First State Bancorp (fka FSNMQ)

[tombrady12nh]

Mr. X,

Given our current capital ratios it is unlikely that the bank will be seized by the FDIC. The bank is currently classified as “undercapitalized”. The next lower classification is “significantly undercapitalized” and then ultimately “critically undercapitalized”. At the critically undercapitalized level the regulators are required seek a solution through requiring additional capital, a buyer for the bank, or seize the institution within 90 days. This does not mean they can’t take action sooner if they deem the depositors to be in jeopardy, ie a lack of liquidity at the bank. Clearly any financial institution that is having capital issues is better off communicating openly and often with their primary regulators about steps that are being taken to restore their capital position.

Chris