UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
December
11, 2008
(Date of
Report - Date of earliest event reported on)
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Vermont
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000-16435
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03-0284070
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(State
of Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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Derby
Road, Derby, Vermont
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05829
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant's
Telephone Number: (802) 334-7915
Not
Applicable
(Former
name, former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17CFR
203.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item
8.01. Other Events
On
December 11, 2008, Community Bancorp. (the “Company”) issued a press release
announcing that (1) it has applied to participate in the U.S. Treasury
Department’s recently established Capital Purchase Program under the Emergency
Economic Stabilization Act of 2008 (“EESA”), and (2) it has elected to
participate in the excess deposit account guaranty portion of the FDIC’s
recently established Temporary Liquidity Guaranty Program under
EESA.
Capital
Purchase Program (“CPP”)
The
Company has applied under the CPP for the sale to Treasury of up to $9.8 million
in preferred stock, representing approximately 3% of risk weighted assets at
September 30, 2008. Under the CPP investment terms announced by
Treasury for companies (like Community Bancorp.) that do not have shares listed
on a national securities exchange, and assuming that the Company’s application
is approved, it is expected that 9,800 shares of preferred stock would be issued
to Treasury at a liquidation price of $1,000 per share (the “Initial Shares”)
and approximately an additional 490 preferred shares would be issued to Treasury
for nominal consideration, pursuant to a preferred stock warrant (the
“Additional Shares”). The Initial Shares would bear a dividend rate
of 5% per year for five years and 9% thereafter. The Additional
Shares would bear interest at the rate of 9% per year. The preferred
shares would be ranked senior to the Company’s common stock and on a parity with
the existing Series A Preferred Stock. The shares would be redeemable
(subject to certain conditions and restrictions), would be fully transferrable
and nonvoting, except for class voting rights in connection with matters which
would materially and adversely affect the rights of the holders of the preferred
shares. In the event of certain dividend arrearages, the holders of
the preferred shares would have the right to elect two directors, but only for
so long as the dividend arrearages remain uncured.
The CPP
terms also provide that common stock dividends may not be increased without
Treasury’s consent during the first three years of the
investment. Thereafter, until the tenth anniversary of the
investment, Treasury’s consent would be required for any increase in common
stock dividends greater than 3% per year. In addition, Treasury’s
consent would be required for any repurchase of equity securities (including
common stock) or trust preferred securities during the ten year period following
Treasury’s investment. These restrictions on dividends and
repurchases only apply during the first ten years for so long as Treasury
continues to hold any of the preferred shares. If any of the
preferred shares are still held by Treasury following the tenth anniversary of
the investment, the Company would be prohibited from paying any common dividends
or repurchasing any equity securities or trust preferred securities until all of
Treasury’s preferred shares are redeemed or Treasury has transferred all of such
securities to third parties.
The
Company has sufficient authorized but unissued shares of preferred stock to
participate in the CPP without the need to amend the Company’s articles of
incorporation.
Participation
in the program is subject to approval by the U.S. Treasury. The
Company cannot predict whether such approval will be granted or, if granted,
whether it will be approved for the full requested amount. In
addition, issuance of the preferred stock under the CPP would require the
consent of the holders of the Company’s existing Series A Preferred
Stock.
If the
Company’s CPP application is approved, it is expected that the closing of
Treasury’s preferred stock purchase would occur in January, 2009.
While
participation in the CPP would enhance the Company’s capital position, the
Company and its subsidiary, Community National Bank, currently meet the
requirements for “well capitalized” institutions under applicable regulatory
capital guidelines.
Temporary
Liquidity Guaranty Program (“TLGP”)
The TLGP
includes two FDIC guaranty programs, a guaranty for certain senior unsecured
debt (the “Debt Guaranty”) and an unlimited deposit account guaranty for certain
types of transaction accounts (the “Transaction Account
Guaranty”). The Company, through its subsidiary Community National
Bank, has elected to participate in both programs.
The Debt
Guaranty applies only to specified types of senior unsecured debt securities
issued by participating institutions between October 14, 2008 and June 30,
2009. The Company does not currently have any outstanding debt
securities that would be covered by the Debt Guaranty. The FDIC’s fee
for the Debt Guaranty is based on the amount and maturity of the guaranteed debt
and ranges from an annualized 50 to 100 basis points. The fee is
assessed only if and to the extent that the participating institution has
guaranteed debt outstanding.
The
Transaction Account Guaranty provides an unlimited guaranty through December 31,
2009 for funds held in non-interest bearing transaction accounts, as well as
funds held in two types of interest bearing accounts: NOW accounts on
which the interest rate paid is 0.50% or lower on and so-called Interest On
Lawyer Trust Accounts (IOLTAs) and similar lawyer trust accounts. The
FDIC will assess quarterly a fee for the Transaction Account Guaranty at an
annualized rate of 10 basis points on covered balances in excess of the $250,000
FDIC deposit insurance limit.
Additional
information concerning the Company’s application to participate in the CPP and
its election to participate in the TLGP is contained in the press release filed
as Exhibit 99.1 to this Report.
Item
9.01. Financial Statements and Exhibits
(d)
Exhibits
99.1 Press Release issued by
Community Bancorp. on December 11, 2008
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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COMMUNITY
BANCORP.
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DATED:
December 11, 2008
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/s/ Stephen P.
Marsh
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Stephen
P. Marsh,
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President
& Chief Executive Officer
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