SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
COMMISSION FILE NO. 0-24532
FLAG FINANCIAL CORPORATION
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(Exact name of Registrant as specified in its charter)
GEORGIA 58-2094179
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 NORTH GREENWOOD STREET, LAGRANGE, GEORGIA 30240
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(Address of principal executive offices)
(706) 845-5000
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(Registrant's telephone number)
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
PAR VALUE
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
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The aggregate market value of the Registrant's outstanding Common Stock held by
non-affiliates of the Registrant on March 19, 2001 was approximately
$41,822,163. There were 7,988,001 shares of Common Stock outstanding as of
March 19, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
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Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 18, 2001, are incorporated by reference in Part
III hereof. Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 2000 are incorporated by reference in Parts I and
II hereof.
FLAG FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
TABLE OF CONTENTS
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ITEM PAGE
NUMBER NUMBER
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PART I
1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . 11
PART II
5. Market for Registrant's Common Stock and Related Shareholder Matters. . 11
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . 11
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 11
7A. Quantitative and Qualitative Disclosures about Market Risk. . . . . . . 11
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . 11
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART III
10. Directors and Executive Officers of the Registrant. . . . . . . . . . . 12
11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . 12
12. Security Ownership of Certain Beneficial Owners and Management. . . . . 12
13. Certain Relationships and Related Transactions. . . . . . . . . . . . . 12
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . 12
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Index of Exhibits . . . . . . . . . . . . . . . . . . . . . . . 18
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PART I
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ITEM 1. BUSINESS
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this document and in documents
incorporated by reference herein, including matters discussed under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," may constitute forward-looking statements for purposes of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended. These forward-looking statements may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from future results,
performance or achievements expressed or implied by the forward-looking
statements. The words "expect," "anticipate," "intend," "plan," "believe,"
"seek," "estimate," and similar expressions are intended to identify the
forward-looking statements. The Company's actual results may differ materially
from the results anticipated in these forward-looking statements due to a
variety of factors, including, without limitation:
(1) The effects of future economic conditions;
(2) Governmental monetary and fiscal policies, as well as legislative and
regulatory changes;
(3) The risks of changes in interest rates on the level and composition of
deposits, loan demand, and the values of loan collateral, securities
and interest rate protection agreements, as well as interest rate
risks;
(4) The effects of competition from other commercial banks, thrifts,
mortgage banking firms, consumer finance companies, credit unions,
securities brokerage firms, insurance companies, money market and
other mutual funds and other financial institutions operating in the
Company's market area and elsewhere, including institutions operating
locally, regionally, nationally and internationally, together with
such competitors offering banking products and services by mail,
telephone, and computer and the Internet; and
(5) The failure of assumptions underlying the establishment of reserves
for possible loan losses and estimations of values of collateral and
various financial assets and liabilities.
All written or oral forward-looking statements attributable to the Company
are expressly qualified in their entirety by these cautionary statements.
THE COMPANY
FLAG Financial Corporation ("FLAG" or the "Company") is a bank holding
company headquartered in LaGrange, Georgia and is registered under the Bank
Holding Company Act of 1956, as amended. The Company is the sole shareholder of
FLAG Bank, (the "Bank"). During 2000, The Citizens Bank and Thomaston Federal
Savings Bank were merged into First Flag Bank. Effective December 31, 2000,
First Flag Bank merged into Citizens Bank and the name of the surviving
institution was changed to FLAG Bank.
The Company was incorporated under the laws of the State of Georgia on
February 9, 1993 at the direction of First Flag Bank for the purpose of becoming
the holding company for First Flag Bank. As a result, shareholders of First
Flag Bank became shareholders of the Company, with the same proportional
interests in the Company as they previously held in First Flag Bank (excluding
the nominal effect on their ownership interest of the exercise of dissenters'
rights by certain shareholders of First Flag Bank). Following the
reorganization into a bank holding company structure, First Flag Bank continued
its business operations as a federally-chartered stock savings bank under the
same name, charter and bylaws. First Flag Bank converted from a federal stock
savings bank to a Georgia state-chartered bank on June 11, 1999.
As a bank holding company, the Company facilitates the Bank's abilities to
serve its customers' requirements for financial services. The holding company
structure provides greater financial and operating flexibility than is available
to the Bank. For example, the Company may assist the Bank in maintaining its
required capital ratios by borrowing money and contributing the proceeds of the
debt to the Bank as primary capital. Additionally, the Articles of Incorporation
and Bylaws of the Company contain terms that provide a degree of anti-takeover
protection to the Company that is currently unavailable to the Bank and it's
shareholders under regulations of the Federal Deposit Insurance Corporation (the
"FDIC"), but is permissible for the Company under Georgia law.
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A substantial portion of the Company's growth has been through acquisitions
of other financial institutions. As part of its ongoing strategic plan, the
Company continually evaluates business combination opportunities and frequently
conducts due diligence activities in connection with possible business
combinations. As a result, business combination discussions, and in some cases
negotiations, frequently take place, and future business combinations involving
cash, debt or equity securities can be expected. Any future business
combination that the Company might undertake may be material, in terms of assets
acquired or liabilities assumed, to the Company's financial condition.
Additionally, a future business combination could result in dilution of book
value and net income per share for the acquirer. The Company's practice is to
avoid possible dilution except where projections indicate a relatively short
payback period.
The Company completed a merger with Middle Georgia Bankshares, Inc.
("Middle Georgia") in March 1998. Through the merger with Middle Georgia, the
Company acquired Citizens Bank, Middle Georgia's wholly-owned bank subsidiary.
The Company completed a merger with Three Rivers Bancshares, Inc. in May 1998.
Three Rivers' wholly-owned subsidiary, Bank of Milan, merged into Citizens Bank
on January 1, 1999. The Company completed a merger with Empire Bank Corp. in
December 1998. Empire Bank Corp.'s wholly-owned subsidiary, Empire Banking
Company, merged into Citizens Bank on January 1, 1999. The Company acquired The
Brown Bank through the merger of The Brown Bank with Citizens Bank effective
December 31, 1998. The Company completed a merger with Thomaston Federal
Savings Bank, whereby, Thomaston Federal Savings Bank merged with a
wholly-owned subsidiary of the Company, created solely to facilitate the merger.
Thomaston Federal Savings Bank became a subsidiary of the Company on August 27,
1999 and merged in First Flag Bank in 2000. The Company completed a merger with
First Hogansville Bankshares, Inc., parent company of The Citizens Bank, located
in Hogansville, Georgia, on September 30, 1999. First Hogansville Bankshares,
Inc. became a subsidiary of the Company. The Citizens Bank merged into First
Flag Bank, on February 11, 2000. On December 31, 2000, First Flag Bank merged
into Citizens Bank and the surviving institution changed its name to FLAG Bank.
As a result of the merger of Empire Banking Company into Citizens Bank, the
Company discontinued the operations of E.B.C. Financial Services, Inc. during
1999. The services provided through E.B.C. Financial Services, Inc. are now
provided through FLAG Insurance Services which operates as a division of FLAG
Bank.
FLAG is also a service provider of mortgage, appraisal, investment and
insurance services though FLAG Mortgage, FLAG Appraisal Services, FLAG
Investment Services and FLAG Insurance Services. All of these services are
provided by a division of FLAG Bank.
THE EAGLE'S LANDING CENTER. In November 1999, FLAG established a corporate
operations center called the Eagle's Landing Center, located in Stockbridge,
Georgia. The Eagle's Landing Center supports the Bank's data/item processing
operations, serves as executive management offices, training facility and a
corporate communications center.
THE BANK
FLAG BANK. FLAG Bank is a state bank organized under the laws of the State
of Georgia with banking offices in the cities of Unadilla, Dooly County, Vienna,
Dooly County, Byromville, Dooly County, Montezuma, Macon County, Oglethorpe,
Macon County, Buena Vista, Marion County, Cusseta, Chattahoochee County,
Cordele, Crisp County, Milan, Telfair County, McRae, Telfair County, LaGrange,
Troup County, Hogansville, Troup County, Thomaston, Upson County, Stockbridge,
Henry County and Suwanee, Forsyth County, Georgia. The Pinehurst, Dooly County,
Georgia, office of FLAG Bank discontinued operations on December 31, 1999. FLAG
Bank was originally chartered in 1931 as the Citizens Bank and became a
wholly-owned subsidiary of Middle Georgia in 1989. On March 31, 1998, Middle
Georgia merged into the Company, and FLAG Bank became a wholly-owned subsidiary
of the Company.
On December 31, 1998, The Brown Bank, with offices in Cobbtown, Metter and
Reidsville, Georgia, merged into FLAG Bank. The Reidsville office of The Brown
Bank division of FLAG Bank discontinued operations on September 30, 1999.
On January 1, 1999, Empire Banking Company, with offices in Homerville,
Waycross and Blackshear, Georgia, merged into FLAG Bank.
On January 1, 1999, Bank of Milan, with offices in Milan and McRae,
Georgia, merged into FLAG Bank.
During the second quarter of 1999, FLAG Bank established a de novo branch
office named First Flag Bank - Statesboro, in Statesboro, Bulloch County,
Georgia.
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On April 30, 1999, FLAG Bank completed its acquisition of the Blackshear
Branch Office of First Georgia Bank, located in Blackshear, Pierce County,
Georgia.
On August 27, 1999, Thomaston Federal merged into the Company and became a
wholly-owned subsidiary of the Company. On December 30, 2000, Thomaston Federal
merged into First Flag Bank.
In November 1999, the Company established a loan production office named
First Flag Bank - Atlanta, in Suwanee, Forsyth County, Georgia, which now
operates as a division of FLAG Bank.
On February 11, 2000, The Citizens Bank, with offices in Hogansville,
Georgia, merged into First Flag Bank.
On December 31, 2000 First Flag Bank merged into the Citizens Bank and the
surviving institution changed its name to FLAG Bank.
FLAG Mortgage operates as a division of FLAG Bank and operates mortgage
loan production offices in LaGrange, Troup County, Columbus, Muscogee County and
Macon, Bibb County, Georgia, and Phenix City, Russell County, Alabama.
BUSINESS OF THE BANK. The Bank's businesses consist primarily of
attracting deposits from the general public and, with these and other funds,
making residential mortgage loans, consumer loans, commercial loans, commercial
real estate loans, residential construction loans and securities investments.
In addition to deposits, sources of funds for the Banks' loans and other
investments include amortization and prepayment of loans, loan origination and
commitment fees, sales of loans or participations in loans, fees received for
servicing loans sold to others and advances from the Federal Home Loan Bank of
Atlanta ("FHLBA"). The Bank's principal sources of income are interest and fees
collected on loans, including fees received for originating and selling loans
and for servicing loans sold to others, and, to a lesser extent, interest and
dividends collected on other investments and service charges on deposit
accounts. The Bank's principal expenses are interest paid on deposits, interest
paid on FHLBA advances, employee compensation, federal deposit insurance
premiums, office expenses and other overhead expenses.
While the Bank attempts to avoid concentrations of loans to a single
industry or based on a single type of collateral, the various types of loans the
Bank makes have certain risks associated with them. Consumer and commercial
loans present risks which, among other things, include fraud, bankruptcy,
economic downturn, deteriorated or non-existing collateral, changes in interest
rates and customer financial problems. Real estate loans present risks related
to, among other things, whether the builder is able to sell the property,
whether the buyer is able to obtain permanent financing and the nature of
changing economic conditions.
The Company's primary asset is its stock in the Bank. Accordingly, its
financial performance is determined primarily by the results of operations of
the Bank. For information regarding the consolidated financial condition and
results of operations of the Company as of December 31, 2000 and 1999 and for
the three years in the period ended December 31, 2000, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
the Consolidated Financial Statements of the Company, and the related notes
which are incorporated by reference in Part II hereof. All average balances
presented in this report were derived based on daily averages.
RECENT DEVELOPMENTS
The following section describes the significant acquisitions and corporate
transactions of the Company during 2000.
On July 31, 2000, FLAG sold its branch locations in Cobbtown, Metter and
Statesboro, Georgia. FLAG recognized a gain of approximately $2,011,000 in this
sale.
On September 30, 2000, FLAG sold its branch locations in Blackshear,
Homerville and Waycross, Georgia. FLAG recognized a gain of approximately
$3,069,000 in this sale.
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EMPLOYEES
As of December 31, 2000, the Company (including the Bank) had 230 full-time
and 24 part-time employees. The employees are not represented by any collective
bargaining unit, and the Company considers its relationship with its employees
to be good.
COMPETITION
The banking business in Georgia is highly competitive. The Bank competes
not only with other banks and thrifts that are located in the same counties as
the Bank and in surrounding counties, but with other financial service
organizations including credit unions, finance companies, and certain
governmental agencies. To the extent that the Bank must maintain non-interest
earning reserves against deposits, it may be at a competitive disadvantage when
compared with other financial service organizations that are not required to
maintain reserves against substantially equivalent sources of funds. Also,
other financial institutions with which the Bank competes may have substantially
greater resources and lending capabilities due to the size of the organization.
SUPERVISION AND REGULATION
Both the Company and the 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.
THE COMPANY
Since the Company owns all of the capital stock of the Bank, it is a bank
holding company under the federal Bank Holding Company Act of 1956. As a
result, the Company is primarily subject to the supervision, examination, and
reporting requirements of the Bank Holding Company Act and the regulations of
the Federal Reserve.
ACQUISITIONS OF BANKS. The Bank Holding Company Act requires every bank
holding company to obtain the Federal Reserve's prior approval before:
- 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;
- Acquiring all or substantially all of the assets of any bank; or
- Merging or consolidating with any other bank holding company.
Additionally, the Bank Holding Company 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 anti-competitive 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 Bank Holding Company Act, if adequately capitalized and
adequately managed, the Company or any other bank holding company located in
Georgia may purchase a bank located outside of Georgia. Conversely, an
adequately capitalized and adequately managed bank holding company located
outside of Georgia may purchase a bank located inside Georgia. 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.
CHANGE IN BANK CONTROL. Subject to various exceptions, the Bank Holding
Company 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 Act of 1934; or
- 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 challenge of the rebuttable control
presumption.
PERMITTED ACTIVITIES. Since we have not qualified or elected to become a
financial holding company, we are generally prohibited under the Bank Holding
Company 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:
- Banking or managing or controlling banks; and
- 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:
- Factoring accounts receivable;
- Making, acquiring, brokering or servicing loans and usual related
activities;
- Leasing personal or real property;
- Operating a non-bank depository institution, such as a savings
association;
- Trust company functions;
- Financial and investment advisory activities;
- Conducting discount securities brokerage activities;
- Underwriting and dealing in government obligations and money market
instruments;
- Providing specified management consulting and counseling activities;
- Performing selected data processing services and support services;
- Acting as agent or broker in selling credit life insurance and other
types of insurance in connection with credit transactions; and
- 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 the Company 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 Bank Holding Company Act
expressly lists the following activities as financial in nature:
- Lending, trust and other banking activities;
- 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;
- Issuing or selling instruments representing interests in pools of
assets permissible for a bank to hold directly;
- Underwriting, dealing in or making a market in securities;
- 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;
- Foreign activities permitted outside of the United States if the
Federal Reserve has determined them to be usual in connection with
banking operations abroad;
- Merchant banking through securities or insurance affiliates; and
- Insurance company portfolio investments.
To qualify to become a financial holding company, the Bank and any other
depository institution subsidiary of the Company must be well capitalized and
well managed and must have a Community Reinvestment Act rating of at least
satisfactory. Additionally, the Company 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, the
Company is expected to act as a source of financial strength for the Bank and to
commit resources to support the Bank. This support may be required at times
when, without this Federal Reserve policy, the Company might not be inclined to
provide it. In addition, any capital loans made by the Company to the Bank will
be repaid only after its deposits and various other obligations are repaid in
full. In the unlikely event of the Company's bankruptcy, any commitment by it
to a federal bank regulatory agency to maintain the capital of the Bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
THE BANK
Since the Bank is a commercial bank chartered under the laws of the State
of Georgia, it is primarily subject to the supervision, examination and
reporting requirements of the FDIC and the Georgia Department of Banking and
Finance. The FDIC and Georgia Department of Banking and Finance regularly
examine the Bank's operations and have the authority to approve or disapprove
mergers, the establishment of branches and similar corporate actions. Both
regulatory agencies have the power to prevent the continuance or development of
unsafe or unsound banking practices or other violations of law. Additionally,
the Bank's deposits are insured by the FDIC to the maximum extent provided by
law. The Bank is also subject to numerous state and federal statutes and
regulations that affect its business, activities and operations.
BRANCHING.Under current Georgia law, the Bank may open branch offices
throughout Georgia with the prior approval of the Georgia Department of Banking
and Finance. In addition, with prior regulatory approval, the Bank may acquire
branches of existing banks located in Georgia. The 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 applicable states' laws. Georgia 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, Georgia has not opted-in to this provision.
Therefore, interstate merger is the only method through which a bank located
outside of Georgia may branch into Georgia. This provides a limited barrier of
entry into the Georgia banking market, which protects us from an important
segment of potential competition. However, because Georgia has 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 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.
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PROMPT CORRECTIVE ACTION. The Federal Deposit Insurance Corporation
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. The federal banking agencies have also specified by regulation the
relevant capital levels for each of the categories. At December 31, 2000, we
qualified for the well capitalized category.
Federal banking regulators are required to take some 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.
An institution in any of the undercapitalized categories 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 1.96 cents per $100 of
deposits for the first quarter of 2001.
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 or the FDIC 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 the Bank. 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 the Bank are subject to state usury laws and federal laws concerning interest
rates. The 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;
- The 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;
- The Equal Credit Opportunity Act, prohibiting discrimination on the
basis of race, creed or other prohibited factors in extending credit;
- The Fair Credit Reporting Act of 1978, governing the use and provision
of information to credit reporting agencies;
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- The Fair Debt Collection Act, governing the manner in which consumer
debts may be collected by collection agencies; and
- The rules and regulations of the various federal agencies charged with
the responsibility of implementing these federal laws.
The deposit operations of the 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
The Company and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve, in the case of the Company, and
the FDIC and Georgia Department of Banking and Finance, in the case of the Bank.
The Federal Reserve has established a risk-based and a leverage measure of
capital adequacy for bank holding companies. The Bank is also subject to
risk-based and leverage capital requirements adopted by the FDIC, 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 shareholders' equity,
minority interests in the equity accounts of consolidated subsidiaries,
qualifying non-cumulative 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 hybrid capital 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, 2000 our consolidated ratio of total capital to
risk-weighted assets was 12.5% and our consolidated ratio of Tier 1 Capital to
risk-weighted assets was 11.3%.
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, 2000, our consolidated leverage ratio was 10.1%. 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.
The Bank and the Company are also both subject to leverage capital
guidelines issued by the Georgia Department of Banking and Finance, which
provide for minimum ratios of Tier 1 capital to total assets.
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."
8
PAYMENT OF DIVIDENDS
The Company is a legal entity separate and distinct from the Bank. The
principal source of the Company's cash flow, including cash flow to pay
dividends to its shareholders, is dividends that the Bank pays to it. Statutory
and regulatory limitations apply to the Bank's payment of dividends to the
Company as well as to the Company's payment of dividends to its shareholders.
If, in the opinion of the federal banking regulator, the Bank were engaged
in or about to engage in an unsafe or unsound practice, the federal banking
regulator could require, after notice and a hearing, that it cease and desist
from its practice. The federal banking 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 Federal
Deposit Insurance Corporation 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.
The Georgia Department of Banking and Finance also regulates the Bank's
dividend payments and must approve dividend payments that would exceed 50% of
the Bank's net income for the prior year. Our payment of dividends may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
At December 31, 2000, the Bank was able to pay approximately $2,973,000 in
dividends to the Company without prior regulatory approval.
RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES
The Company and the Bank are subject to the provisions of Section 23A of
the Federal Reserve Act. Section 23A places limits on the amount of:
- Loans or extensions of credit to affiliates;
- Investment in affiliates;
- The purchase of assets 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
- Any 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. The Company must also comply with other
provisions designed to avoid the taking of low-quality assets.
The Company and the 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.
The Bank is 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.
9
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. 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.
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 the nation's financial institutions. 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 Bank'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
Selected statistical information is included in the Company's Management's
Discussion and Analysis of Financial Condition and Results of Operations as set
forth on pages 6 through 15 of the Company's 2000 Annual Report. Such
information is incorporated by reference.
ITEM 2. PROPERTIES
THE COMPANY AND FLAG BANK
The executive offices of the Company are located at 235 Corporate Center
Drive, The Eagle's Landing Center, Stockbridge, Georgia. The Company leases
this property. FLAG Bank conducts business from facilities primarily owned by
the Bank, all of which are in good condition and are adequate for the Bank's
current and foreseeable needs. The Company and FLAG Bank provide services or
perform operational functions at 25 locations, of which 16 locations are owned
and 9 are leased. Note 5 to the Company's Consolidated Financial Statements
includes additional information regarding amounts invested in premises and
equipment.
ITEM 3. LEGAL PROCEEDINGS
FLAG Financial and the FLAG Bank are periodically involved as plaintiff or
defendant in various legal actions in the ordinary course of their business.
As previously reported, FLAG Bank purchased certain warehouse loans of Gulf
Properties Financial Services, Inc., a residential mortgage broker. The loans
that Gulf Properties sold to FLAG Bank were fraudulent. Gulf Properties filed
Chapter 11 bankruptcy on December 30, 1998. FLAG Bank is serving on the
creditors' committee and is assisting in the liquidation of assets, which will
be distributed on a pro rata basis among the creditors. As of December 31,
2000, FLAG Bank has collected approximately $950,000 as part of the bankruptcy
proceedings. Additionally, FLAG Bank has received $1.6 million from a claim
under its fidelity bond regarding this matter. The perpetrators of the fraud
have pled guilty to criminal charges and have been sentenced to prison. FLAG
Bank obtained a restitution order as part of the criminal sentence. FLAG Bank's
exposure as a result of the fraud was approximately $3 million. Several other
banks also purchased fraudulent loans from Gulf Properties and the total amount
of exposure of all banks is approximately $32 million.
10
As previously reported, Tad Moore Golf, Inc. is a borrower of FLAG Bank. An
investor in Tad Moore Golf, Inc., who is also a lender to Tad Moore Golf, Inc.,
sued FLAG Bank in Southern District Court in New York alleging that FLAG Bank
fraudulently induced the investor into allegedly subordinating his loan to the
loan of FLAG Bank. The investor was also a borrower of FLAG Bank. The
plaintiff is claming $1.6 million in consequential damages and $10 million in
punitive damages. FLAG Bank has succeeded in having the venue of this matter
transferred from New York to United States District Court in Newnan, Georgia.
Discovery ended on July 31, 2000 and FLAG Bank's motion for summary judgement is
pending before the court. FLAG Bank and the plaintiff have tentatively
negotiated a settlement favorable to FLAG Bank and are awaiting final execution
of the settlement agreement. Until the settlement is final, FLAG Bank intends
to continue vigorously defending this claim and pursue counterclaims against the
investor.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company to a vote of its shareholders during
the fourth quarter of 2000.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Information relating to the market for, holders of and dividends paid
on the Company's common stock is set forth under the caption "Corporate
Information - Stock Prices and Dividends" on page 43 of the Company's 2000
Annual Report. Such information is incorporated herein by reference.
The Company did not sell any unregistered shares of its common stock during
2000.
ITEM 6. SELECTED FINANCIAL DATA
Selected consolidated financial data for the Company for each of the
five-year period ended December 31, 2000 is set forth under the caption
"Financial Highlights" on page 5 of the 2000 Annual Report. Such financial data
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations is set forth on pages 6 through 15 of the Company's 2000 Annual
Report. Such information is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about the Company's market risk is
set forth on page 15 of the Company's 2000 Annual Report. Such information is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are included in the Company's 2000
Annual Report on pages 16 through 42 and are incorporated herein by reference:
Report of Certified Public Accountants
Consolidated Balance Sheets as of December 31, 2000 and 1999
Consolidated Statements of Earnings for the years ended December 31, 2000,
1999 and 1998
Consolidated Statements of Comprehensive Income for the years ended
December 31, 2000, 1999 and 1998
Consolidated Statements of Changes in Stockholders' Equity for the years
ended December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended December 31,
2000, 1999 and 1998
Notes to Consolidated Financial Statements
11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors and executive officers of the Company
is set forth under the captions "Proposal 1 - Election of Directors-Nominees, -
Information Regarding Nominees and Continuing Directors and - Executive
Officers" at pages 3 through 6 in the Company's Proxy Statement for its 2000
Annual Meeting of Shareholders to be held on April 18, 2001. Such information
is incorporated herein by reference.
Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934, as amended, by directors and executive officers of the
Company and the Bank is set forth under the caption "Compliance with Section
16(a) of the Securities Exchange Act of 1934" at page 18 in the Proxy Statement
referred to above. Such information is incorporated herein by reference. To
the Company's knowledge, no person was the beneficial owner of more than 10% of
the Company's common stock during 2000.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation and the sale of stock to
certain directors is set forth under the captions "Proposal 1- Election of
Directors- Director Compensation" and "Executive Compensation" at pages 10
through 18 in the Proxy Statement referred to in Item 10 above. Such
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding ownership of the Company's common stock as of
December 31, 2000, by management and beneficial owners of 5% of the Company's
common stock is set forth under the captions "Proposal 1 - Election of
Directors - Management Stock Ownership" and "Principal Shareholders" at pages 7
through 9 and page 18 in the Proxy Statement referred in Item 10 above and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain transactions between the Banks and directors
and executive officers of the Company and the Bank is set forth under the
caption "Related Party Transactions" at page 18 in the Proxy Statement referred
to in Item 10 above and is incorporated herein by reference.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The list of financial statements is included at Item 8.
(a)(2) The financial statement schedules are either included in the
financial statements or are not applicable.
(a)(3) Exhibit List
12
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Articles of Incorporation of the Company, as amended through
October 15, 1993 (incorporated by reference from Exhibit 3.1(i)
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993)
3.2 Bylaws of the Company, as amended through March 30, 1998
(incorporated by reference from Exhibit 3.1(ii) to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)
3.3 Amendment to Bylaws of the Company as adopted by resolution of
Board of Directors on October 19, 1998 (incorporated by reference
from Exhibit 3.3 on Annual Report on Form 10-K for the fiscal
year ended December 31, 1998)
3.4 Amendment to Bylaws of the Company as adopted by resolution of
the Board of Directors on December 20, 2000
4.1 Instruments Defining the Rights of Security Holders (See Articles
of Incorporation at Exhibit 3.1 hereto and Bylaws at Exhibits
3.2, 3.3 and 3.4 hereto)
10.1 Amended and Restated Employment Agreement between J. Daniel
Speight, Jr. and the Company dated as of January 1, 2001*
10.2 Amended and Restated Employment Agreement between John S. Holle
and the Company dated as of January 1, 2001*
10.3 Amended and Restated Employment Agreement between Charles O.
Hinely and the Company dated as of January 1, 2001*
10.4 Separation Agreement between J. Preston Martin and the Company
dated May 13, 1998 (incorporated by reference from Exhibit 10.6
to Amendment No. 1 to the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1997)*
10.5 Separation Agreement between Robert G. Cochran and the Company
dated August 27, 1999 (incorporated by reference from Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1999)*
10.6 Split Dollar Insurance Agreement between J. Daniel Speight, Jr.
and Citizens Bank dated November 2, 1992 (incorporated by
reference from Exhibit 10.7 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.7 Director Indexed Retirement Program for Citizens Bank dated
January 13, 1995 (incorporated by reference from Exhibit 10.8 to
Amendment No. 1 to the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1997)*
10.8 Form of Executive Agreement (pursuant to Director Indexed
Retirement Program for Citizens Bank) for individuals listed on
exhibit cover page (incorporated by reference from Exhibit 10.9
to Amendment No. 1 to the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1997)*
10.9 Form of Flexible Premium Life Insurance Endorsement Method Split
Dollar Plan Agreement (pursuant to Director Indexed Retirement
Program for Citizens Bank) for individuals listed on exhibit
cover page (incorporated by reference from Exhibit 10.10 to
Amendment No. 1 to the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1997)*
13
10.10 Director Indexed Fee Continuation Program for First Federal
Savings Bank of LaGrange effective February 3, 1995 (incorporated
by reference from Exhibit 10.12 to Amendment No. 1 to the
Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1997)
10.11 Form of Director Agreement (pursuant to Director Indexed Fee
Construction Program for First Federal Savings Bank of LaGrange)
for individuals listed on exhibit cover page (incorporated by
reference from Exhibit 10.13 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.12 Form of Flexible Premium Life Insurance Endorsement Method Split
Dollar Plan Agreement (pursuant to Director Indexed Fee
Continuation Program of First Federal Savings Bank of LaGrange)
for individuals listed on exhibit cover page (incorporated by
reference from Exhibit 10.14 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.13 Form of Indexed Executive Salary Continuation Plan Agreement by
and between First Federal Savings Bank of LaGrange and
individuals listed on exhibit cover page (incorporated by
reference from Exhibit 10.15 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.14 Form of Flexible Premium Life Insurance Endorsement Method Split
Dollar Plan Agreement (pursuant to Executive Salary Continuation
Plan for First Federal Savings Bank of LaGrange) for individuals
listed on exhibit cover page (incorporated by reference from
Exhibit 10.16 to Amendment No. 1 to the Company's Annual Report
on Form 10-K/A for the fiscal year ended December 31, 1997)*
10.15 Indexed Executive Salary Continuation Plan Agreement by and
between First Federal Savings Bank of LaGrange and William F.
Holle, Jr. dated February 3, 1995 (incorporated by reference from
Exhibit 10.17 to Amendment No. 1 to the Company's Annual Report
on Form 10-K/A for the fiscal year ended December 31, 1997)*
10.16 Form of Deferred Compensation Plan by and between The Citizens
Bank and individuals listed on exhibit cover page*
10.17 FLAG Financial Corporation 1994 Employees Stock Incentive Plan
(As Amended and Restated through March 30, 1998)*
10.18 FLAG Financial Corporation 1994 Directors Stock Incentive Plan
(As Amended through September 18, 1997)*
10.19 First Amendment to the FLAG Financial Corporation 1994 Employees
Stock Incentive Plan (As Amended and Restated as of March 30,
1998), dated as of March 15, 1999*
10.20 Second Amendment to the FLAG Financial Corporation 1994
Employees Stock Incentive Plan (As Amended and Restated as of
March 30, 1998), dated as of January 16, 2001*
10.21 First Amendment to the FLAG Financial Corporation 1994 Directors
Stock Incentive Plan (As Amended and Restated as of September 18,
1997), dated as of December 21, 1998*
10.22 Second Amendment to the FLAG Financial Corporation 1994
Directors Stock Incentive Plan (As Amended and Restated as of
September 18, 1997), dated as of October 25, 1999*
10.23 Third Amendment to the FLAG Financial Corporation 1994 Directors
Stock Incentive Plan (As Amended and Restated as of September 18,
1997), dated January 16, 2001*
13 2000 Annual Report to Shareholders**
14
21 Subsidiaries
23 Consent of Porter Keadle Moore, LLP
____________________
* The indicated exhibit is a compensatory plan required to be filed as
an exhibit to this Form 10-K.
** Portions of the Company's 2000 Annual Report, as indicated in this
report, are incorporated herein by reference. Other than as noted
herein, the Company's 2000 Annual Report is furnished to the
Securities and Exchange Commission solely for its information and is
not deemed to be "filed" with the Securities and Exchange Commission
or subject to the liabilities of section 18 of the Securities Exchange
Act of 1934, as amended.
(b) Reports on Form 8-K.
REPORTS ON FORM 8-K FILED DURING FOURTH QUARTER OF 2000
- The Company has not made any Form 8-K filings.
REPORTS ON FORM 8-K FILED SINCE YEAR END 2000
- The Company has not made any Form 8-K filings.
(c) The Exhibits not incorporated herein by reference are submitted as a
separate part of this report.
(d) Financial Statements Schedules: The financial statement schedules are
either included in the financial statements or are not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
FLAG FINANCIAL CORPORATION
(Registrant)
Date: March 20, 2001 By: /s/ J. Daniel Speight, Jr.
----------------------------------
J. Daniel Speight, Jr.
Chief Executive Officer
15
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints J. Daniel Speight, Jr. and John S. Holle,
and each of them, as true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him or her and in his or her 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 thereto, and other
documents in connection therewith, as amended, 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 and to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all which said attorneys-in-fact and agents or either
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 Act of 1934, this Report has been
signed by the following persons in the capacities indicated on March 20, 2001:
Signature Title
--------- -----
/s/ Dr. A. Glenn Bailey Director
---------------------------
Dr. A. Glenn Bailey
/s/ James A. Brett Director
---------------------------
James A. Brett
/s/ H. Speer Burdette, III Director
---------------------------
H. Speer Burdette, III
/s/ Robert G. Cochran Vice Chairman of the Board
--------------------------- and Director
Robert G. Cochran
/s/ Patti S. Davis Senior Vice President,
--------------------------- Assistant Secretary and Director
Patti S. Davis
/s/ David B. Dunaway Director
---------------------------
David B. Dunaway
/s/ Fred A. Durand, III Director
---------------------------
Fred A. Durand, III
/s/ Charles O. Hinely Chief Operating Officer and
--------------------------- Director
Charles O. Hinely
/s/ John R. Hines, Jr. Director
---------------------------
John R. Hines, Jr.
/s/ John S. Holle Chairman of the Board and
--------------------------- Director
John S. Holle
16
/s/ James W. Johnson Director
---------------------------
James W. Johnson
/s/ Kelly R. Linch Director
---------------------------
Kelly R. Linch
/s/ J. Preston Martin President and Director
---------------------------
J. Preston Martin
/s/ J. Daniel Speight, Jr. Chief Executive Officer and
--------------------------- Director (principal
J. Daniel Speight, Jr. executive officer)
/s/ John W. Stewart, Jr. Director
---------------------------
John W. Stewart, Jr.
/s/ Robert W. Walters Director
---------------------------
Robert W. Walters
/s/ Thomas L. Redding Senior Vice President, Chief
--------------------------- Financial Officer, Secretary
Thomas L. Redding (principal financial and
accounting officer)
17
FLAG FINANCIAL CORPORATION
INDEX OF EXHIBITS
-------------------
The following exhibits are filed as part of or incorporated by reference in
this report. Where such filing is made by incorporation by reference to a
previously filed registration statement or report, such registration statement
or report is identified in parentheses.
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Articles of Incorporation of the Company, as amended through
October 15, 1993 (incorporated by reference from Exhibit 3.1(i)
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993)
3.2 Bylaws of the Company, as amended through March 30, 1998
(incorporated by reference from Exhibit 3.1(ii) to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)
3.3 Amendment to Bylaws of the Company as adopted by resolution of
Board of Directors on October 19, 1998 (incorporated by reference
from Exhibit 3.3 on Annual Report on Form 10-K for the fiscal
year ended December 31, 1998)
3.4 Amendment to Bylaws of the Company as adopted by resolution of
the Board of Directors on Decembe 20, 2000
4.1 Instruments Defining the Rights of Security Holders (See Articles
of Incorporation at Exhibit 3.1 hereto and Bylaws at Exhibits
3.2, 3.3 and 3.4 hereto)
10.1 Amended and Restated Employment Agreement between J. Daniel
Speight, Jr. and the Company dated as of January 1, 2001*
10.2 Amended and Restated Employment Agreement between John S. Holle
and the Company dated as of January 1, 2001*
10.3 Amended and Restated Employment Agreement between Charles O.
Hinely and the Company dated as of January 1, 2001*
10.4 Separation Agreement between J. Preston Martin and the Company
dated May 13, 1998 (incorporated by reference from Exhibit 10.6
to Amendment No. 1 to the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1997)*
10.5 Separation Agreement between Robert G. Cochran and the Company
dated August 27, 1999 (incorporated by reference from Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1999)*
10.6 Split Dollar Insurance Agreement between J. Daniel Speight, Jr.
and Citizens Bank dated November 2, 1992 (incorporated by
reference from Exhibit 10.7 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.7 Director Indexed Retirement Program for Citizens Bank dated
January 13, 1995 (incorporated by reference from Exhibit 10.8 to
Amendment No. 1 to the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1997)*
10.8 Form of Executive Agreement (pursuant to Director Indexed
Retirement Program for Citizens Bank) for individuals listed on
exhibit cover page (incorporated by reference from Exhibit 10.9
to Amendment No. 1 to the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1997)*
18
10.9 Form of Flexible Premium Life Insurance Endorsement Method Split
Dollar Plan Agreement (pursuant to Director Indexed Retirement
Program for Citizens Bank) for individuals listed on exhibit
cover page (incorporated by reference from Exhibit 10.10 to
Amendment No. 1 to the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1997)*
10.10 Director Indexed Fee Continuation Program for First Federal
Savings Bank of LaGrange effective February 3, 1995 (incorporated
by reference from Exhibit 10.12 to Amendment No. 1 to the
Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1997)
10.11 Form of Director Agreement (pursuant to Director Indexed Fee
Construction Program for First Federal Savings Bank of LaGrange)
for individuals listed on exhibit cover page (incorporated by
reference from Exhibit 10.13 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.12 Form of Flexible Premium Life Insurance Endorsement Method Split
Dollar Plan Agreement (pursuant to Director Indexed Fee
Continuation Program of First Federal Savings Bank of LaGrange)
for individuals listed on exhibit cover page (incorporated by
reference from Exhibit 10.14 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.13 Form of Indexed Executive Salary Continuation Plan Agreement by
and between First Federal Savings Bank of LaGrange and
individuals listed on exhibit cover page (incorporated by
reference from Exhibit 10.15 to Amendment No. 1 to the Company's
Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997)*
10.14 Form of Flexible Premium Life Insurance Endorsement Method Split
Dollar Plan Agreement (pursuant to Executive Salary Continuation
Plan for First Federal Savings Bank of LaGrange) for individuals
listed on exhibit cover page (incorporated by reference from
Exhibit 10.16 to Amendment No. 1 to the Company's Annual Report
on Form 10-K/A for the fiscal year ended December 31, 1997)*
10.15 Indexed Executive Salary Continuation Plan Agreement by and
between First Federal Savings Bank of LaGrange and William F.
Holle, Jr. dated February 3, 1995 (incorporated by reference from
Exhibit 10.17 to Amendment No. 1 to the Company's Annual Report
on Form 10-K/A for the fiscal year ended December 31, 1997)*
10.16 Form of Deferred Compensation Plan by and between The Citizens
Bank and individuals listed on exhibit cover page*
10.17 FLAG Financial Corporation 1994 Employees Stock Incentive Plan
(As Amended and Restated through March 30, 1998)*
10.18 FLAG Financial Corporation 1994 Directors Stock Incentive Plan
(As Amended through September 18, 1997)*
10.19 First Amendment to the FLAG Financial Corporation 1994 Employees
Stock Incentive Plan (As Amended and Restated as of March 30,
1998), dated as of March 15, 1999*
10.20 Second Amendment to the FLAG Financial Corporation 1994
Employees Stock Incentive Plan (As Amended and Restated as of
March 30, 1998), dated as of January 16, 2001*
10.21 First Amendment to the FLAG Financial Corporation 1994 Directors
Stock Incentive Plan (As Amended and Restated as of September 18,
1997), dated as of December 21, 1998*
10.22 Second Amendment to the FLAG Financial Corporation 1994
Directors Stock Incentive Plan (As Amended and Restated as of
September 18, 1997), dated as of October 25, 1999*
10.23 Third Amendment to the FLAG Financial Corporation 1994 Directors
Stock Incentive Plan (As Amended and Restated as of September 18,
1997), dated January 16, 2001*
13 2000 Annual Report to Shareholders**
19
21 Subsidiaries
23 Consent of Porter Keadle Moore, LLP
____________________
* The indicated exhibit is a compensatory plan required to be filed as
an exhibit to this Form 10-K.
** Portions of the Company's 2000 Annual Report, as indicated in this
report, are incorporated herein by reference. Other than as noted
herein, the Company's 2000 Annual Report is furnished to the
Securities and Exchange Commission solely for its information and is
not deemed to be "filed" with the Securities and Exchange Commission
or subject to the liabilities of section 18 of the Securities Exchange
Act of 1934, as amended.
20