<PAGE> 1
FILED PURSUANT TO RULE 424(B)(1)
REGISTRATION NO. 333-87881
REGISTRATION NO. 333-87881-01
PROSPECTUS
1,250,000 PREFERRED SECURITIES
EBH CAPITAL TRUST I
[ENTERBANK HOLDINGS, INC. LOGO]
9.40% CUMULATIVE PREFERRED SECURITIES
FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED
ON A SUBORDINATED BASIS BY
ENTERBANK HOLDINGS, INC.
------------------------
The preferred securities of EBH Capital Trust I being offered generally
consist of an indirect beneficial interest in 9.40% junior subordinated
debentures of Enterbank Holdings, Inc. The junior subordinated debentures have
the same payment terms as the preferred securities and will be purchased and
held by EBH Trust using the proceeds of this offering. A brief description of
the preferred securities can be found under "Prospectus Summary -- The Offering"
in this prospectus.
The preferred securities have been approved for listing on the American
Stock Exchange under the trading symbol "EBT.Pr.A".
------------------------
YOU SHOULD CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 8 BEFORE INVESTING
IN THE PREFERRED SECURITIES.
------------------------
THE PREFERRED SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS, OR OTHER
OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE BANK INSURANCE FUND OF THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
<TABLE>
<CAPTION>
PER PREFERRED
SECURITY TOTAL
------------- -----
<S> <C> <C>
Price to Public........................................... $8.00 $10,000,000
Proceeds to EBH Trust..................................... $8.00 $10,000,000
</TABLE>
This is a firm commitment underwriting. Enterbank will pay underwriting
commissions of $0.40 per preferred security, or a total of $500,000, for the
arranging of the investment in its junior subordinated debentures. The
underwriter has been granted a 30-day option to purchase up to an additional
125,000 preferred securities to cover over-allotments, if any.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
DATE OF THIS PROSPECTUS IS OCTOBER 19, 1999.
<PAGE> 2
[MAP OF ENTERBANK SERVICE AREA]
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
The summary is not complete and does not contain all of the information that you
should consider before investing in the preferred securities. You should read
the entire prospectus carefully. Unless the context otherwise requires,
references in this prospectus to Enterbank include Enterbank Holdings, Inc. and
Enterprise Bank, but not EBH Capital Trust I.
GENERAL
Enterprise Bank, a Missouri bank, was organized in 1988 to focus primarily
on the banking needs of closely-held businesses, their owners and professional
individuals. Enterbank Holdings, Inc., a Delaware Corporation, was formed to
serve as a holding company for Enterprise Bank in 1995. From 1988 through 1996,
commercial banking services were provided to Enterprise Bank customers from a
single location in Clayton, Missouri, an affluent residential and business
oriented suburb of St. Louis. We opened two additional facilities in St. Peters
and Sunset Hills, both also located in the St. Louis Metropolitan Statistical
Area, in 1997. We selected these locations based on our expectations for growth
and the high concentration of closely-held businesses and professionals in these
markets. We opened a central operations facility in St. Louis County in 1998.
As a complement to our banking services, we operate Enterprise Financial
Advisors, a fee-based financial planning and trust service, and our subsidiary,
Enterprise Merchant Banc, Inc., which provides merchant banking services to
closely-held businesses and their owners.
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income.............. $ 1,672 $ 1,326 $ 3,011 $ 2,222 $ 1,702 $ 1,304 $ 1,001
Earnings per share
(diluted)(1).......... 0.22 0.18 0.40 0.33 0.32 0.26 0.21
Total assets............ 410,451 317,408 375,304 291,365 184,584 153,706 122,212
Total deposits.......... 369,334 288,847 339,180 264,301 168,961 141,140 104,799
Total shareholders'
equity................ 30,790 27,613 29,240 26,067 14,758 12,052 10,781
Return on average total
assets(2)............. 0.89% 0.93% 0.94% 0.97% 1.12% 0.99% 0.96%
Return on average total
shareholders'
equity(2)............. 11.20 9.94 10.86 9.78 12.73 11.13 9.71
</TABLE>
- -------------------------
(1) Per share data has been adjusted to give retroactive effect to a 3-for-1
stock split effective September 29, 1999.
(2) Ratios for six month periods are annualized.
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ENTERPRISE BANK
Enterprise Bank offers a broad range of commercial and personal banking
services to our customers. Loans include commercial, real estate, financial and
industrial development, real estate construction and development and consumer
loans which are made primarily to owners and affiliates of our commercial
customers. We also provide cash management, Automated Clearing House,
safe-deposit box, lock box and online banking services.
We have experienced significant internal growth since our inception while
consistently increasing profitability and maintaining asset quality at a level
which we believe compares favorably to our peer group. For the period from
December 31, 1994 to June 30, 1999:
- our loans, assets and deposits increased at compounded annual growth
rates of 35%, 31%, and 32%, respectively;
- our shareholders' equity increased at a compounded annual growth rate of
26%;
- our net income increased at a compounded annual growth rate of 30%; and
- our net loan charge-offs to average loans ratio averaged 0.06%.
We believe our profitable growth and above average asset quality has
resulted principally from our ability to compete effectively in our target
market through our continued emphasis on customer service and responsiveness,
our officers' and directors' relationships within the business community and our
ability to react to the customer dislocation that has accompanied industry
consolidation within our banking markets.
ENTERPRISE MERCHANT BANC, INC.
Enterprise Merchant Banc, Inc. was first established by us in 1995 to
provide merchant banking services to closely-held businesses and their owners.
Its current operations include a minority investment in Enterprise Merchant
Banc, LLC, which focuses on providing equity capital and equity-linked debt
investments to growing companies in need of additional capital to finance
internal and acquisition-related growth. Additionally, Enterprise Merchant Banc,
Inc. receives fee income for its role as a financial advisor in capital raising
transactions as well as mergers and acquisitions. It focuses on "second stage"
and mezzanine financing for established companies rather than "seed money" for
start up operations. Due to our relatively recent entry into this business and
the long-term nature of merchant banking returns, Enterprise Merchant Banc
Inc.'s present contributions to Enterbank Holdings' revenues and net income are
minimal. We believe, however, that it is well-positioned to become a significant
part of our strategy to achieve continued growth and profitability.
ENTERPRISE FINANCIAL ADVISORS
Enterprise Financial Advisors was organized as a division of Enterprise
Bank in late 1997 to provide fee-based personal and corporate financial
consulting and trust services to our target market. Personal financial
consulting includes estate planning, investment management, retirement planning,
trust services and custodial services. Corporate consulting services are focused
in the areas of retirement plans, management compensation and management
succession issues. Some investment management services are provided
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through Argent Capital Management, a money management company that invests
principally in large capitalization companies. We own an 8% interest in Argent
Capital Management. We also receive assistance in staffing, training, marketing
and regulatory compliance from Moneta Group, Inc., a nationally recognized firm
in the financial planning industry. Enterprise Financial Advisors has been an
integral part of Enterbank Holdings' growth, and we believe that it will play a
key role in our strategy to achieve continued growth and profitability as it
continues to expand the products and services it offers to customers.
EBH CAPITAL TRUST I
EBH Trust is a Delaware business trust created in 1999 for the single
purpose of offering the preferred securities and purchasing the junior
subordinated debentures of Enterbank Holdings. EBH Trust will have a term of 35
years, but may dissolve earlier as provided in its trust agreement.
Enterbank Holdings' and EBH Trust's principal executive offices are located
at 150 N. Meramec, St. Louis, Missouri 63105. The main telephone number for both
Enterbank Holdings and EBH Trust is (314) 725-5500.
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THE OFFERING
Preferred Securities issuer..... EBH Capital Trust I.
Securities offered.............. EBH Trust is offering 1,250,000 of its
preferred securities, which represent an
indirect beneficial interest in junior
subordinated debentures issued by Enterbank
and held by EBH Trust.
EBH Trust will sell its preferred securities
to the public and its common securities to
Enterbank. Together, the preferred
securities and the common securities are
referred to as trust securities. EBH Trust
will use the proceeds from the sale of trust
securities to buy a series of 9.40% junior
subordinated debentures due December 15,
2029, from Enterbank with the same payment
terms as the preferred securities.
Quarterly distributions are
payable to you on the Preferred
Securities.................... The distributions payable on each preferred
security will:
- be fixed and accumulate at a rate per year
of 9.40%;
- accrue from the date of issuance of the
preferred securities; and
- be payable quarterly on the 15th day of
March, June, September and December of
each year that the preferred securities
are outstanding, beginning on December 15,
1999, subject to the right to defer
distributions on the preferred securities.
Enterbank and EBH Trust have
rights to defer distributions
to you on the Preferred
Securities.................... EBH Trust may defer distributions on the
preferred securities if Enterbank defers
interest payments on the junior subordinated
debentures. Enterbank generally has the
right to defer interest payments on the
junior subordinated debentures for up to 20
consecutive quarters. During any deferral
period, you will still accumulate the right
to receive distributions when subsequently
made at the annual rate of 9.40%, plus you
will earn interest at the annual rate of
9.40%, compounded quarterly, on any unpaid
distributions.
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<PAGE> 7
You will still be taxed even if
distributions on the Preferred
Securities are deferred....... If distributions on the preferred securities
are deferred, you will also be required to
accrue interest income in the form of
original issue discount and include it in
your gross income for United States federal
income tax purposes for as long as the
junior subordinated debentures remain
outstanding, even if you are a cash basis
taxpayer. For further information on
deferrals and their tax consequences, see
"Risk Factors -- Distributions on the
Preferred Securities may be deferred; you
may have to include interest in your taxable
income before you receive cash,"
"Description of the Junior Subordinated
Debentures -- Option to Extend Interest
Payment Period" and "Material Federal Income
Tax Consequences -- Interest Income and
Original Issue Discount."
You will be required to sell
your Preferred Securities to EBH
Trust when the Junior
Subordinated Debentures
mature........................ The junior subordinated debentures will
mature on December 15, 2029. You will be
required to sell your preferred securities
to EBH Trust upon the stated maturity date
of the junior subordinated debentures or
earlier if they are prepaid.
If the Junior Subordinated
Debentures are prepaid, your
Preferred Securities will be
redeemed...................... Upon Enterbank having received prior
approval of the Board of Governors of the
Federal Reserve System, if required, we may
prepay the junior subordinated debentures
prior to maturity:
- on or after December 15, 2004; or
- at any time upon events occurring which
may have a significant adverse effect on
the benefits to Enterbank of having the
preferred securities outstanding.
Upon any prepayment of the junior
subordinated debentures, your preferred
securities will be redeemed at the
liquidation amount of $8 per preferred
security plus any accrued and unpaid
distributions to the date of redemption. For
further information on redemptions, see
"Description of the Preferred
Securities -- Redemption -- Mandatory and
Optional Rights of Enterbank" and
"Description of the Junior Subordinated
Debentures -- Redemption."
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<PAGE> 8
At its option, Enterbank may
require you to exchange your
Preferred Securities for its
Junior Subordinated
Debentures.................... Enterbank has the right at any time to
dissolve or liquidate EBH Trust and
distribute the junior subordinated
debentures to you in exchange for your
preferred securities. However, Enterbank
must receive prior approval of the Federal
Reserve and first pay the creditors, if any,
of EBH Trust. Upon a dissolution or
liquidation of EBH Trust, you will receive
junior subordinated debentures in exchange
for the principal amount of your holdings in
preferred securities, plus accrued and
unpaid interest equal to the accrued and
unpaid distributions on the preferred
securities. For further information
concerning distribution of the junior
subordinated debentures, see "Description of
the Preferred Securities -- Distribution of
Junior Subordinated Debentures."
Your Preferred Securities are
fully and unconditionally
guaranteed by Enterbank on a
subordinated basis............ Enterbank will fully, irrevocably and
unconditionally guarantee the preferred
securities on a subordinated basis. If
Enterbank does not make a payment on the
junior subordinated debentures, EBH Trust
will not have sufficient funds to make
payments on the preferred securities. The
preferred securities guarantee does not
cover payments when EBH Trust does not have
sufficient funds. For further information
concerning our guarantee of the preferred
securities, see "Description of the
Preferred Securities Guarantee."
Your Preferred Securities rank
lower in payment compared to
other obligations of
Enterbank..................... Enterbank's obligations under its preferred
securities guarantee, the junior subordinated debentures and other governing
documents described in this prospectus are
unsecured and rank junior in right of
payment to all current and future senior and
subordinated debt of Enterbank. In addition,
because Enterbank is a bank holding company,
all existing and future liabilities of any
Enterbank subsidiary will rank prior to all
obligations of Enterbank relating to the
preferred securities and the junior
subordinated debentures. There is no limit
on the amount of other preferred securities
or other junior subordinated debentures of
Enterbank or its subsidiaries that may be
issued in the future.
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<PAGE> 9
Future issuances of this type will rank
equally with Enterbank's obligations under
the junior subordinated debentures and its
preferred securities guarantee described in
this prospectus. The preferred securities
will generally rank equally and payments on
them will be made proportionately, with the
common securities of EBH Trust, which will
be held by Enterbank.
You will have limited voting
rights.......................... As a holder of preferred securities, you
have only limited voting rights. These
rights relate only to the dissolution or
termination of EBH Trust and removal of the
property trustee and the indenture trustee
of EBH Trust upon selected events described
in this prospectus. See "Description of the
Preferred Securities -- Voting Rights;
Amendment of the Trust Agreement."
The Preferred Securities will be
in book entry form only......... You will not receive a certificate for your
preferred securities. Instead, the preferred
securities will be represented by a global
security that will be deposited with and
registered in the name of The Depository
Trust Company or its nominee.
There is no established market
for the Preferred Securities.... The preferred securities have been approved
for listing on the American Stock Exchange
under the trading symbol "EBT.Pr.A". Prior
to this offering, there has been no public
market for the preferred securities. We can
not give any assurance as to the liquidity
of any trading market for the preferred
securities.
Use of proceeds of sale of the
Preferred Securities.......... The proceeds of the sale of the preferred
securities will be invested by EBH Trust in
the junior subordinated debentures.
Enterbank will receive the proceeds from the
issuance of the junior subordinated
debentures. Enterbank intends to:
- repay approximately $5 million of
Enterbank Holdings' debt under its
revolving credit facility; and
- retain the remainder for general corporate
purposes including investments from time
to time in Enterprise Bank in the form of
additional capital.
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<PAGE> 10
RISK FACTORS
In addition to the other information in this prospectus, you should
carefully consider the following factors before investing in the preferred
securities.
RISK FACTORS RELATING TO THE PREFERRED SECURITIES
ENTERBANK'S OBLIGATIONS UNDER THE PREFERRED SECURITIES GUARANTEE AND THE
JUNIOR SUBORDINATED DEBENTURES RANK LOWER THAN OTHER ENTERBANK OBLIGATIONS.
Enterbank's obligations under the junior subordinated debentures are
unsecured and will rank junior in priority of payment to any senior and
subordinated debt Enterbank may incur, which generally includes indebtedness,
liabilities or obligations of Enterbank, contingent or otherwise. Enterbank's
obligations under the junior subordinated debentures will also be effectively
subordinated to all existing and future liabilities and obligations of its
subsidiaries, including Enterprise Bank.
The preferred securities, the junior subordinated debentures and the
preferred securities guarantee do not limit the ability of Enterbank or
Enterprise Bank to incur unlimited future indebtedness, liabilities and
obligations, which may rank senior to the junior subordinated debentures and the
preferred securities guarantee.
For more information on Enterbank's obligations under the preferred
securities guarantee and the junior subordinated debentures, see "Description of
the Preferred Securities Guarantee -- Status of the Preferred Securities
Guarantee" and "Description of the Junior Subordinated Debentures
- -- Subordination of Junior Subordinated Debentures to Senior and Subordinated
Debt of Enterbank."
IF WE DO NOT MAKE PAYMENTS UNDER THE JUNIOR SUBORDINATED DEBENTURES, EBH
TRUST WILL BE UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS AND THE
PREFERRED SECURITIES GUARANTEE WILL NOT APPLY.
The ability of EBH Trust to pay distributions and, upon redemption, the
liquidation amount of $8 per preferred security is solely dependent upon our
ability to make the related payments on the junior subordinated debentures when
due. If we default on our obligation to pay principal of or interest on the
junior subordinated debentures, EBH Trust will not have sufficient funds to pay
distributions or the liquidation amount.
In that case, you will not be able to rely upon the preferred securities
guarantee for payment of these amounts because the preferred securities
guarantee only applies if we make a payment of principal or interest on the
junior subordinated debentures. For more information on our obligations under
the preferred securities guarantee and the junior subordinated debentures, see
"Description of the Preferred Securities Guarantee -- Status of the Preferred
Securities Guarantee" and "Description of the Junior Subordinated Debentures
- -- Subordination of Junior Subordinated Debentures to Senior and Subordinated
Debt of Enterbank."
OUR INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES ARE DEPENDENT
ON OUR RECEIPT OF DIVIDENDS FROM ENTERPRISE BANK.
A substantial majority of our assets consists of our investment in
Enterprise Bank. Thus, our ability to pay interest and principal on the junior
subordinated debentures to
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EBH Trust depends primarily upon our receipt of cash dividends from Enterprise
Bank. Dividend payments from Enterprise Bank to us are subject to, among other
things:
- regulatory limitations, generally based on current and retained earnings
and capital maintenance requirements, imposed by various bank regulatory
agencies;
- profitability, financial condition and capital expenditures and other
cash flow requirements of Enterprise Bank; and
- prior claims of creditors of Enterprise Bank.
If Enterprise Bank is unable to pay sufficient dividends to us, then we
will likely be unable to make payments on the junior subordinated debentures,
thereby leaving insufficient funds for EBH Trust to make payments to you on the
preferred securities.
DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED; YOU MAY HAVE TO
INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH.
It is possible that you will not receive cash distributions on the
preferred securities for up to 20 consecutive quarters (in each case, an
"extension period"). Because you will still be required to include interest in
your income for United States federal income tax purposes as it accrues, you may
have to pay taxes before you actually receive the cash distributions.
We have the right, at one or more times, to defer interest payments on the
junior subordinated debentures for up to 20 consecutive quarters, but not beyond
the maturity date of the junior subordinated debentures and must make payments
of all deferred interest upon the earlier of the end of the extension period or
the maturity date. This right exists only if no event of default under the
junior subordinated debentures has occurred and is continuing. If we exercise
this right, EBH Trust would defer distributions on the preferred securities
during any extension period. However, you would still accumulate distributions
at the annual rate of 9.40% of the liquidation amount of $8 per preferred
security, plus you will earn interest at the annual rate of 9.40%, compounded
quarterly, on any unpaid distributions. When we pay all the accumulated amounts
due to you during an extension period, the extension period will terminate.
However, we have the right to begin another extension period under the same
terms outlined above. There is no limit on the number of times we can elect to
begin an extension period. During an extension period, the preferred securities
may trade at a price that does not fully reflect the value of accrued but unpaid
distributions. See "Description of the Preferred Securities."
You will also not receive the cash distributions related to any accrued and
unpaid interest from EBH Trust if you sell the preferred securities before the
end of an extension period. However, you will be required to include accrued
interest income as original issue discount for United States federal income tax
purposes in respect of your pro rata share of the junior subordinated debentures
held by EBH Trust. While we will take the position that original issue discount
will not arise before the first extension period, it is possible that all
interest on the junior subordinated debentures would be required to be accounted
for as original issue discount. In these circumstances, the receipt of interest
would not separately be reported as taxable income. See "Material Federal Income
Tax Consequences" for more information regarding the tax consequences of the
preferred securities.
We have no current intention of exercising our right to defer interest
payments on the junior subordinated debentures. However, if we exercise our
right in the future, the market price of the preferred securities is likely to
be adversely affected.
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<PAGE> 12
IF WE REDEEM THE JUNIOR SUBORDINATED DEBENTURES IT WILL CAUSE A REDEMPTION
OF THE PREFERRED SECURITIES AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT
THE SAME OR HIGHER RATE OF RETURN.
You are subject to prepayment risk of your preferred securities. If your
preferred securities are redeemed, you may not be able to reinvest the money you
receive in the redemption at a rate that is equal to or higher than the rate of
return you receive on the preferred securities. Although the junior subordinated
debentures have a stated maturity date of December 15, 2029, they may be
redeemed by us prior to maturity which, in turn, would cause an early redemption
of the preferred securities, in the following circumstances:
- In whole or in part, beginning on December 15, 2004 at our option.
- In whole upon a change in the federal tax laws or a change in the
interpretation of the tax laws by the courts or the Internal Revenue
Service, which would result in a risk that (1) EBH Trust may be subject
to federal income tax, (2) the interest we pay on the junior subordinated
debentures will not be deductible by us for federal income tax purposes,
or (3) EBH Trust is or will be subject to more than a minimal amount of
other taxes or governmental charges.
- In whole upon a change in the laws or regulations to the effect that EBH
Trust is or will be considered to be an investment company that is
required to be registered under the Investment Company Act of 1940.
- In whole upon a change in the laws or regulations if there is a risk that
we will not be able to treat all or a substantial portion of the
preferred securities as core capital for purposes of federal banking
guidelines.
Our exercise of these redemption rights is subject to our receipt of prior
approval of federal banking regulators, if required. For further information
concerning tax or regulatory events that may trigger redemption of the junior
subordinated debentures and prepayment of the preferred securities, see
"Description of the Preferred Securities -- Redemption."
YOU ARE SUBJECT TO PREPAYMENT RISK BECAUSE POSSIBLE TAX LAW CHANGES COULD
RESULT IN A REDEMPTION OF THE PREFERRED SECURITIES.
Future legislation may be enacted that could adversely affect the ability
of Enterbank to deduct its interest payments on the junior subordinated
debentures for federal income tax purposes, making redemption of the junior
subordinated debentures likely and resulting in a redemption of the preferred
securities.
From time to time, the Clinton Administration has proposed federal income
tax law changes that would, among other things, generally deny interest
deductions to a corporate issuer if the debt instrument has a term exceeding 15
years and if the debt instrument is not reflected as indebtedness on the
issuer's consolidated balance sheet. Other proposed tax law changes would have
denied interest deductions if the debt instrument had a term exceeding 20 years.
These proposals were not enacted into law. Although it is impossible to predict
future proposals, if a future proposal of this sort were to become effective in
a form applicable to already issued and outstanding securities, Enterbank could
be precluded from deducting interest on the junior subordinated debentures.
Enactment of any such proposal might in turn give rise to a tax event as
described under "Description of the Preferred Securities -- Redemption
- -- Mandatory and Optional Rights of Enterbank."
You should also be aware that a petition was recently filed in the United
States Tax Court as a result of a challenge by the Internal Revenue Service
("IRS") of a taxpayer's
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<PAGE> 13
treatment as indebtedness of a security issued with characteristics similar to
the junior subordinated indentures. Although the IRS agreed to dismissal of the
adjustments related to this issue, it could assert similar adjustments against
other taxpayers. If such adjustments were proposed and the issue were litigated
to a conclusion in which the IRS's position on this matter were sustained, such
a judicial determination could constitute a tax event which could result in an
early redemption of the preferred securities. For further information, see
"Description of the Preferred Securities -- Redemption -- Mandatory and Optional
Rights of Enterbank," "Description of the Junior Subordinated Indentures --
Redemption" and "Material Federal Income Tax Consequences."
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF YOUR INVESTMENT.
Your investment in the preferred securities may decrease in value if the
junior subordinated debentures are distributed to you in exchange for your
preferred securities. We cannot predict the liquidity or market prices for the
junior subordinated debentures that may be distributed. Accordingly, the junior
subordinated debentures that you receive upon a distribution, or the preferred
securities you hold pending such a distribution, may trade at a discount to the
price that you paid to purchase the preferred securities.
Because you may receive junior subordinated debentures, you must also make
an investment decision with regard to these securities. You should carefully
review all the information regarding the junior subordinated debentures
contained in this prospectus.
Under "Material Federal Income Tax Consequences" we discuss applicable
United States federal income tax consequences of a distribution of the junior
subordinated debentures.
IN THE EVENT OF A DEFAULT UNDER THE PREFERRED SECURITIES, YOU MAY BE
REQUIRED TO RELY ON THE PROPERTY TRUSTEE OF EBH TRUST TO ENFORCE YOUR RIGHTS.
You may not be able to directly enforce rights against us if an event of
default occurs with respect to the junior subordinated debentures. For a listing
of events that are events of default, see "Description of the Preferred
Securities -- Events of Default; Notice" and "Description of the Junior
Subordinated Debentures -- Indenture Events of Default."
If an event of default under the junior subordinated debentures occurs and
is continuing, this event will also be an event of default under the preferred
securities. In that case, you generally would first have to rely on the property
trustee's enforcement of its rights as holder of the junior subordinated
debentures against us. If the property trustee fails to exercise its rights
under the junior subordinated debentures, you will then be able to exercise any
other remedies available under the junior subordinated debentures.
However, if the default arises because we fail to pay interest or principal
(except during an extension period) on the junior subordinated debentures, you
may proceed directly against us without first relying on the property trustee.
LIMITED COVENANTS RELATING TO THE PREFERRED SECURITIES AND THE JUNIOR
SUBORDINATED DEBENTURES WILL NOT NECESSARILY PROTECT YOU.
Our obligations as set forth in the governing documents (i.e., relating to
the preferred securities and the junior subordinated debentures) are limited. As
a result, the governing documents will not necessarily protect you in the event
of an adverse change in our financial condition or results of operations. The
governing documents do not limit our ability or any of our subsidiaries to incur
additional debt. You should not consider the terms of the governing documents to
be a significant factor in evaluating whether we will
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<PAGE> 14
be able to comply with our obligations under the junior subordinated debentures
or the preferred securities guarantee.
WE WILL CONTROL EBH TRUST BECAUSE YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of preferred securities, you have limited voting rights. These
rights relate only to the modification of the preferred securities and removal
of the property and indenture trustees of EBH Trust upon a limited number of
events. You will not have any voting rights regarding Enterbank Holdings'
business or any matters regarding the administrative trustees. See "Description
of the Preferred Securities -- Voting Rights; Amendment of the Trust Agreement"
for more information on your limited voting rights.
TRADING CHARACTERISTICS OF THE PREFERRED SECURITIES MAY CREATE ADVERSE TAX
CONSEQUENCES FOR YOU.
The preferred securities may trade at a price that does not reflect the
value of accrued but unpaid interest on the underlying junior subordinated
debentures. If you dispose of your preferred securities between record dates for
payments on the preferred securities, you may have adverse tax consequences.
Under these circumstances, you will be required to include accrued but unpaid
interest on the junior subordinated debentures allocable to the preferred
securities through the date of disposition in your income as ordinary income if
you use the accrual method of accounting or if such interest represents original
issue discount.
If interest on the junior subordinated debentures is included in income
under the original issue discount provisions, you would add this amount to your
adjusted tax basis in your share of the underlying junior subordinated
debentures deemed disposed. If your selling price is less than your adjusted tax
basis, which will include all accrued but unpaid original issue discount
interest included in your income, you could recognize a capital loss which,
subject to certain limited exceptions, cannot be applied to offset ordinary
income for federal income tax purposes. See "Material Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sale or
Redemption of Preferred Securities" for more information on possible adverse tax
consequences to you.
THERE HAS NOT BEEN A PRIOR PUBLIC MARKET FOR THE PREFERRED SECURITIES, AND
AN ACTIVE TRADING MARKET FOR THE PREFERRED SECURITIES MAY NOT DEVELOP.
The preferred securities constitute a new issue of securities with no
established trading market. Although the preferred securities have been approved
for listing on the American Stock Exchange, a listing does not guarantee that an
active trading market for the preferred securities will develop. There is no
assurance of the depth of that market or that holders of preferred securities
will be able to sell their preferred securities easily. An inactive or illiquid
trading market could adversely affect the price of your preferred securities.
ENTERBANK HOLDINGS RISK FACTORS
ANY CHANGES IN INTEREST RATES OR OUR COST OF FUNDS MAY ADVERSELY AFFECT OUR
EARNINGS AND FINANCIAL CONDITION.
Changes in interest rates affect our operating performance and financial
condition in diverse ways. Our profitability depends in substantial part on our
"net interest spread," which is the difference between the rates we receive on
loans and investments and the rates we pay for deposits and other sources of
funds. Our net interest spread will depend on many factors that are partly or
entirely outside our control, including competition, federal economic, monetary
and fiscal policies, and economic conditions generally.
12
<PAGE> 15
Historically, net interest spreads for many financial institutions have widened
and narrowed in response to these and other factors, which are often
collectively referred to as "interest rate risk." We intend to try to minimize
our exposure to interest rate risk, but we will be unable to eliminate it. In
addition, we fund a portion of our loans through wholesale deposits, which are
considered to be a lower cost, more stable source than alternative borrowed
funds. If we are unable to attract wholesale deposits, our cost of funds may
rise, which could have a material adverse effect on our operating results.
In our banking operations, we are subject to interest rate risk on loans
held in our portfolio arising from mismatches (i.e., the interest rate
sensitivity gap) between the dollar amount of repricing or maturing assets and
liabilities, which is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. A higher level of assets repricing or maturing
than liabilities over a given time frame is considered asset-sensitive and is
reflected as a positive gap. In contrast, a higher level of liabilities
repricing or maturing than assets over a given time frame is considered
liability-sensitive and is reflected as a negative gap. An asset-sensitive
position (i.e., a positive gap) will generally enhance earnings in a rising
interest rate environment and will negatively impact earnings in a falling
interest rate environment. A liability-sensitive position (i.e., a negative gap)
will generally enhance earnings in a falling interest rate environment and
negatively impact earnings in a rising interest rate environment. Fluctuations
in interest rates are not predictable or controllable. Although we have
attempted to structure our asset and liability management strategies to mitigate
the impact on net interest income of changes in market interest rates, we can
not give any assurance that a sudden or significant change in prevailing
interest rates will not have a material adverse effect on our operating results.
IF BORROWERS DO NOT REPAY LOANS IT WILL ADVERSELY AFFECT ENTERBANK.
Some borrowers may not repay loans that Enterprise Bank makes to them. This
risk is inherent in the commercial banking business. If a significant amount of
loans are not repaid, it would have an adverse effect on Enterbank's earnings
and overall financial condition, and could cause the insolvency of Enterbank.
Like all financial institutions, Enterprise Bank maintains an allowance for
loan losses to provide for loan defaults and nonperformance. The allowance for
loan losses is maintained at a level management feels is adequate to absorb
losses inherent in the loan portfolio, an evaluation that is primarily based
upon a review of Enterprise Bank's and the banking industry's historical loan
loss experience, known and inherent risks contained in the loan portfolio,
composition, and growth of the loan portfolio, and current and projected
economic factors. However, Enterprise Bank's allowance for loan losses may not
be adequate to cover actual losses, and future provisions for loan losses may
adversely affect Enterbank's earnings. In addition, various regulatory agencies,
as an integral part of the examination process, periodically review Enterprise
Bank's loan portfolio. Such agencies may require Enterprise Bank to add to the
allowance for loan losses based on their judgments and interpretations of
information available to them at the time of their examinations.
OUR ABILITY TO IMPLEMENT OUR STRATEGY IS DEPENDENT UPON THE FUTURE SUCCESS
OF OUR SUBSIDIARIES.
The growth and success of our subsidiaries is important to our ability to
implement our strategy. In particular, both Enterprise Merchant Banc and
Enterprise Financial Advisors are unproven and relatively new operating units
still in the formative stages of growth. Their present contributions to our
revenues and net income are minimal. We do not control the operations of
Enterprise Merchant Banc, LLC, the profitability of which
13
<PAGE> 16
has a direct impact on Enterprise Merchant Banc. Moreover, the business and
profitability of Enterprise Financial Advisors are dependent, in part, on the
performance of third parties over which we have no control, including Argent
Capital Management and Moneta Group, Inc. The failure of these subsidiaries to
grow and be profitable in the future could adversely affect our financial
condition and our ability to meet our strategic objectives.
IF THERE ARE ADVERSE CONDITIONS IN OUR GEOGRAPHIC AREA OR WITH A FEW
CUSTOMERS, THERE MAY HAVE A DISPROPORTIONATELY LARGE EFFECT ON OUR FINANCIAL
RESULTS.
Our success is dependent to a certain extent upon the general economic
conditions in the St. Louis metropolitan area and, in particular, the conditions
for entrepreneurial entities and small businesses which are the focus of our
customer base. Although we expect that economic conditions will be favorable in
our markets, there can be no assurance that favorable economic conditions will
occur or, if they occur, that they will continue. Adverse changes in economic
conditions in the St. Louis metropolitan area could impair our ability to
collect loans and have a negative effect on our overall financial condition.
WE ARE DEPENDENT ON OUR KEY PERSONNEL.
Our growth and development to date have been largely dependent on certain
key employees of Enterbank and Enterprise Bank, the loss of any of whom could
have a material adverse effect. Our key employees are Fred H. Eller, James C.
Wagner, David J. Mishler, James E. Graser, Richard C. Leuck and Paul L. Vogel.
Each of these persons are officers of Enterbank or Enterprise Bank. We carry
"key person" life insurance on the lives of Mr. Eller and Mr. Vogel.
WE ARE IMPACTED BY COMPETITION FROM MANY OTHERS.
Our commercial banking, merchant banking and financial advisory businesses
are all extremely competitive. Many of our competitors are, or are affiliates
of, enterprises that have greater resources than we do.
Through our various businesses, we compete with different institutions,
including:
- other banks and thrift institutions;
- investment companies, mutual funds and money market funds;
- full service and discount broker dealers;
- insurance companies;
- credit unions; and
- mortgage companies.
Some of our competitors are not regulated as extensively as we are and,
therefore, may have greater flexibility in competing for business. Some of these
competitors are subject to similar regulation but have the advantages of
established customer bases, higher lending limits, extensive branch networks,
numerous automated teller machines or other factors. We compete by offering
market rates on our products and prompt service to our customers.
WE OPERATE A BUSINESS THAT IS SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION.
The banking industry is heavily regulated. Our success depends not only on
competitive factors but also on the cost of complying with state and federal
regulations affecting banks and bank holding companies. We are subject to
regulation by the Federal
14
<PAGE> 17
Deposit Insurance Corporation, the Missouri Division of Finance and the Board of
Governors of the Federal Reserve System. These regulations put us at a
competitive disadvantage compared to less regulated competitors such as finance
companies, mortgage banking companies and leasing companies. Banking industry
regulations are primarily intended to protect depositors, not shareholders, and
are subject to continuous change. The ultimate effect of regulatory change
cannot be predicted with certainty. Additional statutes affecting financial
institutions may be proposed and enacted in the future. We are currently subject
to regulations which may change at any time. There can be no assurance that the
cost of complying with government regulations will not adversely affect our
business or economic performance.
WE MAY INCUR SIGNIFICANT COSTS IF WE FORECLOSE ON ENVIRONMENTALLY
CONTAMINATED REAL ESTATE.
If we foreclose on a defaulted real estate loan to recover our investment
in such real estate loan, we may be subject to environmental liabilities in
connection with the underlying real property. These liabilities could exceed the
fair value of the real property. It is also possible that hazardous substances
or wastes, contaminants, pollutants or their sources (as defined by state and
federal laws and regulations) may be discovered on properties during our
ownership or after they are sold to a third party. If they are discovered on a
property that we have acquired through foreclosure or otherwise, we may be
required to remove those substances and clean up the property. We may have to
pay for the entire cost of any removal and clean-up without the contribution of
any other third parties. These costs may also exceed the fair value of the
property. We may also be liable to tenants and other users of neighboring
properties. In addition, we may find it difficult or impossible to sell the
property prior to or following any such clean-up.
THE YEAR 2000 PROBLEM MAY HAVE AN ADVERSE IMPACT ON US OR ON OTHERS UPON
WHOM WE DEPEND.
Much of today's information technology (i.e., computer systems) and
embedded technology (e.g., microcontrollers) identifies a particular year on the
basis of the last two digits of that year. For example, the year "1998" is
recognized by the digits "98." The inability of information technology and
embedded technology to properly recognize a year that begins with "20" instead
of "19," if not corrected, may result in the production of erroneous results or
the failure of systems which rely on information technology and embedded
technology. This failure of systems, production of erroneous results and the
resulting damages is commonly known as the "Y2K Problem."
We are dependent, to a substantial degree, upon the proper functioning of
our computer systems as well as those of our vendors, suppliers and customers.
Most of our products and services rely on information and data provided by
others. Most of this information and data is provided electronically and is
dependent on information systems and telecommunications. The inability of our
vendors and suppliers to provide accurate information in a timely manner, our
inability to accurately and timely process such information, the inability of
our customers to receive and use our products and services, and a general
disruption of telecommunications and utilities as a result of the Y2K Problem
would most likely result in business interruption or shutdown, financial loss,
potential regulatory action, harm to our reputation and potential legal
liability.
We have developed a Y2K Problem compliance program and, as of September 15,
1999, all phases of the program were complete. We have also developed a Y2K
Problem contingency plan for which we believe all training will be completed by
October 31, 1999.
15
<PAGE> 18
Our contingency plan includes, among other things, the preparation and
maintenance of electronic and paper back up reports of Enterprise Bank's
accounts. If we are required to resort to our contingency plan due to the Y2K
Problem, we will incur additional costs, which may be significant, due to
inefficiencies associated with the contingency plan.
Our most likely risk from the Y2K Problem is that our core banking
software, which is used to monitor Enterprise Bank's loans and deposits, will be
unable to perform accurate calculations and maintain records. In the event our
core banking software does not function properly, our record keeping and
calculations will be performed manually by Enterprise Bank personnel. Any such
failure in our core banking software could have a material adverse effect on our
operations and financial performance.
We have incurred costs of approximately $100,000 for our Y2K Problem
compliance program. Although we do not anticipate any significant additional
costs, there can be no assurance that we will not incur additional costs which,
if incurred, may be significant.
Although we have conducted internal development and testing of our computer
systems to insure Y2K Problem compliance, we can give no assurance that our
internal systems will be completely free of errors. Furthermore, we can give no
assurance that all of our vendors will deliver Y2K Problem compliant
certificates or that the vendors will in fact be Y2K Problem compliant despite
their certification of compliance. If either our computer systems or those of
our vendors fail to function properly because of the Y2K Problem, the results of
our operations may materially suffer.
16
<PAGE> 19
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in (i) this prospectus, (ii) any applicable
amendment to this prospectus and (iii) the documents incorporated by reference
into this prospectus, may constitute "forward-looking statements" within the
meaning of the federal securities laws. Forward-looking statements are based on
management's beliefs, assumptions and expectations of our future economic
performance, taking into account the information currently available to them.
These statements are not statements of historical fact. Forward-looking
statements involve risks and uncertainties that may cause our actual results,
performance or financial condition to be materially different from the
expectations of future results, performance or financial condition we express or
imply in any forward-looking statements. Some of the important factors that
could cause our actual results, performance or financial condition to differ
materially from our expectations are:
- The effect that changes in interest rates and our cost of funds have on
our earnings and assets.
- Our level of loan defaults and delinquencies.
- Our ability to successfully grow and realize profits from our commercial
banking operations and our strategic non-banking lines of business.
- Concentrations of our loans in one geographic area.
- Our ability to retain key personnel.
- The degree and nature of our competition.
- Changes in government regulation of our business.
- Environmental liability associated with foreclosures.
- The effect of the Year 2000 problem on us and on those entities with
which we do business.
When used in our documents or oral presentations, the words "believe,"
"may," "will," "should," "intend," "anticipate," "estimate," "expect,"
"objective," "projection," "forecast," "goal," or similar words or the negatives
of these words are intended to identify forward-looking statements. We qualify
any such forward-looking statements entirely by these cautionary factors.
17
<PAGE> 20
USE OF PROCEEDS
All of the proceeds from the sale of preferred securities by EBH Trust will
be invested in the junior subordinated debentures. The net proceeds to Enterbank
Holdings from the sale of the junior subordinated debentures, after deducting
underwriting commissions and estimated offering expenses, will be approximately
$9,320,000, or $10,270,000 if the Underwriter's over-allotment option is
exercised in full. We intend to use the net proceeds to:
- repay approximately $5 million outstanding as of October 18, 1999 under
Enterbank Holdings' revolving credit facility from Jefferson Bank and
Trust Company; and
- retain the remainder for general corporate purposes, including
investments from time to time in Enterprise Bank in the form of
additional capital.
On October 18, 1999, the interest rate on our $5 million revolving credit
facility from Jefferson Bank and Trust Company was 7.75%. Borrowings under the
revolving credit facility, which matures March 31, 2000, have been used to fund
the short term working capital needs of Enterbank Holdings and to provide
additional capital infusions to Enterprise Bank and other subsidiaries of
Enterbank Holdings.
ACCOUNTING TREATMENT
For financial reporting purposes, we will treat EBH Trust as our
subsidiary. Accordingly, we will include the accounts of EBH Trust in our
consolidated financial statements. We will include the preferred securities in
debt in our consolidated balance sheets, and will include appropriate
disclosures about the preferred securities, the guarantee and the junior
subordinated debentures in the notes to our consolidated financial statements.
For financial reporting purposes, we will record distributions on the preferred
securities as interest expense in our consolidated statements of income.
Future reports of Enterbank filed under the Securities Exchange Act of 1934
will include a footnote to the consolidated financial statements stating that:
- EBH Trust is a wholly-owned subsidiary of Enterbank;
- the sole asset of EBH Trust is the junior subordinated debentures,
specifying the principal amount, interest rate and maturity date of the
junior subordinated debentures; and
- the obligations of Enterbank described in this prospectus, in the
aggregate, constitute a full, irrevocable and unconditional guarantee on
a subordinated basis by Enterbank of the obligations of EBH Trust under
the preferred securities. EBH Trust will not provide separate reports
under the Securities Exchange Act of 1934.
18
<PAGE> 21
CAPITALIZATION
The following table sets forth (a) our historical capitalization at June
30, 1999 and (b) our adjusted capitalization at June 30, 1999 after giving
effect to the offering and the use of net proceeds as described in "Use of
Proceeds" above, and assuming the underwriter's over-allotment option is not
exercised.
<TABLE>
<CAPTION>
AT JUNE 30, 1999
----------------------------
AS ADJUSTED
FOR THE
ACTUAL OFFERING
-------- -----------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
LONG-TERM DEBT:
Notes payable....................................... $ 2,250 $ --
Guaranteed preferred beneficial interests in
Enterbank's subordinated debentures.............. -- 10,000
-------- --------
Total long-term debt............................. 2,250 10,000
SHAREHOLDERS' EQUITY:
Common Stock (10,500,000 shares authorized;
7,140,636 shares issued and outstanding)(1)...... 24 24
Surplus............................................. 19,327 19,327
Retained Earnings................................... 11,471 11,471
Accumulated other comprehensive loss................ (32) (32)
-------- --------
Total shareholders' equity....................... 30,790 30,790
-------- --------
Total capitalization............................. $ 33,040 $ 40,790
======== ========
CAPITAL RATIOS:
Ratio of equity to total assets..................... 7.50% 9.94%
Leverage ratio(2)(3)(4)(5).......................... 8.20% 10.56%
Risk-based capital ratios:(3)(4)(5)
Tier 1 capital to risk-weighted assets........... 8.77% 11.28%
Total capital to risk-weighted assets............ 9.74% 12.23%
</TABLE>
- -------------------------
(1) Adjusted to give retroactive effect to a 3-for-1 stock split to be effective
September 29, 1999.
(2) The leverage ratio is Tier 1 capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory maximum limits.
(3) The capital ratios, as adjusted, are computed including the total estimated
net proceeds from the sale of the preferred securities, in a manner
consistent with Federal Reserve guidelines.
(4) Federal Reserve guidelines for calculation of Tier 1 capital to
risk-weighted assets limits the amount of cumulative preferred securities
which can be included in Tier 1 capital to 25% of total Tier 1 capital. The
total amount of preferred securities offered hereby will be included as Tier
1 capital for Enterbank Holdings.
(5) Unrealized gain (loss), net of tax, on available for sale securities, which
is reflected as accumulated other comprehensive loss above, is not included
in calculating regulatory capital ratios.
19
<PAGE> 22
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents our selected consolidated financial data as of
and for the five years in the period ended December 31, 1998 and the six month
periods ended June 30, 1999 and 1998. The information as of and for the five
years in the period ended December 31, 1998 has been derived from our
consolidated financial statements, as incorporated in this prospectus by
reference to our 1998 Annual Report on Form 10-K. The information as of and for
the six month periods ended June 30, 1999 and 1998 is unaudited and, in the
opinion of our management, reflects all adjustments considered necessary for a
fair presentation of the results for such interim periods. Our unaudited interim
results have been derived from our unaudited consolidated financial statements
incorporated in this prospectus by reference to our Quarterly Report on Form
10-Q for the quarter ending June 30, 1999. The information should be read in
conjunction with the financial statements, including the notes thereto,
contained in our Reports on Form 10-K and 10-Q. See "Where You Can Find More
Information." Historical results are not necessarily indicative of results to be
expected for any future period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income............. $ 14,377 $ 11,823 $ 25,414 $ 18,759 $ 12,554 $ 10,914 $ 7,374
Interest expense............ 6,410 5,438 11,869 8,582 5,569 4,887 2,570
--------- --------- --------- --------- --------- --------- ---------
Net interest income......... 7,967 6,385 13,545 10,177 6,985 6,027 4,804
Provision for possible loan
losses.................... 237 521 711 775 345 631 450
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
provision for possible
loan losses............... 7,730 5,864 12,834 9,402 6,640 5,396 4,354
Noninterest income.......... 979 862 2,079 476 1,239 836 805
Noninterest expense......... 6,288 4,581 10,052 6,339 5,146 4,187 3,551
--------- --------- --------- --------- --------- --------- ---------
Income before provision for
income taxes.............. 2,421 2,145 4,861 3,539 2,733 2,045 1,608
Provision for income
taxes..................... 870 819 1,850 1,317 1,031 741 607
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative
effect of a change in
accounting principle...... 1,551 1,326 3,011 2,222 1,702 1,304 1,001
Cumulative effect on prior
years of a change in asset
classification............ 121 -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income.................. $ 1,672 $ 1,326 $ 3,011 $ 2,222 $ 1,702 $ 1,304 $ 1,001
========= ========= ========= ========= ========= ========= =========
DIVIDENDS
Common stock dividends
declared.................. $ 143 $ 117 $ 235 $ 195 $ 122 $ 102 $ 88
Dividend payout ratio....... 8.57% 8.77% 7.81% 8.49% 7.21% 7.87% 8.82%
PER SHARE DATA(1)
Earnings per common share:
Basic....................... $ 0.23 $ 0.19 $ 0.43 $ 0.35 $ 0.37 $ 0.30 $ 0.23
Diluted..................... 0.22 0.18 0.40 0.33 0.32 0.26 0.21
Common stock cash
dividends................. 0.020 0.017 0.033 0.030 0.027 0.023 0.020
Average common shares and
common share equivalents
outstanding............... 7,649,979 7,478,640 7,544,820 6,674,901 5,252,058 5,056,437 4,844,424
Book value (period end)..... $ 4.31 $ 3.89 $ 4.11 $ 3.78 $ 2.96 $ 2.75 $ 2.46
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT
PERIOD END)
Investment securities....... $ 16,209 $ 11,465 $ 46,291 $ 13,434 $ 15,246 $ 16,907 $ 16,542
Loans less unearned loan
fees...................... 338,634 248,357 273,818 225,560 134,133 110,464 85,687
Total assets................ 410,451 317,408 375,304 291,365 184,584 153,706 122,212
Total deposits.............. 369,334 288,847 339,180 264,301 168,961 141,140 104,799
Total debt.................. 9,191 -- 6,000 -- 300 -- --
Common shareholders'
equity.................... 30,790 27,613 29,240 26,067 14,758 12,052 10,781
Total shareholders'
equity.................... 30,790 27,613 29,240 26,067 14,758 12,052 10,781
SELECTED RATIOS
Return on average total
assets(2)................. 0.89% 0.93% 0.94% 0.97% 1.12% 0.99% 0.96%
Return on average total
shareholders' equity(2)... 11.20 9.94 10.86 9.78 12.73 11.13 9.71
Net interest margin......... 4.59 4.80 4.59 4.79 4.96 4.98 5.07
Efficiency ratio............ 70.29 63.21 64.34 59.50 62.57 61.01 63.31
Year end assets per
employee.................. $ 2,870 $ 3,023 $ 3,128 $ 3,469 $ 3,296 $ 3,941 $ 3,395
ASSET QUALITY RATIOS
Allowance for possible loan
losses to loans........... 1.02% 1.21% 1.17% 1.11% 1.32% 1.27% 1.17%
Nonperforming loan to
loans(3).................. 0.00 0.00 0.00 0.02 0.12 0.10 0.00
Allowance for possible loan
losses to nonperforming
loans(3).................. * * * * * * *
Nonperforming assets as a
percent of assets(4)...... 0.20 0.26 0.22 0.29 0.56 0.64 1.45
Net loan charge-offs
(recoveries) to average
loans..................... 0.00 0.03 0.01 0.02 (0.02) 0.24 0.23
CAPITAL RATIOS
Average shareholders' equity
to average assets......... 7.97 9.32 8.70 9.97 8.76 8.89 9.92
Total risk-based capital
ratio..................... 9.74 11.80 10.97 12.28 11.53 11.40 11.75
Leverage ratio.............. 8.20 9.56 9.16 11.42 9.62 9.11 10.46
RATIO OF EARNINGS (LOSS) TO
COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS(5)
Including interest on
deposits.................. 1.36x 1.37x 1.39x 1.39x 1.47x 1.40x 1.58x
Excluding interest on
deposits.................. 5.58 7.15 7.28 9.57 11.51 11.02 9.04
</TABLE>
- -------------------------
(1) Per share data has been adjusted to give retroactive effect to a 3-for-1
stock split effective September 29, 1999.
(2) Ratios for six month periods are annualized.
(3) Nonperforming loans consist of nonaccrual loans and loans with restructured
terms.
(4) Nonperforming assets consist of nonperforming loans and foreclosed assets.
(5) For purposes of calculating the ratio of earnings to combined fixed charges,
earnings consist of income before taxes plus interest and rent expense.
Fixed charges consist of interest and rent expense.
* Not meaningful.
21
<PAGE> 24
BUSINESS
GENERAL
Enterprise Bank was organized in 1988 to focus primarily on the banking
needs of closely-held businesses, their owners and professional individuals.
Enterbank Holdings was formed to serve as a holding company for Enterprise Bank
in 1995. From 1988 through 1996, commercial banking services were provided to
Enterprise Bank customers from a single location in Clayton, Missouri, an
affluent residential and business oriented suburb of St. Louis. We opened two
additional facilities in St. Peters and Sunset Hills, both also located in the
St. Louis Metropolitan Statistical Area, in 1997. We selected these locations
based on our expectations for growth and the high concentration of closely-held
businesses and professionals in these markets. We opened a central operations
facility in St. Louis County in 1998.
As a complement to our banking services, we operate Enterprise Financial
Advisors, a fee-based financial planning and trust service, and our subsidiary,
Enterprise Merchant Banc, Inc., which provides merchant banking services to
closely-held businesses and their owners.
ENTERPRISE BANK
Enterprise Bank offers a broad range of commercial and personal banking
services to our customers. Loans include commercial, real estate, financial and
industrial development, real estate construction and development and consumer
loans which are made primarily to owners and affiliates of our commercial
customers. We also provide cash management, Automated Clearing House,
safe-deposit box, lock box and online banking services.
We have experienced significant internal growth since our inception while
consistently increasing profitability and maintaining asset quality at a level
which we believe compares favorably to our peer group. For the period from
December 31, 1994 to June 30, 1999:
- our loans, assets and deposits increased at compounded annual growth
rates of 35%, 31%, and 32%, respectively;
- our shareholders' equity increased at a compounded annual growth rate of
26%;
- our net income increased at a compounded annual growth rate of 30%; and
- our net loan charge-offs to average loans ratio averaged 0.06%.
We believe we are able to compete effectively in our market because we
stress personal service and our officers and senior management maintain close
working relationships and personal contact with commercial customers and their
businesses. We also believe that our management structure enables us to react to
customer requests for loan and deposit services more quickly than our larger
competitors. We have significant experience in the communities we service and we
continue to target the closely-held business and professional market.
Additionally, industry consolidation has resulted in fewer independent banks and
fewer financial service companies serving our target market niche. We believe
our growth in loans and deposits is also due to the significant number of
referrals we receive from our existing customers.
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<PAGE> 25
Our historical growth strategy has been both customer and asset driven. We
continuously seek to add customers that fit our target market. This strategy has
enabled us to attract customers whose borrowing needs have grown along with our
increasing capacity to fund our customers' loan requests. Additionally, we
increase our loan portfolio based on lending opportunities developed by our
relationship officers. We fund our loan growth by attracting deposits from our
customers, borrowing from the Federal Home Loan Bank and, to a lesser extent,
attracting wholesale deposits. Wholesale deposits are considered to be stable
deposit sources and, when overhead costs are considered, are priced at levels
below costs of alternative borrowed funds.
Our operating strategy has resulted in operating ratios comparable to our
peer banks despite our increasing investments in sales personnel and new lines
of business. We have expanded our customer relationships and controlled
operating costs by:
- operating stand-alone business units managed by personnel who share
directly in the equity appreciation of their units;
- operating a limited number of offices with a high asset base per office;
- emphasizing commercial loans which tend to be larger than retail loans;
- employing an experienced staff, many of whom are rewarded on the basis of
performance and customer service;
- improving data processing and operational systems to increase
productivity and control risk; and
- leasing facilities so that capital can be deployed more effectively to
support growth in earning assets.
Our Board of Directors is comprised primarily of business owners and
professionals who fit our target customer profile. The Board plays an active
role in our business development activities and the credit review process. Their
input and understanding of our needs, and the needs of our target customers, has
been critical in our past success and will be a vital element in our plans for
future growth.
We have historically had a low turnover of relationship officers, and it is
our policy to keep officers assigned to accounts for long periods of time. This
practice improves each officer's understanding of clients' businesses resulting
in knowledgeable credit assessments and superior customer service. Credit
analysts and other personnel support the relationship officers and all are
familiar with each assigned customer creating a "team approach" to serving
customers' needs.
ENTERPRISE MERCHANT BANC, INC.
Enterprise Merchant Banc, Inc. was first established by us in 1995 to
provide merchant banking services to closely-held businesses and their owners.
Its current operations include a minority investment in Enterprise Merchant
Banc, LLC, which focuses on providing equity capital and equity-linked debt
investments to growing companies in need of additional capital to finance
internal and acquisition-related growth. Additionally, Enterprise Merchant Banc,
Inc. receives fee income for its role as a financial advisor in capital raising
transactions as well as mergers and acquisitions. It focuses on "second stage"
and mezzanine financing for established companies rather than "seed money" for
start up operations. Due to our relatively recent entry into this business and
the long-term nature of merchant banking returns, Enterprise Merchant Banc
Inc.'s present contributions to Enterbank Holdings' revenues and net income are
minimal. We
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believe, however, that it is well-positioned to become a significant part of our
strategy to achieve continued growth and profitability.
In order to broaden our array of merchant banking investment activities and
potential opportunities, we recently restructured our ownership and control
positions of our various merchant banking operations. As a result of this
restructuring, we maintain ownership of our wholly-owned subsidiary, Enterprise
Merchant Banc, Inc., which in turn has a minority interest in Enterprise
Merchant Banc, LLC. The minority interest in the LLC is based on a 4.9% voting
and common stock ownership interest and a 24.9% economic interest. The new
structure provides us the ability to achieve economic benefits comparable to
those we would have realized under the previous structure, yet satisfies Federal
Reserve regulations concerning ownership and control.
ENTERPRISE FINANCIAL ADVISORS
Enterprise Financial Advisors was organized as a division of Enterprise
Bank in late 1997 to provide fee-based personal and corporate financial
consulting and trust services to our target market. Personal financial
consulting includes estate planning, investment management, retirement planning,
trust services and custodial services. Corporate consulting services are focused
in the areas of retirement plans, management compensation and management
succession issues. Some investment management services are provided through
Argent Capital Management, a money management company that invests principally
in large capitalization companies. We own an 8% interest in Argent Capital
Management. Enterprise Financial Advisors has been an integral part of Enterbank
Holdings' growth and we believe that it will play a key role in our strategy to
achieve continued growth and profitability as it continues to expand the
products and services it offers to customers.
As part of the organization of Enterprise Financial Advisors, we entered
into solicitation and referral agreements with Moneta Group, Inc., a nationally
recognized firm in the financial planning industry. Under the agreements, Moneta
provides assistance in staffing, training, marketing and regulatory compliance
and in return receives a share of the gross margin generated by Enterprise
Financial Advisors for planning and trust services. In exchange for customer
referrals, Moneta receives compensation in the form of Enterbank stock options.
The agreements are intended to leverage the trust powers of Enterprise Bank with
the established expertise and marketing power of Moneta, thereby enabling
Enterprise Financial Advisors to offer a full range of products and services
with the depth and expertise of a large financial planning firm.
EBH CAPITAL TRUST I
EBH Trust is a Delaware business trust. EBH Trust will exist solely to:
- Issue and sell its common securities to us;
- Issue and sell its preferred securities to the public;
- Use the proceeds from the sale of its common securities and preferred
securities to purchase the junior subordinated debentures from us;
- Distribute the cash payments it receives on the junior subordinated
debentures it owns to the holders of the preferred and common securities;
and
- Engage in other activities that are necessary or incidental to these
purposes.
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DESCRIPTION OF THE PREFERRED SECURITIES
The preferred securities and the common securities will be issued under the
terms of the trust agreement of EBH Trust. The trust agreement will be qualified
as an indenture under the Trust Indenture Act. Initially, Wilmington Trust
Company will be the property trustee and will act as trustee for the purpose of
complying with the Trust Indenture Act. The terms of the preferred securities
will include those stated in the trust agreement of EBH Trust and those made
part of the trust agreement by the Trust Indenture Act. The following is a
summary of the material terms and provisions of the preferred securities and the
trust agreement. Prospective investors in the preferred securities are urged to
read all the provisions of the trust agreement, including the definitions in the
trust agreement, and the Trust Indenture Act. The form of the trust agreement
has been filed as an exhibit to the registration statement of which this
prospectus is a part.
GENERAL OVERVIEW
Under the terms of the trust agreement of EBH Trust, the administrative
trustees will issue the preferred securities and the common securities,
collectively, the trust securities. The preferred securities will represent
preferred undivided beneficial interests in the assets of EBH Trust and the
holders of the preferred securities will be entitled to a preference in most
circumstances regarding distributions and amounts payable on redemption or
liquidation over the common securities of EBH Trust, as well as other benefits
as described in the trust agreement.
The preferred securities will rank pari passu, and payments will be made
thereon pro rata, with the common securities of EBH Trust except as described
under "Subordination of Common Securities of EBH Trust Held by Enterbank" below.
Legal title to the junior subordinated debentures will be held by the
property trustee in trust for the benefit of the holders of the trust
securities. The preferred securities guarantee executed by Enterbank for the
benefit of the holders of the preferred securities will be a guarantee on a
subordinated basis and will not guarantee payment of distributions or amounts
payable on redemption or liquidation of the preferred securities if EBH Trust
does not have funds on hand available to make the payments. See "Description of
Preferred Securities Guarantee." If an event of default under the indenture has
occurred and is continuing and the default is attributable to Enterbank's
failure to pay interest or principal on the junior subordinated debentures on
the due date, a holder of preferred securities may institute a legal proceeding
directly against Enterbank for payment of principal and interest on the junior
subordinated debentures having a principal amount equal to the aggregate
liquidation amount of the preferred securities of the holder. This action is
referred to in this discussion as a direct action. See "Description of the
Junior Subordinated Debentures -- Enforcement of Rights by Holders of Preferred
Securities" and "Relationship Among the Preferred Securities, the Junior
Subordinated Debentures and the Preferred Securities Guarantee."
QUARTERLY DISTRIBUTION PAYMENTS AND EXTENSIONS ON DISTRIBUTION PAYMENTS
PAYMENT OF DISTRIBUTIONS. Distributions on the preferred securities will be
payable at the annual rate of 9.40% of the stated liquidation amount of $8,
payable quarterly in arrears on the 15th day of March, June, September and
December in each year, beginning December 15, 1999. The amount of each
distribution due will include amounts accrued
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and unpaid through the date the distribution is due. Distributions on the
preferred securities will be payable to the holders as they appear on the
register of EBH Trust on the relevant record date. Until the preferred
securities do not remain in book-entry form, the relevant record date will be
one business day prior to the relevant distribution date and, in the event the
preferred securities are not in book-entry form, the relevant record date will
be the first day of the month in which the relevant distribution date occurs.
The right to receive distributions will be cumulative from the date of original
issuance of the preferred securities.
The amount of distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any payment
date is not a business day, the distribution will be made on the next business
day, and without any interest or other payment regarding any delay. As used in
this prospectus, a business day means any day other than a Saturday or a Sunday,
or a day on which banking institutions in Delaware or Missouri are authorized or
required by law or executive order to remain closed.
The only funds of EBH Trust available for distribution to its preferred
securities holders will be payments by Enterbank under the junior subordinated
debentures. See "Description of Junior Subordinated Debentures." If Enterbank
does not make interest payments on the junior subordinated debentures, the
property trustee will not have funds available to pay distributions on the
preferred securities. The payment of distributions, if and to the extent EBH
Trust has legally available funds and cash sufficient to make payments, is
guaranteed by Enterbank. For further information, see "Description of the
Preferred Securities Guarantee."
EXTENSION PERIOD. Unless a debenture event of default has occurred and is
continuing, Enterbank has the right under the indenture to defer interest
payments on the junior subordinated debentures at any time for a period not
exceeding 20 consecutive quarters regarding each extension period. However, no
extension period may extend beyond the stated maturity of the junior
subordinated debentures. As a consequence of any extension election by
Enterbank, quarterly distributions on the preferred securities will be deferred
by EBH Trust during any extension period. Distributions to which holders of
preferred securities are entitled will accumulate additional amounts at the rate
per year of 9.40% thereof, compounded quarterly from the relevant distribution
date. The term distributions as used in this prospectus includes any additional
accumulated amounts.
During any extension period, Enterbank may not (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment regarding, any of its capital stock which includes common
and preferred stock, or (2) make any payment of principal, interest or premium,
if any, on or repay, repurchase or redeem any debt securities of Enterbank that
rank pari passu with or junior in interest to the junior subordinated debentures
or make any preferred securities guarantee payments regarding any preferred
securities guarantee by Enterbank of the debt securities of any subsidiary of
Enterbank if the preferred securities guarantee ranks pari passu with or junior
in interest to the junior subordinated debentures. These restrictions do not
apply to:
- dividends or distributions in capital stock of Enterbank;
- any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any plan of
this type in the future, or the redemption or repurchase of any rights
pursuant to this type of plan;
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- payments under the preferred securities guarantee of Enterbank; or
- purchases of common stock for issuance under any contracts, benefit plans
or similar arrangements with or for its directors, officers, employees or
consultants or a dividend reinvestment or shareholder stock purchase
plan.
Prior to the termination of any extension period, Enterbank may further
extend the extension period, provided that the extension does not cause the
extension period to exceed 20 consecutive quarters or extend beyond the stated
maturity of the junior subordinated debentures. Upon the termination of any
extension period and the payment of all amounts then due, and subject to the
above limitations, Enterbank may elect to begin a new extension period. There is
no limitation on the number of times that Enterbank may elect to begin an
extension period.
Enterbank has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the junior
subordinated debentures.
REDEMPTION -- MANDATORY AND OPTIONAL RIGHTS OF ENTERBANK
MANDATORY REDEMPTION OF PREFERRED SECURITIES. Upon the repayment or
redemption at any time, in whole or in part, of any junior subordinated
debentures, the proceeds from the repayment or redemption will be applied by the
property trustee to redeem a like amount of the trust securities at the
redemption price, as defined below. For more information, see "Description of
the Junior Subordinated Debentures -- Redemption." If less than all of the
junior subordinated debentures are to be repaid or redeemed on a redemption
date, then the proceeds will be allocated to the redemption of the preferred
securities and common securities pro rata.
OPTIONAL REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES. Enterbank will have
the right to redeem the junior subordinated debentures (1) beginning on December
15, 2004, in whole at any time or in part from time to time at a redemption
price equal to the accrued and unpaid interest on the junior subordinated
debentures redeemed to the date fixed for redemption, plus 100% of the principal
amount of the junior subordinated debentures, or (2) at any time, in whole, but
not in part, upon a tax event, an investment company event or a capital
treatment event as defined in the following paragraph. The redemption price will
be equal to the accrued and unpaid interest on the redeemed junior subordinated
debentures, plus 100% of the principal amount. These payments will be subject to
receipt of prior approval by the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. See
"Description of the Junior Subordinated Debentures -- Redemption."
TAX EVENT REDEMPTION, INVESTMENT COMPANY EVENT REDEMPTION, CAPITAL
TREATMENT EVENT REDEMPTION OR DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES. If
a tax event, an investment company event or a capital treatment event occurs
after original issuance of the preferred securities and is continuing, Enterbank
has the right to redeem the junior subordinated debentures in whole. If a
redemption of the junior subordinated debentures occurs, Enterbank would also
cause a mandatory redemption of the preferred securities and common securities
in whole at the redemption price, as defined below, within 90 days following the
occurrence of any of these events. In each case the redemption would be subject
to receipt of prior approval by the Federal Reserve if then required under its
applicable capital guidelines or policies. If any of these events has occurred
and is continuing, and Enterbank does not elect to redeem the junior
subordinated debentures
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and cause a mandatory redemption of the trust securities or to liquidate EBH
Trust and cause the junior subordinated debentures to be distributed to holders
of the trust securities in liquidation of EBH Trust, the trust securities will
remain outstanding. Also, additional sums, as defined below, may be payable on
the junior subordinated debentures.
A tax event requires the receipt by Enterbank and EBH Trust of a legal
opinion to the effect that, as a result of any amendment to, including any
announced prospective change in, the laws or regulations of the United States or
any political subdivision or taxing authority of the United States, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying the tax laws or regulations, there is more than an
insubstantial risk that:
- EBH Trust is, or will be within 90 days of the date of the opinion,
subject to United States federal income tax regarding income received or
accrued on the junior subordinated debentures;
- interest payable by Enterbank on the junior subordinated debentures is
not, or within 90 days of the opinion, will not be, deductible by
Enterbank, in whole or in part, for United States federal income tax
purposes; or
- EBH Trust is, or will be within 90 days of the date of the opinion,
subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges.
An investment company event requires the receipt by Enterbank and EBH Trust
of a legal opinion to the effect that, as a result of any change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority, EBH
Trust is or will be considered an investment company required to be registered
under the Investment Company Act.
A capital treatment event requires the receipt by Enterbank and EBH Trust
of a legal opinion to the effect that, as a result of any amendment to,
including any proposed change in, the laws or regulations of the United States
or any of its political subdivisions, or as a result of any official action or
judicial decision interpreting the laws or regulations, there is more than an
insubstantial risk that Enterbank's ability to treat the preferred securities as
core capital or its equivalent for purposes of the Federal Reserve capital
adequacy guidelines is impaired.
Additional sums means the additional amounts as may be necessary to be paid
by Enterbank on the junior subordinated debentures so that the amount of
distributions payable by EBH Trust on the outstanding trust securities will not
be reduced as a result of any additional taxes, duties, assessments and other
governmental charges to which EBH Trust has become subject.
Like amount means (1) regarding a redemption of trust securities, trust
securities having a liquidation amount, as defined below, equal to that portion
of the principal amount of junior subordinated debentures to be
contemporaneously redeemed in accordance with the indenture, allocated to the
common securities and to the preferred securities based upon the relative
liquidation amounts of these classes and the proceeds of which will be used to
pay the redemption price of the trust securities, and (2) regarding a
distribution of junior subordinated debentures to holders of trust securities in
connection with a dissolution or liquidation of EBH Trust, junior subordinated
debentures having a
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principal amount equal to the liquidation amount of the trust securities of the
holder to whom the junior subordinated debentures are distributed.
Liquidation amount means the stated amount of $8 per trust security.
Redemption price means, regarding any trust security, the liquidation
amount of the trust security, plus accumulated and unpaid distributions to the
redemption date, allocated on a pro rata basis, based on liquidation amounts,
among the trust securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Subject to Enterbank's having received prior approval of the Federal
Reserve, Enterbank will have the right at any time to liquidate EBH Trust and,
after satisfaction of the liabilities of creditors of EBH Trust as provided by
applicable law, cause the junior subordinated debentures to be distributed to
the holders of trust securities in liquidation of EBH Trust. After the
liquidation date fixed for any distribution of junior subordinated debentures
for preferred securities:
- the preferred securities will no longer be deemed to be outstanding;
- the depositary or its nominee, as the record holder of the preferred
securities, will receive a registered global certificate or certificates
representing the junior subordinated debentures to be delivered upon the
distribution; and
- any certificates representing preferred securities not held by the
depositary or its nominee will be deemed to represent the junior
subordinated debentures having a principal amount equal to the
liquidation amount of the preferred securities, and bearing interest
equal to the accrued and unpaid distributions on the preferred
securities, until the certificates are presented to the administrative
trustees or their agent for reissuance.
There can be no assurance as to the market prices for the preferred
securities or the junior subordinated debentures that may be distributed in
exchange for the preferred securities if a dissolution and liquidation of EBH
Trust were to occur. Accordingly, the preferred securities that an investor may
purchase, or the junior subordinated debentures that the investor may receive on
dissolution and liquidation of EBH Trust, may trade at a discount to the price
that the investor paid to purchase the preferred securities. If the junior
subordinated debentures are distributed, Enterbank will use reasonable efforts
to list them on a national securities exchange or quotation system.
REDEMPTION PROCEDURES
Preferred securities redeemed on each redemption date will be redeemed at
the redemption price with the proceeds from the contemporaneous redemption of
the junior subordinated debentures. Redemptions of the preferred securities will
be made and the redemption price will be payable on each redemption date only to
the extent that EBH Trust has funds on hand available for the payment of the
redemption price. See "-- Subordination of Common Securities of EBH Trust Held
by Enterbank" and "Description of the Preferred Securities Guarantee."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of trust securities at the
holder's registered address. Unless EBH Trust defaults in payment of the
applicable redemption price, on and
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after the redemption date, distributions will cease to accrue on the preferred
securities called for redemption.
If EBH Trust gives a notice of redemption regarding the preferred
securities, then, by 12:00 noon, St. Louis, Missouri time, on the redemption
date, the property trustee will pay the redemption price to the depositary, as
the record holder of the preferred securities. The depositary thereafter will
credit the redemption price to the participants for whom it holds the preferred
securities. See "Book-Entry Issuance." If the preferred securities are no longer
in book-entry form, the property trustee, to the extent funds are available,
will deposit with the paying agent for the preferred securities funds sufficient
to pay the aggregate redemption price. The property trustee will give the paying
agent irrevocable instructions and authority to pay the redemption price upon
surrender of certificates evidencing the preferred securities. Notwithstanding
the foregoing, distributions payable on or prior to the redemption date will be
payable to the holders of the preferred securities on the relevant record dates
for the related distribution dates. If notice of redemption has been given and
funds deposited as required, then upon the date of the deposit, all rights of
the holders of the preferred securities will cease, except the right of the
holders of the preferred securities to receive the redemption price, but without
interest on the redemption price, and the preferred securities will cease to be
outstanding. If any date fixed for redemption of the preferred securities is not
a business day, then payment of the redemption price payable on the date will be
made on the next business day and without any interest or other payment for the
delay. If, however, the business day falls in the next calendar year, the
payment will be made on the immediately preceding business day. If payment of
the redemption price in respect of preferred securities called for redemption is
improperly withheld or refused and not paid either by EBH Trust or by Enterbank
under the preferred securities guarantee, distributions on the preferred
securities will continue to accrue at the then applicable rate, from the
redemption date originally established by EBH Trust for the preferred securities
to the date the redemption price is actually paid. In this case the actual
payment date will be the date fixed for redemption for purposes of calculating
the redemption price. See "Description of the Preferred Securities Guarantee."
Subject to applicable law, including, without limitation, federal
securities laws, Enterbank may at any time and from time to time purchase
outstanding preferred securities by tender, in the open market or by private
agreement.
Payment of the redemption price on the preferred securities and any
distribution of junior subordinated debentures to holders of preferred
securities will be made to the applicable record holders as they appear on the
register of the preferred securities on the relevant record date, which date
will be one business day prior to the relevant redemption date; provided,
however, that if any preferred securities are not in book-entry form, the
relevant record date for them will be a date at least 15 days prior to the
redemption date. In the case of a liquidation, the record date will be
established by the property trustee and be no more than 45 days before the
liquidation date.
If less than all of the trust securities are to be redeemed on a redemption
date, then the aggregate redemption price for the trust securities to be
redeemed will be allocated pro rata to the preferred securities and common
securities based upon the relative liquidation amounts of these classes. The
particular outstanding preferred securities to be redeemed will be selected by
any method as the property trustee deems fair and appropriate. This method may
provide for the selection for redemption of portions equal to $8 or an integral
multiple of $8 of the liquidation amount of preferred securities. The property
trustee will promptly notify the trust securities registrar in writing of the
preferred securities selected
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for redemption and, in the case of any preferred securities selected for partial
redemption, the liquidation amount thereof to be redeemed. For all purposes of
the trust agreement, unless the context otherwise requires, all provisions
relating to the redemption of preferred securities will relate to the portion of
the aggregate liquidation amount of preferred securities which has been or is to
be redeemed.
SUBORDINATION OF COMMON SECURITIES OF EBH TRUST HELD BY ENTERBANK
Payment of distributions on, and the redemption price of, the preferred
securities and common securities will be made pro rata based on the liquidation
amounts of these securities. However, if on any distribution date or redemption
date a debenture event of default has occurred and is continuing, no
distributions on or redemption of the common securities will be made. Further,
no other payment on account of the redemption, liquidation or other acquisition
of the common securities will be made unless payment in full in cash of all
distributions payable on all of the outstanding preferred securities are made,
or in the case of redemption the full redemption price on all of the outstanding
preferred securities then called for redemption, has been made or provided for.
All funds available to the property trustee will first be applied to the payment
in full in cash of all distributions on, or redemption price of, the preferred
securities then due and payable.
In the case of any event of default under the trust agreement resulting
from a debenture event of default, Enterbank as holder of the common securities
will be deemed to have waived any right to act regarding any event of default
until the effects of all events of default have been cured, waived or otherwise
eliminated. Until any events of default have been so cured, waived or otherwise
eliminated, the property trustee will act solely on behalf of the holders of the
preferred securities and not on behalf of Enterbank as holder of the common
securities, and only the holders of the preferred securities will have the right
to direct the property trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Enterbank will have the right at any time to terminate EBH Trust and cause
the junior subordinated debentures to be distributed to the holders of the
preferred securities. This right is subject to Enterbank having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. See "Distribution of the Junior
Subordinated Debentures" above.
In addition, under the trust agreement, EBH Trust will automatically
terminate upon expiration of its term and will earlier terminate on the first to
occur of: (1) events of bankruptcy, dissolution or liquidation of Enterbank; (2)
delivery by Enterbank of written direction to the property trustee to terminate
EBH Trust, which direction is optional and wholly within the discretion of
Enterbank; (3) redemption of all of the preferred securities as described under
"-- Redemption -- Mandatory and Optional Rights of Enterbank;" and (4) the entry
of an order for the dissolution of EBH Trust by a court of competent
jurisdiction.
If an early termination occurs as described in clause (1), (2) or (4) above
or upon the expiration of the term of EBH Trust, it will be liquidated by the
trustees as expeditiously as the trustees determine to be possible. The
liquidation will be made after satisfaction of liabilities to creditors of EBH
Trust as provided by applicable law. In the liquidation, holders of the trust
securities will receive a like amount of the junior subordinated debentures,
unless this distribution is determined by the property trustee not
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to be practical. If the property trustee determines that a distribution of the
junior subordinated debentures is not practical, then the holders of preferred
securities will be entitled to receive an amount equal to the liquidation amount
of $8 per trust security plus accrued and unpaid distributions thereon to the
date of payment. This amount, payable out of the assets of EBH Trust available
for distribution, is referred to as the liquidation distribution. If the
liquidation distribution can be paid only in part because EBH Trust has
insufficient assets available to pay the full aggregate liquidation
distribution, then the amounts payable directly by EBH Trust on the preferred
securities will be paid on a pro rata basis. The holders of the common
securities will be entitled to receive distributions upon a liquidation pro rata
with the holders of the preferred securities, except that if a debenture event
of default has occurred and is continuing, the preferred securities will have a
priority over the common securities.
Under current United States federal income tax law and interpretations and
assuming, as expected, EBH Trust is treated as a grantor trust, a distribution
of the junior subordinated debentures should not be a taxable event to holders
of the preferred securities. Should there be a change in law, a change in legal
interpretation, a tax event or other circumstances, however, the distribution
could be a taxable event to holders of the preferred securities. See "Material
Federal Income Tax Consequences." If Enterbank elects neither to redeem the
junior subordinated debentures prior to maturity nor to liquidate EBH Trust and
distribute the junior subordinated debentures to holders of the preferred
securities, the preferred securities will remain outstanding until the repayment
of the junior subordinated debentures.
If Enterbank elects to liquidate EBH Trust and cause the junior
subordinated debentures to be distributed to holders of the preferred securities
in liquidation of EBH Trust, Enterbank will continue to have the right to
shorten the maturity of the junior subordinated debentures under most
circumstances. See "Description of the Junior Subordinated Debentures -- General
Overview."
EVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an event of default under the trust agreement:
- the occurrence of a debenture event of default under the indenture, see
"Description of the Junior Subordinated Debentures -- Indenture Events of
Default"; or
- default by EBH Trust in the payment of any distribution when it becomes
due and payable, and continuation of the default for a period of 30 days;
or
- default by EBH Trust in the payment of any redemption price of any trust
security when it becomes due and payable; or
- default in the performance, or breach, in any material respect, of any
covenant or warranty of the property trustee in the trust agreement,
other than a default or breach in the performance of a covenant or
warranty which is addressed in the previous two points above, and
continuation of the default or breach, for a period of 60 days after
there has been given, by registered or certified mail, to the property
trustee by the holders of at least 25% in aggregate liquidation amount of
the outstanding preferred securities, a written notice specifying the
default or breach
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and requiring it to be remedied and stating that the notice is a "Notice
of Default" under the trust agreement; or
- the occurrence of events of bankruptcy or insolvency regarding the
property trustee and the failure by Enterbank to appoint a successor
property trustee within 60 days thereof.
Within five business days after the occurrence of any event of default
actually known to the property trustee, the property trustee is required to
transmit notice of the event of default to the holders of the preferred
securities, the administrative trustees and Enterbank, unless the event of
default has been cured or waived. Enterbank and the administrative trustees are
required to file annually with the property trustee a certificate as to whether
they are in compliance with all the conditions and covenants applicable to them
under the trust agreement.
If a debenture event of default has occurred and is continuing, the
preferred securities will have a preference over the common securities upon
termination of EBH Trust as described above. See "-- Liquidation Distribution
Upon Termination." Upon a debenture event of default, unless the principal of
all the junior subordinated debentures has already become due and payable,
either the property trustee or the holders of not less than 25% in aggregate
principal amount of outstanding junior subordinated debentures may declare all
of the junior subordinated debentures to be due and payable immediately. Written
notice must be given to Enterbank, and to the property trustee, if given by
holders of the junior subordinated debentures. If the property trustee or the
holders of the junior subordinated debentures fail to declare the principal of
all of the junior subordinated debentures due and payable upon a debenture event
of default, the holders of at least 25% in liquidation amount of the preferred
securities then outstanding will have the right to declare the junior
subordinated debentures immediately due and payable. In either event, payment of
principal and interest on the junior subordinated debentures will remain
subordinated to the extent provided in the indenture. In addition, holders of
the preferred securities have to bring a direct action as discussed below. See
"Description of the Junior Subordinated Debentures -- Enforcement of Rights by
Holders of Preferred Securities."
REMOVAL OF TRUSTEES
Unless a debenture event of default has occurred and is continuing, any
trustee may be removed at any time by the holder of the common securities of EBH
Trust. If a debenture event of default has occurred and is continuing, the
property trustee, Delaware trustee or both may be removed by the holders of a
majority in liquidation amount of the outstanding preferred securities. In no
event will the holders of the preferred securities have the right to vote to
appoint, remove or replace the administrative trustees, which voting rights are
vested exclusively in Enterbank as the holder of the common securities. No
resignation or removal of a trustee and no appointment of a successor trustee
will be effective until the acceptance of appointment by the successor trustee
in accordance with the provisions of the trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an event of default has occurred and is continuing, at any time, for
the purpose of meeting the legal requirements of the Trust Indenture Act or of
any jurisdiction in which any part of trust property may at the time be located,
the holders of the common securities and the administrative trustees have power
to appoint one or more persons either
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to act as (1) a co-trustee, jointly with the property trustee, of all or any
part of the trust property, or (2) to act as separate trustee of any such
property. In either case these trustees will have the powers which may be
provided in the instrument of appointment, and will have vested in them any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the trust agreement. In case a debenture event of default has
occurred and is continuing, the property trustee alone will have power to make
the appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Generally, any person or successor to any of the trustees of EBH Trust may
be a successor trustee to any of the trustees, including a successor resulting
from a merger or consolidation. However, any successor trustee must meet all of
the qualifications and eligibility standards to act as a trustee to EBH Trust.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF EBH TRUST
EBH Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any trust or other person, except as described
below. EBH Trust may, at the request of Enterbank, with the consent of the
administrative trustees and without the consent of the holders of the preferred
securities, the property trustee or the Delaware trustee, undertake the
transactions described above; provided, that:
- the successor entity either (a) expressly assumes all of the obligations
of EBH Trust regarding the preferred securities or (b) substitutes for
the preferred securities other securities having substantially the same
terms as the preferred securities, so long as the successor securities
rank the same as the preferred securities rank in priority regarding
distributions and payments upon liquidation, redemption and otherwise;
- Enterbank expressly appoints a trustee of the successor entity possessing
substantially the same powers and duties as the property trustee as the
holder of the junior subordinated debentures;
- any transaction of this kind does not adversely affect the rights,
preferences and privileges of the holders of the preferred securities,
including any successor securities, in any material respect;
- the successor entity has a purpose identical to that of EBH Trust;
- the successor securities will be listed or traded on any national
securities exchange or other organization on which the preferred
securities may then be listed;
- prior to the transaction, Enterbank has received a legal opinion from
independent counsel to EBH Trust experienced in such matters to the
effect that (a) the transaction does not adversely affect the rights,
preferences and privileges of the holders of the preferred securities,
including any successor securities, in any material respect, and (b)
following any transaction of this kind, neither EBH Trust nor the
successor entity will be required to register as an investment company
under the Investment Company Act; and
- Enterbank or any permitted successor or designee owns all of the common
securities of the successor entity and guarantees the obligations of the
successor
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entity under the successor securities at least to the extent provided by
the preferred securities guarantee. Notwithstanding the foregoing, EBH
Trust will not, except with the consent of holders of 100% in liquidation
amount of the preferred securities, enter into any transaction of this
kind, or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it, if the transaction would cause EBH Trust or the
successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except in certain limited circumstance described below and under
"Description of the Preferred Securities Guarantee -- Amendments and
Assignment", in general, the holders of the preferred securities will have no
voting rights.
The trust agreement may be amended from time to time by Enterbank and the
trustees, without the consent of the holders of the trust securities:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to make
any other provisions regarding matters or questions arising under the
trust agreement, which are not inconsistent with the other provisions of
the trust agreement; or
- to modify, eliminate or add to any provisions of the trust agreement to
the extent that is necessary to ensure that EBH Trust will be classified
for United States federal income tax purposes as a grantor trust at all
times that any trust securities are outstanding or to ensure that EBH
Trust will not be required to register as an investment company under the
Investment Company Act.
Provided, however, that in the case of the first point above, this action
will not adversely affect in any material respect the interests of any holder of
trust securities, and any amendments of the trust agreement will become
effective when notice is given to the holders of the trust securities.
The trust agreement may be amended by the trustees and Enterbank (1) with
the consent of holders representing not less than a majority of the aggregate
liquidation amount of the outstanding trust securities, and (2) upon receipt by
the trustees of an opinion of counsel to the effect that the amendment or the
exercise of any power granted to the trustees in accordance with the amendment
will not affect EBH Trust's status as a grantor trust for United States federal
income tax purposes or EBH Trust's exemption from status as an investment
company under the Investment Company Act. However, without the consent of each
holder of trust securities, the trust agreement may not be amended to (1) change
the amount or timing of any distribution on the trust securities or otherwise
adversely affect the amount of any distribution required to be made in respect
of the trust securities as of a specified date or (2) restrict the right of a
holder of trust securities to institute suit for the enforcement of any payment
of distributions afterwards.
For the time that any junior subordinated debentures are held by the
property trustee, the trustees will not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee, or executing any trust or
power conferred on the indenture trustee regarding the junior
subordinated debentures;
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- waive any past default that is waivable under the indenture;
- exercise any right to rescind or annul a declaration that the principal
of all the junior subordinated debentures will be due and payable; or
- consent to any amendment, modification or termination of the indenture or
the junior subordinated debentures, where this consent is required,
without, in each case, obtaining the prior approval of the holders of a
majority in aggregate liquidation amount of all outstanding preferred
securities. However, where a consent under the indenture would require
the consent of each affected holder of junior subordinated debentures,
this consent may not be given by the property trustee without the prior
consent of each holder of the preferred securities. The trustees will not
revoke any action previously authorized or approved by a vote of the
holders of the preferred securities except by subsequent vote of the
holders of the preferred securities. The property trustee will notify
each holder of the preferred securities of any notice of default
regarding the junior subordinated debentures. In addition to obtaining
these approvals of the holders of the preferred securities, prior to
taking any of the above actions, the trustees will obtain an opinion of
counsel stating that EBH Trust will not, as a consequence of the proposed
action by the property trustee, cease to be classified as a grantor trust
and will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of the action.
Any required approval of holders of the preferred securities may be given
at a meeting of holders of preferred securities convened for this purpose or
under written consent. The property trustee will cause a notice of any meeting
at which holders of the preferred securities are entitled to vote, or of any
matter upon which action by written consent of the holders is to be taken, to be
given to each holder of record of the preferred securities in the manner set
forth in the trust agreement.
No vote or consent of the holders of the preferred securities will be
required for EBH Trust to redeem and cancel the preferred securities in
accordance with the trust agreement.
Any of the preferred securities that are owned by Enterbank, the trustees
or any affiliate of Enterbank or any trustees, will, for purposes of the vote or
consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The preferred securities will be represented by one or more global
certificates registered in the name of the depositary or its nominee. Beneficial
interests in the preferred securities will be shown on, and transfers will be
effected only through, records maintained by participants in the depositary.
Except as described below, preferred securities in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance."
A global security will be exchangeable for preferred securities registered
in the names of persons other than the depositary or its nominee only if:
- the depositary notifies Enterbank that it is unwilling or unable to
continue as a depositary for the global security and no successor
depositary has been appointed, or if at any time the depositary ceases to
be a clearing agency registered under the
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Securities Exchange Act of 1934, at a time when the depositary is
required to be so registered to act as a depositary;
- Enterbank in its sole discretion determines that the global security will
be so exchangeable; or
- there has occurred and is continuing an event of default under the
indenture. Any global security that is exchangeable under the preceding
sentence will be exchangeable for definitive certificates registered in
the names which the depositary directs. It is expected that the
instructions will be based upon directions received by the depositary
regarding ownership of beneficial interests in the global security. In
the event that preferred securities are issued in certificated form, they
will be in denominations of $8 or integral multiples of $8 and may be
transferred or exchanged at the offices described below.
Unless and until it is exchanged in whole or in part for the individual
preferred securities, the global preferred security may not be transferred
except (1) as a whole by the depositary to a nominee of the depositary or by a
nominee of the depositary to the depositary or (2) another nominee of the
depositary or (3) by the depositary or any nominee to a successor depositary or
any nominee of the successor.
Payments on preferred securities represented by a global security will be
made to the depositary, as the depositary for the preferred securities. In the
event the preferred securities are issued in certificated form, distributions
will be payable, the transfer of the preferred securities will be registrable,
and preferred securities will be exchangeable for preferred securities of other
denominations of a like aggregate liquidation amount, at the corporate office of
the property trustee, or at the offices of any paying agent or transfer agent
appointed by the administrative trustees. However, payment of any distribution
may be made at the option of the administrative trustees by check mailed to the
address of the persons entitled to payments or by wire transfer. In addition, if
the preferred securities are issued in definitive form, the record dates for
payment of distributions will be the first day of the month in which the
relevant distribution date occurs. For a description of the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance."
Upon the issuance of a global preferred security, and the deposit of the
global preferred security with or on behalf of the depositary, the depositary
will credit, on its book-entry registration and transfer system, the respective
aggregate liquidation amounts of the individual preferred securities represented
by the global preferred security to persons that have accounts with the
depositary. The accounts will be designated by the dealers, underwriters or
agents regarding the preferred securities. Ownership of beneficial interests in
a global preferred security will be limited to participants or persons that may
hold interests through participants. Ownership of beneficial interests in the
global preferred security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the depositary or its
nominee and the records of participants regarding interests of persons who hold
through participants. The laws of some states require that some purchasers of
securities in those states take physical delivery of the securities in
certificated form. The limits, under these laws, may impair the ability to
transfer beneficial interests in a global preferred security.
For the time that the depositary for a global preferred security, or its
nominee, is the registered owner of the global preferred security, this
registered owner will be considered
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the sole owner or holder of the preferred securities represented by the global
preferred security for all purposes under the trust agreement of EBH Trust.
Except as provided below, owners of beneficial interests in a global preferred
security will not be entitled to have any of the individual preferred securities
represented by the global preferred security registered in their names, will not
receive or be entitled to receive physical delivery of any the preferred
securities in certificated form and will not be considered the owners or holders
thereof.
None of Enterbank, the property trustee, any paying agent, or the
securities registrar for the preferred securities will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the global preferred security or
for maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
Enterbank expects that the depositary, upon receipt of any payment of the
liquidation amount or distributions in respect of a permanent global preferred
security, immediately will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the aggregate
liquidation amount of the global preferred security as shown on the records of
the depositary or its nominee. Enterbank also expects that payments by
participants to owners of beneficial interests in the global preferred security
held through the participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in street name. The payments will be the
responsibility of the participants.
If the depositary for the preferred securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by Enterbank within 90 days, EBH Trust will issue individual preferred
securities in exchange for the global preferred security. In addition, EBH Trust
may at any time in its sole discretion, subject to any limitations described in
this prospectus relating to the preferred securities, determine not to have any
preferred securities represented by one or more global preferred securities. In
this event, Enterbank will issue individual preferred securities in exchange for
the global preferred security or securities representing the preferred
securities. Further, if EBH Trust specifies, an owner of a beneficial interest
in a global preferred security representing preferred securities may receive
individual preferred securities in exchange for the beneficial interests,
subject to any limitations described in this prospectus. In any such instance, a
beneficial interest owner in a global preferred security will be entitled to
physical delivery of individual preferred securities represented by the global
preferred security equal in liquidation amount to the beneficial interest, and
to have the preferred securities registered in its name. Individual preferred
securities issued will be issued in denominations, unless otherwise specified by
EBH Trust, of $8 and integral multiples of $8.
PAYMENT AND PAYING AGENCY
Payments in respect of the preferred securities will be made to the
depositary, which will credit the relevant accounts at the depositary on the
applicable distribution dates. However, if any of the preferred securities are
not held by the depositary, the payments will be made by check mailed to the
address of the holder as the address appears on the register. The paying agent
will initially be the property trustee and any co-paying agent chosen by the
property trustee and acceptable to the administrative trustees and
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Enterbank. The paying agent will be permitted to resign as paying agent upon 30
days' written notice to the property trustee and Enterbank. In the event that
the property trustee is no longer the paying agent, the administrative trustees
will appoint a successor paying agent, which will be a bank or trust company
acceptable to the administrative trustees and Enterbank.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the
preferred securities. Registration of transfers of the preferred securities will
be effected without charge by or on behalf of EBH Trust, but the registrar may
require payment to cover any tax or other governmental charges that may be
imposed in connection with any transfer or exchange. EBH Trust will not be
required to register or cause to be registered the transfer of the preferred
securities after the preferred securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than upon the occurrence and during the
continuance of an event of default, undertakes to perform only the duties which
are specifically set forth in the trust agreement. After an event of default,
the property trustee must exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the property trustee is under no obligation to
exercise any of the powers vested in it by the trust agreement at the request of
any holder of preferred securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred. If no event
of default has occurred and is continuing and the property trustee is required
to decide between alternative causes of action, construe ambiguous provisions in
the trust agreement or is unsure of the application of any provision of the
trust agreement, and the matter is not one on which holders of the preferred
securities are entitled under the trust agreement to vote, then the property
trustee will take action as directed by Enterbank. If the property trustee is
not so directed, it will take action as it deems advisable and in the best
interests of the holders of the trust securities and will have no liability
under the trust agreement except for its own bad faith, negligence or willful
misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate EBH Trust in such a way that EBH Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the junior
subordinated debentures will be treated as indebtedness of Enterbank for United
States federal income tax purposes. In this regard, Enterbank and the
administrative trustees are authorized to take any lawful action not
inconsistent with the certificate of trust of EBH Trust or the trust agreement,
that they determine in their discretion to be necessary or desirable for these
purposes, as long as the action does not materially adversely affect the
interests of the holders of the related preferred securities. Holders of the
preferred securities have no preemptive or similar rights.
EBH Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures will be issued under a subordinated
indenture, dated as of October 19, 1999, between Enterbank and Wilmington Trust
Company, as the indenture trustee. The following is a summary of the material
terms and provisions of the junior subordinated debentures and the indenture.
Prospective investors are urged to read the indenture, which has been filed as
an exhibit to the registration statement of which this prospectus forms a part.
Wherever particular defined terms of the indenture are referred to but not
defined herein, such defined terms have the same meaning as that in the
indenture. The indenture is qualified under the Trust Indenture Act.
Concurrently with the issuance of the preferred securities, EBH Trust will
invest the proceeds from the sale of the preferred securities, together with the
consideration paid by Enterbank for the common securities, in junior
subordinated debentures issued by Enterbank. The junior subordinated debentures
will be issued as unsecured debt under the indenture.
GENERAL OVERVIEW
The junior subordinated debentures will bear interest at the rate of 9.40%
per year of their principal amount, payable quarterly in arrears on the 15th day
of March, June, September and December of each year, beginning December 15,
1999, to the person in whose name each junior subordinated debenture is
registered, subject to minor exceptions, at the close of business on the
business day next preceding the interest payment date. Notwithstanding the
above, in the event that either (1) the junior subordinated debentures are held
by the property trustee and the preferred securities are no longer in book-entry
only form or (2) the junior subordinated debentures are not represented by a
global subordinated debenture, the record date for the interest payment will be
the first day of the month in which the payment is made. The amount of each
interest payment due regarding the junior subordinated debentures will include
amounts accrued and unpaid through the date the interest payment is due. It is
anticipated that, until the liquidation, if any, of EBH Trust, each junior
subordinated debenture will be held in the name of the property trustee in trust
for the benefit of the holders of the preferred securities. The amount of
interest payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on the junior subordinated debentures is not a business day, then payment of the
interest payable on that date will be made on the next business day. Accrued
interest that is not paid on the applicable interest payment date will bear
additional interest at the rate per year of 9.40% compounded quarterly. The term
interest as used in this prospectus includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable interest
payment date and additional sums, as defined below, as applicable.
The junior subordinated debentures will mature on December 15, 2029. This
date, as it may be shortened as described below, is the stated maturity. This
date may be shortened once at any time by Enterbank before the day which is 90
days before the scheduled maturity date to any date not earlier than December
15, 2004, subject to Enterbank having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve. In the event that Enterbank elects to shorten the stated
maturity of the junior subordinated debentures, it will give at least 90 days
prior notice to the registered holders of the junior subordinated debentures,
the property trustee
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and the indenture trustee. The property trustee must give notice to the holders
of the trust securities of the shortening of the stated maturity.
The junior subordinated debentures will be unsecured and will rank junior
and be subordinate in right of payment to all senior and subordinated debt (as
defined in the indenture) of Enterbank. Because Enterbank is a holding company,
the right of Enterbank to participate in any distribution of assets of
Enterprise Bank or any other subsidiary, or upon Enterprise Bank's or any other
subsidiary's liquidation or reorganization or otherwise, and thus the ability of
holders of the junior subordinated debentures to benefit indirectly from the
distribution, is subject to the prior claims of creditors of that subsidiary,
except to the extent that Enterbank may itself be recognized as a creditor of
that subsidiary. Accordingly, the junior subordinated debentures will be
effectively subordinated to all existing and future liabilities of Enterbank's
subsidiaries, and holders of junior subordinated debentures should look only to
the assets of Enterbank for payments on the junior subordinated debentures. The
indenture does not limit the incurrence or issuance of other secured or
unsecured debt of Enterbank, including senior and subordinated debt, whether
under the indenture or any existing or other indenture that Enterbank may enter
into in the future or otherwise. See "Subordination" below.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
If no debenture event of default has occurred and is continuing, Enterbank
has the right under the indenture at any time during the term of the junior
subordinated debentures to defer interest payments at any time for a period not
exceeding 20 consecutive quarters. However, no extension period may extend
beyond the stated maturity of the junior subordinated debentures. At the end of
an extension period, Enterbank must pay all interest then accrued and unpaid,
together with interest at the rate of 9.40% per year, compounded quarterly.
During an extension period, interest will continue to accrue and holders of
junior subordinated debentures will be required to accrue interest income for
United States federal income tax purposes. See "Material Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
During any extension period, Enterbank may not (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment regarding, any of Enterbank's capital stock or (2) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities of Enterbank, including other junior subordinated
debentures, that rank pari passu with or junior in interest to the junior
subordinated debentures or make any preferred securities guarantee payments
regarding any preferred securities guarantee by Enterbank of the debt securities
of any subsidiary of Enterbank if the preferred securities guarantee ranks pari
passu with or junior in interest to the junior subordinated debentures. These
restrictions do not apply to:
- dividends or distributions in capital stock of Enterbank;
- any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any plan in the
future, or the redemption or repurchase of any rights pursuant to this
type of plan;
- payments under the preferred securities guarantee; or
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- purchases of common stock for issuance under any contracts, benefit plans
or similar arrangements with or for its directors, officers, employees or
consultants or a dividend reinvestment or shareholder stock purchase
plan.
Prior to the termination of any extension period, Enterbank may further extend
the extension period, provided that the extension does not cause the extension
period to exceed 20 consecutive quarters or extend beyond the stated maturity of
the junior subordinated debentures. Upon the termination of any extension period
and the payment of all amounts then due on any interest payment date, Enterbank
may elect to begin a new extension period subject to the above requirements. No
interest will be due and payable during an extension period, except at the end
of the extension period.
If the property trustee is the only registered holder of the junior
subordinated debentures, Enterbank must give the property trustee, the
administrative trustees and the indenture trustee notice of its election of any
extension period at least one business day prior to the earlier of (1) the date
the distributions on the preferred securities would have been payable except for
the election to begin or extend the extension period or (2) the date the
administrative trustees are required to give notice to the holders of the
preferred securities of the record date or the date the distributions are
payable, but in any event not less than one business day prior to the record
date. The indenture trustee will give notice of Enterbank's election to begin or
extend a new extension period to the administrative trustees who, in turn, will
give notice to the holders of the preferred securities. There is no limitation
on the number of times that Enterbank may elect to begin an extension period.
ADDITIONAL SUMS TO BE PAID AS A RESULT OF ADDITIONAL TAXES
If EBH Trust or the property trustee is required to pay any additional
taxes, duties, assessments or other governmental charges as a result of a tax
event, Enterbank will pay as additional amounts on the junior subordinated
debentures any amounts which will be required so that the distributions payable
by EBH Trust will not be reduced as a result of any additional taxes, duties or
other governmental charges. See "Description of the Preferred Securities
- -- Redemption -- Mandatory and Optional Rights of Enterbank" for a definition of
tax event.
REDEMPTION
Subject to Enterbank's having received prior approval of the Federal
Reserve, if then required under applicable capital guidelines or policies of the
Federal Reserve, the junior subordinated debentures are redeemable prior to
maturity at the option of Enterbank (1) beginning December 15, 2004, in whole at
any time or in part from time to time, or (2) at any time in whole, but not in
part, upon the occurrence and during the continuance of a tax event, an
investment company event or a capital treatment event, in each case at a
redemption price equal to the accrued and unpaid interest on the junior
subordinated debentures redeemed to the date fixed for redemption, plus 100% of
the principal amount of the junior subordinated debentures. See "Description of
the Preferred Securities -- Redemption -- Mandatory and Optional Rights of
Enterbank" for definitions of tax event, investment company event and capital
treatment event.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of junior subordinated
debentures to be redeemed at the holder's registered address. Unless Enterbank
defaults in payment of the redemption price, on and after the redemption date
interest will cease to accrue on the
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junior subordinated debentures or portions of the junior subordinated debentures
called for redemption.
The junior subordinated debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities -- Liquidation
Distribution Upon Termination," under circumstances involving the termination of
EBH Trust, the junior subordinated debentures may be distributed to the holders
of the preferred securities and common securities in liquidation of EBH Trust
after satisfaction of liabilities to creditors of EBH Trust. If distributed to
holders of the preferred securities in liquidation, the junior subordinated
debentures will initially be issued in the form of one or more global securities
and the depositary, or any successor depositary for the preferred securities,
will act as depositary for the junior subordinated debentures. It is anticipated
that the depositary arrangements for the junior subordinated debentures would be
substantially identical to those in effect for the preferred securities. If the
junior subordinated debentures are distributed to the holders of preferred
securities upon the liquidation of EBH Trust, there can be no assurance as to
the market price of any junior subordinated debentures that may be distributed
to the holders of preferred securities. If the junior subordinated debentures
are distributed, Enterbank will use reasonable efforts to list them on a
national securities exchange or quotation system.
RESTRICTIONS ON PAYMENTS
Enterbank has restrictions on paying dividends or making payments regarding
pari passu or junior debt if:
- there has occurred any event of which Enterbank has actual knowledge that
(a) with the giving of notice or the lapse of time, or both, would
constitute a debenture event of default and (b) in respect of which
Enterbank shall not have taken reasonable steps to cure;
- Enterbank has given notice of its election of an extension period as
provided in the indenture regarding the junior subordinated debentures
and has not rescinded the notice, or the extension period, or any
extension thereof, is continuing; or
- while the junior subordinated debentures are held by EBH Trust, Enterbank
is in default regarding its payment of any obligation under the preferred
securities guarantee.
If any of the events above have occurred, Enterbank will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment regarding, any of Enterbank's
capital stock; or
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of Enterbank, including other
junior subordinated debt, that rank pari passu with or junior in interest
to the junior subordinated debentures or make any preferred securities
guarantee payments regarding any preferred securities guarantee by
Enterbank of the debt securities of any subsidiary of Enterbank if the
preferred securities guarantee ranks pari passu or junior in interest to
the junior subordinated debentures.
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Provided, however, Enterbank may (a) declare and pay dividends or
distributions in common stock, (b) make any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under this type of plan in the future or the redemption or
repurchase of any rights under such plan, (c) make payments under the preferred
securities guarantee and (d) make purchases of common stock related to the
issuance of common stock or rights under any of Enterbank's benefit plans for
its directors, officers or employees.
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES TO SENIOR AND SUBORDINATED DEBT
OF ENTERBANK
In the indenture, Enterbank has agreed that any junior subordinated
debentures will be subordinate and junior in right of payment to all senior and
subordinated debt to the extent provided in the indenture. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization or any bankruptcy, or similar proceedings in connection with
any insolvency or bankruptcy proceeding of Enterbank, the holders of senior and
subordinated debt will first be entitled to receive payment in full of
principal, interest and premium, if any, on the senior and subordinated debt
before the holders of junior subordinated debentures will be entitled to receive
principal or interest payments on the junior subordinated debentures.
In the event of the acceleration of the maturity of any junior subordinated
debentures, the holders of all senior and subordinated debt outstanding upon
acceleration will first be entitled to receive payment in full of all amounts
due to them, including any amounts due upon acceleration, before the holders of
junior subordinated debentures will be entitled to receive any principal or
interest payments on the junior subordinated debentures. However, holders of
subordinated debt will not be entitled to receive payment of any of these
amounts to the extent that the subordinated debt is by its terms subordinated to
trade creditors.
No principal or interest payments on the junior subordinated debentures may
be made if there has occurred and is continuing a default in any payment
regarding senior and subordinated debt or an event of default regarding any
senior and subordinated debt resulting in the acceleration of the maturity of
senior and subordinated debt, or if any judicial proceeding is pending regarding
any of this type of default.
Debt as used in this discussion means regarding any person, whether
recourse is to all or a portion of the assets of the person and whether or not
contingent:
- every obligation of the person for money borrowed;
- every obligation of the person evidenced by bonds, debentures, notes or
other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses;
- every reimbursement obligation of the person regarding letters of credit,
bankers' acceptances or similar facilities issued for the account of the
person;
- every obligation of the person issued or assumed as the deferred purchase
price of property or services, but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business;
- every capital lease obligation of the person; and
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- every obligation of the type referred to in all of the points immediately
above of another person and all dividends of another person the payment
of which, in either case, the person has guaranteed or is responsible or
liable, directly or indirectly, as obligor or otherwise.
Senior and subordinated debt means the principal of and premium, if any,
and interest, if any, on debt of Enterbank, including interest accruing at the
time of the filing of any petition in bankruptcy or for reorganization relating
to Enterbank, whether incurred on or prior to the date of the indenture or
thereafter incurred, unless, in the instrument creating or evidencing the debt
or under which the debt is outstanding, it is provided that the obligations are
not superior in right of payment to the junior subordinated debentures or to
other debt which is pari passu with, or subordinated to, the junior subordinated
debentures.
However, senior and subordinated debt will not be deemed to include:
- any debt of Enterbank which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code was
without recourse to Enterbank;
- any debt to any employee of Enterbank;
- any debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of the debt by the holders of
the junior subordinated debentures as a result of the subordination
provisions of the indenture would be greater than they otherwise would
have been as a result of any obligation of the holders to pay amounts
over to the obligees on the trade accounts payable or accrued liabilities
arising in the ordinary course of business as a result of subordination
provisions to which the debt is subject;
- the preferred securities guarantee; and
- any other debt securities issued under the indenture.
The indenture places no limitation on the amount of additional senior and
subordinated debt that may be incurred by Enterbank. Enterbank expects from time
to time to incur additional indebtedness constituting senior and subordinated
debt.
DENOMINATIONS, REGISTRATION AND TRANSFER
It is anticipated that, until the liquidation, if any, of EBH Trust, each
junior subordinated debenture will be held in the name of the property trustee
in trust for the benefit of the holders of the preferred securities. However, in
the event of either a tax event, investment company event or capital treatment
event, the junior subordinated debentures in certificated form may be exchanged
and represented by global certificates registered in the name of the depositary
or its nominee. In the event of such an exchange, beneficial interests in the
junior subordinated debentures will be shown on, and transfers thereof will be
effected only through, records maintained by the depositary. Except as described
below, junior subordinated debentures in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance."
Unless and until a global subordinated debenture is exchanged in whole or
in part for the individual junior subordinated debentures, it may not be
transferred except (1) as a
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whole by the depositary for the global subordinated debenture to a nominee of
the depositary or (2) by the depositary to a successor depositary selected or
approved by Enterbank or (3) to any nominee of the successor.
A global security will be exchangeable for junior subordinated debentures
registered in the names of persons other than the depositary or its nominee only
if (1) the depositary notifies Enterbank that it is unwilling or unable to
continue as a depositary for the global security and no successor depositary has
been appointed, or if at any time the depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 at a time when the
depositary is required to be so registered to act as a depositary or (2)
Enterbank in its sole discretion determines that the global security will be so
exchangeable. Any global security that is exchangeable under the preceding
sentence will be exchangeable for definitive certificates registered in the
names which the depositary directs. It is expected that the instructions will be
based upon directions received by the depositary from its participants regarding
ownership of beneficial interests in the global security. In the event that
junior subordinated debentures are issued in definitive form, the junior
subordinated debentures will be in denominations of $8 and integral multiples of
$8 and may be transferred or exchanged at the offices described below.
Payments on junior subordinated debentures represented by a global security
will be made to the depositary for the junior subordinated debentures. In the
event junior subordinated debentures are issued in definitive form, principal
and interest will be payable, the transfer of the junior subordinated debentures
will be registrable, and junior subordinated debentures will be exchangeable for
junior subordinated debentures of other denominations of a like aggregate
principal amount, at the corporate office of the indenture trustee, or at the
offices of any paying agent or transfer agent appointed by Enterbank. However,
interest payments may be made at the option of Enterbank by check mailed to the
address of the persons entitled to payments or by wire transfer. In addition, if
the junior subordinated debentures are issued in certificated form, the record
dates for interest payments will be the first day of the month in which the
payment is to be made. For a description of the depositary and the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance."
Enterbank will appoint the indenture trustee as securities registrar under
the indenture. Junior subordinated debentures may be presented for exchange as
provided above, and may be presented for registration of transfer with the form
of transfer endorsed, or a satisfactory written instrument of transfer, duly
executed, at the office of the securities registrar. Enterbank may at any time
rescind the designation of any registrar or approve a change in the location
through which any registrar acts, provided that Enterbank maintains a registrar
in the place of payment. Enterbank may at any time designate additional
registrars regarding the junior subordinated debentures.
In the event of any redemption of less than all of the junior subordinated
debentures, neither Enterbank nor the indenture trustee will be required to
issue, exchange or register the transfer of less than all of the junior
subordinated debentures during a period beginning at the opening of business 15
days before the day of mailing of a notice of redemption selecting for
redemption less than all of the junior subordinated debentures and ending at the
close of business on the day of mailing of the relevant notice of redemption.
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PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the junior subordinated
debentures will be made at the office of the indenture trustee, except that at
the option of Enterbank payment of any interest may be made, except in the case
of a global subordinated debenture, by check mailed to the address of the person
entitled to payment as the person's address appears in the securities register.
Payment of any interest on junior subordinated debentures will be made to the
person in whose name the junior subordinated debenture is registered at the
close of business on the regular record date for the interest payment. Enterbank
may at any time designate additional paying agents or rescind the designation of
any paying agent; however, Enterbank will at all times be required to maintain a
paying agent in each place of payment for the junior subordinated debentures.
Any moneys deposited with the indenture trustee or any paying agent, or
then held by Enterbank in trust, for the payment of the principal of or interest
on the junior subordinated debentures that are not applied and remain unclaimed
for two years after the principal or interest has become due and payable will,
at the request of Enterbank, be repaid to Enterbank. Thereafter, the holder of
the junior subordinated debenture will look, as a general unsecured creditor,
only to Enterbank for payment.
MODIFICATION OF INDENTURE
From time to time Enterbank and the indenture trustee may, without the
consent of the holders of the junior subordinated debentures, amend, waive or
supplement the indenture for specified purposes. These purposes may include,
among other things, curing ambiguities, defects or inconsistencies, provided
that this action does not materially adversely affect the interests of the
holders of the junior subordinated debentures or the preferred securities while
they remain outstanding, and qualifying, or maintaining the qualification of,
the indenture under the Trust Indenture Act. The indenture contains provisions
permitting Enterbank and the indenture trustee, with the consent of the holders
of not less than a majority in aggregate principal amount of the outstanding
junior subordinated debentures, to modify the indenture in a manner affecting
the rights of the holders of the junior subordinated debentures; provided, that,
the modification may not, without the consent of the holder of each outstanding
junior subordinated debenture:
- change the stated maturity of the junior subordinated debentures or
extend the time of payment of interest on them, except as described under
"Description of the Junior Subordinated Debentures -- General Overview"
and "-- Option to Extend Interest Payment Period," or reduce the
principal amount thereof or the rate of interest thereon; or
- reduce the percentage of principal amount of junior subordinated
debentures, the holders of which are required to consent to any such
modification of the indenture. However, while any of the preferred
securities remain outstanding, (1) no modification may be made that
adversely affects the holders of the preferred securities in any material
respect, (2) no termination of the indenture may occur, and (3) no waiver
of any debenture event of default or compliance with any covenant under
the indenture may be effective, without the prior consent of the holders
of at least a majority of the aggregate liquidation amount of the
preferred securities, until the principal and interest of the junior
subordinated debentures have been paid in full and other conditions are
satisfied.
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INDENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the following described
events regarding the junior subordinated debentures that has occurred and is
continuing constitutes a debenture event of default:
- failure for 30 days to pay any interest on the junior subordinated
debentures, when due, subject to the deferral of any due date in the case
of an extension period;
- failure to pay any principal on the junior subordinated debentures when
due whether at maturity, upon redemption, by declaration or otherwise,
provided however that a valid extension of any interest payment period by
Enterbank according to the terms of the indenture will not constitute a
debenture event of default;
- failure by Enterbank to observe or perform in any material respect any of
its other covenants or agreements contained in the indenture for 90 days
after written notice to Enterbank from the indenture trustee or to
Enterbank and the indenture trustee by the holders of at least 25% in
aggregate outstanding principal amount of the junior subordinated
debentures; or
- events in bankruptcy, insolvency or reorganization of Enterbank,
including the voluntary commencement of bankruptcy proceedings, entry of
an order for relief against Enterbank in a bankruptcy proceeding,
appointment of a custodian over substantially all of Enterbank's
property, a general assignment for the benefit of creditors, or a court
order for liquidation of Enterbank.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the indenture
trustee. The indenture trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the junior subordinated debentures may declare
the principal due and payable immediately upon a debenture event of default. The
holders of a majority in aggregate outstanding principal amount of the junior
subordinated debentures may rescind and annul the declaration and waive the
default if the default, other than the non-payment of the principal of the
junior subordinated debentures which has become due solely by the acceleration,
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
indenture trustee. Should the holders of the junior subordinated debentures fail
to annul the declaration and waive the default, the holders of a majority in
aggregate liquidation amount of the preferred securities will have the right to
do so. In case a debenture event of default occurs and is continuing, the
property trustee will have the right to declare the principal of and the
interest on the junior subordinated debentures, and any other amounts payable
under the indenture, to be due and payable and to enforce its other rights as a
creditor.
Enterbank is required to file annually with the indenture trustee a
certificate as to whether Enterbank is in compliance with all the conditions and
covenants applicable to it under the indenture.
ENFORCEMENT OF RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an event of default under the indenture has occurred and is continuing
and the default is attributable to Enterbank's failure to pay interest or
principal on the junior
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subordinated debentures on the due date, a holder of preferred securities may
institute a legal proceeding directly against Enterbank for payment of principal
and interest on the junior subordinated debentures having a principal amount
equal to the aggregate liquidation amount of the preferred securities of the
holder. This action is referred to in this discussion as a direct action. If the
right to bring a direct action is removed, EBH Trust may become subject to the
reporting obligations under the Securities Exchange Act of 1934. Enterbank will
have the right under the indenture to set-off any payment made to the holder of
preferred securities by Enterbank in connection with a direct action.
The holders of the preferred securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the junior subordinated debentures unless there has
been an event of default under the trust agreement. See "Description of the
Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The indenture provides that Enterbank will not consolidate with or merge
into any other person or convey, transfer or lease its properties and assets
substantially as an entirety to any person, and no person will consolidate with
or merge into Enterbank or convey, transfer or lease its properties and assets
substantially as an entirety to Enterbank, unless:
- in case Enterbank consolidates with or merges into another person or
conveys or transfers its properties and assets substantially as an
entirety to any person, the successor person is organized under the laws
of the United States or any state or the District of Columbia, and the
successor person expressly assumes Enterbank's obligations on the junior
subordinated debentures issued under the indenture;
- immediately after giving effect to this type of transaction, no debenture
event of default, and no event which, after notice or lapse of time or
both, would become a debenture event of default, has occurred and is
continuing; and
- other conditions as prescribed in the indenture are met.
The provisions of the indenture do not afford holders of the junior
subordinated debentures protection in the event of a highly leveraged or other
transaction involving Enterbank that may adversely affect holders of the junior
subordinated debentures.
SATISFACTION AND DISCHARGE
Under the indenture, Enterbank will have satisfied and discharged the
indenture when all junior subordinated debentures not previously delivered to
the indenture trustee for cancellation (1) have become due and payable or (2)
will become due and payable at their stated maturity within one year, and
Enterbank deposits in trust with the indenture trustee sufficient funds to pay
and discharge the entire indebtedness on the junior subordinated debentures to
the deposit date or to the stated maturity, as the case may be. This
satisfaction and discharge will not apply to Enterbank's obligations to pay all
other sums due under the indenture and to provide the officers' certificates and
opinions of counsel described in the indenture.
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GOVERNING LAW
The indenture and the junior subordinated debentures will be governed by
and construed in accordance with the laws of the State of Missouri.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The indenture trustee will have and be subject to all the duties and
responsibilities specified for an indenture trustee under the Trust Indenture
Act. Subject to these provisions, the indenture trustee is under no obligation
to exercise any of the powers vested in it by the indenture at the request of
any holder of junior subordinated debentures, unless offered reasonable
indemnity by the holder against the costs, expenses and liabilities which might
be incurred. The indenture trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of its
duties if the indenture trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
COVENANTS OF ENTERBANK
Enterbank will covenant in the indenture, as to the junior subordinated
debentures, that during the time that (1) EBH Trust is the holder of all junior
subordinated debentures, (2) a tax event in respect of EBH Trust has occurred
and is continuing and (3) Enterbank has elected, and has not revoked the
election, to pay additional sums, as defined under "Description of the Preferred
Securities -- Redemption -- Mandatory and Optional Rights of Enterbank," in
respect of the preferred securities, Enterbank will pay to EBH Trust these
additional sums. Enterbank will also covenant, as to the junior subordinated
debentures:
- to maintain directly or indirectly 100% ownership of the common
securities of EBH Trust to which junior subordinated debentures have been
issued, provided that successors which are permitted under the indenture
may succeed to Enterbank's ownership of the common securities;
- to not voluntarily terminate, wind up or liquidate EBH Trust, except upon
approval of the Federal Reserve if then so required, and to use its
reasonable efforts to cause EBH Trust to remain a business trust, except
(a) in connection with a distribution of junior subordinated debentures
to the holders of the preferred securities in liquidation of EBH Trust,
(b) the redemption of all of the trust securities or (c) in connection
with mergers, consolidations, or amalgamations permitted by the trust
agreement; and
- to use its reasonable efforts to cause each holder of trust securities to
be treated as owning an individual beneficial interest in the junior
subordinated debentures.
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BOOK-ENTRY ISSUANCE
Depository Trust Company ("DTC") will act as securities depositary for all
of the preferred securities and, in the event of the distribution of the junior
subordinated debentures to holders of the preferred securities, may act as
securities depositary for all of the junior subordinated debentures. The
preferred securities and the junior subordinated debentures will be issued only
as fully-registered securities registered in the name of Cede & Co., DTC's
nominee. One or more fully-registered global certificates will be issued for the
preferred securities and deposited with DTC. In the event of the distribution of
the junior subordinated debentures to holders of the preferred securities, one
or more fully-registered global certificates may be issued for the junior
subordinated debentures and may be deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the depositary system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain custodial
relationships with direct participants, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the Securities and
Exchange Commission.
Purchases of preferred securities or junior subordinated debentures within
the depositary system must be made by or through direct participants, which will
receive a credit for the preferred securities or junior subordinated debentures
on DTC's records. The ownership interest of each actual purchaser of each
preferred security or junior subordinated debenture is in turn to be recorded on
the direct and indirect participants' records. Beneficial owners will not
receive written confirmation from the DTC of their purchases, but beneficial
owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which the beneficial owners purchased preferred
securities or junior subordinated debentures. Transfers of ownership interests
in the preferred securities or junior subordinated debentures are to be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interests in preferred securities or junior subordinated
debentures, except in the event that use of the book-entry system for the
preferred securities or junior subordinated debentures is discontinued.
DTC has no knowledge of the actual beneficial owners of the preferred
securities or the junior subordinated debentures. DTC's records reflect only the
identity of the direct participants to whose accounts the preferred securities
or junior subordinated debentures are credited, which may or may not be the
beneficial owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners and the voting
rights of direct participants, indirect participants and beneficial owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the preferred securities or junior subordinated debentures. If less than all of
the preferred securities or the junior subordinated debentures are being
redeemed, DTC will determine the amount to be redeemed, in accordance with the
terms of the trust agreement.
Although voting regarding the preferred securities or the junior
subordinated debentures is limited to the holders of record of the preferred
securities or the junior subordinated debentures, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote
regarding preferred securities or the junior subordinated debentures. Under its
usual procedures, DTC would mail an omnibus proxy to the property trustee as
soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
preferred securities or junior subordinated debentures are credited on the
record date and which are used and identified in a listing attached to the
omnibus proxy.
Distribution payments on the preferred securities or the junior
subordinated debentures will be made by the property trustee to DTC. DTC's
practice is to credit direct participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on the payment date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices. Payments will be the responsibility of the
participant and not of DTC, the relevant trustee, EBH Trust or Enterbank,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of distributions to DTC is the responsibility of the
property trustee, disbursement of the payments to direct participants is the
responsibility of DTC, and disbursements of the payments to the beneficial
owners is the responsibility of direct and indirect participants.
DTC may discontinue providing its services as securities depositary
regarding any of the preferred securities or the junior subordinated debentures
at any time by giving reasonable notice to the property trustee and Enterbank.
In the event that a successor securities depositary is not obtained, definitive
preferred securities or subordinated debenture certificates representing the
preferred securities or junior subordinated debentures are required to be
printed and delivered. Enterbank, at its option, may, at any time, decide to
discontinue use of the system of book-entry transfers through DTC, or any
successor depositary. After a debenture event of default, the holders of a
majority in liquidation preference of preferred securities or aggregate
principal amount of junior subordinated debentures may determine to discontinue
the system of book-entry transfers through DTC. In this event, definitive
certificates for the preferred securities or junior subordinated debentures will
be printed and delivered.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that EBH Trust and Enterbank believe to be
accurate, but EBH Trust and Enterbank assume no responsibility for the accuracy
thereof. Neither EBH Trust nor Enterbank has any responsibility for the
performance by DTC or its participants of their respective obligations as
described in this prospectus or under the rules and procedures governing their
respective operations.
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DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
The preferred securities guarantee agreement will be executed and delivered
by Enterbank and Wilmington Trust Company concurrently with the issuance of the
preferred securities. The preferred securities guarantee will be for the benefit
of the holders of the preferred securities. Wilmington Trust Company will act as
trustee under the preferred securities guarantee for the purposes of compliance
with the Trust Indenture Act, and the preferred securities guarantee will be
qualified under the Trust Indenture Act. The following is a summary of the
material provisions of the preferred securities guarantee. Prospective investors
are urged to read the form of the preferred securities guarantee which has been
filed as an exhibit to the registration statement of which this prospectus forms
a part. The guarantee trustee will hold the preferred securities guarantee for
the benefit of the holders of the preferred securities.
GENERAL OVERVIEW
The preferred securities guarantee is an irrevocable guarantee on a
subordinated basis of all of EBH Trust's obligations to make payments under the
preferred securities, but will apply only to the extent that EBH Trust has funds
sufficient to make the payments, and is not a guarantee of collection.
Enterbank will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth in this prospectus, the preferred
securities guarantee payments, as defined below, to the holders of the preferred
securities, as and when due, regardless of any defense, right of set-off or
counterclaim that EBH Trust may have or assert other than the defense of
payment. The following payments regarding the preferred securities, to the
extent not paid by or on behalf of EBH Trust, will be subject to the preferred
securities guarantee of Enterbank:
- any accrued and unpaid distributions required to be paid on the preferred
securities, to the extent that EBH Trust has available funds on hand at
the time;
- the redemption price regarding any preferred securities called for
redemption to the extent that EBH Trust has available funds on hand at
the time; and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
EBH Trust, unless the junior subordinated debentures are distributed to
holders of the preferred securities.
The amount of the preferred securities guarantee will be the lesser of (a)
the liquidation distribution and (b) the amount of assets of EBH Trust remaining
available for distribution to holders of preferred securities. Enterbank's
obligation to make a preferred securities guarantee payment may be satisfied by
direct payment of the required amounts by Enterbank to the holders of the
preferred securities or by causing EBH Trust to pay these amounts to the
holders.
If Enterbank does not make interest payments on the junior subordinated
debentures held by EBH Trust, EBH Trust will not be able to pay distributions on
the preferred securities and will not have funds legally available to pay
distributions. The preferred securities guarantee will rank subordinate and
junior in right of payment to all senior and subordinated debt of Enterbank. See
"Status of the Preferred Securities Guarantee" below. Because Enterbank is a
holding company, the right of Enterbank to participate in any distribution of
assets of any subsidiary upon the subsidiary's liquidation or reorganization or
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otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent Enterbank may itself be recognized as a creditor of that
subsidiary. Accordingly, Enterbank's obligations under the preferred securities
guarantee will be effectively subordinated to all existing and future
liabilities of Enterbank's subsidiaries, and claimants should look only to the
assets of Enterbank for payments under the preferred securities guarantee.
Except as otherwise described in this prospectus, the preferred securities
guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of Enterbank, including senior and subordinated debt whether
under the indenture, any other indenture that Enterbank may enter into in the
future, or otherwise.
Enterbank has, through the preferred securities guarantee, the trust
agreement, the junior subordinated debentures, the indenture and the expense
agreement relating to EBH Trust, taken together, fully, irrevocably and
unconditionally guaranteed on a subordinated basis all of EBH Trust's
obligations under the preferred securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
this preferred securities guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guarantee on a subordinated basis of all of EBH Trust's obligations under the
preferred securities. See "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Preferred Securities Guarantee."
STATUS OF THE PREFERRED SECURITIES GUARANTEE
The preferred securities guarantee will constitute an unsecured obligation
of Enterbank and will rank subordinate and junior in right of payment to all
senior and subordinated debt in the same manner as the junior subordinated
debentures.
The preferred securities guarantee will constitute a guarantee of payment
and not of collection. The guaranteed party may institute a legal proceeding
directly against Enterbank to enforce its rights under the preferred securities
guarantee without first instituting a legal proceeding against any other person
or entity. The preferred securities guarantee will be held for the benefit of
the holders of the preferred securities. The preferred securities guarantee does
not place a limitation on the amount of additional senior and subordinated debt
that may be incurred by Enterbank. Enterbank expects from time to time to incur
additional indebtedness constituting senior and subordinated debt.
AMENDMENTS AND ASSIGNMENT
Except regarding any changes which do not adversely affect the rights of
holders of the preferred securities in a material manner, in which case no
consent will be required, the preferred securities guarantee may not be amended
without the prior approval of the holders of not less than a majority of the
aggregate liquidation amount of the outstanding preferred securities. See
"Description of the Preferred Securities -- Voting Rights; Amendment of the
Trust Agreement." All guarantees and agreements contained in the preferred
securities guarantee will bind the successors, assigns, receivers, trustees and
representatives of Enterbank and will inure to the benefit of the holders of the
preferred securities then outstanding.
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EVENTS OF DEFAULT
An event of default under the preferred securities guarantee will occur
upon the failure of Enterbank to perform any of its payment or other obligations
under the preferred securities guarantee. The holders of not less than a
majority in aggregate liquidation amount of the preferred securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee regarding the preferred securities
guarantee or to direct the exercise of any trust or power conferred upon the
guarantee trustee under the preferred securities guarantee.
Any holder of preferred securities may institute a legal proceeding
directly against Enterbank to enforce the holder's rights under the preferred
securities guarantee without first instituting a legal proceeding against EBH
Trust, the guarantee trustee or any other person or entity.
Enterbank, as guarantor, is required to file annually with the guarantee
trustee a certificate as to whether Enterbank is in compliance with all the
conditions and covenants applicable to it under the preferred securities
guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
a default by Enterbank in performance of the preferred securities guarantee,
undertakes to perform only the duties which are specifically set forth in the
preferred securities guarantee. After default regarding the preferred securities
guarantee, the guarantee trustee must exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the guarantee trustee is under no obligation
to exercise any of the rights or powers vested in it by the preferred securities
guarantee at the request or direction of any holder of the preferred securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The preferred securities guarantee will terminate and be of no further
force and effect upon full payment of the redemption price of the preferred
securities, upon full payment of the amounts payable upon liquidation of EBH
Trust or upon distribution of junior subordinated debentures to the holders of
the preferred securities. The preferred securities guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the preferred securities must restore payment of any sums paid under the
preferred securities or the preferred securities guarantee.
GOVERNING LAW
The preferred securities guarantee will be governed by and construed in
accordance with the laws of the State of Missouri.
THE EXPENSE AGREEMENT
Under the agreement as to expenses and liabilities entered into by
Enterbank under the trust agreement, Enterbank will irrevocably and
unconditionally guarantee to each person or entity to whom EBH Trust becomes
indebted or liable, the full payment of any
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costs, expenses or liabilities of EBH Trust, other than obligations of EBH Trust
to pay to the holders of the preferred securities or other similar interests in
EBH Trust of the amounts due the holders under the terms of the preferred
securities or the other similar interests, as the case may be.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED
DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE
FULL AND UNCONDITIONAL PREFERRED SECURITIES GUARANTEE ON A SUBORDINATED BASIS
Payments of distributions and other amounts due on the preferred
securities, to the extent EBH Trust has funds available for the payment of the
distributions, are irrevocably guaranteed by Enterbank as and to the extent set
forth under "Description of the Preferred Securities Guarantee." Taken together,
Enterbank's obligations under the junior subordinated debentures, the indenture,
the trust agreement, the expense agreement and the preferred securities
guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee on a subordinated basis of payments of distributions and other amounts
due on the preferred securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes the
preferred securities guarantee. It is only the combined operation of those
documents that has the effect of providing a full, irrevocable and unconditional
guarantee on a subordinated basis of EBH Trust's obligations under the preferred
securities. If and to the extent that Enterbank does not make payments on the
junior subordinated debentures, EBH Trust will not pay distributions or other
amounts due on the preferred securities. The preferred securities guarantee does
not cover payment of distributions when EBH Trust does not have sufficient funds
to pay the distributions. In this event, the remedy of a holder of the preferred
securities is to institute a legal proceeding directly against Enterbank for
enforcement of payment of the distributions to the holder. The obligations of
Enterbank under the preferred securities guarantee are subordinate and junior in
right of payment to all senior and subordinated debt.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
junior subordinated debentures, the payments will be sufficient to cover
distributions and other payments due on the preferred securities, primarily
because: (1) the aggregate principal amount of the junior subordinated
debentures will be equal to the sum of the aggregate liquidation amount of the
preferred securities and common securities; (2) the interest rate and interest
and other payment dates on the junior subordinated debentures will match the
distribution rate and distribution and other payment dates for the preferred
securities; (3) Enterbank will pay for any and all costs, expenses and
liabilities of EBH Trust except EBH Trust's obligations to holders of preferred
securities; and (4) the trust agreement further provides that EBH Trust will not
engage in any activity that is not consistent with the limited purposes of EBH
Trust.
Notwithstanding anything to the contrary in the indenture, Enterbank may
satisfy any payment it is otherwise required to make to the trust under the
indenture, by and to the extent that it has made, or is concurrently on the date
of the payment required by the indenture making, a payment under the preferred
securities guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE PREFERRED SECURITIES UNDER THE PREFERRED
SECURITIES GUARANTEE
A holder of any of the preferred securities may institute a legal
proceeding directly against Enterbank to enforce its rights under the preferred
securities guarantee without first
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instituting a legal proceeding against the guarantee trustee, EBH Trust or any
other person or entity.
A default or event of default under any senior and subordinated debt would
not constitute an event of default. However, in the event of payment defaults
under, or acceleration of, senior and subordinated debt, the subordination
provisions of the indenture provide that no payments may be made in respect of
the junior subordinated debentures until the senior and subordinated debt has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on junior subordinated debentures would
constitute an event of default.
LIMITED PURPOSE OF EBH TRUST
The preferred securities evidence a beneficial interest in EBH Trust, and
EBH Trust exists for the sole purpose of issuing the trust securities and
investing the proceeds from the sale of the trust securities in the junior
subordinated debentures. A principal difference between the rights of a holder
of the preferred securities and a holder of a junior subordinated debenture is
that a holder of a junior subordinated debenture is entitled to receive from
Enterbank the principal amount of and interest accrued on junior subordinated
debentures held, while a holder of the preferred securities is entitled to
receive distributions from EBH Trust, or from Enterbank under the preferred
securities guarantee, if and to the extent EBH Trust has funds available for the
payment of the distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
EBH Trust involving the liquidation of the junior subordinated debentures, the
holders of preferred securities will be entitled to receive, out of assets held
by EBH Trust, the liquidation distribution in cash. See "Description of the
Preferred Securities -- Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of Enterbank, the property
trustee, as holder of the junior subordinated debentures, would be a
subordinated creditor of Enterbank, subordinated in right of payment to all
senior and subordinated debt as set forth in the indenture, but entitled to
receive payment in full of principal and interest, before any shareholders of
Enterbank receive payments or distributions. Since Enterbank is the guarantor
under the preferred securities guarantee and has agreed to pay for all costs,
expenses and liabilities of EBH Trust, other than EBH Trust's obligations to the
holders of its preferred securities, the positions of a holder of the preferred
securities and a holder of junior subordinated debentures relative to other
creditors and to shareholders of Enterbank in the event of liquidation or
bankruptcy of Enterbank are expected to be substantially the same.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Armstrong Teasdale LLP, special counsel to Enterbank and
EBH Trust, the following are the material United States federal income tax
consequences of the purchase, ownership and disposition of the preferred
securities. Unless otherwise stated, this discussion deals only with preferred
securities held as capital assets by United States persons, defined below, who
are the beneficial holders (each a "holder") of the preferred securities
acquired upon their original issuance at their original offering price. As used
in this discussion, a United States person means a person that is (1) a citizen
or individual resident (or is treated as a citizen or individual resident) of
the United States for United States federal income tax purposes, (2) a
corporation, partnership or other entity created or organized (or is treated as
created or organized for United States federal income tax purposes) in or under
the laws of the United States or any political subdivision thereof, (3) an
estate the income of which is subject to United States federal income taxation
regardless of its source, or (4) any trust if a (i) court within the United
States is able to exercise primary supervision over the administration of the
trust and (ii) one or more United States persons have the authority to control
all substantial decisions of the trust.
The tax treatment of holders may vary depending on their particular
situation. This discussion does not address all the tax consequences that may be
relevant to a particular holder or to holders who may be subject to special tax
treatment, such as financial institutions, banks, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, individual retirement and certain tax deferred
accounts, foreign investors, or persons that will hold the preferred securities
as part of a position in a "straddle" or as part of a "hedging" or other
integrated transaction. The following summary does not address the tax
consequences to persons whose functional currency is not the United States
dollar or the tax consequences to shareholders, partners or beneficiaries of a
holder of the preferred securities. In addition, this discussion does not
include any description of any alternative minimum tax consequences or other
collateral tax consequences under United States federal income tax laws, or the
tax laws of any state, local or foreign government that may be applicable to a
holder of the preferred securities. This discussion is based on the Internal
Revenue Code of 1986, as amended, the Treasury regulations promulgated
thereunder and administrative and judicial interpretations of those authorities,
as of the date hereof, all of which are subject to change, possibly on a
retroactive basis. Any change of this nature could cause the tax consequences to
vary substantially from the consequences described below, possibly adversely
affecting a holder of the preferred securities.
Each prospective investor should consult their own tax advisors as to the
specific United States federal income tax consequences of the purchase,
ownership and disposition of the preferred securities.
The authorities on which this discussion is based are subject to various
interpretations and the opinions of counsel are not binding on the IRS or the
courts, either of which could take a contrary position. Moreover, no rulings
have been or will be sought from the IRS regarding the transactions described in
this prospectus. Accordingly, there can be no assurance that the IRS will not
challenge the opinions expressed in this discussion or that a court would not
sustain this type of challenge. It is therefore possible that the United States
federal income tax treatment of the purchase, ownership and disposition of
preferred securities may differ from the treatment described below.
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CLASSIFICATION OF EBH TRUST
Counsel will deliver its opinion in connection with the issuance of the
preferred securities that, under current law and assuming full compliance with
the terms of the trust agreement, and based on the facts and assumptions
contained in the opinion, EBH Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes each
holder of the preferred securities will be treated as owning an undivided
beneficial interest in the junior subordinated debentures, and each holder will
be required to include in its gross income its pro rata share of the interest
income or original issue discount, if any, that is paid or accrued on the junior
subordinated debentures. See "--Interest Income and Original Issue Discount."
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Council will deliver its opinion that under current law, the junior
subordinated debentures will be classified for United States federal income tax
purposes as indebtedness of Enterbank. By acceptance of a preferred security,
each holder covenants to treat the junior subordinated debentures as
indebtedness and the preferred securities as evidence of an indirect beneficial
ownership interest in the junior subordinated debentures. No assurance can be
given, however, that this classification will not be challenged by the IRS or,
if challenged, that such a challenge will not be successful. The remainder of
this discussion assumes that the junior subordinated debentures will be
classified for United States federal income tax purposes as indebtedness of
Enterbank. See "Risk Factors -- You are subject to prepayment risk because
possible tax law changes could result in a redemption of the Preferred
Securities."
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the junior subordinated
debentures generally will be included in income by a holder as ordinary income
at the time the interest income is paid or accrued in accordance with the
holder's regular method of tax accounting.
Enterbank's option to defer the payment of interest on the junior
subordinated debentures during an extension period might cause the junior
subordinated debentures to be considered initially issued with original issue
discount or treated as contingent payment debt instruments. Enterbank believes,
and will take the position, that this result will not arise because of a
provision in the Treasury regulations that applies when there is a remote
likelihood that a contingency, such as election to defer the payment of
interest, will occur. However, the Treasury regulations described above have not
yet been addressed in any rulings or other definitive interpretations by the
IRS. It is possible that the IRS could take a contrary position. If the IRS were
to assert successfully that the junior subordinated debentures were issued with
original issue discount regardless of whether Enterbank exercises its right to
defer payments of interest on the debentures, all holders, including those
utilizing the cash method of accounting, would be required to include the
original issue discount in income on a daily economic accrual basis as described
below.
If Enterbank exercises its right to defer payments of interest on the
junior subordinated debentures, the junior subordinated debentures will become
original issue discount instruments. In this event, all holders would be
required to include those amounts treated as original issue discount on the
junior subordinated debentures as a consequence
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of such reclassification in income on a daily economic accrual basis during the
extension period, even though Enterbank would not be expected to pay the
interest until the end of the extension period, and even though some holders may
use the cash method of tax accounting. Thereafter the junior subordinated
debentures would continue to be taxed as original issue discount instruments for
as long as they remained outstanding. Thus, even after the end of the extension
period, all holders would be required to continue to include those amounts
treated as original issue discount on the junior subordinated debentures in
income on a daily economic accrual basis, regardless of their method of tax
accounting and in advance of receipt of the cash attributable to this interest
income. In this event, actual cash payments of interest on the junior
subordinated debentures would not be reported separately as taxable income, but
the amount of original issue discount should be approximately equal to the
aggregate of all future payments of interest on the junior subordinated
debentures. Any amount of original issue discount included in a holder's gross
income (whether or not during a period during which payment is deferred) with
respect to a preferred security will increase such holder's tax basis in the
preferred security, and the amount of distribution received by a holder in
respect of such accrued original issue discount will reduce the tax basis of
such preferred security.
Because income on the preferred securities will constitute interest income
for United States federal income tax purposes, corporate holders of the
preferred securities will not be able to claim a dividends received deduction in
respect of such income.
Enterbank does not anticipate that additional sums, as defined in the
indenture, will be paid. However, if additional sums are paid, they will be
taxable to the security holder as ordinary income, generally as interest income.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES
Under current United States federal income tax law, a distribution by EBH
Trust of the junior subordinated debentures as described under the caption
"Description of the Preferred Securities -- Liquidation and Distribution Upon
Termination" will be a non-taxable event and will result in the holder receiving
directly its pro rata share of the junior subordinated debentures previously
held indirectly through EBH Trust. The junior subordinated debentures received
by the holder will have a holding period and aggregate tax basis equal to the
holding period and aggregate tax basis the holder had in its preferred
securities immediately before the distribution. If, however, the liquidation of
EBH Trust were to occur because EBH Trust is subject to United States federal
income tax on income accrued or received on the junior subordinated debentures
as a result of a tax event or otherwise, the distribution by EBH Trust of junior
subordinated debentures to holders would be a taxable event to EBH Trust and
each holder. A holder would recognize gain or loss as if the holder had sold or
exchanged its preferred securities for the junior subordinated debentures it
received upon the liquidation of EBH Trust. See "-- Sales or Redemption of
Preferred Securities." A security holder would recognize interest income in
respect of junior subordinated debentures received from EBH Trust in the manner
described above under "-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF PREFERRED SECURITIES
Gain or loss will be recognized by a holder on a sale or other taxable
disposition of preferred securities, including a redemption for cash, in an
amount equal to the difference between the amount realized (which for this
purpose will exclude amounts attributable to
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accrued interest or original issue discount not previously included in income,)
and the holder's adjusted tax basis in the preferred securities sold or
redeemed. A holder's adjusted tax basis generally will be its initial purchase
price, increased by any original issue discount previously included in the
holder's gross income to the date of disposition, and decreased by payments, if
any, received on the preferred securities in respect of original issue discount.
Any gain or loss on the taxable disposition of the preferred securities
generally will be treated as capital gain or loss. In general, amounts
attributable to accrued interest on a holder's pro rata share of the junior
subordinated debentures not previously included in income will be taxable as
ordinary income. However, because there is no clear authority regarding whether
a cash basis taxpayer is required to include in income accrued interest in the
event the preferred securities are sold for less than their principal amount,
investors are advised to consult their own tax advisors in such circumstances.
For taxpayers other than corporations, net capital gain, which is defined as net
long-term capital gain over net short-term capital loss for the taxable year,
realized from property, with limited exceptions, is subject to a maximum
marginal stated tax rate of 20%, or 10% in the case of taxpayers in the lowest
tax bracket. Capital gain or loss is long-term if the holding period for the
asset is more than one year, and is short-term if the holding period for the
asset is one year or less. Capital gains realized from assets held for one year
or less are taxed at the same rates as ordinary income. Subject to limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
The preferred securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest on the underlying junior subordinated
debentures. A holder that disposes of its preferred securities between record
dates for payments of distributions, and consequently does not receive a
distribution from EBH Trust for the period prior to the disposition, will
nevertheless be required to include in income accrued but unpaid interest or
accrued original issue discount on the junior subordinated debentures through
the date of disposition and will add this amount to its adjusted tax basis in
its preferred securities. The holder will recognize a capital loss on the
disposition of its preferred securities to the extent the selling price, (which
may not fully reflect the value of accrued but unpaid original issue discount)
is less than the holder's adjusted tax basis in the preferred securities, which
will include accrued but unpaid original issue discount that has been included
in income. As stated previously, subject to limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest paid or original issue discount accrued, if any, on
the junior subordinated debentures, beneficial ownership of which is reflected
in the preferred securities held of record by United States persons, other than
corporations and other tax-exempt holders, will be reported to the IRS.
Generally, income on the preferred securities will be reported on Form 1099,
which form should be mailed to holders by January 31 following each calendar
year. Backup withholding at a rate of 31% will apply to payments of interest to
non-exempt United States persons unless the holder complies with certain
identification and other requirements in applicable Treasury regulations. Any
amounts withheld from a holder under the backup withholding rules will be
allowed as a credit against the holder's United States federal income tax
liability, provided the required information is furnished to the IRS. Payment of
the proceeds from the disposition of the preferred securities to or through the
United States office of a broker is subject to information reporting and backup
withholding unless the holder or beneficial owner establishes an exemption from
information reporting and backup withholding.
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TAX LAW UNCERTAINTIES AND POSSIBLE TAX LAW CHANGES AFFECTING PREFERRED
SECURITIES
The combined tax effects of the trust's purchase of debt instruments such
as the junior subordinated debentures and simultaneous issuance of equity
interests such as the preferred securities has not been addressed in any
Treasury regulations or court decision and has not been approved or disapproved
by the IRS in any published ruling or notice. In a case filed in the United
States Tax Court, the IRS proposed disallowance of the deduction of the interest
expense claimed by a corporation on subordinated debt instruments issued by such
corporation and sold to a related trust. Although the IRS agreed to dismissal of
the relevant adjustments in that case prior to trial, it is not precluded from
asserting similar adjustments against other taxpayers. A variation of the
structure described in this prospectus involving a limited life company rather
than a trust was accepted by the IRS as creating debt giving rise to deductible
interest in Technical Advice Memorandum issued as LR 1999-10046. However,
taxpayers other than the taxpayer to whom a Private Letter Ruling or Technical
Advice Memorandum is addressed are not entitled to rely on them. In addition,
there can be no assurance that the facts underlying the Technical Advice
Memorandum are analogous to the facts underlying the preferred securities
described herein.
Legislative proposals have previously been made by the current
administration, which if enacted, could have adversely affected the ability of
Enterbank to deduct interest paid on the junior subordinated debentures.
Although these proposals were not enacted, there can be no assurance that future
legislation will not affect the ability of Enterbank to deduct interest on the
junior subordinated debentures or otherwise adversely affect the tax treatment
of the transactions described in this prospectus.
Although the IRS agreed to dismissal of the adjustments in the litigation
described above, it could assert similar adjustments against other taxpayers. It
if were to do so and the issue was litigated to a conclusion in which the IRS's
position on this matter was sustained, such a judicial determination could
constitute a tax event which could result in an early redemption of the
preferred securities. Similarly, if legislative proposals of the type described
above were to be enacted, a change of this nature could give rise to a tax
event, which may permit Enterbank to cause a redemption of the preferred
securities. See "Risk Factors -- You are subject to prepayment risk because
possible tax law changes could result in a redemption of the preferred
securities," "Description of the Preferred Securities -- Redemption -- Mandatory
and Optional Rights of Enterbank" and "Description of the Junior Subordinated
Debentures -- Redemption."
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF THE PREFERRED SECURITIES. HOLDERS OF THE
PREFERRED SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS.
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ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code,
generally may purchase preferred securities subject to the investing fiduciary's
determination that the investment in preferred securities satisfies ERISA's
fiduciary standards and other requirements applicable to investments by the
plan.
However, Enterbank and any of its affiliates may be considered a party in
interest, within the meaning of Section 3(14) of ERISA, or a disqualified
person, within the meaning of Section 4975 of the Code, regarding plans
maintained or sponsored by, or contributed to by, Enterbank or an affiliate, or
regarding which Enterbank or an affiliate is a fiduciary, or plans for which
Enterbank or an affiliate provide services. The acquisition and ownership of
preferred securities by an individual retirement arrangement or other plan
described in Section 4975(e)(1) of the Code, regarding which Enterbank or any of
its affiliates is considered a party in interest or a disqualified person, may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, which could give rise to the imposition of substantial taxes unless
the preferred securities are acquired under and in accordance with an applicable
exemption.
As a result, plans regarding which Enterbank and/or any of its affiliates
is a party in interest or a disqualified person should not acquire preferred
securities unless the preferred securities are acquired under and in accordance
with an applicable exemption. Any plans or entities whose assets include plan
assets subject to ERISA or Section 4975 of the Code proposing to acquire
preferred securities should consult with their own counsel.
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UNDERWRITING
Subject to the terms and conditions of the underwriting agreement among us,
EBH Trust and the underwriter, Stifel, Nicolaus & Company, Incorporated, the
underwriter has agreed to purchase from EBH Trust, and EBH Trust has agreed to
sell to the underwriter, 1,250,000 preferred securities.
In the underwriting agreement, the obligations of the underwriter are
subject to approval of certain legal matters by its counsel and to various other
conditions. Under the terms and conditions of the underwriting agreement, the
underwriter is committed to accept and pay for all of the preferred securities,
if any are taken.
The underwriter proposes to offer the preferred securities directly to the
public at the public offering price set forth on the cover page of this
prospectus, and to certain securities dealer at this price, less a concession
not in excess of $0.16 per preferred security. The underwriter may allow, and
the selected dealers may reallow, a discount not in excess of $0.10 per
preferred security to certain brokers and dealers. After the preferred
securities are released for sale to the public, the offering price and other
selling terms may from time to time be changed by the underwriter.
EBH Trust has granted to the underwriter an option, exercisable within 30
days after the date of this prospectus, to purchase up to 125,000 additional
preferred securities at the same price per preferred security to be paid by the
Underwriter for the other preferred securities being offered. The underwriter
may exercise the option only for the purpose of covering over-allotments, if
any, made in connection with the distribution of the Preferred securities being
offered.
If the underwriter exercises its option to purchase additional preferred
securities, EBH Trust will issue and sell to us additional common securities and
we will issue and sell to EBH Trust junior subordinated debentures in an
aggregate principal amount equal to the total aggregate liquidation amount of
the additional preferred securities being purchased under the option and the
additional common securities sold to us.
The table below shows the price and proceeds on a per security and
aggregate basis. The proceeds to be received by EBH Trust as shown in the below
do not reflect estimated expenses of $180,000 payable by us as set forth in the
table below.
<TABLE>
<CAPTION>
PER PREFERRED
SECURITY TOTAL
------------- -----
<S> <C> <C>
Public Offering Price......................... $8.00 $10,000,000
Proceeds to EBH Trust......................... $8.00 $10,000,000
</TABLE>
In view of that fact that the proceeds of the sale of the preferred
securities will be used by EBH Trust to purchase the junior subordinated
debentures from us, we have agreed to pay the underwriter $0.40 per preferred
security, or a total of $500,000, as compensation for arranging the investment
in the junior subordinated debentures. Should the underwriter exercise the
over-allotment option, an aggregate of $550,000 will be paid to the underwriter
for arranging the investment in the junior subordinate debentures.
During a period of 30 days from the date of this prospectus, neither EBH
Trust nor we will, subject to certain exceptions, without the prior written
consent of the underwriter, directly or indirectly, sell, offer to sell, grant
any option for sale of, or other dispose of, any preferred securities, any
security convertible into or exchangeable for preferred securities or junior
subordinated debentures or any debt securities substantially similar to the
junior
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<PAGE> 68
subordinated debentures or equity securities substantially similar to the
preferred securities (except for junior subordinated debentures and the
preferred securities being offered).
The offering of the preferred securities is made for delivery when, as and
if accepted by the underwriter and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriter
reserves the right to reject any order for the purchase of the preferred
securities.
Enterprise Holdings and EBH Trust have agreed to indemnify the underwriter
against several liabilities, including liabilities under the Securities Act of
1933.
Although the preferred securities have been approved for listing on the
American Stock Exchange, no assurances can be made as to the liquidity of the
preferred securities or that an active and liquid market will develop or, if
developed, that the market will continue. The offering price and distribution
rate have been determined by negotiations among representatives of Enterprise
Holdings and the underwriter, and the offering price of the preferred securities
may not be indicative of the market price following the offering.
In connection with the offering, the underwriter may engage in transactions
that are intended to stabilize, maintain or otherwise affect the price of the
preferred securities during and after the offering, such as the following:
- the underwriter may over-allot or otherwise create a short position in
the preferred securities for their own account by selling more preferred
securities than have been sold to them;
- the underwriter may elect to cover any short position by purchasing
preferred securities in the open market or by exercising the
over-allotment option;
- the underwriter may stabilize or maintain the price of the preferred
securities by bidding; and
- the underwriter may impose penalty bids, under which selling concessions
allowed to syndicate members or broker-dealers participating in this
offering are reclaimed if preferred securities previously distributed in
the offering are repurchased in connection with stabilization
transactions or otherwise.
The effect of these transactions may be to stabilize or maintain the market
price at a level above that which might otherwise prevail in the open market.
The imposition of a penalty bid may also affect the price of the preferred
securities to the extent that it discourages resales. No representation is made
as to the magnitude or effect of any such stabilization or other transactions.
Such transactions may be effected on the American Stock Exchange or otherwise
and, if commenced, may be discontinued at any time.
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<PAGE> 69
The following table sets forth the estimated expenses in connection with
the sale and distribution of the preferred securities, other than underwriting
discounts and commissions. All such expenses will be paid by Enterbank.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 3,058
NASD filing fee............................................. 1,600
Blue Sky filing fees and expenses........................... 2,000
American Stock Exchange listing fees........................ 15,000
Accounting fees and expenses................................ 50,000
Legal fees and expenses..................................... 80,000
Printing, postage and mailing............................... 25,000
Other....................................................... 3,342
--------
Total............................................. $180,000
========
</TABLE>
Because the National Association of Securities Dealers may view the
preferred securities as interests in a direct participation program, the offer
and sale of the preferred securities is being made in compliance with the
provisions of Rule 2810 under the NASD Conduct Rules.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy, upon payment of a fee set by
the SEC, any document that we file with the SEC at its public reference rooms in
Washington, D.C. (450 Fifth Street, N.W., 20549), New York, New York (Seven
World Trade Center, 13th Floor, Suite 1300, 10048) and Chicago, Illinois
(Citicorp Center, 500 West Madison Street, 14th Floor, Suite 1400, 60661). You
may also call the SEC at 1-800-432-0330 for more information on the public
reference rooms. Our filings are also available to the public on the internet,
through the SEC's EDGAR database. You may access the EDGAR database at the SEC's
web site at http://www.sec.gov.
You may also obtain a copy of these filings from us at no cost upon your
written or oral request to us. Please direct your requests to Jennifer Smith at
Enterbank Holdings, Inc., 150 North Meramec, St. Louis, Missouri, 63105, or by
telephoning us at (314) 725-5500. To obtain timely delivery, you must request
the information no later than five business days prior to the date you decide to
invest in EBH Capital Trust's preferred securities.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with them. This means that we can disclose important
business, financial and other information in our SEC filings by referring you to
the documents containing this information. Any information referred to in this
way is considered part of this prospectus, and any information filed with the
SEC by us after the date of this prospectus will automatically be deemed to
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we file a
post-effective amendment to the Form S-3 indicating the termination of this
offering:
- Annual Report on Form 10-K for the year ended December 31, 1998.
- Quarterly Report on Form 10-Q for the three months ended March 31, 1999.
- Quarterly Report on Form 10-Q for the six months ended June 30, 1999.
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<PAGE> 70
- Proxy Statement on Schedule 14A filed September 13, 1999.
- Current Report on Form 8-K filed October 7, 1999.
There are not separate financial statements of EBH Capital Trust in this
prospectus. We do not believe such financial statements would be helpful
because:
- EBH Capital Trust is a subsidiary of Enterbank Holdings, Inc., which
files consolidated financial information under the Exchange Act.
- EBH Capital Trust does not have any independent operations other than
issuing the preferred and common securities and purchasing the junior
subordinated debentures of Enterbank Holdings, Inc.
- EBH Capital Trust's only material assets will be the junior subordinated
debentures of Enterbank Holdings, Inc. when issued.
- The combined obligations of Enterbank Holdings, Inc. under the junior
subordinated debentures, the guarantee, the trust agreement and the
indenture have the effect of providing a full and unconditional guarantee
of EBH Capital Trust's obligations under its preferred securities. See
"Description of Junior Subordinated Securities," "Description of the
Preferred Securities," "Description of Preferred Securities Guarantee"
and "Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee."
LEGAL MATTERS
The validity of the preferred securities we are offering, and certain
matters relating to United States federal income tax consequences of this
offering, will be passed upon for us and for EBH Trust by Armstrong Teasdale
LLP, St. Louis, Missouri. Richards, Layton & Finger, Wilmington, Delaware, will
pass upon certain matters relating to Delaware law for EBH Trust. Certain legal
matters will be passed upon for the underwriter by Lewis, Rice & Fingersh, L.C.,
St. Louis, Missouri.
EXPERTS
The consolidated financial statements of Enterbank Holdings, Inc. as of
December 31, 1998 and 1997 and for each of the years in the three-year period
ended December 31, 1998, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we and
EBH Capital Trust have filed with the Securities and Exchange Commission
relating to EBH Capital Trust's preferred securities being offered by this
prospectus. As permitted by SEC rules, this prospectus does not contain all of
the information contained in the registration statement and accompanying
exhibits and schedules we file with the SEC. You may refer to the registration
statement, the exhibits and schedules for more information about us and EBH
Capital Trust's preferred securities. The registration statement, exhibits and
schedules are also available at the SEC's public reference rooms or through its
EDGAR database on the internet.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
The Offering.......................... 4
Risk Factors.......................... 8
Special Note Regarding Forward-Looking
Statements.......................... 17
Use of Proceeds....................... 18
Accounting Treatment.................. 18
Capitalization........................ 19
Selected Consolidated Financial
Data................................ 20
Business.............................. 22
Description of the Preferred
Securities.......................... 25
Description of the Junior Subordinated
Debentures.......................... 40
Book-Entry Issuance................... 51
Description of the Preferred
Securities Guarantee................ 53
Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures and the Preferred
Securities Guarantee................ 57
Material Federal Income Tax
Consequences........................ 59
ERISA Considerations.................. 64
Underwriting.......................... 65
Where You Can Find More Information... 67
Legal Matters......................... 68
Experts............................... 68
About this Prospectus................. 68
</TABLE>
- - WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION THAT DIFFERS FROM
THE INFORMATION IN THIS PROSPECTUS. IF YOU RECEIVE ANY DIFFERENT INFORMATION,
YOU SHOULD NOT RELY ON IT.
- - THE DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT ENTERBANK HOLDINGS, INC. IS OPERATING UNDER THE SAME
CONDITIONS THAT IT WAS OPERATING UNDER WHEN THIS PROSPECTUS WAS WRITTEN. DO
NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AT ANY
TIME PAST THE DATE INDICATED.
- - THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES.
- - THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES TO WHICH IT RELATES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
------------------------------------------------------
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1,250,000 PREFERRED SECURITIES
EBH CAPITAL TRUST I
9.40% CUMULATIVE PREFERRED SECURITIES
FULLY, IRREVOCABLY AND
UNCONDITIONALLY GUARANTEED ON A
SUBORDINATED BASIS BY
[ENTERBANK HOLDINGS, INC. LOGO]
ENTERBANK HOLDINGS,
INC.
------------------------
$10,000,000
9.40% SUBORDINATED DEBENTURES
OF
ENTERBANK HOLDINGS, INC.
------------------------
PROSPECTUS
OCTOBER 19, 1999
------------------------
STIFEL, NICOLAUS & COMPANY
INCORPORATED
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