BOARD OF GOVERNORS 

or THE 

FEOERAL RESERVE SYSTEM 

Paul Pilecki, Esq. 

Winston & Strawn LLP 

1700 K Street, N.W. 

Washington, D.C. 20006 

Dear Mr. Pilecki: 

WA.SHINGTON, o. c. 20551 

March 2, 2010 

SCOTT G. ALVAREZ 

GENERAL COuNSEL 

This responds to your request for a determination that Continental 

Investors Fund LLC and Continental Investors LLC, both of Chicago, 

Illinois, and their subsidiaries and affiliates (collectively, "Continental"), 

would not be deemed to control Three Shores Bancorporation, Inc. ("Three 

Shores"), and its wholly owned subsidiary, Seaside National Bank & Trust 

("Bank"), both of Orlando, Florida, for purposes of the Bank Holding 

Company Act of 1956, as amended, as a result the acquisition of up to 

9.9 percent of the voting and total equity of Three Shores. 

Transaction Summary 

Under the Preferred Stock Purchase Agreement between Continental 

and Three Shores (the "Agreement"), on November 24, 2009, Continental 

acquired Series D-3 Preferred Stock ("Preferred Stock") representing 

9.9 percent of the voting equity of Three Shores. Preferred Stock is voting 

convertible preferred stock that has the same voting rights as common stock. 

Preferred Stock would be convertible at any time by Continental into 

common stock. The Preferred Stock ranks senior to common stock with 

respect to rights on liquidation, dissolution and winding Up,l 

1 \Vhen dividends are paid to holders of common stock, the holders of 

Preferred Stock are entitled to dividends in an amount equal to that which 

they would have been entitled to receive had the Preferred Stock been 

converted into common stock. 
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The Agreement also provides that Continental may provide additional 

equity financing in follow-on investments and grants preemptive rights if 

Three Shores or its subsidiaries offer to sell equity securities. The 

preemptive rights provision of the Agreement restricts Continental from 

acquiring additional equity securities if Continental would own more than 

9.9 percent of the voting equity or 24.9 percent of the total equity of Three 

Shores, unless Continental receives the Board's approval, in which case 

Continental may acquire up to 24.9 percent of the voting and total equity of 

Three Shores. 

Under the Agreement, Continental will have the right to appoint a 

nonvoting observer to the boards of directors of Three Shores and Bank. In 

connection with its request, Continental has provided commitments that are 

similar to those on which the Board previously has relied to ensure that an 

investor is not able to exercise a controlling influence over a bank or bank 

holding company? 

In addition to Continental, two other investors are purchasing shares 

of Three Shores. Each of Continental and the other investors represented 

that it conducted its own due diligence review and made an independent 

decision to invest in Three Shores. In addition, each of them represented 

that it is not an affiliate of any other investor and has not had any 

relationship with, or made any investments with, any other investor prior to 

the investment in Three Shores. Finally, Continental provided commitments 

to ensure that it is not associated with any other investor for purposes of the 

BHC Act? 

Legal Framework 

F or purposes of the BHC Act, a company has control over another 

company if the first company (i) directly or indirectly or acting through one 

or more other persons owns, controls, or has power to vote 25 percent or 

more of any class of voting securities of the other company; (ii) controls in 

any manner the election of a majority of the directors of the other company; 

or (iii) directly or indirectly exercises a controlling influence over the 

2 A copy of all the commitments made by Continental is attached as an 

appendix. 

3 Id. 
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management or policies of the other company.4 The Board's Regulation Y 

also sets forth a set of rebuttable presumptions of control. 5 

Under the proposal, Continental would be deemed to control Three 

Shores for purposes of the BHC Act only if the Board were to find that 

Continental exercised a controlling influence over the management or 

policies of Three Shores. Continental would not own, control, or hold with 

power to vote 25 percent or more of any class of voting securities of, or 

control the election of a majority of the directors of, Three Shores. In 

addition, Continental would not trigger any of the rebuttable presumptions of 

control in Regulation Y with respect to Three Shores as a result of the 

transac ti ons. 

Discussion and Analysis 

The size and nature of the equity investment by Continental in Three 

Shores, when combined with Continental's nonvoting observer at meetings 

of the boards of directors of Three Shores and Bank, raise the issue of 

whether Continental would exercise a controlling influence over the 

management or policies of Three Shores or Banle 

"Nonvoting Observer. In September 2008, the Board issued a policy 

statement regarding equity investments in banks, bank holding companies, 

and nonbanking firms. 6 In its statement, the Board noted that boards of 

directors of banking organizations typically have nine or ten members, and 

that attendance by a representative of a minority investor as an observer to 

allow the investor access to information and as a mechanism for providing 

advice to the banking organization generally would not permit the investor 

to exercise a controlling influence over the banking organization, as long as 

the observer does not have any right to vote at meetings of the board. 

As noted above, Continental will have one nonvoting observer on the 

boards of directors of Three Shores and Bank. Three Shores represented that 

it would be increasing the board of directors of Three Shores from one to 

seven members and decreasing the board of directors of Bank from fourteen 

4 12 U.S.C. § 1841(a)(2); 12 CFR 225.2(e). 

5 See 12 CFR 225.31(d). 

6 12 CFR 225.144 ("Policy Statement"). 
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to seven members.7 After these changes, the boards of directors at Three 

Shores and Bank will be substantially similar in composition and will have a 

majority of directors that are independent from both management and any 

investor. Despite the fact that the boards are slightly smaller than the Policy 

Statement contemplated, the attendance of a nonvoting observer for 

Continental at the board meetings of Three Shores and Bank conforms to the 

Policy Statement. 

Equity Ownership. As noted above, Continental would not own, 

control, or hold with power to vote 25 percent or more of any class of voting 

securities or of the total equity of Three Shores, as required by the BHC Act 

and the Policy Statement. In addition, Continental has provided sufficient 

infonnation to demonstrate that it is not associated with any other investor, 

and therefore the equity investments of such other investors would not be 

attributable to Continental. 

Based on all the facts of record in this case, staff would not at this 

time recommend that the Board find that Continental exercises a controlling 

influence over the management or policies of Three Shores for purposes of 

the BHC Act. In reaching this determination, staff relied on all the facts of 

record, including all the representations and commitments made by or on 

behal f of Continental and Three Shores (whether noted in this letter or 

otherwise contained in your correspondence with the Board). 

This opinion is specifically conditioned on compliance with all the 

commitments and conditions discussed in this letter. Any change in the facts 

presented could result in a different conclusion and should be reported 

7 The changes to the size of the boards are due to the fact that the banking 

organization recently established Three Shores as a holding company above 

Bank and has an established plan to enlarge the board of Three Shores and 

streamline the size and composition of the board of Bank. Continental has 

represented that the changes to the sizes of the two boards were not a 

condition to Continental's investment, and staff does not consider that such 

changes reflect a controlling influence by Continental. 
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immediately. If you have any questions about this matter, please contact 

Sebastian Astrada, Attorney (202-452-3594), or Pat Robinson, Assistant 

General Counsel (202-452-3005), of the Board's Legal Division. 

Sincerely, 
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Appendix 

Continental Investors Fund LLC and Continental Investors LLC 

("Acquirer"), Chicago, Illinois, and their subsidiaries and affiliates 

(collectively, "Acquirer Group"), will not, without the prior approval of the 

Board or its staff, directly or indirectly: 

1. Exercise or attempt to exercise a controlling influence over the 

management or policies of Three Shores Bancorporation ("Target"), 

Orlando, Florida, or any of its subsidiaries; 

2. Have or seek to have a representative of Acquirer Group serve on the 

board of directors of Target or any of its subsidiaries; 

3. Have or seek to have any employee or representative of the Acquirer 

Group serve as an officer, agent, or employee of Target or any of its 

subs i diari es; 

4. Take any action that would cause Target or any of its subsidiaries to 

become a subsidiary of Acquirer Group; 

5. Own, control, or hold with power to vote securities that (when 

aggregated with securities that the officers and directors of the Acquirer 

Group own, control, or hold with power to vote) represent 25 percent or 

more of any class of voting securities of Target or any of its subsidiaries; 

6. Own or control equity interests that would result in the combined voting 

and nonvoting equity interests of the Acquirer Group and its officers and 

directors to equal or exceed 25 percent of the total equity capital of 

Target or any of its subsidiaries, except that, if the Acquirer Group owns, 

holds, or has the power to vote less than 15 percent of the outstanding 

shares of any classes of voting securities of Target, it may own or control 

equity interests greater than 25 percent, but in no case more than 33.3 

percent, of the total equity capital of Target or any of its subsidiaries; 

7. Propose a director or slate of directors in opposition to a nominee or slate 

of nominees proposed by the management or board of directors of Target 

or any of its subsidiaries; 

8. Enter into any agreement with Target or any of its subsidiaries that 

substantially limits the discretion of Target's management over major 
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policies and decisions, including, but not limited to, policies or decisions 

about employing and compensating executive officers; engaging in new 

business lines; raising additional debt or equity capital; merging or 

consolidating with another firm; or acquiring, selling, leasing, 

transferring, or disposing of material assets, subsidiaries, or other entities; 

9. Solicit or participate in soliciting proxies with respect to any matter 

presented to the shareholders of Target or any of its subsidiaries; 

10. Dispose or threaten to dispose (explicitly or implicitly) of equity 

interests of Target or any of its subsidiaries in any manner as a condition 

or inducement of specific action or non-action by Target or any of its 

subsidiaries; or 

11. Enter into any other banking or nonbanking transactions with Target or 

any of its subsidiaries, except that the Acquirer Group may establish and 

maintain deposit accounts with Target, provided that the aggregate 

balance of all such deposit accounts does not exceed $500,000 and that 

the accounts are maintained on substantially the same terms as those 

prevailing for comparable accounts of persons unaffiliated with Target. 

Acquirer also certifies that: 

12. Acquirer is not an affiliate of any other investor in the proposed 

transaction (individually, each an "Investor," and, collectively, the 

"Investors"); 

13. Acquirer has reached its decision to invest in Target independently from 

the other Investors; 

14. Acquirer is not managed or advised by an investment manager or 

investment advisor who performs the same services for any other 

Investor; 

15. Acquirer has not engaged and will not engage as part of a group 

consisting of substantially the same entities as the Investors, in 

substantially the same combination of interests, in any additional 

banking or nonbanking activities or business ventures in the United 

States without prior consultation with the Board; and 

16. Acquirer has not and will not enter any agreements or understandings 

with any other Investor to act in concert for the purpose of exercising a 
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controlling influence over Target or any of its subsidiaries, including, 

but not limited to, any agreements or understandings regarding the 

voting or transfer of shares of Target, other than the agreements 

considered by the Board for the proposed transaction. 

The tenus used in these .commitments have the same meanings as set forth in 

the Bank Holding Company Act of 1956, as amended, and the Board's 

Regulation Y. 

Nothing in these commitments releases the Acquirer Group from compliance 

with the Change in Bank Control Act and the Board's regulations thereunder 

for any subsequent acquisition or increase in the percentage ownership of 

any class of voting shares of Target. 

Acquirer understands that these commitments constitute conditions imposed 

in writing in connection with the Board's findings and decisions related to 

Acquirer's acquisition of up to 9.9 percent of voting shares of Target, 

including a determination that no filing under the Bank Holding Company 

Act is required for this transaction by Acquirer, and, as such, may be 

enforced in proceedings under applicable law.