AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 11, 1995
REGISTRATION NO. 33-------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SUNTRUST BANKS, INC.
(Exact name of registrant as specified in its charter)
Georgia 6022 58-1575035
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorpration or Industrial Classification Identification No.)
organization Code Number)
25 Park Place, N.E.
Atlanta, Georgia 30303
404-588-7711
(Address, including zip code, and telephone number,including area code, of
registrant's principal executive offices)
Raymond D. Fortin
Senior Vice President
SunTrust Banks, Inc.
25 Park Place, N.E.
Atlanta, Georgia 30303
404-588-7165
(Name, address, including zip code, and telephone number
including area code, of agent for service)
Copies to:
L. Kinder Cannon III, Esq. G. Bruce Douglas
Holland & Knight Chairman of the Board
50 North Laura Street Ponte Vedra Banking Corporation
Jacksonville, Florida 32202 100 Sawgrass Corners Drive
(813) 224-9255 Ponte Vedra Beach, Florida 32082
Approximate date of commencement of proposed sale to the public: The
date of mailing the Proxy Statement - Prospectus to the shareholders of
Peoples State Bank.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount to maximum maximum
Title of each class of be offering aggregate Amount of
securities to be registered( price per offering registration
registered 1) share(2) price(2) fee
Common Stock, $1.00 par
value per share....... 154,539 $10.14 $6,480,677 $2,235
(1)Maximum number of shares which may be issued by Registrant under its
Agreements in connection with the acquisition of Ponte Vedra Banking
Corporation assuming that the market price per share of Registrants common
stock is $55.
(2)Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(f)(2), under the Securities Act of 1933, as amended
(the "Securities Act"), the offering price is based on the book value of
Peoples State Bank common stock as of December 31, 1994. There were
437,508 shares, assuming the exercise of all options, of issued and
outstanding common stock of Peoples State Bank on that date, having an
aggregate book value of $6,480,677.
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.
SUNTRUST BANKS, INC.
CROSS REFERENCE SHEET
Item Number Caption Heading in Prospectus
A. Information About the Transaction
1. Forepart of Registration Statement and OutsideOutside Front Cover
Front Cover Page of Prospectus Page; Facing Page
2. Inside Front and Outside Back Cover Available Information;
Pages of Prospectus Incorporation of Certain
Documents by Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings to Summary; SunTrust and Ponte
Fixed Charges and Other Information Vedra Selected Financial Data
4. Terms of the Transaction Summary; The Merger; Comparison
of Rights of Ponte Vedra and
SunTrust Shareholders; Exhibit A
5. Pro Forma Financial Information Summary
6. Material Contacts with the Company The Merger
Being Acquired
7. Additional Information Required for *
Reoffering by Persons and Parties
Deemed to be Underwriters
8. Interests of Named Experts and Counsel Legal Opinion, Relationships
with Independent Public
Accountants and Experts
9. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
B. Information About the Registrant
10. Information with Respect to S-3 Incorporation of Certain Documents
Registrants by Reference; Summary - The
Parties
11. Incorporation of Certain Information Incorporation of Certain
by Reference Documents by Reference
12. Information with Respect to S-2 or *
S-3 Registrants
13. Incorporation of Certain Information *
by Reference
14. Information with Respect to Registrants *
Other than S-2 or S-3 Registrants
C. Information About the Company Being Acquired
15. Information with Respect to S-3 *
Companies
16. Information with Respect to S-2 or S-3 *
Companies
17. Information with Respect to Companies Summary - The Parties;
Other than S-2 or S-3 Companies Business of PonteVedra
D. Voting and Management Information
18. Information if Proxies, Consents or Incorporation of Certain
Authorizations Are to be Solicited Documents by Reference; Summary;
Information Concerning The
Meeting; The Merger; Comparison
of Rights of Ponte Vedra and
SunTrust Shareholders
19. Information if Proxies, Consents or *
Authorizations Are Not to be Solicited,
or in an Exchange Offer
* Inapplicable, not required or none.
October 16, 1995
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special Meeting of
Shareholders (the "Meeting") of Ponte Vedra Banking Corporation ("Ponte
Vedra") to be held at the Sawgrass Office of Ponte Vedra, 100 Sawgrass
Corners Drive, Ponte Vedra Beach, St. Johns County, Florida 32082, at 5:30
p.m. local time on November 14, 1995.
At the Meeting, you will be asked to consider and vote upon the adoption
of an Agreement and Plan of Reorganization, dated as of August 31, 1995, by
and between SunTrust Banks, Inc. ("SunTrust"), Sun Banks, Inc. ("Sun") and
Ponte Vedra and a related Plan and Agreement of Merger between Sun and Ponte
Vedra (collectively the "Agreements"). The Agreements provide for the
conversion of each outstanding share of the $1.00 par value common stock of
Ponte Vedra ("Ponte Vedra Common Stock"), in accordance with the election by
each Ponte Vedra shareholder, into the Merger Consideration. The Merger
Consideration shall mean one of the following: (a) cash in the amount of
$17.50 (the "Cash Consideration"); (b) the number of shares of SunTrust
Common Stock having a value of $17.50 based on the Average Market Price (the
"Stock Consideration"); or (c) a combination of Cash Consideration and Stock
Consideration as described below. Average Market Price shall mean the
average of the closing prices per share of SunTrust Common Stock as reported
on the composite transactions tape of the New York Stock Exchange for each of
the ten consecutive trading days ending on and including the trading day
which is three (3) business days prior to the Effective Date. The number of
shares of Ponte Vedra Common Stock to be converted into the right to receive
Cash Consideration shall not be less than 22% of the number of shares of
Ponte Vedra Common Stock outstanding immediately prior to the Effective Time
(the "Minimum Cash Consideration Number") and shall not be greater than 50%
of the number of shares of Ponte Vedra Common Stock outstanding immediately
prior to the Effective Time (the "Maximum Cash Consideration Number"). The
number of shares of Ponte Vedra Common Stock to be converted into the right
to receive Stock Consideration shall be not less than 50% of the number of
shares of Ponte Vedra Common Stock outstanding immediately prior to the
Effective Time (the "Minimum Stock Consideration Number") and not greater
than 78% of the number of shares of Ponte Vedra Common Stock outstanding
immediately prior to the Effective Time (the "Maximum Stock Consideration
Number"). SunTrust may adjust such elections on a pro rata basis so that the
Maximum Cash Consideration Number and the Maximum Stock Consideration Number
are not exceeded. All combination elections shall be seventy-eight percent
Stock Consideration and twenty-two percent Cash Consideration.
The Agreements provide for the merger of Ponte Vedra with and into Sun.
The foregoing proposed transaction and events are hereinafter referred to as
the "Transaction". It is anticipated that after the Transaction is
consummated, Ponte Vedra National Bank will be merged with and into SunTrust
Bank/North Florida, N.A., which will operate as a wholly owned subsidiary of
Sun.
Approval of the Transaction requires the affirmative vote of holders of
66-2/3% of the outstanding shares of Ponte Vedra Common Stock as of the
record date.
The Board of Directors of Ponte Vedra has approved the Agreements and
believes that the Transaction is fair to and is in the best interests of
Ponte Vedra and its shareholders and unanimously recommends that you vote FOR
the approval and ratification of the Agreements and the Transaction.
The receipt of SunTrust Common Stock by Ponte Vedra shareholders is not
expected to result in the recognition of gain or loss for federal income tax
purposes. Gain or loss may, however, be recognized for federal income tax
purposes with respect to any Cash Consideration received or with regard to
any cash received in lieu of fractional shares or upon the exercise of
dissenters' rights. You should consult with your own tax adviser.
The enclosed Proxy Statement-Prospectus and the accompanying 1994
SunTrust Annual Report provides information regarding the Transaction, as
well as information regarding Ponte Vedra and SunTrust. You should carefully
review and consider all of this information.
Shareholders are entitled to vote all of the shares of Ponte Vedra
Common Stock held of record by them on October 12, 1995, the record date for
the Meeting.
We urge you to consider carefully these important matters, which are
described in the attached Proxy Statement-Prospectus. In order to ensure
that your vote is represented at the Meeting, please mark, sign, date and
mail the proxy card in the enclosed envelope. Please return the proxy even
if you plan to attend the Meeting. If you attend the Meeting, you will have
the opportunity to withdraw your proxy and vote in person if you choose to do
so.
You should not send in your stock certificates until you receive the
appropriate letter of transmittal form and instructions.
On behalf of the Board of Directors, I urge you to vote FOR approval of
the Agreements and the Transaction.
We look forward to seeing you at the Meeting.
G. Bruce Douglas Guy N. Nix, Jr.
Chairman Chairman
Ponte Vedra Banking Corporation Ponte Vedra National Bank
<PAGE>
PONTE VEDRA BANKING CORPORATION
100 Sawgrass Corners Drive
Ponte Vedra Beach, Florida 32082
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 14, 1995
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Ponte
Vedra Banking Corporation ("Ponte Vedra") will be held at 5:30 p.m., local
time, on November 14, 1995, at Ponte Vedra, 100 Sawgrass Corners Drive, Ponte
Vedra Beach, Florida 32082, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreements and
the Transaction as described in the attached Proxy Statement-
Prospectus. A copy of the Agreements are included in the attached
Proxy Statement-Prospectus as Exhibit A.
2. To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
The Board of Directors of Ponte Vedra has fixed October 12, 1995, as the
record date for the determination of shareholders entitled to notice of and
to vote at the Meeting and at any adjournment or adjournments thereof and,
accordingly, only shareholders of record of Ponte Vedra Common Stock at the
close of business on that date will be entitled to notice of and to vote at
the Meeting or any adjournment or adjournments thereof.
Any shareholder of Ponte Vedra shall have the right to dissent from the
Transaction and receive payment in cash of the fair value for his or her
shares of Ponte Vedra Common Stock upon compliance with the procedures set
forth in Florida Statutes Sections 607.1301, 607.1302 and 607.1320, a copy of
which is attached hereto as Exhibit B. Dissenting shareholders will be
entitled to payment in cash of the fair value of only those shares which are
voted against the Transaction or as to which the shareholder has given
written notice to Ponte Vedra that the shareholder dissents from the
Transaction in accordance with the procedures set forth in the accompanying
Proxy Statement-Prospectus.
By Order of the Board of Directors of
Ponte Vedra Banking Corporation
THE BOARD OF DIRECTORS OF PONTE VEDRA UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF PONTE VEDRA COMMON STOCK VOTE TO APPROVE THE PROPOSAL.
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF A SHAREHOLDER RECEIVES MORE THAN ONE PROXY BECAUSE HE OR
SHE OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD
BE COMPLETED AND RETURNED. YOUR COOPERATION WILL BE APPRECIATED. YOUR
PROXY WILL BE VOTED WITH RESPECT TO THE MATTERS IDENTIFIED THEREON IN
ACCORDANCE WITH ANY SPECIFICATIONS ON THE PROXY AND IF NO SPECIFICATION IS
MADE YOUR PROXY WILL BE VOTED FOR ADOPTION OF THE AGREEMENTS AND THE
TRANSACTION.
<PAGE>
PROXY STATEMENT OF
PONTE VEDRA BANKING CORPORATION
FOR THE SPECIAL MEETING OF SHAREHOLDERS
OF PONTE VEDRA BANKING CORPORATION
TO BE HELD ON NOVEMBER 14, 1995
PROSPECTUS
OF
SUNTRUST BANKS, INC.
Common Stock
This Proxy Statement-Prospectus is being furnished to the holders of
shares ("Ponte Vedra Shareholders") of Common Stock, $1.00 par value ("Ponte
Vedra Common Stock"), of PONTE VEDRA BANKING CORPORATION, a Florida
corporation ("Ponte Vedra"), in connection with the solicitation of proxies
by the Board of Directors of Ponte Vedra for use at the Special Meeting of
Shareholders (the "Meeting") to be held on November 14, 1995, at the main
office of Ponte Vedra, 100 Sawgrass Corners Drive, Ponte Vedra Beach, Florida
32082, and at any adjournments or postponements thereof. This Proxy
Statement-Prospectus also constitutes a prospectus of SunTrust Banks, Inc.
("SunTrust"), relating to 154,539 shares of SunTrust Common Stock, par value
$1.00 per share ("SunTrust Common Stock"). At the Meeting, you will be asked
to consider and vote upon the adoption of an Agreement and Plan of
Reorganization, dated as of August 31, 1995, by and between SunTrust and
Ponte Vedra and a related Plan and Agreement of Merger between Sun Bank, Inc.
("Sun Bank") and Ponte Vedra (collectively the "Agreements"). The Agreements
provide for the conversion of each outstanding share of Ponte Vedra Common
Stock, in accordance with the election by each Ponte Vedra Shareholder, into
the Merger Consideration. The Merger Consideration shall mean one of the
following: (a) cash in the amount of $17.50 (the "Cash Consideration"); (b)
the number of shares of SunTrust Common Stock having a value of $17.50 based
on the Average Market Price (the "Stock Consideration"), or (c) a combination
of Cash Consideration and Stock Consideration as described below. Average
Market Price shall mean the average of the closing prices per share of
SunTrust Common Stock as reported on the composite transactions tape of the
New York Stock Exchange for each of the ten consecutive trading days ending
on and including the trading day which is three (3) business days prior to
the Effective Date. The number of shares of Ponte Vedra Common Stock to be
converted into the right to receive Cash Consideration shall be not less than
22% of the number of shares of Ponte Vedra Common Stock outstanding
immediately prior to the Effective Time (the "Minimum Cash Consideration
Number") and not greater than 50% of the number of shares of Ponte Vedra
Common Stock outstanding immediately prior to the Effective Time (the
"Maximum Cash Consideration Number"). The number of shares of Ponte Vedra
Common Stock to be converted into the right to receive Stock Consideration
shall be not less than 50% of the number of shares of Ponte Vedra Common
Stock outstanding immediately prior to the Effective Time (the "Minimum Stock
Consideration Number") and not greater than 78% of the number of shares of
Ponte Vedra Common Stock outstanding immediately prior to the Effective Time
(the "Maximum Stock Consideration Number"). SunTrust may adjust such
elections on a pro rata basis so that the Maximum Cash Election Number and
the Maximum Stock Election Number are not exceeded. All combination
elections shall be seventy-eight percent SunTrust Common Stock and twenty-two
percent Cash Consideration. The foregoing proposed transaction and events
are hereinafter referred to as the "Transaction" or the "Merger". It is
anticipated that following the Transaction, Ponte Vedra National Bank will be
merged with and into SunTrust Bank/North Florida, N.A.
2
<PAGE>
Any shareholder of Ponte Vedra shall have the right to dissent from the
Transaction and receive payment in cash of the fair value for his or her
shares of Ponte Vedra Common Stock upon compliance with the procedures set
forth in Florida Statutes Section 607.1301, 607.1302 and 607.1320, a copy of
which is attached hereto as Exhibit B. Dissenting shareholders will be
entitled to payment in cash of the fair value of only those shares which are
voted against the Transaction or as to which the shareholder has given
written notice to Ponte Vedra that the shareholder dissents from the
Transaction.
The outstanding shares of SunTrust Common Stock are, and the shares
offered hereby will be, listed on The New York Stock Exchange ("NYSE"). The
last reported sale price of SunTrust Common Stock as reported on the NYSE
Composite Transactions Tape on __________________, 1995 was $__________ per
share.
This Proxy Statement-Prospectus and the enclosed proxy are first being
mailed to Ponte Vedra Shareholders on or about October 16, 1995 in connection
with the solicitation of proxies for the Meeting.
THE SHARES OF SUNTRUST COMMON STOCK TO BE ISSUED UNDER THE AGREEMENTS HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OF SUNTRUST COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Proxy Statement-Prospectus is October 16, 1995.
3
<PAGE>
TABLE OF CONTENTS
Page
Available Information .............................................
Incorporation of Certain Documents by Reference ...................
Documents Delivered with This Proxy Statement-Prospectus ..........
Summary ...........................................................
The Parties to the Transaction .................................
The Meeting, Record Date and Vote Required .....................
The Merger .....................................................
Market Prices of SunTrust and Ponte Vedra Common Stock .........
Pro Forma Equivalent Per Common Share Data .....................
SunTrust Selected Financial Data ...............................
Ponte Vedra Selected Financial Data ............................
Information Concerning the Meeting ................................
The Meeting ....................................................
Vote Required ..................................................
The Merger ........................................................
General ........................................................
Exchange of Certificates Representing Ponte Vedra Common Stock..
Background of the Merger .......................................
Reasons for the Merger; Board of Directors Recommendation ......
Fairness Opinion ...............................................
Covenants; Conditions; Representations and Warranties;
Amendment and Termination ....................................
Interests of Certain Persons in the Merger .....................
Beneficial Ownership of Ponte Vedra Common Stock ...............
Directors of Ponte Vedra .......................................
Resales of SunTrust Common Stock ...............................
Regulatory Approvals ...........................................
Certain Federal Income Tax Consequences ........................
Expenses .......................................................
Accounting Treatment ...........................................
NYSE Listing ...................................................
Business of SunTrust ..............................................
Business of Ponte Vedra ...........................................
Comparison of Rights of Ponte Vedra and SunTrust Shareholders .....
Changes in Control .............................................
Anti-Takeover Statutes .........................................
Amendment of Articles of Incorporation .........................
Certain Voting Rights ..........................................
Dividends ......................................................
Board of Directors .............................................
Rights of Dissenting Shareholders .................................
Description of Ponte Vedra Capital Stock ..........................
Description of SunTrust Capital Stock .............................
SunTrust Common Stock ..........................................
SunTrust Provisions Relating to Certain Business Combinations ..
Certain Regulatory Considerations Relating to SunTrust ............
General ........................................................
Payment of Dividends and Other Restrictions ....................
Capital Adequacy ...............................................
Support of Subsidiary Banks and Other ..........................
Legal Opinion .....................................................
Relationships with Independent Public Accountants and Experts .....
EXHIBIT A - Agreement and Plan of Reorganization .................. A-1
EXHIBIT B - Dissenters Rights Statute ............................. B-1
EXHIBIT C - Opinion of Allen C. Ewing & Co ........................ C-1
4
<PAGE>
AVAILABLE INFORMATION
SunTrust is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission ("Commission"). Ponte Vedra is also
subject to the informational requirements of the Exchange Act. A
Registration Statement on Form S-4 under the Securities Act of 1933, as
amended, including this Proxy Statement-Prospectus, has been filed by
SunTrust with the Commission with respect to the SunTrust Common Stock to be
issued upon consummation of the Merger. For further information pertaining
to the shares of SunTrust Common Stock to which this Proxy Statement-
Prospectus relates, reference is made to such Registration Statement,
including the Exhibits and Schedules filed as a part thereof. As permitted
by the rules and regulations of the Commission, certain information included
in the Registration Statement is omitted from this Proxy Statement-
Prospectus. Copies of the Registration Statement as well as the reports,
proxy statements and other information that SunTrust has filed with the
Commission can be obtained from the Commission at prescribed rates by
addressing a written request for such copies to the Public Reference Section
of the Commission at Room 2120, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities referred to above and at the regional offices of the Commission
at: Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and New York Regional Office, 75 Park Place, New York, New
York 10007. SunTrust Common Stock is listed on the NYSE and such reports,
proxy statements and other information concerning SunTrust can be inspected
at the office of the NYSE, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement-Prospectus incorporates documents by reference which
are not presented herein or delivered herewith. Such documents relating to
SunTrust (other than exhibits to such documents) are available without
charge upon request. Requests for such copies should be directed to
SunTrust Banks, Inc., 25 Park Place, N.E., Atlanta, Georgia 30303,
Attention: Raymond D. Fortin, Senior Vice President, Corporate Secretary,
Telephone Number: (404) 588-7165. Such documents relating to Ponte Vedra
(other than exhibits to such documents) are available without charge upon
request directed to Ponte Vedra Banking Corporation, 100 Sawgrass Corners
Drive, Ponte Vedra, Florida 32082. In order to ensure timely delivery of
the documents, any request should be made at least five (5) days prior to
the date of the Meeting of Shareholders.
The following documents filed by SunTrust with the Commission under
Section 13 of the Exchange Act are hereby incorporated by reference into
this Proxy Statement-Prospectus: (i) SunTrust's Annual Report on Form 10-K
for the year ended December 31, 1994; (ii) SunTrust's Proxy Statement in
connection with its 1995 Annual Shareholders' Meeting; (iii) SunTrust's
Quarterly Report on Form 10-Q for the quarters ended March 31, 1995 and June
30, 1995; and (iv) the description of SunTrust's capital stock on pages 2 to
9 in Amendment No. 1, dated August 4, 1987, to its Registration of SunTrust
capital stock on Form 8-B, dated June 10, 1985, filed under Section 12(b) of
the Exchange Act, including any amendments or reports filed for the purpose
of updating such description. SunTrust's File Number with the Commission is
1-8918.
5
<PAGE>
The following documents filed by Ponte Vedra with the Commission under
Section 15(d) of the Exchange Act are hereby incorporated by reference into
this Proxy Statement-Prospectus: (i) Ponte Vedra's Annual Report on Form 10-
KSB for the year ended December 31, 1994 and (ii) Ponte Vedra's Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 1995 and June 30,
1995.
All documents filed by SunTrust or Ponte Vedra pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date hereof and
prior to the Meeting are hereby incorporated by reference into this Proxy
Statement-Prospectus and shall be deemed a part hereof from the date of
filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document which also is incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or superseded shall
not be deemed to constitute a part hereof except as so modified or
superseded.
DOCUMENTS DELIVERED WITH THIS PROXY STATEMENT-PROSPECTUS
This Proxy Statement-Prospectus is delivered together with SunTrust's
Annual Report to Shareholders for the year ended December 31, 1994 ("1994
SunTrust Annual Report").
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement-Prospectus and, if
given or made, such information or representation should not be relied upon
as having been authorized. This Proxy Statement-Prospectus does not
constitute an offer to sell, or a solicitation of an offer to purchase, the
securities offered by this Proxy Statement-Prospectus, or the solicitation
of a proxy, in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. Neither the delivery of
this Proxy Statement-Prospectus or any distribution of the securities to
which this Proxy Statement-Prospectus relates shall, under any
circumstances, create any implication that there has been no change in the
affairs of SunTrust or Ponte Vedra since the date of this Proxy Statement-
Prospectus.
This Proxy Statement-Prospectus does not relate to any resale of SunTrust
Common Stock received by any person upon consummation of the Merger and no
person is authorized to make any use of this Proxy Statement-Prospectus in
connection with any such resale.
SUMMARY
Certain significant matters discussed in this Proxy Statement-Prospectus
are summarized below. These summaries are not intended to be complete and
are qualified in all respects by reference to the detailed information
appearing elsewhere in this Proxy Statement-Prospectus. Shareholders are
urged to review carefully the entire Proxy Statement-Prospectus (including
the Appendices and other documents to which this Proxy Statement-Prospectus
refers).
6
<PAGE>
The Parties to the Transaction
Ponte Vedra
Ponte Vedra was incorporated under the laws of Florida effective October
4, 1988, primarily to serve as the holding company for a national banking
association. On July 19, 1989, Ponte Vedra received the approval of the
Board of Governors of the Federal Reserve System to use the proceeds of an
offering to acquire 550,000 shares of common stock of Ponte Vedra National
Bank (the "Bank") upon the opening of the Bank for business. The Bank
received the final approval of the United States Offices of the Comptroller
of the Currency ("OCC") and opened for business on December 18, 1989. The
Bank is a community-oriented bank serving primarily individual consumers,
professionals, service-oriented small businesses, and real estate
developers. The Bank conducts a general commercial banking business,
including the acceptance of deposits from and making of loans to individuals
and small to medium-sized businesses. The Bank does not currently offer
trust or permissible securities services.
The Bank's Headquarters Office is located at 100 Sawgrass Corners Drive,
Ponte Vedra Beach, St. Johns County, Florida 32082. The Bank has
established three branches. The first was the Ponte Vedra Boulevard Office,
at 282 Ponte Vedra Boulevard, Ponte Vedra Beach, St. Johns County, Florida
32082, which opened in August 1990 and was relocated to 3720 S. 3rd Street,
Jacksonville Beach, Florida 32250, (the South Beach Office) in November of
1993. The second was the North Beach Office, at 363 Atlantic Boulevard,
Suite 16, Atlantic Beach, Duval County, Florida 32233, which opened in
January 1991. The third was the Jacksonville Beach Office, which opened in
February 1993, at 100 North Third Street, Jacksonville Beach, Duval County,
Florida 32250.
SunTrust
SunTrust is a regional bank holding company headquartered at 25 Park
Place, N.E., Atlanta, Georgia 30303, telephone number (404) 588-7711. At
June 30, 1995, SunTrust had consolidated total assets of $44.2 billion,
consolidated loans of $30.1 billion, consolidated deposits of $31.7 billion,
consolidated realized shareholders' equity of $3 billion and consolidated
total shareholders' equity of $4 billion. SunTrust owns through wholly
owned intermediary holding companies all the outstanding capital stock of 29
subsidiary banks that operate in Florida, Georgia, Tennessee and Alabama.
SunTrust, through its subsidiary banks, conducts a broad range of
commercial banking activities, including accepting demand, time and savings
deposits, making both secured and unsecured business and consumer loans and
leases, extending commercial lines of credit, issuing and servicing credit
cards and certain other types of revolving credit accounts, providing
commercial factoring services, cash management services, investment
counseling, safe deposit services, personal and corporate trust and other
fiduciary services and engaging in leasing, mortgage banking, correspondent
banking, international banking, investment banking, trading in U.S.
government securities and municipal bonds and underwriting certain types of
general obligation municipal bonds.
Sun Banks, Inc.
Sun Banks, Inc. is a wholly owned subsidiary of SunTrust that owns all of
the outstanding capital stock of SunTrust's Florida banking subsidiaries.
7
<PAGE>
Additional information about SunTrust and its subsidiaries is included in
documents incorporated by reference in this Proxy Statement-Prospectus. See
"Incorporation of Certain Documents by Reference."
Consideration for Ponte Vedra Common Stock
The Agreements provide for the conversion of each outstanding share of
Ponte Vedra Common Stock, in accordance with the election by each Ponte
Vedra Shareholder, into the Merger Consideration. The Merger Consideration
shall mean one of the following: (a) cash in the amount of $17.50 (the
"Cash Consideration"); (b) the number of shares of SunTrust Common Stock
having a value of $17.50 based on the Average Market Price (the "Stock
Consideration"), or (c) a combination of Cash Consideration and Stock
Consideration as described below. Average Market Price shall mean the
average of the closing prices per share of SunTrust Common Stock as reported
on the composite transactions tape of the New York Stock Exchange for each
of the ten consecutive trading days ending on and including the trading day
which is three (3) business days prior to the Effective Date. The number of
shares of Ponte Vedra Common Stock to be converted into the right to receive
Cash Consideration shall not be less than 22% of the number of shares of
Ponte Vedra Common Stock outstanding immediately prior to the Effective Time
(the "Minimum Cash Consideration Number") and shall not be greater than 50%
of the number of shares of Ponte Vedra Common Stock outstanding immediately
prior to the Effective Time (the "Maximum Cash Consideration Number"). The
number of shares of Ponte Vedra Common Stock to be converted into the right
to receive Stock Consideration shall be not less than 50% of the number of
shares of Ponte Vedra Common Stock outstanding immediately prior to the
Effective Time (the "Minimum Stock Consideration Number") and not greater
than 78% of the number of shares of Ponte Vedra Common Stock outstanding
immediately prior to the Effective Time (the "Maximum Stock Consideration
Number"). SunTrust may adjust such elections on a pro rata basis so that
the Maximum Cash Election Number and the Maximum Stock Election Number are
not exceeded. All combination elections shall be seventy-eight percent
Stock Consideration and twenty-two percent Cash Consideration. Cash will be
paid for shares, if any, with respect to which dissenters' rights shall have
been perfected in accordance with the procedures set forth in Exhibit B
hereof.
The Meeting, Record Date and Vote Required
The Meeting is scheduled to be held at the main office of Ponte Vedra, 100
Sawgrass Corners Drive, Ponte Vedra Beach, St. Johns County, Florida 32082
on November 14, 1995, at 5:30 p.m., local time. The purpose of the Meeting
is to consider and vote upon a proposal to approve the Agreements. Only
holders of shares of Ponte Vedra Common Stock of record at the close of
business on October 12, 1995, will be entitled to receive notice of and to
vote at the Meeting. The affirmative vote of the holders of 66-2/3% of the
shares outstanding on such date is required to adopt the Agreements. As of
the record date, there were 639,120 shares of Ponte Vedra Common Stock
outstanding and entitled to vote, with each share entitled to one vote. As
of September 30, 1995, approximately 33.66% of the outstanding shares of
Ponte Vedra Common Stock were beneficially owned by officers and directors
of Ponte Vedra and their affiliates. Ponte Vedra has been advised that such
directors and executive officers intend to vote their shares in favor of
approval of the Agreements.
8
<PAGE>
The Merger
General
The Agreements, a copy of which is attached as Exhibit A and incorporated
by reference in the Proxy Statement-Prospectus, provide for the Merger of
Ponte Vedra with and into Sun in accordance with the applicable provisions
of the Florida Statutes. The separate existence of Ponte Vedra will cease
following the Merger. It is anticipated that SunTrust Bank/North Florida,
N.A., a wholly owned bank subsidiary of Sun Bank, thereafter will be merged
with Ponte Vedra, with the surviving corporation being called SunTrust
Bank/North Florida, N.A.
Background of the Merger
SunTrust and Ponte Vedra began preliminary discussions of a potential
combination in early 1995, which discussions did not lead to an agreement at
the time. Discussions resumed in June 1995 resulting in the execution of
the Agreements. The Agreements were approved by the Ponte Vedra Board of
Directors on August 21, 1995 and by the Executive Committee of the SunTrust
Board of Directors on August 8, 1995. See "The Merger - Background of the
Merger."
Board of Directors Recommendation
The Board of Directors of Ponte Vedra voted to approve the Agreements and
the Transaction as being in the best interests of Ponte Vedra and Ponte
Vedra Shareholders and unanimously recommends that Ponte Vedra Shareholders
vote FOR the adoption of the Agreements. In reaching its determination that
the Merger is in the best interests of the Ponte Vedra Shareholders, the
Board of Directors of Ponte Vedra considered a number of factors described
under "The Merger - Reasons For the Merger; Board of Directors
Recommendation."
Opinion of Financial Advisor
Allen C. Ewing & Co. ("Ewing") has advised Ponte Vedra's Board of
Directors that in its opinion the Transaction is fair from a financial point
of view to the shareholders of Ponte Vedra. The text of Ewing's opinion,
dated September 26, 1995, which describes the procedures followed,
assumptions made, limitations on the review taken, and other matters in
connection with rendering such opinion is attached as Exhibit C to this
Proxy Statement-Prospectus and should be read in its entirety by Ponte Vedra
Shareholders. See "The Merger - Opinion of Financial Advisors."
Covenants; Conditions; Amendment and Termination
The respective obligations of the parties to consummate the Merger are
subject to, among other things, the requisite vote of Ponte Vedra
Shareholders approving the Agreements and the Transaction and compliance
with certain regulatory requirements. Additional conditions to the
obligations of SunTrust and Ponte Vedra to consummate the Merger are
described under "The Merger - Covenants; Conditions; Representations and
Warranties; Amendment and Termination." See "Information Concerning the
Meeting - Vote Required" and "The Merger - Covenants; Conditions;
Representations and Warranties; Amendment and Termination."
9
<PAGE>
The Agreements may be amended by agreement between Ponte Vedra and
SunTrust, if approved by the Board of Directors of Ponte Vedra and SunTrust,
except that no amendment may change the consideration to be received by
Ponte Vedra Shareholders in the Merger after the Meeting unless approved by
66-2/3% of the Ponte Vedra Shareholders. The Agreements may be terminated
by mutual agreement of SunTrust and Ponte Vedra and by either of them under
certain circumstances described under "The Merger - Covenants; Conditions;
Representations and Warranties; Amendment and Termination."
Termination Fee
Ponte Vedra has agreed that, if on or before July 31, 1996, (a) Ponte
Vedra enters into a definitive agreement or consummates a transaction with
any other person or group, other than SunTrust, with respect to (i) the sale
of all or a substantial portion of the assets of Ponte Vedra; (ii) the sale
of at least 50% of the then outstanding shares of Ponte Vedra's Common
Stock; (iii) a merger involving Ponte Vedra, or (b) any person or group
acquires beneficial ownership of at least 50% of the outstanding common
stock of Ponte Vedra in one or more transactions that are supported,
recommended or endorsed by the Board of Directors of Ponte Vedra, Ponte
Vedra will pay SunTrust a $500,000 termination fee unless if the Agreements
are terminated by Ponte Vedra as a result of a breach of the Agreements by
SunTrust or by Ponte Vedra due to a denial of a required regulatory approval
or failure of the Ponte Vedra Shareholders to adopt the Agreements, unless
at the time of such termination Ponte Vedra is in material breach of the
Agreements. The termination fee may discourage competing offers to the
Merger and is intended by SunTrust to increase the likelihood that the
Merger will be consummated. See "The Merger - Covenants; Conditions;
Representations and Warranties; Termination Fee and No Solicitation
Covenant."
Interests of Certain Persons in the Merger
Certain members of Ponte Vedra's management have certain interests in the
Merger that are in addition to their interests as Ponte Vedra Shareholders
generally. These include, among others, provisions in the Agreements
relating to indemnification, certain payments, the liquidation of stock
options and warrants and continuation of certain other employee benefits.
See "The Merger - Interests of Certain Persons in the Merger."
Regulatory or Other Legal Considerations
Consummation of the Merger is subject to, and conditioned upon receipt of,
all required regulatory approvals and expiration of all required waiting
periods, including receipt of approvals from the Board of Governors of the
Federal Reserve System (the "Federal Reserve") and the OCC. On September
15, 1995, applications were submitted to the Federal Reserve and the OCC for
permission to consummate the transactions contemplated by the Agreements.
As of the date hereof, the Federal Reserve and the OCC have not acted on the
Merger. See "Merger - Conditions to the Merger, Regulatory Approvals."
Effective Date
The Effective Date is expected to occur in January 1996. See "The Merger -
Conditions to the Merger; Regulatory Approvals."
10
<PAGE>
Certain Federal Income Tax Consequences
SunTrust and Ponte Vedra anticipate that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986 (the "Code") and that Ponte Vedra Shareholders will not
recognize gain or loss for federal income tax purposes upon the conversion
of Ponte Vedra Common Stock into SunTrust Common Stock (except with respect
to any cash paid in lieu of fractional shares of SunTrust Common Stock).
Consummation of the Merger is conditioned upon receipt by SunTrust and Ponte
Vedra of an opinion of King & Spalding, tax counsel to SunTrust, to such
effect. Gain or loss will, however, be recognized for federal income tax
purposes with respect to any Cash Consideration received by Ponte Vedra
Shareholders who receive solely cash in exchange for their Ponte Vedra
Common Stock or cash payments made with respect to the exercise of any
dissenters' rights. Ponte Vedra Shareholders who receive a combination of
SunTrust Common Stock and cash will recognize gain (but not any loss) with
respect to each block of their shares of Ponte Vedra Common Stock in an
amount not exceeding the cash allocable to such block of shares. All Ponte
Vedra Shareholders are urged to consult their own tax advisors as to the
specific consequences of the Transaction to them. See "The Merger - Certain
Federal Income Tax Consequences."
Comparison of Rights of Ponte Vedra and SunTrust Shareholders
Ponte Vedra is a corporation organized under the Florida Business
Corporation Act (the "FBCA"). SunTrust is a business corporation organized
under the Georgia Business Corporation Code (the "GBCC"). Ponte Vedra
Shareholders, whose rights as shareholders are currently governed by the
FBCA and the Ponte Vedra Articles of Incorporation and By-laws, upon
consummation of the Merger will become shareholders of SunTrust and their
rights as SunTrust shareholders will be governed by the GBCC and the
SunTrust Articles of Incorporation and By-laws. There are differences in
the rights of holders of Ponte Vedra Common Stock and SunTrust Common Stock
under such laws and governing documents. In addition, the SunTrust Articles
of Incorporation and By-laws contain certain provisions intended to deter
certain takeover attempts. The Ponte Vedra Articles of Incorporation and By-
laws also contain such provisions. See "Merger - Comparison of Rights of
Ponte Vedra and SunTrust Shareholders."
Dissenters' Rights
Under the FBCA, holders of Ponte Vedra Common Stock outstanding and
entitled to vote at the Meeting who do not vote in favor of the Merger
Agreement, Plan of Merger or the Merger and who comply with certain notice
requirements and other procedures will have the right to dissent from the
Merger and to be paid cash for the fair value of their shares. Under
Sections 607.1302 and 607.1320 of the FBCA, a shareholder of Ponte Vedra may
dissent from the Merger by complying with the following procedures: (i) the
shareholder must file with Ponte Vedra, prior to or at the Meeting, a
written notice of intent to demand payment, (ii) the shareholder must
refrain from voting in favor of the Merger, (iii) the shareholder must,
within twenty (20) days of having received notice that the Ponte Vedra
Shareholders have approved the Merger, deliver such shareholder's share
certificates and notice of election to dissent. A shareholder may dissent
as to less than all of the Ponte Vedra shares held by him. A notice of
election may be withdrawn in writing by the shareholder at any time before
an offer is made by Sun Bank to pay for such shareholder's shares. Any
deviation from the procedures required by the FBCA, including certain
11
<PAGE>
procedures following the Meeting, may result in the forfeiture of
dissenters' rights. Accordingly, shareholders wishing to dissent form the
Merger are urged to read carefully "Rights of Dissenting Shareholders" and
Exhibit B attached to this Proxy Statement-Prospectus and should consult
with their own legal advisors.
Resale of SunTrust Common Stock
Shares of SunTrust Common Stock received in the Merger will be freely
transferable by the holders of such shares except for those shares held by
persons who may be deemed to be "affiliates" of Ponte Vedra under applicable
federal securities laws. Shares held by affiliates of Ponte Vedra will be
subject to certain transfer and trading restrictions as described herein.
See "The Merger - Resale of SunTrust Common Stock."
Market Prices of SunTrust and Ponte Vedra Common Stock
SunTrust Common Stock is listed and traded on the NYSE (symbol: STI).
The closing price for SunTrust Common Stock on October ____, 1995 was
$________.
The following table sets forth for the periods indicated the high and low
sales prices and trading volumes (in thousands of shares) of SunTrust Common
Stock as reported on the NYSE Composite transactions reporting system (as
published in The Wall Street Journal) with respect to each calendar quarter
since January 1, 1992. The price of SunTrust Common Stock will fluctuate,
and because the Stock Consideration is set at a specific dollar value of
SunTrust Stock, the number of shares of SunTrust Stock that may be received
as the Stock Consideration can vary. The following table also shows the
cash dividends declared per share of SunTrust Common Stock.
Shares
High Low Cash Traded
Sale Sale Dividends (in thousands)
1992
1st Quarter.......... $39.875 35.750 .25 7,693
2nd Quarter.......... 41.250 33.500 .25 8,204
3rd Quarter.......... 42.250 37.125 .25 7,732
4th Quarter.......... 45.625 37.500 .28 5,465
1993
1st Quarter.......... $49.625 42.000 .28 7,722
2nd Quarter.......... 48.750 42.375 .28 6,855
3rd Quarter.......... 48.000 41.375 .28 7,350
4th Quarter.......... 46.000 42.500 .32 11,044
1994
1st Quarter.......... $47.125 44.250 .32 8,196
2nd Quarter.......... 50.500 43.500 .32 8,090
3rd Quarter.......... 51.375 47.125 .32 5,862
4th Quarter.......... 51.125 46.375 .36 7,688
1995
1st Quarter.......... $55.375 47.250 .36 6,858
2nd Quarter.......... 59.875 53.125 .36 6,147
3rd Quarter.......... 67.750 57.000 .36 7,064
4th Quarter*.........
* Through October 6, 1995
12
<PAGE>
On September 30, 1995, Ponte Vedra had approximately 475 shareholders of
record. There is no established trading market for Ponte Vedra Common Stock
and it has been subject to only limited trading. The Ponte Vedra Common
Stock is not listed on any exchange or quoted on any automated quotation
system and no institution makes a market in the stock. Prior trading
transactions have been infrequent and negotiated privately between the
purchaser and seller. The following table sets forth the most recent sales
prices for such trading transactions, of which Ponte Vedra is aware. The
prices are based upon the best knowledge of Ponte Vedra management and are
not necessarily indicative of the fair market value of the stock at the time
of the trade and may not reflect all trades or the price of those trades.
Approximately 10,500 shares of Ponte Vedra Common Stock have been traded
during 1992, 1993 and 1994 at prices ranging from $7.50 to $12.00 per share.
During 1992, Ponte Vedra acquired 10,000 shares of its own stock at $6.50
per share from a correspondent bank that obtained possession of the stock
pursuant to default of a borrower who pledged the stock as collateral. To
the best knowledge of Ponte Vedra management, the following trades of Ponte
Vedra Common Stock occurred in 1995:
Date Number of Shares Price Per Share
1/24/95 750 $11.00
1/24/95 125 11.00
2/02/95 100 10.50
3/03/95 250 10.50
3/15/95 100 10.50
3/23/95 100 11.00
3/27/95 200 11.00
5/02/95 200 11.00
7/12/95 100 18.00
During 1995, Ponte Vedra acquired an additional 10,000 shares of its
Common Stock for $11.00 per share in partial satisfaction of a loan to a
shareholder from Ponte Vedra National Bank. The execution of a letter of
intent relating to the proposed Merger by the parties was publicly announced
on July 18, 1995. The most recent sale of Ponte Vedra Common Stock prior to
the announcement of the Transaction, for which the management of Ponte Vedra
is aware of the sale price, was on July 12, 1995 at $18 per share for 100
shares.
Ponte Vedra did not declare any cash dividends for the years ended
December 31, 1994, 1993 and 1992. Ponte Vedra has not and does not
anticipate declaring a dividend in 1995.
Pro Forma Equivalent Per Common Share Data(1)
The following table presents selected historical per common share data for
SunTrust and Ponte Vedra and Ponte Vedra equivalent per common share data
on the basis described in Note 2. All common share data has been restated
to reflect stock splits and stock dividends during the periods presented.
This data should be read in conjunction with the historical financial
statements of SunTrust and Ponte Vedra (incorporated by reference into this
Proxy Statement).
13
<PAGE>
<TABLE>
<CAPTION>
Six Months
Ended June 30 Year Ended December 31
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Net income per common share (3):
SunTrust - historical ................. $2.40 $2.13 $4.37 $3.77 $3.13 $2.88 $2.72
Ponte Vedra - historical .............. 0.55 0.02 0.48 0.45 0.55 (0.62) 0.77
SunTrust - pro forma (2) .............. 0.63 0.56 1.14 0.98 0.82 0.75 0.71
Book value per common share:
SunTrust - historical ................. 34.76 28.61 29.85 29.47 21.65 20.05 18.32
Ponte Vedra - historical .............. 9.93 9.08 9.53 9.09 8.60 8.13 8.75
SunTrust - pro forma (2) .............. 9.07 7.47 7.79 7.69 5.65 5.23 4.78
Cash dividends declared per common share (4)(5):
SunTrust - historical ................. 0.72 0.64 1.32 1.16 1.03 0.94 0.86
Ponte Vedra - historical .............. - - - - - - -
SunTrust - pro forma (2) .............. 0.19 0.17 0.34 0.30 0.27 0.25 0.22
</TABLE>
(1) Pro forma data as shown reflects the Merger as a purchase.
(2) Represents data equivalent to one share of Ponte Vedra Common Stock
computed by multiplying SunTrust historical data by the conversion
ratio of .261 of a share of SunTrust Common Stock for each share of
Ponte Vedra Common Stock. This conversion ratio assumes the market value
of SunTrust Common Stock is $67 per share.
(3) Net income per common share is based on the average number of common
shares outstanding during the periods presented. Fully diluted per
common share data is not presented because there are no material
differences between those amounts and the per share common stock data
as presented.
(4) SunTrust declared quarterly dividends per common share of $.36 to
shareholders of record at the close of business on September 1, 1995.
(5) The Agreements restrict the right of Ponte Vedra to declare dividends.
Selected Financial Data and Ratios
The following tables present, on a historical basis, selected unaudited
consolidated financial data and ratios for SunTrust and selected unaudited
financial data and ratios for Ponte Vedra. This information is based on the
consolidated financial statements of SunTrust and Ponte Vedra incorporated
herein by reference, and should be read in conjunction therewith. See
"Incorporation of Certain Documents by Reference." Results for the six
months ended June 30, 1995, are not necessarily indicative of results to be
expected for the entire year. All adjustments necessary to arrive at a fair
statement of results of interim period operations of SunTrust and Ponte
Vedra, in the opinion of management of the respective companies, have been
included and are of a normal recurring nature.
14
<PAGE>
<TABLE>
SUNTRUST BANKS, INC.
SELECTED FINANCIAL DATA
<CAPTION>
Six Months
Ended June 30 Year Ended December 31
(Dollars in millions except per share data) 1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest and dividend income $1,484.9 $1,207.7 $2,552.3 $2,362.3 $2,537.6 $2,856.4 $2,956.6
Interest expense 658.6 413.4 932.5 790.7 975.0 1,463.5 1,654.0
Net interest income 826.3 794.3 1,619.8 1,571.6 1,562.6 1,392.9 1,302.6
Provision for loan losses 51.7 67.8 137.8 189.1 234.2 209.6 201.6
Net interest income after provision
for loan losses 774.6 726.5 1,482.0 1,382.5 1,328.4 1,183.3 1,101.0
Noninterest income 351.1 357.8 699.9 726.5 672.7 612.9 556.8
Noninterest expense 707.8 697.4 1,400.0 1,408.4 1,425.3 1,282.1 1,207.9
Income before provision for income taxes 417.9 386.9 781.9 700.6 575.8 514.1 449.9
Provision for income taxes 141.0 128.4 259.2 226.9 171.4 136.8 94.7
Net income $276.9 $258.5 $522.7 $473.7 $404.4 $377.3 $355.2
Net interest income (taxable-equivalent) $852.1 $822.5 $1,675.6 $1,634.4 1,632.9 1,470.5 1,392.2
Per common share
Net income $2.40 $2.13 $4.37 $3.77 $3.13 $2.88 $2.72
Dividends paid 0.72 0.64 1.32 1.16 1.03 0.94 0.86
Common dividend payout ratio 29.9 % 29.9 % 30.1 % 30.6 % 32.7 % 32.4 % 31.3 %
Market price:
High $ 59 7/8 $ 50 1/2 $ 51 3/8 $ 49 5/8 $ 45 5/8 $ 40 $ 24 1/4
Low 47 1/4 43 1/2 43 1/2 41 3/8 33 1/2 20 1/2 16 1/2
Close 58 1/4 48 3/8 47 3/4 45 43 3/4 39 7/8 22 3/4
Selected Average Balances
Total assets $42,287.9 $40,284.0 $40,489.2 $37,524.9 $35,356.5 $33,892.0 $31,935.0
Earning assets 38,000.9 35,740.0 36,111.0 34,047.3 32,008.6 30,544.4 28,671.2
Loans 29,180.1 25,632.3 26,412.6 24,162.8 22,489.1 22,144.6 22,058.4
Deposits 31,897.8 30,409.6 30,877.8 29,683.3 28,609.6 27,533.0 25,971.7
Realized shareholders' equity 3,016.6 2,942.1 2,960.1 2,875.1 2,697.9 2,509.5 2,266.9
Total shareholders' equity 3,679.9 3,587.3 3,571.5 2,877.2 2,697.9 2,509.5 2,266.9
At Period End
Total assets $44,248.3 $40,865.4 $42,709.1 $40,728.4 $37,789.3 $35,682.6 $34,479.4
Earning assets 38,998.0 36,657.6 38,045.6 35,904.5 34,167.7 31,854.3 30,262.3
Loans 30,079.9 26,749.0 28,548.9 25,292.1 23,493.5 22,251.5 22,770.3
Reserve for loan losses 676.9 610.2 647.0 561.2 474.2 381.0 366.9
Deposits 31,682.6 31,043.0 32,218.4 30,485.8 29,883.0 29,011.5 27,787.9
Long-term debt 948.3 1,056.7 930.4 630.4 554.0 477.3 482.4
Realized shareholders' equity 3,035.7 2,899.8 2,883.3 2,845.8 2,769.7 2,622.8 2,377.1
Total shareholders' equity 4,001.6 3,427.3 3,453.3 3,609.6 2,769.7 2,622.8 2,377.1
Ratios and Other
ROA 1.35 % 1.33 % 1.32 % 1.26 % 1.14 % 1.11 % 1.11 %
ROE 18.51 17.72 17.66 16.48 14.99 15.04 15.67
Net interest margin 4.52 4.64 4.64 4.80 5.10 4.81 4.86
Total shareholders' equity to assets 9.04 8.39 8.09 8.86 7.33 7.35 6.90
Nonperforming assets to total loans
plus other real estate owned 0.84 1.27 0.96 1.61 2.30 3.07 2.70
Number of full-service banking offices 657 657 658 656 654 662 654
Number of full-time equivalent employees 19,374 19,558 19,408 19,532 19,539 19,703 20,339
Average common equivalent
shares (thousands) 115,316 121,127 119,633 125,656 129,307 130,964 130,549
SunTrust's investment securities, total assets and total shareholders' equity
for 1995, 1994 and 1993 include net unrealized securities gain. However,
earning assets exclude this gain as do the calculations of ROA, ROE and the
net interest margin because the gain is not included in income.
15
<PAGE>
</TABLE>
<TABLE>
PONTE VEDRA BANKING CORPORATION
SELECTED FINANCIAL DATA
<CAPTION>
Six Months
Ended June 30 Year Ended December 31
(Dollars in millions except per share data) 1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Total interest income $2,994 $2,022 $4,463 $3,616 $3,446 $2,607 $1,188
Total interest expense 999 455 1,135 863 958 1,101 393
Net interest income 1,995 1,567 3,328 2,753 2,488 1,506 795
Provision for loan losses 79 91 139 101 92 162 80
Net interest income after provision
for loan losses 1,916 1,476 3,189 2,652 2,396 1,344 715
Noninterest income 558 457 941 1,032 481 369 48
Noninterest expense 1,921 1,922 3,880 3,395 2,519 2,118 1,265
Income before provision for income taxes 553 11 250 289 358 (405) (502)
Provision for income taxes 202 - (60) - - - -
Net income $351 $11 $310 $289 $358 ($405) ($502)
Per common share
Net income $0.55 $0.02 $0.48 $0.45 $0.55 ($0.62) ($0.77)
Dividends paid - - - - - - -
Selected Average Balances
Total assets $80,486 $64,915 $62,011 $52,704 $43,522 $30,332 $13,657
Earning assets 70,932 54,272 54,312 44,127 38,753 26,904 12,443
Loans 56,260 41,190 41,598 33,022 26,638 15,141 3,837
Deposits 72,127 57,862 55,437 46,789 37,268 24,148 7,371
Total shareholders' equity 6,371 5,927 5,237 4,994 5,516 5,541 6,008
At Period End
Total assets $87,689 $69,747 $74,178 $40,728 $37,789 $35,683 $34,479
Loans 60,557 44,369 48,993 35,852 28,752 22,824 9,412
Reserve for loan losses 448 446 493 360 287 228 83
Deposits 79,111 62,910 67,127 52,952 41,984 33,372 14,905
Total shareholders' equity 6,483 5,932 6,221 5,924 5,615 5,309 5,713
Ratios and Other
ROA 0.44 % 0.02 % 0.50 % 0.55 % 0.82 % (1.33)% (3.67)%
ROE 5.51 0.19 5.92 5.79 6.47 (7.31) (8.35)
Net interest margin 5.10 5.56 6.15 6.24 6.42 5.27 6.39
Total shareholders' equity to assets 7.92 9.13 8.45 9.48 12.67 18.27 43.99
</TABLE>
16
<PAGE>
INFORMATION CONCERNING THE MEETING
The Meeting
Each copy of this Proxy Statement-Prospectus mailed to the holders of
Ponte Vedra Common Stock is accompanied by a form of proxy solicited by the
Board of Directors of Ponte Vedra for use at the Meeting and at any
adjournments or postponements thereof and the Notice of Special Meeting of
Shareholders. The Meeting is scheduled to be held on November 14, 1995, at
the main office of Ponte Vedra, 100 Sawgrass Corners Drive, Ponte Vedra
Beach, St. Johns County, Florida 32082. Only holders of Ponte Vedra Common
Stock of record at the close of business on October 12, 1995 are entitled to
receive notice of and to vote at the Meeting. As of October 12, 1995, there
were 639,120 shares of Ponte Vedra Common Stock outstanding and entitled to
vote, with each such share entitled to one vote. At the Meeting,
shareholders will consider and vote upon (i) a proposal to approve the
Agreements and (ii) such other matters as may properly be brought before the
Meeting or any adjournments or postponements thereof. It is not anticipated
that any matter other than consideration of the approval of the Agreements
will be brought before the Meeting. If other matters are properly presented
at the Meeting, proxies will be voted in accordance with the best judgment
of the proxy holders in their sole discretion.
When a Ponte Vedra proxy is properly executed and returned, the shares of
Ponte Vedra Common Stock it represents will be voted in accordance with the
directions indicated on the proxy, or if no directions are indicated on a
proxy that is properly executed and returned, the shares will be voted for
approval of the Agreements. Any Ponte Vedra Shareholder giving a proxy has
the power to revoke it at any time before it is voted. Revocation of a
Ponte Vedra proxy is effective upon receipt by the Secretary of Ponte Vedra
at the address shown on the cover of this Proxy Statement-Prospectus of
either (i) an instrument revoking it or (ii) a duly executed Ponte Vedra
proxy bearing a later date. Furthermore, a Ponte Vedra Shareholder giving a
proxy may attend the Meeting, withdraw his proxy prior to the vote and vote
his shares in person if he desires to do so.
PONTE VEDRA SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO PONTE VEDRA IN THE ENCLOSED
POSTAGE-PAID ENVELOPE, EVEN IF THEY ARE PLANNING TO ATTEND THE MEETING.
FAILURE TO RETURN YOUR PROPERLY EXECUTED PROXY OR TO VOTE AT THE MEETING
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE APPROVAL OF THE AGREEMENTS.
This Proxy Statement-Prospectus is also furnished by SunTrust to Ponte
Vedra Shareholders as a Prospectus in connection with the issuance by
SunTrust of the shares of SunTrust Common Stock upon consummation of the
Merger. All information concerning Ponte Vedra in this Proxy Statement-
Prospectus has been furnished by Ponte Vedra and all information concerning
SunTrust has been furnished by SunTrust.
Ponte Vedra will bear the cost of soliciting proxies from Ponte Vedra
Shareholders. The solicitation will be made by mail but also may be made by
telephone or in person by the directors, officers or employees of Ponte
Vedra (who will receive no additional compensation for doing so). Ponte
Vedra will make arrangements with brokerage firms and other custodians,
nominees and fiduciaries to send proxy materials to their principals or
beneficial owners.
PONTE VEDRA SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH
THEIR PROXIES.
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Vote Required
Once a quorum is established, the affirmative vote of 66-2/3% of the out
standing shares of Ponte Vedra Common Stock entitled to vote is required to
approve the Agreements. The failure to return a properly executed proxy
card or, alternatively, to vote in person at the Meeting, will have the same
effect as a vote against the Agreements and Merger. At September 30, 1995,
there were approximately 475 holders of record of Ponte Vedra Common Stock
and a total of 639,120 shares of Ponte Vedra Common Stock outstanding and
entitled to vote at the Meeting, with each share being entitled to one vote.
At September 30, 1995, neither SunTrust nor any of its affiliates owned
any of the outstanding shares of Ponte Vedra Common Stock.
At September 30, 1995, all the directors and executive officers of Ponte
Vedra as a group held 215,150 shares of Ponte Vedra Common Stock
representing 33.66% of the amount outstanding. Ponte Vedra has been advised
that such directors and executive officers intend to vote their shares in
favor of approval of the Agreements.
The presence, in person or by proxy, of a majority of the outstanding
shares of Ponte Vedra Common Stock is necessary to constitute a quorum of
the shareholders in order to take action at a meeting of shareholders. For
these purposes, shares of Ponte Vedra Common Stock which are present, or
represented by proxy, at the Meeting will be counted for quorum purposes
regardless of whether the holder of the shares or proxy fails to vote on the
Agreements or whether a broker with discretionary authority fails to
exercise its discretionary voting authority with respect to the Agreements.
Once a quorum is established, approval of the Agreements requires the
affirmative vote of 66-2/3% of the outstanding shares of Ponte Vedra Common
Stock. For voting purposes, abstentions and failure to return proxies by
any brokers will have the same effect as a vote against the Agreements.
Recommendation of the Ponte Vedra Board
The Ponte Vedra Board has unanimously approved the Agreements and has
determined that the Transaction is fair to, and in the best interests of,
Ponte Vedra and its shareholders. The Board therefore unanimously
recommends that Ponte Vedra Shareholders vote FOR approval of the Agreement.
For the reasons described below, the Ponte Vedra Board believes that the
Transaction will provide significant value to all Ponte Vedra Shareholders
and also enable them to participate in opportunities for future growth that
the Board believes the Transaction makes possible. See "THE MERGER -
Background of and Reason for the Merger."
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THE MERGER
The descriptions of the terms and conditions of the Merger, the
Agreements, and any related documents in this Proxy Statement-Prospectus are
qualified in their entirety by reference to the copy of the Agreements
attached as Exhibit A to this Proxy Statement-Prospectus, to the
Registration Statement of which this Proxy Statement-Prospectus is a part
and to the exhibits to the Registration Statement.
General
Subject to the terms of the Agreements, Ponte Vedra will be merged with
and into Sun in accordance with Florida law. Sun will be the resulting
corporation of the Merger. It is anticipated that following the Merger,
Ponte Vedra National Bank will merge with and into SunTrust Bank/North
Florida, N.A. If all conditions to consummation of the Merger are satisfied
or waived, unless the Agreements are terminated in accordance with their
terms, Articles of Merger reflecting the Merger will be filed with the
Secretary of State of Florida (the "Florida Secretary") and the Florida
Banking Department, and the Merger will then become effective at the time
and date specified in the Articles of Merger (the "Effective Date"). It is
presently contemplated that the Effective Date will occur in January 1996
after the Meeting and the receipt of the approval of the Federal Reserve and
the OCC and the expiration of a statutory Department of Justice waiting
period of up to thirty days following Federal Reserve approval, subject to
the conditions described under "The Merger - Covenants; Conditions;
Representations and Warranties; Amendment and Termination."
Upon completion of the Merger each Ponte Vedra Shareholder choosing not to
exercise a statutory right of dissent will be entitled to receive at his or
her election, in exchange for the automatic cancellation and elimination of
each share of Ponte Vedra Common Stock of which he or she will then be
deemed to be the owners of record, the Merger Consideration. The Merger
Consideration shall mean one of the following (a) cash in the amount of
$17.50 (the "Cash Consideration"); (b) the number of shares of SunTrust
Common Stock having a value of $17.50 based on the Average Market Price (the
"Stock Consideration"); or (c) a combination of Cash Consideration and Stock
Consideration as described below. Average Market Price shall mean the
average of the closing prices per share of SunTrust Common Stock as reported
on the composite transactions tape of the New York Stock Exchange for each
of the ten consecutive trading days ending on and including the trading day
which is three (3) business days prior to the Effective Date. The number of
shares of Ponte Vedra Common Stock to be converted into the right to receive
Cash Consideration shall be not less than 22% of the number of shares of
Ponte Vedra Common Stock outstanding immediately prior to the Effective Time
(the "Minimum Cash Consideration Number") and not greater than 50% of the
number of shares of Ponte Vedra Common Stock outstanding immediately prior
to the Effective Time (the "Maximum Cash Consideration Number"). The number
of shares of Ponte Vedra Common Stock to be converted into the right to
receive Stock Consideration shall be not less than 50% of the number of
shares of Ponte Vedra Common Stock outstanding immediately prior to the
Effective Time (the "Minimum Stock Consideration Number") and not greater
than 78% of the number of shares of Ponte Vedra Common Stock outstanding
immediately prior to the Effective Time (the "Maximum Stock Consideration
Number"). SunTrust may adjust such elections on a pro rata basis so that
the Cash Election Number and the Stock Election Number are not exceeded.
All combination elections shall be seventy-eight percent Stock Consideration
and twenty-two percent Cash Consideration.
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No fractional shares of SunTrust Common Stock will be issued as a result
of the Merger. In lieu of the issuance of fractional shares, each Ponte
Vedra Shareholder who otherwise would be entitled to a fractional share of
SunTrust Common Stock will receive a cash payment (without interest) equal
to the product of the Average Market Price multiplied by the fraction of a
share of SunTrust Common Stock otherwise issuable.
Exchange of Certificates Representing Ponte Vedra Common Stock
Promptly after the Effective Date, each Ponte Vedra Shareholder at the
Effective Date will receive transmittal materials which will contain
instructions with respect to the surrender of certificates representing
shares of Ponte Vedra Common Stock and the distribution of certificates
representing shares of SunTrust Common Stock. Shares of Ponte Vedra Common
Stock will be surrendered to the exchange agent (the "Exchange Agent") which
will be the Stock Transfer Department of SunTrust Bank, Atlanta, Georgia.
PONTE VEDRA SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE A LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of one or more certificates for
shares of Ponte Vedra Common Stock for cancellation, together with properly
completed transmittal materials, the Exchange Agent will distribute to each
Ponte Vedra Shareholder a certificate representing the shares of SunTrust
Common Stock into which the holder's shares of Ponte Vedra Common Stock have
been converted or a check in the amount of the Cash Consideration. Cash
will be paid in lieu of the issuance of factional shares of SunTrust Common
Stock. Ponte Vedra Shareholders will not be entitled to receive interest on
any such cash to be received in the Merger. See "The Merger - General."
Until they have surrendered their Ponte Vedra Common Stock certificates
for exchange, Ponte Vedra Shareholders will not be entitled to receive any
dividends or other distributions that may be declared and payable to holders
of record of SunTrust Common Stock. Upon the surrender of Ponte Vedra
Common Stock certificates, however, SunTrust Common Stock certificates
(together with all such withheld dividends or other distributions with
respect to the certificates, without interest) and any withheld cash payment
for a fractional share interest will be delivered and paid (without
interest).
SunTrust and Ponte Vedra will not be liable to a Ponte Vedra Shareholder
for any SunTrust Common Stock or dividends thereon delivered to a public
official in accordance with any state's abandoned property, escheat, or
other similar law. Any SunTrust Common Stock held by the Exchange Agent
which remains undistributed to the Ponte Vedra Shareholders for six months
after the Effective Date will be delivered to SunTrust upon demand, and any
Ponte Vedra Shareholders who have not surrendered their Ponte Vedra Common
Stock may thereafter only look to SunTrust for payment of their claims for
SunTrust Common Stock, any cash in lieu of fractional shares of SunTrust
Common Stock and any dividends or distributions with respect to SunTrust
Common Stock. After the Effective Date, certificates representing shares of
Ponte Vedra Common Stock converted in the Merger into SunTrust Common Stock
will be deemed for all other corporate purposes to evidence ownership of the
shares of SunTrust Common Stock into which they were converted.
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Background of the Merger
The managements of SunTrust and Ponte Vedra began preliminary discussions
of a potential combination in early 1995, which discussions did not lead to
an agreement at the time. Discussions resumed in June 1995 resulting in the
execution of the Agreements on August 31, 1995. The Agreements were
approved by the Ponte Vedra Board of Directors on August 21, 1995 and by the
Executive Committee of the SunTrust Board of Directors on August 8, 1995.
Reasons for the Merger; Board of Directors Recommendation
The terms of the Agreements are the result of arms-length negotiations
between representatives of SunTrust and Ponte Vedra.
Reasons for the Merger -- Ponte Vedra
In reaching its determination that the Merger and Agreements are fair to,
and in the best interests of, Ponte Vedra and its shareholders, the Ponte
Vedra Board of Directors consulted with its legal and financial advisors, as
well as with Ponte Vedra management, and considered a number of factors,
including, without limitation, the following:
(i) that the current market value of the shares of SunTrust Common Stock
to be issued in the Merger and the cash to be paid in exchange for shares of
Ponte Vedra Common Stock represents a premium over the book value and a
premium over the market value of Ponte Vedra Common Stock prior to the
public announcement of the Merger and that the market for SunTrust Common
Stock is more liquid than that for Ponte Vedra Common Stock;
(ii) the Ponte Vedra Board's familiarity with and review of Ponte Vedra's
business, operations, earnings, prospects and financial condition;
(iii) the Ponte Vedra Board's review, based in part on a presentation by
Ponte Vedra management and its financial adviser Ewing, regarding the
business, operations, earnings and financial condition of SunTrust on both a
historical and a prospective basis;
(iv) the Ponte Vedra Board's review of alternatives to the Merger
(including the alternatives of remaining independent and growing internally,
remaining independent for a period of time and then selling the bank, and
remaining independent and growing through future acquisitions), the range of
possible values to Ponte Vedra Shareholders obtainable through
implementation of such alternatives and the timing and likelihood of
actually receiving such values;
(v) the present market prices for banking and thrift institution stocks;
(vi) the current and prospective economic environment and competitive
constraints facing Ponte Vedra and comparable financial institutions;
(vii) the Ponte Vedra Board's consideration of the following factors: (a)
the current and historical earnings and earning trends of SunTrust and Ponte
Vedra; (b) the market price per share of SunTrust Common Stock; (c) the
relative book values per share for SunTrust and Ponte Vedra; (d) the
respective returns on shareholders' equity; (e) the cash generated by the
respective operations; (f) the respective dividend payment records; (g) the
characteristics, relative sizes and potential of the respective businesses;
(h) the capitalization of SunTrust and its bank subsidiaries and
(i) publicly available information and reports regarding SunTrust and
prospects for SunTrust Common Stock;
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(viii) the expectation that the Merger will generally be a tax-free
transaction to Ponte Vedra and its shareholders, except to the extent that
cash is paid in the Transaction (see "The Merger - Certain Federal Income
Tax Consequences"); and
(ix) the financial advice of Ewing and the fact that the obligations of
Ponte Vedra under the Agreements were conditioned upon receipt of an opinion
of Ewing that the Stock Consideration and Cash Consideration were fair to
the Ponte Vedra Shareholders from a financial point of view, which opinion
was received on September 26, 1995;
The Ponte Vedra Board did not assign any specific or relative weight to
the factors in reaching their conclusion.
Board of Directors' Recommendation -- Ponte Vedra
Based upon the factors set forth above, and such other matters as the
Board deemed relevant, the Board of Directors of Ponte Vedra has unanimously
approved the Agreements and recommends that each Ponte Vedra Shareholder
vote FOR approval of the Agreements, the Transaction, and all other matters
related thereto presented at the Meeting.
Reasons for the Merger -- SunTrust
SunTrust believes that the Merger will benefit SunTrust by providing
greater access to an attractive Florida market presently served by Ponte
Vedra through the acquisition of a well managed and well positioned
financial institution. SunTrust believes that its substantial banking and
other resources of the SunTrust system that will be available to Ponte Vedra
after the Merger will enhance Ponte Vedra service to its customers.
Fairness Opinion
Ponte Vedra has retained Ewing as its investment banking firm in
connection with the Merger. Ewing has delivered to Ponte Vedra its written
opinion, dated September 26, 1995, that, as of the date of such opinion, and
based on the conditions set forth and subject to the limitations expressed
therein, the Transaction is fair to Ponte Vedra Shareholders. Shareholders
of Ponte Vedra are urged to read the opinion in its entirety for a
description of the assumptions made, the matters considered and limitations
on the review undertaken in rendering such opinion.
In arriving at its opinion, Ewing, among other things, (i) reviewed the
Agreements; (ii) met with officers of Ponte Vedra and SunTrust to discuss
business, financial condition, operating results, dividend history and
future prospects; (iii) reviewed annual audited financial statements for the
three most recent years for Ponte Vedra and for SunTrust; (iv) reviewed
publicly available information including recent Securities and Exchange
Commission filings and shareholder communications for Ponte Vedra and for
SunTrust; (v) made a comparison of the published financial condition and
operating results of certain companies considered by Ewing to be in business
comparable to Ponte Vedra; (vi) analyzed published financial information
regarding recent acquisitions in the banking and thrift industries that were
deemed relevant; (vii) considered the estimated earnings dilution to
SunTrust shareholders resulting from completion of the Merger; (viii)
reviewed the historical prices and trading volumes of the common stocks of
Ponte Vedra and SunTrust; (ix) reviewed various published research reports
for SunTrust; and (x) made such other financial studies, analyses, and
investigations as deemed appropriate.
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Ewing did not make or obtain any independent appraisals of the assets of
either Ponte Vedra or SunTrust, nor did it express any opinion regarding the
value of any of Ponte Vedra's or SunTrust's respective assets. Ewing did
not express any opinion as to the prices at which SunTrust Common Stock will
trade if and when they are issued to the shareholders of Ponte Vedra upon
consummation of the Merger.
THE FOREGOING DESCRIPTION OF EWING'S OPINION IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE TEXT OF SAID OPINION WHICH IS ATTACHED HERETO AS EXHIBIT C.
For the services of Ewing in connection with the Merger, Ponte Vedra will
pay Ewing a fee of $67,000.
Covenants; Conditions; Representations and Warranties; Amendment and
Termination
Ponte Vedra Covenants
Pursuant to the Agreements, during the period from the date of the
Agreements and continuing until the Effective Date, Ponte Vedra has agreed
to carry on its business in, and only in, the usual, regular and ordinary
course. Ponte Vedra has also agreed not to take certain actions (unless
expressly contemplated in the Agreements) without the prior written consent
of SunTrust, including, among other things: (i) declaring, setting aside or
paying any dividends; (ii) amending its Articles of Incorporation or By-
laws; (iii) directly or indirectly redeeming, repurchasing, or otherwise
acquiring or exchanging any of its capital stock; and (iv) issuing any
shares of capital stock or granting any rights or options with respect to
its capital stock other than pursuant to its current stock option plan.
Ponte Vedra also has agreed not to take certain enumerated actions relating
to the conduct of its business or pertaining to its employees and employee
benefit arrangements.
In the Agreements, Ponte Vedra has agreed to consent to the use of this
Proxy Statement by SunTrust in connection with the Registration Statement
and to cooperate in the preparation and filing of the Registration Statement
and the distribution of this Proxy Statement. Ponte Vedra and its officers
also agreed to use their best efforts to cause the Ponte Vedra Shareholders
to approve and adopt the Agreements, and to take all appropriate actions to
cause the Merger to be consummated. Ponte Vedra also has covenanted to take
all actions required of it under the FBCA concerning dissenters' rights.
Conditions to Consummation of the Merger
The obligations of Ponte Vedra and SunTrust to consummate the Merger are
conditioned upon adoption of the Agreements by Ponte Vedra Shareholders
owning 66-2/3% of the outstanding shares of Ponte Vedra Common Stock under
applicable law, approval of the Merger by the Federal Reserve, the OCC and
the Florida Department, the absence of any objection by the United States
Justice Department, and approvals by all other appropriate regulatory
authorities. As of the date hereof, such approvals have not been obtained.
The Merger may not be consummated before 30 days (or such shorter period as
the Federal Reserve shall specify) after approval by the Federal Reserve,
and during such period the United States Department of Justice, should it
object to the Merger for competitive reasons, may file suit to enjoin
consummation. Consummation of the Merger by the parties is subject to the
further conditions, among others, that: (i) the representations and
warranties of Ponte Vedra and SunTrust contained in the Agreements must be
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true and correct in all material respects as of the closing date, and the
various covenants of Ponte Vedra and SunTrust must have been duly performed
and complied with pursuant to the Agreements; (ii) SunTrust and Ponte Vedra
must have received certain legal opinions as are customary in a transaction
of this kind; and (iii) the receipt by SunTrust of certain non-compete
agreements. In addition, the SunTrust Common Stock must be listed or
approved for listing on The New York Stock Exchange.
It is anticipated that the foregoing conditions will be satisfied but
Ponte Vedra and SunTrust may waive any condition to their obligations to
consummate the Transaction, except requisite approvals of shareholders and
regulatory authorities. The Agreements may be terminated by any of the
parties if all of the conditions to closing have not been satisfied or
waived on or before July 31, 1996.
Representations and Warranties
The Agreements contain a number of representations and warranties by
SunTrust and Ponte Vedra. The material accuracy of all those
representations and warranties as of the closing date of the Merger is a
condition to the obligation of each party to consummate the Merger. The
representations and warranties relate to matters such as the organization of
each company, the authority of each company to transact its business, to
enter into the Agreements and to consummate the transactions contemplated by
the Agreements, the capitalization of each company, the filing of certain
reports by each company with regulatory authorities and the presentation of
information contained in those reports, the absence of certain changes in
Ponte Vedra's financial condition or business since December 31, 1994, the
payment of taxes and filing of tax returns, each company's allowance for
possible loan losses, the absence of material litigation, the compliance
with laws by each company, the information provided by each company for use
in the Registration Statement, the employee benefit plans of each company,
the employment contracts of Ponte Vedra and the absence of obligations of
any company to brokers or finders.
Amendment and Termination
The Agreements may be amended by agreement between Ponte Vedra and
SunTrust if approved by the Boards of Directors of Ponte Vedra and SunTrust,
except that no amendment reducing the consideration to be received by Ponte
Vedra Shareholders in the Merger may be made after the Meeting unless
approved by 66-2/3% of the Ponte Vedra Shareholders. The Agreements may be
terminated by either Ponte Vedra or SunTrust upon the failure of conditions
to be met on or before July 31, 1996.
Termination Fee and No Solicitation Covenant
Ponte Vedra has agreed that, if on or before July 31, 1996, (a) Ponte
Vedra enters into a definitive agreement or consummates a transaction with
any other person or group, other than SunTrust, with respect to (i) the sale
of all or a substantial portion of the assets of Ponte Vedra; (ii) the sale
of at least 50% of the then outstanding shares of Ponte Vedra Common Stock;
(iii) a merger involving Ponte Vedra, or (b) any person or group acquires
beneficial ownership of at least 50% of the outstanding common stock of
Ponte Vedra in one or more transactions that are supported, recommended or
endorsed by the Board of Directors of Ponte Vedra, Ponte Vedra will pay
SunTrust a $500,000 termination fee. No fee will be due, however, if the
Agreements are terminated by Ponte Vedra as a result of a breach of the
Agreements by SunTrust or by Ponte Vedra due to a denial of a required
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regulatory approval or failure of the Ponte Vedra Shareholders to adopt the
Agreements, unless at the time of such termination Ponte Vedra is in
material breach of the Agreements. The termination fee may discourage
competing offers to the Merger and is intended by SunTrust to increase the
likelihood that the Merger will be consummated.
Interests of Certain Persons in the Merger
Certain members of Ponte Vedra management and the Ponte Vedra Board have
certain interests in the Merger that are in addition to their interests as
Ponte Vedra Shareholders generally. The Ponte Vedra Board was aware of
these interests and considered them, among other matters, in approving the
Agreements and the transactions contemplated thereby.
Indemnification
Pursuant to the Agreements, SunTrust has agreed to maintain the
indemnification with respect to matters occurring before the Effective Date
for such officers and directors provided by Ponte Vedra Articles of
Incorporation and Bylaws for a period of six years.
Effect on Ponte Vedra Stock Option Plan and Warrants
For each share of Ponte Vedra Common Stock covered by a vested option or
warrant, SunTrust shall pay the option holder or warrant holder $7.50 in
cash on the Effective Date. This payment represents the difference between
the option or warrant exercise price of $10.00 and the Cash Consideration of
$17.50. Officers and directors of Ponte Vedra held options and warrants as
set forth in the table below.
Employment Agreement and Non-Compete Agreements
Mr. Guy N. Nix, Jr. has agreed to enter into an Employment Agreement with
SunTrust Bank/North Florida, N.A. to serve as a senior officer of SunTrust
Bank/North Florida, N.A. for a period of three years from the Effective
Date. Mr. Nix will devote his full business time and his best efforts,
skills, and judgment to the performance of his duties on behalf of SunTrust
Bank/North Florida, N.A. Mr. Nix shall be paid $125,000 per year plus
certain normal benefits.
Mr. Nix and each Director of Ponte Vedra will agree not to compete with
SunTrust Bank/North Florida, N.A. for a certain period of time.
Beneficial Ownership of Ponte Vedra Common Stock
The following table sets forth as of September 30, 1995, (i) the name of
each current director of Ponte Vedra and each person known to Ponte Vedra to
be the beneficial owner of more than 5% of Ponte Vedra Stock, (ii) the
number of shares of Ponte Vedra Common Stock beneficially owned by each such
current director, 5% beneficial owner and all officers and directors of
Ponte Vedra as a group, and (iii) the percent of outstanding stock so owned
by each such director, 5% beneficial owner and all such officers and
directors as a group.
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Percent of
Actual
Amount Benficially Owned Common Stock
as of September 30, 1995 Outstanding
Excluding
Name and Address Options and Options and
of Beneficial Owner Common Stock Warrants Warrants
DIRECTORS:
Isabelle Thomas Davis 14,500 10,000 2.23%
1041 Ponte Vedra Boulevard
Ponte Vedra Beach, FL 32082
G. Bruce Douglas 43,000 40,000 6.73
10033 Sawgrass Drive, West, S-102
Ponte Vedra Beach, FL 32082
Samuel J. Foley, Jr. 10,000 10,000 1.56
516 Rutile Drive
Ponte Vedra Beach, FL 32082
Robert W. Fowler 30,000 30,000 4.69
993 Ponte Vedra Boulevard
Ponte Vedra Beach, FL 32082
Ben T. Franklin, Jr. 10,000 10,000 1.56
2209 River Road
Jacksonville, FL 32207
Daniel J. Gallagher 10,000 10,000 1.56
3510 Sunnyside Drive
Jacksonville, FL 32207
John F. Lovejoy, Jr., M.D. 20,000 20,000 3.13
6408 San Jose Boulevard West
Jacksonville, FL 32217
VADM Joseph P. Moorer 5,000 5,000 0.78
547 LeMaster Drive
Ponte Vedra Beach, FL 32082
Guy N. Nix, Jr. 5,450 31,150 0.85
131 Nandina Circle
Ponte Vedra Beach, FL 32082
Reto J. Schneider 50,200 50,000 7.85
2030 Oak Hammock Drive
Ponte Vedra Beach, FL 32082
P. Jeremy Smith, Jr. 17,000 10,000 2.66
10542 Deerwood Club Road
Jacksonville, FL 32256
ALL OFFICERS AND DIRECTORS
AS A GROUP (11 persons) 215,150 226,150 33.66
5% BENEFICIAL OWNERS
James H. Dahl 46,500 7.28
1200 Gulf Life Drive, Ste 902
Jacksonville, FL 32202
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Resales of SunTrust Common Stock
The shares of SunTrust Common Stock issued pursuant to the Agreements will
be freely transferable under the Securities Act except for shares issued to
any shareholder who may be deemed to be an "affiliate" of Ponte Vedra for
purposes of Rule 145 under the Securities Act as of the date of the Meeting.
Affiliates may not sell their shares of SunTrust Common Stock acquired in
connection with the Merger except pursuant to an effective registration
statement under the Securities Act covering such shares or in compliance
with Rule 145 promulgated under the Securities Act or another applicable
exemption from the registration requirements of the Securities Act. Persons
who may be deemed to be affiliates of Ponte Vedra generally include
individuals or entities that control, are controlled by or under common
control with Ponte Vedra and may include certain officers and directors of
Ponte Vedra as well as principal shareholders of Ponte Vedra. Ponte Vedra
has agreed in the Agreements to use its best efforts to cause each director,
executive officer and other person who may be deemed an affiliate of Ponte
Vedra to enter into an agreement with SunTrust providing that such person
will not sell, pledge, transfer or otherwise dispose of shares of Ponte
Vedra Common Stock owned by such person or SunTrust Common Stock to be
received by such person in the Merger, except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder.
Regulatory Approvals
Consummation of the Merger is subject to, and conditioned upon: (i)
receipt of the approvals from the Federal Reserve and the OCC; and (ii) the
failure to interpose objections thereto by the Justice Department and any
other pertinent supervisory and regulatory authorities. Applications were
submitted to the Federal Reserve and the OCC on September 15, 1995. As of
the date hereof, the Federal Reserve and the OCC have not acted on the
Transaction.
The BHC Act provides that the FRB will not approve a transaction (a) which
would result in a monopoly, or which would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States; or (b) the effect of
which in any section of the country may be substantially to lessen
competition, or to tend to create a monopoly, or which in any other manner
would be in restraint of trade, unless the FRB finds that the
anticompetitive effects of the proposed transaction are clearly out-weighed
in the public interest by the probable effect of the transaction in meeting
the convenience and needs of the community to be served. In conducting its
review of any application for approval, the FRB is required to consider the
financial and managerial resources and future prospects of the company or
companies and the banks concerned, and the convenience and needs of the
communities to be served. The BHC Act also requires the FRB to notify the
Attorney General of the United States of the approval of any transaction.
Any action brought under the antitrust laws by the Attorney General (acting
through the Department of Justice) arising out of any transaction must be
commenced by the Department of Justice prior to the earliest date the
transaction could be consummated, which may be up to 30 days after the FRB
approval. The BHC Act further requires that consummation of approved
acquisitions or mergers be delayed for a period of anywhere from 15 to 30
days following the date of FRB approval during which time complaining
parties may obtain a review of the FRB's order by filing a petition
requesting that the order be set aside in the United States Court of Appeals
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for the District of Columbia Circuit, or in the United States Court of
Appeals for the circuit in which the complaining party has its principal
place of business. The waiting period is generally 30 days. However, the
waiting period can be reduced to 15 days if the FRB has not received any
adverse comments from the Attorney General relating to the competitive
factors and the Attorney General has consented to such shorter waiting
period. If no action based on the antitrust laws is commenced before the
termination of the waiting period, the acquisition or merger may not be
attacked thereafter in any judicial proceeding on the ground that it alone
and of itself constituted a violation of any antitrust laws other than
Section 2 of the Sherman Antitrust Act.
The BHC Act discussed above provides for the publication of notices and
the opportunity for administrative hearings relating to the federal or state
filings noted above and permits interested parties to intervene in the
proceedings. If interested parties intervene, administrative and judicial
proceedings relating to both federal and state filings could substantially
delay the regulatory approvals required for consummation of the Merger.
OCC
Under Section 18(c) of the Federal Deposit Insurance Act, sometimes known
as the Bank Merger Act, written approval of the OCC must be obtained before
any insured bank may merge with and assume the depository liabilities of
another insured bank if the surviving or resulting bank is not to be a
member of the Federal Reserve System. Similar approval is also required
wherever any insured bank seeks to merge with a non-insured institution.
The process is initiated by the filing of an application with the Regional
Office of the OCC for the region in which each subject depository
institution is located, which is thereafter considered by such agency to
determine the potential impact of the merger upon certain defined
competitive factors, including the affected geographic and product markets,
the public interest and the likelihood of the merger substantially lessening
competition. Inquiries are required to be made by the reviewing agency of
the Department of Justice and the other bank regulatory agencies,
principally to ensure the application of uniform standards of review, and,
once approval has been issued the applicable merger may not be completed
until the expiration of an addition thirty (30) day period.
There can be no assurance that the regulatory authorities described above
will approve the Merger, and if the Merger is approved, there can be no
assurance as to the date of such approval. There can also be no assurance
that any such approvals will not contain a condition or requirement which
causes such approvals to fail to satisfy the conditions to consummation of
the Merger set forth in the Agreements. There can likewise be no assurance
that the Department of Justice will not challenge the Merger, or if such a
challenge is made, as to the result thereof.
Certain Federal Income Tax Consequences
The federal income tax discussion set forth in this section is included
for general information only. Ponte Vedra Shareholders should consult their
own tax advisers as to the particular tax consequences of the Merger to
them, including the effect of state and local taxes.
Consummation of the Merger is conditioned upon receipt by SunTrust and
Ponte Vedra of an opinion of King & Spalding, SunTrust's tax counsel, dated
as of the Effective Date, that (i) the Merger will be treated as a
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reorganization within the meaning of Section 368(a) of the Code and (ii) the
Ponte Vedra Shareholders will not recognize gain or loss upon the conversion
of Ponte Vedra Common Stock into SunTrust Common Stock in the Merger (except
with respect to any cash paid in lieu of a fractional share of SunTrust
Common Stock). As described in further detail below, the federal income tax
consequences of the Merger to a Ponte Vedra Shareholder will depend upon the
nature of the consideration (i.e., SunTrust Common Stock only, cash only, or
a combination of SunTrust Common Stock and cash) received by such
shareholder in exchange for his or her shares of Ponte Vedra Common Stock.
Receipt of Stock Only
Where a Ponte Vedra Shareholder receives only SunTrust Common Stock in
exchange for his or her Ponte Vedra Common Stock, the shareholder will not
be required to recognize gain or loss on the exchange, except as discussed
below with respect to cash received in lieu of a fractional share interest
in SunTrust Common Stock. The tax basis of the SunTrust Common Stock
received by each Ponte Vedra Shareholder in connection with the Merger will
be the same as the shareholder's basis in the Ponte Vedra Common Stock
surrendered, and the holding period of the SunTrust Common Stock received
will include the holding period of the Ponte Vedra Common Stock surrendered
in exchange therefor.
Receipt of Cash Only
Where a Ponte Vedra Shareholder receives only Cash Consideration in
exchange for his or her Ponte Vedra Common Stock or receives cash payment as
a result of the exercise of dissenters' rights, the shareholder will
recognize capital gain or loss in an amount equal to the difference between
his or her basis in the Ponte Vedra Common Stock surrendered and the amount
of cash received.
Receipt of Stock and Cash
Where a Ponte Vedra Shareholder receives a combination of SunTrust Common
Stock and Cash Consideration in exchange for his or her Ponte Vedra Common
Stock, the shareholder will be required to recognize capital gain with
respect to each block of shares of Ponte Vedra Common Stock surrendered,
equal to the lesser of (i) the fair market value of the SunTrust Common
Stock plus the amount of the Cash Consideration received, less his or her
basis in the Ponte Vedra Common Stock surrendered, or (ii) the amount of the
Cash Consideration received. However, a Ponte Vedra Shareholder will not be
entitled to recognize a loss with respect to any shares of Ponte Vedra
Common Stock that are exchanged for a combination of SunTrust Common Stock
and Cash Consideration. A shareholder's tax basis in the SunTrust Common
Stock received will be the same as the shareholder's basis in the Ponte
Vedra Common Stock surrendered, decreased by the amount of Cash
Consideration received and increased by the amount of any gain recognized by
the shareholder. The shareholder's holding period for the SunTrust Common
Stock will include the holding period of the Ponte Vedra Common Stock
surrendered in exchange therefor.
Consequences of Receipt of Cash in Lieu of Fractional Shares
A Ponte Vedra Shareholder who is entitled to receive cash in lieu of a
fractional share interest of SunTrust Common Stock in connection with the
Merger will recognize as of the Effective Date capital gain or loss equal to
the difference between such cash amount and the shareholder's basis in the
fractional share interest.
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THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER.
THE DISCUSSION AND THE OPINIONS OF COUNSEL DESCRIBED ABOVE ARE BASED ON
CURRENTLY EXISTING PROVISIONS OF THE INTERNAL REVENUE CODE, EXISTING
TREASURY REGULATIONS THEREUNDER, AND CURRENT ADMINISTRATIVE RULINGS AND
COURT DECISIONS. THE OPINIONS OF COUNSEL DESCRIBED ABOVE ARE NOT BINDING
UPON THE INTERNAL REVENUE SERVICE, AND NO RULINGS OF THE INTERNAL REVENUE
SERVICE WILL BE SOUGHT OR OBTAINED. THERE IS NO ASSURANCE THAT THE INTERNAL
REVENUE SERVICE WILL AGREE WITH THE FOREGOING DISCUSSION OR THE OPINIONS
DESCRIBED ABOVE. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH
CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION AND THE
OPINIONS. BECAUSE OF THE COMPLEXITIES OF THE TAX LAWS, EACH PONTE VEDRA
SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR HER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
Expenses
All expenses incurred by or on behalf of the parties in connection with
the Agreements and the transactions contemplated by the Agreements are to be
borne by the party incurring the expense. Notwithstanding the foregoing, if
the Agreements are terminated by SunTrust or Ponte Vedra because of the
willful breach by the other of any representation, warranty, covenant,
undertaking or restriction contained therein, then the breaching party will
pay all such cost and expenses incurred by the non-breaching party.
Accounting Treatment
It is anticipated that the Merger will be accounted for using the purchase
method of accounting for financial reporting purposes.
NYSE Listing
The SunTrust Common Stock is listed on the NYSE. The Ponte Vedra Common
Stock is not traded on any exchange. The SunTrust Common Stock issued to
the Ponte Vedra Shareholders pursuant to the Agreements will be listed on
the NYSE.
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BUSINESS OF SUNTRUST
SunTrust is a regional bank holding company headquartered at 25 Park
Place, N.E., Atlanta, Georgia 30303, telephone number (404) 588-7711. At
June 30, 1995, SunTrust had consolidated total assets of $44.2 billion,
consolidated loans of $30.1 billion, consolidated deposits of $31.7 billion,
consolidated realized shareholders' equity of $3 billion and consolidated
total shareholders equity of $4 billion. SunTrust owns through wholly owned
intermediary holding companies all the outstanding capital stock of 29
subsidiary banks that operate in Florida, Georgia, Tennessee and Alabama.
SunTrust, through its subsidiary banks, conducts a broad range of
commercial banking activities, including accepting demand, time and savings
deposits, making both secured and unsecured business and consumer loans and
leases, extending commercial lines of credit, issuing and servicing credit
cards and certain other types of revolving credit accounts, providing
commercial factoring services, cash management services, investment
counseling, safe deposit services, personal and corporate trust and other
fiduciary services and engaging in leasing, mortgage banking, correspondent
banking, international banking, investment banking, trading in U.S.
government securities and municipal bonds and underwriting certain types of
general obligation municipal bonds.
For a more complete description of the business of SunTrust and selected
financial data, supplemental financial information, SunTrust's management
discussion and analysis of financial conditions and results of operations,
please see SunTrust's Annual Report for the year ended December 31, 1994
delivered with this Proxy Statement.
BUSINESS OF PONTE VEDRA
Through its four locations in Florida, Ponte Vedra provides retail and
commercial lending services typical of those offered by other community
banks. For retail customers, Ponte Vedra offers a full range of depository
products including regular and money market checking accounts, regular,
special and money market savings accounts; various types of certificates of
deposit and Individual Retirement Accounts. The principal lending activity
of Ponte Vedra historically has been the origination of commercial, real
estate and conventional residential mortgage loans. Ponte Vedra also
originates conventional mortgage loans on multi-unit dwellings and other
commercial properties, home equity loans, home investment loans and consumer
loans. Ponte Vedra makes loans primarily in Duval and St. Johns Counties,
Florida. Ponte Vedra does not have a trust department.
COMPARISON OF RIGHTS OF PONTE VEDRA AND SUNTRUST SHAREHOLDERS
SunTrust is a business corporation organized under the Georgia Business
Corporation Code (the "GBCC"). Ponte Vedra is a corporation organized under
the Florida Business Corporations Act ("FBCA"). Ponte Vedra Shareholders,
whose rights as shareholders are currently governed by the FBCA and the
Ponte Vedra Articles of Incorporation and By-laws, will become, upon
consummation of the Merger, shareholders of SunTrust. Their rights as
shareholders of SunTrust will be governed by the GBCC and the SunTrust
Articles of Incorporation and By-laws. Certain differences between the
rights of Ponte Vedra Shareholders and SunTrust Shareholders are summarized
below. The summary does not purport to be a complete statement of the
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rights of Ponte Vedra Shareholders as compared with the rights of SunTrust
Shareholders. The identification of specific differences is not meant to
indicate that other equally or more significant differences do not exist.
The summary is qualified in its entirety by reference to the FBCA, the GBCC,
and the respective Articles of Incorporation and By-laws of SunTrust and
Ponte Vedra.
Changes in Control - Articles of Incorporation
SunTrust. Certain provisions of the SunTrust Articles of Incorporation
and By-laws may have the effect of preventing, discouraging or delaying any
change of control of SunTrust. These provisions include the authority to
issue preferred stock with such rights and privileges as the Board of
Directors may deem appropriate from time to time, provisions for the
classification of the SunTrust Board of Directors and provisions relating to
certain business combinations. In addition, the SunTrust By-laws require a
vote of two-thirds of the full Board of Directors following specified
notice, or of 75% of the full Board of Directors, in order to approve
certain actions relating to business combinations involving SunTrust,
changes in the terms of employment of the Chairman of the Board, President
or Chief Executive Officer of SunTrust and the designation of management
nominees to the Board of Directors of SunTrust. The authority of the Board
of Directors to issue preferred stock with such rights and privileges,
including voting rights, dividend, redemption and conversion rights, may
enable the Board of Directors to prevent a change in control despite a shift
in ownership of SunTrust Common Stock. The classification of the SunTrust
Board of Directors pursuant to which one-third of the directors of SunTrust
are elected each year for a three-year term, and the special Board of
Directors voting provisions, may delay the ability of dissatisfied SunTrust
Shareholders or anyone who obtains a controlling interest in SunTrust Common
Stock to elect a new Board of Directors and to exercise control of SunTrust.
The provisions of the SunTrust Articles of Incorporation relating to certain
business combinations (the "Fair Price Provisions") may have the effect of
deterring or making more difficult a change in control or acquisition of
SunTrust.
The Fair Price Provisions contained in the SunTrust Articles of
Incorporation are summarized below. The Fair Price Provisions require that
certain business combinations involving an Interested Shareholder (as
defined in the Articles of Incorporation to include a person who
beneficially owns (as defined in the Articles of Incorporation) 10% or more
of SunTrust Common Stock) be approved by the holders of at least 75% of the
outstanding shares of SunTrust Common Stock, including the approval of the
holders of at least 75% of the outstanding shares of SunTrust Common Stock
that are not owned by the Interested Shareholder, unless either 75% of the
entire SunTrust Board of Directors approves the transaction or certain
minimum price criteria and procedural safeguards are satisfied. These
transactions include any merger or consolidation of SunTrust into an
Interested Shareholder or any affiliates thereof, any sale of more than $1
million in assets of SunTrust to an Interested Shareholder or any affiliate
thereof, any recapitalization or reclassification of SunTrust securities or
similar transaction increasing the percentage of ownership by an Interested
Shareholder or any proposal for the liquidation of SunTrust.
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The Fair Price Provisions require that a business combination involving
any Interested Shareholder which does not receive the required director or
shareholder vote must meet certain fair price criteria. Those criteria
require, among other things, that the second step consideration in a two-
tier bid be at least equal to the highest of the following four
computations:
(i) the highest per share price (including brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested Shareholder for
any shares of SunTrust Common Stock acquired by it (1) within the two-year
period immediately prior to the first public announcement of the proposed
business combination (the "Announcement Date") or (2) in the transaction in
which it became an Interested Shareholder;
(ii) the highest fair market value per share of SunTrust Common Stock
during the 30-day period ending on the Announcement Date or during the 30-
day period ending on the date on which the Interested Shareholder became an
Interested Shareholder;
(iii) the price per share equal to the highest fair market value per share
as determined in clause (ii) above, multiplied by the ratio of (1) the
highest per share price (including brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Shareholder for any shares
of SunTrust Common Stock acquired during the two-year period preceding the
Announcement Date, to (2) the fair market value of the SunTrust Common Stock
on the date on which the Interested Shareholder made its first purchase of
shares of SunTrust Common Stock during the two-year period; and
(iv) the book value per share of SunTrust Common Stock on the last day of
the month preceding the consummation of the business combination multiplied
by the ratio of (1) the highest price per share paid by the Interested
Shareholder, as determined in clause (i) above, to (2) the book value per
share of SunTrust Common Stock on the last day of the month preceding the
date on which the highest price as determined pursuant to clause (i) above
was based.
In addition, the consideration paid for SunTrust Common Stock in a
business combination must be either cash or the same form of consideration
paid by the Interested Shareholder to acquire the largest number of shares
of SunTrust Common Stock previously acquired by it. Moreover, the
Interested Shareholder must not (i) have acquired, after having become an
Interested Shareholder, additional shares of SunTrust Common Stock, (ii)
have received the benefit of financial assistance from SunTrust or (iii)
have made or failed to make certain changes in SunTrust dividend payments.
The Fair Price Provisions are designed to discourage attempts to take over
SunTrust by utilizing two-tier pricing tactics or by acquiring less than all
of SunTrust's outstanding shares. The provisions were adopted in response
to the occurrence of non-negotiated attempts to take over publicly owned
corporations. These attempts typically involve the accumulation of a
substantial block of the target corporation's stock by the purchaser or a
tender offer by the purchaser to obtain a major stock interest in the target
corporation, followed by a merger or other reorganization of the acquired
company on terms determined entirely by the purchaser. The terms of these
attempts may include two-tier pricing, which is the practice of paying cash
to acquire a controlling interest in a company and acquiring the remaining
equity interest by paying the remaining shareholders a price that is lower
than the price paid to acquire the controlling interest or by utilizing a
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different form of consideration for payment to the remaining shareholders
than was used to purchase the controlling interest.
While the terms of such a non-negotiated takeover could be fair to
SunTrust Shareholders, negotiated transactions may result in more favorable
terms to SunTrust Shareholders because of factors such as timing of the
transaction, the tax effects on the shareholders and the fact that the
nature and amount of the consideration paid to all shareholders will be
negotiated by the parties at arms-length rather than dictated by the
purchaser.
Although the federal securities laws and regulations applicable to certain
of the business combinations covered by the Fair Price Provisions require
that disclosure be made to shareholders of the terms of such a transaction,
these laws do not assure shareholders that the financial terms of the
business combination will be fair to them or that they can effectively
prevent its consummation. The Fair Price Provisions are intended to address
some of the effects of these gaps in federal and state laws and prevent some
of the potential inequities of certain acquisitions that involve two or more
steps. The Fair Price Provisions require that, in order to complete a
business combination that is not approved by a 75% vote of the entire
SunTrust Board of Directors, an Interested Shareholder must obtain the
affirmative vote of the holders of at least 75% of the outstanding SunTrust
Common Stock held by SunTrust Shareholders other than the Interested
Shareholder, or meet the minimum price and procedural requirements of the
Fair Price Provisions.
Due to the difficulties of complying with the requirements of the Fair
Price Provisions, the Fair Price Provisions generally may discourage
attempts to acquire control of SunTrust. As a result, holders of SunTrust
Common Stock may be deprived of an opportunity to sell their shares at a
premium above the market price. In addition, the Fair Price Provisions
would give veto power to the holders of a minority of SunTrust Common Stock
with respect to certain business combinations that are opposed by more than
25% of the SunTrust Board of Directors, but which a majority of shareholders
may believe to be desirable and beneficial. Moreover, in any such business
combination not receiving the requisite approval of SunTrust Shareholders or
of directors, the minimum price provisions of the Fair Price Provisions,
while providing objective pricing criteria, could be arbitrary and not
indicative of value.
The Articles of Incorporation of SunTrust also contain provisions (the
"Business Judgment Provisions") that require the SunTrust Board of
Directors, when evaluating certain offers to purchase the equity securities
of SunTrust, to consider certain factors in addition to the consideration
offered in the acquisition proposal in relation to the market price of
SunTrust's securities or assets. The factors include, among others, the
estimate by the Board of Directors of the future value of SunTrust as an
independent entity, the desirability of maintaining SunTrust as an
independent entity and the impact of the proposed transaction on SunTrust's
employees and customers and upon the communities in which SunTrust and its
subsidiaries operate.
The Ponte Vedra Articles of Incorporation include a provision that
requires the affirmative vote of the holders of two-thirds of the
outstanding shares of Ponte Vedra Common Stock to approve a merger or
acquisition of Ponte Vedra. Consequently, two-thirds of the outstanding
shares of Ponte Vedra must approve the Transaction.
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Anti-Takeover Statutes
The GBCC contains fair price requirements applicable to certain mergers
with certain interested shareholders and restricts certain business
combinations with interested shareholders. These statutory requirements
restrict business combinations with, and the accumulation of shares of
voting stock of, certain Georgia corporations. In accordance with the
provisions of these statutes, SunTrust must elect to be covered by the
restrictions imposed by these statutes. SunTrust has not elected to be
covered by such statutes, but it could do so by action of its Board of
Directors at any time.
The FBCA contains an affiliated transactions provision which applies to
Ponte Vedra. The FBCA affiliated transactions statute imposes procedural
(or in some cases substantive) requirements upon certain business
combinations between a corporation and an interested shareholder (generally,
any person who has acquired 10% or more of the voting stock of the
corporation). The FBCA affiliated transactions statute would permit the
business combination to be effected if (i) certain fair price criteria are
satisfied or (ii) the business combination has been approved by a majority
of the "disinterested directors" (as defined in the FBCA affiliated
transactions statute) or by the holders of two-thirds
of the voting shares other than shares beneficially owned by the interested
shareholders.
The FBCA also contains provisions that, under certain circumstances,
restrict the voting rights of an acquiror of the shares of a Florida
corporation who crosses one of three voting thresholds (20%, 33-1/3% or 50%)
with respect to such shares unless the holders of a majority of each class
of shares of the corporation which are not "interested shares" (as defined
in the statute) vote to approve voting power for such shares.
Amendment of Articles of Incorporation
Generally, the GBCC requires a majority vote of the outstanding shares
entitled to vote to amend articles of incorporation unless the articles of
incorporation, the board of directors or the GBCC provides otherwise. The
SunTrust Articles of Incorporation requires an affirmative vote by a least
75% of the shares entitled to vote (other than shares held by any Interested
Shareholder) to alter or amend the provisions of the Articles of
Incorporation of SunTrust relating to transactions with any Interested
Shareholder.
The FBCA requires the affirmative vote of a majority of the outstanding
shares (or, in certain circumstances, the majority of the outstanding shares
of each class) to amend articles of incorporation. The Articles of
Incorporation of Ponte Vedra require the approval of two-thirds of the
outstanding shares for any amendment to the Articles of Incorporation or
Bylaws of Ponte Vedra affecting the relative rights of shareholders,
changing the votes required for approval of any matter, changing the
restrictions on transfer or encumbrance of shares of capital stock, or
modifying or repealing any of the provisions of the Articles of
Incorporation requiring two-thirds of the outstanding shares of Ponte Vedra
to approve a merger.
Certain Voting Rights
Under the GBCC, unless the articles of incorporation specify otherwise, a
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board of directors need not submit a plan of merger to the shareholders of
the surviving corporation if (i) the merger will not effect any change in or
amendment to the articles of incorporation of the surviving corporation,
(ii) each share of the surviving corporation outstanding immediately prior
to the effectiveness of the merger is to remain outstanding and unchanged
after the merger, and (iii) either no new shares of the surviving
corporation are to be issued or any such shares to be issued can be issued
by the board of directors without further authorization by the shareholders.
The NYSE, however, may require shareholder approval as a prerequisite to
listing shares to be issued in certain merger or other acquisition
transactions, such as when the transaction would result in the present or
potential increase of 18.5% or more in the outstanding shares of common
stock of the acquiring corporation.
The GBCC provides that unless the articles of incorporation specify
otherwise, a plan of merger submitted to shareholders requires the
affirmative vote of a majority of the shares entitled to vote to adopt such
a plan.
As described more fully above, the SunTrust Articles of Incorporation
require a special shareholder vote to approve certain business combinations,
including mergers, consolidations and sales of assets, involving certain
Shareholders.
Under the FBCA, a merger agreement submitted to shareholders for approval
requires the affirmative vote of a majority of shares entitled to vote,
unless the FBCA, the Articles of Incorporation or the board of directors
require a greater vote. The Ponte Vedra Articles of Incorporation require
two-thirds of the outstanding shares to approve the Transaction.
Dividends
A Georgia corporation may pay dividends out of unreserved and unrestricted
earned surplus, out of net earnings for the fiscal year in which declared or
out of the net earnings of the next preceding fiscal year, or out of capital
surplus if certain conditions are met and the shareholders are notified
concurrently that the distribution is from capital surplus. The SunTrust
Articles of Incorporation authorize distributions out of capital surplus.
The FBCA provides that a board of directors may pay a dividend unless,
after giving effect to the dividend: (i) the corporation will be unable to
pay its debts, or (ii) the corporation's total assets would be less than the
sum of its total liabilities plus the amount needed upon dissolution to
satisfy preferential rights superior to those receiving the distribution. A
board of directors may base a determination that a distribution is not
prohibited under (i) or (ii) on financial statements prepared on the basis
of reasonable accounting practices and principles or on a fair valuation or
other method that is reasonable in the circumstances.
In the case of both SunTrust and Ponte Vedra, further restrictions on the
payment of dividends may arise as a result of federal (and in the case of
SunTrust, state) banking laws. See "Certain Regulatory Considerations
Relating to SunTrust - Payment of Dividends and Other Restrictions."
Boards of Directors
As permitted by the GBCC, the SunTrust By-laws divide the SunTrust Board
of Directors into three classes serving staggered three-year terms, with the
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terms of one class of directors to expire each year. The classification of
the SunTrust Board of Directors means that approximately one-third of the
SunTrust Board of Directors is elected each year, with the result that it
would take two annual meetings of SunTrust Shareholders to change the
majority of the members constituting the SunTrust Board of Directors. The
classification of directors has the effect of making it more difficult to
change the composition of the board of directors. A classified board of
directors can help promote the continuity and stability of management and
policies because a majority of the directors at any given time will have
prior experience as directors.
In addition, the SunTrust By-laws provide that any or all of the SunTrust
directors may be removed from office at any time with or without cause, but
only by the affirmative vote of at least 75% of the shares entitled to vote
(excluding any shares held by any Interested Shareholder). As previously
described, the Ponte Vedra Articles of Incorporation and By-laws do not
contain similar provisions. Under the FBCA, the entire Board of Directors
or any Director, may be removed without cause by the vote of a majority of
shareholders entitled to vote at an annual meeting.
RIGHTS OF DISSENTING SHAREHOLDERS
Any shareholder of Ponte Vedra may dissent from the Transaction and
receive in cash the fair value, as of the day prior to the Meeting, of the
Ponte Vedra Common Stock held by such shareholder pursuant to Sections
607.1302 and 607.1320 of the FBCA, copies of which are attached as Exhibit B
hereto. Such fair value is exclusive of any appreciation or depreciation in
anticipation of the Merger. The appraisal value of the Ponte Vedra Common
Stock may be more or less than the consideration that a Ponte Vedra
Shareholder would be entitled to receive in the Transaction. The following
is a summary of the procedures to be followed by Ponte Vedra Shareholders
who wish to dissent from the Transaction.
Under Section 607.1302 of the FBCA, the shareholders of Ponte Vedra have
certain dissenters' rights or appraisal rights in connection with the
Transaction, the procedures for which are set forth in Section 607.1320.
The following is only a summary of Section 607.1320. All statements
relating to the provisions of Section 607.1320 are qualified in their
entirety by reference to the copy of Section 607.1320 attached as Exhibit B
to this Proxy Statement. Shareholders are encouraged to consult their
individual advisors.
Any holder of common stock who wishes to exercise rights of a dissenting
shareholder with respect to any or all shares of common stock owned by such
shareholder and to obtain the "fair value" of any or all of his shares in
cash; (i) must file with Ponte Vedra prior to the vote on the Transaction at
the Meeting, a written notice of intent to demand payment; (ii) may not vote
for approval of the Agreements, the Plan of Merger or the Transaction; (iii)
must file with Ponte Vedra written notice of election to dissent and demand
payment of the fair value of the shares of Ponte Vedra Common Stock within
twenty days after receipt of notice of approval of the Transaction, and
simultaneously surrender to Ponte Vedra the certificates representing the
shares for which such payment is demanded; and (iv) must comply with all
procedural requirements of Section 607.1320.
The written notice of intent to demand payment in (i) above will not be
satisfied under the FBCA by merely voting "Against" approval of the
Agreements by proxy or in person at the Meeting. A shareholder wishing to
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preserve the right and seek appraisal must not vote in favor of approval of
the Agreements and must give a separate written notice of intent to demand
payment prior to the vote on the Agreements at the Meeting.
The notice of election described in (iii) above should be executed by or
for the shareholder of record by stating his name and address, the number,
classes and series of shares as to which he dissents and a demand for
payment of the fair value of his shares. Any shareholder failing to file
such election to dissent within the period set forth will be bound by the
terms of the Agreements, the Plan of Merger and the Transaction.
Upon filing a notice of election to dissent, the shareholder will
thereafter be entitled only to payment as provided under Section 607.1320
and will not be entitled to vote or to exercise any other rights of a
shareholder. A notice of election may be withdrawn in writing by the
shareholder at any time before an offer is made by Ponte Vedra to pay for
his shares. After such offer, no such notice of election may be withdrawn
unless Ponte Vedra consents thereto.
Within ten days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within ten days after the
Transaction is effected, whichever is later, but in no case more than ninety
days from the shareholder's authorization date, Ponte Vedra or SunBanks will
make a written offer to each dissenting shareholder who has made a demand,
as provided in Section 607.1320, to pay an amount Ponte Vedra or SunBanks
estimates to be the fair value of such shares. The written offer to the
dissenting shareholder will be accompanied by certain financial information
concerning Ponte Vedra. No other notice of the consummation of the
Transaction will be given.
If within thirty days after the making of such offer, any shareholder
accepts the same, payment for his shares will be made within ninety days
after the making of such offer or the consummation of the Transaction,
whichever is later. Upon payment of the agreed value, the dissenting
shareholder will cease to have any interest in such shares.
If within the specified period to dissent under Section 607.1320, Ponte
Vedra or SunBanks fails to make such written offer, or if it makes the offer
and any dissenting shareholder fails to accept the same within the period of
thirty days thereafter, then Ponte Vedra or SunBanks shall, within thirty
days after receipt of written demand from any dissenting shareholder given
within sixty days after the date on which the Transaction was effected, or
may, at its election at any time within such period of sixty days, file an
action in any court of competent jurisdiction in St. Johns County, Florida,
to determine the fair value of such shares. If Ponte Vedra or SunBanks
fails to institute an action, any dissenting shareholder may do so in the
name of Ponte Vedra or SunBanks.
The court will also determine whether the dissenting shareholder, as to
whom Ponte Vedra or SunBanks requests the determination, is entitled to
receive payment for his shares. The court will determine and enter a
judgment against Ponte Vedra or SunBanks for the amount of the fair value of
the dissenting shareholder's shares. Thereafter, Ponte Vedra or SunBanks
will pay the dissenting shareholder the amount found to be due him within
ten days after final determination of the proceedings.
The costs and expenses of the proceeding will be assessed against Ponte
Vedra or SunBanks, except, if the court determines that the action of the
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dissenting shareholder in failing to accept Ponte Vedra's or SunBanks's
offer was arbitrary, vexatious or not in good faith, the costs and expenses
may be assessed by the court against the dissenting shareholder.
Additionally, the court may award reasonable compensation to any attorney or
expert employed by the dissenting shareholder if the fair value of the
shares as determined materially exceeds the amount offered by Ponte Vedra or
SunBanks or no offer is made.
THE FOREGOING IS ONLY A SUMMARY OF THE PROCEDURES TO PERFECT DISSENTERS'
RIGHTS. SEE EXHIBIT B.
HOLDERS OF COMMON STOCK WISHING TO EXERCISE RIGHTS OF DISSENTING
SHAREHOLDERS ARE CAUTIONED THAT FAILURE TO FOLLOW THE STATUTORY PROCEDURES
EXACTLY MAY RESULT IN LOSS OF APPRAISAL RIGHTS.
AN EXECUTED BLANK PROXY WILL BE VOTED IN FAVOR OF THE AGREEMENT. UNLESS
LATER REVOKED, SUCH A PROXY BY A SHAREHOLDER WILL BE DEEMED A WAIVER OF HIS
DISSENTERS' RIGHT OF APPRAISAL.
DESCRIPTION OF PONTE VEDRA CAPITAL STOCK
Pursuant to its Articles of Incorporation, Ponte Vedra is authorized to
issue up to 10,000,000 shares of Ponte Vedra Common Stock, par value $1.00
per share, of which 639,120 shares were issued and outstanding at the record
date.
Each share of Ponte Vedra Common Stock is entitled to one vote on all
matters presented to Ponte Vedra Shareholders. Cumulative voting is not
permitted in the election of directors or in any other matter. Each share
of Ponte Vedra Common Stock also is entitled to dividends, but only when and
if declared by the Board of Directors. The right of Ponte Vedra to declare
a dividend on Ponte Vedra Common Stock is restricted by the Agreements.
Certain limitations under federal and Florida law apply to the payment of
dividends by Ponte Vedra. Ponte Vedra has never declared and paid a
dividend on its Common Stock, and is not expected to do so in the
foreseeable future. There are no preemptive rights to purchase Ponte Vedra
Common Stock.
As of September 30, 1995, Ponte Vedra had 475 shareholders of record.
SunTrust Bank, Atlanta, an affiliate of SunTrust, acts as the transfer agent
for its Common Stock. Presently, there is no established market for Ponte
Vedra Common Stock, and there should be no expectation that such a market
will develop in the foreseeable future.
DESCRIPTION OF SUNTRUST CAPITAL STOCK
SunTrust is authorized by its Articles of Incorporation to issue up to
350,000,000 shares of SunTrust Common Stock, par value $1.00 per share, of
which 115,130,650 shares were issued and outstanding at June 30, 1995 and up
to 50,000,000 shares of Preferred Stock, no par value, none of which were
issued and outstanding on the date hereof.
SunTrust Common Stock
Holders of SunTrust Common Stock are entitled to cast one vote for each
share held of record on all matters submitted to a vote of SunTrust
Shareholders and are not entitled to cumulate votes for the election of
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directors. The SunTrust By-laws divided the SunTrust Board of Directors
into three classes with staggered three-year terms, with the members of one
class elected each year. See "The Merger - Comparison of Rights of Ponte
Vedra and SunTrust Shareholders." Holders of SunTrust Common Stock do not
have preemptive rights to subscribe for or to purchase any additional shares
of SunTrust. In the event of liquidation, holders of SunTrust Common Stock
are entitled to share in the distribution of assets remaining after payment
of debts and expenses and after required payments to holders of SunTrust
preferred stock. Holders of SunTrust Common Stock are entitled to receive
dividends when declared by the SunTrust Board of Directors out of funds
legally available therefor, subject to the rights of the holders of SunTrust
preferred stock. The outstanding shares of SunTrust Common Stock are, and
the shares of SunTrust Common Stock to be issued in connection with the
Merger will be, when validly issued, fully paid and nonassessable.
The transfer agent and registrar for SunTrust Common Stock is SunTrust
Bank, Atlanta, Post Office Box 4625, Atlanta, Georgia, 30302-4625.
SunTrust Provisions Relating to Certain Business Combinations
The Articles of Incorporation and By-laws of SunTrust include provisions
relating to certain business combinations and providing for a supermajority
vote on such business combinations and certain other matters. These
provisions may render it more difficult to effect a change of control of
SunTrust and, as a result, may have the effect of deterring a tender offer
or other acquisition proposal involving SunTrust. For a discussion of the
reasons for and the effects of these provisions, see "The Merger -
Comparison of Rights of Ponte Vedra and SunTrust Shareholders."
CERTAIN REGULATORY CONSIDERATIONS
RELATING TO SUNTRUST
General
As a bank holding company, SunTrust is subject to the regulation and
supervision of the Federal Reserve Board. SunTrust's subsidiary banks (the
"Subsidiary Banks") are subject to supervision and examination by applicable
state and federal banking agencies, including the Federal Reserve Board, the
Office of the Comptroller of the Currency (the "Comptroller") and the FDIC.
The Subsidiary Banks are also subject to various requirements and
restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans
that may be granted and the interest that may be charged thereon, and
limitations on the types of investments that may be made and the types of
services that may be offered. Various consumer laws and regulations also
affect the operations of the Subsidiary Banks. In addition to the impact of
regulation, commercial banks are affected significantly by the actions of
the Federal Reserve Board as it attempts to control the money supply and
credit availability in order to influence the economy.
The BHCA currently prohibits the Federal Reserve Board from approving an
application from a bank holding company to acquire shares of a bank located
outside the state in which the operations of the holding company's banking
subsidiaries are principally conducted, unless such an acquisition is
specifically authorized by statute of the state in which the bank whose
shares are to be acquired is located. However, under recently enacted
federal legislation, the restriction on interstate acquisitions will be
abolished effective September 1995, and thereafter, bank holding companies
from any state will be able to acquire banks and bank holding companies
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located in any other state, subject to certain conditions, including
nationwide and state imposed concentration limits. Banks also will be able
to branch across state lines by acquisition, merger or de novo, effective
June 1, 1997 (unless state law would permit such interstate branching at an
earlier date), provided certain conditions are met, including that
applicable state law must expressly permit de novo interstate branching.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by federal law and
regulatory policy that are designed to reduce potential loss exposure to the
depositors of such depository institutions and to the FDIC insurance fund in
the event the depository institution becomes in danger of default or is in
default. For example, under a policy of the Federal Reserve Board with
respect to bank holding company operations, a bank holding company is
required to serve as a source of financial strength to its subsidiary
depository institutions and to commit resources to support such institutions
in circumstances where it might not do so absent such policy. In addition,
the "cross-guarantee" provisions of federal law require insured depository
institutions under common control to reimburse the FDIC for any loss
suffered or reasonably anticipated by either the Savings Association
Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") as a result of
the default of a commonly controlled insured depository institution or for
any assistance provided by the FDIC to a commonly controlled insured
depository institution in danger of default. The FDIC may decline to
enforce the cross-guarantee provisions if it determines that a waiver is in
the best interest of the SAIF or the BIF or both. The FDIC's claim for
damages is superior to claims of shareholders of the insured depository
institution or its holding company but is subordinate to claims of
depositors, secured creditors and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institutions.
Payment of Dividends and Other Restrictions
SunTrust is a legal entity separate and distinct from its subsidiaries,
including the Subsidiary Banks. There are various legal and regulatory
limitations under federal and state law on the extent to which SunTrust's
subsidiaries, including its bank and bank holding company subsidiaries, can
finance or otherwise supply funds to SunTrust.
The principal source of SunTrust's cash revenues is dividends from its
subsidiaries and there are certain limitations under federal, Georgia,
Florida and Tennessee law on the payment of dividends by such subsidiaries.
The prior approval of the Federal Reserve Board or the Comptroller, as the
case may be, is required if the total of all dividends declared by any state
member bank of the Federal Reserve System or any national banking
association 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, less any required transfers to surplus or a fund for the
retirement of any preferred stock. The relevant federal and state
regulatory agencies also have authority to prohibit a state member bank or
bank holding company or a national banking association from engaging in
what, in the opinion of such regulatory body, constitutes an unsafe or
unsound practice in conducting its business. The payment of dividends
could, depending upon the financial condition of the subsidiary, be deemed
to constitute such an unsafe or unsound practice.
Under Georgia law (which would apply to any payment of dividends by
SunTrust Bank, Atlanta) the prior approval of the Georgia Commissioner of
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Banking and Finance is required before any cash dividends may be paid by a
state bank if: (i) total classified assets at the most recent examination
of such bank exceed 80% of the equity capital (as defined, which includes
the reserve for loan losses) of such bank; (ii) the aggregate amount of
dividends declared or anticipated to be declared in the calendar year
exceeds 50% of the net profits (as defined) for the previous calendar year;
or (iii) the ratio of equity capital to adjusted total assets is less than
6%.
Retained earnings of SunTrust's banking subsidiaries available for payment
of cash dividends under all applicable regulations without obtaining
governmental approval were approximately $389 million as of June 30, 1995.
In addition, the Subsidiary Banks and their subsidiaries are subject to
limitations under Section 23A of the Federal Reserve Act with respect to
extensions of credit to, investments in, and certain other transactions
with, SunTrust and its other subsidiaries. Furthermore, loans and
extensions of credit are also subject to various collateral requirements.
Capital Adequacy
The Federal Reserve Board, the Comptroller and the FDIC have issued
substantially similar risk-based and leverage capital guidelines applicable
to United States banking organizations. In addition, those regulatory
agencies may from time to time require that a banking organization maintain
capital above the minimum levels whether because of its financial condition
or actual or anticipated growth. Under the risk-based capital requirements
of these federal bank regulatory agencies, SunTrust and each of the Bank
Subsidiaries are required to maintain a minimum ratio of total capital to
risk-weighted assets of at least 8%. At least half of the total capital is
required to be "Tier 1 capital", which consists principally of common and
certain qualifying preferred shareholders' equity, less certain intangibles
and other adjustment. The remainder ("Tier 2 capital") consists of a
limited amount of subordinated and other qualifying debt (including certain
hybrid capital instruments) and a limited amount of the general loan loss
allowance. The Tier 1 and total capital to risk-weighted asset ratios of
SunTrust as of June 30, 1995 were 8.09% and 10.06%, respectively, exceeding
the minimums required.
In addition, each of the federal regulatory agencies has established a
minimum leverage capital ratio (Tier 1 capital to average tangible assets).
These guidelines provide for a minimum leverage capital ratio of 3% for
banks and bank holding companies that meet certain specified criteria,
including that they have the highest regulatory examination rating and are
not contemplating significant growth or expansion. All other institutions
are expected to maintain a leverage ratio of at least 100 to 200 basis
points above the minimum. The Tier 1 leverage ratio of SunTrust as of June
30, 1995, was 6.80%, which is above the minimum requirements. The
guidelines also provide that banking organizations experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets.
Support of Subsidiary Banks and Other Regulations
Under Federal Reserve Board policy, SunTrust is expected to act as a
source of financial strength to, and to commit resources to support, each of
the Subsidiary Banks. This support may be required at times when, absent
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such Federal Reserve Board policy, SunTrust may not be inclined to provide
it. In the event of a bank holding company's bankruptcy, any commitment by
the bank holding company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
The federal banking agencies have broad powers under current federal law
to take prompt corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the
institutions in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized" as such terms are defined under uniform regulations
defining such capital levels issued by each of the federal banking agencies.
In addition, FDIC regulations require that management report on its
institution's responsibility for preparing financial statements, and
establishing and maintaining an internal control structure and procedures
for financial reporting and compliance with designated laws and regulations
concerning safety and soundness; and that independent auditors attest to and
report separately on assertions in management's reports concerning
compliance with such laws and regulations, using FDIC-approved audit
procedures.
LEGAL OPINION
The legality of the shares of SunTrust Common Stock to be issued upon
consummation of the Transaction will be passed upon for SunTrust by Raymond
D. Fortin, Esq., Senior Vice President of SunTrust.
RELATIONSHIPS WITH
INDEPENDENT PUBLIC ACCOUNTANTS AND EXPERTS
The audited consolidated financial statements of SunTrust Banks, Inc. and
subsidiaries incorporated by reference in this Proxy Statement and elsewhere
in the Registration Statement have been audited by Arthur Andersen LLP,
independent 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.
The audited consolidated financial statements of Ponte Vedra and
subsidiaries incorporated by reference in this Proxy Statement and elsewhere
in the Registration Statement have been audited by Harbeson, Beckerleg &
Fletcher, independent public accountants as indicated in their report with
respect thereto, and are included herein upon the authority of said firm as
experts in giving said reports.
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Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
by and among
SUNTRUST BANKS, INC.,
SUN BANKS, INC.
and
PONTE VEDRA BANKING CORPORATION
August 31, 1995
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
ARTICLE 2
TRANSACTIONS AND TERMS OF MERGER
2.1 Merger 6
2.2 Manner of Converting Shares 6
Ponte Vedra Common Stock 6
Dissenting Shareholders 9
Treasury Shares 9
Fractional Shares 9
2.3 Treatment of Options 9
ARTICLE 3
CLOSING, EFFECTIVE TIME AND DELIVERY OF CONSIDERATION
3.1 Time and Place of Closing 9
3.2 Effective Time 10
3.3 Exchange of Ponte Vedra Common Stock Certificates 10
3.4 Dissenting Shareholders 11
3.5 Termination of Exchange Right 11
3.6 No Liability 11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PONTE VEDRA
4.1 Organization 11
4.2 Capital Stock 12
4.3 Authorization 13
4.4 Absence of Restrictions and Conflicts 13
4.5 The Bank 14
4.6 Financial Statements 14
4.7 Accounting Controls 15
4.8 Absence of Undisclosed Liabilities 15
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4.9 Tax Matters 15
4.10 Loans 16
4.11 Allowance for Loan Losses 17
4.12 Properties 17
4.13 Compliance with Laws 17
4.14 Employee Benefit Plans 18
4.15 Material Contracts 20
4.16 Material Contract Defaults 20
4.17 Legal Proceedings 21
4.18 Absence of Certain Changes or Events 21
4.19 Reports 21
4.20 Ponte Vedra SEC Reports 22
4.21 Statements True and Correct 22
4.22 Brokers and Finders 23
4.23 Environmental Laws 23
4.24 Deposit Insurance 24
4.25 Non-Performing Assets 24
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SUNTRUST
5.1 Organization, Standing and Authority 24
5.2 Capital Stock 25
5.3 SunTrust Subsidiaries 25
5.4 Authority 25
5.5 Financial Statements 26
5.6 Absence of Undisclosed Liabilities 27
5.7 Allowance for Loan Losses 27
5.8 Compliance with Laws 27
5.9 Legal Proceedings 28
5.10 Absence of Certain Changes or Events 28
5.11 Reports 28
5.12 Statements True and Correct 29
5.13 Brokers and Finders 29
ARTICLE 6
COVENANTS AND AGREEMENTS OF PONTE VEDRA
6.1 Conduct of Business - Negative Covenants 29
6.2 Conduct of Business -- Affirmative Covenants 31
6.3 Adverse Changes in Condition 31
6.4 Cooperation 31
6.5 Investigation and Confidentiality 32
6.6 Reports 32
6.7 Current Information 33
6.8 Dividends 33
6.9 Capital Stock 33
6.10 Agreement of Affiliates 33
6.11 Certain Actions 33
6.12 Agreement as to Efforts to Consummate 34
6.13 Agreement to Modify Accounting and
Valuation Policies 34
6.14 Ponte Vedra Disclosure Schedule 34
6.15 State Service Mark Registration 34
6.16 Fairness Opinion 35
6.17 Non-Compete Agreements and Employment Agreement 35
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ARTICLE 7
COVENANTS AND AGREEMENTS OF SUNTRUST
7.1 Conduct of Business 35
7.2 Adverse Changes in Condition 35
7.3 Cooperation 35
7.4 Investigation and Confidentiality 34
7.5 Reports 36
7.6 Approval of Merger 36
7.7 Applications 36
7.8 Agreement as to Efforts to Consummate 37
7.9 Indemnification 37
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration and Proxy Statement;
Shareholder Approval 37
8.2 Tax Opinion 38
8.3 Press Releases 38
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF PONTE VEDRA
9.1 Representations and Warranties 38
9.2 Performance of Agreements and Covenants 38
9.3 Certificates 39
9.4 Corporate Authorization 39
9.5 Shareholder Approval 39
9.6 Consents and Approvals 39
9.7 Legal Proceedings 39
9.8 Opinions of Counsel 40
9.9 Tax Matters 40
9.10 Registration Statement 40
9.11 Material Adverse Change 40
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF SUNTRUST
10.1 Representations and Warranties 40
10.2 Performance of Agreements and Covenants 41
10.3 Certificates 41
10.4 Corporate Authorization 41
10.5 Shareholder Approval 41
10.6 Consents and Approvals 41
10.7 Legal Proceedings 42
10.8 Opinion of Counsel 42
10.9 Tax Matters 43
10.10Registration Statement 43
10.11Stock Options and Warrants 43
10.12Non-Competition Agreements 43
10.13Material Adverse Change 43
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ARTICLE 11
TERMINATION
11.1 Termination 44
11.2 Effect of Termination 44
11.3 Representations, Warranties and Covenants not to
Survive 44
11.4 Termination Fee 45
ARTICLE 12
MISCELLANEOUS
12.1 Expenses 46
12.2 Brokers and Finders 46
12.3 Entire Agreement 46
12.4 Amendments 47
12.5 Waivers 47
12.6 No Assignment 47
12.7 Specific Enforceability 47
12.8 Notices 48
12.9 Governing Law 48
12.10Counterparts 49
EXHIBITS
EXHIBIT 1 Plan of Merger
EXHIBIT 2 Letter from Option Holders
EXHIBIT 3 Letter from Warrant Holders
EXHIBIT 4 Form of Affiliate Letter
EXHIBITS 5 and 6 SunTrust's Counsel Opinion
EXHIBIT 7 Ponte Vedra's Counsel Opinion
EXHIBIT 8 Non Competition Agreements
EXHIBIT 9 Employment Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of the 31st day of August, 1995, by and among: SUNTRUST
BANKS, INC. ("SunTrust"), a corporation organized and existing under the laws
of the State of Georgia, with its principal office located in Atlanta,
Georgia; SUN BANKS, INC. ("Sun Banks"), a corporation organized and existing
under the laws of the State of Florida with its principal office located in
Orlando, Florida; and PONTE VEDRA BANKING CORPORATION ("Ponte Vedra"), a
corporation organized and existing under the laws of the State of Florida,
with its principal office located in Ponte Vedra Beach, Florida.
W I T N E S S E T H :
WHEREAS, the Boards of Directors of SunTrust, Sun Banks and Ponte Vedra
are each of the opinion that the transactions described herein are in the
best interests of the parties to this Agreement and their respective
shareholders. The Agreement provides for the merger of Ponte Vedra with and
into Sun Banks so that Sun Banks will be the surviving entity; and for the
holders of shares of common stock of Ponte Vedra to receive a combination of
cash and shares of the common stock of SunTrust in exchange for their shares
of common stock of Ponte Vedra. As a result, shareholders of Ponte Vedra
shall become shareholders of SunTrust and Sun Banks shall continue to conduct
its business and operations as a wholly owned subsidiary of SunTrust;
WHEREAS, the parties to this Agreement contemplate the merger of Ponte
Vedra National Bank with and into Sun Bank/North Florida, N.A.
contemporaneously with the merger of Ponte Vedra with and into Sun Banks;
WHEREAS, the mergers described herein are subject to the approvals of
the shareholders of Ponte Vedra, the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency, notices to the
Florida Department of Banking and Finance and the Georgia Department of
Banking and Finance, and the satisfaction of certain other conditions
described in this Agreement;
WHEREAS, the parties intend that this Agreement constitute a plan of
reorganization by a transaction of a type described in Section 368(a) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the above and the representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below (in their singular and plural forms as applicable) shall have the
following meanings:
1.1 "Agreement" shall mean this Agreement and Plan of Reorganization.
1.2 "Articles of Merger" shall mean the Articles of Merger to be
executed by Sun Banks and Ponte Vedra and delivered to the Florida Department
relating to the merger of Ponte Vedra into and with Sun Banks as contemplated
by Section 2.1 of this Agreement.
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1.3 "Average Market Price" shall mean the average of the closing prices
per share of SunTrust Common Stock as reported on the Composite Transactions
Tape of the NYSE for each of the ten (10) consecutive trading days ending on
and including the trading day which is three (3) business days prior to the
Effective Time.
1.4 "Bank" shall mean Ponte Vedra National Bank.
1.5 "BHC Act" shall mean the Bank Holding Company Act of 1956, as
amended.
1.6 "Closing" shall mean the closing of the transactions contemplated
hereunder which will take place as described in Section 3.1 of this
Agreement.
1.7 "Confidential Information" shall mean any and all financial,
technical, commercial or other information, data, reports, interpretations,
forecasts and records concerning any person's business and affairs, including
information obtained by meeting with representatives or personnel of such
person; provided, however, that "Confidential Information" does not include
information which (i) was or becomes generally available to the public other
than as a result of a breach of Section 6.5 or 7.4 of this Agreement,
(ii) was or becomes available on a non-confidential basis from a third party
source who is not, to the knowledge of the recipient of such information, in
breach of any confidentiality agreement, or (iii) was or is independently
developed by the other party or its advisers without violating any of their
obligations under this Agreement.
1.8 "Effective Time" shall mean the date and time at which the Merger
becomes effective pursuant to the laws of the State of Florida and as
provided in Section 3.2 of this Agreement.
1.9 "ERISA" shall mean Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended.
1.10 "Exchange Agent" shall mean SunTrust, a SunTrust Subsidiary or a
third party selected by SunTrust and reasonably acceptable to Ponte Vedra.
1.11 Exhibits 1 through 8 inclusive, and the Schedules referenced herein
(including the Ponte Vedra Disclosure Schedule), shall mean the respective
Exhibits and Schedules so marked, each of which has been initialed for
identification by an officer of SunTrust and an officer of Ponte Vedra, and
bound sets of which have been delivered to SunTrust and Ponte Vedra. Such
Exhibits and Schedules 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 or thereto.
1.12 "FDIA" shall mean the Federal Deposit Insurance Act, as amended.
1.13 "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.14 "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.15 "Florida Department" shall mean the Department of State of
Florida.
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1.16 "GAAP" shall mean generally accepted accounting principles as in
effect on the date of the financial statements being referenced.
1.17 "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
1.18 "Merger" shall mean the merger of Ponte Vedra into and with Sun
Banks as provided in Section 2.1 of this Agreement.
1.19 "Merger Consideration" shall have the meaning set forth in Section
2.2 of this Agreement.
1.20 "1933 Act" shall mean the Securities Act of 1933, as amended.
1.21 "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.22 "1994 Consolidated Balance Sheet" shall mean the audited
consolidated balance sheet of Ponte Vedra and its Subsidiary as of December
31, 1994, included in the Ponte Vedra Financial Statements.
1.23 "1995 Consolidated Balance Sheet" shall mean the unaudited
consolidated balance sheet of Ponte Vedra and its Subsidiary as of June 30,
1995, included in the Ponte Vedra Financial Statements.
1.24 "NYSE" shall mean the New York Stock Exchange, Inc.
1.25 "Party" shall mean any of SunTrust, Sun Banks or Ponte Vedra and
"Parties" shall mean all of SunTrust, Sun Banks and Ponte Vedra.
1.26 "Plan of Merger" shall mean the Plan of Merger providing for the
merger of Ponte Vedra into and with Sun Banks, substantially in the form of
Exhibit 1.
1.27 "Ponte Vedra Common Stock" shall mean the common stock, par value
$1.00 per share, of Ponte Vedra.
1.28 "Ponte Vedra Disclosure Schedule" shall mean the disclosure
schedule that has been delivered by Ponte Vedra to SunTrust prior to the
execution of this Agreement.
1.29 "Ponte Vedra Financial Statements" shall mean the
consolidated financial statements of Ponte Vedra and its Subsidiary described
in Section 4.6 of this Agreement
1.30 "Ponte Vedra Subsidiary" shall mean the Bank.
1.31 "Proxy Statement" shall mean the proxy statement, as amended or
supplemented, used by Ponte Vedra to solicit the approval of its Shareholders
of the transactions contemplated by this Agreement.
1.32 "Registration Statement" shall mean the Registration Statement on
Form S-4, or other appropriate form, filed with the SEC by SunTrust under the
1933 Act in connection with the transactions contemplated by this Agreement.
1.33 "Regulatory Authorities" shall mean collectively, the Federal
Reserve Board, the Georgia Department of Banking and Finance, the Florida
Department of Banking and Finance, the SEC and the Comptroller of the
Currency.
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1.34 "SEC" shall mean the Securities and Exchange Commission.
1.35 "Shareholder" shall mean each holder of record of shares of Ponte
Vedra Common stock.
1.36 "Shareholders' Meeting" shall mean the meeting of the shareholders
of Ponte Vedra held pursuant to Section 8.1 of this Agreement.
1.37 "Subsidiaries" shall mean all those corporations, associations or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 5% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, however,
there shall not be included any such entity acquired through foreclosure, any
such entity which owns or operates an automatic teller machine interchange
network, any such entity the equity securities of which are owned or
controlled in a fiduciary capacity or any such entity which is a general
industry association or group.
1.38 "SunTrust Common Stock" shall mean the common stock, par value
$1.00 per share, of SunTrust.
1.39 "SunTrust Companies" shall mean collectively, SunTrust and all
SunTrust Subsidiaries.
1.40 "SunTrust Financial Statements" shall mean the consolidated
financial statements of SunTrust and Subsidiaries described in Section 5.5 of
this Agreement.
1.41 "SunTrust Subsidiaries" shall mean the Subsidiaries of SunTrust.
1.42 The words "hereby," "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision of this Agreement.
ARTICLE 2
TRANSACTIONS AND TERMS OF MERGER
2.1 Merger. Subject to the terms and conditions of this Agreement and
the Plan of Merger, at the Effective Time, Ponte Vedra shall be merged into
and with Sun Banks in accordance with the provisions of and with the effect
provided in the Florida Business Corporation Act. The separate corporate
existence of Ponte Vedra shall thereupon cease, and Sun Banks shall be the
surviving entity of the Merger and shall continue to be governed by the laws
of the State of Florida. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been or will be approved and adopted by
the Boards of Directors of SunTrust, Sun Banks and Ponte Vedra, and the Plan
of Merger which has been or will be approved and adopted by the Boards of
Directors of Ponte Vedra and Sun Banks. The Plan of Merger provides for the
terms and the effects of the Merger, which terms are incorporated herein and
made a part of this Agreement by reference.
2.2 Manner of Converting Shares. All of the shares of SunTrust and Sun
Banks issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding after the Effective Time and shall be
unaffected by the Merger. The manner and basis of converting the shares of
the capital stock of Ponte Vedra upon consummation of the Merger shall be as
follows:
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(a) Ponte Vedra Common Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of SunTrust, Ponte Vedra or the
holders of Ponte Vedra Common Stock:
(i) Subject to the other provisions of this Section 2.2, each
share of Ponte Vedra Common Stock issued and outstanding immediately prior to
the Effective Time (excluding treasury shares and shares held by dissenting
shareholders, as defined in Section 2.2(b)) shall be converted into the right
to receive the Merger Consideration. The "Merger Consideration" shall mean
either (a) cash in the amount of $17.50 (the "Cash Consideration"), (b) the
number of shares of SunTrust Common Stock equal to $17.50 divided by the
Average Market Price (the "Stock Consideration"), or (c) a combination of
Cash Consideration and Stock Consideration in accordance with subparagraph
(iii) of this Section 2.2(a).
(ii) The number of shares of Ponte Vedra Common Stock to be
converted into the right to receive Cash Consideration shall not be less than
22% of the number of shares of Ponte Vedra Common Stock outstanding
immediately prior to the Effective Time (the "Minimum Cash Election Number")
and shall not be greater than 50% of the number of shares of Ponte Vedra
Common Stock outstanding immediately prior to the Effective Time (the
"Maximum Cash Election Number"). The number of shares of Ponte Vedra Common
Stock to be converted into the right to receive Stock Consideration shall be
not less than 50% of the number of shares of Ponte Vedra Common Stock
outstanding immediately prior to the Effective Time (the "Minimum Stock
Election Number") and not greater than 78% of the number of shares of Ponte
Vedra Common Stock outstanding immediately prior to the Effective Time (the
"Maximum Stock Election Number").
(iii) Subject to the proration and election procedures set
forth in this Section 2.2(a), each Shareholder will be entitled to elect to
receive (a) Cash Consideration for all such shares (a "Cash Election"), (b)
Stock Consideration for all of such shares (a "Stock Election"), or (c) Cash
Consideration for 22% of such shares and Stock Consideration for 78% of such
shares (a "Combination Election"). All such elections shall be made on a
form designed for that purpose (a "Form of Election"). Shareholders who hold
such shares as nominees, trustees or in other representative capacities (a
"Representative") may submit multiple Forms of Election, provided that such
Representative certifies that each such Form of Election covers all the
shares of Ponte Vedra Common Stock held by each such Representative for a
particular beneficial owner.
(iv) SunTrust and Ponte Vedra shall each use its best efforts to
mail the Form of Election to all persons who are holders of Ponte Vedra
Common Stock on the record date for the Shareholders' Meeting, on a date that
is not less than twenty (20) business days prior to the Effective Date. A
Form of Election must be received by the Exchange Agent no later than by the
close of business seven (7) business days prior to the Effective Date (the
"Election Deadline") in order to be effective. All elections will be
irrevocable.
(v) Elections shall be made by holders of Ponte Vedra Common Stock
by mailing, faxing or otherwise delivering to the Exchange Agent a Form of
Election. To be effective, a Form of Election must be properly completed,
signed and submitted to the Exchange Agent. SunTrust will have the
discretion, which it may delegate in whole or in part to the Exchange Agent,
to determine whether Forms of Election have been properly completed, signed
and submitted and to disregard immaterial defects in Forms of Election. The
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decision of SunTrust (or the Exchange Agent) in such matters shall be
conclusive and binding. Neither SunTrust nor the Exchange Agent will be
under any obligation to notify any person of any defect in a Form of
Election.
(vi) A holder of Ponte Vedra Common Stock who does not submit a
Form of Election which is received by the Exchange Agent prior to the
Election Deadline (as hereinafter defined) shall be deemed to have made a
Combination Election. If SunTrust or the Exchange Agent shall determine that
any purported Cash Election or Stock Election was not properly made, such
purported Cash Election or Stock Election shall be deemed to be of no force
and effect and the Shareholder making such purported Cash Election or Stock
Election shall for purposes hereof be deemed to have made a Combination
Election.
(vii) All shares of Ponte Vedra Common Stock which are subject
to Cash Elections are referred to herein as "Cash Election Shares". All
shares of Ponte Vedra Common Stock which are subject to Stock Elections are
referred to herein as "Stock Election Shares". If, after the results of the
Forms of Election are calculated, the number of shares of Ponte Vedra Common
Stock to be converted into shares of SunTrust Common Stock exceeds the
Maximum Stock Election Number, the Exchange Agent shall determine the number
of Stock Election Shares which must be redesignated as Cash Election Shares.
All Shareholders who have Stock Election Shares shall, on a prorata basis,
have such number of their Stock Election Shares redesignated as Cash Election
Shares so that the Maximum Stock Election Number and the Minimum Cash
Election Number are achieved. If, after the results of the Forms of Election
are calculated, the number of shares of Ponte Vedra Common Stock to be
converted into cash exceeds the Maximum Cash Election Number, the Exchange
Agent shall determine the number of Cash Election Shares which must be
redesignated as Stock Election Shares. All Shareholders who have Cash
Election Shares shall, on a prorata basis, have such number of their Cash
Election Shares redesignated as Stock Election Shares so that the Maximum
Cash Election Number and Minimum Stock Election Number are achieved.
Notwithstanding the foregoing, no redesignation shall be effected for a
Shareholder who has made a Cash Election but, as a result of such
redesignation, would receive fewer than 20 shares of SunTrust Common Stock in
exchange for all of such Shareholder's shares of Ponte Vedra Common Stock.
In this event, the Cash Election Shares of the remaining Shareholders shall
be redesignated on a prorata basis to achieve the Maximum Cash Election
Number and the Minimum Stock Election Number. Shareholders who make
Combination Elections will not be subject to the redesignation procedures
described herein. SunTrust or the Exchange Agent shall make all computations
contemplated by this Section 2.2(a) and all such computations shall be
conclusive and binding on the holders of Ponte Vedra Common Stock.
(viii) After the redesignation procedure set forth in Section
2.2(a)(vii) is completed, all Cash Election Shares and 22% of the shares of
Ponte Vedra Common Stock which are subject to Combination Elections shall be
converted into the right to receive the Cash Consideration and all Stock
Election Shares and 78% of the shares of Ponte Vedra Common Stock which are
subject to Combination Elections shall be converted into the right to receive
the Stock Consideration. Such certificates previously evidencing shares of
Ponte Vedra Common Stock shall be exchanged for (a) certificates evidencing
the Stock Consideration, or (b) the Cash Consideration, multiplied in each
case by the number of shares previously evidenced by the canceled
certificate, upon the surrender of such certificates in accordance with the
provisions of Section 3.3, without interest. Notwithstanding the foregoing,
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however, no fractional shares of SunTrust Common Stock shall be issued, and,
in lieu thereof, a cash payment shall be made pursuant to Section 2.2(d).
(b) Dissenting Shareholders. Any holder of shares of Ponte Vedra
Common Stock who complies with the provisions of the Florida Business
Corporation Act, as made applicable to the Merger by Section 607.1302 of the
Florida Business Corporation Act, does not vote for or consent to the Plan of
Merger, delivers to Ponte Vedra, prior to the taking of the vote on this
Agreement and the Plan of Merger at the Shareholders' Meeting, written notice
of such Shareholder's intent to demand payment for the shares of Ponte Vedra
Common Stock held by such holder as of the Effective Time and delivers to
Ponte Vedra, within twenty days of having received notice that the
Shareholders of Ponte Vedra have approved this Agreement and the Plan of
Merger, such dissenting holder's share certificates and notice of election to
dissent, shall be entitled to receive the fair value of such shares in cash
as determined pursuant to Section 607.1320 of the Florida Business
Corporation Act.
(c) Treasury Shares. Any and all shares of Ponte Vedra Common Stock
held as treasury shares by Ponte Vedra shall be cancelled and retired at the
Effective Time, and no consideration shall be issued in exchange therefor.
(d) Fractional Shares. No fractional shares of SunTrust Common Stock
will be issued as a result of the Merger. In lieu of the issuance of
fractional shares pursuant to Section 2.2(a) of this Agreement, cash
adjustments (without interest) will be paid to the holder of Ponte Vedra
Common Stock in respect of any fraction of a share of SunTrust Common Stock
that would otherwise be issuable to such holder of Ponte Vedra Common Stock,
and the amount of such cash adjustment shall be determined by multiplying the
fraction of a share of SunTrust Common Stock otherwise issuable times the
Average Market Price.
2.3 Treatment of Options and Warrants. No later than thirty (30) days
after the date of this Agreement, Ponte Vedra shall have delivered to
SunTrust: (i) letters in the form of Exhibit 2 hereto which have been
executed by each holder of options for shares of Ponte Vedra Common Stock;
and (ii) letters in the form of Exhibit 3 hereto which have been executed by
each holder of warrants for shares of Ponte Vedra Common Stock. For each
share of Ponte Vedra Common Stock covered by an option or warrant, SunTrust
shall pay the option holder or warrant holder Seven Dollars and Fifty Cents
($7.50) in cash on the Effective Date, subject to any applicable withholding.
ARTICLE 3
CLOSING, EFFECTIVE TIME AND DELIVERY OF CONSIDERATION
3.1 Time and Place of Closing. Unless otherwise mutually agreed upon
in writing by appropriate executive officers of SunTrust and Ponte Vedra, the
Closing will take place at 10:00 a.m. on the later of January 19, 1996, or
within five (5) business days following the last to occur of (i) the approval
of this Agreement and the Plan of Merger by Ponte Vedra's Shareholders,
(ii) receipt of all required regulatory approvals, (iii) the expiration of
all applicable waiting periods following the regulatory approvals, and (iv)
the date that all of the conditions precedent specified in this Agreement
have been satisfied or waived by the Party or Parties permitted to do so.
The place of Closing shall be at the offices of SunTrust located at 25 Park
Place, Atlanta, Georgia or at such other place as may be mutually agreed upon
by the Parties.
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3.2 Effective Time. As soon as practicable following the Closing, the
parties shall deliver to the Florida Department the Articles of Merger as
provided by Section 607.1105 of the Florida Business Corporation Act. The
Merger and the Plan of Merger shall become effective on the date and at the
time specified in the Articles of Merger.
3.3 Exchange of Ponte Vedra Common Stock Certificates. The Exchange
Agent shall serve as exchange agent in connection with the Merger. The
Exchange Agent shall provide appropriate stock certificate transmittal
materials to the former Shareholders of Ponte Vedra promptly after the
Effective Time. After the Effective Time, each holder of shares of Ponte
Vedra Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares held by dissenting shareholders) shall surrender the
certificate or certificates representing such shares to the Exchange Agent
and shall promptly upon surrender receive the Merger Consideration in
exchange for each such share, without interest. Each certificate for Ponte
Vedra Common Stock so surrendered and all transmittal materials shall be duly
completed and endorsed as the Exchange Agent may require. SunTrust shall not
be obligated to deliver the Merger Consideration to which any former holder
of Ponte Vedra Common Stock is entitled as a result of the Merger until such
holder surrenders his certificate or certificates representing shares of
Ponte Vedra Common Stock for exchange as provided in this Section 3.3. No
dividend or other distribution payable to the holders of record of SunTrust
Common Stock as of any time subsequent to the Effective Time shall be paid to
the holder of any certificate representing shares of Ponte Vedra Common
Stock issued and outstanding immediately prior to the Effective Time until
such holder surrenders such certificate for exchange as provided in this
Section 3.3. Upon surrender of a Ponte Vedra Common Stock certificate, the
SunTrust Common Stock certificate (together with all such withheld dividends
or other distributions, but without interest thereon), any cash payments due
and any cash payment for a fractional share interest (without interest), as
applicable, shall be delivered and paid with respect to each share
represented by such Ponte Vedra Common Stock certificate. After the
Effective Time each certificate that represented outstanding shares of Ponte
Vedra Common Stock prior to the Effective Time shall be deemed for all
corporate purposes (other than the payment of dividends and other
distributions to which the former shareholders of Ponte Vedra Common Stock
may be entitled) to evidence only the right of the holder thereof to receive
the Merger Consideration in exchange for each such share or as provided in
Section 3.4 of this Agreement.
3.4 Dissenting Shareholders. Any holder of shares of Ponte Vedra
Common Stock who complies with Section 607.1320 of the Florida Business
Corporation Act shall not be entitled to surrender his certificate or
certificates representing shares of Ponte Vedra Common Stock and receive in
exchange for each such share the Merger Consideration. Ponte Vedra agrees
that it will not, except with the prior written consent of SunTrust,
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for payment. Each holder of shares of Ponte Vedra Common
Stock who becomes entitled, pursuant to Section 607.1320 of the Florida
Business Corporation Act, to payment of the fair value of his shares shall
receive payment therefor from SunTrust (but only after the value thereof
shall have been agreed upon or finally determined as provided in
Section 607.1320 of the Florida Business Corporation Act).
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3.5 Termination of Exchange Right. Any SunTrust Common Stock held by
an Exchange Agent which remains undistributed to the former Shareholders of
Ponte Vedra for six months after the Effective Time shall be delivered to
SunTrust upon demand, and any former Shareholders of Ponte Vedra who have not
theretofore complied with this Article 3 shall thereafter look only to
SunTrust for payment of their claims for cash, SunTrust Common Stock, any
cash in lieu of fractional shares of SunTrust Common Stock or any dividends
or distributions with respect to SunTrust Common Stock (all without any
interest thereon).
3.6 No Liability. Neither SunTrust nor Sun Banks shall be liable to
any former Shareholder of Ponte Vedra Common Stock for cash, shares of
SunTrust Common Stock or shares of SunTrust Common Stock (or dividends or
distributions with respect thereto) or cash in lieu of fractional shares of
SunTrust Common Stock
delivered to public officials pursuant to any applicable abandoned property,
escheat or similar law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PONTE VEDRA
Except as may be set forth in the Ponte Vedra Disclosure Schedule, Ponte
Vedra hereby represents and warrants to SunTrust and Sun Banks as follows:
4.1 Organization. Ponte Vedra is a corporation duly organized, validly
existing and in good standing under the laws of the state of Florida and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Ponte Vedra
is duly registered as a bank holding company with the Federal Reserve Board,
and under any applicable provisions of Florida law. The Bank is a national
banking association chartered under the laws of the United States and has all
requisite corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by the Bank and to carry
on its business as now being conducted. The Bank is: (i) an "insured
depository institution" as defined in the FDIA and applicable regulations
thereunder; and (ii) a member of the Bank Insurance Fund of the FDIC. Each
of Ponte Vedra and the Bank is duly qualified to transact business, and is in
good standing, as a foreign corporation in each jurisdiction where the
character of its activities requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or
prospects of Ponte Vedra or the Bank. Ponte Vedra has heretofore made
available to SunTrust accurate and complete copies of the articles of
incorporation and bylaws, as currently in effect, of Ponte Vedra and the
Bank. The minutes of the meetings of and written consents of the
shareholders, board of directors and committees of the board of directors of
each of Ponte Vedra and the Bank accurately reflect in all material respects
the business conducted at each of the meetings of the Shareholders, board of
directors and committees of the board of directors of Ponte Vedra and the
Bank. The Ponte Vedra Disclosure Schedule contains a true and correct list
of the jurisdictions in which Ponte Vedra and the Bank are qualified to
transact business as a foreign corporation. As of the date of this
Agreement, the only Subsidiary of Ponte Vedra is the Bank.
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4.2 Capital Stock. The authorized capital stock of Ponte Vedra
consists of One Million (1,000,000) shares of Ponte Vedra Common Stock. Six
Hundred Thirty Nine Thousand One Hundred Twenty (639,120) shares of Ponte
Vedra Common Stock are issued and outstanding as of the date of this
Agreement, and Thirteen Thousand Eight Hundred (13,800) shares of Ponte Vedra
Common Stock are held in Ponte Vedra's treasury. All of the issued and
outstanding shares of Ponte Vedra Common Stock are duly and validly issued
and outstanding and are fully paid and nonassessable. None of the
outstanding shares of Ponte Vedra Common Stock have been issued in violation
of any preemptive rights of the current or past shareholders of Ponte Vedra
as of the date of this Agreement. Ponte Vedra has warrants outstanding
covering 263,666 shares of Ponte Vedra Common Stock, and options outstanding
covering 31,650 shares of Ponte Vedra Common Stock. The Ponte Vedra
Disclosure Schedule contains a true and complete list as of the date of this
Agreement of all persons who hold warrants or options to purchase Ponte Vedra
Common Stock, the number of shares issuable to such person upon the exercise
in full of such warrants or options and the exercise price per share. Except
as set forth above, there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, shares of
the capital stock of Ponte Vedra or contracts, commitments, understandings or
arrangements by which Ponte Vedra was or may be bound to issue additional
shares of its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. As of the date of this
Agreement, there are no contracts, commitments, understandings, or
arrangements by which Ponte Vedra is or may be bound to transfer any shares
of the capital stock or other securities of the Bank.
4.3 Authorization. Ponte Vedra has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations under
this Agreement and to consummate the Merger and other transactions provided
for herein, subject only to the approval of this Agreement and the Plan of
Merger and the Merger by the holders of at least a majority of the
outstanding shares of Ponte Vedra Common Stock. The execution and delivery
of this Agreement by Ponte Vedra and, subject only to the approval of this
Agreement and the Plan of Merger and the Merger by the holders of at least a
majority of the outstanding shares of Ponte Vedra Common Stock, the
performance by Ponte Vedra of its obligations hereunder have been duly and
validly authorized by all necessary corporate action on the part of Ponte
Vedra. The Board of Directors of Ponte Vedra has approved the execution,
delivery and performance of this Agreement and the consummation of the Merger
and the other transactions provided for herein. This Agreement has been duly
executed and delivered by Ponte Vedra and constitutes the valid and binding
agreement of Ponte Vedra, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforceability of creditors' rights generally, general
equitable principles and the discretion of courts in granting equitable
remedies.
4.4 Absence of Restrictions and Conflicts.
(a) Subject only to the approval of this Agreement and the Plan of
Merger by the holders of at least a majority of the outstanding shares of
Ponte Vedra Common Stock and the receipt of all approvals required from the
Regulatory Authorities, the execution, delivery and performance of this
Agreement, the consummation of the Merger and the other transactions
contemplated by this Agreement and the fulfillment of and compliance with the
terms and conditions of this Agreement do not and will not, with the passing
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of time or the giving of notice or both, violate or conflict with, constitute
a breach of or default under, result in the loss of any material benefit
under, or permit the acceleration of any obligation under: (i) any term or
provision of the articles of incorporation or bylaws of Ponte Vedra or the
Bank, (ii) any material contract to which Ponte Vedra or the Bank is a party,
(iii) any judgment, decree or order of any court or governmental authority or
agency to which Ponte Vedra or the Bank is a party or by which Ponte Vedra
or the Bank, or any of their respective properties is bound, or (iv) except
as set forth in the immediately succeeding sentence, any statute, law,
regulation or rule applicable to Ponte Vedra or the Bank, so as to have in
the case of subsections (ii) through (iv) above, a material adverse effect on
the assets, liabilities, results of operations, financial condition, business
or prospects of Ponte Vedra and the Bank taken as a whole. Except for
compliance with the applicable requirements of the 1933 Act, the 1934 Act,
applicable state securities and banking laws, the filing and recording of the
Articles of Merger as required by the Florida Business Corporation Act, and
obtaining approvals from all necessary bank regulatory agencies, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental agency or public or regulatory unit, agency, body or
authority with respect to Ponte Vedra or the Bank is required in connection
with the execution, delivery or performance of this Agreement by Ponte Vedra
or the consummation of the transactions contemplated by this Agreement by
Ponte Vedra, the failure to obtain which would have a material adverse effect
upon the assets, liabilities, results of operations, financial condition,
business or prospects of Ponte Vedra and the Bank taken as a whole.
(b) To the knowledge of Ponte Vedra, as of the date hereof, there is no
reason why any consent, approval, authorization or waiver necessary to permit
consummation of the transactions contemplated hereby should not reasonably be
obtained without the imposition of a condition or requirement that would
materially and adversely impact the economic or business benefits of the
transactions contemplated hereby as to render inadvisable consummation of
such transactions.
4.5 The Bank. The Bank is a Subsidiary of Ponte Vedra and all shares
of the Bank's issued and outstanding capital stock are owned by Ponte Vedra.
All shares of capital stock or other equity interests of the Bank owned by
Ponte Vedra are set forth in the Ponte Vedra Disclosure Schedule and are
owned by Ponte Vedra, either directly or indirectly, free and clear of all
liens, encumbrances, equities or claims. The shares of capital stock or
other equity interests of the Bank have been duly authorized and are validly
issued, fully paid and nonassessable. None of the outstanding shares of the
Bank's capital stock has been issued in violation of any preemptive rights of
the current or past shareholders of the Bank. Except for shares of capital
stock owned by Ponte Vedra, there are no shares of capital stock of the Bank
outstanding and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of capital
stock of the Bank or contracts, commitments, understandings or arrangements
by which the Bank was or may be bound to issue additional shares of its
capital stock or options, warrants or rights to purchase or acquire any
additional shares of its capital stock. The Bank has no Subsidiaries.
4.6 Financial Statements. Ponte Vedra has delivered to SunTrust prior
to the execution of this Agreement copies of the following financial
statements of Ponte Vedra (collectively referred to herein as the "Ponte
Vedra Financial Statements"): (i) audited Consolidated Balance Sheets of
Ponte Vedra and its Subsidiary as of December 31, 1992, 1993 and 1994, and
the related Consolidated Statements of (a) Operations, (b) Changes in
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Stockholders' Equity and (c) Cash Flows for the years then ended and notes
thereto as reported upon by Harbeson, Beckerleg & Fletcher, independent
certified public accountants, and (ii) unaudited Consolidated Balance Sheet
of Ponte Vedra and its Subsidiary as of June 30, 1995, and the related
unaudited Consolidated Statements of (a) Operations, (b) Stockholders'
Equity, and (c) Cash Flows for the periods then ended.
The Ponte Vedra Financial Statements (as of the dates thereof and for
the periods covered thereby): (i) are in accordance with the books and
records of Ponte Vedra and the Bank, which are complete and accurate in all
material respects and which have been maintained in accordance with good
business practices and applicable banking and other legal requirements, and
(ii) present fairly the consolidated financial position and the consolidated
results of operations and cash flows of Ponte Vedra and the Bank, as of the
dates and for the periods indicated, in accordance with GAAP, applied on a
basis consistent with prior periods, except as disclosed in the notes
thereto.
4.7 Accounting Controls. The Bank has devised and maintained systems of
internal accounting controls. These systems provided reasonable assurances
that: (i) all material transactions are executed in accordance with
management's general or specific authorization; (ii) all material
transactions are recorded as necessary to permit the preparation of financial
statements in conformity with GAAP or any other criteria applicable to such
statements, and to maintain proper accountability for items; (iii) access to
the material properties and assets of the Bank is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences.
4.8 Absence of Undisclosed Liabilities. Neither Ponte Vedra nor the
Bank has any obligation or liability (contingent or otherwise) that is
material to Ponte Vedra and the Bank, taken as a whole, or that when combined
with all similar obligations or liabilities would be material to Ponte Vedra
and the Bank, taken as a whole, (i) except as disclosed in the 1994
Consolidated Balance Sheet, and (ii) except for letters of credit, acceptance
or unfunded loan commitments and other liabilities or obligations incurred in
the ordinary course of its business since December 31, 1994, none of which
might reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of Ponte Vedra and the
Bank, taken as a whole, consistent with past practices. Since December 31,
1994, neither Ponte Vedra nor the Bank has paid any obligation or liability
which would be material to Ponte Vedra and the Bank, taken as a whole, except
for obligations paid in connection with transactions by them in the ordinary
course of their business consistent with past practices.
4.9 Tax Matters.
(a) All federal, state, local and foreign tax returns and
information returns (i.e. 1099s, etc.) required to be filed by or on behalf
of Ponte Vedra and the Bank have been timely filed, or requests for
extensions have been timely filed, granted, are disclosed on the Ponte Vedra
Disclosure Schedule and have not expired, and all such returns filed are
complete and accurate in all respects. All taxes shown on such filed
returns or otherwise required to be paid with respect to such returns have
been paid. As of the date of this Agreement, there is no audit examination,
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deficiency or refund litigation or matter in controversy with respect to any
taxes that might result in a determination adverse to Ponte Vedra or the
Bank, except as disclosed on the Ponte Vedra Disclosure Schedule and reserved
against on the 1994 Consolidated Balance Sheet. All taxes, interest,
additions and penalties due with respect to completed and settled
examinations or concluded litigation have been paid. The federal income tax
returns for Ponte Vedra and the Bank have never been audited. The state tax
returns for Ponte Vedra and the Bank have never been audited by the Florida
Department of Revenue, except as disclosed on the Disclosure Schedule.
(b) Neither Ponte Vedra nor the Bank has executed an extension or
waiver of any statute of limitations on the assessment or collection of any
tax due that is currently in effect. Neither Ponte Vedra nor the Bank is a
party to any tax sharing, tax allocation or tax indemnity agreement, or has
been a member of an "affiliated group" other than the affiliated group of
which Ponte Vedra is the "common parent" (as such terms are defined in
Section 1504 of the Internal Revenue Code).
(c) Adequate provision for any federal, state, local or foreign
taxes due or to become due for Ponte Vedra and the Bank for the period or
periods through June 30, 1995, has been made and is reflected on the 1995
Consolidated Balance Sheet.
(d) Deferred taxes of the Bank have been provided for in the Bank
Financial Statements in accordance with GAAP applied on a consistent basis.
Deferred taxes of Ponte Vedra have been provided for and are disclosed in the
Ponte Vedra Disclosure Schedule or in the Ponte Vedra Financial Statements.
(e) As of the end of its taxable year ended December 31, 1994, the
Bank's reserve for losses on loans, as determined under Section 585 of the
Internal Revenue Code, did not exceed $200,000 and the liabilities of the
Bank (within the meaning of Section 357(c) of the Internal Revenue Code) did
not exceed the adjusted basis of the Bank's assets.
4.10 Loans. As of the date of this Agreement, to the best knowledge of
Ponte Vedra's management, each loan in excess of $50,000 reflected as an
asset of the Bank in the 1994 Consolidated Balance Sheet, or acquired since
that date, is the legal, valid and binding obligation of the obligor named
therein, subject to applicable bankruptcy and insolvency laws and the
availability of equitable remedies, and no loans having an unpaid balance
(principal and accrued interest) in excess of $50,000, as of December 31,
1994, or acquired since that date, and no material amount thereof is subject
to any asserted defense, offset or counterclaim known to Ponte Vedra.
4.11 Allowance for Possible Loan Losses. The allowance for possible
loan losses shown on the 1994 Consolidated Balance Sheet and the 1995
Consolidated Balance Sheet were adequate in all material respects to provide
for possible losses, net of recoveries relating to loans previously charged
off, on loans outstanding (including accrued interest receivable) as of
December 31, 1994 and June 30, 1995, respectively.
4.12 Properties. Except as disclosed or reserved against in the 1994
Consolidated Balance Sheet or the 1995 Consolidated Balance Sheet, Ponte
Vedra and the Bank have good and marketable title, free and clear of all
material liens, encumbrances, charges, defaults, or equities of whatever
character to all of the respective properties and assets, tangible or
intangible, reflected in the 1994 Consolidated Balance Sheet and the 1995
Consolidated Balance Sheet. All buildings, and all fixtures, equipment and
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other property and assets which are material to its business on a
consolidated basis, held under leases or subleases by Ponte Vedra or the
Bank, are held under valid instruments enforceable 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). To the best knowledge of Ponte Vedra's and the Bank's
management, the real property owned by Ponte Vedra and the Bank has never
been used for the handling, treatment, storage or disposal of any hazardous
or toxic substance as defined under any applicable state or federal law. The
policies of fire, theft, liability and other insurance maintained with
respect to the assets or businesses of Ponte Vedra and the Bank provide
adequate coverage against loss, and the fidelity bonds in effect as to which
such entities are named insureds are believed by management of Ponte Vedra to
be sufficient.
4.13 Compliance with Laws. To the knowledge of Ponte Vedra's
management, Ponte Vedra and the Bank:
(a) Are in compliance with all laws, regulations, reporting and
licensing requirements and orders applicable to their respective businesses
or employees conducting such businesses, the breach or violation of which
would have a material adverse effect on the business, financial condition or
results of operations of Ponte Vedra and the Bank, taken as a whole; and
(b) Have received no notification from any agency or department of
federal, state or local government or the Regulatory Authorities or the staff
thereof asserting that (i) either Ponte Vedra or the Bank are not in
compliance with any of the statutes, regulations or ordinances which such
governmental authority or Regulatory Authority enforces, which, as a result
of such noncompliance, would result in a material adverse impact on the
business, financial condition or results of operations of Ponte Vedra and the
Bank, taken as a whole, or (ii) threatening to revoke any license, franchise,
permit or governmental authorization which is material to the business,
financial condition or results of operations of Ponte Vedra and the Bank,
taken as a whole. Neither Ponte Vedra nor the Bank are subject to any
written agreement or written understanding with any Regulatory Authorities
with respect to its assets or business.
4.14 Employee Benefit Plans.
(a) The Ponte Vedra Disclosure Schedule lists every pension,
retirement, profit-sharing, deferred compensation, stock option, employee
stock ownership, severance pay, vacation, bonus or other incentive plan, any
other written or unwritten employee program, arrangement, agreement or
understanding, whether arrived at through collective bargaining or otherwise,
any medical, vision, dental or other health plan, any life insurance plan, or
any other employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan," as that term is defined in
Section 3(3) of ERISA, currently or expected to be adopted, maintained by,
sponsored in whole or in part by, or contributed to by Ponte Vedra or any
affiliate thereof for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries under
which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate (collectively,
the "Benefit Plans"). Any of the Benefit Plans which is an "employee pension
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benefit plan," as that term is defined in Section 3(2) of ERISA, or an
"employee welfare benefit plan" as that term is defined in Section 3(1) of
ERISA, is referred to herein as an "ERISA Plan". No Benefit Plan is or has
been a multi-employer plan within the meaning of Section 3(37) of ERISA.
(b) Prior to date hereof, Ponte Vedra has provided SunTrust the
following documents: true, correct and complete copies of all written
Benefit Plans and descriptions of all unwritten Benefit Plans listed in the
Ponte Vedra Disclosure Schedule and all trust agreements or other funding
arrangements, including insurance contracts, all amendments thereto and,
where applicable, with respect to any such plans or plan amendments, all
determination letters, rulings, opinion letters, information letters, or
advisory opinions issued by the Internal Revenue Service or the United States
Department of Labor after December 31, 1974, annual reports or returns,
audited or unaudited financial statements, actuarial valuations, and summary
annual reports for the most recent three plan years, the most recent summary
plan descriptions and any material modifications thereto.
(c) All the Benefit Plans and the related trusts comply with, and
have been administered in compliance with, the provisions of ERISA, the
provisions of the Internal Revenue Code and all other applicable laws, rules
and regulations and collective bargaining agreements. Governmental approvals
for the Benefit Plans have been obtained, including, but not limited to,
favorable determination letters on the qualification of the ERISA Plans and
tax exemption of related trusts, as applicable, under the Internal Revenue
Code, and all such governmental approvals continue in full force and effect.
Neither Ponte Vedra nor the Bank nor any administrator nor fiduciary of any
such Benefit Plan (or agent or delegate of any of the foregoing) has engaged
in any transaction or acted or failed to act in any manner which could
subject Ponte Vedra or the Bank to any direct or indirect liability for a
breach of any fiduciary, co-fiduciary, or other duty under ERISA. No oral or
written representation or communication with respect to any aspect of the
Benefit Plans has been made to employees of Ponte Vedra prior to the
Effective Time which is not in accordance with the written or otherwise
preexisting terms and provisions of such Benefit Plans in effect immediately
prior to the Effective Time. There are no unresolved claims or disputes
under the terms of, or in connection with, the Benefit Plans and no action,
legal or otherwise, has been commenced with respect to any claim.
(d) Since December 31, 1974, no "party in interest" (as defined in
Section 3(14) of ERISA) or "disqualified person" (as defined in
Section 4975(e)(2) of the Internal Revenue Code) of any Benefit Plan has
engaged in any "prohibited transaction" (within the meaning of
Section 4975(c) of the Internal Revenue Code or Section 406 of ERISA). There
has been no (i) "reportable event" (as defined in Section 4043 of ERISA), or
event described in Section 4062(f) or Section 4063(a) of ERISA, or
(ii) termination or partial termination, withdrawal or partial withdrawal
with respect to any of the ERISA Plans which: (1) Ponte Vedra or the Bank
maintains or contributes to or has maintained or contributed to or was
required to maintain or contribute to for the benefit of employees of Ponte
Vedra or the Bank; or (2) which has been maintained or contributed to or was
required to be maintained or contributed to by any member of a controlled
group of trades or business as defined in ERISA Section 4001(a)(14) which
has, since January 1, 1975, included Ponte Vedra.
(e) For any given ERISA Plan, the fair market value of such plan's
assets equals or exceeds the present value of all benefits (whether vested or
not) accrued to date by all present or former participants in such plan. For
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this purpose the assumptions prescribed by the Pension Benefit Guaranty
Corporation for valuing pension plan assets or liabilities upon plan
termination shall be applied, to the extent such assumptions would be
applicable upon termination of each ERISA Plan. To the extent such
assumptions would not apply to the ERISA Plans, the actuarial assumptions
used to determine funding requirements under the plans shall be applied.
(f) As of the Effective Time, neither Ponte Vedra nor the Bank
will have any material current or future liability under any Benefit Plan
that was not reflected in the 1994 Consolidated Balance Sheet or the 1995
Consolidated Balance Sheet.
(g) Neither Ponte Vedra nor the Bank have at any time and do not
now, maintain a Benefit Plan providing welfare benefits (as defined in ERISA
Section 3(1)) to employees after retirement.
(h) There is no requirement that SunTrust or its affiliates make
any contributions to any Benefit Plan attributable to any period ending on or
before the date of Closing, and each Benefit Plan may be terminated by
SunTrust in its sole discretion on or after the Closing date without
liability of any kind or description.
(i) The execution of, or performance of the transactions
contemplated by, this Agreement will not create, accelerate or increase any
obligations under the Benefit Plans, and will not require or cause to be
payable any payment which is an "excess parachute payment" under Section 280G
of the Internal Revenue Code.
4.15 Material Contracts.
(a) Except as reflected on the Ponte Vedra Financial Statements or
the notes thereto, neither Ponte Vedra nor the Bank or any of their
respective assets, businesses or operations is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits under:
(i) any material agreement, arrangement or commitment not cancelable by it
without penalty other than agreements, arrangements or commitments entered
into in the ordinary course of its business consistent with its past
practice, (ii) any agreement, arrangement or commitment relating to the
employment, election or retention in office of any director or officer, or
(iii) any contract, agreement or understanding with any labor union.
(b) Neither Ponte Vedra nor the Bank is a party to or bound by,
nor are any of their properties subject to, any contract or agreement that
(i) restricts the ability of Ponte Vedra or the Bank to compete in any line
of business or (ii) materially restricts the ability of Ponte Vedra or the
Bank to conduct business in the ordinary course.
4.16 Material Contract Defaults. Neither Ponte Vedra nor the Bank is
in default in any material respect under any material contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which
it is a party or by which its respective assets, business or operations may
be bound or affected or under which it or its respective assets, business or
operations receives benefits, and there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute such a
default.
4.17 Legal Proceedings. There are no actions, suits or proceedings
instituted or pending, or to the knowledge of Ponte Vedra's management,
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threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable
outcome) against Ponte Vedra or the Bank or against any property, asset,
interest, or right of any of them, that have a reasonable possibility either
individually or in the aggregate of having a material adverse effect on the
business, financial condition or results of operations of Ponte Vedra and the
Bank, taken as a whole, or that have a reasonable possibility of threatening
or impeding the consummation of the transactions contemplated by this
Agreement. Except for normal and necessary regulatory approvals, neither
Ponte Vedra nor the Bank is a party to any agreement or instrument or is
subject to any charter or other corporate restriction or any judgment, order,
writ, injunction, decree, rule, regulation, code or ordinance that threatens
or might impede the consummation of the transactions contemplated by this
Agreement.
4.18 Absence of Certain Changes or Events. Since December 31, 1994,
the businesses of Ponte Vedra and the Bank have been operated only in the
ordinary course consistent with past practices and there has not been,
occurred or arisen: (i) any damage, destruction, loss or casualty whether or
not covered by insurance which has had or is reasonably likely to have a
material adverse effect on the business, financial condition or results of
operations of Ponte Vedra and the Bank, taken as a whole; (ii) any
declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) in respect of the Ponte Vedra Common
Stock or any redemption or other acquisition of the Ponte Vedra Common Stock
by Ponte Vedra or any split, combination or reclassification of shares of
Ponte Vedra Common Stock declared or made; (iii) any extraordinary losses
suffered not adequately reserved against, whether or not in the ordinary
course of business; (iv) any material assets mortgaged, pledged or subjected
to any lien, charge or other encumbrance, (v) any agreement to do any of the
foregoing; or (vi) any other event, development or condition of any character
including any change in results of operations, financial condition, method of
accounting or accounting practices, nature of business, or manner of
conducting the businesses of Ponte Vedra or the Bank that has had, or is
reasonably likely to have, a material adverse effect on the business,
financial condition or results of operations of Ponte Vedra and the Bank,
taken as a whole.
4.19 Reports. Since January 1, 1992, each of Ponte Vedra and the Bank
has filed all forms, reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with
(i) Federal Reserve Board and (ii) Office of the Comptroller of the Currency
(the "Bank Reports"). Each of such reports and documents, including the
financial statements, exhibits and schedules thereto, at the time of filing
thereof complied in all material respects with the laws and rules and
regulations applicable to it and did not contain any statement which at the
time and in light of the circumstances under which it was made, was false or
misleading with respect to any material fact or which omitted to state any
material fact necessary in order to make the statements contained therein not
false or misleading.
4.20 Ponte Vedra SEC Reports. Ponte Vedra has heretofore made available
to SunTrust (i) Ponte Vedra's Annual Reports on Form 10-KSB for the years
ended December 31, 1992, 1993, and 1994, including all exhibits thereto and
items incorporated therein by reference, (ii) Ponte Vedra's Quarterly Reports
on Form 10-Q for the quarters ended March 31 and June 30, 1995, including all
exhibits thereto and items incorporated therein by reference, (iii) proxy
statements relating to Ponte Vedra's annual meetings of Shareholders on April
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26, 1993, April 18, 1994, and April 17, 1995, and (iv) all other reports or
registration statements (as amended or supplemented prior to the date hereof)
filed by Ponte Vedra with the SEC since December 31, 1992 and prior to the
date hereof, including all exhibits thereto and items incorporated therein by
reference to in items (i) through (iv) of this sentence being referred to as
the "Ponte Vedra SEC Reports"). As of their respective dates, the Ponte
Vedra SEC Reports 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 therein, in light of the circumstances under which they
were made, not misleading. Since December 31, 1992, Ponte Vedra has filed
all forms, reports and documents with the SEC required to be filed by it
pursuant to the federal securities laws and SEC rules and regulations
thereunder, each of which complied as to form, at the time such form, report
or document was filed, in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act and the applicable rules and
regulations thereunder.
4.21 Statements True and Correct. No representation or warranty made
by Ponte Vedra nor any statement or certificate or instrument furnished as
information or included in an Exhibit or Schedule by Ponte Vedra in
connection with this Agreement nor any statement or certificate to be
furnished by Ponte Vedra to SunTrust or Sun Banks pursuant to this Agreement
or in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading. None of the information supplied or to be supplied
by Ponte Vedra or the Bank for inclusion in the Registration Statement to be
filed by SunTrust with the SEC in connection with the SunTrust Common Stock
to be issued in the Merger, the Proxy Statement to be mailed to Ponte Vedra's
Shareholders in connection with the Shareholders' Meeting, and in any other
documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed and, in the case of the Registration Statement, when it becomes
effective, and with respect to the Proxy Statement, when first mailed to the
Shareholders of Ponte Vedra and (as supplemented or amended) at the time of
the Shareholders' Meeting, fail to comply in all material respects with the
laws and rules and regulations applicable to it or be false or misleading
with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading. To the
knowledge of Ponte Vedra's management, all documents that Ponte Vedra or the
Bank is responsible for filing with the SEC or any other Regulatory Authority
in connection with the transactions contemplated herein will comply as to
form in all material respects with the provisions of applicable law.
4.22 Brokers and Finders. Neither the Shareholder, Ponte Vedra nor the
Bank nor any of their respective officers, directors or employees, has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for the Shareholder or Ponte Vedra in
connection with this Agreement or any of the transactions contemplated
hereby, except for an engagement with Allen C. Ewing & Company, whose fees,
which shall not exceed $70,000, will be paid by Ponte Vedra.
4.23 Environmental Laws. To the best knowledge of Ponte Vedra's
management, neither Ponte Vedra nor the Bank is in violation (either
directly, including without limitation as a successor-in-interest in
connection with the enforcement of remedies to realize the value of
properties serving as collateral for outstanding loans, or indirectly,
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including without limitation as a collateral interest holder) of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including those arising under the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, the Federal Water Pollution Control Act, the
Federal Clean Air Act, the Toxic Substances Control Act or any state,
territorial or local statute, regulation, ordinance, order or decree relating
to the environment ("Environmental Laws"), other than any violation which
would not have a material adverse effect on the business, financial condition
or results of operations of Ponte Vedra and the Bank, taken as a whole. As
of the date hereof, neither Ponte Vedra nor the Bank nor, to the knowledge of
Ponte Vedra, any of the Bank's borrowers, has received written notice that it
has been identified by the United States Environmental Protection Agency as a
potential responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B, nor, as of the date
hereof, has Ponte Vedra or the Bank, or to Ponte Vedra's knowledge, any of
the Bank's borrowers, received any written notification from any government
agency that any hazardous waste (as defined by 42 U.S.C. 6903(5)), any
hazardous substances (as defined by 42 U.S.C. 9601(14)), any "pollutant or
contaminant" (as defined by 42 U.S.C. 9601(33)), or any toxic substance,
hazardous materials or oil regulated by any Environmental Laws ("Hazardous
Substances") that it has disposed of has been found at any site at which a
federal or state agency is conducting a remedial investigation or other
action pursuant to any Environmental Law, which notification would reasonably
be expected to result in a material adverse effect on the business, financial
condition or results of operations of Ponte Vedra and the Bank, taken as a
whole.
4.24 Deposit Insurance. The deposit accounts of the Bank are insured
by the FDIC, in accordance with the provisions of the FDIA. The Bank has
paid all regular premiums and special assessments and filed all reports
required under the FDIA.
4.25 Non-Performing Assets. The amount of the non-performing assets at
December 31, 1994 of the Bank as set forth in the Bank Reports, has been
determined in a manner conforming in all material respects with applicable
regulations and published guidelines and the amount of such consolidated non-
performing assets set forth in the Bank Reports prepared and filed after the
date hereof will conform in all material respects to such regulations and
guidelines.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SUNTRUST
5.1 Organization, Standing and Authority. SunTrust is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia, is duly qualified to transact business and is in good
standing in the States of the United States and foreign jurisdictions where
its ownership or leasing of property or the conduct of its business requires
such qualification and in which the failure to be duly qualified could have a
material adverse effect on the business, financial condition or results of
operations of SunTrust and its Subsidiaries on a consolidated basis, and has
all requisite corporate power and authority to carry on its business as now
conducted and to own, lease and operate its assets, properties and business.
SunTrust and Sun Banks have all requisite power and authority to execute and
deliver this Agreement and perform its terms and to consummate the Merger.
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SunTrust and Sun Banks are each duly registered with the Federal Reserve
Board as a bank holding company under the BHC Act.
5.2 Capital Stock. The authorized capital stock of SunTrust consists
of (i) 350,000,000 shares of SunTrust Common Stock, of which 130,460,644
shares were issued and outstanding as of August 17, 1995 and (ii) 50,000,000
shares of SunTrust preferred stock of no par value, of which no shares are
issued and outstanding as of the date of this Agreement. All of the issued
and outstanding shares of SunTrust Common Stock are, and the shares of
SunTrust Common Stock to be issued upon consummation of the Merger shall be,
duly and validly issued and outstanding and are fully paid and non-
assessable. None of the outstanding shares of SunTrust Common Stock has been
issued, and none of the shares of SunTrust Common Stock to be issued upon
consummation of the Merger shall be issued, in violation of any preemptive
rights of its current or former shareholders.
5.3 SunTrust Subsidiaries. SunTrust owns all of the issued and
outstanding capital stock of Sun Banks. Each of the SunTrust Subsidiaries
that is a bank (other than Edge Act banks) is an "insured bank" as defined in
the FDIA and applicable regulations thereunder. No equity securities of any
of the SunTrust Subsidiaries are or may become required to be issued (other
than to a SunTrust Company) by reason of any options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, shares of
the capital stock of any SunTrust Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any SunTrust Subsidiary
is bound to issue (other than to a SunTrust Company) additional shares of its
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock. Except as required by Section 55 of
the National Bank Act in the case of SunTrust Subsidiaries that are national
banks, all of the shares of capital stock of each SunTrust Subsidiary held by
SunTrust are duly and validly issued and fully paid and nonassessable and are
owned by SunTrust free and clear of any claim, lien, encumbrance, or
agreement with respect thereto. Each SunTrust Subsidiary is either a
national banking association, a bank or a corporation, and is duly organized,
validly existing and (as to state chartered banks and corporations) in good
standing under the laws of the jurisdiction in which it is incorporated; has
all requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its businesses as it is now being
conducted; and has all federal, state, local and foreign governmental
authorization necessary for it to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted, except
where the failure to be so authorized would not have a material adverse
effect on the business, financial condition or results of operations of
SunTrust and its Subsidiaries on a consolidated basis.
5.4 Authority.
(a) Execution and delivery of this Agreement and the consummation of
the transactions contemplated herein, including the Merger and performance of
their obligations under this Agreement, have been duly and validly authorized
by all necessary corporate action on the part of SunTrust and Sun Banks.
This Agreement has been duly executed and delivered by SunTrust and Sun Banks
and constitutes the legal, valid and binding obligation of SunTrust and Sun
Banks, enforceable against each of them in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by SunTrust
and Sun Banks, nor the consummation by SunTrust and Sun Banks of the
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transactions contemplated herein, nor compliance with or fulfillment of any
of the terms and conditions hereof by SunTrust or Sun Banks will (i) conflict
with, violate or result in a breach of any provision of the respective
articles of incorporation and bylaws of SunTrust and Sun Banks, or
(ii) constitute or result in the breach of any term, condition or provision
of, or constitute a default (or an event that with notice or lapse of time or
both, would constitute a default) under, or give rise to any right of
termination, cancellation, or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon, any property or assets of
any of the SunTrust Companies, pursuant to any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or obligation to
which any of them is a party or by which any of them or any of their
properties or assets may be subject, and that would, in any such events, have
a material adverse effect on the business, financial condition or results of
operations of SunTrust and its Subsidiaries taken as a whole or the
transactions contemplated hereby, or (iii) subject to receipt of the
requisite approvals referred to in Section 9.6 of this Agreement, to the
knowledge of the management of SunTrust and Sun Banks, violate any order,
writ, injunction, decree, statute, law, rule or regulation applicable to
SunTrust or any of its Subsidiaries of any of their properties or assets.
(c) Other than compliance with the provisions of the applicable state
corporate or securities laws, the 1933 Act and the 1934 Act and the rules and
regulations thereunder and rules of the NYSE and the National Association of
Securities Dealers, Inc.; and other than consents, authorizations, approvals,
or exemptions required from the Federal Reserve Board, the Florida Department
of Banking and Finance or the Georgia Department of Banking and Finance, 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, no notice to, filing with, authorization of, or exemption by, or
consent or approval of any governmental authority or agency is necessary for
the consummation by SunTrust or Sun Banks of the Merger and the other
transactions contemplated in this Agreement.
5.5 Financial Statements. SunTrust has delivered to Ponte Vedra prior
to the execution of this Agreement copies of the following financial
statements of SunTrust and its Subsidiaries included in reports filed with
the SEC (collectively referred to herein as the "SunTrust Financial
Statements"): (i) audited Consolidated Balance Sheets of SunTrust at
December 31, 1992, 1993 and 1994, and the related Consolidated Statements of
(a) Income, (b) Shareholders' Equity and (c) Cash Flows for the years then
ended and the notes thereto as reported upon by Arthur Andersen LLP,
independent certified public accountants, and (ii) unaudited Statements of
Financial Condition of SunTrust at March 31 and June 30, 1995, and the
related Consolidated Statements of Income and Cash Flow for the periods then
ended and the notes thereto.
The SunTrust Financial Statements (as of the dates thereof and for the
periods covered thereby): (i) are in accordance with the books and records
of the SunTrust Companies, which are complete and accurate in all material
respects and which have been maintained in accordance with good business
practices and applicable banking and other legal requirements, and
(ii) present fairly the consolidated financial position and consolidated
results of operations and cash flow of the SunTrust Companies as of the dates
and for the periods indicated, in accordance with GAAP, applied on a basis
consistent with prior periods, except as disclosed in the notes thereto.
5.6 Absence of Undisclosed Liabilities. None of the SunTrust Companies
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has any obligation or liability (contingent or otherwise) that is material on
a consolidated basis to SunTrust, or that when combined with all similar
obligations or liabilities would be material on a consolidated basis to
SunTrust, (i) except as disclosed in the SunTrust Financial Statements and
(ii) except for liabilities or obligations incurred since December 31, 1994
in the ordinary course of business which would not reasonably be expected to
have a material adverse effect on the consolidated financial condition or
results of operations or business of SunTrust and its Subsidiaries. Since
December 31, 1994, none of the SunTrust Companies has paid any obligation or
liability which would be material on a consolidated basis to SunTrust, except
for obligations and liabilities paid in the ordinary course of its business
consistent with past practices.
5.7 Allowance for Loan Losses. The allowance for loan losses shown on
the Consolidated Balance Sheets of SunTrust as of December 31, 1994 and
June 30, 1995, respectively, were adequate in all material respects to
provide for losses, net of recoveries relating to loans previously charged
off, on loans outstanding (including accrued interest receivable) as of
December 31, 1994 and June 30, 1995.
5.8 Compliance with Laws. Each of the SunTrust Companies:
(a) Is in compliance with all laws, regulations, reporting and
licensing requirements and orders applicable to its business or employees
conducting its business, the breach or violation of which would have a
material adverse effect on the business, financial condition or results of
operations of SunTrust on a consolidated basis; and
(b) Has received no notification from any agency or department of
federal, state or local government or the Regulatory Authorities or the staff
thereof asserting that any of the SunTrust Companies is not in compliance
with any of the statutes, regulations or ordinances which such governmental
authority or Regulatory Authority enforces, which, as a result of such
noncompliance, would result in a material adverse effect on the business,
results of operations or financial condition of SunTrust on a consolidated
basis, or threatening to revoke any license, franchise, permit or
governmental authorization which is material to the business, results of
operations or financial condition of SunTrust on a consolidated basis, and is
subject to no written agreement or written understanding with any Regulatory
Authorities with respect to its assets or business.
5.9 Legal Proceedings. There are no actions, suits or proceedings
instituted or pending, or to the knowledge of SunTrust's management,
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 of the SunTrust Companies or against any property,
asset, interest, or right of any of them, that are reasonably expected to
have either individually or in the aggregate a material adverse effect on the
business, results of operations or financial condition of the SunTrust
Companies or that are reasonably expected to materially threaten or
materially impede the consummation of the transactions contemplated by this
Agreement. None of the SunTrust Companies is a party to any agreement or
instrument or is subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance that threatens or might impede the consummation of the transactions
contemplated by this Agreement.
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5.10 Absence of Certain Changes or Events. Since December 31, 1994,
SunTrust and its Subsidiaries on a consolidated basis have not suffered any
change in their business, operations, assets or condition (financial or
otherwise) or suffered any damage, destruction, loss or casualty or
extraordinary loss not adequately reserved against that would have a material
adverse effect on the business, financial condition or results of operations
of SunTrust and its Subsidiaries on a consolidated basis.
5.11 Reports. SunTrust has heretofore made available to Ponte Vedra
(i) SunTrust's Annual Reports on Form 10-K for the years ended December 31,
1992, 1993, and 1994, including all exhibits thereto and items incorporated
therein by reference, (ii) SunTrust's Quarterly Reports on Form 10-Q for the
quarters ended March 31 and June 30, 1995, including all exhibits thereto and
items incorporated therein by reference, (iii) proxy statements relating to
SunTrust's annual meetings of shareholders on April 20, 1993, April 19, 1994,
and April 18, 1995, and (iv) all other reports or registration statements (as
amended or supplemented prior to the date hereof) filed by SunTrust with the
SEC since December 31, 1992 and prior to the date hereof, including all
exhibits thereto and items incorporated therein by reference (the reports and
proxy statements and related materials referred to in items (i) through (iv)
of this sentence being referred to as the "SunTrust SEC Reports"). As of
their respective dates, the SunTrust SEC Reports 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 therein, in light of the
circumstances under which they were made, not misleading. Since December 31,
1992, SunTrust has filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities laws and SEC
rules and regulations thereunder, each of which complied as to form, at the
time such form, report or document was filed, in all material respects with
the applicable requirements of the 1933 Act and the 1934 Act and the
applicable rules and regulations thereunder.
5.12 Statements True and Correct. No representation or warranty made
by SunTrust in this Agreement nor any written statement or certificate
included in an Exhibit or Schedule in connection with this Agreement nor any
written statement or certificate to be furnished by SunTrust to Ponte Vedra
pursuant to this Agreement, contains or will contain any untrue statement of
material fact or omits or will omit to state a material fact necessary to
make the statements made, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
SunTrust for inclusion in the Registration Statement to be filed by SunTrust
with the SEC in connection with the SunTrust Common Stock to be issued in the
Merger, the Proxy Statement to be mailed to Ponte Vedra's Shareholders in
connection with the Shareholders' Meeting, and any other documents to be
filed 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, in the case of the Registration Statement, when it becomes
effective, and with respect to the Proxy Statement, when first mailed to the
Shareholders of Ponte Vedra and (as supplemented or amended) at the time of
the Shareholders' Meeting, fail to comply in all material respects with the
laws and rules and regulations applicable to it or contain any untrue
statement of a material fact, or omit to state any material fact necessary in
order to make the statements therein in the light of the circumstances under
which they were made, not misleading. All documents that SunTrust is
responsible for filing with the SEC or any other Regulatory Authority in
connection with the Merger will comply as to form in all material respects
with the provisions of applicable law.
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5.13 Brokers and Finders. Neither SunTrust nor Sun Banks nor any of
their respective officers, directors or employees acting on behalf of
SunTrust or Sun Banks, except in the ordinary course of business, has
employed any broker or finder or incurred any liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions or
finder's fees and no broker or finder has acted directly or indirectly for
SunTrust or Sun Banks in connection with this Agreement or any of the
transactions contemplated thereby.
ARTICLE 6
COVENANTS AND AGREEMENTS OF PONTE VEDRA
6.1 Conduct of Business - Negative Covenants. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, Ponte Vedra covenants that it will not do or agree or commit to
do, and will cause the Bank not to do or agree or commit to do, any of the
following without the prior written consent of the Chief Executive Officer,
the Chief Financial Officer or the Treasurer of SunTrust, which consent, in
the case of actions described in subparagraph (e) and (f), shall not be
unreasonably withheld:
(a) Amend the articles of incorporation or bylaws of Ponte Vedra or the
Bank; or
(b) Sell, issue repurchase, redeem or otherwise acquire or exchange,
directly or indirectly, any shares of the capital stock or any securities
convertible into any shares of the capital stock of Ponte Vedra or the Bank;
or
(c) Except as otherwise expressly permitted in this Agreement, make or
effect any change in the equity capitalization of Ponte Vedra or the Bank; or
(d) Acquire direct or indirect control over any corporation,
association, firm or organization, other than in connection with (i) mergers,
acquisitions or other transactions approved in advance in writing by
SunTrust, (ii) foreclosures in the ordinary course of business or
(iii) acquisitions of control by a banking subsidiary in its fiduciary
capacity; or
(e) Sell or otherwise dispose of any assets of Ponte Vedra or the Bank
other than in the ordinary course of their business for reasonable and
adequate consideration and consistent with past practices; provided, however,
such covenant in this subparagraph (e) shall not be applicable to the sale of
assets sold in transactions not otherwise prohibited by this Agreement and
for an aggregate amount not in excess of $25,000; or
(f) Other than incurring short-term debt of the type issued solely to
banks and other financial institutions that can be paid at any time without
prepayment penalty or premium, incur any additional debt obligation or other
obligation for borrowed money in excess of an aggregate of $50,000, except,
with regard to the Bank, in the ordinary course of business of the Bank
consistent with past practices (and such ordinary course of business shall
include, but shall not be limited to, creation of deposit liabilities,
purchases of federal funds, sales of certificates of deposit and entry into
repurchase agreements); or
(g) Grant any general increase in compensation to its employees as a
class to Ponte Vedra or the Bank or to any of their officers, except in
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accordance with past practice or as required by law; pay any bonus to
employees of Ponte Vedra or the Bank except in accordance with past practice
or the provisions of any applicable program or plan adopted by the Board of
Directors of Ponte Vedra or the Bank prior to the date of this Agreement;
grant any material increase in fees or other increases in compensation or
other benefits to any directors of Ponte Vedra or the Bank except in
accordance with past practice; or effect any change in retirement benefits
for any class of employees or officers of Ponte Vedra or the Bank (unless
such change is required by applicable law) that would materially increase the
retirement benefit liabilities of Ponte Vedra and the Bank, taken as a whole;
or
(h) Amend any existing employment contract between Ponte Vedra or the
Bank and any person having a salary thereunder in excess of $50,000 per year
(unless such amendment is required by law) to increase the compensation or
benefits payable thereunder or enter into any new employment contract with
any person that such person's employer does not have the unconditional right
to terminate without liability (other than liability for services already
rendered) at any time at or after the Effective Time; or
(i) Adopt any new employee benefit plan of Ponte Vedra or the Bank or
make any material change in or to any existing Benefit Plans 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.
6.2 Conduct of Business -- Affirmative Covenants. Unless the prior
written consent of the Treasurer, the Chief Executive Officer or Chief
Financial Officer of SunTrust shall have been obtained and except as
otherwise contemplated herein, Ponte Vedra will and will cause the Bank to:
operate its business only in the usual, regular and ordinary course; preserve
intact its business organizations and assets; maintain its rights and
franchises; and take no action which would (i) adversely affect its ability
to obtain any necessary approvals of governmental authorities or agencies
required for the consummation of the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.6 of this Agreement, or (ii) adversely affect the
ability of Ponte Vedra to perform its covenants and agreements under this
Agreement.
6.3 Adverse Changes in Condition. Ponte Vedra hereby covenants to give
written notice promptly to SunTrust concerning any material adverse change in
its consolidated condition from the date of this Agreement until the
Effective Time that might adversely affect the consummation of the
transactions contemplated hereby by Ponte Vedra or upon becoming aware of the
occurrence or impending occurrence of any event or circumstance which would
cause or constitute a material breach of any of the representations,
warranties or covenants of Ponte Vedra contained herein. Ponte Vedra shall
use its best efforts to prevent or promptly remedy the same.
6.4 Cooperation. Ponte Vedra hereby covenants to cooperate fully with
SunTrust and to provide in a timely manner such assistance and information to
SunTrust as may be reasonably requested by SunTrust in connection with its
applications for all necessary approvals by Regulatory Authorities in
connection with the transactions contemplated hereby and to consult regularly
with SunTrust concerning the preparation of any such applications or the
Registration Statement and the Proxy Statement.
6.5 Investigation and Confidentiality. Prior to the Effective Time,
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SunTrust may make or cause to be made such investigation, if any, of the
business and properties of Ponte Vedra and the Bank, and of their respective
financial and legal condition as SunTrust reasonably deems necessary or
advisable to familiarize itself and its advisers with such business and
properties; provided, that such investigation shall be reasonably related to
the transactions contemplated hereby and shall not interfere unnecessarily
with Ponte Vedra's or the Bank's normal operations. Ponte Vedra agrees to
furnish SunTrust and SunTrust's advisers with such financial and operating
data and other information with respect to its and the Bank's businesses,
properties and employees as SunTrust shall from time to time reasonably
request. No investigation by SunTrust shall affect the representations and
warranties of Ponte Vedra, and, subject to Section 11.3 of this Agreement,
each such representation and warranty shall survive any such investigation.
SunTrust shall, and shall cause its advisers and agents to, maintain the
confidentiality of all Confidential Information furnished to it by Ponte
Vedra or the Bank and shall not use such information for any purpose not
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, SunTrust shall upon request promptly return all documents
provided by Ponte Vedra or the Bank and any copies thereof, and return or
destroy all work papers containing Confidential Information received from
Ponte Vedra or the Bank.
6.6 Reports. Ponte Vedra and the Bank shall file all reports required
to be filed with the SEC, the Federal Reserve Board and the Comptroller of
the Currency between the date of this Agreement and the Effective Time, and
shall deliver to SunTrust copies of all such reports promptly after the same
are filed. If financial statements are contained in any such reports, such
financial statements will fairly present the financial position as a whole as
of the dates indicated and the results of operations and changes in financial
position for the periods then ended of Ponte Vedra and the Bank. Any audited
financial statements of Ponte Vedra and the Bank shall be in accordance with
GAAP applicable to banks and bank holding companies, applied on a consistent
basis with prior periods except as described in the notes thereto. Unaudited
quarterly financial statements of Ponte Vedra and the Bank shall satisfy the
requirements of the Regulatory Authority with whom such financial statements
are filed. As of their respective dates, such reports will comply in all
material respects with the rules and regulations promulgated by the
applicable Regulatory Authority 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 to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.7 Current Information. During the period from the date of this
Agreement to the Effective Time, Ponte Vedra shall cause one or more of its
representatives to confer on a regular basis with representatives of SunTrust
and to report on the general status of its ongoing operations. Ponte Vedra
shall promptly notify SunTrust of any material change in Ponte Vedra's or the
Bank's business or in the operations of their properties and of any material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) or the institution or the
threat of any material litigation involving Ponte Vedra or the Bank, and will
keep SunTrust fully informed with respect to such events.
6.8 Dividends. From the date of this Agreement to the earlier of the
Effective Time or the termination of this Agreement, neither Ponte Vedra nor
the Bank may declare or pay any dividends, or make any cash or in-kind
distributions, on or in respect of its capital stock without the prior
written consent of SunTrust.
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6.9 Capital Stock. Without the prior written consent of SunTrust, from
the date of this Agreement to the earlier of the Effective Time or the
termination of this Agreement, Ponte Vedra shall not, and shall not enter
into any agreement to, issue or sell any additional shares of Ponte Vedra
Common Stock or any other capital stock of Ponte Vedra, including any shares
of capital stock held in Ponte Vedra's treasury, or any stock appreciation
right, or any option, warrant or other right to purchase any such capital
stock, or any security convertible into or exchangeable for any such capital
stock.
6.10 Agreement of Affiliates. Ponte Vedra agrees to deliver to
SunTrust no later than the date of this Agreement a letter identifying all
persons whom Ponte Vedra reasonably believes, at the time the Merger is
submitted to a vote of its shareholders, will be "affiliates" of Ponte Vedra
for purposes of Rule 145 under the 1933 Act. Ponte Vedra shall cause each
person who is identified as an "affiliate" in the letter referred to above to
deliver to Ponte Vedra within ten (10) days of the date of this Agreement, a
written agreement, substantially in the form of Exhibit 4, providing that
such person will not sell, pledge, transfer or otherwise dispose of the
shares of Ponte Vedra Common Stock held by such person except as
contemplated by this Agreement and will not sell, pledge, transfer or
otherwise dispose of the shares of SunTrust Common Stock to be received by
such person upon consummation of the Merger except in compliance with
applicable provisions of the 1933 Act and the rules and regulations
thereunder.
6.11 Certain Actions. Except with respect to this Agreement and
transactions contemplated hereby, Ponte Vedra shall not solicit or encourage
any inquiry or proposal relating to a merger or consolidation of Ponte Vedra
or the Bank with any entity or the acquisition of Ponte Vedra or the Bank or
all or substantially all of their assets or properties by any person or
entity. Ponte Vedra shall not negotiate with respect to any such
transaction, nor shall it reach any agreement or understanding (formal or
informal, written or otherwise) with respect to any such transaction. It
may, however, communicate information about such inquiry or proposal to its
shareholders to the extent appropriate to reasonably comply with its legal
obligations. Ponte Vedra shall promptly notify SunTrust orally and in
writing in the event it receives any such inquiry or proposal.
6.12 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, Ponte Vedra shall use all 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 and regulations
to consummate and make effective, as soon as practicable after the date of
this Agreement, the transactions contemplated by this Agreement, including,
without limitation, using reasonable effort to lift or rescind any injunction
or restraining order or other order adversely affecting the ability of the
Parties to consummate the transactions contemplated herein. Ponte Vedra
shall use, and shall cause the Bank to use, all reasonable efforts to obtain
consents of all third parties and governmental authorities necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
6.13 Agreement to Modify Accounting and Valuation Policies. No sooner
than five (5) business days prior to the date of Closing, at the request of
SunTrust, Ponte Vedra shall, consistent with GAAP, modify and change certain
of the Bank's or its accounting procedures and the Bank's or its loan,
litigation and real estate valuation policies and practices (including loan
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classification and level of reserves) so as to be applied consistently on a
mutually satisfactory basis with those of SunTrust; and (ii) restructure its
balance sheet prior to consolidation, in such manner as SunTrust shall
specify; provided, however, that the result of any such modification or
change shall not alter any of the financial terms of the transaction
contemplated herein, nor shall it be deemed to be a breach of any
representation or covenant in this Agreement.
6.14 Ponte Vedra Disclosure Schedule. No later than the date of this
Agreement, Ponte Vedra shall have delivered to SunTrust the Ponte Vedra
Disclosure Schedule. The Ponte Vedra Disclosure Schedule shall be consistent
with all Ponte Vedra's and the Bank's filings with the Regulatory
Authorities.
6.15 State Service Mark Registration. No later than 10 days prior to
the date of Closing, Ponte Vedra shall have obtained a service mark
registration from the State of Florida for the name "Ponte Vedra National
Bank", and shall have delivered a copy of the certification of registration
to SunTrust.
6.16 Fairness Opinion. Within 45 days after the date of this Agreement,
the Board of Directors of Ponte Vedra shall have received a written opinion
from Allen C. Ewing & Company to the effect that the consideration to be
received by the Shareholders of Ponte Vedra pursuant to the Merger is fair to
such Shareholders from a financial point of view.
6.17 Non-Compete Agreements and Employment Agreement. Ponte Vedra shall
use its best efforts to cause the individuals listed on Exhibit 8 to execute
and deliver to SunTrust on or before the date of Closing agreements in the
form attached hereto as Exhibit 8. Ponte Vedra shall also use its best
efforts to cause Guy Nix to execute and deliver to SunTrust on or before the
date of Closing an agreement in the form attached hereto as Exhibit 9.
ARTICLE 7
COVENANTS AND AGREEMENT OF SUNTRUST
7.1 Conduct of Business. SunTrust shall, and shall cause the SunTrust
Subsidiaries to, take no action which would (i) adversely affect the ability
of any of them to obtain any necessary approvals of Regulatory Authorities or
agencies required for the consummation of the transactions contemplated
hereby without imposition of a condition or restriction of the type referred
to in the last sentence of Section 10.6 of this Agreement or (ii) adversely
affect the ability of SunTrust to perform its covenants and agreements under
this Agreement.
7.2 Adverse Changes in Condition. SunTrust hereby covenants to give
written notice promptly to Ponte Vedra concerning any material adverse
change in its condition from the date of this Agreement until the Effective
Time that might adversely affect the consummation of the transactions
contemplated hereby by SunTrust or Sun Banks or upon becoming aware of the
occurrence or impending occurrence of any event or circumstance which would
cause or constitute a material breach of any of the representations,
warranties or covenants of SunTrust or Sun Banks contained herein. SunTrust
and Sun Banks shall use its best efforts to prevent or promptly remedy the
same.
7.3 Cooperation. SunTrust hereby covenants to cooperate fully with
Ponte Vedra and to provide such assistance and information to Ponte Vedra as
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may be reasonably requested by Ponte Vedra in connection with its
applications for all necessary approvals by Regulatory Authorities in
connection with the transactions contemplated hereby and to consult regularly
with Ponte Vedra concerning the preparation of any such applications or the
Registration Statement and the Proxy Statement.
7.4 Investigation and Confidentiality. Prior to the Effective Time,
Ponte Vedra may make or cause to be made such investigation, if any, of the
business and properties of SunTrust, the SunTrust Companies and their
respective financial and legal condition as Ponte Vedra reasonably deems
necessary or advisable to familiarize itself and its advisers with such
business and properties; provided, that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with SunTrust's normal operations. SunTrust agrees
to furnish Ponte Vedra and Ponte Vedra's advisers with such financial and
operating data and other information with respect to its businesses,
properties and employees as Ponte Vedra shall from time to time reasonably
request. No investigation by Ponte Vedra shall affect the representations
and warranties of SunTrust, and, subject to Section 11.3 of this Agreement,
each such representation and warranty shall survive any such investigation.
Ponte Vedra shall, and shall cause it advisers and agents to, maintain the
confidentiality of all Confidential Information furnished to it by SunTrust
and shall not use such information for any purpose not contemplated by this
Agreement. If this Agreement is terminated prior to the Effective Time,
Ponte Vedra shall upon request promptly return all documents provided by
SunTrust and copies thereof, and return or destroy all work papers containing
Confidential Information received from SunTrust.
7.5 Reports. SunTrust and Sun Banks shall file all reports required to
be filed with the SEC and the Federal Reserve Board and any other Regulatory
Authority by SunTrust or Sun Banks between the date of this Agreement and the
Effective Time. If financial statements are contained in any such reports,
such financial statements will fairly present the financial position as of
the dates indicated and the results of operations and changes in the
financial position for the periods then ended of SunTrust and its
Subsidiaries in accordance with GAAP applicable to banks and bank holding
companies, applied on a consistent basis. As of their respective dates, such
reports will comply in all material respects with the rules and regulations
promulgated by the applicable Regulatory Authority 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 to make the statements therein, in light of
the circumstances under which they were made, not misleading.
7.6 Approval of Merger. Before the Effective Time, SunTrust, as the
sole shareholder of Sun Banks, shall vote all of the issued and outstanding
shares of Sun Banks in favor of the Plan of Merger and the transactions
contemplated thereby.
7.7 Applications. SunTrust shall prepare and file, or shall cause to
be prepared and filed, applications with the Federal Reserve Board and the
Comptroller of the Currency and all applicable notices with the Georgia
Department of Banking and Finance and the Florida Department of Banking and
Finance and any other Regulatory Authority seeking the requisite approvals
necessary to consummate the transactions contemplated by this Agreement and
shall take such other steps and actions in furtherance thereof as are
necessary and appropriate in order to be able to secure such approvals.
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7.8 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, SunTrust shall use all 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 and regulations
to consummate and make effective, as soon as practicable after the date of
this Agreement, the transactions contemplated by this Agreement, including,
without limitation, using reasonable effort to lift or rescind any injunction
or restraining order or other order adversely affecting the ability of the
Parties to consummate the transactions contemplated herein. SunTrust shall,
and shall cause each of the SunTrust Subsidiaries to, use its best efforts to
obtain consents of all third parties and governmental bodies necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
7.9 Indemnification. SunTrust agrees that all rights to
indemnification and all limitations of liability existing in favor of the
officers and directors of Ponte Vedra and the Bank ("Indemnified Parties") as
provided in their respective articles of incorporation and bylaws as of the
date hereof with respect to matters occurring prior to the Effective Time
shall survive the Merger and shall continue in full force and effect, without
any amendment thereto, for a period of not less than six (6) years from the
Effective Time; provided, however, that all rights to any indemnification in
respect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration and Proxy Statement; Shareholder Approval. As soon as
reasonably practicable after the execution of this Agreement, SunTrust shall
prepare and file the Registration Statement with the SEC. SunTrust and Ponte
Vedra shall use their best efforts to cause the Registration Statement to
become effective under the 1933 Act and shall take any action required to be
taken under applicable state Blue Sky or securities laws in connection with
the issuance of shares of SunTrust Common Stock upon consummation of the
Merger. Each Party shall furnish all information concerning it and the
holders of its capital stock as the other Party may reasonably request in
connection with the foregoing. Ponte Vedra shall call the Shareholders'
Meeting to be held as soon as reasonably practicable after the date of this
Agreement for the purpose of voting upon this Agreement, the Plan of Merger
and such other related matters as it deems appropriate. In connection with
the Shareholders' Meeting, (i) Ponte Vedra shall prepare and file a Proxy
Statement with the SEC and mail it to its Shareholders, (ii) the Board of
Directors of Ponte Vedra shall recommend to its Shareholders the approval and
adoption of this Agreement and the Plan of Merger, and (iii) Ponte Vedra
shall use all reasonable efforts to obtain such Shareholders' approval. As
soon as practicable after the Shareholders' Meeting, Ponte Vedra shall
deliver to SunTrust a certificate of the Secretary of Ponte Vedra containing
the names of the Shareholders of Ponte Vedra that both: (i) have not voted
for the Merger, and (ii) have given written notice prior to the taking of the
vote on this Agreement and the Plan of Merger at the Shareholders' Meeting
that they dissent from the Merger (the "Certificate of Objections"). The
Certificate of Objections shall state the number of shares of Ponte Vedra
Common Stock held by each such Shareholder and the mailing address of each
such Shareholder.
8.2 Tax Opinion. SunTrust and Ponte Vedra hereby agree to use all
reasonable efforts to obtain a written opinion of King & Spalding, tax
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counsel to SunTrust, reasonably acceptable to SunTrust and Ponte Vedra, to
the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code and that the exchange
in the Merger of SunTrust Common Stock for Ponte Vedra Common Stock will not
give rise to gain or loss to the Shareholders of Ponte Vedra with respect to
such exchange (except to the extent of any cash paid in lieu of fractional
shares) (the "Tax Opinion").
8.3 Press Releases. Prior to the Effective Time, SunTrust and Ponte
Vedra 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, however, that nothing in
this Section 8.3 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 obligations.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATION OF PONTE VEDRA
The obligation of Ponte Vedra to consummate the Merger is subject to the
satisfaction of the following conditions, unless waived by Ponte Vedra
pursuant to Section 12.5 of this Agreement:
9.1 Representations and Warranties. The representations and warranties
of SunTrust set forth in this Agreement shall be true and correct in all
material respects 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 at and as of the Effective Time, except for any such
representations and warranties with reference to a specified date, which
shall be true and correct in all material respects as of such date.
9.2 Performance of Agreements and Covenants. Each and all of the
covenants and agreements of SunTrust 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.
9.3 Certificates. SunTrust shall have delivered to Ponte Vedra a
certificate, dated as of the Effective Time and signed on its behalf by its
Treasurer, Chairman of the Board, Chief Financial Officer or Controller, to
the effect that (i) the conditions set forth in Sections 9.1 and 9.2 of this
Agreement have been satisfied (except to the extent waived) and (ii) that
there has been no material adverse change in the business, consolidated
financial condition or consolidated results of operations of SunTrust from
that reflected on the June 30, 1995 financial statements referred to in
Section 5.5, all in such reasonable detail as Ponte Vedra shall request.
9.4 Corporate Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement and the Plan of Merger
and the consummation of the transactions contemplated hereby and thereby
shall have been duly and validly taken by SunTrust and Sun Banks. SunTrust
and Sun Banks shall have furnished to Ponte Vedra certified copies of
resolutions duly adopted by their respective Board of Directors evidencing
the same.
9.5 Shareholder Approval. The shareholders of Ponte Vedra shall have
approved and adopted the Plan of Merger and the Merger and the consummation
of the transactions contemplated thereby, as and to the extent required by
law and by the provisions of any governing instruments.
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9.6 Consents and Approvals. All approvals and authorizations of,
filings and registrations with, and notifications to, all federal and state
authorities required for consummation of the Merger and for the preventing of
any termination of any right, privilege or license of either Party or any of
its Subsidiaries that may be required as a result of the transactions
contemplated by this Agreement which, if not obtained or made, would have a
material adverse effect on the financial condition or results of operation of
such Party and its Subsidiaries on a consolidated basis, shall have been
obtained or made and shall be in full force and effect and all waiting
periods required by law shall have expired. Any approval obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall not be conditioned or restricted in a manner which
in the judgment of the Board of Directors of Ponte Vedra materially adversely
affects the economic benefits of the transactions contemplated hereby so as
to render inadvisable the consummation of the Merger.
9.7 Legal Proceedings. No action or proceeding shall have been
instituted by any governmental authority or, to the knowledge of Ponte
Vedra's management, shall be threatened by any governmental authority seeking
to restrain the consummation of the transactions contemplated by this
Agreement which, in the opinion of the Board of Directors of Ponte Vedra,
renders it impossible or inadvisable to consummate the transactions
contemplated by this Agreement.
9.8 Opinions of Counsel. SunTrust shall have delivered to Ponte Vedra
opinions of corporate counsel to SunTrust, dated as of the Effective Time,
substantially in the form and to the effect specified in Exhibits 5 and 6,
respectively.
9.9 Tax Matters. SunTrust shall have delivered to Ponte Vedra a
certificate dated as of the Effective Time, signed by its Treasurer, Chief
Executive Officer, Chief Financial Officer or Controller to the effect that,
to the knowledge and belief of such officer, the statement of facts and
representations made on behalf of the management of SunTrust and Sun Banks
and presented to the legal counsel delivering the Tax Opinion were at the
date of such presentation true, correct and complete. Ponte Vedra shall have
received a copy of the Tax Opinion referred to in Section 8.2 of this
Agreement.
9.10 Registration Statement. The Registration Statement shall be
effective under the 1933 Act and no stop orders suspending the effectiveness
of the Registration Statement shall be in effect and no proceedings for such
purpose, or under the proxy rules of the SEC pursuant to the 1934 Act and
with respect to the transactions contemplated hereby, shall be pending before
or threatened by the SEC.
9.11 Material Adverse Change. There shall have been no determination by
the Board of Directors of Ponte Vedra that the Merger contemplated by this
Agreement has become impractical because of any state of war or a national
emergency, or because any banking moratorium shall have been declared in the
United States. There shall have been no determination by the Board of
Directors of Ponte Vedra that the consummation of the Merger is not in the
best interest of Ponte Vedra or its Shareholders by reason of a material
adverse change in the business, consolidated financial condition or
consolidated results of operations of SunTrust and its Subsidiaries from that
reflected in the June 30, 1995 Financial Statements of SunTrust referred to
in Section 5.5.
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ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF SUNTRUST
The obligations of SunTrust and Sun Banks to consummate the Merger are
subject to the satisfaction of the following conditions, unless waived by
SunTrust and Sun Banks pursuant to Section 12.5 of this Agreement:
10.1 Representations and Warranties. The representations and
warranties of Ponte Vedra set forth in this Agreement shall be true and
correct in all material respects 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, except for any
such representations and warranties with reference to a specified date, which
shall be true and correct in all material respects as of such date; provided,
however, that Ponte Vedra acknowledges that any breach of Section 4.2 shall
be deemed material.
10.2 Performance of Agreements and Covenants. Each and all of the
covenants and agreements of Ponte Vedra to be performed and complied with
pursuant to this Agreement prior to the Effective Time shall have been duly
performed and complied with in all material respects.
10.3 Certificates. Ponte Vedra shall have delivered to SunTrust a
certificate, dated as of the Effective Time and signed on its behalf by its
Chief Executive Officer, Chief Financial Officer, or its principal accounting
officer, to the effect that (i) the conditions set forth in Section 10.1 and
10.2 of this Agreement have been satisfied (except to the extent waived) and
(ii) that there has been no material adverse change in the business,
financial condition or results of operations of Ponte Vedra and Bank taken as
a whole from that reflected on the June 30, 1995 financial statements
referred to in Section 4.6, all in such reasonable detail as SunTrust shall
request.
10.4 Corporate Authorization. All action by the Board of Directors of
Ponte Vedra necessary to authorize the execution, delivery and performance of
this Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by the Board of Directors of Ponte Vedra. Ponte Vedra shall have
furnished to SunTrust certified copies of resolutions duly adopted by the
Board of Directors of Ponte Vedra evidencing the same.
10.5 Shareholder Approval. The Shareholders of Ponte Vedra shall have
approved and adopted the Plan of Merger and the Merger, and the consummation
of the transactions contemplated thereby, as and to the extent required by
law and by the provisions of any governing instruments, and Ponte Vedra shall
have furnished to SunTrust certified copies of resolutions duly adopted by
Ponte Vedra's Shareholders evidencing the same.
10.6 Consents and Approvals.
(a) All approvals and authorizations of, filings and registrations
with, and notifications to, all federal and state authorities required for
consummation of the Merger and for the preventing of any termination of any
right, privilege or license of either Party or any of its Subsidiaries that
may be required as a result of the transactions contemplated by this
Agreement which, if not obtained or made, would have a material adverse
effect on the financial condition or results of operation of such Party and
its Subsidiaries on a consolidated basis, shall have been obtained or made
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and shall be in full force and effect and all waiting periods required by law
shall have expired. To the extent that any lease, license, loan, financing
agreement or other contract or agreement to which Ponte Vedra is a party
requires the consent of or waiver from the other party thereto as a result of
the transactions contemplated by this Agreement, such consent or waiver shall
have been obtained, unless (i) waived by SunTrust in accordance with
Section 12.5 of this Agreement, or (ii) the failure to obtain such consent or
waiver would not have a material adverse effect on the business, results of
operations or financial condition of Ponte Vedra and the Bank taken as a
whole, following the Merger or the transactions contemplated hereby. Any
approval obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall not be conditioned or
restricted in a manner which in the judgment of the Board of Directors of Sun
Trust materially adversely affects the economic benefits of the transactions
contemplated hereby so as to render inadvisable the consummation of the
Merger.
(b) All approvals and authorizations of, filings and registrations
with, and notifications to, all federal and state authorities required for
consummation of the merger of the Bank with and into Sun Bank/North Florida,
N.A. (the "Bank Merger") and for the preventing of any termination of any
right, privilege or license of either Party or any of its Subsidiaries that
may be required as a result of the transactions contemplated by this
Agreement which, if not obtained or made, would have a material adverse
impact on the financial condition or results of operation of such Party and
its Subsidiaries on a consolidated basis, shall have been obtained or made
and shall be in full force and effect and all waiting periods required by law
shall have expired. To the extent that any lease, license, loan, financing
agreement or other contract or agreement to which the Bank is a party
requires the consent of or waiver from the other party thereto as a result of
the Bank Merger, such consent or waiver shall have been obtained, unless
(i) waived by SunTrust in accordance with Section 12.5 of this Agreement, or
(ii) the failure to obtain such consent or waiver would not have a material
adverse effect on the business, results of operations or financial condition
of Sun Bank/North Florida, N.A. following the Bank Merger. Any approval
obtained from any Regulatory Authority which is necessary to consummate the
Bank Merger shall not be conditioned or restricted in a manner which in the
judgment of the Board of Directors of SunTrust materially adversely affects
the economic benefits of the transactions contemplated hereby so as to render
inadvisable the consummation of the Bank Merger.
10.7 Legal Proceedings. No action or proceeding shall have been
instituted by any governmental authority or, to the knowledge of SunTrust's
management, shall be threatened by any governmental authority seeking to
restrain the consummation of the transactions contemplated by this Agreement
which, in the opinion of the Board of Directors of SunTrust, renders it
impossible to consummate the transactions contemplated by this Agreement.
10.8 Opinion of Counsel. Ponte Vedra shall have delivered to SunTrust
an opinion of Holland & Knight or of other counsel reasonably satisfactory to
SunTrust, dated as of the Effective Time, substantially in the form and to
the effect specified in Exhibit 7.
10.9 Tax Matters. Ponte Vedra shall have delivered to SunTrust a
certificate as of the Effective Time, signed by its Chief Executive Officer
or its Chief Financial Officer to the effect that, to the knowledge and
belief of such officer, the statement of facts and representations made on
behalf of the management of Ponte Vedra and presented to the legal counsel
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delivering the Tax Opinion were at the date of such presentation true,
correct and complete. SunTrust shall have received a copy of the Tax Opinion
referred to in Section 8.2 of this Agreement.
10.10 Registration Statement. The Registration Statement shall be
effective under the 1933 Act and no stop orders suspending the effectiveness
of the Registration Statement shall be in effect and no proceedings for such
purpose, or under the proxy rules of the SEC pursuant to the 1934 Act and
with respect to the transactions contemplated hereby, shall be pending before
or threatened by the SEC.
10.11 Stock Options and Warrants. SunTrust shall have received from
each holder of an outstanding option or warrant to acquire shares of Ponte
Vedra Common Stock a letter in the form of Exhibits 2 or 3 hereto signed by
such option or warrant holder.
10.12 Non-Competition Agreements. The individuals listed on Exhibit 8
hereto shall have executed and delivered to SunTrust agreements in the forms
attached hereto as Exhibit 8.
10.13 Material Adverse Change. There shall have been no determination
by the Board of Directors of SunTrust that the Merger or the other
transactions contemplated by this Agreement have become impractical because
of any state of war or a national emergency, or because any banking
moratorium shall have been declared in the United States. There shall have
been no determination by the Board of Directors of SunTrust that the
consummation of the Merger or the other transactions contemplated by this
Agreement are not in the best interest of SunTrust or its shareholders or Sun
Banks by reason of a material adverse change in the business, consolidated
financial condition or consolidated results of operations of Ponte Vedra and
the Bank from that reflected in the June 30, 1995 financial statements of
Ponte Vedra referred to in Section 4.6.
ARTICLE 11
TERMINATION
11.1 Termination. Notwithstanding any other provision of this
Agreement or the Plan of Merger and notwithstanding the approval and adoption
of the Plan of Merger and the Merger by the shareholders of Ponte Vedra, this
Agreement and the Plan of Merger may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) By votes of the majorities of the Boards of Directors of both
SunTrust and Ponte Vedra; or
(b) By the vote of a majority of the Board of Directors of either
SunTrust or Ponte Vedra in the event of a material breach by Ponte Vedra or
Sun Trust, respectively, of any representation, warranty, covenant or
agreement contained herein which cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching Party of
such breach; or
(c) By the vote of a majority of the Board of Directors of either
SunTrust or Ponte Vedra in the event that the Merger shall not have been
consummated by July 31, 1996, other than as a result of a material breach by
such Party of any representation, warranty, covenant or agreement of such
Party contained herein; or
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(d) By the vote of a majority of the Board of Directors of either
SunTrust or Ponte Vedra in the event that (i) any approval of any Regulatory
Authority or other governmental authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been denied
by final non-appealable action of such authority or if any such denial taken
by such authority is not appealed within the time limit for appeal or (ii) if
the Shareholders of Ponte Vedra fail to approve the adoption of the Plan of
Merger as required by the Florida Business Corporation Act at the
Shareholders' Meeting.
11.2 Effect of Termination. In the event of the termination of this
Agreement and the Plan of Merger pursuant to Section 11.1 of this Agreement,
this Agreement and the Plan of Merger and the obligations of the Parties to
consummate the transactions contemplated hereby shall terminate without
prejudice to the rights of any Party terminating this Agreement to seek
damages or other remedies in respect of the breach of this Agreement, except
that the provisions of Sections 6.5, 7.4, 11.4, 12.1 and 12.2 of this
Agreement shall survive any such termination.
11.3 Representations, Warranties and Covenants Not to Survive. The
respective representations and warranties of the parties contained in this
Agreement and the Plan of Merger and in the instruments and certificates
delivered pursuant hereto and thereto shall expire at, and be terminated and
extinguished at the Effective Time; provided, however, that any
representation or warranty in any agreement, contract, report, opinion,
undertaking, or other document or instrument delivered hereunder in whole or
in part by any person other than SunTrust or Ponte Vedra or directors or
officers thereof in their capacities as such shall not so terminate and shall
not be so extinguished; and provided further that no representation or
warranty of Ponte Vedra or SunTrust contained herein shall be deemed to be
terminated or extinguished so as to deprive Ponte Vedra or SunTrust of any
defense at law or in equity which either of them otherwise would have to any
claim against them by any person, including, without limitation, any
shareholder or former shareholder of either Ponte Vedra or SunTrust, the
representations and warranties aforesaid (except to the extent that they
shall have been waived in accordance herewith) being material inducements to
the consummation by Ponte Vedra and SunTrust of the Merger and other
transactions contemplated hereby.
11.4 Termination Fee. If on or before July 31, 1996 (a) Ponte Vedra
enters into a definitive agreement ("Definitive Agreement") or consummates a
transaction with any corporation, partnership, person or other entity or
group (other than any of the SunTrust Companies) with respect to (i) the sale
of all or a substantial portion of the assets of Ponte Vedra or the Bank,
(ii) the sale of at least 50% of the then outstanding shares of Ponte Vedra
Common Stock or common stock of the Bank, or (iii) a merger, consolidation
or other business combination (except for a merger, consolidation or other
business combination pursuant to which Ponte Vedra acquires another bank and
such transaction does not result in the shareholders of Ponte Vedra
immediately prior to such transaction owning less than 50% of the voting
securities of the ultimate parent of the surviving entity immediately after
the transaction) involving Ponte Vedra or the Bank or (b) any corporation,
partnership, person or other entity or group (other than any of the SunTrust
Companies) acquires beneficial ownership (as the terms "person" and
"beneficial ownership" are defined for purposes of Rule 13d-3 under the 1934
Act) of at least 50% of the then outstanding shares of Ponte Vedra Common
Stock or common stock of the Bank in one or more transactions that are
supported, recommended or endorsed by the Board of Directors of Ponte Vedra
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or the Bank, Ponte Vedra shall pay to SunTrust a termination fee of Five
Hundred Thousand Dollars ($500,000) ("Fee"); provided, however, that no Fee
shall be due and payable hereunder if this Agreement is terminated (i)
pursuant to Sections 11.1(a) or 11.1(c) hereof; (ii) pursuant to Section
11.1(b) if Ponte Vedra is the terminating party; or (iii) by Ponte Vedra
pursuant to 11.1(d) hereof unless at the time that the termination of this
Agreement is effected (y) there exists any material breach by Ponte Vedra of
any representation, warranty, covenant or agreement contained herein or
(z) any of the transactions described in (a) and (b) of this Section 11.4
have been announced. The payment of any Fee due under this Section 11.4
shall be made by wire transfer of immediately available funds within five (5)
business days after the first of the following to occur: (A) execution of a
Definitive Agreement to any transaction described in clauses (a) or (b) of
this Section 11.4 and (B) consummation of any transaction described in
clauses (a) or (b) of this Section 11.4. Any overdue amount of the Fee that
becomes due and payable under this Section 11.4 shall accrue interest at the
prime rate of Trust Company Bank, Atlanta, Georgia, plus two percent (2%) per
annum.
ARTICLE 12
MISCELLANEOUS
12.1 Expenses.
(a) Except as provided in Section 12.1(b) of this Agreement, each of
the Parties shall bear and 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 or other consultants,
investment bankers, accountants and counsel.
(b) Notwithstanding the provisions of Section 12.1(a) of this
Agreement, if for any reason this Agreement and the Plan of Merger are
terminated by any Party before the Effective Time, SunTrust, on the one hand,
and Ponte Vedra, on the other hand, shall bear and pay one-half of the
following expenses: the printing costs incurred in connection with the
printing of the Registration Statement and the Proxy Statement, and all
filing fees paid by SunTrust or Ponte Vedra in connection with any regulatory
applications. Notwithstanding the foregoing, if this Agreement and the Plan
of Merger are terminated by SunTrust or Ponte Vedra pursuant to
Section 11.1(b) of this Agreement because of the willful breach by the other
of any representation, warranty, covenant or agreement contained herein, if
the terminating Party shall not have been in breach (in any material respect)
of any representation, warranty, covenant or agreement contained herein or in
the Plan of Merger, then the breaching Party shall pay all such costs and
expenses, plus costs of counsel, investment bankers and accountants of the
terminating Party. Final settlement with respect to payment of such fees and
expenses by the Parties shall be made within thirty (30) days of the
termination of this Agreement and the Plan of Merger.
12.2 Brokers and Finders. In the event of a claim by any person (other
than Allen C. Ewing & Company) based upon his or its representing or being
retained by or allegedly representing or being retained by either SunTrust or
Ponte Vedra, SunTrust or Ponte Vedra, as the case may be, agrees to indemnify
and hold the other Party harmless of and from any such claim.
12.3 Entire Agreement. This Agreement and the Plan of Merger contain
the entire agreement between the Parties with respect to the transactions
contemplated hereunder and thereunder, and such agreements supersede all
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prior arrangements or understandings with respect thereto, written or oral.
The terms and conditions of this Agreement and the Plan of Merger shall inure
to the benefit of and be binding upon the Parties and their respective
successors. Nothing in this Agreement or the Plan of Merger 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 or the Plan of Merger.
12.4 Amendments. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by all of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided,
however, that the provisions of Section 2.2 of this Agreement relating to the
manner in or basis on which shares of Ponte Vedra Common Stock will be
exchanged for SunTrust Common Stock and/or cash shall not be amended after
the Shareholders' Meeting without the approval of the holders of at least a
majority of the issued and outstanding shares of Ponte Vedra Common Stock.
12.5 Waivers. Prior to the Effective Time, SunTrust, acting through
its Board of Directors, Treasurer, Chairman or Chief Financial Officer, shall
have the right to waive any default in the performance of any term of this
Agreement by Ponte Vedra, to extend the time for the compliance or
fulfillment by Ponte Vedra of any and all of its obligations under this
Agreement and to waive any or all of the conditions precedent to the
obligations of SunTrust or Sun Banks under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
applicable law or governmental regulation. Prior to the Effective Time,
Ponte Vedra, acting through its Board of Directors, Chairman or President,
shall have the right to waive any default in the performance of any term of
this Agreement by SunTrust or Sun Banks, to extend the time for the
compliance or fulfillment by SunTrust or Sun Banks of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Ponte Vedra under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
applicable law or governmental regulation.
12.6 No Assignment. None of the Parties may assign any of its rights
or obligations under this Agreement or the Plan of Merger to any other
person.
12.7 Specific Enforceability. The Parties recognize and hereby
acknowledge that it is impossible to measure in money the damages that would
result to a Party by reason of the failure of any of the Parties to perform
any of the obligations imposed on it by this Agreement. Accordingly, if
after the Shareholders' Meeting, any Party should institute an action or
proceeding seeking specific enforcement of the provisions hereof, each Party
against which such action or proceeding is brought hereby waives the claim or
defense that the Party instituting such action or proceeding has an adequate
remedy at law and hereby agrees not to assert in any such action or
proceeding the claim or defense that such a remedy at law exists.
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12.8 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered
personally, by facsimile transmission or by registered or certified mail,
postage prepaid, 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:
SunTrust: SunTrust Banks, Inc.
25 Park Place, N.E.
Atlanta, Georgia 30303
Attention: Donald T. Heroman
Fax #: 404-827-6491
Copy to Counsel: SunTrust Banks, Inc.
Legal and Regulatory Affairs
25 Park Place, N.E.
Atlanta, Georgia 30303
Attention: Raymond D. Fortin, Esq.
Fax #: 404-581-1637
Ponte Vedra: Ponte Vedra Banking Corporation
P.O. Box 1754
Ponte Vedra Beach, Florida 32004
Attention: G. Bruce Douglas
Fax #: 904-285-7677
Copy to Counsel: Holland & Knight
50 North Laura Street
Suite 3900
Jacksonville, Florida 32202
Attention: L. Kinder Cannon III
Fax #: 904-358-1872
12.9 Governing Law. This Agreement and the Plan of Merger shall be
governed by and construed in accordance with the laws of the State of Florida
except to the extent federal law shall be applicable.
12.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by
officers thereunto duly authorized all as of the day and year first above
written.
SUNTRUST BANKS, INC.
By: ______________________________
Donald T. Heroman
Treasurer
Senior Vice President
ATTEST: __________________________
Assistant Secretary
[CORPORATE SEAL]
SUN BANKS, INC.
By: ______________________________
Title:
ATTEST: __________________________
Title:
[CORPORATE SEAL]
PONTE VEDRA BANKING CORPORATION
By: ______________________________
G. Bruce Douglas
Chairman and Chief Executive
Officer
ATTEST: __________________________
Secretary
[CORPORATE SEAL]
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Exhibit B
607.1301. Dissenters' rights; definitions
The following definitions apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value", with respect to a dissenter's shares, means the value
of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of shareholders in order to authorize the action, or, in the
case of a merger pursuant to s. 607.1104, the day prior to the date on which
a copy of the plan of merger was mailed to each shareholder of record of the
subsidiary corporation.
607.1302. Right of shareholders to dissent
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its
parent under s. 607.1104, and the shareholders would have been entitled to
vote on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation, other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to s. 607.1202, including a sale in dissolution 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 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-
share acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which will be
acquired, if the shareholder is entitled to vote on the plan;
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(e) Any amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendment and if such amendment would
adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to
any of his shares;
2. Altering or abolishing the voting rights pertaining to any
of his shares, except as such rights may be affected by the voting rights of
new shares then being authorized of any existing or new class or series of
shares;
3. Effecting an exchange, cancellation, or reclassification
of any of his shares, when such exchange, cancellation, or reclassification
would alter or abolish his voting rights or alter his percentage of equity in
the corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his
redeemable shares, altering or abolishing any provision relating to any
sinking fund for the redemption or purchase of any of his shares, or making
any of his shares subject to redemption when they are not otherwise
redeemable;
5. Making noncumulative, in whole or in part, dividends of
any of his preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of his
preferred shares; or
7. Reducing any stated preferential amount payable on any of
his preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his shares which are
adversely affected by the amendment.
(3) A shareholder may dissent as to the less than all the shares
registered in his name. In that event, his rights shall be determined as if
the shares as to which he has dissented and his other shares were registered
in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this
section does not apply with respect to a plan of merger or share exchange or
a proposed sale or exchange of property, to the holders of shares of any
class or series which, on the record date fixed to determine the shareholders
entitled to vote at the meeting of shareholders at which such action is to be
acted upon or to consent to any such action without a meeting, were either
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 not fewer than
2,000 shareholders.
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(5) A shareholder entitled to dissent and obtain payment for his shares
under this section may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
607.1320. Procedure for exercise of dissenters' rights
(1)(a) If a proposed corporate action creating dissenters' rights under
s. 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of ss. 607.1301, 607.1302 and
607.1320. A shareholder who wishes to assert dissenters' rights shall:
1. 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. Not vote his shares in favor of the proposed action. A
proxy or vote against the proposed action does not constitute such a notice
of intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under
s. 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of ss. 607.1301, 607.1302 and 607.1320 to
each shareholder simultaneously with any request for his written consent or,
if such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to,
the proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder
who elects to dissent shall file with the corporation a notice of such
election, stating his name and address, the number, classes, and series of
shares as to which he dissents, and a demand for payment of the fair value of
his shares. Any shareholder failing to file such election to dissent within
the period set forth shall be bound by the terms of the proposed corporate
action. Any shareholder filing an election to dissent shall deposit his
certificates for certificated shares with the corporation simultaneously with
the filing of the election to dissent. The corporation may restrict the
transfer of uncertificated shares from the date the shareholder's election to
dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall
not be entitled to vote or to exercise any other rights of a shareholder. A
notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of
such shareholder to be paid the fair value of his shares shall cease, and he
shall be reinstated to have all his rights as a shareholder as of the filing
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of his notice of election, including any intervening preemptive rights and
the right to payment of any intervening dividend or other distribution or, if
any such rights have expired or any such dividend or distribution other than
in cash has been completed, in lieu thereof, at the election of the
corporation, the fair value thereof in cash as determined by the board as of
the time of such expiration or completion, but without prejudice otherwise to
any corporate proceedings that may have been taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within 10 days
after such corporate action is effected, whichever is later (but in no case
later than 90 days from the shareholders' authorization date), the
corporation shall make a written offer to each dissenting shareholder who has
made demand as provided in this section to pay an amount the corporation
estimates to be the fair value for such shares. If the corporate action has
not been consummated before the expiration of the 90-day period after the
shareholders' authorization date, the offer may be made conditional upon the
consummation of such action. Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-
month period ended on the date of such balance sheet or, if the corporation
was not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his shares shall be made within 90 days after
the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period
specified therefor in subsection (5) or if it makes the offer and any
dissenting shareholder or shareholders fail to accept the same within the
period of 30 days thereafter, then the corporation, within 30 days after
receipt of written demand from any dissenting shareholder given within 60
days after the date on which such corporate action was effected, shall, or at
its election at any time within such period of 60 days may, file an action in
any court of competent jurisdiction in the county in this state where the
registered office of the corporation is located requesting that the fair
value of such shares be determined. The court shall also determine whether
each dissenting shareholder, as to whom the corporation requests the court to
make such determination, is entitled to receive payment for his shares. If
the corporation fails to institute the proceeding as herein provided, any
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dissenting shareholder may do so in the name of the corporation. All
dissenting shareholders (whether or not residents of this state), other than
shareholders who have agreed with the corporation as to the value of their
shares, shall be made parties to the proceeding as an action against their
shares. The corporation shall serve a copy of the initial pleading in such
proceeding upon each dissenting shareholder who is a resident of this state
in the manner provided by law for the service of a summons and complaint and
upon each nonresident dissenting shareholder either by registered or
certified mail and publication or in such other manner as is permitted by
law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to
judgment against the corporation for the amount of the fair value of their
shares. The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers shall have such power and authority as is
specified in the order of their appointment or an amendment thereof. The
corporation shall pay each dissenting shareholder the amount found to be due
him within 10 days after final determination of the proceedings. Upon
payment of the judgment, the dissenting shareholder shall cease to have any
interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair
rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined
by the court and shall be assessed against the corporation, but all or any
part of such costs and expenses may be apportioned and assessed as the court
deems equitable against any or all of the dissenting shareholders who are
parties to the proceeding, to whom the corporation has made an offer to pay
for the shares, if the court finds that the action of such shareholders in
failing to accept such offer was arbitrary, vexatious, or not in good faith.
Such expenses shall include reasonable compensation for, and reasonable
expenses of, the appraisers, but shall exclude the fees and expenses of
counsel for, and experts employed by, any party. If the fair value of the
shares, as determined, materially exceeds the amount which the corporation
offered to pay therefor or if no offer was made, the court in its discretion
may award to any shareholder who is a party to the proceeding such sum as the
court determines to be reasonable compensation to any attorney or expert
employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case
of a merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of
such dissenting shareholders would have been converted had they assented to
the merger shall have the status of authorized but unissued shares of the
surviving corporation.
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EXHIBIT C
ALLEN C. EWING & CO. 50 North Laura Street, Suite 3625
INVESTMENT BANKERS Jacksonville, Florida 32202-3812
Telephone 904-354-5573
Telecopier 904-354-7033
September 26, 1995
Board of Directors
Ponte Vedra Banking Corporation
100 Sawgrass Corners Drive
Ponte Vedra Beach, Florida 32082
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of the Ponte Vedra Banking Corporation ("Company")
of Ponte Vedra Beach, Florida, of the consideration to be paid to the
shareholders of the Company by SunTrust Banks, Inc. ("Sun") of Atlanta,
Georgia. Allen C. Ewing & Co. ("Ewing") is a regional investment banking
firm that has specialized in the research, trading, and provision of
corporate finance services to the banking and thrift industries in Florida.
Senior members and the author of this opinion have had extensive experience
in providing a wide variety of services involving banking institutions for
over twenty-five years.
Pursuant to the Agreement and Plan of Reorganization ("Merger Agreement")
dated August 31, 1995, Sun will offer to acquire all of the outstanding
shares of the Company by exchanging cash and Sun shares for shares of the
Company in accordance with the terms defined in the Merger Agreement. As a
result of the proposed transaction, the Company and its subsidiary, Ponte
Vedra National Bank ("Bank"), will be merged with and into subsidiaries of
Sun.
In performing our analysis, we have, among other things:
1. Reviewed the terms of the Merger Agreement.
2. Reviewed the Call Reports for the Bank for the years ended December 31,
1992, December 31, 1993 and December 31, 1994, as well as the Call
Report for the period ended March 31 and June 30, 1995, and the
Company's annual audited financial statements prepared by Harbeson,
Beckerleg & Fletcher for the years ended 1992, 1993 and 1994..
3. Reviewed the non-performing assets of the Bank as of March 31 and June
30, 1995.
4. Analyzed the financial condition of the Bank as to asset and earnings
quality, capital adequacy, etc. and the market value and quality of the
Bank's securities investments.
5. Discussed with management the operations and future prospects of the
Company.
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6. Examined the Bank's market share in the Jacksonville Beaches market and
the competitive banking institutions active in the Bank's marketing
area.
7. Compared the Bank's financial performance with other banking
institutions operating in Florida.
8. Compared the price ratios of the proposed transaction with Sun with
those of recent acquisitions of comparable companies in Florida.
9. Reviewed the Company's program for locating the best acquirors.
In arriving at our opinion, we have relied upon the accuracy and completeness
of the information provided to us by the Company and upon representations and
warranties in the Merger Agreement. We have not conducted any independent
verification of such information or performed any independent appraisal of
the Bank's assets and liabilities.
Ewing's opinion is directed to the Board of Directors and does not constitute
a recommendation to any shareholder as to how such shareholder should vote at
the shareholders' meeting held in connection with the proposed transaction.
Ewing has not been requested to opine as to, and the opinion does not
address, the Board's underlying business decision to support and recommend
the acquisition to the shareholders.
This fairness opinion is supported by the analysis contained in the
evaluation and analysis report which has been prepared by Ewing and will be
delivered to the Board of Directors of the Bank.
Based upon this analysis and our knowledge of and experience in the valuation
of Florida banks, it is our opinion that the consideration to be paid by Sun
for the common shares, warrants and options of the Company is fair, from a
financial point of view, to the shareholders of the Company.
Very truly yours,
ALLEN C. EWING & CO.
By: /s/__________________
Benjamin C. Bishop, Jr.
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Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Part 5 of Article 8 of the Georgia Business Corporation Code states:
14-2-850. Part Definitions.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor entity
of a corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise. A director is considered to be serving an employee benefit plan
at the corporation's request if his duties to the corporation also impose
duties on, or otherwise involve services by, him to the plan or to
participants in or beneficiaries of the plan. Director includes, unless the
context requires otherwise, the estate or personal representative of a
director.
(3) "Expenses" include attorney's fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a proceeding.
(5) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
14-2-851. Authority to indemnify.
(a) Except as provided in subsections (d) and (e) of this Code section,
a corporation may indemnify or obligate itself to indemnify an individual
made a party to a proceeding because he is or was a director against
liability incurred in the proceeding if he acted in a manner he believed in
good faith to be in or not opposed to the best interests of the corporation
and, in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he believed in good faith to be in the interests of the participants
in and beneficiaries of the plan is conduct that satisfies the requirement of
subsection (a) of this Code section.
(c) The termination of a proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
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set forth in subsection (a) of this Code section.
(d) A corporation may not indemnify a director under this Code section:
(1) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
(2) In connection with any other proceeding in which he was adjudged
liable on the basis that personal benefit was improperly received by him.
(e) Indemnification permitted under this Code section in connection
with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
14-2-852. Mandatory indemnification.
Unless limited by its articles of incorporation, to the extent that a
director has been successful, on the merits or otherwise, in the defense of
any proceeding to which he was a party, or in defense of any claim, issue, or
matter therein, because he is or was a director of the corporation, the
corporation shall indemnify the director against reasonable expenses incurred
by him in connection therewith.
14-2-853. Advance for expenses.
(a) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(1) The director furnishes the corporation a written affirmation of
his good faith belief that he has met the standard of conduct set forth in
subsection (a) of Code Section 14-2-851; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
part.
(b) The undertaking required by paragraph (2) of subsection (a) of this
Code section must be an unlimited general obligation of the director but need
not be secured and may be accepted without reference to financial ability to
make repayment.
14-2-854. Court-ordered indemnification and advances for expenses.
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification or advances for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice the court considers necessary
may order indemnification or advances for expenses if it determines:
(1) The director is entitled to mandatory indemnification under Code
Section 14-2-852, in which case the court shall also order the corporation to
pay the director's reasonable expenses incurred to obtain court ordered
indemnification;
(2) The director is fairly and reasonably entitled to indemnification
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in view of all the relevant circumstances, whether or not he met the standard
of conduct set forth in subsection (a) of Code Section 14-2-851 or was
adjudged liable as described in subsection (d) of Code Section 14-2-851, but
if he was adjudged so liable his indemnification is limited to reasonable
expenses incurred unless the articles of incorporation or a by-law, contract,
or resolution approved or ratified by the shareholders pursuant to Code
Section 14-2-856 provides otherwise; or
(3) In the case of advances for expenses, the director is entitled,
pursuant to the articles of incorporation, bylaws, or any applicable
resolution or agreement, to payment or reimbursement of his reasonable
expenses incurred as a party to a proceeding in advance of final disposition
of the proceeding.
14-2-855. Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under Code Section 14-2-
851 unless authorized thereunder and a determination has been made in the
specific case that indemnification of the director is permissible in the
circumstances because he has met the standard of conduct set forth in
subsection (a) of Code Section 14-2-851.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under paragraph (1) of this
subsection, by majority vote of a committee duly designated by the board of
directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;
(3) By special legal counsel:
(A) Selected by the board of directors or its committee in the
manner prescribed in paragraph (1) or (2) of this subsection; or
(B) If a quorum of the board of directors cannot be obtained under
paragraph (1) of this subsection and a committee cannot be designated under
paragraph (2) of this subsection, selected by majority vote of the full board
of directors (in which selection directors who are parties may participate);
or
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
(c) Authorization of indemnification or an obligation to indemnify and
evaluation as to reasonableness of expenses shall be made in the same manner
as the determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be made
by those entitled under paragraph (3) of subsection (b) of this Code section
to select counsel.
14-2-856. Shareholder approved indemnification.
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(a) If authorized by the articles of incorporation or a bylaw,
contract, or resolution approved or ratified by the shareholders by a
majority of the votes entitled to be cast, a corporation may indemnify or
obligate itself to indemnify a director made a party to a proceeding
including a proceeding brought by or in the right of the corporation, without
regard to the limitations in other Code sections of this part.
(b) The corporation shall not indemnify a director under this Code
section for any liability incurred in a proceeding in which the director is
adjudged liable to the corporation or is subjected to injunctive relief in
favor of the corporation:
(1) For any appropriation, in violation of his duties, of any
business opportunity of the corporation;
(2) For acts or omissions which involve intentional misconduct or a
knowing violation of law;
(3) For the types of liability set forth in Code Section 14-2-832;
or
(4) For any transaction from which he received an improper personal
benefit.
(c) Where approved or authorized in the manner described in subsection
(a) of this Code section, a corporation may advance or reimburse expenses
incurred in advance of final disposition of the proceeding only if:
(1) the director furnishes the corporation a written affirmation of
his good faith belief that his conduct does not constitute behavior of the
kind described in subsection (b) of this Code section; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
Code section.
14-2-857. Indemnification of officers, employees, and agents.
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation who is not a director is entitled
to mandatory indemnification under Code Section 14-2-852 and is entitled to
apply for court ordered indemnification under Code Section 14-2-854, in each
case to the same extent as a director; and
(2) A corporation may also indemnify and advance expenses to an
officer, employee, or agent who is not a director to the extent, consistent
with public policy, that may be provided by its articles of incorporation,
bylaws, general or specific action of its board of directors, or contract.
14-2-858. Insurance.
A corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of another foreign or
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domestic corporation, partnership, joint venture, trust, employee benefit
plan, or other enterprise against liability asserted against or incurred by
him in that capacity or arising from his status as a director, officer,
employee, or agent, whether or not the corporation would have power to
indemnify him against the same liability under Code Section 14-2-851 or Code
Section 14-2-852.
14-2-859. Application of Part.
(a) A provision treating a corporation's indemnification of or advance
for expenses to directors that is contained in its articles of incorporation,
bylaws, a resolution of its shareholders or board of directors, or in a
contract or otherwise, is valid only if and to the extent the provision is
consistent with this part. If articles of incorporation limit
indemnification or advance for expenses, indemnification and advance for
expenses are valid only to the extent consistent with the articles.
(b) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with his appearance as a
witness in a proceeding at a time when he has not been made a named defendant
or respondent to the proceeding.
Articles of Incorporation Authority
Article 14 of SunTrust's Articles of Incorporation provides:
In addition to any powers provided by law, in the Bylaws, or otherwise,
the Corporation shall have the power to indemnify any person who becomes a
party or who is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including any action by or in the right of the
Corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
Bylaw Authority
Article VII of SunTrust's Bylaws provides:
Section 1. Indemnified Parties; Reliance. Every person (and the heirs
and personal representatives of such person) who is or was a director,
officer or employee of the Corporation, or of any other entity in which he
served as such at the request of the Corporation, may be indemnified by the
Corporation in accordance with the provisions of this Article VII against any
and all liability and reasonable expense (including, without limitation,
counsel fees and disbursements, and amounts of judgments, fines or penalties
against, or amounts paid in settlement by, a director, officer or employee)
that may be incurred by him in connection with or resulting from any claim,
action, suit or proceeding, whether civil, criminal, administrative or
investigative, or in connection with any appeal relating thereto, in which he
may become involved, as a party or otherwise, or with which he may be
threatened, by reason of his being or having been a director, officer or
employee of the Corporation or such other entity or by reason of any action
taken or omitted by him in his capacity as such director, officer or
employee, whether or not he continues to be such at the time such liability
or expense shall have been incurred. Each person who shall act as a
director, officer or employee of the Corporation or of any other entity
referred to in this Section shall be deemed to be doing so in reliance upon
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the right of indemnification provided for in this Article VII.
Section 2. Indemnification As of Right. Every person (and the heirs
and personal representatives of such person) referred to in Section 1 of this
Article VII who has been wholly successful on the merits with respect to any
claim, action, suit or proceeding of the character described in Section 1,
shall be entitled to indemnification as of right.
Section 3. Indemnification Based on Review. Except as provided in
Section 2 of this Article VII, any indemnification under this Article VII
shall be made:
(A) In the case of a claim, action, suit or proceeding other than by
or in the right of the Corporation to procure a judgment in its favor, only
if the Board of Directors or the Executive Committee of such Board, acting by
a quorum consisting of directors who are not parties to such claim, action,
suit or proceeding, shall find, or independent legal counsel (who may be the
regular counsel of the Corporation) shall render an opinion, or the
shareholders by the affirmative vote of a majority of the shares entitled to
vote thereon shall determine, that the director, officer or employee acted in
good faith in what he reasonably believed to be the best interests of the
Corporation or such other entity, as the case may be, and, in addition, in
any criminal action or proceeding, had no reasonable cause to believe that
his conduct was unlawful; and
(B) In the case of a claim, action, suit or proceeding by or in the
right of the Corporation to procure a judgment in its favor, only if the
Board of Directors or the Executive Committee of such Board, acting by a
quorum consisting of directors who are not parties to such claim, action,
suit or proceeding, shall find, or independent legal counsel (who may be the
regular legal counsel of the Corporation) shall render an opinion, or the
shareholders by the affirmative vote of the majority of the shares entitled
to vote thereon shall determine, that the director, officer or employee acted
in good faith in what he reasonably believed to be the best interests of the
Corporation or such other entity, as the case may be; provided, however, that
no indemnification under this Subsection (B) shall be made with regard to (1)
any claim, issue or matter as to which such director, officer or employee
shall have been adjudged to be liable to the Corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine that, despite the adjudication of liability but in view of all the
circumstances of the case, such director, officer or employee is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper, or (2) amounts paid, or expenses incurred, in connection with the
settlement of any such claim, action, suit or proceeding, without the
approval of a court of competent jurisdiction.
For the purpose of Subsection (A) only, the termination of any claim, action,
suit or proceeding, civil, criminal, administrative, or investigative, by
judgment, settlement (either with or without court approval) or conviction,
upon a pleas of guilty or of nolo contendere or its equivalent, shall not
create a presumption that a director, officer or employee did not meet the
standards of conduct set forth in such Subsection.
Section 4. Advances. Expenses incurred with respect to any claim,
action, suit or proceeding of the character described in this Article VII may
be advanced by the Corporation prior to the final disposition thereof upon
receipt of any undertaking by or on behalf of the recipient to repay such
amount unless it shall be ultimately determined that he is entitled to
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indemnification under this Article VII.
Section 5. Indemnification Not Exclusive. The rights of
indemnification provided in this Article VII shall be in addition to any
rights to which any such director, officer, employee or other person may
otherwise be entitled by contract or as a matter of law.
SunTrust has purchased a policy of directors and officers liability
(including Company reimbursement coverage) insurance that provides certain
coverage for SunTrust and its subsidiaries and their respective directors and
officers with respect to, among other things, liability under federal and
state securities laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the even 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.
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Item 21. Exhibits.
Exhibit Description
2.1 Plan and Agreement of Reorganization, dated as of August 31,
1995, by and between Registrant and Ponte Vedra Banking Corporaton
including as an Exhibit thereto the Plan of Merger (attached as
Exhibit A to the Proxy Statement-Prospectus) filed as part of this
Registration Statement.
3.1 Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989).
3.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990).
5 Legal Opinion of Raymond D. Fortin, Senior Vice President,
regarding the legality of the Registrant's Common Stock being
issued in the Transaction.
5.1 Opinion of King & Spalding, tax counsel to SunTrust,
concerning certain federal income tax consequences of
the Transaction.
13.1 Registrant's 1994 Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission (the "Commission") on
February 22, 1995, which incorporates by reference therein
Registrant's Proxy Statement for its 1995 Annual Meeting of
Shareholders (incorporated herein by reference).
23.1 Consent of Arthur Andersen & Co. LLP
23.2 Consent of Harbeson, Beckerleg & Fletcher
23.3 Consent of Raymond D. Fortin (included in Exhibit 5).
99.1 Form of Proxy
99.2 Ponte Vedra Banking Corporation's Annual Report on Form 10-KSB
for the year ended December 31, 1994.
99.3 Ponte Vedra Banking Corporation's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1995.
99.4 Ponte Vedra Banking Corporation's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1995.
II-8
<PAGE>
Item 22 Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b)(1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(b)(2) The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
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<PAGE>
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide public offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-10
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, SunTrust Banks, Inc. certifies that it has reasonable grounds to
believe that it meets all of 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 Atlanta, State of
Georgia, on the 8th day of August 1995.
SUNTRUST BANKS, INC.
By:/s/ James B. Williams
James B. Williams
Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, constitutes and appoints John W. Spiegel and Raymond D. Fortin, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, to do any and all acts and things
and execute, in the name of the undersigned, any and all instruments which
said attorneys-in-fact and agents may deem necessary or advisable in order to
enable SunTrust Banks, Inc. to comply with the Securities Act of 1933 and any
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing with the Securities and Exchange Commission of the
registration statement on Form S-4 under the Securities Act of 1933,
including specifically but without limitation, power and authority to sign
the name of the undersigned to such 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, and each of them, full power and authority to do and to
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and any of them, or their
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 by the following persons in the
capacities indicated as of the 8th day of August 1995.
Signature Title
/s/ James B. Williams Chairman of the Board
James B. Williams and Chief Executive Officer
/s/ L. Phillip Humann President
L. Phillip Humann and Director
/s/ John W. Spiegel Executive Vice President
John W. Spiegel and Chief Financial Officer
/s/ William P. O'Halloran Senior Vice President
William P. O'Halloran and Chief Accounting Officer
II-11
<PAGE>
/s/ J. Hyatt Brown Director
J. Hyatt Brown
/s/ James D. Camp, Jr. Director
James D. Camp, Jr.
/s/ Roberto C. Goizueta Director
Roberto C. Goizueta
/s/ T. Marshall Hahn, Jr. Director
T. Marshall Hahn, Jr.
/s/ David H. Hughes Director
David H. Hughes
/s/ Joseph L. Lanier, Jr. Director
Joseph L. Lanier, Jr.
/s/ H. G. Pattillo Director
H. G. Pattillo
/s/ Scott L. Probasco, Jr. Director
Scott L. Probasco, Jr.
/s/ R. Randall Rollins Director
R. Randall Rollins
/s/ Robert W. Scherer Director
Robert W. Scherer
/s/ J. Walter Tucker, Jr. Director
J. Walter Tucker, Jr.
/s/ James H. Williams Director
James H. Williams
II-12
<PAGE>
EXHIBIT INDEX
Exhibit Description
2.1 Plan and Agreement of Reorganization, dated as of August 31,
1995, by and between Registrant and Ponte Vedra Banking Corporaton
including as an Exhibit thereto the Plan of Merger (attached as
Exhibit A to the Proxy Statement-Prospectus) filed as part of this
Registration Statement.
3.1 Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989).
3.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990).
5 Legal Opinion of Raymond D. Fortin, Senior Vice President,
regarding the legality of the Registrant's Common Stock being
issued in the Transaction.
5.1 Opinion of King & Spalding, tax counsel to SunTrust,
concerning certain federal income tax consequences of
the Transaction.
13.1 Registrant's 1994 Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission (the "Commission") on
February 22, 1995, which incorporates by reference therein
Registrant's Proxy Statement for its 1995 Annual Meeting of
Shareholders (incorporated herein by reference).
23.1 Consent of Arthur Andersen & Co. LLP
23.2 Consent of Harbeson, Beckerleg & Fletcher
23.3 Consent of Raymond D. Fortin (included in Exhibit 5).
99.1 Form of Proxy
99.2 Ponte Vedra Banking Corporation's Annual Report on Form 10-KSB
for the year ended December 31, 1994.
99.3 Ponte Vedra Banking Corporation's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1995.
99.4 Ponte Vedra Banking Corporation's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1995.
<PAGE>
October 11, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street
Washington, D.C. 20549
Ladies and Gentlemen:
As Senior Vice President, Managing Attorney and Secretary for SunTrust
Banks, Inc. (the "Registrant"), I am familiar with the preparation and filing
of the Registrant's Registration Statement on Form S-4, as filed with the
Securities and Exchange Commission on or about October 17, 1995, pursuant to
which the Registrant proposes to issue up to 154,539 shares of its $1.00 par
value common stock ("Registrant's Common Stock") to the shareholders of
Ponte Vedra Banking Corporation upon the merger of Ponte Vedra Banking
Corporation, with a wholly-owned subsidiary of Registrant.
I have examined, and am familiar with, the originals or copies,
certified or otherwise, of the documents, corporate records and other
instruments of the Registrant relating to the proposed issuance of said
Registrant's Common Stock which I deem relevant and which form the basis of
the opinion hereinafter set forth.
I am of the opinion that under the laws of the State of Georgia, the
jurisdiction in which the Registrant is incorporated and the jurisdiction in
which the Registrant has its principal office, upon the issuance of the
shares of the Registrant's Common Stock pursuant to the aforesaid
Registration Statement, all such shares when so issued will be duly
authorized, validly issued and outstanding, and will be fully paid and non-
assessable shares of the Registrant's Common Stock, and no personal liability
will attach to the holders of any of the shares of the Registrant's Common
Stock.
The undersigned counsel to the Registrant hereby consents to the use of
my opinion as Exhibit 5 to the aforesaid Registration Statement.
Sincerely,
RDF/jj
<PAGE>
Exhibit 5.1
October 4, 1995
SunTrust Banks, Inc.
25 Park Place, NE
Atlanta, Georgia 30303
Ponte Vedra Banking Corporation
P.O. Box 1754
Ponte Vedra Beach, Florida 32004
Re: Federal Income Tax Consequences of Merger
of Ponte Vedra Banking Corporation with and
into Sun Banks, Inc., a Wholly Owned Subsidiary
of SunTrust Banks, Inc.
Ladies and Gentlemen:
We have acted as tax counsel to SunTrust Banks, Inc. ("SunTrust")
in connection with the merger (the "Merger") of Ponte Vedra Banking
Corporation ("Ponte Vedra") with and into Sun Banks, Inc., a wholly owned
subsidiary of SunTrust ("Sun Banks"), pursuant to the Agreement and Plan of
Reorganization dated as of August 31, 1995 (the "Agreement") by and among
SunTrust, Sun Banks and Ponte Vedra. In our capacity as SunTrust's tax
counsel, you have requested our opinion regarding certain of the federal
income tax consequences of the Merger.
We understand that our opinion will be referred to in the Proxy
Statement-Prospectus (the "Proxy Statement") that forms part of the
Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission in connection with the Merger. We hereby consent to
such use of our opinion.
All capitalized terms used herein without definition have the
respective meanings specified in the Proxy Statement.
INFORMATION RELIED ON
In rendering the opinion expressed herein, we have examined such
documents as we have deemed appropriate, including the Agreement and the
Proxy Statement. In our examination of documents, we have assumed, with
your consent, that all documents submitted to us as photocopies or
telecopies faithfully reproduce the originals thereof, that such originals
are authentic, that all such documents have been or will be duly executed to
the extent required, and that all statements set forth in such documents are
accurate. We also have obtained such additional information and
representations as we have deemed relevant and necessary through
consultation with various representatives of SunTrust and Ponte Vedra.
Nevertheless, we have not yet obtained written certificates from SunTrust or
Ponte Vedra to verify certain relevant facts that have been represented to
us or that we have assumed in rendering this opinion. Before rendering our
opinion regarding federal tax consequences at the closing of the Merger, we
anticipate that we will obtain such written certificates and will attach
them as exhibits to our tax opinion delivered at the closing of the Merger.
Based upon the aforementioned information, we have assumed that
the following statements are true on the date hereof and will be true at the
time of the Merger:
(1) The Merger will be consummated in compliance with the material
terms of the Agreement and none of the material terms and conditions therein
have been waived or modified and neither SunTrust, Sun Banks, nor Ponte Vedra
has any plan or intention to waive or modify any such material term or
condition.
(2) The fair market value of the SunTrust Common Stock and other
consideration received by each Ponte Vedra Shareholder will be approximately
equal to the fair market value of the Ponte Vedra Common Stock surrendered in
the Merger.
(3) There is no plan or intention by the Ponte Vedra Shareholders who
own one percent or more of the Ponte Vedra Common Stock, and to the best of
the knowledge of the management of Ponte Vedra, there is no plan or intention
on the part of the remaining Ponte Vedra Shareholders to sell, exchange, or
otherwise dispose of a number of shares of SunTrust Common Stock received in
the Merger that would reduce the Ponte Vedra Shareholders' ownership of
SunTrust Common Stock to a number of shares having a value, as of the date of
the Merger, of less than 50 percent of the value of all of the formerly
outstanding Ponte Vedra Common Stock as of the same date. For purposes of
this representation, shares of Ponte Vedra Common Stock exchanged for cash or
other property, surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of SunTrust Common Stock will be treated as outstanding
Ponte Vedra Common Stock on the date of the Merger. Moreover, shares of
Ponte Vedra Common Stock and shares of SunTrust Common Stock held by Ponte
Vedra Shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger will be considered in making this representation.
(4) Following the Merger, Sun Banks will hold at least 90 percent of
the fair market value of Ponte Vedra's net assets and at least 70 percent of
the fair market value of Ponte Vedra's gross assets held immediately prior to
the Merger. For purposes of this representation, amounts paid by Ponte Vedra
to dissenters, amounts paid by Ponte Vedra to Shareholders who receive cash
or other property, and amounts used by Ponte Vedra to pay reorganization
expenses will be included as assets of Ponte Vedra held immediately prior to
the Merger.
(5) SunTrust will not take any action immediately subsequent to the
Merger that will cause Sun Banks to hold less than 90 percent of the fair
market value of Ponte Vedra's net assets and less than 70 percent of the fair
market value of Ponte Vedra's gross assets held immediately prior to the
Merger. For purposes of this representation, amounts paid by Ponte Vedra to
dissenters, amounts paid by Ponte Vedra to Shareholders who receive cash or
other property, amounts used by Ponte Vedra to pay reorganization expenses,
and all redemptions and distributions (except for regular, normal dividends)
made by Ponte Vedra will be included as assets of Ponte Vedra held
immediately prior to the Merger.
(6) Prior to the Merger, SunTrust will own all of the outstanding
shares of stock of Sun Banks.
(7) Sun Banks has no plan or intention to issue additional shares of
its stock that would result in SunTrust owning less than 80 percent of the
total combined voting power of all classes of Sun Banks stock entitled to
vote and at least 80 percent of the total number of shares of all other
classes of Sun Banks stock.
(8) SunTrust has no plan or intention to cause Sun Banks to issue
additional shares of Sun Banks stock that would result in SunTrust owning
less than 80 percent of the total combined voting power of all classes of Sun
Banks stock entitled to vote and at least 80 percent of the total number of
shares of all other classes of Sun Banks stock.
(9) SunTrust has no plan or intention to reacquire any of the shares
of SunTrust Common Stock issued in the Merger.
(10) SunTrust has no plan or intention to liquidate Sun Banks; to
merge Sun Banks with and into another corporation; to sell or otherwise dispose
of any of the capital stock of Sun Banks; or to cause Sun Banks to sell or
otherwise dispose of any of its assets or any of the assets acquired from
Ponte Vedra, except for dispositions made in the ordinary course of business
or transfers of assets to a corporation in which Sun Banks owns stock
possessing at least 80 percent of the total combined voting power of all
classes of stock entitled to vote and at least 80 percent of the total number
of shares of all other classes of stock of such corporation.
(11) The liabilities of Ponte Vedra assumed by Sun Banks and the
liabilities to which the transferred assets of Ponte Vedra are subject were
incurred by Ponte Vedra in the ordinary course of its business.
(12) Following the Merger, Sun Banks will continue the historic
business of Ponte Vedra or use a significant portion of Ponte Vedra's business
assets in a business.
(13) Each of SunTrust, Sun Banks, and Ponte Vedra will pay all
expenses incurred by it or on its behalf in connection with the Merger. The
Shareholders of Ponte Vedra will pay their expenses, if any, incurred in
connection with the Merger.
(14) There is no intercorporate indebtedness existing between
SunTrust and Ponte Vedra or between Sun Banks and Ponte Vedra that was or will
be issued, acquired, or settled at a discount.
(15) No stock of Ponte Vedra will be issued in the Merger.
(16) Neither Ponte Vedra, SunTrust, nor Sun Banks is a regulated
investment company, a real estate investment trust, or a corporation 50
percent or more of the value of whose total assets (excluding cash, cash
items, receivables and U.S. government securities) are stock or securities
and 80 percent or more of the value of whose total assets are assets held for
investment. For purposes of the 50 percent and 80 percent determinations
under the preceding sentence, stock and securities in any subsidiary
corporation shall be disregarded, and the parent corporation shall be deemed
to own its ratable share of the subsidiary's assets. A corporation shall be
considered a subsidiary for purposes of this paragraph if the parent owns 50
percent or more of the combined voting power of all classes of stock entitled
to vote, or 50 percent or more of the total value of shares of all classes of
stock outstanding.
(17) On the date of the Merger, the fair market value of the assets of
Ponte Vedra will equal or exceed the sum of the liabilities assumed by Sun
Banks, plus the amount of liabilities, if any, to which the transferred
assets are subject.
(18) Ponte Vedra is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership, foreclosure, or
similar proceeding in a federal or state court.
(19) None of the compensation received by any shareholder-employees
of Ponte Vedra in contemplation of or as a result of the Merger will be
separate consideration for, or allocable to, any of their shares of Ponte
Vedra Common Stock; none of the shares of SunTrust Common Stock received by any
shareholder-employees of Ponte Vedra pursuant to the Merger will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-employees pursuant to the Merger will be
for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
(20) The payment of cash in lieu of fractional shares of SunTrust
Common Stock is solely for the purpose of avoiding the expense and
inconvenience to SunTrust of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that
will be paid in the Merger to the Ponte Vedra Shareholders instead of issuing
fractional shares of SunTrust Common Stock will not exceed one percent of the
total consideration that will be issued in the Merger to the Ponte Vedra
Shareholders in exchange for their shares of Ponte Vedra Common Stock. The
fractional share interests of each Ponte Vedra Shareholder will be aggregated
and no Ponte Vedra Shareholder will receive cash in lieu of a fractional
share interest in an amount equal to or greater than the value of one full
share of SunTrust Common Stock.
OPINION
Based on the foregoing, it is our opinion that:
(1) The Merger will constitute a "reorganization" within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code;
(2) The exchange in the Merger of Ponte Vedra Common Stock for
SunTrust Common Stock will not give rise to gain or loss to the Ponte Vedra
Shareholders; and
(3) The discussion in the Proxy Statement under the heading "The
Merger--Certain Federal Income Tax Consequences," accurately summarizes the
material federal income tax consequences of the Merger to Ponte Vedra
Shareholders.
The opinion expressed herein is based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. In addition, our opinion is based solely on the
documents that we have examined, the additional information and certificates
that we have obtained, and the statements set out herein that we have assumed
to be true on the day hereof and at the time of the Merger. Our opinion
cannot be relied upon if any of the material facts contained in such documents,
in such certificates, or in any such additional information are, or later
become, inaccurate or if any of the material statements set out herein are, or
later become, inaccurate. Finally, our opinion is limited to the tax matters
specifically covered thereby, and we have not been asked to address herein,
nor have we addressed herein, any other tax consequences of the Merger.
Very truly yours,
KING & SPALDING
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
January 31, 1995 and incorporated by reference in SunTrust Banks, Inc.'s Form
10-K for the year ended December 31, 1994 and to all references to our firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
October 5, 1995
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
of our report dated January 23, 1995 on our audits of the financial
statements of Ponte Vedra Banking Corporation as of December 31, 1994 and
1993 and for the years then ended. We also consent to the reference to our
firm under the caption "Relationships with Independent Public Accountants
and Experts."
HARBESON, BECKERLEG & FLETCHER
Jacksonville, Florida
October 11, 1995
<PAGE>
Exhibit 99
P R O X Y
Ponte Vedra Banking Corporation
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Ponte Vedra Banking Corporation ("Ponte
Vedra") hereby constitutes and appoints Guy N. Nix, Jr. and Leslie D.
Williams, or any of them, the true and lawful attorneys and proxies of the
undersigned, each with full power of substitution, for and on behalf of the
undersigned, to act at and vote at the Special Meeting of Shareholders
("Meeting") to be held on November 14, 1995, at 5:30 p.m., Ponte Vedra time,
at the Ponte Vedra's Sawgrass Office, 100 Sawgrass Corners Drive, Ponte Vedra
Beach, Florida, and at any adjournment or adjournments thereof:
1. For [ ] Against [ } Abstain [ ]
The approval of an Agreement and Plan of Reorganization, dated
as of August 31, 1995, by and between SunTrust Banks, Inc.
("SunTrust"), SunBanks, Inc. ("SunBanks") and Ponte Vedra and a
related Plan and Agreement of Merger between Sun Banks and Ponte
Vedra. Further, approval for the conversion of each outstanding
share of the $1.00 par value common stock of Ponte Vedra ("Ponte
Vedra Common Stock"), in accordance with the election by each Ponte
Vedra shareholder, into the Merger Consideration. The Merger
Consideration shall mean one of the following: (a) cash in the
amount of $17.50 (the "Cash Consideration"); (b) the number of
shares of SunTrust Common Stock having a value of $17.50 based on
the Average Market Price (the "Stock Consideration"); or (c) a
combination of Cash Consideration and Stock Consideration. Average
Market Price shall mean the average of the closing prices per share
of SunTrust Common Stock as reported on the composite transactions
tape of the New York Stock Exchange for each of the ten consecutive
trading days ending on and including the trading day which is three
(3) business days prior to the Effective Date.
2. In their discretion, to act and vote upon such other business
as may come before the Meeting or any adjournment or adjournments
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 SET FORTH
ABOVE.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated October ___, 1995, and the Proxy Statement-
Prospectus and accompanying documents forwarded therewith and ratifies all
lawful action taken by the above-named attorneys and proxies.
Date: ___________________, 1995 _________________(SEAL)
_________________(SEAL)
Note: Signature(s) should agree with
name(s) on Ponte Vedra stock certificate(s).
Executors, administrators, trustees and other
fiduciaries, and persons signing on behalf
of corporations or partnerships, should so
indicate when signing.
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1994
or
[ ] Transition Report Pursuant to Section 13 or I 5(d)
of the Securities Exchange Act of 1934
For the Transition period from - to
Commission File Number 33-26545-A
PONTE VEDRA BANKING CORPORATION
(Exact name of small business issuer as specified in its charter)
Florida 59-2921958
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Sawgrass Corners Drive
Ponte Vedra Beach, FL 12082
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number including Area Code 904/285-7222
Securities Registered Pursuant to Section 12(b) of the Act: None,
Securities Registered Pursuant to Section 12(g) of the Act: None,
Indicate by check mark whether the issuer (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 such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
the filing requirements for the past 90 days. YES [X] NO [ ]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part ill of this Form 10-KSB or any amendment to
this Form 10-KSB.
State issuer's revenues for its most recent fiscal year. $310,000
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stocks, as of a specified date within
the past 60 days.
The estimated market value within the past 60 days ($10.00 a share) of the
voting stock held by non-affiliates of the Registrant computed by reference
to the price at which such stock was sold pursuant to the Registrant's
prospectus dated March 1, 1989 ($10.00 per share), as of March 1, 1995 was
$4,339,700. The number of shares of the Registrant's common stock, par value
$1.00 per share, issued and outstanding as of March 1, 1995, was 649,120.
Documents Incorporated by reference: None-
<PAGE>
TABLE OF CONTENTS
PARTI
Item 1 Description of Business ------------------------------------------ 1
Item 2 Description of Properties ---------------------------------------- 5
Item 3 Legal Proceedings ----------------------------------------------- 35
Item 4 Submission of Matters to a Vote of Security Holders ------------- 35
PART 11
Item 5 Market for the Registrant's Equity and Related Stockholder
Matters --------------------------------------------------------- 34
Item 6 Management's Discussion and Analysis of Financial Condition and
Results of Operations ------------------------------------------- 25
Item 7 Financial Statements -------------------------------------------- 6
Item 8 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ---------------------------------------- 35
PART III
Item 9 Directors, Executive Officers, Promoters and Control Persons of
the Registrant; Compliance with Section 16 (a) of Exchange Act -- 37
Item 10 Executive Compensation ------------------------------------------ 39
Item 11 Security Ownership of Certain Beneficial Owners and Management -- 40
Item 12 Certain Relationships and Related Transactions ------------------ 42
PART IV
Item 13 Exhibits, Lists and Reports on Form 8-K ------------------------- 43
<PAGE>
BUSINESS
General
Ponte Vedra Banking Corporation (referred to herein as the "Holding Company"
or the "Registrant") was incorporated under the laws of Florida effective
October 4, 1988, primarily to serve as the holding company for a national
banking association. On July 19, 1989, the Holding Company received the
approval of the Board of Governors of the Federal Reserve System (the "Fed")
to use the proceeds of an offering pursuant to a prospectus dated March
1,1989 (the "Prospectus"), to acquire 550,000 shares of common stock of Ponte
Vedra National Bank (the "Bank") (all of the issued and outstanding shares of
common stock of the Bank) upon the opening of the Bank for business. The Bank
received the final approval of the United States Offices of the Comptroller
of the Currency ("OCC") and opened for business on December 18, 1989.
Banking-Operations
The Bank is a community-oriented bank serving primarily individual consumers,
professionals, service-oriented small businesses, and real estate developers.
The Bank conducts a general commercial banking business, including the
acceptance of deposits from and making of loans to individuals and small to
medium-sized businesses. The Bank does not currently offer trust or
permissible securities services.
The Bank opened for business on December 18, 1989, in a modular building on
the proposed site of its Headquarters Office at 1 00 Sawgrass Corners Drive,
Ponte Vedra Beach, St. Johns County, Florida 32082. Construction of the
Bank's Headquarters Office was completed in July 1990, and the Bank moved its
operations from the modular building to this office at that time. The Bank
has established three branches. The first was the Ponte Vedra Boulevard
Office, at 282 Ponte Vedra Boulevard, Ponte Vedra Beach, St. Johns County,
Florida 32082, which opened in August 1990 and was relocated to 3720 S. 3rd
Street, Jacksonville Beach, Florida 32250 (the South Beach Office) in
November of 1993. The second was the North Beach Office, at 363 Atlantic
Boulevard, Suite 16, Atlantic Beach, Duval County, Florida 32233, which
opened in January 1991 . The third was the Jacksonville Beach Office, which
opened in February 1993, at 100 North Third Street, Jacksonville Beach, Duval
County, Florida 32250. Opening these branches has enabled the bank to expand
its service to include Ponte Vedra Beach, Jacksonville Beach, Neptune Beach
and Atlantic Beach, Florida (the "Beaches Service Area") and employ a present
staff of fifty-nine (59) full-time employees and two (2) part-time employees.
The principal sources of funds for the Bank's loans and other investments are
its deposit liabilities. It is the Bank's general policy to offer a complete
line of deposit services, including: non-interest checking accounts, regular
savings accounts, NOW and SuperNOW accounts, money market investment
accounts, as well as, a full range of certificates of deposit and individual
retirement accounts. These services are packaged as attractively as possible,
within the constraint that all services offered are profitable for the Bank.
The competition for deposits extends not only to other banks, but also to
other types of financial institutions. The Bank is committed to providing its
customers with a wide variety of products and services at competitive
interest rates. The Bank does not, however, depend on large certificates of
deposit or brokered deposits. Management continues to emphasize quality
customer service as a key to strengthening the Bank's deposit base.
1
<PAGE>
The Bank's loan portfolio is the largest component of earning assets and
therefore generates the highest amount of revenues. Therefore, management
assesses both credit quality objectives and interest rate objectives in
determining whether to make a given loan and the appropriate pricing. The
Bank's objectives are to maintain a diversified portfolio in order to spread
the risk and protect itself from economic downturns in particular industries.
The Bank's priorities in extending various types of loans will change from
time to time as interest rates, money market Conditions, and competitive
factors change. The Bank now follows these general guidelines to determine
which types of loans should be made:
Desirable Loans
Well secured, short-term working capital loans to established businesses
in our market area;
Loans for and secured by general use machinery and equipment which has a
developed retail market;
Loans secured by readily marketable stocks and bonds with adequate margins
for market fluctuations. We define readily marketable securities as those
stocks with an established national market and a history of steady
performance, as well as those bonds rated "A" or better;
Loans secured by cash value of life insurance in an amount equal to or
greater than the loan;
Loans secured by savings or time accounts of an amount equal to or in
excess of the amount of the loan. This applies primarily to the Bank's own
deposits. It also applies to deposits in other local financial
institutions, as long as there is reasonable expectation that these
deposits will move to the Bank and there is an agreement by the other bank
to acknowledge the assignment and to subordinate their right of offset;
Automobile loans secured by a vehicle whose wholesale value is within NADA
guidelines;
Loan with terms of five years or less, secured by sufficient equity in
real estate, with good primary sources of repayment;
Interim construction loans with a permanent takeout;
Home real estate bridge loans to assist a customer in buying a new home
and selling an old one, as long as it is well secured by equity in the old
home; and
Permanent real estate loans whose interest rates can be adjusted
periodically to market interest rates.
Undesirable Loans,
Loans secured by stock that is closely held and not readily marketable;
Loans secured by speculative (below "B") bonds or bonds issued by foreign
entities;
2
<PAGE>
Interim construction loans without a permanent takeout or plan for
permanent financing;
Loans secured by household goods, jewelry, or works of art; and
Working capital loans to new businesses that are not well secured.
Loans Prohibited Under Bank Policy
Loans secured by restricted stock;
Loans secured by stock of our bank;
Loans secured by U.S. savings bonds
Loans secured by property held in trust for a minor or an incompetent
person;
Loans to borrowers who have previously declared bankruptcy;
Loans to people whose honesty is questionable;
Loans for purposes that might not be legal;
Loans to employees or directors when they are not entirely consistent with
FIRA as spelled out in the regulatory Compliance manual; and
Any loan that has the appearance of being discriminatory under the Equal
Credit Opportunity Act or other federal regulations.
The Bank's fee income has been significantly enhanced by its brokered
mortgage operation which originates residential real estate mortgages and
arranges permanent financing from sources external to the Bank.
In May 1994 the Ponte Vedra National Bank started a Small Business
Administration (SBA) lending department in an effort to better serve the
small business owners and professionals in the beaches and greater
Jacksonville area. SBA loans are commercial loans made to small businesses
and professionals that are partially guaranteed by the U.S. Small Business
Administration. The SBA loan programs allow the Bank greater flexibility in
lending to start-up companies as well as existing companies. The repayment
terms for the SBA loans are usually longer than typical commercial loans
resulting in lower monthly payments for the business owner. Ponte Vedra
National Bank is proud of its small business lending practices and because of
the Bank's experience at making SBA loans, the bank was named a Certified
Lender by the SBA. Ponte Vedra National Bank is the only Bank based at the
beaches that is a Certified Lender and is one of only three Jacksonville
based banks that have earned this respected status.
The principal expenses of the Bank are interest paid on savings and other
deposits (including NOW accounts), employee compensation, occupancy expenses
and other operating expenses.
3
<PAGE>
The Bank, as a national bank, is permitted to branch only to the extent that
state banks and other institutions carrying on a banking business in Florida
are permitted to branch. Although Florida law prohibited cross-country- de
novo branching, in May 1988, the U.S. Comptroller of the Currency permitted a
nationally chartered bank in Dade County to open a branch in Palm Beach
County. In response to this action, the Florida Legislature enacted a statute
giving state chartered banks parity with national banks. The Bank currently
has branches in Duval County and St. Johns County.
Competition
The banking business is highly competitive. The Bank competes with other
commercial banks, savings & loan associations, and credit unions in the
Beaches Service Area. Competition in the financial services industry has
heightened as a result of deregulation and expansion of lending and
investment powers of other financial service organizations such as savings &
loan associations, credit unions, insurance companies, and other non-bank
financial institutions.
Supervision and Regulation
The banking and thrift industries are highly regulated, with numerous federal
and state laws and regulations governing their activities. The Holding
Company is subject to regulation under the Bank Holding Company Act of 1956,
as amended (BHC Act), and its examination reporting requirements. The BHC Act
is administered by the FED, and the Holding Company, as a registered bank
holding company, is required to file with the Fed annual reports and other
information regarding its business operations and those of its subsidiaries.
Additionally, the Holding Company is subject to examination by the Fed. The
BHC Act requires the Holding Company to obtain the Fed's prior approval
before acquiring substantially all the assets of any bank, directly or
indirectly, ownership or control of any voting shares of a bank if, after
such acquisition, it would own or control, directly or indirectly, more than
5% of the voting stock of such bank.
The Holding Company is also restricted in its permissible activities by the
provisions of the Glass-Steagall Act of 1933, which prohibits the Holding
Company from owning subsidiaries that are engaged principally in the issue,
flotation, underwriting, public sale or distribution of securities.
The Bank is supervised, regulated and regularly examined by the OCC. The Bank
is also a member of the Federal Deposit Insurance Corporation ("FDIC"), and,
as such, deposits in the Bank are insured by the FDIC (currently up to the
maximum of $100,000 per account).
The operation of the Bank is subject to federal statutes applicable to
national banks and the regulation of the OCC, the Fed and the FDIC. Such
statutes and regulations relate to required reserves, investments, loans,
mergers and consolidations, issuance of securities, payment of dividends,
establishment of branches and other aspects of the Bank's operations. Under
the provisions of the Federal Reserve Act, the Bank is subject to certain
restrictions on any extensions of credit to the Holding Company, or with
certain exceptions, other affiliates, on investments in the stock or other
securities of national banks, and on the taking of such stock or securities
as collateral on loans to any borrower. In addition, the Bank is prohibited
from engaging in certain tie-in arrangements in connection with any extension
of credit or the providing of any property or service.
4
<PAGE>
Properties
The Bank's headquarters is located at Sawgrass Corners on Highway A1A in
Ponte Vedra Beach, Florida 32082. This office is a one-story, 10,500 square
foot building with three drive-in lanes and adjacent parking. The Sawgrass
Office is leased from a related party. The initial term of the lease extends
until 2005 and the current lease rate is $175,000 per year. The Bank pays all
utilities, insurance, maintenance, and property taxes. The lease has two five-
year renewal options and an option to purchase the leased property during the
year 2001 at its then fair market value,
The North Beach Office is leased from an unrelated third party. The current
term of the lease extends until the year 2000 with a current lease rate of
$52,785 per year. The Bank pays, all utilities, insurance and property taxes.
The lease has two five-year renewal options. The Bank does not have an option
to purchase this property.
The Jacksonville Beach Office is owned by the Bank. The Bank purchased the
building and land in 1992 for $512,000 and subsequently spent approximately
$125,000 to renovate the facility.
In 1992, the Bank purchased an out parcel of the South Beach Regional
Shopping Center at the corner of Third 5treet and Jacksonville Drive for
$377,000 (The "South Beach Office"). The Bank built a $364,000 branch
facility on this lot and relocated the Ponte Vedra Boulevard Office to this
site.
5
<PAGE>
Ponte Vedra Banking Corporation
Management's Statement On Responsibility For Financial Reporting
To Our Stockholders,
The Management of Ponte Vedra Banking Corporation and its subsidiary Ponte
Vedra National Bank is responsible for the objectivity and integrity of the
financial statements and all other financial information included in this
annual report. The consolidated financial statements include amounts that are
based an management's best estimates and judgments. Management believes that
the financial statements have been prepared in accordance with generally
accepted accounting principles and that the other financial information in
the annual report is consistent with those financial statements.
The corporation maintains an internal audit staff which monitors compliance
with the corporation's system of internal controls and reports to management
and to the Audit Committee of the Board of Directors.
The Audit Committee of the Board of Director's has responsibility for
recommending to the Board of Directors the appointment of the independent
auditors for Ponte Vedra Banking Corporation and its subsidiary Ponte Vedra
National Bank. The Audit Committee meets periodically with the internal
auditor to review the scope and findings of the respective audits. The
internal auditor, independent auditors and management each have full and free
access to meet privately as well as together with the Audit Committee to
discuss internal controls, accounting, auditing or other financial reporting
matters.
The consolidated financial statements of Ponte Vedra Banking Corporation have
been independently audited by Harbeson, Beckerleg and Fletcher. Management
has made available all of the Corporation's financial records and related
data, as well as the minutes to stockholders' and directors' meetings.
Furthermore, management believes that all representations made to Harbeson,
Beckerleg and Fletcher during its audit were valid and appropriate. The firms
report appears on the following page.
G. Bruce Douglas Guy N. Nix, Jr.
Chairman and Chief Executive Officer President and Chief Executive Officer
Ponte Vedra Banking Corporation Ponte Vedra National Bank
February 28, 1995
6
<PAGE>
To the Board of Directors
and Stockholders of
Ponte Vedra Banking Corporation
We have audited the accompanying consolidated balances sheets of Ponte
Vedra Banking Corporation and its subsidiary as of December 31, 1994 and
1993, and the related consolidated statements of operations, of changes in
stockholders' equity and of cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express in opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ponte
Vedra Banking Corporation and its subsidiary as of December 31, 1994 and
1993, and the results of their operations and cash flows for the years then
ended, in conformity with generally accepted accounting principles.
HARBESON, BECKERLEG & FLETCHER
Jacksonville, Florida
January 23, 1995
7
<PAGE>
PONTE VEDRA BANKING CORPORATION
CONSOLIDATED BALANCE SHEETS
At December 31
(In thousands) 1994 1993
ASSETS
Cash and Due From Banks $7,657 $8,406
Interest Bearing Deposits in Banks 100 100
Federal Funds Sold 1,700 1,800
Investment Securities Held to Maturity (Note 3) 10,397 10,476
Investment Securities Available for Sale 1,909 764
Loans, Less Allowance for Loan Losses (Note 4) 48,500 35,492
Property, Equipment and Leashold Improvements,
net (Notes 5 & 7) 3,274 3,073
Accrued interest receivable 349 221
Other assets 282 257
Total Assets $74,168 $60,589
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $17,349 $16,011
NOW Accounts 10,891 11,815
Savings 4,251 3,033
Money Market Accounts 12,534 12,017
Certificates of Deposit Under $100,000 15,878 6,867
Certificates of Deposit $100,000 and Over 6,224 3,209
Total Deposits 67,127 52,952
Securities Sold Under Agreements to Repurchase 622 1,560
Acrued Interest Payable 52 24
Other Liabilities 146 119
Total Liabilities 67,947 54,655
Commitments and Contingent Liabilities (Note 7)
Common stock, Par value $1, 1,000,000 shares authorized;
652,290 shares issued 653 653
Capital in Excess of Par 5,818 5,818
Net Unrealized Gain (loss) on Investment Securities
Available For Sale (13) 10
Retained Earnings (206) (516)
Treasury Stock (3,800 Shares), at cost (Note 7) (31) (31)
Total Stockholders' equity 6,221 5,934
Total liabilities and stockholders' equity $74,168 $60,589
See Independent Auditor's Report and Notes to Financial Statements.
8
<PAGE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31
(Dollars in thousands) 1994 1993
Interest Income:
Interest and Fees on Loans $3,843 $2,969
Interest on Investment Securities:
U.S. Treasury 377 25
U.S. Government Agencies and Corporations 166 550
Other Securities 10 10
Interest on Federal Funds Sold 63 58
Interest on Deposits in Banks 4 4
Total Interest Income 4,463 3,616
Interest expense:
Interest on Deposits 1,117 849
Other 18 14
Total Interest Expense 1,135 863
Net interest income 3,328 2,753
Provision for loan losses 139 101
Net Interest Income After Provision for Loan Losses 3,189 2,652
Other Income:
Securities Transactions (Note 3) 5 141
Service Fees 640 469
Other Operating Income 295 422
Total Other Income 940 1,032
Other Expenses:
Salaries and Benefits 2,050 1,721
Occupancy Expense 611 607
Other Operating Expense 1,218 1,067
Total Other Expense 3,879 3,395
Income Before Income Taxes 250 289
Income Tax Expense, Net of Related Tax Benefits
of Operating Loss Carryforwards (Note 6) (60) -
Net Income $310 $289
Earnings Per Share:
Net Income $0.48 $0.45
Weighted Average Shares Outstanding 648,220 647,957
See Independent Auditor's Report and Notes to Financial Statements
9
<PAGE>
<TABLE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
Consolidated Statement Of Changes in Stockholders' Equity
(Dollars in thousands)
<CAPTION>
Capital Unrealized
Common In Excess Gain Retained Treasury
stock of Par (Loss) Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1992 $653 $5,818 ($1,163) - $5,308
Net Income - - 358 - 358
Treasury Stock Purchased (Note 7) - - - (65) (65)
Stock Issued, Stock Bonuses - - - 14 14
Balance, December 31, 1992 653 5,818 (805) (51) 5,615
Treasury Stock Sold (Note 7) - - 20 20
Change in Unrealized Gain (Loss) - - $10 - - 10
Net Income - - 289 - 289
Balance, December 31, 1993 653 5,818 10 (516) (31) 5,934
Change in Unrealized Gain (Loss) - - (23) - - (23)
Net Income - - - 310 - 310
Balance, December 31, 1994 $653 $5,818 ($13) ($206) ($31) $6,221
<FN>
<F1> See Independent Auditor's Report and Notes to Financial Statements.
</TABLE>
10
<PAGE>
<TABLE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended Ended
December 31
(In thousands)<F1> 1994 1993
<S> <C> <C>
Cash Flow from Operating Activities:
Net income $310 $289
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Provision for Loan Losses 139 101
Depreciation 327 186
Accretion/Amortization on Securities (295) 45
Change In:
Interest Receivable (128) 129
Interest Payable 28 (1)
Other liabilities 28 (187)
Other assets (25) (137)
Cash Provided by Operating Activities 384 425
Cash Flows from Investing Activities:
Purchase of Investment Securities (5,439) (6,465)
Proceeds from Maturities and Sales of Investment Securities 4,644 5,536
Loans Originated (35,228) (22,408)
Principal Collected on Loans 22,081 15,280
Purchase of Property and Equipment, Net (527) (1,013)
Cash Used in Investing Activities (14,469) (9,070)
Cash Flows from Financing Activities:
Net Increase in Demand Deposits, NOW Accounts, Savings
and Money Market Accounts 2,149 10,506
Net Increase in Certificates of Deposit 12,026 462
Securities Sold Under Agreements to Repurchase (938) 1,234
Treasury Stock Transactions, net - 20
Cash Provided from Financing Activities 13,237 12,222
Net Increase (Decrease) in Cash and Cash Equivalents (848) 3,577
Cash and Cash Equivalents, Beginning of Period 10,305 6,728
Cash and Cash Equivalents, End of Period $9,457 $10,305
<FN>
<F1> See Independent Auditor's Report and Notes to Financial Statements
</TABLE>
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
DECEMBER 31, 1994 AND 1993
Note 1 - Summary of Significant Accounting Policies;
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned bank subsidiary, Ponte Vedra National Bank. All material
intercompany accounts and transactions have been eliminated.
Investment Securities
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain investments in Debt and Equity Securities," as
of December 31, 1993. In accordance with SFAS No. 115, securities are
classified as either held to maturity, available for sale or trading.
Investment securities classified as held to maturity are stated at cost,
adjusted for amortization of premiums and accretion of discounts. Held-to-
maturity securities are carried at amortized cost as the company has the
ability and positive intent to hold these securities to maturity. Investment
securities available for sale are carried at fair value and represent
securities that are not classified as held to maturity.
Gains and losses are recognized and shown separately in the Statements of
Operations upon realization or when impairment of values is deemed to be
other than temporary. These gains or losses are recognized using the specific
identification method. Unrealized holding gains and losses for securities
available for sale are excluded from the Statements of Operations and
reported net of taxes as a separate component of shareholders' equity until
realized.
Loans and Allowances for Loan Losses
Loans are stated at the amount of unpaid principal, reduced by unearned
discount and an allowance for loan losses. Unearned discount on installment
loans is recognized as income over the terms of the loans by the interest
method. Interest on other loans is calculated by using the interest method on
daily balances of the principal amount outstanding. Accrual of interest is
discontinued on a loan when management believes, after considering economic
and business conditions and collection efforts that the borrower may be
unable to meet payments when they become due. Upon discontinuance, all unpaid
accrued interest is reversed. Loan fees, net of related costs, are deferred
and amortized over the life of the loan (or commitment period) using the
interest method The allowance for loan losses is established through a
provision for loan losses charged to expenses. Loans are charged against the
allowance for loan losses when management believes that the collectibility of
the principal is unlikely. The allowance is maintained at a level adequate to
absorb probable losses. Management determines the adequacy of the allowance
based upon evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as changes
in the nature and volume of the loan portfolio, overall portfolio quality,
review of specific problem loans, and current economic conditions that may
affect the borrower's ability to pay.
12
<PAGE>
Property and Equipment
Land is stated at cost. Property and equipment is stated at cost less
accumulated depreciation computed principally on the straight-line method
over the estimated useful lives of the assets.
Income Taxes
Provisions for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount
of taxable income and between the tax bases of assets and liabilities and
their reported amounts in the financial statements. Deferred tax assets and
liabilities are included the financial statements at currently enacted income
tax rates applicable to the period in which the deferred lax assets and
liabilities are expected to be realized or settled as prescribed in FASB
Statement No. 109, "Accounting for income Taxes."' As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.
Earnings Per Share
Earnings per share are computed on the weighted-average number of shares of
common stock outstanding and common stock equivalents (from options and
warrants) assumed outstanding during the period. Options and warrants were
not dilutive through December 31, 1994.
Cash Flow Information
For purposes of reporting cash flows, cash and cash equivalents includes cash
and due from banks, interest bearing deposits in other banks and federal
funds sold. Generally, federal funds sold are sold for one-day periods.
Retirement Plan
Effective January 1, 1992, the Bank established the Ponte Vedra National Bank
Retirement Savings Plan, a 401(k) profit sharing plan, with a 5-year graded
vesting schedule, for all eligible employees. Upon ongoing approval of the
Board of directors; the Bank will make a contribution equal to 25% of the
employee's contribution, up to a maximum of 6% of compensation, subject to
certain adjustments and limitations ($11,200 in 1994 and $10,400 in 1993).
The Plan provides that a discretionary contribution will be made to the
Plan's Trust Fund, in an amount decided each year by the Board of Directors;
and all eligible employees will share in this profit sharing contribution.
For the period ended December 31, 1994 and 1993, the Board of Directors
authorized the Bank to contribute $7,500 as the profit sharing contribution.
It is the Board's intent to make recurring contributions to the Plan;
however, the amount of the contribution may be modest, or none, in some years
where the Bank's profitability has not been such to support a contribution to
the Plan.
Fair Values of Financial Instruments
Statement of Financial Accounting No. 107, "Disclosures about Fair Value of
Financial Instruments", requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. In
cases where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. In that regard, the derived fair
value estimates cannot substantiated by comparison to independent markets
and, in many cases could not be realized in immediate settlement of the
instruments. Statement No. 107 excludes certain financial instruments and all
non-financial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value
of the Company
13
<PAGE>
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported in the statement
of financial condition for cash and cash equivalents approximate those
assets' fair values.
Investment securities: Fair values for investment securities are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.
Loans: For variable rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
amounts. The fair values for other loans (for example, fixed rate
commercial real estate and rental property mortgage loans and commercial
and industrial loans) are estimated using discounted cash flows analysis,
based on interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality. Loan fair value estimates
include judgments regarding future expected loss experience and risk
characteristics. The carrying amount of accrued interest receivable
approximates its fair value.
Deposits: The fair values disclosed for demand deposits are, by
definition, equal to the amount payable on demand at the reporting date
(that is their carrying amounts), The fair values for certificates of
deposit are estimated using a discounted cash flow calculation that
applies interest rates currently being offered on certificates to a
schedule of aggregated contractual maturities on such time deposits. The
carrying amount of accrued interest payable approximates fair value.
Securities sold under agreements to repurchase: The carrying amounts
approximate their fair values.
Commitments to extend credit: Commitments to extend credit were evaluated
and fair value was estimated using the fees currently charged to enter
into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counterparties. For
fixed-rate loan commitments, fair value also considers the difference
between current levels of interest rates and the committed rates.
Note 2 - Background and Organization
Organization
Ponte Vedra Banking Corporation (the Company) was incorporated effective
October 4, 1988, primarily to serve as the holding company for a national
banking association (the Bank). In 1989, the Company raised $6,451,000 (net
of selling expenses) through an offering of its common stock, of which
$5,500,000 was used to capitalize the Bank. The Bank opened for business;
December 18, 1989, under the name Ponte Vedra National Bank. The Bank is
operating in the Beaches Service Area which includes Ponte Vedra Beach,
Jacksonville Beach, Neptune Beach and Atlantic Beach, Florida. The Company
owns 100% of the common stock of the Bank.
14
<PAGE>
Note 3 - Investment Securities
The amortized cost and estimated market values of investments in debt
securities are as follows (000's omitted):
<TABLE>
<CAPTION>
Held To Maturity at December 31, 1994 Available For Sale at December 31, 1994
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Type of Investment Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities $6,815 - ($427) $6,388 $945 - ($17) $928
U.S. Government Agencies 3,251 - (29) 3,222 500 - (4) 496
Corporate Securities - - - - - - - -
Mortgage-backed Securities 331 7 - 338 - - - -
Other securities - - - - 479 6 - 485
Total $10,397 $7 ($456) $9,948 $1,924 $6 ($21) $1,909
</TABLE>
<TABLE>
<CAPTION>
Held To Maturity at December 31, 1993 Available For Sale at December 31, 1993
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Type of Investment Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities $9,067 - ($5) $9,062 $400 - - $400
U.S. Government Agencies 751 14 - 765 - - - -
Corporate Securities - - - - - - - -
Mortgage-backed Securities 493 15 - 508 - - - -
Other securities 165 - - 165 354 10 - 364
Total $10,476 $29 ($5) $10,500 $754 $10 - $764
</TABLE>
The amortized cost and estimated market value of debt securities at December
31, 1994, by contractual maturity, are shown below (000's omitted). 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.
<TABLE>
<CAPTION>
Held To Maturity Available For Sale
1994 1994
Amortized Market Amortized Market
Maturity Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in One Year or Less $4,234 $4,186 $1,345 $1,329
Due After One Year Through Five Years 5,832 5,424 100 95
Due After Five Years Through Ten Years - - - -
Total Debt Securities 10,066 9,610 1,445 1,424
Mortgage-backed Securities 331 338 - -
Other securities - - 479 485
Total Securities $10,397 $9,948 $1,924 $1,909
</TABLE>
15
<PAGE>
Proceeds from sales of investment securities were $4,639,000 in 1994
($5,444,000 in 1993). Gross gains of $15,054 in 1994 ($141,000 in 1993) were
realized on those sales.
At December 31, 1994, $4,945,000 of the investment securities were pledged to
secure public deposits or for other purposes required or permitted by law.
Note 4 - Loans
Major classifications of loans are as follows (000's omitted):
December 31,
1994 1993
Commercial $6,363 $4,732
Real Estate Construction 6,949 6,589
Real Estate Mortgages 31,397 21,197
Installment 4,561 3,552
49,270 36,070
Allowance for Loan Losses (493) (360)
Unearned Income on Loans (277) (218)
Loans, Net $48,500 $35,492
Changes in the allowance for loan losses were as follows (000's omitted):
For the Year
Ended December 31,
1994 1993
Balance, Beginning of Year $360 $287
Provision Charged to Operations 139 101
Charge-Offs (6) (38)
Recoveries - 10
Balance, End of Year $493 $360
Loans on which the accrual of interest has been discontinued totaled
approximately $1,180,000 at December 31, 1994, and S219,000 at December 31,
1993.
Note 5 - Property and Equipment (000's omitted)
December 31,
Useful Life 1994 1993
Buildings and Improvements $716 $713
Furniture and Fixtures 5-10 Years 350 319
Equipment 5-10 Years 1,537 1,100
Leashold Improvements 5-40 Years 766 713
Land Improvements 50 48
3,419 2,893
Accumulated Depreciation (705) (460)
2,714 2,433
Land 640 640
Total Property & Equipment $3,354 $3,073
Depreciation and amortization expense amounted to $327,000 in 1994 and
$186,000 in 1993.
16
<PAGE>
Note 6 - Income Taxes:
The income tax provision (benefit) is comprised of the following:
1994 1993
Current $154 $127
Deferred (42) (19)
Benefit of net operating
loss carryforward (112) (108)
Change in deferred tax
asset valuation allowance (60) -
Total ($60) -
The differences between federal income tax computed at the statutory rate and
the actual income Tax Expense is shown below:
1994 1993
Income before income taxes $250 $289
Tax @ 34% $85 $97
State income taxes-net 10 11
Permanent differences 10 -
Other 7 -
112 108
Benefit of net operating loss
carryforward (112) (108)
Change in deferred tax asset
valuation allowance (60) -
Total benefit ($60) -
The components of the net deferred tax asset are as follows:
December 31,
1994 1993
Loan loss reserve $83 $56
Depreciation (10) -
Deferred pre-opening costs - 4
Loan fees 17 -
Net operating loss carryforward - 112
90 172
Valuation allowance - (172)
Deferred tax asset, net $90 -
The valuation allowance at December 31, 1993 was provided to reduce the
deferred tax assets to zero because it was not believed that it was more
likely than not that they would be realized. At December 31, 1994, the
valuation allowance is no longer considered necessary.
17
<PAGE>
Note 7 - Commitments and Related Party Transactions
Leases
The Bank has a lease from a partnership (in which two organizers are general
partners) for the Bank's headquarters. The initial term of the lease is
fifteen years. The initial lease rate is $175,000 per year. The Bank pays all
utilities, insurance, maintenance, and property taxes. The annual lease rate
will increase every fifth year in accordance with the increase in the U.S.
Consumer Price Index, not to exceed 5%. The lease has two five-year renewal
options and an option to purchase the leased property during the eleventh
year of the lease at its then fair market value.
The Bank opened a branch office in January 1991, located in Atlantic Beach,
Florida. The initial term of the lease is 10 years with an initial lease rate
of $52,785 per year. The Bank pays all utilities, insurance and property
taxes. The lease has two five-year renewal options. The Bank has a sub-lease
from an unrelated third party for the Bank's Operation Center that will
expire in July, 1999. The following is a schedule of minimum lease
commitments outstanding under operating leases at December 31, 1994:
Year Ended Office
December 31, Space Equipment
1995 $267,000 $13,500
1996 267,000 9,050
1997 267,000 9,050
1998 267,000 5,600
1999 267,000 -
After 1999 1,215,000 -
Building and equipment rental expenses were $465,000 in 1994 and $321,000 in
1993.
Related Parties
Directors and executive officers of the parent company and their related
interest were indebted to the Company in the aggregate amounts of $820,000
and $796,000 at December 31, 1994 and 1993, respectively. In the opinion of
management, these loans do not involve more then the normal risk of
collectibility and were made by the Company in the normal course of business
at normal credit terms, including interest rates and collateral.
Stock Warrants and Options
Each organizing shareholder was issued warrants to purchase one share of
common stock for each share purchased by them pursuant to their
subscriptions. Subject to Certain limitations, these warrants are exercisable
upon vesting at any time during the ten-year period following the
commencement of operations of the Bank at a per share exercise price equal to
$10 per share. One-third of each organizing shareholder's warrants vested
each year on the anniversary of the Bank's opening, provided certain service
requirements were met.
The status of warrants outstanding at December 31, 1994, is presented below:
Grant Number of Warrant Price Total
Year Warrant Shares Per Share Price
1989 263,666 $10.00 $2,636,660
263,666 of the warrants are fully vested and are exercisable at December 31,
1994.
18
<PAGE>
Treasury Stock and Stock Bonuses
The Company acquired 10,000 shares of its Stock at $6.50 a share on August
24, 1992. Subsequently in 1992, the Company sold 2,200 of these shares to the
Bank at $6.50 per share for officer stock bonuses, resulting in $50,700 of
Treasury Stock (7,800) shares at December 31,1992. In 1993 an additional
3,100 of these shares were sold to the Bank for accrued officer stock bonuses
at December 31, 1992. The Company held $30,550 of Treasury Stock (3,800) at
December 31, 1994. Effective December 31, 1994, the Bank accrued non-
executive officer bonuses which will be paid in 1995 via the issuance of
Stock. This stock was not issued at December 31, 1994.
Note 8 - Retained Earnings
Banking regulations limit the amount of cash dividends that may be paid
without prior approval of the Bank's regulatory agency. Retained earnings
could not be charged with dividends at December 31, 1994.
The Bank is also required to maintain minimum amounts of capital to total
"risk weighted" assets by banking regulators. At December 1, 1994, the
Company and the Bank are in the "well capitalized" category. The Company's
ratios at December 31, 1994 are as follows:
Tier I Capital Ratio 13.04%
Total Capital Ratio 14.07%
Leverage Ratio 8.39%
Note 9 - Financial Instruments
The Company originates financial instruments with off-balance-sheet risk in
the normal course of business, usually for a fee, to meet the financing needs
of its customers. These financial instruments include commitments to extend
credit and letters of credit, and involve varying degrees of credit risk in
excess of the amounts reflected in the Balance Sheets.
Commitments to extend credit are contractual obligations to lend to a
customer as long as all established contractual conditions are satisfied.
Commitments generally have fixed expiration dates or other termination
clauses.
Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Standby letters
of credit are generally terminated through the performance of a specified
condition or through the lapse of time.
Commercial letters of credit are conditional commitments issued by the
Company to guarantee payment by a customer to a third party upon proof of
shipment or delivery of goods as agreed. Commercial letters of credit are
used primarily for importing or exporting goods and are terminated when
proper payment is made by the customer.
19
<PAGE>
The Company's exposure to credit loss in the event of non-performance by the
other party to commitments to extend credit, standby letters of credit and
commercial letters of credit is represented by the contractual or notional
amounts of these instruments. As these off-balance-sheet financial
instruments have essentially the same credit risk involved in extending
loans, the Company generally uses the same credit and collateral policies in
making these commitments and conditional obligations as it does for on-
balance-sheet instruments. Since many of the commitments to extend credit,
standby letters of credit and commercial letters of credit are expected to
expire without being drawn upon, the contractual or notional amounts do not
represent future cash requirements.
The Estimated Fair Values of the Company's financial instruments are as
follows (000's Omitted):
December 31, 1994
Carrying Fair
Amount Value
Financial assets:
Cash and cash equivalents $7,757 $7,757
Securities:
Held to Maturity 10,397 9,948
Available for Sale 1,909 1,909
Loans - net 48,500 49,000
Accrued interest 349 349
Financial liabilities:
Deposits 67,127 67,000
Securities sold under
agreement to repurchase 622 622
Unrecognized financial instruments:
Commitments to extend credit 11,902
Standby letters of credit 309
20
<PAGE>
Note 10 - Parent Company Financial Information
Following is condensed financial information for Ponte Vedra Banking
Corporation (Parent Company Only):
<TABLE>
Condensed Balance Sheets
(Dollars in Thousands)
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
ASSETS
Cash & Due From Banks $1 $7
Interest Bearing Deposits in Banks 2 -
Investment Securities Available for Sale 755 764
Equity in Net Assets of Bank Subsidiary (Ponte Vedra National Bank) 5,471 5,159
Other Assets 4 5
Total Assets $6,233 $5,935
LIABILTIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accrued Expenses $2 -
Total Liabilities 2 -
Stockholders' Equity:
Common Stock, Par Value $1; 1,000,000 shares authorized
652,920 shares issued 653 653
Capital in Excess of Par Value 5,818 5,818
Net Unrealized Gain (Loss) on Investment Securities
Available for Sale (4) 10
Retained Earnings (206) (516)
Treasury Stock (3,800 Shares), at cost (Note 7) (30) (30)
Total Stockholders' Equity 6,231 5,935
Total Liabilities and Stockholders' Equity $6,233 $5,935
</TABLE>
21
<PAGE>
<TABLE>
Condensed Statements of Income
(Dollars in Thousands)
<CAPTION>
Year Ended December 31
1994 1993
<S> <C> <C>
Revenues:
Interest on Investments $24 $25
Interest on Deposits in Banks - -
Securities Transactions - 31
Total Revenues 24 56
Costs and Expenses:
Other 26 40
Total Costs and Expenses 26 40
Income Before Equity in Income of Bank (2) 16
Equity in Income of Bank 312 273
Income Before Income Taxes 310 289
Income tax Expense, Net of Related Tax Benefits
of Operating Loss Carryforwards - -
Net Income $310 $289
</TABLE>
22
<PAGE>
<TABLE>
Condensed Statements of Cash Flows
(Dollars in Thousands)
<CAPTION>
Year Ended December 31
1994 1993
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $310 $289
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities
Equity in income of Subsidiary Bank (312) (274)
Amortization of Leaseholds - -
Change In:
Other Assets 1 3
Other Liabilities 2 -
Cash Provided in Operating Activities 1 18
Cash Flows from Investing Activities:
Purchase and Sales of Investment Securities (Net) (5) (54)
Cash Provided (Used) in Investing Activities (5) (54)
Cash Flows from Financing Activities:
Treasury Stock (Purchased) Sold - 21
Cash Provided by Financing Activities - 21
Net Decrease in Cash and Cash Equivalents (4) (15)
Cash and Cash Equivalents, Beginning of Year 7 22
Cash and Cash Equivalents, End of Year $3 $7
</TABLE>
23
<PAGE>
Selected Financial Data
The following table of selected financial information has been derived from
the consolidated financial statements of the Holding Company. The selected
financial information with respect to the Holding Company should be read in
conjunction with the consolidated financial statements of the Holding Company
and Management's Discussion and Analysis of Financial Condition and Results
of Operations which are included elsewhere in this Annual Report.
<TABLE>
<CAPTION>
(Dollars in Thousands, except per share amounts)
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Total Loans (net) $48,500 $35,492 $28,465 $22,596 $ 9,329
Allowance for Loan Losses 493 360 287 228 83
Total Assets 74,178 60,579 48,255 39,398 21,051
Total Deposits 67,127 52,952 41,984 33,372 14,905
Total Shareholders' Equity 6,231 5,924 5,615 5,309 5,713
Total Interest Income 4,463 3,616 3,446 2,607 1,188
Total Interest Expense 1,135 863 958 1,101 393
Net Interest Income 3,328 2,753 2,488 1,506 795
Provision for Loan Losses 139 101 92 162 80
Other Income 941 1,032 481 369 48
Other Expenses 3,880 3,395 2,519 2,118 1,265
Net Income (Loss) 310 289 358 (405) (502)
Net Income (Loss) Per Share 0.48 0.45 0.55 (0.62) (0.77)
Long-Term Obligations - - - - -
Dividends Per Share - - - - -
</TABLE>
24
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion sets forth the major factors that have affected the
Holding Company's financial condition and results of operations for the years
ended December 31, 1994 and 1993. These comments should be read in
conjunction with the consolidated financial statements and related notes
thereto
General
The Corporation earned net income in 1994 of $310,000 which compares with
1993 earnings of $289,000. The majority of the Corporation's 1994 earnings
came in the second half of the year when the bank's two newest branches were
fully paid for and began to operate profitably. Also contributing to the
strong earnings was the implementation during mid-year of a Small Business
Administration (SBA) department. By selling these SBA loans into the
secondary market, the Bank earned premiums of $35,000 during 1994.
By utilization of the Company's Net Operating Loss Carryforward, the
Corporation recognized a impact to the bottom line in 1994 as an income tax
benefit. Following the provisions under Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes," ("SFAS 109") the
Corporation recognized an income tax benefit of $60,000. The Corporation's
earnings, beginning with the fourth quarter of 1994, are reported on a fully-
taxed basis.
The $310,000 net income earned in 1994 represents $3,879,525 of operating
expenses, $3,189,047 of net interest income after provision for loan losses
and $940,621 of other income. The Holding Company's operating expense was
comprised of salary and benefits of $2,050,501, occupancy expense of $610,621
and other operating expense of $1,218,403.
During the year ended December 31, 1993, the Holding Company earned a net
income of $289,471. This net income represents $3,394,809 of operating
expenses, $2,652,042 of net interest income after provision for loan losses
and $1,032,239 of other income. The Holding Company's operating expense was
comprised of salary and benefits of $1,721,522, occupancy expense of $606,669
and other operating expense of $1,066,618.
Mortgage Banking Operations' income ($116,000) also contributed significantly
to the Bank's earnings in 1994.
Earning Assets
Securities. Beginning in 1993, the Bank made a concerted effort to shorten
the average life of the investment portfolio in order to reduce potential
market value depreciation risk in future years. Portfolio repositioning, by
its nature, produces securities gains and losses because sales and purchases
of securities in the portfolio occur at various levels of market interest
rates.
As of December 31, 1993, the Corporation adopted statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115"). As a result of the adoption of SFAS 115,
Debt and equity securities that were previously measured at amortized cost
are measured at fair value.
25
<PAGE>
The Holding Company and Bank on a consolidated basis had investment
securities of $12,316,000 as of December 31, 1994. The following table sets
forth the book value, approximate market value and maturities of the
securities in the investment portfolio at December 31, 1994.
Investment Portfolio: Types and Maturities
Holding Company and Bank Consolidated - (Dollars in Thousands)
<TABLE>
<CAPTION>
Approximate Due Due Due Due
Market Value Book Value Within Within Within After
Type of Investment at 12/31/94 at 12/31/94 1 Year 1-5 Years 5-10 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities $7,316 $7,760 $1,828 $5,932 $ - $ -
U.S. Government Agencies 3,718 3,751 3,751 - - -
Corporate Securities - - - - - -
11,034 11,511 5,579 5,932 - -
Mortgage-backed Securities 338 331 - 331 - -
Other Securities 485 479 314 - - 165
Total $11,857 $12,321 $5,893 $6,263 $ - $ 165
Year-end Yield 4.88% 5.02% 0.00% 6.00%
</TABLE>
Loans. The Bank's lending strategy stresses dynamic conservatism. In light of
continued loan growth, the Bank has supplemented and strengthened its loan
review policies and procedures. The Bank continues to emphasize credit
judgment that focuses on a customers' debt obligations, ability to pay, and
economic trends in general.
Loans outstanding, the most significant component of earnings assets, totaled
$48,5000,000 at December 31, 1994 compared with $35,492,000 at December 31,
1993. All such loans were domestic. The table below sets forth the types and
maturities of the loans in the Bank's portfolio at December 31, 1994.
Loan Portfolio: Types and Maturities
(Bank Only - Dollars in Thousands)
<TABLE>
<CAPTION>
Balance Due Due Due
at Within Within After
12/31/94 Percent 1 Year 1-5 Years 5 Years
<S> <C> <C> <C> <C> <C>
Commercial, Financial and Agricultural $6,363 12.91% $3,399 $2,471 $493
Real Estate Construction 6,949 14.10% 4,124 1,957 86
Real Estate Mortgage 31,389 63.71% 17,959 9,661 3,769
Installment Loans to Individuals 4,569 9.28% 623 3,579 36
Lease Financing - 0.00% - -
Total 49,270 100.00% 26,105 17,668 5,497
Loans Maturing With:
Fixed Interest Rates 26,347 3,182 17,668 5,497
Floating or Adjustable Interest Rates 21,711 21,711 - -
Non-Accrual 1,212 1,212 - -
Total $49,270 $26,105 $17,668 $5,497
</TABLE>
26
<PAGE>
Loan Quality
Provision/Allowance for Loan Losses. The provision expense for loan losses is
a charge to earnings in the current period to increase the allowance to a
level deemed adequate by management to absorb potential loan loses. In 1994,
the Bank's provision expense was $139,000.
The Bank maintains an allowance for loan losses which it believes is adequate
to absorb potential losses in the loan portfolio. The adequacy of the
allowance for loan losses is analyzed, and adjustments are made quarterly,
based on a review of all significant loans with particular emphasis on non-
accruing, past due and other loans that management believes require special
attention because of uncertainties as to their collectibility in accordance
with their existing terms. The Bank maintains the allowance at the minimum
level required by this methodology or 1% of outstanding loans, whichever is
greater. Currently, the Bank's allowance is at 1% and this level was found to
be adequate by the National Bank Examiners of the Office of the Comptroller
of the Currency during their last examination of the Bank. The Bank's
allowance for loan losses at December 31, 1994, was $493,000, or 1 % Of year-
end loans- The following table sets forth a breakdown of the allowance for
loan losses by loan category:
Allocation of Allowance for Loan Losses
(Bank Only - Dollars in Thousands)
<TABLE>
<CAPTION>
Loan % of Loans in Loan Loss Loan % of Loans in Loan Loss
Balances at Each Category Allowance at Balances at Each Category Allowance at
12/31/94 to Total Loans 12/31/94 12/31/93 to Total Loan 12/31/93
<S> <C> <C> <C> <C> <C> <C>
Commercial, Financial and Agricultural $6,363 12.91% $3,399 $4,732 13.12% $47
Real Estate Construction 6,949 14.10% 4,124 6,589 18.27% 66
Real Estate Mortgage 31,389 63.71% 17,959 21,197 58.76% 212
Installment Loans to Individuals 4,569 9.28% 623 3,551 9.85% 35
Lease Financing - 0.00% - - 0.00% -
Total $49,270 100.00% $26,105 $36,069 100.00% $360
</TABLE>
Non-performing loans at December 31, 1994 totaled $1,212,000. These loans
were current as to the payment of principal and interest as of December 31,
1994, but were placed in non-performing status because of uncertainty over
the borrowers' ability to make future payments.
While year-end 1994 non-performing loans look significantly higher than 1993,
the majority of this variance is one loan of $750,000 on which the payment of
interest occurs monthly. This loan is 85% SBA guaranteed and will mature in
May of 1995.
During 1994, the Bank charged-off two loans totaling $6,000, or .01% of total
loans outstanding. Three loans totaling $38,000, or .11% of total loans were
charged-off during 1993. At December 31, 1994, past due loans were $40,000,
or .08% of total loans outstanding. This represents a significant improvement
over past due loans as of December 31, 1993 ($182,000 or -51 %).
27
<PAGE>
Allowance for Loan Losses
December 31,
1994 1993
Balance, Beginning of Year $360 $287
Provision Charged to Operations 139 101
Charge-Offs (6) (38)
Recoveries - 10
Balance, End of Year $493 $360
Problem Loans
December 31,
1994 1993
Past Due Non- Past Due Non-
over 30 Accrual over 30 Accrual
Commercial $5 $749 $ - $-
Real Estate Construction - 219 - -
Real Estate Mortgages 13 119 182 199
Installment 22 125 - 21
Total $40 $1,212 $182 $220
Liabilities
Deposits. The rates paid on deposits have declined since 1991, as interest
rates in general have declined. During this period, the Bank has been
competitive in the rates paid for such deposits.
The Bank's total deposits (net of deposits owned by the Holding Company) at
December 31, 1994, were $67,127,000, as compared to $52,952,000 in 1993. The
table below sets forth the average daily amount of the various types of
deposits held by the Bank and the average rate paid on these deposits during
1994.
Deposits
(Bank Only - Dollars in Thousands)
Balance at 1994 Average 1994 Average
Types of Deposits 12/31/94 Balance Rate Paid On
Demand Deposits $17,349 $14,590 N/A %
NOW Accounts 10,891 10,923 1.61%
Savings Accounts 4,251 3,530 1.76%
Money Market Accounts 12,534 12,581 2.13%
Time Deposits Under $100,000 15,878 9,970 4.41%
Time Deposits $100,000 and Over 6,224 3,843 3.88%
Total $67,127 $55,437 1.98%
28
<PAGE>
The table below sets forth the maturities of the time deposits of $100,000
and over.
Time Deposits $100,000 and Over
(Bank Only - Dollars in Thousands)
Balance
Term at 12/31/94 Percent
Less Than Three Months $1,255 20%
Three to Six Months 566 9%
Six to Twelve Months 3,461 56%
More Than Twelve Months 942 15%
Total $6,224 100%
Asset/Liability Management
Net interest income, the Bank's primary source of earnings, can fluctuate
widely With significant interest rate movements. To lessen the impact of
these swings, the Bank's balance sheet must be structured so that repricing
opportunities exist for both assets and liabilities in roughly equivalent
amounts at approximately the same time intervals. imbalances in these
repricing opportunities at any point in time constitute interest rate
sensitivity. The sensitivity of future earnings to interest rate changes is
carefully monitored and managed through regular monthly asset liability
modeling under differing rate and growth assumptions. These projections
enable the Bank to adjust its strategies to protect the net interest margin
against significant interest rate fluctuations.
29
<PAGE>
The following chart shows the Bank's interest sensitivity as of December 31,
1994. The cumulative gap, as a percent of total assets, is well within the
Bank's guidelines and minimizes the Bank's exposure due to changes in the
interest rate environment.
<TABLE>
<CAPTION>
Non-Rate
3 Months Over 3 Mo's Sensitive &
Revolving or Less Thru 12 Mo's Over 1 Year Total
<S> <C> <C> <C> <C> <C>
Variable Rate Loans $16,605 - - - $16,605
Fixed-Rate Loans 3,281 9,503 19,881 32,665
Total Loans 16,605 3,281 9,503 19,881 49,270
Securities - 999 3,734 6,828 11,561
Federal Funds Sold and
Other Earning Assets 1,700 - - - 1,700
Total Earning Assets 18,305 4,280 13,237 26,709 62,531
Cash, Property and Other Assets - - - 11,630 11,630
Less: Allowance for Loan Losses
& Unearned Income on Loans - - - (770) (770)
Total Assets $18,305 $4,280 $13,237 $37,569 $73,391
Demand Deposits - - - 17,352 17,352
NOW Accounts - - 10,891 10,891
Money Market Accounts 12,534 - - - 12,534
Savvings Deposits - - - 4,251 4,251
Certificates of Deposit - 3,914 12,656 3,415 19,985
IRA's - 213 938 966 2,117
Total Deposits 12,534 4,127 13,594 36,875 67,130
Federal Funds Purchased and
and Other Short-Term Borrowings 622 - - - 622
Long-Term Debt - - - - -
Other Liabilities - - - 179 179
Shareholders' Equity - - - 5,460 5,460
Total Liabilities and Shareholders'
Equity $13,156 $4,127 $13,594 $42,514 $73,391
Interest Rate Sensitivity Gap $5,149 $153 ($357) ($4,945)
Gap/Total Assets 7.42% 0.21% -0.49% -6.49%
Cumulative Gap $5,149 $5,302 $4,945 -
Cum Gap/Total Assets 7.42% 7.63% 7.15% 7.63%
</TABLE>
For the year ended December 31, 1994, the Company's total interest income was
$4,463,000. Total interest expense was $1,135,00 and the provision for loan
losses was $139,000. Net interest income after provision for loan losses was
$3,189,000.
The following table sets forth the average asset, liability and equity
balances for fiscal 1994 and 1993 interest income and expense for fiscal 1994
and 1993, and the average yield in assets and liabilities for fiscal 1994 and
1993, respectively.
30
<PAGE>
Average Balances, Interest, Yields and Rates
(Holding Company and Bank Consolidated - Dollars in Thousands)
<TABLE>
<CAPTION>
Average 1994 1994 Average 1993 1993
Balance Interest Average Balance Interest Average
Fiscal 1994 Income/Exp Yield % Fiscal 1993 Income/Exp Yield %
Assets
<S> <C> <C> <C> <C> <C> <C>
Loans:
Commercial, Financial and Agricultural $5,408 $572 10.58% $4,222 $283 6.70%
Real Estate Construction 8,686 833 9.59% 7,016 662 9.44%
Real Estate Mortgage 21,266 1,830 8.61% 16,864 1,594 9.45%
Installment Loans 3,743 373 9.97% 2,830 267 9.43%
Equity/Personal Lines 2,495 234 9.38% 2,090 162 7.75%
Foreign - - - - - -
Total Loans, Net of Unearned Income 41,598 3,842 9.24% 33,022 2,968 8.99%
Securities:
Taxable 11,276 553 4.90% 9,680 585 6.04%
Tax-Free - - - - - -
Total Securities 11,276 553 4.90% 9,680 585 6.04%
Fed Funds Sold 1,338 63 4.71% 1,325 58 4.38%
Securities Purchased under Resell Agrmts - - - - - -
Other Earning Assets 100 4 4.00% 100 4 4.00%
Total Earning Assets 54,312 $4,462 8.22% 44,127 $3,615 8.19%
Cash and Due From Banks 4,417 5,840
Premises and Fixed Assets, net 3,230 2,603
Allowance for Loan Losses (425) (331)
Other Assets 477 465
Total Assets $62,011 $52,704
Liabilities & Equity
Deposits:
NOW Accounts $10,923 $176 1.61% $9,226 $147 1.59%
Money Market Account 12,581 269 2.14% 12,010 272 2.26%
Savings Deposits 3,530 62 1.76% 2,740 52 1.90%
CDs Under $100,000 9,970 440 4.41% 7,751 276 3.56%
CD's Over $100,000 3,843 149 3.88% 2,657 102 3.84%
Total Interest Bearing Deposits 40,847 1,096 2.68% 34,384 849 2.47%
Fed Funds Purchased 245 10 4.08% - - -
Securities Sold Under Agrmt to Repurchase 960 18 1.88% 764 14 1.83%
Other Short-Term Borrowings - - - - - -
Long-Term Debt - - - - - -
Total interest Bearing Liabilities 42,052 $1,124 2.67% 35,148 $863 2.46%
Demand Deposits 14,591 12,405
Other Liabilities 131 157
Shareholders' Equity 5,237 4,994
Total Liabilities and Equity $62,011 $52,704
</TABLE>
31
<PAGE>
1994 1993
Interest Differential
Interest Rate Spread 5.55% 5.73%
Cost of Total Funds Supporting
Earning Assets 2.07% 1.64%
Net Yield on Earning Assets 6.15% 6.24%
The following table sets forth the return on average assets, the return on
average equity and the average equity to average asset ratio for the periods
indicated.
1994 1993
Return on Average Assets (ROAA) 0.50% 0.55%
Return on Equity (ROE) 5.92% 5.79%
Equity to Assets 8.45% 9.48%
Net interest income, the difference between the interest earned on assets and
the interest paid on deposits and other liabilities, remains the largest
contributor to the Bank's earnings, Net interest income can also be analyzed
in terms of the changing rates and changing volume. The following table
describes the extent to which changes in interest rates and changes in the
volume of earning assets and interest bearing liabilities have affected
interest income and interest expense.
Rate/Volume Variance Analysis
(In Thousands)
<TABLE>
<CAPTION>
1994 Compared to 1993 1993 Compared to 1992
Rate/ Increase/ Rate/ Increase/
Volume Yield Decrease Volume Yield Decrease
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans:
Commercial $79 $210 $289 $130 ($125) $5
Real Estate:
Construction 158 13 171 138 (74) 64
Mortgages 416 (180) 236 325 (135) 190
Installment 86 20 106 37 (36) 1
Equity/Personal Lines 31 41 72 18 (9) 9
Total Loans 770 104 874 648 (379) 269
Securities 96 (128) (32) (93) (29) (122)
Fed Funds Sold 1 4 5 19 3 22
Total Interest Income 867 (20) 847 574 (405) 169
Interest Expense
Deposits:
NOWs 27 2 29 46 (24) 22
Money Markets 13 (16) (3) 66 (83) (17)
Savings Accounts 15 (5) 10 27 (11) 16
CDs Under $100m 79 85 164 48 (101) (53)
CDs $100m & Over 46 1 47 (28) (36) (64)
Total Interest-Bearing Deposits 180 67 247 159 (255) (96)
Fed Funds Purchased 10 - 10 (5) - (5)
Securities Sold Under Agmt to Repurch 4 - 4 9 (4) 5
Total Interest Expense 194 67 261 163 (259) (96)
Net Interest Income $673 ($87) $586 $411 ($146) $265
</TABLE>
32
<PAGE>
In 1994, net interest income was $3,329,000, a 21% increase from the previous
year of $2,753,000. The increase in 1994 was attributable to a higher level
of interest earning assets and the restructuring of nonperforming loans which
still gain interest.
Dividends. There were no dividends paid or declared by the Company during the
year ended December 31, 1994.
Liquidity. Liquidity is measured by a bank's ability to raise cash when
needed without adversely impacting profits. The Bank must be capable of
meeting its customers' immediate withdrawal requirements, funding loans and
lines of credit, and in general, fulfilling its customers' credit needs. The
Bank's balance sheet has been structured to provide natural sources of
liquidity and, should it become necessary, the Bank could borrow temporary
funds, or sell some of its loans, or sell some of its investment securities.
Additionally, natural and easily accessible liquidity can be provided within
the Company's market by raising long-term CD rates above the average. As of
December 31, 1994, investment securities totaling $1,924,000 were classified
as available for sale for liquidity purposes.
Capital Resources. Regulatory agencies have approved guidelines to implement
a risk-based capital framework that makes capital requirements more sensitive
to the risk profiles of individual banking companies. The table below shows
the Cornpany's risk-based capital ratios which are well above regulatory
minimums and industry averages.
Risk-Based Capital
(Dollars in Thousands)
December 31,
1994 1993
Tier I Capital:
Shareholders' Equity $6,221 $5,934
Total Tier 1 Capital 6,221 5,934
Tier II Capital:
ELigible portion of allowance
for loan losses 493 360
Total Tier II Capital 493 360
Total Risk-Based Capital $6,714 $6,294
Total Risk-Adjusted Assets $47,708 $36,067
Tier I Capital Ratio 13.04% 16.17%
Total Risk-Based Capital Ratio 14.07% 17.15%
Leverage Ratio 8.39% 9.92%
Trends. The Company is unaware of any trends, events or uncertainties that
will have or that are reasonably likely to have a material effects on the
Company's liquidity, capital resources or operations. The Company is unaware
of any current recommendations by the regulatory authorities, to which its
operations are subject, which if they were to be implemented would have such
an effect.
33
<PAGE>
Market for Holding Company's Common Equity and Related Stockholder Matters
There is currently no established public trading market for the Holding
Company's common stock. The Holding Company knows of no market maker or
quoted bid and asked prices for its common stock and to its knowledge, the
number of transactions occurring in its common stock is relatively few.
During 1992, the Holding Company acquired 10,000 shares Of its Own stock at
$6.50 per share from a correspondent bank that obtained possession of the
stock pursuant to the default Of a borrower who pledged the stock as
collateral.
The Holding company is aware of stock trades for prices ranging from a low of
$10.00 to a high of $12.00 per share in 1994. inasmuch as there is no active
market, and the foregoing prices are based on a limited number of small
volume transactions, shareholders should not rely on these figures as the
market value of the Holding Company's stock.
The Holding Company publicly offered 750,000 shares of its common stock
pursuant to a Prospectus dated March 1, 1989. The offering terminated August
4, 1989, with the consummation of the sale of 650,920 shares pursuant to such
offering. The Holding Company acquired 10,000 shares of its stock at $6.50
per share on August 24, 1992. Subsequently, the Holding Company sold to the
Bank, 5,300 of these shares at $6.50 per share for employee stock bonuses.
The Holding Company currently holds 3,800 shares of treasury stock. in
addition to the 2,000 shares previously issued in 1990 as a stock bonus to
Guy N. Nix,)r., President of the Bank, 5,300 shares were issued as stock
bonuses to officers of the Bank for 1992 performance. As of March 1, 1995,
the Holding Company's common stock was held of record by 478 persons. As of
March 1, 1995, all officers and directors of the Holding Company as a group
(I 1) owned 215,150 shares (not including currently exercisable options or
warrants) or 33.14% of the outstanding stock of the Holding Company.
The Holding Company has not paid any cash dividends since its formation. It
is not anticipated that it will pay any cash dividends on its common stock in
the foreseeable future. Dividends may be paid only out of cash earnings of
the Holding Company. The existence of such dividends will depend upon the
earnings of the Bank and its ability to pay dividends to the Holding Company.
Under Federal banking laws, the approval of the OCC will be required if the
total of all dividends declared in any calendar year by the Bank exceeds the
Bank's net profits to date, as defined for that year, combined with its
retained net profits for the preceding two years. The OCC also has the
authority under Federal law to enjoin a national bank from engaging in what,
in its opinion, constitutes an unsafe or unsound practice in conducting its
business, including the payment of a dividend under certain circumstances.
Recently, the OCC and the Federal Reserve Board have expressed their view
that national banks and bank holding companies should refrain from or limit
dividend increases or reduce or eliminate dividends under circumstances in
which the bank or bank holding company fails to meet minimum capital
requirements or in which its earnings are impaired,
The Directors of the Bank anticipate that the earnings of the Bank will be
retained by the Bank during the foreseeable future and held for purposes of
enhancing the Bank's capital. Consequently, it is unlikely that the Holding
Company will have funds from the Bank available for dividend distributions to
its shareholders during that period.
34
<PAGE>
Legal Proceedings
There are no material legal proceedings pending (or known by the Holding
Company to be contemplated by governmental authorities) to which the Holding
Company or Bank is a party or to which any of their proper is the subject.
Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the Holding Company's security holders
during the fourth quarter of the fiscal year.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Beginning in 1993, the Company terminated its relationship with its
independent accountants for fiscal year 1994, Harbeson, Beckerleg and
Fletcher, and engaged Thomas, Schemer and Sparks, P,A. as its independent
accountants. With respect to the Company's consolidated financial statements
for 1994 and all prior periods preceding the change in accountants, there
were no disagreements between the Company and Harbeson, Beckerleg and
Fletcher on any matter of accounting principles or practices, financial
statement disclosure, auditing scope or procedure, and were not qualified or
modified as to uncertainty in or utility of accounting principles. The
decision to change accountants was recommended by the Company's Audit
Committee and approved by its Board of Directors.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Ponte Vedra Banking Corporation
Date: December 23, 1994 By: Guy M. Nix
Vice President and
Chief Financial Officer
35
<PAGE>
Item 4 - Change in registrants certifying accountants.
(1) On December 19, 1994, the Company's Board of Directors approved a motion
to change its certifying accountants, Harbeson, Beckerleg & Fletcher,
for the year ending December 31, 1995.
(i) The accountant's report on the financial statements for either of
the past two (2) years did not contain an adverse opinion or a
disclaimer of opinion or was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
(ii) The decision to change accountants was approved by the Board of
Directors upon recommendation made by the Company's Audit Committee
on December 19, 1994.
(iii) In connection with the audit of the Company's financial
statements for the past two (2) years, there were no disagreements
with Harbeson, Beckerleg & Fletcher on any matter of accounting
principles or practices, financial statement disclosures or
auditing scope or procedures
(iv) For the year ending December 31, 1994, the Board of Directors (and
Audit Committee) are not aware of any disagreements with Harbeson,
Beckerleg & Fletcher on any matter of accounting principles or
practices, financial statement disclosures or auditing scope or
procedures.
(2) On December 19, 1994, the Company's Board of Directors approved a motion
to engage Nolan, Stevens & Thomas, P.A. to audit the Company's financial
statements for the period ending December 31, 1995. During the Company's
two most recent fiscal years, it did not consult the newly engaged
accountant regarding the application of accounting principles or any
other matter that the Company may use in reaching a decision as to any
accounting, auditing, or financial reporting issue.
(3) Harbeson, Beckerleg & Fletcher has been furnished with a copy of the
Form 8-K and we have requested that they respond directly to the
Commission within ten (10) business days from the date of this report.
36
<PAGE>
Directors and Executive Officers
The directors of the Holding Company, their ages and business experience
during the past five years are as follows:
Name,
Age at March 1, 1995, and Principal Other Business Director
Occupation Since January 1, 1989 Affiliations Since
- -------------------------------------- ------------------------ --------
Isabelle Thomas Davis (2,4) None 1988
Self-employed investor, March 1990 to
present.
G. Bruce Douglas, 60 (1,3) President Chairman, President and 1988
and Chief Executive Officer of Douglas Chief Executive Officer
Capital Management, Inc., an of the Ponte Vedra
investment counseling firm, 1984 to Banking Corporation
present, Vice President of Invictus
Incorporated, a corporation engaged in
investment banking, 1988 to present.
Samuel J. Foley, Jr., 56 (2,4) None 1992
President, Douglas Securities, inc.,
1988 to present.
Robert W. Fowler, 75, (1,3) President None 1988
and Chief Executive Officer of R. W,
Fowler & Assoc., Inc., a company
involved in the manufacture and
distribution of industrial plastic
products to chemical processing
industries, and numerous affiliated
companies, 1954 to present
Ben T. Franklin, Jr., 51, (1,3) Director of U.S. General 1988
President and CEO of Treadwell Construction, Inc.
Incorporated, a regional petroleum
industry equipment, service and
construction corporation, June 1992 to
present; Managing General Partner of
Atlantic Capital Properties, 1981 to
present: President of Invictus Inc., a
Corporation engaged in investment
banking, 1988 to present
Daniel J. Gallagher, 48, (2) Partner Trustee of the 1988
of the law firm of Holland & Knight. Jacksonville Public
January 1990 to present: Partner of Libraries; Vice
the law firm of Gallagher, Mikals & Chairman, Board of
Cannon, P.A., formerly known as Governors of
Callagher, Baumer, Mikals, Bradford, Jacksonville Chamber of
Cannon & Walters, P.A., January 1979 Commerce; Director of
to December 1989; Hospice, N.E.
37
<PAGE>
John F. Lovejoy, Jr., M.D., 56, (2,4) Member of American Board 1988
Orthopaedic surgeon, St. Lukes of Orthopaedic Surgery;
Hospital and Baptist Medical Center, Clinical Instructor at
Jacksonville, July 1973 to present the University of
Florida; Fellow of
American Academy of
Orthopaedic Surgeons
Vice Admiral Joseph P. Moorer, USN Member of Board of 1988
(Ret.), 72, (2,4) Vice President and Trustees of Jacksonville
assistant to President of W.W. Gay University and Director
Mechanical Contractor, Inc., January of W.W. Gay Integrated
1990 to present: Vice President for Communications Systems
Operations of Jacksonville University,
1985 to December 1989
Guy N. Nix, Jr., 55 (1,3,4) Chairman, Trustee and Treasurer of 1988
President and CEO of Ponte Vedra Life Care Pastoral
National Bank, December 1989 to Services, Inc. Chairman,
present: Consultant to the Company, The Churchmen.
October 1988 to 1989: Executive
Officer of Chase Bank of Florida,
February 1986 to October 1988
Reto J. Schneider, 55, (1,3)President None 1988
and Chief Executive Officer of Baita
International, Inc., a real estate
investment and development firm
headquarters in Jacksonville, Florida,
July 1986 to present: Elected to
Executive Committee September 1992 and
to Loan Committee, August 1992
P. Jeremy Smith. Jr., 43, (1,3,4) Vice Member of Executive 1988
President and member of the Board of Committee and immediate
Directors of Gate Petroleum Company, a past Chairman of the
petroleum distribution and real estate Board of Trustees of
development company based in Jacksonville Country Day
Jacksonville, Florida. School; Finance
Committee of the Chamber
of Commerce.
1. Member of the executive committee of the Bank's Board of Directors, which
held 12 meetings in 1994. The executive committee has the authority,
during intervals between meetings of the Board of Directors, to exercise
power on matters designated by the Board.
2. Member of the audit committee of the Bank's Board of Directors, which held
3 meetings in 1994. The audit committee meets with representatives of the
Bank's independent public accountants to determine the scope of each audit
and review the results.
3. Member of the loan committee of the Bank's Board of Directors, which held
14 meetings in 1994. The loan committee establishes loan policy and
monitors the loan portfolio.
4. Member of the investment committee of the Bank's Board of Directors, which
held 6 meetings in 1994. The investment committee establishes investment
policy and monitors the investment portfolio.
38
<PAGE>
Each of the directors of the Holding Company is a director of the Bank.
During the year ended December 31, 1993, the Board of Directors of the
Holding Company and the Bank held 4 meetings and 12 meetings, respectively.
All members of the Board attended at least 75% of the meetings of the Board
of the Holding Company and Bank and all committees on which they served.
Directors are elected annually.
The officers of the Holding Company are as follows:
Officer
Name Since Position
- ------------------------ ----------- -------------------------------------
G. Bruce Douglas, 60 1988 Chairman, President and
Chief Executive Officer
Ben T. Franklin, Jr., 51 1988 Vice President
Guy N. Nix, Jr., 55 1988 Vice President and
Chief Financial Officer
P. Jeremy Smith, Jr., 43 1988 Secretary
The following table provides certain information concerning each of the
executive officers of the Bank:
Name, Age at Executive Principal Occupation Since
March 1, 1995 Officer Since January 1, 1989
- ---------------------- ------------- -------------------------------------
Guy N. Nix, Jr., 55 1989 President and CEO of the Bank,
December 1989 to Present; Consultant
to the Holding Company, October 1988
to December 1989
Barry W. Chandler, 43 1990 Senior Vice President and Senior
Lender of the Bank March 1990 to
present; Vice President of C&S Bank
of Duval County (formerly Ocean State
Bank), January 1986 to March 1990
Executive Compensation
Cash Remuneration Of Executive Officers
The following table shows the aggregate cash compensation paid or accrued by
the Registrant and its subsidiaries during the three fiscal years ended
December 31, 1994, to its Chief Executive Officer, the only Executive Officer
whose aggregate salary and bonus exceeded $100,000 during such years.
SUMMARY COMPENSATION TABLE
Other Annual Stock
Name and Principal Compensation Options/
Position Year Salary($) Bonus($) ($) SARS (#)
- --------------------- ----- --------- --------- ------------ ---------
Guy N. Nix, Jr. 1994 125,000 23,772 13,142 None
Chairman, President & 1993 116,667 13,653 13,849 3,000
CEO, Holding
Company; Vice- 1992 115,000 33,350 11,415 6,509
President & CFO, Bank
39
<PAGE>
Other annual compensation includes car allowance, group term life insurance
premiums, and contributions to the Bank's retirement savings plan. The
aggregate amount of perquisites and other personal benefits received, if any,
did not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus for such named executive officer.
Mr. Nix's compensation has been in accordance with an employment agreement
between the Holding Company and Mr. Nix which was executed on March 17, 1992,
(the "Revised Nix Employment Agreement"), which superseded the prior
employment agreement dated September 18,1989. The term of the Revised Nix
Employment Agreement is effective until December 31, 1993, and shall continue
for one year commencing January 1, 1994 and each January 1, thereafter,
unless either party elects not to renew this Agreement. If Mr. Nix is
terminated for other than cause, he will continue to be paid the base salary
and group fringe benefits for the remaining term and will receive 15 months
of severance pay paid monthly following the date of termination, and will
continue to receive group fringe benefits for the remaining term of the
Revised Nix Employment Agreement and for the 15 months of severance. Mr. Nix
will receive an annual base salary of $125,000 per annum.
On December 29, 1992, the Holding Company entered into a Deferred
Compensation Agreement with Mr. Nix. The agreement provides for a retirement
date after Mr. Nix's sixtieth (60th) birthday at Mr. Nix's election. The
agreement further provides monthly payments 6n the retirement date of Mr. Nix
at $2,300 per month. Such payments commence on the first day after Mr. Nix's
retirement date and are payable each month thereafter until the earlier of
the employee's date of death or fifteen (1 5) years from the employee's
normal retirement date. All benefits under this agreement vested at the rate
of twenty percent (20%) per annum and are 100% vested after five (5) years of
service with the Company.
Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth as of March 1, 1995, (i) the name of each
current director of the Holding Company and each person known to the Holding
Company to be the beneficial owner of more than 5% of the Holding Company
Stock, (ii) the number of shares of the Holding Company's stock beneficially
owned by each such current director, 5% beneficial owner and all officers and
directors of the Holding Company as a group, and (iii) the percent of
outstanding stock so owned by each such director, 5% beneficial owner and all
such officers and directors as a group.
40
<PAGE>
Amount Percent of Class
Beneficially Adjusted for
Name and Address Of Owned as of Actual Exercise of
Beneficial Owner March 1, 1995 Shares All
Stock Warrants Outstanding Warrants(2)
DIRECTORS:
Isabelle Thomas Davis 14,500 10,000 2.23% 2.68%
1041 Ponte Vedra Boulevard
Ponte Vedra Beach, FL 32082
G. Bruce Douglas 43,000 40,000 6.62% 9.09%
67 Ponte Vedra Boulevard
Ponte Vedra Beach, FL 32082
Samuel J. Foley, Jr. 10,000 10,000 1.54% 2.19%
516 Rutile Drive
Ponte Vedra Beach, FL 32082
Robert W. Fowler 30,000 30,000 4.62% 6.57%
993 Ponte Vedra Boulevard
Ponte Vedra Beach, FL 32082
Ben T. Franklin, Jr. 10,000 10,000 1.54% 2.19%
2209 River Road
Jacksonville, FL 32207
Daniel J. Gallagher 10,000 10,000 1.54% 2.19%
3510 Sunnyside Drive
Jacksonville, FL 32207
John F. Lovejoy, Jr., M.D. 20,000 20,000 3.08% 4.38%
6408 San Jose Boulevard West
Jacksonville, FL 32217
VADM Joseph P. Moorer 5,000 5,000 0.77% 1.10%
547 LeMaster Drive
Ponte Vedra Beach, FL 32082
Guy N. Nix, Jr.(1) 5,450 5,450 0.84% 0.82%
131 Nandina Circle
Ponte Vedra Beach, FL 32082
Reto J. Schneider 50,200 50,000 7.73% 10.98%
2030 Oak Hammock Drive
Ponte Vedra Beach, FL 32082
P. Jeremy Smith, Jr. 17,000 10,000 2.62% 2.96%
10542 Deerwood Club Road
Jacksonville, FL 32256
5% BENEFICIAL OWNERS
James H. Dahl 46,500 7.16%
1200 Gulf Life Drive, Ste
902
Jacksonville, FL 32202
41
<PAGE>
ALL OFFICERS AND DIRECTORS 215,150 197,000 33.14% 45.15%
AS A GROUP (11 persons)
(1) Does not include stock options totaling 16,018 shares.
(2) See preceding table.
Certain Relationships and Related Transactions
The Holding Company and the Bank have banking and other business transactions
in the ordinary course of business with organizers, directors and officers of
the Holding Company and Bank and their affiliates, including members of their
families or corporations, partnerships or other organizations in which such
officers or directors have a controlling interest, on substantially the same
terms (including price, or interest rate and collateral) as those prevailing
at the time for comparable transactions with unrelated parties. Such banking
transactions are not expected to involve more than the normal risk of
collectibility nor present other unfavorable features to the Holding Company
and the Bank.
The Bank entered into a Lease and Building Agreement dated September 25,
1989, with Sawgrass Corners, Ltd. (formerly known as Douglas Partnerships
III, Ltd.), a Florida limited partnership, pursuant to which Sawgrass
Corners, Ltd. built a 10,500 square foot, single story building with three
drive-in lanes and adjacent parking which it leased to the Bank for the
Bank's headquarters. The general partner of Sawgrass Corners, Ltd. is
Invictus incorporated (formerly known as Douglas/Franklin Properties, inc.),
a Florida Corporation wholly owned by two of the directors of the Bank
(Messrs. Douglas and Franklin). The initial term of the lease is 15 years.
The initial lease rate is $175,000 per year. The Bank pays all utilities,
insurance, maintenance, and property taxes. The annual lease rate will
increase after each five-year period in accordance with the increase in the
Revised Consumer Price Index or U.S. Urban Wage Earners and Clerical Workers
- - All Item (1967-100) ("CPI"), subject to a cap of 5% for the five-year
period. The lease has two five-year renewal options and an option to purchase
the leased property, during the eleventh year of the lease at its then fair
market value.
The Organizers of the Holding Company and Bank received opinions from a
commercial real-estate appraiser and a commercial real-estate broker that the
above lease rates are comparable to rates generally charged for other similar
commercial property in Ponte Vedra Beach, Florida.
The Holding Company retained the law firm of Holland & Knight during the
fiscal year ended December 31, 1994 to perform Professional services in
connection with various Securities law filings required to be made by the
Holding Company. In addition, Holland & Knight provided various legal
services to the Bank. Daniel J. Gallagher, a director of the Bank and Holding
Company is a partner of such law firm.
Directors and executive officers of the Holding Company and their related
interests were indebted to the Bank in the aggregate amounts of $820,000 and
$796,000 at December 31, 1994 and 1993, respectively. in the opinion of
management, these loans do not involve more than the normal risk of
collectibility and were made by the Bank in the normal course business at
normal credit terms, including interest rate and collateral.
42
<PAGE>
Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements. Information with respect to this item is
contained on pages F-1 through F-15 of this Annual Report on Form
10-K.
2. Financial Statement Schedules. All financial statements schedules are
omitted because the information is either not applicable or is in the
Company's consolidated financial statements and related notes
contained elsewhere in this Annual Report on Form 10-K.
3. Exhibits Table.
3.1 Articles of incorporation of Ponte Vedra Banking Corporation and
amendments thereto are incorporated herein by reference to Exhibits
3(a) and 3(d) of Registrant's Registration Statement on Form S-18 and
Amendment No. 1 thereto, File No. 33-26543-A, as filed with the
Commission on January 13, 1989, and February 23, 1989, respectively,
3.2 Amended Bylaws of Ponte Vedra Banking Corporation are incorporated
herein by reference to Exhibit 3.2 of Registrant's Annual Report on
Form 10-K for the year ended December 31, 1989.
4. The rights of security holders are defined in the Articles of
incorporation, as amended, of Ponte Vedra Banking Corporation,
incorporated herein by reference to Exhibits 3(a) and 3(d) of
Registrant's Registration Statement on Form 5-1 8 and Amendment No. 1
thereto, file No. 33-25545-A, as filed with the Commission on January
13, 1989, and February 23, 1989, respectively, and the Amended Bylaws
of Ponte Vedra Banking Corporation incorporated herein by references to
Exhibit 3.2 of Registrant's Annual Report on Form 10-K for the year
ended December 31, 1989.
10.1 Employment Agreement dated September 18, 1989, between Registrant
and Guy N. Nix, Jr., is incorporated herein by reference to Exhibit
10. 1 of Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.
10.2 Stock Option Agreement dated December 18, 1989, between Registrant
and Guy N. Nix, Jr., is incorporated herein by reference to Exhibit
10.2 of Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.
10.4 Form of Stock Purchase Warrant issued to Registrant's organizers on
December 18, 1989, is incorporated herein by reference to Exhibit
10(c) of Registrant's Registration Statement on Form S-18 and
Amendment No.1 thereto, File No. 33-26545-A, as filed with the
Commission on January 13, 1989, and February 23, 1989, respectively.
10.5 Agreement to Build and Lease dated September 25, 1989, between
Sawgrass Corners, Ltd. (formerly known as Douglas Partnerships
III, Ltd.) and Registrant, is incorporated herein by reference to
Exhibit 10.5 of Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990.
10.6 Agreement to build and Lease dated January 13, 1991, between Ponte
Vedra Banking Corporation and Registrant is incorporated herein by
reference to exhibit 10.6 of Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990.
43
<PAGE>
10.7 Lease Agreement dated February 1, 1990, between Shoppes of Northshore
and Registrant is incorporated herein by reference to Exhibit 10.7 of
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991.
10.8 Sub-lease Agreement dated July 1, 1994, between Arvida/)MB Partners
and Registrant.
22.0 List of Subsidiaries is incorporated herein by reference to Exhibit
22.0 of Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990.
(b) Reports on Form 8-K.
23.0 Form 8-K Filed on December 31, 1994.
(c) Exhibits Required by item 601 of Regulation S-B
Exhibits required to be filed by the Company pursuant to item 601 of
Regulation S-8 are contained in the Exhibits listed in response to item
13(a)3, and are incorporated herein by reference.
(d) Financial Statement Schedules Required by Regulation S-8.
All Financial Statement Schedules required by Regulation 5-B are omitted
because the information is either not applicable or is presented in the
Company's Consolidated Financial Statements and related notes contained
elsewhere in this Annual Report on Form 10-K.
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 its behalf by the undersigned, thereunto duly authorized, on the 20th day
of March, 1995.
PONTE VEDRA BANKING CORPORATION
By: G. Bruce Douglas, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
Isabelle T. Davis Director
Bruce Douglas President(Director)
Samuel J. Foley Director
Robert W. Fowler Director
Ben T. Franklin Vice President(Director)
Daniel J. Gallagher Director
Joseph M. Hixon Director
John F. Lovejoy, Jr. Director
Edward J. McMahon Director
Joseph. P Moorer Director
Guy N. Nix, Jr. Vice President and Chief
Financial Officer/Director
Reto Schneider Director
P. Jeremy Smith, Jr. Secretary/Director
44
<PAGE>
EXHIBIT 10.8
LEASE AGREEMENT
SAWGRASS ADMINISTRATION BUILDING
PONTE VEDRA BEACH, FLORIDA
THIS LEASE is made and entered into the 1st day of July, 1994 by and between
DOUGLAS PARTNERSHIPS II., LTD.,a Florida Limited Partnership ("Lessor"),
whose address is P.O. Box 6746, Jacksonville, Florida 32236-6746, and Ponte
Vedra National Bank, a National Corporation ("Lessee"), whose address is P.O.
Box 1754 Ponte Vedra Beach, Florida 32004
NOW THEREFORE, for and in consideration of the Mutual Promises, covenants
and conditions herein contained. and the rent reserved by Lessor to be paid
by Lessee to Lessor, Lessor hereby leases to Lessee and Lessee hereby rents
from Lessor a portion of the Building located in St. Johns County, Florida,
as more particularly described on Exhibit A attached hereto ("the Premises"),
for the term, at the rentals, and upon the terms and conditions hereinafter
set forth.
1. PREMISES.
The Premises hereby leased, let and demised by Lessor unto Lessee, contain
approximately 4325 square feet of finished office space, together with the
right to use, on a non-exclusive basis with other occupants of the Building,
the common areas of the building consisting of approximately 2,725 square
feet of space. Lessee hereby acknowledges that it leases the Premises in
their current as is condition unless otherwise provided by a separate
agreement Signed by the Lessor and Lessee.
2. TERM.
2.1 The term of this Lease and the accrual of rents hereunder shall
commence on the date hereof (the "Commencement Date") and shall expire at
12:00 P.M. midnight of the last day of the 60th month thereafter, including
any partial month in accordance with paragraph 3.2 hereof if this Lease
commences on any date other than the first (1st) day of a month (the "Term"),
or, the expiration of any option period exercised in accordance with
Paragraph 2.4 below, but in no event shall the term of this Lease extend
beyond 30 June 1999 (the "Expiration Date").
2.2 At the Expiration Date, or upon the earlier termination of this
Lease, Lessee shall peaceably vacate and surrender the Premises to the Lessor
in accordance with this lease and, except for conditions caused by a casualty
giving rise to termination under paragraph 11 hereof, the Premises shall then
be in a broom clean condition, reasonable wear and tear excepted.
2.3 If the Lessee retains. without Lessor's consent. possession of the
Premises or any part hereof after, the Expiration Date, Lessee shall pay
Lessor per diem rental at double the rate payable in the month immediately
preceding said holdover, for the time Lessee thus remains in possession but
acceptance of said payments by Lessor shall not operate to extend the term of
this Lease.
2.4 Provided Lessee is not in default hereunder, Lessee is granted the
option to extend the Lease term for N/A successive month periods following
the expiration of the initial term (the "Extended Term") upon the same terms
and conditions set forth herein except, rent payable during the Extended Term
shall be in the following amounts:
2.4.1 During the first Extended Term, which shall be months __ through
__, the total amount of ___ Dollars ($), payable monthly;
2.4.2 During the second Extended Term, which shall be months __
through __, the total amount of ___ Dollars ($), payable monthly;
In addition, in the event this Lease provides for improvements to be made to
the Premises on or before Lessee's taking possession of the Premises, said
provisions shall not be applicable. This option to extend the term of this
Lease may only be exercised by Lessee's giving written notice of its exercise
thereof to Lessor not later then sixty (60) days prior to the expiration of
the current term of the Lease.
3. RENT.
3.1 During the Term hereof, Lessee covenants and agrees to pay to Lessor
a fixed rent (subject to adjustment as set forth hereafter) ("Rent"), in
advance, in the total amount of Four Hundred Ten Thousand, Five Hundred
Seventy Five and No/100 Dollars ($410,375.00), payable as follows: months 1
through 60, $6,847.91 monthly. The Rent shall be due and payable in monthly
installments from the Commencement Date forward.
3.2 Each monthly installment of Rent shall be payable to Lessor in
advance on the first (1st) day of each calendar month of the term at Lessor's
address set forth above, or at such other place as Lessor may from time to
time designate in writing, without notice, demand or offset. If the
Commencement Date is not an the first (lst) day of a calendar month, the Rent
for the period between the Commencement Date and the first (1st) day of the
following month shall be apportioned on a per diem basis, at the monthly
rental rate provided and shall be payable on the Commencement Date. In
addition to the Rent payable during the term of this Lease, Lessee shall also
pay the amount of any use or sales tax on said Rent imposed by the State of
Florida.
3.3 Upon execution of this Lease, Lessee shall deposit with Lessor, a sum
equal to N/A month's rent (the "Deposit"). The Deposit shall he held by
Lessor without liability for interest thereon as security for the faithful
performance of all the terms and conditions of this Lease by Lessee. If the
rent herein reserved or any other sum payable by Lessee to Lessor shall be
overdue or unpaid, or should Lessor make payments, or repairs to the
Premises, on behalf of Lessee which Lessee is required to make, or should
Lessee fail to Perform any of the terms of this Lease, then Lessor may, at
its option and without prejudice to any other remedy to which Lessor may have
on account thereof, appropriate and apply the Deposit, or so much thereof as
may be necessary to compensate Lessor toward the payment of rent or loss or
damage sustained by Lessor due to such breach on the part of Lessee, and
Lessee shall forthwith, upon demand by Lessor, restore the Deposit to the
original sum deposited. Should Lessee comply with all of the terms of this
Lease and promptly pay all of the rent as it falls due. and al other sums
payable by Lessee to Lessor, the Deposit shall be returned in full to Lessee
within thirty (30) days following the Expiration Date.
4.USE.
Lessee shall use the premises solely for the purpose of office space in
connection with Lessee's banking/mortgage business and for no other purpose
whatsoever. Lessee shall not make, suffer, or permit any unlawful, improper,
or offensive use of the Premises, or any part thereof, or permit any nuisance
thereon. Lessee acknowledges that its business is a bank accounting/mortgage
loan business and not a general retail or public "walk-in" operation.
5.REPAIRS, MAINTENENCE, SURRENDER, AND OPERATIONAL COSTS.
5.1 Subject to the obligation of Lessee to pay to Lessor a "pro rata
share" (as defined below) of the cost thereof, Lessor shall:
(a) make provisions for the maintenance of the exterior walls, roof,
building exterior, and structure of the Building in good repair, and the roof
of the Building water tight;
(b) make provisions for the maintenance of the exterior glass,
grounds, parking areas, and walks of the Building, and common areas in good
condition;
(c) make provisions for the maintenance of the interior of the
Premises (excluding floor, wall and ceiling coverings, light bulbs and
fixtures, personal property owned or leased by Lessee or those claiming by,
through or under Lessee, telephone equipment and telephone lines, trade
fixtures, interior glass, and interior partitions, including plumbing,
wiring, piping, heating and cooling equipment, fixtures and equipment, in
good and substantial repair;
(d) make provisions for landscaping maintenance;
(e) make Provisions for Pest control service to the Premises;
(f) make provisions for electric, water and sewer services and trash
collection
(g) make provisions for Janitorial services to the common areas of
the Building.
(h) make provisions for the payment of all assessments, taxes, and
levies imposed on the Building, land or the associated common areas
including, without limitation, ad valorem taxes and association dues.
5.2 Lessee shall be liable for and required to make any repairs, perform
any maintenance, or satisfy any claims to or upon the Premises or the
Building, that are required by, related to, or which rise from or grow out of
negligence, fault, misfeasance, or malfeasance of or by Lessee, its
employees, agents, invitees, licensees, or customers.
5.3 Except for Lessor's Maintenance obligations provided above. Lessee
shall service, keep, repair, replace, and maintain the interior of the
Premises and the property owned or leased by Lessee clean and in good
condition and repair during the Term of this Lease including, without
limitation, floor, wall and ceiling coverings; light bulbs and fixtures;
property owned or leased by Lessee or those claiming by, through or under
Lessee; telephone equipment and telephone lines, trade fixtures; interior
glass and interior partitions. Lessee agrees to make repairs promptly as they
may be needed at it's own expense, and at the end of the term or upon
termination of this Lease, Lesser shall deliver up the Premises in good
condition and repair, reasonable wear and tear excepted, and in a broom clean
condition with all glass and all windows and doors intact except for damage
to such glass by fire or other casualty beyond the control of Lessee.
5.4 Lessee shall be responsible for placing its trash in the trash
receptacles provided by Lessor on the exterior of the Building. Lessee shall
be responsible for arranging and paying for all other utility services,
cleaning services, and maintenance services other than these which Lessor is
specifically required to furnish to Lessee under this Lease including,
without limitation, phone service, additional cooling and heating systems, if
necessary, daily cleaning services. and security services.
5.5 Lessor, and Lessee acknowledge that a portion of the Rent is
allocated to Lessee's estimated "pro rata share" of all assessments and taxes
assessed against the Building, the common areas, and the real property upon
which the building and common areas are located and all charges paid or
incurred by Lessor in maintaining repairing, replacing, servicing and
insuring the Building, the Premises, and associated common areas and
providing electrical, water and sewer, and trash collection services to the
Building, the Premises and associated common areas (the "Operating Costs"),
as set forth in Exhibit B attached hereto. Lessee acknowledges that its
percentage of charges is based on the ratio of Lessee's total square footage
of the Premises plus the pro rata share of the common areas of the Building
(which pro rata share is equal to 40 percent of the total, or 5,401 square
feet) to the total square footage of the Building. Within one hundred twenty
(120) days after the end of each annual accounting period chosen by Lessor,
Lessor shall furnish to Lessee a Statement setting forth, in reasonable
detail all charges incurred or paid by Lessor as Operating Costs. In the
event that portion of the Rent allocated to Operating Costs and paid by
Lessee to Lessor is less than Lessee's pro rata share of Operating Costs,
Lessee agrees to pay to Lessor, within ten (10) days after receipt of
Lessor's statement, the amount of the underpayment, and the monthly
installments of Rent for the remainder of the term may be increased
accordingly, at lessor's option. In the event Lessee has paid to Lessor more
than its pro rata share of the actual Operating Costs, no refund shall be due
Lessee.
5.6 Lessee acknowledges that the Premises are encumbered by and subject
to the Restated Sawgrass Declaration of Covenants Re: Assessments and the
Articles of Incorporation and the Bylaws of The Sawgrass Association, Inc.
Lessee shall abide by all the rules, regulations, and covenants that relate
to Lessee and the Premises as of the date of this Lease.
6.QUIET ENJOYMENT.
Subject to the terms and provisions of this Lease, Lessor covenants that it
shall do nothing to disturb Lessees quiet enjoyment of the Premises during
the term of this Lease if Lessee shall observe and perform the covenants and
provisions of this Lease.
7.TAXES AND GOVERNMENTAL ASSESSMENTS.
Lessee shall pay before delinquency all governmental assessments, license and
permit fees and other governmental levies and charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever which are assessed, levied, confirmed, imposed or become a
lien upon Lessee's property in the Premises and taxes imposed by the terms of
this Lease. The terms of this paragraph shall include, without limitation,
sales and use taxes imposed on the rents, fees, and charges paid to Lessor
under this Lease.
8.RIGHT OF ACCESS.
Subject to Lessor's right to promulgate uniform rules for the use thereof,
Lessee shall have a non-exclusive license and right to the non-exclusive use,
in common with employees, and invitees, of automobile and equipment parking
and storage areas, driveways, and footways, the common areas of the Building,
and other facilities as may be designated from time to time by Lessor,
subject to the terms and conditions of this Lease.
9.ALTERATION TO THE PREMISES AND EQUIPMENT.
Except for the installation of unattached trade fixtures, furnishings and
equipment. Lessee shall not make any alteration or addition to the premises
without first obtaining the express prior written consent of Lessor. Upon
expiration and termination of this Lease, all attached installation,
fixtures, improvements, and alterations made or installed by Lessee,
including electric lighting fixtures, made by Lessee, and all repairs,
improvements, replacements, and alterations to the Premises made by Lessee,
shall remain a part of the Premises unless required to be removed by Lessor,
in which event Lessee shall repair any damage caused by removal of said
improvements.
10.NO LIENS.
Lessee agrees that it will make full and prompt payment of all sums necessary
to pay for the cost of repairs, alterations, improvements, charges, or other
work done by Lessee to the Premises. Lessor and Lessee agree to indemnify and
hold harmless one another, from and against any and all such costs and
liabilities incurred by either party arising from or growing out of such
actions by the other, and against any and all mechanics' materialmen's, or
laborer's liens rising from or, growing out of such work or the cost thereof
which may be asserted, claimed, or charged against the Premises or the
Building or Site on which it is located. Notwithstanding anything to the
contrary in this Lease, the interest of Lessor in the Premises shall not be
subject to liens for improvements made by or for Lessee, whether or not the
same shall be made or done in accordance with an agreement between Lessor,
and it is specifically understood and agreed that in no event shall Lessor,
or the interest of Lessor in the Premises, be liable for or subjected to any
mechanics', materialmen's or laborer's liens for improvements or work made by
or for Lessee; and this Lease specifically prohibits the subjecting of
Lessor's interest in the Premises to any mechanics', materialmen's or
laborer's liens for improvements made by Lessee or for which Lessee is
responsible for payment under the terms of this. Lease. All persons dealing
with Lessee are hereby placed on notice of this provision. If any notice or
claim of lien shall be asserted of record against the interest of Lessor in
the Premises, the Building in which the Premises are located, or any
improvement or work done by or for Lessee, or any person claiming by, through
or under Lessee, or for improvements or, work the cost of which is the
responsibility of Lessee, Lessee agrees to have such notice of claim of lien
canceled and discharged of record as a claim against the interest of Lessor
in the Premises, the Building in which the Premises are located. or the site
on which the Premises are located (either by payment or bond as permitted by
1aw) within ten (10) days after notice to Lessee by Lessor, and if Lessee
shall fail to do so, Lessee shall be considered in default under this Lease.
11. CASUALTY.
In the event the Premises are rendered untenable by fire or other Casualty
which in the reasonable opinion of Lessee shall render the Premises unfit for
the continued operation of Lessee's business, Lessee shall have the right to
terminate this Lease. If Lessee elects to terminate this Lease, the Rent
shall be paid to and adjusted as of the date of which termination by Lessee,
and the term of this lease shall then expire, this Lease shall be of no
further force or effect, Lessor shall be entitled to sole possession of the
Premises, and Lessee shall assign to Lessor the right to receive payment of
any insurance proceeds payable with respect to said casualty. Lessor shall
have no obligation to Lessee to Lessee to rebuild or repair the Premises
unless required pursuant to the terms of the lease.
12. INSURANCE AND INDEMNITY.
Lessee shall, at its expense, provide and maintain in force during the entire
term of this Lease, and any extension or renewal hereof, for its operations
in the Premises, the Building and the common areas, public liability
insurance with limits of coverage of not less than Five Hundred Thousand and
No/l00 Dollars ($500,000.00) per person. and not less than one million
Dollars, ($1,000,000.00) for each occurrence, and property damage insurance
with limits of coverage of not less than Five Hundred Thousand and No/100
Dollars ($500,000.00) Per occurrence, which may be incorporated into blanket
or umbrella coverage of Lessee. Lessee's coverage must name Lessor as an
additional insured.
12-1 Lessee acknowledges that Lessor is required under the terms of the
Lease to maintain throughout the term of the Lease Casualty insurance and
general comprehensive and extended coverage insurance for the Premises equal
to the full insurable replacement value of the Building and all improvements
thereon. Lessee acknowledges that the policy of insurance maintained by
Lessor provides coverage for the property of Lessee and is advised to obtain
insurance coverage for said property.
12.2 Lessor shall Provide evidence of Lessor's insurance coverage, and
Lessee shall provide evidence of its insurance coverage, as required herein,
upon execution of this Lease and thereafter within thirty (30) days of the
anniversary date of such policies of insurance. Lessee's and Lessor's
policies of insurance Shall name each other as additional insureds. If at any
time Lessor or Lessee shall receive a distribution of insurance proceeds
which is properly allocable to the interest of the other party, then the
party receiving such distribution shall immediately distribute such proceeds
to the party entitled to same.
12.3 Lessee will indemnify Lessor and save Lessor harmless from and
against any and all claims, actions, damages, liability and expense
(including, without limitation, reasonable fees of attorneys, investigators
and experts) in connection with loss of life, personal injury or damage to
property arising out of the occupancy or use by Lessee of the Premises or any
part thereof or occasioned wholly (or in part by any act or omission of
Lessor, its agents, contractors, employees, licenses or invitees, or by
breach of Lessor's obligations under the terms of this Lease.
13. INSPECTION AND REPAIR.
Lessor or its respective representatives shall have the right at all
reasonable times and without advance notice, to enter upon the Premises for
the purpose of inspection or for the purpose of making or causing to be made
any repairs or otherwise to protect its interests.
14. DEFAULT.
14.1 If Lessee shall (a) fail to make any rental or other payment due
hereunder within five (5) days after the same shall become due, or (b) file a
voluntary petition of bankruptcy or shall be adjudicated bankrupt or
insolvent or shall file any petition or answer seeking any reorganization,
arrangement or composition, readjustment, liquidation, dissolution or similar
relief for itself under the present or any future federal bankruptcy act, or
(c) make an assignment for the benefit of its creditors, or (d) have its
leasehold estate taken upon execution against Lessee, or (e) abandon the
Premises during the terms thereof, or (f) breach or fail to perform any of
the agreements made in this Lease other than the agreement to pay rent, and
shall fail to cure or to commence and diligently pursue such cure of any non-
monetary default within fifteen (15) days after written notice from Lessor,
then Lessor, in any such event(s), shall have the option to:
party to whom such notice is directed at the address set forth in the first
paragraph of this Lease. By giving at least to (2) days prior written notice
to the other party, either party may change its address for notices
hereunder.
20. BROKERAGE.
Lessee and Lessor acknowledge that it has not dealt, consulted, or negotiated
with any real estate broker, agent, or, salesperson. Each party hereby agrees
to indemnify and hold harmless the other from and against any and all loss
and liability resulting from or arising out of any Claim that the other party
has dealt or negotiated with any real estate broker. salesperson, or agent,
in connection with the transaction which is the subject of this Lease.
21. ENTIRE AGREEMENT.
This Lease sets forth the entire understanding between Lessor and Lessee, and
shall not be changed, modified, or amended except by an instrument in writing
signed by the party against whom the enforcement of any SUCH Change,
modification, or amendment is sought. The covenants and agreements herein
contained shall bind, and the benefit and advantages hereof shall inure to,
the respective heirs, legal representations, successors, and assigns of
Lessor and Lessee. Whenever used, the singular number shall include the
plural and the plural the singular, and the use of any gender shall include
all genders. The headings set forth in this Lease are for ease of reference
only and shall not be interpreted to modify or limit the provisions hereof.
This Lease shall be governed by and construed in accordance with the 1aws of
the State of Florida.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be executed
the day and year first above written.
LESSOR:
Signed, sealed, and delivered DOUGLAS PARTNERSHIPS II, LTD.
in the presence of: A Florida Limited Partnership
BY: ITIVICTUS INCORPORATED
A Florida Corporation, the General
Partner
As to Lessor By Ben T. Franklin, Jr. President
LESSEE:
PONTE VEDRA NATIOAL BANK
A National Corporation
By: Guy M. Nix, Jr.
President
<PAGE>
EXHIBIT 23
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 1994
PONTE VEDRA BANKING CORPORATION
(Exact name of small business issuer as specified in its charter)
Commission File Number 33-26545-A
Florida 59-2921958
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Sawgrass Corners Drive
Ponte Vedra Beach, FL 12082
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code 904-285-7222
(Former name or former address, if changed since last report)
<PAGE>
Securities and Exchange Commission
450 5h Street, N.W.
Washington, D. C. 20549
Re: Ponte Vedra Banking Corporation
Commission File Number 33-26545-A
59-2921958
Gentlemen:
We are presently the principal accountants of Ponte Vedra Banking
Corporation for the year ending December 31, 1994. We have been informed that
Ponte Vedra Banking Corporation has made a decision to change accountants for
the year ending December 31, 1995.
We have read Item 4 of Form 8-K of Ponte Vedra Banking Corporation dated
December 23, 1994, and we agree with such statements, except we are not in a
position to agree or disagree with the statements under paragraph (2).
Very yours,
Harbeson, Beckerleg & Fletcher
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTEPLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31,1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 33-26545-A
PONTE VEDRA BANKING CORPORATION
(Exact name of small business issuer as specificd in its charter)
Florida 59-2921958
(State of Incorporation) (I.R.S. Employer Identification No.)
100 Sawrass Corners Drive, Ponte Vedra Beach, FL 32082
(Address of principal executive offices) (Zip Code)
(904) 285-7222
(Issuers telephone number, including area code)
Non-Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the issuer (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 such 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.
(1) YES [X] NO [ ]
(2) YES [X] NO [ ]
The number of shares of the issuer's $1.00 par value common stock
outstanding as of March 31, 1995, was 639,120.
Page 1 of 11
<PAGE>
PONTE VEDRA BANKING CORPORATION
INDEX
Part 1.Financial Information Page
Item 1. Financial Statements - Unaudited
Consolidated Balance Sheets -- as of December
31, 1994, and March 30, 1995 3
Consolidated Statements of Income (Loss) --
Three Months ended March 31, 1994 and 1995 4
Consolidated Statements of Cash Flows - Three
Months ended March 31, 1994 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information 11
Page 2 of 11
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
PONTE VEDRA BANKING CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, March 31,
1994 1995
(In thousands)<F1> (Audited) (Unaudited)
<S> <C> <C>
ASSETS
Cash and Due From Banks $7,657 $5,111
Interest Bearing Deposits in Banks 100 100
Federal Funds Sold 1,700 500
Investment Securities Held to Maturity (Note 2) 10,397 9,453
Investment Securities Available for Sale (Note 2) 1,909 1,941
Loans, Less Allowance for Loan Losses 48,500 52,411
Property, Equipment and Leashold Improvements, net 3,274 3,191
Accrued interest receivable 349 297
Other assets 282 278
Total Assets $74,168 $73,282
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $17,349 $18,009
NOW Accounts 10,891 9,703
Savings 4,251 3,911
Money Market Accounts 12,534 11,675
Certificates of Deposit Under $100,000 15,878 15,996
Certificates of Deposit $100,000 and Over 6,224 5,848
Total Deposits 67,127 65,142
Securities Sold Under Agreements to Repurchase 622 1,655
Acrued Interest Payable 52 57
Other Liabilities 146 168
Total Liabilities 67,947 67,022
Commitments and Contingent Liabilities
Common stock, Par value $1, 1,000,000 shares authorized;
652,290 shares issued at December 31, 1994 and March 31, 1995 653 653
Capital in Excess of Par 5,818 5,821
Net Unrealized Gain (loss) on Investment Securities
Available For Sale (13) 10
Retained Earnings (206) (89)
Treasury Stock (4,700 Shares and 13,800 shares, respectively),
at cost (Note 4) (31) (135)
Total Stockholders' equity 6,221 6,260
Total liabilities and stockholders' equity $74,168 $73,282
<FN>
<F1> See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 3 of 11
<PAGE>
<TABLE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
For the Three Months
ended March 31,
(000's omitted - except per share data)(Unaudited)<F1> 1994 1995
<S> <C> <C>
Interest Income:
Interest and Fees on Loans $824 $1,208
Interest on Investment Securities 135 134
Interest on Federal Funds Sold 3 30
Interest on Deposits in Bank 1 1
Total Interest Income 963 1,373
Interest expense:
Interest on Deposits 216 419
Other 7 17
Total Interest Expense 223 436
Net interest income 740 937
Provision for loan losses 36 -
Net Interest Income After Provision
for Loan Losses 704 937
Other Income:
Service Fees 130 169
Securities Transactions - -
Other Operating Income 94 57
Total Other Income 224 226
Other Expenses:
Salaries and Benefits 487 500
Occupancy Expense 247 270
Other Operating Expense 205 207
Total Other Expense 939 977
Income Before Income Taxes (11) 186
Income Tax Expense - 69
Net Income $(11) $117
Earnings Per Share:
Net Income $(0.02) $0.18
Weighted Average Shares Outstanding 648 639
<FN>
<F1> See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 4 of 11
<PAGE>
<TABLE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Three Months
Ended March 31,
(In thousands)<F1> 1994 1995
<S> <C> <C>
Cash Flow from Operating Activities:
Net income $(11) $117
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Provision for Loan Losses 36 -
Depreciation 62 85
Accretion/Amortization on Securities 62 70
Change In:
Interest Receivable 138 52)
Interest Payable (1) 6
Other liabilities (67) 21
Other assets (267) 4
Cash Used in Operating Activities (48) 355
Cash Flows from Investing Activities:
Purchases of Investment Securities - -
Proceeds from Maturities and
Sales of Investment Securities (62) 827
Loans Originated (9,167) (10,559)
Principal Collected on Loans 6,163 6,648
Purchase of Property and Equipment, Net (78) (169)
Cash Used in Investing Activities (3,144) (3,253)
Cash Flows from Financing Activities:
Net Increase (Decrease) in Demand Deposits
NOW Accounts, Savings and
Money Market Accounts (144) (1,726)
Net Increase (Decrease) in
Certificates of Deposit 5 (259)
Federal Funds Purchased
Net Increase (Decrease) in Securities Sold
Under Agreements to Repurchase (287) 1,033
Treasury Stock Transactions, net - 104
Cash Provided by (Used in) Financing
Activities (426) (848)
Net Increase (Decrease) in Cash and Cash Equivalents (3,618) (3,746)
Cash and Cash Equivalents, Beginning of Period 10,305 9,457
Cash and Cash Equivalents, End of Period $6,687 $5,711
<FN>
<F1> See Accompanying Notes to Consolidated Financial Statements
</TABLE>
Page 5 of 11
<PAGE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995 AND 1994
Note 1 - Interim Statement Adjustments
The unaudited interim consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary to a fair
statement of the results for the periods presented. All adjustments are of a
normal and recurring nature. The interim consolidated financial statements
are designed to be read in conjunction with the most recent annual report.
Note 2 - Accounting Policies
Investment Securities
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities," as
of December 31, 1993. In accordance with SFAS No. 115, securities are
classified as either held to maturity, available for sale or trading.
Gains and losses are recognized and shown separately in the Statements of
Income upon realization or when impairment of values is deemed to be other
than temporary. These gains and losses are recognized using the specific
identification method. Unrealized holding gains and losses for securities
available for sale are excluded from the Statements of Income and are
reported net of taxes as a separate component of shareholders' equity until
realized.
Income Taxes
Provision for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount
of taxable income and between the tax bases of assets and liabilities and
their reported amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently enacted
income tax rates applicable to the period in which the deferred tax assets
and liabilities are expected to be realized or settled as prescribed in SFAS
No. 109, 'Accounting for Income Taxes." As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
Note 3 - Background and Organization
Ponte Vedra Banking Corporation (the Company) was incorporated effective
October 4, 1988, primarily to serve as the holding company for a national
banking association (the Bank). In 1989, the Company raised $6,451,000 (net
of selling expenses) through an offering of its common stock, of which
$5,500,000 was used to capitalize the Bank. The Bank opened for business
December 18, 1989, under the name "Ponte Vedra National Bank." The Bank is
headquartered in Ponte Vedra Beach, Florida. The Bank is operating in the
Beaches Service Area which includes Ponte Vedra Beach, Jacksonville Beach,
Neptune Beach and Atlantic Beach, Florida. The Company owns 100% of the
common stock of the Bank.
Page 6 of 11
<PAGE>
Note 4 - Commitents and Related Party Transactions
Treasury Stock and Stock Bonuses
The Company held $30,550 of Treasury Stock (4,700 Shares) at December 31,
1994. Effective December 31, 1994, the bank accrued non-executive officer
bonuses. These non-executive officer stock bonuses were purchased from the
Company by the Bank in January, 1995 (900 shares at $10.00 per share),
resulting in $24,700 of Treasury Stock (3,800 shares) at January 31, 1995.
Subsequently, on March 31, 1995, the Company acquired 10,000 of its stock at
$11.00 a share. As of March 31, 1995, the Company holds $134,700 of Treasury
Stock (13,800 shares).
Page 7 of 11
<PAGE>
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion sets forth the major factors that have affected the
Registrant's financial condition and results of operations for the quarter
ended March 31, 1995, as reflected in the consolidated financial statements
included at pages 3 - 7 of this Quarterly Report on Form 10-QSB. These
comments should be read in conjunction with the consolidated financial
statements and with the management's discussion and analysis of financial
condition and result of operations in the Annual Report on Form 10-KSB.
1. Earnings.
Gross earnings results for the first quarter, 1995, were the best in the
historry of the Bank. Income before extraordinary items, securities gains or
income taxes for the quarter increased from a loss of $11,000 as of March 31,
1994, to a profit of $186,000 for the period ended March 31, 1995. This 1995
first quarter income is a 1,792% increase over the same period last year.
Record net income can be primarily attributed to a 33% increase in net
interest income, contributed by a 29% increase in earning assets. Interest
income rose 43% while interest expense showed an increase of 96%, The marked
increase in interest expense is attributable to a rising rate environment
coupled with a interest bearing deposit growth of 22% for the period from
March 31, 1994, to March 31, 1995.
Other income, as well as other expense, remained primarily static when
comparing the two periods. However, during the second quarter of 1994, a
Small Business Administration Department was established at the Bank to
increase non-interest fee income. At the same time, the bank began the
downsizing of bank personnel. Management expects that these two factors will
dramatically impact comparisons of prior periods when filing future 1995
quarterly reports.
2. Dividends.
There were no dividends paid or declared by the Registrant during the quarter
ended March 31, 1995, nor during any prior quarter.
3. Liquidity and Capital Adequacy.
The Bank's goal is to maintain adequate liquidity to meet potential funding
needs of loan and deposit customers. This is achieved by maintaining a stable
base of core deposits and other interest-bearing funds augmented by a marked
diversity in customers, products and market areas. The ability to maintain
liquidity also is enhanced by earnings power and adequate capital. The Bank's
ALCO committee meets semi-monthly to establishes guidelines on all rates paid
on deposits or generated from loans while tracking liquidity needs and
ensuring adequate funding capacity.
New risk-based capital guidelines have been developed that assign weighted
levels of risk to assets and certain other financial instruments in order to
assess capital adequacy. At March 31, 1995, the Bank and Holding Company
exceeded these new capital requirements. The Registrants capital ratio is
12.65%, risk-based capital ratio is 13.65% and the leverage capital ratio is
8.26% at March 31, 1995.
Page 8 of 11
<PAGE>
4. Net Interest income.
Net interest income (before provision for loan losses), the difference
between interest and fees earned on earning assets and the interest incurred
on interest-bearing liabilities, remains a strong contributor to the Bank's
earnings. For the three months ended March 31, 1995, net interest income
(before provision for loan losses) was $937,000, a 27% increase from the same
period last year of $740,000. Of earning assets, growth was strongest in
loans ($38,457,000 at March 31, 1994, compared to $52,411,000 at March 31,
1995), representing 36% of the total earning assets growth.
Earning assets increased over 29% compared to the same period last year. The
growth in time deposits under $100,000, has helped provide sufficient funds
to satisfy the majority of loan volume of the Bank's customers and has kept
the Bank from becoming dependent upon time deposits of $100,000 or more.
The Bank, primarily through its ALCO committee, actively manages this income
source to provide the largest possible amount of income while balancing
interest rate and liquidity risks.
5. Trends.
Registrant is unaware of any trends, events or uncertainties that will have
or that are reasonably likely to have a material effect on the Registrant's
liquidity, capital resources or operations. The Registrant is unaware of any
current recommendations by the regulatory authorities to which its operations
are subject that if they were to be implemented would have such an effect.
6. Problem Loans and Provision for Loan Losses.
Non-performing loans at March 31, 1995, totaled $1,218,000. These loans were
current as to the payment of principal and interest, but were placed in non-
performing status because of uncertainty over the Borrowers' ability to make
future payments. These non-performing loans comprise slightly more than 2% of
total loans outstanding as of March 31, 1995. While first quarter 1995 non-
performing loans look significantly higher than the same period last year
($126,000 as of March 31, 1994), the majority of this variance is one
commercial loan for $750,000 on which the payment of interest occurs monthly.
This loan is 85% SBA-guaranteed and will mature in May, 1995.
During the period ended March 31, 1995, the Bank charged off a net of $460
on an installment loan repossessed and then subsequently sold. This represents
less than .001% of total loans outstanding. One loan in the amount of $4,100,
or.01% of total loans outstanding, was charged off during the same period
last year. Past due loans at March 31, 1995, were $335,000, or .63% of total
loans outstanding. No other loans were past due, restructured or non-accrual
during this period. At March 31, 1995, the Company's reserve for loan losses
totaled $493,000, which is .93% of total loans.
The Bank maintains an allowance for loan losses which it believes is adequate
to absorb potential losses in the loan portfolio. The allowance amounts to
two principal components; amounts specifically provided for loans reviewed on
an individual or pool basis, and a general portion designed to supplement the
specific allocations. The adequacy of the allowance for loan losses is
analyzed, and adjustments arc made quarterly, based on a review of all
significant loans with particular emphasis on non-accruing, past due and
other loans that management believes require special attention because of
uncertainties as to their collectibility in accordance with their existing
terms.
Page 9 of 11
<PAGE>
7. Provision for Taxes.
Effective 1992, the Bank adopted the provisions of SFAS No. 109, "Accounting
for Income Taxes." The cumulative effect of that change in the method of
accounting for income taxes did not impact the 1992 or 1993 consolidated
statements of income. Provisions for income taxes are based on taxes payable
or refundable for the current year and deferred taxes on temporary
differences between the amount of taxable income and between the tax bases of
assets and liabilities and their reported amounts in the consolidated
financial statements. Deferred tax assets and liabili6es are included in the
consolidatcd financial statements at currently enacted income tax rates
applicable to the period in which the deferred tax assets and liabilities are
expected to be realized or settled as prescribed in SFAS No. 109. As changes
in tax laws or rates are enacted, deferred tax assets and liabilities are
adjusted through the provision for income taxes.
The bank began paying income taxes in the fourth quarter, 1994. By
utilization of the Company's net operating loss carryforward (under the
provisions of SFAS No. 109), the Company recognized an income tax benefit of
$60,000 to 1994 earnings. The Corporation's earnings are now reported on a
fully-taxed basis.
Income tax expense attributable to income before extraordinary items was
$69,000 for the quarter ended March 31, 1995. This is based on an expected
income tax rate of 37.3%.
Page 10 of 11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings,
Not applicable during the current period.
Item 2. Change in Securities.
During the period ended March 31, 1995, the Company acquired additional
treasury stock, while in the same period selling some of its original
treasury stock to the Bank for non-executive officer compensation. A more
comprehensive breakdown of these changes is included in Note 4 of the
Company's consolidated financial statements.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders,
The Annual Meeting of the Stockholders of the Company was held April 17, 1995.
At that mecting Isabelle Thomas Davis, G. Bruce Douglas, Samuel J. Foley, Jr.,
Robert W. Fowler, Ben T. Franklin, Jr., Daniel J. Gallagher, John F. Lovejoy,
Jr., Joseph P. Moorer, Guy N. Nix, Jr., Reto J. Schneider and P. Jeremy
Smith, Jr. were elected as directors for the ensuing year by the following
vote:
FOR WITHOLD
332,414 100
In addition, the appointment of Stevens, Thomas, Schemer & Sparks, P.A., to
examine the Holding Company's financial statements for fiscal 1995 was
approved by the following vote:
FOR AGAINST ABSTAIN
331,014 900 700
No other matters were submitted for a vote of Security Holders.
Item 5. Other Inforination.
In Febmary 1995, the Bank changed data processing systems from SunTrust Data
Systems (STDS) to BISYS, Inc. This move was generated by a notification from
STDS that they would no longer provide this service.
Item 6. Exhibits and Reports.
(a) Exhibits. None,
(b) Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PONTE VEDRA BANKING CORPORATION
Guy N. Nix, Jr.,
Vice President and Chief Financial Officer
Dated:
Page 11 of 11
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTEPLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30,1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 33-26545-A
PONTE VEDRA BANKING CORPORATION
(Exact name of small business issuer as specificd in its charter)
Florida 59-2921958
(State of Incorporation) (I.R.S. Employer Identification No.)
100 Sawrass Corners Drive, Ponte Vedra Beach, FL 32082
(Address of principal executive offices) (Zip Code)
(904) 285-7222
(Issuers telephone number, including area code)
Non-Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the issuer (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 such 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.
(1) YES [X] NO [ ]
(2) YES [X] NO [ ]
The number of shares of the issuer's $1.00 par value common stock
outstanding as of June 30, 1995, was 639,120.
Page 1 of 11
<PAGE>
PONTE VEDRA BANKING CORPORATION
INDEX
Part 1.Financial Information Page
Item 1. Financial Statements - Unaudited
Consolidated Balance Sheets -- as of December
31, 1994, and June 30, 1995 3
Consolidated Statements of Income -- Three
Months and Six Months ended June 30, 1994 and 1995 4
Consolidated Statements of Cash Flows - Three
Months and Six Months ended June 30, 1994 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information 11
Page 2 of 11
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
PONTE VEDRA BANKING CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)<F1> (Audited) (Unaudited)
<S> <C> <C>
ASSETS
Cash and Due From Banks $7,657 $5,786
Interest Bearing Deposits in Banks 100 100
Federal Funds Sold 1,700 4,900
Investment Securities Held to Maturity (Note 2) 10,397 9,509
Investment Securities Available for Sale (Note 2) 1,909 2,841
Loans, Less Allowance for Loan Losses 48,500 60,109
Property, Equipment and Leashold Improvements, net 3,274 3,141
Accrued interest receivable 349 344
Other assets 282 959
Total Assets $74,168 $87,689
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $17,349 $17,201
NOW Accounts 10,891 10,959
Savings 4,251 3,792
Money Market Accounts 12,534 11,034
Certificates of Deposit Under $100,000 15,878 22,980
Certificates of Deposit $100,000 and Over 6,224 13,145
Total Deposits 67,127 79,111
Securities Sold Under Agreements to Repurchase 622 1,684
Acrued Interest Payable 52 90
Other Liabilities 146 322
Total Liabilities 67,947 81,207
Commitments and Contingent Liabilities
Common stock, Par value $1, 1,000,000 shares authorized;
652,290 shares issued at December 31, 1994 and June 30, 1995 653 653
Capital in Excess of Par 5,818 5,821
Net Unrealized Gain (loss) on Investment Securities
Available For Sale (13) (3)
Retained Earnings (206) 146
Treasury Stock (4,700 Shares and 13,800 shares, respectively),
at cost (Note 4) (31) (135)
Total Stockholders' equity 6,221 6,482
Total liabilities and stockholders' equity $74,168 $87,689
<FN>
<F1> See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 3 of 11
<PAGE>
<TABLE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
For the Three Months For the Six Months
ended June 30, ended June 30,
(000's omitted - except per share data)(Unaudited)<F1> 1994 1995 1994 1995
<S> <C> <C> <C> <C>
Interest Income:
Interest and Fees on Loans $920 $1,449 $1,744 $2,657
Interest on Investment Securities 133 137 268 271
Interest on Federal Funds Sold 5 34 8 63
Interest on Deposits in Bank 1 1 2 3
Total Interest Income 1,059 1,621 2,022 2,994
Interest expense:
Interest on Deposits 213 541 436 960
Other 19 21 19 39
Total Interest Expense 232 562 455 999
Net interest income 827 1,059 1,567 1,995
Provision for loan losses 55 80 91 79
Net Interest Income After Provision
for Loan Losses 772 979 1,476 1,916
Other Income:
Service Fees 152 191 282 360
Securities Transactions 12 19 12 19
Other Operating Income 69 122 163 179
Total Other Income 233 332 457 558
Other Expenses:
Salaries and Benefits 524 465 1,011 965
Occupancy Expense 229 251 476 521
Other Operating Expense 230 228 435 435
Total Other Expense 983 944 1,922 1,921
Income Before Income Taxes 22 367 11 553
Income Tax Expense - 133 - 202
Net Income $22 $234 $11 $351
Earnings Per Share:
Net Income $0.03 $0.37 $0.02 $0.55
Weighted Average Shares Outstanding 648 639 648 639
<FN>
<F1> See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 4 of 11
<PAGE>
<TABLE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(In thousands)<F1> 1994 1995 1994 1995
<S> <C> <C> <C> <C>
Cash Flow from Operating Activities:
Net income $22 $234 $11 $351
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Provision for Loan Losses 55 79 91 79
Depreciation 70 50 132 135
Accretion/Amortization on Securities 68 76 130 146
Change In:
Interest Receivable 48 (47) 186 5
Interest Payable 8 32 7 38
Other liabilities 36 155 (31) 176
Other assets 177 (681) (90) (677)
Cash Used in Operating Activities 484 (102) 436 253
Cash Flows from Investing Activities:
Purchase of Investment Securities (993) (1,002) (993) (1,002)
Proceeds from Maturities and
Sales of Investment Securities 2,311 (15) 2,249 812
Loans Originated (9,385) (10,604) (18,552) (21,163)
Principal Collected on Loans 3,672 2,897 9,835 9,545
Purchase of Property and Equipment, Net (35) (98) (113) (267)
Cash Used in Investing Activities (4,430) (8,822) (7,574) (12,075)
Cash Flows from Financing Activities:
Net Increase (Decrease) in Demand Deposits
NOW Accounts, Savings and
Money Market Accounts 6,320 (312) 6,176 (2,038)
Net Increase (Decrease) in
Certificates of Deposit 3,827 14,282 3,832 14,023
Federal Funds Purchased
Net Increase (Decrease) in Securities Sold
Under Agreements to Repurchase (487) 29 (774) 1,062
Treasury Stock Transactions, net - - - 104
Cash Provided by (Used in) Financing
Activities 9,660 13,999 9,234 13,151
Net Increase (Decrease) in Cash and Cash Equivalents 5,714 5,075 2,096 1,329
Cash and Cash Equivalents, Beginning of Period 6,687 5,711 10,305 9,457
Cash and Cash Equivalents, End of Period $12,401 $10,786 $12,401 $10,786
<FN>
<F1> See Accompanying Notes to Consolidated Financial Statements
</TABLE>
Page 5 of 11
<PAGE>
PONTE VEDRA BANKING CORPORATION AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
Note 1 - Interim Statement Adjustments
The unaudited interim consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary to a fair
statement of the results for the periods presented. All adjustments are of a
normal and recurring nature. The interim consolidated financial statements
are designed to be read in conjunction with the most recent annual report.
Note 2 - Accounting Policies
Investment Securities
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities," as
of December 31, 1993. In accordance with SFAS No. 115, securities are
classified as either held to maturity, available for sale or trading.
Gains and losses are recognized and shown separately in the Statements of
Income upon realization or when impairment of values is deemed to be other
than temporary. These gains and losses are recognized using the specific
identification method. Unrealized holding gains and losses for securities
available for sale are excluded from the Statements of Income and are
reported net of taxes as a separate component of shareholders' equity until
realized.
Income Taxes
Provision for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount
of taxable income and between the tax bases of assets and liabilities and
their reported amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently enacted
income tax rates applicable to the period in which the deferred tax assets
and liabilities are expected to be realized or settled as prescribed in SFAS
No. 109, 'Accounting for Income Taxes." As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
Loan Fees
During the quarter ended June 30, 1995, an adjustment was made to correct an
error in the application of SFAS No. 91, "Accounting for Nonrefundable Fees
and Costs Associated with Originating or Acquiring Loans and Initial Direct
Costs of Leases." SFAS No. 91 requires a matching of the cost of originating
loans against the fees earned on a loan-by-loan basis, and amortizing the
resulting net deferred credit (fee income) or debit (origination costs) over
the estimated life of the loan. The Bank has historically deferred all loan
commitment fees, while expensing all origination costs. This accounting
treatment has understated income and stockholders' equity.
The cumulative effect of the adjustment on prior periods was not considered
material by management and no restatement was made. The total effect of the
adjustment on the quarter ended June 30, 1995 (including amounts related to
1995), was less than $35,000, with approximately $22,000 related to prior
periods before 1995 (or about 6.3% of net income for 1995).
Page 6 of 11
<PAGE>
Note 3 - Background and Organization
Ponte Vedra Banking Corporation (the Company) was incorporated effective
October 4, 1988, primarily to serve as the holding company for a national
banking association (the Bank). In 1989, the Company raised $6,451,000 (net
of selling expenses) through an Offering of its common stock, of which
$5,500,000 was used to capitalize the Bank. The Bank opened for business
December 18, 1989, under the name "Ponte Vedra National Bank." The Bank is
headquartered in Ponte Vedra Beach, Florida. The Bank is operating in the
Beaches Service Area which includes Ponte Vedra Beach, Jacksonville Beach,
Neptune Beach and Atlantic Beach, Florida. The Company owns 100% of the
common stock of the Bank.
Note 4 - Commitents and Related Party Transactions
Treasury Stock and Stock Bonuses
The Company held $30,550 of Treasury Stock (4,700 Shares) at December 31,
1994. Effective December 31, 1994, the bank accrued non-executive officer
bonuses. These non-executive officer stock bonuses were purchased from the
Company by the Bank in January, 1995 (900 shares at $10.00 per share),
resulting in $24,700 of Treasury Stock (3,800 shares) at January 31, 1995.
Subsequently, on March 31, 1995, the Company acquired 10,000 of its stock at
$11.00 a share. As of June 30, 1995, the Company holds $134,700 of Treasury
Stock (13,800 shares).
Page 7 of 11
<PAGE>
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion sets forth the major factors that have affected the
Registrant's financial condition and results of operations for the quarter
ended June 30, 1995, as reflected in the consolidated financial statements
included at pages 3 - 7 of this Quarterly Report on Form 10-QSB. These
comments should be read in conjunction with the consolidated financial
statements and with the management's discussion and analysis of financial
condition and result of operations in the Annual Report on Form 10-KSB.
1. Earnings.
Net income for the second quarter of 1995 was S234,000, or $.37 per share, as
compared to $22,000, or $.03 per share, for the second quarter of 1994. The
improvement is earnings is primarily attributable to a continued growth in
loans, an increase of 37% in the second quarter 1995. A continued growth in
fees earned on small business administration loans sold into the secondary
market generated $60,000 in noninterest income for the second quarter 1995,
and $71,000 for the six months ended June 30, 1995.
During the second quarter, the Bank corrected an error in the application of
an accounting principle, which increased earnings for the three and six
months ended June 30, 1995, by about $35,000. See Note 2 of Notes to Interim
Consolidated Financial Statements on page 6 for a further explanation. For
the year ending December 31, 1995, management anticipates that the effect on
net income will be immaterial.
The Bank's total deposits increased by approximately $12,000,000, or 18%, in
the six months ended June 30, 1995, and by approximately $16,000,000, or 26%
for the three months ended June 30, 1995. Consolidation of the banking
industry within the primary market area, in conjunction with an aggressive CD
campaign in the second quarter, contributed strongly to the Bank's deposit
growth. For the six months and three months ended June 30, 1995, loans
increased by approximately $12,000,000 and $8,000,000, respectively,
significantly enhancing earnings.
2. Dividends.
There were no dividends paid or declared by the Registrant during the quarter
ended June 30, 1995, nor during any prior quarter.
3. Liquidity and Capital Adequacy.
The Bank's goal is to maintain adequate liquidity to meet potential funding
needs of loan and deposit customers. This is achieved by maintaining a stable
base of core deposits and other interest-bearing funds augmented by a marked
diversity in customers, products and market areas. The ability to maintain
liquidity also is enhanced by earnings power and adequate capital. The Bank's
ALCO committee meets semi-monthly to establishes guidelines on all rates paid
on deposits or generated from loans while tracking liquidity needs and
ensuring adequate funding capacity.
Page 8 of 11
<PAGE>
New risk-based capital guidelines have been developed that assign weighted
levels of risk to assets and certain other financial instruments in order to
assess capital adequacy. At June 30, 1995, the Bank and Holding Company
exceeded these new capital requirements. The Registrants capital ratio is
11.06%, risk-based capital ratio is 12.04% and the leverage capital ratio is
8.33% at June 30, 1995.
4. Net Interest income.
Net interest income (before provision for loan losses), the difference
between interest and fees earned on earning assets and the interest incurred
on interest-bearing liabilities, remains a strong contributor to the Bank's
earnings. For the three months ended June 30, 1995, net interest income
(before provision for loan losses) was $1,081,000, and was $2,017,000 for the
first six months of 1995, an increase quarter to quarter of $145,000, or 45%.
Of earning assets, growth was strongest in loans ($60,109,000 at June 30,
1995, compared to $48,500,000 at December 30, 1994), representing 24% of the
total earning assets growth.
Earning assets increased over 31% compared to the same period last year. The
growth in time deposits under $100,000, and a large-dollar static transaction
deposit base has helped provide sufficient funds to satisfy the majority of
loan volume of the Bank's customers and has kept the Bank from becoming
dependent upon time deposits of $100,000 or more, even though these time
deposits have increased.
The Bank, primarily through its ALCO committee, actively manages this income
source to provide the largest possible amount of income while balancing
interest rate and liquidity risks.
5. Trends.
Registrant is unaware of any trends, events or uncertainties that will have
or that are reasonably likely to have a material effect on the Registrant's
liquidity, capital resources or operations. The Registrant is unaware of any
current recommendations by the regulatory authorities to which its operations
are subject that if they were to be implemented would have such an effect.
6. Problem Loans and Provision for Loan Losses.
Non-performing loans at June 30, 1995, totaled $344,000, a significant
decrease from first quarter non-performing loans which were $1,218,000. The
majority of this variance was one commercial loan for $750,000 on which the
payment of interest occurred monthly. The loan was 85% SBA-guaranteed and
matured in May, 1995, at which time it was charged off. All non-performing
loans at June 30, 1995, were current as to the payment of principal and
interest, but were placed in non-performing status because of uncertainty
over the Borrowers' ability to make future payments. These non-performing
loans comprise slightly more than.57% of total net loans outstanding.
Page 9 of 11
<PAGE>
On May 31, 1995, the Bank charged off two loans for a net of $124,170. During
the period ended March 31, 1995, the Bank charged off a net of $460 on an
installment loan repossessed and then subsequently sold. Total charge-offs
for the six months ended June 30, 1995, represents less than .3% of total
loans outstanding. One loan in the amount of $4,100, or.01% of total loans
outstanding, was charged off during the same period last year. Past due loans
at June 30, 1995, were $117,971, or.57% of total net loans outstanding. No
other loans were past due, restructured or non-accrual during this period. At
June 30, 1995, the Company's reserve for loan losses totaled $572,363, which
is approximately .94% of total loans.
The Bank maintains an allowance for loan losses which it believes is adequate
to absorb potential losses in the loan portfolio. The allowance amounts to
two principal components; amounts specifically provided for loans reviewed on
an individual or pool basis, and a general portion designed to supplement the
specific allocations. The adequacy of the allowance for loan losses is
analyzed, and adjustments arc made quarterly, based on a review of all
significant loans with particular emphasis on non-accruing, past due and
other loans that management believes require special attention because of
uncertainties as to their collectibility in accordance with their existing
terms.
7. Provision for Taxes.
Effective 1992, the Bank adopted the provisions of SFAS No. 109, "Accounting
for Income Taxes." The cumulative effect of that change in the method of
accounting for income taxes did not impact the 1992 or 1993 consolidated
statements of income. Provisions for income taxes are based on taxes payable
or refundable for the current year and deferred taxes on temporary
differences between the amount of taxable income and between the tax bases of
assets and liabilities and their reported amounts in the consolidated
financial statements. Deferred tax assets and liabili6es are included in the
consolidatcd financial statements at currently enacted income tax rates
applicable to the period in which the deferred tax assets and liabilities are
expected to be realized or settled as prescribed in SFAS No. 109. As changes
in tax laws or rates are enacted, deferred tax assets and liabilities are
adjusted through the provision for income taxes.
The bank began paying income taxes in the fourth quarter, 1994. By
utilization of the Company's net operating loss carryforward (under the
provisions of SFAS No. 109), the Company recognized an income tax benefit of
$60,000 to 1994 earnings. The Corporation's earnings are now reported on a
fully-taxed basis.
Income tax expense attributable to income before extraordinary items was
$133,000 for the quarter ended June 30, 1995 and $202,000 for the six months
ended June 30, 1995. This is based on an expected income tax rate of 37.6%.
Page 10 of 11
<PAGE>
PART II. OTHER INFORMATION
Items 1. through 4.
Not applicable during the current period.
Item 5. Other Information,
On July 17, 1995, the Board of Directors of Ponte Vedra Banking Corporation
accepted a non-binding proposal pursuant to which the Corporation and its
wholly owned subsidiary, Ponte Vedra National Bank, would be merged with and
into SunBanks, Inc., and SunBank/North Florida, NA, respectively, for
approximately $13,429,000 consisting of a combination of cash and shares of
common stock of SunTrust Banks, Inc. The acquisition is subject to
negotiation of a definitive agreement along with regulatory and Ponte Vedra
Banking Corporations' shareholder approvals. The transaction is expected to
be concluded in the first quarter of 1996.
Item 6.Exhibits and Reports,
(a) Exhibits. None.
(b) Reports on Form 8-K.
Form 8-K filed on April 17, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PONTE VEDRA BANKING CORPORATION
Guy N. Nix, Jr.,
Vice President and Chief Financial Officer
Dated: 8/11/95
Page 11 of 11
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 17, 1995
PONTE VEDRA BANKING CORPORATION
(Exact name of small business issuer as specified in its charter)
Commission File Number 33-26545-A
Florida 59-2921958
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Sawgrass Corners Drive
Ponte Vedra Beach, FL 32082
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code 904-285-7222
(Former name or former address, if changed since last report)
<PAGE>
PART II INFORMATION INCLUDED IN FORM 8-K
Item 1 - None.
Item 2 - None.
Item 3 - None.
Item 4 -Change in registrant's certifying accountants.
(1) On December 19. 1994, the Company's Board Of Directors approved a motion
to dismiss its certifying accountants, Harbeson, Beckerleg & Fletcher,
after the completion of the audit for the year ended December 31, 1994.
(i) The accountant's report on the financial statements for either of
the past two (2) years ended December 31, 1994, did not contain an
adverse opinion or a disclaimer of opinion or was not qualified or
modified as to uncertainty, audit scope, or accounting principles.
(ii) The decision to change accountants was approved by the Board of
Directors upon recommendation made by the Company's Audit Committee
on December 19, 1994.
(iii) In connection with the audit of the Company's financial statements
for the past two (2) years ended December 31, 1994, and for the
subsequent interim period through the date of this Form 8-K, there
were no disagreements with Harbeson, Beckerleg & Fletcher on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures.
(2) During a duly called Annual Meeting of the Shareholders on April 17,
1995, the Company's Shareholders approved a motion to engage Stevens,
Thomas, Schemer & Sparks, P.A. (formerly Nolan, Stevens & Thomas, P.A.)
to audit the Company's financial statements for the period ending
December 31, 1995. During the Company's two (2) most recent fiscal years
ended December 31, 1994, and for the subsequent interim period through
the date of this Form 8-K, it did not consult the newly engaged
accountant regarding the application of accounting principles or any
other matter that the Company may use in reaching a decision as to any
accounting, auditing, or financial reporting issue.
(3) Harbeson, Beckerleg & Fletcher has furnished the Company with a letter
addressed to the Securities and Exchange Commission stating that they
agree with the statements made by the Company concerning the dismissal
of the Company's certifying accountants for the year ending December 31,
1995. Their letter is included in this Form 8-K as Exhibit XVI (a).
(4) Stevens, Thomas, Schemer & Sparks, P.A., has furnished the Company with
a letter addressed to the Securities and Exchange Commission stating
that they agree with the statements made by the Company concerning the
election of the Company's certifying accountants for the year ending
December 31, 1995. their letter is included in this Form 8-K as Exhibit
XVI (b).
2
<PAGE>
Item 5 - None.
Item 6 - None.
Item 7 - Exhibits on Form 8-K.
(1) None.
(2) None.
(3) Exhibit Table.
Item 8 - None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PONTE VEDRA BANKING CORPORATION
Date April 24, 1995 By: Guy N. Nix
Vice President and
Chief Financial Officer
3
<PAGE>
EXHIBIT TABLE
Page #
Exhibit XVI (a) Letter re change in certifying accountants 5
Exhibit XVI (b) Letter re change in certifying accountants 6
<PAGE>
April 24, 1994
4
<PAGE>
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Re: Ponte Vedra Banking Corporation
Commission File Number 33-26545-A
59-2921958
Gentlemen:
We were the principal accountants of Ponte Vedra Banking Corporation for the
two years ending December 31, 1994. We have been informed that Ponte Vedra
Banking Corporation has made a decision to change accountants for the year
ending December 31, 1995.
We have read Item 4 of Form 8-K of Ponte Vedra Bankhig Corporation dated
April 24, 1995, and we agree with such statements, except we are not in a
position to agree or disagree with the statements under paragraph (2).
Very truly yours,
Harbeson, Beckerleg & Fletcher
5
<PAGE>
April 24, 1994
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Re: Ponte Vedra Banking Corporation
Commission File Number 33-26545-A
59-2921958
Gentlemen:
We have read Item 4 of Form 8-K of Ponte Vedra Banking Corporation dated
April 24, 1995, and we agree with such statements, except we are not in a
position to agree or disagree with the statements under paragraph (I)(iii).
Sincerely,
Stevens, Thomas, Schemer & Sparks, P.A.
6
