SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995
Commission File Number 0-27200
EVERGREEN BANCSHARES, INC.
A Florida Corporation
(IRS Employer Identification No. 63-1025500)
111 S. Monroe Street, Suite 200
Tallahassee, Florida 32304
(904) 222-4600
Securities Registered Pursuant to Section 12(b)
of the Securities Exchange Act of 1934: None
Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934: Common Stock, $1.00 Par Value
Check whether the Issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that
the Registrant was required to file such report(s), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No
Check if there is no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B contained 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 III of the Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year: $9,573,889.
The aggregate market value of the Common Stock of the Registrant
held by nonaffiliates of the Registrant on September 30, 1996, was
$4,240,701. As of such date, no organized trading market existed
for the Common Stock of the Registrant. The aggregate market value
was computed by reference to the $17 price at which the most recent
known sales were transacted. For the purposes of this response,
directors, officers and holders of 5% or more of the Registrant's
Common Stock are considered the affiliates of the Registrant at
that date.
The number of shares outstanding of the Registrant's Common Stock
as of September 30, 1996: 1,000,292 shares of $1.00 per value
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Transitional Small Business Disclosure Format
Yes No [X]
PART I
Item 1. Description of Business.
A. Business Development
Evergreen Bancshares, Inc., (the "Company") is a bank
holding company registered under the federal Bank Holding Company
Act of 1956, as amended. The Company is a Florida corporation
organized in 1990. The Company's principal offices are located at,
and its mailing address is, 111 S. Monroe Street, Tallahassee,
Florida 32304. Its telephone number is (904) 222-4600. As of
December 31, 1995, on a consolidated basis, the Company had assets
of approximately $124 million and stockholders' equity of
approximately $6.5 million.
The Company is the sole shareholder of Guaranty National
Bank of Tallahassee (the "Bank"). The Bank was chartered under
federal law in 1986. The Company acquired the Bank in a stock
exchange between the Company and the Bank in 1990. The Bank's
address is 1706 West Tennessee Street, Tallahassee, Florida 32304.
In 1990, the Bank opened its first branch office. In
January 1992, the Bank acquired the branch office and deposits of
Anchor Savings Bank, FSB, located on Ocala Road in Tallahassee. In
1993, the Bank acquired three other Tallahassee branch offices of
Anchor in two transactions. During 1994, the Bank opened a branch
in south Tallahassee. Accordingly, the Bank has seven offices in
Tallahassee at this time. This is the Bank's principal
distribution method for its products and services.
B. Business of the Company
The Bank is a full-service commercial bank, without trust
powers. It offers a full range of interest bearing and
non-interest bearing deposit accounts, including commercial and
consumer checking accounts, negotiable order of withdrawal ("NOW")
accounts, money market accounts, individual retirement accounts,
public fund accounts, regular interest bearing savings accounts,
certificates of deposit, and most types of loans, including
commercial loans, real estate loans, consumer direct/indirect
installment loans and VISA/MasterCard loans. In addition, the Bank
provides such consumer services as safe deposit boxes, custodial
services, notary services, incoming and outgoing collections,
travelers checks, U.S. Bonds, money orders, cashiers checks, wire
transfer services, coupon collection, night depository service, and
automated teller services.
The primary service area of the bank generally encompasses
the City of Tallahassee in Leon County, Florida.
Tallahassee is a relatively slow growth market compared to
other major Florida markets and is the state capital and the
location of Florida State and Florida A&M Universities, and
Tallahassee Community College. Government and related entities are
the principal employers and accordingly, management believes that
the local economy is relatively insulated from cyclical
microeconomic phenomena.
The commercial banking and financial services industries
are extremely competitive in the Bank's market area. The Bank
faces direct competition both in attracting deposits and making
loans from approximately 30 financial institutions, including
commercial banks, savings institutions and credit unions located in
its principal market area. The commercial banks in its market area
include many large institutions which have greater financial and
marketing resources available to them than are available to the
Bank. Most of these offices are branches of banks affiliated with
major bank holding companies headquartered in North Carolina,
Georgia, Alabama, and other areas of Florida. Further, competition
is provided by financial institutions located in adjoining
counties, as well as other types of financial institutions such as
insurance companies, finance companies, pension funds and brokerage
houses and other money funds.
The Bank competes for deposits through the interest rates
it pays and the quality of services offered and competes for loans
principally through the interest rates and loan fees it charges and
the efficiency and quality of services it provides.
Banks and their holding companies, and many of their
affiliates, are extensively regulated under both federal and state
law. Accordingly, the Company's principal products and services
are reviewed by these governmental agencies. The Company is not
aware of any of its products or services being viewed by any of
these agencies as not being in compliance with applicable law.
Supervision, regulation, and examination of banks by regulatory
agencies are intended primarily for the protection of depositors,
rather than shareholders.
Subsequent to year end, the Bank entered into a formal
agreement with its primary federal regulator, the Office of the
Comptroller of the Currency. The agreement, dated as of March 7,
1996, provides that the Bank will develop a profit plan and a
capital plan, employ a management consultant, review its loan loss
reserve and reserve policy, revise and implement its
asset/liability management policy, correct any violations of law,
and amend the Bank's call reports. Generally, management expects
to achieve compliance with the agreement on a timely basis;
however, the agreement calls for the achievement of certain capital
ratios by August 31, 1996. The ratios are as follows: Tier 1
(leverage), 5.0%; Tier 1 to risk weighted assets, 8.0%; and, total
capital to risk weighted assets, 10.0%. The Bank is not in
compliance with these ratios at year end, 1995 or at the date of
this filing. Management's plans to achieve these ratios on a
timely basis is discussed in the "Management's Discussion and
Analysis" section.
At December 31, 1995, the Bank had 62 full-time employees
(including 17 officers), and 17 part-time employees. The Bank
considers its relationship with its employees to be excellent. The
Bank will hire additional persons as needed on a full-time and
part-time basis, including tellers and customer service
representatives. The Bank provides employee benefits programs,
including group life, health and dental insurance, and paid
vacations and sick leave for its employees. Certain of the
officers of the Company are also officers of the Bank. The Company
has no employees other than such officers.
During the last two fiscal years, there have been no
material expenditures on research and development activities or
compliance with environmental laws.
C. Periodic Filing Status
The Company has not timely made its periodic filings with
the Securities and Exchange Commission. Accordingly, readers
should also refer to the Company's filings on Form 10-QSB for the
periods ending March 31, June 30 and September 30, 1996.
Item 2. Description of Property.
The main office of the Bank is located in an office building
at 1706 West Tennessee Street, Tallahassee, Florida. The premises
contain approximately 7,000 square feet of office space. This
facility is owned by the Bank in fee simple without any material
mortgages, liens or encumbrances against it.
The Bank's other locations, whether the property is owned or
leased, and size in square feet are summarized on the table below:
Location Owned/Leased Square Footage
Main Bank
1706 W. Tennessee Street Owned 7,080
Northeast Branch
1827 Capital Circle, N.E. Leased 5,194
Ocala Road Branch
111 Ocala Road Leased 1,784
Northside Branch
2437 N. Monroe Street Leased 4,081
Downtown Branch
111 S. Monroe Street Leased 11,808
Eastside Branch
345 S. Magnolia Street Leased 2,321
S. Monroe Branch & Operations Center
2613 S. Monroe Street Leased 9,868
In the opinion of management, the above-described properties
are adequately covered by insurance and in good condition for use
as banking offices.
Other than as incidental to its business, there is no policy
to invest in any type of real estate except through the issuance of
real estate loans, both residential and commercial.
The Company conducts, through the Bank, a full complement of
lending activities, including commercial, real estate, consumer
installment and VISA/Mastercard loans. There are three primary
types of loans in the Bank's portfolio: commercial, real estate and
consumer.
The commercial loan portfolio consists mainly of loans to
individuals, partnerships and corporate borrowers for a variety of
purposes, including term and working capital loans. Commercial
loan underwriting is based on an analysis of borrower's ability to
service the debt, the business prospects of the enterprise, and
appropriate collateralization by assets of the enterprise or its
owners. The majority of these loans are structured with maximum
maturity periods of one year and reprice daily or at least
annually.
The Bank's real estate loans consist of residential and
commercial first mortgage loans, second mortgage financing, and
construction loans. The Bank's underwriting criteria depend on the
type of real estate loans. Residential first mortgage loans are
limited to maturities of fifteen years or less and commercial
mortgage loans are structured with repricing features no greater
than three years, thereby reducing the interest rate risks
sometimes associated with real estate lending. All FNMA/FHLMC
guidelines apply to single family residential mortgage loans with
maximum loan amounts of $203,150 and 90% maximum loan to value
ratios required. All amounts over 80% require private mortgage
insurance coverage. Commercial real estate loans are limited to
75% loan to value ratios as required by regulatory limitations
contained in 12 C.F.R. 34. Construction loans make up a small
percentage of the total real estate loan portfolio (currently less
than five percent) and generally reprice at conversion to permanent
adjustable rate financing.
The Bank's consumer loan portfolio consists primarily of
installment loans to individuals for personal, family and household
purposes, including automobile loans to individuals on a direct and
indirect basis. This category also includes VISA/MasterCard loans.
Consumer loans are underwritten primarily on the borrower's ability
to service the loan out of income. This category of loans also
includes loans secured by mortgages on the residences of borrowers
for a variety of purposes, including home improvements, education
and other personal expenditures. These home equity loans are
limited to 80% loan to value, including other debt on the
residence.
Each kind of loan presents different risks depending on the
borrowing collateral, if any, and repayment and repricing features.
Loans which are unsecured, like some consumer loans, rely solely on
the borrower for repayment of the loans. The risks associated with
consumer loans includes accelerated deterioration in the value of
the underlying collateral for such loans and historical industry
trends which indicate consumer loans may be slower paying loans,
especially in an inflationary or recessionary economic environment.
These loans are generally repaid from employment income sources of
the consumer. If employment of the consumer is hampered in any
way, the risk is high the loan will not be repaid in full from the
sale of the underlying collateral. Loans collateralized by real
estate are partially dependent on the value of the collateral,
which may be illiquid, if the borrower fails to repay the loan.
Generally, commercial real estate is believed to be less liquid
than residential real estate. Construction loans present a risk in
that the collateral, if construction is not completed, are
particularly illiquid. Loans with longer repayment terms, such as
15-year mortgages, allow borrowers more time to develop financial
difficulties. Commercial loans typically become troubled in times
of industry or regional economic downturns. Repricing features of
loans affect interest rate risk in that the Bank's costs of funding
may increase more rapidly than the Bank's ability to reprice its
loan, especially in periods of rising interest rates.
Item 3. Legal Proceedings.
The Company is not aware of any pending legal proceedings,
other than routine litigation incidental to the business of the
Bank, to which the Bank is a party or to which any of its
properties is subject. The Company is aware of no pending legal
proceedings to which it is a party.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of the holders of
the Company's Common Stock, through solicitation of proxies or
otherwise, during the fourth quarter of fiscal year 1995.
PART II
Item 5. Market For Common Equity and Related Stockholder Matters.
The Company has only one class of common stock outstanding.
There is no public trading market. There are approximately 127
shareholders of record.
On August 3, 1995, the Company completed the sale of 48,435
shares of its common stock in the amount of $968,700, in a
registered offering under the Securities Act of 1933.
Incentive stock options have been granted to certain officers
at prices ranging from $10 to $17 per share. At December 31, 1995,
there were employee options outstanding which could result in the
purchase of up to 63,282 shares of the Company's common stock, all
of which were immediately exercisable. There are no warrants on,
or other securities convertible into, the Company's common stock.
The Company has not agreed to register under the Securities
Act any stock to be sold by its holders. Because the Company is
voluntarily registered under the Securities Exchange Act of 1934,
certain of its unregistered shares could be sold under Rule 144 of
the Securities Act of 1933 if certain conditions were met.
However, in the absence of a market maker to match buyers and
sellers, among other reasons, Rule 144 is not presently available
to holders of the Company's unregistered shares.
Beginning in the second quarter of 1994, the Company paid a
quarterly dividend of 5 cents per share to shareholders of record.
For the second quarter of 1995, dividends were suspended. While
the Board of Directors of the Company intended that the dividend
payments mark the institution of regular quarterly dividends, there
can be no assurances that the Company will have sufficient
financial resources to return in the future to a program of regular
dividend payments.
The amount of any cash dividend is within the discretion of
the Board of Directors and will depend, among other matters, upon
the earnings and financial condition of the Company, as well as
upon any applicable statutory constraints. As of December 31,
1995, the Bank accounted for approximately 95% of the Company's
consolidated assets. The Company derives substantially all of its
income from dividends received from the Bank. The Company's cash
needs to date have been substantially fulfilled by capital
contributions and the sale of common stock. Various statutory
provisions limit the amount of dividends the Bank may pay to the
Company without regulatory approval. At present, the Bank may not
pay dividends to the Company. In addition, federal statutes
restrict the ability of the Bank to make loans to the Company.
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operation of Evergreen
Bancshares, Inc.
Details regarding the Company's financial performance are presented
in the following discussion, which should be read in conjunction
with the consolidated financial statements and notes thereto
included elsewhere.
Background Information
Evergreen Bancshares, Inc. (the "Company") commenced operations on
June 6, 1990, by the acquisition of all of the issued and
outstanding stock of its wholly-owned subsidiary, Guaranty National
Bank of Tallahassee (the "Bank"). The Company has undergone
substantial changes in the last four years, beginning with the
establishment of a de novo branch office of the Bank in June, 1990;
the acquisition of the University Office of Anchor Savings Bank,
FSB ("Anchor") in 1992; and the acquisitions in 1993 of the three
remaining offices of Anchor located in Tallahassee. In the three
acquisitions, which were accounted for under the purchase method of
accounting, the Company assumed the deposit liabilities while
acquiring very few loans.
The impact on the financial condition of the Company of the
purchase acquisitions undertaken during 1992 and 1993 is summarized
as follows:
<TABLE>
<CAPTION>
Total
Assets Loans Deposits
Increase in first quarter 1992
resulting from acquisition of
<S> <C> <C> <C>
the University Office $10,340,905 $ 8,367 $10,339,121
Total 1992 $10,340,905 $ 8,367 $10,339,121
Increase in second quarter 1993
resulting from acquisition of
the Northside Office $24,342,118 $ 80,548 $24,320,659
Increase in fourth quarter 1993
resulting from acquisition of
the Downtown and Magnolia Offices 54,962,773 195,570 55,929,663
Total 1993 $79,304,891 $276,118 $80,250,322
</TABLE>
The Company paid premiums totaling approximately $2.6 million for
the Anchor deposit acquisitions in 1992 and 1993. The premiums are
being amortized over the estimated lives of the related deposits,
considering current and estimated future customer attrition, which
is estimated to be 8 years.
On August 3, 1995 the Company issued and sold 52,868 shares of
common stock at $20.00 per share under terms of an initial public
offering. Net proceeds to the Company after recognizing
underwriting and other related costs were $928,895. The Company
used $700,000 of the net proceeds to purchase an additional 70,000
of shares of its wholly-owned subsidiary, the Bank.
Subsequent to year-end 1995, the Bank entered into a Formal
Agreement with its primary federal regulator, the Office of the
Comptroller of the Currency. The Formal Agreement is the Bank's
written commitment to take certain actions requested by the OCC.
In particular, the Formal Agreement provides that the Bank will:
develop a profit plan to improve the Bank's earnings; develop a
three-year capital program, including meeting certain regulatory
capital ratios (discussed below); employ an outside consultant to
review and report on the current management and board supervision
of the Bank; submit a plan of implementation of the management
consultant's recommendations; revise and improve the Bank's
procedures for maintaining its allowance for loan losses; adjust
and revise the Bank's asset and liability management policy;
correct any violations of the law, rule or regulation; refile call
reports for the first three quarters of 1995; and ensure the
accuracy of all future regulatory reports filed by the Bank. The
Formal Agreement requires payment of these requirements.
Nevertheless, the failure to comply with the requirements under the
Formal Agreement may result in the levy of civil money penalties
against the Bank and/or its directors, the removal of officers
and/or directors, or the institution of cease and desist
proceedings against the Bank and/or its directors.
In the opinion of Management, the most important area of the Formal
Agreement relates to the achievement of certain prescribed capital
ratios no later than August 31, 1996. Please see "VIII. Other
Issues - Capital Adequacy" for further discussion.
The independent auditors' report accompanying the consolidated
financial statements contained herein indicate the consolidated
financial statements have been prepared assuming the Company will
continue as a going concern. The report further indicates the
recurring losses from operations and the failure of the Bank to
meet certain capital ratios required by Federal banking agencies
raise substantial doubt about the Company's ability to continue as
a going concern. Note 2 to the consolidated financial statements
includes a description of Management's plans to mitigate the
prospects of the Company not continuing as a going concern.
Additional information on Management's plan is contained at
"Management's Strategy to Improve Results," infra. The auditors'
conclusion is not a prediction that the Company will not continue
as a going concern, nor should the absence of such a conclusion in
future audits be taken as an assurance of an entity's ability to
continue as a going concern.
SELECTED FINANCIAL DATA
Selected financial data of the Company is presented below for the
twelve month periods ended December 31, 1995 and 1994. They are
derived from audited consolidated financial statements of the
Company. All adjustments of a normal recurring nature which, in
the opinion of Management, are necessary to present a fair
statement of the results for the interim periods have been made.
The selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the consolidated financial statements
and notes thereto.
<TABLE>
RESULTS OF OPERATIONS TABLE
<CAPTION>
For the Years Ended
December 31,
1995 1994
Consolidated Statement of
Operations Data:
<S> <C> <C>
Total interest income $ 8,891,639 $ 7,262,013
Total interest expense 5,851,742 3,751,917
Net interest income 3,039,897 3,510,096
Provision for loan losses 735,000 155,474
Non-interest income 682,250 713,113
Non-interest expense 5,506,063 4,435,320
Net Loss $< 2,548,405> $< 236,974>
Net Income per common share $< 2.87> $< 0.27>
Weighted average number of
shares outstanding 916,102 870,930
</TABLE>
<TABLE>
<CAPTION>
Consolidated Balance Sheet Data: As of December 31,
1995 1994
Investment Securities:
<S> <C> <C>
Available-for-sale $ 36,877,731 $ 29,086,700
Held to maturity 7,807,136 29,834,922
Total Loans - Gross 61,609,137 59,438,897
Total Assets 124,401,405 129,327,585
Total Deposits 117,192,363 105,357,079
Shareholders' equity $ 6,559,232 $ 7,273,445
Bank Capital Ratios:
Tier 1 capital 7.90% 10.16%
Total risk-based capital 8.69% 10.53%
Leverage ratio 4.08% 6.45%
Asset Quality Ratios:
Allowance for loan losses
to gross loans 0.82% 0.37%
Allowance for loan losses
to non-performing loans 457% 163%
Non-performing loans to
gross loans 0.18% 0.23%
Non-performing loans to
total assets 0.09% 0.11%
</TABLE>
On August 3, 1995, the Company issued and sold 52,868 shares of
common stock at $20.00 per share under terms of an initial public
offering. Net proceeds to the Company after recognizing
underwriting and other related costs were $928,895. The Company
used $700,000 of the net proceeds to purchase an additional 70,000
shares of its wholly-owned subsidiary, Guaranty National Bank, at
a price of $10.00 per share. The Company's principal business
activity is conducted by its only subsidiary, Guaranty National
Bank of Tallahassee.
The Bank operates by attracting deposits from the general public
and using such funds to invest in consumer, residential real
estate, credit card and commercial loans, as well as investment
securities. The Bank's revenues are derived principally from
interest earned on loans and investments and from service charges
assessed on deposit accounts, while the Bank's major expenses are
interest paid on deposits and salary and benefits expense. During
1992 and 1993, Management undertook a strategic initiative which
provided for the expansion of its banking operations and markets
through branch office acquisitions and additional branch openings.
In this connection, certain initial outlays were required to fund
the opening of each facility, including the investment in premises
and equipment, staffing, and promotional activities. While it is
anticipated that interest income will increase commensurate with
the increase in interest expense upon the acquisition of the
related deposits, non-interest expense will generally be
disproportionately higher until such time as the volume of deposits
and associated net interest income is sufficient to cover these
costs, and funds are re-invested in higher yielding assets such as
loans. The Bank's results of operations depend primarily on the
level of net interest income, which is the difference between
interest earnings on loans and investments, and interest expense
incurred on deposits and other borrowings. Net interest income is
dependent upon the yields received on interest earning-assets and
rates paid on interest-bearing liabilities. Changes in net
interest income are caused by changes in the interest rates earned
or paid and by volume changes in loans, investment securities,
federal funds sold and deposits.
Additionally, the mix of earning assets, on an average basis,
changed to include a greater portion of loans, which generate
higher yields than investment securities. Growth in the volume of
interest earning assets, rather than changes in interest rates, was
the primary contributor to the increase in interest income in 1993.
The following discussion focuses on significant changes in the
financial condition and results of operations of the Company and
the Bank. This discussion and analysis should be read in
conjunction with the consolidated financial statements of the
Company.
Summary of Financial Performance and Results of Operation
Operating results for 1995 were unsatisfactory. Losses resulted
principally from three activities: (1) losses related to two data
processing conversions, (2) inadequate interest margin, and (3)
increased provisions for potential loan losses. These losses in
combination eliminated the possible tax benefits from the holdings
of tax free municipal securities and that portfolio was liquidated
in the 4th quarter of 1995 at no loss to the Bank as discussed in
the Investment Portfolio section of this analysis. As a result of
the matters discussed above the Company reported a net loss for the
year 1995 of $2,548,403 or $2.87 per share compared to a net loss
of $236,974 or $ .27 per share for the year 1994.
The two key measures of profitability in the banking industry are
return on average equity (ROE) and return on average assets (ROA).
Return on equity was (36.5)% in 1995 compared to (3.06)% in 1994
and 5.43% in 1993. Return on assets declined to (1.93)% in 1995
from (0.19)% in 1994 and 0.47% in 1993.
Statement of Condition
At December 31, 1995 the Company reported total assets of
$124,401,405 compared to $129,327,585 at the end of 1994 and
$124,371,123 at the end of 1993. Average total assets were
$131,823,000 in 1995 verses $122,133,000 in 1994 and $71,373,000 in
1993. The acquisition of three Anchor offices in May and November
1993 is the primary reason for the increase in average assets
between the years 1993 and 1994.
Net Interest Margin
Net interest margin narrowed in 1995. Despite an increase in
interest income in 1995, net income for the year declined
reflecting lower non-interest revenues, an increase in non-interest
expenses, and the higher provision for loan losses. The lower net
interest margins were the result of narrowing margins between
earnings on assets and interest on interest bearing liabilities.
Provisions for Potential Loan Losses
In addition the 1995 results were negatively impacted by a $735,000
evaluation reserve for possible loan losses which is discussed
further in the Reserve for Loan Losses section of this analysis.
Management's Strategy to Improve Results
The Company's mission is to be a sound, efficient, and profitable
financial services Company with a professional staff committed to
maximizing shareholder value by structuring and delivering quality
services that attract customers and satisfy their needs and
preferences. Management's goals, in concert with its acquisition
plan to acquire the deposit liabilities of Anchor Savings Bank, has
been to maintain profitability and a strong capital position. The
Company seeks to accomplish this goal by pursuing the following
strategies: (1) improving asset quality, (2) emphasizing lending in
the one to four family residential mortgage market, (3) controlling
interest rate risk, and (4) controlling operating expenses and
improving fee income. It is Management's intent to continue to
employ these strategies in the future.
The Company operates out of its seven full service offices in
Tallahassee. Managing deposit pricing and controlling asset growth
after a period of rapid asset growth is a primary management
objective. The Company is presently pursuing a tightly controlled
growth strategy which is designed to result in an improved capital
to assets ratio. The Company manages its deposit account pricing
based on current interest rate trends in both the U.S. Treasury
market and local competitors rates. Traditionally the Company has
set its deposit rates at levels between the deposit rates offered
at commercial banks and savings institutions.
(1) Improving Asset Quality - The Company remains focused
on maintaining its asset quality. At December 31, 1995 the
Company's non-performing assets as a percentage of total assets
amounted to .089% compared to .049% and .034% at the end of fiscal
1994 and 1993 respectively. Management believes that the solid
asset quality of the Company's loan portfolio since 1993 is due
primarily to the Company's collection efforts and conservative
lending policies.
(2) Real Estate Lending - The Company has emphasized and
plans to continue to emphasize making traditional one to four
family mortgage loans in its primary market areas.
(3) Controlling Interest Rate Risk - The Company's policy
is to maintain a balance between interest earning assets and
interest bearing liabilities such that its cumulative one year gap
ratio is within the range of negative and positive 15% of total
assets. The Company has implemented policies designed to reduce
its exposure to interest rate risk through the origination of
adjustable rate mortgages "ARM" loans in its real estate loan
portfolio. Management believes that although investment in ARM
loans may reduce short term profits below that which may be
obtainable through investment in fixed rate mortgage loans, an ARM
loan portfolio reduces the Company's exposure to adverse interest
rate fluctuation and enhances long term profitability. The Company
also attempted to reduce its exposure to interest rate risk by
managing the composition of its deposit portfolio through selective
pricing of deposits. In its investment securities portfolio the
Company has recently emphasized maintaining adequate liquidity
particularly through the investment in short term instruments that
generally do not exceed an average life of three years. This is
consistent with the objective of reducing asset terms to better
match liability repricing.
(4) Controlling Operating Expenses and Improving Fee
Income - The Company's loan origination/loan servicing, and
deposit accounting operations are both labor intensive.
Historically, the Company has sought to control operating expenses
through a budget process which focuses on operating efficiencies.
The operating expenses for the Company are reported monthly to the
Board of Directors and major variances from the original budget are
discussed. The Company has been able to limit the increase in
overall compensation and benefit expense in recent years through
these methods and Management believes the Company has achieved
partial economies of scale in its loan origination and loan
servicing operations as well as its "back room" operations. The
Company has focused on increasing in level of its fee income. The
Company conducts a survey of its competitors' fee structures during
the year. Based on this survey and other factors, the Company
adjusts its fee structure so that the Company's fees are in the mid
range in the Company's market area. During 1994 and continuing
into 1995, the rising interest rate environment impacted deposit
balances. This resulted in a narrowing net interest margin with
which to support the expense burden. In order to return to a
satisfactory net interest margin level, several steps are being
taken by Management: Management is actively involved in the
soliciting and underwriting of new loans and secondly, Management
is curtailing operating expenses across all areas of the Bank and
reviewing product and service pricing.
I.
Distribution of Assets, Liabilities, and Stockholders' Equity
Interest Rates and Interest Differential
Net Interest Income
Net interest income, defined as the amount of revenue generated by
earning assets reduced by the interest cost of funding those
assets, is the principle source of earnings for the Company,
constituting 31.8% of total net revenues in 1995, 44.0% in 1994,
and 44.3% in 1993. Consequently, changes in the mix and volume of
earning assets and interest bearing liabilities and their related
yields and interest rates have a major impact on earnings. Net
interest income for 1995 was $3,039 million, a decrease of 13.4%
from the $3,510 million reported for 1994. In 1994 net interest
income grew 50.6% from the $2,330 million reported for 1993. The
improvement in net interest income for 1994 and 1993 was due to a
higher volume of average earning assets during these years, and a
shift in the mix to include a higher proportion of loans in 1995.
In 1995 average earning assets increased 1.24% while average loans
grew 13.9% reflecting growth in both real estate and consumer
loans. During the year average loans as a percent of average
earning assets increased to 53.8% from 47.9% in 1994. The average
rate of growth in loans during 1995 was 13.9% compared to an
increase of 1.24% in earning assets. In 1994 the average rate of
growth in loans was 63.1% compared to an increase of 15.8% in
earning assets. Contributing to the higher level of earning assets
in loans during this three year period was the completion of the
three acquisitions of the Anchor Savings Bank offices. These
acquisitions were accounted for as a purchase and added, on a
combined basis, approximately $79.3 million in total assets in
1993. The growth in average earning assets in 1995 was funded by
an increase in both deposits and borrowed funds.
Total average deposits, the Company's largest source of funding,
increased 15.1% to $109,673 million in 1995. The increase in total
deposits, which were primarily time deposits, was due to an active
solicitation of deposits in the first quarter of 1995 in line with
a plan to reduce the Bank's reliance on short term borrowed funds.
The table below reflects the composition of earning assets at year
end December 31, 1995, 1994 and 1993.
Another key factor in the determination of the level of net
interest income is the net interest margin. The net interest
margin is computed by dividing fully taxable equivalent net
interest income by average earning assets, and measures how
effectively the Bank utilizes its earning assets in relationship to
the interest cost of funding them. The net interest margin was
2.6% in 1995 compared to 3.04% during 1994 and 2.36% in 1993.
Contributing to the decline in net interest margin during the three
years was a narrowing in the net interest spread or the difference
between the average rate earned on earning assets and the average
rate paid for interest bearing liabilities. The net interest
spread in 1995 was 2.28% versus 2.35% in 1994 and 3.77% in 1993.
The decrease in the net interest margin and spread during this
period partially reflects the repricing and rate sensitivity
characteristics of the Company's balance sheet, as well as the
acquisition of the deposits in the Anchor transaction. In 1995,
the rate of decline lessened compared to 1994 because of the
generally declining interest rate environment through most of 1995
and actions taken in the 4th quarter of 1995 to reduce the
Company's overall interest rate risk. Interest rates, after
declining during the period 1990 through 1993, increased sharply in
1994. The prime rate increased from 6% to 8.5% and the Federal
Reserve Bank's discount rate increased from 3% to 4.75%. The
compression in the net interest margin and spread in 1994 was
primarily the result of a 300 basis point increase in the general
level of interest rates during the year. Management anticipates a
stable net interest margin during 1996 compared to the level
experienced in 1995 and 1994; provided the economy continues to
grow at a moderate pace and interest rates remain relatively
stable. An analysis of the Company's net interest income including
average yields and rates is presented in the tables below.
<TABLE>
<CAPTION>
1995 1994
______________________________ ______________________________
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
(Amounts in Thousands)
Earning Assets
<S> <C> <C> <C> <C> <C> <C>
Loans (2) . . . . . . . . . . $ 63,645 $ 5,466 8.59% $ 46,664 $ 3,850 8.25%
Investment Securities:
Taxable Income . . . . . . 47,083 2,858 6.07% 54,369 2,853 5.25%
Non-Taxable Income (1) . . 8,104 384 4.74% 8,758 639 7.30%
Federal funds sold . . . . . 1,988 160 8.05% 2,630 98 3.73%
Total earning assets . . . 120,820 8,868 7.34% 112,421 7,440 6.62%
Allowance for loan losses . . < 312> < 223>
Cash and due from banks . . . 4,468 4,079
Bank premises and
equipment, net . . . . . . 1,747 1,571
Other assets . . . . . . . . 5,100 4,255
Total Assets . . . . . . . $ 131,823 $ 122,103
Interest Bearing
Liabilities
Interest bearing
deposits:
NOW accounts . . . . . . . $ 7,694 167 2.17% $ 7,985 173 2.17%
Savings deposits . . . . . 9,434 220 2.33% 13,378 371 2.78%
Money market accounts . . . 8,751 274 3.13% 11,999 336 2.80%
Certificates and
other time deposits . . . 82,448 4,708 5.71% 67,447 2,607 3.87%
Total Interest bearing
deposits $ 108,327 5,369 4.96% $ 100,809 3,487 3.46%
Other Borrowings 6,565 482 7.34% 5,705 265 4.65%
Total Interest
Bearing
Liabilities . . . . . . . 114,892 5,851 5.09% 106,514 3,752 3.52%
Non-interest bearing
demand deposits 8,800 7,295
Other liabilities 750 570
Shareholders' equity . . . . 7,381 7,724
Total Liabilities and
Shareholders' Equity . . $ 131,823 $ 122,103
Net Interest Income
and Spread $ 3,017 2.25% $ 3,688 3.10%
Net Yield on Earning
Assets . . . . . . . . 2.28% 3.28%
<FN>
____________________
(1) Interest income related to tax-exempt securities exempt from
federal income tax is stated on a taxable equivalent basis,
assuming a 34% tax rate.
(2) Nonaccrual loans are included in the average loan balance.
Loan fees and the incremental direct costs associated with making
loans are deferred and subsequently recognized over the life of the
loan as an adjustment of interest income.
</FN>
</TABLE>
<TABLE>
<CAPTION>
1995 Versus 1994 1994 Versus 1993
Variance Due to (1) Variance Due to (1)
Net Net
Rate Volume Change Rate Volume Change
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans (2) ....................... $ 215 1,401 1,616 $< 337> $ 1,269 $ 932
Investment Securities:
Taxable Income ................ 386 < 381> 5 144 1,400 1,544
Non-taxable income (2) ........ < 208> < 47> < 255> 15 432 447
Federal funds sold ............ 86 < 24> 62 < 4> < 62> < 66>
Total interest income ....... 479 949 1,428 < 182> 3,039 2,857
Interest Expense:
Interest bearing deposits:
NOW accounts .................. 0 < 6> < 6> < 8> 72 64
Savings deposits .............. < 42> < 109> < 151> < 34> < 9> < 43>
Money market accounts ......... 29 < 91> < 62> 2 162 164
Certificates and other time
deposits .................... 1,517 584 2,101 < 153> 1,256 1,103
Other Borrowings ................ 265 265
Total interest expense ...... 1,504 378 1,882 < 193> 1,746 1,553
Net Interest Income <1,025> 571 < 454> $ 11 $ 1,293 $ 1,304
<FN>
____________________
(1) The mix variance, not separately stated, has been
proportionately allocated to the rate and volume variances based on
their absolute dollar amount.
(2) Interest income related to tax-exempt securities exempt from
federal income tax is stated on a taxable equivalent basis,
assuming a 34% tax rate.
</FN>
</TABLE>
Non-Interest Revenues
Non-interest revenues decreased $30,863 or 4.33% in 1995 compared
with a $22,704 or 3.1% decrease in 1994. Factors affecting
non-interest revenues are discussed below. Net gains from the sale
of securities recognized during 1995 fell to zero versus a gain of
$25,663 in 1994. Service charges on deposit accounts increased
$25,912 or 14.4% in 1995 compared to an increase of $25,530 or
16.5% in 1994. Service charge revenues in any given year are
dependent on the number of accounts, primarily transaction
accounts, and the level of activity subject to service charges.
Both the number of accounts and activity subject to service charges
declined in 1995. The largest single category of non-interest
revenues were service charges on deposit accounts including NSF
fees. Also contributing to the decline in total non-interest
revenues during 1995 were declines in investment services income.
Investment services income decreased $31,112 in 1995 primarily due
to Management's decision to change the third party provider of
mutual funds. Rising interest rates and increased instability in
the bond market were the primary reasons for the decline in
investment services income. Management expects on a recurring
basis total non-interest revenues in 1996 to exceed the levels
reported in 1995. The primary reasons include a continued emphasis
on sales and service quality, higher levels of transaction volumes
particularly on products to be introduced during 1996 as well as
enhancements in data processing capability. The table following
the next section reflects non-interest revenue (and non-interest
expense) performance of the Bank during the years ended December
31, 1995, 1994 and 1993 by category. Non-interest income as a
percentage of average earning assets represented 0.58% in 1995
compared to 0.62% in 1994 and 0.74% in 1993.
Non-Interest Expense
Each of the major categories of non-interest expenses for 1994
through 1995 is shown in the income statement contained in the
financial statements.
Non-interest expenses for 1995 were $5,506,063, an increase of
$1,070,743 or 24% over 1994 compared with an increase of $1,934,104
or 77% in 1993. The most significant factor impacting the
Company's non-interest expense during 1995 was costs associated
with the Company's data processing expense. The Company
experienced an increase of $517,665 or 72% over 1994 in other
operating expenses which were primarily related to ancillary costs
associated with the conversion. The largest category of
non-interest expenses is salaries and benefits expense. These
costs increased in 1995 to $1,690,291 or 14% from the level
reported for 1994. The higher expense reflects an approximate 8
person or 13.33% increase in the number of officers and employees
at the end of 1995 compared to year end 1994. Employee benefits as
reported in 1995 were $118,491, a decrease of 18.55% over 1994.
Management expects employee salary and benefits to increase at a
slightly faster rate in 1996 due to the addition of several officer
and staff personnel in line with the Company's 1996 Management
Plan. These increases will be made to remain competitive, to
continue to attract more qualified personnel and to meet conditions
of the Formal Agreement with the OCC regarding middle management
and staffing. During 1994 salaries, wages and benefits increased
as the result of the addition of a number of new officers to the
staff and the establishment of a company 401K plan. Net Occupancy
Expense, which includes furniture, fixtures and equipment expense,
was $838,239 in 1995 compared to $822,631 in 1994, an increase of
$15,608 or 1.90%.
A large volume of unreconciled items accumulated during 1994 and
1995. As a result, significant resources were committed to
clearing these outstanding items in 1995. At the request of the
Board of Directors, the Company's auditors reviewed these areas of
the Bank in the 2nd quarter of 1995 to determine the adequacy of
internal controls and procedures. Based upon their findings,
Management implemented additional internal control and procedures
in the 3rd quarter of 1995. All accounts now have established
frequencies of reconcilement in addition to procedures for timely
clearing of outstanding items.
During 1994 the Company undertook building renovations, expanded
its operations center and acquired an additional banking location.
Depreciation, maintenance and repairs and other cost associated
with the new and existing facilities were the primary expense
categories contributing to the overall increases in both 1995 and
1994. Occupancy expenses are expected to increase at a slightly
higher rate in the future because of the Company's obligation under
a series of leases for its branch locations. Other non-interest
expense increased $483,134 or 26% in 1995 compared to an increase
of $826,986 or 82% in 1994. The increase in 1994 was attributable
to reorganization of the Company's offices and substantially higher
data processing expense as a result of the conversion of the data
processing facilities. FDIC deposit insurance premiums decreased
$6,539 or 2.95% in 1995 due to a decrease in the ratio implemented
by the FDIC.
At December 31, 1995 approximately 20.4% of the Company's
assessment deposit base was insured by the Bank Insurance Fund
(BIF) the remaining 79.6% of the assessment deposit base is insured
by the Savings Association Insurance Fund (SAIF), whose rates were
not lowered during 1995. In November, 1995, the FDIC reduced the
premium rate on BIF insured deposits for most banks to zero
beginning in 1996. Under the FDIC's rules, the Bank's insurance
premium rate on BIF insured deposits was not reduced. In September
of 1996, the U.S. Congress proposed legislation which would charge
a special one time assessment on insured deposits to recapitalize
the SAIF to its statutory mandated minimum designated reserve ratio
of 1.25%. The assessment rate is approximately $0.65 per $100.00
of SAIF-insured deposits. The FDIC has exempted the Bank from
payment of the special assessment. The Bank will continue to pay
higher semi-annual assessments than those institutions which pay
the special assessment.
Certain other operating expenses in 1995 decreased $143,360 or
26.2%. Included in the decrease was a $86,112 decrease in the
amortization of the core deposit intangible associated with the
Anchor acquisitions, as a result of the reclassification of
approximately $310,000 from intangible core deposit premiums to
premises and equipment to record the fair market value of the
Anchor branch facility acquired in 1993. Also, professional
services expense decreased $57,248 or 25.8% in 1995 due to
decreased expansion activity. Management anticipates that expenses
associated with professional services will continue to decline in
1996. Non-credit operational losses increased $119,696 due to
increased activity and volume of transactions during 1994.
Provision for Loan Losses
Management performs a quarterly review and analysis of the
allowance for loan losses. A specific reserve is provided for on
all classified loans and a general reserve is provided for on all
other loans. Provisions for loan losses in 1995 totaled $735,000,
a $579,526 increase or 372.8% from the $155,474 reported in 1994
and $23,474 higher than the $132,000 reported in 1993. At the same
time net loan charge-offs increased in 1995 to $439,264 from
$174,694 in 1994 and $66,902 in 1993. The increase in the
provision for loan losses and net charge-offs over the last two
years generally reflect higher levels of credit risk in the
consumer loan portfolio primarily due to aging of the portfolio and
the emerging weaknesses in the consumer sector, combined with
aggressive marketing initiatives to develop consumer installment
loan business in 1994 and 1995. Measured as a percentage of loans,
net charge-offs increased during the previous two years.
Management expects loan losses to continue to rise in 1996 both in
absolute terms and measured as a percentage of average loans. The
exact amount of the increase cannot be determined, however, one of
the primary factors affecting the magnitude of the increase is the
continuing shift in the mix of the loan portfolio to include a
greater proportion of commercial and commercial real estate loans.
In addition, other factors include anticipated further weakness in
the consumer sector during 1996 and continuation of aggressive
marketing programs to develop new business, principally in the area
of commercial and credit card loans.
Further discussion of asset quality trends may be found in the
section of this report entitled "III. Loan Portfolio." Management
considers the allowance for loan losses at December 31, 1995 to be
adequate based on the current level of non-performing loans and the
potential for loss inherent in the portfolio at year end.
Income Taxes
In 1995, the Company recorded income tax of $29,489 and a tax
benefit of $130,611 in 1994. Despite 1995's large loss, the
Company did not record an income tax benefit in view of its
then-uncertain earnings prospect.
Statement of Condition Discussion
At December 31, 1995, the Company reported total assets of
$121,401,405 compared to $129,327,585 at the end of 1994, and
$124,371,123 at the end of 1993. Average total assets were
$131,828,000 in 1995 versus $121,123,000 in 1994 and $105,476,000
in 1993. The acquisition of three Anchor offices in May and
November 1993 is the primary reason for the increase in average
assets between the years 1993 and 1994.
Earning Assets
In the banking industry, the predominate earning assets are loans
and investment securities. The proportion of earning assets to
total assets generally measures the effectiveness of Management's
efforts to invest available funds into the most efficient and
profitable uses. In 1995 earning assets were 91.7% of total
average assets compared to 92.1% in 1994 and 94.4% in 1993. The
decrease in 1995 is primarily a reflection of the movement of other
earning assets between the categories of loans, investment
securities and federal funds sold. During 1993 and 1994 and
continuing into the 1st quarter of 1995, investment securities were
the largest single category of earning assets for the Company. At
December 31, 1995 loans, net of unearned income totaled $61,453, an
increase of 3.7% from the $59,256 reported at the end of 1994.
Capital
At December 31, 1995, the Company reported total equity (including
net unrealized losses on investment securities) of $6,559,232 as
compared to $7,273,445 at year end 1994, a reduction of 11%. Total
equity (not including net unrealized losses on investment
securities) declined from $8,374,422 at year end 1994 to $6,754,912
at year end 1995. See generally "VIII. Other Issues - Capital
Adequacy."
II.
Investment Portfolio
During 1993, the Company acquired by purchase a significant volume
of investment securities as a result of the acquisitions of the
deposit liabilities of three Anchor branch offices. The investment
portfolio is comprised of U.S. Treasury or other U.S. government
agency obligations, and government agency issued mortgage backed
securities.
Investment Securities
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," ("SFAS No. 115"), which
addresses the accounting and reporting for certain investments in
debt and equity securities. This Statement requires that only debt
securities that the Company has the positive intent and ability to
hold to maturity be classified as held to maturity and reported at
amortized cost. Securities that are bought and held principally
for the purpose of selling them in the near term are required to be
classified as trading securities and reported at fair value with
unrealized gains and losses reflected in the statement of income.
All other securities are required to be classified as
available-for-sale securities and reported at fair value with
unrealized gains and losses net of taxes reflected as a separate
component of shareholders' equity until realized.
The effect of adopting SFAS No. 115 effective January 1, 1994 was
to reduce to shareholders' equity by $82,730, net of deferred
income taxes.
Realized gains or losses on disposition of investment securities
are recorded on the trade date and are based on the net proceeds
and the adjusted carrying amount of the securities sold, using the
specific identification method.
During 1995, the Financial Accounting Standards Board issued a
Special Report, "A Guide to Implementation of Statement 115 on
Accounting for Certain Investment in Debt and Equity Securities,"
which permitted financial institutions a one-time opportunity to
reassess the appropriateness of all investment security
classifications and to transfer securities classified as held to
maturity to available for sale without calling into question
Management's intent to hold other investments to maturity in the
future. Accordingly, the Company transferred all of its U.S.
Treasury securities and municipal securities and a portion of its
mortgage-backed securities with an unamortized cost of $20,841,536
to available for sale in December 1995. The unrealized gain
related to this transfer was $264,875.
Investments are carried on the consolidated balance sheet dated
December 31, 1995 at estimated fair value for available-for-sale
securities and at amortized cost for held-to-maturity securities.
The following table presents information, on the basis of selected
maturity, about the composition of the Company's investment
portfolio as of December 31, 1995 and 1994.
<TABLE>
<CAPTION>
As of December 31, 1995 As of December 31, 1994
Estimated Estimated Taxable
Amortized Fair Amortized Fair Equivalent
Cost Value Cost Value Yield
(Amounts in Thousands)
Available for Sale:
U.S. Treasury:
<S> <C> <C> <C> <C>
Within one year .......... $ 1,018 $ 1,013 $ $
One to five years ........ 3,029 3,024 4,084 3,834 4.97%
Total .................. 4,047 4,037 4,084 3,834 4.97%
FNMA, FHLMC, GNMA and
Small Business Assoc.
mortgage-backed
securities:
Within one year .......... 13,537 13,530
One to five years ........ 13,633 13,603 6,373 6,028 5.95%
Five to ten years ........
Over ten years ........... 15,323 15,058 19,426 18,263 6.30%
Total debt securities ...... 36,540 36,228 25,800 24,291 6.22%
Equity securities .......... 630 650 961 961 6.12%
Total available-for-sale
securities ............. 37,190 36,878 $30,844 $29,087 6.05%
Held to Maturity:
U.S. Treasury securities:
One to five years ........ $ $
Five to ten years ........ _____ _____ 7,373 6,449 5.60%
Total .................. 7,373 6,449 5.60%
FNMA, FHLMC, GNMA and
Small Business Assoc.
mortgage-backed
securities:
Within one year .......... $ $ $ $
One to five years ........ 7,807 7,712 8,727 8,000 5.04%
Five to ten years ........
Over ten years ........... $ $ 5,273 4,785 6.49%
Total .................. 7,807 7,712 14,000 12,785 5.86%
Municipal securities (1):
Within one year .......... $ $ $ $
One to five years ........ 355 354 8.18%
Five to ten years ........ 4,507 4,042 7.71%
Over ten years ........... 3,600 3,281 6.92%
Total .................. 8,462 7,677 7.35%
Total debt securities ...... 7,807 7,712 29,835 26,911 6.22%
Equity securities .......... 0 0
Total held-to-maturity
securities ............. $ 7,807 $ 7,712 $29,835 $26,911
<FN>
(1) Yields related to state, county and municipal securities are
stated on a taxable equivalent basis, assuming a 34% tax rate.
(2) Distribution of maturities for mortgage-backed securities is
based on expected cash flows which may be different from the
contractual terms.
</FN>
</TABLE>
Quality Rating of Securities
Current regulatory credit guidelines call for all purchases of
securities for the investment portfolio to be rated investment
grade by Moody's or Standard & Poor's. Securities backed by the
U.S. government and its agencies, both on a direct and indirect
basis, represented approximately 51% of the investment portfolio at
December 31, 1995. All mortgage-backed securities are AAA rated.
III.
Loan Portfolio
The majority of the Bank's loans are made to customers located in
the Tallahassee Area. New loans and loan renewals are reviewed by
management and the directors of the Bank. Management regularly
assesses the quality of its loan portfolio and assigns risk ratings
to substantially all extensions of credit in its commercial and
real estate portfolios. Lending officers have the primary
responsibility for monitoring credit quality, identifying problem
loans and recommending changes in risk ratings. The Compliance
Department of the Bank provides an independent assessment of credit
ratings, credit quality and the credit management process. This is
achieved through regular reviews of loan documentation, collateral,
risk ratings and problem loan classifications. Overall credit risk
is reduced by maintaining a loan portfolio that is diverse in terms
of type of loan, industry concentration, size of individual loans,
geographic distribution and borrower concentration, size of
individual loans, geographic distribution and borrower
concentration, thus minimizing the adverse impact of any single
event or set of circumstances. The loan portfolio is reviewed at
least monthly for credit concentrations, and an analysis of the
adequacy of the reserve for loan losses is now conducted monthly.
Loan concentrations are defined as amounts loaned to a number of
borrowers engaged in similar activities, which could cause them to
be similarly impacted by economic or other conditions. The Bank's
most significant concentration of credit which was $30.0 million at
December 31, 1995 and $32.3 million at December 31, 1994 occurred
in loans to consumers for the purchase of automobiles, trucks and
vans. However, these loans are not concentrated in any one
automobile manufacturer, dealer or related consumer group. The
risks associated with consumer loans includes accelerated
deterioration in the value of the underlying collateral for such
loans and historical industry trends which indicate consumer loans
may be slower paying loans especially in an inflationary or
recessionary economic environment. These loans are generally
repaid from employment income sources of the consumer. If
employment of the consumer is hampered in any way, the risk is high
the loan will not be repaid in full from the sale of the underlying
collateral.
A. Types of Loans
The following table sets forth the Bank's loan portfolio
by type at the dates indicated:
<TABLE>
Table ----- Loan Portfolio by Types of Loans
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
Amount Amount Amount
(Amounts in Thousands)
<S> <C> <C> <C>
Real estate mortgage loans $ 23,249 $ 18,939 $ 11,492
Commercial loans 4,455 3,219 4,283
Consumer installment 29,343 32,274 14,417
Visa, Mastercard, and
Home Equity 4,562 5,007 5,228
Gross Loans 61,609 59,439 35,420
Deferred loan fees 498 460 221
Unearned income < 156> < 183> < 58>
Allowance for loan losses < 507> < 220> < 239>
Total loans, net $ 61,444 $ 59,496 $ 35,344
</TABLE>
B. Maturities and Sensitivities of Loans to Changes in Interest Rates
The following table presents the maturities of the loan
portfolio based on remaining contractual repayments of principal
and interest rate sensitivity at December 31, 1995.
<TABLE>
<CAPTION>
Interest Rate Sensitivity
Predetermined Floating
Category Total Rate Rate
(Amounts in Thousands)
Due or maturing in:
<S> <C> <C> <C>
One year or less $ 23,756 $ 15,458 $ 8,298
One to five years 26,616 24,150 2,466
Over five years 11,237 11,237 0
Total $ 61,609 $ 50,845 $ 10,764
</TABLE>
C. Risk Elements
Non accrual, Past-due and Restructured Loans
The accrual of interest is discontinued on a loan when
Management determines, after consideration of economic and business
factors affecting collection efforts, that the loan no longer meets
the regulatory criteria for performing loans and that collection of
interest appears doubtful. All loans which are 90 days past-due
are considered nonaccrual unless they are adequately secured and
there is a reasonable assurance of full collection of principal and
interest. Management closely monitors all loans which are
contractually 90 days past due, renegotiated, or on nonaccrual
status. At December 31, 1995 the amount of non-accrual loans in
the portfolio was $75,644 representing 0.12% of net loans
outstanding. This compares to $63,249 in nonaccrual loans
representing 0.11% of net loans outstanding as of December 31,
1994. There were no loans which would be defined as troubled debt
restructuring at either year end 1995 or 1994. As of December 31,
1995, nonaccrual loans were $108,141 and loans 90 days or more past
due were $887,019. There were no renegotiated or restructured
loans as of December 31, 1995.
An analysis of nonaccrual, past-due and restructured loans at the
dates indicated is reflected in the following table.
<TABLE>
Table ----- Nonaccrual, Past-due and Restructured Loans(1)
<CAPTION>
As of As of As of
December 31 December 31 December 31
1995 1994 1993
<S> <C> <C> <C>
Nonaccrual impaired loans $ 168,141 $ 63,000 $ 41,780
Aggregate non-impaired loans
contractually past due 90
days or more as to interest
or principal payments(2) 887,019 72,000 75,955
Aggregate loans re-
negotiated to provide a
reduction or deferral of
interest or principal 0 0 0
Total nonaccrual, past due and
restructured loans $ 995,160 $ 135,000 $117,735
<FN>
(1) The Bank has no foreign loans.
(2) Exclusive of loans for which interest is not being accrued.
</FN>
</TABLE>
Impaired loans represent loans measured pursuant to Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan." Interest income on nonaccrual loans, if
recognized, is recorded on a cash basis. For the year 1995, the
amount of interest income not recorded on nonaccrual loans at
December 31, 1995, was $26,080.
At December 31, 1995, there were no potential problem loans where
known information about possible credit problems of the borrower
caused Management to have serious doubts as to the ability of such
borrower to comply with the present loan repayment terms and which
may result in such loans being place on a nonaccrual basis.
The tables below provide data on the credit quality of the loan
portfolio (historically) and current delinquencies.
Percent Reserve Percentage
Date Charge Offs (1) Factor (2)
12/31/87 0.46% 0.75%
12/31/88 0.19% 0.50%
12/31/89 0.00% 0.50%
12/31/90 0.06% 0.50%
12/31/91 0.41% 0.50%
12/31/92 0.13% 0.40%
12/31/93 0.17% 0.40%
12/31/94 0.30% 0.40%
12/31/95 0.75% 0.70%
03/31/96 0.17% 0.70%
9 Year Average 0.27% 0.52%
(1) Expressed as a percentage of net loans at period end
(2) As determined by management
<TABLE>
<CAPTION>
1995 1994
GNB Dollars GNB Dollars
Delinquency Outstanding Delinquency Outstanding
<C> <C> <C> <C> <C>
JAN 1.41% $60,686 1.10% $35,389
FEB 1.47% 61,184 1.28% 35,999
MAR 1.39% 61,995 1.26% 38,309
APR 1.73% 64,613 1.58% 40,946
MAY 1.96% 66,183 1.10% 42,753
JUN 1.89% 66,552 1.08% 44,684
JUL 2.24% 65,563 1.22% 47,370
AUG 3.04% 65,125 1.52% 50,664
SEP 3.36% 64,183 1.30% 52,557
OCT 3.79% 63,360 1.25% 54,914
NOV 3.89% 62,256 1.33% 57,392
DEC 3.32% 61,453 1.30% 59,235
Average 2.46% 63,596 1.28% 46,684
</TABLE>
Other Real Estate
The Company had no other real estate acquired through
foreclosure, deed in lieu of foreclosure, or classified as
in-substance foreclosure at December 31, 1995, 1994, 1993 or 1992.
D. Other Interest Bearing Assets
At December 31, 1995, there were no other interest
bearing assets required to be disclosed if such assets were loans.
IV.
Allowance for Loan Losses
The allowance for loan losses to absorb estimated future losses is
maintained by additions charged to operations as provisions for
loan losses and by loan recoveries, with actual losses charged as
reductions to the allowance. The Company's process for evaluating
the adequacy of the allowance for loan losses has three basic
elements: first, the identification of problem loans; second, the
establishment of appropriate loan loss allowances once individual
specific problem loans are identified; and third, a methodology for
estimating loan losses based on the inherent risk in the rest of
the loan portfolio.
The identification of problem loans is achieved mainly through
individual review of all major loans such as delinquency, debt
coverage, loan-to-value ratio and location of collateral property.
Loss allowances are established for specifically identified problem
loans based on reviews of current operating financial information
and the fair value of the underlying collateral.
The allowance for loan losses also includes estimates based upon
consideration of actual loss experience of loans for the past
several years by loan type, year of origination, delinquency
statistics, location of collateral property and projected economic
conditions and other trends. Based upon this process,
consideration of the current economic environment and other
factors, Management determines what it considers to be an
appropriate allowance for loan losses. Although the Company
believes it has a sound basis for this estimation, actual
charge-offs incurred in the future are highly dependent upon future
events, including the economies of the areas in which the Company
lends. Charge-offs to the allowance are made when the loan is
considered uncollectible or is transferred to real estate owned.
Recoveries are credited to the allowance. The adoption of SFAS No.
114 does not impact the comparability of the credit risk tables in
this section."
As a result of the 1995 examination, the Bank sought to improve its
timely recognition of losses on loans, principally in the consumer
and credit card portfolios. Although the Bank has historically
taken charge-offs on a quarterly basis to ensure that published
call reports accurately reflected the Bank's financial condition,
the Bank's Formal Agreement with the OCC requires that future
charge-offs strictly adhere to the statutory requirements and to
the Bank's own collection policy. As a result, the Bank has
recently amended its procedures for determining the adequacy of the
reserve for loan losses and, effective March 31, 1996, any required
adjustment will be booked prior to or on the last day of each
calendar quarter. Loan charge-offs will be taken on a monthly
basis as required by policy.
The following table summarizes the Bank's loan loss experience.
<TABLE>
Table ----- Summary of Loan Loss Experience
<CAPTION>
For the Year Ended December 31,
(Amounts in Thousands)
1995 1994 1993
Allowance for Loan Losses
<S> <C> <C> <C>
at Beginning of Year $ 220 $ 239 $ 167
Charge-offs:
Commercial 37 < 77> < 5>
Real Estate Mortgage Loans 0 0 < 21>
Consumer Installment 336 < 106> < 48>
Credit Cards 105 0 < 9>
Total Charge-offs < 478> < 183> < 83>
Recoveries:
Commercial 0 0 5
Real Estate Mortgage Loans 0 0 13
Consumer Installment 26 6 4
Credit Cards 4 3 1
Total Recoveries 30 9 23
Net Charge-Offs < 448> < 174> < 60>
Provision for losses charged
to operations 735 155 132
Allowance for Loan Losses
at end of year $ 507 $ 220 $ 239
Average Amount of Loans
Outstanding $63,332 $46,664 $31,611
Ratio of net charge-offs to
average loans outstanding 0.71% 0.37% 0.19%
</TABLE>
The following table sets forth the allocation of the reserve for
possible loan losses by loan type and as a percentage of the total
reserve.
<TABLE>
Table ----- Allowance for Loan Losses
<CAPTION>
As of December 31,
1995 1994
Percent of Percent of
Loans in Each Loans in Each
Category to Category to
Amount Total Loans Amount Total Loans
(000's) (000's)
<S> <C> <C> <C> <C>
Commercial Loans $ 30 6% $ 24 6%
Real Estate Mortgage Loans 179 35% 37 32%
Consumer Installment 266 52% 101 54%
Credit Card loans 32 7% 58 8%
Total $ 507 100% $ 220 100%
</TABLE>
Although the allowance for loan losses was determined by specific
and general allocation methods, the entire allowance is available
to absorb losses from any category of loans.
Loan Losses
Net loan charge-offs amounted to $448,300 or 0.71% of average loans
in 1995, compared to $174,500 or 0.37% of average loans in 1994.
There can be no assurance that in any particular period of time
the Company will not sustain loan losses which are substantial in
relation to the size of the allowance for loan losses. When
establishing a provision Management makes various estimates
regarding the value of collateral and future economic events.
Actual experience, however, may differ from these estimates. It is
Management's opinion that the allowance at December 31, 1995 is
adequate to absorb losses from loans in the portfolio as of year
end.
V.
Deposits
Although total deposits at year end December 31, 1995 increased
$11,835,300 to $117,192,400 from $105,357,000 at December 31, 1994,
average total deposits during the year 1995 increased from
$108,119,000 million in 1994 to $117,127,000 in 1995 representing
an increase of $9,008,000 million or 8.33%. In 1993 deposits
increased $75,475,400 million or 190%. Contributing to the decline
in average deposits during the year was a restructuring plan
adopted by the Bank in May 1995 that was designed to shrink the
Bank's total asset base. Further discussion of this plan may be
found at "Management's Strategy to Improve Results." The Company
increased its total deposits in 1992 and 1993 primarily through
acquisitions and Management believes that the Company now has a
network of branch offices strategically located to develop future
loan and deposit growth throughout Tallahassee. During 1995,
Management lessened its emphasis on the acquisition of higher
paying time deposits (principally certificates of deposits) with
the result that many of the higher cost time deposits acquired from
the acquisitions were not renewed and were withdrawn from the
Company.
The composition of deposits at December 31, 1995 and 1994 is
summarized below:
<TABLE>
<CAPTION>
12/31/95 12/31/94
<S> <C> <C> <C> <C>
Non-interest bearing deposits $ 9,050,682 7.72% 7,704,442 7.31%
NOW 8,621,737 7.36% 8,275,574 7.85%
Money Market 8,765,853 7.48% 9,345,183 8.87%
Savings 8,673,519 7.40% 10,891,488 70.34%
Other Time 72,789,210 62.11% 60,601,828 57.53%
Total Deposits $117,192,363 100% $105,357,079 100%
</TABLE>
The maturities of certificates of deposit of $100,000 or more at
December 31, 1995 and 1994 are presented below:
<TABLE>
Table ----- Maturity of Certificates of Deposit of $100,000 or More.
<CAPTION>
December 31, 1995 December 31, 1994
(Amounts in Thousands)
<S> <C> <C>
Three months or less $ 1,705 $ 1,815
Over three months through one year 3,482 4,378
Over one year 4,444 2,346
Total outstanding $ 9,631 $ 8,539
</TABLE>
VI.
Short-Term Borrowings
On August 29, 1994, the Bank entered into a revolving line of
credit debt agreement with Federal Home Loan Bank of Atlanta with
a maximum available line of credit of $15,000,000. Interest is
paid quarterly and is based upon a variable interest rate which is
also reset quarterly. The original interest rates on these
advances were on average approximately 5%. Principal is due in one
year from the date of each advance. This line of credit agreement
expires in August, 1996. This line of credit is secured by pledged
investment securities with a par value totaling $17 million. The
primary purpose of the borrowing is to fund the increase in demand
for consumer, real estate and other types of loans, without further
liquidation of investment securities held in the available for sale
portfolio.
Short-term borrowings consist primarily of federal funds purchased
and securities sold under agreements to repurchase that mature
either overnight or at a fixed maturity generally not exceeding
three months.
Average funds purchased, which are composed of federal funds
purchased and Federal Home Bank of Atlanta borrowings, increased in
1995 from $5,725 to $6,610 or 15.5%, and at December 31, 1995, the
Company is not purchasing federal funds nor borrowing under an
established line of credit from the Federal Home Loan Bank Board in
Atlanta. Federal Funds purchased and Federal Home Loan Bank
borrowings balances, rates for fiscal year 1995 and 1994 are
reflected in the table below.
Federal Funds purchased and Federal Home Loan Bank Borrowings (in
millions)
December
1995 1994
Fed Funds $ 0.0 $ 1.5
FHLB $ 0.0 $19.4
VII.
Return on Equity and Assets
Selected ratios for measurement of net income and equity are
presented below:
<TABLE>
Table ----- Return on Equity and Assets.
<CAPTION>
For the Year Ended December 31,
1995 1994
<S> <C> <C>
Return on average assets < 0.19%> 0.47%
Return on average equity < 3.06%> 5.43%
Dividend payout ratio <55.31%> --
Average equity to average assets ratio 6.33% 8.60%
</TABLE>
VIII.
Other Issues
Liquidity
Liquidity for a commercial bank is generally described as the
availability of funds to meet increased loan demand and/or
excessive deposit withdrawals. Management monitors the Company's
financial position to ensure that it has sufficient liquid assets
to meet normal transaction requirements, take advantage of
investment opportunities, and provide for the possibility of
unforeseen liquidity or deposit withdrawals. Liquidity is
immediately available from three major sources: (a) cash on hand
and on deposit at other banks, (b) the outstanding balance of
federal funds sold and (c) the available-for-sale securities
portfolio. Although additional liquidity is readily obtainable by
purchasing federal funds from other banks, the Bank has not found
it necessary to utilize this resource to any substantial extent in
recent years. Management does not intend to sell any investment
securities except for investments available-for-sale. In addition,
the Company has both the intent and ability to hold until maturity
all investments currently classified as held to maturity. All debt
securities are of investment grade quality and, if the need arises,
can be promptly liquidated on the open market or pledged as
collateral for short-term borrowing. In line with its approach to
liquidity, the Bank, as a matter of policy, does not solicit or
accept brokered deposits for funding asset growth. Instead, loans
and other assets are based on the core of local deposits.
Capital Adequacy
Under guidelines established by the federal banking regulators,
capital adequacy is currently measured for regulatory purposes by
certain risk-based capital ratios, supplemented by a leverage
ratio. The risk-based capital ratios are calculated as a ratio of
capital to risk-weighted assets. Risk-weighted assets are computed
by measuring the relative credit risk of both the asset categories
on the balance sheet and various off-balance sheet exposures.
Capital is divided into two classes: Tier 1 and Tier 2. Tier 1
capital consists primarily of common shareholders' equity and
qualifying perpetual preferred stock, net of goodwill and other
disallowed intangible assets. Tier 2 capital, which is limited to
the total of Tier 1 capital and other specific limitations,
includes allowable amounts of subordinated debt, mandatory
convertible securities, preferred stock and the allowance for loan
losses. Under current requirements, the minimum Tier 1 capital
ratio is 4%, and the minimum total capital ratio, consisting of
both Tier 1 and Tier 2 capital, is 8%. At December 31, 1995, the
Company had a Tier 1 risk-based capital ratio of 7.90% and a total
risk-based capital ratio of 8.69%.
The leverage ratio is the ratio of Tier 1 capital only to average
total assets for the most recent quarter, after reduction of those
assets for goodwill and other disallowed intangible assets at the
measurement date. The required ratio ranges from 3% to 5%, subject
to federal bank regulatory evaluation of the organization's overall
safety and soundness. At December 31, 1995, the Company had a
leverage ratio of 4.08%.
Article IV of the Formal Agreement requires the Bank to achieve
certain capital ratios by August 30, 1996. These capital ratios
are significantly higher than those presently recorded by the bank.
The Formal Agreement required the attainment of the following
ratios:
Ratio Required Ratio
Tier 1 leverage ratio 5.0%
Tier 1 risk weighted ratio 8.0%
Total risk weighted ratio 10.0%
These ratios exceed the ratios required for the regulatory rating,
"well-capitalized." At December 31, 1995, the Bank was rated
"adequately capitalized." At December 31, 1995, the Bank's capital
ratios were calculated as follows:
Ratio December 31, 1995
Tier 1 leverage ratio 4.08%
Tier 1 risk weighted ratio 7.90%
Total risk weighted ratio 8.69%
Management has taken steps to attempt to ensure that the Bank's
capital is restored to a level required by the Formal Agreement.
The steps taken by Management include continuation of its May 1995
Restructuring Plan, as amended, which has enabled the Bank to
shrink from total assets of $136.6 million as of 6/30/95 to $124.6
million at 12/31/95 and $107,083 million at 6/30/96. Although the
Bank continues to experience large operating losses, the shrinking
has enabled the Bank to reduce the deterioration in the capital
leverage ratio with the result that the leverage ratio has remained
relatively constant since December 31, 1995 and at September 30,
1996 stood at 4.11%. This risk weighted ratios declined by
September 30, 1996.
In addition to this specific corrective action plan, Management has
implemented a Capital Plan under terms and conditions of the Formal
Agreement. On April 22, 1996, the Bank promulgated its Capital
Plan to achieve the Formal Agreement's capital ratios. In the
Capital Plan, the Bank proposed to continue to control asset growth
and may in fact continue to shrink the Bank; change to mix of
assets and liabilities by emphasizing loans in favor of investment
securities and core deposits in favor of high cost deposits;
improving the net interest margin and non-interest income and
controlling overhead; and augmenting capital. The Bank's primary
plan to augment capital is through a private placement of
additional stock. In addition, as of April, 1996, the Bank is
considering the sale of one or more branches which would be likely
to be undertaken if favorable premiums and excess liquidity are
available. Nevertheless, the Bank failed to meet the capital ratio
targets contained in the Formal Agreement as of August 30, 1996.
In September, 1996, the Bank further modified its capital and
profitability plan to recognize that it failed to attain the
capital ratios required by the Formal Agreement and to improve its
profitability. The plan provides for the Bank to monitor asset
growth giving consideration to the favorable impact limiting growth
would have on the Bank's capital ratios; changing the mix of assets
and liabilities by emphasizing loans in favor of investment
securities and core deposits in favor of high cost deposits;
improving the net interest margin and non-interest income and
controlling overhead; and augmenting capital.
The Bank's primary plan to augment capital is through a private
placement of additional stock. The Company entered into a Common
Stock Purchase Agreement with certain of its directors dated
October 17, 1996, which contemplates sales of equity principally
through the sale of shares of Company's stock at $17.00 per share
at various times during the remainder of 1996 and 1997. This
additional capital will support loan and deposit growth and
portfolio restructurings. An additional provision added by
amendment dated November 14, 1996, is a capital injection feature
where the purchasing shareholders agreed to purchase additional
equity from the Company (for injection into the Bank) within thirty
days of any quarter end during 1997 that the Bank does not attain
certain prescribed capital ratios. These prescribed quarterly
capital ratios targets gradually increase over 1997 to the level of
the capital ratios required under the Formal Agreement.
During September and November of 1996, the Bank submitted to the
OCC and amended, respectively, its capital plan. On November 21,
1996, the OCC informed the Bank that the OCC had decided to approve
the capital plan, as amended. If the Bank fails to successfully
implement the capital plan, it will be subject to significant
restrictions on its operations as provided by federal law and
likely enforcement action by the OCC.
Interest Rate Sensitivity
The objective of asset/liability management is to optimize net
interest income while minimizing the effect of interest rate
changes on the net interest margin. Managing this aspect of the
Company's operations involves periodic monitoring of the interest
sensitive assets relative to interest-sensitive liabilities over
specific time intervals. All interest-bearing assets and
liabilities are evaluated as maturing at the earlier of the
repricing date or contractual maturity date. Although liabilities
without specific terms such as NOW and savings accounts are
generally considered core deposits for liquidity purposes, they are
deemed to reprice immediately for purposes of interest rate
sensitivity analysis. Other deposit instruments are evaluated
based upon historical trend or rate index.
The following table presents an interest rate sensitivity analysis
as of December 31, 1995.
<TABLE>
<CAPTION>
3 mos or less 3 mos - 1 yr Beyond 1 yr Total
(Amounts in Thousands)
Earning Assets:
<S> <C> <C> <C> <C>
Loans, gross $ 8,625 $ 15,131 $ 37,853 $ 61,609
Investment securities 13,978 1,215 29,492 44,685
Federal funds sold 5,410 0 0 5,410
Total Earning Assets 28,013 16,346 67,345 111,704
Interest-Bearing Liabilities:
NOW accounts 8,622 8,622
Savings deposits 8,674 8,674
Money market accounts 8,766 8,766
Time deposits of $100,000 or more 1,672 3,345 4,274 9,291
Other time deposits 15,286 24,020 33,483 72,789
Total Interest-Bearing Liabilities 43,020 27,365 37,757 108,142
Interest sensitivity gap $< 15,007> $<111,019> $ 29,588 $ 3,562
Cumulative gap $< 15,007> $< 26,026> $ 3,562 $ 3,562
Cumulative gap percentage of total
earning assets < 54%> < 159%> 5% 3%
Ratio of interest-sensitive assets to
interest-sensitive liabilities 65% 60% 178% 103%
</TABLE>
At December 31, 1995, the Company had $44,359 in interest-sensitive
assets compared to $70,385 in interest-sensitive liabilities that
will mature or reprice within a year.
A negative gap position is indicative of a bank which has a greater
volume of interest-sensitive liabilities repricing (or maturing)
than it does interest-sensitive assets, in a given time interval.
In this instance, the probable impact on net interest income would
be positive in a declining rate environment and negative if rates
were rising. Conversely, a positive gap position represents a
greater volume of interest-sensitive assets repricing (or maturing)
than it does interest-sensitive liabilities. Thus, an increase in
rates would positively impact net interest income as the yield on
earning assets would increase prior to the increase in the cost of
interest-bearing liabilities. The actual impact on net interest
income, however, cannot easily be predicted as other factors could
maximize or minimize the effect. For example, a change in the
prime interest rate could effect an immediate change to rates on
prime-related assets, whereas a liability which reprices according
to changes in Treasury rates might (1) lag in the timing of the
change and (2) increase in rate in an amount different than the
change in the prime interest rate.
Management believes that the current balance sheet structure of
interest-sensitive assets and liabilities does not represent a
material risk to earnings or liquidity in the event of a change in
market rates, such as those experienced in the last ten years.
Risk Management
Risk identification in management are key elements in the overall
management of the Company. In Management's opinion the primary
risk exposures of the Bank are interest rate, liquidity, and credit
risk. Some of the more significant processes used to manage and
control these risks are described below:
Asset/Liability Management
The Company maintains a formal Asset/Liability Management process
to quantify, monitor and control interest rate risk and to assist
Management in maintaining stability in the net interest rate margin
under varying interest rate environments. This is accomplished
primarily through the implementation of lending, funding and
pricing strategies designed to maximize net interest income
performance under varying interest rate environments subject to
liquidity and interest rate guidelines.
The objective of Asset/Liability Management is to optimize net
interest income while minimizing the effect of interest rate
changes on the net interest margin. Managing this aspect of the
Company's operations involves periodic monitoring of interest
sensitive assets relative to interest sensitive liabilities over
specific time intervals.
Interest Rate Risk
The primary tool used by the Company to measure interest rate risk
is an earnings simulation model which evaluates the impact of
different interest rate scenarios on the Company's projected
business plan over a twelve month horizon. In addition, Management
uses the more traditional interest sensitivity gap analysis which,
unlike earnings simulation models, present a point in time
measurement. As such, interest rate sensitivity gap analysis in
itself does not incorporate the effects of future balance sheet
trends, changes in the relationship between yields earned and rates
paid, patterns or rate movements in general, or changes in
pre-payment speeds due to changes in rates (except for certain
investment portfolio securities). All interest bearing assets and
liabilities are evaluated as maturing at the earlier of the
repricing date or contractual maturity date. Liabilities without
specific terms, such as NOW and savings accounts, are generally
considered core deposits for liquidity purposes and are deemed to
reprice over historically determined time periods.
The Company does not utilize various off balance sheet instruments
such as interest rate swaps and caps to assist in managing interest
rate risk.
See also the discussion above, "Interest Rate Sensitivity."
Credit Risk
The Company evaluates its credit risk, which is primarily in its
loan portfolio. See the discussions at "III. Loan Portfolio," and
"IV. Allowance for Loan Losses."
The 1995 and 1994 changes in net interest income on a taxable
equivalent basis, as measured by rate and volume variances, are
analyzed in the following table.
Effects of Inflation
The operations of the Bank are subject to the effects of inflation
through interest rate fluctuations and changes in the general price
level of noninterest operating expenses. Such costs as salaries,
fringe benefits and utilities have tended to increase at a rate
comparable to or even greater than the general rate of inflation.
Broadly speaking, all operating expenses have risen to higher
levels as inflationary pressures have increased. Management has
responded to this situation by evaluating and adjusting fees
charged for specific services and by emphasizing operating
efficiencies.
The level of interest rates is also considered to be influenced by
inflation, rising whenever inflationary expectations and the actual
level of inflation increase and declining whenever the inflationary
outlook appears to be improving. Management constantly monitors
this situation, attempting to adjust both rates received on earning
assets and rates paid on interest-bearing liabilities in order to
maintain the desired net yield on earning assets.
Item 7. Financial Statements.
The required financial statements are contained at pages 45
through 65 of this form.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons.
The Board of Directors of the Company consists of six
directors, all of whose terms expire at the next annual meeting of
the Company which is not yet scheduled. Executive officers of the
Company serve at the pleasure of the Board of Directors. The
following table indicates for each director, executive officer,
promoter and control person the age, principal occupation, or
employment for the last five years, position and offices held, with
the Company and the Bank, and the term the person was first elected
as a director or first became an executive officer.
In December of 1995, Richard A. Altobellis, a founder of the
Company and the Bank, passed away. In March, 1996, Thomas L.
Collier resigned as a director of the Company and the Bank. Also
in March, 1996, William L. Sutton, President and a director of the
Bank, resigned. Also in March, Kyla M. Bryson, Cashier/CFO of the
Bank, resigned. In October, 1996, Robert W. Minnick, Jr., a
director and President and CEO of the Company, and a director and
CEO of the Bank, resigned.
<TABLE>
<CAPTION>
Present & Principal
Name, Age and Year Position and Offices Occupation for
Became Director Held with the Company Last Five Years
<S> <C> <C>
Anthony L. Bajoczky Director, the Company Attorney, Bajoczky &
49, 7/90 and 11/86 (2) and the Bank Fournier, PA (law firm)
David A. Barrett Chairman, the Company; Attorney, Barrett,
47, 7/90 and 11/86 (1) Vice Chairman, the Bank Hoffman & Hall, PA
(law firm)
Rica A. Barrett Director, the Bank Horse Breeder/Farmer;
50, 12/92 (1) Owner, The Nature
Factory, 1980-1991
Kenneth C. Fuqua Director, the Company President, State
54, 7/90 and 11/86 and the Bank Securities Corp. (insurance)
Wilma B. Lauder Director, the Bank Compliance Manager, Florida
54, 12/93 Housing Finance Agency
Robert W. Minnick, Jr. President/CEO and President/CEO of the
58, 7/90 and 3/88 (3) Director, the Company; Company and CEO of
CEO and Director, the Bank the Bank
Marilyn Brinkley Newton Director, the Bank Investor and Tree Farmer;
65, 12/92 Retired Educator
Vernon E. Sanders Secretary/Treasurer Principal, Catledge, Sanders
56, 7/90 and 11/86 and Director, the Company and Sanders, CPA
Chairman of the Board,
the Bank
Frederic Q. Vroom, MD Director, the Company Medical Coordinator, Neuroscience
60, 7/90 and 11/86 and the Bank Center, Tallahassee Memorial Regional
Medical Center; Physician & President
Tallahassee Neurological Clinic (1981-
1994)
<FN>
(1) Rica Barrett is the spouse of David A. Barrett.
(2) Mr. Bajoczky was previously associated with the firm of
Barrett, Bajoczky, Hoffman & Harper, P.A. from 1977 until April 30,
1991. On April 30, 1991, he organized Bajoczky & Fournier, P.A. of
which he is a principal.
(3) Mr. Minnick became an executive officer of the Bank in
November, 1986. Mr. Minnick resigned in October, 1996.
</TABLE>
The Company's Stock is voluntarily registered under 12(g)
of the Securities Exchange Act of 1934. Based on a review of forms
3, 4 and 5, and amendments thereto submitted to the Company, the
Company has no knowledge of any director, officer, or beneficial
owner of 10% of any class of the Company's securities that failed
to timely file any such form.
None of the directors listed above serve as directors of other
companies which issue publicly traded securities or securities
registered under the Securities Exchange Act of 1934.
No directors have been involved in any material events which
would be detrimental to an evaluation as to the ability or
integrity of any director, executive officer, promoter or control
person.
Employees and Executive Officers of the Bank
The Company and the Bank presently employ 62 persons full-time and
17 persons on a part-time basis, including 17 full-time officers.
As appropriate to the growth of the Bank and to fill vacancies, it
is management's intent to hire additional persons as needed on a
full-time and part-time basis. As of the date of this report, the
Bank's offices of President and Cashier are vacant.
The Bank's executive officers are appointed by the Board of
Directors and hold office at the will of the Board.
As of December 31, 1995, the executive officers of the Bank were as
follows:
Name & Time with the Bank Age Position with the Bank
Robert W. Minnick, Jr.* (1988) 57 CEO and Director
Gary F. Linton (1988) 42 Senior Vice President/Loans
Linda C. Alexionok (1992) 42 Senior Vice President/Operations
Kyla M. Bryson* (1994) 43 Chief Financial Officer
William L. Sutton* (1994) 57 President
*Resigned subsequent to year end.
Robert W. Minnick, Jr. has served as CEO of the Bank since March
1988 and President/CEO of the Company since June 1990. Prior to
joining the Bank in 1986 as executive vice president/cashier, he
held senior management positions with Sun Bank/Tallahassee
(12/84--10/86) and North Florida National Bank (11/78--12/84) where
he was President/CEO. He resigned from all offices with the
Company and the Bank in October, 1996.
Gary F. Linton has served as Vice President and then Senior Vice
President of the Bank since March 1988. From 1985 to 1988, he was
employed in various capacities by Capital City 1st National Bank,
Tallahassee. He has nine years lending experience.
Linda C. Alexionok has served as Vice President/Branch
Administrator since 1992. From 1985 to 1989 she was employed by
Capital City 1st National Bank in lending and as assistant vice
president. From 1989 to 1992 she was employed in various
capacities by Barnett Bank, Tallahassee.
Kyla M. Bryson joined the Bank in June 1994 as Vice President &
Cashier. From 1990 to 1994 she was comptroller and chief financial
officer of the Florida State University Credit Union. She was also
employed by the State of Florida, Department of Regulation, as
assistant director of finance from 1989 to 1990. She is a
Certified Public Accountant. She resigned in February, 1996.
William L. Sutton joined the Bank in May 1994 as President. He
previously served as president of banks in Winter Haven and
Tallahassee and was Florida Secretary of Commerce in 1990-91.
Prior to his appointment as Secretary of Commerce, he served as
president and then area chairman for First Florida Bank,
Tallahassee, between 1975 and 1987. He resigned in March, 1996.
After year end 1995, the Bank added the following executive
officers:
Name & Time with the Bank Age Position with the Bank
Arthur P. Wimberley, Jr. (1996) 45 Executive Vice President
Jack D. Kane (1996) 37 Senior Vice President/
Commercial Loan Officer
Arthur P. Wimberley, Jr. joined the Bank in April of 1996. Prior
to joining the Bank, he served as a senior vice president - senior
commercial lender at SunTrust Bank, Tallahassee, and its
predecessors since 1984.
Jack D. Kane joined the Bank in June of 1996. Prior to joining the
Bank, he served as vice president at SunTrust Bank, Tallahassee,
and its predecessors since 1986.
Item 10. Executive Compensation.
The following table shows for each of the last three fiscal
years of the Company the compensation paid to the Company's CEO and
Vice President, both of whom resigned in 1996. No other executive
officer received an annual salary and bonus in excess of $100,000.
<TABLE>
<CAPTION>
Securities
Other Under-
Annual Restricted lying LTIP All Other
Name & Principal Compen- Stock Options/ Pay- Compens-
Position Salary Bonus sation (1) Awards SARs outs tion
Robert W. Minnick, Jr., CEO
<C> <C> <C> <C> <C> <C> <C> <C>
1995 $120,000 $30,000 $4,700 $ 0 $ 0 $ 0 $1,473
1994 120,000 30,000 5,050 0 22,566 0 1,473 (2)
1993 85,000 56,000 3,250 0 7,525 0 1,473 (2)
William L. Sutton,
Vice President
1995 $100,000 $ 0 $4,700 $ 0 $ 0 $ 0 $ 0
1994 71,356 10,000 0 0 0 0 0
<FN>
(1) Represents cash compensation paid to Mr. Minnick for
Guaranty National Bank Board meeting fees. Mr. Minnick does not
receive compensation for attendance at board committee meetings, of
which he attended 53 in 1995.
(2) The amount shown reflects amounts accrued for Mr. Minnick's
account for premiums paid by the Company on a term life insurance
policy owned by Mr. Minnick. It does not include premiums paid by
the Company on a term life insurance policy of which the Company is
the owner and beneficiary.
</FN>
</TABLE>
The Company has granted no stock appreciation rights or stock
options in 1996.
The following table shows, for the executive officer listed above,
certain information relating to options exercised during the last
fiscal year.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying Options in
Shares Options at the Money at
Acquired FY End FY End
or Value Exercisable/ Exercisable/
Name Exercised Realized Unexercisable Unexercisable
Robert W. Minnick, Jr.
<C> <C> <C> <C> <C>
12/29/95 1,333 10,664 30,600 $253,600
William L. Sutton 0 0 0 0
</TABLE>
The Company has no long-term incentive plans.
None of the executive officers of the Company receive a salary or
other compensation, other than board of director or committee fees,
from the Company. During 1995, Mr. Minnick and Mr. Sutton received
salaries from the Company's subsidiary bank where they served as
CEO and President, respectively. Director and committee fees paid
by the Company's subsidiary bank during 1995 to Messrs. Barrett,
Minnick, Sutton and Sanders were $13,700, $4,700, $4,700 and
$14,150, respectively. Directors of the Company received a fee of
$400 per Board meeting attended, and directors of the Bank receive
a fee of $400 per Board meeting attended which was suspended in
November, 1995. Committee members are paid $150 per committee
meeting attended which was suspended in November, 1995.
Mr. Minnick, Ms. Alexionok, Mr. Kane, Mr. Wimberley and Mr. Linton
have entered into multi-year employment agreements.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The table below contains information for any person who is
known by management to be the beneficial owner of more than five
percent of the Company's only class of stock, $1.00 par value
common.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Owner Percent of Class (1)
<S> <C> <C>
David A. Barrett (3)
2120 Hill N Dale Road, N.
Tallahassee, FL 219,166 23.14
Rica Barrett (2)
2120 Hill N Dale Road, N.
Tallahassee, FL 107,561 11.35
Anthony L. Bajoczky
2009 Rabbitt Hill Rd.
Tallahassee, FL 97,598 10.30
Thomas L. Collier (3)
30420 S. Dixie Highway
Homestead, FL 30030 83,526 8.82
Ken Fuqua (3)
2587 Noble Drive
Tallahassee, FL 32312 82,116 8.68
Fred Q. Vroom, MD (3)
2801 Edenderry Dr.
Tallahassee, FL 32308 82,613 8.72
Eric S. Hoffman
Post Office Box 930
Tallahassee, FL 32301 48,502 5.12
<FN>
(1) Based on 947,294 shares outstanding at December 31, 1995
plus 63,282 shares subject to stock options.
(2) Rica Barrett is the spouse of David A. Barrett. Mr.
Barrett disclaims beneficial ownership of such shares.
(3) Subsequent to year end 1995, Mr. Collier sold 44,609 shares
on January 18, 1996. Mr. Barrett purchased 39,715; Mr. Fuqua
purchased 2,000; and Dr. Vroom purchased 387 of these shares.
These purchasers have purchased other shares in 1996.
</FN>
</TABLE>
The following table sets forth the number of shares of the
Company's Stock beneficially owned on December 31, 1995, by certain
executive officers of the company and by all directors and
executive officers of the Company and its subsidiary Bank as a
group.
<TABLE>
Table ----- Stock Ownership of Management
<CAPTION>
Name Common Shares Percentage of Class
Outstanding(1)
<S> <C> <C>
Anthony L. Bajoczky 97,598 10.30
David A. Barrett 219,166 24.13
Rica A. Barrett (3) 107,561 11.35
Thomas L. Collier (2) 83,526 8.82
Ken Fuqua 82,116 8.68
Wilma Brinkley Lauder (3) 6,694 0.71
Robert W. Minnick, Jr. (2) 36,818 (4) 0.66
Marilyn B. Newton (3) 33,552 3.54
Vernon E. Sanders 9,035 0.95
William L. Sutton (3)(2) 1,250 0.13
Fred Q. Vroom, M.D. 82,613 (5) 8.72
All Directors and Executive
Officers as a Group (15 Persons) 729,329 76.99
* less than 0.01%
<FN>
(1) Outstanding shares represent the 947,294 shares of Company
common stock outstanding on December 31, 1995, not increased by the
63,282 shares subject to the stock option plans discussed herein.
(2) This person has resigned since year end, 1995.
(3) Member Board of Directors of the Bank only.
(4) Includes 30,600 shares subject to option under the
Company's Incentive Stock Option Plan.
(5) Includes 15,197 shares owned by Tallahassee Neurological
Associates Profit Sharing Plan of which Dr. Vroom has an interest.
Includes 2,500 shares owned by Dr. Vroom's son, Robert Frederic
Vroom.
</TABLE>
Item 12. Certain Relationships and Related Transactions.
The Company transacts business with directors and officers of
the Company and its subsidiaries in the ordinary course of
business. Loans to these parties and their related interests at
December 31, 1995 and 1994 were approximately $2,388,848 and
$2,403,011, respectively.
Ms. Barrett, Mrs. Newton, Mr. Barrett, Mr. Sanders, Mr. Sutton
and Mr. Minnick served as members of the Personnel & Compensation
Committee of the Bank throughout 1995. During 1995, the Company's
subsidiary Bank engaged in customary banking transactions and had
outstanding loans to certain of the Company's directors, including
members of the Compensation Committee, executive officers, their
associates and members of the immediate families of such directors
and executive officers. These loans were made in the ordinary
course of business and were made on substantially the same terms,
including interest rates, as those prevailing at the time for
comparable transactions with others. In the opinion of management,
these loans do not involve more than the normal risk of
collectability or present other unfavorable features.
The Company and the Bank have retained in the past, and
propose to retain in the future, on behalf of the Company and the
Bank, the law firm of Barrett, Hoffman & Hall of which the chairman
of the Company and vice chairman of the Bank, David A. Barrett is
a partner and Eric S. Hoffman, a principal shareholder of the
Company is a partner. Legal fees were paid or accrued to this firm
by the Company and the Bank of approximately $30,119 for 1995, and
$11,004 for 1994. This amount does not include fees paid by
customers of the Bank directly to the law firm. In addition to the
fees paid to the law firm for legal and related services, the Bank
during 1995 paid the firm $14,400 for yard and external maintenance
on four of the Bank's six office locations. The fees paid by the
Bank did not exceed 5% of the law firm's gross revenue for the last
full fiscal year. Management of the Company believes that the
transactions with the law firm were at substantially similar terms
to those which could have been obtained from unaffiliated parties.
The Bank currently leases office space from certain
partnerships and individuals affiliated with the Company. These
lease agreements, which began in 1990 and have varying terms,
provide that the Bank will pay, in the aggregate, approximately
$621,284, subject to certain adjustments. A discussion of the
leases follows below.
Capital Circle Branch. In June 1990, the Bank entered into a
lease agreement with Guaranty Bank Real Estate Partnership (a
partnership now comprised of the estate of former director
Altobellis, and directors Bajoczky, Barrett, Fuqua, and Vroom) to
lease a branch location of the Bank at 1827 Capital Circle, N.E.,
Tallahassee, Florida. The agreement provided for among other
things, the lease of 3,931 square feet at an annual lease payment
of $44,400 (subject to certain adjustments), or $11.29 per sq. ft.,
for a 5-year initial term, with three 5-year renewal period
options. In October, 1990, the Bank leased an additional 600 sq.
ft. upon the same lease terms and conditions as the lease executed
in June, 1990, and in January, 1992, the Bank leased an additional
663 sq. ft. in the building upon the same lease terms and
conditions as the lease executed in June, 1990. The total lease
payments made by the Bank to the partnership during 1995 amounted
to $75,654, and in 1994 amounted to $74,994. Management of the
Company believes that the transactions with the partnership were on
substantially similar terms to those which could have been obtained
from unaffiliated parties.
South Monroe Branch and Operations Center. In July, 1992, the
Bank entered into a lease agreement with 2613 South Monroe Real
Estate Partnership, a Florida general partnership (a partnership
comprised of directors Barrett and Vroom and shareholder Hoffman)
to lease the Bank's Operations Center located at 2613 South Monroe,
Second Floor, Tallahassee, Florida. The agreement provided for,
among other things, the lease of 4,131 sq. ft. on the 2nd floor at
an annual lease payment of $37,200 (subject to certain adjustments)
or $9.01 per sq. ft. for a 5-year initial term, with three 5-year
renewal period options. In December, 1993, the Bank exercised its
option under the original lease agreement to lease an additional
5,737 sq. ft. on the first floor of the building for use as a
branch banking office. The agreement provided for, among other
things, an annual lease payment of $67,200 (subject to certain
adjustments) or $11.71 per sq. ft. The lease agreement also
provides for a minimum increase of 3% per annum until termination.
The total lease payments made by the Bank to the partnership during
1995 amounted to $199,992 and $116,497 in 1994. Management of the
Company believes that the transactions with the partnership were on
substantially similar terms to those which could have been obtained
from unaffiliated parties.
Downtown Branch. In November 1993, the Bank acquired the
downtown office of Anchor Savings Bank, FSB ("Anchor") and assumed
the existing lease agreement between Anchor and David A. Barrett
and Eric S. Hoffman. The agreement provides for, among other
things, the lease of approximately 6,000 sq. ft. at an annual lease
payment of $120,000 or $20.00 per sq. ft. Also included in the
lease agreement are 20 parking spaces for customers and employee
use at an annual fee of $14,400, and a covered drive-through
banking facility. The term of the lease is for a period of five
years dating from February 7, 1992, and includes an option to renew
for two consecutive five-year renewal periods. The total lease
payments made by the Bank to David A. Barrett and Eric S. Hoffman
during 1995 amounted to $305,645, and in 1994 - $209,778. In
April, 1994, the Bank entered into a lease agreement with Messrs.
Barrett and Hoffman to lease 6,248 square feet on the second floor
of this building. The annual lease payment is $121,968 for a
period of five years. The lease also includes seven covered
parking places and three uncovered parking places located adjacent
to the premises with a lease payment of $110.00 and $90.00 per
month for the covered and uncovered places, respectively. The
lease agreement also provides for a minimum increase of 3% per
annum until termination. Management of the Company believes that
the transactions with these affiliated parties were on
substantially similar terms to those which could have been obtained
from unaffiliated parties.
There were no other business relationships with any director,
executive officer, their associates and members of the immediate
families of such directors and executive officers under which the
Company has made or proposes to make payments for property or
services in excess of $60,000 or 5% of the other entities'
consolidated gross revenues for the last full fiscal year.
Item 13. Exhibits and Reports on Form 8-K.
A. Financial Statements.
The following financial statements and accountants'
reports have been filed as Item 7 in Part II of this report:
Independent Auditors' Report
Consolidated Balance Sheets - December 31, 1995 and 1994
Consolidated Statements of Operations - years ended December 31,
1995 and 1994
Consolidated Statement of Changes in Stockholder's Equity - years
ended December 31, 1995 and 1994
Consolidated Statements of Cash Flow - years ended December 31,
1995 and 1994
B. Exhibits
Number Description of Exhibits Page
3 Articles of incorporation and bylaws (incorporated herein by
reference, as filed in the registrant's Registration Statement
on Form SB-2 filed September 15, 1994, File # 33-84100)
10.1 Incentive Stock Option Plan (incorporated herein by
reference, as filed in the registrant's Registration Statement
on Form SB-2 filed September 15, 1994, File # 33-84100)
10.2 Lease Agreements (incorporated herein by reference, as
filed in the registrant's Registration Statement on Form SB-2
filed September 15, 1994, File # 33-84100)
10.5-1 Employment contract dated December 28, 1995 by and
between the Bank and Robert W. Minnick, Jr.
10.5-2 Employment contract dated December 28, 1995 by and
between the Bank and Linda C. Alexionok.
10.5-3 Employment contract dated December 28, 1995 by and
between the Bank and Gary F. Linton.
10.5-4 Employment contract dated March 29, 1996 by and between
the Bank and Arthur P. Wimberley, Jr.
10.5-5 Employment contract dated June 10, 1996 by and between
the Bank and Jack D. Kane.
21 List of Subsidiaries (incorporated herein by reference, as
filed in the registrant's Registration Statement on Form SB-2
filed September 15, 1994, File # 33-84100)
27 Financial data schedule for electronic filers (submitted
only with EDGAR version)
C. Reports on Form 8-K
No reports on Form 8-K were filed during the fourth
quarter of the year ended December 31, 1995.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EVERGREEN BANCSHARES, INC.
(Registrant)
BY: /s/ Linda C. Alexionok
Linda C. Alexionok
Secretary
Date: November 25, 1996
In accordance with the Exchange Act, this report has been
signed by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated:
Signature Title Date
Principal Financial
Officer, Treasurer and
/s/ Vernon E. Sanders a Director November 25, 1996
Vernon E. Sanders
/s/ Anthony L. Bajoczky Chairman, November 25, 1996
Anthony L. Bajoczky Director
/s/ David A. Barrett Director November 25, 1996
David A. Barrett
/s/ Kenneth C. Fuqua Director November 26, 1996
Kenneth C. Fuqua
/s/ Frederic Q. Vroom, MD Director November 25, 1996
Frederic Q. Vroom, MD
EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
Consolidated Financial Statements for
the Years Ended December 31, 1995 and
1994 and Independent Auditors' Report
EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1995 AND 1994:
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statements of Shareholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Evergreen Bancshares, Inc. and Subsidiary
Tallahassee, Florida
We have audited the accompanying consolidated balance sheets of
Evergreen Bancshares, Inc. and Subsidiary, Guaranty National Bank
of Tallahassee (collectively, the "Company") as of December 31,
1995 and 1994, and the related consolidated statements of
operations, shareholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company at December 31, 1995 and 1994, and the results of their
operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements for the year
ended December 31, 1995 have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2
to the financial statements, the Company's recurring losses from
operations and failure of the Bank to meet certain capital ratios
required by federal banking agencies raise substantial doubt about
the Company's ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
As discussed in Note 1 to the consolidated financial statements,
effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities".
Deloitte & Touche, LLP
Jacksonville, Florida
March 8, 1996
EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS:
Cash and due from banks $ 6,909,701 $ 5,043,118
Federal funds sold 5,410,000
Total cash and cash equivalents 12,319,701 5,043,118
INVESTMENT SECURITIES:
Available for sale, at fair value 36,877,731 29,086,700
Held to maturity (fair value of $7,711,770 and
$26,910,980 at December 31, 1995 and 1994) 7,807,136 29,834,922
LOANS, net (allowance for loan losses of $506,635
and $219,963 at December 31, 1995 and 1994) 61,444,193 59,495,672
PREMISES AND EQUIPMENT, net 2,700,572 1,616,395
ACCRUED INTEREST RECEIVABLE 638,902 887,547
INTANGIBLE CORE DEPOSIT PREMIUMS, net 1,567,464 2,116,600
ORGANIZATION COSTS, net 146,732 211,625
DEFERRED INCOME TAXES 116,959 685,305
OTHER ASSETS 782,015 349,701
TOTAL $124,401,405 $129,327,585
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Non-interest bearing $ 9,050,682 $ 7,704,442
Interest bearing 108,141,681 97,652,637
Total deposits 117,192,363 105,357,079
FEDERAL FUNDS PURCHASED 1,500,000
OTHER BORROWED FUNDS 14,423,000
ACCRUED INTEREST PAYABLE 527,923 514,784
ACCRUED EXPENSES AND OTHER LIABILITIES 121,887 259,277
Total liabilities 117,842,173 122,054,140
COMMITMENTS AND CONTINGENCIES (Notes 2 and 8)
SHAREHOLDERS' EQUITY:
Common stock, par value $1; 1,250,000 shares
authorized; 947,294 and 894,426 shares issued
and outstanding at December 31, 1995 and 1994 947,294 894,426
Additional paid-in capital 8,529,089 7,653,062
Accumulated deficit (2,721,471) (173,066)
Unrealized losses on investment securities, net (195,680) (1,100,977)
Total shareholders' equity 6,559,232 7,273,445
TOTAL $124,401,405 $129,327,585
See notes to consolidated financial statements.
</TABLE>
<TABLE>
EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,1995 AND 1994
<CAPTION>
1995 1994
INTEREST INCOME:
<S> <C> <C>
Loans, including fees $ 5,466,272 $3,850,119
Investment securities:
Taxable 2,800,934 2,852,974
Tax-exempt 383,607 422,117
Federal funds sold 159,696 98,321
Other 81,130 38,482
Total interest income 8,891,639 7,262,013
INTEREST EXPENSE:
Deposits 5,369,087 3,487,328
Other borrowed funds 465,258 195,928
Federal funds purchased 17,397 68,661
Total interest expense 5,851,742 3,751,917
NET INTEREST INCOME BEFORE PROVISION FOR
LOAN LOSSES 3,039,897 3,510,096
PROVISION FOR LOAN LOSSES 735,000 155,474
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 2,304,897 3,354,622
OTHER INCOME:
Service charges on deposits 206,533 180,621
Commissions and fees on deposits and other 475,717 506,829
Gain on sale of investment securities 25,663
Total other income 682,250 713,113
OTHER EXPENSES:
Salaries and employee benefits 1,690,291 1,484,246
Occupancy expense 838,239 822,631
Data processing 658,689 292,734
Professional services 164,175 221,423
Amortization of core deposit premiums 239,116 325,228
Insurance 266,745 282,590
Stationery and supplies 123,273 106,566
Furniture and equipment expense 142,785 98,256
Postage and freight 87,100 86,366
Loss on sale of investment securities 62,705
Other operating expenses 1,232,945 715,280
Total other expenses 5,506,063 4,435,320
LOSS BEFORE INCOME TAXES (2,518,916) (367,585)
INCOME TAX PROVISION (BENEFIT) 29,489 (130,611)
NET LOSS $(2,548,405) $ (236,974)
NET LOSS PER COMMON SHARE $ (2.87) $ (0.27)
WEIGHTED AVERAGE COMMON SHARES AND COMMON
STOCK EQUIVALENTS OUTSTANDING 916,102 870,930
See notes to consolidated financial statements.
</TABLE>
<TABLE>
EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31,1995 AND 1994
<CAPTION>
Unrealized
Losses on
Additional Retained Investment
Common Stock Paid-in Earnings Securities
Shares Amount Capital (Deficit) Net
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 865,644 $865,644 $7,518,352 $ 194,967
Cumulative effect of change
in method of accounting for
investment securities, net of
deferred income taxes (Note 1) $ (82,730)
Issuance of common stock 28,782 28,782 134,710
Unrealized losses on investment
securities, net of deferred
income taxes (1,018,247)
Dividends (131,059)
Net loss (236,974)
BALANCE, DECEMBER 31, 1994 894,426 894,426 7,653,062 (173,066) (1,100,977)
Issuance of common stock 52,868 52,868 876,027
Unrealized gains on investment
securities, net of deferred
income taxes 905,297
Net loss (2,548,405)
BALANCE, DECEMBER 31, 1995 947,294 $947,294 $8,529,089 $(2,721,471) $ (195,680)
See notes to consolidated financial statements.
</TABLE>
<TABLE>
EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<CAPTION>
1995 1994
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (2,548,405) $ (236,974)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Provision for loan losses 735,000 155,474
Depreciation, amortization and accretion,
net 540,374 894,390
Deterred income taxes 78,027 (130,611)
Loss (gain) on sale of investment securities 62,705 (25,663)
Decrease (increase) in accrued interest
receivable 248,645 83,174
Increase in organizational costs (5,774) (24,284)
Increase in other assets (219,508) (549,052)
Increase (decrease) in accrued interest payable 13,139 125,149
Increase (decrease) in accrued expenses and
other liabilities (137,390) 164,867
Loss on sale of other real estate 65,449
Net cash provided by (used in)
operating activities (1,167,738) 456,470
INVESTING ACTIVITIES:
Proceeds from sales of investment securities
available for sale 24,770,807 8,725,381
Proceeds from maturities of investment
securities held to maturity 3,736,164 500,000
Purchases of investment securities
available for sale (12,987,195) (1,363,300)
Purchases of investment securities held
to maturity (355,000)
Proceeds from principal paydowns on
mortgage-backed securities, available
for sale 6,971,789
Net loan originations exceeding
principal repayments (3,106,988) (24,307,376)
Purchase of bank premises and equipment (908,046) (298,210)
Proceeds from sale of other real estate 98,400
Net cash (used in) provided by
investing activities 11,603,142 (10,126,716)
FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits,
NOW, money market and savings accounts 14,286,420 (6,329,830)
Net decrease in certificates of deposit (2,451,136) (3,521,748)
Net (decrease) increase in Federal funds
purchased (1,500,000) 1,500,000
(Repayments of) proceeds from other borrowings (14,423,000) 14,423,000
Dividends paid (131,059)
Proceeds from sale of common stock 928,895 163,492
Net cash provided by (used in)
financing activities (3,158,821) 6,103,855
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 7,276,583 (3,566,391)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 5,043,118 8,609,509
CASH AND CASH EQUIVALENTS, END OF YEAR $12,319,701 $ 5,043,118
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid $ 5,838,603 $ 3,626,768
Income taxes paid $ - $ -
NON-CASH INVESTING AND FINANCING ACTIVITIES:
INVESTMENT SECURITIES:
Investment securities transferred to
available for sale $20,841,536 $ 5,346,405
Unrealized loss on investment securities,
net of deferred income taxes of
$116,959 and $607,215 $ 195,680 $ 1,018,247
See notes to consolidated financial statements.
</TABLE>
EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - Evergreen Bancshares, Inc. (the "Holding Company") was
incorporated on March 12, 1990 as a bank holding company under the
Bank Holding Company Act of 1956, as amended. The Holding
Company's principal asset is the investment in its wholly-owned
subsidiary, Guaranty National Bank of Tallahassee (the "Bank").
The Bank was incorporated on April 16, 1986 and opened for business
on November 17, 1986, as a nationally chartered bank. The Holding
Company acquired the Bank on July 19, 1990 in a stock for stock
exchange.
The accounting and reporting policies of the Holding Company and
its wholly-owned subsidiary (collectively, the "Company") conform
to generally accepted accounting principles and to general
practices within the banking industry. The following summarizes
the more significant of the Company's accounting and reporting
policies and practices:
Consolidation - The consolidated financial statements include the
Holding Company and the Bank. All significant intercompany
balances and transactions have been eliminated.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents - Cash and cash equivalents include cash
on hand, amounts due from banks, Federal funds sold, and other
short-term, highly liquid interest bearing deposits and investment
securities with an original maturity of three months or less.
Generally, Federal funds are sold for one-day periods.
Investment Securities -Effective January 1, 1994, the Company
adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities",
("SFAS No. 115"), which addresses the accounting and reporting for
certain investments in debt and equity securities. This Statement
requires that only debt securities that the Company has the
positive intent and ability to hold to maturity be classified as
held to maturity and reported at amortized cost. Securities that
are bought and held principally for the purpose of selling them in
the near term are required to be classified as trading securities
and reported at fair value with unrealized gains and losses
reflected in the statement of income. All other securities are
required to be classified as available-for-sale securities and
reported at fair value with unrealized gains and losses net of
taxes reflected as a separate component of shareholders' equity
until realized.
The effect of adopting SFAS No. 115 effective January 1, 1994 was
to reduce to shareholders' equity by $82,730, net of deferred
income taxes.
Realized gains or losses on disposition of investment securities
are recorded on the trade date and are based on the net proceeds
and the adjusted carrying amount of the securities sold, using the
specific identification method.
During 1995, the Financial Accounting Standards Board issued a
Special Report, "A Guide to Implementation of Statement 115 on
Accounting for Certain Investment in Debt and Equity Securities",
which permitted financial institutions a one-time opportunity to
reassess the appropriateness of all investment security
classifications and to transfer securities classified as held to
maturity to available for sale without calling into question
management's intent to hold other investments to maturity in the
future. Accordingly, the Company transferred all of its U.S.
Treasury securities and municipal securities and a portion of its
mortgage-backed securities with an unamortized cost of $20,841,536
to available for sale in December 1995. The unrealized gain
related to this transfer was $264,875.
Loans - Loans are stated at the amount of unpaid principal, net of
unearned income, deferred loan fees and an allowance for loan
losses. Interest on certain installment loans is recognized as
income over the life of the loans using a method approximating the
interest method. Interest on loans is calculated primarily by
using the simple interest method on daily balances of the principal
amount outstanding.
Nonrefundable fees and certain direct costs associated with
originating or acquiring loans are recognized over the life of
related loans as an adjustment of yield.
Allowance for Loan Losses - The allowance for loan losses is
established through a provision for loan losses charged to expense.
Loans are charged against the allowance for loan losses when
management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will
be adequate to absorb losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of the
loans and prior loan loss experience. The evaluations take into
consideration such factors as changes in the nature and volume of
the loan portfolio, review of specific problem loans and current
economic conditions that may affect the borrowers' ability to
repay.
Impaired loans are loans for which it is probable that the creditor
will be unable to collect all amounts due according to the contract
terms of the loan agreement. Impairment losses are included in the
allowance for loan losses through a charge to the provision for
loan losses. Impairment losses are measured by the present value
of expected future cash flows discounted at the loan's effective
interest rate, or at either the loan's observable market price or
the fair value of collateral. Adjustments to impairment losses due
to changes in the fair value of impaired loan's underlying
collateral are included in the provision for loan losses. Upon
disposition of an impaired loan, any related valuation allowance is
reversed through a chargeoff to the allowance for loan losses.
Large groups of smaller homogeneous loans (residential real estate,
installment, and credit card loans) are collectively evaluated for
impairment. Nonaccrual large loans, troubled debt restructurings,
performing large loans and large loans more than 90 days past due
in which full payment of principal and interest is not expected are
individually evaluated for impairment.
Premises and Equipment - Premises and equipment are stated at cost
less accumulated depreciation. Depreciation and amortization are
computed principally on the straight-line method over the estimated
useful lives of 7 to 40 years.
Intangible Core Deposit Premiums- The Company paid premiums to
acquire certain deposits of another financial institution. Such
premiums are being amortized over the estimated lives of the
related deposits which is generally 8 years.
Organization Costs - Organization costs are being amortized on a
straight-line basis over 5 years.
Other Real Estate - Other real estate, acquired by foreclosure or
deed in lieu of foreclosure, is recorded at cost which is the
estimated fair value of the property at the time the loan is
foreclosed. Subsequent to foreclosure, these properties are
carried at the lower of cost or fair value. An allowance is
established for subsequent adjustments determined necessary based
upon the estimated fair value of the underlying collateral. Costs
relating to the development and improvement of property are
capitalized, whereas those relating to maintaining the property are
charged to expense.
The amounts the Bank could ultimately recover from other real
estate could differ from the amounts used in arriving at the net
carrying value of the assets because of the future market factors
beyond the Bank's control or changes in the Bank's strategy for
recovering its investment.
Income Taxes - The Holding Company and its subsidiary file
consolidated Federal and state income tax returns. Income tax
charges or credits are generally allocated to each member of the
consolidated group on the basis of their respective taxable income
or loss included in the consolidated income tax returns.
The Company uses an asset and liability approach to accounting for
income taxes. Under this method, deferred tax assets and
liabilities are recognized based on differences between financial
statement and tax basis of assets and liabilities using presently
enacted tax rates.
Reclassification - During 1995, the Company reclassified
approximately $310,000 from intangible core deposit premiums to
premises and equipment to record the fair market value of a branch
facility acquired in 1993.
2. REGULATORY MATTERS
Regulatory Capital Requirements - The Bank is subject to various
regulatory capital requirements administered by the federal banking
agencies. Under capital adequacy guidelines and the framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weightings and other factors.
Following are the quantitative measures of capital adequacy to
which the Bank is subject and the Bank's actual capital:
Required
Minimum
Actual Capital
Amount Ratio Ratio
As of December 31, 1995:
Tier 1 capital $5,039,103 7.90% 4.00%
Total capital 5,545,738 8.69 8.00
Leverge capital 5,039,103 4.08 4.00
The Agreement - On March 7, 1996, the Bank entered into a written
agreement with the Office of the Comptroller of the Currency (the
"Agreement"). The Agreement provides that the Bank's board of
directors (the "Board") will perform the following:
-- Develop a profit plan to improve and sustain the earnings of the
Bank;
-- Develop a three year capital program whereby the Bank will achieve
Tier 1 capital at least equal to 5% of adjusted total assets, Tier
1 capital at least equal to 8% of risk-weighted assets; and total
risk-based capital at least equal to 10% of risk-weighted assets by
August 31, 1996;
-- Employ an independent outside management consultant to review and
report on the current management and Board supervision of the Bank
and submit a plan of implementation;
-- Review the adequacy of the Bank's allowance for loan losses and
establish an effective program for the maintenance of an adequate
allowance for loan losses;
-- Revise and implement a written asset and liability management
policy;
-- Immediately take all steps necessary to correct each violation of
law, rule or regulation cited in any report of examination; and
-- Cause the Bank to refile amended Reports of Condition and Income
for the periods ending March 31, 1995, June 30, 1995 and September
30, 1995 and implement policies and procedures to ensure the
accuracy of all regulatory reports filed by the Bank.
The Agreement provides specific time limitations for the completion
of the above items, which begin to run from the effective date of
the Agreement. Such time requirements may be extended by the OCC
for good cause upon written application by the Board.
Management has taken measures to comply with the Agreement and
plans to continue these efforts. Failure to comply with the
requirements under the Agreement may result in the levy of civil
money penalties against the Bank and/or its directors, removal of
officers and directors, or institution of Cease-and-Desist
proceedings.
Going Concern - The accompanying consolidated financial statements
have been prepared on a going-concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. As shown in the financial statements,
the Company incurred net losses of $2,548,405 and $236,974 during
the years ended December 31, 1995 and 1994, respectively. As
discussed above, the Agreement requires specific actions to be
taken by the Board towards improving the financial condition and
operating results of the Bank. Based upon the results of
operations for 1995, unaudited results for the three month period
ending March 31, 1996, and management's budgeted results for the
remainder of 1996, it appears possible that the Bank will not be
able to maintain sufficient capital without the sale of a
significant portion of the Bank's assets/deposits or by raising
additional capital through subsequent offerings or private
placements.
These factors, among others, may indicate the Company will be
unable to continue as a going concern. The consolidated financial
statements do not include the adjustments, if any, that might have
been required had the outcome of the above-mentioned uncertainties
been known, nor any adjustments relating to the recoverability of
recorded asset amounts or the amounts of liabilities that may be
necessary should the Company be unable to continue as a going
concern. The Company's continuation as a going concern is
dependent on the Company's ability to comply with the terms of the
Agreement, meet prescribed capital requirements, and ultimately,
return to profitable operations.
Management's Plans - Management has undertaken plans to reduce
operating expenses, restructure the deposit and loan portfolios,
increase the loan-to-deposit ratio, and reduce the Bank's interest
rate risk by more closely matching the maturities of interest
bearing deposits with interest earning assets, in efforts to reduce
the Bank's net operating losses. Management is also considering
alternatives which include the sale of one or more branches and/or
the possibility of raising additional capital through private
placements.
New Legislation - Congress has enacted legislation that would
impose a one-time special assessment on savings associations in
order to recapitalize the Savings Association Insurance Fund
("SAIF"). The legislation would require SAIF member institutions
to pay a special assessment rate of approximately 86 basis points
per $100 of all assessable deposits as of a certain date. The FDIC
has exempted the Bank from payment of the special assessment.
However, the Bank will continue to pay higher semi-annual
assessments than those institutions which pay the special
assessment.
3. INVESTMENT SECURITIES
The amortized cost and fair values of investment securities are as
follows:
<TABLE>
<CAPTION>
December 31, 1995
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Held to maturity:
U.S. Government agency
<S> <C> <C> <C>
obligations $ 3,990,440 $ (50,491) $ 3,939,949
Mortgage-backed securities 3,816,696 (44,875) 3,771,821
Total debt securities
held to maturity 7,807,136 (95,366) 7,711,770
Available for sale:
U.S. Treasury securities 4,047,285 (9,905) 4,037,380
U.S. Government agency
obligations 15,536,752 (15,139) 15,521,613
Mortgage-backed securities 16,956,274 $ 9,952 (297,547) 16,668,679
Total debt securities
available for sale 36,540,311 9,952 (322,591) 36,227,672
Federal Reserve Bank stock 261,259 261,259
FNMA stock 388,800 388,800
Total investment securities,
available for sale 37,190,370 9,952 (322,591) 36,877,731
$44,997,506 $ 9,952 $(417,957) $44,589,501
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
Gross Gross
Amortized Unrealized Unrealized Fair
Costs Gains Losses Value
Held to maturity:
<S> <C> <C> <C>
U.S. Treasury securities $ 7,372,613 $(923,616) $ 6,448,997
U.S. Government agency
obligations 3,987,845 (380,206) 3,607,639
Mortgage-backed securities 10,012,330 (834,922) 9,177,408
Municipal securities 8,462,134 (785,198) 7,676,936
Total debt securities
held to maturity 29,834,922 (2,923,942) 26,910,980
Available for sale:
U.S. Treasury securities 4,083,507 (249,300) 3,834,207
U. S. Government agency
obligations 4,001,160 (267,051) 3,734,109
Mortgage-backed securities 21,798,360 $ 7,492 (1,248,668) 20,557,184
Total debt securities
available for sale 29,883,027 7,492 (1,765,019) 28,125,500
Federal Reserve Bank stock 240,000 240,000
FNMA stock 721,200 721,200
Total investment securities,
available for sale 30,844,227 7,492 (1,765,019) 29,086,700
$60,679,149 $7,492 $(4,688,961) $55,997,680
</TABLE>
The Federal Reserve Bank stock does not have a readily determinable
fair value because ownership in this investment is restricted and
they are not traded in a recognized market. Because of this, no
unrealized gains or losses, if any, on this investment are reported
as of December 31, 1995 and 1994.
The mortgage-backed securities held as of December 31, 1995 and
1994 are principally comprised of government agency guaranteed
securities.
The amortized cost and fair value of debt securities at December
31, 1995, by contractual maturity, are shown below. 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.
Amortized Fair
Cost Value
Held to maturity:
Due after one year through five years $ 3,990,440 $ 3,939,949
Mortgage-backed securities 3,816,696 3,771,821
$ 7,807,136 $ 7,711,770
Available for sale:
Due in one year or less $14,554,634 $14,542,818
Due after one year through five years 5,029,403 5,016,175
19,584,037 19,558,993
Mortgage-backed securities 16,956,274 16,668,679
$36,540,311 $36,227,672
Proceeds from the sales of investment securities available for sale
during 1995 and 1994 were $23,939,766 and $8,725,381, respectively.
Gross gains of $74,149 and $86,770 and gross losses of $137,178 and
$61,107 were realized on those sales occurring during 1995 and
1994, respectively.
At December 31, 1995 and 1994, the Bank had $2,094,380 and
$23,899,000 in investment securities pledged as collateral on the
Federal Home Loan Bank obligation and on public deposits,
respectively. The pledged investment securities at December 31,
1995 and 1994 are comprised of available for sale securities with
a carrying value of $2,094,380 and $8,121,000, respectively, and
held to maturity investments with a carrying value of $0 and
$15,778,000, respectively.
4. LOANS
Major classifications of loans at December 31, 1995 and 1994 are
summarized as follows:
1995 1994
Residential real estate $ 18,145,760 $ 15,906,308
Residential construction 702,645
Commercial real estate 4,401,149 3,485,256
Commercial - non-real estate 4,454,839 3,219,035
Consumer installment 29,342,809 32,274,190
VISA and Mastercard 4,561,935 4,554,108
61,609,137 59,438,897
Deferred loan costs 497,871 459,978
Unearned income (156,180) (183,240)
Allowance for loan losses (506,635) (219,963)
Loans, net $61,444,193 $59,495,672
The Bank's primary lending area is Northcentral Florida. Although
the Bank's loan portfolio is diversified, a significant portion of
its loans are collateralized by real estate. It is the Bank's
lending policy to collateralize real estate loans based upon
certain loan to appraisal value ratios.
Impaired loans on which the accrual of interest has either been
discontinued or reduced amounted to $110,837 and $63,249 as of
December 31, 1995 and 1994, respectively.
The activity in the allowance for loan losses is as follows:
1995 1994
Balance - Beginning of year $ 219,963 $ 238,975
Provision 735,000 155,474
Recoveries 30,017 8,485
Charge-offs (478,345) (182,971)
Balance - End of year $ 506,635 $ 219,963
The Company transacts business with directors and officers of the
Company in the ordinary course of business. Total loans
outstanding to these parties and their related interests at
December 31, 1995 and 1994 were approximately $2,612,436 and
$2,804,041, respectively.
5. PREMISES AND EQUIPMENT
Major classifications of premises and equipment at December 31,
1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Land $ 200,000 $ 200,000
Buildings 705,646 742,382
Furniture, equipment and automobiles 1,798,121 1,010,984
Leasehold improvements 582,081 108,755
3,285,848 2,062,121
Accumulated depreciation and amortization (585,276) (445,726)
Bank premises and equipment, net $2,700,572 $1,616,395
</TABLE>
Depreciation and amortization of $107,175 and $138,131 are included
in operating expenses for 1995 and 1994, respectively.
6. INTEREST BEARING DEPOSITS
The composition of interest bearing deposits at December 31, 1995
and 1994 are summarized below:
1995 1994
NOW accounts $ 8,621,737 $ 8,275,574
Money market accounts 8,765,853 9,345,183
Savings accounts 8,673,519 10,891,488
Time deposits of $100,000 or more 9,291,362 8,538,564
Other time deposits 72,789,210 60,601,828
7. INCOME TAXES
The income tax provisions for 1995 and 1994 were related to
deferred income taxes.
The Company's provision (benefit) for income taxes differs from the
amount computed by applying the statutory Federal income tax rate
to pretax income for the following reasons:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Tax benefit at Federal statutory rate of 34% $ (882,576) $ (124,979)
Decrease (increase) resulting from:
Net operating loss 912,065
State income tax (net of Federal income
tax benefit) (20,217)
Other - net 14,585
Total $ 29,489 $ (130,611)
</TABLE>
The tax effect of temporary differences that give rise to deferred
tax assets and deferred tax liabilities at December 31, 1995 and
1994, is presented below:
<TABLE>
<CAPTION>
1995 1994
Deferred tax assets:
<S> <C> <C>
Allowance for loan losses $ 113,514 $ 54,275
Net operating loss carryforward 1,414,717 450,640
Unrealized loss on investment securities 116,959 661,357
Other 9,411 4,291
Gross deferred tax assets 1,654,601 1,170,563
Valuation allowance for deferred tax assets (1,147,143) (123,781)
Net deferred tax assets 507,458 1,046,782
Deferred tax liabilities:
Intangible core deposit premium 266,098 242,860
Bank premises and equipment, net 124,401 118,617
Gross deferred tax liabilities 390,499 361,477
Net deferred tax asset $ 116,959 $ 685,305
</TABLE>
As of December 31, 1995, the Company has a tax net operating loss
carryforward of approximately $3,800,000 which is scheduled to
expire in years 2002 through 2007.
8. COMMITMENTS
In the normal course of business, the Bank makes various
commitments that are not presented in the accompanying consolidated
financial statements. At December 31, 1995 and 1994, the Bank had
unfunded loan commitments and lines of credit of approximately
$8,759,285 and $8,607,000 and standby letters of credit of
approximately $20,000 and $37,500. Unused credit card lines
included in these commitment balances were $6,918,285 and
$5,054,000, respectively. Such commitments all include exposure to
some credit loss in the event of nonperformance of the customer.
The Bank's credit policies and procedures for credit commitments
and financial guarantees are the same as those for extensions of
credit that are recorded on the consolidated balance sheet.
Management does not believe that these commitments present any
significant liquidity risk to the Bank.
The Company leases building space for branch locations under
various operating lease agreements. Several of the lease
agreements are with certain directors of the Bank and their
respective interests. The operating leases provide for annual
increases in base rent based on changes in the Consumer Price Index
(with a minimum of 3% in two significant related party leases), and
payment of common area maintenance charges. The leases all have
renewal options for aggregate periods ranging from 5 to 40 years.
Lease expense for the years ended December 31, 1995 and 1994 was
approximately $561,163 and $528,300, respectively. Future minimum
lease payments under the operating leases, as of December 31, 1995
are as follows:
Related
Party Other
Lease Lease
Payments Payments Total
1996 $ 514,697 $ 109,290 $ 623,987
1997 331,098 84,222 415,320
1998 240,105 82,248 322,353
1999 126,774 82,248 209,022
2000 36,525 82,248 118,773
Thereafter 222,712 222,712
$ 1,249,199 $ 662,968 $ 1,912,167
9. STOCK OPTIONS
The Company has a Management Stock Option and Non-Qualified Stock
Option Plans under which stock options have been granted to key
officers, directors and shareholders to purchase 74,500 shares of
Company common stock. These options are currently exercisable to
purchase common stock at $10 and $12 per share. The options
terminate upon cessation of employment or death or expiration of
option periods in 1996 through 1998. In 1995 and 1994, 4,433 and
26,435 options were exercised, respectively. Options for an
aggregate of 46,632 shares of common stock are exercisable at
December 31, 1995.
10. PARENT COMPANY
Presented below are condensed financial statements for Evergreen
Bancshares, Inc. (parent only):
Condensed Balance Sheets as of December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
Assets:
<S> <C> <C>
Cash and cash equivalents $ 3,437 $ 190,253
Investment in bank subsidiary 6,409,871 7,236,225
Organization costs, net 43,332 57,777
Deferred tax asset 154,839 112,925
Premises and equipment, net 134,409
Total $ 6,611,479 $ 7,731,589
Liabilities and Shareholders' Equity:
Due to subsidiary $ 458,144
Accrued expenses and other liabilities $ 52,247
Total liabilities 52,247 458,144
Shareholders' equity:
Common stock 947,294 894,426
Additional paid-in capital 8,529,089 7,653,062
Accumulated deficit (2,721,471) (173,066)
Unrealized losses on investment securities
net of income taxes (195,680) (1,100,977)
Total shareholders' equity 6,559,232 7,273,445
Total $ 6,611,479 $ 7,731,589
</TABLE>
<TABLE>
Condensed Statements of Operations and Retained Earnings (Deficit)
For the Years Ended December 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Equity in undistributed net loss of bank subsidiary $(2,431,638) $ (17,588)
Dividend income 80,000
Interest income 4,147 614
Amortization of organizational expenses (14,445) (14,431)
Salaries and employee benefits (7,500) (135,927)
Occupancy expense (107,092)
Other expenses (140,883) (103,228)
Income tax benefit 41,914 60,678
Net loss (2,548,405) (236,974)
Dividends paid (131,059)
Retained earnings (deficit), beginning of year (173,066) 194,967
Accumulated deficit, end of year $(2,721,471) $(173,066)
</TABLE>
<TABLE>
Condensed Statements of Cash Flows For the Years Ended
December 31, 1995 and 1994
<CAPTION>
1995 1994
Operating activities:
<S> <C> <C>
Net loss $(2,548,405) $(236,974)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Equity in undistributed net loss of subsidiary 2,431,638 17,588
Amortization of organizational expenses 14,445 14,431
Increase in deferred tax asset (41,914) (112,925)
(Decrease) increase in other liabilities (271,475) 458,144
Net cash (used in) provided by operating activities (415,711) 140,264
Investing activities:
Capital contributed to subsidiary (700,000)
Purchase of bank premises (134,409)
Net cash used in investing activities (700,000) (134,409)
Financing activities:
Proceeds from sale of common stock 928,895 163,492
Dividends paid (131,059)
Net cash provided by financing activities 928,895 32,433
(Decrease) increase in cash and cash equivalents (186,816) 38,288
Cash and cash equivalents, beginning of year 190,253 151,965
Cash and cash equivalents, end of year $ 3,437 $ 190,253
</TABLE>
11. EMPLOYEE BENEFIT PLAN
During 1994, the Bank established a 401(k) Savings Plan which
covers substantially all full-time employees of the Bank.
Employees may elect to defer and contribute between 1% and 15% of
their compensation to the Plan, subject to a maximum dollar amount
of $9,240 in 1995 and 1994.
The cost of administering the Plan totaled $1,900 and $1,207 for
the years ended December 31, 1995 and 1994, respectively.
12. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
In 1995, the Company adopted Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Value of Financial
Instruments" ("SFAS No. 107"). This statement addresses disclosure
of estimated fair values of certain financial instruments. The
estimated fair value amounts have been determined by the Company
using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily
required to interpret market data to develop the estimates of fair
value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize in
a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it is
practicable to estimate that value:
Cash and Cash Equivalents - For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.
Investment Securities - For investment securities, fair value
equals quoted market price, if available. If a quoted market price
is not available, fair value is estimated using quoted market
prices for similar securities.
Loans - The fair value of loans is estimated by discounting the
future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings and for the
same remaining maturities.
Deposit Liabilities - The fair value of deposit liabilities is
estimated using the rates currently offered for similar deposits of
similar remaining maturities. Such estimate of fair value is not
intended to represent market value, deposit based premium or
portfolio liquidation value, and only represents an estimate of
fair value based on interest rates as required by current financial
reporting requirements.
Commitments to Extend Credit - The fair value of commitments is
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. The fees for such investments are consistent with
fees currently charged by the Bank. Accordingly, disclosure of the
carrying amount and fair value of these balance sheet financial
statements have been omitted.
The carrying values and estimated fair values of the Company's
financial instruments as of December 31, 1995 are as follows:
Carrying Fair
Value Value
Financial assets:
Cash and cash equivalents $ 12,319,701 $ 12,319,701
Investment securities 45,019,162 44,589,501
Loans, net of unearned interest and
deferred loan fees 61,444,193 63,623,367
Financial liabilities:
Deposits $ 108,141,681 $ 109,236,365
13 SUBSEQUENT EVENTS (UNAUDITED)
In September, 1996, the Bank modified its capital and profitability
plan to recognize that it failed to attain the capital ratios
required by the Formal Agreement (as discussed in Note 2) and to
improve its profitability. The plan provides for the Bank to
monitor asset growth giving consideration to the favorable impact
limiting growth would have on the Bank's capital ratios; changing
the mix of assets and liabilities by emphasizing loans in favor of
investment securities and core deposits in favor of high cost
deposits; improving the net interest margin and non-interest income
and controlling overhead; and augmenting capital.
The Bank's primary plan to augment capital is through a private
placement of additional stock. The Company entered into a Common
Stock Purchase Agreement with certain of its directors dated
October 17, 1996, which contemplates sales of equity principally
through the sale of shares of Company's stock at $17.00 per share
at various times during the remainder of 1996 and 1997. This
additional capital will support loan and deposit growth and
portfolio restructurings. An additional provision added by
amendment dated November 14, 1996, is a capital injection feature
where the purchasing shareholders agreed to purchase additional
equity from the Company (for injection into the Bank) within thirty
days of any quarter end during 1997 that the Bank does not attain
certain prescribed capital ratios. These prescribed quarterly
capital ratios targets gradually increase over 1997 to the level of
the capital ratios required under the Formal Agreement.
On November 21, 1996, the OCC approved the Capital Plan, as
amended. If the Bank fails to successfully implement the Capital
Plan, it will be subject to significant restrictions on its
operations as provided by federal law and likely enforcement action
by the OCC.
EXHIBIT 10.5-1
Robert W. Minnick, Jr. Employment Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this the 28 day of December,
1995, among Guaranty National Bank of Tallahassee, ("GUARANTY") a
national banking association, and its sole shareholder EVERGREEN
BANCSHARES, INC., with its principal place of business located at
1706 West Tennessee Street, Tallahassee, Florida 32301 (hereinafter
referred to as the "Employer"), and Robert W. Minnick, Jr. whose
residential address is 1309 Leewood Drive, Tallahassee, Florida
32312 (hereinafter referred to as the "Employee").
Recitals
WHEREAS, Employer recognizes that Employee must be a key
factor in the success of Employer's business.
NOW THEREFORE, in consideration of the mutual covenants and
premises, and a signing bonus paid herewith in the amount of Thirty
Thousand Dollars ($30,000.00), the parties hereto agree as follows:
1. [Reserved]
2. Term of Employment.
2.1 Term. The Employer hereby employs the Employee and
the Employee hereby accepts employment with the Employer for an
initial term of five (5) years beginning on January 1, 1996, and
terminating on December 31, 2000.
2.2 Renewal. Unless either party notifies the other
before December 1, 1999 of an intent not to permit the renewal of
this agreement, this contract shall be deemed to be renewed on the
same terms as this agreement for an additional three year period to
December 31, 2003.
3. Duties of Employee.
3.1 General Duties. Employee will serve as President and
Chief Executive Officer of EVERGREEN and until relieved, CEO and
Acting President of GUARANTY, with duties and responsibilities
customary to those offices. During the Employment Term, Employee
will report solely to Employer's Board of Directors. Employees
shall do and perform all services or acts necessary or advisable to
manage and conduct the business of the Employer, subject always to
the policies set by the Board of Directors, and in accordance with
any and all governing rules and regulations of regulatory agencies.
In discharging the foregoing duties, Employee shall use such
prudence and due care as is customary for officers of institutions
similar to Employer, and shall act at all times in good faith and
with loyalty to Employer.
3.2 Devotion of Entire Time to Employer's Business. The
Employee shall devote his entire productive time, ability, and
attention to the business of the Employer during the Employment
Term. The Employee shall not directly or indirectly render any
services of a business, commercial, or professional nature to any
other persons or organization, whether for compensation or
otherwise, without the prior written consent of the Board of
Directors or the Joint Executive Planning Committee of the
Employer; provided, however, that the foregoing shall not preclude
reasonable participation as a member in community, civic, trade
association or similar organizations, or the pursuit of personal
investments which do not interfere with normal business activities
of Employer.
3.3 Uniqueness of Employee's Services. The Employee
hereby represents that the service to be performed by him under the
terms of this Agreement are of special, unique, unusual,
extraordinary, intellectual character which gives them a peculiar
value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. The Employee therefore
expressly agrees that the Employer, in addition to any other rights
or remedies which the Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent a breach of this
Agreement by the Employee.
4. Compensation of Employee.
4.1 Salary. As compensation for his services hereunder,
the Employee shall receive a salary of One Hundred Twenty Thousand
and No/100 Dollars ($120,000.00), per year, payable in accordance
with the general payroll practice of Employer. During each
succeeding year of the term hereof, Employee's salary shall be
increased by no less than three percent (3%) over the previous
year's salary. The Board of Directors may provide for a larger
annual increase at its discretion.
4.2 Bonus. Employee shall be entitled to additional
compensation in the form of an annual bonus measured as a
percentage of his salary described in Section 4.1, payable on or
before January 15 of each following year.
Employee will be compensated with the bonus in accordance with
the plan specified below, contingent on Employer's achievement of
a return on average asset of at least 1.0% (the "Threshold Level"),
if 1.0%, bonus is 1.0% of salary; if 1.1%, bonus is 2.0% of salary;
if 1.2%, bonus is 3.0% of salary; if 1.3%, bonus is 5.0% of salary;
if 1.35% or greater, bonus is 10.0% of salary. In addition to the
Threshold Level bonus, Employee will be compensated with a
Performance Area bonus in accordance with the plan specified below
(the "Performance Area". If Employer shall not achieve the
Threshold Level, Employee's entitlement to a bonus shall be
measured by his achievement for each year of the employment term in
each of three Performance Areas: (1) classified assets as a
percentage of total assets at year end ("Classified Level"): (2)
loans past due thirty (30) days or longer as a percentage of total
loans at year end ("Past Due Level"); (3a) growth in deposits
during the year over the deposits at the previous year ("Deposit
Growth"); and (3b) growth in loans during the year over loans at
the previous year end ("Loan Growth"). Deposit Growth and Loan
Growth shall constitute a single Performance Area and the
achievement of Loan Growth and Deposit Growth levels of achievement
shall be required to achieve the Growth Performance Area.
Achievement for each Performance Area shall be determined by
reference to the criteria outlined below. Achievement in a
Performance Area shall entitle Employee to a bonus for that
achievement of five percent (5%) of his salary.
LEVEL OF ACHIEVEMENT
PERFORMANCE AREA TO ATTAIN BONUS
(1) Classified Level Less than or equal to 1.0%
(2) Past Due Level Less than or equal to 2.0%
(3) Growth
Deposit Growth Greater than or equal to 5%
Loan Growth Greater than or equal to 8%
4.3 Automobile. Employee shall be entitled to, at no cost
to Employee, an automobile customary to persons in his position in
the industry, all of the expenses of which shall be paid by
Employer. Such automobile shall be purchased by Employer and
provided to Employee no later than one (1) month after the date of
this Agreement. No later than two (2) years after the date of this
Agreement, Employer shall purchase for Employee's use a new
replacement vehicle.
4.4 Employment Benefit Program. Employee shall be
entitled to participate in any plan of the Employer relating to
group medical insurance coverage or retirement benefits that the
Employer may adopt for the benefit of its executive employees.
Employer shall pay one hundred percent (100%) of the premiums for
Employee's medical insurance coverage.
4.5 Stock Options. Thirty (30) days after execution of
this agreement, Evergreen shall grant stock options on 10,000
shares of stock of Evergreen under Evergreen's Incentive Stock
Option Plan, as amended.
4.6 Club Memberships. Employer shall reimburse Employee's
club membership expenses for one country club and one social club
of the Employee's choosing.
5. Termination of Employment.
5.1 By Employer. This Agreement may be terminated by
decision of three-fourths of the Board of Directors of the Employer
upon thirty (30) days' notice of termination, but only for just
cause upon thirty (30) days notice of termination.
5.2 Termination for Cause. For the purpose of this
Agreement, "cause" shall mean termination for personal dishonesty,
incompetence, repeated or flagrant misconduct, breach of fiduciary
duty involving personal profit, consistent failure to perform
stated duties, repeated or flagrant violation of any law, rule or
regulation applicable to Employee's occupation (other than traffic
violations or similar offenses), or of a cease-and-desist order
issued by the office of the Comptroller of the Currency which
requires the replacement of senior management.
5.3 [Reserved]
5.4 Termination by Employee. Employee may terminate his
employment with Employer at any time by giving ninety (90) days'
written notice of such termination to Employer in the manner
provided below for the giving of notices. Upon such termination,
all salary and other benefits shall cease on the date of
termination. Such termination shall not prejudice any remedy which
Employer may have either at law, in equity, or under this
Agreement.
6. Remedies in the Event of Breach.
6.1 Damages for Breach of Contract. In the event of a
breach of this Agreement by the Employer, the Employee may recover
from the Employer ninety percent (90%) of the remaining amount owed
him as salary for all periods remaining under this Agreement if
paid in one lump sum, and the entire remaining amount if paid as
and when due (the election of which shall be at the discretion of
the Employer). Any termination of Employee not for cause shall be
conclusively deemed to be a breach of this Agreement by the
Employer.
6.2 Change in Control. Notwithstanding any other
provision of this Agreement, in the event of a change in control of
Employer, either party shall, within three (3) months after the
consummation of such change in control, have the right to terminate
this Agreement. For purposes of this paragraph, a "change in
control" of Employer shall occur at any time that the members of
the Board of Directors extant of the date of this Agreement,
members of their immediate family, any entity controlled by such
director or a member of his immediate family, any trust under which
the beneficiaries are one or more of such directors or one or more
members of their immediate family, and the Employee (hereinafter,
the "Present Control Group") shall fail to own in the aggregate at
least (i) 51% of the outstanding voting shares of Employer or a
company which owns 100% of the stock of Employer (the "Parent") or
(ii) 35% of such shares of Employer or the Parent so long as no
other shareholder (or "group" within the meaning of Regulation 13D
of the Securities and Exchange Commission or persons "acting in
concert" as defined in or interpreted under 12 C.F.R. Part 5.50) of
Employer's or the Parent's voting shares holds more than 10% of
such voting shares. If, as a result of such a change in control or
at any other time (other than being relieved as CEO and Acting
President of GUARANTY), Employee's position, duties and/or
responsibilities materially change Employee shall have the right to
terminate this Agreement and shall have no further responsibility
hereunder. Any termination by Employee under this paragraph shall
be treated as a termination other than for cause. If termination
under this paragraph shall occur with more than one year remaining
in the term of employment, as provided by Section 2 of this
Agreement, such termination shall be treated as a breach of this
Agreement by the Employer with exactly one year remaining in the
term of employment and Employee shall continue to be compensated as
provided under Section 6.1 for only one year after the date of
termination.
7. Confidentiality. Employee agrees to hold in the
strictest confidence any information and material which is related
to the business of Employer, or which is designated as proprietary
and confidential by the Employer. Employee further agrees that, at
no time during the course of the Agreement by and between the
Employer and Employee, shall Employee divulge any proprietary,
confidential, secret, or other privileged information concerning
Employer, its customers, finances, costs, pricing, profits, sales,
salaries, internal operations or workings, trade secrets,
consultants, research sources, products, processes, know-how,
marketing methods, future plans or other business of the Employer,
or other trade information of any kind whatsoever acquired by
Employee while associated with Employer. Employee further agrees
that all such information shall be deemed acquired and held by
Employee in a fiduciary capacity and for the benefit of the
Employer.
8. Non-Compete. Employee further agrees that he will not,
directly or indirectly, solicit or attempt to solicit business or
patronage from any customer of Employer nor any person,
corporation, or other such entity for other than Employer, for such
business and services now engaged in by Employer. Employee will
not, during the course of his employment or business relationship
with Employer, and for a period of two (2) years following the
termination of such business relationship, or so long as Employer
or its related entities continue to carry on a like business,
service contracts with and accounts from, or work in the business
of banking for any entity other than Employer for the purpose of
providing services now engaged in by Employer.
The parties hereto agree that the scope of this Agreement is
the entire of the international marketplace serviced by Employer or
its related entities at that time of termination of employment and
the entire national marketplace for banking services by Employer.
Employee agrees that, at no time during Employee's employ with
Employer, Employee will not engage in any business, calling or
enterprise which is or may be contrary to the welfare, interest, or
benefit of the Employer.
9. General Provisions.
9.1 Notices. Any notices to be given hereunder by either
party to the other party may be effected by personal delivery in
writing or by mail, registered or certified, postage prepaid, with
return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph of
this Agreement, but each party may change his address by written
notice in accordance with this paragraph. Notices delivered
personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of the second day
following deposit in the United States Mail.
9.2 Entire Agreement. This Agreement supersedes any and
all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of the Employee by
the Employer and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever. Each party to this Agreement acknowledges that no
representations. inducements. promises. or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing signed by the
party to be charged.
9.3 Partial Invalidity. If any provision in this
Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remaining provisions shall
nevertheless continue in full force without being impaired or
invalidated in any way.
9.4 Heirs and Assigns. This Agreement shall inure the
benefit of, and be enforceable against, the heirs and assigns of
the parties hereto.
9.5 Interpretation. This Agreement has been prepared
jointly by the parties and it is agreed that it shall not be
interpreted against either of the parties as matter of
interpretation of contracts.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day first above written.
EMPLOYEE:
/s/ Robert W. Minnick, Jr.
ROBERT W. MINNICK, JR.
EMPLOYER:
GUARANTY NATIONAL BANK OF
TALLAHASSEE
BY: /s/ Linda C. Alexionok BY: /s/ David A. Barrett
Its Senior Vice President Its Vice Chairman
EMPLOYER:
EVERGREEN BANCSHARES, INC.
BY: /s/ David A. Barrett
Its Chairman
EXHIBIT 10.5-2
Linda C. Alexionok Employment Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this the 28 day of December, 1995,
between Guaranty National Bank of Tallahassee, a national banking
association, with principal place of business located at 1706 West
Tennessee Street, Tallahassee, Florida, 32301 (hereinafter referred
to as the "Employer"), and Linda Alexionok [Senior Vice President],
whose residential address is 2212 Woodlawn, Tallahassee, Florida
32303 (hereinafter referred to as the "Employee") and specially
joined by Evergreen Bancshares, Inc., with same address as
Employer, the sole shareholder of Employer ("Evergreen").
Recitals
WHEREAS, Employer recognize that Employee is a key factor in
the success of Employer's business.
NOW, THEREFORE, in consideration of the mutual covenants and
premises, and a signing bonus paid herewith in the amount of Twelve
Thousand Five Hundred Dollars ($12,500.00) the parties hereto agree
as follows:
1. [Reserved]
2. Term of Employment.
2.1 Term. The Employer hereby employs the Employee and
the Employee hereby accepts employment with the Employer for an
initial term of five (5) years beginning on January 1, 1996, and
terminating on December 31, 2000.
2.2 Renewal. Unless either party notifies the other
before December 1, 1999 of an intent not to permit the renewal of
this agreement, this contract shall be deemed to be renewed on the
same terms as this agreement for an additional three (3) year
period to December 31, 2003.
3. Duties of Employee.
3.1 General Duties. Employee will serve as Senior Vice
President/Operations of Employer, with the duties and
responsibilities customary to that office. During the Employment
Term, Employee will report to Employer's Board of Directors or to
the Chief Executive Officer. Employees shall do and perform all
services or acts necessary or advisable to manage and conduct the
business of the Employer, subject always to the policies set by the
Board of Directors, and in accordance with any and all governing
rules and regulations of regulatory agencies. In discharging the
foregoing duties, Employee shall use such prudence and due care as
is customary for officers of institutions similar to Employer, and
shall act at all times in good faith and with loyalty to Employer.
3.2 Devotion of Entire Time to Employer's Business. The
Employee shall devote his entire productive time, ability, and
attention to the business of the Employer during the Employment
Term. The Employee shall not directly or indirectly render any
services of a business, commercial, or professional nature to any
other persons or organization, whether for compensation or
otherwise, without the prior written consent of the Board of
Directors or the Joint Executive Planning Committee of the
Employer; provided, however, that the foregoing shall not preclude
reasonable participation as a member in community, civic, trade
association or similar organizations, or the pursuit of personal
investments which do not interfere with normal business activities
of Employer.
3.3 Uniqueness of Employee's Services. The Employee
hereby represents that the service to be performed by him under the
terms of this Agreement are of a special, unique, unusual,
extraordinary, intellectual character which gives them a peculiar
value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. The Employee therefore
expressly agrees that the Employer, in addition to any other rights
or remedies which the Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent a breach of this
Agreement by the Employee.
4. Compensation of Employee.
4.1 Salary. As compensation for his services hereunder,
the Employee shall receive a salary of Seventy Five Thousand
Dollars ($75,000.00), per year, payable in accordance with the
general payroll practice of Employer. During each succeeding year
of the term hereof, Employee's salary shall be increased by no less
than three percent (3%) over the previous year's salary. The Board
of Directors may provide for a larger annual increase at its
discretion.
4.2 Bonus. Employee shall be entitled to additional
compensation in the form of an annual bonus measured as a
percentage of her salary described in Section 4.1, payable on or
before January 15 of each following year.
Employee will be compensated with the bonus in accordance with
the plan specified below (the "Threshold level"). If Employer
shall not achieve the Threshold Level, Employee shall not be
eligible for any bonus.
Achievement in the Performance Area below shall entitle
Employee to a bonus for that achievement of the percentage of the
salary indicated:
THRESHOLD LEVEL TO
PERFORMANCE AREA ATTAIN APPLICABLE BONUS BONUS
Return on Assets 1.00 to 1.34 5% of salary
1.35 and over 10% of salary
4.3 Automobile. Employee shall be entitled to, at no cost
to
Employee, an automobile customary to persons in his position in the
industry, all of the expenses of which shall be paid by Employer.
Such automobile shall be purchased by Employer and provided to
Employee no later than one (1) month after the date of this
Agreement.
4.4 Employment Benefit Program. Employee shall be
entitled to participate in any plan of the Employer relating to
group medical insurance coverage or retirement benefits that the
Employer may adopt for the benefit of its executive employees.
Employer shall pay one hundred percent (100%) of the premiums for
Employee's medical insurance coverage.
5.0 Termination of Employment.
5.1 By Employer. This Agreement may be terminated by
written decision of three-fourths of the Board of Directors of the
Employer or Chief Executive Officer and a majority of the Board of
Directors , but only for just cause upon thirty (30) days' notice
of termination.
5.2 Termination for Cause. For the purpose of this
Agreement, "cause" shall mean termination for personal dishonesty,
professional incompetence, repeated or flagrant misconduct, breach
of fiduciary duty involving personal profit, consistent failure to
perform stated duties, repeated or flagrant violation of any law,
rule or regulation applicable to Employee's occupation (other than
traffic violations or similar offenses), or of a cease-and-desist
order issued by the office of the Comptroller of the Currency which
requires the replacement of senior management.
5.3 [Reserved]
5.4 Termination by Employee. Employee may terminate his
employment with Employer at any time by giving ninety (90) days'
written notice of such termination to Employer in the manner
provided below for the giving of notices. Upon such termination,
all salary and other benefits shall cease on the date of
termination. Such termination shall not prejudice any remedy which
either party may have either at law, in equity, or under this
Agreement.
6. Remedies in the Event of Breach.
6.1 Damages for Breach of Contract. In the event of a
breach of this Agreement by the Employer, the Employee may recover
from the Employer ninety percent (90%) of the remaining amount owed
him as salary for all periods remaining under this Agreement if
paid in one lump sum, and the entire remaining amount if paid as
and when due (the election of which shall be at the discretion of
the Employer). Any termination of Employee not for cause shall be
conclusively deemed to be a breach of this Agreement by the
Employer.
6.2 Change in Control. Notwithstanding any other
provision of this Agreement, in the event of a change in control of
Employer, Employee, within three (3) months after the consummation
of such change in control, have the right to terminate this
Agreement. For purposes of this paragraph, a "change in control"
of Employer shall occur at any time that the members of the Board
of Directors extant of the date of this Agreement, members of their
immediate family, any entity controlled by such director or a
member of his immediate family, any trust under which the
beneficiaries are one or more of such directors or one or more
members of their immediate family, and the Employee (hereinafter,
the "Present Control Group") shall fail to own in the aggregate at
least (i) 51% of the outstanding voting shares of Employer or a
company which owns 100% of the stock of Employer (the "Parent") or
(ii) 35% of such shares of Employer or the Parent so long as no
other shareholder (or "group" within the meaning of Regulation 13D
of the Securities and Exchange Commission or persons "acting in
concert" as defined in or interpreted under 12 C.F.R. Part 5.50) of
Employer's or the Parent's voting shares holds more than 10% of
such voting shares. If, as a result of such a change in control or
at any other time, Employee shall have the right to terminate this
Agreement, and shall have no further responsibility hereunder. Any
termination by Employee under this paragraph shall be treated as a
termination other than for cause. If termination under this
paragraph shall occur with more than one year remaining in the term
of employment, as provided by Section 2 of this Agreement, such
termination shall be treated as a breach of this Agreement by the
Employer with exactly one year remaining in the term of employment
and Employee shall continue to be compensated as provided under
Section 6.1 for only one year after the date of termination.
7. Confidentiality. Employee agrees to hold in the
strictest confidence any information and material which is related
to the business of Employer, or which is designated as proprietary
and confidential by the Employer. Employee further agrees that, at
no time during the course of the Agreement by and between the
Employer and Employee, shall Employee divulge any proprietary,
confidential, secret, or other privileged information concerning
Employer, its customers, finances, costs, pricing, profits, sales,
salaries, internal operations or workings, trade secrets,
consultants, research sources, products, processes, know-how,
marketing methods, future plans or other business of the Employer,
or other trade information of any kind whatsoever acquired by
Employee while associated with Employer. Employee further agrees
that all such information shall be deemed acquired and held by
Employee in a fiduciary capacity and for the benefit of the
Employer.
8. Non-Compete. Employee further agrees that he will not,
directly or indirectly, solicit or attempt to solicit business or
patronage from any customer of Employer nor any person,
corporation, or other such entity for other than Employer, for such
business and services now engaged in by Employer. Employee will
not, during the course of his employment or business relationship
with Employer, and for a period of two (2) years following the
termination of such business relationship, or so long as Employer
or its related entities continue to carry on a like business,
service contracts with and accounts from, or work in the business
of banking for any entity other than Employer for the purpose of
providing services now engaged in by Employer.
The parties hereto agree that the scope of this Agreement is
the entire of the international marketplace serviced by Employer or
its related entities at that time of termination of employment and
the entire national marketplace for banking services by Employer.
Employee agrees that, at no time during the Employee's employ
with Employer, Employee will not engage in any business, calling or
enterprise which is or may not be contrary to the welfare,
interest, or benefit of the Employer.
9. General Provisions.
9.1 Notices. Any notices to be given hereunder by either
party to the other party may be effected by personal delivery in
writing or by mail, registered or certified, postage prepaid, with
return receipt requested. Mailed notices shall be addressed to
the parties at the addresses appearing in the introductory
paragraph of this Agreement, but each party may change his address
by written notice in accordance with this paragraph. Notices
delivered personally shall be deemed communicated as of actual
receipt; mailed notices shall be deemed communicated as of the
second day following deposit in the United States Mail.
9.2 Entire Agreement. This Agreement supersedes any and
all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of the Employee by
the Employer and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing signed by the
party to be charged.
9.3 Partial Invalidity. If any provision in this
Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remaining provisions shall
nevertheless continue in full force without being impaired or
invalidated in any way.
9.4 Heirs and Assigns. This Agreement shall inure the
benefit of, and be enforceable against, the heirs and assigns of
the parties hereto.
9.5 Interpretation. This Agreement has been prepared
jointly by the parties and it is agreed that it shall not be
interpreted against either of the parties as matter of
interpretation of contracts.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day first above written.
EMPLOYEE:
/s/ Linda C. Alexionok
LINDA ALEXIONOK
EMPLOYER:
GUARANTY NATIONAL BANK
BY: /s/ David A. Barrett BY: /s/ Robert W. Minnick, Jr.
Its Vice Chairman Its CEO
By execution hereof by its duly authorized officers, Evergreen
joins in the foregoing Agreement and undertakes that to the extent
applicable, Evergreen will be bound thereby and will do and perform
all acts and things referred to or provided to be done by
Evergreen.
EVERGREEN BANCSHARES, INC.
BY: /s/ Robert W. Minnick, Jr.
Its President
EXHIBIT 10.5-3
Gary F. Linton Employment Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this the 28 day of December,
1995, between Guaranty National Bank of Tallahassee, a national
banking association, with principal place of business located at
1706 West Tennessee Street, Tallahassee, Florida 32301 (hereinafter
referred to as the "Employer"), and Gary F. Linton [Senior Vice
President], whose residential address is 4001 McLaughlin Drive,
Tallahassee, Florida 32308 (hereinafter referred to as the
"Employee") and specially joined by Evergreen Bancshares, Inc.,
with same address as Employer, the sole shareholder of Employer
("Evergreen").
Recitals
WHEREAS, Employer recognizes that Employee must be a key
factor in the success of Employer's business.
NOW THEREFORE, in consideration of the mutual covenants and
premises, and a signing bonus paid herewith in the amount of Twelve
Thousand Five Hundred Dollars ($12,500.00) the parties hereto agree
as follows:
1. [Reserved]
2. Term of Employment.
2.1 Term. The Employer hereby employs the Employee and
the Employee hereby accepts employment with the Employer for an
initial term of five (5) years beginning on January 1, 1996, and
terminating on December 31, 2000.
2.2 Renewal. Unless either party notifies the other
before December 1, 1999 of an intent not to permit the renewal of
this agreement, this contract shall be deemed to be renewed on the
same terms as this agreement for an additional three year period to
December 31, 2003.
3. Duties of Employee.
3.1 General Duties. Employee will serve as Senior Vice
President/Loans of Employer, with the duties and responsibilities
customary to that office. During the Employment Term, Employee
will report solely to Employer's Board of Directors or to the Chief
Executive Officer. Employees shall do and perform all services or
acts necessary or advisable to manage and conduct the business of
the Employer, subject always to the policies set by the Board of
Directors, and in accordance with any and all governing rules and
regulations of regulatory agencies. In discharging the foregoing
duties, Employee shall use such prudence and due care as is
customary for officers of institutions similar to Employer, and
shall act at all times in good faith and with loyalty to Employer.
3.2 Devotion of Entire Time to Employer's Business. The
Employee shall devote his entire productive time, ability, and
attention to the business of the Employer during the Employment
Term. The Employee shall not directly or indirectly render any
services of a business, commercial, or professional nature to any
other persons or organization, whether for compensation or
otherwise, without the prior written consent of the Board of
Directors or the Joint Executive Planning Committee of the
Employer; provided, however, that the foregoing shall not preclude
reasonable participation as a member in community, civic, trade
association or similar organizations, or the pursuit of personal
investments which do not interfere with normal business activities
of Employer.
3.3 Uniqueness of Employee's Services. The Employee
hereby represents that the service to be performed by him under the
terms of this Agreement are of special, unique, unusual,
extraordinary, intellectual character which gives them a peculiar
value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. The Employee therefore
expressly agrees that the Employer, in addition to any other rights
or remedies which the Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent a breach of this
Agreement by the Employee.
4. Compensation of Employee.
4.1 Salary. As compensation for his services hereunder,
the Employee shall receive a salary of Seventy Five Thousand
Dollars ($75,000.00), per year, payable in accordance with the
general payroll practice of Employer. During each succeeding year
of the term hereof, Employee's salary shall be increased by no less
than three percent (3%) over the previous year's salary. The Board
of Directors may provide for a larger annual increase at its
discretion.
4.2 Bonus. Employee shall be entitled to additional
compensation in the form of an annual bonus measured as a
percentage of his salary described in Section 4. 1, payable on or
before January 15 of each following year, Employee will be
compensated with the bonus in accordance with the plan specified
below, contingent on Employer's achievement of a return on average
asset of at least 1.0% (the "Threshold Level") with a bonus of 1.0%
of salary; if 1.1%, bonus is 2.0% of salary; if 1.2%, bonus is 3.0%
of salary; if 1.3, bonus is 5.0% of salary. In addition to the
"Threshold Level" bonus, Employee will be compensated with a
Performance Area Bonus in accordance with the plan specified below
(the "Performance Area"). If Employer shall not achieve the
Threshold Level, Employee's entitlement to a bonus shall be
measured by his achievement for each year of the employment term in
two Performance Areas: (1) classified assets as a percentage of
total assets at year end ("Classified Level"); and (2) loans past
due thirty (30) days or longer as a percentage of total loans at
year end ("Past Due Level").
Achievement for each Performance Area shall be determined by
reference to the criteria outlined below. Achievement in a
Performance Area shall entitle Employee to a bonus for that
achievement of five percent (5%) of his salary.
LEVEL OF ACHIEVEMENT
PERFORMANCE AREA TO ATTAIN BONUS
(1) Classified Level Less than or equal to 1.0%
(2) Past Due Level Less than or equal to 2. 0%
4.3 Automobile. Employee shall be entitled to, at no cost
to Employee, an automobile customary to persons in his position in
the industry, all of the expenses of which shall be paid by
Employer. Such automobile shall be purchased by Employer and
provided to Employee no later than one (1) month after the date of
this Agreement.
4.4 Employment Benefit Program. Employee shall be
entitled to participate in any plan of the Employer relating to
group medical insurance coverage or retirement benefits that the
Employer may adopt for the benefit of its executive employees.
Employer shall pay one hundred percent (100%) of the premiums for
Employee's medical insurance coverage.
5. Termination of Employment.
5.1 By Employer. This Agreement may be terminated by
decision of three-fourths of the Board of Directors of the Employer
or Chief Executive Officer and a majority of the Board of
Directors, but only for just cause upon thirty (30) days' notice of
termination.
5.2 Termination for Cause. For the purpose of this
Agreement, "cause" shall mean termination for personal dishonesty,
incompetence, repeated or flagrant misconduct, breach of fiduciary
duty involving personal profit, consistent failure to perform
stated duties, repeated or flagrant violation of any law, rule or
regulation applicable to Employee's occupation (other than traffic
violations or similar offenses), or of a cease-and-desist order
issued by the office of the Comptroller of the Currency which
requires the replacement of senior management.
5.3 [Reserved]
5.4 Termination by Employee. Employee may terminate his
employment with Employer at any time by giving ninety (90) days'
written notice of such termination to Employer in the manner
provided below for the giving of notices. Upon such termination,
all salary and other benefits shall cease on the date of
termination. Such termination shall not prejudice any remedy which
Employer may have either at law, in equity, or under this
Agreement.
6. Remedies in the Event of Breach.
6.1 Damages for Breach of Contract. In the event of a
breach of this Agreement by the Employer, the Employee may recover
from the Employer ninety percent (90%) of the remaining amount owed
him as salary for all periods remaining under this Agreement if
paid in one lump sum, and the entire remaining amount if paid as
and when due (the election of which shall be at the discretion of
the Employer). Any termination of Employee not for cause shall be
conclusively deemed to be a breach of this Agreement by the
Employer.
6.2 Change in Control. Notwithstanding any other
provision of this Agreement, in the event of a change in control of
Employer, either party shall, within three (3) months after the
consummation of such change in control, have the right to terminate
this Agreement. For purposes of this paragraph, a "change in
control" of Employer shall occur at any time that the members of
the Board of Directors extant of the date of this Agreement,
members of their immediate family, any entity controlled by such
director or a member of his immediate family, any trust under which
the beneficiaries are one or more of such directors or one or more
members of their immediate family, and the Employee (hereinafter,
the "Present Control Group") shall fail to own in the aggregate at
least (i) 51% of the outstanding voting shares of Employer or a
company which owns 100% of the stock of Employer (the "Parent") or
(ii) 35% of such shares of Employer or the Parent so long as no
other shareholder (or "group" within the meaning of Regulation 13D
of the Securities and Exchange Commission or persons "acting in
concert" as defined in or interpreted under 12 C.F.R. Part 5.50) of
Employer's or the Parent's voting shares holds more than 10% of
such voting shares. If, as a result of such a change in control or
at any other time, Employee's position, duties and/or
responsibilities materially change, Employee shall have the right
to terminate this Agreement and shall have no further
responsibility hereunder. Any termination by Employee under this
paragraph shall be treated as a termination other than for cause.
If termination under this paragraph shall occur with more than one
year remaining in the term of employment, as provided by Section 2
of this Agreement, such termination shall be treated as a breach of
this Agreement by the Employer with exactly one year remaining in
the term of employment and Employee shall continue to be
compensated as provided under section 6.1 for only one year after
the date of termination.
7. Confidentiality. Employee agrees to hold in the
strictest confidence any information and material which is related
to the business of Employer, or which is designated as proprietary
and confidential by the Employer. Employee further agrees that, at
no time during the course of the Agreement by and between the
Employer and Employee, shall Employee divulge any proprietary,
confidential, secret, or other privileged information concerning
Employer, its customers, finances, costs, pricing, profits, sales,
salaries, internal operations or workings, trade secrets,
consultants, research sources, products, processes, know-how,
marketing methods, future plans or other business of the Employer,
or other trade information of any kind whatsoever acquired by
Employee while associated with Employer. Employee further agrees
that all such information shall be deemed acquired and held by
Employee in a fiduciary capacity and for the benefit of the
Employer.
8. Non-Compete. Employee further agrees that he will not,
directly or indirectly, solicit or attempt to solicit business or
patronage from any customer of Employer nor any person,
corporation, or other such entity for other than Employer, for such
business and services now engaged in by Employer. Employee will
not, during the course of his employment or business relationship
with Employer, and for a period of two (2) years following the
termination of such business relationship, or so long as Employer
or its related entities continue to carry on a like business,
service contracts with and accounts from, or work in the business
of banking for any entity other than Employer for the purpose of
providing services now engaged in by Employer.
The parties hereto agree that the scope of this Agreement is
the entire of the international marketplace serviced by Employer or
its related entities at that time of termination of employment and
the entire national marketplace for banking services by Employer.
Employee agrees that, at no time during Employee's employ with
Employer, Employee will not engage in any business, calling or
enterprise which is or may be contrary to the welfare, interest, or
benefit of the Employer.
9. General Provisions.
9.1 Notices. Any notices to be given hereunder by either
party to the other party may be effected by personal delivery in
writing or by mail, registered or certified, postage prepaid, with
return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph of
this Agreement, but each party may change his address by written
notice in accordance with this paragraph. Notices delivered
personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of the second day
following deposit in the United States Mail.
9.2 Entire Agreement. This Agreement supersedes any and
all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of the Employee by
the Employer and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing signed by the
party to be charged.
9.3 Partial Invalidity. If any provision in this
Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remaining provisions shall
nevertheless continue in full force without being impaired or
invalidated in any way.
9.4 Heirs and Assigns. This Agreement shall inure the
benefit of, and be enforceable against, the heirs and assigns of
the parties hereto.
9.5 Interpretation. This Agreement has been prepared
jointly by the parties and it is agreed that it shall not be
interpreted against either of the parties as matter of
interpretation of contracts.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day first above written.
EMPLOYEE:
/s/ Gary F. Linton
GARY F. LINTON
EMPLOYER:
GUARANTY NATIONAL BANK
BY: /s/ David A. Barrett BY: /s/ Robert W. Minnick, Jr.
Its Vice Chairman Its CEO
By execution hereof by its duly authorized officers, Evergreen
joins in the foregoing Agreement and undertakes that to the extent
applicable, Evergreen will be bound thereby and will do and perform
all acts and things referred to or provided to be done by
Evergreen.
EVERGREEN BANCSHARES, INC.
BY: /s/ Robert W. Minnick, Jr.
Its President
EXHIBIT 10.5-4
Arthur P. Wimberley, Jr. Employment Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this the 29th day of March, 1996,
between Guaranty National Bank of Tallahassee, a national banking
association, with its principal place of business located at 1706
West Tennessee Street, Tallahassee, Florida 32301 (hereinafter
referred to as the "Employer"), and Arthur P. Wimberley, Jr.
[Executive Vice President/Senior Loan Officer], whose residential
address is 4359 Millwood Lane, Tallahassee, Florida 32312
(hereinafter referred to as the "Employee") and specially joined by
Evergreen Bancshares, Inc., with same address as Employer, the
sole shareholder of Employer ("Evergreen").
Recitals
WHEREAS, the parties recognize that Employee must be a key factor
in the success of Employer's business now and in the future for the
parties to benefit from this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
premises, the parties hereto agree as follows:
1. [Reserved]
2. Term of Employment.
2.1 Term. From the date hereof, Employee will serve as
Executive Vice President/Senior Loan Officer of Employer, with the
duties and responsibilities of the senior lender and commercial
loan officer of Employer. Employee will report to Employer's Chief
Executive Officer (CEO). After January 1, 1998, subject to CEO
recommendation, Board of Directors approval and approval of the
Office of the Comptroller of the Currency, Employee may serve as
President and Chief Executive Officer of Employer, with the duties
and responsibilities customary to that office. The Employer hereby
employs the Employee and the Employee hereby accepts employment
with the Employer for an initial term of five (5) years beginning
on April 1, 1996, and terminating on March 31, 2001. Employee
recognizes that until OCC approval of his employment as
contemplated herein, he shall serve hereunder in an "acting"
capacity; if the OCC should decline to approve or endorse
employee's employment as contemplated hereunder this Agreement
shall be void and neither party shall have further rights
hereunder.
2.2 Renewal. Unless either party notifies the other
before March 1, 2001 of an intent not to permit the renewal of this
agreement, this contract shall be deemed to be renewed an the same
terms as this agreement for an additional three (3) year period to
March 31, 2004.
3. Duties of Employee.
3.1 General Duties. Employee will serve as Executive Vice
President/Senior Loan Officer of Employer, with the duties and
responsibilities customary to that office. Any material reduction
in Employee's duties without the consent of the Employee shall be
deemed a breach of the Employment Agreement by the Employer.
During the Employment Term, Employee will report solely to
Employer's Board of Directors or to the Chief Executive Officer.
Employee shall do and perform all services or acts necessary or
advisable to fulfill the duties and responsibilities of the
Executive Vice President/Senior Loan Officer of the Employer,
subject always to the policies set by the Board of Directors and
the directions of the CEO and in accordance with any and all
governing rules and regulations of regulatory agencies. In
discharging the foregoing duties, Employee shall use such prudence
and due care as is customary for officers of institutions similar
to Employer, and shall act at all times in good faith and with
loyalty to Employer.
3.2 Devotion of Entire Time to Employer's Business. The
Employee shall devote his entire productive time, ability, and
attention to the business of the Employer during the Employment
Term. The Employee shall not directly or indirectly render any
services of a business. commercial. or professional nature to any
other persons or organization, whether for compensation or
otherwise, without the prior written consent of the Board of
Directors or the Joint Executive Planning Committee of the
Employer; provided, however, that the foregoing shall not preclude
reasonable participation as a member in community, civic, trade
association or similar organizations, or the pursuit of personal
investments including ownership and management of income producing
property which do not interfere with normal business activities of
Employer.
3.3 Uniqueness of Employee's Services. The Employee
hereby represents that the service to be performed by him under the
terms of this Agreement are of special, unique, unusual,
extraordinary, intellectual character which gives them a peculiar
value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. The Employee therefore
expressly agrees that the Employer, in addition to any other rights
or remedies which the Employer may possess, shall be entitled to
injunctive and other equitable relief, without bond, to prevent a
breach of this Agreement by the Employee.
4. Compensation of Employee.
4.1 Salary. As compensation for his services hereunder,
the Employee shall receive a salary of One Hundred Thousand Dollars
($100,000.00), per year, payable in accordance with the general
payroll practice of Employer. During each succeeding year of the
term hereof, Employee's salary shall be increased by no less than
three percent (3%) over the previous year's salary. The Board of
Directors may provide for a larger annual increase at its
discretion.
4.2 Bonus. Employee shall be entitled to additional
compensation in the form of an annual bonus measured as a
percentage of his salary described in Section 4.1, payable on or
before January 15 of each following year.
Employee will be compensated with the bonus in accordance with
the plan specified below, contingent on Employer's achievement of
a return on average assets of at least 1.0% (the "Threshold
Level"). If Employer shall not achieve the Threshold Level,
Employee shall not be eligible for any bonus. The Threshold Level
should not be applicable until calendar year 1997. If Employer
shall achieve the Threshold Level, Employee's entitlement shall be
measured by his achievement for each year of the employment term in
three Performance areas: (1) classified assets as a percentage of
total loans at year end ("Classified Level"); (2) loans past due
thirty (30) days or longer as a percentage of total loans at year
end ("Past Due Level"); (3a) growth in MMDA and transaction
deposits during the year over the deposits at the previous year end
("Deposit Growth); and (3b) growth in loans during the year over
loans at the previous year end ("Loan Growth"). Deposit Growth and
Loan Growth shall constitute a single Performance area and the
achievement of Loan Growth and Deposit Growth levels of achievement
shall be required to achieve the Growth Performance area.
Achievement for each Performance area shall be determined by
reference to the criteria outlined below which may be adjusted by
the Board of Directors of Employer annually. Achievement in
Performance areas 1 and 2 shall entitle Employee to a bonus for
that achievement of five percent (5%) of his salary, and
achievement in the Growth Performance area entities Employee to a
bonus for that achievement of ten percent (10%) of his salary.
LEVEL OF ACHIEVEMENT TO
PERFORMANCE AREA ATTAIN APPLICABLE BONUS
(1) Classified Level Less than or equal to 3.0%
(annual average and at year end)
(2) Past Due Level Less than or equal to 1.5%
(annual average and at year end)
(3) Growth
Deposit Growth Greater than or equal to 10%, annually
Loan Growth Greater than or equal to 14%, annually
4.3 Automobile. Employee shall be entitled to, at no cost
to Employee, an automobile customary to persons in his position in
the industry, all of the expenses of which shall be paid by
Employer. Such automobile shall be purchased by Employer and
provided to Employee no later than one (1) month after the date of
this Agreement. No later than two (2) years after the date of this
agreement, Employer shall purchase for Employee's use a replacement
vehicle.
4.4 Employment Benefit Program. Employee shall be
entitled to participate in any plan of the Employer relating to
group medical insurance coverage or retirement benefits that the
Employer may adopt for the benefit of its executive employees.
Employer shall pay one hundred percent (100%) of the premiums for
Employee's medical insurance coverage.
4.5 Stock Options. Evergreen shall grant stock options on
10,000 shares of stock of Evergreen under Evergreen's Incentive
Stock Option Plan, as amended (which expires in 1996) at an
exercise price of $14.25 per share. In future years, Employee
shall be granted options under a future incentive stock option
plan, as awarded by the Board of Directors, taking into account at
least Employee's position with the Bank and Employee's performance,
Employee acknowledges that any future incentive stock option plan
is subject, among other things, to shareholder approval.
4.6 Club Membership. Employer shall reimburse Employee's
club membership expenses for one country club and one social club
of the Employee's choosing.
5. Termination of Employment.
5.1 By Employer. This Agreement may be terminated by
decision of three-fourths of the Board of Directors of the
Employer. but only for just cause upon thirty (30) days' notice of
termination.
5.2 Termination for Cause. For the purpose of this
Agreement, "cause" shall mean termination for personal dishonesty,
professional incompetence, a breach of this Agreement, repeated or
flagrant misconduct, breach of fiduciary duty involving personal
profit, repeated failure to perform stated duties, repeated or
flagrant violation of any law, rule or regulation applicable to
Employee's occupation (other than traffic violations or similar
offenses), violation of any law, rule,, or regulation regarding
moral turpitude or financial impropriety, or of a cease-and-desist
order issued by the Office of the Comptroller of the Currency which
requires the replacement of any senior management.
5.3 [Reserved]
5.4 Termination by Employee. Employee may terminate his
employment with Employer at any time by giving ninety (90) days'
written notice of such termination to Employer in the manner
provided below for the giving of notices. Upon such termination,
all salary and other benefits, other than pursuant to section 4.5
above, shall cease on the date of termination; provided, however,
if Employee terminates his employment, because of Employer's breach
of this Agreement. (after notice from Employee to Employer and a
reasonable time to cure with no resolution], Employee may seek
damages as determined by a court of competent jurisdiction which
may include Employee's rights to continued employee benefits, if
any. Such termination shall not prejudice any remedy which
Employer may have either at law, in equity, or under this
Agreement.
6. Remedies in the Event of Breach.
6.1 Damages for Breach of Contract. In the event of a
breach of this Agreement by the Employer, as severance pay, the
Employee may recover from the Employer ninety percent (90%) of the
remaining amount owed him as salary for all periods remaining
under this Agreement if paid in one lump sum, or the entire
remaining amount if paid as and when due (the election of which
shall be at the discretion of the Employer). Any termination of
Employee not for cause shall be conclusively deemed to be a breach
of this Agreement by the Employer. If Employee is terminated not
for cause, of if Employee terminates employment because Employer
has breached this Agreement, after notice from Employee to Employer
and a reasonable time to cure such breach with no resolution,
Employee will not be subject to the Non-Compete provisions of this
Agreement contained in Section 6.4 below.
6.2 Change in Control. Notwithstanding any other provision of
this Agreement, in the event of a change in control of Employer,
either party shall, within three (3) months after written notice
from Employer to Employee or actual notice by Employee, whichever
first occurs, of the consummation of such change in control, have
the right to terminate this Agreement. For purposes of this
paragraph, a change in control" of Employer shall occur at any time
that the members of the Board of Directors extant of the date of
this Agreement, members of their immediate family, any entity
controlled by such director or a member of his immediate family,
any trust under which the beneficiaries are one or more of such
directors or one or more members of their immediate family, and the
Employee (hereinafter, the "Present Control Group") shall fail to
own in the aggregate at least (i) 51% of the outstanding voting
shares of Employer or a company which owns 100% of the stock of
Employer (the "Parent") or (ii) 35% of such shares of Employer or
the Parent so long as no other shareholder (or "group" within the
meaning of Regulation 13D of the Securities and Exchange Commission
or persons "acting in concert" as defined in or interpreted under
12 C.F.R. Part 5.50) of Employer's or the Parent's voting shares
holds more than 10% of such voting shares. If, as a result of such
a change in control or at any other time after a change in control,
Employee's position, duties and/or responsibilities materially
change, Employee shall have the right to terminate this Agreement
and shall have no further responsibility hereunder. Any
termination by Employee under this paragraph shall be treated as a
termination other than for cause. If termination under this
paragraph shall occur with more than one year remaining in the term
of employment, as provided by Section 2 of this Agreement, such
termination shall be treated as a breach of this Agreement by the
Employer with exactly two (2) years remaining in the term of
employment and Employee shall continue to be compensated as
provided under Section 6.1 for only two (2) years after the date of
termination as Employee's sole compensation for the termination.
If termination under this paragraph shall occur with less than one
(1) year remaining in the term of employment, as provided by
Section 2 of this Agreement, such termination shall be treated as
a breach of this Agreement by the Employer and Employee shall
continue to be compensated as provided by the Employer, and
Employee shall continue to be compensated as provided under Section
6.1 for only the remaining term of the Agreement as Employee's sole
compensation for the termination.
6.3 Confidentiality. Employee agrees to hold in the
strictest confidence any information and material which is related
to the business of Employer, or which is designated as proprietary
and confidential by the Employer. Employee further agrees that, at
no time during the course of the Agreement by and between the
Employer and Employee, shall Employee divulge any proprietary,
confidential, secret, or other privileged information concerning
Employer, its customers, finances, costs, pricing, profits, sales,
salaries, internal operations or workings, trade secrets,
consultants, research sources, products, processes, know-how,
marketing methods, future plans or other business of the Employer,
or other trade information of any kind whatsoever acquired by
Employee while associated with Employer. Employee further agrees
that all such information shall be deemed acquired and held by
Employee in a fiduciary capacity and for the benefit of the
Employer.
6.4 Non-Compete. Employee further agrees that he will
not, directly or indirectly, solicit or attempt to solicit business
or patronage from any customer of Employer nor any person,
corporation, or other such entity for other than Employer, for such
business and services now engaged in by Employer. Employee will
not, during the course of his employment or business relationship
with Employer, and for a period of two (2) years following the
termination of such business relationship, or so long as Employer
or its related entities continue to carry on a like business,
service contracts with and accounts from, or work in the business
of banking for any entity other than Employer for the purpose of
providing services now engaged in by Employer, whichever time
period shall lapse first.
The parties hereto agree that the scope of this Agreement is
the entire of the international marketplace serviced by Employer or
its related entities at that time of termination of employment and
the entire national marketplace for banking services by Employer.
Employee agrees that, at no time during Employee's employ with
Employer, Employee will not engage in any business, calling or
enterprise which is or may be contrary to the welfare, interest, or
benefit of the Employer.
The parties stipulate that a breach of this paragraph will
cause irreparable harm or injury to Employer and that such a breach
is a material breach of this Agreement, enforceable by injunction
without bond.
7. General Provisions.
7.1 Notices. Any notices to be given hereunder by either
party to the other party may be effected by personal delivery in
writing or by mail, registered or certified, postage prepaid, with
return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph of
this Agreement, but each party may change his address by written
notice in accordance with this paragraph. Notices delivered
personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of the second day
following deposit in the United States Mail.
7.2 Entire Agreement. This Agreement supersedes any and
all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of the Employee by
the Employer and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing signed by the
party to be charged.
7.3 Partial Invalidity. If any provision in this Agreement
is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in any
way.
7.4 Heirs and Assigns. This Agreement shall inure the
benefit of, and be enforceable against, the heirs and assigns of
the parties hereto.
7.5 Interpretation. This Agreement has been prepared
jointly by the parties and it is agreed that it shall not be
interpreted against either of the parties as matter of
interpretation of contracts.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day first above written.
EMPLOYEE:
/s/ Arthur P. Wimberley, Jr.
ARTHUR P. WIMBERLEY, JR.
EMPLOYER:
GUARANTY NATIONAL BANK
By: /s/ Robert W. Minnick, Jr.
Its CEO
By execution hereof by its duly authorized officers, Evergreen
joins in the foregoing Agreement and undertakes that to the extent
applicable, Evergreen will be bound thereby and will do and perform
all acts and things referred to or provided to be done by
Evergreen.
/s/ David A. Barrett
EVERGREEN BANCSHARES, INC.
BY: David A. Barrett
Its Chairman
EXHIBIT 10.5-5
Jack D. Kane Employment Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this the 10 day of June, 1996,
between GUARANTY NATIONAL BANK, a national banking association,
with its principal place of business located at 1706 West Tennessee
Street, Tallahassee, Florida, 32301 (hereinafter referred to as the
"Employer"), and Jack D. Kane, whose residential address is 6328
Pickney Hill Rd., Tallahassee, Florida 32312 (hereinafter referred
to as the "Employee") and specially joined by Evergreen Bancshares,
Inc., with same address as Employer, the sole shareholder of
Employer ("Evergreen").
Recitals
WHEREAS, the parties recognize that Employee is a key factor
in the success of Employer's business now and in the future.
NOW, THEREFORE, in consideration of the mutual covenants and
premises, the parties hereto agree as follows:
1. [Reserved]
2. Term of Employment.
2.1 Term. The Employer hereby employs the Employee and
the Employee hereby accepts employment with the Employer for an
initial term of five (5) years beginning on June 11, 1996, and
terminating on June 10, 2001.
2.2 Renewal. Unless either party notifies the other
before March 1, 2001 of an intent not to permit the renewal of this
agreement, this contract shall be deemed to be renewed on the same
terms as this agreement for an additional three (3) year period to
March 31, 2004.
3. Duties of Employee.
3.1 General Duties. Employee will serve as Senior Vice
President/Commercial Loan Officer of Employer, with the duties and
responsibilities customary to that office. Any material reduction
in Employee's duties, without the consent of the Employee, will be
deemed a breach of the Employment Agreement by the Employer.
During the Employment Term, Employee will report to Employer's
Board of Directors, the Chief Executive Officer and the Executive
Vice President. Employee will do and perform all services or acts
necessary or advisable to fulfill the duties and responsibilities
of a Senior Vice President/Commercial Loan Officer, subject always
to the policies set by the Board of Directors, and in accordance
with any and all governing rules and regulations of regulatory
agencies. In discharging the foregoing duties, Employee will use
such prudence and due care as is customary for officers of
institutions similar to Employer, and will act at all times in good
faith and with loyalty to Employer.
3.2 Devotion of Entire Time to Employer's Business. The
Employee shall devote his entire productive time, ability, and
attention during normal business hours to the business of the
Employer during the Employment Term. The Employee will not
directly or indirectly render any services of a business,
commercial, or professional nature to any other persons or
organization, whether for compensation or otherwise, without the
prior written consent of the Board of Directors or the Joint
Executive Planning Committee of the Employer; provided, however,
that the foregoing will not preclude reasonable participation as a
member in community, civic, trade association or similar
organizations, or the pursuit of personal investments which do not
interfere with normal business activities of Employer.
3.3 Uniqueness of Employee's Services. The Employee
hereby represents that the service to be performed by him under the
terms of this Agreement are of a special, unique, unusual,
extraordinary, intellectual character which gives them a peculiar
value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. The Employee therefore
expressly agrees that the Employer, in addition to any other rights
or remedies which the Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent a breach of this
Agreement by the Employee.
4. Compensation of Employee.
4.1 Salary. As compensation for his services hereunder,
the Employee shall receive an initial annual base salary of
Seventy-Five Thousand Dollars ($75,000.00), payable in accordance
with the general payroll practice of Employer. Beginning and
including January 1, 1997, and every twelve months thereafter,
Employee's annual base salary shall be increased by no less than
three percent (3%) over the previous annual base salary. The Board
of Directors may provide for a larger annual increase at its
discretion.
4.2 Bonus. Employee shall be entitled to additional
compensation in the form of an origination bonus, payable within
thirty (30) days of the end of each calendar quarter, and annual
bonuses, as set forth herein, payable on or before January 15 of
each following year.
a. Origination Bonus. The Employee will be compensated
with a bonus of two-tenths of one percent (0.20%) percent of total
loans originated by Employee, closed and booked, not including any
of which shall be either more than 30 days past due or classified
as substandard or below, as of each quarter end. Effective for
1998, this bonus shall be contingent upon achievement of certain
performance level thresholds which shall include the retention of
Employee-produced loans, and Employer's return on average assets.
In 1997, the Employer and Employee shall define these required
performance levels.
b. Retention Bonus. Effective for 1998, Employer and
Employee shall define the required performance threshold and
appropriate amount of bonus to reflect the payment of a quarterly
bonus for the retention of loans originated by Employee.
c. Annual Bonuses. Employee shall be entitled to annual
bonuses measured by achievement for each year of the employment
term in three additional performance areas: (1) classified assets
of Employee's Loan Portfolio as a percentage of total assets at
year end ("Classified Level"); (2) loans produced by Employer past
due thirty (30) days or longer as a percentage of total Employer
loans at year end ("Past Due Level"); (3a) growth in MMDA and
transaction deposits during the year over the deposits at the
previous year end ("Deposit Growth"); (3b) growth in loans during
the year over loans at the previous year end ("Loan Growth").
Achievement of performance areas 1 and 2 shall entitle Employee to
a bonus of 5% of his salary and achievement of performance areas 3a
and 3b shall entitle Employee to an additional bonus of 10% of his
Salary. Deposit Growth and Loan Growth shall constitute a single
Performance area and the achievement of Loan Growth and Deposit
Growth Levels of achievement shall be required to achieve the
Growth Performance area. Achievement for each Performance area
shall be determined by reference to the criteria outlined below
which may be adjusted by the Board of Directors of Employer
annually.
LEVEL OF ACHIEVEMENT TO
PERFORMANCE AREA ATTAIN APPLICABLE BONUS
1. Classified Level of Less than or equal to 3.0%
Employer's Loan (annual average and at year
Portfolio end)
2. Past Due Level of Less than or equal to 2.0%
Employer's entire Loan (annual average and at year
Portfolio end)
3. Growth of Employer
Deposit Growth Greater than or equal to 10%,
annually
Loan Growth Greater than or equal to 14%,
annually
Entitlement to either of the annual bonuses is conditioned
upon the following:
a. Employer's return on average assets of one percent
(1.0%) at year end.
b. Employee's achievement of Tier One Capital of at least
5% of adjusted total assets, Tier One Capital of at least 8% of
risk-weighted assets and Total Risk-Based Capital of at least 10%
of risk weighted assets as August 31, 1996, and maintenance of
these levels thereafter
4.3 Automobile. Upon employment and every two years
thereafter, Employee shall be entitled to, at no cost to Employee,
a new automobile customary to persons in his position in the
industry, all of the expenses of which shall be paid by Employer.
Such automobile shall be purchased by Employer and provided to
Employee no later than one (1) month after the date of this
Agreement.
4.4 Employment Benefit Program. Employee shall be
entitled to participate in any plan of the Employer relating to
group medical insurance coverage or retirement benefits including
401K plan that the Employer may adopt for the benefit of its
executive employees. Employer shall pay one hundred percent (100%)
of the premiums for Employee's medical insurance coverage.
4.5 Stock Options. Evergreen shall grant stock options on
10,000 shares of stock of Evergreen under Evergreen's Incentive
Stock Option Plan, as amended (which expires in 1996) at an
exercise price of $14.25 per share. In future years, Employee
shall be granted options under a future incentive stock option
plan, as awarded by the Board of Directors, taking into account at
least Employee's position with the Bank and Employee's performance.
Employee acknowledges that any future incentive stock option plan
is subject, among other things, to shareholder approval.
5.0 Termination of Employment.
5.1 By Employer. This Agreement may be terminated by
written decision of three-fourths of the Board of Directors of the
Employer, but only for just cause upon thirty (30) days' notice of
termination.
5.2 Termination for Cause. For the purpose of this
Agreement, "just cause" shall mean termination for personal
dishonesty, professional incompetence, repeated or flagrant
misconduct, breach of fiduciary duty involving personal profit,
consistent failure to perform stated duties, repeated or flagrant
violation of any law, rule or regulation applicable to Employee's
occupation (other than traffic violations or similar offenses), or
of a cease-and-desist order issued by the office of the Comptroller
of the Currency.
5.3 [Reserved]
5.4 Termination by Employee. Employee may terminate his
employment with Employer at any time by giving ninety (90) days'
written notice of such termination to Employer in the manner
provided below for the giving of notices. Upon such termination,
all salary and other benefits, other than pursuant to section 4.5
above, shall cease on the date of termination; provided however, if
Employee terminates his employment, because of Employer's breach of
this Agreement, (after notice from Employee to Employer and a
reasonable time to cure without such resolution), Employee may seek
damages as determined by a court of competent jurisdiction, which
may include Employee's right to continued employment benefits, if
any. Such termination shall not prejudice any remedy which either
party may have either at law, in equity, or under this Agreement.
6. Remedies in the Event of Breach.
6.1 Damages for Breach of Contract. In the event of a
breach of this Agreement by the Employer, as severance pay, the
Employee may recover from the Employer ninety percent (90%) of the
remaining amount owed him as salary for all periods remaining under
this Agreement if paid in one lump sum, and the entire remaining
amount if paid as and when due (the election of which shall be at
the discretion of the Employer). Any termination of Employee not
for cause shall be conclusively deemed to be a breach of this
Agreement by the Employer.
6.2 Change in Control. Notwithstanding any other
provision of this Agreement, in the event of a change in control of
Employer, Employee, within three (3) months after written notice
from Employer to Employee or actual notice by Employee, whichever
comes first, of the consummation of such change in control, have
the right to terminate this Agreement. For purposes of this
paragraph, a "change in control" of Employer shall occur at any
time that the members of the Board of Directors extant of the date
of this Agreement, members of their immediate family, any entity
controlled by such director or a member of his immediate family,
any trust under which the beneficiaries are one or more of such
directors or one or more members of their immediate family, and the
Employee (hereinafter, the "Present Control Group") shall fail to
own in the aggregate at least (I) 51% of the outstanding voting
shares of Employer or a company which owns 100% of the stock of
Employer (the "Parent") or (ii) 35% of such shares of Employer or
the Parent so long as no other shareholder (or "group") within the
meaning of Regulation 13D of the Securities and Exchange Commission
or persons "acting in concert" as defined in or interpreted under
12 C.F.R. Part 5.50) of Employer's or the Parent's voting shares
holds more than 10% of such voting shares. If, as a result of such
a change in control, Employee shall have the right to terminate
this Agreement, and shall have no further responsibility hereunder.
Any termination by Employee under this paragraph shall be treated
as a termination other than for cause. If as a result of change of
control, termination under this paragraph shall occur with more
than one year remaining in the term of employment, as provided by
Section 2 of this Agreement, such termination shall be treated as
a breach of this Agreement by the Employer with exactly one (1)
year remaining in the term of employment and Employee shall
continue to be compensated as provided under Section 6.1 for only
one (1) year after the date of termination. If termination under
this paragraph shall occur with less than one year remaining in the
term of employment, as provided by Section 2 of this Agreement,
such termination shall be treated as a breach of this Agreement by
the Employer, and Employee shall be compensated for only the
remaining term of this Agreement, as Employee's sole compensation
for the termination.
7. Confidentiality. Employee agrees to hold in the
strictest confidence any information and material which is related
to the business of Employer, or which is designated as proprietary
and confidential by the Employer. Employee further agrees that, at
no time during the course of the Agreement by and between the
Employer and Employee, shall Employee divulge any proprietary,
confidential, secret, or other privileged information concerning
Employer, its customers, finances, costs, pricing, profits, sales,
salaries, internal operations or workings, trade secrets,
consultants, research sources, products, processes, know-how,
marketing methods, future plans or other business of the Employer,
or other trade information of any kind whatsoever acquired by
Employee while associated with Employer. Employee further agrees
that all such information shall be deemed acquired and held by
Employee in a fiduciary capacity and for the benefit of the
Employer.
8. Non-Compete. Except for termination of employment
under sections 5.1 or 6.2 hereof or expiration of this employment
agreement, Employee further agrees that he will not, directly or
indirectly, solicit or attempt to solicit business or patronage
from any customer of Employer nor any person, corporation, or other
such entity for other than Employer, for such commercial banking
business and services now engaged in by Employer, during the course
of his employment or business relationship with Employer, and for
a period of two (2) years following the termination of such
business relationship, or so long as Employer or its related
entities continue to carry on a like business, service contracts
with and accounts from, or work in the business of commercial
banking for any entity other than Employer for the purpose of
providing services now engaged in by Employer. Notwithstanding
anything to the contrary otherwise contained herein, after
termination of employment the noncompete provisions hereof shall
not apply, so long as Employee does not become an employee or agent
of a bank or savings and loan association.
The parties hereto agree that the scope of this Agreement is
the entire of the international marketplace serviced by Employer or
its related entities at that time of termination of employment and
the entire national marketplace for banking services by Employer.
Employee agrees that, at no time during the Employee's employ
with Employer, Employee will not engage in any business, calling or
enterprise which is or may not be contrary to the welfare,
interest, or benefit of the Employer.
9. General Provisions.
9.1 Notices. Any notices to be given hereunder by either
party to the other party may be effected by personal delivery in
writing or by mail, registered or certified, postage prepaid, with
return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph of
this Agreement, but each party may change his address by written
notice in accordance with this paragraph. Notices delivered
personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of the second day
following deposit in the United States Mail.
9.2 Entire Agreement. This Agreement supersedes any and
all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of the Employee by
the Employer and contains all of the covenants and agreements
between the parties with respect to such employment in any manner
whatsoever. Each party to this Agreement acknowledges that
norepresentations, inducements, promises, or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing signed by the
party to be charged.
9.3 Partial Invalidity. If any provision in this
Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remaining provisions shall
nevertheless continue in full force without being impaired or
invalidated in any way.
9.4 Heirs and Assigns. This Agreement shall inure the
benefit of, and be enforceable against, the heirs and assigns of
the parties hereto.
9.5 Interpretation. This Agreement has been prepared
jointly by the parties and it is agreed that it shall not be
interpreted against either of the parties as matter of
interpretation of contracts.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day first above written.
EMPLOYEE:
/s/ Jack D. Kane
JACK D. KANE
EMPLOYER:
GUARANTY NATIONAL BANK
By: /s/ Robert W. Minnick, Jr.
Its CEO
By execution hereof by its duly authorized officers, Evergreen
joins in the foregoing Agreement and undertakes that to the extent
applicable, Evergreen will be bound thereby and will do and perform
all acts and things referred to or provided to be done by
Evergreen.
/s/ David A. Barrett
EVERGREEN BANCSHARES, INC.
BY: David A. Barrett
Its Chairman
EXHIBIT 27
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS DATED DECEMBER 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
9-03(1) Cash and due from banks 6,909,701
9-03(2) Interest-bearing deposits 0
9-03(3) Federal funds sold-purchased securities for resale 5,410,000
9-03(4) Trading account assets 0
9-03(6) Investment and mortgage backed securities held for sale 36,877,731
9-03(6) Investment and mortgage backed securities held to
maturity - carrying value 7,807,136
9-03(6) Investment and mortgage backed securities held to
maturity - market value 7,711,770
9-03(7) Loans 61,444,193
9-03(7)(2) Allowance for losses 506,635
9-03(11) Total assets 124,401,405
9-03(12) Deposits 117,192,363
9-03(13) Short-term borrowings 0
9-03(15) Other Liabilities 649,810
9-03(16) Long-term debt 0
9-03(19) Preferred stock-mandatory redemption 0
9-03(20) Preferred stock-no mandatory redemption 0
9-03(21) Common Stock 947,294
9-03(22) Other stockholders' equity 5,611,938
9-03(23) Total liabilities and stockholders' equity 124,401,405
9-04(1) Interest and fees on loans 5,466,272
9-04(2) Interest and dividends on investments 3,184,541
9-04(4) Other interest income 240,826
9-04(5) Total interest income 8,891,639
9-04(6) Interest on deposits 5,369,087
9-04(9) Total interest expense 5,851,742
9-04(10) Net interest income 3,039,897
9-04(11) Provision for loan losses 735,000
9-04(13)(h) Investment securities gains/losses 0
9-04(14) Other expenses 5,506,063
9-04(15) Income/loss before income tax (2,518,916)
9-04(17) Income/loss before extraordinary items 0
9-04(18) Extraordinary items, less tax 0
9-04(19) Cumulative change in accounting principal 0
9-04(20) Net income or loss (2,548,405)
9-04(21) Earnings per share-primary ( 2.87)
9-04(21) Earnings per share-fully diluted 0
I.B.5 Net yield-interest earning assets-actual 7.34
III.C.1(a) Loans on nonaccrual 110,837
III.C.1(b) Accruing loans past due 90 days or more 0
III.C.1(c) Troubled debt restructuring 0
III.C.2 Potential problem loans 0
IV.A.1 Allowance for loan loss-beginning of period 219,963
IV.A.2 Total chargeoffs (478,345)
IV.A.3 Total recoveries 30,017
IV.A.4 Allowance for loan loss-end of period 506,635
IV.B.1 Loan loss allowance allocated to domestic loans 506,635
IV.B.2 Loan loss allowance allocated to foreign loans 0
IV.B.3 Loan loss allowance-unallocated 0
</TABLE>
