PROSPECTUS SUPPLEMENT
DATED JANUARY 22, 2001
TO PROSPECTUS DATED MARCH 13, 2000
ISLANDS BANCORP
630,000 SHARES (MINIMUM)
1,000,000 SHARES (MAXIMUM)
OF
COMMON STOCK
Dear Investors and Prospective Investors:
This document supplements our prospectus dated March 13, 2000, which
relates to the offer and sale of a minimum of 630,000 shares and a maximum of
1,000,000 shares of Islands Bancorp common stock at a purchase price of $10.00
per share. The primary purpose of this supplement is to describe additional
individuals we intend to appoint to the board of directors of Islands Bancorp
and Islands Community Bank, N.A., subject to necessary regulatory approvals.
Additionally, we have selected a new site within our primary service area for
our main office building, and this supplement describes our new location and
proposed facilities.
We believe that our new main office location in Beaufort Plaza is a
positive move that will increase the bank's success. The facility, once
renovated, will be an attractive and convenient location to bank for all of
northern Beaufort County. It is also our belief that in order to be effective,
a bank management team must be involved, dedicated, and competent; and it must
also represent a broad cross section of talents. We have expanded our board by
adding six new directors. These individuals complement the board and provide
the skills and knowledge to guide the bank throughout opening and the growth to
follow.
Sincerely,
/s/ William B. Gossett,
William B. Gossett,
President and Chief Executive Officer
This supplement should be read with the prospectus dated March 13, 2000.
This supplement is qualified by reference to the prospectus except to the extent
that the information in this supplement supersedes the information contained in
the prospectus.
MANAGEMENT
ADDITIONAL DIRECTORS
In addition to the directors described in the prospectus, the individuals
described below are proposed directors of the Bancorp and the bank. Subject to
receipt of the necessary regulatory approvals, we intend to appoint the
following individuals to the board of directors of the Bancorp and the bank. We
have not yet determined in which class of the Bancorp's board of directors each
of the individuals will be placed, but we intend to add two individuals to each
of our three classes so that the classes will remain as nearly equal in number
as possible.
CHARLES R. DOBSON is President and the sole shareholder of Dobson
Construction, a commercial building construction company, headquartered in
Newport News, Virginia. Prior to its sale in 1999, Mr. Dobson was the President
and sole shareholder of Dobson Homes also headquartered in Newport News,
Virginia. Dobson Homes developed residential real estate throughout the
southeastern United States, including Beaufort County and the South Carolina
LowCountry. Additionally, for approximately two years, Mr. Dobson served as a
Director of Peninsula Trust Bank in Gloucester, Virginia. For many years, Mr.
Dobson has contributed a house to the "Home for the Homeless" charity. He was
also the 1998 Virginia Winner of Ernst and Young's Entrepreneur of the Year
Award.
DARYL A. FERGUSON served as the President and Chief Operating Officer of
Citizens Utilities in Stamford, Connecticut from 1990 until his retirement in
2000. Mr. Ferguson was also the founder and Chief Executive Officer of Electric
Lightwave from 1991 to 2000. Additionally, Mr. Ferguson has served as a
Director of Hungarian Telephone Company since 1998 and as its Co-Chairman of the
Board since May 2000. He also served on the Telecommunications Policy Committee
for and with the Governor of Utah. Mr. Ferguson also chaired the committee that
brought the Battleship South Dakota to South Dakota, and he helped found the
Battleship South Dakota Memorial and Museum.
STANCEL E. KIRKLAND, SR. was a partner in the Kirkland Law Firm in
Columbia, South Carolina from 1971 until his retirement in 1999. Mr. Kirkland
has served as counsel to and the managing member of Bull Point Plantation, a
developer of residential communities, in Seabrook, South Carolina since 1993.
He has also been a partner or owner in numerous real estate development
projects. Additionally, Mr. Kirkland served on the Lexington County Advisory
Board for C&S National Bank for ten years and the Columbia, South Carolina
Advisory Board for NationsBank for two years. Mr. Kirkland is also a member of
the Columbia Chamber of Commerce and the South Carolina and Lexington County Bar
Associations.
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CARL E. LIPSCOMB has served as the President and Chief Executive Officer of
Lipscomb Construction in Hilton Head, South Carolina since 1981. Lipscomb
Construction builds custom homes in the Beaufort County area. Mr. Lipscomb was
a member of the Hilton Head Homebuilders Association from 1982 until 1991, and
served on its Board of Directors and as its President in 1989. Mr. Lipscomb has
been a major financial supporter to the building fund of the Hilton Head Boys &
Girls Club and helped to erect its new building in 1999. He has also been a
financial supporter of, and helped to erect, the Hilton Head Christian Academy
School. Mr. Lipscomb has been a long-time supporter of Habitat for Humanity and
has participated in the Architects Tour of Homes for the College Fund for many
years.
JIMMY LEE MULLINS has been the sole owner and Chief Executive Officer of
Mullins Trucking Co., Inc. in Yemassee, South Carolina since 1994. Mr.
Mullins served as a United States Marine from 1991 to 1993, retiring as a First
Sergeant. Mr. Mullins is involved with United Way fundraising and is a Veteran
of Foreign Wars. He is also a member of the South Carolina Trucking
Association, the Masonic Lodge, and the Moose Lodge.
NARAYAN SHENOY has been a partner in Critical Health Systems, Inc. in
Columbia, South Carolina, where he has practiced Anesthesiology since 1977. Dr.
Shenoy has served on various committees at Lexington County Hospital, Baptist
Medical Center, Providence Hospital and the Surgery Center at Forrest Drive, in
Columbia, South Carolina. He has also participated in the construction of the
Hindu Temple and Cultural Center in Columbia, South Carolina. Through his
involvement in various communities, civic, professional and charitable
activities, he hopes to assist the bank with the design, delivery and marketing
of bank services to minority communities.
We are requesting approval from the Office of the Comptroller of the
Currency for each of the individuals described above to serve on the board of
directors of the bank. We expect to receive written approval for Mr. Ferguson
and Mr. Kirkland shortly. We also expect to receive written approval for the
other proposed directors within 30 to 90 days. If our regulators do not approve
any of our proposed directors, they will not become directors, and they will not
be granted warrants. See "-Stock Warrants of Directors."
Unless the context otherwise requires, when we refer to our "directors" in
this supplement, we are including both our existing and our proposed directors,
and we have assumed that our proposed directors will be approved by our
regulators.
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EXECUTIVE OFFICERS
Subject to regulatory approval, Michael S. Butler will serve as the Chief
Financial Officer of the Bancorp and the bank. Mr. Butler has over 24 years of
banking experience. Most recently, from 1999 to 2000, he served as a Senior
Vice President and the Chief Financial Officer of Hartsville Community Bank.
Prior to that, he was a senior engagement manager for Broadway & Seymour, Inc.,
a technology and business solutions consultant to banks and financial
institutions, in Charlotte, North Carolina, from 1993 to 1999. Mr. Butler was a
Vice President of North Carolina National Bank from 1989 to 1992. He also
served in various positions with South Carolina National Bank from 1977 to 1989,
culminating in his position as a Senior Vice President.
STOCK WARRANTS OF DIRECTORS
Each of our existing and proposed directors has devoted substantial time
and effort to the activities necessary to organize the Bancorp and the bank.
Additionally, each of them has agreed to guarantee indebtedness of the Bancorp.
In consideration of these efforts and in recognition of their financial risks,
each of our directors will receive a warrant to purchase a number of shares of
common stock equal to the number of shares he or she purchases in this offering,
up to an aggregate maximum for all directors of 210,115. Since our directors
are expected to purchase an aggregate of more than 210,115 shares in this
offering, the aggregate maximum number of shares subject to the warrants will be
allocated among our directors on a pro rata basis based on the number of shares
the director purchases in this offering or in any other manner approved by our
regulators.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number and percentage of outstanding
shares of common stock anticipated to be beneficially owned by the existing and
proposed officers and directors of the Bancorp and the bank upon the closing of
a minimum offering of 630,000 shares. The table does not include shares which
may be purchased by the individuals upon the exercise of warrants that are
expected to be granted to them upon the closing of the offering.
Beneficial ownership, as reflected in the table, is determined in
accordance with the rules and regulation of the Securities and Exchange
Commission. Beneficial ownership generally includes securities as to which a
person has or shares the power to vote or to direct the vote or has or shares
the power to dispose or to direct the disposition. A person is also deemed to
be a beneficial owner of any security as to which that person has the right to
acquire beneficial ownership within 60 days, including shares of common stock
subject to currently exercisable stock options or warrants.
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SHARES ANTICIPATED TO BE BENEFICIALLY OWNED
AFTER THE OFFERING
NUMBER PERCENTAGE OF
NAME OF SHARES TOTAL SHARES
- ------------------------ --------- --------------
EXISTING DIRECTORS:
William B. Gossett 30,050 4.8%
Avery E. Cleland 11,050 1.8
Louis O. Dore 11,050 1.8
Paul M. Dunnavant, III 12,050 1.9
Martha B. Fender 10,500 1.7
D. Martin Goodman 11,250 1.8
Edward J. McNeil, Jr. 11,050 1.8
Frances K. Nicholson 12,300 2.0
J. Frank Ward 10,220 1.6
Bruce K. Wyles 11,050 1.8
PROPOSED DIRECTORS:
Charles R. Dobson 30,000 4.8
Daryl A. Ferguson 20,000 3.2
Stancel E. Kirkland, Sr. 20,000 3.2
Carl E. Lipscomb 19,400 3.1
Jimmy L. Mullins 20,000 3.2
Narayan Shenoy 20,000 3.2
EXECUTIVE OFFICER WHO
IS NOT ALSO A DIRECTOR:
Michael S. Butler 0 0
TOTAL 259,970 41.3%
In addition to the shares listed in the table above, our existing and
proposed directors may purchase an aggregate of approximately 100,000 additional
shares of common stock. If our existing and proposed directors were to purchase
100,000 additional shares, the number and percentage ownership following the
offering for all of our existing and proposed directors and executive officers
as a group would be 359,970 shares or 57.1 percent of the minimum offering and
36.0 percent of the maximum offering.
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FACILITIES
Subject to regulatory approval, our main office will be located in Beaufort
Plaza, 2348 Boundary Street, Beaufort, South Carolina. We plan to purchase a
former Wachovia Bank office located at this site for $640,000. The office is a
one-story banking facility with approximately 7,500 square feet.
We plan to begin renovation of the main building approximately six months
after the bank opens for business. We also expect that the renovations will
take approximately six months to complete and that the total cost of the
renovations will be approximately $637,500. During the renovation period, we
plan to operate out of a modular building that will be placed at the same
Boundary Street location.
We have purchased approximately 2.3 acres of land at 131 Sea Island Parkway
on Lady's Island, South Carolina for a purchase price of $520,000. Initially,
we planned to construct our main office on this site. However, we have decided
to locate the main office at the Boundary Street location, because we believe it
will provide the bank with greater visibility and will be more accessible to our
customers. We intend to keep the Lady's Island location as a future branch
site. Upon completion of the main office building renovations, we plan to
relocate the modular building to the Lady's Island location to be used as a
branch office. The bank will be required to seek regulatory approval prior to
establishing a branch at this location.
RISK FACTORS
WE INTEND TO GRANT WARRANTS AND STOCK OPTIONS TO OUR DIRECTORS AND TO SOME OF
OUR EMPLOYEES WHICH, IF EXERCISED, WOULD REDUCE YOUR PERCENTAGE OWNERSHIP IN THE
BANCORP.
If the offering is unsuccessful, our existing directors will lose
approximately $100,000 they have paid toward organizational and offering
expenses and $5,500 they have paid to purchase shares of the Bancorp, and our
existing and proposed directors would also be obligated to repay additional
indebtedness of the Bancorp that they have personally guaranteed. In
recognition of these financial risks, and their willingness to serve as
directors without pay until the bank is cumulatively profitable, we intend to
grant to each of our directors a warrant to purchase one additional share of
common stock for each share of common stock the director purchases in this
offering, up to an aggregate maximum for all directors of 210,115 shares. On
the basis of the number of shares our existing and proposed directors have
indicated they intend to purchase in this offering, we intend to issue to them
warrants to purchase an aggregate of 210,115 shares of common stock. See
"Management-Stock Warrants of Directors" and "Security Ownership of Management."
In addition, we intend to establish an incentive stock option plan which will
allow us to grant stock options to officers and other employees who are
contributing significantly to the management or operation of the business of the
Bancorp or the bank. Under this plan, we intend to reserve a number of shares
of common stock for the issuance of options equal to 15% of the shares
outstanding after this offering.
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Any future exercise of the warrants or any options that may be granted
under the stock option plan would reduce your percentage ownership in the
Bancorp. For example, prior to the exercise of their warrants, our directors
are expected to own approximately 41.3 percent of shares outstanding. This
assumes the sale of only the minimum number of shares in this offering and the
purchase by our directors of the aggregate number of shares of common stock they
have indicated they intend to purchase. See "Security Ownership of Management."
If our directors were to exercise all of their warrants, they would own
approximately 56.0 percent of the outstanding shares. Again, this assumes the
sale of only the minimum number of shares in this offering and the purchase by
our directors of the aggregate number of shares of common stock they have
indicated they intend to purchase.
TOGETHER, OUR DIRECTORS AND EXECUTIVE OFFICERS WILL HAVE THE ABILITY TO
INFLUENCE SHAREHOLDERS ACTIONS.
Together, our directors and executive officers will be able to
significantly influence the outcome of director elections or shareholder votes
on significant transactions such as mergers or acquisitions. Generally, a
quorum equal to a majority of the outstanding shares must be present for
shareholders to act. To be elected, a director nominee must receive more votes
than any other nominee for the same seat on the board of directors. As applied
to us, South Carolina law provides that the holders of two-thirds of our
outstanding shares must approve a merger or acquisition. We anticipate that
after this offering, our directors and executive officers will directly or
indirectly own at least 259,970 shares, representing 41.3 percent of the minimum
offering and 26.0 percent of the maximum offering. Our directors may also
purchase an aggregate of approximately 100,000 additional shares, in which event
our directors and executive officers would directly or indirectly own 359,970
shares, representing 57.1 percent of the minimum offering and 36.0 percent of
the maximum offering. Additionally, we will be issuing warrants to our
directors and options to our executive officers. Although these warrants and
options will vest over time, if our directors and executive officers were to
exercise all of their warrants and options, they would directly or indirectly
own approximately 488,985 shares, not including the additional 100,000 shares
that our directors may purchase, or 56.0 percent of the minimum offering and
38.8 percent of the maximum offering. See "Description of Securities" on page
37 of the prospectus.
LEGAL MATTERS
Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia is acting as
counsel to the Bancorp in connection with matters relating to this prospectus
supplement.
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