Community Capital Bancshares, Inc. Form 10-KSB
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-KSB
(Mark
One)
x Annual report under
Section 13 or 15(d) of the Securities Exchange Act of 1934
For
fiscal year ended December
31, 2004
o Transition report
under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the
transition period from _____________ to _______________
Commission
File Number 000-25345
COMMUNITY
CAPITAL BANCSHARES, INC.
(Name
of small business issuer in its charter)
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Georgia |
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58-2413468 |
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(State
or other jurisdiction of
incorporation
or organization) |
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(IRS
Employer Identification No.) |
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2815
Meredyth Drive, Albany, GA |
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31707 |
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(Address
of Principal Executive Offices) |
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(Zip
Code) |
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(229)
446-2265
(Issuer’s
Telephone Number, including Area Code)
Securities
registered pursuant to Section 12(b) of the Act: None.
Securities
registered pursuant to Section 12(g) of the Act: Common
Stock, $1.00 per value.
Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that registrant was required to file such reports) and (2) has been subject
to such filing requirements for past 90 days. Yes x No o
Check if
disclosure of delinquent filers in response to Item 405 of Regulation S-B is not
contained in this form, and no disclosure will be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. o
State
issuer’s revenue for its most recent fiscal year: $10,870,000
Aggregate
market value of the voting stock held by non-affiliates computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within the past 60 days: The
aggregate number of shares of the Company’s common stock held by non-affiliates
as of March 21, 2005 was 2,350,210. The aggregate market value of these shares
as of March 21, 2005 was $28,625,558 based on the Nasdaq SmallCap Market closing
price of $12.18 per share on March 21, 2005.
APPLICABLE
ONLY TO CORPORATE REGISTRANTS
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date. 2,906,840
shares as of March 21, 2005.
Transitional
Small Business Disclosure format (check one): Yes
o No x
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Annual Report to Shareholders for the fiscal year ended December 31, 2004
are incorporated by reference into Parts I and II. Portions of the Proxy
Statement for the Annual Meeting of Shareholders, scheduled to be held April 25,
2005, are incorporated by reference into Part III.
Page
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PART
I
Community
Capital
Community
Capital Bancshares, Inc. is a bank holding company headquartered in Albany,
Georgia and is registered under the Bank Holding Company Act of 1956, as
amended. Community Capital was incorporated under the laws of the State of
Georgia on August 19, 1998 and is the sole shareholder of Albany Bank &
Trust, N.A. and AB&T National Bank. Community Capital common stock is quoted
on the Nasdaq Small Cap market under the symbol “ALBY.”
Community
Capital’s principal business is the ownership and management of its subsidiary
banks. Community Capital was organized to facilitate its subsidiary banks’
ability to serve their customers’ requirements for financial services. The
holding company structure provides flexibility for expansion of Community
Capital’s banking business through the acquisition of other financial
institutions and the provision of additional capital to these subsidiaries. For
example, we may assist the subsidiaries in maintaining their required capital
ratios by borrowing money and contributing the proceeds of that debt to the
subsidiary as primary capital.
Subsidiary
Banking Operations
General
Albany
Bank & Trust was chartered as a national bank under the laws of the United
States and began business as a full-service commercial bank on April 28,
1999. Albany Bank & Trust operates three full-service banking locations and
one loan production office in Albany, Georgia.
AB&T
National Bank, which was formerly known as First Bank of Dothan, was acquired by
Community Capital on November 13, 2003. On September 13, 2004, we changed First
Bank of Dothan’s name to “AB&T National Bank” and converted its charter from
an Alabama state bank charter to a national bank charter under the laws of the
United States. AB&T National Bank operates one full-service banking location
in Dothan, Alabama, and one full-service banking location in Auburn, Alabama.
Albany
Bank & Trust and AB&T National Bank (collectively, the “Banks”) offer
lending services which include consumer loans to individuals, commercial loans
to small- to medium-sized businesses and professional concerns and real
estate-related loans. The Banks offer a broad array of competitively priced
deposit services including demand deposits, regular savings accounts, money
market deposits, certificates of deposit and individual retirement accounts. To
complement our lending and deposit services, we also provide cash management
services, safe-deposit boxes, travelers’ checks, direct deposit, automatic
drafts, and courier services to commercial customers. We offer our services
through a variety of delivery systems including our three full-service
locations, one loan production office, automated teller machines, telephone
banking, and Internet banking.
Philosophy
The Banks
operate as community banks emphasizing prompt, personalized customer service to
the residents and businesses located in Dougherty and Lee Counties, Georgia, and
Houston and Lee Counties, Alabama. We strive to provide responsive delivery of
quality products and services to business customers and competitively priced
consumer products to individual customers seeking a higher level of personalized
service than that provided by larger, regional banks. We have adopted this
philosophy in order to attract customers and acquire market share controlled by
other financial institutions in these market areas. We believe that the Banks
offer residents in their respective market areas the benefits associated with a
locally-owned and -managed bank. The Banks’ active call programs allow their
officers and directors to promote the Banks by personally describing the
products, services and philosophy of the Banks to both existing customers and
new business prospects. In addition, all officers of the Banks are local
residents with substantial banking experience in their market areas, which
facilitates the Banks’ efforts to provide products and services designed to meet
the needs of our customer base. The Banks’ directors are active members of their
respective business communities, and their continued active community
involvement provides them with an opportunity to promote the Banks and their
products and services.
Market
Areas and Competition
Albany
Bank & Trust is located in Albany, Georgia, and its primary market area is
the ten-mile radius surrounding its main office. Albany Bank & Trust draws a
majority of its business from its primary market area which includes the
majority of Dougherty County and the southern portion of Lee County. Albany Bank
& Trust competes for deposits and loan customers with other financial
institutions whose resources are equal to or greater than those available to
Albany Bank & Trust and Community Capital. According to information provided
by the Federal Deposit Insurance Corporation (the “FDIC”) as of June 30, 2004,
Dougherty County was served by 12 commercial banks with a total of 30 offices in
Dougherty County. As of June 30, 2004, the total deposits within Dougherty
County for these institutions was approximately $1.17 billion, of which
approximately $100.9 million was held by Albany Bank & Trust. At December
31, 2004, Albany Bank & Trust’s total deposits were $115 million. We believe
our local ownership and management as well as our focus on personalized service
help us to compete with these institutions and to attract deposits and loans in
our market area.
AB&T
National Bank is headquartered in Dothan, Alabama. Its primary market areas are
Houston and Lee Counties, Alabama. AB&T
National Bank draws a majority of its business from the Houston County market
area due to the maturity of its presence in this market. According to
information provided by the FDIC as of June 30, 2004, these two market areas
were served by 19 commercial banks. As of June 30, 2004, total deposits within
these counties were approximately $2.7 billion. At December 31, 2004, AB&T
National Bank’s total deposits were $28.7 million. Like Albany Bank & Trust,
AB&T National Bank must compete with the larger institutions by promoting
prompt, personalized service to its customers.
Loan
Portfolios
Lending
Policy. Our
subsidiary banks aggressively seek creditworthy loans within a limited
geographic area. The Banks’ primary lending functions include consumer loans to
individuals and commercial loans to small- and medium-sized businesses and
professional concerns. In addition, they make real estate-related loans,
including construction loans for residential and commercial properties, and
primary and secondary mortgage loans for the acquisition or improvement of
personal residences. The overall policy is to avoid concentrations of loans to a
single industry or based on a single type of collateral.
Real
Estate Loans. The
Banks make commercial real estate loans, construction and development loans, and
residential real estate loans. These loans include commercial loans where they
take a security interest in real estate out of an abundance of caution and not
as the principal collateral for the loan, but exclude home equity loans, which
are classified as consumer loans.
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Commercial
Real Estate.
Commercial real estate loan terms generally are limited to five years or
less, although payments may be structured on a longer amortization basis.
Interest rates may be fixed or adjustable, but generally are not fixed for
a period exceeding 60 months. The Banks normally charge an origination fee
on these loans. We attempt to reduce credit risk on our commercial real
estate loans by emphasizing loans on owner-occupied office and retail
buildings where the ratio of the loan principal to the value of the
collateral as established by independent appraisal does not exceed 80% and
net projected cash flow available for debt service equals 120% of the debt
service requirement. In addition, from time to time the Banks require
personal guarantees from the principal owners of the property supported by
a review of the principal owners’ personal financial statements. Risks
associated with commercial real estate loans include fluctuations in the
value of real estate, new job creation trends, tenant vacancy rates and
the quality of the borrower’s management. Community Capital attempts to
limit its risk by analyzing borrowers’ cash flow and collateral value on
an ongoing basis. |
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Construction
and Development Loans.
Construction and development loans are made both on a pre-sold and
speculative basis. If the borrower has entered into an agreement to sell
the property prior to beginning construction, then the loan is considered
to be on a pre-sold basis. If the borrower has not entered into an
agreement to sell the property prior to beginning construction, then the
loan is considered to be on a speculative basis. Construction and
development loans are generally made with a term of nine months and
interest is paid quarterly. The ratio of the loan principal to the value
of the collateral as established by independent appraisal generally does
not exceed 80%. Speculative loans are based on the borrower’s financial
strength and cash flow position. Loan proceeds are disbursed based on the
percentage of completion and only after the project has been inspected by
an experienced construction lender or appraiser. Risks associated with
construction loans include fluctuations in the value of real estate and
new job creation trends. |
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Residential
Real Estate.
The Banks’ residential real estate loans consist of residential first and
second mortgage loans and residential construction loans. We offer fixed
and variable rates on our mortgages with the amortization of first
mortgages generally not to exceed 15 years and the rates not to be fixed
for over 60 months. These loans are made consistent with the Banks’
appraisal policies and with the ratio of the loan principal to the value
of collateral as established by independent appraisal not to exceed 90%.
We believe these loan-to-value ratios are sufficient to compensate for
fluctuations in real estate market value and to minimize losses that could
result from a downturn in the residential real estate market.
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The banks
also offer conventional mortgages to their customers. These loans are
pre-qualified for sale in the secondary market prior to closing. These loans are
not retained on the Banks’ books. The Banks retain a portion of the closing
costs and fees as compensation for originating the loan.
Commercial
Loans. Loans
for commercial purposes in various lines of businesses are one of the primary
components of our loan portfolios. The terms of these loans vary by purpose and
by type of underlying collateral, if any. The Banks typically make equipment
loans for a term of five years or less at fixed or variable rates, with the loan
fully amortized over the term. Equipment loans generally are secured by the
financed equipment, and the ratio of the loan principal to the value of the
financed equipment or other collateral is generally 80% or less. Loans to
support working capital typically have terms not exceeding one year and usually
are secured by accounts receivable, inventory or personal guarantees of the
principals of the business. For loans secured by accounts receivable or
inventory, principal is typically repaid as the assets securing the loan are
converted into cash, and for loans secured with other types of collateral,
principal is typically due at maturity. The quality of the commercial borrower’s
management and its ability both to evaluate properly changes in the supply and
demand characteristics affecting its markets for products and services and to
respond effectively to such changes are significant factors in a commercial
borrower’s creditworthiness.
Consumer
Loans. The
Banks make a variety of loans to individuals for personal, family and household
purposes, including secured and unsecured installment and term loans, home
equity loans and lines of credit. Consumer loan repayments depend upon the
borrower’s financial stability and are more likely to be adversely affected by
divorce, job loss, illness and personal hardships. Because many consumer loans
are secured by depreciable assets such as boats, cars and trailers, the loan
should be amortized over the useful life of the asset. To minimize the risk that
the borrower cannot afford the monthly payments, all fixed monthly obligations
should not exceed 38% of the borrower’s gross monthly income. The borrower
should also be employed for at least 12 months prior to obtaining the loan. The
loan officer reviews the borrower’s past credit history, past income level, debt
history and, when applicable, cash flow and determines the impact of all these
factors on the ability of the borrower to make future payments as
agreed.
Investments. In
addition to loans, the Banks make other investments primarily in obligations of
the United States or obligations guaranteed as to principal and interest by the
United States, other taxable securities and other obligations of states and
municipalities. As of December 31, 2004, investment securities comprised
approximately 20% of the Company’s assets, with net loans comprising
approximately 69%. Both subsidiary banks also engage in federal funds
transactions with their principal correspondent banks and primarily acts as a
net seller of funds. The sale of federal funds amounts to a short-term loan from
the subsidiary bank to another bank.
Community
Capital’s investment policy specifies that the investment portfolio’s primary
objective is to assist in the management of the Banks’ asset / liability
management. Investment purchases are used to maximize the return on available
funds while matching investment maturities with maturities of interest-bearing
liabilities. Under the policy, the subsidiary banks may invest in U.S.
Government, federal agency, municipal and corporate bonds. Rated bonds must be
rated “BAA” or higher, and in-state bonds must be “A” or higher. Purchases of
non-rated, out-of-state municipal bonds are prohibited. Other bonds may be
purchased after an evaluation of the creditworthiness of the issuer. These
investment securities are kept in safekeeping accounts at correspondent banks.
While the sale of investment securities is permitted to improve quality of
yields or to restructure the portfolio, the investment officer is prohibited
from maintaining a trading account or speculation in bonds on behalf of the
subsidiary banks.
All
purchases and sales are reviewed by the individual subsidiary bank’s Board of
Directors on a monthly basis. The Asset and Liability Management Committee
implements the investment policy and reviews it on an annual basis.
Deposits. Albany
Bank & Trust and AB&T National Bank offer a wide range of commercial and
consumer deposit accounts, including checking accounts, money market accounts, a
variety of certificates of deposit, and individual retirement accounts. The
primary sources of deposits are residents of, and businesses and their employees
located in, our primary market areas. Deposits are obtained through personal
solicitation by officers and directors, direct mail solicitations and
advertisements published in the local media. To attract deposits, the subsidiary
banks offer a broad line of competitively priced deposit products and services.
Financial
Services. Albany
Bank & Trust offers customers a variety of non-deposit investment products
such as trust services, stocks, mutual funds and annuities that are not FDIC
insured. These products give customers an opportunity to diversify their
holdings. Primary sources of customers are residents of the Albany Bank &
Trust market area.
Other
Banking Services. Community
Capital’s other banking services include ATM and MasterCard check cards, direct
deposit, travelers’ checks, cash management services, courier service for
commercial customers, bank-by-mail, bank-by-telephone, Internet banking, wire
transfer of funds, night depositories and safe-deposit boxes.
Asset
and Liability Management. The
Asset and Liability Management Committee manages Community Capital’s assets and
liabilities and strives to provide an optimum and stable net interest margin, a
profitable after-tax return on assets and return on equity and adequate
liquidity. The committee conducts these management functions within the
framework of written loan and investment policies that the subsidiary banks have
adopted. The committee attempts to maintain a balanced position between
rate-sensitive assets and rate-sensitive liabilities. Specifically, it charts
assets and liabilities on a matrix by maturity, effective duration and interest
adjustment period and attempts to manage any gaps in maturity
ranges.
Employees
At
December 31, 2004, Community Capital and its subsidiaries employed 78 full-time
employees and 6 part-time employees. Community Capital considers its
relationship with its employees to be excellent.
Supervision
and Regulation
Community
Capital and its banking subsidiaries, Albany Bank & Trust and AB&T
National Bank, are subject to extensive state and federal banking regulations
that impose restrictions on and provide for general regulatory oversight of
their operations. These laws are generally intended to protect depositors and
not shareholders. The following discussion describes the material elements of
the regulatory framework that applies to us.
Community
Capital
Community
Capital is a bank holding company under the federal Bank Holding Company Act of
1956 (the “BHC Act”) and, as a result, is primarily subject to the supervision,
examination, and reporting requirements of the BHC Act and the regulations of
the Board of Governors of the Federal Reserve System (the “Federal Reserve”). As
a bank holding company located in Georgia, the Georgia Department of Banking and
Finance (the “GDBF”) also regulates and monitors all significant aspects of our
operations.
Acquisitions
of Banks. The BHC
Act requires every bank holding company to obtain the Federal Reserve’s prior
approval before:
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· |
acquiring
direct or indirect ownership or control of any voting shares of any bank
if, after the acquisition, the bank holding company will directly or
indirectly own or control more than 5% of the bank’s voting
shares; |
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acquiring
all or substantially all of the assets of any bank;
or |
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· |
merging
or consolidating with any other bank holding
company. |
Additionally,
the BHC Act provides that the Federal Reserve may not approve any of these
transactions if it would result in or tend to create a monopoly or,
substantially lessen competition or otherwise function as a restraint of trade,
unless the anticompetitive effects of the proposed transaction are clearly
outweighed by the public interest in meeting the convenience and needs of the
community to be served. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. The Federal Reserve’s consideration of financial resources generally
focuses on capital adequacy, which is discussed below.
Under the
BHC Act, if adequately capitalized and adequately managed, Community Capital or
any other bank holding company located in Georgia or Alabama may purchase a bank
located outside Georgia or Alabama. Conversely, an adequately capitalized and
adequately managed bank holding company located outside Georgia or Alabama may
purchase a bank located inside Georgia or Alabama. In each case, however,
restrictions may be placed on the acquisition of a bank that has only been in
existence for a limited amount of time or will result in specified
concentrations of deposits. For example, Georgia law prohibits a bank holding
company from acquiring control of a financial institution until the target
financial institution has been incorporated for three years. Alabama law
prohibits a bank holding company from acquiring control of a financial
institution until the target financial institution has been incorporated for
five years. These limitations do not apply to our banking subsidiaries because
they have been in existence for the applicable time periods.
Change
in Bank Control. Subject
to various exceptions, the BHC Act and the Change in Bank Control Act, together
with related regulations, require Federal Reserve approval prior to any person
or company acquiring “control” of a bank holding company. Control is
conclusively presumed to exist if an individual or company acquires 25% or more
of any class of voting securities of the bank holding company. Control is
rebuttably presumed to exist if a person or company acquires 10% or more, but
less than 25%, of any class of voting securities and either:
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the
bank holding company has registered securities under Section 12 of
the Securities Exchange Act of 1934;
or |
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no
other person owns a greater percentage of that class of voting securities
immediately after the transaction. |
Our
common stock is registered under the Securities Exchange Act of 1934. The
regulations provide a procedure for challenging the rebuttable presumption of
control.
Permitted
Activities. Bank
holding companies are generally prohibited under the BHC Act from engaging in or
acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in any activity other than:
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banking
or managing or controlling banks; and |
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an
activity that the Federal Reserve determines to be so closely related to
banking as to be a proper incident to the business of
banking. |
Activities
that the Federal Reserve has found to be so closely related to banking as to be
a proper incident to the business of banking include:
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factoring
accounts receivable; |
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· |
making,
acquiring, brokering or servicing loans and usual related
activities; |
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leasing
personal or real property; |
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operating
a non-bank depository institution, such as a savings
association; |
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trust
company functions; |
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· |
financial
and investment advisory activities; |
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conducting
discount securities brokerage activities; |
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· |
underwriting
and dealing in government obligations and money market
instruments; |
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· |
providing
specified management consulting and counseling
activities; |
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· |
performing
selected data processing services and support
services; |
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acting
as agent or broker in selling credit life insurance and other types of
insurance in connection with credit transactions;
and |
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performing
selected insurance underwriting activities. |
Despite
prior approval, the Federal Reserve may order a bank holding company or its
subsidiaries to terminate any of these activities or to terminate its ownership
or control of any subsidiary when it has reasonable cause to believe that the
bank holding company’s continued ownership, activity or control constitutes a
serious risk to the financial safety, soundness, or stability of it or any of
its bank subsidiaries.
Generally,
if Community Capital qualifies and elects to become a financial holding company,
it may engage in activities that are financial in nature or incidental or
complementary to financial activity. The BHC Act expressly lists the following
activities as financial in nature:
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lending,
trust and other banking activities; |
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insuring,
guaranteeing, or indemnifying against loss or harm, or providing and
issuing annuities, and acting as principal, agent, or broker for these
purposes, in any state; |
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· |
providing
financial, investment, or advisory
services; |
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· |
issuing
or selling instruments representing interests in pools of assets
permissible for a bank to hold directly; |
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· |
underwriting,
dealing in or making a market in
securities; |
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· |
other
activities that the Federal Reserve may determine to be so closely related
to banking or managing or controlling banks as to be a proper incident to
managing or controlling banks; |
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· |
foreign
activities permitted outside of the United States if the Federal Reserve
has determined them to be usual in connection with banking operations
abroad; |
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· |
merchant
banking through securities or insurance affiliates;
and |
| |
· |
insurance
company portfolio investments. |
To
qualify to become a financial holding company, each depository institution
subsidiary of Community Capital must be well capitalized and well managed and
must have a Community Reinvestment Act rating of at least satisfactory.
Additionally, Community Capital must file an election with the Federal Reserve
to become a financial holding company and must provide the Federal Reserve with
30 days’ written notice prior to engaging in a permitted financial activity.
Although we are eligible to elect to become a financial holding company, we
currently have no plans to make such an election.
Support
of Subsidiary Institutions. Under
Federal Reserve policy, Community Capital is expected to act as a source of
financial strength its banking subsidiaries and to commit resources to support
the banks. This support may be required at times when, without this Federal
Reserve policy, Community Capital might not be inclined to provide it. In
addition, any capital loans made by Community Capital to its banking
subsidiaries will be repaid only after its deposits and various other
obligations are repaid in full. In the unlikely event of Community Capital’s
bankruptcy, any commitment by it to a federal bank regulatory agency to maintain
the capital of Albany Bank & Trust or AB&T National Bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
Our
Banking Subsidiaries
Since
Albany Bank & Trust and AB&T National Bank are chartered as a national
banks, they are primarily subject to the supervision, examination and reporting
requirements of the National Bank Act and the regulations of the Office of the
Comptroller of the Currency (the “OCC”). The OCC regularly examines our
subsidiary banks’ operations and has the authority to approve or disapprove
mergers, the establishment of branches and similar corporate actions. The OCC
also has the power to prevent the continuance or development of unsafe or
unsound banking practices or other violations of law.
Additionally,
Albany Bank & Trust’s and AB&T National Bank’s deposits are insured by
the FDIC to the maximum extent provided by law. The Banks are also subject to
numerous state and federal statutes and regulations that affect their business,
activities and operations.
Branching.
National
banks are required by the National Bank Act to adhere to branching laws
applicable to state banks in the states in which they are located. Under current
Georgia law, Albany Bank & Trust may open branch offices throughout Georgia
with the prior approval of the OCC. In addition, with prior regulatory approval,
Albany Bank & Trust may acquire branches of existing banks located in
Georgia. Albany Bank & Trust and any other national or state-chartered bank
generally may branch across state lines by merging with banks in other states if
allowed by the laws of the applicable state (the foreign state). Georgia law,
with limited exceptions, currently permits branching across state lines through
interstate mergers.
Under
current Alabama law, AB&T National Bank may open branch offices throughout
Alabama with the prior approval of the OCC. In addition, with prior regulatory
approval, AB&T National Bank may acquire branches of existing banks located
in Alabama. AB&T National Bank and any other national or state-chartered
bank generally may branch across state lines by merging with banks in other
states if allowed by the laws of the applicable state (the foreign state).
Alabama law, with limited exceptions, currently permits branching across state
lines through interstate mergers.
Under the
Federal Deposit Insurance Act, states may “opt-in” and allow out-of-state banks
to branch into their state by establishing a new start-up branch in the state.
Currently, neither Georgia nor Alabama has opted-in to this provision.
Therefore, interstate merger is the only method through which a bank located
outside of these states may branch into either of these states. This provides a
limited barrier of entry into the Georgia and Alabama banking markets, which
protects us from an important segment of potential competition. However, because
Georgia and Alabama have elected not to opt-in, our ability to establish a new
start-up branch in another state may be limited. Many states that have elected
to opt-in have done so on a reciprocal basis, meaning that an out-of-state bank
may establish a new start-up branch only if their home state has also elected to
opt-in. Consequently, until Georgia or Alabama changes its election, the only
way we will be able to branch into states that have elected to opt-in on a
reciprocal basis will be through interstate merger.
Prompt
Corrective Action.
The FDIC
Improvement Act of 1991 establishes a system of prompt corrective action to
resolve the problems of undercapitalized financial institutions. Under this
system, the federal banking regulators have established five capital categories
(well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized) in which all institutions are
placed. Federal banking regulators are required to take various mandatory
supervisory actions and are authorized to take other discretionary actions with
respect to institutions in the three undercapitalized categories. The severity
of the action depends upon the capital category in which the institution is
placed. Generally, subject to a narrow exception, the banking regulator must
appoint a receiver or conservator for an institution that is critically
undercapitalized. The federal banking agencies have specified by regulation the
relevant capital level for each category. At December 31, 2004, we qualified for
the well-capitalized category.
An
institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency. A
bank holding company must guarantee that a subsidiary depository institution
meets its capital restoration plan, subject to various limitations. The
controlling holding company’s obligation to fund a capital restoration plan is
limited to the lesser of 5% of an undercapitalized subsidiary’s assets at the
time it became undercapitalized or the amount required to meet regulatory
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches or engaging in any new line of business, except under
an accepted capital restoration plan or with FDIC approval. The regulations also
establish procedures for downgrading an institution to a lower capital category
based on supervisory factors other than capital.
FDIC
Insurance Assessments.
The FDIC
has adopted a risk-based assessment system for insured depository institutions
that takes into account the risks attributable to different categories and
concentrations of assets and liabilities. The system assigns an institution to
one of three capital categories: (1) well capitalized; (2) adequately
capitalized; and (3) undercapitalized. These three categories are substantially
similar to the prompt corrective action categories described above, with the
“undercapitalized” category including institutions that are undercapitalized,
significantly undercapitalized, and critically undercapitalized for prompt
corrective action purposes. The FDIC also assigns an institution to one of three
supervisory subgroups based on a supervisory evaluation that the institution's
primary federal regulator provides to the FDIC and information that the FDIC
determines to be relevant to the institution's financial condition and the risk
posed to the deposit insurance funds. Assessments range from 0 to 27 cents per
$100 of deposits, depending on the institution's capital group and supervisory
subgroup. In addition, the FDIC imposes assessments to help pay off the $780
million in annual interest payments on the $8 billion Financing Corporation
bonds issued in the late 1980s as part of the government rescue of the thrift
industry. This assessment rate is adjusted quarterly and is set at
1.44 cents per $100 of deposits for the first quarter of 2005.
The FDIC
may terminate its insurance of deposits if it finds that the institution has
engaged in unsafe and unsound practices, is in an unsafe or unsound condition to
continue operations, or has violated any applicable law, regulation, rule,
order, or condition imposed by the FDIC.
Community
Reinvestment Act. The
Community Reinvestment Act requires that, in connection with examinations of
financial institutions within their respective jurisdictions, the Federal
Reserve, the FDIC or the OCC shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low-
and moderate-income neighborhoods. These facts are also considered in evaluating
mergers, acquisitions, and applications to open a branch or facility. Failure to
adequately meet these criteria could impose additional requirements and
limitations on Albany Bank & Trust. Since our aggregate assets are not more
than $250 million, under the Gramm-Leach-Bliley Act, we are subject to a
Community Reinvestment Act examination only once every 60 months if we receive
an “outstanding” rating, once every 48 months if we receive a “satisfactory”
rating and as needed if our rating is “less than satisfactory.” Additionally, we
must publicly disclose the terms of various Community Reinvestment Act-related
agreements.
Other
Regulations. Interest
and other charges collected or contracted for by Albany Bank & Trust and
AB&T National Bank are subject to state usury laws and federal laws
concerning interest rates. For example, under the Soldiers’ and Sailors’ Civil
Relief Act of 1940, a lender is generally prohibited from charging an annual
interest rate in excess of 6% on any obligation for which the borrower is a
person on active duty with the United States military. Albany Bank & Trust's
and AB&T National Bank’s loan operations are also subject to federal laws
applicable to credit transactions, such as the:
| |
· |
Federal
Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers; |
| |
· |
Home
Mortgage Disclosure Act of 1975, requiring financial institutions to
provide information to enable the public and public officials to determine
whether a financial institution is fulfilling its obligation to help meet
the housing needs of the community it serves;
|
| |
· |
Equal
Credit Opportunity Act, prohibiting discrimination on the basis of race,
creed or other prohibited factors in extending
credit; |
| |
· |
Fair
Credit Reporting Act of 1978, governing the use and provision of
information to credit reporting agencies; |
| |
· |
Fair
Debt Collection Act, governing the manner in which consumer debts may be
collected by collection agencies; |
| |
· |
Soldiers’
and Sailors’ Civil Relief Act of 1940, governing the repayment terms of,
and property rights underlying, secured obligations of persons in military
service; and |
| |
· |
Rules
and regulations of the various federal agencies charged with the
responsibility of implementing these federal
laws. |
In
addition to the federal and state laws noted above, the Georgia Fair Lending Act
(“GAFLA”) imposes restrictions and procedural requirements on most mortgage
loans made in Georgia, including home equity loans and lines of credit. On
August 5, 2003, the OCC issued a formal opinion stating that the entirety of
GAFLA is pre-empted by federal law for national banks and their operating
subsidiaries. As a result, Albany Bank & Trust and AB&T National Bank
are exempt from the requirements of GAFLA.
The
deposit operations of Albany Bank & Trust and AB&T National Bank are
subject to:
| |
· |
the
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 records;
and |
| |
· |
the
Electronic Funds Transfer Act and Regulation E issued by the Federal
Reserve to implement that act, which govern automatic deposits to and
withdrawals from deposit accounts and customers’ rights and liabilities
arising from the use of automated teller machines and other electronic
banking services. |
Capital
Adequacy
Community
Capital, Albany Bank & Trust and AB&T National Bank are required to
comply with the capital adequacy standards established by the Federal Reserve
(in the case of Community Capital) and the OCC (in the case of Albany Bank &
Trust and AB&T National Bank). The Federal Reserve has established a
risk-based and a leverage measure of capital adequacy for bank holding
companies. Albany Bank & Trust and AB&T National Bank are subject to
risk-based and leverage capital requirements adopted by the OCC, which are
substantially similar to those adopted by the Federal Reserve for bank holding
companies.
The
risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items,
such as letters of credit and unfunded loan commitments, are assigned to broad
risk categories, each with appropriate risk weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The
minimum guideline for the ratio of total capital to risk-weighted assets is 8%.
Total capital consists of two components, Tier 1 Capital and Tier 2 Capital.
Tier 1 Capital generally consists of common stock, minority interests in the
equity accounts of consolidated subsidiaries, noncumulative perpetual preferred
stock, and a limited amount of qualifying cumulative perpetual preferred stock,
less goodwill and other specified intangible assets. Tier 1 Capital must equal
at least 4% of risk-weighted assets. Tier 2 Capital generally consists of
subordinated debt, other preferred stock, and a limited amount of loan loss
reserves. The total amount of Tier 2 Capital is limited to 100% of Tier 1
Capital. At December 31, 2004 our ratio of total capital to risk-weighted assets
was 20.84% and our ratio of Tier 1 Capital to risk-weighted assets was
19.88%.
In
addition, the Federal Reserve has established minimum leverage ratio guidelines
for bank holding companies. These guidelines provide for a minimum ratio of Tier
1 Capital to average assets, less goodwill and other specified intangible assets
of 3% for bank holding companies that meet specified criteria, including having
the highest regulatory rating and implementing the Federal Reserve’s risk-based
capital measure for market risk. All other bank holding companies generally are
required to maintain a leverage ratio of at least 4%. At December 31, 2004, our
leverage ratio was 14.81%. The guidelines also provide that bank holding
companies experiencing internal growth or making acquisitions will be expected
to maintain strong capital positions substantially above the minimum supervisory
levels without reliance on intangible assets. The Federal Reserve considers the
leverage ratio and other indicators of capital strength in evaluating proposals
for expansion or new activities.
Failure
to meet capital guidelines could subject a bank or bank holding company to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on accepting
brokered deposits, and certain other restrictions on its business. As described
above, significant additional restrictions can be imposed on FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
“—Prompt Corrective Action.”
Payment
of Dividends
Community
Capital is a legal entity separate and distinct from Albany Bank & Trust and
AB&T National Bank. The principal sources of Community Capital’s cash flow,
including cash flow to pay dividends to its shareholders, are dividends that
Albany Bank & Trust and AB&T National Bank pay to their sole
shareholder, Community Capital. Statutory and regulatory limitations apply to
Albany Bank & Trust’s and AB&T National Bank’s payment of dividends to
Community Capital as well as to Community Capital’s payment of dividends to its
shareholders.
Albany
Bank & Trust and AB&T National Bank are required by federal law to
obtain prior approval of the OCC for payments of dividends if the total of all
dividends declared by their respective boards of directors in any year will
exceed (1) the total of the bank’s net profits for that year, plus
(2) its retained net profits of the preceding two years, less any required
transfers to surplus.
The
payment of dividends by Community Capital, Albany Bank & Trust and AB&T
National Bank may also be affected by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines. If, in the opinion of its
federal bank regulatory agency, Albany Bank & Trust or AB&T National
Bank were engaged in or about to engage in an unsafe or unsound practice, the
federal bank regulatory agency could require, after notice and a hearing, that
the bank stop or refrain engaging in the practice. The federal bank regulatory
agencies have indicated that paying dividends that deplete a depository
institution’s capital base to an inadequate level would be an unsafe and unsound
banking practice. Under the FDIC Improvement Act of 1991, a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. Moreover, the federal
agencies have issued policy statements that provide that bank holding companies
and insured banks should generally only pay dividends out of current operating
earnings. See “—Prompt Corrective Action” above.
Restrictions
on Transactions with Affiliates
Community
Capital, Albany Bank & Trust and AB&T National Bank are subject to the
provisions of Section 23A of the Federal Reserve Act. Section 23A places limits
on the amount of:
| |
· |
a
bank’s loans or extensions of credit to
affiliates; |
| |
· |
a
bank’s investment in affiliates; |
| |
· |
assets
a bank may purchase from affiliates, except for real and personal property
exempted by the Federal Reserve; |
| |
· |
loans
or extensions of credit to third parties collateralized by the securities
or obligations of affiliates; and |
| |
· |
a
bank’s guarantee, acceptance or letter of credit issued on behalf of an
affiliate. |
The total
amount of the above transactions is limited in amount, as to any one affiliate,
to 10% of a bank's capital and surplus and, as to all affiliates combined, to
20% of a bank's capital and surplus. In addition to the limitation on the amount
of these transactions, each of the above transactions must also meet specified
collateral requirements. Albany Bank & Trust and AB&T National Bank must
also comply with other provisions designed to avoid the taking of low-quality
assets.
Community
Capital, Albany Bank & Trust and AB&T National Bank are also subject to
the provisions of Section 23B of the Federal Reserve Act which, among other
things, prohibit an institution from engaging in the above transactions with
affiliates unless the transactions are on terms substantially the same, or at
least as favorable to the institution or its subsidiaries, as those prevailing
at the time for comparable transactions with nonaffiliated companies.
Albany
Bank & Trust and AB&T National Bank are also subject to restrictions on
extensions of credit to its executive officers, directors, principal
shareholders and their related interests. These extensions of credit
(1) must be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
third parties, and (2) must not involve more than the normal risk of
repayment or present other unfavorable features.
Privacy
Financial
institutions are required to disclose their policies for collecting and
protecting confidential information. Customers generally may prevent financial
institutions from sharing nonpublic personal financial information with
nonaffiliated third parties except under narrow circumstances, such as the
processing of transactions requested by the consumer or when the financial
institution is jointly sponsoring a product or service with a nonaffiliated
third party. Additionally, financial institutions generally may not disclose
consumer account numbers to any nonaffiliated third party for use in
telemarketing, direct mail marketing or other marketing to consumers.
Consumer
Credit Reporting
On
December 4, 2003, President Bush signed the Fair and Accurate Credit
Transactions Act (the “FAIR Act”), amending the federal Fair Credit Reporting
Act (the “FCRA”). These amendments to the FCRA (the “FCRA Amendments”) became
effective in 2004.
The FCRA
Amendments include, among other things:
| ·
|
requirements
for financial institutions to develop policies and procedures to identify
potential identity theft and, upon the request of a consumer, place a
fraud alert in the consumer’s credit file stating that the consumer may be
the victim of identity theft or other
fraud; |
| ·
|
new
consumer notice requirements for lenders that use consumer report
information in connection with risk-based credit pricing
programs; |
| ·
|
for
entities that furnish information to consumer reporting agencies (which
includes our banking subsidiaries), requirements to implement procedures
and policies regarding the accuracy and integrity of the furnished
information, and regarding the correction of previously furnished
information that is later determined to be inaccurate;
and |
| ·
|
a
requirement for mortgage lenders to disclose credit scores to
consumers. |
The FCRA
Amendments also prohibit a business that receives consumer information from an
affiliate from using that information for marketing purposes unless the consumer
is first provided a notice and an opportunity to direct the business not to use
the information for such marketing purposes (the “opt-out”), subject to certain
exceptions. We do not share consumer information among our affiliated companies
for marketing purposes, except as allowed under exceptions to the notice and
opt-out requirements.
Anti-Terrorism
Legislation
Albany
Bank & Trust and AB&T National Bank are subject to the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), the Bank Secrecy Act,
and rules and regulation of the Office of Foreign Assets Control (the “OFAC”).
These statutes and related rules and regulations impose requirements and
limitations on specified financial transactions and account relationships,
intended to guard against money laundering and terrorism financing. Community
Capital and its subsidiaries established a customer identification program
pursuant to Section 326 of the USA PATRIOT Act and the Bank Secrecy Act, and
otherwise have implemented procedures and policies to comply with the foregoing
rules.
Proposed
Legislation and Regulatory Action
New
regulations and statutes are regularly proposed that contain wide-ranging
proposals for altering the structures, regulations and competitive relationships
of financial institutions operating and doing business in the United States. We
cannot predict whether or in what form any proposed regulation or statute will
be adopted or the extent to which our business may be affected by any new
regulation or statute.
Effect
of Governmental Monetary Polices
Our
earnings are affected by domestic economic conditions and the monetary and
fiscal policies of the United States government and its agencies. The Federal
Reserve’s monetary policies have had, and are likely to continue to have, an
important impact on the operating results of commercial banks through its power
to implement national monetary policy in order, among other things, to curb
inflation or combat a recession. The monetary policies of the Federal Reserve
affect the levels of bank loans, investments and deposits through its control
over the issuance of United States government securities, its regulation of the
discount rate applicable to member banks and its influence over reserve
requirements to which member banks are subject. We cannot predict the nature or
impact of future changes in monetary and fiscal policies.
Selected
Statistical Information
The
responses to this section of Item I are included in the Company’s Annual Report
to Shareholders, under the heading “Selected Financial Information and
Statistical Data” at pages 10 through 16, and are incorporated herein by
reference.
Community
Capital’s executive offices and Albany Bank & Trust’s main office is located
at 2815 Meredyth Drive, Albany, Dougherty County, Georgia. Albany Bank &
Trust owns this property, which includes a two-story, Colonial-style building
consisting of approximately 10,700 square feet, four drive-up widows, a night
depository and one automated teller machine.
Community
Capital also leases approximately 7,500 square feet at 2722 Dawson Road, Suite
1, Albany, Georgia 31707 under a five-year operating lease, which is used as its
operations center. Albany Bank & Trust also operates two branch offices and
a loan production office. The address, approximate square footage and lease
information for these properties is set forth below:
|
Lee
County Branch Office |
Downtown
Albany Branch |
Loan
Production Office |
|
1533-B
Highway 19 S |
214
Pine Avenue |
1529
Moultrie Road |
|
Leesburg,
GA 31763 |
Albany,
GA, 31701 |
Albany,
GA 31705 |
|
5-year
operating lease |
30-year
capital lease |
5-year
operating lease |
|
1,500
square feet |
2,500
Square feet |
1,500
square feet |
AB&T
National Bank is headquartered at 1479 W. Main Street, Dothan, Alabama. AB&T
National Bank owns this property, which includes a one-story brick building
consisting of approximately 6,000 square feet, three drive-up windows, one
automated teller machine and a night depository. AB&T National Bank also
operates a branch office, under the name of First National Bank of Lee County,
in a temporary banking facility located at 1943 E. Glenn Avenue, Auburn,
Alabama. This property is owned and consists of approximately 2,000 square feet,
a drive-up window, night depository and an automated teller machine.
Other
than normal real estate commercial lending activities of Albany Bank & Trust
and AB&T National Bank, Community Capital generally does not invest in real
estate, interests in real estate, real estate mortgages, or securities of or
interests in persons primarily engaged in real estate activities.
There are
no material pending legal proceedings to which Community Capital is a party or
of which any of its properties are subject; nor are there material proceedings
known to Community Capital to be contemplated by any governmental authority; nor
are there material proceedings known to Community Capital, pending or
contemplated, in which any director, officer or affiliate or any principal
security holder of Community Capital or any associate of any of the foregoing,
is a party or has an interest adverse to Community Capital.
None.
PART
II
The
response to this Item is partially included in Community Capital’s Annual Report
to Shareholders at page 48 and is incorporated herein by reference.
Community
Capital issued no unregistered securities during the fiscal year ended December
31, 2004. Additionally, Community Capital did not purchase any shares of its
common stock during the fourth quarter of 2004.
The
response to this Item is included in Community Capital’s Annual Report to
Shareholders, under the heading “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” at pages 1 through 9, and is
incorporated herein by reference.
The
following financial statements are included in Community Capital’s Annual Report
to Shareholders at pages 15 through 46, and are incorporated herein by
reference.
| |
§ |
Independent
Auditors’ Report |
| |
§ |
Consolidated
balance sheets as of December 31, 2004 and 2003
|
| |
§ |
Consolidated
statements of income for the years ended December 31, 2004 and 2003
|
| |
§ |
Consolidated
statements of comprehensive income for the years ended December 31, 2004
and 2003 |
| |
§ |
Consolidated
statements of stockholders’ equity for the years ended December 31, 2004
and 2003 |
| |
§ |
Consolidated
statements of cash flows for the years ended December 31, 2004 and 2003
|
| |
§ |
Notes
to consolidated financial statements |
Not
Applicable.
Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, as of the
end of the period covered by this report, our management, including our Chief
Executive Officer and Chief Financial Officer, reviewed and evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures under Exchange Act Rule 13a-15(b). Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that such
disclosure controls and procedures are adequate to ensure that material
information relating to the Company, including its consolidated subsidiaries,
that is required to be included in its periodic filings with the Securities and
Exchange Commission, is timely made know to them. During the quarter ended
December 31, 2004 there were no changes in the Company's internal controls that
materially affected, or are reasonably likely to materially affect, the
Company's control over financial reporting.
None.
PART
III
The
responses to this Item are included in Community Capital’s Proxy Statement for
the Annual Meeting of Shareholders to be held April 25, 2005, under the
following headings, and are incorporated herein by reference.
Proposal
One: Election of Directors -Class II Nominated Directors, -Continuing
Class III Directors and -Continuing Class I Directors” at pages 3
through 4;
“Executive
Officers,” at page 6;
“Section
16(a) Beneficial Ownership Reporting Compliance,” at page 12.
The
Company has a Code of Ethics that applies to the Company’s Chief Executive
Officer and Principal Financial and Accounting Officer. The Company will provide
a copy of the Code of Ethics free of charge to any shareholder upon written
request to the Company.
The
responses to this Item are included in Community Capital’s Proxy Statement for
the Annual Meeting of Shareholders to be held April 25, 2005, under the heading
“Compensation” at pages 6 through 10, and are incorporated herein by
reference.
The
response to this Item is partially included in Community Capital’s Proxy
Statement for the Annual Meeting of Shareholders to be held April 25, 2005,
under the headings “Security Ownership of Certain Beneficial Owners” at pages 11
through 12, and is incorporated herein by reference.
Equity
Compensation Plans
The table
below sets forth information regarding shares of Community Capital common stock
authorized for issuance under the following Community Capital equity
compensation plans and agreements:
| |
· |
Community
Capital Bancshares, Inc. 1998 Stock Incentive
Plan |
| |
· |
Community
Capital Bancshares, Inc. 2000 Outside Directors’ Stock Option
Plan |
| |
· |
Community
Capital Bancshares, Inc. Non-qualified Stock Option Agreement with
Charles M. Jones, III |
| |
· |
Community
Capital Bancshares, Inc. Restated Employee Stock Purchase
Plan |
| |
· |
Community
Capital Bancshares, Inc. Non-qualified Stock option agreements with David
Baranko, David Guillebeau, Paul Joiner, Rosa Ramsey, and LaDonna
Urick. |
The Stock
Incentive Plan was approved by shareholders on March 11, 1999. None of the other
equity compensation plans or agreements listed above has been approved by
Community Capital’s shareholders. Each of those plans or agreements is described
below.
| |
|
Number
of securities to be issued upon exercise of outstanding options and
warrants |
|
Weighted-average
exercise price of outstanding options and warrants |
|
Number
of securities remaining available for future issuance under the equity
compensation plans (excluding shares subject to outstanding
options) |
|
|
Equity
compensation plans approved by security holders |
|
|
165,853 |
|
|
|
8.60 |
|
|
|
137,721 |
|
|
|
Equity
compensation plans not approved by security holders |
|
|
367,076 |
|
|
|
8.21 |
|
|
|
14,521 |
|
|
|
Total |
|
|
532,929 |
|
|
|
8.33 |
|
|
|
152,242 |
|
|
2000
Outside Directors’ Stock Option Plan. The 2000
Outside Directors’ Stock Option Plan was adopted by the Board of Directors on
April 24, 2000. This plan is not subject to the Employment Retirement Income
Security Act of 1974, nor is it qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended. The 2000 Outside Directors’ Stock Option Plan
provides for the issuance of nonqualified stock options to members of the Board
of Directors who are not employees of Community Capital or any of its affiliates
and the Chairman of the Board of Directors, regardless of whether he is an
employee of Community Capital. Community Capital has reserved up to 21,429
shares of Community Capital’s common stock for issuance under this plan upon
exercise of an option. This number may change in the event of future stock
dividends, stock splits, recapitalizations and similar events. If an option
expires or terminates without being exercised, the shares subject to the
unexercised portion of the option may again be available for awards under the
2000 Outside Directors’ Stock Option Plan. The purpose of this plan is to
promote in its non-employee directors personal interest in the welfare of
Community Capital and provide incentives to the individuals who are primarily
responsible for shaping and carrying out the long-term plans of Community
Capital.
The 2000
Outside Directors’ Stock Option Plan provides for an annual grant of an option
to purchase 142 shares of Community Capital’s common stock to the existing
non-employee directors and an option to purchase 285 shares of Community
Capital’s common stock to the Chairman of the Board as of the date of each
annual shareholders’ meeting. Options granted pursuant to this plan are
generally nontransferable except by will or the laws of descent and distribution
unless otherwise permitted by the Board of Directors. These options are fully
vested and exercisable immediately, subject to any restriction imposed by the
primary federal regulator of Community Capital. The exercise price of these
options must be equal to the fair market value of the common stock on the date
the option is granted. The term of the options may not exceed ten years from the
date of grant. If a participant ceases to be a director of Community Capital or
any affiliate, the options expire, terminate and become unexercisable no later
than 90 days after the date the participant ceases to provide such
services.
Non-qualified
Stock Option Agreement with Charles M. Jones, III. On
November 15, 1999, Mr. Jones was granted an option to purchase 21,429 shares of
Community Capital’s common stock at an exercise price of $7.35 per share, as
adjusted to reflect Community Capital’s ten-for-seven stock split effective in
January 2001. This option vests in 20% equal increments over five years
beginning on the first anniversary of the grant date for so long as Mr. Jones
serves as a director of Community Capital or any of its affiliates. The option
will be come fully vested if Mr. Jones retires on or after he reaches age 65 or
upon a change in control of Community Capital. The option will expire on the
tenth anniversary of the grant date or, if earlier, 90 days after Mr. Jones
ceases to be a director of Community Capital or any affiliate.
Non-qualified
Stock Option Agreement with Members of Management. On
February 23, 2003, Community Capital granted five members of management options
to purchase an aggregate of 50,000 shares of Community Capital’s common stock at
an exercise price of $10.18 per share. These options vest in 20% equal
increments over five years beginning on the first anniversary of the grant date
for so long as the individual serves as an employee of Community Capital or any
of its affiliates. The options will become fully vested if there is a change in
control of Community Capital. The options will expire on the tenth anniversary
of the grant date or, if earlier, 90 days after the optionee ceases to be an
employee of Community Capital or any affiliate. Since the options were only
granted to officers of Community Capital and the Bank, the option grants did not
involve a public offering and therefore were exempt from registration under
Section 4(2) of the Securities Act of 1933.
Restated
Employee Stock Purchase Plan. The
Employee Stock Purchase Plan enables eligible employees to purchase shares of
Community Capital common stock through payroll deductions. An employee is
eligible to participate in the Employee Stock Purchase Plan if that employee is
a resident of Georgia and is employed in a position that customarily requires at
least 20 hours of work per week. Under the Employee Stock Purchase Plan,
employee payroll deductions are combined with matching contributions made by
Community Capital and used to purchase shares of Community Capital common stock
on behalf of the employee at the end of each calendar quarter. The shares are
purchased in the open market at prevailing prices at the time of the purchase or
may be purchased from Community Capital at fair market value. Fair market value
is determined by Community Capital in good faith based on all relevant facts and
circumstances as of the date of purchase. If an employee terminates employment
with Community Capital or any affiliate or the employee no longer satisfies the
eligibility requirements, the employee’s payroll deductions made under the
Employee Stock Purchase Plan that have not been used to purchase shares of
Community Capital’s common stock will be returned to that employee and any
matching credits will be forfeited.
Warrant
Agreements with Each of Community Capital’s Directors. On March
11, 1999, Community Capital issued its directors warrants to purchase an
aggregate of 302,420 shares of Community Capital’s common stock at $7.00 per
share, as adjusted to reflect Community Capital’s 10-for-7 stock split effective
in January 2001. The warrants become exercisable in 20% annual increments
beginning on the first anniversary of the issuance date. Exercisable warrants
will remain exercisable for the ten-year period following the date of issuance
or for 90 days after the warrant holder ceases to be a director of Community
Capital, whichever is shorter. The exercise price of each warrant is subject to
adjustment for stock splits, recapitalizations or other similar events.
Additionally, if the Bank’s capital falls below the minimum level, as determined
by the OCC, Community Capital may be directed to require the directors to
exercise or forfeit their warrants.
ITEM 12.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
responses to this Item are included in Community Capital’s Proxy Statement for
the Annual Meeting of Shareholders to be held April 25, 2005, under the headings
“Relationships and Related Transactions” at page 12 and “Compensation” at pages
6 through 10, and are incorporated herein by reference.
(a) Exhibits
Exhibit
Number Exhibit
|
3.1 |
Articles
of Incorporation. (Incorporated herein by reference to exhibit of same
number in Community Capital’s Registration Statement on Form SB-2,
Registration No. 333-68307, filed December 3,
1998.) |
| |
3.2 |
Bylaws.
(Incorporated herein by reference to exhibit of same number in Community
Capital’s Registration Statement on Form SB-2, Registration No. 333-68307,
filed December 3, 1998.) |
| |
4.1 |
Instruments
Defining the Rights of Security Holders. See Articles of Incorporation at
Exhibit 3.1 hereto and Bylaws at Exhibit 3.2 hereto.
|
| |
4.2 |
Amended
and Restated Declaration of Trust. (Incorporated herein by reference to
exhibit of the same number in Community Capital's Quarterly Report on Form
10-QSB for the period ended March 31, 2003 (File no. 000-25345), filed May
15, 2003.) |
| |
4.3 |
Indenture
Agreement. (Incorporated herein by reference to exhibit of the same number
in Community Capital's Quarterly Report on Form 10-QSB for the period
ended March 31, 2003 (File no. 000-25345), filed May 15,
2003.) |
| |
4.4 |
Guarantee
Agreement. (Incorporated herein by reference to exhibit of the same number
in Community Capital's Quarterly Report on Form 10-QSB for the period
ended March 31, 2003 (File no. 000-25345), filed May 15,
2003.) |
| |
10.3* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and Robert E. Lee. (Incorporated by
reference to exhibit of same number in Community Capital's Quarterly
Report on Form 10-QSB for the quarterly period ended September 30, 2004
(File no. 000-25345), filed November 15,
2004.) |
| |
10.4* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and David C. Guillebeau. (Incorporated
by reference to exhibit of same number in Community Capital's Quarterly
Report on Form 10-QSB for the quarterly period ended September 30, 2004
(File no. 000-25345), filed November 15,
2004.) |
| |
10.5 |
Form
of Community Capital Bancshares, Inc. Organizers’ Warrant Agreement.
(Incorporated herein by reference to exhibit of same number in Commuity
Capital’s Amendment No. 1 to Registration Statement on Form SB-2,
Registration No. 333-68307, filed February 2,
1999.) |
| |
10.6* |
Community
Capital Bancshares, Inc. Amended and Restated 1998 Stock Incentive Plan.
(Incorporated by reference to exhibit of same number in Community
Capital’s Amendment No. 2 to Registration Statement on Form SB-2,
Registration No. 333-68307, filed February 2,
1999.) |
| |
10.7* |
Form
of Community Capital Bancshares, Inc. Incentive Stock Option Award.
(Incorporated herein by reference to exhibit of same number in Community
Capital’s Registration Statement on Form SB-2, Registration No. 333-68307,
filed December 3, 1998.) |
| |
10.8* |
Community
Capital Bancshares, Inc. 2000 Outside Directors’ Stock Option Plan.
(Incorporated by reference to exhibit of same number in Community
Capital’s Quarterly Report on Form 10-QSB for the quarterly period ended
September 30, 2000 (File no. 000-25345), filed November 14,
2000.) |
| |
10.9* |
Community
Capital Bancshares, Inc. Non-Qualified Stock Option Agreement with Charles
Jones, dated November 15, 1999. (Incorporated by reference to exhibit of
same number in Community Capital’s Quarterly Report on Form 10-QSB for the
quarterly period ended September 30, 2000 (File no. 000-25345), filed
November 14, 2000.) |
| |
10.10* |
Community
Capital Bancshares, Inc. Non-Qualified Stock Option Agreement with Richard
Bishop, dated April 11, 2000. (Incorporated by reference to exhibit of
same number in Community Capital’s Quarterly Report on Form 10-QSB for the
quarterly period ended September 30, 2000 (File no. 000-25345), filed
November 14, 2000.) |
| |
10.11* |
First
Amendment to the Community Capital Bancshares, Inc. 1998 Stock Incentive
Plan. (Incorporated by referece to exhibit of same number in Community
Capital's Form 10-KSB (File no. 000-25345), filed March 26,
2002.) |
| |
10.12* |
First
Amendment to the Community Capital Bancshares, Inc. 2000 Outside
Directors’ Stock Option Plan. (Incorporated by referece to exhibit of same
number in Community Capital's Form 10-KSB (File no. 000-25345), filed
March 26, 2002.) |
| |
10.13* |
Community
Capital Bancshares, Inc. Restated Employee Stock Purchase Plan.
(Incorporated by referece to exhibit of same number in Community Capital's
Form 10-KSB (File no. 000-25345), filed March 26,
2002.) |
|
10.14 |
Agreement
and Plan of Merger by and between First Bank of Dothan, Inc. and Community
Capital Bancshares, Inc., dated as of July 2, 2003. (Incorporated by
reference to Exhibit 99.1 in Community Capital's Current Report on Form
8-K (File no. 000-25345), filed July 7,
2003.) |
| |
10.15 |
First
Amendment to the Agreement and Plan of Merger by and between First Bank of
Dothan, Inc. and Community Capital Bancshares, Inc., dated August 6, 2003.
(Incorporated by reference to exhibit of same number in Community
Capital's Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 2003 (File no. 000-25345), filed August 14,
2003.) |
| |
10.16 |
Second
Amendment to the Agreement and Plan of Merger by and Between First Bank of
Dothan, Inc. and Community Capital Bancshares, Inc., dated September 24,
2003. (Incorporated by reference to Exhibit 99.1 in Community Capital's
Registration Statement on Form S-3, Registration No. 333-111323,
filed December 18, 2003.) |
| |
10.17* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and David J. Baranko. (Incorporated by
reference to exhibit of same number in Community Capital's Quarterly
Report on Form 10-QSB for the quarterly period ended September 30, 2004
(File no. 000-25345), filed November 15,
2004.) |
| |
10.18* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and Paul E. Joiner, Jr. (Incorporated
by reference to exhibit of same number in Community Capital's Current
Report on Form 8-K (File no. 000-25345), filed December 7,
2004.) |
| |
10.19* |
Salary
Continuation Agreement dated September 13, 2004, among Albany Bank &
Trust, N.A., Community Capital Bancshares, Inc. and Robert E.
Lee. |
| |
10.20* |
Salary
Continuation Agreement dated September 13, 2004, among Albany Bank &
Trust, N.A., Community Capital Bancshares, Inc. and Paul E. Joiner,
Jr. |
| |
13.1 |
Community
Capital Bancshares, Inc. 2004 Annual Report to Shareholders. Except with
respect to those portions specifically incorporated by reference into this
Report, Community Capital’s 2004 Annual Report to Shareholders is not
deemed to be filed as part of this Report. |
|
22.1 |
Subsidiaries
of Community Capital Bancshares, Inc. |
| |
23.1 |
Consent
of Mauldin & Jenkins, LLC |
| |
24.1 |
Power
of Attorney (appears on the signature pages to this Annual Report on
10-KSB). |
| |
31.1 |
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
| |
31.2 |
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
| |
32.1 |
Certification
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 |
_____________________________
*
Compensatory plan or arrangement.
(b) Reports
on Form 8-K filed in the fourth quarter of 2004:
Form 8-K
filed November 10 ,2004 reporting earnings for the third quarter of
2004.
Form 8-K
filed December 7, 2004 reporting a material definitive agreement.
The
responses to this Item are included in the Company’s Proxy Statement for the
Annual Meeting of Shareholders to be held April 25, 2005, under the heading
“Independent Public Accountant” on page 13.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
| |
|
|
| |
COMMUNITY
CAPITAL BANCSHARES, INC. |
|
|
|
| Date: March 21,
2005 |
By: |
/s/ Robert E.
Lee |
| |
Robert E. Lee |
| |
President |
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, that
each person whose signature appears on the signature page to this Report
constitutes and appoints Robert E. Lee and Charles M. Jones, III, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place, and stead, in
any and all capacities, to sign any and all amendments to this Report, and to
file the same, with all exhibits hereto, and other documents in connection
herewith with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
|
Signature |
|
Title |
|
Date |
| |
|
|
|
|
| |
|
Director |
|
|
|
Robert
M. Beauchamp |
|
|
|
|
| |
|
|
|
|
|
/s/
Bennett D. Cotton, Jr. |
|
Director |
|
March
21, 2005 |
|
Bennett
D. Cotten, Jr. |
|
|
|
|
| |
|
|
|
|
|
/s/
Glenn A. Dowling |
|
Director |
|
March
21, 2005 |
|
Glenn
A. Dowling |
|
|
|
|
| |
|
|
|
|
|
/s/
Mary Helen Dykes |
|
Director |
|
March
21, 2005 |
|
Mary
Helen Dykes |
|
|
|
|
| |
|
|
|
|
|
/s/
Charles M. Jones, III |
|
Chairman
of the Board |
|
March
21, 2005 |
|
Charles
M. Jones, III |
|
and
Chief Executive Officer |
|
|
|
/s/
Van Cise Knowles |
|
Director |
|
March
21, 2005 |
|
Van
Cise Knowles |
|
|
|
|
| |
|
|
|
|
|
/s/
C. Richard Langley |
|
Director |
|
March
21, 2005 |
|
C.
Richard Langley |
|
|
|
|
| |
|
|
|
|
|
/s/
Robert E. Lee |
|
Director
and President |
|
March
21, 2005 |
|
Robert
E. Lee |
|
(Principal
Executive Officer) |
|
|
| |
|
|
|
|
|
/s/
William F. McAfee |
|
Director |
|
March
21, 2005 |
|
William
F. McAfee |
|
|
|
|
| |
|
|
|
|
|
/s/
Mark M. Shoemaker |
|
Director |
|
March
21, 2005 |
|
Mark
M. Shoemaker |
|
|
|
|
| |
|
|
|
|
|
/s/
Jane Anne D. Sullivan |
|
Director |
|
March
21, 2005 |
|
Jane
Anne D. Sullivan |
|
|
|
|
| |
|
|
|
|
|
/s/
John P. Ventulett, Jr. |
|
Director |
|
March
21, 2005 |
|
John
P. Ventulett, Jr. |
|
|
|
|
| |
|
|
|
|
|
/s/
Lawrence B. Willson |
|
Director |
|
March
21, 2005 |
|
Lawrence
B. Willson |
|
|
|
|
| |
|
|
|
|
|
/s/
James D. Woods |
|
Director |
|
March
21, 2005 |
|
James
D. Woods |
|
|
|
|
| |
|
|
|
|
|
/s/
David J. Baranko |
|
Chief
Financial Officer |
|
March
21, 2005 |
|
David
J. Baranko |
|
(Principal
Financial and |
|
|
| |
|
Accounting
Officer) |
|
|
EXHIBIT
INDEX
Exhibit
Number Exhibit
|
3.1 |
Articles
of Incorporation. (Incorporated herein by reference to exhibit of same
number in Community Capital’s Registration Statement on Form SB-2,
Registration No. 333-68307, filed December 3,
1998.) |
| |
3.2 |
Bylaws.
(Incorporated herein by reference to exhibit of same number in Community
Capital’s Registration Statement on Form SB-2, Registration No. 333-68307,
filed December 3, 1998.) |
| |
4.1 |
Instruments
Defining the Rights of Security Holders. See Articles of Incorporation at
Exhibit 3.1 hereto and Bylaws at Exhibit 3.2 hereto.
|
| |
4.2 |
Amended
and Restated Declaration of Trust. (Incorporated herein by reference to
exhibit of the same number in Community Capital's Quarterly Report on Form
10-QSB for the period ended March 31, 2003 (File no. 000-25345), filed May
15, 2003.) |
| |
4.3 |
Indenture
Agreement. (Incorporated herein by reference to exhibit of the same number
in Community Capital's Quarterly Report on Form 10-QSB for the period
ended March 31, 2003 (File no. 000-25345), filed May 15,
2003.) |
| |
4.4 |
Guarantee
Agreement. (Incorporated herein by reference to exhibit of the same number
in Community Capital's Quarterly Report on Form 10-QSB for the period
ended March 31, 2003 (File no. 000-25345), filed May 15,
2003.) |
| |
10.3* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and Robert E. Lee. (Incorporated by
reference to exhibit of same number in Community Capital's Quarterly
Report on Form 10-QSB for the quarterly period ended September 30, 2004
(File no. 000-25345), filed November 15,
2004.) |
| |
10.4* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and David C. Guillebeau. (Incorporated
by reference to exhibit of same number in Community Capital's Quarterly
Report on Form 10-QSB for the quarterly period ended September 30, 2004
(File no. 000-25345), filed November 15,
2004.) |
| |
10.5 |
Form
of Community Capital Bancshares, Inc. Organizers’ Warrant Agreement.
(Incorporated herein by reference to exhibit of same number in Commuity
Capital’s Amendment No. 1 to Registration Statement on Form SB-2,
Registration No. 333-68307, filed February 2,
1999.) |
| |
10.6* |
Community
Capital Bancshares, Inc. Amended and Restated 1998 Stock Incentive Plan.
(Incorporated by reference to exhibit of same number in Community
Capital’s Amendment No. 2 to Registration Statement on Form SB-2,
Registration No. 333-68307, filed February 2,
1999.) |
|
|
10.7* |
Form
of Community Capital Bancshares, Inc. Incentive Stock Option Award.
(Incorporated herein by reference to exhibit of same number in Community
Capital’s Registration Statement on Form SB-2, Registration No. 333-68307,
filed December 3, 1998.) |
| |
10.8* |
Community
Capital Bancshares, Inc. 2000 Outside Directors’ Stock Option Plan.
(Incorporated by reference to exhibit of same number in Community
Capital’s Quarterly Report on Form 10-QSB for the quarterly period ended
September 30, 2000 (File no. 000-25345), filed November 14,
2000.) |
| |
10.9* |
Community
Capital Bancshares, Inc. Non-Qualified Stock Option Agreement with Charles
Jones, dated November 15, 1999. (Incorporated by reference to exhibit of
same number in Community Capital’s Quarterly Report on Form 10-QSB for the
quarterly period ended September 30, 2000 (File no. 000-25345), filed
November 14, 2000.) |
| |
10.10* |
Community
Capital Bancshares, Inc. Non-Qualified Stock Option Agreement with Richard
Bishop, dated April 11, 2000. (Incorporated by reference to exhibit of
same number in Community Capital’s Quarterly Report on Form 10-QSB for the
quarterly period ended September 30, 2000 (File no. 000-25345), filed
November 14, 2000.) |
| |
10.11* |
First
Amendment to the Community Capital Bancshares, Inc. 1998 Stock Incentive
Plan. (Incorporated by referece to exhibit of same number in Community
Capital's Form 10-KSB (File no. 000-25345), filed March 26,
2002.) |
| |
10.12* |
First
Amendment to the Community Capital Bancshares, Inc. 2000 Outside
Directors’ Stock Option Plan. (Incorporated by referece to exhibit of same
number in Community Capital's Form 10-KSB (File no. 000-25345), filed
March 26, 2002.) |
| |
10.13* |
Community
Capital Bancshares, Inc. Restated Employee Stock Purchase Plan.
(Incorporated by referece to exhibit of same number in Community Capital's
Form 10-KSB (File no. 000-25345), filed March 26,
2002.) |
|
10.14 |
Agreement
and Plan of Merger by and between First Bank of Dothan, Inc. and Community
Capital Bancshares, Inc., dated as of July 2, 2003. (Incorporated by
reference to Exhibit 99.1 in Community Capital's Current Report on Form
8-K (File no. 000-25345), filed July 7,
2003.) |
| |
10.15 |
First
Amendment to the Agreement and Plan of Merger by and between First Bank of
Dothan, Inc. and Community Capital Bancshares, Inc., dated August 6, 2003.
(Incorporated by reference to exhibit of same number in Community
Capital's Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 2003 (File no. 000-25345), filed August 14,
2003.) |
| |
10.16 |
Second
Amendment to the Agreement and Plan of Merger by and Between First Bank of
Dothan, Inc. and Community Capital Bancshares, Inc., dated September 24,
2003. (Incorporated by reference to Exhibit 99.1 in Community Capital's
Registration Statement on Form S-3, Registration No. 333-111323,
filed December 18, 2003.) |
| |
10.17* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and David J. Baranko. (Incorporated by
reference to exhibit of same number in Community Capital's Quarterly
Report on Form 10-QSB for the quarterly period ended September 30, 2004
(File no. 000-25345), filed November 15,
2004.) |
| |
10.18* |
Employment
Agreement dated September 13, 2004, among Albany Bank & Trust, N.A.,
Community Capital Bancshares, Inc. and Paul E. Joiner, Jr. (Incorporated
by reference to exhibit of same number in Community Capital's Current
Report on Form 8-K (File no. 000-25345), filed December 7,
2004.) |
| |
10.19* |
Salary
Continuation Agreement dated September 13, 2004, among Albany Bank &
Trust, N.A., Community Capital Bancshares, Inc. and Robert E.
Lee. |
| |
10.20* |
Salary
Continuation Agreement dated September 13, 2004, among Albany Bank &
Trust, N.A., Community Capital Bancshares, Inc. and Paul E. Joiner,
Jr. |
| |
13.1 |
Community
Capital Bancshares, Inc. 2004 Annual Report to Shareholders. Except with
respect to those portions specifically incorporated by reference into this
Report, Community Capital’s 2004 Annual Report to Shareholders is not
deemed to be filed as part of this Report. |
|
22.1 |
Subsidiaries
of Community Capital Bancshares, Inc. |
| |
23.1 |
Consent
of Mauldin & Jenkins, LLC |
| |
24.1 |
Power
of Attorney (appears on the signature pages to this Annual Report on
10-KSB). |
| |
31.1 |
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
| |
31.2 |
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
| |
32.1 |
Certification
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 |
_____________________________
*
Compensatory plan or arrangement.