term Debt $ 3,000 $ 8,000
Other Liabilities 1,429 1,126
-------- --------
Total Liabilities 4,429 9,126
-------- --------
SHAREOWNERS' EQUITY
Preferred Stock; $.01 par value, 3,000,000 shares
authorized; no shares issued and outstanding - -
Common Stock, $.01 par value; 90,000,000
shares authorized; 10,190,069 and 10,163,919
shares issued and outstanding 102 102
Additional Paid-in Capital 9,249 8,561
Retained Earnings 129,055 119,521
Accumulated Other Comprehensive
Income, Net of Tax (6,190) 678
-------- --------
Total Shareowners' Equity 132,216 128,862
-------- --------
Total Liabilities and Shareowners' Equity $136,645 $137,988
======== ========
The cash flows for the parent company for the three years ended
December 31, were as follows:
Parent Company Statements of Cash Flows
1999 1998 1997
--------------------------------------------------------------------------
Cash Flows From Operating Activities:
Net Income $15,252 $15,294 $14,401
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Equity in undistributed
earnings of Subsidiary Banks (8,205) (8,755) (8,630)
Non-Cash Compensation 260 868 563
Amortization of Goodwill - 25 25
(Increase) Decrease in Other Assets (40) 1,155 (295)
Net Increase (Decrease) in Other Liabilities 292 (357) 299
------- ------- -------
Net Cash Provided by Operating Activities 7,559 8,230 6,363
------- ------- -------
Cash From Financing Activities:
Acquisition of Interest-Bearing Deposits - - (141)
Repayment of Long-Term Debt (5,000) (5,000) (2,000)
Payment of Dividends (5,718) (4,328) (3,727)
Issuance of Common Stock, Net 428 1,148 1,040
------- ------- -------
Net Cash Used in Financing Activities (10,290) (8,180) (4,828)
------- ------- -------
Net (Decrease) Increase in Cash (2,729) 50 1,535
Cash at Beginning of Period 4,749 4,699 3,164
------- ------- -------
Cash at End of Period $ 2,020 $ 4,749 $ 4,699
======= ======= =======
Note 20
CORPORATE REORGANIZATION
On October 18, 1997, the Company consolidated its three remaining
bank affiliates, Levy County State Bank, Farmers & Merchants Bank
of Trenton and Branford State Bank into Capital City Bank. The
consolidation enabled the Company to present a consistent image
to a broader market and to better serve its clients through the
use of a common name with multiple, convenient locations. The
Company's operating results for 1997 included pre-tax charges of
$655,000, which were attributable to the corporate
reorganization.
Note 21
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standard Board issued SFAS
No. 130, "Reporting Comprehensive Income", which requires that
certain transactions and other economic events that bypass the
income statement must be displayed as other comprehensive income.
The Company's comprehensive income consists of net income and
changes in unrealized gains (losses) on securities available-for-
sale, net of income taxes.
Comprehensive income for 1998, 1997 and 1996 was calculated as
follows:
(Dollars in Thousands) 1999 1998 1997
--------------------------------------------------------------------------
Net Unrealized Gains (Losses)
Recognized in Other Comprehensive Income:
Before Tax $(10,566) $ 109 $ 802
Less Income Tax (3,698) 38 281
-------- ------- -------
Net of Tax (6,868) 71 521
Amounts Reported in Net Income:
(Loss) Gain On Sale of Securities (12) 87 (15)
Net Amortization 1,417 758 695
-------- ------- -------
Reclassification Adjustment 1,405 845 680
Less Income Tax Expense 492 296 238
-------- ------- -------
Reclassification Adjustment, Net of Tax 913 549 442
Amounts Reported in Other Comprehensive Income:
Unrealized (Loss) Gain Arising During the
Period, Net of Tax (5,955) 620 963
Net Unrealized (Losses) Recognized in
Reclassification Adjustments, Net of Tax (913) (549) (442)
-------- ------- -------
Other Comprehensive Income (6,868) 71 521
Net Income 15,252 15,294 14,401
-------- ------- -------
Total Comprehensive Income $ 8,384 $15,365 $14,922
======== ======= =======
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures.
Not applicable.
Part III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference to the sections entitled "Election of
Directors" and "Executive Officers, Compensation and Other
Information" in the Registrant's Proxy Statement dated April 4, 2000,
to be filed on or about April 4, 2000.
Item 11. Executive Compensation
Incorporated herein by reference to the section entitled "Executive
Officers, Compensation and Other Information" and the subsection
entitled "Director Compensation" under the section entitled "Meetings
and Committees of the Board of Directors" in the Registrant's Proxy
Statement dated April 4, 2000, to be filed on or about April 4, 2000.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Incorporated herein by reference to the section entitled
"Shareownership of Management and Principal Shareowners" in the
Registrant's Proxy Statement dated April 4, 2000, to be filed on or
about April 4, 2000.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to the subsection entitled
"Compensation Committee Interlocks and Insider Participation" under
the section entitled "Meetings and Committees of the Board of
Directors" and the subsection entitled "Transactions With Management
and Related Parties" under the section entitled "Executive Officers,
Compensation and Other Information" in the Registrant's Proxy
Statement dated April 4, 2000, to be filed on or about April 4, 2000.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
14(a)(1) List of Financial Statements
Report of Independent Certified Public Accountants
Consolidated Statements of Income for each of the three years in the
period ended December 31, 1999
Consolidated Statements of Financial Condition for the years ended
December 31, 1999 and 1998
Consolidated Statements of Changes in Shareowners' Equity for each of
the three years in the period ended December 31, 1999
Consolidated Statements of Cash Flows for each of the three years in
the period ended December 31, 1999
Notes to Consolidated Financial Statements
Other schedules and exhibits are omitted because the required
information either is not applicable or is shown in the financial
statements or the notes thereto.
14(a)(3) Exhibits
2(a) Agreement and Plan of Merger, dated as of December 10, 1995, by
and among Capital City Bank Group, Inc.; a Florida corporation to be
formed as a direct wholly-owned subsidiary of the Company; and First
Financial Bancorp, Inc., is incorporated herein by reference to the
Registrant's Form 10-K dated March 29, 1996 (File No. 0-13358).
2(b) Merger Agreement and Plan of Merger, dated October 18, 1997, by
and among Capital City Bank, Levy County State Bank, Farmers &
Merchant Bank of Trenton and Branford State Bank, is incorporated
herein by reference to the Registrant's Form 10-K dated March 27, 1998
(File No. 0-13358).
2(c) Agreement and Plan of Merger, dated as of February 11, 1999, by
and among Capital City Bank Group, Inc., Grady Holding Company and
First National Bank of Grady County is incorporated herein by
reference to the Registrant's Form 8-K as filed with the Commission on
March 26, 1999 (File No. 0-13358).
3(a) Articles of Incorporation, as amended, of Capital City Bank
Group, Inc., are incorporated herein by reference to Exhibit B of the
Registrant's 1996 Proxy Statement dated April 12, 1996 (File No. 0-
13358).
3(b) By-Laws, as amended, of Capital City Bank Group, Inc., are
incorporated herein by reference to Exhibit 3(b) of the Company's Form
10-Q for the period ended September 30, 1997 (File No. 0-13358).
10(b) Promissory Note and Pledge and Security Agreement evidencing a
line of credit by and between Registrant and SunTrust, dated November
18, 1995, is incorporated herein by reference to the Registrant's Form
10-K/A dated April 9, 1996 (File No. 0-13358).
10(c) Capital City Bank Group, Inc. 1996 Associate Incentive Plan, as
amended, is incorporated herein by reference to Exhibit 10 of the
Registrant's Form S-8 Registration Statement, as filed with the
Commission on December 23, 1996 (File No. 333-18543).
10(d) Capital City Bank Group, Inc. Amended and Restated 1996 Director
Stock Purchase Plan, filed herewith.
10(e) Capital City Bank Group, Inc. 1996 Dividend Reinvestment and
Optional Stock Purchase Plan is incorporated herein by reference to
the Registrant's Form S-3 filed on January 30, 1997 (File No. 333-
20683).
21 A listing of Capital City Bank Group's subsidiaries is filed
herewith.
23(a) Consent of Independent Certified Public Accountants
27 Financial Data Schedule
14(b) REPORTS ON FORM 8-K
Capital City Bank Group, Inc., filed no Form 8-K during the fourth
quarter 1999.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on March 23, 2000, on its behalf by the undersigned, thereunto
duly authorized.
CAPITAL CITY BANK GROUP, INC.
/s/ William G. Smith, Jr.
William G. Smith, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on March 23, 2000 by the following persons
in the capacities indicated.
/s/ William G. Smith, Jr.
William G. Smith, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
/s/ J. Kimbrough Davis
J. Kimbrough Davis
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
DuBose Ausley
/s/ Thomas A. Barron
Thomas A. Barron
/s/ Cader B. Cox, III
Cader B. Cox, III
/s/ John K. Humphress
John K. Humphress
Lina S. Knox
/s/ John R. Lewis
John R. Lewis
/s/ William G. Smith, Jr.
William G. Smith, Jr.
/s/ John B. Wight, Jr.
John B. Wight, Jr.
Exhibit 21. List of Subsidiaries of Registrant
Direct Subsidiaries:
Capital City Bank
First Financial Bancorp, Inc.
First National Bank of Grady County
Indirect Subsidiaries:
Capital City Trust Company
Capital City Services Company
Capital City Securities, Inc.
Capital City Mortgage Company
Community Financial Services, Inc.
First Insurance Agency of Grady County
Exhibit 23 Consent of Independent Certified Public
Accountants
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into the
Company's previously filed Registration Statement File Nos. 333-20683,
333-18557, 33-60113, 333-36693, and 333-18543.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
March 27, 2000
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareowners and Board of Directors of Capital City Bank Group,
Inc.
We have audited the accompanying consolidated statements of financial
condition of Capital City Bank Group, Inc. (a Florida Corporation) and
subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, changes in shareowners' equity and
cash flows for each of the three years in the period ended December
31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with accounting principles
generally accepted in the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Capital
City Bank Group, Inc. and subsidiaries as of December 31, 1999 and
1998, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United
States.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
January 27, 2000
Exhibit 27. Financial Data Schedule
[ARTICLE] 9
[CIK] 0000726601
[NAME] CAPITAL CITY BANK GROUP, INC.
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] DEC-31-1999
[CASH] 79,454
[INT-BEARING-DEPOSITS] 13,618
[FED-FUNDS-SOLD] 0
[TRADING-ASSETS] 0
[INVESTMENTS-HELD-FOR-SALE] 0
[INVESTMENTS-CARRYING] 330,952
[INVESTMENTS-MARKET] 321,192
[LOANS] 928,486
[ALLOWANCE] (9,929)
[TOTAL-ASSETS] 1,430,520
[DEPOSITS] 1,202,658
[SHORT-TERM] 66,275
[LIABILITIES-OTHER] 15,113
[LONG-TERM] 14,258
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 102
[OTHER-SE] 132,114
[TOTAL-LIABILITIES-AND-EQUITY] 1,430,520
[INTEREST-LOAN] 78,527
[INTEREST-INVEST] 17,600
[INTEREST-OTHER] 3,558
[INTEREST-TOTAL] 99,685
[INTEREST-DEPOSIT] 38,315
[INTEREST-EXPENSE] 41,247
[INTEREST-INCOME-NET] 58,438
[LOAN-LOSSES] 2,448
[SECURITIES-GAINS] (12)
[EXPENSE-OTHER] 58,012
[INCOME-PRETAX] 22,731
[INCOME-PRE-EXTRAORDINARY] 15,252
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 15,252
[EPS-BASIC] 1.50
[EPS-DILUTED] 1.50
[YIELD-ACTUAL] 4.67
[LOANS-NON] 2,965
[LOANS-PAST] 781
[LOANS-TROUBLED] 26
[LOANS-PROBLEM] 5,800
[ALLOWANCE-OPEN] 9,827
[CHARGE-OFFS] 3,198
[RECOVERIES] 860
[ALLOWANCE-CLOSE] 9,929
[ALLOWANCE-DOMESTIC] 9,929
[ALLOWANCE-FOREIGN] 0
[ALLOWANCE-UNALLOCATED] 0
</TABLE>
Exhibit 10(d)
CAPITAL CITY BANK GROUP, INC.
AMENDED AND RESTATED
DIRECTOR STOCK PURCHASE PLAN
1. Purpose. The purpose of the Amended and Restated 1996
Director Stock Purchase Plan (the "Plan") is to provide certain
members of the Board of Directors (the "Eligible Directors") of
Capital City Bank Group, Inc. (the "Company") and its
Subsidiaries with the ability to apply all or a portion of their
annual retainer and monthly fees received from serving as
directors to the purchase of shares of Common Stock at a ten
percent (10%) discount from fair market value. A further purpose
of the Plan is to advance the interests of the Company and its
stockholders by encouraging increased Common Stock ownership by
the Eligible Directors, thereby promoting long-term shareholder
value by strengthening their commitment to the welfare of the
Company and promoting an identity of interest between
stockholders and Eligible Directors.
2. Definitions. The following definitions shall be
applicable throughout the Plan.
(a) "Board" shall mean the Board of Directors of
the Company.
(b) "Common Stock" shall mean the Common Stock of
the Company, one penny ($0.01) par value per share.
(c) "Company" shall mean Capital City Bank
Group, Inc., a Florida corporation.
(d) "Director Fees" shall mean annual retainers,
monthly fees or committee meeting fees for serving as
directors of the Company or its Subsidiaries.
(e) "Eligible Directors" shall mean members of the
Board of Directors of the Company (including community
and advisory directors) and its Subsidiaries who receive
Director Fees.
(f) "Option A Eligibility Date" shall mean
January 1 of each year, commencing January 1, 2000.
(g) "Option A Fair Market Value" shall mean the
average of (i) the high and low prices of the shares of
Common Stock on the principal national securities
exchange on which the Common Stock is traded for the
ten (10) trading days immediately preceding each
Eligibility Date, if the Common Stock is then traded on
a national securities exchange; or (ii) the last
reported sale prices of the shares of Common Stock on
the Nasdaq National Market for the ten (10) trading
days immediately preceding the Eligibility Date, if the
Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid prices
last quoted by an established quotation service for
over-the-counter securities for the ten (10) trading
days immediately preceding the Eligibility Date, if the
Common Stock is not reported on the Nasdaq National
Market. In the event there is no trading in the shares
of Common Stock, "Option A Fair Market Value" shall be
deemed to be the fair value of the Common Stock as
determined by the Board after taking into consideration
all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at
arm's length.
(h) "Option A Purchase Period" shall mean the
fifteen day period beginning with the Option A
Eligibility Date each year in which an Eligible
Director may make an election indicating the dollar
amount of his or her annual retainer and fees received
from serving as a director in the preceding year which
he or she would like to be applied to the purchase of
shares of Common Stock; provided, however, that if the
Option A Purchase Period shall end on a Saturday,
Sunday or legal holiday, the Option A Purchase Period
shall extend to 5:00 p.m. of the next business day.
(i) "Option B Eligibility Date" shall mean
December 1 of each year, commencing December 1, 2000;
provided, however, for year 2000 the Option B
Eligibility Date shall be January 1, 2000.
(j) "Option B Fair Market Value" shall mean
(i) the closing price of the Common Stock on the
principal national securities exchange on which the
Common Stock is traded, if the common stock is then
traded on a national securities exchange; or (ii) the
closing price of the shares of Common Stock on the
Nasdaq National Market, if the Common Stock is not then
traded on a national securities exchange; or (iii) the
closing bid price last quoted by an established
quotation service for over-the-counter securities, if
the Common Stock is not reported on the Nasdaq National
Market. In the event that there is no trading in the
shares of Common Stock, "Option B Fair Market Value"
shall be deemed to be the fair value of the Common
Stock as determined by the Board after taking into
consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer
prices of the Common Stock in private transactions
negotiated at arm's length.
(k) "Option B Purchase Period" shall mean the
thirty-one day period beginning with the Option B
Eligibility Date each year in which an Eligible
Director may make an election indicating the percentage
of his or her annual retainer and fees to be received
from serving as a director in the upcoming year which
he or she would like to be applied to the purchase of
shares of Common Stock; provided, however, that for
year 2000 the Option B Purchase Period shall mean at
any time on or before September 30, 2000; and provided
further that, if the Option B Purchase Period shall end
on a Saturday, Sunday or legal holiday, the Option B
Purchase Period shall extend to 5:00 p.m. of the next
business day.
(l) "Plan" shall mean the Amended and Restated
1996 Director Stock Purchase Plan of Capital City Bank
Group, Inc.
(m) "Stock" shall mean the Common Stock or such
other authorized shares of stock of the Company as the
Board may from time to time authorize for use under the
Plan.
(n) "Subsidiary" shall mean any corporation which
is a "subsidiary corporation" of the Company within the
meaning of Section 424(f) of the Internal Revenue Code
of 1986, as amended.
3. Effective Date and Duration. The Plan and any amendments
hereto shall become effective on the date of approval by the
Board (except that the amendments adopted by the Board on
February 24, 2000 shall be effective as of January 1, 2000) (the
"Effective Date"), and shall terminate upon adoption of a
resolution of the Board terminating the Plan.
4. Administration. The Board shall administer the Plan. The
Board shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations
and to make all such determinations relating to the Plan as it
may deem necessary or advisable for the administration of the
Plan. The Board's interpretation of the Plan and all decisions
and determinations by the Board with respect to the Plan shall be
final, binding, and conclusive on all parties unless otherwise
determined by the Board.
5. Common Stock Subject to the Plan.
(a) The aggregate number of shares of Common Stock
which shall be made available for sale under the Plan
shall not exceed one hundred fifty thousand (150,000)
(consisting of the 50,000 shares included upon
commencement of the Plan in 1996, as adjusted for
subsequent stock splits). However, the aggregate
number of shares of Common Stock available under the
Plan shall be subject to appropriate adjustment in the
case of any extraordinary dividend or other
distribution, recapitalization, forward or reverse
stock split, reorganization, merger, consolidation,
spin-off, combination, repurchase, share exchange, or
other similar corporate transaction or event affecting
the Common Stock.
(b) Common Stock to be issued to an Eligible
Director under the Plan will be registered in the
record or beneficial name of the Eligible Director or
in the record or beneficial name of the Eligible
Director and his or her spouse.
6. Eligibility. Each person who is an Eligible Director on
any Option A Eligibility Date or any Option B Eligibility Date
shall be eligible to participate in the Plan.
7. Option A Purchase of Common Stock Pursuant to the Plan.
(a) Manner of Election. At any time during the
Option A Purchase Period an Eligible Director may elect
to have all or a portion of his or her Director Fees
earned in the preceding calendar year applied to the
purchase of shares of Common Stock. Election must be
made by written notice to the Chief Financial Officer
of the Company or such other person as designated from
time to time by the Board and must be accompanied by a
check payable to the order of the Company in the amount
of such election.
(b) Purchase Price. The purchase price per share
of Common Stock purchased under Option A pursuant to
this Item 7 of the Plan shall be ninety percent (90%)
of Option A Fair Market Value.
(c) When Stock Shall Be Issued to Eligible
Directors. As soon as practicable after each Option A
Purchase Period, shares of Common Stock purchased under
the Plan shall be issued to the purchasing Eligible
Director.
7. Option B Purchase of Common Stock Pursuant to the Plan.
(a) Manner of Election. At any time during the
Option B Purchase Period an Eligible Director may elect
to have all, one-half or none of his or her Director
Fees to be earned in the upcoming calendar year applied
to the purchase of shares of Common Stock. Election
must be made by written notice to the Chief Financial
Officer of the Company or such other person as
designated from time to time by the Board.
(b) Purchase Price. The purchase price per share of
Common Stock purchased under Option B pursuant to this
Item 8 of the Plan shall be ninety percent (90%) of the
Option B Fair Market Value as determined on the last
stock trading day of the month in which each Board or
committee meeting occurred.
(c) When Stock Shall Be Issued to Eligible
Directors. Shares purchased under Option B pursuant to
this Item 8 of the Plan shall be issued to the
purchasing Eligible Director at such intervals as
determined by the Board from time to time.
8. General.
(a) Additional Provisions. The purchase of any
shares of Common Stock under the Plan may also be
subject to such other provisions (whether or not
applicable to purchases made by any other Director) as
the Board determines appropriate including, without
limitation, provisions to comply with Federal and state
securities laws and Federal and state income tax
withholding requirements.
(b) Government and Other Regulations. The
obligations of the Company shall be subject to all
applicable laws, rules and regulations, and to such
approvals by governmental agencies as may be required.
(c) Tax Withholding. Notwithstanding any other
provision of the Plan, a Director receiving Common
Stock purchased under the Plan may be required to pay
to the Company or a Subsidiary, as appropriate, prior
to delivery of such Common Stock, the amount of any
such taxes which the Company or Subsidiary is required
to withhold, if any, with respect to such Common Stock.
Subject in particular cases to the disapproval of the
Board, the Company may accept shares of Common Stock of
equivalent Option A Fair Market Value or Option B Fair
Market Value in payment of such withholding tax
obligations if the Director elects to make payment in
such manner at the time of election.
(b) Employment Director Rights. Neither this Plan
nor any action taken hereunder shall be construed as
giving any Eligible Director any right to be retained
in the employ or as a director of the Company or a
Subsidiary.
(c) No Liability of Board Members. No member of
the Board shall be personally liable by reason of any
contract or other instrument executed by such member or
on his behalf in his capacity as a member of the Board
nor for any mistake of judgment made in good faith, and
the Company shall indemnify and hold harmless each
member of the Board and each other employee, officer or
director of the Company to whom any duty or power
relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability
(including any sum paid in settlement of a claim)
arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own
fraud or bad faith; provided, however, that approval of
the Board shall be required for the payment of any
amount in settlement of a claim against any such
person. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification
to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a
matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them
harmless.
(d) Governing Law. The Plan will be administered
in accordance with Federal laws, or in the absence
thereof, the laws of the State of Florida.
(e) Nontransferability. A person's rights and
interest under the Plan may not be sold, assigned,
donated or transferred or otherwise disposed of,
mortgaged, pledged or encumbered.
(f) Reliance on Reports. Each member of the
Board shall be fully justified in relying, acting or
failing to act, and shall not be liable for having so
relied, acted or failed to act in good faith, upon any
report of the type contemplated by Florida Statute
607.0830(2) as currently in effect and upon any other
information furnished in connection with the Plan by
any person or persons other than himself.
(g) Expenses. The expenses of administering the
Plan shall be borne by the Company and its
Subsidiaries.
(h) Pronouns. Masculine pronouns and other words
of masculine gender shall refer to both men and women.
(i) Titles and Headings. The titles and headings
of the sections in the Plan are for convenience of
reference only, and in the event of any conflict, the
text of the Plan, rather than such titles or headings
shall control.
9. Nonexclusivity of the Plan. The adoption of this Plan by
the Board shall not be construed as creating any limitations on
the power of the Board to adopt such other incentive arrangements
as it may deem desirable, and such arrangements may be either
applicable generally or only in specific cases.
10. Amendments and Termination. The Board may at any time
terminate the Plan. The Board may, at any time, or from time to
time, amend or suspend and, if suspended, reinstate, the Plan in
whole or in part.
* * *
As adopted by the Board of Directors of Capital City Bank Group,
Inc. as of
February 23, 1996 and as amended
as of December 20, 1996 and as of
February 24, 2000 (which latter amendment
is effective retroactive to January 1, 2000).
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act (the "FBCA") grants each
corporation organized thereunder the power to indemnify its officers,
directors, employees and agents on certain conditions against
liabilities arising out of any action or proceeding to which any of
them is a party by reason of being such officer, director, employee or
agent. The FBCA permits a Florida corporation, with the approval of its
shareowners, to include within its articles of incorporation a
provision eliminating or limiting the personal liability of its
directors to such corporation or its shareowners for monetary damages
resulting from certain breaches of the directors' fiduciary duty of
care, both in suits by or on behalf of the corporation and in actions
by shareowners of the corporation.
Capital City Bank Group, Inc.'s ("Capital City") Articles of
Incorporation and Bylaws include provisions which allow Capital City to
take advantage of such provisions of the FBCA. The Capital City
Articles of Incorporation and Bylaws also provide for the
indemnification, to the fullest extent permitted by the FBCA, of
officers and directors of Capital City. Capital City currently
maintains policies of insurance under which the directors and officers
of Capital City are insured, within the limits and subject to the
limitations of the policies, against specified expenses in connection
with the defense of actions, suits or proceedings to which they are
parties by reason of being or having been such directors or officers.
ITEM 21. EXHIBITS.
The following exhibits are filed herein or have been, as noted,
previously filed:
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated as of September 25, 2000,
by and between First Bankshares of West Point, Inc. and
Capital City Bank Group, Inc. (Included as Appendix A to the
Proxy Statement/Prospectus included in this Registration
Statement).
5.1 Opinion of Gunster, Yoakley & Stewart, P.A. regarding the
legality of the securities being offered hereby.
8.1 Opinion of Gunster, Yoakley & Stewart, P.A. as to federal
income tax consequences.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Gunster, Yoakley & Stewart, P.A. (Included as part
of the opinions contained in Exhibits 5.1 and 8.1 herein).
23.3 Consent of Brown, Burke Capital Partners, Inc.
24.1 A power of attorney where various individuals authorize the
signing of their names to any and all amendments to this
registration statement and other documents submitted in
connection herewith is contained on the first page of the
signature pages following Part II of this registration
statement.
99.1 Form of Proxy of First Bankshares of West Point, Inc.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(2) 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 SEC 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.
(3) To respond to requests for information that is incorporated
by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13
of this Form S-4, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(4) 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.
(5) That prior to any public reoffering of the securities
registered 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 issuer undertakes
that such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(6) That every prospectus: (i) that is filed pursuant to
Paragraph (5) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
it meets all the requirements for filing on Form S-4 and has duly
caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of
Tallahassee, State of Florida, on January 5, 2001.
Capital City Bank Group, Inc.
By: /s/ William G. Smith, Jr.
William G. Smith, Jr.,
President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints J. Kimbrough Davis
and William G. Smith, Jr., or either one of them (with full power
to act alone), his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all
capacities, to sign and execute on behalf of the undersigned any
and all amendments to this registration statement, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to
do and perform each and every act and thing requisite and necessary
to be done in connection with any such amendments, as fully to all
intents and purposes as he or she might or could do in person, and
does hereby ratify and confirm all that said attorneys-in-fact and
agents, or their respective substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
President, Chief Executive
/s/ William G. Smith, Jr. Officer and Director January 5, 2001
William G. Smith, Jr. (Principal Executive Officer)
Executive Vice President and
/s/ J. Kimbrough Davis Chief Financial Officer January 5, 2001
J. Kimbrough Davis (Principal Financial and
Accounting Officer)
/s/ DuBose Ausley Chairman of the Board January 5, 2001
DuBose Ausley and Director
/s/ Thomas A. Barron Director January 5, 2001
Thomas A. Barron
/s/ Cader B. Cox, III Director January 5, 2001
Cader B. Cox, III
/s/ John K. Humphress Director January 5, 2001
John K. Humphress
/s/ Lina S. Knox Director January 5, 2001
Lina S. Knox
/s/ John R. Lewis Director January 5, 2001
John R. Lewis
/s/ John B. Wight, Jr. Director January 5, 2001
John B. Wight, Jr.
EXHIBIT INDEX
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated as of September 25, 2000,
by and between First Bankshares of West Point, Inc. and
Capital City Bank Group, Inc. (Included as Appendix A to the
Proxy Statement-Prospectus included in this Registration
Statement).
5.1 Opinion of Gunster, Yoakley & Stewart, P.A. regarding the
legality of the securities being offered hereby.
8.1 Opinion of Gunster, Yoakley & Stewart, P.A. as to federal
income tax consequences.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Gunster, Yoakley & Stewart, P.A. (Included as part
of the opinions contained in Exhibits 5.1 and 8.1 herein).
23.3 Consent of Brown, Burke Capital Partners, Inc.
24.1 A power of attorney where various individuals authorize the
signing of their names to any and all amendments to this
registration statement and other documents submitted in
connection herewith is contained on the first page of the
signature pages following Part II of this registration
statement.
99.1 Form of Proxy of First Bankshares of West Point, Inc.
