Investor Relations

Change in Financial Reporting

Historically, Paragon has been required to prepare and file with the OCC, among other items, annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, proxy statements, current reports on Form 8-K and other related materials. In April 2008, the OCC published a final rule that, among other things, repeals Section 16.20 of the OCC regulations, thereby eliminating the requirement for Paragon to comply with the rules, regulations and forms under Section 13 of the Exchange Act, including but not limited to, Paragon’s obligation to file annual, quarterly, and current reports (Form 10-KSB, Form 10-QSB, Form 8-Ks) with the OCC. The final rule became effective on July 1, 2008.

Although we will no longer be required to prepare and file reports in compliance with the rules, regulations and forms proscribed by the SEC, including the rules and regulations enacted as a result of the Sarbanes-Oxley Act, we will continue to be regulated by the OCC and the FDIC. We also believe that we will continue to be subject to the anti-fraud provisions of the federal securities laws and the securities laws of the state of Tennessee.

In addition, our directors and executive officers were previously required to file reports with the OCC reflecting their beneficial ownership of shares of our common stock and any changes in their beneficial ownership. Our directors and executive officers were also subject to liability for short-swing profits under Section 16 of the Exchange Act. In connection with the repeal of Section 16.20, our executive officers and directors will no longer be required to file reports with the OCC reflecting changes in their beneficial ownership of our shares, nor will our directors and executive officers be subject to liability for short-swing profits.

We currently intend to send to all of our shareholders quarterly and annual letters updating them on our performance, and to distribute press releases summarizing our results to the local media. These quarterly and annual letters will not provide the detailed information included in our SEC reports, but rather will be abbreviated summaries of our performance for the most recently completed quarter and will include a short summary of our earnings results and asset and liability growth for the period presented as well as updates on any important developments during the quarter. We also currently intend to provide our shareholders with an annual summary balance sheet and historical operating performance financial data for the last 3 years in advance of our annual shareholders' meeting. We will also furnish a copy of our audited financial statements to any shareholder that requests a copy.

In addition to these quarterly and annual letters, we will continue to file regulatory reports with our federal regulators. Under FDIC requirements, we will file Consolidated Reports on Condition and Income (Call Reports). This report, which is publicly available 15 days after the filing deadline, is a compilation of schedules relating to our balance sheet and income statement. Unlike the reports required by the SEC, these regulatory filings do not provide a detailed discussion and analysis of our financial condition and results of operations like the MD&A included in our SEC reports, and shareholders will not have the benefit of management’s detailed analysis of our results. Nor will these filings include any detailed information on our executive compensation programs and philosophies or the specific amounts we pay our executive officers and directors. The Call Reports are publicly available on the website for the Federal Financial Institutions Examination Council (FFIEC) Central Data Repository Public Data Distribution at https://cdr.ffiec.gov/public.

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