Filed On 12/30/98 · SEC File 333-69973 · Accession Number 950144-98-14255
As Of Filer Filing On/For/As Docs:Pgs Issuer Agent
12/30/98 First Capital Bank Holding Corp SB-2 11:143 950144
Registration of Securities by a Small-Business Issuer · Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2 First Capital Bank Holding Corporation 68 338K
2: EX-3.1 Amended and Restated Articles of Incorporation 9 42K
3: EX-3.2 Bylaws of the Company 24 104K
4: EX-4.1 Specimen Common Stock Certificate 2 7K
5: EX-4.2 Form of Escrow Agreement 5 29K
6: EX-10.1 Real Estate Sales Contract From Proposed Site 8 55K
7: EX-10.2 Amended and Restated Employment Agreement 8 35K
8: EX-10.3 1998 Incentive Stock Option Plan 8 39K
9: EX-10.4 Form of Organizer Warrant Certificate 8 40K
10: EX-23.2 Consent of Porter Keadle Moore, Llp. 1 6K
11: EX-27 Financial Data Schedule 2± 8K
As filed with the Securities and Exchange Commission on December 30, 1998
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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FIRST CAPITAL BANK HOLDING CORPORATION
(Name of small business issuer in its charter)
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FLORIDA 6712 59-3532208
(State or other (Primary Standard Industrial (IRS Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
---------------------------------
1875A SOUTH 14TH STREET
FERNANDINA BEACH, FLORIDA 32034
(904) 321-0400
(Address and telephone number
of principal executive offices)
---------------------------------
MICHAEL G. SANCHEZ
1875A SOUTH 14TH STREET
FERNANDINA BEACH, FLORIDA 32034
(904) 321-0400
(Name, address and telephone
number of agent for service)
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Copies Requested to:
ROBERT C. SCHWARTZ, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
(404) 815-3758
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed maximum
Title of each class of Amount to be offering Proposed maximum aggregate Amount of
securities to be registered registered price per share(1) offering price registration fee
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Common Stock 1,000,000 $10.00 $10,000,000 $2,780.00
$.01 par value
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(1) Estimated solely for the purpose of calculating the fee pursuant to Rule
457(a) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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1,000,000 SHARES
COMMON STOCK
FIRST CAPITAL BANK HOLDING CORPORATION
[LOGO]
A BANK HOLDING COMPANY FOR
FIRST NATIONAL BANK OF NASSAU COUNTY
FERNANDINA BEACH, FLORIDA
A PROPOSED NATIONAL BANK
This is an initial public offering of shares of common stock of First
Capital Bank Holding Corporation ("First Capital"). We are offering a minimum of
610,000 shares and a maximum of 1,000,000 shares at a public offering price of
$10.00 per share. The shares are being offered on a "best-efforts" basis through
Allen C. Ewing & Co. as sales agent for First Capital (the "Sales Agent") so
that we can raise the minimum amount of capital necessary to form a national
bank, First National Bank of Nassau County ("First National Bank"). Offering
shares on a "best-efforts basis" means that the Sales Agent has agreed to devote
appropriate time and energy to marketing and selling the shares, but does not
guarantee that all, or any, shares will be sold. The minimum subscription amount
is 100 shares per investor.
We will deposit all subscription funds in an interest-bearing escrow
account with The Bankers Bank until we have received subscriptions for 610,000
shares. If we have not received subscriptions for 610,000 shares by ________,
1999, we will terminate the offering and promptly return all subscription funds
to subscribers, with interest. We may, however, at our option, extend the
offering for three consecutive 90-day periods until ___________, 1999, without
giving notice to you. We may reject all or part of any subscription for any
reason. The Sales Agent will receive commissions of either $0.25 or $0.50 on any
shares sold in the offering, except that no commissions will be paid for the
330,000 shares to be sold to the organizers of First Capital.
There is currently no public market for our common stock. We expect to
list the common stock on the Nasdaq SmallCap Stock Market at some time in the
future, but we do not intend to apply for such listing at this time.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. WE URGE
YOU TO READ CAREFULLY THE "RISK FACTORS" SECTION BEGINNING ON PAGE 4, ALONG WITH
THE REST OF THIS PROSPECTUS, BEFORE YOU MAKE YOUR INVESTMENT DECISION.
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Minimum Maximum
Per Share Offering Offering
--------- -------- --------
Price to Public $10.00 $6,100,000 $10,000,000
Maximum Sales Commissions(1) $ 0.50 $ 0(2) $ 335,000
Proceeds to First Capital $ 9.50 $6,100,000 $ 9,665,000
(1) We will offer our common stock to three different groups of investors and
the amount of commissions to be paid to the Sales Agent will vary depending on
the amount of common stock purchased by each group. The Sales Agent will receive
commissions of either $0.25 or $0.50 on any shares not sold to the organizers.
The above figures assume that all shares other than those sold to the organizers
will be sold with a commission of $0.50. For additional information, see "Plan
of Distribution" beginning on page 13.
(2) Commissions will be paid out of funds received in the offering only to the
extent such funds exceed $6,100,000, which is the amount that will be received
should the minimum offering be sold.
- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
ALLEN C. EWING & CO.
Sales Agent
The date of this Prospectus is _____________, 1999.
PROSPECTUS SUMMARY
This summary highlights some information from this prospectus. It may
not contain all of the information that is important to you. To understand this
offering fully, you should read the entire prospectus carefully, including the
risk factors and the financial statements.
THE COMPANY
First Capital was formed to operate as a bank holding company. The
proceeds of this offering will be used to purchase all of the common stock to be
issued by First National Bank, a national bank to be formed under the laws of
the United States of America. The proceeds will also provide working capital for
First National Bank to commence its operations, to pay organizational expenses
and for other general corporate purposes. Neither First Capital nor First
National Bank has commenced business operations, and neither will do so until we
have completed the offering and have obtained the requisite approvals of certain
regulatory agencies. Our main office will be located in Fernandina Beach, Nassau
County, Florida. We anticipate that First National Bank will commence business
operations out of its temporary office in May of 1999, or as soon thereafter as
practicable. It will operate as a full-service commercial bank, except that it
will not have any trust powers. Our temporary mailing address is 1875A South
14th Street, Fernandina Beach, Florida 32034, and our temporary telephone number
is (904) 321-0400.
STRATEGY
Our business strategy is to create a customer-driven financial
institution focused on providing personalized service to clients and offering
products designed to meet their specific needs. We believe that First National
Bank can attract clients who prefer to conduct business with a locally-managed
institution that demonstrates a continuing, active interest in its clients'
business and personal objectives.
We believe First National Bank will be able to generate
competitively-priced loans and deposits in the Nassau County market and
anticipate that its staff will use data processing systems selected to deliver
high-quality products and provide responsive service to clients. We anticipate
that First National Bank will contract with third-party service providers to
provide customers with convenient electronic access to their accounts and other
competitive bank products. Such an arrangement should allow First National Bank
to use current technology while minimizing the costs of delivery. We expect this
approach to its operations to be appealing to clients who have been receiving
banking services in the depersonalized environment of larger competitors. See
"Business of First National Bank" beginning on page 18.
MARKET AREA
Fernandina Beach is located in Nassau County, Florida, which is within
the Jacksonville, Florida Metropolitan Statistical Area ("Jacksonville MSA").
This area includes the five counties of Duval, Nassau, St. Johns, Clay, and
Baker. Nassau County is an integral part of the Jacksonville MSA and has
participated in the growth experienced by the Jacksonville MSA in recent years.
First National Bank's Primary Service Area (the "PSA") will include the Florida
communities of Fernandina Beach, Amelia Island, O'Neil, and Yulee, as well as
St. Mary's, Georgia. Amelia Island is considered to be one of the foremost
residential and retirement areas in Florida, and the Ritz-Carlton Hotel and the
Amelia Island Plantation are among the premier resort hotels on Florida's East
Coast.
The population within a 15-mile radius of our prospective office grew
from 30,463 in 1980, according to the U.S. Census, to 69,542 in 1998 (estimated
by National Decision Systems), an increase of 132% during the period. The
current population within that radius is projected to increase to 80,000 by
2004. The estimated average household income within a 15-mile radius is $49,012
per year. As of June 30, 1998, total bank deposits in Nassau County were
approximately $369 million.
COMPETITION
The banking industry in First National Bank's PSA has experienced
significant consolidation in recent years principally as the result of the
liberalization of interstate banking and branching laws. Many of our area's
former community banks have been acquired by large regional financial
institutions headquartered outside our PSA. This consolidation has resulted in
repricing of products and services, elimination of local boards of directors,
adjustments
in management and branch personnel, and a change in the level of personalized
customer service. Because of recent changes in interstate banking regulations,
we expect this type of consolidation to continue.
We believe that this competitive situation, when coupled with our
area's sable family income and growing economic business base, creates a
favorable opportunity for a new commercial bank. In addition, we believe that
our management experience and our dedicated local board of directors will
attract customers to our locally-managed community bank, as these attributes
offer the prospect of highly professional, personalized attention and timely
response to product and service requests due to an active interest in our
customers' business and personal financial needs. Once we open for business,
First National Bank will be the only independent commercial bank headquartered
in the PSA.
The Nassau County market is currently served by six banks and three
credit unions. The regional bank holding companies represented in Nassau County
are NationsBank Corporation, SouthTrust Bank Corporation, First Union
Corporation, Synovus Financial Corporation, and Compass Bancshares, Inc. There
are no existing locally-owned community banks in Nassau County.
THE OFFERING
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Common Stock Offered................................... 1,000,000 shares. A minimum of 610,000 shares are
required to be sold in the offering. See "Terms of the
Offering" beginning on page 10.
Common Stock to be
Outstanding after the Offering......................... Minimum--610,000 shares
Maximum--1,000,000 shares
Public Offering Price.................................. $10.00 per share
Plan of Distribution................................... Shares of the common stock of First Capital will be
marketed on a best-efforts, 610,000 share minimum
basis through Allen C. Ewing & Co., our sales agent,
which will receive no more than a 5% commission on
such sales. Each investor must purchase a minimum
of 100 shares. See "Terms of the Offering--Plan of
Distribution" at page 13.
Purchases by Organizers of First Capital............... 330,000 shares pursuant to this offering.
Offering Conditions.................................... All of the following conditions must be met for the
offering to be completed:
- at least $6,100,000 must be deposited with
the Escrow Agent
- the Federal Reserve Board must approve First
Capital's application to become a bank
holding company
- the organizers must receive preliminary
approval from the Office of the Comptroller
of the Currency to charter First National
Bank
- the Federal Deposit Insurance Corporation
must approve First National Bank's
application for deposit insurance
- First Capital must not have canceled this
offering before funds are withdrawn from the
subscription escrow account
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Escrow Arrangements.................................... Until these conditions have been met, we will place
all subscription funds in an escrow account. If these
offering conditions are not satisfied, all escrowed
funds will be returned promptly to the subscribers,
with interest.
If all of these offering conditions are met, the
escrow agent will release all funds to First Capital.
The funds of anyone subscribing after escrow is
broken will not be placed in escrow, but will be
immediately available to us. Once escrow is broken,
all subscribers may lose a portion of their
subscription funds if either First Capital or First
National Bank does not receive final regulatory
approvals. Prior to the release of the funds, the
escrow agent can invest subscription funds in certain
short-term investments upon instruction by the
President of First Capital. See "Terms of the
Offering" beginning on page 10.
Use of Proceeds........................................ The proceeds of the offering will be used:
- to purchase all First National Bank stock to
be issued and outstanding ($6 million), in
order to
- provide working capital to commence its
business operations (including officers' and
employees' salaries and construction of
permanent office facilities)
- to pay expenses in connection with the
formation of First Capital, the organization
of First National Bank, and this securities
offering, and for other corporate purposes
- Twenty-five percent of all funds received in
excess of $6 million will be reserved by
First Capital for growth of First National
Bank; the remainder will be reserved for
general corporate purposes at the holding
company level. See "Use of Proceeds"
beginning on page 14.
Risk Factors........................................... YOU SHOULD READ THE "RISK FACTORS" SECTION, BEGINNING
ON PAGE 4, AS WELL AS THE OTHER CAUTIONARY STATEMENTS
THROUGHOUT THE ENTIRE PROSPECTUS, TO ENSURE THAT YOU
UNDERSTAND THE RISKS ASSOCIATED WITH AN INVESTMENT IN
THE COMMON STOCK.
3
RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including but not limited to those described below. You
should consider carefully these risk factors together with all of the other
information included in this prospectus before you decide to purchase shares of
our common stock.
Some of the information in this prospectus may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
words such as "may," "will," "expect," "anticipate," "estimate," "continue," or
other similar words. These statements discuss future expectations, contain
projections of results of operations or of financial condition or state other
"forward-looking" information. When considering such forward-looking statements,
you should keep in mind the risk factors and other cautionary statements in this
prospectus. The risk factors noted in this section and other factors noted
throughout this prospectus, including certain risks and uncertainties, could
cause our actual results to differ materially from those contained in any
forward-looking statement.
NEW ENTITIES--NO OPERATING HISTORY TO EVALUATE
Neither First Capital nor First National Bank has commenced any active
business operations other than matters related to our initial organization and
the raising of capital. First Capital was only recently formed, and First
National Bank will not receive final approval from the Office of the Comptroller
of the Currency (the "OCC") to begin operations until after this offering is
completed. Consequently, you will not have access to information that would be
available to purchasers of securities of a financial institution with a history
of operations. Since First National Bank is in organization, it has no operating
history on which to base any estimate of its future earning prospects.
POSSIBLE LOSS OF SUBSCRIPTION FUNDS IN THE EVENT FIRST NATIONAL BANK FAILS TO
COMMENCE OPERATIONS
Several approvals must be obtained and requirements met before First
National Bank can begin operations. Within eighteen months after preliminary
charter approval is obtained from the OCC, First National Bank must obtain final
approval to commence banking operations.
In the event that we have satisfied the offering conditions, broken
escrow and issued the shares of common stock, but final approval to commence
banking operations is not granted within eighteen months after receipt of
preliminary approval from the OCC, First National Bank would not be able to
commence banking operations and we would seek to dissolve and liquidate First
Capital. Upon liquidation, we would return to subscribers all subscription funds
with interest, less all expenses incurred by First Capital. In short, if you
invest in the common stock and First Capital breaks escrow and incurs start-up
expenses, but final regulatory approval is not granted, you may lose part of
your initial investment. See "Terms of the Offering--Failure of First National
Bank to Commence Operations" at page 12.
POTENTIAL DELAY IN COMMENCING OPERATIONS
Although we expect to receive all regulatory approvals and to commence
business in the second quarter of 1999, we can give no assurance as to when, if
at all, these events will occur. Any delay in commencing First National Bank's
operations will increase pre-opening expenses and postpone First National Bank's
realization of potential revenues. Such a delay will cause our accumulated
deficit to increase as a result of continuing operating expenses, such as
salaries and other administrative expenses, and our lack of revenue.
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RELIANCE ON KEY MANAGEMENT
Regulatory approval to establish and operate a national bank partially
depends upon the OCC's approval of that bank's proposed chief executive officer.
Generally, the chief executive officer of a start-up financial institution is
considered vital to the potential success of the new institution. In our charter
application to the OCC, we proposed Michael G. Sanchez as First National Bank's
chief executive officer. If Mr. Sanchez were to become unavailable for any
reason, final regulatory approval to commence banking operations would be
delayed until the OCC approved a suitable replacement. It is possible that we
would not be able to find a suitable replacement for Mr. Sanchez. See
"Management" beginning on page 29.
SIGNIFICANT INITIAL LOSSES EXPECTED
Initially, First Capital will merely act as the sole shareholder of
First National Bank. Thus, its profitability will depend upon the successful
operation of First National Bank. Typically, new banks are not profitable in the
first year of operation and sometimes are not profitable for several years.
First National Bank will incur substantial expenses in establishing itself as a
going concern, and we can offer no assurance that it will be profitable or that
future earnings, if any, will meet the levels of earnings prevailing in the
banking industry.
POTENTIAL DILUTION RESULTING FROM FUTURE CAPITAL NEEDS
We intend to capitalize First National Bank at $6,000,000. We will
reserve twenty-five percent of all funds received in excess of the $6,000,000
capitalization for the growth of First National Bank in compliance with OCC
regulations. We will hold the remainder of the funds for general corporate
purposes. Although we anticipate that the minimum amount of capital to be raised
by this offering (i.e., $6,100,000) will be sufficient to support First National
Bank's immediate capital needs, the Board of Directors of First Capital may,
from time to time, issue additional shares of the authorized common stock of
First Capital or other securities to obtain additional capital. Additional
shares of common stock may be offered on terms different from the terms of this
offering. The future issuance of these additional shares would dilute your
ownership interest in the Company.
COMPETITION IN NASSAU COUNTY
First National Bank will be a full service commercial bank in
Fernandina Beach, Nassau County, Florida, except that it will not have any trust
powers. The Nassau County market is served by six banks and three credit unions.
Competition among financial institutions in Nassau County is intense, and we
will compete with other state and national banks, savings and loan associations,
consumer finance companies, credit unions, money market mutual funds, and other
financial institutions which have far greater financial resources than those
available to us. As a start-up financial institution, First National Bank's
relatively small capital base may affect its ability to compete for loans due to
regulatory lending limitations. Its size may also impact its ability to compete
effectively with larger institutions in offering other services. The Riegle-
Neal Interstate Banking and Branching Efficiency Act of 1994 has further
increased competition by eliminating interstate branching barriers for certain
financial institutions and enabling financial institutions located outside
Florida to more easily access the market served by First National Bank. If First
National Bank is unable to compete for deposits, loans, and other banking
business effectively, there would likely be an adverse effect on its potential
for growth and profitability. See "Business of First National Bank--Market Area
and Competition" beginning on page 18.
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POTENTIAL ADVERSE EFFECT OF UNPREDICTABLE ECONOMIC CONDITIONS
Commercial banks and other financial institutions, including bank
holding companies, are affected by economic and political conditions, both
domestic and international, and by governmental monetary policies. Conditions
such as inflation, recession, unemployment, high interest rates, short money
supply, scarce natural resources, international disorders and other factors
beyond First National Bank's control may adversely affect its profitability. See
"Business of First National Bank--Monetary Policies" at page 24.
The success of First Capital will depend significantly upon general
economic conditions in Florida and Nassau County. A prolonged economic
dislocation or recession, whether in Florida generally or in Nassau County,
could cause First Capital's non-performing assets to increase, thereby causing
operating losses, impaired liquidity and the erosion of capital. Such an
economic dislocation or recession could result from a variety of causes,
including natural disasters such as hurricanes, floods or tornadoes, or a
prolonged downturn in various industries upon which the economies of Florida
and/or Nassau County depend. Future adverse changes in the Florida economy or
the local economy of Nassau County could have a material adverse effect on First
Capital's business, future prospects, financial condition or results of
operations.
INTEREST RATE SENSITIVITY
First National Bank will attempt to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash, loan, investment, borrowing and capital policies. Its
asset/liability mix will likely be monitored on a daily basis. A report
reflecting interest-sensitive assets and interest-sensitive liabilities will be
prepared and presented monthly to First National Bank's Board of Directors. The
objective of this policy is to control interest-sensitive assets and liabilities
to minimize the impact of substantial movements in interest rates on First
National Bank's earnings. Nevertheless, rapidly rising or falling interest rates
may adversely affect its performance.
POTENTIAL LIMITATION ON GROWTH RESULTING FROM LOW LENDING LIMITS
At least during our first years of operation, First National Bank's
legally mandated lending limits will be lower than those of many of its
competitors because it will have less capital than many of its competitors.
Initially, First National Bank's legal lending limit will be $900,000. Our lower
lending limits may discourage potential borrowers who have lending needs that
exceed these limits, which may restrict our ability to grow. We may try to serve
the needs of these borrowers by selling loan participations to other
institutions, but this strategy may not succeed.
POTENTIAL ADVERSE EFFECT OF GOVERNMENT REGULATION
First Capital and First National Bank will operate in a highly
regulated environment and will be subject to supervision and examination by
several regulatory agencies. As a bank holding company, First Capital will be
subject to regulations and supervision by the Federal Reserve Board. As a
national bank, the deposits of which will be federally-insured to the extent
permitted by law, First National Bank will be subject to regulation and
supervision primarily by the OCC and, to a lesser extent, by the Federal Deposit
Insurance Corporation (the "FDIC"). Additionally, certain Florida state laws,
primarily pertaining to maximum rates of interest that may be charged on loans,
will apply to First National Bank's operations. First Capital and First National
Bank are vulnerable to future legislation and government policy, including bank
deregulation and interstate expansion, which could adversely affect the banking
industry as a whole. In particular, First National Bank will be subject to
regulatory capital requirements. Although we believe that First National Bank's
initial capitalization will be sufficient to support its anticipated growth for
its first five years of operation, these regulatory capital requirements may
constrain future growth without the infusion of
6
additional capital. These regulations are intended primarily for the protection
of depositors, not for the benefit of investors, and they restrict or limit the
manner in which First Capital and First National Bank may conduct business and
obtain financing. First Capital and First National Bank are also subject to
changes in federal and state law, regulations, governmental policies, income tax
laws and accounting principles. The effects of any potential changes cannot be
predicted, but they could adversely affect the future businesses and operations
of First Capital, First National Bank, or both. See "Supervision and Regulation"
beginning on page 24.
COMMON STOCK IS NOT AN INSURED BANK DEPOSIT
Although deposits at First National Bank will be insured by the FDIC to
the maximum amount permitted by law, shares of First Capital common stock are
not bank or deposit accounts. Thus, shares of First Capital common stock are not
insured by the FDIC or any other governmental agency.
ABILITY OF ORGANIZERS TO INFLUENCE CORPORATE ACTIONS
The organizers intend to purchase 330,000 shares or $3,300,000 in the
offering, which will equal approximately 54.1% of the 610,000 shares to be
outstanding upon completion of the minimum offering or 33.0% of the 1,000,000
shares to be outstanding should the maximum number of shares be sold. All
purchases by the organizers will be made at the same public offering price,
$10.00 per share, as that paid by other investors and will count towards the
achievement of the minimum offering. The organizers have represented to First
Capital that all purchases of common stock will be made for investment purposes
only and not with a view to resell such shares. See "Security Ownership of
Certain Beneficial Owners and Management" at page 34.
In addition, once the offering is complete, the organizers will be
granted warrants to purchase additional shares of common stock. Each warrant
will entitle the organizer to purchase one additional share of common stock. The
actual number of warrants granted will vary depending upon the number of shares
actually sold in the offering, with a cap on the ratio of warrants to shares
such that each organizer will receive no more than one warrant for every two
shares he or she purchased in the offering. Given the organizers' intent to
purchase 330,000 shares in the offering, they will receive up to a maximum of
165,000 warrants. Therefore, upon completion of the maximum offering and the
exercise of all of their warrants, the organizers will own 495,000 shares or
42.5% of the total shares outstanding. Assuming the completion of the minimum
offering, the organizers will receive 82,207 warrants. Therefore, upon
completion of the minimum offering and the exercise of all of their warrants,
the organizers will own 412,207 shares of common stock, or 59.5% of the total
number of shares outstanding.
As a result of such ownership, the organizers will be able to exercise
significant control over the management and affairs of First Capital and First
National Bank. In addition, the exercise of such warrants will dilute your
ownership interest in First Capital. See "Terms of the Offering--Purchases by
Organizers of First Capital" at page 12.
DILUTIVE EFFECT OF STOCK OPTION PLANS
We have established an Incentive Stock Option Plan which will allow us
to grant stock options to employees who are contributing significantly to the
management or operation of the business of First Capital or First National Bank.
Under this plan, we have reserved 100,000 shares of common stock for the
issuance of options under the Incentive Stock Option Plan, of which Michael G.
Sanchez, the President of First Capital and First National Bank, will receive
options to purchase 30,000 shares or 5% of the number of
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shares sold in the offering, whichever is less. Any exercise of options will
dilute your ownership interest in First Capital. See "Management--Stock Option
Plans" at page 33.
DETERRENT EFFECT OF ANTI-TAKEOVER PROVISIONS
First Capital's Amended and Restated Articles of Incorporation (the
"Articles of Incorporation") contain provisions that could deter and make it
more difficult for a third party to bring about a merger, sale of control, or
similar transaction, even if a majority of shareholders vote in favor of such a
transaction. In addition, the Articles of Incorporation establish a classified
Board of Directors, which means that only one-third of the members of the Board
of Directors is elected each year and each director serves for a term of three
years. First Capital's Articles of Incorporation also authorize the Board of
Directors to issue a series of preferred stock without shareholder action. The
issuance of preferred stock by First Capital could discourage a third party from
attempting to acquire, or make it more difficult for a third party to acquire, a
controlling interest in First Capital, and could adversely affect the voting
power or other rights of holders of its common stock. These provisions also make
it more difficult for a third party to achieve a change in control of First
Capital through the acquisition of a large block of its common stock without
approval by the Board of Directors. As a result, you may be deprived of
opportunities to sell some or all of your shares at prices that represent a
premium over market prices. See "Description of Capital Stock" beginning on page
35.
POSSIBILITY THAT AN ACTIVE TRADING MARKET MAY NOT DEVELOP
The small size of this offering, among other things, makes unlikely the
development and maintenance of an active and liquid trading market for the
shares. You should only invest in the common stock if you have a long-term
investment intent. If an active market does not develop, you may not be able to
sell your shares promptly or perhaps at all. Even if you can sell your shares,
you may not be able to sell them at a price equal to or above the price you paid
for them. Although we expect to list the common stock on the Nasdaq SmallCap
Stock Market at some time in the future, at this time, we do not intend to apply
for such listing.
NO DIVIDENDS
We do not expect to pay dividends on the common stock for the
foreseeable future. Rather, we intend to retain future earnings of First
National Bank (if any) to enhance its capital structure to, among other things,
support future growth. Dividend distributions of national banks are restricted
by statute and regulation. Our future dividend policy will depend on First
National Bank's earnings, capital requirements, financial condition and other
factors we consider relevant. See "Dividend Policy" at page 16.
ARBITRARY DETERMINATION OF OFFERING PRICE
There is no established market for shares of the common stock, nor was
there an established market prior to this offering. The offering price was
arbitrarily determined by the organizers, and does not bear any relationship to
First Capital's assets, book value, net worth or any other recognized criteria
of value. In determining the offering price of the common stock, the OCC's
capital requirements for First National Bank and general market conditions for
the sale of such securities were considered. Should a market develop for the
common stock after this offering is complete, there is no guarantee that the
market price will be greater than or equal to the public offering price.
8
ABSENCE OF PREEMPTIVE RIGHTS AND CUMULATIVE VOTING RIGHTS
As a shareholder of First Capital, you will not have any preemptive
rights with respect to the issuance of additional shares of common stock or any
other class of stock, which means that if we decide to issue additional shares
of common stock, you will not automatically be entitled to maintain your
percentage ownership by purchasing additional shares. In addition, you will not
have cumulative voting rights. This means that in the election of directors, you
will be entitled to cast only one vote per share for each director position to
be filled. Under a cumulative voting scheme, you would be entitled to cast a
total number of votes equal to the number of shares you own, multiplied by the
number of director positions being filled, and you could cast your votes for any
one director or divide the votes among several nominated directors. One effect
of cumulative voting is to prevent a majority shareholder from necessarily being
able to determine the make-up of the entire board of directors. As a minority
shareholder, you will not have the protection of cumulative voting.
RISKS ASSOCIATED WITH THE YEAR 2000
As the year 2000 approaches, an important business issue has emerged
regarding existing application software programs and operating systems. Many
existing application software products were designed to accommodate a two-digit
year. For example, "98" is stored on the system and represents 1998 and "00"
represents 1900. As a result, any computer programs or equipment that are date
dependent may, for example, recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruption of operations, a temporary inability to process transactions,
send invoices, or engage in similar normal business activity.
First Capital's and First National Bank's business will be highly
dependent on communications and information systems, including systems which
monitor deposit and lending accounts. We will rely on software and hardware
developed by independent third parties to provide these critical systems.
However, as we expect that any computer system or software purchased for First
National Bank's operations will be Year 2000 compliant, we do not anticipate
that First Capital or First National Bank will incur significant operating
expenses or be required to incur material costs to be Year 2000 compliant.
First National Bank will utilize a third-party vendor to provide its
primary banking applications, including core processing systems. We intend to
choose a third-party vendor that has modified or upgraded its computer
applications to ensure timely Year 2000 compliance. In addition, we intend to
implement a Year 2000 compliance program to review the Year 2000 issue that may
be faced by our other third-party vendors. Under the program, we will examine
the need for modifications or replacement of all non-Year 2000-compliant
software. We do not currently expect that the cost of our Year 2000 compliance
program will be material to our financial condition and expect that we will
satisfy the compliance program without material disruption of our operations. We
intend to evaluate the potential effect on our third-party vendors' data
processing systems of Year 2000 issues and to obtain a representation from such
vendors that their core processing systems will be fully Year 2000 compliant
before First National Bank opens for business. If we or our vendors do not
successfully and timely achieve Year 2000 compliance, First National Bank's
business, future prospects, financial condition or results of operations could
be materially adversely affected.
We and the OCC are concerned about the effect of Year 2000 issues on
First National Bank's loan customers. Certain customers may encounter
difficulties in continuing operations should they fail to address these issues.
This could cause them to default on their loan obligations to First National
Bank, reducing the value of its loan portfolio. Therefore, our customer
relationships will be monitored to ensure that our loan customers make any
needed systems modifications in a timely fashion. In addition, First National
Bank will review Year 2000 related issues as part of its normal underwriting
criteria and loan approval process, and
9
will include Year 2000 compliance requirements and covenants requiring
compliance within its standard loan agreements. Nevertheless, there can be no
assurance that our customers will be Year 2000 compliant; therefore, the Year
2000 problem may still cause loan defaults, which would negatively impact First
Capital's earnings.
Although we will take extensive steps to address Year 2000 related
issues, there can be no assurance that we will identify and make all necessary
modifications or that we will not encounter unforeseen difficulties or costs.
Furthermore, in the event that First National Bank's internal systems or the
systems provided by its data processing vendor or other companies on which First
Capital's systems rely should fail, we cannot assure that there will be no
negative impact on our systems or operations. See "Business of First National
Bank--Year 2000" beginning on page 23.
TERMS OF THE OFFERING
GENERAL
First Capital is offering hereunder 1,000,000 shares of its common
stock for cash at a price of $10.00 per share. The common stock will be offered
on a "best-efforts" basis through the Sales Agent, which means that the Sales
Agent has agreed to devote appropriate time and energy to marketing and selling
the shares, but does not guarantee that all, or any, shares will be sold. Each
investor must purchase a minimum of 100 shares. The purchase price of $10.00 per
share must be paid in full upon execution and delivery of the Subscription
Agreement. All subscriptions tendered by investors are subject to acceptance by
the Board of Directors of First Capital, and First Capital reserves the absolute
and unqualified right to reject or reduce any subscription for any reason prior
to acceptance. Rejected subscriptions will be returned to the subscriber without
interest. An investor whose subscription is reduced may withdraw his or her
subscription within ten days after being notified of such reduction by First
Capital. First Capital reserves the right to cancel this offering at any time,
for any reason whatsoever, prior to the time it withdraws funds from the
subscription escrow account.
Prior to this offering there has been no established public market for
the shares of the common stock. Furthermore, there can be no assurance that an
established market for such stock will develop. The offering price has been
arbitrarily determined and is not a reflection of First Capital's book value,
net worth or any other such recognized criteria of value. In determining the
offering price of the common stock, the capital requirements of the OCC and
general market conditions for the sale of such securities were considered. There
can be no assurance that, if a market should develop for the common stock, the
post-offering market price will equal or exceed the offering price.
CONDITIONS OF THE OFFERING
This offering will expire at 5:00 p.m. Eastern Time, on _______, 1999
(90 days from the date of this Prospectus) (the "Expiration Date"), unless such
date is extended by First Capital. The Expiration Date may be extended by First
Capital without notice to subscribers for up to three consecutive 90-day
periods, or no later than __________, 1999. The offering is expressly
conditioned upon fulfillment of the following conditions (the "Offering
Conditions") on or prior to the Expiration Date, as extended. The Offering
Conditions, which may not be waived, are as follows:
(a) Not less than $6,100,000 must be deposited with the Escrow
Agent in the subscription escrow account;
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(b) First Capital must receive approval from the Federal Reserve
Board of its application to become a bank holding company;
(c) The organizers must receive preliminary approval from the OCC
to charter the First National Bank;
(d) First National Bank must receive approval of its application
for deposit insurance from the FDIC; and
(e) First Capital must not have canceled this offering prior to
the time funds are withdrawn from the subscription escrow
account.
ESCROW OF SUBSCRIPTION FUNDS
Until the Offering Conditions above have been met, all subscription
funds and documents tendered by investors will be placed in a subscription
escrow account with The Bankers Bank (the "Escrow Agent"). Pursuant to the terms
of the Escrow Agreement (the form of which is attached to this prospectus as
Appendix A), if all of the Offering Conditions are met, First Capital may
certify such fact to the Escrow Agent and the Escrow Agent will release all
subscription funds, and any profits thereon, to First Capital. Subscription
funds are not insured by the FDIC or any other governmental agency.
Pending disposition of the subscription escrow account under the Escrow
Agreement, the Escrow Agent is authorized, upon instructions to be given by
Michael G. Sanchez, to invest subscription funds in interest-bearing bank
accounts, including saving accounts and bank money market accounts, short-term
direct obligations of the United States Government and/or in short-term FDIC
insured bank certificates of deposit, with maturities not to exceed 90 days.
First Capital will invest the subscription funds and any additional funds
obtained after breaking escrow and before it infuses capital into First National
Bank in a similar manner. The offering proceeds will be used to purchase capital
stock of First National Bank and to repay expenses incurred in the organization.
See "Use of Proceeds" beginning on page 14.
In the event the Offering Conditions are not met by the Expiration
Date, as extended, the Escrow Agent shall promptly return to the subscribers
their subscription funds, together with their allocated share of profits, if
any, earned on the investment of the subscription escrow account. Each
subscriber's proportionate share of subscription escrow account earnings shall
be that fraction (i) the numerator of which is the dollar amount of such
subscriber's tendered subscription multiplied by the number of days between the
date of acceptance of the investor's subscription and the date of the offering
termination, inclusive (the subscriber's "Time Subscription Factor"), and (ii)
the denominator of which is the aggregate Time Subscription Factors of all
investors depositing subscription funds in the subscription escrow account. The
expenses incurred by First Capital prior to the satisfaction of the Offering
Conditions will be borne by the organizers and not by the shareholders.
NO ASSURANCE CAN BE GIVEN THAT SUBSCRIPTION FUNDS CAN OR WILL BE
INVESTED AT THE HIGHEST RATE OF RETURN AVAILABLE OR THAT ANY PROFITS WILL BE
REALIZED FROM THE INVESTMENT OF SUBSCRIPTION FUNDS.
If all Offering Conditions are satisfied, and First Capital withdraws
the subscription funds from the subscription escrow account, all profits and
earnings on such account shall belong to First Capital. If the minimum offering
of 610,000 shares of common stock are sold before the expiration date, a minimum
closing will be held at First Capital's offices. At that minimum closing, the
funds will be released from the subscription escrow account to First Capital and
investors will become shareholders of First Capital.
11
The Bankers Bank, by accepting appointment as Escrow Agent under the
Escrow Agreement, in no way endorses the purchase of First Capital's common
stock.
FAILURE OF FIRST NATIONAL BANK TO COMMENCE OPERATIONS
The OCC requires that a new national bank open for business (i.e.,
obtain a charter) within 18 months after receipt of preliminary approval from
the OCC. The organizers anticipate that First National Bank will open for
business in May 1999. Because final approval of First National Bank's charter is
conditioned on First Capital's raising funds to capitalize First National Bank
at $6,000,000, First Capital expects to issue the shares of common stock before
it has obtained all final regulatory approvals for First National Bank. In the
event that First Capital issues the shares of common stock and the OCC does not
grant First National Bank final regulatory approval to commence banking
operations by 18 months after it receives preliminary approval from the OCC,
First Capital will solicit shareholder approval for its dissolution and
liquidation, in which event, First Capital will promptly return to subscribers
all subscription funds and interest earned thereon, less all expenses incurred
by us, including the expenses of the offering and the organizational and
pre-opening expenses of First Capital and First National Bank. Therefore, if
either First Capital or First National Bank does not receive final regulatory
approvals, subscribers whose funds were originally placed in escrow and
subscribers whose funds were immediately available to First Capital may lose a
portion of their subscription funds. It is possible that this return may be
further reduced by amounts paid to satisfy claims of creditors, as discussed in
the following paragraph.
Once First Capital issues the shares of common stock offered hereby,
the offering proceeds may be considered part of general corporate funds and thus
may be subject to the claims of creditors of First Capital, including claims
against First Capital that may arise out of actions of its officers, directors,
or employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the offering before First National Bank begins banking
operations. If such an attachment occurred and it became necessary to pay the
subscription funds to shareholders because of failure to obtain all necessary
regulatory approvals, the payment process might be delayed, and if it became
necessary to pay creditors from the subscription funds, the payment to
shareholders might be further reduced.
PURCHASES BY ORGANIZERS OF FIRST CAPITAL
The organizers will purchase 330,000 shares of the common stock
pursuant to this offering, which will constitute approximately 54.1% of the
610,000 shares to be outstanding upon completion of the minimum offering, or
33.0% of the 1,000,000 shares to be outstanding should the maximum number of
shares be sold. All purchases of shares by the organizers will be made at the
same public offering price, $10.00 per share, as that paid by other investors
and will count toward the achievement of the minimum offering. The organizers
have represented to First Capital that any such purchases will be made for
investment purposes only and not with a view to resell such shares. See
"Security Ownership of Certain Beneficial Owners and Management" beginning on
page 34.
In addition, in consideration of their efforts in organizing First
Capital and First National Bank, the organizers will be granted warrants to
purchase additional shares of the common stock once the offering is complete.
Each warrant will entitle the organizer to purchase one additional share of
common stock. The actual number of warrants granted will vary depending on the
number of shares actually sold in the offering, with the ratio of warrants to
shares capped such that each organizer may receive no more than one warrant for
every two shares such organizer purchases in this offering. Given the intent of
the organizers to purchase 330,000 shares in the offering, the organizers will
be granted 165,000 warrants upon completion of the maximum offering. Upon
completion of the minimum offering, the organizers will receive warrants to
purchase 82,207 shares of common stock. Any warrants granted will become
exercisable in equal amounts
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beginning on the date First National Bank commences business and on each of the
four succeeding anniversaries of that date. All warrants granted will expire
five years after the date of grant. An organizer exercising his or her warrants
will pay the public offering price of $10.00 per share. The warrants will
provide the organizers with the opportunity to profit from any future increase
in the market value of the common stock or any increase in the net worth of
First National Bank without presently paying for the warrant shares initially.
The exercise of such warrants will dilute your ownership interest in First
Capital. See "Risk Factors--Ability of Organizers to Influence Corporate
Actions" at page 7.
PLAN OF DISTRIBUTION
Shares of the common stock of First Capital will be marketed on a
"best-efforts," 610,000 share minimum basis through Allen C. Ewing & Co. (the
"Sales Agent"), 50 North Laura Street, Jacksonville, Florida 32202
(904-354-5573). The Sales Agent may, however, engage other broker-dealers to
participate in the selling effort.
The common stock will be offered directly to the public at the public
offering price set forth on the cover page of this prospectus. The common stock
will be offered to three different groups of investors--organizers, the Nassau
County community, and the general public--and the amount of commissions to be
paid to the Sales Agent will vary depending upon the amount of common stock
purchased by each group. The Sales Agent will receive no commissions for the
330,000 shares of common stock to be purchased by the organizers. The Sales
Agent will be paid a commission of 2.5% on all shares of common stock sold in
the community offering, and will be paid a commission of 5.0% on all of the
shares of common stock sold in the public offering. Commissions will be paid
from funds received in this offering only to the extent that such funds exceed
$6,100,000. In the event that the Sales Agent decides to form a selling group by
enlisting additional broker-dealers, it may reallow to such additional
registered broker-dealer up to $.25 per share of the commission to be paid to
the Sales Agent for shares sold in the public offering. The Sales Agent has
reserved the right to allocate shares of common stock among the three investor
groups as needed. The Sales Agent will be reimbursed for legal fees and
out-of-pocket expenses it incurs in the offering.
Subject to certain limitations, First Capital and the Sales Agent have
agreed to indemnify each other against certain liabilities, including certain
civil liabilities, under the Securities Act of 1933, as amended (the "Securities
Act"), or to contribute to payments that First Capital or the Sales Agent may be
required to make in respect thereof. The Sales Agent has informed First Capital
that it does not intend to exercise its discretionary authority in order to
purchase shares of common stock for any account over which it holds
discretionary authority.
In the event that the Offering Conditions have not been satisfied by
the Expiration Date, First Capital will terminate this offering and promptly
return subscription funds to the subscribers, together with their allocated
share of profits, if any, earned on the investment of the subscription escrow
account as described above. See "Terms of the Offering--Escrow of Subscription
Funds" at page 11.
As soon as practicable, but no more than ten business days after First
Capital receives a subscription, First Capital will accept or reject the
subscription. Subscriptions not rejected by First Capital within this ten day
period shall be deemed accepted. Once a subscription is accepted by First
Capital, it cannot be withdrawn by the subscriber. Payment from any subscriber
for shares in excess of the number of shares allocated to such subscriber will
be refunded by mail, without interest, within ten days of the date of rejection.
13
Certificates representing shares of common stock of First Capital, duly
authorized and fully paid, will be issued as soon as practicable after
subscription funds are released to First Capital from the subscription escrow
account.
Subscriptions to purchase shares of common stock can be made by
completing the subscription agreement attached to this prospectus and delivering
it to First Capital's offices at 1875A South 14th Street, Fernandina Beach,
Florida 32034, or mailing the same in the enclosed self-addressed, stamped
envelope. Full payment of the purchase price must accompany the subscription.
First Capital reserves the right to disregard any subscription which is not
fully paid when First Capital receives it. No subscription agreement is binding
until accepted by First Capital, and First Capital may refuse to accept any
subscription for shares, in whole or in part, for any reason whatsoever. After a
subscription is accepted and proper payment received, First Capital shall not
cancel it unless all accepted subscriptions are canceled. Unless otherwise
agreed by First Capital, all subscription amounts must be paid in United States
currency by check, bank draft or money order payable to "The Bankers Bank,
Escrow Agent for First Capital Bank Holding Corporation." A subscription will be
accepted in writing by First Capital in the Form of Acceptance attached to this
prospectus.
USE OF PROCEEDS
The gross proceeds from the sale of shares of common stock offered by
First Capital are estimated to be $6,100,000 assuming the sale of a minimum of
610,000 shares, and $10,000,000 assuming the sale of a maximum of 1,000,000
shares. However, if 610,000 shares are not sold prior to the expiration date as
defined above, then First Capital will terminate the offering and promptly
return all funds received from subscribers. See "Terms of the Offering"
beginning on page 10.
The estimated expenses of this offering are as follows:
· Download Table
Minimum Maximum
Offering Offering
-------- --------
Registration fees, including blue
sky fees and expenses .......... $ 10,280 $ 10,280
Legal fees and expenses ......... 35,000 35,000
Commissions to the Sales Agent .. 0* 335,000
Accounting fees and expenses .... 3,500 3,500
Printing and engraving expenses . 5,000 5,000
Advertising ..................... 5,500 5,500
Mailing and distribution ........ 960 960
Entertainment ................... 3,500 3,500
Miscellaneous ................... 5,000 5,000
Total Expenses ............. $ 68,740 $ 403,740
========== ==========
Net proceeds .................... $6,031,260 $9,596,260
----------
* Commissions will be paid out of funds received in the offering only to the
extent such funds exceed $6,100,000, which is the amount expected to be received
in the minimum offering.
The net proceeds of this offering as well as any interest earned on the
subscription funds will be used by First Capital, after breaking escrow,
primarily for the purchase of all of the issued and outstanding capital
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stock of First National Bank. First National Bank will, in turn, use the funds
as capital to commence its business operations (including officers' and
employees' salaries and construction of its permanent facilities) and to repay
expenses incurred in the organization of First Capital and First National Bank.
As indicated in the charter application of First National Bank filed by
First Capital with the OCC, First Capital intends to capitalize First National
Bank at $6,000,000. Twenty-five percent of all funds received in excess of the
$6,000,000 required to capitalize First National Bank will be held by First
Capital to be available for the future growth of First National Bank in
compliance with OCC regulations. The remainder of the funds will be held by
First Capital to be reserved for general corporate purposes.
A portion of the net proceeds of this offering beyond the minimum will
be retained by First Capital for the purpose of funding any required additions
to the capital of First National Bank. Since national banks are regulated with
respect to the ratio that their total assets may bear to their total capital, if
First National Bank experiences greater growth than anticipated, it may require
the infusion of additional capital to support that growth. Management
anticipates, however, that the proceeds of this offering will be sufficient to
support First National Bank's immediate capital needs and will seek, if
necessary, long- and short-term debt financing to support any additional needs;
however, management can give no assurance that such financing, if needed, will
be available or if available will be on terms acceptable to management.
The following is a schedule of the estimated use by First National Bank
of the proceeds from the sale of the common stock of First Capital, including
its estimated operating expenses for its first 12 months of operation.
· Enlarge/Download Table
Organizational and pre-opening expenses of First National Bank including
salaries, legal and accounting fees(1) ......................... $ 500,000 *
Land purchase and construction of permanent bank facility(2) ........... 1,115,000 +
Lease and set-up costs of temporary bank facility and
occupancy expenses(3) .......................................... 174,000 *
Salaries and benefits(4) ............................................... 648,000 +
General and administrative expenses, composed primarily of
data processing, marketing and advertising, telephone
and casualty and deposit insurance(5) .......................... 228,000 +
Furniture, fixtures and equipment(6) ................................... 600,000 *
Working capital ........................................................ 2,735,000
$6,000,000
==========
----------
* Represents expenses which will be incurred prior to commencement of
operations of First National Bank.
+ Represents operating expenses which will be incurred during First
National Bank's first 12 months of operations.
(1) These expenses will be incurred prior to the commencement of operations
of First National Bank and are being funded from a line of credit in
the principal amount of $700,000 that First Capital has obtained from
The Bankers Bank, Atlanta, Georgia.
(2) Costs for construction of First National Bank's permanent facility are
based on estimates from an architect. The land upon which the facility
will be located has been purchased for $265,000 from Bosco Enterprises.
See "Certain Transactions" at page 35. The construction is expected to
begin in January 1999 and be completed in August 1999. See "Business of
First Capital -- Premises" at page 17.
(3) Upon final approval from the OCC, First National Bank will open in a
temporary facility until such time as a permanent facility can be
constructed.
(4) Salaries and benefits are based on management's estimates of the number
and types of employees which will be required during the first 12
months of operations of First National Bank. It is presently
anticipated that First National Bank will employ 16 persons during such
12 months, including 5 officers.
(5) These expenses are based on the experiences of similar size banks in
the region and on management's previous banking experience.
(6) Furniture and equipment cost is based on the organizers' estimates and
upon information from suppliers of bank equipment of the costs required
to furnish and equip First National Bank for the expected level of
operations.
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The expenses described above are estimates only and assume First National Bank
will commence operations in May 1999, or as soon thereafter as practicable.
Actual expenses may exceed these amounts. A portion of these expenses will be
offset by revenues generated by First National Bank during its first year of
operation.
DIVIDEND POLICY
First Capital and First National Bank are both start-up operations. The
Board of Directors of First Capital intends to reinvest earnings for such period
of time as is necessary to ensure the success of the operations of First
National Bank. There are no current plans to initiate payment of cash dividends,
and future dividend policy will depend on First National Bank's earnings,
capital requirements, financial condition and other factors considered relevant
by the Board of Directors of First Capital.
First National Bank will be restricted in its ability to pay dividends
under the national banking laws and by regulations of the OCC. Pursuant to 12
U.S.C. ss. 56, a national bank may not pay dividends from its capital. In
addition, no dividends may be made in an amount greater than a national bank's
undivided profits, subject to other applicable provisions of law. Payments of
dividends out of undivided profits is further limited by 12 U.S.C. ss. 60(a),
which prohibits a bank from declaring a dividend on its shares of common stock
until its surplus equals its stated capital, unless there has been transferred
to surplus not less than 1/10 of First National Bank's net income of the
preceding two consecutive half year periods (in the case of an annual dividend).
Pursuant to 12 U.S.C. ss. 60(b), the approval of the OCC is required if the
total of all dividends declared by First National Bank in any calendar year
exceeds the total of its net income for that year combined with its retained net
income for the preceding two years, less any required transfers to surplus or a
fund for the retirement of any preferred stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
First Capital is still in the development stage, and will remain in
that stage until the offering of the Common Stock is complete. First Capital
initially funded its start-up and organization costs through advances from the
organizers in the amount of $75,000. First Capital subsequently obtained a line
of credit in the amount of $700,000 from The Bankers Bank, a portion of the
proceeds of which were used to repay, without interest, the $75,000 advanced by
the organizers. A portion of the proceeds of this offering will be used to repay
the line of credit, to the extent that such repayment is reasonable and not
detrimental to the operations of First Capital, and to the extent that such
repayment is allowed by the OCC and other appropriate regulatory authorities.
See "Use of Proceeds" beginning on page 14. Total organizational costs as of
October 31, 1998, amounted to approximately $68,935. These costs include
consultant fees ($51,535) and regulatory application fees ($17,400).
Subscription funds during the offering contemplated herein will be
placed in an escrow account and invested in bank accounts, including savings
accounts and bank money market accounts, in direct obligations of the United
States Government, and in short-term insured bank certificates of deposit with
maturities not to exceed 90 days.
In the opinion of First Capital, the minimum net proceeds of $6,000,000
from the minimum offering will be adequate capital to support the growth of both
First Capital and First National Bank for their first five years of operation.
It is not anticipated that First Capital will need to raise additional funds to
meet expenditures required to operate the business of First Capital and First
National Bank over the next 12
16
months. All anticipated material expenditures for such period have been
identified and provided for out of the proceeds of this offering. See "Use of
Proceeds" beginning on page 14.
BUSINESS OF FIRST CAPITAL
GENERAL
First Capital was incorporated under the laws of the State of Florida
on July 29, 1998 for the purpose of organizing First National Bank and
purchasing 100% of the outstanding capital stock of First National Bank, which
will conduct a general banking business in Fernandina Beach, Florida. The
organizers expect to receive preliminary approval from the OCC to charter First
National Bank on or before January 30, 1999. First Capital also expects First
National Bank to receive approval of its application for deposit insurance from
the FDIC on or before January 30, 1999. Upon receipt of preliminary approval
from the OCC, First Capital will file an application with the Federal Reserve
Board to become a bank holding company. First Capital has been organized as a
mechanism to enhance First National Bank's ability to serve its future
customers' requirements for financial services. The holding company structure
will provide flexibility for expansion of First Capital's banking business
through acquisition of other financial institutions and provision of additional
banking-related services which the traditional commercial bank may not provide
under present laws. For example, banking regulations require that First National
Bank maintain a minimum ratio of capital to assets. In the event that First
National Bank's growth is such that this minimum ratio is not maintained, First
Capital may borrow funds, subject to the capital adequacy guidelines of the
Federal Reserve Board, and contribute them to the capital of First National Bank
and otherwise raise capital in a manner which is unavailable to First National
Bank under existing banking regulations.
First Capital has no present plans to acquire any operating
subsidiaries other than First National Bank; however, it is expected that First
Capital may make additional acquisitions in the event that First National Bank
becomes profitable and such acquisitions are deemed to be in the best interests
of First Capital and its shareholders. Such acquisitions, if any, will be
subject to certain regulatory approvals and requirements. See "Supervision and
Regulation" beginning on page 24.
PREMISES
On June 16, 1998, First Capital entered into a contract to acquire 1.28
acres of land located at 1891 South 14th Street at its intersection with Island
Walk Way in Fernandina Beach, Nassau County, Florida 32034, for a total purchase
price of $265,000. The property was purchased from Bosco Enterprises. One of the
principals of Bosco Enterprises is the husband of one of the organizers, Lorie
L. McCarroll. The organizers have received an appraisal from an independent
third party appraising the value of the property at $265,000. First Capital
intends to construct its headquarters building on this property. The building
will contain approximately 6,500 square feet of finished space at a cost of
approximately $800,000. The building is expected to contain one vault, an
automated teller machine, seven offices, two loan closing rooms, five teller
stations, four drive-in windows and a loan operations area.
Until construction of the permanent bank building is complete, First
Capital and First National Bank will temporarily operate out of offices located
at 1875A South 14th Street, Fernandina Beach, Florida 32034. First Capital will
lease the approximately 1,584 square foot facility pursuant to an 11-month lease
(extendable for any period upon written agreement of the parties) at the monthly
rental of $1,200 ($9.09 per square foot). It is estimated that First Capital and
First National Bank will operate out of this temporary facility for
approximately twelve months until construction of the headquarters building is
complete. First Capital is leasing its temporary offices from Miller, Lee &
McCarroll, Inc., of which David F. Miller and
17
Lorie L. McCarroll, two of the organizers, are principals. For additional
information, see "Certain Transactions" at page 35.
In addition to its headquarters facility, First National Bank plans to
open a small branch office facility, at a location to be determined, in the
third year of its operations. Management expects that the land for this branch
facility will be acquired for a purchase price of approximately $150,000 and the
building will be constructed for approximately $650,000. This facility is
expected to contain a safe, two offices, four teller stations, and two drive-in
windows. First Capital does not anticipate any material expenditures in
connection with its compliance with environmental laws.
The mailing address of First Capital's temporary office is 1875A South
14th Street, Fernandina Beach, Florida 32034, and its temporary telephone number
is (904) 321-0400.
BUSINESS OF FIRST NATIONAL BANK
GENERAL
The organizers expect preliminary approval from the OCC to charter
First National Bank on or before January 30, 1999. The organizers expect
approval of First National Bank's application for deposit insurance from the
FDIC on or before January 30, 1999.
First National Bank anticipates that it will commence business
operations in May 1999 in a temporary facility located at 1875A South 14th
Street, Fernandina Beach, Florida 32034. First National Bank plans to be a full
service commercial bank, without trust powers. First National Bank will offer a
full range of interest bearing and non-interest bearing accounts, including
commercial and retail checking accounts, money market accounts, individual
retirement accounts, regular interest bearing statement savings accounts,
certificates of deposit, commercial loans, real estate loans, home equity loans
and consumer/installment loans. In addition, First National Bank will provide
such consumer services as U.S. Savings Bonds, travelers checks, cashiers checks,
safe deposit boxes, bank by mail services, direct deposit, credit cards and
automatic teller services.
The philosophy of management of First National Bank with respect to its
initial operations will emphasize prompt and responsive personal service to
members of the business and professional community of Nassau County, Florida, in
order to attract customers and acquire market share now controlled by other
financial institutions in First National Bank's market area. First National
Bank's prime location and range of banking services, as well as its emphasis on
personal attention and service, prompt decision making and consistency in
banking personnel, will be major tools in First National Bank's efforts to
capture such market share. In addition, First National Bank's executive officers
have substantial banking experience, which will be an asset in providing both
products and services designed to meet the needs of First National Bank's
customer base. Several of the organizers are active members of the business
community in and around the Fernandina Beach area, and continued active
community involvement will provide an opportunity to promote First National Bank
and its products and services. The organizers intend to utilize target marketing
and superior selling efforts in order to build a distinct institutional image
for First National Bank and to capture a customer base.
MARKET AREA AND COMPETITION
The primary market area for the proposed Bank in Fernandina Beach,
Nassau County, Florida, is within the Jacksonville Metropolitan Statistical Area
("Jacksonville MSA"), which includes the five
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counties of Duval, Nassau, St. Johns, Clay, and Baker. Nassau County is an
integral part of the Jacksonville metropolitan area and has participated in the
growth experienced by the Jacksonville MSA in recent years. The Jacksonville
market has a current population in excess of 1,000,000 people and is projected
to grow to a population of 1,200,000 by 2010. Fernandina Beach's strategic
location within the Jacksonville MSA, along with its coastal setting, makes it a
location of choice for many residents taking advantage of the resources and job
opportunities in the metropolitan market of Jacksonville.
The five-county area has a lower unemployment rate than the State of
Florida which, in turn, is lower than the national average. The climate and
geography of the area have encouraged strong population and economic growth and
the new NFL football team, the Jacksonville Jaguars, has given the five-county
area a higher profile regionally and nationally.
First National Bank's primary service area (the "PSA") represents a
geographic area which includes the communities of Amelia Island, Fernandina
Beach, O'Neil, and Yulee, Florida, and St. Mary's, Georgia. The boundaries of
the PSA are the St. Mary's River and the State of Georgia to the North, the
Atlantic Ocean to the East, Duval County to the South, and Baker County to the
West.
Nassau County has many positive attributes that contribute to the
area's business growth and stability. These include easy access to two
interstates, an extensive rail service network, Jacksonville International
Airport, and the Port of Fernandina, which is the deepest natural port on the
southeastern coast of the United States. The paper, timber, and resort
industries form the core of the area's economy and, as an indication of recent
growth, commercial building permits have increased 237% over the past ten years.
Amelia Island is considered to be one of the foremost residential and retirement
areas in Florida as it attracts affluent retirees and second homeowners from the
Eastern states of the country. The Ritz-Carlton Hotel with its 300 rooms and the
Amelia Island Plantation are among the premier resort hotels on Florida's East
Coast.
The 1990 census estimate of the population within a fifteen-mile radius
of the proposed Bank site was approximately 51,000, a 67.5% increase over the
1980 population. The population within the fifteen-mile radius is approximately
70,000 currently, projected to be approximately 80,000 by 2004. From 1988 to
1998, residential building permits increased from 609 to 996, an increase of
63.5%, with much of that growth occurring in the last five years. The estimated
average family income in Nassau County is $55,294 within a five-mile radius of
the proposed Bank site and $49,102 within a fifteen-mile radius. Median home
values within a five-mile radius are $97,386, and $88,245 within a fifteen-mile
radius.
First National Bank will target its products and services to meet the
needs of the area's customer base and will be a full-service bank, initially
focusing on providing small- to middle-market business loans, residential
mortgages, and consumer loans to these customers. The organizers estimate that
more than 75% of First National Bank's proposed customer base will be businesses
and/or residents located in the PSA. The PSA represents a diverse market with a
growing population and economy.
Competition in First National Bank's PSA is intense. As of June 30,
1998, total bank deposits in Nassau County were approximately $369 million; the
market is served by six banks and three credit unions. The regional bank holding
companies represented in Nassau County are NationsBank Corporation with a market
share of 28.6% total deposits, First Union Corporation with 28.5%, SouthTrust
Bank Corporation with 11.8%, Synovus Financial Corporation with 14.0%, and
Compass Bancshares, Inc. with 7.2%.
There are no existing locally-owned community banks in Nassau County, as
SouthTrust and Synovus recently entered the Nassau County market via the
acquisition of the two remaining independent community banks. Therefore, upon
opening for business in 1999, First National Bank will be the sole independent
commercial bank headquartered in the PSA.
19
Financial institutions primarily compete with one another for deposits.
In turn, a bank's deposit base directly affects such bank's loan activities and
general growth. Primary methods of competition include interest rates on
deposits and loans, service charges on deposit accounts and the designing of
unique financial services products. First National Bank will be competing with
financial institutions which have much greater financial resources than it will
have, and which may be able to offer more and unique services and possibly
better terms to their customers. However, the organizers of First National Bank
believe that it will be able to attract sufficient deposits to enable it to
compete effectively with other area financial institutions. The organizers
believe that First National Bank will have the advantage of being locally owned
and managed, enabling it to benefit from the high visibility and excellent
business contacts of its organizers.
First National Bank will be in competition with existing area financial
institutions other than commercial banks and savings and loan associations,
including insurance companies, consumer finance companies, brokerage houses,
credit unions and other business entities which have recently been invading the
traditional banking markets. Due to the growth of First National Bank's PSA, it
is anticipated that additional competition will continue to be created by new
entrants to the market.
DEPOSITS
First National Bank will offer a full range of interest-bearing and
non-interest-bearing accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, regular
interest-bearing statement savings accounts and certificates of deposit with
fixed and variable rates and a range of maturity date options. The sources of
deposits will be residents, businesses and employees of businesses within First
National Bank's market area, obtained through the personal solicitation of its
officers and directors, direct mail solicitation, and advertisements published
in the local media. First National Bank will pay competitive interest rates on
time and savings deposits up to the maximum permitted by law or regulation. In
addition, First National Bank will implement a service charge fee schedule
competitive with other financial institutions in its market area, covering such
matters as maintenance fees on checking accounts, per item processing fees on
checking accounts, returned check charges and the like.
LOAN PORTFOLIO
First National Bank will engage in a full complement of lending
activities, including commercial, consumer/installment (including credit cards)
and real estate loans. Initially, First National Bank will have a legal lending
limit for unsecured loans of up to $900,000 to any one person. See "Supervision
and Regulation" beginning on page 24.
Commercial and Industrial Loans
Commercial lending will be directed principally towards businesses
whose demands for funds fall within First National Bank's legal lending limits
and who are potential deposit customers of First National Bank. This category of
loans includes loans made to individual, partnership or corporate borrowers, and
obtained for a variety of business purposes. Particular emphasis will be placed
on loans to small- and medium-sized businesses and professionals. Risks of these
types of loans depend on the general business conditions of the local economy
and the local business borrower's ability to sell its products and services in
order to generate sufficient business profits to repay First National Bank under
the agreed upon terms and conditions. The value of the collateral held by First
National Bank as a measure of safety against loss is most volatile in this loan
category.
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Consumer Loans
First National Bank's consumer loans will consist primarily of
installment loans to individuals for personal, family and household purposes,
including automobile loans to individuals and pre-approved lines of credit,
separate from and including credit cards. This category of loans will also
include lines of credit and term loans secured by second mortgages on the
residences of borrowers for a variety of purposes including home improvements,
education, and other personal expenditures. Loss or decline of income by the
borrower due to layoffs, divorce or unexpected medical expenses represent
unplanned occurrences that may represent risk of default to First National Bank.
In the event of default, a shortfall in the value of the collateral may pose a
loss to First National Bank in this loan category.
Real Estate Loans
First National Bank's real estate loans will consist of residential
first and second mortgage loans, residential construction loans, and, to a
limited degree, commercial real estate loans. These loans will be made
consistent with First National Bank's appraisal policy and real estate lending
policy which will detail maximum loan-to-value ratios and maturities. These
loan-to-value ratios will be sufficient to compensate for fluctuations in the
real estate market to minimize the risk of loss to First National Bank.
Residential Mortgage
These loans will be granted to qualified individuals for the purchase
of existing single family residences in First National Bank's market area. Both
fixed and variable rate loans will be offered with competitive terms and fees
consistent with national mortgage investor guidelines. These loans will be made
consistent with First National Bank's appraisal policy and real estate lending
policy which will detail maximum loan-to-value ratios and maturities. Management
expects that these loan-to-value ratios will be sufficient to compensate for
fluctuations in the real estate market to minimize the risk of loss. Mortgage
loans that do not conform to First National Bank's asset/liability mix policies
will be sold in the secondary markets. The risk of this type of activity depends
on the salability of the loan to national investors and interest rate changes.
Delivering these loans to the end investor on a mandatory basis and meeting the
investor's quality control procedures limits First National Bank's risk of
making adjustable rate mortgage loans. The risk assumed by First National Bank
will be conditioned upon its internal controls, loan underwriting and market
conditions in the national mortgage market. First National Bank will retain
loans for its portfolio when it has sufficient liquidity to fund the needs of
the established customers and when rates are favorable to retain the loans. The
loan underwriting standards and policies will generally be the same for both
loans sold in the secondary market and those retained in First National Bank's
portfolio.
Residential Construction
These loans will be made for the construction of single family
residences in First Capital's market area. The loans will be granted to
qualified individuals with down payments of at least 20% of the appraised value
or contract price, whichever is less. The interest rates are expected to
fluctuate at 1% to 2% above First National Bank's prime interest rate during the
six month construction period. First National Bank will also charge a fee of 1%
to 2% in addition to the normal closing costs. These loans generally command
higher rates and fees commensurate with the risk warranted in the construction
lending field. The risk in construction lending is dependent upon the
performance of the builder in building the project to the plans and
specifications of the borrower and First National Bank's ability to administer
and control all phases of the construction disbursements. Upon completion of the
construction period, management anticipates that the mortgage will be converted
to a permanent loan and normally sold to an investor in the secondary mortgage
market.
21
Commercial Real Estate
To a limited extent, First National Bank anticipates that it will also
offer commercial real estate loans to developers of both commercial and
residential properties. In making these loans, First National Bank intends to
manage its credit risk by actively monitoring such measures as advance rate,
cash flow, collateral value and other appropriate credit factors. Management
will attempt to reduce credit risk in the commercial real estate portfolio be
emphasizing loans on owner-occupied office and retail buildings where the
loan-to-value ratio, established by independent appraisals, does not exceed 80%.
In addition, First National Bank may require personal guarantees of the
principal owners.
The organizers believe First National Bank's market offers a
significant opportunity for residential real estate mortgage lending. This
opportunity includes residential construction loans to buyers and owners as well
as to creditworthy contractors for custom-built homes with purchase contracts in
place. First National Bank anticipates that permanent mortgage loans would be
offered with terms that parallel purchase commitments from permanent investors.
While risk of loss in First National Bank's loan portfolio is primarily
tied to the credit quality of the various borrowers, risk of loss may also
increase due to factors beyond its control, such as local, regional and/or
national economic downturns. General conditions in the real estate market may
also impact the relative risk in First National Bank's real estate portfolio. Of
First National Bank's target areas of lending activities, commercial loans are
generally considered to have greater risk than real estate loans or consumer
installment loans.
The organizers intend to originate loans and to participate with other
banks with respect to loans which exceed First National Bank's lending limits.
Management does not believe that loan participations will necessarily pose any
greater risk of loss than loans which First National Bank originates.
INVESTMENTS
In its first year of operation, management anticipates that investment
securities will comprise approximately 27% of First National Bank's assets,
other investments will comprise approximately 5% of its assets and loans will
comprise approximately 63% of its assets. First National Bank intends to invest
primarily in direct obligations of the United States, obligations guaranteed as
to principal and interest by the United States, obligations of agencies of the
United States, and certificates of deposit issued by commercial banks. In
addition, First National Bank will enter into Federal Funds transactions with
its principal correspondent banks and anticipates that it will primarily act as
a net seller of such funds. The sale of Federal Funds amounts to a short-term
loan from First National Bank to another bank.
ASSET/LIABILITY MANAGEMENT
It is the objective of First National Bank to manage assets and
liabilities to provide a satisfactory, consistent level of profitability within
the framework of established cash, loan investment, borrowing, and capital
policies. Certain of First National Bank's officers will be responsible for
monitoring policies and procedures that are designed to ensure an acceptable
composition of the asset/liability mix, stability, and leverage of all sources
of funds while adhering to prudent banking practices. It is the overall
philosophy of management to support asset growth primarily through growth of
core deposits, which include deposits of all categories made by individuals,
partnerships and corporations. Management will seek to invest the largest
portion of First National Bank's assets in commercial, consumer and real estate
loans.
22
First National Bank's asset/liability mix likely will be monitored on a
daily basis with a monthly report reflecting interest-sensitive assets and
interest-sensitive liabilities being prepared and presented to the Board of
Directors. The objective of this policy is to control interest-sensitive assets
and liabilities so as to minimize the impact of substantial movements in
interest rates on First National Bank's earnings.
CORRESPONDENT BANKING
Correspondent banking involves the providing of services by one bank to
another bank which, from an economic or practical standpoint, cannot provide
that service for itself. First National Bank will be required to purchase
correspondent services offered by larger banks, including check collections,
purchase of Federal Funds, security safekeeping, investment services, coin and
currency supplies, overline and liquidity loan participations, and sales of
loans to or participations with correspondent banks.
First National Bank anticipates that it will sell loan participations
to correspondent banks with respect to loans which exceed its lending limit. As
compensation for services provided by a correspondent, First National Bank may
maintain certain balances with such correspondents in non-interest bearing
accounts.
DATA PROCESSING
First National Bank intends to enter into a data processing servicing
agreement with a third party vendor which has not been identified at this time.
It is expected that this servicing agreement will provide First National Bank
with a full range of data processing services, including an automated general
ledger, deposit accounting, commercial, real estate and installment lending,
data processing, and central information filing.
YEAR 2000
As the year 2000 ("Year 2000") approaches, an important business issue
has emerged regarding existing application software programs and operating
systems. To save computing time and disk space, many existing application
software products were designed to accommodate only a two-digit year rather than
a four-digit year. For example, "98" is stored on the system and represents 1998
and "00" represents 1900. As a result, software or equipment that is date
dependent may, for example, recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruption of operations, a temporary inability to process transactions,
send invoices, or engage in similar normal business activity.
Communications and information systems, including systems which monitor
deposit and lending accounts, are critical to First Capital's and First National
Bank's business. Software and hardware developed by independent third parties
will be installed to provide primary banking applications, including core
processing systems. First National Bank intends to choose a source for these
systems that has modified or upgraded its computer applications to become Year
2000 compliant. In addition, First Capital and First National Bank intend to
implement a Year 2000 compliance program whereby First National Bank will review
the Year 2000 issue that may be faced by its other third-party vendors and loan
and deposit customers. Under such program, First Capital will examine the need
for modifications or replacement of all non-Year 2000 compliant pieces of
software. First Capital does not currently expect that the cost of its and First
National Bank's Year 2000 compliance program will be material to its financial
conditions and expects that it will satisfy such compliance program without
material disruption of its operations. Management of First Capital intends to
evaluate the potential effect on its third-party vendor's data processing
systems resulting from Year 2000 issues and to obtain a representation from such
vendor that its core processing systems will be fully Year 2000 compliant prior
to the opening of First National Bank for
23
business. In the event that First Capital, First National Bank, such vendor or
its other significant vendors or loan customers do not successfully and timely
achieve Year 2000 compliance, First National Bank's business, future prospects,
financial condition or results of operations could be materially adversely
affected.
An area of concern to First Capital, First National Bank, and its
primary regulator, the OCC, is the effect of Year 2000 issues on its loan
customers. Failure to address Year 2000 related issues could have significant
impact on the ability of certain customers to continue operations. First
National Bank's loan portfolio could be negatively impacted if customers are
unable to honor loan agreements and defaults occur as a result of failure to
address Year 2000. These customer relationships will be monitored to ensure that
the necessary systems modifications will be made on a timely basis. In addition,
First National Bank will review Year 2000 related issues as part of its normal
underwriting criteria and loan approval process. It also will include Year 2000
compliance requirements and covenants requiring compliance within its standard
loan agreements. Nevertheless, there can be no assurance that these customers
will be Year 2000 compliant. Failure of certain customers to adequately address
these issues could result in loan defaults which would negatively impact First
Capital's earnings.
Although First Capital and First National Bank will take extensive
steps to address Year 2000 related issues, there can be no assurance that all
necessary modifications will be identified and made or that unforeseen
difficulties or costs will not arise. In addition, there can be no assurance
that the failure of First National Bank's internal systems or the systems
provided by its data processing vendor or other companies on which First
Capital's systems rely will not negatively impact First National Bank's systems
or operations.
EMPLOYEES
In their first year of operation, First Capital and First National Bank
anticipate that they will employ 16 persons, including 5 officers. First
National Bank will hire additional persons as needed, including additional
tellers and financial service representatives.
MONETARY POLICIES
The results of operations of First National Bank will be affected by
credit policies of monetary authorities, particularly the Federal Reserve Board.
The instruments of monetary policy employed by the Federal Reserve Board include
open market operations in U.S. Government securities, changes in the discount
rate on member bank borrowings, changes in reserve requirements against member
bank deposits and limitations on interest rates which member banks may pay on
time and savings deposits. In view of changing conditions in the national
economy and in the money markets, as well as the effect of action by monetary
and fiscal authorities, including the Federal Reserve Board, no prediction can
be made as to possible future changes in interest rates, deposit levels, loan
demand, or the business and earnings of First National Bank.
SUPERVISION AND REGULATION
First Capital and First National Bank will operate in a highly
regulated environment, and their business activities will be governed by
statute, regulation, and administrative policies. The business activities of
First Capital and First National Bank will be closely supervised by a number of
regulatory agencies, including the Federal Reserve Board, the OCC, the Florida
Banking Department and the FDIC.
First Capital will be regulated by the Federal Reserve Board under the
federal Bank Holding Company Act, which requires every bank holding company to
obtain the prior approval of the Federal Reserve Board
24
before acquiring more than 5% of the voting shares of any bank or all or
substantially all of the assets of a bank, and before merging or consolidating
with another bank holding company. The Federal Reserve Board (pursuant to
regulation and published policy statements) has maintained that a bank holding
company must serve as a source of financial strength to its subsidiary banks. In
adhering to the Federal Reserve Board policy, First Capital may be required to
provide financial support to a subsidiary bank at a time when, absent such
Federal Reserve Board policy, First Capital may not deem it advisable to provide
such assistance.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994, which became effective in November 1994, the restrictions on interstate
acquisitions of banks by bank holding companies were repealed on September 29,
1995, such that First Capital and any other bank holding company located in
Florida is able to acquire a bank located in any other state, and a bank holding
company located outside Florida can acquire any Florida-based bank, in either
case subject to certain deposit percentage and other restrictions. The
legislation also provides that, unless an individual state elects beforehand
either (i) to accelerate the effective date or (ii) to prohibit out-of-state
banks from operating interstate branches within its territory, on or after June
1, 1997, adequately capitalized and managed bank holding companies will be able
to consolidate their multistate bank operations into a single bank subsidiary
and to branch interstate through acquisitions. De novo branching by an
out-of-state bank would be permitted only if it is expressly permitted by the
laws of the host state. The authority of a bank to establish and operate
branches within a state will continue to be subject to applicable state
branching laws.
A bank holding company is generally prohibited from acquiring control
of any company which is not a bank and from engaging in any business other than
the business of banking or managing and controlling banks. However, there are
certain activities which have been identified by the Federal Reserve Board to be
so closely related to banking as to be a proper incident thereto and thus
permissible for bank holding companies, including the following activities:
acting as investment or financial advisor to subsidiaries and certain outside
companies; leasing personal and real property or acting as a broker with respect
thereto; providing management consulting advice to nonaffiliated banks and
nonbank depository institutions; operating collection agencies and credit
bureaus; acting as a futures commission merchant; providing data processing and
data transmission services; acting as an insurance agent or underwriter with
respect to limited types of insurance; performing real estate appraisals;
arranging commercial real estate equity financing; providing securities
brokerage services; and underwriting and dealing in obligations of the United
States, the states and their political subdivisions. In determining whether an
activity is so closely related to banking as to be permissible for bank holding
companies, the Federal Reserve Board is required to consider whether the
performance of such activities by a bank holding company or its subsidiaries can
reasonably be expected to produce such benefits to the public as greater
convenience, increased competition and gains in efficiency that outweigh such
possible adverse effects as undue concentration of resources, decreased or
unfair competition, conflicts of interest and unsound banking practices.
Generally, bank holding companies are required to obtain prior approval of the
Federal Reserve Board to engage in any new activity not previously approved by
the Federal Reserve Board.
As a national bank, First National Bank is subject to the supervision
of the OCC and, to a limited extent, the FDIC and the Federal Reserve Board.
With respect to expansion, national banks situated in the State of Florida are
generally prohibited from establishing branch offices or facilities outside of
the county in which such main office is located, except (i) in adjacent counties
in certain situations, or (ii) by means of a merger, consolidation or sale of
assets.
First National Bank is also subject to the Florida banking and usury
laws restricting the amount of interest which it may charge in making loans or
other extensions of credit. In addition, First National Bank, as a subsidiary of
First Capital, is subject to restrictions under federal law in dealing with
First Capital and
25
other affiliates, if any. These restrictions apply to extensions of credit to an
affiliate, investments in the securities of an affiliate and the purchase of
assets from an affiliate.
Loans and extensions of credit by national banks are subject to legal
lending limitations. Under federal law, a national bank may grant unsecured
loans and extensions of credit in an amount up to 15% of its unimpaired capital
and surplus to any person if the loans and extensions of credit are not fully
secured by collateral having a market value at least equal to their face amount.
In addition, a national bank may grant loans and extensions of credit to a
single person up to 10% of its unimpaired capital and surplus, provided that the
transactions are fully secured by readily marketable collateral having a market
value determined by reliable and continuously available price quotations, at
least equal to the amount of funds outstanding. This 10% limitation is separate
from, and in addition to, the 15% limitation for unsecured loans. Loans and
extensions of credit may exceed the general lending limit if they qualify under
one of several exceptions. Such exceptions include certain loans or extensions
of credit arising from the discount of commercial or business paper, the
purchase of bankers' acceptances, loans secured by documents of title, loans
secured by U.S. obligations and loans to or guaranteed by the federal
government.
Both First Capital and First National Bank are subject to regulatory
capital requirements imposed by the Federal Reserve Board and the OCC. In 1989,
both the Federal Reserve Board and the OCC issued new risk-based capital
guidelines for bank holding companies and banks which make regulatory capital
requirements more sensitive to differences in risk profiles of various banking
organizations. The capital adequacy guidelines issued by the Federal Reserve
Board are applied to bank holding companies on a consolidated basis with the
banks owned by the holding company. The OCC's risk capital guidelines apply
directly to national banks regardless of whether they are a subsidiary of a bank
holding company. Both agencies' requirements (which are substantially similar),
provide that banking organizations must have capital equivalent to 8% of
weighted risk assets. The risk weights assigned to assets are based primarily on
credit risks. Depending upon the riskiness of a particular asset, it is assigned
to a risk category. For example, securities with an unconditional guarantee by
the United States government are assigned to the lowest risk category. A risk
weight of 50% is assigned to loans secured by owner-occupied one to four family
residential mortgages, provided that certain conditions are met. The aggregate
amount of assets assigned to each risk category is multiplied by the risk weight
assigned to that category to determine the weighted values, which are added
together to determine total risk-weighted assets. Both the Federal Reserve Board
and the OCC have also implemented new minimum capital leverage ratios to be used
in tandem with the risk-based guidelines in assessing the overall capital
adequacy of banks and bank holding companies. Under these rules, banking
institutions are required to maintain a ratio of 3% "Tier 1" capital to total
assets (net of goodwill). Tier 1 capital includes common shareholders equity,
noncumulative perpetual preferred stock and minority interests in the equity
accounts of consolidated subsidiaries.
Both the risk-based capital guidelines and the leverage ratio are
minimum requirements, applicable only to top-rated banking institutions.
Institutions operating at or near these levels are expected to have
well-diversified risk, high asset quality, high liquidity, good earnings and in
general, have to be considered strong banking organizations, rated composite 1
under the CAMELS rating system for banks. Institutions with lower ratings and
institutions with high levels of risk or experiencing or anticipating
significant growth would be expected to maintain ratios 100 to 200 basis points
above the stated minimums.
The OCC has amended the risk-based capital guidelines applicable to
national banks in an effort to clarify certain questions of interpretation and
implementation, specifically with regard to treatment of originated and
purchased mortgage servicing rights and other intangible assets. The OCC's
guidelines provide that intangible assets are generally deducted from Tier 1
capital in calculating a bank's risk-based capital ratio. However, certain
intangible assets which meet specified criteria ("qualifying intangibles") such
as mortgage servicing rights are retained as a part of Tier 1 capital. The OCC
currently maintains that only
26
mortgage servicing rights and purchased credit card relationships meet the
criteria to be considered qualifying intangibles. The OCC's guidelines formerly
provided that the amount of such qualifying intangibles that may be included in
Tier 1 capital was strictly limited to a maximum of 25% of total Tier 1 capital.
The OCC has amended its guidelines to increase the limitation on such qualifying
intangibles from 25% to 50% of Tier 1 capital and further to permit the
inclusion of purchased credit card relationships as a qualifying intangible
asset.
In addition, the OCC has adopted rules which clarify treatment of asset
sales with recourse not reported on a bank's balance sheet. Among assets
affected are mortgages sold with recourse under Fannie Mae, Freddie Mac and
Farmer Mac programs. The rules clarify that even though those transactions are
treated as asset sales for bank Call Report purposes, those assets will still be
subject to a capital charge under the risk-based capital guidelines.
The OCC, the Federal Reserve Board and the FDIC recently adopted final
regulations revising their risk-based capital guidelines to further ensure that
the guidelines take adequate account of interest rate risk. Interest rate risk
is the adverse effect that changes in market interest rates may have on a bank's
financial condition and is inherent to the business of banking. Under the new
regulations, when evaluating a bank's capital adequacy, the agency's capital
standards now explicitly include a bank's exposure to declines in the economic
value of its capital due to changes in interest rates. The exposure of a bank's
economic value generally represents the change in the present value of its
assets, less the change in the value of its liabilities, plus the change in the
value of its interest rate off-balance sheet contracts. Concurrently, the
agencies issued a joint policy statement to bankers, effective June 26, 1996, to
provide guidance on sound practices for managing interest rate risk. In the
policy statement, the agencies emphasize the necessity of adequate oversight by
a bank's board of directors and senior management and of a comprehensive risk
management process. The policy statement also describes the critical factors
affecting the agencies' evaluations of a bank's interest rate risk when making a
determination of capital adequacy. The agencies' risk assessment approach used
to evaluate a bank's capital adequacy for interest rate risk relies on a
combination of quantitative and qualitative factors. Banks that are found to
have high levels of exposure and/or weak management practices will be directed
by the agencies to take corrective action.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"Act"), enacted on December 19, 1991, provides for a number of reforms relating
to the safety and soundness of the deposit insurance system, supervision of
domestic and foreign depository institutions and improvement of accounting
standards. One aspect of the Act involves the development of a regulatory
monitoring system requiring prompt action on the part of banking regulators with
regard to certain classes of undercapitalized institutions. While the Act does
not change any of the minimum capital requirements, it directs each of the
federal banking agencies to issue regulations putting the monitoring plan into
effect. The Act creates five "capital categories" ("well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized") which are defined in the Act and which will
be used to determine the severity of corrective action the appropriate regulator
may take in the event an institution reaches a given level of
undercapitalization. For example, an institution which becomes
"undercapitalized" must submit a capital restoration plan to the appropriate
regulator outlining the steps it will take to become adequately capitalized.
Upon approving the plan, the regulator will monitor the institution's
compliance. Before a capital restoration plan will be approved, any entity
controlling a bank (i.e., holding companies) must guarantee compliance with the
plan until the institution has been adequately capitalized for four consecutive
calendar quarters. The liability of the holding company is limited to the lesser
of five percent of the institution's total assets or the amount which is
necessary to bring the institution into compliance with all capital standards.
In addition, "undercapitalized" institutions will be restricted from paying
management fees, dividends and other capital distributions, will be subject to
certain asset growth restrictions and will
27
be required to obtain prior approval from the appropriate regulator to open new
branches or expand into new lines of business.
As an institution drops to lower capital levels, the extent of action
to be taken by the appropriate regulator increases, restricting the types of
transactions in which the institution may engage and ultimately providing for
the appointment of a receiver for certain institutions deemed to be critically
undercapitalized.
The Act also provides that banks have to meet new safety and soundness
standards. In order to comply with the Act, the Federal Reserve Board, the OCC
and the FDIC have adopted regulations defining operational and managerial
standards relating to internal controls, loan documentation, credit
underwriting, interest rate exposure, asset growth, and compensation, fees and
benefits.
Both the capital standards and the safety and soundness standards which
the Act seeks to implement are designed to bolster and protect the deposit
insurance fund.
In response to the directive issued under the Act, the regulators have
established regulations which, among other things, prescribe the capital
thresholds for each of the five capital categories established by the Act. The
following table reflects the capital thresholds:
· Enlarge/Download Table
TOTAL RISK-BASED TIER 1 RISK-BASED TIER 1
CAPITAL RATIO CAPITAL RATIO LEVERAGE RATIO
------------- ------------- --------------
Well capitalized(1)....................... 10.0% 6.0% 5.0%
Adequately Capitalized(1)................. 8.0% 4.0% 4.0%(2)
Undercapitalized(3)....................... < 8.0% < 4.0% < 4.0%(4)
Significantly Undercapitalized(3)......... < 6.0% < 3.0% < 3.0%
Critically Undercapitalized............... -- -- < 2.0%(5)
---------------------------
(1) An institution must meet all three minimums.
(2) 3.0% for composite 1-rated institutions, subject to appropriate federal
banking agency guidelines.
(3) An institution falls into this category if it is below the specified
capital level for any of the three capital measures.
(4) Less than 3.0% for composite 1-rated institutions, subject to
appropriate federal banking agency guidelines.
(5) Ratio of tangible equity to total assets.
As a national bank, First National Bank is subject to examination and
review by the OCC. This examination is typically completed on-site at least
annually and is subject to off-site review at call. The OCC, at will, can access
quarterly reports of condition, as well as such additional reports as may be
required by the national banking laws.
As a bank holding company, First Capital is required to file with the
Federal Reserve Board an annual report of its operations at the end of each
fiscal year and such additional information as the Federal Reserve Board may
require pursuant to the Act. The Federal Reserve Board may also make
examinations of First Capital and each of its subsidiaries.
The scope of regulation and permissible activities of First Capital and
First National Bank is subject to change by future federal and state
legislation. In addition, regulators sometimes require higher capital levels on
a case-by-case basis based on such factors as the risk characteristics or
management of a particular institution. First Capital and First National Bank
are not aware of any attributes of their operating plan that would cause
regulators to impose higher requirements.
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ORGANIZERS AND PRINCIPAL SHAREHOLDERS
The following persons comprise the organizers of First Capital and
First National Bank: Ron Anderson, Christina H. Bryan, C. Brett Carter, Suellen
Rodeffer Garner, Dr. William K. Haley, Lorie L. McCarroll, David F. Miller,
William J. Mock, Jr., Marlene J. Murphy, Robert L. Peters, Lawrence Piper,
Michael G. Sanchez, Harry R. Trevett, Edward E. Wilson, and Marshall E. Wood.
All of the organizers reside in or near Fernandina Beach, Florida. The
organizers as a group intend to subscribe for 330,000 shares or $3,300,000 in
the offering, which will equal approximately 54.1% of the 610,000 shares to be
outstanding upon completion of the minimum offering or 33.0% of the 1,000,000
shares to be outstanding upon completion of the maximum offering.
Upon commencement of the business of First National Bank, Michael G.
Sanchez will receive options to purchase shares of First National Bank's common
stock equal to the lesser of 30,000 shares or 5% of the amount of common stock
sold in this offering, at an exercise price of $10.00 per share. Twenty percent
of these options shall vest when First National Bank opens for business and
twenty percent shall vest on each of the four successive anniversaries of First
National Bank's opening for business. See "Management--Employment Agreement"
beginning on page 32.
Each of the organizers intends to purchase a certain number of the
shares of common stock of First Capital offered hereby. See "Security Ownership
of Certain Beneficial Owners and Management" at page 34 for a table setting
forth specific numbers of shares to be purchased and the percentage of common
stock to be owned by the organizers after completion of the minimum offering.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF FIRST CAPITAL AND FIRST NATIONAL BANK
First Capital's directors and executive officers and First National
Bank's proposed directors and executive officers are as follows:
· Download Table
Proposed Position
Name Position with First Capital with First National Bank
---- --------------------------- ------------------------
Ron Anderson Class II Director Director
Christina H. Bryan Class I Director Director
C. Brett Carter Class II Director Director
Suellen Rodeffer Garner Chairman of the Board Chairman of the Board
and Class I Director and Director
Dr. William K. Haley Class II Director Director
Lorie L. McCarroll Treasurer and
Class II Director Director
David F. Miller Class II Director Director
William J. Mock, Jr. Class III Director Director
Marlene J. Murphy Class III Director Director
29
· Download Table
Proposed Position
Name Position with First Capital with First National Bank
---- --------------------------- ------------------------
Robert L. Peters Secretary and
Class III Director Director
Lawrence Piper Class III Director Director
Michael G. Sanchez President, Chief Executive President, Chief Executive
Officer and Class I Director Officer and Director
Harry R. Trevett Class I Director Director
Edward E. Wilson Class III Director Director
Marshall E. Wood Class I Director Director
Each of the above persons, with the exception of Suellen Rodeffer
Garner and Michael G. Sanchez, has been a director of First Capital since August
1, 1998. Ms. Garner and Mr. Sanchez have served as directors since inception.
First Capital has a classified Board of Directors whereby one-third of the
members will be elected each year at its Annual Meeting of Shareholders. Upon
such election, each director of First Capital will serve for a term of three
years. See "Description of Capital Stock--Board of Directors" beginning on page
36. First Capital's officers are appointed by the Board of Directors and hold
office at the will of the Board.
Each of First National Bank's proposed directors will, upon approval of
the OCC, serve until First National Bank's first shareholders' meeting, which
meeting will be held shortly after First National Bank receives its charter. At
that meeting, First Capital, as sole shareholder of First National Bank, intends
to elect each interim director to First National Bank's Board of Directors, and
intends to elect Michael G. Sanchez as President and Chief Executive Officer of
First National Bank. After the first shareholders' meeting, directors of First
National Bank will serve for a term of one year and will be elected each year at
its Annual Meeting of Shareholders. First National Bank's officers will be
appointed by its Board of Directors and will hold office at the will of the
Board.
RON ANDERSON, age 54, has served as a director of First Capital since
August 1, 1998. Prior to his service with First Capital, Mr. Anderson served as
managing general partner of Marel Enterprises, a bank property lessor, beginning
in 1997. Mr. Anderson is also the President of several automobile-related
businesses, including Ron Anderson Chevrolet, Anderson Pontiac Buick, Ron
Anderson Pontiac, Rontex- Douglas, and Anderson Enterprises. Mr. Anderson served
as a director of Bank South from 1985 to 1986.
CHRISTINA H. BRYAN, age 53, has served as a director of First Capital
since August 1, 1998. Ms. Bryan is a co-owner of several businesses, serving in
the following capacities: director and Treasurer of Rex Packing, Inc. since
1972; President of Florida Petroleum Corp. since 1984; Secretary and Treasurer
of Island Seafood Co. since 1972; Director and Vice President of YCG, Inc. since
1980; and director and Vice President of YE Hall, Inc. since 1972.
C. BRETT CARTER, age 38, has served as a director of First Capital
since August 1, 1998. Mr. Carter has served as President of Brett's Waterway
CAFE, Inc. since 1989 and as President of Fernandina Improvements, Inc. since
1997. Mr. Carter has also served as a director of Amelia's Restaurant, Inc.
since 1989.
30
SUELLEN RODEFFER GARNER, age 42, has served as a director of First
Capital since July 31, 1998, and served as Secretary and Treasurer of First
Capital from Inception to July 1998. Ms. Garner served as a director of Barnett
Bank of Nassau County from 1990 to 1998. In addition, Ms. Garner is a licensed
orthodontist and has been co-owner of Suellen Rodeffer and David Tod Garner
D.D.S., P.A. since 1983.
DR. WILLIAM K. HALEY, age 42, has served as a director of First Capital
since August 1, 1998. Dr. Haley has been a partner of the AIMB Investment Club
and of Medical Equities Partners since 1995. He is also a licensed surgeon and
has been a partner of and surgeon for North Florida Surgeons P.A. since 1988.
LORIE L. MCCARROLL, age 33, has served as a director of First Capital
since August 1, 1998 and as its Treasurer since July 1998. Ms. McCarroll is a
Certified Public Accountant and has served in that capacity for Miller, Lee &
McCarroll, Inc. since 1992. Ms. McCarroll has also served as an officer with
several rental real estate companies, including Lee-McCarroll, Inc. (Vice
President since 1997); Miller Trevett, McCarroll, Inc. (Treasurer since 1996);
and Miller, Lee & McCarroll, Inc. (Vice President and Secretary since 1997).
DAVID F. MILLER, age 69, has served as a director of First Capital
since August 1, 1998. He has been a consultant for Steinmart, a general fashion
retailer, since 1990, and has owned Amelia Service Center, a real estate
business in Fernandina Beach, Florida, since 1991. Mr. Miller served as
President and Vice- Chairman of the Board of Directors for J.C. Penny Co from
1953 to 1990, and as a director of Barnett Bank of Jacksonville, Florida from
1990 to 1996. Mr. Miller has also served as a director for Winn-Dixie Stores,
Inc. since 1986 and for Suiza Corp. since 1997.
WILLIAM J. MOCK, JR., age 30, has served as a director of First Capital
since August 1, 1998. Mr. Mock is the owner of The Prudential Island Realty, a
real estate sales business which he founded in 1994. Mr. Mock also serves as
President of two real estate investment companies, The Centre Street Company and
Mock Land Company, both of which he founded in 1998.
MARLENE J. MURPHY, age 57, has served as a director of First Capital
since August 1, 1998. Ms. Murphy has been a co-owner of and served as President
of Tilted Anchor Inc., a retail store located in Fernandina Beach, Florida,
since 1983.
ROBERT L. PETERS, age 38, has served as a director of First Capital
since August 1, 1998, and as its Secretary since July 1998. Mr. Peters has been
as an attorney with the law firm of Jacobs and Peters in Fernandina Beach,
Florida, since 1993. Mr. Peters holds a B.S. in accounting and real estate and
received his J.D. from Florida State University.
LAWRENCE PIPER, age 42, has served as a director of First Capital since
August 1, 1998. Mr. Piper has owned and managed Coastal Telephone Systems, a
telephone sales and service company, since 1991.
MICHAEL G. SANCHEZ, age 49, has served as President and Chief Executive
Officer of First Capital since July 31, 1998 and as a director since inception.
Mr. Sanchez will continue to serve as First Capital's President and Chief
Executive Officer after First National Bank commences operations and will serve
in the same capacity for First National Bank once elected, as intended, by the
Board of Directors. Mr. Sanchez has entered into an employment agreement with
First Capital and First National Bank. Prior to founding First Capital, Mr.
Sanchez served as Group President of Lending for Tucker Federal Bank, Tucker,
Georgia, from 1997 to 1998. He also served as President, Chief Executive Officer
and director of Premier Bank, Acworth, Georgia, from 1995 to 1996 and for
Summerville National Bank, Summerville, South Carolina, from 1993 to 1995. Mr.
Sanchez also served as a senior vice president with Prime Bank, Decatur,
Georgia, from 1990 to 1993; with Enterprise National Bank, Atlanta, Georgia,
from 1988 to 1990; and with National City Bank, Rome, Georgia, from 1972 to
1983. Prior to his service with Enterprise National Bank, Mr. Sanchez served
31
as Vice President and Regional Manager for Bank South, N.A., Atlanta, Georgia,
from 1983 to 1988. Mr. Sanchez has over 25 years of experience in the banking
industry.
HARRY R. TREVETT, age 43, has served as a director of First Capital
since August 1, 1998. Mr. Trevett is a certified general contractor and a
licensed real estate broker in the state of Florida. Mr. Trevett owns and serves
as President of several businesses in the real estate and construction
industries, including Trevett & Associated Realty (since 1979); Trevett Homes,
Inc. (since 1982); and Trevett Construction Group (since 1988).
EDWARD E. WILSON, age 47, has served as a director of First Capital
since August 1, 1998. Mr. Wilson is a licensed insurance agent and real estate
salesperson. He is part-owner and has served as an officer of several Florida
insurance agencies comprising Morrow Insurance Group, Inc., including agencies
located in Madison (Secretary and Treasurer since 1985); Dowling Park (Secretary
and Treasurer since 1988); Fernandina Beach (President since 1987); and Yulee
(President since 1998).
MARSHALL E. WOOD, age 52, has served as a director of First Capital
since August 1, 1998. Mr. Wood is an attorney licensed in the states of Florida
and Tennessee. In addition, Mr. Wood served as a director of Barnett Bank of
Nassau County from 1981 to 1998. Mr. Wood has served as President and sole
director of Marshall E. Wood, P.A., Amelia Island, Florida since 1995 and served
as Vice President and Director for Wood & Poole, P.A. from 1986 to 1995.
There are no family relationships between any director or executive
officer and any other director or executive officer of First Capital.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by First Capital to or on behalf of its Chief
Executive Officer for the year ended December 31, 1998. No other officers or
directors of the Board have received compensation in excess of $100,000 for
services to First Capital.
SUMMARY COMPENSATION TABLE
· Download Table
Annual Compensation
-------------------
Name and
Principal Position Year Salary Bonus
------------------ ---- ------ -----
Michael G. Sanchez 1998 $32,000(1) $-0-
President and
Chief Executive
Officer
----------
(1) Salary figure pro-rated from September 1, 1998, the date Mr. Sanchez
was first employed by First National Bank.
EMPLOYMENT AGREEMENT
On September 1, 1998, the organizers entered into an Employment
Agreement (the "Agreement") with Michael G. Sanchez pursuant to which Mr.
Sanchez shall be employed as President and Chief Executive Officer of First
National Bank for a period commencing on August 15, 1998, and ending on August
15, 2003. Under the Agreement, Mr. Sanchez shall be entitled to receive a
minimum annual base salary of $96,000,
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which may be increased from time to time in the sole discretion of the Board of
Directors of First National Bank. In addition, Mr. Sanchez shall be provided
with an automobile, at a cost not to exceed $25,000, as soon as First Capital's
initial public offering is completed, and shall receive a bonus of $10,000 as
soon as practicable after First National Bank opens for business.
Beginning on the first anniversary of First National Bank's opening for
business and on each successive anniversary until it is profitable on a
cumulative basis, Mr. Sanchez shall be eligible to receive in addition to his
base salary such performance bonuses as determined in the discretion of the
Board of Directors of First National Bank. Beginning on the end of the first
year in which First National Bank becomes profitable on a cumulative basis and
continuing in each successive year thereafter during the term of the Agreement,
Mr. Sanchez shall receive a bonus equal to five percent of the net income of
First National Bank.
The Agreement provides for the grant of stock options to Mr. Sanchez in
the amount of the lesser of 30,000 shares or five percent of the Common Stock of
First Capital sold in its initial public offering, at a purchase price of $10.00
per share pursuant to an Incentive Stock Option Plan which was adopted by the
Board of Directors of First Capital in November of 1998. Twenty percent of these
options shall vest beginning on the date First National Bank commences business,
and twenty percent shall vest on each of the four successive anniversaries of
its opening for business. All such options shall be exercisable for a period of
ten years from the date of grant.
The Agreement also provides that Mr. Sanchez shall receive any and all
benefits, such as health, hospitalization, disability, and term life insurance,
generally made available to other senior executives of First Capital and First
National Bank.
Mr. Sanchez has agreed to a non-compete and non-solicitation provision
pursuant to which he agrees that, through the actual date of termination of the
Agreement and for a period of twelve months thereafter, he shall not, without
the prior written consent of First National Bank, either directly or indirectly
serve as an executive officer of any bank, bank holding company, or other
financial institution within a 35-mile radius of First National Bank.
The Agreement provides that First National Bank may terminate the
employment of Mr. Sanchez for any reason, and, in such event, Mr. Sanchez shall
be entitled to the payment of his base salary for a period of twelve months.
COMPENSATION OF DIRECTORS
Directors will not receive any compensation during First National
Bank's first year of operations.
STOCK OPTION PLANS
First Capital's Board of Directors has adopted an Incentive Stock
Option Plan (the "Plan") to cover Mr. Sanchez' options and for employees who are
contributing significantly to the management or operation of the business of
First Capital or its subsidiaries as determined by a committee designated by the
Board of Directors to administer the Plan. The Plan is contingent upon approval
by the shareholders of First Capital. The Plan provides for the grant of options
at the discretion of the committee administering the Plan. No person may serve
as a member of the committee who is then eligible for a grant of options under
the Plan or has been so eligible for a period of one year prior to his or her
service on the committee. The option exercise price must be at least 100% (110%
in the case of a holder of 10% or more of the Common Stock) of the fair market
value of the stock on the date the option is granted. The options are
exercisable by the
33
holder thereof in full at any time prior to their expiration in accordance with
the terms of the Plan. Stock options granted pursuant to the Plan will expire on
or before (1) the date which is the tenth anniversary of the date the option is
granted, or (2) the date which is the fifth anniversary of the date the option
is granted in the event that the option is granted to a key employee who owns
more than 10% of the total combined voting power of all classes of stock of
First Capital or any of its subsidiaries, if any.
The Board of Directors may, at First Capital's first annual meeting of
shareholders after First National Bank opens for business, propose for
shareholder approval a directors' stock option plan, which will be designed to
provide incentive compensation to directors in the event that First Capital's
common stock increases in value during the term of such options. The details of
this directors' option plan have not yet been determined, but these details will
be disclosed to shareholders in First Capital's proxy statement issued in
connection with solicitation of shareholder approval of such plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Each of the organizers of First Capital intends to purchase a number of
the shares of common stock of First Capital offered hereby, as set forth in the
following table, which specifies the percentage of common stock to be owned by
the organizers assuming completion of the minimum offering of 610,000 shares.
· Download Table
PERCENT OF
NUMBER OF TOTAL
NAME OF BENEFICIAL OWNER SHARES(1) SHARES
------------------------ ----------- -------
Ron Anderson 15,000 2.46%
Christina H. Bryan 25,000 4.10
C. Brett Carter 40,000 6.56
Suellen Rodeffer Garner 40,000 6.56
Dr. William K. Haley 10,000 1.64
Lorie L. McCarroll 15,000 2.46
David F. Miller 40,000 6.56
William J. Mock 20,000 3.28
Marlene J. Murphy 10,000 1.64
Robert L. Peters 20,000 3.28
Lawrence Piper 5,000 0.82
Michael G. Sanchez 10,000 1.64
Harry R. Trevett 40,000 6.56
Edward E. Wilson 20,000 3.28
Marshall E. Wood 20,000 3.28
------- -----
TOTAL 330,000 54.10%
---------------------------
(1) In addition, each of the organizers will be granted warrants to
purchase additional shares of common stock. Each organizer will receive
up to a maximum of one warrant for every two shares of common stock he
or she has purchased in the offering. Each warrant will entitle the
organizer to purchase one additional share of common stock. The
warrants will become exercisable in equal parts beginning on the date
that First National Bank commences business and on each of the four
succeeding anniversaries of such date. The warrants will expire five
years after the date of grant and will be exercisable at the public
offering price of $10.00 per share. See "Terms of the
Offering--Purchases by Organizers of First Capital" beginning on page
12.
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CERTAIN TRANSACTIONS
Once First National Bank opens for business, it is anticipated that it
will extend loans from time to time to certain of its directors, executive
officers, their associates, and members of the immediate families of the
directors. These loans will be made in the ordinary course of business on
substantially the same terms, including interest rates, collateral and repayment
terms, as those prevailing at the time for comparable transactions with persons
not affiliated with First Capital or First National Bank, and will not involve
more than the normal risk of collectibility or present other unfavorable
features.
The rental real estate firm of Miller, Lee & McCarroll, Inc., of which
David F. Miller is part-owner and Lorie L. McCarroll is Vice President,
Secretary, and part-owner, is lessor of First Capital's temporary office space
at 1875 South 14th Street, Fernandina Beach, Florida 32034, and receives monthly
rental payments of $1,200 thereon from First Capital. Based on available market
data, the Board of Directors has determined that the lease rate is competitive.
Ms. McCarroll and Mr. Miller are directors of First Capital and First National
Bank.
The real property on which the permanent facility will be built was
acquired from Bosco Enterprises. One of the principals of Bosco Enterprises is
the husband of Organizer and Director Lorie McCarroll. The organizers have
received an appraisal from an independent third party appraising the value of
the property at the purchase price, $265,000.
First Capital has acquired key-man life insurance on the life of
Michael G. Sanchez from Morrow Insurance Group, Inc. Edward E. Wilson, an
organizer and director of First Capital and First National Bank, is the owner of
Morrow Insurance Group, Inc. Although the policy is being underwritten by an
independent insurance company, it is expected that Mr. Wilson will receive
commissions as an agent for his involvement with the transaction.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of First Capital consists of 10,000,000
shares of common stock, $.01 par value, and 1,000,000 shares of preferred stock,
$.01 par value. No shares of either type are presently issued and outstanding.
COMMON STOCK
The holders of common stock are entitled to elect the members of the
Board of Directors of First Capital and such holders are entitled to vote as a
class on all matters required or permitted to be submitted to the shareholders
of First Capital.
35
No holder of any class of stock of First Capital has preemptive rights
with respect to the issuance of shares of that or any other class of stock and
the common stock is not entitled to cumulative voting rights with respect to the
election of directors.
The holders of common stock are entitled to dividends and other
distributions if, as, and when declared by the Board of Directors out of assets
legally available therefor. Upon the liquidation, dissolution, or winding up of
First Capital, the holder of each share of common stock will be entitled to
share equally in the distribution of First Capital's assets. The holders of
common stock are not entitled to the benefit of any sinking fund provision. The
shares of common stock of First Capital are not subject to any redemption
provisions, nor are they convertible into any other security or property of
First Capital. All outstanding shares of each class of common stock are, and the
shares to be outstanding upon completion of this offering will be, fully paid
and nonassessable.
PREFERRED STOCK
The Board of Directors may, without approval of First Capital's
shareholders, from time to time authorize the issuance of preferred stock in one
or more series for such consideration and, within certain limits, with such
relative rights, preferences and limitations as the Board of Directors may
determine. The relative rights, preferences and limitations that the Board of
Directors has the authority to determine as to any such series of preferred
stock include, among other things, dividend rights, voting rights, conversion
rights, redemption rights and liquidation preferences. Because the Board of
Directors has the power to establish the relative rights, preferences and
limitations of each series of preferred stock, it may afford to the holders of
any such series preferences and rights senior to the rights of the holders of
shares of common stock. Although the Board of Directors has no intention at the
present time of doing so, it could cause the issuance of preferred stock that
could discourage an acquisition attempt or other transactions that some, or a
majority of, the shareholders might believe to be in their best interests or in
which the shareholders might receive a premium for their shares of common stock
over the market price of such shares.
BOARD OF DIRECTORS
The initial Board of Directors of First Capital consists of fifteen
directors. The directors are divided into three classes, designated Class I,
Class II and Class III. Each class will consist, as nearly as may be possible,
of one-third of the total number of directors constituting the entire Board of
Directors. The term of First Capital's initial Class I directors will expire at
its first annual meeting of shareholders; the term of its initial Class II
directors will expire at the second annual meeting of shareholders; and the term
of its initial Class III directors will expire at the third annual meeting of
shareholders. At each annual meeting of shareholders, successors to the class of
directors whose term expires at the annual meeting will be elected for a
three-year term. If the number of directors is changed, an increase or decrease
will be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class will
hold office for a term that will coincide with the remaining term of that class,
but in no event will a decrease in the number of directors shorten the term of
any incumbent director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors will have the same remaining term as
that of his predecessor. Except in the case of removal from office, any vacancy
on the Board of Directors, will be filled by a majority vote of the remaining
directors then in office.
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and his or her position
filled by another person nominated and elected for that purpose by the holders
of 75 percent of the outstanding shares of First Capital's common stock.
36
The effect of the classified Board of Directors is to make it more
difficult for a person, entity or group to effect a change in control of First
Capital through the acquisition of a large block of its voting stock.
REQUIREMENTS FOR SUPERMAJORITY APPROVAL OF TRANSACTIONS
First Capital's Articles of Incorporation contain provisions requiring
supermajority shareholder approval to effect certain extraordinary corporate
transactions which are not approved by the Board of Directors. The Articles of
Incorporation require the affirmative vote or consent of the holders of at least
two-thirds (66-2/3%) of the shares of each class of common stock of First
Capital entitled to vote in elections of directors to approve any merger,
consolidation, disposition of all or a substantial part of the assets of First
Capital or a subsidiary of First Capital, exchange of securities requiring
shareholder approval, or liquidation of First Capital ("Covered Transaction"),
if any person who, together with his affiliates and associates owns beneficially
5% or more of any voting stock of First Capital ("Interested Person"), is a
party to the transaction; provided that three-fourths (75%) of the entire Board
of Directors of First Capital has not approved the transaction. In addition, the
Articles of Incorporation require the separate approval by the holders of a
majority of the shares of each class of stock of First Capital entitled to vote
in elections of directors which are not beneficially owned, directly or
indirectly, by an Interested Person, of any merger, consolidation, disposition
of all or a substantial part of the assets of First Capital or a subsidiary of
First Capital, or exchange of securities requiring shareholder approval
("Business Combination"), if an Interested Person is a party to such
transaction; provided, that such approval is not required if (a) the
consideration to be received by the holders of the stock of First Capital meets
certain minimal levels determined by a formula under the Articles of
Incorporation (generally the highest price paid by the Interested Person for any
shares which he has acquired), (b) there has been no reduction in the average
dividend rate from that which was obtained prior to the time the Interested
Person became such, and (c) the consideration to be received by shareholders who
are not Interested Persons shall be paid in cash or in the same form as the
Interested Person previously paid for shares of such class of stock. These
Articles of First Capital's Articles of Incorporation, as well as the Article
establishing a classified Board of Directors, may be amended, altered, or
repealed only by the affirmative vote or consent of the holders of at least 75
percent of the shares of each class of stock of First Capital entitled to vote
in elections of directors.
The effect of these provisions is to make it more difficult for a
person, entity or group to effect a change in control of First Capital through
the acquisition of a large block of its voting stock.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
As provided under Florida law, First Capital's Articles of
Incorporation provide that a director shall not be personally liable to First
Capital or its shareholders for monetary damages for breach of duty of care or
any other duty owed to First Capital as a director, except that such provision
shall not eliminate or limit the liability of a director (a) for any
appropriation, in violation of his duties, of any business opportunity of First
Capital, (b) for acts or omissions which involve intentional misconduct or a
knowing violation of law, (c) for unlawful corporate distributions, or (d) for
any transaction from which the director received an improper personal benefit.
Article VI of First Capital's Bylaws provides that First Capital shall
indemnify a director who has been successful in the defense of any proceeding to
which he was a party or in defense of any claim, issue or matter therein because
he is or was a director of First Capital, against reasonable expenses incurred
by him in connection with such defense.
First Capital's Bylaws also provide that First Capital is required to
indemnify any director, officer, employee or agent made a party to a proceeding
because he is or was a director, employee or agent against
37
liability incurred in the proceeding if he acted in a manner he believed in good
faith or to be in or not opposed to the best interests of First Capital and, in
the case of any criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. Determination concerning whether or not the applicable
standard of conduct has been met can be made by (a) a disinterested majority of
the Board of Directors, (b) a majority of a committee of disinterested
directors, (c) independent legal counsel, or (d) an affirmative vote of a
majority of shares held by disinterested shareholders. No indemnification may be
made to or on behalf of a director, officer, employee or agent (i) in connection
with a proceeding by or in the right of First Capital in which such person was
adjudged liable to First Capital or (ii) in connection with any other proceeding
in which such person was adjudged liable on the basis that personal benefit was
improperly received by him.
First Capital may, if authorized by its shareholders by a majority of
votes which would be entitled to be cast in a vote to amend its Articles of
Incorporation, indemnify or obligate itself to indemnify a director, officer,
employee or agent made a party to a proceeding, including a proceeding brought
by or in the right of First Capital.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
First Capital has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
STATUTORY ANTI-TAKEOVER PROVISIONS
The State of Florida has statutory provisions relating to business
combinations between a Florida corporation and an "interested shareholder" that
outline the statutory requirements to effect such transactions. Florida also has
statutory provisions relating to "control-share acquisitions." However, these
statutory anti-takeover provisions do not apply to First Capital because it has
elected not to be governed by these provisions in its Articles of Incorporation.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which First Capital
or First National Bank is a party or of which any of their properties are
subject; nor are there material proceedings known to First Capital or First
National Bank to be contemplated by any governmental authority; nor are there
material proceedings known to First Capital or First National Bank, pending or
contemplated, in which any director, officer or affiliate or any principal
security holder of First Capital or First National Bank, or any associate of any
of the foregoing is a party or has an interest adverse to First Capital or First
National Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby have been passed upon for First Capital by Smith, Gambrell &
Russell, LLP, Atlanta, Georgia, counsel to First Capital.
38
EXPERTS
The financial statements of First Capital as of October 31, 1998
included in this Prospectus have been audited by Porter Keadle Moore LLP,
independent certified public accountants, as stated in their report, which is
included herein, and has been so included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
First Capital has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement (herein, together with all
amendments thereto, called the "Registration Statement") under the Securities
Act of 1933, as amended, with respect to the shares of common stock offered
hereby. This Prospectus does not contain all of the information included in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to First Capital and the common stock, reference is
hereby made to the Registration Statement and the exhibits and schedules
thereto. In addition, First Capital will provide, without charge, to each person
who receives a prospectus, upon written or oral request of such person, a copy
of any of the information that was incorporated by reference in the prospectus.
Such request shall be directed to First Capital either at its initial address at
1875A South 14th Street, Fernandina Beach, Florida 32034 or at its initial
telephone number at (904) 321-0400.
39
FINANCIAL STATEMENTS
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
OCTOBER 31, 1998
C O N T E N T S
---------------
· Enlarge/Download Table
P A G E
-------
Report of Independent Certified Public Accountants........................................................ F-3
Balance Sheet............................................................................................. F-4
Statement of Operations................................................................................... F-5
Statement of Changes in Stockholder's Deficit............................................................. F-6
Statement of Cash Flows................................................................................... F-7
Notes to Financial Statements............................................................................. F-8
F-1
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
FINANCIAL STATEMENTS
OCTOBER 31, 1998
(WITH INDEPENDENT ACCOUNTANT'S REPORT THEREON)
F-2
[PORTER KEADLE MOORE, LLP LETTERHEAD]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
First Capital Bank Holding Corporation
We have audited the accompanying balance sheet of First Capital Bank Holding
Corporation (a development stage corporation) as of October 31, 1998, and the
related statements of operations, changes in stockholder's deficit and cash
flows for the period from July 29, 1998 (inception) to October 31, 1998. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Capital Bank Holding
Corporation as of October 31, 1998 and the results of its operations and its
cash flows from July 29, 1998 (inception) to October 31, 1998 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that First
Capital Bank Holding Corporation will continue as a going concern. As discussed
in note 1 to the financial statements, the Company is in the organization stage
and has not commenced operations. Also, as discussed in note 3, the Company's
future operations are dependent on obtaining capital through an initial stock
offering and obtaining the necessary final regulatory approvals. These factors
and the expense associated with development of a new banking institution raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are described in note 3. The
financial statements do not include any adjustments relating to the
recoverability of reported asset amounts or the amount of liabilities that might
result from the outcome of this uncertainty.
/s/ Porter Keadle Moore, LLP
----------------------------------------
Atlanta, Georgia
December 2, 1998
F-3
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
OCTOBER 31, 1998
· Download Table
Assets
------
Cash $ 3,766
Land 265,000
Deferred offering expenses 10,685
Other assets 26,424
---------
$ 305,875
=========
Liabilities and Stockholder's Deficit
-------------------------------------
Accounts payable and accrued expenses $ 9,772
Note payable - line of credit 430,678
---------
Current liabilities 440,450
---------
Stockholder's deficit:
Preferred stock, par value $.01, 1,000,000 shares authorized;
no shares issued or outstanding --
Common stock, par value $.01, 10,000,000 shares authorized;
10 shares issued and outstanding --
Additional paid-in capital 500
Deficit accumulated during the development stage (134,575)
---------
(134,075)
Less: Common stock subscribed (500)
---------
Total stockholder's deficit (134,575)
---------
$ 305,875
=========
See accompanying notes to financial statements.
F-4
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO OCTOBER 31, 1998
· Download Table
Expenses:
Salaries and employee benefits $ 34,551
Interest 6,340
Other operating 93,684
--------
Net loss $134,575
========
See accompanying notes to financial statements.
F-5
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIT
FOR THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO OCTOBER 31, 1998
· Enlarge/Download Table
Deficit
Accumulated
Additional During the Common
Preferred Common Paid-in Development Stock
Stock Stock Capital Stage Subscribed Total
--------- ------ ----------- ----------- ---------- -------
Common stock subscribed $-- -- 500 -- (500) --
Net loss -- -- -- (134,575) -- (134,575)
-------- -------- -------- -------- -------- --------
Balance, October 31, 1998 $-- -- 500 (134,575) (500) (134,575)
======== ======== ======== ======== ===== ========
See accompanying notes to financial statements.
F-6
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO OCTOBER 31, 1998
· Download Table
Cash flows from operating activities:
Net loss $(134,575)
Adjustments to reconcile net loss to net cash used in
operating activities:
Increase in other assets (26,424)
Increase in accounts payable and accrued expenses 9,772
---------
Net cash used in operating activities (151,227)
---------
Cash flows from investing activities:
Purchase of land (265,000)
Payments for stock offering expenses (10,685)
---------
Net cash used in investing activities (275,685)
---------
Cash flows from financing activities, consisting of
proceeds from note payable 430,678
---------
Net increase in cash 3,766
Cash at beginning of period --
---------
Cash at end of period $ 3,766
=========
Supplemental disclosure of cash flow information:
Interest paid $ 6,340
=========
Noncash financing activities:
Common stock subscribed $ 500
=========
See accompanying notes to financial statements.
F-7
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
First Capital Bank Holding Corporation (the Company) was incorporated
for the purpose of becoming a bank holding company. The Company intends
to acquire 100% of the outstanding common stock of First National Bank
of Nassau County (the Bank) (in organization), which will operate in
the Fernandina Beach, Florida area. The organizers of the Bank filed a
joint application to charter the Bank with the Office of the
Comptroller of Currency and the Federal Deposit Insurance Corporation
on September 30, 1998. Provided that the application is timely approved
and necessary capital is raised, it is expected that operations will
commence in the second quarter of 1999.
Operations through October 31, 1998 relate primarily to expenditures by
the organizers for incorporating and organizing the Company. All
expenditures by the organizers are considered expenditures of the
Company.
The Company plans to raise between $6,100,000 and $10,000,000 through
an offering of its common stock at $10 per share, of which $6,000,000
will be used to capitalize the Bank. The organizers and directors
expect to subscribe for a minimum of approximately $3,000,000 of the
Company's stock.
In connection with the Company's formation and initial offering,
warrants will be issued to the organizing stockholders. The warrants
allow each holder to purchase one additional share of common stock for
each two shares purchased in connection with the initial offering and
are exercisable on each of the four succeeding anniversaries of the
date of opening of the Bank at the initial offering price of $10 per
share. These warrants expire five years after the date of grant. The
actual number of warrants granted will be limited so that the
organizers will own no more than 23% of the total number of shares
outstanding on a fully diluted basis. The Company has also reserved
100,000 shares for the issuance of options under an employee incentive
stock option plan.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION COSTS
Costs incurred for the organization of the Company and the Bank
(consisting principally of legal, accounting, consulting and
incorporation fees) are being expensed as incurred.
DEFERRED OFFERING EXPENSES
Costs incurred in connection with the stock offering, consisting of
direct, incremental costs of the offering, are being deferred and will
be offset against the proceeds of the stock sale as a charge to
additional paid in capital.
PRE-OPENING EXPENSES
Costs incurred for overhead and other operating expenses are included
in the current period's operating results.
PROFORMA NET LOSS PER COMMON SHARE
Proforma net loss per common share is calculated by dividing net loss
by the minimum number (610,000) of common shares, which would be
outstanding should the offering be successful, as prescribed in Staff
Accounting Bulletin Topic 1:B. The proforma net loss per share for the
period ended October 31, 1998 was $0.22 per share.
F-8
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(3) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $134,575 for the period from July
29, 1998 (inception) to October 31, 1998. At October 31, 1998,
liabilities exceeded assets by $134,575.
At October 31, 1998, the Company is funded by a line of credit from a
bank. Management believes that the current level of expenditures is
well within the financial capabilities of the organizers and adequate
to meet existing obligations and fund current operations, but obtaining
final regulatory approvals and commencing banking operations is
dependent on successfully completing the stock offering.
To provide permanent funding for its operation, the Company is
currently offering a minimum of 610,000 and a maximum of 1,000,000
shares of its common stock, $.01 par value, at $10 per share in an
initial public offering. Costs related to the organization and
registration of the Bank's common stock will be paid from the gross
proceeds of the offering. Shares issued which are outstanding at
October 31, 1998 will be redeemed concurrently with the consummation of
the offering. Should subscriptions for the minimum offering not be
obtained, amounts paid by the subscribers with their subscriptions will
be returned and the offer withdrawn.
(4) LINE OF CREDIT
Organization, offering and pre-opening costs incurred prior to the
opening for business will be funded under a $700,000 line of credit.
The terms of the existing line of credit, which is guaranteed by the
organizers, include a maturity of July 29, 1999 and interest calculated
at the prime interest rate.
(5) PREFERRED STOCK
Shares of preferred stock may be issued from time to time in one or
more series as established by resolution of the Board of Directors of
the Company. Each resolution shall include the number of shares issued,
preferences, special rights and limitations as determined by the Board.
(6) COMMITMENTS AND RELATED PARTY TRANSACTIONS
On August 19, 1998 the Company entered into an operating lease
agreement with two of the organizers for space which will serve as the
temporary main office of the Company and the Bank at a rate of $1,200
per month, subject to increase after 6 months. The lease expires on
June 30, 1999 and can be canceled with a 30 day written notice.
Land on which the main office will be constructed was purchased from a
company owned by the spouse of one of the organizers.
The Company entered into an employment agreement with its President and
Chief Executive Officer, providing for an initial term of five years
commencing August 15, 1998. The agreement provides for a base salary,
an incentive bonus based on five percent of the Company's pre-tax
earnings, and annual stock options which vest equally over five years
at $10 per share equal to the lesser of 30,000 shares or five percent
of the number of shares sold in the initial public offering.
Additionally, the Company is to maintain a $1,000,000 key man life
insurance policy, with $500,000 payable to the Company and $500,000
payable to the President's family. The agreement further provides for
other prerequisites, and subjects the President to certain noncompete
restrictions.
F-9
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(7) INCOME TAXES
At October 31, 1998, the Company had a net operating loss carryforward
for tax purposes of $6,340, which will expire in 2013, if not
previously utilized. No income tax expense or benefit was recorded for
the period ended October 31, 1998, due to this loss carryforward.
The following summarizes the sources and expected tax consequences of
future taxable deductions which comprise the net deferred taxes at
October 31, 1998:
· Download Table
Deferred tax assets:
Pre-opening expenses $ 43,315
Operating loss carryforwards 2,156
--------
Total gross deferred tax assets 45,471
Less valuation allowance (45,471)
--------
Net deferred taxes $ --
========
The future tax consequences of the differences between the financial
reporting and tax basis of the Company's assets and liabilities
resulted in a net deferred tax asset. A valuation allowance was
established for the net deferred tax asset, as the realization of these
deferred tax assets is dependent on future taxable income.
F-10
APPENDIX "A"
First Capital Bank Holding Corporation
1875A South 14th Street
Fernandina Beach, Florida 32034
________________, 1999
The Bankers Bank
3715 Northside Parkway
300 North Creek
Suite 800
Atlanta, Georgia 30327
Attention: [name]
Gentlemen:
First Capital Bank Holding Corporation, a Florida corporation (the
"Company"), proposes to offer for sale up to 1,000,000 shares of its $.01 par
value common stock (the "Common Stock"), which shares shall be registered under
the Securities Act of 1933, as amended, by the filing of a Registration
Statement on Form SB-2 with the Securities and Exchange Commission. Shares will
be offered at a price of $10.00 each. The minimum subscription per subscriber is
100 shares.
(1) The Company hereby appoints and designates you as Escrow Agent for the
purposes set forth herein. By your signature hereto, you acknowledge
and accept said appointment and designation. The Company understands
that you, by accepting said appointment and designation, in no way
endorse the merits of the offering of the shares described herein. The
Company agrees to notify any person acting on its behalf that your
position as Escrow Agent does not constitute such an endorsement, and
to prohibit said persons from the use of your name as an endorser of
such offering. The Company further agrees to allow you to review any
sales literature in which your name appears and which is used in
connection with such offering.
(2) The Company shall deliver all payments received in purchase of the
shares (the "Subscription Funds") to you in the form in which they are
received by noon of the next business day after their receipt by the
Company, and the Company shall deliver to you within five (5) calendar
days copies of written acceptances of the Company for shares in the
Company for which the Subscription Funds represent payment. Upon
receipt of such written acceptance by the Company, the Escrow Agent
shall deposit such funds into the Escrow Account. The Company shall
also deliver to you copies of completed Subscription Agreements for
each subscriber, along with such subscriber's name, address, number of
shares subscribed and social security or taxpayer identification
number.
(3) Subscription Funds shall be held and disbursed by you in accordance
with the terms of this Agreement.
A-1
________________, 1999
(4) In the event any Subscription Funds are dishonored for payment for any
reason, you agree to orally notify the Company immediately thereof and
to confirm same in writing and to return the dishonored Subscription
Funds to the Company in the form in which they were delivered to you.
(5) Should the Company elect to accept a subscription for less than the
number of shares shown in the purchaser's Subscription Agreement, by
indicating such lesser number of shares on the written acceptance of
the Company transmitted to you, you shall deposit such payment in the
escrow account and then remit within ten (10) calendar days after such
deposit to such subscriber at the address shown in his Subscription
Agreement that amount of his Subscription Funds in excess of the amount
which constitutes full payment for the number of subscribed shares
accepted by the Company as shown in the Company's written acceptance,
without interest or diminution. Said address shall be provided by the
Company to you as requested.
(6) As used herein, the term "Total Receipts" shall mean the sum of all
Subscription Funds delivered to you pursuant to Paragraph (2) hereof,
less all Subscription Funds returned pursuant to Paragraphs (4) and (5)
hereof.
(a) As used herein, the term "Expiration Date" shall mean the date
which marks the 90th day after the date of the Prospectus;
provided, however, in the event that you are given oral
notification, followed in writing, by the Company that it has
elected to extend the offering for an additional period of 90
days after the initial period, then the Expiration Date shall
mean the date which marks the 180th day after the date of the
Prospectus; provided further, in the event that you are given
oral notification, followed in writing, by the Company that it
has elected to extend the offering for an additional period of
90 days after the first extension, then the Expiration Date
shall mean the date which marks the 270th day after the date
of the Prospectus.
(b) If Total Receipts equal $6,100,000 on or before the Expiration
Date, you shall, on the Closing Date, no later than 10:00
A.M., Eastern Daylight Time, upon receipt of 24-hour written
instructions from the Company, remit all amounts representing
Subscription Funds, plus any profits or earnings thereon after
deducting your fees, if any, held by you pursuant hereto in
accordance with such instructions.
(7) If (i) Total Receipts are less than $6,100,000 as of 5:00 P.M.,
Eastern Daylight Time on the Expiration Date, or (ii) the offering is
canceled by the Company at any time prior to the Expiration Date, then
you shall promptly remit to each subscriber at the address set forth in
his Subscription Agreement an amount equal to the amount of his
Subscription Funds thereunder, adjusted for his allocated share of any
net profits earned on the investment of the Subscription Funds as set
forth in Paragraph 8, below. The Company hereby agrees to provide to
you in writing the specific allocations of net profits attributable to
each subscriber hereunder.
(8) Pending disposition of the Subscription Funds under this Agreement, you
are authorized, upon oral instructions, followed in writing, given by
Michael G. Sanchez, to invest Subscription Funds in Federal Funds, in
short-term direct obligations of the United States government, in
short-term FDIC or FSLIC insured certificates of deposit, and/or in
Fidelity Institutional U.S. Treasury Cash Portfolio, for short-term
obligations of the United States government, but in any case with
maturities of 90 days or less. For purposes of Paragraph 7 above, the
specific allocations of net profits
A-2
________________, 1999
attributable to each subscriber shall be determined by the Company as
follows: each subscriber's allocated share of earnings on the
Subscription Funds, after deducting your fees, if any, shall be that
fraction (i) the numerator of which is the dollar amount of such
subscriber's accepted subscription multiplied by the number of days
between the date of acceptance of the purchaser's subscription and the
date of the offering's termination, inclusive (the subscriber's "Time
Subscription Factor"), and (ii) the denominator of which is the
aggregate Time Subscription Factors of all purchasers depositing
Subscription Funds in the escrow account.
(9) Your obligations as Escrow Agent hereunder shall terminate upon your
transferring all funds you hold hereunder pursuant to the terms of
Paragraphs (4) through (7) herein, as applicable.
(10) As used herein, "Closing Date" shall mean the third business day
following the date of receipt by you of Total Receipts aggregating
$6,100,000 and executed Subscription Agreements and copies of written
acceptances of the Company in connection therewith.
(11) You shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization, or other paper or
document which you believe to be genuine and what it purports to be.
(12) You shall not be liable for anything which you may do or refrain from
doing in connection with this Escrow Agreement, except your own gross
negligence or willful misconduct.
(13) You may confer with legal counsel in the event of any dispute or
question as to the construction of any of the provisions hereof, or
your duties hereunder, and you shall incur no liability and you shall
be fully protected in acting in accordance with the opinions and
instructions of such counsel. Any and all expenses and legal fees in
this regard are payable from the Subscription Funds unless paid by the
Company.
(14) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection
with any Subscription Funds involved herein or affected hereby, you
shall be entitled to refuse to comply with any such claims or demands
as long as such disagreement may continue, and in so refusing, shall
make no delivery or other disposition of any Subscription Funds then
held by you under this Agreement, and in so doing you shall be entitled
to continue to refrain from acting until (a) the right of adverse
claimants shall have been finally settled by binding arbitration or
finally adjudicated in a court assuming and having jurisdiction of the
Subscription Funds involved herein or affected hereby or (b) all
differences shall have been adjusted by agreement and you shall have
been notified in writing of such agreement signed by the parties
thereto. In the event of such disagreement, you may, but need not,
tender into the registry or custody of any court of competent
jurisdiction all money or property in your hands under the terms of
this Agreement, together with such legal proceedings as you deem
appropriate and thereupon to be discharged from all further duties
under this Escrow Agreement. The filing of any such legal proceeding
shall not deprive you of your compensation earned prior to such filing.
You shall have no obligation to take any legal action in connection
with this Agreement or towards its enforcement, or to appear in,
prosecute or defend any action or legal proceeding which would or might
involve you in any cost, expense, loss or liability unless
indemnification shall be furnished.
A-3
________________, 1999
(15) You may resign for any reason, upon thirty (30) days written notice to
the Company. Upon the expiration of such thirty (30) day notice period,
you may deliver all Subscription Funds and copies of Subscription
Agreements in your possession under this Escrow Agreement to any
successor Escrow Agent appointed by the Company, or if no successor
Escrow Agent has been appointed, to any court of competent
jurisdiction. Upon either such delivery, you shall be released from any
and all liability under this Escrow Agreement. A termination under this
paragraph shall in no way change the terms of paragraphs 13 and 14
affecting reimbursement of expenses, indemnity and fees. You shall have
the right to deduct from the Subscription Funds transferred to any
successor Escrow Agent any outstanding and unpaid expenses or fees.
(16) You agree to charge your customary and normal fee for your services
hereunder. A copy of the current schedule is attached hereto. The fee
schedule may be modified from time to time. The acceptance fee and
expenses shall be paid in advance or at closing by the Company. Any
subsequent fees and expenses will be paid by the Company upon receipt
of invoice.
(17) All notices and communications hereunder shall be in writing and shall
be deemed to be duly given if sent by registered or certified mail,
return receipt requested, to the respective addresses set forth herein.
You shall not be charged with knowledge of any fact, including but not
limited to performance or non-performance of any condition, unless you
have actually received written notice thereof from the Company or its
authorized representative clearly referring to this Escrow Agreement.
(18) The rights created by this Escrow Agreement shall inure to the benefit
of, and the obligations created hereby shall be binding upon the
successors and assigns of you and the parties hereto. Notwithstanding
the foregoing, the Company may not assign its rights hereunder without
your prior written consent.
(19) This Escrow Agreement shall be construed and enforced according to the
laws of the State of Florida.
(20) This Escrow Agreement shall terminate and you shall be discharged of
all responsibility hereunder at such time as you shall have completed
your duties hereunder.
(21) This Escrow Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
(22) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions
described herein and supersedes all prior agreements or understandings,
written or oral, between the parties with respect thereto. Further,
this Escrow Agreement may only be amended by a written amendment signed
by the parties hereto.
(23) If any provision of this Escrow Agreement is declared by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and
effect without being impaired or invalidated in any way.
(24) The Company shall provide you with its Employer Identification Number
as assigned by the Internal Revenue Service. Additionally, the Company
shall complete and return to you any and all tax forms
A-4
________________, 1999
or reports required to be maintained or obtained by you. In the event
that Subscription Funds are returned to subscribers pursuant to
paragraph 7 hereof, you shall, based upon the information available to
you, file with the Internal Revenue Service and send to each subscriber
a Form 1099-INT with respect to contributions of interest to
subscribers. All interest or other income earned under this Escrow
Agreement which is payable to the Company pursuant to paragraph 6
hereof shall be allocated and paid as directed by the Company and
reported to the Internal Revenue Service as having been so allocated
and paid.
(25) Your signature hereto is your consent that a signed copy hereof may be
filed with the various regulatory authorities of the State of Florida
and with any Federal Government agencies or regulatory authorities.
Please indicate your acceptance of this Agreement by executing a copy
of this letter and returning it to the undersigned.
Very truly yours,
FIRST CAPITAL BANK HOLDING CORPORATION
By:
-------------------------------------
Michael G. Sanchez
President and Chief Executive Officer
Attest:
----------------------------------
Secretary
(CORPORATE SEAL)
ACCEPTED AND AGREED:
THE BANKERS BANK
By:
-------------------------------------
Vice President
A-5
APPENDIX "B"
FIRST CAPITAL BANK HOLDING CORPORATION
SUBSCRIPTION AGREEMENT
To: First Capital Bank Holding Corporation
1875A South 14th Street
Fernandina Beach, Florida 32034
Ladies and Gentlemen:
You have informed me that First Capital Bank Holding Corporation (the
"Company") is offering up to 1,000,000 shares of its $.01 par value common stock
(the "Common Stock") at a price of $10.00 per share as described in and offered
pursuant to the Prospectus furnished to the undersigned herewith (the
"Prospectus"). In addition, you have informed me that the minimum subscription
is 100 shares.
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned hereby tenders this subscription, together with
payment in United States currency by check, bank draft or
money order payable to "The Bankers Bank, Escrow Agent for
First Capital Bank Holding Corporation" or any other
consideration satisfactory to the Company (the "Funds"),
representing the payment of $10.00 per share for the number of
shares of the Common Stock indicated below.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that
the Company shall have the right to accept or reject this
subscription in whole or in part, for any reason whatsoever.
The Company shall reject this subscription, if at all, in
writing within ten business days after receipt of this
subscription. The Company may reduce the number of shares for
which the undersigned has subscribed, indicating acceptance of
less than all of the shares subscribed on its written form of
acceptance.
3. ACKNOWLEDGMENTS. The undersigned hereby acknowledges receipt
of a copy of the Prospectus and agrees to be bound by the
terms of this Agreement and the Escrow Agreement.
4. REVOCATION. The undersigned agrees that once this Subscription
Agreement is accepted by the Company, it may not be withdrawn.
Therefore, until the earlier of the expiration of five
business days after receipt by the Company of this
Subscription Agreement or acceptance of this Subscription
Agreement by the Company, the undersigned may withdraw this
subscription and receive a full refund of the subscription
price. The undersigned agrees that, except as provided in this
Section 4, he or she shall not cancel, terminate or revoke
this Subscription Agreement or any agreement of the
undersigned made hereunder and that this Subscription
Agreement shall survive the death or disability of the
undersigned.
BY EXECUTING THIS SUBSCRIPTION AGREEMENT, THE SUBSCRIBER IS NOT WAIVING ANY
RIGHTS HE OR SHE MAY HAVE UNDER FEDERAL SECURITIES LAWS, INCLUDING THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934.
B-1
Please fill in the information requested below, make your check payable
to "The Bankers Bank, Escrow Agent for First Capital Bank Holding Corporation",
and mail the Subscription Agreement, Stock Certificate Registration
Instructions, and check to the attention of Michael G. Sanchez, President, First
Capital Bank Holding Corporation, 1875A South 14th Street, Fernandina Beach,
Florida 32034.
-------------------------------------
No. of Shares Subscribed (Signature of Subscriber)
-------------------------------------
Funds Tendered ($10.00 Name (Please Print or Type)
per share subscribed)
Date:
--------------------------------
Phone Number:
(Home)
--------------------------------
(Office)
------------------------------
Residence Address:
-------------------------------------
-------------------------------------
-------------------------------------
City, State and Zip Code
-------------------------------------
Social Security Number or other
Taxpayer Identification Number
B-2
STOCK CERTIFICATE REGISTRATION INSTRUCTIONS
_______________________________________________________________________________
Name
_______________________________________________________________________________
Additional Name if Tenant in Common or Joint Tenant
Mailing Address:_______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Social Security Number or other Taxpayer Identification Number:_______________
Number of Shares to be registered in above name(s): _____________
Legal form of ownership:
· Download Table
___ Individual ___ Joint Tenants with Rights of Survivorship
___ Tenants in Common ___ Uniform Gift to Minors
___ Other _____________________
INFORMATION AS TO BANKING INTERESTS
1. As a prospective shareholder, I would be interested in the following services
checked below:
· Download Table
PERSONAL BUSINESS
(a) Checking Account ___ ___
(b) Savings Account ___ ___
(c) Certificates of Deposit ___ ___
(d) Individual Retirement Accounts ___ ___
(e) Checking Account Overdraft Protection ___ ___
(f) Consumer Loans (Auto, etc.) ___ ___
(g) Commercial Loans ___ ___
(h) Equity Line of Credit ___ ___
(i) Mortgage Loans ___ ___
(j) Revolving Personal Credit Line ___ ___
(k) Safe Deposit Box ___ ___
(l) Automatic Teller Machines (ATM's) ___ ___
2. I would like our new bank to provide the following additional services:
(a)
(b)
B-3
FORM OF ACCEPTANCE
First Capital Bank Holding Corporation
1875A South 14th Street
Fernandina Beach, Florida 32034
To:
Dear Subscriber:
First Capital Bank Holding Corporation (the "Company") acknowledges
receipt of your subscription for _____ shares of its $.01 par value Common Stock
and your check for $__________.
The Company hereby accepts your subscription for the purchase of _____
shares of its Common Stock, at $10.00 per share, for an aggregate of
$__________, effective as of the date of this letter.
Your stock certificate(s) representing shares of Common Stock duly
authorized and fully paid will be issued to you as soon as practicable after all
Subscription Funds are released to the Company from the Subscription Escrow
Account, all as described in the Subscription Agreement executed by you and in
the Prospectus furnished to you. In the event that (i) the offering is canceled,
or (ii) the minimum number of subscriptions (610,000 shares) is not obtained, or
(iii) the Company shall not have received approval from the Federal Reserve
Board to become a bank holding company, or (iv) First National Bank shall not
have received charter approval from the Office of the Comptroller of the
Currency and approval for deposit insurance from the Federal Deposit Insurance
Corporation, your Subscription Funds will be returned to you, adjusted for net
profits from the investment of such funds, if any, as described in the
Prospectus.
If this acceptance is for a lesser number of shares than that number
subscribed by you as indicated in your Subscription Agreement, your payment for
shares of Common Stock in excess of the number of shares accepted hereby will be
refunded to you by mail, without interest, within ten (10) days of the date
hereof.
Very Truly Yours,
FIRST CAPITAL BANK HOLDING CORPORATION
By: _______________________________
Michael G. Sanchez
President and Chief Executive Officer
B-4
-------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE
ANY INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL
OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN
THIS PROSPECTUS IS CURRENT AS OF ____________________________.
---------------------------
TABLE OF CONTENTS
· Enlarge/Download Table
PAGE
Prospectus Summary................................................................................................1
Risk Factors......................................................................................................4
Terms of The Offering............................................................................................10
Plan of Distribution.............................................................................................13
Use of Proceeds..................................................................................................14
Dividend Policy..................................................................................................16
Management's Discussion And
Analysis of Financial Condition
And Results of Operations.....................................................................................16
Business of First Capital........................................................................................17
Business of First National Bank..................................................................................18
Supervision And Regulation.......................................................................................24
Organizers And Principal
Shareholders..................................................................................................29
Management.......................................................................................................29
Security Ownership of Certain
Beneficial Owners and
Management....................................................................................................34
Certain Transactions.............................................................................................35
Description of Capital Stock.....................................................................................35
Legal Proceedings................................................................................................38
Legal Matters....................................................................................................38
Experts..........................................................................................................38
Additional Information...........................................................................................39
Financial Statements............................................................................................F-1
Appendix A--Escrow Agreement
Appendix B--Subscription Materials
---------------------------
Until __________, (90 days after the date of this Prospectus), all dealers that
buy, sell or trade these securities, whether or not participating in this
offering, may be required to deliver a Prospectus. This requirement is in
addition to the dealers' obligation to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
-----------------------------------------------------
-------------------------------------------------------------------------------
1,000,000 SHARES
FIRST CAPITAL BANK
HOLDING CORPORATION
A Bank Holding Company for
[LOGO]
FIRST NATIONAL BANK OF
NASSAU COUNTY
A Proposed National Bank
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
ALLEN C. EWING & CO.
Sales Agent
____________, 1999
-----------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act ("FBCA")
permits a Florida corporation to indemnify any person who may be a party to any
third party proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, against liability
incurred in connection with such proceeding (including any appeal thereof) if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 607.0850(2) of the FBCA permits a Florida corporation to
indemnify any person who may be a party to a derivative action if such person
acted in any of the capacities set forth in the preceding paragraph, against
expenses and amounts paid in settlement not exceeding, in the judgement of the
board of directors, the estimated expenses of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding (including appeals), provided that the person
acted under the standards set forth in he preceding paragraph. However, no
indemnification shall be made for any claim, issue or matter for which such
person is found to be liable unless, and only to the extent that, the court.
determines that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Section 607.0850(4) of the FBCA provides that any indemnification made
under the above provisions, unless pursuant to a court determination, may be
made only after a determination that the person to be indemnified has met the
standard of conduct described above. This determination is to be made by a
majority vote of a quorum consisting of the disinterested directors of the board
of directors, by duly selected independent legal counsel, or by a majority vote
of the disinterested shareholders. The board of directors also may designate a
special committee of disinterested directors to make this determination.
Section 607.0850(3), however, provides that a Florida corporation must
indemnify any director, or officer, employee or agent of a corporation who has
been successful in the defense of any proceeding referred to in Section
607.0850(1) or (2), or in the defense of any claim, issue or matter therein,
against expenses actually and reasonably incurred by him in connection
therewith.
Expenses incurred by a director or officer in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it is ultimately determined that
such director or officer is not entitled to indemnification under Section
607.0850. Expenses incurred by other employees or agents in such a proceeding
may be paid in advance of final disposition thereof upon such terms or
conditions that the board of directors deems appropriate.
The FBCA further provides that the indemnification and advancement of
payment provisions contained therein are not exclusive and it specifically
empowers a corporation to make any other further indemnification or advancement
of expenses under any bylaw, Agreement, vote of shareholders or disinterested
actions taken in other capacities while holding an office. However, a
corporation cannot indemnify or advance expenses if a judgment or other final
adjudication establishes that the actions of the director or officer were
material to the adjudicated cause of action and the director or officer (a)
violated criminal law, unless the director or officer had reasonable cause to
believe his conduct was unlawful, (b) derived an improper personal benefit from
a transaction, (c) was or is a director in a circumstance where the liability
under Section 607.0834 (relating to unlawful distributions) applies, or (d)
engages in willful misconduct or conscious disregard for the best interests of
the corporation in a proceeding by or in right of the corporation to procure a
judgment in its favor or in a proceeding by or in right of a shareholder.
II-1
Article XI of the Company's Articles of Incorporation provide that the
Company shall indemnify any director or officer or any former director or
officer against any liability arising from any action or suit to the full extent
permitted by Florida law as referenced above.
Article VI of the Company's By-Laws provides that the Company shall
indemnify a director, officer, employee or agent who has been successful on the
merits or otherwise in the defense of any action, suit or proceeding to which he
was a party or in defense of any claim, issue or matter therein because he is or
was a director, officer, employee or agent of the Company, against reasonable
expenses incurred by him in connection with such defense.
The Company's By-Laws also provide that the Company is required to
indemnify any director, officer, employee or agent made a party to a proceeding
because he is or was a director, employee or agent against liability incurred in
the proceeding if he acted in a manner he believed in good faith or to be in or
not opposed to the best interests of the Company and, in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by (a) a disinterested majority of the Board of
Directors, (b) a majority of a committee of disinterested directors, (c)
independent legal counsel, or (d) an affirmative vote of a majority of shares
held by disinterested shareholders. No indemnification may be made to or on
behalf of a director, officer, employee or agent (i) in connection with a
proceeding by or in the right of the Company in which such person was adjudged
liable to the Company unless the court in which the action, suit or proceeding
was brought, upon application, determines indemnification is fair and
reasonable.
The Company may, if authorized by its shareholders by a majority of
votes which would be entitled to be cast in a vote to amend the Company's
Articles of Incorporation, indemnify or obligate itself to indemnify a director,
officer, employee or agent made a party to a proceeding, including a proceeding
brought by or in the right of the Company.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered, other than the sales commissions. All of the amounts shown are
estimated except for the registration fees of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.
· Download Table
SEC Registration Fee........................................... $ 2,780
NASD Filing Fee................................................ $ 1,500
Blue Sky Fees and Expenses..................................... $ 6,000
Printing and Engraving Expenses................................ $ 5,000
Legal Fees and Expenses........................................ $ 35,000
Accounting Fees and Expenses................................... $ 3,500
Advertising.................................................... $ 5,500
Mailing and Distribution....................................... $ 960
Entertainment.................................................. $ 3,500
Miscellaneous.................................................. $ 5,000
----------
Total................................................ $ 68,740
==========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
II-2
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration Statement:
· Download Table
Exhibit No. Description of Exhibit
----------- ----------------------
3.1 Amended and Restated Articles of
Incorporation of the Company.
3.2 Bylaws of the Company.
4.1 Specimen Common Stock Certificate.
4.2 Form of Escrow Agreement.
5.1 Opinion of Smith, Gambrell & Russell, LLP.(1)
10.1 Real Estate Sales Contract for the proposed
site of the Company at 1875A South 14th
Street, Fernandina Beach, Florida, dated
June 16, 1998.
10.2 Amended and Restated Employment Agreement
between the Organizers of the Company and
Michael G. Sanchez, dated as of September 1,
1998.
10.3 1998 Incentive Stock Option Plan.
10.4 Form of Organizer Warrant Certificate.
23.1 Consent of Smith, Gambrell & Russell, LLP
(contained in their opinion filed as
Exhibit 5.1 hereto).(1)
23.2 Consent of Porter Keadle Moore LLP.
24 Power of Attorney (included in signature
page to this Registration Statement).
27 Financial Data Schedule (for SEC use only)
-------------------------------------
(1) To be filed by amendment.
ITEM 28. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the
total dollar volume of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, changes in the volume and
price represent no more than a 20% change in the
maximum aggregate
II-3
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration of the
securities offered, and the offering of the securities at
the time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
[SIGNATURE PAGE FOLLOWS]
II-4
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Fernandina Beach, State of Florida on December 28, 1998.
FIRST CAPITAL BANK HOLDING CORPORATION
Date: December 28, 1998 By: /s/ Michael G. Sanchez
-------------------------------------
Michael G. Sanchez
President and Chief Executive Officer
(Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael G. Sanchez and Suellen Rodeffer
Garner, and each of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for him, in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises as fully and to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
· Download Table
Signature Title Date
--------- ----- ----
/s/ Ron Anderson Director December 28, 1998
-------------------------------------
Ron Anderson
/s/ Christina H. Bryan Director December 28, 1998
-------------------------------------
Christina H. Bryan
/s/ C. Brett Carter Director December 28, 1998
-------------------------------------
C. Brett Carter
/s/ Suellen Rodeffer Garner Chairman of the Board December 28, 1998
-------------------------------------
Suellen Rodeffer Garner
/s/ William K. Haley, M.D. Director December 28, 1998
-------------------------------------
William K. Haley, M.D.
· Enlarge/Download Table
/s/ Lorie L. McCarroll Treasurer and Director December 28, 1998
----------------------------------------
Lorie L. McCarroll
/s/ David F. Miller Director December 29, 1998
----------------------------------------
David F. Miller
/s/ William J. Mock, Jr. Director December 28, 1998
----------------------------------------
William J. Mock, Jr.
/s/ Marlene J. Murphy Director December 28, 1998
----------------------------------------
Marlene J. Murphy
/s/ Robert L. Peters Director December 28, 1998
----------------------------------------
Robert L. Peters
/s/ Lawrence Piper Secretary and Director December 28, 1998
----------------------------------------
Lawrence Piper
/s/ Michael G. Sanchez President, Chief Executive December 28, 1998
---------------------------------------- Officer and Director
Michael G. Sanchez
/s/ Harry R. Trevett Director December 28, 1998
----------------------------------------
Harry R. Trevett
/s/ Edward E. Wilson Director December 28, 1998
----------------------------------------
Edward E. Wilson
/s/ Marshall E. Wood Director December 28, 1998
----------------------------------------
Marshall E. Wood
EXHIBIT INDEX
· Download Table
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
--------- -----------------------------------------------------
3.1 Amended and Restated Articles of Incorporation of the
Company.
3.2 Bylaws of the Company.
4.1 Specimen Common Stock Certificate.
4.2 Form of Escrow Agreement.
5.1 Opinion of Smith, Gambrell & Russell, LLP.(1)
10.1 Real Estate Sales Contract for the proposed site of
the Company at 1875A South 14th Street, Fernandina
Beach, Florida, dated June 16, 1998.
10.2 Amended and Restated Employment Agreement between the
Organizers of the Company and Michael G. Sanchez,
dated as of September 1, 1998.
10.3 1998 Incentive Stock Option Plan.
10.4 Form of Organizer Warrant Certificate.
23.1 Consent of Smith, Gambrell & Russell, LLP (contained
in their opinion filed as Exhibit 5.1 hereto).(1)
23.2 Consent of Porter Keadle Moore, LLP.
24 Power of Attorney (included in signature page to this
Registration Statement).
27 Financial Data Schedule (for SEC use only)
(1) To be filed by amendment.
Dates Referenced Herein and Documents Incorporated By Reference
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