As filed with the Securities and Exchange Commission on March 7, 2003;
File Number 333-103651
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Pre-Effective Amendment Number One to
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MARCO COMMUNITY BANCORP, INC.
-----------------------------
(Name of small business issuer in its charter)
Florida 43-2001206
- ----------------------------- ------------------
(State of jurisdiction of (I.R.S. Employer
incorporation or organization) incorporation No.)
6712
-----------------------------
(Primary Standard Industrial
Classification Code Number)
1122 North Collier Boulevard
Chamber of Commerce Plaza
Marco Island, Florida 34145
(239) 389-5200
------------------------------
(Address and telephone number
of principal executive offices)
Richard Storm, Jr.
Organizing Chairman
1122 North Collier Boulevard
Chamber of Commerce Plaza
Marco Island, Florida 34145
(239) 389-5200
--------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies Requested to:
A. George Igler, Esq. or Richard L. Pearlman, Esq.
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
(850) 878-2411
Approximate date 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 of
1933 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, please 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate Amount of
securities to be registered registered(1) per share(2) offering price (3) registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock 1,550,000 shares $9.00 $13,950,000 $1,128.56
Warrants to Purchase Common Stock 1,000,000 warrants $0.00 $0 $0.00
====================================================================================================================================
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<FN>
(1) Up to 1,000,000 in units composed of one share and one warrant to purchase
one-quarter share of common stock. Units will not be issued or
certificated. Shares and warrants will be issued and certificated
separately. In addition, up to 300,000 shares of common stock will be sold
independently.
(2) The securities offered hereby will be sold on a best-efforts basis by
certain of our directors and executive officers and no commissions will be
paid on such sales.
(3) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
</FN>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a) may
determine.
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[Company Logo]
MARCO COMMUNITY BANCORP, INC.
Up To 1,000,000 Units Composed of 1,000,000 Shares of Common Stock
and 1,000,000 Warrants to Purchase One-Quarter Share of
Common Stock, and Up to 300,000 Shares of Common Stock
Marco Community Bancorp, Inc. is conducting an offering of its securities
in three phases. The first phase is open for 30 days to residents of Marco
Island, Goodland and Isle of Capri, Florida and the subdivisions in
unincorporated Collier County, Florida, known as Fidders Creek or located on
Mainsail Drive, and our directors and employees only. Those individuals may
subscribe for units composed of one share of our common stock and one warrant to
purchase one-quarter share of our common stock. Phase one will conclude after 30
days or when we sell 500,000 units, whichever comes first. Phase two will then
be open to all other Florida residents to purchase identical units for 60 days.
At the option of the Board of Directors, we may extend phase two for up to an
additional 60 days. Phase two will end no later than _______, 2003. In the first
two phases, the units are priced at $9.00 and the exercise price of the warrants
is also $9.00 per whole share. The minimum subscription in these phases is 100
units and we will place all subscription funds in an escrow account, pending
receipt of subscriptions for a minimum of 800,000 units, or termination of the
entire offering.
Our organizers and executive officers intend to purchase at least 289,745
units in phases one and two. At the conclusion of phases one, two and three,
these insiders will own between 22.29% and 36.22% of our outstanding common
stock.
Phase three of the offering will begin only if the minimum 800,000 units
are sold in phases one and two and when and if our wholly-owned subsidiary,
Marco Community Bank (In Organization) opens for business; it will end no later
than December 30, 2003. In this phase, we will offer up to 300,000 shares of our
common stock to the bank's depositors whose accounts meet certain criteria.
Units which are not sold in phases one and two will not be available for
subscription in phase three. The price of these shares of common stock we will
be $9.00 and we will also require a minimum subscription of 100 shares.
Through a subscription committee, the Board reserves the right to reject
any subscription, in any phase, in whole or in part. Once we accept a
subscription, a subscriber will not be permitted to withdraw it. If we do not
receive subscriptions for a minimum of 800,000 units in the first two phases,
the entire offering will be terminated. Furthermore, the Board has reserved the
right to terminate the offering for any reason. In the event we terminate the
offering because we do not receive the minimum amount of subscriptions in the
first two phases, all subscription funds, together with any earned interest,
will be promptly refunded.
Our primary activity to this date has been organizing Marco Community Bank
(In Organization), which we intend to operate as a community bank in Marco
Island, Florida. The proceeds from this offering will primarily be used to
capitalize the bank. This is our initial public offering of our securities.
There is no established market for our common stock and warrants, and none
should be expected to develop after the offering.
See "Risk Factors" beginning on page 4 for a discussion of certain risks
that should be carefully considered by prospective investors.
---------------------
The securities we are offering are not savings accounts or savings deposits
and are not insured by the Federal Deposit Insurance Corporation or any other
government agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
====================================================================================================================================
Subscription Estimated Fees and Proceeds to the
Price Underwriting Expenses Company(2)
====================================================================================================================================
Per unit in phases one and two (1) $9.00 $0 $9.00
Per share in phase three (1) $9.00 $0 $9.00
Minimum Offering (3) $7,200,000 $0 $7,200,000
Maximum Offering (4) $13,950,000 $0 $13,950,000
====================================================================================================================================
- ----------
<FN>
(1) The securities offered hereby will be sold on a best-efforts bases by
certain of our directors and executive officers and no commissions will be
paid on such sales.
(2) Before deducting offering expenses estimated to be $50,000, including
registration fees, legal and accounting fees, printing and other
miscellaneous expenses.
(3) Amount based on the sale of 800,000 units at $9.00 per unit.
(4) Amount based on the sale of 1,000,000 units, 300,000 shares and the
exercise of 1,000,000 warrants to purchase 250,000 shares at $9.00 per unit
and per share.
</FN>
The date of this prospectus is April __, 2003.
[ARTIST'S RENDERING]
FUTURE HOME - MARCO COMMUNITY BANK
AND MARCO COMMUNITY BANCORP, INC.
Corner of San Marco Road and South Barfield Drive
Adjacent to True-Value Hardware
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
prospectus and is qualified in its entirety by the more detailed information and
financial statements appearing elsewhere in this prospectus. Prospective
purchasers are urged to read the entire prospectus carefully.
The Company
Marco Community Bancorp, Inc. ("Company") was incorporated under the laws
of the State of Florida on January 28, 2003, for the purpose of operating as a
bank holding company pursuant to the Bank Holding Company Act of 1956. We intend
to use the net proceeds of this offering to purchase 100% of the common stock to
be issued by Marco Community Bank (In Organization) ("Bank"), to redeem
preferred stock which has been issued to our organizers to fund organizational
expenses and for other corporate purposes. Neither the Company nor the Bank has
commenced business operations, and neither will do so until this offering is
completed and the requisite approvals of the Florida Department of Financial
Services ("Florida Department"), the Federal Deposit Insurance Corporation
("FDIC") and the Board of Governors of the Federal Reserve System ("Federal
Reserve") are obtained.
The Company's and the Bank's main office will be located in Marco Island,
Collier County, Florida. The Bank will operate as a full service commercial bank
with primary emphasis upon high quality service directed at meeting the
financial needs of the individuals and businesses residing and located in and
around Marco Island, Florida. It is anticipated that the Bank will commence
business operations sometime during the second quarter of 2003, or as soon after
as practicable.
There is presently no market for our securities and we do not anticipate
one developing after the offering. Therefore, it may be difficult for you to
sell your securities, as only an informal market between buyers and sellers may
develop.
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Temporary Headquarters: 1122 North Collier Boulevard,
Chamber of Commerce Plaza
Marco Island, Florida 34145
Mailing Address: Post Office Box 1340
Marco Island, Florida 34146
Telephone Number: (239) 389-5200
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The Offering
Securities offered......................... 1,000,000 units consisting of
one share of common stock and
one warrant to purchase
one-quarter share of common
stock, and 300,000 individual
shares. We require a minimum
of 800,000 units to be sold
and have set a maximum of
1,000,000 units and 300,000
individuals shares to be sold
in this offering.
Price...................................... $9.00 per unit or per share,
as applicable.
Terms of warrants.......................... Units sold during phases one
and two of the offering will
each contain one warrant.
Each warrant will entitle the
holder thereof to purchase
one-quarter share of
additional common stock for
$9.00 per share during the
two-year period following the
Bank opening for business.
The Board may extend the term
of the warrants for up to six
months and may call them upon
30 days notice after the Bank
has been open for one year.
The warrants are not
transferrable except under
certain circumstances.
Phase one.................................. During phase one, we will
permit only residents of
Marco Island, Goodland and
Isle of Capri, Florida and
the subdivisions in
unincorporated Collier
County, Florida known as
Fiddlers Creek or located on
Mainsail Drive, as well as
directors and employees of
the Company or the Bank, to
purchase units of our common
stock and warrants. This
phase will last for the
shorter of 30 days or until
500,000 units are sold.
Phase two.................................. During phase two, we will
permit only residents of
Florida to purchase units of
our common stock and
warrants. This phase will
last for 60 days immediately
following phase one; however,
the Board may extend the term
for up to 60 additional days.
Phase three................................ During phase three, we will
permit certain personal and
business Bank depositors to
purchase individual shares of
common stock. This phase will
begin when the Bank opens for
business and will last until
the earlier of the sale of
300,000 shares or December
30, 2003.
Eligible personal depositors
will be those who agree to
maintain a checking account
with an average balance of
$1,000 for at least 18 months
or who purchase a certificate
of deposit of at least
$10,000, with a term of at
least 18 months. Personal
depositors will be permitted
to subscribe for a minimum of
100 shares and a maximum of
750 shares.
Eligible business depositors
will be those who agree to
maintain their primary
operating account with an
average balance of $5,000 for
at least 18 months. Business
depositors will be permitted
to purchase a minimum of 100
shares and a maximum of 2,000
shares.
2
To maximize the likelihood
that all the offered shares
are purchased by our
depositors, we will lift the
purchase limitations in phase
three after December 1, 2003.
After that date, all eligible
depositors will be permitted
to increase their purchases
to up to 20,000 shares, on a
first-come-first-served
basis.
Purchase limitations....................... Except for our directors and
employees, who have no
purchase limitations,
subscribers will be permitted
to subscribe for a minimum of
100 units or shares and a
maximum of 20,000 units or
shares.
Best efforts offering...................... No brokerage commission will
be paid in connection with
the offering, as no
underwriter or broker has
been retained. Units and
shares will be offered
through our employees and
directors who will receive no
compensation for such sales.
Units and shares are being
offered on a best efforts
basis. This means there is no
guarantee that we will be
able to sell all or any of
the securities offered.
Risk Factors............................... Before investing, you should
carefully consider the "Risk
Factors" section beginning on
page 4.
Information About the Offering
Questions concerning the offering should be directed to Michael A.
Micallef, Jr., President, or directors Joel M. Cox, Sr. or Stephen A. McLaughlin
at Marco Community Bancorp, Inc., 1122 North Collier Boulevard, Chamber of
Commerce Plaza, Marco Island, Florida 34145; (239) 394-3901.
Use of Proceeds
We will use the proceeds of the offering to purchase 100% of the
to-be-issued capital stock of the Bank; to provide working capital for the Bank
to commence its business operations (including officers' and employees'
salaries); to redeem the preferred stock issued to our organizers to pay
expenses in connection with the formation of the Company, the organization of
the Bank, and this offering; and for other corporate purposes. Proceeds not used
to purchase Bank stock will be used to fund future capital requirements of the
Bank, as well as for other permissible investments for bank holding companies,
including the possible acquisition of other financial institutions.
RISK FACTORS
An investment in our securities involves a high degree of risk. You should
carefully consider the risks below and other information in this prospectus
before deciding to invest in our common stock.
We have incurred capital losses since we commenced operations and we are likely
to continue to incur losses in the future.
We expect to incur significant losses before we are able to open the Bank. We
are unable to predict at what point we may become profitable, if ever. There is
a risk that we may never become profitable.
3
Our primary asset will be the Bank, and our profitability will be dependent
upon its successful operation. Although we anticipate that we will open the Bank
in the second quarter of 2003, we can offer no assurance as to when, if at all,
this will occur. Any delay in opening the Bank will increase our pre-opening
expenses and postpone our realization of potential revenues. Such a delay would
cause our accumulated deficit to increase as a result of continuing operating
expenses, including mortgage payments, salaries and other administrative
expenses. We will incur substantial expenses operating the Bank, and we can
offer no assurance that the Company will be profitable or that future earnings,
if any, will meet the levels of earnings prevailing in the banking industry.
Our securities have no trading market and one may never develop, which will
limit your ability to sell your securities.
Presently there is no established market for our securities. There can be
no assurance that an established public market will develop for such securities
upon completion of this offering or that substantial trading activity in the
shares will occur for several years, if at all. Furthermore, we do not intend to
list our securities on a national securities exchange or to qualify such common
stock for quotation on NASDAQ. Therefore, there will not be a liquid market for
such securities. You may find it difficult or impossible to liquidate your
investment at a time when they you may desire to do so. You may, therefore, be
required to bear the economic risks of this investment for an indefinite period
of time.
The offering price may exceed the fair market value of our shares which would
cause an immediate decrease in the value of your investment.
Prior to the offering, there has been no active trading market in our
common stock. Our offering price bears no relationship to the amount of our
assets, book value, shareholders' equity or other typical criteria of value, and
may exceed the fair market value of our shares and the price at which shares may
be sold after the offering. Consequently, you may lose a portion of your
investment simply as a result of our inaccurately determining the offering
price.
We may need to raise additional capital, which could dilute your ownership
interest if the sale is at a price less than the price per share in the
offering.
We may need to raise additional capital in the future to support our
business, expand our operations, or maintain minimum capital levels required by
our bank regulatory agencies. If we do sell additional shares of common stock to
raise capital, we may sell shares at a price less than what is being paid in
this offering, which would dilute your ownership interest. Such dilution could
be substantial.
Our executive officers and directors will have substantial control over the
Company after the offering, which could delay or prevent a change of control
favored by our other shareholders.
Our executive officers and directors, if acting together, will be able to
significantly influence all matters requiring approval by our shareholders,
including election of directors and the approval of mergers or other business
combination transactions. Our executive officers and directors have expressed
their intent to purchase 289,745 units, representing approximately 22.29% of the
total number of shares outstanding, based on 1,300,000 shares outstanding
(excluding warrants) after the offering is completed.
4
The interest of these shareholders may differ from the interests of other
shareholders and these shareholders, acting together, will be able to influence
significantly all matters requiring approval by shareholders. As a result, our
executive officers and directors could approve or cause us to take actions of
which you disapprove or that may be contrary to your interests and those of
other investors.
Certain provisions of Florida law may discourage or prevent a takeover of the
Company and result in a lower market price for our common stock.
Florida law, as well as certain federal regulations, contain anti-takeover
provision that apply to us. These provisions could discourage potential buyers
from seeking to acquire us in the future, even though certain shareholders may
wish to participate in such a transaction. These provisions could also adversely
affect the market price of our common stock.
We have a very limited operating history.
We have recently been formed and do not have any prior operating history.
We will not have any initial business activities other than purchasing property
for our and the Bank's corporate headquarters and completing the organization of
the Bank, working to become a bank holding company and investing the proceeds of
the offering. It is expected that we may incur operating losses during our
initial years of operation, and may not achieve significant profitability for
some time, if at all. No assurance can be given as to our long-term
profitability. In addition to the possibility that we fail to receive final
regulatory approval in connection with the formation of the Bank, our business
is subject to the risks inherent in the establishment of any new business
enterprise. Because of our lack of operating history, you do not have access to
the type and amount of information that would be available to a purchaser of the
securities of a financial institution or holding company with an operating
history.
We may not succeed in implementing our business strategy.
We may not be able to effectively manage the expansion of our operations,
or achieve the rapid execution necessary to achieve profitability. We may not
succeed in implementing our business strategy and, even if we do succeed, our
strategy may not have the favorable impact on operations that we anticipate. If
we are unable to manage growth effectively, or to otherwise implement our
business strategy, our business and the value of your investment could be
materially adversely affected.
If we cannot attract quality loans and deposits, we will not be able to grow.
Our ability to increase our assets depends in large part on our ability to
attract additional deposits at competitive rates. Furthermore, we must be able
to attract quality loans to fund with our deposits.
We may not be able to compete with our competitors for larger customers, because
our lending limits will be lower than theirs.
As a start-up financial institution, our lending limits will be
significantly less than those of many of our competitors. This may adversely
affect our ability to establish loan relationships with larger businesses in our
primary market.
Some of our borrowers may not repay their loans, and losses from loan defaults
may exceed the allowance we establish for that purpose, which may have an
adverse effect on our business.
5
Some borrowers may not repay loans that we make to them. If a significant
number of loans are not repaid, it will have an adverse effect on our earnings
and overall financial condition. The determination of an appropriate level of
loan loss allowance is an inherently difficult process and is based on numerous
assumptions. As a result, our allowance for loan losses may not be adequate to
cover actual losses, and future provision for loan losses may adversely affect
our earnings.
If adverse economic conditions in our target market exists for a prolonged
period, our financial results could be adversely affected.
A prolonged economic downturn or recession in that market would result in
operating losses, impaired liquidity and the erosion of capital. A variety of
factors could cause such an economic dislocation or recession, including adverse
developments in the industries in this area, such as tourism, or natural
disasters such as hurricanes and floods, which are more likely to occur in
coastal communities such as Collier County, Florida.
If real estate values in our target market decline, our loan portfolio would be
impaired.
A significant portion of our loan portfolio will likely consist of
mortgages secured by real estate located in our market area. If real estate
prices decline in the market, the value of the real estate collateral securing
our loans could be reduced. Such a reduction in the value of our collateral
could increase the number of non-performing loans and adversely affect our
financial performance and the value of your investment.
Cautionary Statement Regarding Forward Looking Statements
We have made forward-looking statements in this prospectus that are subject
to risks and uncertainties. These forward-looking statements include information
about possible or assumed future results of our operations or performance after
the offering. Also, when we use any of the words "believes," expects,"
"anticipates," "intends," "may," or similar expressions, we are making forward
looking statements. Many possible events or factors could affect our future
financial results, and could cause those results or performances to differ
materially from those expressed in our forward-looking statements. These
possible events or factors include:
o Legal and regulatory risks and uncertainties;
o Economic, political and competitive forces affecting us; and
o The risk that our analyses of these risks and forces could be
incorrect, or that the strategies we have developed to deal with
them may not succeed.
You should also recognize that all forward-looking statements are
necessarily speculative and speak only as the date made. You should also
recognize that various risks and uncertainties, such as those described above,
could cause actual results for future periods to differ materially. Although we
believe that the expectations reflected in such forward-looking statements are
reasonable, we can give no assurance that any expectations will prove to be
correct.
TERMS OF OFFERING
General
We are conducting an offering of our securities in three phases. The first
two phases are limited to purchasers residing in certain geographic areas, as
well as our directors and employees, and the last phase is limited to certain of
the Bank's Florida-based depositors. During the initial phases, prospective
6
investors may subscribe for units consisting of our common stock and warrants to
purchase our common stock. In the third phase, eligible depositors may subscribe
for common stock only.
In all three phases, we reserve the right to accept or reject all
subscriptions, in whole or in part. A subscription committee of our Board of
Directors will review each subscription and determine whether, and to what
extent, to accept it. Other than Company and Bank directors and employees, no
investor will be permitted to purchase less than 100 units or shares or more
than 20,000 units or shares. Further limits for phase three are described below.
All of these limits are applicable to individual investors and their related
interests, such as owned businesses, trusts, and spouses.
During the first two phases of the offering, all subscription funds will be
placed in an escrow account with the Independent Bankers' Bank of Florida acting
as escrow agent. Upon receiving accepted subscriptions for the minimum offering
amount of 800,000 units in phase one or phase two, the escrow agent will
disburse the accepted subscription funds to us and we will issue our securities.
An additional closing will occur at the end of the second phase. Phase three
will end on the earlier of the date we sell 300,000 shares or December 30, 2003.
We will sell a minimum of 800,000 units and a maximum of 1,000,000 units in
phases one and two. Furthermore, if we do not sell at least 800,000 units in
phases one and two, we will not conduct phase three and will terminate the
offering and refund all of the subscription funds, along with any earned
interest. In addition, we reserve the right to cancel this offering at any time
prior to the time we withdraw funds from the escrow account, for any reason
whatsoever.
In no instance will any of our directors or officers receive any discount
of the purchase prices of our securities in any of the three phases of the
offering.
Phase One
The initial phase of the offering is open to residents of Marco Island,
Goodland and Isle of Capri, Florida, the subdivisions in unincorporated Collier
County, Florida known as Fiddlers Creek or located on Mainsail Drive, and the
Company's and the Bank's directors and employees only, for the shorter of 30
days or until 500,000 units are sold. In this phase, we are offering units of
our securities at $9.00 per unit. We require a minimum purchase of 100 units.
These units consist of one share of common stock and one warrant to purchase
one-quarter share of common stock, at an exercise price of $9.00 per share.
The warrants will be exercisable for the two-year period immediately
following the Bank's opening for business. Our Board of Directors, however, may
call the warrants upon 30 days notice, after the Bank has been open for one
year. In addition, the Board may extend the term of the warrants for up to six
additional months. In no instance will we issue fractional shares. The warrants
will be transferable only:
o to a parent, sibling, spouse, child or grandchild of the warrant
holder;
o to a pension or profit sharing plan of which the holder or
holder's spouse is a beneficiary;
o to a business entity or trust owned or controlled by the holder
or holder's spouse; or
o by court order.
7
Phase Two
The second phase of the offering will be open for the 60 days immediately
following phase one. Our Board of Directors may also extend this phase for up to
an additional 60 days. This phase will be open to all Florida residents. In this
phase, we will offer units identical in composition and price as offered in
phase one. We will also require a minimum purchase of 100 units.
Phase Three
If a minimum of 800,000 units in phases one and two are sold, we will begin
phase three of the offering on the day the Bank opens for business. During this
phase, we will only offer shares of common stock at $9.00 per share to certain
eligible Bank depositors. This phase will last until the earlier of December 30,
2003, or when we receive and accept subscriptions for 300,000 shares. During
this phase, we will accept subscriptions directly and issue stock on an ongoing
basis.
Eligible personal depositors will be those Bank depositors who reside in
Florida and who either: (i) purchase a certificate of deposit of at least
$10,000, with a minimum term of 18 months; or (ii) agree to maintain a checking
account with an average minimum balance of $1,000 for at least 18 months. Each
eligible personal depositor will be allowed to subscribe for a minimum of 100
shares and a maximum of 750 shares. Regardless of how accounts are titled, each
individual and members of that person's immediate family will be permitted to
make any one subscription.
Business depositors who agree to maintain their primary operating account
with a $5,000 average balance for at least 18 months will also be permitted to
subscribe for common stock. Each eligible business depositor will be allowed to
subscribe for a minimum of 100 shares and a maximum of 2,000 shares.
To maximize the likelihood that all the offered shares are purchased by our
depositors, we will lift the specific purchase limitations of phase three after
December 1, 2003. After that date, all eligible personal and business depositors
will be permitted to increase the size of their purchases to up to 20,000
shares. Any increased orders will be filled on a first-come-first-served basis.
No Established Market and Determination of Offering Price
Prior to this offering, there has been no established public market for our
securities and there can be no assurance that an established market will
develop. The offering price has been arbitrarily determined and is not a
reflection of the Company's book value, net worth or any other such recognized
criteria of value. In determining the offering price of the units and common
stock, the capital requirements of the Bank's regulators and general market
conditions for the sale of such securities were considered. There can be no
assurance that, if a market should develop for our securities, the post-offering
market prices will equal or exceed the initial offering prices.
Continuous Offering
Pursuant to Securities and Exchange Commission Rule 415 (17 C.F.R. Section
230.415), the Company intends to offer shares of common stock to certain
eligible Bank depositors on a continuous basis until the earlier of the date the
Bank opens for business or until December 30, 2003.
In addition, we will continue to offer our common stock to warrant holders
on a continuous basis until 24 months following the date the Bank commences
operations, unless the warrants are called or their terms are extended, as
8
described elsewhere in this prospectus. During this period, we will accept the
exercise funds directly and issue stock upon receipt of exercised warrants and
the exercised funds.
Conditions of the Offering
The offering will expire at 5:00 p.m. Eastern Time on the date the warrants
expire. The offering is expressly conditioned upon fulfillment of the following
conditions on or prior to the expiration date. The offering conditions, which
may not be waived, are:
o Not less than $7,200,000 shall have been deposited with the
escrow agent and accepted by us by the end of phase two;
o The Bank shall have received final approval from the Department
to charter the Bank and the Bank shall have received final
approval of its application for deposit insurance from the FDIC;
and
o We shall not have canceled this offering prior to the time funds
are withdrawn from the escrow account.
Escrow of Subscription Funds
Until the offering conditions have been met, all subscription funds and
documents tendered by prospective investors will be placed in an escrow account
with the Independent Bankers' Bank of Florida serving as escrow agent, pursuant
to the terms of our Escrow Agreement, the form of which is attached to this
prospectus as Appendix A. If all of the offering conditions are met, we will
certify such fact to the escrow agent and the escrow agent will release to us
all subscription funds, and any earned income.
Pending disposition of the escrow account, the escrow agent is authorized,
upon our instructions to invest subscription funds in direct obligations of the
United States Government, in overnight repurchase agreements collateralized at
102% with obligations of the United States Treasury or United States Government
Agencies. No assurance can be given that the subscription funds can or will be
invested at the highest rate of return available or that any income will be
realized from the investment of the subscription funds.
In the event the offering conditions are not met by the expiration date,
the escrow agent shall promptly return to the subscribers their subscription
funds, together with their share of any income earned on the investment of the
escrow account. Each subscriber's proportionate share of any 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 acceptance of the investor's subscription and the termination of the
offering, inclusive; and (ii) the denominator of which is the aggregate of all
subscribers' numerators, defined in (i).
We can give no assurance that subscription funds can or will be invested at
the highest rate of return available or that any income will be realized from
the investment of subscription funds. If all offering conditions are satisfied,
and the Company withdraws the subscription funds from the escrow account, all
earnings on such account shall belong to the Company.
9
The Independent Banker's Bank of Florida, by accepting appointment as
escrow agent under the escrow agreement, in no way endorses the purchase of our
securities by any person.
Failure of Bank to Commence Operations
The Department requires that a new state bank open for business within 12
months after receipt of preliminary approval from the Department. We anticipate
that the Bank will open for business sometime in the second quarter of 2003.
Because final approval of the Bank's charter and application for deposit
insurance are conditioned on our raising funds to capitalize the Bank at
$6,400,000, we expect to issue shares of common stock before the Bank has
obtained all final regulatory approvals. In the event that we issue common stock
and the Department does not grant the Bank final regulatory approval, we will
promptly return all subscription funds and interest earned thereon, less all
incurred expenses. It is also probable that this return will be further reduced
by amounts paid to satisfy claims of creditors.
Once we issue shares of common stock, the offering proceeds may be
considered part of our general corporate funds and be subject to the claims of
our creditors, including claims against us that may arise out of actions of our
officers, directors, or employees. It is possible, therefore, that one or more
creditors may seek to attach the proceeds of the offering prior to the Bank's
commencement of operations. If such an attachment occurs and it becomes
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 becomes necessary to pay creditors from the subscription funds, the
payment to shareholders might be further reduced.
Plan of Distribution and How to Subscribe
We may cancel this offering for any reason at any time prior to the release
of subscription funds from the escrow account, and accepted subscriptions are
subject to cancellation in the event that we elect to cancel the offering in its
entirety.
Units and common stock will be marketed on a best-efforts basis exclusively
through certain directors and executive officers of the Company and the Bank,
none of whom will receive any commissions or other form of remuneration based on
the sale of our securities. In the event that the offering conditions have not
been satisfied by November 1, 2003, we may engage an underwriter to sell units
on a best-efforts basis and such underwriter would receive a commission based
upon such sales. It is anticipated that commissions paid to an underwriter, if
retained, will not exceed 7% of the $9.00 per unit sales price and that other
expenses of such underwriting will not exceed an aggregate of $10,000. We do not
anticipate having to retain an underwriter in this offering. In the event that
the offering conditions have not been satisfied by the expiration date, this
offering will be terminated and subscription funds promptly returned to the
subscribers, together with their allocated share of any earnings on the
investment of the escrow account.
As soon as practicable, but no more than 20 business days after receipt of
a subscription, our subscription committee will accept or reject such
subscription. Subscriptions not rejected within this 20 business day period
shall be deemed accepted. Once a subscription is accepted, it cannot be
withdrawn by the subscriber. Payment from any subscriber for units or common
stock in excess of the amount of securities allocated to such subscriber, if
any, will be refunded by mail, without interest, within 20 business days of the
date of rejection.
10
Certificates representing shares of common stock and warrants, duly
authorized and fully paid, will be issued as soon as practicable after funds are
released to us from the escrow account.
Subscriptions to purchase units or common stock can be made by completing
the appropriate Order Form enclosed with this prospectus and delivering one to
our temporary offices located at 1122 North Collier Boulevard, Chamber of
Commerce Plaza, Marco Island, Florida 34145, or mailing one in the enclosed
self-addressed envelope. Full payment of the purchase price must accompany any
subscription. Failure to pay the full subscription price shall entitle us to
reject the subscription. No Order Form is binding until accepted by us. In our
sole discretion, we may refuse to accept any subscription in whole or in part,
for any reason whatsoever. After a subscription is accepted, we may not cancel
the subscription unless all accepted subscriptions are cancelled. All
subscription amounts must be paid in United States currency by check, bank draft
or money order payable to: Independent Bankers' Bank of Florida, Escrow Agent
for Marco Community Bancorp, Inc. A subscription will only be accepted in
writing by the Company.
USE OF PROCEEDS
We intend to contribute at least $6,400,000 of the proceeds of the minimum
offering in cash to the Bank, and retain the remainder of the net proceeds of
the offering for improvement of our premises, for general corporate purposes and
for future contributions to the Bank.
In order to provide funds for the payment of initial organizational,
pre-opening and other expenses, our organizers initially advanced $180,000 to
the Company. The Company's obligation to repay these advances has been
extinguished in exchange for the issuance of 1,800 shares of redeemable
preferred stock. The preferred stock is redeemable by the Company for $100 per
share at any time and does not mandate the payment of any dividend, but will
have a distribution preference above common stock in the event of a dissolution
of the Company. A portion of the proceeds of the offering will be used to redeem
the preferred stock.
We have also obtained a $1,100,000, unsecured line of credit from the
Independent Bankers' Bank of Florida, primarily to purchase the site of our
permanent facility. This line of credit is guaranteed by each Company and
proposed Bank director. We have drawn $850,000 on this line of credit to
purchase the site of our permanent facility, which will be an office
condominium. The Bank intends to purchase the entire first floor of this
condominium to serve as its main office.
A portion of the proceeds will be retained by the Company for general
corporate purposes and to fund any additional capital needs of the Bank. Since
banks are regulated with respect to the ratio that their total assets may bear
to their total capital, if the Bank experiences greater growth than anticipated,
it may require the infusion of additional capital to support that growth. We
anticipate that the proceeds of the offering will be sufficient to support the
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 will be available on terms acceptable to
management.
The proceeds from the sale of units and shares are estimated to be a
minimum of $7,200,000 and a maximum of $11,700,000.
The proceeds from this offering will be applied as follows:
11
Minimum Maximum
Capitalization of the Bank $ 6,400,000 $ 6,400,000
Repayment of Land Acquisition Draw 620,000(1) 850,000
Redemption of Preferred Stock 180,000(2) 180,000
Construction of Office Condominium -(2) 1,594,366(2)
Working Capital - 2,675,634
Total $ 7,200,000 $11,700,000
=========== ===========
- ---------
(1) If we do not raise at least $7,430,000, the guarantors will repay the
remaining $230,000 in consideration of the Company issuing them promissory
notes in equal amount.
(2) We will not begin construction of the office condominium unless we raise
adequate capital.
The Bank will apply its $6,400,000 capitalization as follows:
Investments $5,475,000
Pre-opening expenses 400,000
Working capital 300,000
Fixed Assets 85,000
Furniture, Fixtures and Equipment 79,000
Other Assets 70,000
----------
Total $6,400,000
==========
After it opens, the Bank will liquidate investments on an as-needed basis
to fund loans and for working capital.
PRO FORMA CAPITALIZATION
The following table sets forth the pro forma capitalization of the Company,
depending on the number of units and shares sold in the offering, not counting
any eventual exercise of warrants (total minimum of 800,000 units and shares and
maximum of 1,300,000 units and shares):
Projected Capitalization Projected Capitalization
Based Upon Based Upon
Minimum Offering Maximum Offering
Stockholders' Equity
Common stock, $0.01 par value per share,
800,000 and 1,300,000 shares outstanding,
respectively $ 8,000 $ 13,000
Surplus 7,192,000 11,687,000
Retained Earnings (Loss) (1) (450,000) (450,000)
Total Stockholders' Equity 6,750,000 11,250,000
============ ============
Book Value Per Share $ 8.44 $ 8.65
- ---------
<FN>
(1) The estimated total organizational, pre-opening and offering expenses are
$450,000.
</FN>
12
DESCRIPTION OF PROPERTIES
In March 2003, we purchased an approximately 1.5 acre lot from San Marco
Realty, Inc. Proposed Bank director Robert D. Mathews is the principal of this
corporation. To purchase this lot, we have obtained a $1,100,000 line of credit
from the Independent Bankers' Bank of Florida and have drawn $850,000 on it. The
line bears interest at the prime rate minus one-half percent, with a floor of
4%. It is unsecured, but guaranteed by each of the Company and proposed Bank
directors. As stated above, we intend to repay the loan with the proceeds of
this offering.
The lot is located at the corner of San Marco Road and South Barfield Drive
in Marco Island. The property is zoned for commercial development and we have
already received site plan approval to build a two-story, 12,000 square foot
office building. We expect to have the facility fully permitted in March 2003,
and to commence construction by April or May 2003. Upon completion of the
construction, we intend to file a declaration of condominium for building. The
Bank intends to purchase the entire first floor of the condominium for $850,000
and half the cost of necessary site work construction.
Before construction of the permanent facility is completed, the Bank will
occupy a 950 square foot temporary facility. This facility is located at 1122
North Collier Boulevard, Chamber of Commerce Plaza, Marco Island, Florida 34145.
The lease is for a term of one-year and the rental rate is $1,000 per month. We
have the right to terminate the lease after 10 months and to extend it for
consecutive two-month periods.
DIVIDEND POLICY
As the Company and the Bank are both start-up operations, it will be the
policy of both Boards of Directors to reinvest earnings for such period of time
as is necessary to ensure our successful operations. There are no current plans
to pay of cash dividends, and future dividend policy will depend on the Bank's
earnings, capital requirements, financial condition and other factors considered
relevant by the Boards of Directors.
The Bank will be restricted in its ability to pay dividends under Florida
banking laws and by regulations of the Department. Pursuant to Section 658.37,
Florida Statutes, a state bank may not pay dividends from its capital. All
dividends must be paid out of current net profits then on hand plus retained net
profits of the preceding two years, after deducting bad debts, depreciation and
other worthless assets, and after making provision for reasonably anticipated
future losses on loans and other assets. Payments of dividends out of net
profits is further limited by Section 658.37, which prohibits a bank from
declaring a dividend on its shares of common stock until its surplus equals its
stated capital, unless the bank has transferred at least 20% of its net profits
for the preceding year to its surplus (in the case of an annual dividend).
Finally, a state bank may not declare a dividend which would cause the Bank's
capital accounts to fall below the minimum amount required by law by a banking
regulatory agency.
SUPERVISION AND REGULATION
General
As a registered bank holding company, we will be subject to an extensive
body of state and federal banking laws and regulations which impose specific
requirements and restrictions on virtually all aspects of our operations.
13
We are also affected by government monetary policy and by regulatory measures
affecting the banking industry in general.
The following is a brief summary of some of the statues, rules and
regulations which affect our operations. This summary is qualified in its
entirety by reference to the particular statutory and regulatory provisions
referred to below and is not intended to be an exhaustive description of the
statutes or regulations applicable to our business. Any change in applicable
laws or regulations may have a material adverse effect on the business and
prospects of the Company and the Bank.
Marco Community Bancorp, Inc.
We intend to become a bank holding company within the meaning of the Bank
Holding Company Act of 1956. As such, we will be required to file annual reports
and other information with the Federal Reserve regarding our business operations
and those of our subsidiaries. We will also be subject to the supervision of,
and to periodic inspections by, the Federal Reserve.
The Bank Holding Company Act generally requires every bank holding company
to obtain the prior approval of the Federal Reserve before:
o acquiring all or substantially all of the assets of a bank;
o acquiring direct or indirect ownership or control of more than 5%
of the voting shares of any bank or bank holding company; or
o merging or consolidating with another bank holding company.
The Bank Holding Company Act and the Federal Change in Bank Control Act,
together with regulations of the Federal Reserve, require certain steps be taken
prior to a person or company acquires control of a bank holding company.
Depending on the particular circumstances, either the Federal Reserve's approval
must be obtained, or notice must be furnished to the Federal Reserve and not
disapproved, prior to any person or company acquires control of a bank holding
company, subject to certain exemptions. Control is conclusively presumed to
exist when an individual or company acquires 25% or more of any class of voting
securities of a bank holding company. Control is rebuttably presumed to exist if
a person acquires 10% or more, but less than 25%, of any class of voting
securities, and either the bank holding company has registered securities under
Section 12 of the Securities Exchange Act of 1934, or no other person owns a
greater percentage of that class of securities immediately after the
transaction.
Except as authorized by the Bank Holding Company Act and Federal Reserve
regulations or orders, a bank holding company is generally prohibited from
engaging in, or acquiring direct or indirect control of more than 5% of the
voting shares of any company engaged in any business other than the business of
banking or managing and controlling banks. Some of the activities the Federal
Reserve has determined by regulation to be proper incidents to the business of
banking, and thus permissible for bank holding companies, include:
o making or servicing loans and certain types of leases;
o engaging in certain insurance and discount brokerage activities;
o performing certain data processing services;
o acting in certain circumstances as a fiduciary or investment or
financial advisor;
o providing management consulting services;
o owning savings associations; and
14
o making investments in corporations or projects designed primarily
to promote community welfare.
In accordance with Federal Reserve policy, a bank holding company is
expected to act as a source of financial strength to its subsidiary banks. In
adhering to the Federal Reserve's policy, we may be required to provide
financial support to the Bank when, absent such policy, we might not deem it
advisable to provide such assistance.
Under the Bank Holding Company Act, the Federal Reserve may also require a
bank holding company to terminate any activity or relinquish control of a
non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the
Federal Reserve's determination that the activity or control constitutes a
serious risk to the financial soundness or stability of any subsidiary bank of
the bank holding company. Further, federal bank regulatory authorities have
additional discretion to require a bank holding company to divest itself of any
bank or non-bank subsidiary if an agency determines that divestiture may aid the
depository institution's financial condition.
The Sarbanes-Oxley Act of 2002 will also impose significant corporate
governance standards on the Company. The primary areas of such regulation
concern Board oversight of the auditing process, certification of periodic
securities reporting and transactions between officers or directors and the
Company.
Marco Community Bank (In Organization)
As a state-chartered bank, the Bank will be subject to the supervision and
regulation of the Department and the FDIC. The Bank's deposits will be insured
by the FDIC for a maximum of $100,000 per depositor. For this protection, the
Bank may be required to pay a semi-annual statutory assessment and must comply
with the rules and regulations of the FDIC. The assessment, if any, levied for
deposit insurance will vary, depending on the capital position of the Bank, and
other supervisory factors.
Areas regulated and monitored by the bank regulatory authorities include:
o security devices and procedures;
o adequacy of capitalization and loss reserves;
o loans;
o investments;
o borrowings;
o deposits;
o mergers;
o issuances of securities;
o payment of dividends;
o establishment of branches;
o corporate reorganizations;
o transactions with affiliates;
o maintenance of books and records; and
o adequacy of staff training to carry out safe lending and deposit
gathering practices.
15
Capital Adequacy Requirements
Banks are subject to regulatory capital requirements imposed by the Federal
Reserve and the FDIC. Until a bank and its holding company's assets reach $150
million, the capital adequacy guidelines issued by the Federal Reserve are
applied to bank holding companies on a non-consolidated basis, unless the bank
holding company is engaged in non-bank activities involving significant
leverage, or it has a significant amount of outstanding debt held by the general
public. The FDIC's risk- based capital guidelines apply directly to inured state
banks, regardless of whether they are subsidiaries of a bank holding company.
These requirements establish minimum capital ratios in relation to assets, both
on an aggregate basis as adjusted for credit risks and off-balance sheet
exposures. The risk weights assigned to assets are based primarily on credit
risks. For example, securities with an unconditional guarantee by the United
States government are assigned to the lowest risk category. 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.
Capital is then classified into two categories, Tier 1 and Tier 2. Tier 1
capital consists of common and qualifying preferred shareholders' equity, less
goodwill and other adjustments. Tier 2 capital consists of mandatory
convertible, subordinated, and other qualifying term debt, preferred stock not
qualifying for Tier 1 capital, and a limited amount of allowance for credit
losses, up to a designated percentage of risk-weighted assets, Under the
risk-based guidelines, banks must maintain a specified minimum ratio of
"qualifying" capital to risk-weighted assets. At least 50% of an institution's
qualifying capital must be "core" or Tier 1 capital, and the balance may be
"supplementary" or Tier 2 capital. In addition, the guidelines require banks to
maintain a minimum leverage ratio standard of capital adequacy. The leverage
standard requires top-rated institutions are required to maintain a Tier 1
leverage capital to assets ration of 3%. All other institutions are required to
maintain a Tier 1 leverage capital ratio of 4% or greater, based upon their
particular circumstances and risk profiles.
Federal bank regulatory agencies have adopted regulations revising the
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 regulations, when
evaluating a bank's capital adequacy, the revised 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.
Federal bank regulatory agencies possess broad powers to take prompt
corrective action as deemed appropriate for an insured depository institution
and its holding company, based on the institution's capital levels. The extent
of these powers depends upon whether the institution in question is considered
"well-capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," or "critically undercapitalized." Generally, as an
institution is deemed to be less than well-capitalized, the scope and severity
of the agencies' powers increase, ultimately permitting an agency to appoint a
receiver for the institution. Business activities may also be influenced by an
institution's capital classification. For instance, only a "well-capitalized"
depository institution may accept brokered deposits without prior regulatory
approval, and can engage in various expansion activities with prior notice,
rather than prior regulatory approval. However, rapid growth, poor loan
portfolio performance or poor earnings performance, or a combination of these
factors, could change the capital position of the Bank in a relatively short
period of time. Failure to meet these capital requirements could subject the
16
Banks to prompt corrective action provisions of the FDIC, which may include
filing with the appropriate bank regulatory authorities a plan describing the
means and a schedule for achieving the minimum capital requirements. In
addition, the Bank would not be able to receive regulatory approval of any
application that required consideration of capital adequacy, such a s a branch
or merger application, unless we could demonstrate a reasonable plan to met the
capital requirement within an acceptable period of time.
Dividends
Our ability to pay cash dividends will depend almost entirely upon the
amount of dividends that the Bank will be permitted to pay by statute or
regulation. Additionally, Florida law provides that we may only pay dividends if
the dividend payment would not render us insolvent, or unable to meet our
obligations as they come due.
The Department limits a bank's ability to pay dividends. As a
state-chartered bank, the Bank will be subject to regulatory restrictions on the
payment of dividends, including a prohibition of payment of dividends from the
Bank's capital under certain circumstances without the prior approval of the
Department and the FDIC. Except with the prior approval of the Department, all
dividends of any Florida bank must be paid out of retained net profits from the
current period and the previous two years, after deducting expenses, including
losses and bad debts. In addition, a state-chartered bank in Florida is required
to transfer at least 20% of its net income to surplus until their surplus equals
the amount of paid-in capital.
Other Laws
State usury and credit laws limit the amount of interest and various other
charges collected or contracted by a bank on loans. Our loans are also subject
to federal laws applicable to credit transactions, such as the:
o Federal Truth-In-Lending Act, which governs disclosures of credit
terms to consumer borrowers;
o Community Reinvestment Act, which requires financial institutions
to meet their obligations to provide for the total credit needs
of the communities they serve, including investing their assets
in loans to low- and moderate-income borrowers;
o Home Mortgage Disclosure Act requiring financial institutions to
provide information to enable public officials to determine
whether a financial institution is fulfilling its obligations to
meet the housing needs of the community it serves; o Equal Credit
Opportunity Act prohibiting discrimination on the basis of race,
creed or other prohibitive factors in extending credit;
o Real Estate Settlement Procedures Act, which requires lenders to
disclose certain information regarding the nature and cost of
real estate settlements, and prohibits certain lending practices,
as well as limits escrow account amounts in real estate
transactions;
o Fair Credit Reporting Act governing the manner in which consumer
debts may be collected by collection agencies; and
o Rules and regulations of various federal agencies charged with
the responsibility of implementing such federal laws.
17
Our operations are also subject to the:
o The privacy provisions of the Gramm-Leach-Bliley act of 1999,
which requires us to maintain privacy policies intended to
safeguard consumer financial information, to disclose these
policies to our customers, and allow customers to "opt out" of
having their financial service providers disclose their
confidential financial information to non- affiliated third
parties, subject to certain exceptions;
o Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes
procedures for complying with administrative subpoenas of
financial record; and
o Electronic Funds Transfer Act and Regulation E, which govern
automatic deposits to, and withdrawals from, deposit accounts and
customers' rights and liabilities arising from the use of debit
cards, automated teller machines and other electronic banking
services.
Interstate Banking and Branching
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, eligible bank holding companies in any state are permitted, with Federal
Reserve approval, to acquire banking organizations in any other state. The
Interstate Banking and Branching Efficiency Act also removed substantially all
of the prohibitions on interstate branching by banks. The authority of a bank to
establish and operate branches within a state, however, continues to be subject
to applicable state branching laws. Under current Florida law, the Bank will be
permitted to establish branch offices throughout Florida, with the prior
approval of the Department and the FDIC. In addition, with prior regulatory
approval, we will be able to acquire existing banking operations in other
states.
Financial Modernization
The Gramm-Leach-Bliley Act of 1999 sought to achieve significant
modernization of the federal bank regulatory framework by allowing the
consolidation of banking institutions with other types of financial services
firms, subject to various restrictions and requirements. In general, the
Gramm-Leach-Bliley Act repealed most of the federal statutory barriers which
separated commercial banking firms from insurance and securities firms and
authorized the consolidation of such firms in a "financial services holding
company." We have no immediate plans to utilize the structural options created
by the Gramm-Leach-Bliley Act, but we may develop such plans in the future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is still in the development stage, and will remain in that
state until the offering is completed. We have funded our start-up and
organization costs through the proceeds from preferred stock which has been
issued to Company and Bank directors. In addition, we have purchased an
approximately 1.5 acre site on which we intend to construct a 12,000 square foot
condominium and sell the entire first floor to the Bank.
As of _________, 2002, we have incurred an accumulated deficit of
$___________. These funds have been spent on salaries, equipment, legal and
accounting fees, application fees and other operating expenses.
18
In the opinion of the Company, net proceeds of $7,200,000 from the offering
will satisfy the cash requirements of the Company and the Bank for our first
years of operation. It is not anticipated that the Company will find it
necessary to raise additional funds to meet expenditures required to operate the
business of the Company and the Bank over the next 12 months. All anticipated
material expenditures for such period have been identified and provided of out
of the proceeds of this offering.
We have also obtained a $1.2 million line of credit from a bankers' bank.
We have drawn on this line to purchase our main office site, and will utilize
this line to fund future expenses during the offering. We anticipate that this
line will provide us with the necessary liquidity to continue our organizational
and pre-opening activities until we complete the offering.
BUSINESS OF THE COMPANY
General
The Company was incorporated under the laws of the State of Florida on
January 28, 2003, for the purpose of organizing the Bank and purchasing 100% of
the outstanding capital stock of the Bank. The Company was formed by group of
Marco Island business leaders, bank executives and community leaders who believe
that there is a significant demand for a locally-owned community bank. Each of
the nine directors of the Company or the Bank were previously directors or
officers of other financial institutions in the Marco Island and Naples area. We
received preliminary approval from the Department to charter the Bank on March
5, 2003. The Bank filed its application for deposit insurance with the FDIC on
February 12, 2003. The Company intends to file an application with the Federal
Reserve to become a one-bank holding company when the FDIC approves our
application. The Company has been organized as a mechanism to enhance the Bank's
ability to serve our future customers' requirements for financial services. The
holding company structure will also provide flexibility for expansion of the
Company's banking business through acquisition of other financial institutions
and provision of additional banking-related services, which traditional
commercial banks may not provide under present laws.
Under Federal Reserve regulations, the Company is expected to be a source
of financial strength to the Bank. Banking regulations will require that the
Bank maintain a minimum ratio of capital to assets. In the event that the Bank's
growth is such that this minimum ratio is not maintained, the Company may borrow
funds, subject to the capital adequacy guidelines of the Federal Reserve, and
contribute them to the capital of the bank and otherwise raise capital in a
manner which is unavailable to the Bank under existing banking regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank; however, it is expected that we may make additional
acquisitions in the event that the Bank becomes profitable and such acquisitions
are deemed to be in our best interests. Such acquisitions would be subject to
certain regulatory approvals and requirements.
BUSINESS OF THE BANK
General
The Bank anticipates that it will commence business operations in the
second quarter of 2003 in a temporary facility located at the corner of San
Marco Road and South Barfield Drive, in Marco Island, Florida. We expect the
permanent office condominium facility to be ready for occupancy in the second
quarter of 2003.
19
The Bank plans to be a full-service commercial bank, without trust powers.
The 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 and Keogh accounts, regular interest bearing
statement savings accounts, certificates of deposit, commercial loans, real
estate loans, home equity loans and consumer installment loans In addition, the
Bank will provide such consumer products and services as U.S. Savings Bonds,
travelers checks, cashiers checks, safe deposit boxes, bank by mail services,
direct deposit and automatic teller services.
The philosophy of the Bank's management with respect to its initial
operations will emphasize prompt and responsive personal service to members of
the business and professional communities of Marco Island, Isle of Capri and
Goodland, Florida, in order to attract customers and acquire market share now
controlled by other financial institutions in our market area. Our prime
location and range of banking services, as well as our emphasis on personal
attention and service, prior experience in the market area, prompt decision
making and consistency in banking personnel, will be major tools in our efforts
to capture such market share. In addition, our proposed officers have
substantial banking experience, which will be an asset in providing both
products and services designed to meet the needs of our customer base. The
Company's and Bank's directors are active members of the business community in
Marco Island and their continued active community involvement will provide an
opportunity to promote the Bank and its products and services. We intend to
utilize effective advertising and one-on-one selling efforts in order to build a
distinct institutional image or the Bank and to capture a customer base.
Market Area and Competition
The primary service area of the proposed Bank has been experiencing steady
growth in both jobs and banking deposits in recent year. Marco Island is the
primary residential and commercial center located in the southeast part of
Collier County, Florida. Collier County maintains a steady tourist, industrial
and agricultural base, which has been expanding in recent years. The largest
employers in the County include: Collier County School Board; Naples Community
Hospital, Inc.; Publix Supermarket, Inc.; Collier County Board of County
Commissioners; Marriott Corporation; Winn-Dixie Stores, Inc.; and Ritz Carlton
Hotel. Agricultural activities in the county center around the cattle, produce
and saltwater fishing industries. Numerous resorts, hotels and other tourist
facilities are located in Marco Island, as well as a number of winter
residences.
Competition among financial institutions in our primary service area is
intense. There are eight commercial banks with a total of nine branches in Marco
Island. All eight banks are affiliated with major bank holding companies. There
are no savings associations or credit unions located in Marco Island, however,
savings associations and credit unions are located in nearby communities. We
believe that we will be able to effectively compete in our market, based upon
our banking philosophy, which places emphasis on customer service, friendly and
personable employee attitudes, and the development of banking products that
address the primary needs of our customer base. Our directors and management
will actively represent us in local community events and functions.
Financial institutions primarily compete with one another for deposits. In
turn, a bank's deposit base directly affect 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 availability of
unique financial services products. We will be competing with financial
institutions which have much greater financial resources than us, and which may
be able to offer more services and unique services and possibly better terms to
their customers. We, however, believe that we will be able to attract sufficient
deposits to enable us to compete effectively with other area financial
institutions.
20
We 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 targeting traditional banking
markets. Due to the growth of the Marco Island area, it can be anticipated that
additional competition will continue from new entrants to the market.
We will offer a full range of interest bearing and non-interest bearing
deposit accounts, including commercial and retail checking accounts, money
market accounts, individual retirement and Keogh accounts, regular interest
bearing 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 business with in our market area,
obtained through the personal solicitation of our officers and directors, direct
mail solicitation and advertisements published in the local media. We intend to
pay competitive interest rates on time and savings deposits up to the maximum
permitted by law or regulation. In addition, we will implement a service charge
fee schedule competitive with other financial institutions in our market area
covering such matters as maintenance fees on checking accounts, per item
processing fees on checking accounts and returned check charges.
Loan Portfolio
We consider the maintenance of a well-underwritten and diversified loan
portfolio a prudent and profitable method of employing funds raised through
deposits. The Bank's objective will be to maintain a high quality, diversified
credit portfolio consisting of commercial, consumer and mortgage loans. The Bank
will originate a minimal amount of subprime and speculative type loans due to
the high risk involved in these types of loans. Additionally, we anticipate
lower than normal loan-to-value ratios within the loan portfolio due to the
wealth and higher annual incomes of Marco Island residents.
We intend to offer loan products and programs that will be responsive to
the business community's financial requirements. Our borrowers will generally be
located within the Bank's primary trade area, Marco Island. Our secondary trade
area is defined as the remainder of Collier County and southern Lee County.
The Bank's Board of Directors will establish a loan policy which will
provide the Bank's lenders with the discretion necessary to accomplish our
lending objectives, while assuring compliance with all state and federal banking
regulations. The Bank Board's Loan Committee will be responsible for ensuring
the soundness of the Bank's credit policy, adherence to lending policies and
compliance with applicable laws, rules and regulations. To fulfill these
responsibilities, the Loan Committee will review the adequacy of the Bank's
credit policy on at least an annual basis, review all large loans and monitor
the performance of the loan portfolio on an ongoing basis.
The Bank will maintain a loan loss reserve sufficient to protect the Bank
against anticipated and unanticipated losses and management will review the
reserve's adequacy at least quarterly with the Bank's Board of Directors.
Commercial Loans - We intend to provide commercial loans to the business
community to provide funds for such purposes as financing business equipment and
commercial real estate. Our emphasis will be on loans secured by commercial real
estate, rather than riskier receivables or business inventory loans. Commercial
loans may be either short term (one year or less) or intermediate term in nature
and may be secured, unsecured or partially secured. Maturities will be
structured in relation to the economic purpose of the loan, conforming to the
anticipated source of repayment. Interest rates are expected to be originated
21
on a floating rate basis. It is anticipated that loans will be made tied to
prime rate. The basis upon which we will set rates over prime will be based upon
the risk of the credit facility. We will attempt to place floors and pre-payment
penalties whenever possible. In addition, we will attempt to originate fee
income on each loan closed through the Bank.
Term loans are those having an anticipated final maturity of more than one
year from the initial funding date. Generally, loans extending more than 24
months will be made pursuant to formal written loan agreements between the
borrower and the Bank. Amortization schedules on term loans secured by
collateral other than real estate will typically reflect a complete payout
within seven years of the funding date. Loans secured by commercial real estate
will generally be amortized over 20 years, with five to seven year maturities.
Demand notes may be utilized in connection with certain secured commercial
loan transactions where the nature of the transactions suggest that such
structure is clearly preferable; however, time notes will be utilized as a
matter of routine.
The following types of credit may be considered by the Bank, subject to
adequate available resources to monitor and service such credit: (i) real estate
development loans secured by a first lien on the property where the Bank is also
providing construction and/or permanent financing; (ii) term loans secured by
machinery and equipment (terms of such loans will be consistent with the
purpose, cash flow capacity, and economic life of collateral); and (iii) credit
lines for short term working capital requirements. All credit lines will be
subject to review at least annually and will generally carry a requirement for a
minimum 30 consecutive day annual out-of-debt period.
Consumer Loans - Consumer loans will be provided to individuals for
household, family and personal expenditures. Generally, consumer loans will have
a maturity of not longer than six years. The primary type of consumer lending
will be for the financing of boats and automobiles, pre-approved liens of
credit, home improvements and education. The Bank's loan policy will provide a
specific guideline for the required terms and credit criteria. We expect to make
loans secured by second mortgages on real estate and other collateral, as well
as making unsecured loans.
Mortgage Loans - We will offer mortgage loan programs to provide financing
primarily for the acquisition or construction of single-family, owner-occupied
primary residences. All loans will be structured with an amortization schedule
not exceeding 30 years. These loans will be maintained in our loan portfolio and
also sold in the secondary market, in order to generate fee income.
Normally, the loan to value ratio of each conventional mortgage will not
exceed 80%. However, the Bank will participate with private mortgage insurance
companies for the purpose of providing loans with a loan to value ratio of up to
97%.
The Bank will participate in community mortgage programs which are
established for the benefit of residents of low to moderate income neighborhoods
within the Bank's trade areas.
During our first three years of operation, we intend to attempt to
structure our loan portfolio as follows:
22
Type of Loan % of Total Loan Portfolio
Construction or Land Development 9% - 11%
Real Estate Finance 55% - 58%
Commercial 23% - 26%
Personal 7% - 8%
Deposit Generation
We will compete aggressively for deposits in the Marco Island market. Among
our product offerings will be online business banking, checking accounts, cash
management services, safe deposit boxes, travelers' checks, direct deposit of
payroll and social security checks, wire transfers, telephone banking and
automatic drafts. We believe these accounts and products are profitable when
considering the entire potential customer relationship, which may include other
deposit accounts, loans, and sources of fee income.
We plan to offer certificate of deposit promotions designed to attract
customers that we intend to cross-sell other services, including loan products.
Our goal is to attract customers who will become permanent customers due to more
responsive, more personalized, and faster service. We will also seek to garner
as much zero interest or low cost deposits as possible.
We will offer a tiered money market/savings product whereby the Bank will
pay higher rates on higher deposit balances. We believe this deposit vehicle
will allow the Bank to compete with money market funds.
We also intend to focus on relationship banking. Typically, customers are
more profitable as the number of services they utilize increases and that the
balance in each individual account increases as the total number of accounts
increase.
Investments
At the close of its first year of operation, management of the Bank
anticipates that investment securities will comprise a substantial portion of
the Bank's assets. Initially, we intend to invest primarily in direct
obligations of the United States, obligations guaranteed as to principal and
interest by the United States and obligations of agencies of the United States.
In addition, we will enter into Federal Funds transactions with our principal
correspondent bank and anticipate that we will primarily act as a net seller of
such funds. The sale of Federal Funds will amount to a short-term loan from us
to another bank, usually overnight.
Asset/Liability Management
It will be our objective to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash management, loan, investment, borrowing and capital policies.
Designated Bank officers will be responsible for monitoring policies and
procedures that are designed to ensure 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. We will seek to invest the largest portion of our assets in
commercial, consumer and real estate loans.
23
Our asset/liability mix will likely be monitored on a daily basis with a
monthly report reflecting interest-sensitive assets and interest-sensitive
liabilities being prepared and presented to the Bank's 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 our
earnings.
Correspondent Banking
Correspondent banking involve the providing of services by one bank to
another bank which cannot provide that service for itself from an economic or
practical standpoint. The Bank will be required to purchase correspondent
services offered by larger banks, including check collections, purchase and sale
of Federal Funds, securities safekeeping, investment services, coin and currency
supplies, overline and liquidity loan participations and sales of loans to or
participations with correspondent banks.
We anticipate that the Bank will sell loan participations to correspondent
banks with respect to loans that exceed our lending limit. As compensation for
services provided by a correspondent, we may maintain certain balances with such
correspondents in non-interest bearing accounts.
Data Processing
We intend to sign a data processing servicing agreement with an outside
service bureau. It is expected that this servicing agreement will provide for
the Bank to receive a full range of data processing services, including an
automated general ledger, deposit accounting, commercial, real estate and
installment loan processing, payroll, central information file and ATM
processing and investment portfolio accounting.
Employees
In its first year of operation, we anticipate that seven persons will be
employed on a full-time basis at the Bank, including three executive officers.
We will hire additional persons as needed, including additional tellers and
financial service representatives. We will also have at least three executive
officers of the Company, one of whom will not be a Bank employee.
Monetary Policies
The results of our operations will be affected by credit policies of
monetary authorities, particularly the Federal Reserve. The instruments of
monetary policy employed by the Federal Reserve 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 the 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, no accurate prediction can be made
as to possible future changes in interest rates, deposit levels, loan demand or
our business and earnings.
MANAGEMENT AND STOCK OWNERSHIP
The following persons are the original directors of the Company: Joel M.
Cox, Sr.; Stephen A. McLaughlin; Robert A. Marks, E. Terry Skone and Richard
Storm, Jr. (Organizing Chair). Mr. Skone is the Company's Chief Executive
Officer. The proposed directors of the Bank are: Joel M. Cox, Sr., Jamie B.
24
Greusel, Melanie J. Hanson, Anthony J. Iannotta, Robert A. Marks (Organizing
Chair), Robert D. Mathews, Stephen A. McLaughlin and E. Terry Skone. In
addition, Michael A. Micallef, Jr. has been proposed as the Bank's President and
Chief Executive Officer and is the Company's President and Chief Operating
Officer. These individuals, as a group, intend to subscribe for 289,745 units in
the offering, which will equal 36.22% of the 800,000 minimum units required to
be sold in order to release funds from the escrow account.
All of our organizational expenses have been financed by loans from the
directors to the Company. In the event that the requisite approvals are
obtained, a portion of the proceeds will be used to repay these loans to the
extent such repayment is allowed by the Department and other appropriate bank
regulatory authorities.
All initial directors' terms shall expire at the first meeting of
shareholders at which directors are elected. In the case of the Bank, it is
expected that such a meeting will be held shortly before the Bank opens for
business. In the case of the Company, such a meeting will likely occur in March
or April of 2004. The Company's and Bank's executive officers are appointed by
the respective Boards of Directors and hold office at the will of the Boards.
Any Company director may be removed, with or without cause, at any regular
or special meeting of shareholders called for that purpose by the vote of at
least 66% of the outstanding shares of Company common stock.
The following is a brief summary of our directors' and executive officers'
business, professional and civic experience.
The Company
Joel M. Cox, Sr., age 64, a director of the Company and a proposed director
of the Bank, has over 40 years of experience in the banking and insurance
industries. Mr. Cox has been Vice President and a director of Cox Insurance
Agency, Inc., in Marco Island, since 1984. He has also been a director of
People's Community Bank of the West Coast in Sarasota, Florida since 1999, and a
director of its parent holding company, People's Community Bancshares, Inc.,
since its acquisition of that bank in 2002. He was also a director of Citizens
Community Bank of Florida in Marco Island and of its parent holding company,
Citizens Community Bancorp, Inc. from their founding in 1995 until they were
acquired by F.N.B. Corporation in 2001.
Robert A. Marks, age 71, a director of the Company and proposed Bank
director, retired from Metropolitan Life Insurance Company in 1986, after a
30-year career culminating in his service as a Regional Manager based in
Nashville, Tennessee. From 1996 to 2001, he was a director of Citizens Community
Bank of Florida and Citizens Community Bancorp, Inc. Mr. Marks made honorary
director of Citizens Community Bank in April, 2000.Mr. Marks received a
Chartered Life Underwriter degree in 1971 from the American College of Life
Underwriters.
Stephen A. McLaughlin, age 56, a director of the Company and proposed Bank
director, is involved in the operation of several Maine-based real estate
consulting and timber companies, including Stillwater Land & Lumber Limited and
Stillwater Associates. He was a director of Citizens Community Bank of Florida
and of Citizens Community Bancorp, Inc. from their founding in 1995 until 2001.
From 1996 to 1998, he served as that bank's Vice President for Administration.
Mr. McLaughlin graduated from the University of Maine in 1968 with an
engineering degree.
25
Michael A. Micallef, Jr., age 53, is the President and Chief Operating
Officer of the Company and proposed President and Chief Executive Officer of the
Bank. Until recently, he was President and Chief Operating Officer of Sterling
Bank, FSB in Lantana, Florida. He held that position from July 1999, until he
resigned to join the Bank and the Company in February 2003. Prior to that, he
was President and Chief Executive Officer of Citizens Community Bank of Florida
in Marco Island from 1997 to 1999. From 1993 to 1997, he served as President and
Chief Executive Officer of Bank Boynton, FSB, in Boynton Beach, Florida. From
1986 to 1992, he was with United Savings, Melbourne, Florida, where he served as
Chief Executive Officer. Mr. Micallef earned a graduate banking degree from
Brown University in 1979, an MBA from Fordham University in 1976, and a B.S.
from St. Peters College in 1973.
Richard Storm, Jr., age 61, a director of the Company, has been a resident
of Collier County, Florida for over 23 years. Mr. Storm has over 25 years of
director experience in banking and was a founding director, Chairman of the
Board and CEO of Citizens Community Bank of Florida and its parent holding
company, Citizens Community Bancorp, Inc. He served in those capacities until
those institutions were sold in April 2001. From 1987 to 1994, Mr. Storm served
as a director and Corporate Secretary of Citizens National Corporation, a bank
holding company located in Naples, Florida. Following Citizens National's merger
with AmSouth Bank of Florida in 1994, Mr. Storm served as a City Director of
AmSouth Bank until 1995. Mr. Storm was also a director of Danbury Bank and
Trust, Danbury, Connecticut from 1974 to 1979. In addition to his bank
affiliations, Mr. Storm has an extensive background in real estate management,
marketing, finance and development. He is currently President of LoanStar
Capital, Inc. (a mortgage and venture capital company), President of Deer Run
Properties, Inc. (a real estate development company) and Chairman and President
of Cumberland Properties, Inc., a shopping center owner/operator.
E. Terry Skone, age 62, Chief Executive Officer and a director of the
Company and a proposed Bank director, retired as President and Chairman of
Deerwood Bancorporation, Inc. and of First National Bank of Deerwood, Deerwood,
Minnesota in 1997, after 42 years of service. Following his retirement, he was a
director of Citizens Community Bancorp, Inc. from 1998 to 1999. In 1962, he
received a BS from Gustavus Adolphus College, and in 1969, graduated from the
University of Wisconsin School of Banking.
The Bank
The Board of Directors of the Bank is comprised of individuals with strong
banking, business and community ties to Collier County, Florida. All of the
directors have banking experience. In addition to Joel M. Cox, Sr., Stephen A.
McLaughlin, Robert A. Marks and E. Terry Skone, whose biographical information
is above, the following individuals also serve as directors of the Bank:
Jamie B. Greusel, age 41, a proposed Bank director, has been a principal in
the law firm of Berry & Greusel, P.A. in Marco Island since 1988. She is
licensed to practice in both Florida and New Jersey. Ms. Greusel was previously
a director of Citizens Community Bank of Florida from 1998 to 2001. She earned
her law degree from Stetson University, cum laude, in 1987 and her BA from
Juniata College in 1983.
Melanie J. Hanson, age 37, a proposed Bank director, has been a trustee of
the A.D. Watson Trust in Marco Island since 1999. She has also been a realtor
with Coldwell Banker in Marco Island since 1994. Ms. Hanson was a director of
Citizens Community Bank of Florida from 2000 to 2001. She has been a resident of
Marco Island since 1989, having relocated from the United Kingdom.
26
Anthony Iannotta, age 44, a proposed Bank director, has been President of
Marco Island Community Mortgage since 2001. Prior to that, he was President of
CCB Mortgage, Inc. (a subsidiary of Citizens Community Bancorp, Inc.) from 1999
to 2001, and President of Island Mortgage from 1988 to 1999. All of these
businesses were mortgage originators and processors in Marco Island, Florida.
Mr. Iannotta received a financial planning degree from Adelphia University in
1981.
Robert D. Mathews, age 70, a proposed Bank director, has owned and operated
the Marco Island True Value Hardware since 1991. From 1999 to 2001, he was also
a director of Citizens Community Bank of Florida and very active on its loan
committee. Prior to that he owned and operated hardware and grocery stores in
Indiana for over 30 years.
The directors and executive officers of the Company and the Bank intend to
purchase the number of shares and warrants set forth in the following table,
which also specifies the percentage of common stock to be owned by these
individuals after completion of the offering.
Position Position Number Right Percent Percent
with the with the of to of of
Name Company Bank Shares Acquire(1) Minimum(2) Maximum(3)
- ---- ------- ---- ------ ---------- ---------- ----------
Joel M. Cox, Sr. Director Director 22,222 5,555 3.44 2.13
Jamie B. Greusel - Director 22,222 5,555 3.44 2.13
Melanie J. Hanson - Director 27,777 6,944 4.30 2.66
Anthony Iannotta - Director 11,111 2,777 1.73 1.07
Robert A. Marks Director Organizing Chair 28,000 7,000 4.34 2.68
Robert D. Mathews - Director 27,777 6,944 4.30 2.66
Stephen A. McLaughlin Director Director 30,000 7,500 4.64 2.87
Michael A. Micallef, Jr. President & COO President & CEO 1,000 250 0.16 0.10
E. Terry Skone CEO & Director Director 55,000 13,750 8.45 5.23
Richard Storm, Jr. Organizing Chair - 64,636 16,159 9.99 6.14
------- ------ ----- ----
Total (10 people) 289,745 72,434 41.51% 26.39%
======= ====== ===== =====
- --------------
<FN>
(1) Warrants issued in the offering.
(2) Based on 800,000 shares outstanding and only the listed beneficial owner
exercising his or her warrants.
(3) Based on 1,300,000 shares outstanding and only the listed beneficial owner
exercising his or her warrants.
</FN>
Each of our directors and executive officers will acquire their units
during phase one or two and, therefore, will acquire both common stock and
warrants. While there can be no assurance that they will exercise their
warrants, it can be assumed that most or all will exercise such rights and will,
therefore, acquire additional common stock during the 24-month period following
the date the Bank opens for business.
DIRECTOR COMPENSATION
We will not pay Company or Bank directors any fees for their service on the
Board or Board committees, until we have achieved at least two consecutive
quarters of profitable operations. In addition, we will not pay directors any
fees for their service on any Board committees until the Bank has been open for
at least six months. Neither Board has determined the amount of any such fees,
but we do not expect such fees to exceed the level of fees typically paid to
directors of banks or companies of sizes, profitability or locations similar to
us.
We will also not grant any stock options to any Company or Bank directors
until the Bank has been open for at least six months. Any grant of options will
not be effective until the Board adopts a written stock option plan, and the
plan is ratified by a majority vote of our shareholders.
27
EXECUTIVE COMPENSATION
Neither the Company nor the Bank currently has any formal employment
contracts with our executive officers or other employees. We do intend to enter
into a written employment agreement with Mr. Micallef on or about the time the
Bank commences operations. The terms of the employment agreement will be similar
to those of other bank executive officers of similar institutions. On March 1,
2003, we began paying Michael A. Micallef's annual salary of $120,000.
At this time, the Company has not adopted any stock based compensation
programs for any of its executive officers or other employees. Any grant of
options will not be effective until the Board has adopted a written stock option
plan and the plan is ratified by a majority vote of our shareholders.
TRANSACTIONS WITH RELATED PARTIES
The Company has purchased a lot in Marco Island from San Marco Realty, Inc.
for $850,000, a price which we believe is comparable to similar lots owned by
non-related parties. Bank director Robert D. Mathews is the principal of this
corporation. We have also obtained an appraisal of the real property, which
values the land at $850,000. The Company intends to construct an office
condominium on this site, and sell the entire first floor to the Bank to be used
as its main office.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 1,000,000 shares of
preferred stock, of which 1,800 shares, designated as Series A, are outstanding
and owned by the nine Company and Bank directors, and 9,000,000 shares of common
stock, par value $0.01 per share, of which no shares are presently issued or
outstanding.
Common Stock
The holders of common stock are entitled to elect the members of the
Company's Board of Directors and such holders are entitled to vote as one class
on all matters required or permitted to be submitted to the shareholders of the
Company. No holder of the common stock has preemptive rights with respect to the
issuance of shares of that or any other class of stock and the holders of common
stock are 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 legally
available assets. Upon the liquidation, dissolution or winding up of the
Company, the holder of each share of common stock will be entitled to share
equally in the distribution of the Company's assets. The holders of common stock
are not entitled to the benefit of any sinking fund provision. The shares of
common stock of the Company are not subject to any redemption provisions, nor
are they convertible into any other security or property of the Company. All
shares of common stock outstanding upon completion of this offering will be
fully paid and nonassessable.
Warrants
In this offering, we will issue warrants to purchase one-quarter share of
common stock at an exercise price of $9.00 per share. In no instance will we
issue fractional shares. The warrants will be exercisable for the two-year
period immediately following the Bank opening for business. Our Board of
28
Directors, however, may call the warrants upon 30 days written notice, after the
Bank has been open for 12 months. In addition, the Board may extend the term of
the warrants for up to six additional months. The warrants will be transferrable
only:
o to a parent, sibling, spouse, child or grandchild of the warrant
holder;
o to a pension or profit sharing plan of which the holder or
holder's spouse is a beneficiary;
o to a business entity or trust owned or controlled by the holder
or holder's spouse; or
o by a court order.
Preferred Stock
Our Articles of Incorporation also provide for the issuance of 1,000,000
shares of preferred stock. The Board of Directors is authorized to issue the
preferred stock in series and to fix the particular designation of and the
rights, preferences, privileges and restrictions granted to and imposed upon
each series, all without further approval of our shareholders. We have issued
1,800 shares of Series A Preferred Stock to the nine Company and Bank directors.
These shares may be redeemed at any time for their purchase price of $100 per
share, but the shares do not pay a mandatory dividend. The stock, however, does
have a liquidation preference over our common stock, in the event of a
liquidation or dissolution of the Company.
Acquisition Offers
Our Board of Directors, when evaluating any offer of another person or
entity to: (i) make a tender or exchange offer for any equity security of the
Company; (ii) merge or consolidate the Company with another corporation or
entity; or (iii) purchase or otherwise acquire all or substantially all of the
properties and assets of the Company, shall, in connection with the exercise of
its judgment in determining what is in the best interest of the Company and its
shareholders, give due consideration to all relevant factors, including, without
limitation:
o the social and economic effect of acceptance of such offer on the
Company's present and future customers and employees and those of
its subsidiaries;
o the communities in which the Company and its subsidiaries operate
or are located;
o the ability of the Company to fulfill its corporate objectives as
a financial institution holding company; and
o the ability of its subsidiary financial institutions to fulfill
the objectives of such institutions under applicable statutes and
regulations.
INDEMNIFICATION
Our Articles of Incorporation provide for the indemnification of directors,
officers, employees and agents to the maximum extent permitted by Florida law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
under the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
29
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or the
Bank is a party or of which any of their properties are subject; nor are there
material proceedings known to us contemplated by any governmental authority; nor
are there material proceedings known to us, pending or contemplated, in which
any director, officer or affiliate or any proposed principal security holder of
the Company, or any associate of any of the foregoing is a party or has an
interest adverse to the Company or the Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of common stock and
warrants offered will be passed upon for the Company by Igler & Dougherty, PA.,
1501 Park Avenue East, Tallahassee, Florida 32301, counsel to the Company.
EXPERTS
The financial statements of the Company as of January 31, 2003, and for the
period from January 28, 2003 (inception) to January 31, 2003, included elsewhere
in the Registration Statement have been included in reliance upon the reports of
Hacker, Johnson & Smith, P.A., independent certified public accountants, and
upon the authority of said firm as experts in accounting and auditing matters.
ADDITIONAL INFORMATION
We will file annual, quarterly, and special reports, proxy statements, and
other information with the Securities and Exchange Commission. This prospectus
constitutes a part of a registration statement filed by us with the Securities
and Exchange Commission. This prospectus omits certain of the information
contained in the registration statement, and we refer you to the registration
statement and the related exhibits for further information with respect to the
Company and the securities offered by this prospectus. Any statements in this
prospectus concerning any exhibit are not necessarily complete and in such
instances we refer you to the copy of such exhibit filed with the Securities and
Exchange Commission. Each statement is qualified in its entirety by such
reference.
You can obtain and copy the registration statement, including the exhibits,
in person or by mail, by paying prescribed rates at the Public Reference Room of
the Securities and Exchange Commission at 450 Fifth Street, NW, Washington, DC
20549, or at the Securities and Exchange Commission's regional offices located
at 1401 Brickell Avenue, Suite 200, Miami, Florida 33131. You may obtain
information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. In addition, the
Securities and Exchange Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements that
are filed electronically with the Securities and Exchange Commission.
30
MARCO COMMUNITY BANCORP, INC.
(A Development Stage Company)
Marco Island, Florida
Audited Financial Statements
At January 31, 2003 and the Period from June 1, 2002
(Date of Inception) to January 31, 2003
(Together with Independent Auditors' Report)
F-1
Independent Auditors' Report
Board of Directors
Marco Community Bancorp, Inc.
(A Development Stage Company)
Marco Island, Florida:
We have audited the accompanying balance sheet of Marco Community Bancorp, Inc.
(A Development Stage Company) (the "Company") at January 31, 2003, and the
related statements of operations, changes in stockholders' deficit, and cash
flows for the period from June 1, 2002 (Date of Inception) to January 31, 2003.
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 auditing standards generally accepted
in the United States of America. 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 the Company at January 31,
2003, and the results of its operations and its cash flows for the period from
June 1, 2002 (Date of Inception) to January 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.
HACKER, JOHNSON & SMITH PA
Tampa, Florida
February 21, 2003
F-2
MARCO COMMUNITY BANCORP, INC.
(A Development Stage Company)
Balance Sheet
January 31,
-----------
2003
----
Assets
Cash ............................................................. $ 12,835
Land deposit ..................................................... 25,000
---------
Total ..................................................... $ 37,835
=========
Liabilities and Stockholders' Deficit
Due to Organizers ................................................ 120,000
Accounts payable ................................................. 8,308
---------
Total liabilities ......................................... 128,308
---------
Commitments (Note 3)
Stockholders' deficit:
Preferred stock, no par value, 1,000,000 shares
authorized, none issued or outstanding .................... -
Common stock, $.01 par value, 9,000,000 shares
authorized, none issued or outstanding .................... -
Deficit accumulated during the development stage ............. (90,473)
---------
Total stockholders' deficit ............................... (90,473)
---------
Total ..................................................... $ 37,835
=========
See Accompanying Notes to Financial Statements.
F-3
MARCO COMMUNITY BANCORP, INC.
(A Development Stage Company)
Statement of Operations
Period from
June 1,
2002 (Date of
Inception) to
January 31,
-----------
2003
----
Organizational expenses ......................................... $ 90,473
--------
Net loss accumulated during the development stage ........... $(90,473)
========
See Accompanying Notes to Financial Statements.
F-4
MARCO COMMUNITY BANCORP, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Deficit
Period from June 1, 2002 (Date of Inception) to January 31, 2003
Total
Preferred Common Accumulated Stockholders'
Stock Stock Deficit Deficit
----- ----- ------- -------
Net loss accumulated during the
development stage ................................... $ - - (90,473) (90,473)
====== ====== ====== ======
Balance at January 31, 2003 ............................. $ - - (90,473) (90,473)
====== ====== ====== ======
See Accompanying Notes to Financial Statements.
F-5
MARCO COMMUNITY BANCORP, INC.
(A Development Stage Company)
Statement of Cash Flows
Period from
June 1,
2002 (Date of
Inception) to
January 31,
-----------
2003
----
Cash flows used in organizational activities during the development stage:
Net loss accumulated during the development stage ....................................................... $ (90,473)
Increase in accounts payable ............................................................................ 8,308
---------
Cash flows used in organizational activities during the
development stage ................................................................................ (82,165)
---------
Cash flows used in investing activity-
Deposit for land ........................................................................................ (25,000)
---------
Cash flows from financing activity-
Proceeds received from organizers ....................................................................... 120,000
---------
Net change in cash .......................................................................................... 12,835
Cash at beginning of period ................................................................................. -
---------
Cash at end of period ....................................................................................... $ 12,835
=========
Supplemental disclosures of cash flow information- Cash paid during period for:
Interest ................................................................................................ $ -
=========
Income taxes ............................................................................................ $ -
=========
See Accompanying Notes to Financial Statements.
F-6
MARCO COMMUNITY BANCORP, INC.
(A Development Stage Company)
Notes to Financial Statements
At January 31, 2003 and the Period from June 1, 2002
(Date of Inception) to January 31, 2003
(1) Summary of Significant Accounting Policies
General. Marco Community Bancorp, Inc. (the "Company") was incorporated on
January 28, 2003 in the State of Florida. The Company intends to file
for approval from the Board of Governors of the Federal Reserve System
to become a one-bank holding company and plans to acquire 100% of the
outstanding shares of Marco Community Bank (the "Bank"), which is
planned to be incorporated and organized in Marco Island, Florida. The
operations of the Company, which initially are intended to consist
solely of the ownership of the Bank, have not commenced as of January
31, 2003. Therefore, with the exception of organizational costs which
are being expensed when incurred, accounting policies have not been
established. The Company has adopted a fiscal year end of December 31.
Estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(2) Organization
On September 30, 2002, the Organizers of the Company filed an application
for authority to organize a state-chartered bank with the Comptroller of
the State of Florida, Department of Banking and Finance which they have
deemed complete.
(3) Commitments
The Company has entered into a purchase agreement dated May 10, 2002 to
purchase a parcel of land for $850,000 for which they have paid a
$25,000 deposit. The Bank intends to construct its main office at this
location. The Company expects to close on the purchase of this property
in March, 2003. The purchase is expected to be financed with a loan from
a financial institution.
(continued)
F-7
MARCO COMMUNITY BANCORP, INC.
(A Development Stage Company)
Notes to Financial Statements, Continued
(4) Sale of Common Shares and Warrants
The Company plans to offer a total of 1,300,000 shares of its common stock
to the public. (1) During the initial offering period 1,000,000 shares
will be included in units with a unit consisting of one share of common
stock and one purchase warrant. The price per unit is expected to be $9.
A total of 1,000,000 units will be offered for sale. Each warrant
entitles the holder thereof to purchase one-quarter of one share of
additional common stock for $9 per share during the 24 month period
following the commencement of banking operations. No fractional shares
will be issued. (2) After the sale of 1,000,000 units has been
completed, 250,000 shares will be available to holders of the warrants.
However there can be no assurance given that any of the warrants will be
exercised. In addition, after commencement of banking operations, the
Company plans to offer an additional 300,000 shares with no warrant
attached at $9 a share.
(5) Due to Organizers
The Organizers of the Bank contributed $120,000 to the Bank for
organizational expenses incurred by the Bank. The Organizers will be
reimbursed from proceeds of the stock offering.
F-8
================================================================================
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock. In this prospectus, "the
Company," "we," and "our" refer to Marco Community Bancorp, Inc., a Florida
corporation.
------------------------------------
TABLE OF CONTENTS:
------------------------------------
Page
Prospectus Summary ........................................................ 1
Risk Factors .............................................................. 3
Terms of Offering ......................................................... 7
Use of Proceeds ........................................................... 11
Pro Forma Capitalization .................................................. 12
Description of Properties ................................................. 13
Dividend Policy ........................................................... 13
Supervision and Regulation ................................................ 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ........................................................ 18
Business of the Company ................................................... 19
Business of the Bank ...................................................... 19
Management and Stock Ownership ............................................ 25
Director Compensation ..................................................... 27
Executive Compensation .................................................... 28
Transactions with Related Parties ......................................... 28
Description of Securities ................................................. 28
Indemnification ........................................................... 30
Legal Proceedings ......................................................... 30
Legal Matters ............................................................. 30
Experts ................................................................... 30
Additional Information .................................................... 30
Financial Statements ...................................................... F-1
================================================================================
Up to 1,000,000 Units Composed
of 1,000,000 Shares of Common Stock
and 1,000,000 Warrants to Purchase
One-Quarter Share of
Common Stock, and up to 300,000
Shares of Common Stock
LOGO
--------------------------------------------
PROSPECTUS
--------------------------------------------
April __, 2003
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24: Indemnification of Directors and Officers
The Company's Articles of Incorporation provide that the Company shall
indemnify its directors, employees and agents to the fullest extent permitted by
Florida law.
Under Florida law, the Company's directors shall not be personally liable
to the Company or its stockholders for monetary damages for breach of duty of
care or any other duty owed to the Company as a director, unless the breach of
or failure to perform those duties constitutes:
o a violation of criminal law, unless the director had reasonable
cause to believe his conduct was unlawful, or had no reasonable
cause to believe his conduct was unlawful;
o a transaction from which the director received an improper
personal benefit;
o an unlawful corporate distribution;
o an act or omission which involves a conscious disregard for the
best interests of the Company or which involves willful
misconduct; or
o an act of recklessness or an act or omission which was committed
in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety or property.
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. All of the amounts shown are estimated except for the registration
fees of the Securities and Exchange Commission.
SEC Registration Fees.................................. $ 1,129
Blue Sky Registration Fees & Expenses.................. 3,000
Legal Fees and Expenses................................ 35,000
Accounting Fees........................................ 1,500
Printing Expenses...................................... 3,000
Miscellaneous.......................................... 6,371
-------
Total......................................... $ 50,000
=======
Item 26: Recent Sales of Unregistered Securities.
On April 7, 2003, the Company issued 1,800 shares of its Class A Preferred
Stock to its directors and directors of the Bank. The shares were issued in
consideration of the cancellation of $100 per share.
Item 27: Exhibits and Financial Statement Schedules
The following exhibits are filed with the Securities and Exchange
Commission and are incorporated by reference into this Registration Statement.
The Exhibits denominated with an (a) were filed with the Company's Form SB-2
which was filed with the Securities and Exchange Committee on March 7, 2003.
Exhibit
Number Description of Exhibit
- ------ --------------------------------------------------------------------
(a) 3.1 Articles of Incorporation
(a) 3.2 Bylaws
(a) 4.1 Specimen Common Stock Certificate
(a) 4.2 2003 Warrant Plan
(a) 4.3 Specimen Warrant Certificate
(a) 5.1 Opinion of Igler & Dougherty, P.A.
(a) 10.1 Form of Proposed Escrow Agreement
(a) 23.1 Consent of Igler & Dougherty, P.A. - included in Opinion - See
Exhibit 5.1
23.2 Consent of Hacker, Johnson & Smith, P.A.
(a) 24.1 Power of Attorney - included in Signature Page of Registration
Statement
(a) 99.1 Stock Order Form for Phases One and Two
(a) 99.2 Stock Order Form for Phase Three
Item 28. Undertakings.
The Registrant hereby undertakes that:
(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities 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 Securities Act and is, therefore, unenforceable.
(2) 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, suite or proceeding) is asserted by such director,
officer or controlling person in connection withe 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 Securities Act and will be governed by the final
adjudication of such issue.
(3) For the purpose of determining any liability under the Securities Act,
treat the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(B)(1), or (4) or
497(h) under the Securities Act (ss.ss. 230.424(b)(1),(4) or 230.497(h)) as part
of this registration statement as of the time the Commission declared it
effective.
(4) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered int eh registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
(5) It will 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 value 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, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration fee" table in the
effective registration statement; and
(iii) include any additional or changed material information on the plan of
distribution.
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 has duly caused this
Pre-Effective Amendment Number One to its Registration Statement on Form SB-2 to
be signed on its behalf by the undersigned, in the City of Marco Island, State
of Florida on April 9, 2003.
MARCO COMMUNITY BANCORP, INC.
Date: April 9, 2003 By: /s/ Edward T. Skone
Edward T. Skone
Chief Executive Officer
Date: April 9, 2003 By: /s/ Michael A. Micallef, Jr.
Michael A. Micallef, Jr.
President, Chief Operating Officer and
Principal Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment Number One to the Registration Statement has been signed
by the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Joel M. Cox
Joel M. Cox Director April 9, 2003
/s/ Robert A. Marks
Robert A. Marks Director April 9, 2003
*/s/ Edward Terry Skone
Stephen A. McLaughlin Director April 9, 2003
President, Chief
/s/ Michael A. Micallef Operating Officer and
Michael A. Micallef Principal Financial Officer April 9, 2003
Signature Title Date
--------- ----- ----
/s/ Edward T. Skone Chief Executive Officer
Edward T. Skone and Director April 9, 2003
Chairman of the Board April 9, 2003
/s/ Richard Storm, Jr.
Richard Storm, Jr.
* Pursuant to Power of Attorney filed March 7, 2003, authorizing Edward T.
Skone and Michael A. Micallef, or either of them, as the true and lawful
attorneys-in-fact to sign all amendments to the Form SB-2 Registration Statement
File No. 333-103651.