"Some of our shareholders may still be wondering why our Company would issue preferred stock to the United States Treasury under the TARP Capital Purchase Program when so many banks have declined to participate in TARP or have replaced TARP preferred stock with dilutive common stock or expensive and dilutive convertible preferred stock. After months of deliberation and careful financial analysis, our Board of Directors concluded that the acceptance of TARP proceeds would be the most cost-effective means for the Company to grow and still maximize growth in earnings per share.
"More specifically, the increase in our capital base from the issuance of preferred stock under TARP allows the Company to grow by at least $80,000,000 in assets. Comparable growth in our capital through the issuance of new common stock or convertible preferred stock at the currently depressed valuation levels for community bank stocks would have resulted in massive dilution to our existing shareholders, which we avoided through participation in the TARP program. When the capital markets recover for community banks in the future, the Company can always repurchase the TARP preferred stock through some combination of retained earnings, capital loans and/or the issuance of additional common stock at a much higher valuation. But until then, the Company can continue to grow its assets and earnings without capital constraints, and the current shareholders can benefit from this growth without serious dilution to their earnings per share."