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First Capital Bank Holding Corp · SB-2 · On 12/30/98

Filed On 12/30/98   ·   SEC File 333-69973   ·   Accession Number 950144-98-14255

  in   Show  and 
  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 


SB-2   ·   First Capital Bank Holding Corporation
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"Calculation of Registration Fee
3Prospectus Summary
4The Offering
6Risk Factors
9Ability of Organizers to Influence Corporate Actions
12Terms of the Offering
13Escrow of Subscription Funds
14Failure of First National Bank to Commence Operations
"Purchases by Organizers of First Capital
15Plan of Distribution
16Use of Proceeds
18Dividend Policy
"Management's Discussion And Analysis of Financial Condition And Results of Operations
19Business of First Capital
"Premises
20Business of First National Bank
"Market Area and Competition
25Year 2000
26Monetary Policies
"Supervision and Regulation
31Organizers And Principal Shareholders
"Management
34Employment Agreement
35Stock Option Plans
36Security Ownership of Certain Beneficial Owners and Management
37Certain Transactions
"Description of Capital Stock
"Common Stock
38Board of Directors
40Legal Proceedings
"Legal Matters
41Experts
"Additional Information
42Financial Statements
61Prospectus
"Sales Agent
62Item 24. Indemnification of Directors and Officers
63Item 25. Other Expenses of Issuance and Distribution
"Item 26. Recent Sales of Unregistered Securities
64Item 27. Exhibits and Financial Statement Schedules
"Item 28. Undertakings
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As filed with the Securities and Exchange Commission on December 30, 1998 Registration No. 333-__________ -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------- FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------------ FIRST CAPITAL BANK HOLDING CORPORATION (Name of small business issuer in its charter) ------------------------------ · Download Table 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) --------------------------------- 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 --------------------------------- 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 · Enlarge/Download Table ============================= =============== ===================== ============================== =================== 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 ------------------------------------------------------------------------------------------------------------------------ Common Stock 1,000,000 $10.00 $10,000,000 $2,780.00 $.01 par value ============================= =============== ===================== ============================== =================== (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. · Download Table 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.
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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
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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 · Enlarge/Download Table 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 2
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· Enlarge/Download Table 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
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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. 4
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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. 5
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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
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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 7
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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
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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
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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; 10
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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
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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 12
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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
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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 14
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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. 15
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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
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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
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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 in