As
filed with the Securities and Exchange Commission on January 11, 2012
Registration No. 333-177766
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment
No. 2
to
Form S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
T Bancshares, Inc.
(Exact Name of Registrant as Specified in its Governing Instruments)
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Texas
(state or other jurisdiction of
incorporation or organization)
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6021
(Primary Standard Industrial
Classification Code Number)
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71-0919962
(I.R.S. Employer
Identification No.) |
16000 Dallas Parkway, Suite 125
Dallas, Texas 75248
(972) 720-9000
(Address, Including Zip Code, and Telephone Number, including
Area Code, of Registrants Principal Executive Offices)
Patrick Howard
President and Chief Executive Officer
T Bancshares, Inc.
16000 Dallas Parkway, Suite 125
Dallas, Texas 75248
(972) 720-9000
(214) 720-9025 (Telecopy)
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
Copies to:
Michael G. Keeley, Esq.
Hunton & Williams LLP
1445 Ross Avenue, Suite 3700
Dallas, Texas 75202-2799
(214) 979-3000
(214) 740-7138 (Telecopy)
Approximate date of commencement of proposed sale to public: As soon as practicable after the
Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the Securities Act),
check the following box. þ
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. o
Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer,
a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company þ |
CALCULATION OF REGISTRATION FEE
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Proposed Maximum |
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Proposed Maximum |
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Title of Each Class of |
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Amount to be |
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Offering Price |
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Aggregate |
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Amount of |
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Securities To Be Registered |
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Registered |
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per Share |
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Offering Price |
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Registration Fee |
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Nontransferable Common Stock Subscription Rights(1) |
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1,941,305 |
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N/A |
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N/A |
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$0(2) |
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Common Stock, par value $0.01 per share |
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2,911,957(3) |
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$2.00 |
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$5,823,914 |
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$667.43(4) |
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Total |
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2,911,957 |
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(1) |
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The subscription rights are being issued without consideration and each represents the
right to subscribe for 1.5 shares of common stock, par value $0.01 per share. |
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(2) |
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Pursuant to Rule 457(e), no separate registration fee is payable with respect to the
subscription rights being offered hereby since the subscription rights are being registered in
the same registration statement as the securities to be offered pursuant thereto. |
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(3) |
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Represents the maximum number of shares issuable upon the exercise of the subscription rights
and/or subscriptions during the limited public offering. |
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(4) |
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Estimated in accordance with Rule 457(o) under the Securities Act of 1933, as amended, solely
for the purpose of calculating the amount of registration fee. |
The registrant hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration
Statement shall become effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO
COMPLETION, DATED JANUARY 11, 2012
PROSPECTUS
2,911,957 Shares
Common Stock
We are distributing, at no charge to each of our shareholders, nontransferable
subscription rights to purchase an aggregate of up to 2,911,957 shares of our common stock for an
aggregate subscription price of $5,823,914. Subscription rights certificates, entitling you to
purchase 1.5 shares of our common stock for every one (1) share of common stock you owned as of the
close of business on December 12, 2011, are being delivered to you along with this prospectus.
Each subscription right will entitle you to purchase 1.5 shares of our common stock at the
subscription price of $2.00 per share, which we refer to as the basic subscription right. We will
not issue fractional shares. If you fully exercise your basic subscription rights and other
shareholders do not fully exercise their basic subscription rights, you will be entitled to
exercise an oversubscription privilege to purchase, subject to limitations, a portion of the
unsubscribed shares of our common stock. To the extent you exercise your oversubscription
privilege and pay for an amount of shares that exceeds the number of the unsubscribed shares
available to you, any excess subscription amount received by the subscription agent will be
returned, without interest or deduction, as soon as practicable. The subscription rights will
expire if they are not exercised by 5:00 p.m., New York City time, on ____________, 20__, unless we
extend the rights offering period. However, we will not extend the rights offering period beyond
______________, 20______.
You should carefully consider, prior to the expiration of the rights offering, whether to
exercise your subscription rights. All exercises of subscription rights are irrevocable. Our board
of directors is making no recommendation regarding your exercise of the subscription rights. The
subscription rights are not transferable and will not be listed for trading on any stock exchange
or market or on the Over-The-Counter Bulletin Board (the OTCBB).
We are also offering the shares of common stock offered but not subscribed for in the rights
offering to the public through a limited public offering. This offering is available only to
persons selected by us, in our sole discretion. The limited public offering will expire at the
close of business on _________, 20__, which is also the expiration date of the rights offering,
unless we extend it in our sole discretion. However, we will not
extend the limited public offering period beyond
_____, 2012. We reserve the right to accept or reject, in whole or
in part, any subscription tendered in the rights offering or the limited public offering.
We will conduct the rights offering and the limited public offering solely on a best efforts
basis without the services of an underwriter or placement agent, but we may choose to do so at our
discretion. We reserve the right to amend or terminate either or both of the offerings at any
time.
Our
common stock is quoted on the OTCBB under the symbol TBNC.OB. On _________, 2012, the
closing bid of our common stock as reported by the OTCBB was $_____ per share.
The exercise of your subscription rights for shares of our common stock involves risks. See
Risk Factors beginning on page 13 of this prospectus, the section entitled Risk Factors in our
Annual Report on Form 10-K for the year ended December 31, 2010, our Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 2011, June 30,
2011, and September 30, 2011, and all other documents
incorporated by reference in this prospectus in their entirety to read about important factors you
should consider before exercising your subscription rights.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this prospectus is _________, 2012.
TABLE OF CONTENTS
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EX-4.4 |
EX-23.1 |
You should rely only on the information contained or incorporated by reference in this
prospectus. We have not authorized anyone to provide you with additional or different information.
If anyone provides you with different or inconsistent information, you should not rely on it. We
are not making an offer to sell securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information in this prospectus is accurate only as of the
date on the front cover of this prospectus, and any information we have incorporated by reference
is accurate only as of the date of the document incorporated by reference, in each case, regardless
of the time of delivery of this prospectus or any exercise of the subscription rights. Our
business, financial condition, results of operations and prospects may have changed since such
dates. Nothing on our website, is incorporated into this prospectus.
Unless the text clearly suggests otherwise, all references in this prospectus to us, we,
our or the company include T Bancshares, Inc. and its subsidiaries, including, T Bank, N.A.,
which we sometimes refer to as the Bank.
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
The following are examples of what we anticipate will be common questions about the rights
offering. The answers are based on selected information from this prospectus and the documents
incorporated by reference herein. The following questions and answers do not contain all of the
information that may be important to you and may not address all of the questions that you may have
about the rights offering. This prospectus and the documents incorporated by reference herein
contain more detailed descriptions of the terms and conditions of the rights offering and provide
additional information about us and our business, including the potential risks related to the
rights offering, our common stock and our business.
Q. What is the rights offering?
A. It is a distribution, at no charge, to holders of our common stock, of the right to subscribe
for shares of our common stock. Shareholders of record as of 5:00 p.m., New York City time, on
December 12, 2011, the rights offering record date, will receive the right to subscribe for 1.5
shares of common stock for every one (1) share of common stock they owned as of such date.
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Example: You owned 1,000 shares of our common stock as of 5:00 p.m., New
York City time, on the record date. You would receive 1,000 subscription rights and
would have the right to purchase up to 1,500 shares of common stock, at a price of
$2.00 per full share pursuant to your basic subscription rights. |
For more information, see The Rights Offering Basic Subscription Rights.
Q. What is the oversubscription privilege?
A. In the event you exercise your basic subscription rights in full, you may also choose to
subscribe for any shares of our common stock that are not purchased by our other shareholders
through the exercise of their basic subscription rights, subject to limitations on oversubscription
privileges. You may subscribe for as many shares as are available, up to a limit that would cause
your ownership of shares to equal no more than 9.9% of our outstanding common stock following this
rights offering.
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Example: You owned 1,000 shares of our common stock, on the record date
and choose to exercise the 1,000 subscription rights initially received for 1,500
shares of common stock. In addition, you may subscribe for up to 477,972 shares at a
price of $2.00 per full share, representing 9.9% of our outstanding common stock
assuming all of the shares offered hereby are sold. |
If sufficient shares of common stock are available, we will seek to honor your exercise of the
oversubscription privilege request in full prior to accepting subscriptions during the limited
public offering. If, however, oversubscription requests exceed the number of shares of common
stock available, we will allocate the available shares of common stock among shareholders who
oversubscribed. For more information, see The Rights Offering Oversubscription Privilege and
Limit on How Many Shares of Common Stock You May Purchase in the Rights Offering.
ALL EXERCISES OF SUBSCRIPTION RIGHTS ARE IRREVOCABLE. Once you send in your rights
certificate to exercise any subscription rights, you cannot revoke the exercise of your
subscription rights, even if you later learn information that you consider to be unfavorable and
even if the market price of our common stock is below the subscription price. You should not
exercise your subscription rights unless you are sure that you wish to purchase additional shares
of our common stock.
Q. How do I exercise my subscription rights? What forms and payment are required to purchase the
shares of common stock offered pursuant to this rights offering?
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A. If you wish to exercise your subscription rights, you must deliver the following items to the
subscription agent before 5:00 p.m., New York City time, on _________, 20__:
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a properly completed Subscription Rights Certificate; and |
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payment for the full amount of shares of common stock you wish to
purchase pursuant to your basic subscription right and oversubscription
privilege. |
If your shares are held in the name of a broker, dealer, or other nominee, then you should
send your Subscription Rights Certificate and subscription payment to that record holder. If you
are the record holder, then you should send your Subscription Rights Certificate and subscription
payment by overnight delivery, first class mail or courier service to:
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, NY 11219
Payments must be made in full in United States dollars for the full number of shares for which
you are subscribing by:
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check or bank draft payable to American Stock Transfer & Trust Company, LLC, the
subscription agent for T Bancshares, Inc., drawn upon a U.S. bank; |
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postal or express money order payable to American Stock Transfer & Trust Company, LLC; or |
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wire transfer of immediately available funds to the following account maintained
by the subscription agent: |
T Bancshares, Inc. Escrow Account
c/o American Stock Transfer & Trust Company, LLC
Account No.: 530-354624
ABA/Routing Number: 021000021
Additional details are provided under The Rights Offering Method of Exercising
Subscription Rights and The Rights Offering Payment Method. If you cannot deliver your
rights certificate to the subscription agent prior to the expiration of the rights offering, you
may follow the guaranteed delivery procedures described under The Rights Offering Guaranteed
Delivery Procedures.
Q. What should I do if I want to participate in the rights offering, but I hold my shares in the
name of my broker, dealer, custodian bank, or other nominee?
A. If you hold your shares of common stock in the name of a broker, dealer, custodian bank, or
other nominee, the record holder must exercise the subscription rights on your behalf for the
shares of common stock you wish to purchase. Please promptly contact your broker, dealer,
custodian bank, or other nominee that is the record holder of your shares in order to comply with
the subscription instructions. Please note that if your shares are held in the name of a broker,
dealer, or other nominee, your nominee may establish a deadline before the expiration date of the
rights offering in order to exercise your subscription rights. For more information, see The
Rights Offering Method of Exercising Subscription Rights Subscriptions by Beneficial Owners
and Beneficial Owners.
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Q. How was the subscription price of $2.00 per share determined?
A. Our board of directors determined the subscription price after considering our needs for
additional capital to meet and sustain regulatory requirements, the estimated price at which our
shareholders might be willing to participate in the rights offering, historical and current trading
prices for our common stock, the amount of proceeds desired, the potential need for liquidity,
potential market conditions and the desire to provide an opportunity to our shareholders to
participate in the rights offering. The subscription price does not necessarily bear any
relationship to the book value of our assets or our past operations, cash flows, earnings,
financial condition, net worth or any other established criteria used to value securities. The
market price of our common stock may decline during or after the rights offering and you may not be
able to sell the underlying common stock purchased during the rights offering at a price equal to
or greater than the subscription price. You should not consider the subscription price to be an
indication of the fair market value of the common stock to be offered in the rights offering. For
more information, see The Rights Offering Determination of Subscription Price.
Q. How will the rights offering affect the book value of the common stock?
A. On September 30, 2011, the book value of our common stock was $5.22 per share. If all subscription
rights are exercised, following the offering, the pro forma book value of our common stock will be
$3.24. Because the offering price of $2.00 per share is less than the pro forma book value of
$3.24, you will experience accretion of $1.24 per share with respect to the shares purchased.
Q. Am I required to exercise all of the subscription rights I receive in the rights offering?
A. No. You may exercise some or all of your subscription rights, or you may choose not to exercise
any subscription rights.
Q. How soon must I act to exercise my subscription rights?
A. You may exercise your subscription rights at any time beginning on the date of this prospectus
until the expiration date of the rights offering, which is __________, 20__, at 5:00 p.m., New York
City time, unless we extend the rights offering period. Please note that if your shares are held
in the name of a broker, dealer, or other nominee, your nominee may establish a deadline before the
expiration date of the rights offering in order to exercise your subscription rights. For more
information, see The Rights Offering Expiration Date and Amendments.
Q. Will our directors and executive officers participate in the rights offering?
A. Yes. All of our directors are shareholders and have indicated that they will participate in the rights
offering. Accordingly, our directors will not participate in the limited public offering. In
addition, our executive officers who are currently shareholders have indicated that they will
participate in the rights offering. Executive officers who are not currently shareholders may
participate in the limited public offering and have indicated that they intend to do so.
Q. May I transfer my subscription rights?
A. No. You may not transfer your subscription rights.
Q. Are we requiring a minimum subscription to complete the rights offering?
A. No. We are not requiring a minimum number of rights exercised or shares sold to complete the
rights offering.
Q. How many shares of our common stock will be outstanding after the rights offering?
A. As of December 12, 2011, we had 1,941,305 shares of our common stock issued and outstanding. The
number of shares of our common stock that we will issue in this rights offering through the
exercise of subscription rights will depend on the number of shares that are subscribed for in the
rights offering. We anticipate that we will have a maximum of 4,853,262 shares of common stock
outstanding after consummation of the rights offering and limited public offering.
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Q. Are there risks in exercising my subscription rights?
A. Yes. The exercise of your subscription rights involves risks. You should carefully consider
the information in this prospectus, including the risks described under the heading Risk Factors
and the documents incorporated by reference in this prospectus.
Q. What fees or charges apply if I purchase shares of the common stock?
A. There will be no cost to you beyond the subscription price for the shares of common stock you
purchase and any fees your broker may charge you.
Q. Whom should I contact if I have other questions?
A. If you have questions or need assistance with respect to the rights offering, please contact our
subscription agent, American Stock Transfer & Trust Company, LLC, at (877) 248-6417, or our
information agent, D.F. King & Co., Inc. at (800) 829-6551. If you have other questions or need
assistance, please contact Patrick Howard, our CEO, or Ken Bramlage, our CFO, at 972-720-9000.
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PROSPECTUS SUMMARY
This prospectus summary contains basic information about us and this offering. Because it is a
summary, it does not contain all of the information that you should consider before deciding
whether or not you should exercise your subscription rights. To understand this offering fully, you
should carefully read this prospectus, including the Risk Factors section and the information
incorporated by reference in this prospectus, including our audited consolidated financial
statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended
December 31, 2010, our Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, 2011,
June 30, 2011, and September 30, 2011.
Reasons for the Offerings
We are engaging in the rights offering in order to raise capital to support our anticipated
growth. We have chosen to pursue a rights offering so that our shareholders have the opportunity
to avoid or limit dilution of their ownership interests in our common stock. In addition, we
intend to conduct a limited public offering of any shares not subscribed for in the rights
offering. The limited public offering would be available only to persons selected by us, in our
sole discretion.
T Bancshares, Inc.
The company is a bank holding company headquartered in Dallas, Texas, offering a broad array
of banking services through the Bank. Our principal markets include North Dallas, Addison, Plano,
Frisco, Grapevine, Southlake and the neighboring Texas communities. We currently operate through a
main office located at 16000 Dallas Parkway, Dallas, Texas, and a branch office at 8100 North
Dallas Parkway, Plano, Texas. We also have a loan production office located at 850 East State
Highway 114, Suite 200, Southlake, Texas.
We were incorporated under the laws of the State of Texas on December 23, 2002 to organize and
serve as the holding company for the Bank. The Bank opened for business on November 2, 2004.
As
of September 30, 2011, we had, on a consolidated basis, total
assets of approximately $114.6
million, net loans of approximately $85.7 million, total
deposits of approximately $103.0 million,
and shareholders equity of approximately $10.1 million. As
of September 30, 2011, the Bank had $91,000 nonaccrual loans,
which we believe to be immaterial.
Our common stock is quoted on the OTCBB under the symbol TBNC.OB.
Primary Lines of Business
The Bank is a full-service commercial bank serving our principal markets. The Bank offers a
broad range of community banking services to small- to medium-sized businesses, and consumers.
Lending services include commercial loans to small- to medium-sized businesses, professional
concerns and limited consumer loans primarily to the principals and employees of our business
customers. The Bank offers a broad array of deposit services including demand deposits, regular
savings accounts, money market accounts, certificates of deposit and individual retirement
accounts. For the convenience of its customers, the Bank also offers debit cards, automatic
transfers, domestic and foreign wire transfers, cashiers checks and personalized checks. The Bank
also has a significant trust services business. The Banks services are provided through a variety
of delivery systems including automated teller machines, private banking, telephone banking and
Internet banking.
Commercial Loans. Loans for commercial purposes in various lines of businesses are a
major component of the Banks loan portfolio. The targets in the commercial loan markets are
retail establishments, professional service providers, in particular dentists, and small- to
medium-sized businesses.
Real Estate Loans. The Bank makes commercial real estate loans, construction and
development loans, small business loans and residential construction loans. These loans include
commercial loans where the Bank takes a security interest in real estate as a prudent practice and
not as the principal collateral for the loan.
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Consumer Loans. The Bank makes loans to individuals for personal, family and
household purposes, including secured and unsecured installment and term loans. These loans are
typically to the principals and employees of our business customers.
Portfolio Composition. The following table sets forth the composition of the Banks
loan portfolio at September 30, 2011. Loan balances do not include undisbursed loan proceeds, unearned
income, and allowance for loan losses.
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Portfolio Percentage at |
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September 30, 2011 |
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Commercial and Industrial |
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66.1 |
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Consumer Installment |
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0.8 |
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Real Estate Mortgage |
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26.1 |
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Real Estate Construction |
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7.0 |
% |
Investments. The Bank invests a portion of its assets in U.S. Treasuries, government
agency mortgage backed securities, direct obligations of quasi government agencies including Fannie
Mae, Freddie Mac, and the Federal Home Loan Bank, and federal funds sold. No investment in any of
those instruments exceeds any applicable limitation imposed by law or regulation. The Banks
investments are managed in relation to loan demand and deposit growth, and are generally used to
provide for the investment of excess funds at minimal risks while providing liquidity to fund
increases in loan demand or to offset deposit fluctuations. The Banks Asset-Liability Committee
reviews the investment portfolio on an ongoing basis in order to ensure that the investments
conform to the Banks policy as set by the board of directors.
Deposit Services. Deposits are the major source of the Banks funds for lending and
other investment activities. Additionally, we also generate funds from loan principal repayments
and prepayments. Scheduled loan repayments are a relatively stable source of funds, while deposit
inflows and outflows and loan prepayments are influenced significantly by general interest rates
and market conditions. The Bank considers the majority of its regular savings, demand, NOW, and
money market deposit accounts, as well as its trust custodial deposits, to be core deposits. These
accounts comprised approximately 58% of the Banks total
deposits as of September 30, 2011. The Banks
remaining deposits were composed of time deposits less than $100,000,
which comprised 8.0% of
total deposits, and time deposits of $100,000 and greater, which
comprised approximately 34% of
total deposits as of September 30, 2011. The Bank believes it is very competitive in the types of
accounts and interest rates we offer on deposit accounts, in particular money market accounts and
time deposits. We actively solicit these deposits through personal solicitation by our officers
and directors, advertisements published in the local media, and through our Internet banking
strategy.
Trust
money market deposits available to the Bank as of September 30,
2011 were approximately $40
million. These deposits could be transferred by the Banks trust department within one business day
from third party investment funds into a money market account controlled by the trust department
and maintained at the Bank. One hundred percent of the funds would be insured deposits by the FDIC
to the underlying beneficial owners of the funds. With additional advances available from the
Federal Home Loan Bank of Dallas and Federal Reserve Bank of Dallas and the money market deposits
available through the Banks trust department, the Bank has off-balance sheet liquidity available
of 40% of total assets as of September 30, 2011.
As a result of not
being considered well capitalized, we cannot price our deposit products in excess of 0.75% over the
national average of similar deposit types and terms as published weekly by the FDIC. Because of the
85% loan to deposit requirement, we intend to spread future asset growth across various asset
categories in addition to loan assets. Other areas of asset growth are anticipated to be high
quality, short term, investment grade securities. These asset classes currently provide a lower
return to the Bank, commensurate with their lower risk, as compared to loan assets. We do not
believe the restrictions on deposit pricing will factor into the Banks future growth because of
the availability of the trust money market deposits. In addition, we have been able to replace
maturing time deposits at managed volumes and rates that were well below the maximum rate
allowable.
Trust Services. Since August 2006, the Bank has offered traditional fiduciary
services, such as serving as executor, trustee, agent, administrator or custodian for individuals,
nonprofit organizations, employee benefit plans and organizations. As of September 30, 2011, the Bank
had approximately $842 million in trust assets under management.
Other Banking Services. Other banking services currently offered or anticipated
include cashiers checks, direct deposit of payroll and Social Security checks, bank-by-mail and
debit cards. The Bank offers its customers free usage of any automated teller machine in the
world. We also may offer expanded financial services, such as insurance, financial planning and
investments in the future.
Administrative Action
On April 15, 2010, the
Bank and the Comptroller of the Currency of the United States of America, or the Comptroller, entered into a formal
written agreement, as such term is used in the Comptrollers regulations (the formal agreement).
In addition, the
Bank entered into a consent order requiring the payment by the Bank of a civil money penalty in the amount of $100,000
(the 2010 Consent Order).
The formal agreement replaced
the consent order that the Bank entered into with the Comptroller in July 2008 (the 2008 Consent Order), and,
consequently, the 2008 Consent Order was terminated. In the formal agreement and the 2010 Consent Order, the
Comptroller made findings that the Bank violated the Federal Trade Commission Act and engaged in unfair banking
practices as a result of the Banks account relationships maintained with a third party payment processor and certain
telemarketers and internet merchants between September 1, 2006 and August 27, 2007. The Comptroller also made findings
that the Bank engaged in unsafe and unsound banking practices relating to asset quality, liquidity management and earnings.
As a result of those findings, the Comptroller proposed the 2010
Consent Order and the formal agreement to the Bank requiring the Bank to provide
restitution to consumers of the telemarketers and internet merchants, as well as continuing certain requirements from the
2008 Consent Order resulting from the Comptrollers findings of unsafe and unsound banking practices relating to asset
quality, liquidity management and earnings. The Bank neither admitted nor denied the
Comptrollers findings, but agreed to enter into the formal agreement and the 2010 Consent Order.
To resolve the matter, on April
15, 2010, the Bank entered into the 2010 Consent Order requiring a civil money penalty in the amount of $100,000 and
executed the formal agreement with the Comptroller, which contained, among other provisions, requirements to establish
a segregated deposit account for consumer restitution and to maintain a loan to deposit ratio no greater than 85% (see
Risks Related to the Company under Risk Factors). The formal agreement also requires the Bank to achieve a tier 1
capital ratio of 9.0% and a total risk based capital ratio of 11.5%, which are the same capital ratios that the Bank
was required to achieve under the 2008 Consent Order. The requirement to maintain certain capital levels means the Bank
cannot be considered well capitalized even if the Banks capital ratios exceed the requirements set forth in the formal
agreement. In addition, the formal agreement required the Bank to submit a written program to reduce its level of criticized
assets and a written profit plan to improve and sustain its earnings.
The Bank paid the civil money
penalty in April 2010. In addition, the Bank submitted the required capital, liquidity enhancement, and profit plans,
as well as a written program to reduce criticized assets to the Comptroller in accordance with the requirements of the
formal agreement. The Comptroller did not object to the plans and program as submitted. Although the Bank was previously
unable to comply with the capital ratio requirements of the 2008 Consent Order and formal agreement, as of September 30,
2011 and December 31, 2011, the Banks capital ratios and loan to deposit ratios exceeded the requirements set forth in the
formal agreement.
2
Business Strategy
We believe we can effectively compete as a community bank in our market area and the niche
markets we serve. We offer a broad range of commercial and consumer banking services primarily to
small- to medium-sized businesses and independent single-family residential and commercial
contractors. We believe that meeting the needs of our customers and making their banking experience
more efficient leads to increased customer loyalty. In addition to our traditional community
banking services, we offer trust services to individuals and benefit plans. Finally, we have a
nationwide niche practice in servicing the banking needs of dental professionals.
Beginning in 2010 and through the first nine months of 2011, we have encountered two
significant challenges. As a result of those challenges, our earnings for 2010 and for the first
nine months of 2011 were negatively impacted due to our consumer restitution obligation and the
accrued income correction related to our collective investment funds. We believe both of these
issues were isolated occurrences and have been resolved. Despite those challenges, we believe that
we have efficiently leveraged our available capital while managing our balance sheet to strict
mandated guidelines. While this has hindered our growth, we believe that our focused expense
reductions and active management of available funding options have increased our income potential.
The following table demonstrates our income potential of the Bank since January 1, 2010 when
calculated without giving effect to the costs and expenses directly related to the consumer
restitution and collective investment funds matters. The following table contains non-GAAP
financial measures; see Reconciliation of Non-GAAP Financial Measures below.
3
T BANCSHARES, INC.
STATEMENTS OF INCOME
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
|
YTD |
|
|
|
Sept. 30, |
|
|
June 30, |
|
|
March 31, |
|
|
Dec. 31, |
|
|
Sept. 30, |
|
|
June 30, |
|
|
March 31, |
|
|
|
2011(2) |
|
|
2011(2) |
|
|
2011(2) |
|
|
2010 |
|
|
2010(2) |
|
|
2010(2) |
|
|
2010(2) |
|
Interest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
$ |
5,180 |
|
|
$ |
3,526 |
|
|
$ |
1,819 |
|
|
$ |
7,752 |
|
|
$ |
5,929 |
|
|
$ |
4,061 |
|
|
$ |
2,039 |
|
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
1,595 |
|
|
|
1,149 |
|
|
|
579 |
|
|
|
2,600 |
|
|
|
1,993 |
|
|
|
1,365 |
|
|
|
723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
3,585 |
|
|
|
2,377 |
|
|
|
1,240 |
|
|
|
5,152 |
|
|
|
3,936 |
|
|
|
2,696 |
|
|
|
1,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
(59 |
) |
|
|
(47 |
) |
|
|
19 |
|
|
|
851 |
|
|
|
871 |
|
|
|
1,185 |
|
|
|
1,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net int. inc. after prov. for loan losses |
|
|
3,644 |
|
|
|
2,423 |
|
|
|
1,221 |
|
|
|
4,301 |
|
|
|
3,064 |
|
|
|
1,511 |
|
|
|
13 |
|
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust income |
|
|
6,489 |
|
|
|
4,350 |
|
|
|
2,134 |
|
|
|
7,735 |
|
|
|
5,717 |
|
|
|
3,812 |
|
|
|
1,891 |
|
Trust advisory expense |
|
|
(5,453 |
) |
|
|
(3,644 |
) |
|
|
(1,819 |
) |
|
|
(6,597 |
) |
|
|
(4,874 |
) |
|
|
(3,252 |
) |
|
|
(1,606 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Trust fee income |
|
|
1,036 |
|
|
|
706 |
|
|
|
315 |
|
|
|
1,139 |
|
|
|
843 |
|
|
|
560 |
|
|
|
285 |
|
Service fees |
|
|
221 |
|
|
|
109 |
|
|
|
81 |
|
|
|
159 |
|
|
|
122 |
|
|
|
76 |
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income |
|
|
1,257 |
|
|
|
815 |
|
|
|
396 |
|
|
|
1,298 |
|
|
|
965 |
|
|
|
636 |
|
|
|
324 |
|
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
|
6,058 |
|
|
|
4,747 |
|
|
|
3,450 |
|
|
|
6,069 |
|
|
|
4,726 |
|
|
|
2,873 |
|
|
|
1,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(1,157 |
) |
|
$ |
(1,509 |
) |
|
$ |
(1,833 |
) |
|
$ |
(470 |
) |
|
$ |
(697 |
) |
|
$ |
(726 |
) |
|
$ |
(1,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addback:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restitution |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
560 |
|
|
$ |
560 |
|
|
$ |
|
|
|
$ |
|
|
Restitution related legal & administrative |
|
|
23 |
|
|
|
16 |
|
|
|
9 |
|
|
|
127 |
|
|
|
124 |
|
|
|
101 |
|
|
|
101 |
|
Trust CTF |
|
|
1,973 |
|
|
|
1,928 |
|
|
|
2,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust CTF related legal & administrative |
|
|
256 |
|
|
|
172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total addback |
|
|
2,252 |
|
|
|
2,116 |
|
|
|
2,109 |
|
|
|
687 |
|
|
|
684 |
|
|
|
101 |
|
|
|
101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income after addback [NonGAAP] (1) |
|
$ |
1,095 |
|
|
$ |
608 |
|
|
$ |
276 |
|
|
$ |
217 |
|
|
$ |
(13 |
) |
|
$ |
(625 |
) |
|
$ |
(1,079 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Earnings [NonGAAP] (1) |
|
$ |
487 |
|
|
$ |
332 |
|
|
$ |
276 |
|
|
$ |
229 |
|
|
$ |
613 |
|
|
$ |
454 |
|
|
$ |
(1,079 |
) |
|
|
|
(1) |
|
Constitutes a non-GAAP financial measure. We use non-GAAP financial
measures because we believe they are useful for evaluating our financial condition, operations and
performance over periods of time, as well as in managing and evaluating our business. We also
believe that non-GAAP financial measures provide users of our financial information with a
meaningful measure for assessing our financial condition, financial results and credit trends, as
well as comparison to financial result for prior periods. These disclosures should not be viewed
as a substitute for results determined in accordance with GAAP, and are not necessarily comparable
to non-GAAP performance measures that other companies may use. See Reconciliation of
Non-GAAP Financial Measures below. |
|
(2) |
|
Unaudited. |
After recognizing significant loan losses during the first quarter of 2010, subsequent
loan recoveries during the second and third quarters of 2010 supplemented earnings from ordinary
operations. As the table reflects, we believe our management team has positioned the Banks balance
sheet, combined with targeted expense reductions, to result in consistent quarterly earnings from
ongoing banking activities through September 2011. We believe that additional capital will allow us
to grow our asset size while adding marginal additional overhead. We believe current staffing will
support asset growth to $150 million with only nominal incremental increases in expenses.
Another significant component of our business strategy is to utilize relatively low cost
deposits provided by our trust activities to fund additional loan growth. The amount of deposits
available to us while maintaining full FDIC insurance protection for our trust customers has
consistently exceeded $30 million for the last three years. During 2011, the average cost of these
deposits has been below 0.11%. With the maturity of significant volumes of five-year
4
CDs, which were above current market rates and funded the Banks growth in 2006, lower cost funds
along with the low cost trust deposits have contributed to a significant improvement in the Banks
net interest margin from 3.3% for the year ending December 31,
2008 to 5.0% for the month ending September 30, 2011.
Management Team
In September 2007, we hired Patrick Howard to serve as the managing officer of the Bank,
serving on our board of directors as well as the board of directors of the Bank. Previously, Mr.
Howard served as the Executive Vice President, Chief Operating Officer of a $2.2 billion savings
bank headquartered in Denver, Colorado, since 1994. With over 25 years in the banking industry,
Mr. Howards responsibilities have included executive level responsibility for commercial, real
estate, and consumer lending as well as all facets of bank operations, regulatory compliance, and
business and strategic planning. In July 2011, we named Mr. Howard President and CEO of both T
Bancshares, Inc. and T Bank, N.A.
In February 2008, we successfully recruited D. Craig Barnes to the position of Executive Vice
President and Chief Credit Officer of the Bank. Mr. Barnes brings over 35 years of banking
experience including serving as the Chief Executive Officer of a mutual savings bank which he
successfully turned around and grew six fold in asset size during his tenure.
Also in July 2008, Ken Bramlage joined the Bank. In addition to his Certified Public
Accountant credentials, Mr. Bramlage brings 26 years in bank accounting and balance sheet
management to the table. He was named Chief Financial Officer of both the Company and the Bank in
2010.
Other key members of the management team include Steve Jones, who is our Plano Market
President and also serves on our board of directors. Steve is seasoned lender, having spent the
last 27 years active in the north Texas and Metroplex markets. Charles Holmes is our Chief Trust
Officer, bringing 36 years of trust experience to our organization. Finally, Audrey Wendell is our
Professional & Executive Market President. Ms. Wendell has been instrumental in creating our
success in the dental lending market, a key element of our business strategy.
We believe this experienced management team, coupled with our diverse, community-oriented
board of directors, enhances our ability to attract and retain commercial customers. Since late
2007, the management team has focused on building a solid banking platform which can successfully
support the future growth and expansion of our business strategy. This involved successfully
resolving multiple regulatory and operational issues.
Key accomplishments of our current management team include:
|
|
|
resolution and removal of an informal regulatory agreement entered into in March
2007; |
|
|
|
|
|
resolution of Bank Secrecy Act matters occurring during 2006 through August 2007, which were
identified in the 2008 Consent Order, with no further anticipated charges or recoveries related thereto; |
|
|
|
|
|
|
resolution of regulatory mandated consumer restitution as a result of events
which occurred during 2006 through August 2007 with no further anticipated charges or recoveries related thereto; |
|
|
|
|
|
|
as of September 30, 2011 and December 31, 2011, achievement of capital ratios and loan to deposit
ratios that meet or exceed those mandated by the formal agreement between the Bank
and the Comptroller of the Currency; and |
|
|
|
|
|
|
identification and resolution of an income accrual issue with our collective
investment funds that predominantly occurred during the first year of trust
operations in 2006-2007 when fund accounting was outsourced. We
anticipate no further charges related to this issue and the
possibility of recovery from third parties is unknown at this time. |
|
5
Corporate Information
Our principal executive offices are located at 16000 Dallas Parkway, Suite 125, Dallas, Texas
75248. Our telephone number is (972) 720-9000. The Banks website is http://www.tbank.com. The
information contained on our website is not part of this prospectus.
6
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth our summary consolidated historical financial and operating
data for the periods and at the dates indicated. The historical financial data for each of the
five years in the period ended December 31, 2010 are derived from the historical consolidated
financial statements. The historical financial data for the nine months ended September 30, 2011 and
2010, are derived from our unaudited financial statements. In our opinion, this unaudited
information has been prepared on a basis consistent with the audited consolidated historical
financial statements included by reference elsewhere in this prospectus and includes all
adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair
presentation of our financial position and results of operations for these periods. This
information should be read in conjunction with our historical consolidated financial statements and
the notes thereto. The historical results presented are not necessarily indicative of future
results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of or for the nine months ended September 30, |
|
|
As of or for the year ended December 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Summary Income Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
5,180 |
|
|
$ |
5,929 |
|
|
$ |
7,753 |
|
|
$ |
8,498 |
|
|
$ |
9,846 |
|
|
$ |
10,320 |
|
|
$ |
5,445 |
|
Interest expense |
|
|
1,595 |
|
|
|
1,993 |
|
|
|
2,600 |
|
|
|
3,340 |
|
|
|
4,929 |
|
|
|
4,934 |
|
|
|
1,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
3,585 |
|
|
|
3,936 |
|
|
|
5,153 |
|
|
|
5,158 |
|
|
|
4,917 |
|
|
|
5,386 |
|
|
|
3,450 |
|
Provision for loan losses |
|
|
(59 |
) |
|
|
871 |
|
|
|
851 |
|
|
|
1,370 |
|
|
|
417 |
|
|
|
600 |
|
|
|
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net trust income |
|
|
1,036 |
|
|
|
843 |
|
|
|
1,138 |
|
|
|
1,037 |
|
|
|
1,211 |
|
|
|
1,013 |
|
|
|
808 |
|
Other noninterest income |
|
|
221 |
|
|
|
122 |
|
|
|
159 |
|
|
|
116 |
|
|
|
203 |
|
|
|
1,454 |
|
|
|
816 |
|
Total noninterest income |
|
|
1,257 |
|
|
|
965 |
|
|
|
1,297 |
|
|
|
1,153 |
|
|
|
1,414 |
|
|
|
2,467 |
|
|
|
1,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
|
|
6,058 |
|
|
|
4,727 |
|
|
|
6,069 |
|
|
|
8,785 |
|
|
|
6,342 |
|
|
|
6,452 |
|
|
|
4,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(1,157 |
) |
|
|
(697 |
) |
|
|
(470 |
) |
|
|
(3,844 |
) |
|
|
(428 |
) |
|
|
801 |
|
|
|
12 |
|
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,157 |
) |
|
$ |
(697 |
) |
|
$ |
(470 |
) |
|
$ |
(3,844 |
) |
|
$ |
(428 |
) |
|
$ |
801 |
|
|
$ |
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) per common
share -diluted |
|
|
(0.60 |
) |
|
|
(0.36 |
) |
|
|
(0.24 |
) |
|
|
(1.99 |
) |
|
|
(0.25 |
) |
|
|
0.46 |
|
|
|
0.01 |
|
Book value at end of period |
|
|
5.22 |
|
|
|
5.64 |
|
|
|
5.74 |
|
|
|
5.97 |
|
|
|
8.09 |
|
|
$ |
8.29 |
|
|
$ |
7.74 |
|
Dividends declared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding and
dilutive potential common shares
outstanding |
|
|
1,942,461 |
|
|
|
1,941,305 |
|
|
|
1,941,305 |
|
|
|
1,936,099 |
|
|
|
1,703,801 |
|
|
|
1,728,540 |
|
|
|
1,681,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
114,588 |
|
|
$ |
114,783 |
|
|
$ |
115,148 |
|
|
$ |
139,411 |
|
|
$ |
136,250 |
|
|
$ |
147,515 |
|
|
$ |
130,391 |
|
Cash and cash equivalents |
|
|
19,354 |
|
|
|
5,331 |
|
|
|
10,189 |
|
|
|
7,292 |
|
|
|
8,457 |
|
|
|
23,560 |
|
|
|
37,766 |
|
Total securities available |
|
|
5,119 |
|
|
|
4,045 |
|
|
|
5,889 |
|
|
|
6,087 |
|
|
|
1,703 |
|
|
|
1,491 |
|
|
|
1,456 |
|
Total loans |
|
|
87,203 |
|
|
|
101,467 |
|
|
|
95,939 |
|
|
|
123,132 |
|
|
|
125,031 |
|
|
|
121,524 |
|
|
|
89,083 |
|
Allowance for loan losses |
|
|
1,498 |
|
|
|
1,777 |
|
|
|
1,754 |
|
|
|
1,713 |
|
|
|
1,638 |
|
|
|
1,600 |
|
|
|
1,000 |
|
Total deposits |
|
|
102,972 |
|
|
|
89,214 |
|
|
|
95,770 |
|
|
|
108,125 |
|
|
|
111,096 |
|
|
|
132,910 |
|
|
|
117,134 |
|
Short-term borrowing |
|
|
|
|
|
|
12,200 |
|
|
|
6,000 |
|
|
|
16,000 |
|
|
|
10,500 |
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
10,138 |
|
|
|
10,949 |
|
|
|
11,137 |
|
|
|
11,591 |
|
|
|
13,794 |
|
|
|
14,126 |
|
|
|
13,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin |
|
|
4.80 |
% |
|
|
4.20 |
% |
|
|
4.30 |
% |
|
|
3.45 |
% |
|
|
3.33 |
% |
|
|
4.16 |
% |
|
|
4.98 |
% |
Nonperforming loans to total loans |
|
|
0.10 |
% |
|
|
1.77 |
% |
|
|
1.87 |
% |
|
|
3.08 |
% |
|
|
3.67 |
% |
|
|
0.90 |
% |
|
|
0.11 |
% |
Nonperforming assets to total loans |
|
|
2.40 |
% |
|
|
4.73 |
% |
|
|
4.27 |
% |
|
|
4.38 |
% |
|
|
3.67 |
% |
|
|
0.90 |
% |
|
|
0.11 |
% |
Allowance for loan losses to
nonperforming loans(1) |
|
|
n/a |
|
|
|
98.72 |
% |
|
|
97.44 |
% |
|
|
45.08 |
% |
|
|
35.61 |
% |
|
|
145.45 |
% |
|
|
n/a |
|
Allowance for loan losses
to total loans |
|
|
1.72 |
% |
|
|
1.75 |
% |
|
|
1.83 |
% |
|
|
1.39 |
% |
|
|
1.31 |
% |
|
|
1.31 |
% |
|
|
1.12 |
% |
Net charge-offs to average
loans |
|
|
0.22 |
% |
|
|
0.75 |
% |
|
|
0.72 |
% |
|
|
1.06 |
% |
|
|
0.29 |
% |
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of or for the nine months ended September 30, |
|
|
As of or for the year ended December 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Capital Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital (to risk-weighted assets) |
|
|
12.25 |
% |
|
|
11.36 |
% |
|
|
12.20 |
% |
|
|
11.33 |
% |
|
|
12.05 |
% |
|
|
13.00 |
% |
|
|
13.55 |
% |
Tier 1 capital (to risk-weighted assets) |
|
|
10.99 |
% |
|
|
10.11 |
% |
|
|
10.94 |
% |
|
|
10.08 |
% |
|
|
10.80 |
% |
|
|
11.74 |
% |
|
|
12.53 |
% |
Tier 1 capital (to average assets) |
|
|
9.59 |
% |
|
|
9.24 |
% |
|
|
9.41 |
% |
|
|
7.51 |
% |
|
|
9.21 |
% |
|
|
9.45 |
% |
|
|
10.81 |
% |
|
|
|
(1) |
|
Nonperforming loans were either $0 or immaterial amounts at September 30, 2011 and December
31, 2006. The ratio is therefore meaningless and not applicable (n/a). |
Reconciliation of Non-GAAP Financial Measures
The table below contains certain supplemental financial information which has been determined
by methods other than U. S. generally accepted accounting principles (GAAP). Non-GAAP financial
measures provide useful supplemental information to both management and investors in evaluating the
Companys financial results. These non-GAAP measures should not be considered a substitute for GAAP
basis measures and results, and we strongly encourage investors to review our consolidated
statements in their entirety and not to rely on any single financial measure. Non-GAAP financial
measures are not standardized, and, therefore, it may not be possible to compare these financial
measures with other companies non-GAAP financial measures that may have the same or similar names.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly
applied and are not audited. To mitigate these limitations, the Company has procedures in place to
ensure that these measures are calculated using the appropriate GAAP or regulatory components and
to ensure that the companys capital performance is properly reflected for period-to-period
comparisons. Although these non-GAAP financial measures are frequently used by shareholders in the
evaluation of a company, they have limitations as analytical tools, and should not be considered in
isolation, or as a substitute for analyses of results as reported under GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
YTD |
|
|
YTD |
|
|
|
Sept. 30, |
|
|
June 30, |
|
|
March 31, |
|
|
Dec. 31, |
|
|
Sept. 30, |
|
|
June 30, |
|
|
March 31, |
|
|
|
2011(3) |
|
|
2011(3) |
|
|
2011(3) |
|
|
2010 |
|
|
2010(3) |
|
|
2010(3) |
|
|
2010(3) |
|
Net Income (Loss) [Per GAAP] (1) |
|
$ |
(1,157 |
) |
|
$ |
(1,509 |
) |
|
$ |
(1,833 |
) |
|
$ |
(470 |
) |
|
$ |
(697 |
) |
|
$ |
(726 |
) |
|
$ |
(1,180 |
) |
Addback:(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restitution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
560 |
|
|
|
560 |
|
|
|
|
|
|
|
|
|
Restitution related legal & administrative |
|
|
23 |
|
|
|
16 |
|
|
|
9 |
|
|
|
127 |
|
|
|
124 |
|
|
|
101 |
|
|
|
101 |
|
Trust CTF |
|
|
1,973 |
|
|
|
1,928 |
|
|
|
2,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust CTF related legal & administrative |
|
|
256 |
|
|
|
172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total addback |
|
|
2,252 |
|
|
|
2,116 |
|
|
|
2,109 |
|
|
|
687 |
|
|
|
684 |
|
|
|
101 |
|
|
|
101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income after addback [NonGAAP] (2) |
|
$ |
1,095 |
|
|
$ |
607 |
|
|
$ |
276 |
|
|
$ |
217 |
|
|
$ |
(13 |
) |
|
$ |
(625 |
) |
|
$ |
(1,079 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net Income, in accordance with GAAP. |
|
(2) |
|
Adjusted Net Income, as calculated for non-GAAP purposes. |
|
(3) |
|
Unaudited. |
8
THE RIGHTS OFFERING
|
|
|
Basic Subscription Right
|
|
We are distributing to you, at no charge, one (1) nontransferable
subscription rights for every one (1) share of our common stock that
you owned as of the record date. Each subscription right entitles you to purchase 1.5 shares of our common stock. If the rights offering is fully
subscribed, we expect the gross proceeds from the rights offering to be
approximately $5.8 million. |
|
|
|
Subscription Price
|
|
The subscription price is $2.00 per share. |
|
|
|
|
Record Date
|
|
5:00 p.m., New York City time, on December 12, 2011. |
|
|
|
|
Oversubscription Privilege
|
|
If you timely and fully exercise your basic subscription rights with
respect to all of the subscription rights you hold and other rights
holders do not exercise their basic subscription rights in full, you
may also subscribe for any shares of our common stock that our other
shareholders do not purchase through the exercise of their basic
subscription rights pursuant to the oversubscription privilege (subject
to availability and the limits described below under the heading
Limitation on the Purchase of Shares). |
|
|
|
No Minimum
|
|
There is no minimum number of rights that must be exercised or shares
sold as a condition to accepting subscriptions and closing the
offerings. |
|
|
|
Procedures for Exercising Rights
|
|
To exercise your subscription rights, you must take the following steps: |
|
|
|
|
|
If you are a record holder of our common stock, as of
the record date you must: |
|
|
|
|
|
properly complete and sign the subscription rights
certificate which accompanies this prospectus; and |
|
|
|
|
|
return the completed and signed subscription rights
certificate with full payment for the number of shares of common stock
which you are subscribing for to the subscription agent. |
|
|
|
|
|
If you are a beneficial owner of shares that are
registered in the name of a broker, dealer, custodian bank or other
nominee, as of the record date: |
|
|
|
|
|
you should instruct your broker, dealer or other nominee in
accordance with the procedures described in The Rights Offering
Beneficial Owners; and |
|
|
|
|
|
your broker, dealer, custodian bank or other nominee must
exercise your subscription rights on your behalf and deliver all
documents and payments to the subscription agent at or before 5:00
p.m., New York City time, on _________, 20_. |
|
|
|
|
|
Your payment may be made by check or bank draft drawn upon a U.S. bank
or postal, telegraphic or express money order payable to American
Stock Transfer & Trust Company, LLC, as subscription agent. The
subscription agent must receive the properly completed and signed
subscription rights certificate and payment prior to the expiration
date of the rights offering. See The Rights Offering Subscription
Procedures and The Rights Offering Subscription Payments.
|
9
|
|
|
Subscription Agent for Rights
Offering
|
|
You may also exercise your subscription rights by using the guaranteed
delivery procedures described in The Rights Offering Notice of
Guaranteed Delivery. American Stock Transfer & Trust Company, LLC |
|
|
|
Information Agent for Rights
Offering
|
|
D.F. King & Co., Inc. |
|
|
|
Limitation on Purchase of Shares
|
|
Unless we otherwise agree in writing, a person or entity, together with
related persons or entities, may not exercise subscription rights
(including oversubscription privileges) to purchase shares of our
common stock that, when aggregated with their existing ownership, would
result in such person or entity, together with any related persons or
entities, owning in excess of 9.9% of our issued and outstanding shares
of common stock following the closing of the transactions contemplated
by this rights offering, or otherwise being required to obtain
regulatory approval. See The Rights Offering Limit on How Many
Shares of Common Stock You May Purchase in the Rights Offering. |
|
|
|
Expiration Date of the Rights
Offering
|
|
5:00 p.m., New York City time, on ________, 20_. |
|
|
|
Use of Proceeds
|
|
We intend to use the proceeds of the rights offering for general
corporate purposes, including providing capital to the Bank. See Use
of Proceeds. |
|
|
|
Transferability of Rights
|
|
You may not sell or otherwise transfer your subscription rights. The
subscription rights will not be listed on any securities exchange or
national market or quoted on any quotation system. |
|
|
|
No Board Recommendation
|
|
Our board of directors is making no recommendation regarding whether
you should exercise your subscription rights. We urge you to make your
decision based on your own assessment of our business and financial
condition, our prospects for the future, and the terms of the rights
offering. Please see Risk Factors for a discussion of some of the
risks involved in investing in our common stock. |
|
|
|
|
Unsubscribed Shares;
Limited Public Offering
|
|
At the same time that we are conducting the rights offering, we may
also conduct a limited public offering of common stock to the public.
This offering would be available only to persons selected by us, in our
sole discretion. All of our directors are shareholders and have indicated that they will participate in the
rights offering. Accordingly, our directors will not participate in the limited public offering. In
addition, our executive officers who are currently shareholders have indicated that they will
participate in the rights offering. Executive officers who are not currently shareholders may
participate in the limited public offering and have indicated that
they intend to do so.
The only shares that will be offered in the limited
public offering are shares that are not subscribed for in the rights
offering. In the limited public offering, investors will have the
opportunity to subscribe to purchase shares at the subscription price.
The limited public offering will expire at the close of business on
____________, 20__, unless we extend it in our sole discretion. However, we will not extend the limited public
offering beyond _____, 2012. We
reserve the right to reject, in whole or in part, any subscription
tendered in the limited public offering. This offering would be
conducted solely on a best efforts basis by our directors and
executive officers. Neither our directors nor our executive officers
will receive commissions or any form of remuneration in connection with
the offerings. |
|
10
|
|
|
Subscription Procedures;
Limited Public Offering
|
|
If you are an investor in the limited public offering, you may
subscribe for shares by properly completing and signing the
subscription agreement included with this prospectus and delivering it,
along with payment of the entire subscription price for all of the
shares for which you are subscribing, to T Bank, N.A., the escrow
agent, on or before the expiration date of the limited public offering.
The escrow agent must receive the properly completed and signed
subscription agreement and payment prior to the expiration date of the
limited public offering. See The Limited Public Offering -
Subscription Procedures and The Limited Public Offering Payment
Method. |
|
|
|
Eligible Investors; Limited
Public Offering
|
|
We will offer shares of common stock in the limited public offering to
Texas residents that are limited to not more than 35 new non-accredited
investors and an unlimited number of accredited investors. See The
Limited Public Offering Suitability. |
|
|
|
Escrow Agent for Limited Public
Offering
|
|
T Bank, N.A. |
|
|
|
Closing of the Offerings
|
|
We will accept subscriptions tendered in the rights offering as soon as
practicable after its expiration. If the rights offering (including the
oversubscription privilege) is not fully subscribed as of the
expiration date and we receive subscriptions in the limited public
offering, we will accept subscriptions in the limited public offering
on the terms described herein, close the offerings and mail stock
certificates as soon as practicable after the expiration date. |
|
|
|
No Revocation
|
|
All exercises of subscription rights and orders to subscribe for common
stock are irrevocable, even if you later learn information that you
consider to be unfavorable to the exercise of your subscription rights.
You should not exercise your subscription rights or deliver your
subscription agreement unless you are sure that you wish to purchase
shares of our common stock at the subscription price. |
|
|
|
Material U.S. Federal Income
Tax Consequences
|
|
For U.S. federal income tax purposes, you should not recognize income,
gain, or loss upon receipt, exercise, or expiration of a subscription
right. You should consult your own tax advisor as to the tax
consequences to you of the receipt, exercise, or expiration of the
subscription rights in light of your particular circumstances. |
|
|
|
Extension, Cancellation, and
Amendment
|
|
We have the option to extend the rights offering and the limited public
offering and the period for exercising your subscription rights,
although we do not presently intend to do so. Our board of directors
may cancel the offerings at any time prior to the expiration date of
the offerings for any reason. In the event that we cancel the
offerings, all subscription payments that the subscription agent and
escrow agent, as applicable, have received will be returned, without
interest or deduction, as soon as practicable. We also reserve the
right to amend or modify the terms of the rights offering or limited
public offering at any time prior to the expiration date of the
offerings. |
11
|
|
|
|
Shares Outstanding Before
the Rights Offering and
The Limited Public Offering
|
|
1,941,305 shares of our common stock were outstanding as of December 12,
2011. |
|
|
|
|
Fees and Expenses
|
|
We will pay the fees and expenses related to the rights offering and
the limited public offering. |
|
|
|
Questions
|
|
If you have any questions about the rights offering, including
questions about subscription procedures and requests for additional
copies of this prospectus or other documents, please contact the
subscription agent, American Stock Transfer & Trust Company, LLC, at
(877) 248-6417, or the information agent, D.F. King & Co., Inc. at
(800) 829-6551. |
|
|
|
|
|
If you have any other questions or need assistance, please contact
Patrick Howard, our CEO, or Ken Bramlage, our CFO, at (972) 720-9000. |
12
RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully
consider the risks described below, together with the other information included or incorporated
by reference in this prospectus, including the risk factors set forth in our annual report on
Form 10-K for the fiscal year ended December 31, 2010, our Quarterly Reports for fiscal quarters
ended March 31, 2011, June 30, 2011, and September 30, 2011, and the risks that we have highlighted in other sections
of this prospectus. The risks and uncertainties not presently known to us or that we currently
deem immaterial also may impair our business operations. If any of the following risks actually
occur, our business, results of operations, and financial condition could suffer materially. In
that event, the trading price and market value of our common stock could decline, and you may
lose all or part of your investment in our common stock. The risks discussed below include
forward-looking statements, and our actual results may differ substantially from those discussed
in these forward-looking statements.
RISKS RELATED TO THE COMPANY
We are operating under a formal agreement with the Comptroller. If we fail to comply with any
provision of the formal agreement, the Comptroller may take further action against us.
In early 2010, the Comptroller
informed the Bank that the Comptroller intended to institute an enforcement action against the Bank based on the
Comptrollers findings of violations the Federal Trade Commission Act and unfair practices as a result of the
Banks account relationships with a third party payment processor and certain telemarketers and internet merchants
between September 1, 2006 and August 27, 2007. The Comptroller proposed the formal agreement and provisions in the formal
agreement requiring the Bank to provide restitution to consumers of the telemarketers and the internet merchants, as well
as continuing certain requirements from the 2008 Consent Order resulting from the Comptrollers findings of unsafe and
unsound banking practices relating to asset quality, liquidity management and earnings. The Bank neither admitted nor
denied the Comptrollers findings, but agreed to enter into the formal agreement.
The Comptroller asserted that
certain consumers of the telemarketers and the internet merchants were entitled to restitution for unauthorized charges
made to the consumers accounts held with a third party bank by the telemarketers and internet merchants who were deposit
customers of the Bank. For example, a merchant would charge a consumer for a product and the purchase price would be
withdrawn from the consumers account with a third party bank and deposited into an account at the Bank by means of a
remotely created check, which does not contain the signature of the person on whose account the check is drawn, or
similar instrument generated by the payment processor. The Comptroller founds that the Banks relationship with the
third party payment processor and certain of telemarketers and merchants constituted unfair practices in connection
with the Banks account relationships with such third parties and unsafe or unsound banking practices at the Bank.
Rather than challenge the
Comptrollers findings in court, the Bank agreed to enter into a formal agreement with the Comptroller and the 2010
Consent Order for a civil money penalty payable by the Bank to resolve the matter with the Comptroller. The formal
agreement replaced the 2008 Consent Order in its entirety and, consequently, the 2008 Consent Order was terminated.
The Bank neither admitted nor denied the Comptrollers assertions, and the Bank disputed the amount of consumer
restitution related to the alleged violations of the Federal Trade Commission Act.
To resolve the
matter, on April 15, 2010, the Bank entered into the 2010 Consent Order requiring a
civil money penalty in the amount of $100,000 and executed the formal agreement with the
Comptroller, containing the following general terms:
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require the Bank to reimburse consumers for up to $5.1 million for
charges made to them by certain merchants who were deposit customers
of the Bank. On October 28, 2011, the Comptroller concurred that the
Bank has fulfilled this obligation, and we believe that there will be
no more charges or recoveries related to this obligation; |
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require the Bank to establish a capital plan which, among other
provisions, details the Banks plan to achieve tier 1 capital ratio of
9% and total risk based capital ratio of 11.5%; |
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require the Bank to develop a written program designed to reduce the
level of criticized assets; |
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require the Bank to develop and implement an asset liquidity
enhancement plan designed to increase the amount of asset liquidity
maintained by the Bank, including a loan to deposit ratio of 85%; and |
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require the Bank to develop a written profit plan to improve and
sustain the earnings of the Bank. |
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The Bank paid the civil money penalty in April 2010. In addition, the Bank submitted the
required capital, liquidity enhancement, and profit plans, as well as a written program to reduce
criticized assets to the Comptroller in accordance with the requirements of the formal agreement.
The Comptroller did not object to the plans and program as
submitted.
The capital requirements set forth in the formal agreement are a continuation of the capital requirements contained in the Banks 2008 Consent Order. As of September 30, 2011 and December 31, 2011, the Banks capital ratios and loan to deposit ratio met or exceeded
the requirements of the formal agreement. Compliance with these provisions was due, in part, to a
managed strategy to reduce both the assets and liabilities of the Bank. Although we believe that we are
compliant with all of the provisions of the formal agreement, such
a determination lies in the sole discretion of the Comptroller. In addition, the Bank may not be
able to comply with all of the requirements of the formal agreement, including meeting the stated
capital requirements or loan to deposit ratio contained therein on a continuous, ongoing basis.
If the Comptroller determines, in its sole discretion, that the Bank is not in compliance with the capital
requirements of the formal agreement, the Comptroller may require the Bank to prepare and submit a capital
contingency plan to sell, merge or liquidate the Bank. If we are forced to sell, merge or liquidate the Bank,
you may lose some or all of your investment.
If as a result of its review or examination of the Bank, the Comptroller should determine that
the financial condition, capital resources, asset quality, liquidity, earnings ability, or other
aspects of its operations have worsened or that it or its management is violating or has violated
the formal agreement, or failed to comply with any provision of the
formal agreement, or any law or regulation, various additional remedies are available to the Comptroller. Such remedies
include the power to enjoin unsafe or unsound practices, to require affirmative action to correct
any conditions resulting from any violation or practice, to issue an administrative order that can
be judicially enforced, to direct an increase in capital, to restrict our growth, to assess civil
monetary penalties, to remove officers and directors, and ultimately to terminate our deposit
insurance, which would result in the seizure of the Bank by its regulators. As of September 30,
2011, the Comptroller has made no such determination relating to any of the aforementioned aspects
of the Banks operations.
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The formal agreement with the Comptroller prevents us from being well capitalized under the system of
prompt corrective action established by the Federal Deposit Insurance Corporation Improvement Act
of 1991 which may inhibit our ability to retain and attract deposits.
The Banks capital
ratios as of September 30, 2011 were 9.59% tier 1 leverage ratio and 12.25%
total risk based capital ratio. Although the Banks capital ratios met the definition of well
capitalized under the system of prompt corrective action and exceed the requirements of the formal agreement, the formal agreement prevents us from being
considered well capitalized regardless of our capital ratios. Because of FDIC restrictions which
took effect on January 1, 2010 for all insured banks which are considered not well capitalized, the
Bank is restricted from offering rates in excess of .75% over the national average rate for various
deposit terms as published weekly by the FDIC. This may adversely and materially affect the Banks
ability to attract and retain deposits which could have a negative impact on the Banks liquidity
and impair its ability to comply with the formal agreement.
Since we commenced operations in 2004, we have had a short and intermittent history of experiencing
profits.
Our profitability will depend on the Banks profitability and, while we were profitable in
2006 and 2007, we experienced significant and material losses since 2008. We may incur continued
difficulties or setbacks reaching profitability in the future. We have incurred substantial
start-up expenses associated with our organization and our public offering and sustained losses or
achieved minimal profitability during our initial years of operations. At September 30, 2011, we had an
accumulated deficit account of approximately $8.6 million, principally resulting from the
organizational and pre-opening expenses that we incurred in connection with the opening of the
Bank, losses on loans, accrued reserves in connection with the formal agreement with the Comptroller and
the resolution of the matters related to the collective investment funds. In addition, due to the
extensive regulatory oversight to which we are subject, we expect to incur significant
administrative costs. Our success will depend, in large part, on our ability to attract and retain
deposits and customers for our services. If we are ultimately unsuccessful, you may lose part or
all of the value of your investment.
Our results of operation and financial condition would be adversely affected if our allowance for
loan losses is not sufficient to absorb actual losses.
Experience in the banking industry indicates that a portion of our loans in all categories of
our lending business will become delinquent, and some may only be partially repaid or may never be
repaid at all. Our methodology for establishing the adequacy of the allowance for loan losses
depends on subjective application of risk grades as indicators of borrowers ability to repay.
Deterioration in general economic conditions and unforeseen risks affecting customers may have an
adverse effect on borrowers capacity to repay timely their obligations before risk grades could
reflect those changing conditions. In times of improving credit quality, with growth in our loan
portfolio, the allowance for loan losses may decrease as a percent of total loans. Changes in
economic and market conditions may increase the risk that the allowance would become inadequate if
borrowers experience economic and other conditions adverse to their businesses. Maintaining the
adequacy of our allowance for loan losses may require that we make significant and unanticipated
increases in our provisions for loan losses, which would materially affect our results of
operations and capital adequacy. Recognizing that many of our loans individually represent a
significant percentage of our total allowance for loan losses, adverse collection experience in a
relatively small number of loans could require an increase in our allowance. Federal regulators, as
an integral part of their respective supervisory functions, periodically review our allowance for
loan losses. The regulatory agencies may require us to change classifications or grades on loans,
increase the allowance for loan losses with large provisions for loan losses and to recognize
further loan charge-offs based upon their judgments, which may be different from ours. Any increase
in the allowance for loan losses required by these regulatory agencies could have a negative effect
on our results of operations and financial condition.
Failure to implement our business strategies may adversely affect our financial performance.
We have developed a business plan that details the strategies we intend to implement in our
efforts to achieve profitable operations. If we cannot implement our business strategies, we will
be hampered in our ability to develop business and serve our customers, which, in turn, could have
an adverse effect on our financial performance. Even if our business strategies are successfully
implemented, we cannot assure you that our strategies will have the favorable impact that we
anticipate. Furthermore, while we believe that our business plan is reasonable and that our
strategies will enable us to execute our business plan, we have no control over the future
occurrence of certain events upon which our business plan and strategies are based, particularly
general and local economic conditions that may affect
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the Banks loan-to-deposit ratio, total deposits, the rate of deposit growth, cost of funding, the
level of earning assets and interest-related revenues and expenses.
We may elect or be compelled to seek
additional capital, but that capital may not be available or
it may be dilutive. If we cannot maintain the capital ratios set forth in our formal
agreement, the Comptroller may take further action against us.
We are required by the formal agreement
to achieve and maintain a tier 1 leverage capital ratio of 9% and a total risk-based capital ratio of 11.5%. We were
also required to achieve and maintain these capital ratios under the 2008 Consent Order; however, we were unable to comply with these requirements
from July 2008 until September 30, 2011.
As of September 30, 2011 and throughout the fourth quarter of 2011, the Banks tier 1 leverage capital ratio was 9.59%. The Banks total risk based
capital ratio was 12.25%. Although as of September 30, 2011, the Banks capital ratios exceeded the requirements
set forth in the formal agreement, there is no assurance the Bank will continue to meet those requirements in the future.
If the Comptroller determines, in its sole discretion, that the Bank is not in compliance with the capital
requirements of the formal agreement, the Comptroller may require the Bank to prepare and submit a capital
contingency plan to sell, merge or liquidate the Bank. If we are forced to sell, merge or liquidate the Bank,
you may lose some or all of your investment.
The Company currently does not have any capital available to invest in the Bank. If needed, we
will look to raise additional capital through multiple avenues, including focused expense
reductions, optimizing our balance sheet for loans and deposits and increasing net interest income
and ultimately improving the overall earnings of the Company. A number of financial institutions
have recently raised considerable amounts of capital as a result of deterioration in their results
of operations and financial condition arising from the negative impact of the mortgage loan market,
non-agency mortgage-backed security market, and deteriorating economic conditions, which may
diminish our ability to raise additional capital.
Our ability to raise capital will depend on conditions in the capital markets, which are
outside our control, and on our financial performance. Accordingly, we cannot be assured of our
ability to raise capital when needed, on favorable terms or at all. If we cannot raise additional
capital when needed, we will be subject to increased regulatory supervision and the imposition of
restrictions on our growth and business. These outcomes could negatively impact our ability to
operate or further expand our operations through acquisitions or the establishment of additional
branches and may result in increases in operating expenses and reductions in revenues that could
have a material adverse effect on our financial condition and results of operations. In addition,
in order to raise additional capital, we may need to issue shares of our common stock that would
dilute the book value of our common stock and reduce our shareholders percentage ownership
interest to the extent they do not participate in future offerings. Also, if we are unable to raise
additional capital, we may be required to take alterative actions which may include the sale of
income-producing assets to meet our capital requirements, which could have an adverse impact on our
operations and ability to generate income.
Our ability to use net operating loss carryovers to reduce future tax payments may be limited or
restricted.
We have generated significant NOLs as a result of our recent losses. We generally are able to
carry NOLs forward to reduce taxable income in future years. However, our ability to utilize the
NOLs is subject to the rules of Section 382 of the Internal Revenue Code. Section 382 generally
restricts the use of NOLs after an ownership change. An ownership change occurs if, among other
things, the shareholders (or specified groups of shareholders) who own or have owned, directly or
indirectly, 5% or more of a corporations common stock or are otherwise treated as 5% shareholders
under Section 382 and the Treasury regulations promulgated thereunder increase their aggregate
percentage ownership of that corporations stock by more than 50 percentage points over the lowest
percentage of the stock owned by these shareholders over a three-year rolling period. In the event
of an ownership change, Section 382 imposes an annual limitation on the amount of taxable income a
corporation may offset with NOL carry forwards. This annual limitation is generally equal to the
product of the value of the corporations stock on the date of the ownership, multiplied by the
long-term tax-exempt rate published monthly by the Internal Revenue Service. Any unused annual
limitation may be carried over to later years until the applicable expiration date for the
respective NOL carry forwards.
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We do not anticipate that our rights offering will cause an ownership change within the
meaning of Section 382. However, we cannot ensure that our ability to use our NOLs to offset income
will not become limited in the future. As a result, we could pay taxes earlier and in larger
amounts than would be the case if our NOLs were available to reduce our federal income taxes
without restriction.
The success of our trust services is dependent upon market fluctuations and a non-diversified
source for its growth.
Since August 2006, we have offered traditional fiduciary services such as serving as executor,
trustee, agent, administrator or custodian for individuals, non profit organizations, employee
benefit plans and organizations. The Bank received regulatory approval from the Comptroller to
establish trust powers in February 2006. As of September 30, 2011, the Bank had approximately $842
million in trust assets under management. To date, virtually all of the growth in our assets under
management relates to a registered investment advisor who has advised its clients of the existence
of our trust services. We have not compensated the registered investment advisor in any way for
making its clients aware of our trust services and cannot assure you that the investment advisor
will continue to notify its clients of our trust services or that those clients will open trust
accounts at the Bank. Furthermore, the level of assets under management is significantly impacted
by the market value of the assets which has increased in 2009 and 2010 after the sharp decline
during 2008. In addition, we are subject to regulatory supervision with respect to these trust
services that may restrain our growth and profitability.
Certain of our investment advisory and wealth management contracts are subject to termination on
short notice, and termination of a significant number of investment advisory contracts could have a
material adverse impact on our revenue.
Certain of our investment advisory and wealth management clients can terminate their
relationships with us, reduce their aggregate assets under management, or shift their funds to
other types of accounts with different rate structures for any number of reasons, including
investment performance, changes in prevailing interest rates, inflation, changes in investment
preferences of clients, changes in our reputation in the marketplace, change in management or
control of clients, loss of key investment management personnel and financial market performance.
We cannot be certain that our trust operations will be able to retain all of its clients. If its
clients terminate their investment advisory and wealth management contracts, our trust operations,
and consequently we, could lose a substantial portion of our revenues and liquidity.
We have a loan concentration related to the acquisition and financing of dental practices.
Loan concentrations are considered to exist when there are amounts loaned to a multiple number
of borrowers engaged in similar activities that would cause them to be similarly impacted by
economic or other conditions. There were no losses in the dental portfolio from 2005 through 2008.
In 2009 and 2010, losses represented 0.89% and 0.33% of year end dental portfolio assets,
respectively. There have been no losses year to date through September 30, 2011. At September 30, 2011, our
commercial loan portfolio included $58.7 million of loans to the dental industry, including
practice acquisition loans, dental equipment loans, and dental facility loans. This represented
approximately 67.2% of our total funded loans. We believe that these loans are conservatively
underwritten to credit worthy borrowers and are diversified geographically. However, to the extent
that there is a decline in the dental industry in general, we may incur significant losses in our
loan portfolio as a result of this concentration.
Our operations are significantly affected by interest rate levels.
Our profitability is dependent to a large extent on our net interest income, which is the
difference between interest income we earn as a result of interest paid to us on loans and
investments and interest we pay to third parties such as our depositors and those from whom we
borrow funds. Like most financial institutions, we are affected by changes in general interest rate
levels, which are currently at record low levels, and by other economic factors beyond our control.
Prolonged periods of unusually low interest rates may have an adverse effect on earnings by
reducing the value of demand deposits, stockholders equity and fixed rate liabilities with rates
higher than available earning assets. Interest rate risk can result from mismatches between the
dollar amount of repricing or maturing assets and liabilities and from mismatches in the timing and
rate at which our assets and liabilities reprice. Although we have implemented strategies which we
believe reduce the potential effects of changes in interest rates on our results of operations,
these
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strategies will not always be successful. In addition, any substantial and prolonged increase in
market interest rates could reduce our customers desire to borrow money from us or adversely
affect their ability to repay their outstanding loans by increasing their costs since most of our
loans have adjustable interest rates that reset periodically. If our borrowers ability to repay is
affected, our level of non-performing assets would increase and the amount of interest earned on
loans will decrease, thereby having an adverse effect on operating results. Any of these events
could adversely affect our results of operations or financial condition.
We face intense competition from a variety of competitors.
We face competition for deposits, loans, and other financial services from other community
banks, regional banks, out-of-state and in-state national banks, savings banks, thrifts, credit
unions and other financial institutions as well as other entities which provide financial services,
including consumer finance companies, securities brokerage firms, insurance companies, mutual
funds, and other lending sources and alternative investment providers. Some of these financial
institutions and financial services organizations are not subject to the same degree of regulation
as we are. We face increased competition due to the Gramm-Leach-Bliley Act, which allows insurance
firms, securities firms, and other non-traditional financial companies to provide traditional
banking services. The banking business in our target banking market and the surrounding areas has
become increasingly competitive over the past several years, and we expect the level of competition
to continue to increase. Many of these competitors have been in business for many years, have
established customers, are larger, have substantially higher lending limits than we do, and are
able to offer certain services that we do not provide. In addition, many of these entities have
greater capital resources than we have, which among other things may allow them to price their
services at levels more favorable to the customer or to provide larger credit facilities.
We believe that the Bank will be a successful competitor in the areas financial services
market. An inability to compete effectively with other financial institutions serving our target
banking market could have a material adverse effect on the Banks growth and profitability.
We compete in an industry that continually experiences technological change, and we may not be able
to compete effectively with other banking institutions with greater resources.
The banking industry continues to undergo rapid technological changes with frequent
introduction of new technology-driven products and services. In addition to providing better
service to customers, the effective use of technology increases efficiency and enables us to reduce
costs. Our future success depends in part upon our ability to address the needs of our customers by
using technology to provide products and services that will satisfy customer demands for
convenience as well as to create additional operating efficiencies. Many of our competitors have
substantially greater resources to invest in technological improvements. Such technology may permit
competitors to perform certain functions at a lower cost than we can. We may not be able to
effectively implement new technology-driven products and services or be successful in marketing
these to our customers. Our inability to do so could have a material adverse effect on our ability
to compete effectively in our market and also on our business, financial condition, and results of
operations.
Our legal lending limits may impair our ability to attract borrowers and ability to compete with
larger financial institutions.
Our per customer lending limit at September 30, 2011 was approximately $1.7 million, subject to
further reduction based on regulatory criteria. Accordingly, the size of loans which we can offer
to potential customers is less than the size which many of our competitors with larger lending
limits are able to offer. This limit has affected and will continue to affect our ability to seek
relationships with larger businesses in our market area. We accommodate loans in excess of our
lending limit through the sale of portions of such loans to other banks. However, we may not be
successful in attracting or maintaining customers seeking larger loans or in selling portions of
such larger loans on terms that are favorable to us.
An economic downturn, especially one affecting our primary service area, could diminish the quality
of our loan portfolio, reduce our deposit base, and negatively affect our financial performance.
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Adverse economic developments can impact the collectability of loans and the sustainability of
our core deposits and may negatively impact our earnings and financial condition. In addition, the
banking industry in general is affected by economic conditions such as inflation, recession,
unemployment, and other factors beyond our control. A prolonged economic recession or other
economic dislocation could cause increases in nonperforming assets and impair the values of real
estate collateral, thereby causing operating losses, decreasing liquidity, and eroding capital.
Factors that adversely affect the economy in our local banking market could reduce our deposit base
and the demand for our products and services, which may decrease our earnings capability.
Monetary policy and other economic factors could adversely affect the Banks profitability.
Our results of operations may be materially and adversely affected by changes in prevailing
economic conditions, including declines in real estate market values, rapid changes in interest
rates, and the monetary and fiscal policies of the federal government. Our profitability is partly
a function of the spread between the interest rates earned on investments and loans and those paid
on deposits. As with most banking institutions, our net interest spread is affected by general
economic conditions and other factors that influence market interest rates and our ability to
respond to changes in such rates. At any given time, our assets and liabilities may be affected
differently by a given change in interest rates. As a result, an increase or decrease in rates
could have a material adverse effect on our net income, capital and liquidity. While we take
measures to reduce interest-rate risk, these measures may not adequately minimize exposure to
interest-rate risk.
We are subject to extensive regulatory oversight, which could constrain our growth and
profitability.
Banking organizations such as the Company and the Bank are subject to extensive federal and
state regulation and supervision. Laws and regulations affecting financial institutions are
undergoing continuous change, and we cannot predict the ultimate effect of these changes. We cannot
assure you that any change in the regulatory structure or the applicable statutes and regulations
will not materially and adversely affect the business, condition or operations of the Company or
the Bank or benefit competing entities that are not subject to the same regulations and
supervision.
Bank regulators have imposed various conditions, among other things, that: (1) the Company
would not assume additional debt without prior approval by the Federal Reserve Board; (2) the
Company and the Bank will remain well-capitalized at all times; (3) we will make appropriate
filings with the regulatory agencies; and (4) the Bank will meet all regulatory requirements as set
forth. The regulatory capital requirements imposed on the Bank could have the effect of
constraining growth.
We are subject to extensive state and federal government supervision and regulations that
impose substantial limitations with respect to loans, purchase of securities, payments of
dividends, and many other aspects of the banking business. Regulators include the Comptroller, the
Federal Reserve, and the FDIC. Applicable laws, regulations, interpretations, assessments and
enforcement policies have been subject to significant and sometimes retroactively applied changes
and may be subject to significant future changes.
The Dodd-Frank Act, enacted in July 2010, instituted major changes to the banking and
financial institutions regulatory regimes in light of the recent performance of and government
intervention in the financial services sector. Other changes to statues, regulations or regulatory
policies, including changes in interpretation or implementation of statutes, regulations or
policies, could affect the Company in substantial and unpredictable ways. Such changes could
subject the Company to reduced revenues, additional costs, limit the types of financial services
and products the Company may offer and/or increase the ability of non-banks to offer competing
financial services and products, among other things. Failure to comply with laws, regulations or
policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation
damage, which could have a material adverse effect on the Companys business, financial condition
and results of operations.
Regulatory agencies are funded, in part, by assessments imposed upon banks. Additional
assessments could occur in the future which could impact our financial condition. Many of these
regulations are intended to protect depositors, the public, and the FDIC, not shareholders. Future
legislation or government policy could adversely affect the banking industry, our operations, or
shareholders. The burden imposed by federal and state regulations may place banks, in general, and
us, specifically, at a competitive disadvantage compared to less regulated competitors. Federal
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economic and monetary policy may affect our ability to attract deposits, make loans, and achieve
satisfactory operating results.
RISKS RELATED TO THE RIGHTS OFFERING AND THE LIMITED PUBLIC OFFERING
This rights offering may cause the trading price of our common stock to decrease immediately, and
this decrease may continue.
The number of shares we proposed to issue and ultimately do issue if we complete the rights
offering, may result in an immediate decrease in the market value of the common stock. This
decrease may continue after the completion of the rights offering.
Any rights holder exercising its subscription right takes the risk that no one else will purchase
common shares in this rights offering.
This is a best efforts, no minimum rights offering being conducted solely by the Company.
There is no commitment by anyone to exercise its right to purchase any of the common shares being
offered. Because there is no minimum number of rights that must be exercised or shares that must be
sold in this rights offering, we can provide no assurance regarding the amount of capital we will
actually raise in this rights offering. We cannot give any assurance that any or all of the rights
will be exercised.
If you do not act promptly and follow the subscription instructions, your exercise of rights will
be rejected.
If you desire to purchase shares of our common stock in this rights offering, you must act
promptly to ensure that the subscription agent actually receives all required forms and payments
before the expiration of this rights offering at 5:00 p.m., New York City time, on ___________,
20_. If you are a beneficial owner of shares, you must act promptly to ensure that your broker,
dealer, custodian bank or other nominee acts for you and that the subscription agent receives all
required forms and payments before this rights offering expires. We are not responsible if your
nominee fails to ensure that the subscription agent receives all required forms and payments before
this rights offering expires. If you fail to complete and sign the required subscription forms,
send an incorrect payment amount, or otherwise fail to follow the subscription procedures that
apply to the exercise of your rights before this rights offering expires, the subscription agent
will reject your subscription or accept it only to the extent of the payment received. Neither we
nor our subscription agent undertakes any responsibility or action to contact you concerning an
incomplete or incorrect subscription form or payment, nor are we under any obligation to correct
such forms or payment. We have the sole discretion to determine whether a subscription exercise
properly complies with the subscription procedures.
You will not be able to sell the common shares you buy in this rights offering until the shares you
elect to purchase are issued to you.
If you purchase shares in this rights offering by submitting a rights certificate and payment,
we will mail you a direct registration account statement or, upon request, a stock certificate as
soon as practicable following the expiration of this rights offering. If your shares are held by a
broker, dealer, custodian bank or other nominee and you purchase shares, your account with your
nominee will be credited by your nominee. Until the common shares you elect to purchase are issued
to you, you may not be able to sell your shares even though the common shares issued in this rights
offering will be listed for trading on the OTCBB. The stock price may decline between the time you
decide to sell your shares and the time you are actually able to sell your shares.
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If you do not fully exercise your subscription rights, your ownership interest will be diluted.
Assuming we sell the full amount of common stock issuable in connection with the rights
offering, we will issue approximately 2,911,957 shares of our common stock. If you choose not to
fully exercise your basic subscription right prior to the expiration of the rights offering, your
relative ownership interest in our common stock will be diluted relative to shareholders who
exercise their subscription rights and to the extent shares are issued in the limited public
offering.
Since you cannot revoke the exercise of your subscription rights and the market price of our common
stock is volatile and may decline after you elect to exercise the subscription rights, you could be
committed to buying shares above the market price of our common stock.
The market price of our common stock could be subject to wide fluctuations in response to
numerous factors, some of which are beyond our control. These factors include, among other things,
actual or anticipated variations in our costs of doing business, operating results and cash flow,
the nature and content of our earnings releases and our competitors earnings releases, changes in
financial estimates by securities analysts, business conditions in our markets and the general
state of the securities markets and the market for other financial stocks, changes in capital
markets that affect the perceived availability of capital to companies in our industry,
governmental legislation or regulation, currency and exchange rate fluctuations, and general
economic and market conditions, such as downturns in our economy and recessions.
Once you exercise your subscription rights, you may not revoke them. The market price of our
common stock may decline after you elect to exercise your subscription rights. If you exercise
your subscription rights and, afterwards, the public trading market price of our common stock
decreases below the subscription price, you will have committed to buying shares of our common
stock at a price above the prevailing market price and could have an immediate unrealized loss.
Our common stock is traded on the OTCBB under the ticker symbol TBNC.OB, and the closing bid
price of our common stock on _______, 2012, as reported by the OTCBB, was $____ per share.
Moreover, following the exercise of your subscription rights you may not be able to sell your
common stock at a price equal to or greater than the subscription price. We will not pay you
interest on any funds delivered to the subscription agent pursuant to the exercise of subscription
rights.
The subscription price determined for this rights offering and limited public offering may not be
indicative of the value of our common stock.
Our board of directors determined the subscription price of the common stock after reviewing a
variety of factors. The subscription price is not necessarily related to our book value, tangible
book value, multiple of earnings or any other established criteria of determining value and may or
may not be considered the fair market value of our common stock offered in these offerings. After
the completion of the offerings, you may not be able to dispose of any shares of common stock that
you purchase in the offerings at a price at or above the price that you pay in the offerings. The
value of our common stock may also be subject to significant fluctuations in response to our future
operating results and other factors.
This rights offering may cause the price of our common stock to decrease.
The shares of common stock that will be issuable in this offering may cause the price of our
common stock to decrease. If the holders of the shares purchased in this offering choose to sell
some or all of those shares, the resulting sales could further depress the market price of our
common stock.
This is a best efforts offering, and we may not be able to raise all the capital we need to fully
implement our business strategy.
This is a best efforts offering which means there is no guarantee that we will be able to
sell all or any of the shares of common stock offered in this prospectus. There is no minimum
number of rights exercised or shares that we must sell to complete the offerings. In the event
that we are unable to raise sufficient capital from the offerings, it is
20
likely that we will need to obtain additional capital so that we may be able to execute
successfully our business strategy. Any necessary future raising of capital, if available, may be
on terms that are not favorable to us. If adequate capital is not available, we will be subject to
an increased level of regulatory supervision and our business, operating results and financial
conditions could be adversely affected.
A limited public offering of unsubscribed shares as described in this prospectus will reduce, and
future common stock offerings may reduce, the ownership percentage of our current shareholders.
Our current shareholders who do not fully exercise their subscription rights may experience
dilution in their percentage ownership of our outstanding common stock as a result of the rights
offering. In addition, if we do not sell all of the shares offered in the rights offering, and
offer unsubscribed shares in a limited public offering, any shares sold in the limited public
offering will dilute the ownership interests of our current shareholders. Furthermore, if we
conduct additional offerings of shares of our common stock in the future, you may experience
dilution in your percentage ownership of our outstanding common stock.
In many situations, our board of directors has the authority, without any vote of our
shareholders, to issue shares of our authorized but unissued stock, including shares authorized but
unissued under our stock option plans. In the future, we may issue additional securities, through
public or private offerings, in order to raise additional capital. Any such issuance would dilute
the percentage of ownership interest of existing shareholders. In addition, option holders may
exercise their options at a time when we would otherwise be able to obtain additional equity
capital on more favorable terms.
If you exercise your rights, you commit to purchasing the shares of common stock at the designated
subscription price and may not revoke your rights even if the public trading market price of such
shares decreases below the subscription price.
Your exercise of rights to purchase our common stock is irrevocable. If you exercise your
rights and, afterwards, the public trading market price of our common stock decreases below the
subscription price, you will have committed to buying our common stock at a price above the
prevailing market price and could have an immediate unrealized loss. Our common stock is currently
listed for trading on the OTCBB under the ticker symbol TBNC.OB and the last reported price of
our common stock on the OTCBB on
__________, 2012 was $_______ per share. Following the exercise of
your rights, you may not be able to sell your shares of common stock at a price equal to or greater
than the subscription price.
Because our management will have broad discretion over the use of the net proceeds from this rights
offering, you may not agree with how we use the proceeds, and we may not invest the proceeds
successfully.
While we currently anticipate that we will use the net proceeds of this rights offering for
general corporate purposes, our management may allocate the proceeds as it deems appropriate.
Accordingly, you will be relying on the judgment of our management with regard to the use of the
proceeds of this rights offering, and you will not have the opportunity, as part of your investment
decision, to influence how the proceeds are being used. If we invest the proceeds pending
application of the funds, it is possible that the proceeds will be invested in a way that does not
yield a favorable, or any, return for us.
There is no obligation for our directors or executive officers to subscribe for any shares of
common stock in this rights offering.
To the extent they held shares of common stock as of the record date, our directors and
officers are entitled to participate in the rights offering on the same terms and conditions
applicable to all rights holders. We anticipate that 100% of our directors and named executive
officers will participate in this rights offering.
21
RISKS RELATED TO OUR COMMON STOCK
Our common stock is thinly traded and, therefore, you may have difficulty selling shares.
Our common stock is traded on the OTCBB. However, due to the relative inactive market for
our common stock, you may not be able to liquidate your shares without delay. The shares being
offered in this prospectus have not been registered under the Securities Act. Holders of our
common stock will not have registration rights with respect to their shares.
There is a limited existing market for our common stock. Accordingly, you should be
prepared to hold your shares of common stock for an unknown period. There is also no assurance
as to what price, if any, holders of our common stock will be able to receive in exchange for
their shares. Future trading prices of our common stock, if any, will depend on many factors
including, but not limited to, prevailing interest rates, our operating results and the market
for similar securities.
We do not anticipate paying dividends for the foreseeable future.
We do not anticipate
dividends will be paid on our common stock for the foreseeable future.
The Company is largely dependent upon dividends paid by the Bank to provide funds to pay cash
dividends if and when the board of directors may declare such dividends.
In addition, pursuant to the formal agreement with the Comptroller, the Bank may declare a
dividend only (1) when the Bank is in compliance with its capital plan, as approved by the
regulators, (2) when, after giving effect to the dividend, the Bank would not be insolvent, (3) if
the amount of the dividend does not exceed the Banks surplus, and (4) with prior approval of the
Banks regulators.
Future earnings may not
be sufficient to satisfy regulatory requirements and permit the legal payment of dividends to
shareholders at any time in the future. Even if we could legally declare dividends, the amount
and timing of such dividends would be at the discretion of our board of directors. The board of
directors may in its sole discretion decide not to declare dividends.
The market price of our common stock may be volatile.
The trading price of our common stock may fluctuate widely as a result of a number of
factors, many of which are outside our control. In addition, the stock market is subject to
fluctuations in the share prices and trading volumes that affect the trading prices of the shares
of many companies.
The market price of our common stock is subject to fluctuations as a result of a variety of
factors, including the following:
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quarterly variations in our operating results or those of other banking
institutions; |
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changes in national and regional economic conditions, financial markets or the
banking industry; and |
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other developments affecting us or other financial institutions. |
The trading volume of our common stock is limited, which may increase the volatility of the
market price for our stock. In addition, the stock market has experienced significant price and
volume fluctuations in recent years. This volatility has had a significant effect on the market
prices of securities issued by many companies for reasons not necessarily related to the
operating performance of these companies.
Your shares of common stock will not be an insured deposit.
Your investment in our common stock will not be a bank deposit and will not be insured or
guaranteed by the FDIC or any other government agency. Your investment will be subject to
investment risk, and you must be capable of affording the loss of your entire investment.
Provisions of our Articles of Incorporation and Bylaws, as well as state and federal banking
regulations, could delay or prevent a takeover of us by a third party.
From time to time we are approached about a sale of the Company or a majority ownership
position in the Company. Our Articles of Incorporation and Bylaws could delay, defer or prevent a
third party from acquiring us,
22
despite the possible benefit to our shareholders, or otherwise
adversely affect the price of our common stock. For example, our Bylaws contain provision for
allowing the Chairman, President, or majority of the Board of Directors to call special meetings of
shareholders. A special meeting of shareholders may be called by the shareholders, provided that
shareholders representing not less than one-third of all outstanding shares entitled to be cast on
any matter proposed to be considered at the special meeting join in the request.
Any individual, acting alone or with other individuals, who is seeking to acquire, directly or
indirectly, 10% or more of our outstanding common stock must comply with the Change in Bank Control
Act, which requires prior notice to the FDIC. As a result, interested investors in our common
stock need to be aware of and comply with those requirements, to the extent applicable.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this registration statement that are not purely historical are
forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, including our expectations, intentions, beliefs, or strategies regarding the
future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions
or future events or performance are not historical facts and are forward-looking statements. These
statements are often, but not always, made through the use of words or phrases such as may,
should, could, predict, potential, believe, will likely result, expect, anticipate,
seek, estimate, intend, plan, projection, would and outlook, and similar expressions.
Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause
actual results to differ materially from those expressed in them. Any forward-looking statements
are qualified in their entirety by reference to the factors discussed throughout this document. All
forward-looking statements concerning economic conditions, rates of growth, rates of income or
values as may be included in this document are based on information available to us on the dates
noted, and we assume no obligation to update any such forward-looking statements. It is important
to note that our actual results may differ materially from those in such forward-looking statements
due to fluctuations in interest rates, inflation, government regulations, economic conditions,
customer disintermediation and competitive product and pricing pressures in the geographic and
business areas in which we conduct operations, including our plans, objectives, expectations and
intentions and other factors discussed under the section entitled Risk Factors, in our Annual
Report on Form 10-K for the year ended December 31, 2010, including the following:
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we have limited operating history upon which to base an estimate of our future financial performance; |
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if we are unable to implement our business plan and strategies,
we will be hampered in our ability to develop business and serve
our customers, which, in turn, could have an adverse effect on
our financial performance; |
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we are subject to significant government regulation and
legislation that increases the cost of doing business and
inhibits our ability to compete including the potential impact of
the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Basel III; |
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if we fail to retain our key employees, growth and profitability could be adversely affected; |
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if we fail to retain our trust customers, our non-interest income could be adversely affected; |
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we face substantial competition in our primary market area; |
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the Banks methodology with respect to reconciling the variance
and over-accrual may be challenged by our trust customers, which
could in turn adversely affect our financial performance; |
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if we fail to sustain attractive investment returns to our trust
customers, our growth and profitability in our trust services
could be adversely affected; |
23
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we have a significant dental industry loan concentration in which
economic or regulatory changes could adversely affect the ability
of those customers to fulfill their loan obligations; |
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if we fail to adequately address formal administrative actions
with the Comptroller, including, without limitation, the
formal agreement, this may have an adverse impact on the Companys
operating results or financial condition; |
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we compete in an industry that continually experiences
technological change, and we may not be able to compete
effectively with other banking institutions with greater
resources; |
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the Banks current legally mandated lending limits are lower than
those of our competitors, which may impair our ability to attract
borrowers; |
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changes in governmental economic and monetary policies, the
Internal Revenue Code and banking and credit regulations, as well
as other factors, will affect the demand for loans and the
ability of the Bank to attract deposits; |
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changes in the general level of interest rates and other economic
factors can affect the Banks interest income by affecting the
spread between interest-earning assets and interest-bearing
liabilities; |
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we have no current intentions of paying cash dividends; |
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we may not be able to raise additional capital on terms favorable
to us or we may be required to raise capital under terms which
are dilutive to existing shareholders; and |
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our directors and executive officers beneficially own a
significant portion of our outstanding common stock. |
These factors and the risk factors referred to in our Annual Report on Form 10-K for the year ended
December 31, 2010 could cause actual results or outcomes to differ materially from those expressed
in any forward-looking statements made by us, and you should not place undue reliance on any such
forward-looking statements. Any forward-looking statement reflects only information known to us as
of the date on which it is made and we do not undertake any obligation to update any
forward-looking statement or statements to reflect events or circumstances after the date on which
such statement is made or to reflect the occurrence of unanticipated events. New factors emerge
from time to time, and it is not possible for us to predict which will arise.
USE OF PROCEEDS
The net proceeds from the sale of the shares of common stock in the offerings will depend upon
the number of shares of common stock purchased. Assuming the sale of all the shares of common
stock offered in the rights offering (or the limited public offering) at a subscription price of
$2.00 per share, the net proceeds will be approximately $5.8 million, after deducting our estimated
offering expenses. We expect that the total net proceeds will be used to provide the required
capital to support future growth and for general corporate purposes.
DIVIDEND POLICY
We do not expect to pay dividends on our common stock in the foreseeable future. It is the
policy of our board of directors to reinvest earnings for such period of time as is necessary to
ensure our successful operations. There are no current plans to initiate payment of cash
dividends, and future dividends will depend on our earnings, capital and regulatory requirements,
financial condition and other factors considered relevant by our board of directors.
24
MARKET INFORMATION
Our common stock has been quoted on the OTCBB under the symbol TBNC.OB since June 2007. The
table below gives the high and low bid information for the last two fiscal years. The bid
information in the table was obtained from the OTCBB and reflects the high and low closing bid
prices during 2012, 2011 and 2010, and may not represent actual transactions. There may have been
other transactions in our common stock of which we are not aware. On December 12, 2011, we had ____
record holders of our common stock.
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High |
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Low |
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2012 |
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First
Quarter (through January 11, 2012) |
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$ |
1.75 |
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$ |
1.75 |
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2011 |
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Fourth Quarter |
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$ |
4.30 |
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$ |
1.50 |
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Third Quarter |
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$ |
2.00 |
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$ |
1.82 |
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Second Quarter |
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$ |
4.75 |
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$ |
1.75 |
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First Quarter |
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$ |
3.00 |
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$ |
1.45 |
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2010 |
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Fourth Quarter |
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$ |
2.50 |
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$ |
1.60 |
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Third Quarter |
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$ |
3.50 |
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$ |
1.50 |
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Second Quarter |
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$ |
3.75 |
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$ |
0.75 |
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First Quarter |
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$ |
5.76 |
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$ |
3.00 |
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On ____________, 2012, the last closing price reported on the OTCBB for our common stock was
$_____ per share.
CAPITALIZATION
The following table sets forth our unaudited consolidated capitalization as of September 30, 2011:
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on an actual basis; and |
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on an as adjusted basis to give effect to the issuance and sale of 2,911,957
shares of common stock in this offering, net of estimated offering expenses. |
The following data should be read in conjunction with our consolidated financial statements,
the accompanying notes thereto, and Managements Discussion and Analysis in our periodic reports
on Form 10-K and Form 10-Q, which are incorporated herein by reference.
25
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September 30, 2011 |
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(unaudited) |
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Actual |
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As Adjusted |
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(Amounts in thousands, except share |
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and per share amounts) |
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Shareholders Equity: |
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Common Stock, $.01 par
value, 10,000,000 shares
authorized, 1,941,305
shares issued and
outstanding; 4,853,262
shares issued and
outstanding, as adjusted |
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$ |
19 |
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$ |
49 |
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Additional paid-in capital |
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18,607 |
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24,141 |
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Retained earnings |
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(8,609 |
) |
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(8,609 |
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Total shareholders equity |
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$ |
10,138 |
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$ |
15,702 |
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Book value per common share |
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5.22 |
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3.24 |
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THE RIGHTS OFFERING
Before exercising any subscription rights, you should read carefully the information set forth
under Risk Factors.
Reasons for the Rights Offering
In authorizing the rights offering, our board of directors considered a number of factors
including our needs for additional capital to meet and sustain regulatory requirements, the price
at which our shareholders might be willing to participate in the rights offering, historical and
current trading prices for our common stock, the amount of proceeds desired, the potential need for
liquidity, potential market conditions, and the desire to provide opportunity to our shareholders
to participate in the rights offering. Our board of directors also considered several alternative
capital raising methods prior to concluding that the rights offering was the appropriate option
under the circumstances. We intend to use the net proceeds for general corporate purposes,
including providing capital to the Bank. We believe that the rights offering will strengthen our
financial condition by generating additional cash and increasing our capital position; however, our
board of directors is making no recommendation regarding your exercise of the subscription rights
or the purchase of our shares. We urge you to make your decision based on your own assessment of
our business and financial condition, our prospects for the future, and the terms of the rights
offering.
The Subscription Rights
On or about
__________, 2012, we are distributing to each record holder of our common stock,
as of the record date, which is 5:00 p.m. New York City time on
December 12, 2011, at no charge, one (1)
nontransferable subscription right for every one (1) share of common stock owned by the record
holder as of the record date for a total of 2,911,957 subscription rights. The subscription rights
will be evidenced by nontransferable subscription rights certificates. Each subscription right
will entitle you to purchase 1.5 shares of our common stock at a subscription price of $2.00 per
share, which we refer to as the basic subscription right and, if you fully exercise your basic
subscription rights and other shareholders do not fully exercise their basic subscription rights,
you would be entitled to exercise an oversubscription privilege, to subscribe for additional shares
of our common stock, subject to limitations.
Subscription Price
The subscription price is $2.00 per share. For more information regarding how the
subscription price was determined, see Determination of Subscription Price.
Basic Subscription Right
With your basic subscription right, you may purchase 1.5 shares of our common stock per
subscription right, upon delivery of the required documents and payment of the subscription price,
prior to the expiration date of the rights offering. You may exercise all or a portion of your
basic subscription rights or you may choose not to exercise any of your subscription rights. If
you do not exercise your basic subscription rights in full, you will not be entitled to purchase
shares pursuant to your oversubscription privilege.
We will credit the account of each rights holder with shares of our common stock purchased
pursuant to the exercise of the basic subscription right as soon as practicable after the rights
offering has expired.
26
Oversubscription Privilege
If you timely and fully exercise your basic subscription rights and therefore purchase all of
the shares of common stock available to you pursuant to your basic subscription right, you are
entitled to subscribe for additional shares of our common stock at the same subscription price
pursuant to the oversubscription privilege, subject to certain limitations and allotment.
In order to properly exercise your oversubscription privilege, you must deliver payment of the
subscription price for each share you propose to purchase pursuant to your oversubscription
privilege before the expiration of the rights offering. Because we will not know the total number
of unsubscribed shares prior to the expiration of the rights offering, if you wish to maximize the
number of shares you purchase pursuant to your oversubscription privilege, you will need to deliver
payment in an amount equal to the aggregate subscription price for the maximum number of shares of
our common stock available to you, assuming that no shareholders other than you have purchased any
shares of our common stock pursuant to their basic subscription rights.
We can provide no assurances that you will actually be entitled to purchase any shares of
common stock upon the exercise of your oversubscription privilege. You will not be entitled to
purchase shares pursuant to the oversubscription privilege if all of our shareholders exercise
their basic subscription rights in full, and we will only honor an oversubscription privilege to
the extent sufficient shares of our common stock are available following the exercise of the basic
subscription rights.
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To the extent the aggregate subscription price of the maximum number of
unsubscribed shares available to you pursuant to the oversubscription privilege is
less than the amount you actually paid in connection with the exercise of the
oversubscription privilege, you will be allocated only the number of unsubscribed shares available to you, and any excess subscription payments received by the
subscription agent will be returned to you, without interest or deduction, as soon
as practicable. |
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To the extent the amount you actually paid in connection with the exercise of the
oversubscription privilege is less than the aggregate subscription price of the
maximum number of unsubscribed shares available to you pursuant to the
oversubscription privilege, you will be allocated the number of unsubscribed shares
for which you actually paid in connection with the oversubscription privilege. |
If sufficient shares of common stock are available, we will seek to honor your
oversubscription request in full. If, however, oversubscription requests exceed the shares of
common stock available, we will allocate the available shares of common stock among shareholders
who oversubscribed on a pro rata basis, by multiplying the number of shares requested by each
shareholder through the exercise of their oversubscription privileges by a fraction that equals (x)
the number of shares available to be issued through oversubscription privileges divided by (y) the
total number of shares requested by all shareholders through the exercise of their oversubscription
privileges. We will honor oversubscription privilege requests prior to accepting subscriptions
during the limited public offering.
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Example: 10,000 shares remain unsubscribed following the exercise of all of the
basic subscription rights by our shareholders. Two (2) shareholders exercised their
basic subscription rights in full and have each subscribed for additional shares of
our common stock pursuant to his over subscription privilege. Shareholder A has
subscribed for an additional 15,000 shares of our common stock. Shareholder B has
subscribed for an additional 5,000 shares of our common stock. According to the
oversubscription privilege formula above, Shareholder A and B would receive the
following: |
Shareholder A: 15,000 x (10,000/20,000) = 7,500 shares
Shareholder B: 5,000 x (10,000/20,000) = 2,500 shares
We will credit the account of each rights holder with shares of our common stock purchased
pursuant to the exercise of the oversubscription right as soon as practicable after the rights
offering has expired.
27
Limit on How Many Shares of Common Stock You May Purchase in the Rights Offering
Unless we otherwise agree in writing, you, together with the following persons, may not
exercise subscription rights (including the oversubscription privilege) to purchase shares of our
common stock which, when aggregated with your existing ownership, would result in you, together
with the following persons, owning in excess of 9.9% of our issued and outstanding shares of common
stock following the closing of the transactions contemplated by this rights offering:
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your immediate family, including your spouse, father, mother, stepfather,
stepmother, brother, sister, stepbrother, stepsister, son, daughter, stepson,
stepdaughter, grandparent, grandson, granddaughter, father-in-law, mother-in-law,
brother-in-law, sister-in-law, son-in-law, daughter-in-law, and the spouse of any of
the foregoing; |
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companies, partnerships, trusts, or other entities in which you are a trustee,
have a controlling beneficial interest or hold a senior management position; or |
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other persons who may be your associates or persons acting in concert with you. |
The term associate is used above to indicate any of the following relationships with a person:
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any corporation or organization, other than the company or a subsidiary thereof,
of which a person is a senior officer or partner, or beneficially owns, directly or
indirectly, 10% or more of any class of equity securities of the corporation or
organization; |
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any trust or other estate, if the person has a substantial beneficial interest in
the trust or estate or is a trustee or fiduciary of the estate (although a person
who has a substantial beneficial interest in one of our tax-qualified or
non-tax-qualified employee plans, or who is a trustee or fiduciary of the plan is
not an associate of the plan, and our tax-qualified employee plans are not
associates of a person); |
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any person who is related by blood or marriage to such person and who is a
director or senior officer of the company or a subsidiary thereof; and |
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any person acting in concert with the persons or entities specified above. |
As used above, the term acting in concert means:
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knowing participation in a joint activity or interdependent conscious parallel
action towards a common goal, whether or not pursuant to an express agreement; or |
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a combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding, relationship,
agreement, or other arrangement, whether written or otherwise. |
A person or company that acts in concert with another person or company (other party) shall
also be deemed to be acting in concert with any person or company who is also acting in concert
with that other party, except that any of our tax-qualified employee plans will not be deemed to be
acting in concert with its trustee or a person who serves in a similar capacity solely for the
purpose of determining whether stock held by the trustee and stock held by the plan will be
aggregated.
In addition, we will not issue shares of common stock pursuant to the exercise of basic
subscription rights or oversubscription privileges to any shareholder who, in our sole opinion,
could be required to obtain prior clearance or approval from or submit a notice to any state or
federal bank regulatory authority to acquire, own, or control such shares if, as of the expiration
date of the rights offering, we determine that such clearance or approval has not been
28
satisfactorily obtained and any required waiting period has not expired. If we elect not to issue
shares in such case, such shares will become available to satisfy any oversubscription by other
shareholders pursuant to subscription rights.
Expiration Date and Amendments
The subscription period, during which you may exercise your subscription rights, expires at
5:00 p.m., New York City time, on __________, 20__, unless we extend the rights offering period.
However, we will not extend the rights offering period beyond ______, 2012.
If you do not exercise your subscription rights prior to that time, your subscription rights will
expire and will no longer be exercisable. We will not be required to issue shares of our common
stock to you if the subscription agent receives your rights certificate or your subscription
payment after that time, regardless of when you sent the rights certificate and subscription
payment, unless you send the documents in compliance with the guaranteed delivery procedures
described below. We reserve the right to extend the rights offering and the period for exercising
your subscription rights, although we do not presently intend to do so. We may extend the
expiration of the rights offering by giving oral or written notice to the subscription agent prior
to the expiration of the rights offering. If we elect to extend the expiration of the rights
offering, we will issue a press release announcing such extension no later than 9:00 a.m., New York
City time, on the next business day after the most recently announced expiration of the rights
offering. We reserve the right to amend or modify the terms of the rights offering prior to the
expiration of the offering.
If you hold your common stock in the name of a broker, dealer, custodian bank or other
nominee, the nominee will exercise your subscription rights on your behalf in accordance with your
instructions. Please note that your nominee may establish a deadline before the expiration date of
the rights offering.
Method of Exercising Subscription Rights
The exercise of subscription rights is irrevocable and may not be cancelled or modified. You
may exercise your subscription rights as follows:
Subscription by Registered Holders. You may exercise subscription rights by properly
completing and executing the rights certificate together with any required signature guarantees and
forwarding it, together with your full subscription payment to the subscription agent at the
address set forth below under Subscription Agent. These documents and payment of the full
subscription price must be received by the subscription agent before the expiration date of the
rights offering.
Subscription by Beneficial Owners. If you are a beneficial owner of shares of our
common stock that are registered in the name of a broker, dealer, custodian bank, or other nominee,
or if you hold our common stock certificates and would prefer to have an institution conduct the
transaction relating to the subscription rights on your behalf, you should instruct your broker,
dealer, custodian bank, or other nominee or institution to exercise your subscription rights and
deliver all documents and payment to the subscription agent at the address set forth below under
Subscription Agent on your behalf before 5:00 p.m., New York City time, on the expiration date
of the rights offering. We will not consider your subscription rights exercised unless the
subscription agent receives from you, your broker, dealer, custodian bank, nominee, or institution,
as the case may be, all of the required documents and your full payment of the subscription price
before the expiration date of the rights offering.
Subscription by DTC Participants. We expect that the exercise of your rights may be
made through the facilities of the Depository Trust Company (DTC). If your rights are held of
record through DTC, you may exercise your rights by instructing DTC, or having your broker instruct
DTC, to submit to the subscription agent certification as to the aggregate number of rights you are
exercising and the number of shares of common stock you are subscribing for under your basic
subscription right and your oversubscription privilege, if any, and your full subscription payment.
Payment Method
Payments must be made in full in United States dollars for the full number of shares for which
you are subscribing by:
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check or bank draft payable to American Stock Transfer & Trust Company, LLC, the
subscription agent for T Bancshares, Inc., drawn upon a U.S. bank; |
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postal or express money order payable to the subscription agent; or |
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wire transfer of immediately available funds to the following account maintained
by the subscription agent: |
T Bancshares, Inc. Escrow Account
c/o American Stock Transfer & Trust Company, LLC
Account No.: 530-354624
ABA/Routing Number: 021000021
We will not honor payment received after the expiration date of the rights offering, and the
subscription agent will return your payment to you, without interest or deduction, as soon as
practicable. The subscription agent will be deemed to receive payment upon:
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clearance of any uncertified check deposited by the subscription agent; |
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receipt by the subscription agent of any certified check or bank draft, drawn
upon a U.S. bank; |
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receipt by the subscription agent of any postal or express money order; or |
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receipt of collected funds in the subscription account designated above. |
If you elect to exercise your subscription rights, we urge you to consider using a certified
or cashiers check, money order, or wire transfer of funds to ensure that the subscription agent
receives your funds prior to the expiration of the rights offering. If you send an uncertified
check, payment will not be deemed to have been received by the subscription agent until the check
has cleared. If you send a certified check or bank draft, drawn upon a U.S. bank, a postal or
express money order, or wire or transfer funds directly to the subscription account, payment will
be deemed to have been received by the subscription agent immediately upon receipt of such
instruments and wire or transfer.
Any personal check used to pay for shares of our common stock must clear the appropriate
financial institutions prior to 5:00 p.m., New York City time, on __________, 20__, which is the
expiration of the rights offering. The clearinghouse may require five or more business days.
Accordingly, if you intend to pay the subscription payment by means of an uncertified personal
check, we urge you to make payment sufficiently in advance of the expiration of the rights offering
to ensure such payment is both received and cleared by such date.
You should read the instruction letter accompanying the rights certificate carefully and
strictly follow it. Do not send rights certificates or payments to T Bancshares, Inc. Except as
described below under Guaranteed Delivery Procedures, we will not consider your subscription
received until the subscription agent has received delivery of a properly completed and duly
executed rights certificate and payment of the full subscription amount. You and your nominee bear
the risk of delivery of all documents and payments and neither we nor the subscription agent have
any responsibility for such deliveries.
The method of delivery of rights certificates and payment of the subscription amount to the
subscription agent will be at the risk of the holders of subscription rights. If sent by mail, we
recommend that you send those certificates and payments by overnight courier or by registered mail,
properly insured, with return receipt requested, and that you allow a sufficient number of days to
ensure delivery to the subscription agent and clearance of payment prior to the expiration of the
rights offering.
Unless a rights certificate states that the shares of our common stock are to be delivered to
the record holder of such rights or such certificate is submitted for the account of a bank or a
broker, signatures on such rights certificate
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must be guaranteed by an eligible guarantor institution, as such term is defined in Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended, subject to any standards and procedures adopted
by the subscription agent.
Subscription Agent
We have appointed American Stock Transfer & Trust Company, LLC to act as subscription agent
for the rights offering. We will pay all fees and expenses of the subscription agent related to
the rights offering and have also agreed to indemnify the subscription agent from liabilities it
may incur in connection with the rights offering. The address to which subscription documents,
rights certificates, notices of guaranteed delivery, and subscription payments other than wire
transfers should be mailed or delivered is:
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, NY 11219
If you deliver subscription documents, rights certificates, or notices of guaranteed delivery
in a manner different than that described in this prospectus, we may not honor the exercise of your
subscription rights.
You should direct any questions or requests for assistance concerning the method of
subscribing for the shares of our common stock or for additional copies of this prospectus to
American Stock Transfer & Trust Company, LLC at (877) 248-6417.
Information Agent
We have appointed D.F. King & Co., Inc. to act as information agent for the rights offering.
We will pay all fees and expenses of the information agent related to the rights offering and have
also agreed to indemnify the information agent from liabilities it may incur in connection with the
rights offering.
You should direct any questions or requests for assistance concerning the method of
subscribing for the shares of our common stock or for additional copies of this prospectus to:
D.F. King & Co., Inc.
48 Wall Street
22nd Floor
New York, New York 10005
For information by telephone:
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (800) 829-6551
Funds will be Held by Subscription Agent Until Shares of Our Common Stock Are Issued
The subscription agent will hold your payment of the subscription price in connection with the
exercise of your subscription rights with other payments received from other holders of
subscription rights until we issue your shares of our common stock to your consummation of the
rights offering or the termination of the rights offering. If the rights offering is canceled for
any reason, all subscription payments received by the subscription agent will be returned, without
interest or deduction, as soon as practicable.
Medallion Guarantee May Be Required
Your signature on each subscription rights certificate must be guaranteed by an eligible
institution, such as a member firm of a registered national securities exchange or a member of the
Financial Industry Regulatory Authority,
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Inc., or a commercial bank or trust company having an office or correspondent in the United States,
subject to standards and procedures adopted by the subscription agent, unless:
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your subscription rights certificate states that shares are to be delivered to
you as record holder of those subscription rights; or |
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you are an eligible institution. |
You can obtain a signature guarantee from a financial institutionsuch as a commercial bank,
savings and loan association, credit union or broker dealerthat participates in one of the
Medallion Signature Guarantee Programs. T Bank, N.A. is a participant in the Medallion Signature
Guarantee Program and can guarantee your signature on the subscription rights certificates. If a
financial institution is not a member of a recognized Medallion Signature Guarantee Program, it
would not be able to provide signature guarantees. Also, if you are not a customer of a
participating financial institution, it is likely the financial institution will not guarantee your
signature. Therefore, the best source of a Medallion Guarantee would be a bank, savings and loan
association, brokerage firm, or credit union with whom you do business. The participating
financial institution will use a Medallion imprint or stamp to guarantee the signature, indicating
that the financial institution is a member of a Medallion Signature Guarantee Program and is an
acceptable signature guarantor.
Missing or Incomplete Subscription Information
If you do not indicate the number of subscription rights being exercised, or the subscription
agent does not receive the full subscription payment for the number of subscription rights that you
indicate are being exercised, then you will be deemed to have exercised the maximum number of
subscription rights that may be exercised with the aggregate subscription payment you delivered to
the subscription agent. If the subscription agent does not apply your full subscription payment to
your purchase of shares of our common stock, any excess subscription payment that the subscription
agent receives will be returned, without interest or deduction, as soon as practicable.
No Minimum Condition
There is no minimum number of shares that must be subscribed for by our existing shareholders
as a condition to accepting subscriptions and closing the rights offering. We have the right to
accept or reject any subscriptions validly tendered.
Conditions, Withdrawal, and Termination
We reserve the right to amend, terminate or withdraw the rights offering prior to the
expiration of the rights offering for any reason. We may, for example, terminate the rights
offering, in whole or in part, if at any time before completion of the rights offering there is any
judgment, order, decree, injunction, statute, law or regulation entered, enacted, amended, or held
to be applicable to the rights offering that in the sole judgment and discretion of our board of
directors would or might make the rights offering or its completion, whether in whole or in part,
illegal, or otherwise restrict or prohibit completion of the rights offering. We may waive any of
these conditions and choose to proceed with the rights offering even if one or more of these events
occur. If we terminate the rights offering, in whole or in part, all affected subscription rights
will expire without value, and all excess subscription payments received by the subscription agent
will be returned, without interest or deduction, as soon as practicable.
Cancellation Rights
Our board of directors may cancel the rights offering at any time for any reason prior to the
time the rights offering expires. If we cancel the rights offering, we will issue a press release
notifying shareholders of the cancellation and all subscription payments received by the
subscription agent will be returned, without interest or deduction, as soon as practicable.
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Fees and Expenses
We are not charging any fee or sales commission to issue subscription rights to you or to
issue shares of common stock to you if you exercise your subscription rights (other than the
subscription price). If you exercise your subscription rights through the record holder of your
shares, you are responsible for paying any fees your record holder may charge you, as well as any
commissions, fees, taxes, or other expenses you may incur in connection with the exercise of the
subscription rights.
No Fractional Shares
We will not issue fractional shares. Fractional shares of our common stock resulting from the
exercise of the basic subscription rights and the oversubscription privileges will be eliminated by
rounding down to the nearest whole share, with the total subscription payment being adjusted
accordingly. Any excess subscription payments that the subscription agent receives will be
returned, without interest or deduction, as soon as practicable.
Notice to Nominees
If you are a broker, dealer, custodian bank, or other nominee holder that holds shares of our
common stock for the account of others on the record date, you should notify the beneficial owners
of the shares for whom you are the nominee of the rights offering as soon as possible to learn
their intentions with respect to exercising their subscription rights. You should obtain
instructions from the beneficial owner, as set forth in the instructions we have provided to you
for your distribution to beneficial owners. If the beneficial owner so instructs, you should
complete the appropriate rights certificate and submit it to the subscription agent with the proper
subscription payment. If you hold shares of our common stock for the account(s) of more than one
beneficial owner, you may exercise the number of subscription rights to which all beneficial owners
in the aggregate otherwise would have been entitled had they been direct holders of our common
stock on the record date, provided that you, as a nominee record holder, make a proper showing to
the subscription agent by submitting the form entitled Nominee Holder Certification, which is
provided to you with your rights offering materials. If you did not receive this form, you should
contact the subscription agent to request a copy from the subscription agent.
Beneficial Owners
If you are a beneficial owner of shares of our common stock or will receive your subscription
rights through a broker, dealer, custodian bank, or other nominee, and you wish to exercise your
subscription rights, you will need to have your broker, dealer, custodian bank, or other nominee
act for you. If you hold certificates of our common stock directly and would prefer to have your
broker, dealer, custodian bank, or other nominee act for you, you should contact your nominee and
request it to effect the transactions for you. To indicate your decision with respect to your
subscription rights, you should complete and return to your broker, dealer, custodian bank, or
other nominee the form entitled Beneficial Owner Election Form. You should receive this form
from your broker, dealer, custodian bank, or other nominee with the other rights offering
materials. If you wish to obtain a separate subscription rights certificate, you should contact
the nominee as soon as possible and request that a separate subscription rights certificate be
issued to you. You should contact your broker, dealer, custodian bank, or other nominee if you do
not receive this form, but you believe you are entitled to participate in the rights offering. We
are not responsible if you do not receive the form from your broker, dealer, custodian bank, or
nominee or if you receive it without sufficient time to respond.
Guaranteed Delivery Procedures
If you wish to exercise subscription rights, but you do not have sufficient time to deliver
the rights certificate evidencing your subscription rights to the subscription agent prior to the
expiration of the rights offering, you may exercise your subscription rights by using the following
guaranteed delivery procedures:
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deliver to the subscription agent before the expiration date of the rights
offering the aggregate subscription payment for all shares of common stock you
elected to purchase pursuant to the exercise of subscription rights in the manner
set forth above under Payment Method; |
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deliver to the subscription agent before the expiration date of the rights
offering the form entitled Notice of Guaranteed Delivery substantially in the form
distributed with your subscription rights certificates; and |
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deliver the properly completed rights certificate evidencing your subscription
rights being exercised with any required signatures guaranteed, to the subscription
agent within three (3) business days following the date you submit your Notice of
Guaranteed Delivery. |
Your Notice of Guaranteed Delivery must be delivered in substantially the same form
distributed to you with your rights certificate. Your Notice of Guaranteed Delivery must include a
signature guarantee from an eligible institution, acceptable to the subscription agent. A form of
that guarantee is included with the Notice of Guaranteed Delivery.
In your Notice of Guaranteed Delivery, you must provide:
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your name; |
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the number of subscription rights represented by your rights certificate, the
number of shares of our common stock for which you are subscribing under your basic
subscription rights, and the number of shares of our common stock for which you are
subscribing under your oversubscription privilege, if any; and |
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your guarantee that you will deliver to the subscription agent any rights
certificate evidencing the subscription rights you are exercising within three (3)
business days following the date the subscription agent receives your Notice of
Guaranteed Delivery. |
You may deliver your Notice of Guaranteed Delivery to the subscription agent in the same
manner as your rights certificate at the address set forth above under Subscription Agent.
We will send you additional copies of the form of Notice of Guaranteed Delivery if you need
them. To request additional copies of the form of Notice of Guaranteed Delivery, please contact
American Stock Transfer & Trust Company, LLC at (877) 248-6417.
Validity of Exercise of Subscription Rights
We will resolve all questions regarding the validity and form of the exercise of each rights
holders subscription privilege, including time of receipt and eligibility to participate in the
rights offering. Our determination will be final and binding. Once made, subscriptions and
directions are irrevocable, and we will not accept any alternative, conditional or contingent
subscriptions or directions. We reserve the absolute right to reject any subscriptions or
directions not properly submitted or the acceptance of which would be unlawful. You must resolve
any irregularities in connection with the exercise of your subscription rights before the rights
offering period expires, unless waived by us in our sole discretion. Neither we nor the
subscription agent shall be under any duty to notify you or your representatives of defects in your
exercise of subscription rights. A subscription will be considered accepted, subject to our right
to withdraw or terminate the rights offering, only when a properly completed and duly executed
rights certificate and any other required documents and the full subscription payment have been
received by the subscription agent. Our interpretations of the terms and conditions of the rights
offering will be final and binding.
Rights of Subscribers
You will have no rights as a holder of the shares of our common stock for which you subscribe
in the rights offering, if any, until certificates representing the shares of our common stock are
issued to you or your account is credited with the shares of our common stock purchased in the
rights offering. You will have no right to revoke your subscription after your rights certificate
or the Beneficial Owner Election Form, the full subscription payment, and any other required
documents have been delivered to the subscription agent.
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Foreign Shareholders
We will not mail this prospectus or rights certificates to shareholders with addresses that
are outside the United States or that have an army post office or foreign post office address. The
subscription agent will hold these rights certificates for their account. To exercise subscription
rights, our foreign shareholders must notify the subscription agent prior to 5:00 p.m., New York
City time, at least three business days prior to the expiration of the rights offering and
demonstrate to the satisfaction of the subscription agent that the exercise of such subscription
rights does not violate the laws of the jurisdiction of such shareholder.
No Revocation or Change
Once you submit the form of rights certificate or Notice of Guaranteed Delivery to exercise
any subscription rights, you will not be allowed to revoke or change the exercise or request a
refund of monies paid. All exercises of subscription rights are irrevocable. You should not
exercise your subscription rights unless you are certain that you wish to purchase additional
shares of our common stock at the subscription price.
Transfer of Rights
You may not sell, or otherwise transfer, your subscription rights. We are not applying for
listing of the subscription rights or any exchange or dealer quotation system.
You are responsible for all commissions, fees and other expenses (including brokerage
commissions and any applicable taxes) incurred in connection with the exercise of your rights,
except that we will pay all fees of the subscription agent associated with the exercise of rights.
Any amounts you owe the subscription agent will be deducted from your account.
If you do not exercise your rights before the expiration date, your rights will expire and
will no longer be exercisable.
Material U.S. Federal Income Tax Consequences of Rights Offering
For U.S. federal income tax purposes, you should not recognize income, gain, or loss upon
receipt or exercise or expiration of these subscription rights to purchase shares of our common
stock for the reasons described below in Material U.S. Federal Income Tax Consequences.
No Recommendation to Rights Holders
Our board of directors is making no recommendation regarding whether you should exercise your
subscription rights. You are urged to make your decision based on your own assessment of our
business and financial condition, our prospects for the future and the terms of this rights
offering. Please see Risk Factors for a discussion of some of the risks involved in investing in
our common stock.
Listing
The subscription rights will not be listed for trading on OTCBB or any stock exchange or
market. The shares of our common stock issued upon exercise of the subscription rights will be
listed on the OTCBB under the ticker symbol TBNC.OB.
Shares of Our Common Stock Outstanding After the Rights Offering
Assuming no stock options or warrants are exercised prior to the expiration of the rights
offering, we anticipate that we will have a maximum of 4,853,262 shares of common stock outstanding
after consummation of the rights offering. The number of shares of common stock that we will issue
in the rights offering will depend on the number of shares that are subscribed for by our
shareholders in the rights offering and whether any shares are sold in the limited public offering.
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Questions
American Stock Transfer & Trust Company, LLC, the subscription agent, and D.F. King & Co.,
Inc., the information agent, are available to answer questions relating to the procedures and
submission of payments in the rights offering. You may call the subscription agent at (877)
248-6417, Monday through Friday during regular business hours. You may also call the information
agent, at (800) 829-6551 Monday through Friday during regular business hours. You may also contact
Patrick Howard, our CEO, or Ken Bramlage, our CFO, at (972) 720-9000, Monday through Friday during
regular business hours.
THE LIMITED PUBLIC OFFERING
General
To the extent that not all of the shares of our common stock offered by this prospectus are
purchased pursuant to the exercise of basic subscription rights and oversubscription privileges, we
are offering the shares of common stock to certain individuals identified by us through a limited
public offering. The limited public offering will be made on a best efforts basis by our
executive officers and directors and would occur simultaneously with the rights offering. Our
directors and executive officers will participate in the sale of securities in the limited public
offering in accordance with the requirement of Rule 3a4-1 of the Securities Exchange Act of 1934,
as amended. Neither our directors nor executive officers will receive commissions or any form of
remuneration in connection with the limited public offering.
In the limited public offering, investors identified by us will have the opportunity to
subscribe to purchase shares at $2.00 per share, which is the same as the subscription price in the
rights offering. The limited public offering will expire at 5:00 p.m., New York City time, on
_________, 20__, unless we extend it in our sole discretion.
However, we will not extend the limited public offering beyond ________, 2012.
Shareholders who purchase our common stock in the rights offering will not have a right to
sell their shares in the limited public offering. This prospectus does not cover any resales of
our common stock received by a shareholder upon exercise of any subscription rights, and no person
is authorized to make use of this prospectus in connection with any such resale.
Shares Available for Sale
The only shares that will be offered in the limited public offering are shares that are not
purchased during the rights offering. Therefore, if the rights holders subscribe for all of the
shares by exercising their basic subscription rights and/or their oversubscription privileges,
there will be no shares available in the limited public offering. If shares are available in the
limited public offering but are insufficient to satisfy in full all subscriptions validly tendered
and not rejected by us, we will allocate the available shares of common stock among subscribers in
the limited public offering on a pro rata basis, by multiplying the number of shares requested by
each shareholder in the limited public offering by a fraction that equals (x) the number of shares
available to be issued after honoring subscriptions in the rights offering, divided by (y) the
total number of shares requested by all shareholders in the limited public offering.
All of our directors are shareholders and have indicated that they will participate in the
rights offering. Accordingly, our directors will not participate in the limited public offering. In
addition, our executive officers who are currently shareholders have indicated that they will
participate in the rights offering. Executive officers who are not currently shareholders may
participate in the limited public offering and have indicated that they intend to do so.
Suitability
We will offer shares of common stock in the limited public offering in reliance upon
exemptions from registration requirements of the Texas Securities Act of 1957, as amended (the
Texas Act), including Section 5.T of the Texas Act and Rules 109.13(k) and 109.13(l) promulgated
thereunder relating to a transactional exemption for offerings to Texas residents that are limited
to not more than 35 new non-accredited investors and an unlimited number of accredited investors,
respectively.
As a result, the limited public offering is being made only to persons:
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who we believe to be Texas residents based on our records and representations
provided in the Subscription Agreement; and |
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who are accredited investors or well informed, sophisticated investors. |
An investment in the shares of common stock offered in this limited public offering is
suitable only for those interested investors:
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whose business and investment experience, either alone or together with an
experienced advisor, make them capable of evaluating the merits and risks of their
prospective investment in the shares of common stock; and |
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who have adequate means of providing for their current needs and personal
contingencies, have no need for liquidity with respect to their investment and are
able to afford the loss of their entire investment. |
Accredited Investors
Under Section 5.T of the Texas Act, offerings made to Texas residents that are limited to not
more than 35 new non-accredited investors and an unlimited number of accredited investors are
exempt from registration. In general, accredited investors are persons having a certain minimum
income or net worth, institutional investors or members of our management personnel. As used
herein, an accredited investor will mean any person who comes within any of the following
categories, or who we reasonably believe comes within any of the following categories, at the time
of the sale of the shares of common stock to that person:
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any natural person whose individual net worth, or joint net worth with
his spouse, at the time of purchase, exceeds $1,000,000, excluding the value of the
individuals primary residence (calculated by subtracting from the estimated fair
market value of the property the amount of debt secured by the property, up to the
estimated fair market value of the property); |
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any natural person who had an individual or joint income with that
persons spouse in excess of $200,000 or $300,000, respectively, in each of the two
most recent years and reasonably expects the same income level in the current year; |
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any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer; |
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any organization described in section 501(c)(3) of the Code,
corporation, Massachusetts or similar business trust, or partnership, not formed for
the specific purpose of acquiring the shares of common stock with total assets in
excess of $5,000,000; |
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any entity in which all of the equity owners are accredited investors; |
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any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940; |
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any trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the shares of common stock, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities
Act; and |
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any bank as defined in section 3(a)(2) of the Securities Act, whether
acting in its individual or fiduciary capacity; any broker or dealer registered
pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company
as defined in section 2(a)(13) of the Securities Act; any investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; any Small Business Investment
Company licensed by the U.S. Small Business Administration under section 301(c) or
(d) of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if |
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such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee Retirement Income Security
Act of 1974 if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors. |
As discussed above, up to 35 persons who are not accredited investors, but who meet certain
requirements may acquire shares of common stock pursuant to this limited public offering. Among
these requirements is that the interested investor, either alone or together with his or her
investment representative, must demonstrate the knowledge and sophistication in financial and
business matters demonstrate that he or she is capable of evaluating the merits and risks of
investing in the shares of common stock.
These suitability standards represent minimum suitability guidelines for interested investors,
and the satisfaction of these standards does not necessarily mean that the shares of common stock
are a suitable investment for you. Accordingly, you must rely upon your own judgment and the
judgment of your advisors in making a decision to purchase the shares of common stock. You should
consider whether the shares of common stock are suitable in light of your individual investment
objective as well as your present and expected future financial tax position and needs.
Pursuant to the Subscription Agreement, each subscriber of the limited public offering will be
required to represent to us that he or she is a Texas resident. For purposes of this offering, an
individual will be deemed to be a Texas resident if, at the time of the offer and sale, his or her
principal residence was within the State of Texas. The residence of an inter vivos or testamentary
trust is to be determined based on the principal address of the trust, as well as the residence of
the trustee. Under applicable interpretations, a trust created under Texas law, with trustees that
are Texas residents and a Texas address for the trust, will be eligible to participate in the
limited public offering, even if the beneficiaries of the trust reside outside Texas.
We will rely on the representations and warranties made by subscribers to determine
suitability. Accordingly, interested investors are advised to review carefully the provisions of
the Subscription Agreement before subscribing for any shares of common stock offered by this
prospectus.
EACH INTERESTED INVESTOR IS URGED TO CONSULT A QUALIFIED FINANCIAL AND TAX ADVISOR AND AN ATTORNEY
IN CONNECTION WITH SUCH CONSIDERATION AND GIVE PARTICULAR ATTENTION TO THE LIMITED LIQUIDITY OF,
AND RISKS ASSOCIATED WITH, AN INVESTMENT IN THE SHARES OF COMMON STOCK.
Limitations on Purchases by Outside Investors
Unless we otherwise agree in writing, a new investor, together with related persons or
entities, may not purchase shares of our common stock which would result in the new investor,
together with related persons or entities, owning in excess of 9.9% of our issued and outstanding
shares of common stock. In addition, we will not issue shares of common stock to any new investor
who, in our sole opinion, could be required to obtain prior clearance or approval from or submit a
notice to any state or federal bank regulatory authority to acquire, own, or control such shares
if, as of the expiration date of the limited public offering, we determine that such clearance or
approval has not been satisfactorily obtained and any required waiting period has not expired.
38
Subscription Procedures
If you are an investor in the limited public offering, you may subscribe for shares by
properly completing and signing the subscription agreement accompanying this prospectus and
delivering it, along with payment of the entire subscription price for all shares for which you are
subscribing, to the escrow agent on or before the expiration date of the limited public offering.
The escrow agent for the limited public offering is T Bank, N.A. You may deliver your
subscription agreement and payment to the escrow agent by mail, by overnight courier or by hand
delivery to the following addresses:
T Bank, N.A., escrow agent for T Bancshares, Inc.
Attn: Patrick Howard, President
16000 Dallas Parkway, Suite 125
Dallas, Texas 75248
We have provided an envelope that you may use for mail delivery, but your method of delivery
is your choice and you bear the risk of a failed or late delivery. If you use mail delivery, we
recommend registered mail. In any event, you must deliver the subscription agreement and payment
so that they are received by the escrow agent no later than the expiration date of the limited
public offering. Please allow adequate time for delivery based upon your chosen method.
We will resolve any issues relating to whether your subscription is timely and proper, and our
determination will be final and binding. If your subscription is defective, we may reject it,
waive the defect or allow you to correct it, in our sole discretion. Neither we nor the escrow
agent has a duty to notify you of any defect in your subscription. You are solely responsible for
the timely and proper submission of your order form and payment.
YOUR SUBSCRIPTION, ONCE MADE, IS IRREVOCABLE.
Payment Method
Payments must be made in full in U.S. currency by:
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check or bank draft payable to T Bank, N.A., as escrow agent for T Bancshares,
Inc., drawn upon a U.S. bank; |
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postal or express money order payable to the escrow agent; or |
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wire transfer of immediately available funds to the escrow account maintained by
the escrow agent at T Bank, N.A. |
We will not honor payment received after the expiration date of the limited public offering,
and the escrow agent will return your payment to you, without interest or deduction, as soon as
practicable. The escrow agent will be deemed to receive payment upon:
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clearance of any uncertified check deposited by the escrow agent; |
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receipt by the escrow agent of any certified check or bank draft, drawn upon a
U.S. bank; |
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receipt by the escrow agent of any postal or express money order; or |
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receipt of collected funds in the escrow agents account. |
39
If you are an investor in the limited public offering and elect to participate, we urge you to
consider using a certified or cashiers check, money order, or wire transfer of funds to ensure
that the subscription agent receives your funds prior to the expiration of the limited public
offering. If you send an uncertified check, payment will not be deemed to have been received by
the escrow agent until the check has cleared. If you send a certified check or bank draft drawn
upon a U.S. bank, a postal or express money order, or wire or transfer funds directly to the escrow
account, payment will be deemed to have been received by the escrow agent immediately upon receipt
of such instruments and wire or transfer.
Any personal check used to pay for shares of our common stock must clear the appropriate
financial institutions prior to 5:00 p.m., New York City time, on __________, 20__, which is the
expiration of the limited public offering. The clearinghouse may require five or more business
days. Accordingly, holders that wish to pay the subscription payment by means of an uncertified
personal check are urged to make payment sufficiently in advance of the expiration of the limited
public offering to ensure such payment is both received and cleared by such date.
We will not consider your subscription received until the escrow agent has received delivery
of a properly completed and duly executed subscription agreement and payment of the full
subscription amount. You and your nominee bear the risk of delivery of all documents and payments
and neither we nor the escrow agent have any responsibility for such deliveries. If sent by mail,
we recommend that you send the subscription agreement and payments by overnight courier or by
registered mail, properly insured, with return receipt requested, and that you allow a sufficient
number of days to ensure delivery to the subscription agent and clearance of payment prior to the
expiration of the limited public offering.
Questions
We are available to answer questions relating to the procedures and submission of payments in
the limited public offering. You may contact Patrick Howard, our CEO, or Ken Bramlage, our CFO, at
(972) 720-9000, Monday through Friday during regular business hours.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our
common stock as of December 12, 2011, the record date, by:
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each person known by us to own beneficially more than 5% of our common stock; |
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each named executive officer; |
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each of our directors; and |
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all of our directors and named executive officers as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting
and investment power with respect to the securities. Subject to applicable community property
laws, the persons named in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them. The applicable percentage of ownership
for each shareholder is based on 1,941,305 shares of common stock outstanding as of December 12, 2011.
Shares of common stock issuable upon exercise of options and other rights beneficially owned that
are exercisable within sixty days of the record date, are deemed outstanding for the purpose of
computing the percentage ownership of the person holding those options and other rights but are not
deemed outstanding for computing the percentage ownership of any other person. Unless otherwise
noted, the address for each shareholder listed below is c/o T Bancshares, Inc., 16000 Dallas
Parkway, Suite 125, Dallas, Texas 75248.
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Amount and Nature of |
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Name of Beneficial Owners |
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Beneficial Ownership |
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Percent of Class |
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Greater Than 5% Shareholders that is not
a Director or Executive Officer: |
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Security Financial Life Insurance Company
4000 Pine Lake Road
P.O. Box 82248
Lincoln, Nebraska 68501-2248 |
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100,000 |
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5.15 |
% |
Patrick Adams |
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137,940 |
(1) |
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6.77 |
% |
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Directors and Named Executive Officers: |
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Stanley Allred |
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21,274 |
(2) |
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1.09 |
% |
D. Craig Barnes |
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5,000 |
(9)(10) |
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* |
Dan Basso |
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45,686 |
(2) (8) |
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2.35 |
% |
Frankie Basso |
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49,754 |
(3) (8) |
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2.56 |
% |
Ken Bramlage |
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1,800 |
(9)(11) |
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* |
David Carstens |
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21,274 |
(2) |
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1.09 |
% |
Ron Denheyer |
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21,274 |
(2) |
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1.09 |
% |
Charles Holmes |
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13,254 |
(4)(9) |
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* |
Patrick Howard |
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23,992 |
(5) |
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1.23 |
% |
Steven Jones |
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51,206 |
(6) |
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2.60 |
% |
Eric Langford |
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45,685 |
(7) |
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2.35 |
% |
Charles Mapes |
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21,678 |
(3) |
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1.11 |
% |
Thomas McDougal |
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21,273 |
(2) |
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1.09 |
% |
Cyvia Noble |
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22,901 |
(2) |
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1.18 |
% |
Gordon Youngblood |
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18,000 |
(2) |
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* |
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All Directors and Executive Officers as a group |
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384,051 |
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19.69 |
% |
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* |
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Represents less than 1% of the total shares outstanding (1,941,305) as of December 12, 2011. |
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(1) |
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Includes warrants to purchase 5,000 shares of common stock,
options to purchase 90,000 shares of common stock, all of which
are exercisable as of the date of this registration statement and
held by Mr. Adams, and 17,940 shares owned directly by a trust
for which Mr. Adams serves as co-trustee. |
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Includes warrants to purchase 5,000 shares of common stock which are
exercisable as of the date of this registration statement. |
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(3) |
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Includes warrants to purchase 5,000 shares of common stock
exercisable as of the date of this registration statement and 28,480
shares owned directly by a trust for which Mr. Basso serves as
co-trustee. |
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Includes options to purchase 11,000 shares of common stock, all of
which are exercisable as of the date of this registration statement. |
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Includes options to purchase 17,000 shares of common stock, all of
which are exercisable as of the date of this registration statement. |
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Includes warrants to purchase 5,000 shares of common stock, options
to purchase 25,000 shares of common stock, all of which are
exercisable as of the date of this registration statement, and 1,627
shares owned directly by Mr. Jones spouse and 1,219 shares owned
directly by Mr. Jones children. |
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Includes warrants to purchase 5,000 shares of common stock and 8,000
shares owned directly by Mr. Langfords children. |
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(8) |
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Director Dan Basso is the father of Director Frankie Basso. |
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(9) |
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Not a Director; however is an executive officer of the Bank. |
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(10) |
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Includes options to purchase 5,000 shares of common stock, all of
which are exercisable as of the date of this registration statement. |
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(11) |
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Includes options to purchase 1,800 shares of common stock, all of
which are exercisable as of the date of this registration statement. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Under Section 402 of the Sarbanes-Oxley Act of 2002, it is now unlawful for any issuer to
extend, renew or arrange for the extension of credit in the form of a personal loan to or for any
director or executive officer of that issuer. This prohibition does not apply to certain types of
loans described in Section 402 that are (i) made available by the issuer in the ordinary course of
the issuers consumer credit business; (ii) of a type generally made available by such issuer to
the public; and (iii) made by the issuer on market terms, or terms that are no more favorable than
those offered by the issuer to the general public.
Section 402 also does not apply to loans by an insured depository institution, such as T Bank,
N.A., if the loan is subject to the insider lending restrictions of Section 22(h) of the Federal
Reserve Act or the Federal Reserves Regulation O. We believe that all related transactions comply
with Section 402 of the Sarbanes-Oxley Act or have been made pursuant to a valid exception from
Section 402 of the Sarbanes-Oxley Act.
Certain of our officers, directors and principal shareholders and their affiliates have had
transactions with T Bank, N.A., including borrowings and investments in certificates of deposit.
Our management believes that all such loans and investments have been and will continue to be made
in the ordinary course of business of T Bank, N.A. on substantially the same terms, including
interest rates paid and collateral required, as those prevailing at the time for comparable
transactions with unaffiliated persons, and do not involve more than the normal risk of
collectibles or present other unfavorable features.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material U.S. federal income tax consequences, as of the
date of this prospectus, to U.S. holders (as defined below) of the receipt, transfer, exercise,
sale and expiration of subscription rights received by them in the rights offering. We have not
sought, and we do not intend to obtain, an opinion regarding the material U.S. federal income tax
consequences discussed herein. For purposes of this discussion, a U.S. holder is a beneficial
owner of shares of our common stock who holds such shares as a capital asset for U.S. federal
income tax purposes (generally property held for investment) and is for U.S. federal income tax
purposes:
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an individual who is a citizen or resident of the United States (including
certain former citizens and former long-term residents); |
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a corporation, or other entity taxable as a corporation for U.S. federal
tax purposes, created or organized in or under the laws of the United States or any
state thereof or the District of Columbia; |
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an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or |
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a trust (i) that is subject to the primary supervision of a court within
the United States and the control of one or more United States persons as defined in
section 7701(a)(30) of the Code (as defined below) or (ii) that was in existence as of
August 20, 1996 and that has a valid election in effect under applicable Treasury
regulations to be treated as a United States person. |
This discussion does not describe all of the tax consequences that may be relevant to a U.S.
holder in light of its particular circumstances. For example, this discussion does not address:
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tax consequences to U.S. holders who may be subject to special tax
treatment, such as dealers in securities or currencies, traders in securities that elect
to use the mark-to-market method of accounting |
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for their securities, financial
institutions, partnerships or other pass-through entities for U.S. federal income tax
purposes (or investors in such entities), regulated investment companies, expatriates,
real estate investment trusts, tax-exempt entities, insurance companies, individual
retirement accounts or other tax-deferred account, or retirement plans; |
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tax consequences to persons holding shares of our common stock or
subscription rights as part of a hedging, constructive sale or conversion, straddle or
other risk reducing transaction; |
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tax consequences to U.S. holders whose functional currency is not the
U.S. dollar; |
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tax consequences to persons who are not U.S. holders; |
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the U.S. federal estate, gift or alternative minimum tax consequences, if
any, to U.S. holders; or |
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any state, local, or foreign tax consequences. |
If a partnership or other entity classified as a partnership for U.S. federal tax purposes
holds shares of our common stock, the tax treatment of a partner of such partnership will generally
depend upon the status of the partner and the activities of the partnership. If you are a partner
of a partnership holding shares of our common stock, you should consult your own tax advisors
concerning the tax treatment of the receipt of subscription rights in the rights offering and the
exercise and lapse of the subscription rights.
This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended
(the Code), its legislative history, Treasury regulations promulgated thereunder, published
rulings and judicial decisions as of the date of this prospectus. The foregoing authorities are
subject to change or differing interpretations at any time with possible retroactive effect.
We intend to treat the distribution of subscription rights pursuant to the rights offering as
a non-taxable transaction for United States federal income tax purposes and the remaining portion
of this summary describes the United Stated federal income tax consequences of such treatment.
However, there can be no assurance that the Internal Revenue Service (IRS) will take a similar
view or would agree with the tax consequences described below. No advance tax ruling has been
sought or obtained from the IRS regarding the U.S. federal income tax consequences described below.
If the IRS contests a conclusion set forth herein, no assurance can be given that a U.S. holder
would ultimately prevail in a final determination by a court.
THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX
ADVICE TO ANY U.S. HOLDER. EACH U.S. HOLDER SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE RECEIPT, EXERCISE, AND EXPIRATION OF SUBSCRIPTION RIGHTS
RECEIVED IN THE RIGHTS OFFERING IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION.
Receipt, Exercise, and Expiration of the Subscription Rights
For U.S. federal income tax purposes, a U.S. holder should not recognize income, gain, or loss
upon its receipt of subscription rights in the rights offering, the expiration of such subscription
rights, or its exercise of such subscription rights.
A U.S. holders tax basis in its subscription rights received in the rights offering will
depend upon the relative fair market value of the subscription rights received by such holder and
our common stock owned by the U.S. holder at the time the subscription rights are distributed by
us. If either (1) the fair market value of the subscription rights on the date such subscription rights are distributed by us is equal to or exceeds 15% of the fair market
value on such date of the shares of our common stock with respect to which the subscription rights
are received or (2) such U.S. holder elects, in its U.S. federal income tax return for the taxable
year in which the subscription rights are received, to allocate part of its basis in its shares of
our common stock held to the subscription rights, then, upon exercise or sale of the
43
subscription rights, the U.S. holders basis in its shares of our common stock with respect to which the
subscription rights are received will be allocated among such shares and the subscription rights
received in proportion to their respective fair market values on the date the subscription rights
are distributed by us. If the subscription rights received by a U.S. holder have a fair market
value that is less than 15% of the fair market value on such date of the shares of our common stock
with respect to which the subscription rights are distributed by us, the U.S. holders basis will
be zero, unless the holder elects to allocate the basis in its shares of our common stock, as
discussed in the previous sentence. A U.S. holder who allows a subscription right received in the
rights offering to expire will not recognize gain or loss, and such holders tax basis in the
shares of our common stock with respect to which the subscription rights are received will be equal
to the tax basis in such common stock immediately before the receipt of the subscription rights in
the rights offering.
A U.S. holders basis in the shares of our common stock acquired through the exercise of
subscription rights should equal the sum of the subscription price paid for the shares and the U.S.
holders tax basis, if any, in the subscription rights. The holding period for the shares of our
common stock acquired through the exercise of the subscription rights will begin on the date the
subscription rights are exercised. If a U.S. holder sells subscription rights received in this
rights offering, the U.S. holders tax basis, if any, in the subscription rights will be used to
determine the U.S. holders gain or loss on the sale of the subscription right.
Notwithstanding the foregoing, if a U.S. holder exercises subscription rights received in this
rights offering after disposing of the shares of our common stock with respect to which the
subscription rights are received, then certain aspects of the tax treatment of the exercise of the
subscription rights are unclear, including (1) the allocation of the basis of the shares sold and
the subscription rights received in respect of such shares, (2) the impact of such allocation on
the amount and timing of gain or loss recognized with respect to the shares sold, and (3) the
impact of such allocation on the basis of the shares of our common stock acquired through the
exercise of such subscription rights. If a U.S. holder exercises the subscription rights received
in the rights offering after disposing of the shares of our common stock with respect to which the
subscription rights are received, such U.S. holder should consult its tax advisors.
CIRCULAR 230 DISCLOSURE
TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE IRS, WE INFORM YOU THAT (A) ANY UNITED
STATES FEDERAL INCOME TAX ADVICE CONTAINED HEREIN (INCLUDING ANY ATTACHMENTS OR ENCLOSURES) WAS NOT
INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING UNITED STATES
FEDERAL TAX PENALTIES, (B) ANY SUCH ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE
TRANSACTION OR MATTER ADDRESSED HEREIN AND (C) ANY TAXPAYER TO WHOM THE TRANSACTIONS OR MATTERS ARE
BEING PROMOTED, MARKETED OR RECOMMENDED SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES
FROM AN INDEPENDENT TAX ADVISOR.
The following discussion is a summary of certain United States federal income tax consequences
that will apply to you as a U.S. Holder of our shares of common stock.
Sale, Exchange, Repurchase, Redemption or Other Disposition of Shares of Our Common Stock
You will generally recognize gain or loss upon the sale, exchange, repurchase, redemption
or other disposition of a share of our common stock equal to the difference between the amount
realized (less accrued interest which will be taxable as such) upon the sale, exchange, repurchase,
redemption or other taxable disposition and your adjusted tax basis in the share of common stock.
Your tax basis in a share of common stock will generally be equal to the amount you paid for the
share of common stock. Any gain or loss recognized on a taxable disposition of the share of common stock will be capital gain or loss.
If you are an individual and have held the share of common stock for more than one year, such
capital gain will be subject to reduced rates of taxation. Your ability to deduct capital losses
may be limited.
44
Dividends and Other Distributions of Shares of Our Common Stock
Distributions made to you with respect to your shares of common stock (other than in
redemption of Shares subject to the redemption rules of Section 302(b) of the Internal Revenue
Code) will generally constitute dividends to the extent of your allocable share of our current or
accumulated earnings and profits. Distributions in excess of our current or accumulated earnings
and profits will represent first a return of capital for U.S. federal income tax purposes to the
extent of your tax basis in the shares of common stock and thus, will generally not be taxable to
you. Distributions to you in excess of your tax basis in your shares of common stock and your
allocable share of our current or accumulated earnings and profits will be taxable to you as
capital gain. Any such capital gain will be treated as a long-term capital gain if you have held
your Shares for more than one year as of the date that you receive the distribution you will be
subject to a reduced rate of tax. See Certain Federal Income Tax Consequences Sale, Exchange,
Repurchase, Redemption or other Disposition of Shares of Our Common Stock, above for additional
discussion of capital gains.
Distributions treated as dividends under the foregoing rules generally will be taxable as
ordinary income to you but may be treated as qualified dividend income. Under current federal
income tax law, qualified dividend income received by individuals and other non-corporate
shareholders is taxed at long-term capital gains rates, which currently reach a maximum of 15%.
However, the favorable tax treatment applicable to qualified dividends is set to expire for tax
years beginning after December 31, 2012 and qualifying dividend income will thereafter be subject
to U.S. federal income tax at the rates applicable to ordinary income (which rates are scheduled to
increase at that time to a maximum rate of 39.6%), unless further Congressional action is taken.
For a dividend to constitute qualified dividend income, the shareholder generally must hold the
shares paying the dividend for more than 60 days during the 121-day period beginning 60 days before
the ex-dividend date, although a longer period may apply if the shareholder engages in certain risk
reduction transactions with respect to the common stock.
Dividends paid by us to corporate shareholders are expected to be eligible for the dividends
received deduction available under Section 243 of the Internal Revenue Code. However, corporate
shareholders should be aware that certain limitations apply to the availability of the dividends
received deduction, including rules which limit the deduction in cases where (i) certain holding
period requirements are not met, (ii) the corporate shareholder is obligated (e.g., pursuant to a
short sale) to make related payments with respect to positions in substantially similar or related
property, or (iii) the corporate shareholders investment shares of common stock is financed with
indebtedness. Corporate shareholders should consult their own tax advisors regarding the
application of these limitations to their particular situations
Backup Withholding and Information Reporting
Information reporting requirements generally will apply to payments of principal and interest
made by us on the proceeds of the sale or other disposition prior to the maturity of the Shares.
You may be subject to backup withholding when you receive interest and principal payments or upon
the proceeds received from a sale or other disposition of the Shares. The backup withholding rate
is currently 28% and this rate is currently scheduled to increase to 31% for taxable years
beginning or after January 1, 2013. Backup withholding will not apply, however, if you:
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furnish to us a correct taxpayer identification number and certify that you are not
subject to backup withholding on the substitute Form W-9 or successor form included in
the Subscription Agreement; or |
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are otherwise exempt from backup withholding. |
Backup withholding is not an additional tax but is credited against the federal income tax
liability of the taxpayer subject to the withholding. If backup withholding results in an
overpayment of a taxpayers federal income taxes, that taxpayer may obtain a refund from the IRS.
Surtax on Net Investment Income
For taxable years beginning after December 31, 2012, interest income (including both stated
interest and original issue discount) for certain individuals, estates and trusts may be subject to
a new 3.8% surtax. On March 30, 2010, President Barack Obama signed into law the Health Care and
Education Reconciliation Act of 2010, amending
the Patient Protection and Affordable Care Act that he signed into law on March 23, 2010 (together
the 2010 Health
45
Care Law). For taxable years beginning after December 31, 2012, the 2010 Health
Care Law imposes a new 3.8% surtax on the net investment income of certain individuals and trusts
earning more than a certain threshold amount. For individuals, the threshold amount is $200,000
for taxpayers filing their federal income tax return as a single individual, $250,000 for taxpayers
filing a joint federal income tax return, and $125,000 for married taxpayers filing separately.
The 3.8% surtax on individuals will be imposed on the lesser of the taxpayers net investment
income or the excess (if any) of the taxpayers modified adjusted gross income for that taxable
year over the taxpayers threshold amount. Modified adjusted gross income is defined as the
taxpayers adjusted gross income increased by the amount excluded from income as foreign earned
income under Section 911(a)(1) of the Internal Revenue Code net of any deductions (taken into
account in computing adjusted gross income) or exclusions disallowed with respect to foreign earned
income. The 3.8% surtax on estates and trusts is imposed on the lesser of the undistributed net
investment income of such estate or trust for that taxable year or the excess (if any) of the
adjusted gross income of the estate or trust (as defined in Section 67(e) of the Internal Revenue
Code) over the dollar amount at which the highest tax bracket in Section 1(e) of the Internal
Revenue Code begins for such taxable year. For 2011, the highest tax bracket for trusts and
estates starts when the trust or estates taxable income exceeds $11,350. For purposes of this
surtax, net investment income includes interest, dividends, annuities, royalties, and rents, as
well as gross income from a trade or business that would be treated as a passive activity with
respect to that taxpayer and gross income from a trade or business of trading in financial
instruments or commodities. Prospective investors should consult their own tax advisors with
respect to whether you would be subject to this new 3.8% surtax and how it would apply to their
ownership of an interest in an S corporation.
PLAN OF DISTRIBUTION
On
or about _______, 2012, we intend to issue subscription rights and distribute copies of
this prospectus to those persons who are holders of common stock as of the record date of 5:00 p.m.
New York City time, on December 12, 2011. Upon completion of the rights offering, we intend to issue
shares of our common stock directly to those persons who properly exercised their subscription
rights prior to the expiration of the rights offering. While we are conducting the rights
offering, we will also conduct a limited public offering of the shares of common stock to certain
persons selected by us, in our sole discretion. After determining the number of shares of our
common stock to be issued pursuant to basic subscription rights and oversubscription privileges, we
intend to accept subscriptions for any remaining shares offered by the prospectus, if any, received
from those persons who properly subscribed to purchase shares prior to the expiration of the
limited public offering.
There is no established public market for the common stock. Our common stock is not listed on
any exchange, and we do not intend to apply for any listing. Our common stock has been traded in on
the OTCBB under the symbol TBNC.OB and trading on such market is highly illiquid and volatile.
The company is not applying for listing of the subscription rights on any exchange or dealer
quotation system.
Certain of our employees, officers or directors may solicit responses from you to the rights
offering and the limited public offering, but such individuals will not receive any commissions or
compensation for such services other than their normal employment compensation. Our employees,
officers and directors will rely on the safe harbor from broker-dealer registration set out in Rule
3a4-1 under the Securities Exchange Act of 1934.
We have not agreed to enter into any standby or other arrangements to purchase any rights or
any shares of common stock. In addition, we have not entered into any agreements regarding
stabilization activities with respect to our securities.
We will pay the fees of American Stock Transfer & Trust Company, LLC, the subscription agent,
which are estimated to be approximately $20,000. We will also reimburse the subscription agent for
any out-of-pocket expenses and indemnify it for any losses. We will also pay the fees of D.F. King
& Co., Inc., the information agent, which are estimated to be
approximately $7,500. We will also
reimburse the information agent for any out-of-pocket expenses and indemnify it for any losses. We
will also pay the fees of T Bank, N.A., the escrow agent, which are estimated to be approximately
$3,000. We will reimburse the escrow agent for any out-of-pocket expenses and indemnify it for
any losses.
46
Other than the agreements with the subscription agent and the escrow agent, as described
herein, we do not know of any existing agreements between or among any shareholder, broker, dealer,
underwriter, or agent relating to the sale or distribution of the common stock in connection with
this rights offering.
DETERMINATION OF SUBSCRIPTION PRICE
In arriving at the subscription price, our board of directors reviewed and analyzed among
other things, the following: (1) the prospectus; (2) the financial statements of the company; (3)
certain other publicly available financial and other information regarding the company; (4)
publicly available information about other banking organizations, the trading markets for their
securities and the nature and terms of certain other transactions relevant to our inquiry; (5) the
book value and financial condition of the company; (6) the future earnings and dividend paying
capacity of the company; (7) previous sales of our common stock; and, (8) the prevailing market
prices for selected publicly-traded banking organizations in the United States.
Our board of directors also considered those financial and other factors as it deemed
appropriate under the circumstances, including among others the following: (1) the historical and
current financial position and results of operations of the company, including interest income,
interest expense, net interest income, net interest margin, provision for loan losses, noninterest
income, noninterest expense, earnings, dividends, internal capital generation, book value,
intangible assets, return on assets, return on stockholders equity, capitalization, the amount and
type of nonperforming assets, loan losses and the reserve for loan losses, all as set forth in the
financial statements for the company; and (2) the assets and liabilities of the company, including
the loan portfolio, deposits, other liabilities, historical and current liability sources and costs
and liquidity.
LEGAL MATTERS
Certain legal matters with respect to the validity of the subscription rights and the shares
of our common stock issuable upon exercise of the subscription rights, as well as the shares of our
common stock offered by this prospectus in the limited public offering, have been passed upon for
us by Hunton & Williams LLP.
EXPERTS
The consolidated financial statements for the years ended December 31, 2010 and December 31,
2009, appearing in the Companys Annual Report on Form 10-K for the year ended December 31, 2010,
have been incorporated by reference in reliance on the report of Weaver and Tidwell, LLP, an
independent registered public accounting firm, given upon the authority of said firm as experts in
auditing and accounting.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with it, which means
that we can disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this prospectus, and the
information that we file later with the SEC will automatically update and supersede this
information. We incorporate into this prospectus by reference (i) the documents listed below that
we have filed with the SEC (except for such documents or portions thereof that state that they are
furnished, but not filed, with the SEC), and (ii) all documents subsequently filed by us with the
SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, until the expiration date of the rights offering, including all documents filed after the
date of the initial registration statement of which this prospectus is a part and prior to the
effectiveness of this registration statement. We hereby incorporate by reference the following
documents:
|
1. |
|
Our Annual Report on Form 10-K for the year ended December 31, 2010; |
|
|
|
2. |
|
Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June
30, 2011, and September 30, 2011; |
|
|
|
3. |
|
Our Current Report on Form 8-K filed with the SEC on June 29, 2011; |
|
|
4. |
|
Our Proxy Statement on Schedule 14A filed with the SEC on May 2, 2011; and |
47
|
5. |
|
The descriptions of our common stock set forth in our registration statements
filed pursuant to Section 12 of the Exchange Act. |
All documents that we file subsequent to the date of this prospectus and prior to the
termination of the offering of our common stock contemplated hereby pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 shall be deemed to be incorporated by
reference into this prospectus and to be a part hereof from the date of filing of such documents.
Information in documents that is deemed, in accordance with SEC rules, to be furnished and not
filed shall not be deemed to be incorporated by reference into this prospectus. Any statement
contained in a document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded, to constitute a
part of this prospectus.
You may request a copy of these filings, other than an exhibit to a filing unless that exhibit
is specifically incorporated by reference into that filing, at no cost, by writing to or
telephoning us at the following address: Patrick Howard, President, T Bancshares, Inc., 16000
Dallas Parkway, Suite 125, Dallas, Texas 75248. Telephone requests may also be directed to: (972)
720-9000. We maintain an internet site at http://www.tbank.com which contains information
concerning us and our subsidiaries. The information contained on our internet site and those of
our subsidiaries is not incorporated by reference in this prospectus and should not be considered a
part of this prospectus.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the
SEC. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding the company. You may also read and copy any
document we file with the SEC at its public reference facilities at 100 F Street, N.E., Washington,
D.C. 20549. You can also obtain copies of the documents at prescribed rates by writing to the
Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.
We will also provide you with a copy of any or all of the reports or documents that have been
incorporated by reference into this prospectus or the registration statement of which it is a part
(i) upon written or oral request, and (ii) at no cost to you. If you would like to request any
reports or documents from the company, please contact Patrick Howard, President and CEO, at (972)
720-9000 or at phoward@tbank.com.
48
2,911,957 Shares
Common Stock
PROSPECTUS
_______________, 2012
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than underwriting discounts and
commissions, payable in connection with the sale and distribution of the securities being
registered. All amounts are estimates except the Securities and Exchange Commission registration
fee.
|
|
|
|
|
SEC registration fee |
|
$ |
667.43 |
|
Blue Sky fees and expenses |
|
|
500.00 |
|
Printing, postage and mailing expenses |
|
|
10,000.00 |
|
Legal and accounting fees and expenses |
|
|
75,000.00 |
|
Subscription
agent, information agent and escrow agent fees and expenses |
|
|
30,500.00 |
|
Miscellaneous |
|
|
5,000.00 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
121,667.43 |
|
|
|
|
|
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Chapter 8 of the Texas Business Organizations Code, as amended (the TBOC), authorizes us to
indemnify certain persons, including any person who was, is or is threatened to be made a named
defendant or respondent in a threatened, pending, or completed action, suit or proceeding because
the person is or was a director or officer, against judgments, penalties (including excise and
similar taxes), fines, settlements and reasonable expenses (including court costs and attorneys
fees) actually incurred by the person in connection with the threatened, pending, or completed
action, suit or proceeding. We are required by Chapter 8, Subchapter B to indemnify a director or
officer against reasonable expenses (including court costs and attorneys fees) incurred by him in
connection with a threatened, pending, or completed action, suit or proceeding in which he is a
named defendant or respondent because he is or was a director or officer if he has been wholly
successful, on the merits or otherwise, in the defense of the action, suit or proceeding. Section
8.003 of the TBOC provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under the corporations articles
of incorporation. In particular, our Articles of Incorporation, as amended, provide for the
indemnification by us of our officers and directors to the fullest extent permitted by law.
We maintain an insurance policy covering our officers and directors, within the limits and
subject to the limitations of the policies, against certain expenses in connection with the defense
of actions, suits, or proceedings and certain liabilities which might be imposed as a result of
such actions, suits, or proceedings, to which they are parties by reason of being or having been
our directors or officers.
ITEM 16. EXHIBITS
See Exhibit Index attached hereto and incorporated herein by reference.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes: |
|
(a)(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement: |
|
|
|
(i) |
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, |
II-1
|
(ii) |
|
To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the effective registration
statement, and |
|
|
(iii) |
|
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement. |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(4) The undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrants annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plans annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) The undersigned registrant hereby undertakes to supplement the prospectus, after the
expiration of the subscription period, to set forth the results of the subscription offer, the
transactions by the underwriters during the subscription period, the amount of unsubscribed
securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof.
If any public offering by the underwriters is to be made on terms differing from those set forth on
the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms
of such offering.
(6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy as expressed in the Securities
Act of 1933 and is therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(7) For purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-2
(b) The undersigned registrant hereby undertakes to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934;
and, where interim financial information required to be presented by Article 3 of Regulation S-X
are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has
duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned,
thereunto duly authorized on January 11, 2012.
|
|
|
|
|
|
T BANCSHARES, INC.
|
|
|
/s/ Patrick Howard
|
|
|
Patrick Howard |
|
|
President and Chief Executive Officer
(Principal Executive Officer) |
|
|
|
|
|
|
/s/ Ken Bramlage
|
|
|
Ken Bramlage |
|
|
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer) |
|
|
Pursuant to the requirements of the Securities Act, this registration statement has been
signed by the following persons on this
11th day of
January, 2012, in the capacities indicated.
|
|
|
/s/ Patrick Howard
|
|
/s/ Ken Bramlage |
Patrick Howard; Director, President and CEO
|
|
Ken Bramlage; Chief Financial Officer |
(Principal Executive Officer)
|
|
(Principal Financial Officer; |
|
|
Principal Accounting Officer) |
|
|
|
*
Stanley Allred; Director
|
|
*
Eric Langford; Director |
|
|
|
*
Dan Basso; Director, Chairman
|
|
*
Charles Mapes; Director |
II-4
|
|
|
*
Frankie Basso; Director
|
|
*
Thomas McDougal; Director |
|
|
|
*
David Carstens; Director
|
|
*
Cyvia Noble; Director |
|
|
|
|
|
*
Gordon Youngblood; Director |
|
|
|
|
|
|
|
|
|
|
* |
By: |
/s/ Patrick Howard |
|
|
|
|
Patrick Howard
Attorney-in-Fact |
|
|
|
(Pursuant to the Power of Attorney granted in the Companys Registration Statement on Form S-1, initially filed on November 4, 2011.) |
II-5
EXHIBIT INDEX
|
|
|
Exhibit |
|
|
No. |
|
Description of Exhibit |
3.1
|
|
Articles of Incorporation of the Registrant (1) |
|
|
|
3.2
|
|
Bylaws of the Registrant (2) |
|
|
|
4.1
|
|
Specimen Common Stock Certificate (5) |
|
|
|
4.2
|
|
Specimen Warrant Certificate (5) |
|
|
|
4.3
|
|
Subscription Agent Agreement between Registrant and American Stock Transfer & Trust Company,
LLC, as Subscription Agent ** |
|
|
|
4.4
|
|
Form of Subscription Rights Certificate |
|
|
|
4.5
|
|
Information Agent Agreement between Registrant and D.F.King & Co., Inc., as Information Agent ** |
|
|
|
5.1
|
|
Legal opinion of Hunton &
Williams LLP dated December 12, 2011** |
|
|
|
10.1
|
|
T Bancshares, Inc. (f/k/a First Metroplex Capital, Inc.) 2005 Incentive Plan (3)(4) |
|
|
|
10.2
|
|
Form of Incentive Stock Option Agreement (3)(4) |
|
|
|
10.3
|
|
Form of Non-Qualified Stock Option Agreement (3)(4) |
|
|
|
10.4
|
|
T Bancshares, Inc. (f/k/a First Metroplex Capital, Inc.) Organizers Warrant Agreement dated
November 2, 2004 (5) |
|
|
|
10.5
|
|
T Bancshares, Inc. (f/k/a First Metroplex Capital, Inc.) Shareholders Warrant Agreement
dated November 2, 2004 (5) |
|
|
|
10.6
|
|
Extension of term of Initial Shareholder Warrants (5) |
|
|
|
10.7
|
|
Form of Employment Agreement by and between T Bancshares, Inc. and Patrick Howard
(4)(6) |
|
|
|
10.8
|
|
Form of Employment Agreement by and between T Bancshares, Inc. and Steve Jones
(4)(7) |
|
|
|
10.9
|
|
Form of Executive Employment Agreement Modification by and between T Bancshares, Inc. and
Steve Jones(8) |
|
|
|
10.9
|
|
Agreement between T Bank, N.A. and the Office of the Comptroller of the Currency, dated April
15, 2010(9) |
|
|
|
10.10
|
|
Consent Order for Civil Money Penalty of T Bank, N.A., dated April 15, 2010(9) |
|
|
|
21.1
|
|
List of Subsidiaries of T Bancshares, Inc.(10) |
|
|
|
23.1
|
|
Consent of Weaver & Tidwell, LLP |
|
|
|
23.2
|
|
Consent of Hunton & Williams LLP (contained in Exhibit 5.1 hereto)** |
|
|
|
24.1
|
|
Power of attorney (included on signature page) |
II-6
|
|
|
Exhibit |
|
|
No. |
|
Description of Exhibit |
99.1
|
|
Form of Letter to Shareholders ** |
|
|
|
99.2
|
|
Form of Letter to Beneficial Holders ** |
|
|
|
99.3
|
|
Form of Letter to Clients ** |
|
|
|
99.4
|
|
Form of Nominee Holder Certification ** |
|
|
|
99.5
|
|
Beneficial Holder Election Form ** |
|
|
|
99.6
|
|
Form of Notice of Guaranteed Delivery for Rights Certificates ** |
|
|
|
99.7
|
|
Subscription Agreement for Limited Public Offering ** |
|
|
|
99.8
|
|
Escrow Agreement between Registrant and T Bank, N.A., as Escrow Agent ** |
|
|
|
|
|
|
(1)
|
|
Incorporated by reference from the Quarterly Report on Form 10-Q filed
by Registrant with the SEC on August 15, 2011. |
|
(2)
|
|
Incorporated by reference from the Current Report on Form 8-K filed by
Registrant with the SEC on April 30, 2008. |
|
(3)
|
|
Incorporated by reference from the Registration Statement on Form S-8
filed by the Registrant with the SEC on September 20, 2005 (file no.
333-128456). |
|
(4)
|
|
Indicates a compensatory plan or contract. |
|
(5)
|
|
Incorporated by reference from the Registration Statement on Form SB-2
filed by the Registrant with the SEC on December 15, 2003 and as
amended on June 11, 2007 (file no. 333-111153). |
|
(6)
|
|
Incorporated by reference from the Current Report on Form 8-K filed by
Registrant with the SEC on September 5, 2007. |
|
(7)
|
|
Incorporated by reference from the Annual Report on Form 10-KSB filed
by Registrant with the SEC on March 5, 2005 and, as amended on April
20, 2005. |
|
(8)
|
|
Incorporated by reference from the Quarterly Report on Form 10-QSB
filed by Registrant with the SEC on November 14, 2007. |
|
(9)
|
|
Incorporated by reference from the Annual Report on Form 10-K filed by
Registrant with the SEC on April 15, 2010. |
|
(10)
|
|
Incorporated by reference from the
Annual Report on Form 10-K filed by the
Registrant with the SEC on March 31, 2011. |
II-7