|
Georgia
|
| |
6022
|
| |
58-1807304
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
Neil E. Grayson
D. Lee Kiser, Jr. Nelson Mullins Riley & Scarborough LLP 2 West Washington Street, Suite 400 Greenville, South Carolina 29601 Telephone: (864) 373-2300 |
| |
Todd H. Eveson
Stuart M. Rigot Wyrick Robbins Yates & Ponton LLP 4101 Lake Boone Trail, Suite 300 Raleigh, NC 27607 Telephone: (919) 781-4000 |
|
| Large accelerated filer ☒ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☐ | | | Smaller reporting company ☐ | |
| | | | Emerging growth company ☐ | |
| | ||||||||||||||||||||||||||||
Title of each class of
Securities to be Registered |
| | |
Amount to be
Registered(1) |
| | |
Proposed Maximum
Offering Price Per Share |
| | |
Proposed Maximum
Aggregate Offering Price(2) |
| | |
Amount of
Registration Fee |
| ||||||||||||
Common Stock, par value $1.00 per share
|
| | | | | 4,022,467 | | | | | | | N/A | | | | | | $ | 119,678,777.00 | | | | | | $ | 13,056.95 | | |
|
|
| |
|
|
|
James C. Engel
President and Chief Executive Officer, Aquesta Financial Holdings, Inc. |
|
|
Place:
|
| |
Aquesta Bank Corporate Headquarters
19510 Jetton Road, 2nd Floor Cornelius, North Carolina 28031 |
|
|
Date:
|
| | September 15, 2021 | |
|
Time:
|
| | 5:00 p.m. Eastern Daylight Time | |
| | |
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| | | | A-1 | | | |
| | | | B-1 | | | |
| | | | C-1 | | | |
| | | | D-1 | | |
| | |
United Common
Stock |
| |
Aquesta
Common Stock |
| |
Implied Value of One Share
of Aquesta Common Stock |
| |||||||||
May 26, 2021
|
| | | $ | 33.79 | | | | | $ | 12.95 | | | | | $ | 21.58 | | |
[•], 2021
|
| | | $ | [•] | | | | | $ | [•] | | | | | $ | [•] | | |
in thousands, except per share data)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
INCOME SUMMARY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest revenue
|
| | | $ | 557,996 | | | | | $ | 552,706 | | | | | $ | 500,080 | | | | | $ | 389,720 | | | | | $ | 335,020 | | |
Interest expense
|
| | | | 56,237 | | | | | | 83,312 | | | | | | 61,330 | | | | | | 33,735 | | | | | | 25,236 | | |
Net interest revenue
|
| | | | 501,759 | | | | | | 469,394 | | | | | | 438,750 | | | | | | 355,985 | | | | | | 309,784 | | |
Provision for credit losses
|
| | | | 80,434 | | | | | | 13,150 | | | | | | 9,500 | | | | | | 3,800 | | | | | | (800) | | |
Noninterest income
|
| | | | 156,109 | | | | | | 104,713 | | | | | | 92,961 | | | | | | 88,260 | | | | | | 93,697 | | |
Total revenue
|
| | | | 577,434 | | | | | | 560,957 | | | | | | 522,211 | | | | | | 440,445 | | | | | | 404,281 | | |
Expenses
|
| | | | 367,989 | | | | | | 322,245 | | | | | | 306,285 | | | | | | 267,611 | | | | | | 241,289 | | |
Income before income tax expense
|
| | | | 209,445 | | | | | | 238,712 | | | | | | 215,926 | | | | | | 172,834 | | | | | | 162,992 | | |
Income tax expense
|
| | | | 45,356 | | | | | | 52,991 | | | | | | 49,815 | | | | | | 105,013 | | | | | | 62,336 | | |
Net income
|
| | | | 164,089 | | | | | | 185,721 | | | | | | 166,111 | | | | | | 67,821 | | | | | | 100,656 | | |
Merger-related and other charges
|
| | | | 7,018 | | | | | | 7,357 | | | | | | 7,345 | | | | | | 14,662 | | | | | | 8,122 | | |
Income tax benefit of merger-related and other charges
|
| | | | (1,340) | | | | | | (1,695) | | | | | | (1,494) | | | | | | (3,745) | | | | | | (3,074) | | |
Impact of remeasurement of deferred tax asset resulting from 2017 Tax Cuts and Jobs Act
|
| | | | — | | | | | | — | | | | | | — | | | | | | 38,199 | | | | | | — | | |
Impairment of deferred tax asset on cancelled non-qualified stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 976 | | |
Release of disproportionate tax effects lodged in OCI
|
| | | | — | | | | | | — | | | | | | — | | | | | | 3,400 | | | | | | — | | |
Net income – operating(1)*
|
| | | $ | 169,767 | | | | | $ | 191,383 | | | | | $ | 171,962 | | | | | $ | 120,337 | | | | | $ | 106,680 | | |
PERFORMANCE MEASURES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Per common share:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted net income – GAAP
|
| | | $ | 1.91 | | | | | $ | 2.31 | | | | | $ | 2.07 | | | | | $ | 0.92 | | | | | $ | 1.40 | | |
Diluted net income – operating(1)*
|
| | | | 1.98 | | | | | | 2.38 | | | | | | 2.14 | | | | | | 1.63 | | | | | | 1.48 | | |
in thousands, except per share data)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Common stock cash dividends declared
|
| | | | 0.72 | | | | | | 0.68 | | | | | | 0.58 | | | | | | 0.38 | | | | | | 0.30 | | |
Book value
|
| | | | 21.90 | | | | | | 20.53 | | | | | | 18.24 | | | | | | 16.67 | | | | | | 15.06 | | |
Tangible book value(3)*
|
| | | | 17.56 | | | | | | 16.28 | | | | | | 14.24 | | | | | | 13.65 | | | | | | 12.95 | | |
Key performance ratios:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Return on common equity – GAAP(2)
|
| | | | 9.25% | | | | | | 11.89% | | | | | | 11.60% | | | | | | 5.67% | | | | | | 9.41% | | |
Return on common equity – operating(1)(2)*
|
| | | | 9.58 | | | | | | 12.25 | | | | | | 12.01 | | | | | | 10.07 | | | | | | 9.98 | | |
Return on tangible common
equity – operating(1)(2)(3)* |
| | | | 12.24 | | | | | | 15.81 | | | | | | 15.69 | | | | | | 12.02 | | | | | | 11.86 | | |
Return on assets – GAAP
|
| | | | 1.04 | | | | | | 1.46 | | | | | | 1.35 | | | | | | 0.62 | | | | | | 1.00 | | |
Return on assets – operating(1)*
|
| | | | 1.07 | | | | | | 1.51 | | | | | | 1.40 | | | | | | 1.09 | | | | | | 1.06 | | |
Dividend payout ratio – GAAP
|
| | | | 37.70 | | | | | | 29.44 | | | | | | 28.02 | | | | | | 41.30 | | | | | | 21.43 | | |
Dividend payout ratio – operating(1)*
|
| | | | 36.36 | | | | | | 28.57 | | | | | | 27.10 | | | | | | 23.31 | | | | | | 20.27 | | |
Net interest margin (fully taxable equivalent)
|
| | | | 3.55 | | | | | | 4.07 | | | | | | 3.91 | | | | | | 3.52 | | | | | | 3.36 | | |
Efficiency ratio – GAAP
|
| | | | 55.71 | | | | | | 55.77 | | | | | | 57.31 | | | | | | 59.95 | | | | | | 59.80 | | |
Efficiency ratio – operating(1)*
|
| | | | 54.64 | | | | | | 54.50 | | | | | | 55.94 | | | | | | 56.67 | | | | | | 57.78 | | |
Equity to total assets
|
| | | | 11.29 | | | | | | 12.66 | | | | | | 11.59 | | | | | | 10.94 | | | | | | 10.05 | | |
Tangible common equity to tangible assets(3)*
|
| | | | 8.81 | | | | | | 10.32 | | | | | | 9.29 | | | | | | 9.14 | | | | | | 8.77 | | |
ASSET QUALITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonperforming loans
|
| | | $ | 61,599 | | | | | $ | 35,341 | | | | | $ | 23,778 | | | | | $ | 23,658 | | | | | $ | 21,539 | | |
Foreclosed properties
|
| | | | 647 | | | | | | 476 | | | | | | 1,305 | | | | | | 3,234 | | | | | | 7,949 | | |
Total NPAs
|
| | | | 62,246 | | | | | | 35,817 | | | | | | 25,083 | | | | | | 26,892 | | | | | | 29,488 | | |
ACL – loans
|
| | | | 137,010 | | | | | | 62,089 | | | | | | 61,203 | | | | | | 58,914 | | | | | | 61,422 | | |
Net charge-offs
|
| | | | 18,316 | | | | | | 12,216 | | | | | | 6,113 | | | | | | 5,998 | | | | | | 6,766 | | |
ACL – loans to loans
|
| | | | 1.20% | | | | | | 0.70% | | | | | | 0.73% | | | | | | 0.76% | | | | | | 0.89% | | |
Net charge-offs to average loans
|
| | | | 0.17 | | | | | | 0.14 | | | | | | 0.07 | | | | | | 0.08 | | | | | | 0.11 | | |
NPAs to loans and foreclosed properties
|
| | | | 0.55 | | | | | | 0.41 | | | | | | 0.30 | | | | | | 0.35 | | | | | | 0.43 | | |
NPAs to total assets
|
| | | | 0.35 | | | | | | 0.28 | | | | | | 0.20 | | | | | | 0.23 | | | | | | 0.28 | | |
AVERAGE BALANCES ($ in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans
|
| | | $ | 10,467 | | | | | $ | 8,708 | | | | | $ | 8,170 | | | | | $ | 7,150 | | | | | $ | 6,413 | | |
Investment securities
|
| | | | 2,752 | | | | | | 2,647 | | | | | | 2,899 | | | | | | 2,847 | | | | | | 2,691 | | |
Earning assets
|
| | | | 14,226 | | | | | | 11,609 | | | | | | 11,282 | | | | | | 10,162 | | | | | | 9,257 | | |
Total assets
|
| | | | 15,467 | | | | | | 12,687 | | | | | | 12,284 | | | | | | 11,015 | | | | | | 10,054 | | |
Deposits
|
| | | | 13,135 | | | | | | 10,579 | | | | | | 10,000 | | | | | | 8,950 | | | | | | 8,177 | | |
Shareholders’ equity
|
| | | | 1,821 | | | | | | 1,556 | | | | | | 1,380 | | | | | | 1,180 | | | | | | 1,059 | | |
Common shares – basic (thousands)
|
| | | | 83,184 | | | | | | 79,700 | | | | | | 79,662 | | | | | | 73,247 | | | | | | 71,910 | | |
Common shares – diluted (thousands)
|
| | | | 83,248 | | | | | | 79,708 | | | | | | 79,671 | | | | | | 73,259 | | | | | | 71,915 | | |
AT PERIOD END ($ in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans
|
| | | $ | 11,371 | | | | | $ | 8,813 | | | | | $ | 8,383 | | | | | $ | 7,736 | | | | | $ | 6,921 | | |
Investment securities
|
| | | | 3,645 | | | | | | 2,559 | | | | | | 2,903 | | | | | | 2,937 | | | | | | 2,762 | | |
Total assets
|
| | | | 17,794 | | | | | | 12,916 | | | | | | 12,573 | | | | | | 11,915 | | | | | | 10,709 | | |
Deposits
|
| | | | 15,232 | | | | | | 10,897 | | | | | | 10,535 | | | | | | 9,808 | | | | | | 8,638 | | |
Shareholders’ equity
|
| | | | 2,008 | | | | | | 1,636 | | | | | | 1,458 | | | | | | 1,303 | | | | | | 1,076 | | |
Common shares outstanding (thousands)
|
| | | | 86,675 | | | | | | 79,014 | | | | | | 79,234 | | | | | | 77,580 | | | | | | 70,899 | | |
(in thousands, except per share data)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Expense reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (GAAP)
|
| | | $ | 367,989 | | | | | $ | 322,245 | | | | | $ | 306,285 | | | | | $ | 267,611 | | | | | $ | 241,289 | | |
Merger-related and other charges
|
| | | | (7,018) | | | | | | (7,357) | | | | | | (7,345) | | | | | | (14,662) | | | | | | (8,122) | | |
Expenses – operating
|
| | | $ | 360,971 | | | | | $ | 314,888 | | | | | $ | 298,940 | | | | | $ | 252,949 | | | | | $ | 233,167 | | |
Net income reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (GAAP)
|
| | | $ | 164,089 | | | | | $ | 185,721 | | | | | $ | 166,111 | | | | | $ | 67,821 | | | | | $ | 100,656 | | |
Merger-related and other charges
|
| | | | 7,018 | | | | | | 7,357 | | | | | | 7,345 | | | | | | 14,662 | | | | | | 8,122 | | |
Income tax benefit of merger-related and other charges
|
| | | | (1,340) | | | | | | (1,695) | | | | | | (1,494) | | | | | | (3,745) | | | | | | (3,074) | | |
Impact of tax reform on remeasurement of deferred tax asset
|
| | | | — | | | | | | — | | | | | | — | | | | | | 38,199 | | | | | | — | | |
Impairment of deferred tax asset on canceled non-qualified stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 976 | | |
Release of disproportionate tax effects lodged in
other comprehensive income |
| | | | — | | | | | | — | | | | | | — | | | | | | 3,400 | | | | | | — | | |
Net income – operating
|
| | | $ | 169,767 | | | | | $ | 191,383 | | | | | $ | 171,962 | | | | | $ | 120,337 | | | | | $ | 106,680 | | |
(in thousands, except per share data)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Diluted income per common share reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted income per common share (GAAP)
|
| | | $ | 1.91 | | | | | $ | 2.31 | | | | | $ | 2.07 | | | | | $ | 0.92 | | | | | $ | 1.40 | | |
Merger-related and other charges
|
| | | | 0.07 | | | | | | 0.07 | | | | | | 0.07 | | | | | | 0.14 | | | | | | 0.07 | | |
Impact of tax reform on remeasurement of deferred tax asset
|
| | | | — | | | | | | — | | | | | | — | | | | | | 0.52 | | | | | | — | | |
Impairment of deferred tax asset on canceled non-qualified stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 0.01 | | |
Release of disproportionate tax effects lodged in
other comprehensive income |
| | | | — | | | | | | — | | | | | | — | | | | | | 0.05 | | | | | | — | | |
Diluted income per common share –
operating |
| | | $ | 1.98 | | | | | $ | 2.38 | | | | | $ | 2.14 | | | | | $ | 1.63 | | | | | $ | 1.48 | | |
Book value per common share reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Book value per common share (GAAP)
|
| | | $ | 21.90 | | | | | $ | 20.53 | | | | | $ | 18.24 | | | | | $ | 16.67 | | | | | $ | 15.06 | | |
Effect of goodwill and other intangibles
|
| | | | (4.34) | | | | | | (4.25) | | | | | | (4.00) | | | | | | (3.02) | | | | | | (2.11) | | |
Tangible book value per common share
|
| | | $ | 17.56 | | | | | $ | 16.28 | | | | | $ | 14.24 | | | | | $ | 13.65 | | | | | $ | 12.95 | | |
Return on tangible common equity reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Return on common equity (GAAP)
|
| | | | 9.25% | | | | | | 11.89% | | | | | | 11.60% | | | | | | 5.67% | | | | | | 9.41% | | |
Merger-related and other charges
|
| | | | 0.33 | | | | | | 0.36 | | | | | | 0.41 | | | | | | 0.92 | | | | | | 0.48 | | |
Impact of tax reform on remeasurement of deferred tax asset
|
| | | | — | | | | | | — | | | | | | — | | | | | | 3.20 | | | | | | — | | |
Impairment of deferred tax asset on canceled non-qualified stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 0.09 | | |
Release of disproportionate tax effects lodged in
other comprehensive income |
| | | | — | | | | | | — | | | | | | — | | | | | | 0.28 | | | | | | — | | |
Return on common equity – operating
|
| | | | 9.58 | | | | | | 12.25 | | | | | | 12.01 | | | | | | 10.07 | | | | | | 9.98 | | |
Effect of goodwill and other intangibles
|
| | | | 2.66 | | | | | | 3.56 | | | | | | 3.68 | | | | | | 1.95 | | | | | | 1.88 | | |
Return on tangible common equity – operating
|
| | | | 12.24% | | | | | | 15.81% | | | | | | 15.69% | | | | | | 12.02% | | | | | | 11.86% | | |
Return on assets reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Return on assets (GAAP)
|
| | | | 1.04% | | | | | | 1.46% | | | | | | 1.35% | | | | | | 0.62% | | | | | | 1.00% | | |
Merger-related and other charges
|
| | | | 0.03 | | | | | | 0.05 | | | | | | 0.05 | | | | | | 0.09 | | | | | | 0.05 | | |
Impact of tax reform on remeasurement of deferred tax asset
|
| | | | — | | | | | | — | | | | | | — | | | | | | 0.35 | | | | | | — | | |
Impairment of deferred tax asset on canceled non-qualified stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 0.01 | | |
Release of disproportionate tax effects lodged in
other comprehensive income |
| | | | — | | | | | | — | | | | | | — | | | | | | 0.03 | | | | | | — | | |
Return on assets – operating
|
| | | | 1.07% | | | | | | 1.51% | | | | | | 1.40% | | | | | | 1.09% | | | | | | 1.06% | | |
|
(in thousands, except per share data)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Dividend payout ratio reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividend payout ratio (GAAP)
|
| | | | 37.70% | | | | | | 29.44% | | | | | | 28.02% | | | | | | 41.30% | | | | | | 21.43% | | |
Merger-related and other charges
|
| | | | (1.34) | | | | | | (0.87) | | | | | | (0.92) | | | | | | (5.65) | | | | | | (1.02) | | |
Impact of tax reform on remeasurement of deferred tax asset
|
| | | | — | | | | | | — | | | | | | — | | | | | | (11.61) | | | | | | — | | |
Impairment of deferred tax asset on canceled non-qualified stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (0.14) | | |
Release of disproportionate tax effects lodged in
other comprehensive income |
| | | | — | | | | | | — | | | | | | — | | | | | | (0.73) | | | | | | — | | |
Dividend payout ratio – operating
|
| | | | 36.36% | | | | | | 28.57% | | | | | | 27.10% | | | | | | 23.31% | | | | | | 20.27% | | |
Efficiency ratio reconciliation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Efficiency ratio (GAAP)
|
| | | | 55.71% | | | | | | 55.77% | | | | | | 57.31% | | | | | | 59.95% | | | | | | 59.80% | | |
Merger-related and other charges
|
| | | | (1.07) | | | | | | (1.27) | | | | | | (1.37) | | | | | | (3.28) | | | | | | (2.02) | | |
Efficiency ratio – operating
|
| | | | 54.64% | | | | | | 54.50% | | | | | | 55.94% | | | | | | 56.67% | | | | | | 57.78% | | |
Tangible common equity to tangible assets reconciliation
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Equity to assets (GAAP)
|
| | | | 11.29% | | | | | | 12.66% | | | | | | 11.59% | | | | | | 10.94% | | | | | | 10.05% | | |
Effect of goodwill and other intangibles
|
| | | | (1.94) | | | | | | (2.34) | | | | | | (2.30) | | | | | | (1.80) | | | | | | (1.28) | | |
Effect of preferred equity
|
| | | | (0.54) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Tangible common equity to tangible assets
|
| | | | 8.81% | | | | | | 10.32% | | | | | | 9.29% | | | | | | 9.14% | | | | | | 8.77% | | |
|
Name and Age
|
| |
Position(s)
Held |
| |
Director
Since(1) |
| |
Principal Occupation and
Business Experience |
|
Carol Houle (49) | | |
Director
|
| |
2018
|
| | Senior Vice President, Global Head of Consulting & Marketing, Financial Services and Insurance, for Atos (technology consultancy) | |
Paul Jaszewski (63) | | |
Director
|
| |
2017
|
| | Physicians Anesthesiologist for American Anesthesiology of the South, PLLC | |
James R. Borders (56)
|
| |
Director
|
| |
2006
|
| | President, AC Controls Co., Inc., Charlotte, NC (industrial valves and instrumentation) | |
Alison J. Smith (66) | | |
Director
|
| |
2017
|
| | Former director of ASB Bancorp Inc., Yadkin Valley Financial Corporation and American Community Bancshares, Inc.; former President of Smith Capital, Inc., Charlotte, NC (financial advisory and investment banking firm) | |
Name and Age
|
| |
Director
Since(1) |
| |
Term
Expires |
| |
Principal Occupation and
Business Experience |
|
Spencer Cohn (35) | | |
2019
|
| |
2023
|
| | Vice President of Castle Creek Capital | |
Paul A. Dougovito (73)
|
| |
2006
|
| |
2022
|
| | Banking Industry Consultant, Boston, MA; former bank CFO and acting CEO | |
Jon Dressler (53) | | |
2006
|
| |
2022
|
| | Proprietor, Rate Roots Hospitality Group, Charlotte, NC (owns restaurants) | |
Jim Engel (61) | | |
2006
|
| |
2022
|
| | President and CEO, Aquesta Bank/Aquesta Financial Holdings, Inc.; Certified Public Accountant and Attorney, Cornelius, NC; formerly, Partner, KPMG, LLP | |
David Goodrum (59) | | |
2006
|
| |
2022
|
| | President and General Manager, JD Goodrum Co., Inc., Charlotte, NC (general contracting company) | |
Ginger Griffin (58) | | |
2006
|
| |
2023
|
| | Co-owner of Royal Bliss Brewing Company, Denver, NC; Former Marketing Executive and Business Owner, Ginger Griffin Marketing & Design, Cornelius, NC | |
Charles Knox, Jr. (56) | | |
2006
|
| |
2023
|
| | Commercial Real Estate Broker and Developer, Cornelius, NC | |
Craig M. Larsen (55) | | |
2006
|
| |
2023
|
| | Owner-CEO, REVITA Anti-Aging Center, Charlotte, NC; former President, Industrial Timber, Hiddenite, NC | |
Name
|
| |
Position with
Company/Bank |
| |
Business Experience
|
|
Jim Engel (61) | | | President and Chief Executive Officer of Aquesta and Aquesta Bank | | | Former Certified Public Accountant and Attorney, Cornelius, NC; formerly, Partner, KPMG, LLP, Charlotte, NC | |
Tim Beck (55) | | | Executive Vice President and Chief Credit Officer of Aquesta Bank | | | Former Senior Vice President & Regional Lending Executive, Silverton Bank, Charlotte, NC | |
Jeff Brinkman (51) | | | Executive Vice President and North Carolina/Charlotte Market President of Aquesta Bank | | | Former Senior Vice President and Charlotte Commercial Market Executive of Regions Bank; Senior Vice President and Healthcare Line of Business Executive of Fifth Third, VA, NC and SC | |
Kristin Couch (50) | | | Executive Vice President and Chief Financial Officer of Aquesta and Aquesta Bank | | | Former Controller, Auburn Bank, Auburn, AL | |
Greg Dickinson (51) | | | Executive Vice President and South Carolina Market President of Aquesta Bank | | | Former Senior Vice President & Commercial Market Executive, Capital Bank, Charleston, SC | |
Rick Eveson (53) | | | Executive Vice President, Chief Operating and Compliance Officer of Aquesta Bank | | | Former Senior Vice President and Retail Lending Executive of Aquesta Bank; Senior Vice President and Senior Consumer Lender, blueharbor bank, Mooresville, NC; Senior Vice President and Retail Lending Executive and Vice President and Consumer Underwriting Manager of First Charter Bank, Charlotte, NC | |
Kristen Maxwell (35) | | | Executive Vice President and Director of Human Resources of Aquesta Bank | | | Former human Resources Business Partner of Yadkin Bank, Raleigh, NC | |
Office Location
|
| |
Year
Opened |
| |
Approximate
Square Footage |
| |
Owned
or Leased |
|
Aquesta Bank (Main Office)
19510 Jetton Rd. Cornelius, NC 28031 |
| |
2006
|
| |
10,000
|
| |
Owned
|
|
Davidson Branch
568 Jetton St. Suite 100 Davidson, NC 28036 |
| |
2007
|
| |
2,920
|
| |
Leased
|
|
Mooresville Branch
837 Williamson Rd. Mooresville, NC 28117 |
| |
2009
|
| |
3,133
|
| |
Owned
|
|
Brawley School Road Branch
1078 Brawley School Rd. Mooresville, NC 28117 |
| |
2011
|
| |
3,133
|
| |
Owned
|
|
Huntersville Branch
9906 Knockando Ln. Huntersville, NC 28078 |
| |
2014
|
| |
3,366
|
| |
Building Owned,
Land Leased |
|
Office Location
|
| |
Year
Opened |
| |
Approximate
Square Footage |
| |
Owned
or Leased |
|
SouthPark Branch
4519 Sharon Rd. Charlotte, NC 28211 |
| |
2015
|
| |
1,732
|
| |
Leased
|
|
Wilmington Branch
901 Military Cutoff Rd. Wilmington, NC 28405 |
| |
2016
|
| |
7,580
|
| |
Owned
|
|
Rea Farms Branch
9915 Sandy Rock Place Charlotte, NC 28277 |
| |
2019
|
| |
5,840
|
| |
Owned
|
|
The Pines Branch
400 Avinger Lane Davidson, NC 28036 |
| |
2021
|
| |
340
|
| |
Leased
|
|
Operations Center
464 Williamson Road Mooresville, NC 28117 |
| |
2018
|
| |
10,500
|
| |
Owned
|
|
| | |
70% Stock
|
| |
100% Stock
|
| ||||||
Transaction Price / Tangible Book Value Per Share
|
| | | | 194% | | | | | | 194% | | |
Transaction Price / LTM Earnings Per Share
|
| | | | 17.9x | | | | | | 17.8x | | |
Transaction Price / 2021E Projected EPS(1)
|
| | | | 14.4x | | | | | | 14.4x | | |
Transaction Price / 2022E Projected EPS(1)
|
| | | | 15.6x | | | | | | 15.6x | | |
Tangible Book Premium / Core Deposits (CDs > $100K)(2)
|
| | | | 12.4% | | | | | | 12.3% | | |
Market Premium as of May 25, 2021
|
| | | | 64.3% | | | | | | 63.6% | | |
| | |
Beginning Value
5/25/2020 |
| |
Ending Value
5/25/2021 |
| ||||||
Aquesta
|
| | | | 100% | | | | | | 132.1% | | |
Aquesta Peer Group
|
| | | | 100% | | | | | | 146.3% | | |
S&P 500 Index
|
| | | | 100% | | | | | | 185.1% | | |
NASDAQ Bank Index
|
| | | | 100% | | | | | | 141.7% | | |
| | |
Beginning Value
5/25/2018 |
| |
Ending Value
5/25/2021 |
| ||||||
Aquesta
|
| | | | 100% | | | | | | 108.4% | | |
Aquesta Peer Group
|
| | | | 100% | | | | | | 89.9% | | |
S&P 500 Index
|
| | | | 100% | | | | | | 108.4% | | |
NASDAQ Bank Index
|
| | | | 100% | | | | | | 153.9% | | |
| | |
Beginning Value
5/25/2020 |
| |
Ending Value
5/25/2021 |
| ||||||
United
|
| | | | 100% | | | | | | 184.8% | | |
United Peer Group
|
| | | | 100% | | | | | | 182.6% | | |
S&P 500 Index
|
| | | | 100% | | | | | | 185.1% | | |
NASDAQ Bank Index
|
| | | | 100% | | | | | | 141.7% | | |
| | |
Beginning Value
5/25/2018 |
| |
Ending Value
5/25/2021 |
| ||||||
United
|
| | | | 100% | | | | | | 100.4% | | |
United Peer Group
|
| | | | 100% | | | | | | 98.1% | | |
S&P 500 Index
|
| | | | 100% | | | | | | 108.4% | | |
NASDAQ Bank Index
|
| | | | 100% | | | | | | 153.9% | | |
|
Bank of South Carolina Corporation
Bank of the James Financial Group, Inc. Community Bankers Trust Corporation First Community Corporation First National Corporation FVCBankcorp, Inc. MainStreet Bancshares, Inc. |
| |
National Bankshares, Inc.
Old Point Financial Corporation Peoples Bancorp of North Carolina, Inc. Select Bancorp, Inc. Village Bank and Trust Financial Corp. Virginia National Bankshares Corporation |
|
| | |
Aquesta
|
| |
Aquesta
Peer Group Median |
| |
Aquesta
Peer Group Mean |
| |
Aquesta
Peer Group Low |
| |
Aquesta
Peer Group High |
| |||||||||||||||
Total assets ($M)
|
| | | | 752 | | | | | | 1,492 | | | | | | 1,317 | | | | | | 554 | | | | | | 1,885 | | |
Loans / Deposits (%)
|
| | | | 90.6 | | | | | | 76.6 | | | | | | 76.9 | | | | | | 57.4 | | | | | | 95.0 | | |
LLR / Gross Loans (%)
|
| | | | 0.92 | | | | | | 1.01 | | | | | | 1.04 | | | | | | 0.66 | | | | | | 1.28 | | |
Non-performing assets(1) / Total assets (%)
|
| | | | 0.76 | | | | | | 0.47 | | | | | | 0.51 | | | | | | 0.08 | | | | | | 1.20 | | |
Tangible common equity/Tangible assets (%)
|
| | | | 8.01 | | | | | | 9.11 | | | | | | 8.96 | | | | | | 7.37 | | | | | | 10.63 | | |
Tier 1 Leverage Ratio (%)
|
| | | | 9.02(2) | | | | | | 10.18 | | | | | | 9.94 | | | | | | 8.33 | | | | | | 11.65 | | |
Total RBC Ratio (%)
|
| | | | 14.06(2) | | | | | | 14.85 | | | | | | 14.99 | | | | | | 12.59 | | | | | | 19.73 | | |
CRE / Total RBC Ratio (%)
|
| | | | 251.1(2) | | | | | | 243.1 | | | | | | 249.7 | | | | | | 135.6 | | | | | | 389.9 | | |
MRQ Return on average assets (%)
|
| | | | 1.41 | | | | | | 1.19 | | | | | | 1.22 | | | | | | 0.67 | | | | | | 2.22 | | |
MRQ Return on average equity (%)
|
| | | | 16.99 | | | | | | 11.53 | | | | | | 12.69 | | | | | | 7.29 | | | | | | 28.68 | | |
MRQ Net interest margin (%)
|
| | | | 3.59 | | | | | | 3.31 | | | | | | 3.36 | | | | | | 2.79 | | | | | | 3.97 | | |
MRQ Efficiency ratio (%)
|
| | | | 53.0 | | | | | | 57.6 | | | | | | 60.9 | | | | | | 51.6 | | | | | | 74.3 | | |
MRQ Cost of Deposits (%)
|
| | | | 0.39² | | | | | | 0.30 | | | | | | 0.33 | | | | | | 0.05 | | | | | | 0.71 | | |
Price/Tangible book value (%)
|
| | | | 118 | | | | | | 117 | | | | | | 124 | | | | | | 101 | | | | | | 207 | | |
Price/LTM EPS (x)
|
| | | | 10.9 | | | | | | 12.5 | | | | | | 12.3 | | | | | | 6.1 | | | | | | 17.6 | | |
Current Dividend Yield (%)
|
| | | | 0.9 | | | | | | 2.4 | | | | | | 1.9 | | | | | | 0.0 | | | | | | 3.8 | | |
Market value ($mm)
|
| | | | 56 | | | | | | 144 | | | | | | 150 | | | | | | 71 | | | | | | 242 | | |
|
Ameris Bancorp Atlantic
Union Bankshares Corporation BancorpSouth Bank Bank OZK FB Financial Corporation Home Bancshares, Inc. Renasant Corporation |
| |
ServisFirst Bancshares, Inc.
Simmons First National Corporation TowneBank Trustmark Corporation United Bankshares, Inc. WesBanco, Inc. |
|
| | |
United
|
| |
United
Peer Group Median |
| |
United
Peer Group Mean |
| |
United
Peer Group Low |
| |
United
Peer Group High |
| |||||||||||||||
Total assets ($M)
|
| | | | 18,557 | | | | | | 17,240 | | | | | | 19,323 | | | | | | 11,936 | | | | | | 27,277 | | |
Loans / Deposits (%)
|
| | | | 73.0 | | | | | | 80.4 | | | | | | 78.7 | | | | | | 67.0 | | | | | | 87.8 | | |
LLR / Gross Loans (%)
|
| | | | 1.07 | | | | | | 1.43 | | | | | | 1.44 | | | | | | 0.99 | | | | | | 2.25 | | |
Non-performing assets(1) / Total assets (%)
|
| | | | 0.53 | | | | | | 0.40 | | | | | | 0.38 | | | | | | 0.13 | | | | | | 0.71 | | |
Tangible common equity/Tangible assets (%)
|
| | | | 8.52 | | | | | | 8.62 | | | | | | 9.06 | | | | | | 7.04 | | | | | | 13.94 | | |
Tier 1 Leverage Ratio (%)
|
| | | | 9.39 | | | | | | 9.49 | | | | | | 9.89 | | | | | | 8.25 | | | | | | 13.98 | | |
Total RBC Ratio (%)
|
| | | | 14.92 | | | | | | 15.27 | | | | | | 15.53 | | | | | | 12.48 | | | | | | 18.76 | | |
CRE / Total RBC Ratio (%)
|
| | | | 198.9 | | | | | | 228.0 | | | | | | 235.7 | | | | | | 195.1 | | | | | | 314.6 | | |
MRQ Return on average assets (%)
|
| | | | 1.64 | | | | | | 1.69 | | | | | | 1.70 | | | | | | 1.14 | | | | | | 2.41 | | |
MRQ Return on average equity (%)
|
| | | | 14.56 | | | | | | 11.81 | | | | | | 13.13 | | | | | | 8.26 | | | | | | 20.24 | | |
MRQ Net interest margin (%)
|
| | | | 3.17 | | | | | | 3.16 | | | | | | 3.26 | | | | | | 2.77 | | | | | | 3.97 | | |
MRQ Efficiency ratio (%)
|
| | | | 52.1 | | | | | | 54.4 | | | | | | 52.2 | | | | | | 27.7 | | | | | | 72.7 | | |
MRQ Cost of Deposits (%)
|
| | | | 0.14 | | | | | | 0.27 | | | | | | 0.26 | | | | | | 0.13 | | | | | | 0.46 | | |
Price/Tangible book value (%)
|
| | | | 186 | | | | | | 182 | | | | | | 202 | | | | | | 144 | | | | | | 359 | | |
Price/LTM EPS (x)
|
| | | | 14.3 | | | | | | 14.3 | | | | | | 14.0 | | | | | | 10.1 | | | | | | 19.6 | | |
Price/2021 Est. EPS (x)
|
| | | | 12.3 | | | | | | 13.7 | | | | | | 13.3 | | | | | | 10.5 | | | | | | 18.7 | | |
Price/2022 Est. EPS (x)
|
| | | | 14.0 | | | | | | 15.2 | | | | | | 14.9 | | | | | | 10.6 | | | | | | 18.9 | | |
Current Dividend Yield (%)
|
| | | | 2.2 | | | | | | 2.3 | | | | | | 2.2 | | | | | | 1.0 | | | | | | 3.3 | | |
Market value ($mm)
|
| | | | 2,879 | | | | | | 3,126 | | | | | | 3,290 | | | | | | 1,935 | | | | | | 5,340 | | |
Acquiror
|
| |
Target
|
|
Colony Bankcorp Inc. | | | SouthCrest Financial Group, Inc. | |
SmartFinancial Inc. | | | Sevier County Bancshares, Inc. | |
Seacoast Banking Corporation of Florida | | | Legacy Bank of Florida | |
Shore Bancshares Inc. | | | Severn Bancorp, Inc. | |
Fidelity D & D Bancorp Inc. | | | Landmark Bancorp, Inc. | |
First National Corporation | | | Bank of Fincastle | |
BancorpSouth Bank | | | FNS Bancshares, Inc. | |
LINKBANCORP Inc. | | | GNB Financial Services, Inc. | |
Virginia National Bankshares Corporation | | | Fauquier Bankshares, Inc. | |
Acquiror
|
| |
Target
|
|
Equity Bancshares, Inc. | | | American State Bancshares, Inc. | |
Farmers & Merchants Bancorp, Inc. | | | Perpetual Federal Savings Bank | |
Southern California Bancorp | | | Bank of Santa Clarita | |
Colony Bankcorp, Inc. | | | SouthCrest Financial Group, Inc. | |
Bank of Marin Bancorp | | | American River Bankshares | |
SmartFinancial, Inc. | | | Sevier County Bancshares, Inc. | |
Seacoast Banking Corporation of Florida | | | Legacy Bank of Florida | |
Shore Bancshares, Inc. | | | Severn Bancorp, Inc. | |
Fidelity D & D Bancorp, Inc. | | | Landmark Bancorp, Inc. | |
First National Corporation | | | Bank of Fincastle | |
BancorpSouth Bank | | | FNS Bancshares, Inc. | |
LINKBANCORP, Inc. | | | GNB Financial Services, Inc. | |
BancorpSouth Bank | | | National United Bancshares, Inc. | |
Virginia National Bankshares Corporation | | | Fauquier Bankshares, Inc. | |
| | |
United /Aquesta
|
| |
Regional Precedent Transactions
|
| | ||||||||||||||||||||||||||||||||
| | |
100.0%
Stock |
| |
70.0%
Stock |
| |
Median
|
| |
Mean
|
| |
Low
|
| |
High
|
| | ||||||||||||||||||||
Deal Value ($M)
|
| | | | 133.5 | | | | | | 134.0 | | | | | | 62.6 | | | | | | 75.9 | | | | | | 31.6 | | | | | | 146.0 | | | | | |
Transaction Price / LTM Earnings Per Share (x)
|
| | | | 17.8 | | | | | | 17.9 | | | | | | 18.1 | | | | | | 18.3 | | | | | | 10.1 | | | | | | 32.6 | | | | | |
Transaction Price / Tangible Book Value Per Share (%)
|
| | | | 194 | | | | | | 194 | | | | | | 131 | | | | | | 132 | | | | | | 85 | | | | | | 187 | | | | | |
Tangible Book Value Premium to Core Deposits (%)
|
| | | | 12.3 | | | | | | 12.4 | | | | | | 4.4 | | | | | | 5.3 | | | | | | 0.7 | | | | | | 16.2 | | | | | |
1-Day Market Premium (%)
|
| | | | 63.6 | | | | | | 64.3 | | | | | | 29.3 | | | | | | 21.5 | | | | | | (43.1) | | | | | | 63.9 | | | | | |
| | |
United /Aquesta
|
| |
Nationwide Precedent Transactions
|
| | ||||||||||||||||||||||||||||||||
| | |
100.0%
Stock |
| |
70.0%
Stock |
| |
Median
|
| |
Mean
|
| |
Low
|
| |
High
|
| | | | ||||||||||||||||||
Deal Value ($M)
|
| | | | 133.5 | | | | | | 134.0 | | | | | | 80.5 | | | | | | 83.5 | | | | | | 31.6 | | | | | | 146.0 | | | | | |
Transaction Price / LTM EarningsPer Share (x)
|
| | | | 17.8 | | | | | | 17.9 | | | | | | 18.4 | | | | | | 18.4 | | | | | | 10.1 | | | | | | 32.6 | | | | | |
Transaction Price / Tangible Book Value Per Share (%)
|
| | | | 194 | | | | | | 194 | | | | | | 133 | | | | | | 136 | | | | | | 85 | | | | | | 187 | | | | | |
Tangible Book Value Premiumto Core Deposits (%)
|
| | | | 12.3 | | | | | | 12.4 | | | | | | 4.8 | | | | | | 6.0 | | | | | | 0.7 | | | | | | 16.2 | | | | | |
1-Day Market Premium (%)
|
| | | | 63.6 | | | | | | 64.3 | | | | | | 35.1 | | | | | | 23.9 | | | | | | (43.1) | | | | | | 63.9 | | | | | |
Discount Rate
|
| |
10.0x
|
| |
11.0x
|
| |
12.0x
|
| |
13.0x
|
| |
14.0x
|
| |
15.0x
|
| ||||||||||||||||||
10.0%
|
| | | $ | 14.26 | | | | | $ | 15.63 | | | | | $ | 17.01 | | | | | $ | 18.38 | | | | | $ | 19.75 | | | | | $ | 21.12 | | |
11.0%
|
| | | | 13.67 | | | | | | 14.99 | | | | | | 16.30 | | | | | | 17.62 | | | | | | 18.93 | | | | | | 20.24 | | |
12.0%
|
| | | | 13.11 | | | | | | 14.37 | | | | | | 15.63 | | | | | | 16.89 | | | | | | 18.15 | | | | | | 19.41 | | |
12.5%
|
| | | | 12.58 | | | | | | 13.79 | | | | | | 14.99 | | | | | | 16.20 | | | | | | 17.41 | | | | | | 18.62 | | |
14.0%
|
| | | | 12.07 | | | | | | 13.23 | | | | | | 14.39 | | | | | | 15.55 | | | | | | 16.70 | | | | | | 17.86 | | |
15.0%
|
| | | | 11.59 | | | | | | 12.70 | | | | | | 13.81 | | | | | | 14.92 | | | | | | 16.03 | | | | | | 17.15 | | |
16.0%
|
| | | | 11.13 | | | | | | 12.20 | | | | | | 13.26 | | | | | | 14.33 | | | | | | 15.40 | | | | | | 16.46 | | |
Discount Rate
|
| |
100%
|
| |
110%
|
| |
120%
|
| |
130%
|
| |
140%
|
| |
150%
|
| ||||||||||||||||||
10.0%
|
| | | $ | 12.49 | | | | | $ | 13.68 | | | | | $ | 14.87 | | | | | $ | 16.06 | | | | | $ | 17.25 | | | | | $ | 18.44 | | |
11.0%
|
| | | | 11.97 | | | | | | 13.11 | | | | | | 14.25 | | | | | | 15.39 | | | | | | 16.54 | | | | | | 17.68 | | |
12.0%
|
| | | | 11.48 | | | | | | 12.58 | | | | | | 13.67 | | | | | | 14.76 | | | | | | 15.86 | | | | | | 16.95 | | |
13.0%
|
| | | | 11.02 | | | | | | 12.07 | | | | | | 13.11 | | | | | | 14.16 | | | | | | 15.21 | | | | | | 16.26 | | |
14.0%
|
| | | | 10.58 | | | | | | 11.58 | | | | | | 12.59 | | | | | | 13.59 | | | | | | 14.60 | | | | | | 15.60 | | |
15.0%
|
| | | | 10.16 | | | | | | 11.12 | | | | | | 12.08 | | | | | | 13.05 | | | | | | 14.01 | | | | | | 14.98 | | |
16.0%
|
| | | | 9.76 | | | | | | 10.68 | | | | | | 11.61 | | | | | | 12.53 | | | | | | 13.46 | | | | | | 14.38 | | |
Annual Estimate Variance
|
| |
10.0x
|
| |
11.0x
|
| |
12.0x
|
| |
13.0x
|
| |
14.0x
|
| |
15.0x
|
| ||||||||||||||||||
(15.0%)
|
| | | $ | 10.70 | | | | | $ | 11.72 | | | | | $ | 12.74 | | | | | $ | 13.76 | | | | | $ | 14.77 | | | | | $ | 15.79 | | |
(10.0%)
|
| | | | 11.30 | | | | | | 12.38 | | | | | | 13.46 | | | | | | 14.54 | | | | | | 15.61 | | | | | | 16.69 | | |
(5.0%)
|
| | | | 11.90 | | | | | | 13.04 | | | | | | 14.18 | | | | | | 15.31 | | | | | | 16.45 | | | | | | 17.59 | | |
0.0%
|
| | | | 12.50 | | | | | | 13.70 | | | | | | 14.89 | | | | | | 16.09 | | | | | | 17.29 | | | | | | 18.49 | | |
5.0%
|
| | | | 13.10 | | | | | | 14.36 | | | | | | 15.61 | | | | | | 16.87 | | | | | | 18.13 | | | | | | 19.39 | | |
10.0%
|
| | | | 13.70 | | | | | | 15.01 | | | | | | 16.33 | | | | | | 17.65 | | | | | | 18.97 | | | | | | 20.29 | | |
15.0%
|
| | | | 14.30 | | | | | | 15.67 | | | | | | 17.05 | | | | | | 18.43 | | | | | | 19.81 | | | | | | 21.19 | | |
Discount Rate
|
| |
13.0x
|
| |
14.0x
|
| |
15.0x
|
| |
16.0x
|
| |
17.0x
|
| |
18.0x
|
| ||||||||||||||||||
7.0%
|
| | | $ | 28.32 | | | | | $ | 30.27 | | | | | $ | 32.21 | | | | | $ | 34.16 | | | | | $ | 36.11 | | | | | $ | 38.05 | | |
8.0%
|
| | | | 27.15 | | | | | | 29.01 | | | | | | 30.87 | | | | | | 32.74 | | | | | | 34.60 | | | | | | 36.46 | | |
9.0%
|
| | | | 26.04 | | | | | | 27.82 | | | | | | 29.61 | | | | | | 31.39 | | | | | | 33.17 | | | | | | 34.95 | | |
10.0%
|
| | | | 24.99 | | | | | | 26.69 | | | | | | 28.40 | | | | | | 30.11 | | | | | | 31.81 | | | | | | 33.52 | | |
11.0%
|
| | | | 23.99 | | | | | | 25.62 | | | | | | 27.26 | | | | | | 28.89 | | | | | | 30.53 | | | | | | 32.16 | | |
12.0%
|
| | | | 23.03 | | | | | | 24.60 | | | | | | 26.17 | | | | | | 27.74 | | | | | | 29.30 | | | | | | 30.87 | | |
13.0%
|
| | | | 22.13 | | | | | | 23.63 | | | | | | 25.14 | | | | | | 26.64 | | | | | | 28.14 | | | | | | 29.64 | | |
Discount Rate
|
| |
170%
|
| |
180%
|
| |
190%
|
| |
200%
|
| |
210%
|
| |
220%
|
| ||||||||||||||||||
7.0%
|
| | | $ | 35.41 | | | | | $ | 37.31 | | | | | $ | 39.22 | | | | | $ | 41.13 | | | | | $ | 43.03 | | | | | $ | 44.94 | | |
8.0%
|
| | | | 33.93 | | | | | | 35.76 | | | | | | 37.58 | | | | | | 39.40 | | | | | | 41.23 | | | | | | 43.05 | | |
9.0%
|
| | | | 32.53 | | | | | | 34.28 | | | | | | 36.02 | | | | | | 37.77 | | | | | | 39.51 | | | | | | 41.26 | | |
10.0%
|
| | | | 31.20 | | | | | | 32.87 | | | | | | 34.55 | | | | | | 36.22 | | | | | | 37.89 | | | | | | 39.56 | | |
11.0%
|
| | | | 29.94 | | | | | | 31.54 | | | | | | 33.14 | | | | | | 34.74 | | | | | | 36.34 | | | | | | 37.95 | | |
12.0%
|
| | | | 28.74 | | | | | | 30.28 | | | | | | 31.81 | | | | | | 33.34 | | | | | | 34.88 | | | | | | 36.41 | | |
13.0%
|
| | | | 27.60 | | | | | | 29.07 | | | | | | 30.54 | | | | | | 32.01 | | | | | | 33.48 | | | | | | 34.96 | | |
Annual Estimate Variance
|
| |
13.0x
|
| |
14.0x
|
| |
15.0x
|
| |
16.0x
|
| |
17.0x
|
| |
18.0x
|
| ||||||||||||||||||
(15.0%)
|
| | | $ | 21.76 | | | | | $ | 23.22 | | | | | $ | 24.68 | | | | | $ | 26.14 | | | | | $ | 27.60 | | | | | $ | 29.06 | | |
(10.0%)
|
| | | | 22.88 | | | | | | 24.42 | | | | | | 25.97 | | | | | | 27.51 | | | | | | 29.06 | | | | | | 30.60 | | |
(5.0%)
|
| | | | 23.99 | | | | | | 25.62 | | | | | | 27.25 | | | | | | 28.88 | | | | | | 30.51 | | | | | | 32.14 | | |
0.0%
|
| | | | 25.11 | | | | | | 26.83 | | | | | | 28.54 | | | | | | 30.26 | | | | | | 31.97 | | | | | | 33.69 | | |
5.0%
|
| | | | 26.22 | | | | | | 28.03 | | | | | | 29.83 | | | | | | 31.63 | | | | | | 33.43 | | | | | | 35.23 | | |
10.0%
|
| | | | 27.34 | | | | | | 29.23 | | | | | | 31.12 | | | | | | 33.00 | | | | | | 34.89 | | | | | | 36.78 | | |
15.0%
|
| | | | 28.46 | | | | | | 30.43 | | | | | | 32.40 | | | | | | 34.38 | | | | | | 36.35 | | | | | | 38.32 | | |
Name of Individual
|
| |
Cash
Payment for Options |
| |
Cash
Payment for Warrants |
| |
Value of
Unvested Restricted Shares(1) |
| |
Total
|
| ||||||||||||
James R. Borders, Jr.
|
| | | $ | 749,518 | | | | | $ | 409,922 | | | | | | — | | | | | $ | 1,159,440 | | |
Spencer Cohn
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Paul A. Doughvito
|
| | | $ | 38,283 | | | | | | — | | | | | | — | | | | | $ | 38,283 | | |
Jonathan E. Dressler
|
| | | $ | 312,280 | | | | | $ | 146,877 | | | | | | — | | | | | $ | 459,157 | | |
James C. Engel
|
| | | $ | 2,314,171 | | | | | $ | 729,094 | | | | | $ | 280,243 | | | | | $ | 3,323,508 | | |
J. David Goodrum
|
| | | $ | 324,817 | | | | | | — | | | | | | — | | | | | $ | 324,817 | | |
Ginger Griffin
|
| | | $ | 650,199 | | | | | $ | 243,026 | | | | | | — | | | | | $ | 893,225 | | |
Carol Houle
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Paul Jaszewski
|
| | | $ | 212,003 | | | | | $ | 25,372 | | | | | | — | | | | | $ | 237,375 | | |
Charles Knox, Jr.
|
| | | $ | 190,505 | | | | | $ | 253,144 | | | | | | — | | | | | $ | 443,649 | | |
Craig M. Larsen
|
| | | $ | 378,246 | | | | | $ | 258,264 | | | | | | — | | | | | $ | 636,510 | | |
Alison J. Smith
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Non-Director Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | |
Tim Beck
|
| | | $ | 397,391 | | | | | | — | | | | | $ | 140,122 | | | | | $ | 537,513 | | |
Jeff Brinkman
|
| | | | — | | | | | | — | | | | | $ | 61,689 | | | | | $ | 61,689 | | |
Kristin Couch
|
| | | $ | 290,763 | | | | | | — | | | | | $ | 104,430 | | | | | $ | 395,193 | | |
Greg Dickinson
|
| | | | — | | | | | | — | | | | | $ | 120,293 | | | | | $ | 120,293 | | |
Rick Eveson
|
| | | $ | 133,745 | | | | | | — | | | | | $ | 137,257 | | | | | $ | 271,002 | | |
Jeanne Jordan
|
| | | | — | | | | | | — | | | | | $ | 92,533 | | | | | $ | 92,533 | | |
Kristin Maxwell
|
| | | | — | | | | | | — | | | | | $ | 103,108 | | | | | $ | 103,108 | | |
Name and Address of Beneficial Owner
|
| |
Shares
Beneficially Owned(1)(2)(3) |
| |
Percentage
Beneficially Owned(4) |
| ||||||
Directors and Executive Officers: | | | | | | | | | | | | | |
Tim Beck
|
| | | | 46,391 | | | | | | 1.07% | | |
James R. Borders, Jr.
|
| | | | 109,577 | | | | | | 2.49% | | |
Jeff Brinkman
|
| | | | 3,000 | | | | | | * | | |
Spencer Cohn
|
| | | | 0 | | | | | | * | | |
Kristin Couch
|
| | | | 37,489 | | | | | | * | | |
Greg Dickinson
|
| | | | 7,900 | | | | | | * | | |
Paul A. Dougovito
|
| | | | 126,601 | | | | | | 2.93% | | |
Jonathan E. Dressler
|
| | | | 61,757 | | | | | | 1.42% | | |
Jim Engel
|
| | | | 517,705 | | | | | | 11.46% | | |
Rick Eveson
|
| | | | 11,050 | | | | | | * | | |
J. David Goodrum
|
| | | | 53,817 | | | | | | 1.24% | | |
Ginger Griffin
|
| | | | 122,848 | | | | | | 2.80% | | |
Carol Houle
|
| | | | 120 | | | | | | * | | |
Paul Jaszewski
|
| | | | 31,879 | | | | | | * | | |
Jeanne Jordan
|
| | | | 5,000 | | | | | | * | | |
Charles Knox, Jr.
|
| | | | 45,992 | | | | | | 1.06% | | |
Craig M. Larsen
|
| | | | 77,416 | | | | | | 1.77% | | |
Kristin Maxwell
|
| | | | 6,200 | | | | | | * | | |
Alison J. Smith
|
| | | | 42,190 | | | | | | * | | |
All directors and executive officers as a group (18 individuals)
|
| | | | 1,306,932 | | | | | | 27.00% | | |
5% or Greater Stockholders: | | | | | | | | | | | | | |
Castle Creek Capital Partners VII, LP(5)
|
| | | | 1,454,400 | | | | | | 25.73% | | |
Alliance Bernstein L.P.(6)
|
| | | | 531,825 | | | | | | 12.31% | | |
|
AQUESTA
|
| |
UNITED
|
|
| may not (including by means of merger, consolidation or otherwise), without obtaining the approval of the holders of a majority of the issued and outstanding shares of Aquesta convertible preferred stock, (a) alter or change the rights, preferences, privileges or restrictions provided for the benefit of the holders of the Aquesta convertible preferred stock so as to affect them adversely, (b) increase or decrease the authorized number of shares of Aquesta convertible preferred stock or (c) enter into any agreement, merger or business consolidation, or engage in any other transaction, or take any action that would have the effect of adversely changing any preference or any relative or other right provided for the benefit of the holders of the Aquesta convertible preferred stock. Castle Creek, as the sole holder of the Aquesta convertible preferred stock, has entered into a support agreement with United pursuant to which Castle Creek has agreed to vote all the shares of Aquesta common stock and Aquesta convertible preferred stock that it owns in favor of approval of the merger. Pursuant to the terms of the merger agreement and the Aquesta articles of incorporation, as amended, each share of Aquesta convertible preferred stock will automatically convert into 100 shares of Aquesta common stock immediately prior to the effective time of the merger. The full rights of the holders of Aquesta convertible preferred stock are set forth in Aquesta’s articles of incorporation, as amended. | | | series, the voting rights (if any) of the shares of the series, and the powers, preferences and relative, participation, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such series. As of the date hereof, there were 4,000 shares of preferred stock outstanding, all of which are designated as the United Series I preferred stock. | |
|
SIZE OF BOARD OF DIRECTORS
|
| |||
| Aquesta’s bylaws provide that the number of directors on the Aquesta board of directors may range from five to 21 directors. Within the foregoing limits, the number of directors is determined only by a resolution of the Aquesta board of directors. The Aquesta board of directors is currently composed of 12 directors. On January 31, 2019, Aquesta entered into a stockholder agreement with Castle Creek that entitles Castle Creek to have one representative on the Aquesta board of directors so long as Castle Creek owns in the aggregate at least 4.9% of the outstanding shares of Aquesta common stock. | | | United’s bylaws provide that the number of directors on United’s board of directors may range from eight to 14. The number of directors may be increased or decreased from time to time by the board of directors by resolution, but no decrease shall have the effect of shortening the term of an incumbent director. United’s board of directors is currently comprised of ten directors. | |
|
CLASSES OF DIRECTORS
|
| |||
| Pursuant to Aquesta’s bylaws, the Aquesta board of directors is divided into three classes, with each class being as nearly equal in number as possible. At each annual meeting of stockholders following the initial | | | United’s board of directors consists of one class. All directors serve a one-year term, expiring at the next annual meeting of shareholders or until their respective successors are duly elected and qualified. | |
|
AQUESTA
|
| |
UNITED
|
|
| classification of the board, directors elected to succeed those directors whose terms expire are elected for a term of three years or until their successors are elected and qualified. In the event of any increase or decrease in the number of directors, the additional or eliminated directorships shall be so classified or chosen so that all classes of directors shall remain and become equal in number, as nearly as possible. | | | | |
|
REMOVAL OF DIRECTORS
|
| |||
| As a Nevada corporation, and pursuant to the NRS, an Aquesta director may be removed as a director only by the vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote. | | | The articles of incorporation of United provide that directors may be removed only for cause and only upon the affirmative vote of the holders of two-thirds of the issued and outstanding shares entitled to vote on the removal. | |
|
FILLING VACANCIES ON THE BOARD OF DIRECTORS
|
| |||
| Subject to the rights of the holders of the Aquesta convertible preferred stock, Aquesta’s bylaws provide that vacancies in the office of director, including vacancies created by newly created directorships resulting from an increase in the number of directors, may be filled only by a vote of a majority of the directors then holding office, whether or not a quorum, at any regular or special meeting of the board called for that purpose. Any director so elected will serve for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred. If a vacancy occurs on the Aquesta board of directors related to the board representative appointed by Castle Creek, then Castle Creek has the right to designate the replacement of its representative, so long as Castle Creek continues to own 4.9% of the shares of Aquesta’s outstanding common stock. | | | United’s bylaws provide that a vacancy occurring in the board of directors for any reason may be filled for the unexpired term, unless the shareholders have elected a successor, by the affirmative vote of a majority of the remaining directors, whether or not the remaining directors constitute a quorum. | |
|
SPECIAL MEETINGS OF STOCKHOLDERS OR SHAREHOLDERS
|
| |||
| Aquesta’s bylaws provide that special meetings of stockholders may be called at any time only by the chairman of the board, the president or the chief executive officer or by resolution of at least three-fourths of the directors then in office. At a special meeting of Aquesta stockholders, no business may be transacted and no corporate action may be taken other than that stated in the notice of meeting. | | | United’s bylaws provide that special meetings may be called by the board of directors, the chairman of the board of directors, the chief executive officer, the president or the chief financial officer and by the holders of at least 25% of the shares entitled to vote on the matter considered at the annual meeting. | |
|
AQUESTA
|
| |
UNITED
|
|
|
QUORUM
|
| |||
| Except as otherwise provided by law, Aquesta’s bylaws, or Aquesta’s articles of incorporation, as amended, a majority of the voting power, which includes the voting power that is present in person or by proxy, constitutes a quorum for the transaction of business at a stockholders’ meeting. | | | Under United’s bylaws, except as otherwise provided by law or by United’s articles of incorporation, the holders of record of a majority of the shares of capital stock of United, issued and outstanding, entitled to vote at the meeting, present in person or by proxy shall constitute a quorum at a meeting of shareholders. | |
|
NOTICE OF STOCKHOLDER OR SHAREHOLDER MEETINGS
|
| |||
| Aquesta’s bylaws provide that, except as otherwise provided by law, written notice stating the place, date and hour of any meeting of stockholders must be delivered to each stockholder of record entitled to vote at such meeting not less than 10, nor more than 60, days before the date of such meeting. Any notice of meeting for a special meeting of stockholders must also include the purpose(s) for which the meeting is called. | | | United’s bylaws provide that written notice of the date, time and place of each annual and annual meeting of United’s shareholders will be given no fewer than ten days nor more than 60 days before the meeting date to each shareholder of record entitled to vote at the meeting. | |
|
ADVANCE NOTICE OF STOCKHOLDER OR SHAREHOLDER PROPOSALS
|
| |||
|
Aquesta’s bylaws provide that for a proposal to be properly brought before an annual meeting by a stockholder, the stockholder must be a stockholder of record and have given timely notice thereof in writing to Aquesta’s Secretary. To be timely, a stockholder’s notice must be delivered to or received by the Secretary not later than the following dates: (i) 90 days in advance of the anniversary of the previous year’s annual meeting if the current year’s meeting is to be held within 30 days prior to, on the anniversary date of, or after the anniversary of the previous year’s annual meeting; and (ii) with respect to an annual meeting of stockholders held at a time other than within the time periods set forth in the immediately preceding clause (i), the close of business on the 10th day following the date on which notice of such meeting is first given to stockholders.
A stockholder’s notice to the Secretary shall set forth as to the matter the stockholder proposes to bring before the annual meeting (a) a brief description of the proposal desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; (b) the name and address of the stockholder proposing such business; (c) the class and number of shares of Aquesta which are owned of record by the
|
| | United’s bylaws provide that for business to be brought properly before an annual meeting by a shareholder, the shareholder must have given timely notice of the business in writing to the Secretary. To be timely, the notice must be delivered or mailed to and received at the principal offices of United on or before the later to occur of (i) 14 days prior to the annual meeting or (ii) five days after notice of the meeting is provided to the shareholders. A shareholder’s notice must set forth (i) a brief description of each matter of business the shareholder proposes to bring before the meeting and the reasons for conducting the business at the meeting; (ii) the name, as it appears on United’s books, and address of the shareholder proposing the business; (iii) the series or class and number of shares of United’s capital stock that are beneficially owned by the shareholder; and (iv) any material interest of the shareholder in the proposed business. | |
|
AQUESTA
|
| |
UNITED
|
|
|
another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada, from time to time against all expenses, liability and loss (including attorney’s fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him or her in connection therewith, except that there shall be no indemnification to the extent such indemnification is not permitted under Section 1828(k) of Title 12 of the United States Code and the implementing regulations thereunder.
The foregoing rights of indemnification are not exclusive of any other right that such directors, officers or representatives may have or later acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law, or otherwise.
Expenses of directors and officers incurred in defending a civil or criminal action, suit or proceeding by reason of any act or omission of such director or officer acting as a director or officer are to be paid by Aquesta as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of any undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by Aquesta.
The indemnification and advancement of expenses provided described above continues for a person who has ceased to be a director, officer, employee or agent, and inures to the benefit of the heirs, executors and administrators of such person.
Aquesta’s articles of incorporation, as amended, permit the Aquesta board of directors to cause Aquesta to purchase and maintain insurance, or make other financial arrangements on behalf of any person who is or was a director or officer of Aquesta, against any liability asserted against such person and incurred in any such capacity or arising out of such status.
|
| |
In addition, United’s bylaws require it to indemnify its directors, officers, employees, and agents for expenses actually and reasonably incurred in connection with legal actions or proceedings instituted by or in the right of United to procure a judgment in its favor, if the actions of the director, officer, employee, or agent being indemnified meet the standards of conduct set forth therein. However, United will not indemnify a director, officer, employee, or agent for such expenses if such person is adjudged liable to United, unless so ordered by the court in which the legal action or proceeding is brought.
A determination concerning whether or not the applicable standard of conduct has been met by a director, officer, employee, or agent seeking indemnification must be made by (1) a disinterested majority of the Board of Directors, (2) United’s legal counsel, if a quorum of disinterested directors is not obtainable or if the disinterested directors so order, or (3) an affirmative vote of a majority of shares held by the shareholders. No indemnification may be made to or on behalf of a director, officer, employee, or agent in connection with any other proceeding in which such person was adjudged liable on the basis that personal benefit was improperly received by him or her.
As provided under Georgia law, the liability of a director may not be eliminated or limited (1) for any appropriation, in violation of his duties, of any business opportunity of United, (2) for acts or omissions which involve intentional misconduct or a knowing violation of law, (3) for unlawful corporate distributions, or (4) for any transaction from which the director received an improper benefit.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to United’s directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, United has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
United’s directors and officers are insured against losses arising from any claim against them as such for wrongful acts or omission, subject to certain limitations.
|
|
|
AMENDMENTS TO ARTICLES OF INCORPORATION AND BYLAWS
|
| |||
| Under Chapter 78 of the NRS, and subject to certain limited exceptions delineated therein, every | | | United’s articles of incorporation specifically provide that any amendment or repeal of any | |
|
AQUESTA
|
| |
UNITED
|
|
|
amendment to Aquesta’s articles of incorporation must be adopted by the Aquesta board of directors and submitted to the stockholders for approval. For the amendment to be approved by stockholders, such amendment must be approved by stockholders holding shares in Aquesta representing at least a majority of the voting power.
If any proposed amendment would adversely alter or change any preference or any relative or other right given to any class or series of outstanding shares, then, in addition to any approval otherwise required, the amendment must be approved by the holders of shares representing a majority of the voting power of each class or series adversely affected by the amendment regardless of limitations or restrictions on the voting power thereof. Different series of the same class of shares do not constitute different classes of shares for the purpose of voting by classes except when the series is adversely affected by an amendment in a different manner than other series of the same class.
Aquesta’s articles of incorporation, as amended, provide that the Aquesta board of directors has the exclusive authority to adopt, amend, or repeal from time to time Aquesta’s bylaws. Aquesta’s bylaws provide that the bylaws may be amended or repealed at any regular or special meeting of the entire board by the vote of two-thirds of the members of the entire board then in office; provided, however, that any bylaw made by the board may be altered, amended, rescinded or repealed by the holders of shares of capital stock entitled to vote thereon at any annual meeting or at any special meeting called for that purpose in accordance with the percentage requirements set forth the bylaws.
|
| |
provision of the articles of incorporation or Article II (Shareholders’ Meetings) or Article III (Board of Directors) of the bylaws requires the affirmative vote of holders of a majority of the shares of United’s capital stock then issued and outstanding and entitled to vote on such matters.
United’s bylaws provide that United’s board of directors may alter, amend or repeal United’s bylaws or adopt new bylaws, subject to the voting requirement included in United’s articles of incorporation. Any bylaws adopted by United’s board of directors may be altered, amended or repealed, and new bylaws adopted, by the shareholders of United.
|
|
|
ACTION BY WRITTEN CONSENT OF THE STOCKHOLDERS OR SHAREHOLDERS
|
| |||
| Aquesta’s bylaws and articles of incorporation, as amended, do not expressly address action by written consent of stockholders. As a Nevada corporation, action by written consent by Aquesta stockholders is therefore governed by Chapter 78 of the NRS. Under the NRS, any action required or permitted to be taken at a meeting of the Aquesta stockholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required. | | | United’s bylaws provide that any action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if a written consent (or consents) has been signed by the holders of outstanding United capital stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent must be given to those shareholders who have not consented in writing. | |
| | |
United Common Stock
|
| |
Aquesta Common Stock
|
| ||||||||||||||||||||||||||||||
|
High
|
| |
Low
|
| |
Dividend
|
| |
High
|
| |
Low
|
| |
Dividend
|
| ||||||||||||||||||||
Quarter Ended: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
September 30, 2021 (through [•], 2021)
|
| | | $ | [•] | | | | | $ | [•] | | | | | $ | [•] | | | | | $ | [•] | | | | | $ | [•] | | | | | $ | [•] | | |
June 30, 2021
|
| | | | 35.47 | | | | | | 31.24 | | | | | | 0.19 | | | | | | 21.50 | | | | | | 11.81 | | | | | | — | | |
March 31, 2021
|
| | | | 36.67 | | | | | | 29.33 | | | | | | 0.19 | | | | | | 11.94 | | | | | | 10.90 | | | | | | — | | |
December 31, 2020
|
| | | | 28.94 | | | | | | 16.69 | | | | | | 0.18 | | | | | | 11.00 | | | | | | 9.40 | | | | | | 0.12 | | |
September 30, 2020
|
| | | | 20.60 | | | | | | 15.73 | | | | | | 0.18 | | | | | | 10.00 | | | | | | 9.38 | | | | | | — | | |
June 30, 2020
|
| | | | 24.35 | | | | | | 14.95 | | | | | | 0.18 | | | | | | 10.30 | | | | | | 9.68 | | | | | | — | | |
March 31, 2020
|
| | | | 31.02 | | | | | | 15.71 | | | | | | 0.18 | | | | | | 12.15 | | | | | | 9.88 | | | | | | — | | |
December 31, 2019
|
| | | | 31.66 | | | | | | 27.01 | | | | | | 0.18 | | | | | | 11.60 | | | | | | 10.67 | | | | | | 0.11 | | |
September 30, 2019
|
| | | | 29.28 | | | | | | 25.24 | | | | | | 0.17 | | | | | | 11.30 | | | | | | 10.61 | | | | | | — | | |
June 30, 2019
|
| | | | 28.98 | | | | | | 24.91 | | | | | | 0.17 | | | | | | 11.50 | | | | | | 10.52 | | | | | | — | | |
| | |
United
Common Stock |
| |
Aquesta
Common Stock |
| |
Implied Value
of One Share of Aquesta Common Stock |
| |||||||||
May 26, 2021
|
| | | $ | 33.79 | | | | | $ | 12.95 | | | | | $ | 21.58 | | |
[ ]
|
| | | $ | [ ] | | | | | $ | [ ] | | | | | $ | [ ] | | |
United SEC Filings
|
| |
Period or Date Filed
|
|
Annual Report on Form 10-K | | | Year ended December 31, 2020 | |
Quarterly Report on Form 10-Q | | | Quarter ended March 31, 2021 | |
Current Reports on Form 8-K | | | Filed on January 19, 2021, April 20, 2021, April 23, 2021, May 13, 2021, May 14, 2021, May 27, 2021, July 15, 2021, and July 20, 2021 (other than the portions of those documents furnished under Items 2.02 or 7.01 (including related exhibits) that are not deemed to be “filed”) | |
| | |
Page
|
| |||
LIST OF EXHIBITS | | | | | | | |
| | | | A-1 | | | |
| | | | A-1 | | | |
| | | | A-1 | | | |
| | | | A-1 | | | |
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-2 | | | |
| | | | A-3 | | | |
| | | | A-3 | | | |
| | | | A-3 | | | |
| | | | A-4 | | | |
| | | | A-6 | | | |
| | | | A-8 | | | |
| | | | A-8 | | | |
| | | | A-8 | | | |
| | | | A-8 | | | |
| | | | A-9 | | | |
| | | | A-9 | | | |
| | | | A-9 | | | |
| | | | A-10 | | | |
| | | | A-10 | | | |
| | | | A-11 | | | |
| | | | A-11 | | | |
| | | | A-12 | | | |
| | | | A-12 | | | |
| | | | A-14 | | | |
| | | | A-15 | | | |
| | | | A-16 | | | |
| | | | A-17 | | | |
| | | | A-17 | | | |
| | | | A-18 | | | |
| | | | A-19 | | | |
| | | | A-22 | | | |
| | | | A-23 | | | |
| | | | A-23 | | |
| | |
Page
|
| |||
| | | | A-23 | | | |
| | | | A-23 | | | |
| | | | A-24 | | | |
| | | | A-24 | | | |
| | | | A-24 | | | |
| | | | A-24 | | | |
| | | | A-24 | | | |
| | | | A-25 | | | |
| | | | A-25 | | | |
| | | | A-25 | | | |
| | | | A-25 | | | |
| | | | A-26 | | | |
| | | | A-26 | | | |
| | | | A-26 | | | |
| | | | A-27 | | | |
| | | | A-27 | | | |
| | | | A-28 | | | |
| | | | A-28 | | | |
| | | | A-28 | | | |
| | | | A-28 | | | |
| | | | A-29 | | | |
| | | | A-30 | | | |
| | | | A-30 | | | |
| | | | A-30 | | | |
| | | | A-30 | | | |
| | | | A-31 | | | |
| | | | A-31 | | | |
| | | | A-31 | | | |
| | | | A-32 | | | |
| | | | A-34 | | | |
| | | | A-34 | | | |
| | | | A-34 | | | |
| | | | A-35 | | | |
| | | | A-35 | | | |
| | | | A-35 | | | |
| | | | A-35 | | | |
| | | | A-36 | | | |
| | | | A-36 | | | |
| | | | A-37 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-39 | | | |
| | | | A-39 | | |
| | |
Page
|
| |||
| | | | A-39 | | | |
| | | | A-40 | | | |
| | | | A-41 | | | |
| | | | A-41 | | | |
| | | | A-42 | | | |
| | | | A-42 | | | |
| | | | A-42 | | | |
| | | | A-43 | | | |
| | | | A-44 | | | |
| | | | A-45 | | | |
| | | | A-45 | | | |
| | | | A-46 | | | |
| | | | A-47 | | | |
| | | | A-47 | | | |
| | | | A-47 | | | |
| | | | A-47 | | | |
| | | | A-56 | | | |
| | | | A-57 | | | |
| | | | A-57 | | | |
| | | | A-57 | | | |
| | | | A-57 | | | |
| | | | A-57 | | | |
| | | | A-57 | | | |
| | | | A-58 | | | |
| | | | A-58 | | | |
| | | | A-58 | | | |
| | | | A-58 | | | |
| | | | A-59 | | | |
| | | | A-59 | | |
| Buyer: | | |
United Community Banks, Inc.
2 West Washington Street, Suite 700 Greenville, SC 29601 Attention: Melinda Davis Lux |
|
| | | | Email: melinda_davislux@ucbi.com | |
| Copy to Counsel: | | |
Nelson Mullins Riley & Scarborough LLP
2 West Washington Street, Suite 700 Greenville, SC 29601
Attention:
Neil Grayson
Lee Kiser
|
|
| | | |
Email:
neil.grayson@nelsonmullins.com
lee.kiser@nelsonmullins.com
|
|
| Aquesta: | | |
Aquesta Financial Holdings, Inc.
19510 Jetton Rd. Cornelius, NC 28031
Attention:
Jim Engel
|
|
| | | | Email: jengel@aquestabank.com | |
| Copy to Counsel: | | |
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300 Raleigh, NC 27607
Attention:
Todd H. Eveson
|
|
| | | |
Email:
teveson@wyrick.com
|
|
| | |
2020
|
| |
2019
|
| ||||||
Assets
|
| ||||||||||||
Cash and cash equivalents
|
| | | $ | 37,146,868 | | | | | | 19,456,627 | | |
Investment securities available-for-sale
|
| | | | 52,534,658 | | | | | | 56,687,947 | | |
Other investments
|
| | | | 1,678,300 | | | | | | 2,386,000 | | |
Loans
|
| | | | 556,960,895 | | | | | | 415,070,729 | | |
Allowance for loan losses
|
| | | | (5,319,214) | | | | | | (3,867,729) | | |
Deferred loan fees/costs
|
| | | | (2,009,766) | | | | | | 93,654 | | |
Loans, net of deferred loan fees/costs and allowance for loan losses
|
| | | | 549,631,915 | | | | | | 411,296,654 | | |
Premises and equipment, net
|
| | | | 17,529,844 | | | | | | 17,595,173 | | |
Intangible assets, net
|
| | | | 22,893 | | | | | | 28,419 | | |
Bank owned life insurance
|
| | | | 12,324,801 | | | | | | 6,168,164 | | |
Accrued interest receivable
|
| | | | 3,384,965 | | | | | | 1,207,206 | | |
Other assets
|
| | | | 5,913,813 | | | | | | 8,183,932 | | |
Total assets
|
| | | $ | 680,168,057 | | | | | | 523,010,122 | | |
Liabilities and Stockholders’ Equity
|
| ||||||||||||
Liabilities: | | | | | | | | | | | | | |
Deposits:
|
| | | | | | | | | | | | |
Non-interest bearing demand
|
| | | $ | 186,373,287 | | | | | | 136,800,283 | | |
NOW
|
| | | | 68,131,639 | | | | | | 56,357,484 | | |
Money market and savings
|
| | | | 239,841,265 | | | | | | 180,399,462 | | |
Time deposits
|
| | | | 63,622,517 | | | | | | 46,413,199 | | |
Total deposits
|
| | | | 557,968,708 | | | | | | 419,970,428 | | |
Federal Home Loan Bank advances
|
| | | | 28,400,000 | | | | | | 46,400,000 | | |
Other borrowed funds
|
| | | | 30,542,500 | | | | | | 140,150 | | |
Accrued interest payable
|
| | | | 61,551 | | | | | | 107,507 | | |
Other liabilities
|
| | | | 4,646,637 | | | | | | 3,025,073 | | |
Total liabilities
|
| | | | 621,619,396 | | | | | | 469,643,158 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Preferred stock, no par value; 1,000,000 shares authorized; 11,834
and 10,084 shares issued and outstanding, respectively |
| | | | 13,609,100 | | | | | | 11,596,600 | | |
Common stock, $.01 par value; 10,000,000 shares authorized; 4,289,805 and 4,442,185 shares issued and outstanding, respectively
|
| | | | 42,897 | | | | | | 44,421 | | |
Additional paid-in capital
|
| | | | 27,015,345 | | | | | | 28,899,648 | | |
Unearned compensation
|
| | | | (383,962) | | | | | | (273,960) | | |
Retained earnings
|
| | | | 18,729,832 | | | | | | 14,234,972 | | |
Accumulated other comprehensive loss
|
| | | | (458,551) | | | | | | (1,134,717) | | |
Total stockholders’ equity
|
| | | | 58,548,661 | | | | | | 53,366,964 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 680,168,057 | | | | | | 523,010,122 | | |
| | |
2020
|
| |
2019
|
| ||||||
Interest income: | | | | | | | | | | | | | |
Loans, including fees
|
| | | $ | 23,396,636 | | | | | | 20,941,845 | | |
Investment securities
|
| | | | | | | | | | | | |
Taxable
|
| | | | 770,093 | | | | | | 1,309,293 | | |
Tax-exempt
|
| | | | 1,134 | | | | | | 6,721 | | |
Deposits in other banks and federal funds sold
|
| | | | 140,054 | | | | | | 304,599 | | |
Total interest income
|
| | | | 24,307,917 | | | | | | 22,562,458 | | |
Interest expense: | | | | | | | | | | | | | |
Money market, NOW and savings deposits
|
| | | | 2,373,647 | | | | | | 2,988,655 | | |
Time deposits
|
| | | | 935,129 | | | | | | 1,149,621 | | |
Federal Home Loan Bank advances
|
| | | | 1,140,066 | | | | | | 1,783,519 | | |
Other borrowed funds
|
| | | | 80,326 | | | | | | 35,813 | | |
Total interest expense
|
| | | | 4,529,168 | | | | | | 5,957,618 | | |
Net interest income
|
| | | | 19,778,749 | | | | | | 16,604,840 | | |
Provision for loan losses
|
| | | | 1,951,800 | | | | | | 340,000 | | |
Net interest income after provision for loan losses
|
| | | | 17,826,949 | | | | | | 16,264,840 | | |
Noninterest income: | | | | | | | | | | | | | |
Service charges on deposit accounts
|
| | | | 1,001,542 | | | | | | 937,320 | | |
Gain (loss) on sale of securities, net
|
| | | | 252,446 | | | | | | (49,697) | | |
SBA loan sale income
|
| | | | 995,962 | | | | | | 1,181,484 | | |
Mortgage broker fees
|
| | | | 239,536 | | | | | | 189,142 | | |
Other income
|
| | | | 348,240 | | | | | | 589,032 | | |
Total noninterest income
|
| | | | 2,837,726 | | | | | | 2,847,281 | | |
Noninterest expense: | | | | | | | | | | | | | |
Salaries and employee benefits
|
| | | | 7,669,292 | | | | | | 8,481,869 | | |
Occupancy
|
| | | | 1,528,562 | | | | | | 1,376,648 | | |
Net gain on sales and write-downs of other real estate owned
|
| | | | (12,920) | | | | | | (18,622) | | |
Advertising and promotion
|
| | | | 229,172 | | | | | | 211,221 | | |
Professional fees
|
| | | | 960,885 | | | | | | 744,369 | | |
Other operating
|
| | | | 3,471,964 | | | | | | 2,934,268 | | |
Total noninterest expense
|
| | | | 13,846,955 | | | | | | 13,729,753 | | |
Earnings before income taxes
|
| | | | 6,817,720 | | | | | | 5,382,368 | | |
Income tax expense
|
| | | | 1,555,216 | | | | | | 1,028,972 | | |
Net earnings
|
| | | $ | 5,262,504 | | | | | | 4,353,396 | | |
Earnings per share – Basic
|
| | | $ | 0.96 | | | | | | 0.82 | | |
Earnings per share – Diluted
|
| | | $ | 0.91 | | | | | | 0.77 | | |
Weighted average shares outstanding – Basic
|
| | | | 5,470,697 | | | | | | 5,302,640 | | |
Weighted average shares outstanding – Diluted
|
| | | | 5,763,633 | | | | | | 5,630,070 | | |
| | |
2020
|
| |
2019
|
| ||||||
Net earnings
|
| | | $ | 5,262,504 | | | | | | 4,353,396 | | |
Other comprehensive income: | | | | | | | | | | | | | |
Unrealized holding gain on investment securities available-for- sale
|
| | | | 1,192,148 | | | | | | 2,315,752 | | |
Tax effect
|
| | | | (269,426) | | | | | | (523,360) | | |
Reclassification of (gain) loss recognized in net earnings
|
| | | | (252,446) | | | | | | 49,697 | | |
Tax effect
|
| | | | 57,053 | | | | | | (11,231) | | |
Unrealized holding (loss) on derivatives
|
| | | | (66,434) | | | | | | (435,934) | | |
Tax effect
|
| | | | 15,271 | | | | | | 98,679 | | |
Other comprehensive income
|
| | | | 676,166 | | | | | | 1,493,603 | | |
Comprehensive income
|
| | | $ | 5,938,670 | | | | | | 5,846,999 | | |
| | |
Preferred Stock
|
| |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Unearned
Compensation |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Loss |
| |
Total
|
| |||||||||||||||||||||||||||||||||
|
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||||
Balance December 31, 2018
|
| | | | — | | | | | | — | | | | | | 4,039,485 | | | | | $ | 40,394 | | | | | | 25,909,960 | | | | | | (285,444) | | | | | | 10,367,810 | | | | | | (2,628,320) | | | | | | 33,404,400 | | |
Dividends on common and preferred stock – $.11 per share
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (486,234) | | | | | | — | | | | | | (486,234) | | |
Exercise of stock options/warrants
|
| | | | — | | | | | | — | | | | | | 85,150 | | | | | | 852 | | | | | | 331,871 | | | | | | — | | | | | | — | | | | | | — | | | | | | 332,723 | | |
Restricted stock grant
|
| | | | — | | | | | | — | | | | | | 23,200 | | | | | | 232 | | | | | | 249,411 | | | | | | (249,643) | | | | | | — | | | | | | — | | | | | | — | | |
Restricted stock forfeiture
|
| | | | — | | | | | | — | | | | | | (15,650) | | | | | | (157) | | | | | | (161,970) | | | | | | 162,127 | | | | | | — | | | | | | — | | | | | | — | | |
Equity compensation expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (70,000) | | | | | | 99,000 | | | | | | — | | | | | | — | | | | | | 29,000 | | |
Net earnings
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,353,396 | | | | | | — | | | | | | 4,353,396 | | |
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,493,603 | | | | | | 1,493,603 | | |
Capital raise common shares, net
of issuance costs of $918,304 |
| | | | — | | | | | | — | | | | | | 310,000 | | | | | | 3,100 | | | | | | 2,640,376 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,643,476 | | |
Capital raise preferred shares
|
| | | | 10,084 | | | | | | 11,596,600 | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,596,600 | | |
Balance December 31, 2019
|
| | | | 10,084 | | | | | $ | 11,596,600 | | | | | | 4,442,185 | | | | | $ | 44,421 | | | | | | 28,899,648 | | | | | | (273,960) | | | | | | 14,234,972 | | | | | | (1,134,717) | | | | | | 53,366,964 | | |
Dividends on common and preferred stock – $.12 per share
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (767,644) | | | | | | — | | | | | | (767,644) | | |
Exercise of stock options/warrants
|
| | | | — | | | | | | — | | | | | | 682 | | | | | | 7 | | | | | | 4,509 | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,516 | | |
Restricted stock grant
|
| | | | — | | | | | | — | | | | | | 23,000 | | | | | | 230 | | | | | | 257,600 | | | | | | (257,830) | | | | | | — | | | | | | — | | | | | | — | | |
Restricted stock forfeiture
|
| | | | — | | | | | | — | | | | | | (1,062) | | | | | | (11) | | | | | | (9,817) | | | | | | 9,828 | | | | | | — | | | | | | — | | | | | | — | | |
Equity compensation expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (125,845) | | | | | | 132,000 | | | | | | — | | | | | | — | | | | | | 6,155 | | |
Net earnings
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,262,504 | | | | | | — | | | | | | 5,262,504 | | |
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 676,166 | | | | | | 676,166 | | |
Conversion of common stock to
preferred |
| | | | 1,750 | | | | | | 2,012,500 | | | | | | (175,000) | | | | | | (1,750) | | | | | | (2,010,750) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Balance December 31, 2020
|
| | | | 11,834 | | | | | $ | 13,609,100 | | | | | | 4,289,805 | | | | | $ | 42,897 | | | | | | 27,015,345 | | | | | | (389,962) | | | | | | 18,729,832 | | | | | | (458,551) | | | | | | 58,548,661 | | |
| | |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net earnings
|
| | | $ | 5,262,504 | | | | | | 4,353,396 | | |
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation, amortization and accretion
|
| | | | 1,179,969 | | | | | | 980,978 | | |
Amortization of intangible assets
|
| | | | 5,526 | | | | | | 5,526 | | |
Provision for loan losses
|
| | | | 1,951,800 | | | | | | 340,000 | | |
Deferred income tax benefit
|
| | | | (468,782) | | | | | | (249,286) | | |
Equity compensation expense
|
| | | | 6,155 | | | | | | 29,000 | | |
(Gain) loss on sale of securities
|
| | | | (252,446) | | | | | | 49,697 | | |
Loss on sale of premises and equipment
|
| | | | — | | | | | | 17,132 | | |
(Gain) on sales of other real estate owned
|
| | | | (12,920) | | | | | | (18,622) | | |
Increase in cash surrender value of life insurance
|
| | | | (156,637) | | | | | | (139,629) | | |
Change in:
|
| | | | | | | | | | | | |
Accrued interest receivable
|
| | | | (2,177,759) | | | | | | (95,142) | | |
SBA loan sales receivable
|
| | | | (1,864,458) | | | | | | (6,841,995) | | |
Other assets
|
| | | | 4,714,688 | | | | | | 1,022,119 | | |
Accrued interest payable
|
| | | | (45,956) | | | | | | 21,173 | | |
Other liabilities
|
| | | | 1,570,401 | | | | | | 186,279 | | |
Net cash provided (used in) by operating activities
|
| | | | 9,712,085 | | | | | | (399,374) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Proceeds from maturities/calls/paydowns of investment securities available-for-sale
|
| | | | 21,284,251 | | | | | | 9,002,116 | | |
Proceeds from sales of investment securities available-for-sale
|
| | | | 20,221,869 | | | | | | 1,797,930 | | |
Purchases of investment securities available-for-sale
|
| | | | (36,526,889) | | | | | | (13,867,504) | | |
Change in loans, net
|
| | | | (141,224,337) | | | | | | (46,236,846) | | |
Proceeds from the sale of other real estate owned
|
| | | | 569,440 | | | | | | 150,000 | | |
Proceeds from sale of premises and equipment
|
| | | | — | | | | | | 54,178 | | |
Purchases of premises and equipment
|
| | | | (691,380) | | | | | | (2,360,774) | | |
Proceeds from sale of other investments
|
| | | | 707,700 | | | | | | 2,288,500 | | |
Purchase of bank owned life insurance
|
| | | | (6,000,000) | | | | | | — | | |
Proceeds from death benefits from life insurance
|
| | | | — | | | | | | 181,821 | | |
Net cash used in investing activities
|
| | | | (141,659,346) | | | | | | (48,990,579) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Change in deposits, net
|
| | | | 137,998,280 | | | | | | 99,766,750 | | |
Dividends on common stock
|
| | | | (767,644) | | | | | | (486,234) | | |
Exercise of stock options
|
| | | | 4,516 | | | | | | 332,723 | | |
Proceeds from Capital Raise
|
| | | | — | | | | | | 15,158,380 | | |
Capital Raise offering costs
|
| | | | — | | | | | | (918,304) | | |
Proceeds from other borrowings
|
| | | | 41,777,016 | | | | | | 27,226,074 | | |
Payment of other borrowings
|
| | | | (11,374,666) | | | | | | (28,898,934) | | |
Net change in federal funds purchased
|
| | | | — | | | | | | (237,000) | | |
Proceeds from Federal Home Loan Bank advances
|
| | | | 67,526,172 | | | | | | 97,800,250 | | |
Payments of Federal Home Loan Bank advances
|
| | | | (85,526,172) | | | | | | (152,800,250) | | |
Net cash provided by financing activities
|
| | | | 149,637,502 | | | | | | 56,943,455 | | |
Net change in cash and cash equivalents
|
| | | | 17,690,241 | | | | | | 7,613,502 | | |
Cash and cash equivalents at beginning of the year
|
| | | | 19,456,627 | | | | | | 11,843,125 | | |
Cash and cash equivalents at end of the year
|
| | | $ | 37,146,868 | | | | | | 19,456,627 | | |
Supplemental information on cash payments: | | | | | | | | | | | | | |
Interest paid
|
| | | $ | 4,575,124 | | | | | | 5,936,445 | | |
Taxes paid
|
| | | $ | 449,735 | | | | | | 1,714,273 | | |
Supplemental information of non-cash transactions: | | | | | | | | | | | | | |
Change in unrealized (loss) on derivatives, net of tax
|
| | | $ | (94,389) | | | | | | (337,255) | | |
Change in unrealized loss on available-for-sale investments, net of tax
|
| | | $ | 770,555 | | | | | | 1,830,858 | | |
Loans transferred to other real estate owned
|
| | | $ | 937,276 | | | | | | 131,378 | | |
Cashless exercise of stock options
|
| | | $ | — | | | | | | 203 | | |
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Estimated
Fair Value |
| ||||||||||||
December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agency securities
|
| | | $ | 2,950,948 | | | | | | 118,954 | | | | | | — | | | | | | 3,069,902 | | |
Mortgage-backed securities
|
| | | | 44,932,628 | | | | | | 709,191 | | | | | | 9,176 | | | | | | 45,632,643 | | |
Corporate shares
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Municipal bonds
|
| | | | 3,856,863 | | | | | | 30 | | | | | | 24,780 | | | | | | 3,832,113 | | |
Total
|
| | | $ | 51,740,439 | | | | | | 828,175 | | | | | | 33,956 | | | | | | 52,534,658 | | |
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Estimated
Fair Value |
| ||||||||||||
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agency securities
|
| | | $ | 9,058,632 | | | | | | 240 | | | | | | 45,798 | | | | | | 9,013,074 | | |
Mortgage-backed securities
|
| | | | 47,274,798 | | | | | | 184,695 | | | | | | 236,163 | | | | | | 47,223,330 | | |
Corporate shares
|
| | | | 500,000 | | | | | | — | | | | | | 48,457 | | | | | | 451,543 | | |
Municipal bonds
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 56,833,430 | | | | | | 184,935 | | | | | | 330,418 | | | | | | 56,687,947 | | |
| | |
Amortized
Cost |
| |
Estimated
Fair Value |
| ||||||
Due in one year or less
|
| | | $ | — | | | | | | — | | |
Due after one year through five years
|
| | | | — | | | | | | — | | |
Due after five years through ten years
|
| | | | 951,163 | | | | | | 973,413 | | |
After ten years
|
| | | | 5,856,648 | | | | | | 5,928,602 | | |
Mortgage-backed securities
|
| | | | 44,932,628 | | | | | | 45,632,643 | | |
| | | | $ | 51,740,439 | | | | | | 52,534,658 | | |
Available-for-Sale
|
| |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
|
Count
|
| |
Estimated
Fair Value |
| |
Unrealized
Losses |
| |
Count
|
| |
Estimated
Fair Value |
| |
Unrealized
Losses |
| ||||||||||||||||||||
Unrealized loss for less than 12 months: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agency securities
|
| | | | — | | | | | $ | — | | | | | | — | | | | | | 7 | | | | | $ | 5,018,880 | | | | | | 40,954 | | |
Mortgage-backed securities
|
| | | | 2 | | | | | | 6,122,053 | | | | | | 9,176 | | | | | | 4 | | | | | | 6,274,550 | | | | | | 66,387 | | |
Corporate bonds
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Foreign debt securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Municipal bonds
|
| | | | 12 | | | | | | 3,214,199 | | | | | | 24,780 | | | | | | — | | | | | | — | | | | | | — | | |
Less than 12 months
|
| | | | 14 | | | | | | 9,336,252 | | | | | | 33,956 | | | | | | 11 | | | | | | 11,293,430 | | | | | | 107,341 | | |
Unrealized loss for more than 12 months:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agency securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1 | | | | | | 1,993,954 | | | | | | 4,844 | | |
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | 14 | | | | | | 12,203,609 | | | | | | 169,776 | | |
Corporate bonds
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1 | | | | | | 451,543 | | | | | | 48,457 | | |
Foreign debt securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Municipal bonds
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
More than 12 months
|
| | | | — | | | | | | — | | | | | | — | | | | | | 16 | | | | | | 14,649,106 | | | | | | 223,077 | | |
Total
|
| | | | 14 | | | | | $ | 9,336,252 | | | | | | 33,956 | | | | | | 27 | | | | | $ | 25,942,536 | | | | | | 330,418 | | |
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
|
Amount
|
| |
% of Total
Loans |
| |
Amount
|
| |
% of Total
Loans |
| ||||||||||||||
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family residential
|
| | | $ | 18,061,178 | | | | | | 3.2% | | | | | $ | 22,101,417 | | | | | | 5.3% | | |
Multi-family and commercial
|
| | | | 291,313,012 | | | | | | 52.2% | | | | | | 257,036,792 | | | | | | 61.9% | | |
Construction
|
| | | | 24,981,496 | | | | | | 4.5% | | | | | | 42,012,118 | | | | | | 10.1% | | |
Home equity lines of credit
|
| | | | 28,067,403 | | | | | | 5.0% | | | | | | 31,354,385 | | | | | | 7.6% | | |
Total real estate loans
|
| | | | 362,423,089 | | | | | | 64.9% | | | | | | 352,504,712 | | | | | | 84.9% | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 194,509,572 | | | | | | 35.0% | | | | | | 62,141,488 | | | | | | 14.9% | | |
Loans to individuals
|
| | | | 25,209 | | | | | | 0.1% | | | | | | 38,826 | | | | | | 0.1% | | |
Overdrafts
|
| | | | 3,025 | | | | | | 0.0% | | | | | | 385,703 | | | | | | 0.1% | | |
Total other loans
|
| | | | 194,537,806 | | | | | | 35.1% | | | | | | 62,566,017 | | | | | | 15.1% | | |
Total loans
|
| | | | 556,960,895 | | | | | | 100.0% | | | | | | 415,070,729 | | | | | | 100.0% | | |
Allowance for loan losses
|
| | | | (5,319,214) | | | | | | | | | | | | (3,867,729) | | | | | | | | |
Unamortized deferred costs/fees
|
| | | | (2,009,766) | | | | | | | | | | | | 93,654 | | | | | | | | |
Total loans, net
|
| | | $ | 549,631,915 | | | | | | | | | | | $ | 411,296,654 | | | | | | | | |
December 31, 2020:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses:
|
| |
1 – 4
Family Residential |
| |
Multi-family
and Commercial |
| |
Construction
|
| |
Home
Equity Lines of Credit |
| |
Commercial
and Industrial |
| |
Loans to
Individuals |
| |
Overdrafts
|
| |
Unallocated
|
| |
Total
|
| |||||||||||||||||||||||||||
Balance at beginning of the period
|
| | | $ | 167,514 | | | | | | 2,060,292 | | | | | | 251,614 | | | | | | 262,286 | | | | | | 785,384 | | | | | | 14,406 | | | | | | — | | | | | | 326,233 | | | | | | 3,867,729 | | |
Provision for loan
losses |
| | | | (54,693) | | | | | | 719,474 | | | | | | 46,919 | | | | | | (93,872) | | | | | | 167,961 | | | | | | (10,414) | | | | | | 6,484 | | | | | | 1,169,942 | | | | | | 1,951,800 | | |
Charge-offs
|
| | | | — | | | | | | (659,102) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (14,499) | | | | | | — | | | | | | (673,601) | | |
Recoveries
|
| | | | — | | | | | | 153,270 | | | | | | — | | | | | | — | | | | | | 12,000 | | | | | | — | | | | | | 8,015 | | | | | | — | | | | | | 173,286 | | |
Ending balance
|
| | | $ | 112,821 | | | | | | 2,273,934 | | | | | | 298,533 | | | | | | 168,414 | | | | | | 965,345 | | | | | | 3,992 | | | | | | — | | | | | | 1,496,175 | | | | | | 5,319,214 | | |
Ending balance individually evaluated for impairment
|
| | | $ | — | | | | | | 255,251 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 255,251 | | |
Ending balance collectively evaluated for impairment
|
| | | | 112,821 | | | | | | 2,018,683 | | | | | | 298,533 | | | | | | 168,414 | | | | | | 965,345 | | | | | | 3,992 | | | | | | — | | | | | | 1,496,175 | | | | | | 5,063,963 | | |
| | | | $ | 112,821 | | | | | | 2,273,934 | | | | | | 298,533 | | | | | | 168,414 | | | | | | 965,345 | | | | | | 3,992 | | | | | | — | | | | | | 1,496,175 | | | | | | 5,319,214 | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for
impairment |
| | | $ | — | | | | | | 4,552,216 | | | | | | — | | | | | | — | | | | | | 1,196,906 | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,749,122 | | |
Collectively evaluated for
impairment |
| | | | 18,061,178 | | | | | | 286,760,796 | | | | | | 24,981,496 | | | | | | 28,067,403 | | | | | | 193,312,666 | | | | | | 25,209 | | | | | | 3,025 | | | | | | — | | | | | | 551,211,773 | | |
| | | | $ | 18,061,178 | | | | | | 291,313,012 | | | | | | 24,981,496 | | | | | | 28,037,403 | | | | | | 194,509,572 | | | | | | 25,209 | | | | | | 3,025 | | | | | | — | | | | | | 556,960,895 | | |
December 31, 2019:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses:
|
| |
1 – 4
Family Residential |
| |
Multi-family
and Commercial |
| |
Construction
|
| |
Home
Equity Lines of Credit |
| |
Commercial
and Industrial |
| |
Loans to
Individuals |
| |
Overdrafts
|
| |
Unallocated
|
| |
Total
|
| |||||||||||||||||||||||||||
Balance at beginning of the
period |
| | | $ | 127,920 | | | | | | 2,281,241 | | | | | | 102,208 | | | | | | 256,669 | | | | | | 395,688 | | | | | | 16,106 | | | | | | — | | | | | | 313,533 | | | | | | 3,493,365 | | |
Provision for loan losses
|
| | | | 39,594 | | | | | | (223,749) | | | | | | 149,406 | | | | | | 5,617 | | | | | | 356,447 | | | | | | (1,700) | | | | | | 1,685 | | | | | | 12,700 | | | | | | 340,000 | | |
Charge-offs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,259) | | | | | | — | | | | | | (4,259) | | |
Recoveries
|
| | | | — | | | | | | 2,800 | | | | | | — | | | | | | — | | | | | | 33,249 | | | | | | — | | | | | | 2,574 | | | | | | — | | | | | | 38,623 | | |
Ending balance
|
| | | $ | 167,514 | | | | | | 2,060,292 | | | | | | 251,614 | | | | | | 262,286 | | | | | | 785,384 | | | | | | 14,406 | | | | | | — | | | | | | 326,233 | | | | | | 3,867,729 | | |
Ending balance
individually evaluated for impairment |
| | | $ | — | | | | | | 139,995 | | | | | | — | | | | | | — | | | | | | 5,094 | | | | | | — | | | | | | — | | | | | | — | | | | | | 145,089 | | |
Ending balance collectively
evaluated for impairment |
| | | | 167,514 | | | | | | 1,920,297 | | | | | | 251,614 | | | | | | 262,286 | | | | | | 780,290 | | | | | | 14,406 | | | | | | — | | | | | | 326,233 | | | | | | 3,722,640 | | |
| | | | $ | 167,514 | | | | | | 2,060,292 | | | | | | 251,614 | | | | | | 262,286 | | | | | | 785,384 | | | | | | 14,406 | | | | | | — | | | | | | 326,233 | | | | | | 3,867,729 | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | — | | | | | | 4,678,882 | | | | | | — | | | | | | 138,057 | | | | | | 1,302,983 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,119,922 | | |
Collectively evaluated for impairment
|
| | | | 22,101,417 | | | | | | 252,357,910 | | | | | | 42,012,118 | | | | | | 31,216,328 | | | | | | 60,838,505 | | | | | | 38,826 | | | | | | 385,703 | | | | | | — | | | | | | 408,950,807 | | |
| | | | $ | 22,101,417 | | | | | | 257,036,792 | | | | | | 42,012,118 | | | | | | 31,354,385 | | | | | | 62,141,488 | | | | | | 38,826 | | | | | | 385,703 | | | | | | — | | | | | | 415,070,729 | | |
December 31, 2020:
|
| |
Unpaid
Principal Balance(1) |
| |
Recorded
Investment(2) |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
Impaired loans without related allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family and commercial
|
| | | $ | 4,296,965 | | | | | | 4,296,965 | | | | | | — | | | | | | 4,410,531 | | | | | | 2,697 | | |
Home Equity Lines of Credit
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Other loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 1,196,906 | | | | | | 1,196,906 | | | | | | — | | | | | | 1,250,712 | | | | | | 2,279 | | |
| | | | | 5,493,871 | | | | | | 5,493,872 | | | | | | — | | | | | | 5,661,243 | | | | | | 4,976 | | |
Impaired loans with related allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family and commercial
|
| | | | 255,251 | | | | | | 255,251 | | | | | | 255,251 | | | | | | 265,163 | | | | | | — | | |
Home Equity Lines of Credit
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Other loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 255,251 | | | | | | 255,251 | | | | | | 255,251 | | | | | | 265,163 | | | | | | — | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family and commercial
|
| | | | 4,552,216 | | | | | | 4,552,216 | | | | | | 255,251 | | | | | | 4,675,694 | | | | | | 2.697 | | |
Home Equity Lines of Credit
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Other loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 1,196,906 | | | | | | 1,196,906 | | | | | | — | | | | | | 1,250,712 | | | | | | 2,279 | | |
| | | | $ | 5,749,122 | | | | | | 5,749,122 | | | | | | 255,251 | | | | | | 5,926,406 | | | | | | 4,976 | | |
December 31, 2019:
|
| |
Unpaid
Principal Balance(1) |
| |
Recorded
Investment(2) |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
Impaired loans without related allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family and commercial
|
| | | $ | 4,477,503 | | | | | | 4,477,503 | | | | | | — | | | | | | 4,540,230 | | | | | | 124,929 | | |
Home Equity Lines of Credit
|
| | | | 138,057 | | | | | | 138,057 | | | | | | — | | | | | | 137,229 | | | | | | — | | |
Other loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 1,277,300 | | | | | | 1,277,300 | | | | | | — | | | | | | 1,378,442 | | | | | | 51,886 | | |
| | | | | 5,892,860 | | | | | | 5,892,860 | | | | | | — | | | | | | 6,055,901 | | | | | | 176,815 | | |
December 31, 2019:
|
| |
Unpaid
Principal Balance(1) |
| |
Recorded
Investment(2) |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
Impaired loans with related allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family and commercial
|
| | | | 201,379 | | | | | | 201,379 | | | | | | 139,995 | | | | | | 198,812 | | | | | | — | | |
Home Equity Lines of Credit
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Other loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 25,683 | | | | | | 25,683 | | | | | | 5,094 | | | | | | 56,246 | | | | | | 3,875 | | |
| | | | | 227,062 | | | | | | 227,062 | | | | | | 145,089 | | | | | | 255,058 | | | | | | 3,875 | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family and commercial
|
| | | | 4,678,882 | | | | | | 4,678,882 | | | | | | 139,995 | | | | | | 4,739,042 | | | | | | 124,929 | | |
Home Equity Lines of Credit
|
| | | | 138,057 | | | | | | 138,057 | | | | | | — | | | | | | 137,229 | | | | | | — | | |
Other loans:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 1,302,983 | | | | | | 1,302,983 | | | | | | 5,094 | | | | | | 1,434,688 | | | | | | 55,761 | | |
| | | | $ | 6,119,922 | | | | | | 6,119,922 | | | | | | 145,089 | | | | | | 6,310,959 | | | | | | 180,690 | | |
|
| | |
Pass
|
| |
Special
Mention |
| |
Substandard
Accruing |
| |
Nonaccrual
|
| |
Total
|
| |||||||||||||||
December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family residential
|
| | | $ | 18,061,178 | | | | | | — | | | | | | — | | | | | | — | | | | | | 18,061,178 | | |
Multi-family and commercial
|
| | | | 285,595,988 | | | | | | 1,204,856 | | | | | | — | | | | | | 4,512,168 | | | | | | 291,313,012 | | |
Construction
|
| | | | 24,981,496 | | | | | | — | | | | | | — | | | | | | — | | | | | | 24,981,496 | | |
Home equity lines of credit
|
| | | | 28,067,403 | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,067,403 | | |
Total real estate loans
|
| | | | 356,706,065 | | | | | | 1,204,856 | | | | | | — | | | | | | 4,512,168 | | | | | | 362,423,089 | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 193,290,902 | | | | | | 75,321 | | | | | | — | | | | | | 1,143,349 | | | | | | 194,509,572 | | |
Loans to individuals
|
| | | | 25,209 | | | | | | — | | | | | | — | | | | | | — | | | | | | 25,209 | | |
Overdrafts
|
| | | | 3,025 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,025 | | |
Total other loans
|
| | | | 193,319,136 | | | | | | 75,321 | | | | | | — | | | | | | 1,143,349 | | | | | | 194,537,806 | | |
Total
|
| | | $ | 550,025,201 | | | | | | 1,280,177 | | | | | | — | | | | | | 5,655,517 | | | | | | 556,960,895 | | |
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family residential
|
| | | $ | 22,101,417 | | | | | | — | | | | | | — | | | | | | — | | | | | | 22,101,417 | | |
Multi-family and commercial
|
| | | | 250,058,531 | | | | | | 5,926,360 | | | | | | — | | | | | | 1,051,901 | | | | | | 257,036,792 | | |
Construction
|
| | | | 42,012,118 | | | | | | — | | | | | | — | | | | | | — | | | | | | 42,012,118 | | |
Home equity lines of credit
|
| | | | 31,216,328 | | | | | | — | | | | | | — | | | | | | 138,057 | | | | | | 31,354,385 | | |
Total real estate loans
|
| | | | 345,388,394 | | | | | | 5,926,360 | | | | | | — | | | | | | 1,189,958 | | | | | | 352,504,712 | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial
|
| | | | 60,841,426 | | | | | | 1,274,012 | | | | | | 24,130 | | | | | | 1,920 | | | | | | 62,141,488 | | |
Loans to individuals
|
| | | | 38,826 | | | | | | — | | | | | | — | | | | | | — | | | | | | 38,826 | | |
Overdrafts
|
| | | | 385,703 | | | | | | — | | | | | | — | | | | | | — | | | | | | 385,703 | | |
Total other loans
|
| | | | 61,265,955 | | | | | | 1,274,012 | | | | | | 24,130 | | | | | | 1,920 | | | | | | 62,566,017 | | |
Total
|
| | | $ | 406,654,349 | | | | | | 7,200,372 | | | | | | 24,130 | | | | | | 1,191,878 | | | | | | 415,070,729 | | |
|
Prior year balance
|
| | | $ | 5,763,761 | | |
|
Advances
|
| | | | 819,670 | | |
|
Repayments
|
| | | | (2,265,561) | | |
| | | | | $ | 4,317,870 | | |
| | |
2020
|
| |
2019
|
| ||||||
Land
|
| | | $ | 4,805,232 | | | | | | 4,805,232 | | |
Buildings
|
| | | | 14,683,874 | | | | | | 14,374,622 | | |
Furniture and fixtures
|
| | | | 3,700,479 | | | | | | 3,386,344 | | |
Construction-in-progress
|
| | | | 63,829 | | | | | | 2,516 | | |
| | | | | 23,253,414 | | | | | | 22,568,714 | | |
Accumulated depreciation
|
| | | | 5,723,570 | | | | | | 4,973,541 | | |
Total
|
| | | $ | 17,529,844 | | | | | | 17,595,173 | | |
|
2021
|
| | | $ | 41,371,176 | | |
|
2022
|
| | | | 12,447,166 | | |
|
2023
|
| | | | 7,868,879 | | |
|
2024
|
| | | | 1,022,174 | | |
|
2025
|
| | | | 913,122 | | |
| | | | | $ | 63,622,517 | | |
| | |
Maturity
Dates |
| |
Interest
Basis |
| |
Weighted
Average Interest Rate |
| |
2020
|
| |
2019
|
| |||||||||
Federal Reserve PPP
Liquidity Facility |
| |
2022
|
| |
Fixed
|
| | | | 0.35% | | | | | $ | 30,542,500 | | | | | | — | | |
Other borrowed funds
|
| |
Overnight
|
| |
Fixed
|
| | | | 0.56% | | | | | | — | | | | | | 140,150 | | |
| | | | | | | | | | | | | | | | $ | 30,542,500 | | | | | | 140,150 | | |
| | |
2020
|
| |
2019
|
| ||||||
Current
|
| | | $ | 2,023,998 | | | | | | 1,278,258 | | |
Deferred
|
| | | | (468,782) | | | | | | (249,286) | | |
Total income tax expense
|
| | | $ | 1,555,216 | | | | | | 1,028,972 | | |
| | |
2020
|
| |
2019
|
| ||||||
Pretax income at statutory rate
|
| | | $ | 1,431,720 | | | | | | 1,130,297 | | |
State income tax expense, net
|
| | | | 109,043 | | | | | | 25,345 | | |
Benefit of Solar Credit Investment
|
| | | | — | | | | | | (63,941) | | |
Changes in BOLI
|
| | | | (32,894) | | | | | | (53,503) | | |
Other
|
| | | | 47,347 | | | | | | (9,226) | | |
Total income tax expense
|
| | | $ | 1,555,216 | | | | | | 1,028,972 | | |
| | |
2020
|
| |
2019
|
| ||||||
Deferred income tax assets: | | | | | | | | | | | | | |
Unrealized loss on securities
|
| | | $ | — | | | | | | 32,821 | | |
Unrealized loss on derivatives
|
| | | | 312,761 | | | | | | 297,747 | | |
Allowance for loan losses
|
| | | | 1,222,090 | | | | | | 696,263 | | |
Pre-opening costs and expenses
|
| | | | 2,677 | | | | | | 3,001 | | |
Stock-based compensation
|
| | | | 206,735 | | | | | | 204,408 | | |
Deferred compensation
|
| | | | 216,474 | | | | | | 173,473 | | |
Basis Difference in Solar Credit Investment
|
| | | | — | | | | | | 191,919 | | |
Intangibles
|
| | | | 9,416 | | | | | | 22,561 | | |
Service Charges and Fees
|
| | | | 486,559 | | | | | | — | | |
Other
|
| | | | 133,060 | | | | | | 87,837 | | |
Total deferred income tax assets
|
| | | | 2,589,772 | | | | | | 1,710,030 | | |
Deferred income tax liabilities: | | | | | | | | | | | | | |
Premises and equipment
|
| | | | 677,481 | | | | | | 582,815 | | |
Basis difference in Solar Credit Investment
|
| | | | 105,370 | | | | | | — | | |
Unrealized gain on securities
|
| | | | 179,175 | | | | | | — | | |
Bad debt recapture
|
| | | | 173,113 | | | | | | — | | |
SBA servicing asset
|
| | | | 251,585 | | | | | | 187,967 | | |
Other
|
| | | | 23,937 | | | | | | 31,940 | | |
Total deferred income tax liabilities
|
| | | | 1,410,661 | | | | | | 802,722 | | |
Net deferred income tax assets
|
| | | $ | 1,179,111 | | | | | | 907,308 | | |
| | |
Actual
|
| |
For Capital
Adequacy Purposes |
| |
To Be Well
Capitalized Under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
|
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||||
|
(Dollars in Thousands)
|
| |||||||||||||||||||||||||||||||||||
December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common Equity Tier 1 (to Risk-Weighted Assets)
|
| | | $ | 59,812 | | | | | | 14.15% | | | | | $ | 19,027 | | | | | | 4.50% | | | | | $ | 27,843 | | | | | | 6.50% | | |
Total Capital (to Risk-Weighted Assets)
|
| | | $ | 65,099 | | | | | | 15.40% | | | | | $ | 33,825 | | | | | | 8.00% | | | | | $ | 42,282 | | | | | | 10.00% | | |
Tier I Capital (to Risk-Weighted Assets)
|
| | | $ | 59,812 | | | | | | 14.15% | | | | | $ | 25,369 | | | | | | 6.00% | | | | | $ | 33,825 | | | | | | 8.00% | | |
Tier I Capital (to Average Assets)
|
| | | $ | 59,812 | | | | | | 9.06% | | | | | $ | 27,852 | | | | | | 4.00% | | | | | $ | 34,815 | | | | | | 5.00% | | |
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common Equity Tier 1 (to Risk-Weighted Assets)
|
| | | $ | 54,253 | | | | | | 13.63% | | | | | $ | 17,916 | | | | | | 4.50% | | | | | $ | 25,879 | | | | | | 6.50% | | |
Total Capital (to Risk-Weighted Assets)
|
| | | $ | 58,121 | | | | | | 14.60% | | | | | $ | 31,851 | | | | | | 8.00% | | | | | $ | 39,813 | | | | | | 10.00% | | |
Tier I Capital (to Risk-Weighted Assets)
|
| | | $ | 54,253 | | | | | | 13.63% | | | | | $ | 23,888 | | | | | | 6.00% | | | | | $ | 31,851 | | | | | | 8.00% | | |
Tier I Capital (to Average Assets)
|
| | | $ | 54,253 | | | | | | 10.71% | | | | | $ | 20,266 | | | | | | 4.00% | | | | | $ | 25,333 | | | | | | 5.00% | | |
| | |
2020
|
| |||
Assets | | | | | | | |
Operating lease right-of-use asset
|
| | | $ | 2,242,930 | | |
Liabilities | | | | | | | |
Current portion of the operating lease liabilities
|
| | | $ | 242,360 | | |
Operating lease long term liabilities
|
| | | | 2,031,191 | | |
Total lease liability
|
| | | $ | 2,273,551 | | |
|
2021
|
| | | $ | 294,410 | | |
|
2022
|
| | | | 300,144 | | |
|
2023
|
| | | | 306,039 | | |
|
2024
|
| | | | 301,195 | | |
|
2025
|
| | | | 226,081 | | |
|
Thereafter
|
| | | | 1,144,752 | | |
|
Less: Imputed Interest
|
| | | | (299,070) | | |
| | | | | $ | 2,273,551 | | |
|
Weighted average remaining lease term (years)
|
| | | | 9.66 | | |
|
Weighted average discount rate (percentage)
|
| | | | 2.40 | | |
| | |
2020
|
| |
2019
|
| ||||||
Financial instruments whose contract amounts represent credit risk: | | | | | | | | | | | | | |
Commitments to extend credit
|
| | | $ | 77,825,446 | | | | | | 67,722,131 | | |
Undisbursed lines of credit
|
| | | | 29,811,913 | | | | | | 18,628,605 | | |
Standby letters of credit
|
| | | | 365,000 | | | | | | 115,000 | | |
| Level 1 — | | | Valuation is based upon quoted prices for identical instruments traded in active markets. | |
| Level 2 — | | | Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |
| Level 3 — | | | Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agency securities
|
| | | $ | — | | | | | | 3,069,902 | | | | | | — | | | | | | 3,069,902 | | |
Mortgage-backed securities
|
| | | | — | | | | | | 45,632,643 | | | | | | — | | | | | | 45,632,643 | | |
Corporate bonds
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Municipal bonds
|
| | | | — | | | | | | 3,832,113 | | | | | | | | | | | | 3,832,113 | | |
| | | | $ | — | | | | | | 52,534,658 | | | | | | — | | | | | | 52,534,658 | | |
Fair value of derivatives: | | | | | | | | | | | — | | | | | | | | | | | | | | |
Derivative liabilities
|
| | | $ | — | | | | | | 1,386,357 | | | | | | — | | | | | | 1,386,357 | | |
| | | | $ | — | | | | | | 1,386,357 | | | | | | — | | | | | | 1,386,357 | | |
|
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agency securities
|
| | | $ | — | | | | | | 9,013,074 | | | | | | — | | | | | | 9,013,074 | | |
Mortgage-backed securities
|
| | | | — | | | | | | 47,223,330 | | | | | | — | | | | | | 47,223,330 | | |
Corporate bonds
|
| | | | — | | | | | | 451,543 | | | | | | — | | | | | | 451,543 | | |
Foreign debt securities
|
| | | | — | | | | | | 56,687,947 | | | | | | — | | | | | | 56,687,497 | | |
Municipal bonds
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | $ | — | | | | | | 56,687,947 | | | | | | — | | | | | | 56,687,947 | | |
Fair value of derivatives: | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative liabilities
|
| | | $ | — | | | | | | 1,319,801 | | | | | | — | | | | | | 1,319,801 | | |
| | | | $ | — | | | | | | 1,319,801 | | | | | | — | | | | | | 451,543 | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans, net
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total assets at fair value
|
| | | $ | — | | | | | | — | | | | | | — | | | | | | — | | |
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans, net
|
| | | | — | | | | | | — | | | | | | 81,973 | | | | | | 81,973 | | |
Total assets at fair value
|
| | | $ | — | | | | | | — | | | | | | 81,973 | | | | | | 81,973 | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
Other real estate owned
|
| | | | — | | | | | | — | | | | | | 380,756 | | | | | | 380,756 | | |
Total assets at fair value
|
| | | $ | — | | | | | | — | | | | | | 380,756 | | | | | | 380,756 | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | |
Other real estate owned
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total assets at fair value
|
| | | $ | — | | | | | | — | | | | | | — | | | | | | — | | |
|
| | |
Carrying
Amount |
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| |||||||||||||||
December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Financial Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks
|
| | | $ | 36,410,868 | | | | | | 36,410,868 | | | | | | — | | | | | | — | | | | | | 36,410,868 | | |
Available for sale securities
|
| | | | 52,534,658 | | | | | | — | | | | | | 52,534,658 | | | | | | — | | | | | | 52,534,658 | | |
Other investments
|
| | | | 1,678,300 | | | | | | — | | | | | | 1,678,300 | | | | | | — | | | | | | 1,678,300 | | |
Loans, net
|
| | | | 549,631,915 | | | | | | — | | | | | | — | | | | | | 549,315,619 | | | | | | 549,315,619 | | |
Other real estate owned
|
| | | | 380,756 | | | | | | — | | | | | | — | | | | | | 380,756 | | | | | | 380,756 | | |
Cash surrender value of life insurance owned
|
| | | | 12,324,801 | | | | | | — | | | | | | 12,324,801 | | | | | | — | | | | | | 12,324,801 | | |
Financial Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-interest bearing
|
| | | | 186,373,287 | | | | | | 186,373,287 | | | | | | — | | | | | | — | | | | | | 186,373,287 | | |
Interest bearing
|
| | | | 371,595,421 | | | | | | — | | | | | | — | | | | | | 371,839,187 | | | | | | 371,839,187 | | |
Federal home loan bank advances
|
| | | | 28,400,000 | | | | | | — | | | | | | 28,400,000 | | | | | | — | | | | | | 28,400,000 | | |
Other borrowed funds
|
| | | | 30,542,500 | | | | | | — | | | | | | 30,542,500 | | | | | | — | | | | | | 30,542,500 | | |
Derivative liabilities
|
| | | | 1,386,357 | | | | | | — | | | | | | 1,386,357 | | | | | | — | | | | | | 1,386,357 | | |
| | |
Carrying
Amount |
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| |||||||||||||||
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Financial Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks
|
| | | $ | 18,720,627 | | | | | | 18,720,627 | | | | | | — | | | | | | — | | | | | | 18,720,627 | | |
Available for sale securities
|
| | | | 56,687,947 | | | | | | — | | | | | | 56,687,947 | | | | | | — | | | | | | 56,687,947 | | |
Other investments
|
| | | | 2,386,000 | | | | | | — | | | | | | 2,386,000 | | | | | | — | | | | | | 2,386,000 | | |
Loans, net
|
| | | | 411,296,654 | | | | | | — | | | | | | — | | | | | | 411,180,383 | | | | | | 411,180,383 | | |
Other real estate owned
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Cash surrender value of life insurance owned
|
| | | | 6,168,164 | | | | | | — | | | | | | 6,168,164 | | | | | | — | | | | | | 6,168,164 | | |
Financial Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-interest bearing
|
| | | | 136,800,283 | | | | | | 136,800,283 | | | | | | — | | | | | | — | | | | | | 136,800,283 | | |
Interest bearing
|
| | | | 283,170,145 | | | | | | — | | | | | | — | | | | | | 283,526,966 | | | | | | 283,526,966 | | |
Federal home loan bank advances
|
| | | | 46,400,000 | | | | | | — | | | | | | 46,400,000 | | | | | | — | | | | | | 46,400,000 | | |
Other borrowed funds
|
| | | | 140,150 | | | | | | — | | | | | | 140,150 | | | | | | — | | | | | | 140,150 | | |
Derivative liabilities
|
| | | | 1,319,801 | | | | | | — | | | | | | 1,319,801 | | | | | | — | | | | | | 1,319,801 | | |
| | |
Outstanding Options
|
| |||||||||||||||
|
Number
Outstanding |
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Term |
| |||||||||||
Balance at December 31, 2018
|
| | | | 571,187 | | | | | $ | 5.37 | | | | | | 5.10 | | |
Options exercised
|
| | | | (63,217) | | | | | $ | 5.25 | | | | | | — | | |
Options forfeited
|
| | | | (9,751) | | | | | $ | 6.22 | | | | | | — | | |
| | |
Outstanding Options
|
| |||||||||||||||
|
Number
Outstanding |
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Term |
| |||||||||||
Balance at December 31, 2019
|
| | | | 498,219 | | | | | $ | 5.25 | | | | | | 3.96 | | |
Options exercised
|
| | | | (682) | | | | | $ | 6.62 | | | | | | — | | |
Options forfeited
|
| | | | — | | | | | | — | | | | | | — | | |
Balance at December 31, 2020
|
| | | | 497,537 | | | | | $ | 5.38 | | | | | | 3.54 | | |
Exercisable at December 31, 2020
|
| | | | 495,279 | | | | | | | | | | | | | | |
|
|
Aquesta Financial Holdings, Inc. and Aquesta Bank Board of Directors
|
| |||
|
James Borders, Jr. (Chairman)
|
| |
Spencer Cohn
|
|
|
AC Control Company, Inc., President
|
| |
Castle Creek Capital, Vice President
|
|
|
Jon Dressler
|
| |
Paul Dougovito
|
|
|
Banking Consultant
|
| |
Proprietor, Rare Roots Hospitality Group
|
|
|
Jim Engel
|
| |
J. David Goodrum
|
|
|
President and Chief Executive Officer
|
| |
JD Goodrum Company Inc.
|
|
| | | |
President and General Manager
|
|
|
Carol Houle
|
| |
Ginger Griffin
|
|
|
Ginger Griffin Marketing and Design, Principal
|
| |
FSI at Atos
|
|
| | | |
SVP — Global Head of Consulting and Marketing
|
|
|
Paul Jaszewksi
|
| |
Charles Knox, Jr.
|
|
|
Physicians Anesthesiologist
|
| |
The Knox Group,
|
|
|
American Anesthesiology of the South, PLLC
|
| |
Commercial Real Estate Broker and Developer
|
|
|
Craig Larsen
|
| |
Alison Smith
|
|
|
REVITA Anti-Aging Center, Owner/CEO
|
| |
Smith Capital Inc., President
|
|
|
Executive Aquesta Bank Officers
|
| |||
|
Jim Engel
|
| |
Tim Beck
|
|
|
President and Chief Executive Officer
|
| |
Chief Credit Officer
|
|
|
Kristin Couch
|
| |
Rick Eveson
|
|
|
Chief Financial Officer
|
| |
Chief Operations and Compliance Officer
|
|
|
Greg Dickinson
|
| |
Jeff Brinkman
|
|
|
South Carolina Market President
|
| |
North Carolina/Charlotte Market President
|
|
|
Kristen Maxwell
|
| |
Jeanne Jordan
|
|
|
Director of Human Resources
|
| |
Head of Consumer Banking and Treasury
|
|
|
Stock Transfer Agent
Continental Stock Transfer & Trust Company 17 Battery Place New York, New York 10004 |
| |
Independent Auditors
Wipfli, LLP 235 Peachtree Street, NE Suite 1800 Atlanta, Georgia 30303 |
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
By:
/s/ H. Lynn Harton
H. Lynn Harton
|
| |
Chairman, President and Chief
Executive Officer (Principal Executive Officer) |
| |
July 29, 2021
|
|
|
By:
/s/ Jefferson L. Harralson
Jefferson L. Harralson
|
| |
Executive Vice President and
Chief Financial Officer (Principal Financial Officer) |
| |
July 29, 2021
|
|
|
By:
/s/ Alan H. Kumler
Alan H. Kumler
|
| |
Senior Vice President and
Chief Accounting Officer (Principal Accounting Officer) |
| |
July 29, 2021
|
|
|
By:
/s/ Thomas A. Richlovsky
Thomas A. Richlovsky
|
| |
Lead Independent Director
|
| |
July 29, 2021
|
|
|
By:
/s/ Robert Blalock
Robert Blalock
|
| |
Director
|
| |
July 29, 2021
|
|
|
By:
/s/ L. Cathy Cox
L. Cathy Cox
|
| |
Director
|
| |
July 29, 2021
|
|
|
By:
/s/ Kenneth L. Daniels
Kenneth L. Daniels
|
| |
Director
|
| |
July 29, 2021
|
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
By:
/s/ Lance F. Drummond
Lance F. Drummond
|
| |
Director
|
| |
July 29, 2021
|
|
|
By:
/s/ Jennifer Mann
Jennifer Mann
|
| |
Director
|
| |
July 29, 2021
|
|
|
By:
/s/ David C. Shaver
David C. Shaver
|
| |
Director
|
| |
July 29, 2021
|
|
|
By:
/s/ Tim Wallis
Tim Wallis
|
| |
Director
|
| |
July 29, 2021
|
|
|
By:
/s/ David H. Wilkins
David H. Wilkins
|
| |
Director
|
| |
July 29, 2021
|
|
|
By:
/s/ James P. Clements
James P. Clements
|
| |
Director
|
| |
July 29, 2021
|
|
Exhibit 3.1
(Composite)1
RESTATED ARTICLES OF INCORPORATION
OF
UNITED COMMUNITY BANKS, INC.
I.
The name of the corporation is United Community Banks, Inc.
II.
The corporation is organized pursuant to the provisions of the Georgia Business Corporation Code.
III.
The corporation shall have perpetual duration.
IV.
The corporation is a corporation for profit and is organized for the following general purposes: to be a bank holding company; to carry on any lawful businesses or activities relating thereto; and to engage in any lawful act or activity for which corporations may be organized under the Georgia Business Corporation Code.
V.
The corporation shall have authority to issue 200,000,000 shares of common stock, $1.00 par value (the “Common Stock”), 30,000,000 shares of non-voting common stock, $1.00 par value (the “Non-Voting Common Stock”), having the powers, rights and preferences, and the qualifications, limitations and restrictions thereof, as set forth in Exhibit A attached hereto and 10,000,000 shares of preferred stock, $1.00 par value (the “Preferred Stock”). Subject to the provisions of any applicable law or the Bylaws of the corporation (as from time to time amended) with respect to fixing the record date for the determination of shareholders entitled to vote, and except as otherwise provided by any applicable law or by the resolution or resolutions of the board of directors providing for the issue of any series of Preferred Stock, the holders of the Common Stock shall have and possess exclusive voting power and rights for the election of directors and for all other purposes, with each share being entitled to one vote.
The Board of Directors is hereby expressly authorized to issue, at any time and from time to time, shares of Preferred Stock in one or more series. The number of shares within such series shall be designated by the Board of Directors in one or more resolutions, and the shares of each series so designated shall have such preferences with respect to Common Stock and other series of Preferred Stock, and such other rights, restrictions or limitations with respect to voting, dividends, conversion, exchange, redemption and any other matters, as may be set forth in one or more resolutions adopted by the Board of Directors. To the extent required by law, Articles of Amendment setting forth any such designations, preferences, rights, restrictions or limitations shall be filed with the Georgia Secretary of State prior to the issuance of any shares of such series.
1 This composite articles of incorporation represents the articles of incorporation of United Community Banks, Inc. as amended through June 30, 2021.
- 1 -
The authority of the Board of Directors with respect to the establishment of each series of Preferred Stock shall include, without limiting the generality of the foregoing, determination of the following matters which may vary between series:
(a) | The number of shares constituting that series and the distinctive designation of that series; |
(b) | The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payments of dividends on shares of that series; |
(c) | Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
(d) | Whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provisions for adjustment of the conversion rate in such events as the Board of Directors shall determine; |
(e) | Whether the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions; |
(f) | Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
(g) | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding-up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and |
(h) | Any other relative preferences, rights, restrictions or limitations of that series, including but not limited to any obligations of the corporation to repurchase shares of that series upon the occurrence of specified events. |
VI.
No holder of any of the shares of any class of the corporation shall be entitled as of right to subscribe for, purchase or otherwise acquire any shares of any class of the corporation which the corporation proposes to issue or any rights or options which the corporation proposes to grant for the purchase of shares of any class of the corporation or for the purchase of any shares, bonds, securities, or obligations of the corporation which are convertible into or exchangeable for, or which carry any rights, to subscribe for, purchase, or otherwise acquire shares of any class of the corporation and any and all of such shares, bonds, securities, or obligations of the corporation, whether now or hereafter authorized or created, may be issued, or may be reissued if the same have been reacquired and if their reissue is not prohibited, and any and all of such rights and options may be granted by the Board of Directors to such individuals and entities, and for such lawful consideration, and on such terms, as the Board of Directors in its discretion may determine, without first offering the same, or any thereof, to any said holder.
VII.
The corporation shall not commence business until it shall have received at least $500.00 in payment for the issuance of shares of its stock.
- 2 -
VIII.
In addition to, but not in limitation of, the general powers conferred by law, the corporation shall have the power to make distributions to its shareholders out of its capital surplus, to purchase its own shares out of its unreserved and unrestricted capital surplus available therefor and to carry on any lawful business.
IX.
In discharging the duties of their respective positions and in determining what is believed to be in the best interests of the corporation, the Board of Directors of the corporation, committees of the Board of Directors, and individual directors, in addition to considering the effects of any action on the corporation or its shareholders, may consider interests of the employees, customers, suppliers, and creditors of the corporation and its subsidiaries, the communities in which offices or other establishments of the corporation and its subsidiaries are located, and all other factors such directors consider pertinent; provided, however, that such consideration shall be deemed solely to grant discretionary authority to the directors and shall not be deemed to provide to any constituency any right to be considered.
X.
No director of the corporation shall be personally liable to the corporation or its shareholders for monetary damages for breach of his duty of care or other duty as a director, provided, that this provision shall eliminate or limit the liability of a director only to the extent permitted from time to time by the Georgia Business Corporation Code or any successor laws or laws.
XI.
Except as otherwise provided by law, any amendment or repeal of any provision of the Articles of Incorporation or Article II (Stockholders’ Meetings) or III (Board of Directors) of the Bylaws of the corporation requires the affirmative vote of holders of a majority of the shares of capital stock of the corporation then issued and outstanding and entitled to vote on such matters.
XII.
I. | (A) In addition to any affirmative vote required by law, and subject to the provisions of any series of Preferred Stock which may at the time be outstanding, the affirmative vote of the holders of not less than 75% of the outstanding shares of Common Stock of the corporation and the affirmative vote of the holders of not less than 75% of the outstanding shares of Common Stock of the corporation other than those beneficially owned (as defined below) by an Interested Shareholder (as defined below) (the “two-tier requirement”), shall be required for the approval or authorization of any Business Combination (as defined below) of the corporation with such Interested Shareholder; provided that the two-tier voting requirement shall not be applicable if the Business Combination was approved by three-fourths of all Directors. |
(B) The term “Business Combination” as used in this Article XII shall mean:
(i) | any merger or consolidation of the corporation or any Subsidiary (as hereafter defined) with (a) any Interested Shareholder (as hereinafter defined) or (b) any other corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Shareholder; or |
(ii) | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder of any assets of the corporation or any Subsidiary having an aggregate Fair Market Value (as hereinafter defined) of $1,000,000 or more; or |
- 3 -
(iii) | the issuance or transfer by the corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the corporation or any Subsidiary to any Interested Shareholder or any Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $1,000,000 or more; or |
(iv) | the adoption of any plan or proposal for the liquidation or dissolution of the corporation proposed by or on behalf of an Interested Shareholder or any Affiliate of any Interested Shareholder; or |
(v) | any reclassification of securities (including any reverse stock split), or recapitalization of the corporation, or any merger or consolidation of the corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the corporation or any Subsidiary which is directly or indirectly owned by any Interested Shareholder or any Affiliate of any Interested Shareholder. |
II. For purposes of this Article XII:
(A) A “person” shall mean any individual, firm, corporation or other entity.
(B) “Interested Shareholder” shall mean any person (other than the corporation, any Subsidiary or either the corporation or any Subsidiary acting as Trustee or in a similar fiduciary capacity) who or which:
(i) | is the beneficial owner of more than 10% of the outstanding Common Stock; or |
(ii) | is an Affiliate of the corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10% or more of then outstanding Common Stock; or |
(iii) | acquired any shares of Common Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Shareholder, if such acquisition shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1993. |
(C) A person shall be a “beneficial owner” of any Common Stock:
(i) | which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or |
(ii) | which such person or any of its Affiliates or Associates has, directly or indirectly, (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or |
(iii) | which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Common Stock. |
- 4 -
(D) For the purposes of determining whether a person is an Interested Shareholder pursuant to paragraph B of this Section II, the number of shares of Common Stock deemed to be outstanding shall include shares deemed owned through application of paragraph C(ii)(a) of this Section II but shall not include any other shares of Common Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(E) (i) An “Affiliate” of a specified person is a person that directly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
(ii) | The term “Associate” used to indicate a relationship with any person means (1) any firm, corporation or other entity (other than the corporation or any Subsidiary) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities, (2) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, and (3) any relative or spouse or such person, or any relative of such spouse who has the same home as such person. |
(F) “Subsidiary” means any corporation of which a majority of any class of equity securities is owned, directly or indirectly, by the corporation unless owned solely as trustee or other similar fiduciary capacity.
(G) “Fair Market value” means:
(i) | in the case of stock, the closing sales price of a share of such stock on the Composite Tape on the New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which such stock is listed, or, if such stock is not listed on any such exchange, the closing sales price or the sales price or the average of the bid and asked prices reported with respect to a share of such stock on the National Association of Securities Dealers, Inc. Automated Quotation System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board in good faith; and |
(ii) | in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board in good faith. |
(H) The term “acquire” or “acquired” means the acquisition of beneficial ownership.
(I) The Board of Directors of the corporation shall have the power and duty to determine for the purposes of this Article XII, on the basis of information known to them after reasonable inquiry,
(i) | whether a person is an Interested Shareholder, |
(ii) | the number of shares of Common Stock beneficially owned by any person, |
(iii) | whether a person is an Affiliate or Associate or another, and |
(iv) | whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $1,000,000 or more. |
(J) Nothing contained in this Article XII shall be construed to relieve any Interested Shareholder or any of its Affiliates or Associates from any fiduciary obligation imposed by law.
- 5 -
XIII.
A director of the corporation may be removed only for cause and upon the affirmative vote of the holders of two-thirds of the issued and outstanding shares entitled to vote on such matter.
- 6 -
Exhibit A to Restated Articles of Incorporation
Of
United Community Banks, Inc, as amended
CERTIFICATE OF DESIGNATIONS
OF
NON-VOTING COMMON STOCK
OF
UNITED COMMUNITY BANKS, INC.
1. Designation. The shares of such class of non-voting common stock, $1.00 par value, of United Community Banks, Inc. (the “Corporation”) shall be designated “Non-Voting Common Stock” (referred to herein as the “Non-Voting Common Stock”).
2. Authorized Number. The number of shares constituting the Non-Voting Common Stock shall be as set forth in the first paragraph of Article V of the Restated Articles of Incorporation, as amended.
3. Rights. Except as set forth below, the Non-Voting Common Stock shall have the same rights and privileges, share ratably and be identical in all respects to the Common Stock as to all matters. Each share of Non-Voting Common Stock shall have the same relative powers, preferences and rights as, and shall be identical in all respects with, all the other shares of Non-Voting Common Stock of the Corporation.
4. Voting Rights. The holders of Non-Voting Common Stock shall have no voting rights except as provided herein or required by law. Notwithstanding the foregoing, and in addition to any other vote required by law, the affirmative vote of the holders of a majority of the outstanding shares of Non-Voting Common Stock, voting separately as a class, shall be required to amend, alter or repeal (including by merger, consolidation or otherwise) any provision of these Articles of Amendment that significantly and adversely affects the rights, preferences or privileges of the Non-Voting Common Stock contained herein.
5. Dividends. Subject to preferential dividend rights, if any, applicable to any shares of the Preferred Stock, the holders of Non-Voting Common Stock shall be entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors on the Common Stock. If a dividend is declared and paid with respect to the Common Stock, then the Board shall declare and pay an equivalent dividend, on a per share basis, to the Non-Voting Common Stock. Likewise, if the Board of Directors declares and pays a dividend on the Non-Voting Common Stock, it shall declare and pay an equivalent dividend, on a per share basis, on the Common Stock. The holders of the Non-Voting Common Stock shall share ratably in any such dividend in proportion to the number of shares of Common Stock and Non-Voting Common Stock held by each such holder. All dividends paid with respect to the Common Stock and Non-Voting Common Stock shall be paid pro rata to the holders of such shares entitled thereto; provided, however, that no dividend payable in Common Stock or rights or warrants to subscribe for Common Stock shall be declared on the Non-Voting Common Stock and no dividend payable in Non-Voting Common Stock or rights or warrants to subscribe for Non-Voting Common Stock shall be declared on the Common Stock, but instead, in the case of such a dividend, each class shall receive such dividend in like stock or rights or warrants to subscribe for like stock.
6. Distributions. In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of Preferred Stock, holders of the Common Stock and the Non-Voting Common Stock shall be entitled to receive all the remaining assets of the Corporation of whatever kind available for distribution to shareholders ratably in proportion to the number of shares of Common Stock and Non-Voting Common Stock held by them.
7. Adjustment. In the event of any stock split, combination or other reclassification of shares of either the Common Stock or the Non-Voting Common Stock, the outstanding shares of the other class shall be proportionately split, combined or reclassified in a similar manner, provided, however, that in any such transaction, only holders of Common Stock shall receive shares of Common Stock and only holders of Non-Voting Common Stock shall receive shares of Non-Voting Common Stock.
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8. Conversion.
(a) The Non-Voting Common Stock may be converted into Common Stock in accordance with the provisions of this paragraph 8 by any Convertible Holder following an Approved Transfer (as defined herein). The term “Approved Transfer” means a sale or other transfer (i) to an Affiliate of the holder of the Non-Voting Common Stock to be transferred under common control with such holder’s ultimate parent, general partner or investment advisor but only if the transferee agrees in writing for the benefit of the Corporation to be bound by the terms of that certain Investment Agreement or Subscription Agreement by and between the Corporation and such holder pursuant to which such shares of Non-Voting Common Stock were sold to such holder (the “Investment Agreement”); (ii) in a widely distributed public offering registered pursuant to the Securities Act of 1933, as amended; (iii) to a person that is acquiring at least a majority of the Corporation’s outstanding “voting securities” (as defined in the Bank Holding Company Act of 1956, as amended and any rules or regulations promulgated thereunder) not including any voting securities such person is acquiring from the holder of the Non-Voting Common Stock to be transferred or its Affiliates; or (iv) upon certification by the holder of the Non-Voting Common Stock to be transferred in writing to the Corporation that the such holder believes that the transferee shall not, after giving effect to such transfer, own for purposes of the Bank Holding Company Act of 1956, as amended, or the Change of Bank Control Act of 1978, as amended, and any rules and regulations promulgated thereunder, more than 2% of any class of voting securities of the Corporation outstanding at such time. The term “Affiliate” means, with respect to any person, any person directly or indirectly, controlling, controlled by or under common control with, such other person. “Convertible Holder” means a holder of Non-Voting Common Stock, other than the initial holder of such Non-Voting Common Stock or an Affiliate thereof, who acquires one or more shares of Non-Voting Common Stock in an Approved Transfer.
(b) Conditions of Conversion. Following an Approved Transfer, a Convertible Holder may surrender to the Corporation (at the principal office of the Corporation) a certificate or certificates representing all or part of the Convertible Holder’s shares of Non-Voting Common Stock and in such event each share of Non-Voting Common Stock represented by such certificate or certificates will convert into one share of Common Stock. Except as otherwise provided herein, each conversion of Non-Voting Common Stock shall be deemed to have been effected as of the close of business on the date on which the certificate or certificates representing such shares of Non-Voting Common Stock to be converted have been surrendered for conversion at the principal office of the Corporation. Notwithstanding any other provision hereof, if a conversion of Non-Voting Common Stock is to be made in connection with a merger, consolidation, reclassification or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property or any dissolution or liquidation, the conversion of any shares of Non-Voting Common Stock may, at the election of the holder thereof, be conditioned upon the consummation of such event or transaction, in which case such conversion shall not be deemed to be effective until such event or transaction has been consummated.
(c) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Non-Voting Common Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Non-Voting Common Stock. The Corporation shall take all action necessary so that all shares of Common Stock issuable upon conversion of Non-Voting Common Stock will, upon issue, be duly and validly issued, fully paid, and non-assessable, and free from all taxes, liens, charges and encumbrances in respect of the issuance or delivery thereof. The Corporation shall take all such actions as may be necessary to assure that all such shares of Common Stock issuable upon conversion of the Non-Voting Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares may be listed (except for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not take any action which would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Non-Voting Common Stock.
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9. Mergers, Consolidations, Etc. In the event of any merger, consolidation, reclassification or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, each share of Non-Voting Common Stock will at the same time be similarly exchanged or changed in an amount per whole share equal to the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, that each share of Common Stock would be entitled to receive as a result of such transaction, provided that at the election of such holder, any securities issued with respect to the Non-Voting Common Stock shall be non-voting securities under the resulting corporation’s organizational documents and the Corporation shall make appropriate provisions (in form and substance reasonably satisfactory to the holders of a majority of the Non-Voting Common Stock then outstanding) and take such actions necessary to ensure that holders of the Non-Voting Common Stock shall retain securities with substantially the same rights and benefits as the Non-Voting Common Stock. Subject to the foregoing, in the event the holders of Common Stock are provided the right to convert or exchange Common Stock for stock or securities, cash and/or any other property, then the holders of the Non-Voting Common Stock shall be provided the same right based upon the number of shares of Common Stock such holders would be entitled to receive if such shares of Non-Voting Common Stock were converted into shares of Common Stock immediately prior to such offering. In the event that the Corporation offers to repurchase shares of Common Stock from its shareholders generally, the Corporation shall offer to repurchase Non-Voting Common Stock pro rata based upon the number of shares of Common Stock such holders would be entitled to receive if such shares were converted into shares of Common Stock immediately prior to such repurchase. In the event of any pro rata subscription offer, rights offer or similar offer to holders of Common Stock, the Corporation shall provide the holders of the Non-Voting Common Stock the right to participate based upon the number of shares of Common Stock such holders would be entitled to receive if such shares were converted into shares of Common Stock immediately prior to such offering; provided that at the election of such holder, any shares issued with respect to the Non-Voting Common Stock shall be issued in the form of Non-Voting Common Stock rather than Common Stock.
10. Notices. At any time notice is provided to the holders of Common Stock, the Corporation shall give written notice to all holders of Non-Voting Common Stock at or prior to such time.
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DESIGNATIONS, POWERS, PREFERENCES,
LIMITATIONS, RESTRICTIONS, AND RELATIVE RIGHTS
OF
SENIOR 6.875% NON-CUMULATIVE PREFERRED STOCK, SERIES I
OF
UNITED COMMUNITY BANKS, INC.
First: The name of the corporation is United Community Banks, Inc., a corporation organized and existing under the laws of the State of Georgia (the “Issuer”).
Second: The Restated Articles of Incorporation of the Issuer, as amended, authorize the issuance of 10,000,000 shares of preferred stock, par value $1.00 per share, of the Issuer (“Preferred Stock”) in one or more series, and authorizes the Board of Directors of the Issuer (the “Board of Directors”) to fix by resolution or resolutions the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of the shares of such series.
Third: That the following resolution was duly adopted by a duly authorized committee of the Board of Directors as required by O.C.G.A. § 14-2-602 and Article V of the Restated Articles of Incorporation by unanimous written consent on June 3, 2020.
Resolved, that pursuant to the provisions of the Restated Articles of Incorporation of the Issuer, as amended, and applicable law, a series of Preferred Stock, par value $1.00 per share, of the Issuer be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
RIGHTS AND PREFERENCES
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is “6.875% Non-Cumulative Preferred Stock, Series I” (“Series I”). Each share of Series I shall be identical in all respects to every other share of Series I, except as to the respective dates from which dividends thereon shall accrue, to the extent such dates may differ as permitted pursuant to Section 4(a) below. Series I will rank equally with Parity Stock, if any, and will rank senior to Junior Stock with respect to the payment of dividends and/or the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation. Shares of Series I may be represented in the form of uncertificated or certificated shares, provided, however, that any holder of certificated shares of Series I and, upon request, every holder of uncertificated shares of Series I shall be entitled to have a certificate for shares of Series I signed by, or in the name of, the Corporation certifying the number of shares owned by such holder.
Section 2. Number of Shares. The authorized number of shares of Series I shall be 4,000. Shares of Series I that are redeemed, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Series I.
Section 3. Definitions. As used herein with respect to Series I:
(a) “Appropriate Federal Banking Agency” means the “appropriate federal banking agency” with respect to the Corporation as that term is defined in Section 3(q) of the Federal Deposit Insurance Act or any successor provision.
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(b) “Articles of Amendment” means this Articles of Amendment relating to the Series I, as it may be amended from time to time.
(c) “Articles of Incorporation” means the Restated Articles of Incorporation, as amended, of the Corporation, as it may be amended from time to time, and shall include this Articles of Amendment.
(d) “Board of Directors” means the board of directors of the Corporation.
(e) “Bylaws” means the Amended and Restated Bylaws of the Corporation, as amended and as they may be amended from time to time.
(f) “Business Day” means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City are generally authorized or obligated by law, regulation or executive order to close.
(g) “Common Stock” means the common stock, par value $1.00 per share, of the Corporation.
(h) “Junior Stock” means the Common Stock and any other class or series of stock of the Corporation that ranks junior to Series I as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) “Parity Stock” means any class or series of stock of the Corporation (other than Series I) that ranks equally with Series I both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation, if any.
(j) “Preferred Stock” means any and all series of Preferred Stock, having a par value of $1.00 per share, of the Corporation, including the Series I.
(k) “Regulatory Capital Event” means the good faith determination by the Corporation that, as a result of (i) any amendment to, or change in, the laws, rules or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the initial issuance of any share of Series I, (ii) any proposed change in those laws, rules or regulations that is announced or becomes effective after the initial issuance of any share of Series I, or (iii) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws, rules or regulations or policies with respect thereto that is announced after the initial issuance of any share of Series I, there is more than an insubstantial risk that the Corporation will not be entitled to treat the full liquidation preference amount of $25,000 per share of Series I then outstanding as “tier 1 capital” (or its equivalent) for purposes of the capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or, as and if applicable, the capital adequacy guidelines or regulations of any successor Appropriate Federal Banking Agency) as then in effect and applicable, for so long as any share of Series I is outstanding.
(l) “Voting Preferred Stock” means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 7(b) below) or any other matter as to which the holders of Series I are entitled to vote as specified in Section 7 of this Articles of Amendment, and any and all other series of Preferred Stock (other than Series I) that rank equally with Series I as to the payment of dividends and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series I shall be entitled to receive, when, as and if declared by the Board of Directors (or any duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Georgia law, non-cumulative cash dividends at the rate per annum equal to 6.875% applied to the liquidation preference amount of $25,000 per share of Series I. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors (or any duly authorized committee of the Board of Directors), on March 15, June 15, September 15 and December 15 (“Dividend Payment Dates”), commencing on September 15, 2020; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such dividend shall instead be payable on the immediately succeeding Business Day, without interest or other payment in respect of such delayed payment. Dividends on Series I shall not be cumulative; holders of Series I shall not be entitled to receive any dividends not declared by the Board of Directors (or any duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
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Dividends on the Series I shall not be declared or set aside for payment if and to the extent such dividends would cause the Corporation to fail to comply with the capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or, as and if applicable, the capital adequacy guidelines or regulations of any successor Appropriate Federal Banking Agency) applicable to the Corporation.
Dividends that are payable on Series I on any Dividend Payment Date will be payable to holders of record of Series I as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors (or any duly authorized committee of the Board of Directors) that is not more than 60 days nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a “Dividend Period”) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence on and include the date of original issue of the Series I, provided that, for any share of Series I issued after such original issue date, the initial Dividend Period for such shares may commence on and include such other date as the Board of Directors (or any duly authorized committee of the Board of Directors) shall determine and publicly disclose) and shall end on and include the calendar day preceding the next Dividend Payment Date. Dollar amounts resulting from that calculation will be rounded to the nearest cent, with one-half cent being rounded upward. Dividends payable on the Series I in respect of any Dividend Period shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable in respect of a Dividend Period shall be payable in arrears – i.e., on the first Dividend Payment Date after such Dividend Period.
Holders of Series I shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series I as specified in this Section 4 (subject to the other provisions of this Articles of Amendment).
(b) Priority of Dividends. So long as any share of Series I remains outstanding, (i) no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), (ii) no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such Junior Stock by the Corporation and (iii) no shares of Parity Stock shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation other than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series I and such Parity Stock except by conversion into or exchange for Junior Stock unless, in each case, the full dividends for the latest completed Dividend Period on all outstanding shares of Series I have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of the Corporation, or any affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series I and any shares of Parity Stock, all dividends declared on the Series I and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series I and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
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Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors (or any duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the shares of Series I or Parity Stock shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series I shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series I as to such distribution, and subject to the rights of the holders of any Parity Stock upon liquidation, in full an amount equal to $25,000 per share, together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series I and all holders of any Parity Stock, the amounts paid to the holders of Series I and to the holders of all such Parity Stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series I and the holders of all such Parity Stock. In any such distribution, the “Liquidation Preference” of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series I and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series I and all holders of any Parity Stock, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series I receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series I is perpetual and has no maturity date. The Corporation may, at its option, redeem the shares of Series I at the time outstanding, upon notice given as provided in Section 6(c) below, (i) in whole or in part, from time to time, on any date on or after September 15, 2025 (or, if not a Business Day, the next succeeding Business Day), or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Event, in each case, at a redemption price per share equal to $25,000, plus (except as otherwise provided herein below) an amount equal to any dividends per share that have accrued but not been paid for the then-current Dividend Period to but excluding the redemption date, whether or not such dividends have been declared. The redemption price for any shares of Series I shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above. Notwithstanding the foregoing, the Corporation may not redeem shares of Series I without having received the prior approval of the Appropriate Federal Banking Agency if then required under capital guidelines applicable to the Corporation.
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(b) No Sinking Fund. The Series I will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series I will have no right to require redemption of any shares of Series I.
(c) Notice of Redemption. Notice of every redemption of shares of Series I shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Section 6(c) shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series I designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series I. Notwithstanding the foregoing, if the Series I or any depositary shares representing interests in the Series I are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series I at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series I to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series I at the time outstanding, the shares to be redeemed shall be selected either pro rata or by lot. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series I shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption unless the Corporation defaults in the payment of the redemption price of the shares of shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Voting Rights.
(a) General. The holders of Series I shall not have any voting rights except as set forth below or as otherwise from time to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series I or any shares of Voting Preferred Stock shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a “Nonpayment Event”), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series I, together with the holders of all outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the “Preferred Stock Directors”), provided that the Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights) and that the election of any Preferred Stock Directors shall not cause the Corporation to violate the corporate governance requirements of the Nasdaq Global Select Market (or any other exchange on which the Corporation’s securities may be listed) that listed companies must have a majority of independent directors.
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In the event that the holders of the Series I, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series I or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series I or any series of Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 10 below, or as may otherwise be required by law.
When dividends have been paid in full on the Series I and any Voting Preferred Stock for four consecutive Dividend Periods after a Nonpayment Event, then the right of the holders of Series I and Voting Preferred Stock to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series I and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of all of the outstanding shares of the Series I and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of all of the outstanding shares of the Series I and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
(c) Other Voting Rights. So long as any shares of Series I are outstanding, in addition to any other vote or consent of stockholders required by law or by the Articles of Incorporation, the vote or consent of the holders of at least two-thirds of the shares of Series I and any Parity Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Articles of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series I with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series I. Any amendment, alteration or repeal of any provision of the Articles of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series I, taken as a whole; or
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(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series I, a merger or consolidation of the Corporation with another corporation or other entity, or a conversion, transfer, domestication or continuance into another entity or an entity organized under the laws of another jurisdiction, unless in each case (x) the shares of Series I remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity or in the case of any such conversion, transfer, domestication or continuance, the shares of Series I are converted into or exchanged for preferred securities of the surviving or resulting entity or its ultimate parent and such surviving or resulting entity or ultimate parent, as the case may be, is organized under the laws of the United States of America, any State thereof, the District of Columbia, Bermuda, the Cayman Islands or any country or state that is a member of the Organization of Economic Cooperation and Development, and (y) such shares remaining outstanding or such preferred securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series I immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 7(c), any increase in the amount of the authorized or issued Series I or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series I with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series I.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series I and one or more but not all other series of Preferred Stock, then only the Series I and such series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series I, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series I, the Corporation may amend, alter, supplement or repeal any terms of the Series I:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Articles of Amendment that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series I that is not inconsistent with the provisions of this Articles of Amendment.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series I shall be required pursuant to Section 7(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series I shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series I (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors (or any duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Articles of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series I is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series I, Parity Stock and/or Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series I are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
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Section 8. Information Rights. During any period in which the Corporation is not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any shares of Series I are outstanding, the Corporation will use its best efforts to (a) transmit through the Corporation’s website at www.ucbi.com (or other permissible means under the Exchange Act) to all holders of the Series I, as their names and addresses appear on the record books of the Corporation and without cost to such holders, copies of the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, respectively, that the Corporation would have been required to file with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13 or 15(d) of the Exchange Act if it were subject thereto (other than any exhibits that would have been required); and (b) promptly, upon request, supply copies of such reports to any holders or prospective holder of Series I. The Corporation will use its best efforts to mail (or otherwise provide) the information to the holders of the Series I within 15 days after the respective dates by which a periodic report on Form 10-K or Form 10-Q, as the case may be, in respect of such information would have been required to be filed with the SEC, if the Corporation were subject to Section 13 or 15(d) of the Exchange Act, in each case, based on the dates on which the Corporation would be required to file such periodic reports if it were a “non-accelerated filer” within the meaning of the Exchange Act.
Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series I may deem and treat the record holder of any share of Series I as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 10. Notices. All notices or communications in respect of Series I shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Articles of Amendment, in the Articles of Incorporation or Bylaws or by applicable law.
Section 11. Rank. For the avoidance of doubt, the Board of Directors (or any duly authorized committee of the Board of Directors) may, without the vote of the holders of Series I, authorize and issue additional shares of Junior Stock or shares of any class or Series of stock of the Corporation now existing or hereafter authorized that ranks equally with the Series I in the payment of dividends or in the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the Corporation.
Section 12. No Preemptive or Conversion Rights. No share of Series I shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted. No share of Series I shall have any rights to convert such Series I into shares of any other class of capital stock of the Corporation.
Section 13. Other Rights. The shares of Series I shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Articles of Incorporation or as provided by applicable law.
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Exhibit 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of United Community Banks, Inc. of our report dated February 25, 2021 relating to the financial statements, and the effectiveness of internal control over financial reporting, which appears in United Community Banks, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Atlanta, GA
July 29, 2021
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form S-4 and related Prospectus of United Community Banks, Inc. of our report dated April 29, 2021, relating to the consolidated financial statements of Aquesta Financial Holdings, Inc. for the years ended December 31, 2020 and 2019. We also consent to the reference to our firm under the heading “Experts” in such Prospectus.
/s/ WIPFLI LLP
Atlanta, Georgia
July 29, 2021
Exhibit 99.1
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1251 AVENUE OF THE AMERICAS,
6TH FLOOR
P 212 466-7800 | TF 800 635-6851
Piper Sandler & Co. Since 1885.
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CONSENT OF PIPER SANDLER & CO.
We hereby consent to the inclusion of our opinion letter to the Board of Directors of Aquesta Financial Holdings, Inc. (the “Company”) as an Annex to the Proxy Statement/Prospectus relating to the proposed merger of the Company with United Community Banks, Inc. contained in the Registration Statement on Form S-4, as filed with the Securities and Exchange Commission, and to references to such opinion and the quotation or summarization of such opinion in such Proxy Statement/Prospectus and the Registration Statement. In giving such consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended (the “Act”), or the rules and regulations of the Securities and Exchange Commission thereunder (the “Regulations”), nor do we admit that we are experts with respect to any part of such Proxy Statement/Prospectus and the Registration Statement within the meaning of the term “experts” as used in the Act or the Regulations.
/s/ Piper Sandler & Co.
New York, New York
July 29, 2021