OTC Markets Newsletter
OTC Markets Group News May 2014
Welcome Founding Banks to OTCQX!

This month, OTC Markets Group announced the first banks to trade on our OTCQX® marketplace under a new qualification process for U.S. community and regional banks. The announcement expands the OTCQX marketplace for U.S. and international companies and distinguishes publicly-traded community and regional banks that are strongly-capitalized, transparent in their news and disclosure and committed to enhancing value for their shareholders.

To celebrate, we asked our Founding Banks to discuss how they uniquely serve the banking needs and growth of their own communities:

[logo] Calvin B. Taylor Bankshares, Inc. (Taylor Bank) (OTCQX: TYCB)

Calvin B. Taylor Bankshares, Inc. (Taylor Bank) (OTCQX: TYCB)

“Taylor Bank is operated today on the same guiding principles that our founder, Calvin B. Taylor, set forth when founding the bank over 120 years ago. Operating under conservative principles, and by identifying and deploying banking products and services its customers need to succeed, the bank has grown, adapted and flourished alongside the coastal communities of Maryland, Delaware and Virginia.

“Taylor Bank has earned a region wide reputation as a strong, safe, and stable financial institution. The bank meets the needs of its consumer and business customers through a variety of personal and electronic delivery channels.

“Taylor Bank does not try to be ‘everything to everyone.’ Instead, the bank prefers to cultivate personal relationships, emphasize responsiveness, and work to prosper its customers in a constantly changing economic and regulatory environment. All stakeholders including customers, employees, and stockholders are the focal point of our efforts each day, while simultaneously striving to maximize earnings, maintain high asset quality, and provide a consistent return and value.”

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[logo] Cortland Bancorp (OTCQX: CLDB)

Cortland Bancorp (OTCQX: CLDB)

“Cortland Banks takes great pride in its more than 120-year history as a community bank. Recently rated 5 stars by Bauer Financial Inc., Cortland Banks continues to strive to provide its customers with the highest quality of integrated financial services. We are committed to serving local businesses by offering complete financial solutions including business checking, cash management and remote deposit capture services.

“Our team of experienced loan advisors has met the lending needs of local small to mid-size business in almost every industry for real estate. Our business asset financing lines of credit and letters of credit have enabled us to grow our loan portfolio by more than 30% over the last three years.

“Cortland Bank is a full service state bank engaged in commercial and retail banking and trust services. Cortland Banks operates a total of 12 offices, employing approximately 185 people in the Mahoning, Trumbull, Portage and Ashtabula County area.”

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[logo] First BancTrust Corp. (OTCQX: FIRT)

First BancTrust Corp. (OTCQX: FIRT)

Paris, Illinois-based First BancTrust Corporation, the financial holding company for First Bank & Trust, S.B. (“FBT”), an Illinois-chartered savings bank, adapts to meet the diverse needs of its communities, according to President and CEO Jack Franklin. In its rural communities, that means providing a majority of the home loans – “a core competence” – as well as consumer lending and agricultural lending where loan officers are farmers themselves. In the larger, urban market of university town Champaign, Illinois, that includes commercial and industrial (“C&I”) lending, small business lending and “a fair amount” of mortgage lending. Local staff is seasoned and tailored to the specific lending needs of their local markets.

When they are not serving customers, FBT employees are involved in giving back to the community through various local fundraising events, volunteer and donation activities. One of the bank's most popular events is a “Dancing with the Stars”-style fundraiser to benefit the local Boys & Girls Club in Champaign. The county president's dream to reproduce this event pairs local celebrities with professional dance instructors in an annual dance competition. Last year the event raised over $150,000 in a one sell out night. “It is one of the toughest tickets in town,” says Mr. Franklin.

First BancTrust’s ability to adapt to the changing needs of its communities and expansion into new markets is paying off. Last year, the bank achieved in excess of $400 million in assets, up from $100 million just a dozen years ago.

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[logo] First ULB Corp. (OTCQX: FUBP)

First ULB Corp. (OTCQX: FUBP)

Headquartered in Oakland, CA, First ULB Corp. is the parent company of United Labor Bank, F.S.B., a federally-chartered, FDIC-insured stock savings bank primarily serving the cash management needs of small and independent businesses in four states. The bank has nine branches plus a Small Business Administration department located in Los Angeles and has plans to expand into the Pacific Northwest.

One of the most important commitments for United Labor Bank is supporting the financial education of its clients, says First ULB Corp. President and CEO Malcolm Hotchkiss. The bank has taught basic financial education in 22 labor apprenticeship programs and graduated over 3,500 apprentices with basic financial skills. Today, its apprenticeship program has become a train-the-trainer program in partnership with the Federal Deposit Insurance Corporation (FDIC)’s Money Smart program designed to educate small business owners and entrepreneurs in basic financial tools like budgeting, taxes, organizational skills and resources.

Since Hotchkiss came to First ULB Corp. in 1994, the bank has grown from $30 million in assets to close to $400 million last year.

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[logo] Harleysville Savings Financial Corp. (OTCQX: HARL)

Harleysville Savings Financial Corp. (OTCQX: HARL)

Founded in 1915, Harleysville Savings Bank was one of three financial firms formed at the turn of the last century to serve the housing needs of the residents of Harleysville in eastern Pennsylvania. Today, it is the only independent company with the Harleysville brand still serving the community and it has expanded beyond residential lending into business lending.

According to Ronald Geib, president and CEO of Harleysville Savings Financial Corp., that commitment to the community is testament to the bank’s management and board of directors: “Our board of directors are not just investors in a community bank. We are here to serve another 100 years.” They do that not only through money, but by donating their time to the local United Way, senior centers and local sports and community centers.

Likewise, when Harleysville Savings Financial deregistered from the SEC and delisted from Nasdaq to the OTCQB marketplace under the JOBS Act in December 2012, the bank was able to increase its cash dividend by a penny, giving back to shareholders what it was saving in “attorneys’ fees, printing costs and registration to Nasdaq.”

Today, the bank is “doing well,” according to Geib. While the business lending market was hit during the recession and other local banks have changed hands, Harleysville achieved $800 million in assets last year, $500 million of which were loans and $120 million of which were business loans. Harleysville was also named to American Banker magazine’s list of the Top 200 Community Banks for the fourth consecutive year based on its average return on equity (ROE) over a three year period.

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[logo] Katahdin Bankshares Corp. (OTCQX: KTHN)

Katahdin Bankshares Corp. (OTCQX: KTHN)

Headquartered in Houlton, Maine, on the U.S.-Canadian border, Katahdin Bankshares may be the most remote of the OTCQX founding banks but it is no less impactful in terms of its commitment to its individual and business customers. Its subsidiary, Katahdin Trust Company, a Maine-state chartered commercial bank, was established in 1918 and now has 19 branch offices throughout the state.

Today, many of the bank’s business customers are sole proprietors or “smaller operators” and the bank often goes out of its way to meet their needs, often times going to their place of business to close a loan. As Katahdin Trust Company President and CEO Jon Prescott says, “We strive to be service-oriented.”

Going the extra mile for its customers helped the bank earn a Preferred Lender designation from the Small Business Administration (SBA) in 2012, an elite status that will allow it to process and close SBA loans more quickly.

Katahdin Bankshares’ success has resulted in continued profits for the bank. Katahdin Bankshares was named to American Banker magazine’s list of the Top 200 Community Banks for the seven consecutive years, 2007 to 2013.

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[logo] Standard Financial Corp. (OTCQX: STND)

Standard Financial Corp. (OTCQX: STND)

“Standard Bank, PaSB, a community bank with assets of $434 million, operates nine offices which are nestled in southwestern Pennsylvania and northern Maryland. Established in 1913, the bank just marked it 100th anniversary and took the year to celebrate its growth and success. The original savings and loan company was established with a vision to ‘provide financial services to community members for the betterment of families and communities as a whole,’ which is the same vision Standard Bank holds today. Since it was established, the bank has continued to grow by keeping the needs of their hometowns in the forefront. To meet these needs, Standard Bank began offering commercial lending products and services to aid local businesses, which are the foundations of local economies.

“In 2010, the Standard Charitable Foundation was established in conjunction with the conversion of Standard Financial Corp. from mutual to stock form. The foundation’s vision extends from the bank’s mission and works to provide financial support to local non-profits for the betterment of the community.

“Standard Bank associates, however, are the real heart of the bank’s hallmark: customer service. Associates work hard to meet customers’ needs through active listening and problem solving – not through pushing highlighted products or services. Since associates live, work, and play in the communities they serve, they have a great enthusiasm to volunteer and serve in the community. To support their enthusiasm, the bank started providing associates one paid day each year so they may volunteer at their organization of choice.

“As Standard Bank enter its next century of business, the bank has created new personal and business checking accounts that focus on rewards and customer relationships with the added of mobile banking coming this fall. In addition to reformatting deposit accounts, the bank also continues to make new and creative efforts to meet the lending needs of the communities it serves through providing affordable and flexible loan options.”

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[logo] Virginia National Bankshares Corp. (OTCQX: VABK)

Virginia National Bankshares Corp. (OTCQX: VABK)

Headquartered in Charlottesville, Virginia, Virginia National Bankshares is the bank holding company for Virginia National Bank, a commercial bank with seven banking offices located in Central Virginia. The bank offers investment management and trust services under the trade name of VNB Wealth Management through its subsidiary, VNB Trust, N.A.

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The following firms have been approved to serve as Corporate Brokers for banks on OTCQX: Boenning & Scattergood Inc., D.A. Davidson & Co., FIG Partners LLC, Keefe, Bruyette and Woods, Inc., McAdams Wright Ragen, Inc. and StockCross Financial Services, Inc.



NEW RULES FOR U.S. REGIONAL AND COMMUNITY BANKS ON OTCQX
OTCQX for banks, an expansion of the OTCQX marketplace, is designed to meet the unique needs of U.S. financial institutions that are established, well-managed, and strongly capitalized. Under a more streamlined process, banks on OTCQX:

Leverage their existing regulatory reporting standards to qualify
Are current in their reporting to a bank regulator
Must meet high financial standards
Appoint a “Corporate Broker,” a FINRA member broker-dealer specializing in trading in and advising banks, to provide guidance on the trading of their stock and access to institutional investors, trading expertise and wealth management services

Click here to learn more about the requirements for banks on OTCQX.
Get to Know Your Community
[photo] Interview with Stephen Randall, CFO of Titan Medical Inc.

This month, we speak with Stephen Randall, CFO of Titan Medical Inc. (OTCQX: TITXF). Titan Medical, which has a primary listing on TSX Venture, is focused on the design and development of a robotic surgical system for application in minimally invasive surgery. Mr. Randall talks to us about where the company is in its development cycle, the role of OTCQX in the company’s capital market strategy, and growth in the global medical robotic systems market.

OTC Markets Group: Tell us about Titan Medical. What do you do?

Stephen Randall: Titan Medical is developing a Single Port Orifice Robotic Technology (SPORT™) Surgical System, which is comprised of a surgeon-controlled single incision robotic platform that includes a 3D high definition vision system and interactive instruments for performing minimally invasive surgery (“MIS”) procedures. The surgeon workstation provides the surgeon with an interface to the robotic platform and a 3D endoscopic view of inside a patient’s body during MIS procedures. The SPORT™ Surgical System will enable the surgeon to insert surgical instruments and 3D vision into the patient’s body through a 25 mm skin incision. Once inserted, the device will deploy into a working configuration wherein the 3D vision system and interactive multi-articulating instruments are controlled by a surgeon at the workstation.

Click to read more.

OTCM: You have competitors in the market. How will Titan Medical’s robotic surgery technology compare?

SR: Titan’s SPORT™ Surgical System has the following advantages versus competitive systems:

  • improved dexterity and surgical access;
  • small architecture providing easy set-up and manoeuvrability;
  • designed for small space surgery;
  • an estimated capital cost of less than $1,000,000;
  • competitive replacement costs for surgical tools; and
  • a smaller footprint in the operating room.

OTCM: Where are you in the development cycle? When do you expect to reach commercialization?

SR: Titan is on track with respect to its testing phases and is expected to attain all its clinical milestones on schedule. Titan has completed its first major milestone -- the completion of technical feasibility and integrated testing -- and is about to start its second major milestone. The second phase is initiation of pre-clinical and clinical planning process with FDA. The third and fourth phases are CE Mark (European Union) regulatory approval and the commercial launch in the European Union market, respectively. CE Mark approval is expected during 2015 followed by the commercial launch of the product in the European Union later in 2015. The fifth phase, initiation of FDA 510(K) approval, is expected near the end of 2015 with commercialization following quickly thereafter.

OTCM: You recently completed two capital raises. How much did you raise and what do you plan to do with the proceeds?

SR: Titan raised almost U.S. $35 million in two equity raises this spring. These funds will be used to finance the development of Titan’s Single Port Orifice Robotic Technology (SPORT™) Surgical System through to commercialization. Titan has essentially taken all financial risk off the table.

OTCM: Titan Medical joined OTCQX on February 24, 2012. How has OTCQX helped you leverage your existing regulatory filings to globalize your shareholder base?

SR: Approximately 80% of Titan’s investors are American. Listing on the OTCQX has helped Titan to grow and maintain its American shareholder base and attract new investors. In its most recent offerings, Titan was able to raise additional funding in the U.S. Previously, the vast majority of Titan’s funding was raised in Canada.

OTCM: What else should U.S. investors knows about Titan Medical?

SR: The global medical robotic systems market is currently worth $4 billion of which a little more than half consists of Intuitive Surgical, the largest robotic surgery company in the world that is currently marketing its product. The global medical robotic systems market is expected to be worth $20 billion by 2020.

Titan’s development work is being done by Ximedica out of Providence, Rhode Island, a full service ISO 13485 certified and FDA registered product development firm with an exclusive focus on medical products.

Click to close.

Light Up The Market
[photo] [photo]

[photo]
Levon Resources (OTCQX: LVNVF), Victory Energy (OTCQX: VYEY), and 8 Founding Banks Light up the Market in May to celebrate joining OTCQX!

Follow us on Twitter at @OTCMarket to keep up with OTCQX companies Lighting Up Their Market.
Monthly Trade Summary

April 2014

Marketplace Designations # of Securities Monthly Dollar Volume Monthly Dollar Volume
per Security
YTD Dollar Volume Aggregate Market Capitalization
(in Millions)*
OTCQX® 339 $2,630,827,041 $7,760,552 $13,190,458,510 $1,621,146
OTCQB® 3,034 $5,504,898,788 $1,814,403 $33,167,026,879 $235,032
OTC Pink® Current Information 3,311 $9,075,795,136 $2,741,104 $41,055,645,667 $12,449,706
OTC Pink Limited Information 503 $195,100,519 $387,874 $991,353,546 $14,956
OTC Pink No Information 2,720 $978,511,509 $359,747 $5,324,013,525 $55,419
Totals 9,907 $18,385,132,994 $1,855,772 $93,728,498,127 $14,376,259
*Data as of April 30, 2014
Newsletter Sponsor
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Events, Webinars & Sponsorships
News
OTCM Hosted Events and Webinars:

OTCQX and OTCQB Marketplaces for International Companies - Webinar (June 11, 2014)

OTCM Co-Hosted Events and Webinars:

Edison Group: OTCQB a venture stage marketplace in the US - London, UK (June 23, 2014)

Szaferman Lakind: New OTCQB Eligibility Standards - Webinar (Archived Replay of May 22 webinar)

If you are hosting an event to educate your clients about the new OTCQB eligibility standards, we would be happy to participate. Please contact us if you are interested.

OTCM is Attending:


IR Magazine Awards - Brazil 2014 - Sāo Paulo, Brazil (July 22, 2014)

IR Magazine Awards - Europe 2014 - London, UK (June 24, 2014)

FISD General Meeting and Index Forum - New York (June 18, 2014)

FIF Quarterly Event: A Constructive Conversation on Market Structure - New York (June 17, 2014)

St. Louis Traders Association (STASL) Annual Summer Gathering - St. Louis (June 12-13, 2014)

Contact us if you are interested in meeting us at one of these events.
Interview with Jason Paltrowitz, Global Head of Business Development, OTC Markets - MarketRadio.ca (May 22, 2014)

Eight Institutions Move Shares to Bank-Only Trading Platform - American Banker (May 21, 2014)

OTC Public Market for Community Banks Launching - Pittsburgh Business Times (May 21, 2014)

OTC Markets Group Welcomes Banks to OTCQX Marketplace - press release (May 21, 2014)

Solutions for Community Banks in the Public Markets: Q&A with Broker-Dealers - BankDirector.com (May 9, 2014)

New Penny Stock Listing Rules Require Executive Certifications - Wall Street Journal, CFO Journal (May 2, 2014)

OTC Markets Delists 239 Stocks from QB But Opens Mart to Ventures - Traders Magazine (May 1, 2014)
Fact of the Month
75% of all publicly-traded banks with assets less than $1 billion trade on the OTCQX and OTCQB marketplaces.
Regulation & Compliance
Market Data Updates
Revised Migration Date for New FINRA ORF Platform
  The migration date for firms to begin reporting OTC equity security trades and trades in restricted equity securities effected pursuant to Securities Act Rule 144A to the new OTC Reporting Facility (ORF) technology platform has been moved to September 15, 2014. Additional information can be found here. FINRA has also published a new FINRA OTC Reporting Facility (ORF) Migration Website. In addition, the SEC has approved amendments to the Equity Trade Reporting and OATS Rules that will also be effective on September 15, 2014.

Proposed Amendment to Require New Certification upon Filing a Form 211
  FINRA has filed with the SEC a proposal to amend FINRA Rule 6432 (Compliance with the Information Requirements of SEA Rule 15c2-11) that would requires members to certify that they have not accepted any payment or other consideration for market making from issuers and related persons. OTC Markets Group intends to submit a comment letter on this proposal. More information may be found here.

New Requirements Require Alternative Trading Systems to Report Weekly Volume Information
  Effective May 12, 2014, FINRA Rule 4552 requires Alternative Trading Systems (ATS) to (i) report to FINRA weekly volume information and number of securities transactions within the ATS by security and (ii) acquire and use a single, unique market participant identifier (MPID) when reporting information to FINRA. OTC Link® ATS provides reporting under this rule. The full notice can be found here.

SEC Releases Proposed Rules on Regulation A+

  On December 18, 2013, the SEC released proposed rules on Regulation “A+” which are intended to increase access to the capital markets for smaller issuers mandated by Title IV of the JOBS Act. Proposed rule amendments can be found here. Comments to the rule proposal can be found here. OTC Markets Group’s letter commenting on the proposed rules may be found here.
After receiving feedback from the market data and broker-dealer community, we have added a second daily delivery of the OTC Compliance Data file. The file provides broker-dealers and compliance/risk mitigation teams with key compliance data points:
Data on 10,000 U.S. and global securities on the OTCQX, OTCQB, and OTC Pink marketplaces
Penny Stock, bankruptcy, shell, and caveat emptor status, as well as marketplace designations
Delivered 2x daily in pipe-delimited format
Click here to learn more.

Total dollar volume of ADRs in the OTCM ADR Index rose 29% quarter-on-quarter to a record $33.86 billion during Q1 2014.

OTC Markets Group decommissioned the ASCII Reference Data and Trade channels on the evening of May 2, 2014. The ASCII channels have been replaced by binary versions which offer more data points and require less bandwidth.

For more information, contact our Market Data Services at +1.212.220.2166 or marketdata@otcmarkets.com.

OTCQX New Additions
Our Marketplaces
16 new companies joined OTCQX in May:


A complete list of OTCQX companies is available on otcmarkets.com.
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