As you know, ALL U.S. Banks are eligible to participate in the U.S. Treasury’s Capital Purchase Program, better known as the “bailout.” The decision as to whether or not a bank chooses to participate in the Program is an individual one and one based on criteria that may or may not be unique to a particular bank.

We at Lyons National Bank chose not to participate. This was an easy decision for us for many reasons. First, our capital position is very strong, and we are classified as being a “well capitalized” bank by all the regulatory agencies that oversee us. Second, we did not, and will not, participate in the sub-prime lending practices that created much of the current financial issues the nation is facing, therefore the quality of our loans is very good. Third, we have not changed our lending standards. We continue to prudently and actively lend to all consumers and businesses who exhibit the wherewithall to repay the debt without causing undo stress on their finances. Finally, while we understand the depth of the financial crisis the nation faces and appreciate the urgent response by the Treasury, we believe the Program has morphed into something other than its originally intended purpose. Therefore, we believe much of the money allocated to the Program could be spent more wisely elsewhere.

We align our business principles with the long-standing principles of private enterprise. We will continue to grow internally. We will support that growth by adding the additional earnings it generates to our already strong capital base. If and when an extraordinary opportunity presents itself, we will complete our due diligence on that opportunity. If we determine it is a worthwhile and profitable endeavor for our shareholders and that it is beneficial to both our customers and the communities we serve, we will make our case with our shareholders and other investors. If we have done our homework thoroughly, we are confident we will be successful in raising additional private capital.

We thank our shareholders for their continued confidence and support; and thank our customers for allowing us to be their Bank.

Sincerely,

Robert A. Schick
President and CEO