Bank1[1] - BANK OF THE EASTERN SHORE AMENDMENT AND...

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Unformatted text preview: BANK OF THE EASTERN SHORE AMENDMENT AND SUPPLEMENT TO OFFERING CIRCULAR DATED AUGUST 18, 2010 Up to 2,740,000 Units (Common Stock and Warrant) - $ 3.65 per Unit This Amendment and Supplement (“Supplement”) must be read in conjunction with Bank of the Eastern Shore’s (the “Bank”) Offering Circular dated August 18, 2010, (the “Offering C contains 1nf0rmat10n that is different from or addit10nal to information presented in order for your subscription to be retained by the Bank must affirmatively confirm to the Bank that you want to submit the same subscription for the Offering at the new price. The Bank will not issue fractional shares, so the Bank will round up the number of shares to the nearest whole share based, upon the funds investors originally submitted and any difference in price for the partial price of that share is being provided by members of the Board of Directors. If you have already sent a subscription, and adjusted for the new Offering price, you Offering Price The Board of Directors has adjusted the purchase price in the Offering from $8.00 per Unit to $3.65 per Unit. The decision to reduce the Offering Price was made after consulting with an independent financial advisor and taking into consideration the current pricing environment for financial institution equity offerings, the national and local economic environment, and the Bank’s capital needs. The new Offering price is made possible because of a reduction of the par value of the Bank’s common stock. The reduction in par value was approved by the banking regulators and by a vote of the Bank’s shareholders at a Special Shareholder Meeting held on January 13, 2011. The Offering began on August 18, 2010, and will terminate on June 30, 2011. For current shareholders, there is no minimum number of Units that must be purchased. New investors are required to purchase at least 5,480 Units in order to participate in the Offering. Our Board of Directors reserves the right, in its sole discretion, to accept or reject any subscription, in whole or in part, or to waive the minimum purchase requirement. This table summarizes the Offering and the amounts we expect to receive. Total from Sale Per Unit of 2,740,000 Units Offeriggprice ........................................................................... .. $ 3.65 $ 10,001,000 Financiqgédvisory Fees?“ .................................. .. s 0.03 $ 87,500 Maximum Broker Dealer Fees—(17:... ........................ .. $ 0.22 $ 600,060 Proceeds to us before aliensesm: ........................................... .. $ 3.40 $ 9,313,440 m Includes the Initial Advisory Fee of $12,500 and the Pi See mTerms of Offering ~ Plan of Distribution” on page 22 of the Offering Circular. (2) The maximum broker dealer fee is based upon a maximum percentage of 6% for shares sold by contacts specific to the broker dealer and is exclusive of any fees related to any other capital raising transaction. We estimate that the expenses of the Offering payable by us will total approximately 52197500. See 18 of the Offering Circular and page 5 of this Supplement. nancing Advisory Fee of $75,000 paid to Baxter l’entriss & Company. (3) “Use of Proceeds” on page January 28, 2011 Our Reasons for the Offering We are conducting this Offering principally to raise additional capital to enhance our capital ratios in this difficult economic environment, to reduce our ratio of classified assets, to support our future loan and deposit growth, and for general corporate purposes. On Augnst 31, 2010, we entered into a formal supervisory written agreement with the Board of Governors of the Federal Reserve System (“FRB”) and State of Maryland, Department of Labor, Licensing and Regulation, Division of Financial Regulation, Office of the Commissioner of Financial Regulation (“Commissioner”) (“Written Agreement”). Under the Written Agreement, additional requirements have been placed on the Bank including specific requirements to implement plans for adequate maintenance of capital and the reduction of classified assets. The capital raised in this Offering will help the Bank to reduce its classified assets ratios and to comply with the capital plan, which requires the Bank to reach and maintain heightened capital levels over and above what is required in order to be considered “Well Capitalized” under the regulations of the FRB. Although we expect the capital raised in this Offering to be instrumental in meeting the requirements of the Written Agreement, as well as providing necessary capital to resolve our asset quality issues and in allowing the Bank to implement its business strategy, we may need to undertake additional offerings. There can be no assurances that such future offerings will not be on better terms than this Offering. Recent Events Since September 30, 2010, the Bank has continued to reduce its problem assets and expenses in order to help sustain the Bank during the current difficult economy. As a result of that effort, we have had some success at selling our other real estate owned (“OREO”). During the fourth quarter of 2010, we sold approximately $1.0 million in OREO assets, but due to the sluggish economic recovery and high unemployment in Dorchester County, have added a similar amount of new OREO. After analyzing the needs of our customers, along with the products and services we are providing, we were able to reduce our staffing from 48 to 36 employees. As a result of these reductions and other cost saving measures, the Bank anticipates a savings of $95,250 per quarter during 2011. Net losses for the fourth quarter were approximately $5.6 million, which includes provisions to the allowance for loan and lease losses (“ALLL”). As of December 31, 2010, we had total net loans of $156.0 million and we charged off $7.8 million in loans in 2010, including $3.5 million suggested by our regulators. During the fourth quarter, we recognized additional provisions to the ALLL of $1.36 million. At December 31, 2010, the Bank had approximately $205.2 in total assets and $14.3 million in stockholders’ equity. We have also retained a broker dealer to assist us in raising capital in this Offering. In conjunction with those efforts, we may also sell our Bank-Owned Life Insurance (“BOLI”) policies as a means of augmenting the Bank’s capital through a separate capital raising transaction. The specific terms for any such transaction can not be determined at this time. Results and Capital Condition as of September 30, 2010 During the first three quarters of 2010, we charged off $3.17 million in loans. Also during that period, we recognized additional provisions to the ALLL of $4.97 million. Net losses through the third quarter of 2010 were $3.4 million, or $4.03 per common share, which includes the provision for ALLL. Chargecffs net of recoveries for the first three quarters were $3.0 million, which is an increase of $1.1 from December 31, 2009. Net impaired loans were approximately $33.3 million, a decrease of $2.0 million from December 31, 2009. Foreclosed assets were $900,000, an increase of $190,000 from December 31, 2009. Other real estate owned totaled $3.1 milliort at September 30, 2010, an iacrease of $900,000 from December 31, 2009. Norrperformirtg loans {aoaaccmal and past~ due 90 days, but still accruing) were $26.3 million, a $1.2 millioa iacrease from December 31, 2009. Totai assets at the cod of the first three quarters were $213.2 million, which is a $16.6 million, or a 7.2% decrease, from December 31, 2009. Totai net loans decreased by $9.3milliott, or a 5.4% decrease from Decemiier 31, 2009. Totai shareholders‘ equity was $15.0 million at September 30, 2010, a decrease of $1.6 millioa from December 31, 2009. At September 30, 2010, book vaiue was $17.65 per common share. The following table sets out our regalatory capital ratios at September 30, 2010: Bank’s Bank’s Bank’s minimum minimum mioimum “Well “Adequately “Under Bank’s Capitalized” Capitalized” Capitaiized” minimum Bank’s capita! ratios capital capital ratios required ratios for raties for for ratios under at regulatory regulatory regulatory current September 30, gumses gums mimosa Capital Plan 2010 Tier 1 leverage capital ratio 5.00% 4.00% 3.00% 8.00% 5.55% Tier 1 riaiebased capita§ ratio 6.00% 4.00% 3.00% - 6.72% Total risk-based capital ratio 10.00% 8.00% 6.00% 10.00% 8.03% FORWARB»LOOKING STATEMENTS This Supplement, iricluding information incorporated herein by reference, may contain forward- looking statements within tire meaning of the Private Securities Litigatiori Reform Act of 1995. Words such as “okay,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “is confident that” and similar expressions are intended to identify these forward- looking statements. These forward-looking statements involve risk and uncertainty and a variety of factors couid cause our actuaE results and experience to differ materially from the anticipated results or other expectations expressed in these forwardlooking statements. We do not have a policy of updating or revising forward-looking statements except as otherwise required by law, and silence by management over time should not be coostrued to mean that actual events are occurring as estimated in such forward- looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently ascertain- Factors that could have a material adverse effect or: our operations include, but are not limited to, changes is: '> the factors described trader the hearing “Risk Factors" begianing oo page 12 of the Offering Circelar and additional factors as stated below; geaerai ecoaomic cortditioos; legislativefregeiatory changes; monetary and fiscal policies of the us. Govemmeot; tire quality arid composition of our loan or investment portfoiios; dentan for loan products; deposit flows; competition; demaod for fioaacial services in our primary trade area; litigation, tax and other regulatory matters; accounting principles and guidelines; and other economic, competitive, governmental, regolatory arid techrtologicai factors affecting our operations, pricing and services. V V/ V V V V V V" V V Regulatory Matters On August 31, 2010, at the request of the Commissioner and the FRB, the Bank entered into a formal Written Agreement among the Bank, the Commissioner and the FRB. The Written Agreement represents a formal agreement among the Bank, the Commissioner and the FRB as to areas of the Bank’s operations that warrant improvement and presents a plan for making those improvements. The Written Agreement imposes no fines or penalties on the Bank, but by entering the Written Agreement, we have, among other things, become subiect to restrictions on our ability to develop new business lines, as well as restrictions on our existing business lines and we are required to raise additional capital. The substantive provisions of the Written Agreement require the Bank to: > Provide a written plan Within 60 days to strengthen Board oversight of the Bank management and operations; > Take actions necessary within of} days to employ an experienced, permanent, full—time chief lending officer. We have already satisfied the requirements of this provision with the hiring of Gregory J. Olinde as our Senior Vice President and Chief Credit Officer; > Submit within 60 days, a written plan to strengthen credit risk management practices; > Submit within 60 days, a revised plan to strengthen the Bank’s lending and credit administration practices; > Within 60 days take all steps necessary to correct any documentation and credit deficiencies in the Bank’s loan files that are listed in the most recent Report of Examination; > Submit within 60 days, a written program for the effective grading of the Bank’s loan portfolio; > Submit within 60 days, a written program for the effective, ongoing review of the Bank’s loan portfolio by a qualified independent third party or by qualified staff independent of the Bank’s lending function and providing for the Board review of those reports; Submit within 60 days, a written program for real estate appraisals and appraisal reviews; Within 10 days charge off all assets or portion of assets classified as a loss in the latest Report of Examination by our banking regulators and within 30 days of any such classification in future Reports of Examination; > Request and receive prior written approval of the banking regulators before we may declare or pay any dividends; > Refrain from, directly or indirectly, extending or renewing any credit to a borrower who’s loans or other extensions of credit have been criticized in the latest or future Reports of Examination, without the prior approval of a majority of the full Board of Directors; > Submit Within 60 days a plan that is designed to improve the Bank’s position with current loans in excess of $250,000 that are past due, on the Bank’s Problem Loan List, or were adversely classified in the Report of Examination and submit a similar plan within 30 days of any such loan, relationship or other asset being so classified in subsequent reports of examination; > Review and revise within 60 days the Bank’s Allowance for Loan and Lease Losses (“ALLL”) methodology consistent with relevant supervisory guidance and within 60 days submit a written program for the maintenance of an adequate ALLL; Submit within 68 days a written plan to maintain sufficient capital at the Bank; Submit within 60 days a written business plan for the remainder of 2010 and 2011 to improve the Bank’s earnings and overall condition; Comply with restrictions on indemnification and execute severance payments; and Submit quarterly progress reports to the FRB and the Commissioner, including updates on assets improvement plans. VV VV V V We have taken the actiens required by {110 Wriiien Agreemeni and have submified to {he FRB and Commissioas: our iflitial response under {he Wrifien Agreement, including the submissioa of all reqaired plaas, prsgrams and wrifien mamrials aecessary. We commas to work {a meet the heighiened capital {eggimmems is the ca§ital 91311 submitted to the FRB and Commissicner, and this Offering is pan 0i that 83011. We save {ficfii’sffié 3 {890121018 reply £10m the FRB and Commissioner t0 our (0513011583 and sfihmissiess {0 {3318 35213 are casiiauiag {0 provide addilional detail, supplements, amendments. and plans as Qafifiéfifi {31‘ reqassisfi. Lass: Psdfsiia 53;: Ssfiiammf 3%. 2918, {hit mmpesiiian of {he Bank’s 198:1 parifclie was (6911318 in thousands): Gatsimiding {sans Nsnperforming [133118 % of Mtg ’13: sf Lea; % 9f T913! BaSaace Nenperforming fidsawiing f‘uril’niie Assets Outstanding“ mans Agricultural s 562 033% 0.22% s - 0.00% Construction» Ekvelopment 8,433 4.93 3,93 6,815 2592 Commercial and Industrial 21343. 12.63 19.20 1,985 7.55 Multi-family Residential Real Em 56.279 3259 26.49 7,352 27.95 Nonresidential Real Estate 27 8 15.69 12.67 5 128 1950 Total Commercial Loans 114,085 66.27 5352 21,281 80.92 Residential Real Estate” 511.153 29.21 24.00 4.984 18.95 Consumer Other Consumer Loans 6,782 3.94 3.18 33 0.13 Other Loans 137 0.08 0.06 ; 0.00 Total Consumer and 0mg Loans 58,072 33.73 232% _.5_10_11 w Tom! 5 w Mgi: $ M @912 (1) Residential Estate includias lmmfi equin lines of credit (Remainder cf {his page 11110111103813}; left blank.) SELECTED FINANCIAL DATA Oar anditno finsnciai staterooms as of and for the years fancied Dscornber 31, 2008 and 2009, are inclodsrl as Appendix A to the Offering Circntar. The foiiowing Summary Financial Data shook} be read in conjnnction with the “Management’s Discussion and Analysis of Financiai Condition and Results of Operations” sections contained in the Offering Circnlar. The Bank’s historicai resoits are not neosssariiy indicative of rosnits to be extracted in {more p At or For the Nine eriods (doiiars in thousands except per share information). Months Ending A! or for the Year Ending September 30, December 31, 2010 2009 2009 2008 2007 Baiance Sheet Data: Totai assets 8 213,159 $ 237,233 8 229,841 8 232,642 8 220,300 Total loans, not 161,170 181,740 170,457 180,109 173,512 Total deposits 181,242 189,053 192,073 184,402 173,151 Shareholders" equity“ 15,034 24,313 18,559 24,222 23,250 Income Statement Data: Net interest income 4,017 5,446 5,951 6,990 7,290 Provision for loan and lease losses 4,975 ‘ 9,126 717 82 Noninterest income 2,422 664 729 726 806 Noninterest expense 5,109 4,603 5,372 5,472 4,678 Income tax (benefit) 111 400 (2,928) 370 1,169 Net (loss) earnings (3,431) 727 (4,890) 1,157 2,168 Per Share Outstanding Data: Basic net (loss) earnings per common share $ (4.12) $ 0.90 8 (6.02) 8 1.48 $ 2.79 Diluted net (loss) earnings per common share _ 8 (4.12) S 0.90 $ (6.02) 8 1.44 $ 2.70 Book value per common share at year or period end”’ 3 17.65 $ 29.92 8 22.88 8 30.40 $ 29.85 Common shares outstanding, year or period-end 851,689 812,637 811,062 796,717 778,968 Average common shares outstanding, basic 832,095 811,062 812,154 782,445 777,945 Average common shares outstanding, diluted 832,095 811,062 812,154 802,867 801,943 Performance Ratios: Return on average assets -2.07% 0,41% -2.08% 0.51% 1.03% Return on average: equity 26.44% 4.08% 21.31% 4.90% 9.74% Not interest margin 2.63% 3.26% 2.79% 3.38% 3.82% Asset Quality Ratios: Allowance to year or period end loans 6.38% 1.07% 5.02% 0.99% 0.77% Nonperforming loans to allowance for loan losses 239.36% 778.86% 35.81% 38.11% 151.86% Nonporforming loans to total loans 15.28% 8.34% 14.01% 2.60% 0.51% Nonperforming assets to total 353603 15.59% 7.68% 13.63% 2.04% 0.40% Not chargeoffs to average loans 0.36% 2.77% 1.06% 0.15% 0.00% Capital Ratios: Total risk~bascrl capitai ratio 8.49% 14.17% 9.07% 14.46% 13.42% Tier 1 risk~b3sed capital! ratio 7.18% 13.10% 7.78% 13.45% 12.68% Tier 1 leverage capitai ratio 5.90% 10.18% 6.28% 10.42% 10.68% Total equity to total assets 7.05% 10.25% 8.08% 10.40% 10.55% Other Data: Number of 1611—61138 ompioyeesm 4s 4s 46 4s 47 Number of fail-service branch offices 2 2 2 2 2 “3711:: FEB and Commissioner required the Bani: to disaii (torrentiy has no earnings. in addition, the Bank expects to take additional provisions of approximate foortii quarter of 2010. Considering Gross two items, and rooming the sharehoi sharehoidor equity of 89.6 mitiion and an adjostsd book ow ail of its deferred tax asset ($4.425 miliion) because the Bank 1y $1.0 miliion during the dors’ sanity by them rosoits in adjusted valor. no: share of $11.28, at the date: of this Soppiement. {2} In and effort to retinas: assensss we have had to rodeo: oor staff and as of the date of this Suoplemont we had 36 6111-6836 employees. LA USE OF PROCEEDS The foilowing table reflects the anticipated net proceeds of the Offering based on the maximum gross proceeds of $10,001,000, after deducting estimated Offering expenses of $197,500 the maximum of $87,500 in Financial Advisory fees and the maximum of $600,060 in broker dealer fees, if a broker is used to assist in the sate of Units in this Offering. Because this is a best efforts offering and there is no minimum number of Units that must be sold, any funds received from an investor wilt be avaiiable to us regardless of the number of Units sold and will not be refunded to the investor. If the Offering terminates for any reason without the acceptance of subscription proceeds by the Bank, alt subscription proceeds will be promptly returned to the subscribers, without interest and without any deduction for expenses. We are presenting this information assuming that we will sell all of the Units that we are offering, although we may close the Offering even if less than all of the Units are sold. Percent of Amount Gross Proceeds Gross Offering proceeds $10,001,000 100.00% Maximum Financial Advisory Fee“) 87,500 0.88 Maximum Broker Dealer Poem 600,060 6.00 Estimated Offering expenses“) 197 500 £2 Net Offering proceeds 55 33% mg % (1) Based on $75,000 Financiai Advisory Fee paid to Baxter Fentriss & Company at the dosing of the Offering and an initial Financial Advisory Fee paid upon the engagement of Baxter Fentriss & Company. (2) The maximum broker dealer fee is based upon a maximum percentage of 6% for shares sold by contacts specific to broker dealer and is exclusive of any fees related to any other capital raising transaction. (3) Includes marketing fees, printing fees and fees for legal and accounting services. Our management will have broad discretion in determining the specific timing and use of the proceeds from the Offering. We intend to use the net proceeds of this Offering to enhance the Bank’s capital ratios during the current difficult economic environment, to reduce our ratio of classified assets, maintain adequate reserves and to provide for new loans. We may also look at opportunities to expand our branch network, although we have not identified any specific branch locations. IMPACT ON BOOK VALUE At September 30, 2010, our net tangible book value was $15.0 million, or $17.65 per share*, based upon 851,689 shares outstanding. Net tangible book value per share represents the amount of our shareholders’ equity, divided by the number of shares of common stock outstanding. The increase in book value per share attributable to new investors represean the difference between the amount per share paid by purchasers of our shares in the Offering and the pro forma net tangible book value per share of our stock immediately after completion of the Offering. The following table illustrates the change in book value per share attributable to new investors based on the sale of 2,740,000 Units (the maximum number of Units offered) after deducting: the maximum Financial Advisory Fee to be paid to the Financial Adviser (including the $12,500 initiai Financial Advisory Fee) of $87,500; the maximum fee to the broker dealer of 600,060; and estimated Offering expenses of $197500. Assuming 2,740,000 Units Sold Offering price ....................................................................................................... .. $ 3.65 Net Offering proceeds .......................................................................................... .. 5 3.33 Net tangible book: value per share at September 30, 2010* .................................. .. $ 17.65 Pro forma net tangible book value per share after the Offering ............................ .. S 6.97 increase (decrease) in net tangible book value attributabie to the sale of Units in the Offering {assuming 2,740,000 Units soid) ......................................................... .. $ {10.68) Accretion in pro forma tangible book value to the purchasers of common stock assuming 23740000 Units sold ........................................................................... .. S __3.32 O Footnorg from table or: previous page. * The F118 and Commissionar required the Bank to disaiiow aii of its deferred tax assci ($4.425 miiiion} because the Bank currcndy has no earnings. in addition, the Bank expects to take additional provisions of approximateiy $1.0 miliiou during ths fourth quartcr of 2010. As a resuit of these two faciors, shareholders’ equity has been reduced. As of tha date of this Supoiomcnt, tho Bank had adjusted shareholder equity of approximatcly $9.6 million and an adjusted book vaiuc per share of$11.28. CAPITALIZATION The foiiowing tahie sets forth the Bank’s capitalization as of September 30, 2010, and as adjusted to give effect to tho procccds from the assumed sale of 2,740,000 Units (the maximum number of Units being offered), after deducting: the maximum Financiai Advisory Fees of $87,500; the maximum fee to the broker dealer of 600,060; and the estimated Offering expenses of $197,500 (doiiars in thousands). Actual at As Adjusted for September 302 2010 Sale of 2,740,000 Units Stockholders’ Equity: \ Common stock, actual as of September 30, 2010, $1.00 par value, 851,689 issued and outstanding, adjusted for stock sale, $1.00 par value, 3,591,689 issued and outstanding at the completion of the Offering“) ........................................................................ .. $ 8,517 $ 3,592 Additional paiddn capital 9,469 24,395 Accumulated deficit ....................................................................... .. (3,057) (3057) Accumulated other comprehensive income .................................... .. 105 105 Total stockholders’ equity ............................ .. $ & Capital Ratios: Total risk-based capital rating) ....................................................... .. 8.03 % 13.88% Tier 1 leverage ratio ....................................................................... .. 5.55% 10.69% Tier 1 rislobascd capital ration) .......... .. 6.72% 12.57% Total equity to total assets .............................................................. .. 7.05% 1 1.20% (1) No effect has been given to the issuance of additional shares of common stock pursuant to outstanding stock options. As of September 30, 2010, there were outstanding stock options to purchase 12,614 shares of common stock. (2) Assumes net proceeds invested in Federal Funds. TERMS OF WARRANTS Each warrant acquired as part of a Unit in this Offering will confer the right to purchase one share of the Bank’s common stock, at the price of $5.15. Each of the warrants will be non~transfcrabic other than by wiii or pursuant to the laws of descent and distribution. The warrants wiii expire on March 31, 2016. In addirion, the warrants contain a provision whereas their exercise price may be reduced for 90 days in the event insufficient capital is raised in this Offering and a subsequent offering is commenced. The complete terms of {he warrants, cxccpt as modified within this Suppicmcnt, are set out within tho warrani form attached to the Offering Circular as Appendix B. RISK FACTORS In addition to those Risk Factors contained in the Offering Circular, investors should also consider the following risk factors when making a decision to invest in shares of the Bank’s common stock. Formal regulatory enforcement actions could have a material adverse effect on our business, operations, financial condition, results of operations or the value of our common stock. Under the Written Agreement, we are required to prepare and implement plans to increase capital and meet heightened capital requirements, as well as decrease classified assets and address the various operations of the Bank. Under the Written Agreement we are subject to restrictions on our ability to develop any new business lines, as well as restrictions on our existing business lines. The Written Agreement requires the Bank to raise additional capital and to dispose of certain assets and liabilities within a prescribed period of time. The provisions of the Written Agreement or any additional enforcement action could have a material negative effect on our business, operations, financial condition, results of operations or the value of our common stock. Our ability to utilize our deferred tax assets and the value of net operating loss carryfomards may be reduced as a result of the sale of our common stock in this Offering. There is a significant likelihood that this Offering will cause a reduction in the value of our net operating loss (“NOL”) carryforwards realizable for income tax purposes. Section 382 of the Internal Revenue Code of 1986, as amended, imposes restrictions on the use of a corporation’s NOLs, as well as certain recognized built-in losses and other carryforwards, after an “ownership change” occurs. A Section 382 “ownership change” occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three—year period. If an ownership change occurs, Section 382 would impose an annual limit on the amount of prechange NOLs and other losses we can use to reduce our taxable income generally equal to the product of the total value of our outstanding equity immediately prior to the ownership change and the applicable federal long-term tax-exempt interest rate for the month of the ownership change. Future sales ofour' common stock could dilute our existing shareholders and depress the market price of our common stock. We may need to issue additional common stock in the near future to fund future growth and meet our capital needs. We can issue common stock without shareholder approval, up to the number of authorized shares set forth in the Bank’s Articles of Incorporation. Our Board of Directors has the discretion to authorize the issuance of additional shares of common stock or other securities to meet the Bank’s capital needs, subject to limitations imposed by our banking regulators. There can be no assurance that such shares can he issued at prices or on terms better than or equal to the terms obtained by our current shareholders. The issuance oi any additional shares of common stock by us in the future may result in a reduction of the book value or market price, if any, of the then—outstanding common stock. Issuance of additional shares of common stock will reduce the proportionate ownership and voting power of our existing shareholders. Neither the FRB, the Commissioner, the Federal Deposit Insurance Corporation, 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 the Offering Circular or this Supplement. Any representation to the contrary is a criminal offense. ...
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This note was uploaded on 03/22/2011 for the course ACCT 630 taught by Professor Seese during the Spring '11 term at Old Dominion.

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Bank1[1] - BANK OF THE EASTERN SHORE AMENDMENT AND...

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