FWP
Common Stock Offering
2012
Issuer
Free
Writing
Prospectus
Dated
July
20,
2012
Filed
Pursuant
to
Rule
433
Registration
Statement
No.
333-180456

Forward-Looking Information
Certain
statements
in
this
presentation
may
constitute
“forward-looking
statements”
within
the
meaning
of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that
include projections, predictions, expectations or beliefs about future events or results or otherwise and
are not statements of historical fact.  Such statements are often characterized by the use of qualified
words
(and
their
derivatives)
such
as
“expect,”
“believe,”
“estimate,”
“plan,”
“project,”
“anticipate”
or
other
statements
concerning
opinions
or
judgments
of
New
Peoples
Bankshares,
Inc.
“the
Company”
and
its management about future events.  Although the Company believes that its expectations with respect
to forward-looking statements are based upon reasonable assumptions within the bounds of its existing
knowledge of its business and operations, there can be no assurance that actual results, performance or
achievements of the Company will not differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements.  Actual future results and trends
may differ materially from historical results or those anticipated depending on a variety of factors,
including, but not limited to, the effects of and changes in: general economic conditions, the interest rate
environment, legislative and regulatory requirements, competitive pressures, new products and delivery
systems, inflation, changes in the stock and bond markets, technology, and consumer spending and
savings habits.  The Company does not update any forward-looking statements that may be made from
time to time by or on behalf of the Company.
Other Information
The Company has filed a registration statement (including a prospectus) with the Securities and Exchange
Commission (the “SEC”) for the offering to which this communication relates, and the registration
statement became effective on July 6, 2012.  Before you invest, you should read the prospectus in that
registration
statement
and
other
documents
the
Company
has
filed
with
the
SEC
for
more
complete
information about the Company and the offering. You may get these documents for free by visiting
EDGAR on the SEC website at www.sec.gov.  The final prospectus, dated July 6, 2012, was filed with the
SEC
on
July
16,
2012.
Alternatively,
the
Company
will
arrange
to
send
you
the
prospectus
if
you
request
it
by calling 1-276-873-6288.
1

Why Are We Conducting a Common Stock Offering?
Why Are We Conducting a Common Stock Offering?
•
To enable us to fulfill our mission of meeting the expectations of our
vested stakeholders, i.e. Shareholders, Regulators, Customers,
Employees and Communities by:
•
Increasing our capital and improving our capital ratios to strengthen our balance sheet
as we continue to resolve and manage our elevated level of nonperforming assets and
potential future loan losses
•
Raising
sufficient
capital
to
enable
compliance
with
our
capital
plan
as
approved
by
our
regulators
•
We did not participate in TARP funds
•
We have not solicited out-of-market institutional investors
•
The Common Stock Offering is the most fair to our exiting shareholders and best source of
capital available
•
Complying with the requirements of the Formal Written Agreement with regulators
•
Restoring our capital position as impacted by a cumulative net loss of $24.2 million
from January 1, 2009 through March 31, 2012 due primarily to increases in our
provisions for loan losses and write-downs of our other real estate owned properties
•
Positioning ourselves for proposed Basel III capital proposals in future years that may
impact the bank
•
Allowing us to return to profitability more quickly
2

Offering Overview
Offering Overview
Issuer:
New Peoples Bankshares, Inc. (OTCBB:NWPP)
Offering
Structure:
Common Stock Rights Offering to Existing Shareholders and Standby Public Offering, whereby shares that
are not purchased by the existing shareholders may be sold to the public
Offering Size:
Up to $25.0 Million ($10.0 Million Minimum)
Shares Offered:
6,666,667 shares @ minimum offering, or 16,676,845 shares outstanding minimum pro forma
16,666,667 shares @ maximum offering, or 26,676,845 shares outstanding maximum pro forma 
Offering Price:
$1.50 per share, or 57.69% of tangible book value at March 31, 2012
Director
Commitment :
All of the Directors have collectively committed to a total of $1.0 million, or 666,667 shares, which is applied
toward the $10.0 million minimum.
Directors Keene
and White Debt
Conversion
Have agreed to the conversion of $5.45 million of holding company debt plus accrued interest to common
stock at the same terms as included in the offering, resulting in 3,813,225 shares issued and 762,643
warrants issued
Securities Issued:
*
Rights to acquire 1.665 shares of our common stock for each share held
*
Nontransferable stock warrant for every 5 shares purchased with a 5 year maturity and an exercise price of
$1.75 per warrant.  Immediately exercisable.
Use of Proceeds:
Up to $8.0 million will be applied to increase the Bank’s equity capital as necessary and appropriate, to serve
as a buffer for any possible future unanticipated degradation in
the Bank’s loan or asset portfolios, and for
general corporate purposes.  The remaining funds will be used for general corporate purposes, as well as to
provide additional capital support to the Bank should that become necessary and appropriate.
Expected Closing
Rights Offering –
August 15, 2012 (may extend to September 15, 2012) -
Public  Offering –
October 15, 2012
3

COMPETITIVE STRENGTHS
4

Our Mission
Our Mission
•
Our overall mission continues to be to build a high performing
community bank focused on providing high quality, state of
the art, “golden rule”
banking services within our
communities, resulting in increased shareholder value 
5

•
New Peoples’
differentiating factors that provide a foundation for a
high performing institution built on customer service and franchise
value creation through profitable growth:
•
Leading Deposit Market Share
•
Core Deposit Base
•
Historically Strong Net Interest Margin Management
•
Experienced Management Team
•
Committed Board of Directors
6
Competitive Strengths
Competitive Strengths

•
Leading Deposit Market Share
•
#2 in the Tri-State Area Deposit Market
•
8.85% of the Tri-State Area deposits
•
Outpaced deposit growth for our market area which had a 5 year
compounded annual rate of 2.3%, our growth was 4.6%
•
Strong market penetration with 23 convenient branch locations
Competitive Strengths
Competitive Strengths
7
Note:  Information as of June 30, 2011, except branch locations.

New Peoples Bank
New Peoples Bank
Branch Locations
Branch Locations
Virginia
Locations
Honaker (HQ)
Abingdon
Big Stone Gap
Bland
Bluefield
Bristol-Linden Square
Castlewood
Chilhowie
Clintwood
Gate City
Grundy
Haysi
Jonesville
Lebanon
Norton
Pound
Pounding Mill
Tazewell
Weber City
Wise
West
Virginia
Locations
Bluewell
Princeton
Tennessee
Locations
Kingsport
8

•
Core Deposit Base
•
Focused
on
high
quality,
“golden
rule”
banking
services
within
our
communities
•
Provider of superior service through one of the largest branch
networks in our market area
•
Strong core deposit base funding our loan growth
•
39.15% of our deposits are in checking, money market and savings
accounts
•
77.21% of our deposits are core deposits (Total Deposits less time
deposits greater than $100,000 and brokered deposits)
•
Only $2.7 million in brokered deposits which is very favorable to peers
Competitive Strengths
Competitive Strengths
9
Note:  Information as of March 31, 2012.

Company Statistics
Company Statistics
New Peoples Bank opened in October 28, 1998
New Peoples Bankshares formed in 2001
Total Shareholders
4,437 ¹
Total Customer Relationships
47,164 ²
Total Households
38,023 ²
Total # of Deposits
64,099 ²
Total # of Loans
11,841 ²
Total # of Branches
23 ³
# of Counties Served in VA, TN and WV
12 ³
Market Share of Deposits in Tri-State Area based on
June 30, 2011 FDIC Deposit Summary Data
# 2 position in Deposit
Market Share
8.85% of total deposits
10
1
Information as of Shareholder Record Date, June 26, 2012
2
Information as of May 14, 2012
3
Information as of May 31, 2012

•
Historically Strong Net Interest Margin Management
•
Successfully managing a strong net interest margin, a key contributor
to delivering consistent profitability resulting in solid returns to
shareholders
•
Historically maintained a net interest margin over 4%
•
We believe we can continue this trend as we continue to improve asset
quality, cultivate and grow core deposits, and effectively position
ourselves
to
maintain
or
improve
our
net
interest
margin
in
both
rising
and falling interest rate cycles
Competitive Strengths
Competitive Strengths
11

Net Interest Margin Trend
Net Interest Margin Trend
December 31, 2007 through March 31, 2012
December 31, 2007 through March 31, 2012
Peer Data Source:  Federal Reserve Board of Governors Bank Holding Company Performance Report
12
4.11%
4.13%
4.14%
4.35%
4.29%
3.88%
3.65%
3.61%
3.76%
3.81%
3.72%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2007
2008
2009
2010
2011
3/31/2012
Net Interest Margin
Peer Data BHC $500 Million to $1 Billion
4.15%

•
Experienced Management Team
•
Our executive team consists of 4 officers with over 130 years of
combined experience
•
An average of 33 years experience in the financial services industry
•
Strongly committed to leading the organization to profitability,
strength and shareholder value
Competitive Strengths
Competitive Strengths
13
Name
Position
Years of
Experience
Years with
NPB
Jonathan H. Mullins
President and Chief Executive
Officer
31
14
Frank Sexton, Jr.
Executive Vice President and Chief
Operating Officer
40
14
C. Todd Asbury
Executive Vice President, Chief
Financial Officer, Secretary and
Treasurer
24
8
Stephen W. Trescot
Executive Vice President and Chief
Credit Officer
39
1

•
Committed Board of Directors
•
11 community leaders native to our market area
•
Actively
involved
in
local
economic
development
and
promotion
of
our
market area
•
Fully engaged in the oversight of bank management 
•
Committed to investing $1.0 million, or 10% of the minimum offering
amount
•
2 Directors invested $5.45 million to payoff holding company debt and
have agreed to the conversion of the debt plus accrued interest to
common stock after the rights offering is complete
•
Dedicated to increasing shareholder value through enhanced stock
value
•
Devoted to paying dividends as soon as possible
Competitive Strengths
Competitive Strengths
14

Board of Directors
Board of Directors
15
Name
Position
Committees
Director
Since
Michael G. McGlothlin
Chairman of
the Board
Executive
(Chair), Compliance, Nominating, Offering
1998
John Cox
Vice Chairman
of the Board
Asset Liability Management, Audit, Compensation
(Chair), Compliance, Executive, Nominating,
Offering
1998
Tim
W. Ball
Director
n/a
1999
Joe M. Carter
Director
Asset Liability Management,
Director Loan
1998
Charles H.
Gent, Jr.
Director
Audit, Compensation
1998
Eugene Hearl
Director
Asset
Liability Management, Audit,  Compensation,
Compliance, Director Loan, Executive
2010
Harold Lynn Keene,
Jr.
Director
Asset Liability Management, Audit (Chair),  Compliance,
Director Loan (Chair), Executive, Nominating, Offering
1998
A. Frank
Kilgore
Director
Compensation
1998
Fred W. Meade
Director
Compensation, Director
Loan, Executive, Nominating
1998
Jonathan H. Mullins
Director
Asset Liability Management,
Compensation,
Compliance, Executive
2010
B. Scott White
Director
Asset Liability Management,
Audit, Compliance (Chair),
Executive, Nominating, Offering
1998

FINANCIAL SNAPSHOT
16

Consolidated Financial Snapshot
Consolidated Financial Snapshot
March 31, 2012 and December 31, 2011
17
Balance Sheet
March 31, 2012
December 31, 2011
Total Assets
$768.4 million
$780.4 million
Total Loans
$573.8 million
$597.8 million
Total Allowance for Loan Loss
$   18.0 million
$  18.4 million
Total Deposits
$699.1 million
$708.3 million
Total Equity Capital
$  26.2 million
$   28.9 million
Tangible Book Value
$2.60
$2.87
Basic Shares Outstanding
10,010,178
10,010,178
Diluted Shares Outstanding
10,010,178
10,010,178
Equity to Assets Ratio
3.41%
3.70%
Tier 1 Leverage Ratio
3.92%
4.23%
Total Risk Based Capital Ratio
9.08%
9.15%

Consolidated
Consolidated
Financial
Financial
Snapshot
Snapshot
(continued)
(continued)
March 31, 2012 and December 31, 2011
18
Earnings
Quarter Ended
March 31, 2012
Year Ended
December 31, 2011
Net
Interest Income
$   7.1 million
$   32.2
million
Net Interest
Margin %
4.15%
4.29%
Provision for Loan Losses
$    2.0 million
$     8.0 million
Noninterest Income
$    1.5 million
$     5.5 million
Noninterest Expenses
$    9.0 million
$   39.4
million
Net (Loss)
($    2.5 million)
($      8.9 million)
Net (Loss)
per Share
($0.25)
($0.89)
Asset Quality
March 31, 2012
December 31, 2011
Total Non Performing Assets (NPAs)
$ 61.4 million
$ 58.9 million
NPAs/ Total Assets Ratio
7.98%
7.60%
ALLL to Total Loans Ratio
3.14%
3.07%

STRATEGIC INITIATIVES
19

Our Strategy
Our Strategy
•
Our immediate business strategy is directed towards building
shareholder value by:
•
Returning to profitability
•
Improving asset quality
•
Enhancing our regulatory capital levels
•
Over the long-term, we want to  position ourselves favorably
to take advantage of future growth opportunities within our
markets and to pay dividends to shareholders
20

STRATEGIC INITIATIVES -
RETURNING TO PROFITABILITY
21

Strategic Actions and Initiatives Taken to
Strategic Actions and Initiatives Taken to
Improve Profitability,
Improve Profitability,
Asset Quality, and Capital
Asset Quality, and Capital
•
Improving Profitability
•
Continuing to maintain a net interest margin in excess of 4.00% and have
historically been able to do this
•
Lowered our cost of deposits over 122 basis points from 2.25% at
December 31, 2009 to 1.03% at March 31, 2012
•
Reduced total employees from 367 at December 31, 2009 to 295 at March
31, 2012, a total reduction of 72, or 19.62%
•
Frozen salaries in the year 2012
•
Reduced the 100% matching employee 401K contribution from up to 5% to
up to 3% in 2012
•
Closed/consolidated eight underperforming branch offices since 2010, and
will continue to evaluate performance of the branch network
•
Reduced overhead through aforementioned branch closings and a reduction
in full time equivalent employees resulting in estimated annual cost savings
of $1.0 million
•
Stabilizing asset quality issues
22

Net
Net
Income/
Income/
(Loss)
(Loss)
Trend
Trend
(In
(In
thousands)
thousands)
For Years  Ending December 31, 2007 Through December 31, 2011 and
For Years  Ending December 31, 2007 Through December 31, 2011 and
First Quarter March 31, 2012
First Quarter March 31, 2012
23
(1) Includes a one-time non cash Goodwill impairment loss totaling $4 million.
-$10,000
-$8,000
-$6,000
-$4,000
-$2,000
$0
$2,000
$4,000
$6,000
Net Income/ (Loss)

Provision
Provision
for
for
Loan
Loan
Loss
Loss
Expense
Expense
and
and
Net
Net
Charge
Charge
Offs
Offs
(In
(In
thousands)    
thousands)    
For Years Ending December 31, 2007 through December 31, 2011 and
For Years Ending December 31, 2007 through December 31, 2011 and
First Quarter Ended March 31, 2012
First Quarter Ended March 31, 2012
24
2007
2008
2009
2010
2011
3/31/2012
Provision
for
Loan
Loss
$3,840
$1,500
$12,841
$22,328
$7,959
$1,950
Net Charge Offs
$2,090
$1,216
$1,157
$15,902
$14,746
$2,299
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
Provision
for
Loan
Loss
compared
to
Net
Charge-Offs

OREO
OREO
Expenses/
Expenses/
(Gains)
(Gains)
(In
(In
thousands)
thousands)
For Years Ending December 31, 2007 through December 31, 2011 and
For Years Ending December 31, 2007 through December 31, 2011 and
First Quarter Ended March 31, 2012
First Quarter Ended March 31, 2012
25
($1,000)
($500)
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
$6,000
OREO Expenses/ (Gains)

STRATEGIC INITIATIVES-
IMPROVING ASSET QUALITY
26

•
Enhanced and Reorganized Management and Board of
Directors
•
Hired a new, outside Chief Credit Officer with over 30 years experience in
credit administration and loan portfolio risk
•
Re-positioned our former Chief Credit Officer to Senior Loan Officer with
responsibility for the Bank’s loan production and business development
•
Appointed a new outside director, Eugene Hearl, who has over 40 years of
banking experience
•
Formed a standing Director Loan Committee to enhance the loan approval
process and Board knowledge of loan credits
Strategic Actions and Initiatives Taken to
Strategic Actions and Initiatives Taken to
Improve Profitability, Asset Quality, and Capital
Improve Profitability, Asset Quality, and Capital
27

•
Asset Quality Improvement Initiatives
•
Adopted new loan policies and procedures with stricter credit underwriting
standards, streamlined the loan approval process, and implemented a
continuing education program for employees
•
Formed, fully developed and staffed a special assets department with eight
full-time employees concentrating on problem asset resolution
•
Created and trained a commercial lending division with nine lenders and
support staff managed by the Bank’s Senior Lending Officer specialized to
serve our commercial business
•
Enhanced loan concentration identification and implemented new
procedures for monitoring and managing loan concentrations
•
Reduced all loan concentration limits below Federal Reserve guidelines
•
Established a new allowance for loan loss model and policy and assigned
oversight to an employee with significant Allowance for Loan Loss (“ALLL”)
experience
•
Hired an expert outside loan review company to periodically review our loan
portfolio resulting in more accurate risk grading of our loan portfolio
Strategic Actions and Initiatives Taken to
Strategic Actions and Initiatives Taken to
Improve Profitability, Asset Quality, and Capital
Improve Profitability, Asset Quality, and Capital
28

Nonperforming
Nonperforming
Assets
Assets
(In
(In
thousands)
thousands)
December 31, 2007 through March 31, 2012
December 31, 2007 through March 31, 2012
29
2007
2008
2009
2010
2011
3/31/2012
Total NPAs
$5,364
$8,943
$34,231
$59,820
$58,912
$61,355
OREO
$2,051
$2,496
$5,643
$12,346
$15,092
$15,009
Nonaccrual Loans
$2,946
$6,414
$24,713
$45,781
$42,316
$43,679
90 Days + Accruing Interest
$267
$33
$3,875
$1,693
$1,504
$2,667
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Nonperforming Assets

Delinquency
Delinquency
Trends
Trends
30+
30+
days
days
(In
(In
thousands)
thousands)
December 31, 2010 through March 31, 2012
December 31, 2010 through March 31, 2012
30
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
12/31/2010
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
90 Days+
$23,404
$21,185
$31,137
$30,784
$24,820
$33,000
60-89 Days
$10,110
$5,836
$6,197
$4,752
$6,609
$3,760
30-59 Days
$22,426
$14,754
$22,269
$13,849
$24,328
$12,755
Loan Portfolio Delinquencies

31
Loan
Loan
Risk
Risk
Grades
Grades
(In
(In
millions)
millions)
December 31, 2010 through March 31, 2012
December 31, 2010 through March 31, 2012
$50
$200
$300
$350
$400
$500
$550
$600
$650
$700
$750
Loan Classifications Trend
$0
$100
$150
$250
$450
12/31/2010
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
Doubtful
$6
$7
$7
$6
$3
$3
Substandard
$86
$94
$99
$94
$95
$97
Special Mention
$30
$35
$44
$52
$47
$49
Pass
$586
$546
$514
$477
$452
$426

Allowance for Loan Loss as % of Loans Trend
Allowance for Loan Loss as % of Loans Trend
December 31, 2007 through March 31, 2012
December 31, 2007 through March 31, 2012
32

STRATEGIC INITIATIVES –
ENHANCING OUR REGULATORY CAPITAL RATIOS
33

Strategic Actions and Initiatives Taken to Improve
Strategic Actions and Initiatives Taken to Improve
Profitability, Asset Quality, and Capital
Profitability, Asset Quality, and Capital
•
Proactively Downsized Balance Sheet and Higher Risk Assets
•
Reduced total assets $96.6 million from $865.0 million at March 31,
2011 to $768.4 million at March 31, 2012
•
Reduced gross loans over $189.8 million from $763.6 million to
$573.8 million from December 31, 2009 to March 31, 2012
•
Reduced total deposits $83.3 million from $782.4 million at    
March 31, 2011 to $699.0 million at March 31, 2012, mainly higher
cost time deposits
•
Reduced risk profile of the loan portfolio in compliance with
regulatory standards
•
Reduced higher risk weighted assets overall for the Bank by    
$164.5 million since December 31, 2009
•
Developed a three year strategic and capital plan that incorporates
these strategic initiatives including the common stock offering
•
Paid off Silverton line of credit at the holding company with the
proceeds from the unsecured Director Notes (being converted to
common stock in this offering)
34

35
Strategic
Strategic
Shrinking
Shrinking
Trend
Trend
(In
(In
Millions)
Millions)
December 31, 2007-
December 31, 2007-
March 31, 2012
March 31, 2012

Risk Weighted Assets Shrinking Trend (In Millions)
Risk Weighted Assets Shrinking Trend (In Millions)
December 31, 2007-
December 31, 2007-
March 31, 2012
March 31, 2012
36
2007
2008
2009
2010
2011
3/31/2012
Total Assets
$616.9
$639.8
$645.8
$597.3
$502.4
$481.3
$400
$450
$500
$550
$600
$650
$700
Total Bank Risk Weighted Assets

Consolidated Capital Trend –
Consolidated Capital Trend –
Actual
Actual
and
and
Pro
Pro
Forma
Forma
(In
(In
Millions)
Millions)
December 31, 2007-
December 31, 2007-
March 31, 2012
March 31, 2012
37
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
2007
2008
2009
2010
2011
3/31/2012
Total Common Equity
Proforma Minimum
Proforma Maximum

Capital Ratio Trend –
Capital Ratio Trend –
Actual and Pro Forma
Actual and Pro Forma
Consolidated Tier 1 Leverage Ratio
Consolidated Tier 1 Leverage Ratio
December 31, 2007 through March 31, 2012
December 31, 2007 through March 31, 2012
38
7.22%
7.72%
6.14%
4.62%
4.23%
3.92%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2007
2008
2009
2010
2011
3/31/2012
Leverage Ratio
Pro Forma Min
Pro Forma Max
Minimum Leverage to Remain Well Capitalized
6.44% Min
8.50% Max

Capital Ratio Trend –
Capital Ratio Trend –
Actual and Pro Forma Total
Actual and Pro Forma Total
Risk Based Capital Ratio –
Risk Based Capital Ratio –
Consolidated
Consolidated
December 31, 2007 through March 31, 2012
December 31, 2007 through March 31, 2012
39
10.29%
10.78%
9.83%
8.87%
9.15%
9.08%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2007
2008
2009
2010
2011
3/31/2012
Leverage Ratio
Pro Forma Min
Pro Forma Max
Minimum Leverage to Remain Well Capitalized
12.20% Min
15.32% Max

INVESTMENT SUMMARY
40

•
Competitive Strengths
•
Attractive retail deposit franchise and proven ability to grow market
share to further develop and enhance our position
•
Provider of quality banking services to our customers through
innovative products, community involvement and excellent customer
service in which we have proven success
•
Effective management of a strong net interest margin that historically
has outpaced our peers and is the key driving force to strong core
earnings
•
Committed Board of Directors and Management that have been
instrumental to resolve issues through collaborative efforts involving
talents, time, experience and finances
Investment Summary
Investment Summary
41

•
Strategic Initiatives Taken
•
Returning to profitability
•
Instituted efficiencies that will produce immediate and long term cost
savings
•
Tied employee compensation with the interest of investors
•
Identified and managing credit problems and expecting loan related losses
to be less than in the past
•
Improving asset quality
•
Stabilized asset quality issues
•
Implemented numerous policies and procedures to ensure the quality of
new loans going forward
•
Learned valuable lessons during this extended economic recession
and
have implemented necessary changes to weather future similar situations,
should they arise, more favorably
Investment Summary
Investment Summary
42

•
Enhancing our regulatory capital levels
•
Reduced balance sheet risk resulting in stronger asset quality and lower capital
requirements due to lower concentrations in certain industries and loan sectors
•
This stock offering is the best solution available to successfully enhance our
regulatory capital levels
•
The Offering
•
First rights to purchase are to our loyal shareholders who have supported
us faithfully
•
Priced attractively below book value
•
Added value, warrants offer the potential for future investment possibly at
a discount
•
The success of this stock offering helps us to move forward and fulfill our
mission and purpose
•
We believe the offering price and accompanying warrants provide good
upside potential to investors in the offering
Investment Summary -
Investment Summary -
continued
continued
43

Appendix 1 -Financial Trends and Ratios
Appendix 1 -Financial Trends and Ratios
44
At and for 
the Three Months
ended
March 31,
At and for the Years ended December 31,
2012
2011
2011
2010
2009
2008
2007
(Dollars in thousands and shares in whole numbers)
Balance Sheet
  Total Assets.............................................
$  768,447
$
864,665
$    780,384 
$  852,627 
$    857,910 
$     807,898 
$   765,951
  Gross Loans.............................................
573,752
683,025
597,816
707,794 
763,570 
721,174 
682,260
  Allowance for Loan Losses.....................
(18,031)
(19,660)
(18,380)
(25,014)
(18,588)
(6,904)
(6,620)
  Other Real Estate Owned........................
15,009
13,553
15,092 
12,346 
5,643 
2,496 
2,051
  Deposits...................................................
699,085
782,411
708,315 
766,080 
   760,714 
    705,688 
657,033
  Total Borrowings.....................................
39,629
40,829
   39,929 
   45,829 
    46,779 
   47,991 
58,930
  Shareholders’ Equity...............................
26,170
38,086
28,873 
37,523 
  46,619 
  50,323 
45,249
Summary of Operations
  Interest Income........................................
$       9,022
$   10,984
$      41,769 
$    48,028 
$    50,378 
$       52,317 
$       51,447
  Interest Expense......................................
1,897
2,814
9,606 
13,898 
   18,563 
    23,095 
25,738
  Net Interest Income.................................
7,125
8,170
32,163 
34,130 
  31,815 
  29,222 
25,709
  Provision for Loan Losses.......................
1,950
1,145
7,959 
22,328 
  12,841 
   1,500 
3,840
  Noninterest Income.................................
1,467
1,311
5,524 
5,934 
5,449 
5,550 
4,651
  Noninterest Expense................................
8,987
7,613
39,422 
31,894 
29,847 
26,619 
23,674
  Net Income before Taxes........................
(2,345)
723
(9,694)
(14,158)
(5,424)
6,653
2,846
  Income Tax Expense (Benefit)................
190
174
  (784)
  (5,093)
(1,738)
1,916 
(24)
  Net Income (Loss)...................................
$   (2,535)
$        549
$     (8,910)
$    (9,065)
$    (3,686)
$          4,737 
$         2,870
Per Share Data 
  Book Value..............................................
$        2.61
$       3.83
$          2.88 
$        3.75 
$        4.66 
$           5.03 
$           4.54
  Tangible Book Value...............................
2.60
3.40
2.87 
3.31 
4.21 
4.56 
4.06
  Net Income (Loss), Basic........................
(0.25)
0.05
(0.89)
(0.91)
(0.37)
0.47 
0.29
  Net Income (Loss), Diluted.....................
(0.25)
0.05
(0.89)
(0.91)
(0.37)
0.46 
0.28
  Basic Shares Outstanding........................
10,010,178
10,010,178
10,010,178 
10,009,468 
10,008,943 
9,980,348 
9,957,949
  Diluted Shares Outstanding.....................
10,010,178
10,010,178
10,010,178
10,009,468 
10,008,943 
10,234,909 
10,371,577
Profitability 
  Return (Loss) on Average Assets............
(1.32%)
(1.96%)
(1.07%)
(1.05%)
(0.44%)
0.61%
0.42%
  Return (Loss) on Average Equity............
(36.09%)
(39.76%)
(24.35%)
(19.60%)
(7.37%)
9.98%
6.60%
  Net Interest Margin (1)............................
4.15%
4.12%
4.29%
4.35%
4.14%
4.13%
4.11%
  Efficiency Ratio.......................................
105.06%
86.16%
104.63%
79.28%
80.10%
76.55%
77.98%

Appendix 1 (continued) –
Appendix 1 (continued) –
Financial Trends and Ratios
Financial Trends and Ratios
45
Liquidity Ratios
  Total Loans to Deposits...........................
82.07%
87.30%
84.40%
92.39%
100.38%
102.19%
103.84%
  Noninterest Bearing Deposits to 
     Total Deposits.......................................
16.14%
13.14%
15.48%
11.46%
11.61%
13.53%
12.74%
  Nonbrokered Deposits to 
     Total Deposits.......................................
99.61%
97.47%
98.46%
97.41%
96.68%
98.96%
100.00%
Capital Adequacy Ratios
  Total Equity to Total Assets....................
3.41%
4.44%
3.70%
4.40%
5.43%
6.23%
5.91%
  Leverage Ratio........................................
3.92%
4.58%
4.23%
4.62%
6.14%
7.72%
7.22%
  Tier 1 Capital...........................................
6.23%
6.75%
6.57%
6.54%
8.12%
9.50%
8.73%
  Total Risk-Based Capital.........................
9.02%
9.08%
9.15%
8.87%
9.83%
10.78%
10.29%
Asset Quality Ratios
  Net Charge-Offs to Average Loans.........
1.57%
1.58%
2.24%
2.14%
0.15%
0.17%
0.34%
  Nonperforming Loans to Total Loans.....
8.08%
6.37%
7.33%
6.71%
3.74%
0.89%
0.47%
  Nonperforming Assets to Total Assets....
7.98%
6.59%
7.60%
7.02%
3.99%
1.11%
0.69%
  Allowance for Loan Losses to
   
Gross Loans...........................................
3.14%
2.75%
3.07%
3.53%
2.43%
0.96%
0.97%
  Allowance for Loan Losses to
    Nonperforming Loans...........................
38.91%
43.14%
41.94%
52.69%
65.02%
107.09%
206.04%
Other Data
  Number of Branch Offices......................
27
27
27 
27 
  31 
31 
30
  Number of Employees.............................
295
341
312 
            362 
         367 
377 
371
(1)    Net interest margin is calculated as tax-equivalent net interest income divided by average earning assets and represents our net yield on our earning asset
At and for 
the Three Months ended
March 31,
At and for the Years ended December 31,
2012
2011
2011
2010
2009
2008
2007
(Dollars in thousands and shares in whole numbers)

Appendix 2 -
Appendix 2 -
Pro Forma Capital Table
Pro Forma Capital Table
As of March 31, 2012
($ in thousands, except per share amounts)
As Adjusted
Actual
Minimum
$10,000,000.50
Maximum
$25,000,000.50
Short-Term Debt:
Capital Notes
$    5,450
$              -
$            -
Long-Term Debt:
Trust Preferred Securities
16,496
16,496
16,496
Stockholders' Equity:
Common Stock, $2.00 par value; authorized 50,000,000 shares;
10,010,178 shares issued and outstanding at March 31, 2012;
20,310,178 pro forma for minimum; 30,310,178 pro forma for
maximum
20,020
40,980
60,980
Additional Paid-in Capital and Warrants
21,689
15,974
10,974
Accumulated Other Comprehensive Loss
81
81
81
Retained Earnings
(15,620)
(15,620)
(15,620)
Total Stockholders' Equity
$  26,170
$   41,415
$  56,415
Total Capitalization
$  48,116
$   57,911
$  72,911
Per Share:
Book Value per Share
$     2.61
$      2.02
$     1.85
Tangible Book Value per Share
$     2.60
$      2.02
$     1.85
Capital Ratios:
Tier 1 Leverage Ratio
3.92%
6.44%
8.50%
Tier 1 Risk-Based Capital Ratio
6.27%
10.43%
14.04%
Total Risk-Based Capital Ratio
9.08%
12.20%
15.32%
Tangible Equity to Tangible Assets (period-end)
3.39%
5.31%
7.10%
(1) 
The
closing
date
of
the
offering
is
not
known
as
of
the
date
of
this
prospectus.
Consequently,
the
amount
of
accrued
interest
on
the
capital
notes
that
will
be
outstanding as of the closing date, and the number of
Conversion
Shares into which that interest will be convertible, are also not known as of the date of this prospectus.  Therefore, the portion of the Conversion Shares related to accrued interest is calculated based on
interest accrued through September 15, 2012 in this table.
(2) 
Assumes proceeds invested in cash with a zero risk-weightings.
(3) 
Assumes proceeds added to average assets at period-end.
46

Appendix 3
Appendix 3
March 31,
2012
$10 Million
Minimum-
Less Cost
Notes
Converted
Total New
Minimum
Effect
Tangible Capital
$
26,069,336
$
9,525,000.50
$
5,719,839.04
$
15,244,839.54
$
41,314,176
# of Shares
10,010,178
6,666,667
3,813,225
10,479,892
20,490,070
Book Value Per
Share
$
2.60
$
1.43
$
1.50
$
1.45
$
2.02
Dilution to
existing
shareholder
$
(0.58)
March 31,
2012
All Exercised
Subscription
Rights
$25.0 Million
Maximum -
Less Cost
Notes
Converted
Total New
Effect
Tangible Capital
$
26,069,336
$
24,525,000.50
$
5,719,839.04
$
30,244,839.54
$
56,314,176
# of Shares
10,010,178
16,666,667
3,813,225
20,479,892
30,490,070
Book Value Per
Share
$
2.60
$
1.47
$
1.50
$
1.48
$
1.85
Dilution to
Existing
Shareholders
$
(0.75)
Assuming Minimum Amount is Raised
Assuming All Subscription Rights are Exercised -
Maximum
47
Dilution
Dilution
Effect
Effect
if
if
Existing
Existing
Shareholders
Shareholders
Do
Do
Not
Not
Participate
Participate

Glossary of terms
48
Allowance for Loan Losses  -
The allowance for loan losses is maintained at a level that, in management’s judgment, is adequate to absorb credit losses inherent in the loan
portfolio.  The loan portfolio is analyzed periodically and loans are assigned a risk rating.  Allowances for impaired loans are generally determined based on collateral values or the
present value of expected cash flows.  A general allowance is made for all other loans not considered impaired as deemed appropriate by management.  In determining the
adequacy of the allowance, management considers the following factors: the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired
loans, the estimated value of any underlying collateral, prevailing environmental factors and economic conditions, and other inherent risks.  While management uses available
information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in collateral values and changes in estimates of
cash flows on impaired loans.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
Efficiency ratio -
The allowance is increased by a provision for loan losses, which is charged to expense and reduced by charge-offs, net of recoveries.  Loans are charged against the allowance for
loan losses when management believes that collectability of all or part of the principal is unlikely.  Past due status is determined based on contractual terms.
This ratio indicates the percentage of each dollar of revenue spent to support the entity.  It is computed by dividing Non-Interest Expense by Total revenues
(Noninterest expense/ (Net interest income + other income)).  It indicates how efficiently a bank is spending the revenues generated.  Items not included in this calculation include,
provision for loan losses, nonrecurring items and income taxes.
Net interest margin -
This ratio is the average yield earned on average earning assets.  It is computed by annualizing net interest income for the period shown and dividing by
average earning assets for the period shown.  It is one of the most telling indicators of a bank’s profitability as it accounts generally for 90% of pretax income.
Loan Risk Ratings:
•
Pass
-
Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their
debt and other factors.
•
Special Mention
-
Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or
financial strength.  Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be
relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special mention loans have potential weaknesses which may, if not checked or
corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.
•
Substandard -
A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. 
Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct
possibility that the institution will sustain some loss if the deficiencies are not corrected.
•
Doubtful -
Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make
collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.
Other Real Estate Owned
–
Other real estate owned represents properties acquired through foreclosure or deed taken in lieu of foreclosure.  At the time of
acquisition, these properties are recorded at the lower of cost or fair value less estimated costs to sell.  Expenses incurred in connection with operating these
properties and subsequent write-downs, if any, are charged to expense.  Subsequent to foreclosure, management periodically considers the adequacy of the reserve
for losses on the property.  Gains and losses on the sales of these properties are credited or charged to income in the year of the sale.
Risk weighted assets -
Risk-weighted assets are computed by adjusting each asset class for risk in order to determine a bank's real world exposure to potential
losses. Regulators then use the risk weighted total to calculate how much loss-absorbing capital a bank needs to sustain it through difficult markets.