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Paragon Secondary Offering Oversubscribed

07-31-06

Paragon National Bank announced today that it has closed its secondary offering to raise additional capital and that the Bank’s offering was over-subscribed. Paragon completed the sale of 980,000 shares of its common stock at a price of $12.50 per share.

The bank previously announced, on May 12, 2006, that it had filed a registration statement with the Office of the Comptroller of the Currency to seek permission for the secondary stock offering.  The offering was for sale up to 880,000 shares of its common stock, with an option to sell an additional 100,000 shares to cover over-allotments, if any.  The 980,000 shares sold at $12.50 will generate net proceeds of approximately $11.7 million in capital for Paragon.  Shares of Paragon’s stock closed at $13.01 on July 27, 2006. 

Investor meetings were held on July 11 and 13 at the Dixon Gallery and Gardens to provide details of the offering.  Invitations were sent to all shareholders and others who had expressed an interest in investing in additional Paragon stock.  Both sessions were attended by more than 100 people interested in investing.   Robert Shaw, Paragon President and CEO, explained that the proceeds from the stock sale will be used to finance additional growth by increasing the bank’s lending limits, improving capital ratios, and funding operations.  Shaw also introduced Team Paragon members and representatives from Howe Barnes Investments, Inc, the underwriter of the offering on a best efforts basis.  Howe Barnes makes a market in Paragon’s stock. 

Paragon was launched in 2005 with $23.2 million in capital, a record for de novo banks in the Memphis, Shelby County area.  Since its inception, Paragon has experienced rapid growth.  It was the second fastest growing de novo in the U.S. formed during 2005.  Current assets exceed $210 million. 

After the offering was closed, Shaw stated, “Original shareholders should be happy with the 25% increase in value from their initial purchase price. We are gratified by the response to this stock offering.  We believe our growth since the bank opened and the response to this offering are confirmations that the Memphis area needed a locally-owned bank that provides the broad range of products and services and high level of customer service that Paragon provides.  We believe this stock offering will allow us to continue to grow and provide Paragon’s brand of banking to more Memphians.”  Shareholders should find further comfort in their investment because 92% of Paragon employees own stock in the bank including an additional $1.4 million invested by the Directors and employees in the recent offering.

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