As filed with the Securities and Exchange Commission on June 10, 2011.March 17, 2014.

Registration No. 333-                    

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

MaconEntegra Financial Corp.

(Exact Name of Registrant as Specified in Its Charter)

220 One Center Court

Franklin, North Carolina 28734

(828) 524-7000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Mr. Roger D. Plemens

President and Chief Executive Officer

220 One Center Court

Franklin, North Carolina 28734

(828) 524-7000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:  ¨x

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

CALCULATION OF REGISTRATION FEE

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

[LOGO]

MACONENTEGRA FINANCIAL CORP.

(Proposed Holding Company for Macon Bank, Inc.)

Up to 5,750,0004,945,000 Shares of Common Stock

Macon

Entegra Financial Corp., a North Carolina corporation, is offering shares of common stock for sale in connection with the conversion of Macon Bancorp from the mutual to the stock form of organization, and the merger of Macon Bancorp with and into MaconEntegra Financial Corp. Entegra Financial Corp. is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. We expect that our common stock will be listed for trading on the NASDAQ Global Market under the symbol “”“ENFC” upon conclusion of the offering. There is currently no public market for our common stock.

We are offering up to 5,750,0004,945,000 shares of common stock for sale. We may sell up to 6,612,5005,686,750 shares of common stock to reflect regulatory considerations, changes in market and financial conditions, and/or demand for the common stock that would increase ourpro formamarket value in excess of $57.5$49.5 million (5,750,000(4,945,000 shares multiplied by the $10.00 purchase price per share) without resoliciting subscribers. We must sell a minimum of 4,250,0003,655,000 shares in order to complete the offering.

We are offering the shares in a “subscription offering” to eligible depositors and borrowers of Macon Bank, Inc., the banking subsidiary of Macon Bancorp. Shares not purchased in the subscription offering may be offered for sale to the general public in a “community offering.” We also may offer for sale shares not purchased in the subscription offering or community offering through a “syndicated offering” managed by Raymond JamesSandler O’Neill & Associates, Inc.Partners, L.P.

All shares are being offered for sale at a price of $10.00 per share. You will not pay any commission for your purchases. The minimum number of shares you may order is 25 shares. Unless increased, the maximum number of shares that may be ordered by any person in the subscription offering, the community offering or the syndicated offering is 75,00030,000 shares, and, no person, together with any associate or group of persons acting in concert, may purchase more than 125,00050,000 shares in the offering. The offering is expected to expire at 4:00 p.m., Eastern Daylight Time, on [].                    ]. Upon notice to you on or before, we may extend this expiration date to no later than. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [extension date], or the number of shares to be sold is increased to more than 6,612,5005,686,750 shares or decreased to fewer than 4,250,0003,655,000 shares. If the offering is extended beyond [],            ], or the number of shares to be sold is increased to more than 6,612,5005,686,750 shares or decreased to fewer than 4,250,0003,655,000 shares, we will resolicit subscribers, giving them an opportunity to change or cancel their orders. Funds received during the offering will be held in a segregated account at Macon Bank and will earn interest calculated at Macon Bank’s tier 1 statement savings rate, which is currently% 0.05% per annum.

Raymond JamesSandler O’Neill & Associates, Inc.Partners, L.P. will assist us in selling our shares of common stock on a best efforts basis. Raymond JamesSandler O’Neill & Associates, Inc.Partners, L.P. is not required to purchase any shares that are being offered for sale. Purchasers will not pay a commission to purchase shares in the offering. Raymond JamesSandler O’Neill & Associates, Inc.Partners, L.P. has advised us that following the offering it intends to make a market in the common stock, but is under no obligation to do so.

This investment involves a degree of risk, including the possible loss of your investment. Please read “Risk Factors”“Risk Factors” beginning on page     13..

OFFERING SUMMARY

Price: $10.00 per Share

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. None of the Securities and Exchange Commission, the North Carolina Commissioner of Banks, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, nor any state securities regulator 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.

For assistance, please call the Stock Information Center, toll free, at (    )     -     .

Raymond James & Associates, Inc.

The date of this prospectus is[].

TABLE OF CONTENTS

i

SUMMARY

The following summary highlights material information in this prospectus. It may not contain all of the information that is important to you. For additional information, you should read this entire prospectus carefully, including the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements.

In this prospectus, the terms “Bancorp” or “Macon Bancorp” mean Macon Bancorp, a North Carolina chartered mutual holding company; “Macon Financial”“Entegra” means MaconEntegra Financial Corp., a North Carolina corporation; and “Bank” or “Macon Bank” mean Macon Bank, Inc., Bancorp’s North Carolina chartered bank subsidiary. Terms such as “we, “our,” and “us” refer collectively to Bancorp, Macon FinancialEntegra and the Bank, unless the context indicates another meaning; and “you” and “your” refer to subscribers of Macon Financial’sEntegra’s common stock.

The Companies

Macon Financial.Entegra.This offering is being made by Macon Financial,Entegra, a newly formed North Carolina corporation thatorganized in 2011 as “Macon Financial Corp.” and renamed “Entegra Financial Corp.” in 2014. Entegra will own all of the outstanding shares of common stock of Macon Bank upon completion of this offering and the mutual-to-stock conversion of Macon Bancorp. Other than matters of an organizational nature, Macon FinancialEntegra has not engaged in any business to date. Following the conversion and the offering, Macon Financial will be renamed “Macon Bancorp”.

Macon Bancorp.Macon Bancorp is a North Carolina chartered mutual holding company headquartered in Franklin, North Carolina. It was organized in 1997, when the Bank converted from a mutual savings bank to a stock savings bank, and owns 100% of the outstanding shares of common stock of the Bank. Bancorp also has one non-bank subsidiary, Macon Capital Trust I, a Delaware statutory trust, formed in 2003 to facilitate the issuance of trust preferred securities. On a consolidated basis, as of MarchDecember 31, 2011,2013, Bancorp had total assets of $932.8$784.6 million, total loans of $667.7$521.9 million, total deposits of $782.1$684.2 million and total equity of $56.3$32.5 million. As a mutual holding company, Bancorp has no shareholders and is controlled by the depositors and borrowers of the Bank.

Pursuant to the terms of our plan of conversion, Macon Bancorp will merge with and into Macon FinancialEntegra and, in doing so, will convert from a mutual form of organization to a stock form of organization. Upon the completion of the conversion, Bancorp will cease to exist, and the Bank will become a wholly-owned subsidiary of Macon Financial which will be renamed “Macon Bancorp”.Entegra.

Macon Bank. Macon Bank is a North Carolina chartered stock savings bank headquartered in Franklin, North Carolina. It was organized in 1922, as a North Carolina chartered mutual savings and loan association. In 1992, it converted to a North Carolina chartered mutual savings bank. In 1997, upon the formation of Bancorp, it converted to a North Carolina chartered stock savings bank.For questions regarding the conversion or the offering, please call our Stock Information Center, toll free, at Macon Bank has one subsidiary, Macon Services, Inc., Monday through Friday betweena.m. andp.m., Eastern Daylight Time. The Stock Information Center will be closed on weekends and bank holidays.which holds real estate for investment.

Our Executive Offices.Our executive offices are located at 220 One Center Court, Franklin, North Carolina 28734 and the telephone number at this address is (828) 524-7000. Our website address iswww.maconbank.com. www.maconbank.com. Information on our website is not incorporated into this prospectus and should not be considered part of this prospectus.

For questions regarding the conversion or the offering, please call our Stock Information Center, toll free, at (        )         -             , Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern Time. The Stock Information Center will be closed on weekends and bank holidays.

Our Business

Overview.The Bank was organized as a mutual savings and loan association. As a mutual savings and loan association, or “thrift,” for the Bank’s primary purpose was to promoteof promoting home ownership through mortgage lending, financed by locally gathered deposits. Surviving the Great Depression of the 1930’s, we remained a single-office bank until we opened oura second office in downtown Murphy, North Carolina in 1981. Between 1993 and 2002, we added eight more branches in North Carolina, including a second office in Franklin, one in each of Highlands, Brevard, Sylva, Cashiers and Arden, and two in Hendersonville. In 2007, we opened two more branches in Columbus and Saluda, North Carolina.

Today, in addition to our corporate headquarters, weWe have 11 branches located throughout the Westernwestern North Carolina counties of Cherokee, Henderson, Jackson, Macon, Polk and Transylvania, which we consider our primary market area. Our business consists primarily of accepting deposits from individuals and small businesses and investing those deposits, together with funds generated from operations and borrowings, primarily in loans secured by real estate, including commercial real estate loans, one- to four-family residential loans, construction loans, home equity loans and lines of credit. We also originate commercial business loans and invest in investment securities. Through our mortgage loan production operations we originate loans for sale in the secondary markets to Fannie Mae and others, generally retaining the servicing

rights in order to generate cash flow,servicing income, supplement our core deposits with escrow deposits and maintain relationships with local borrowers. We offer a variety of deposit accounts, including savings accounts, certificates of deposit, money market accounts, commercial and regular checking accounts, and individual retirement accounts.

In addition to making loans within our primary market area, weWe also regularly extend loans to customers located in neighboring counties, including Buncombe, Clay, Haywood, Rutherford and RutherfordSwain in North Carolina; Fannin, Rabun, Towns and Union in Georgia; and Cherokee, Greenville, Oconee, Pickens and Spartanburg in South Carolina, which we consider our secondary market area.

We encounter significant competition in ourThe primary and secondary market areas. We compete with commercial banks, savings institutions, finance companies, credit unions and other financial services companies. Manyeconomic drivers of our larger commercial bank competitors have greater name recognition and offer certain services that we do not. However, we believe that our long-time presence in our primary market area are tourism and focus on superior servicea vacation and retirement home industry. This area has numerous small- to mid-sized businesses, which are instrumental to our success and leading deposit market share. Between 2000 and 2010, we increased our share of the combined deposits of all banks and thrifts operating in our primary market area from 9.4%business customers. These businesses include agricultural producers, artisans and specialty craft manufacturers, small industrial manufacturers, and a variety of service oriented industries. The largest employers in 2000Macon County include Drake Software, a national tax software provider, based in Franklin.

A new casino and hotel complex is currently under construction in Cherokee County. The casino and hotel, which will be operated by Caesars Entertainment Corp., are projected to 17.4%create additional employment directly, and indirectly through increased economic activity in 2010, and now lead our competitors in total deposits within our primary market area, as shown below.

Competing Banks and Thrifts

Source: FDICthe area.

In addition to successfully building our branch network and growing our core deposits, we have sought to createcreated an infrastructure that will accommodate future growth. One of our core strengths has been our successful mortgage loan operation, through which we originate and sell mortgage loans in the secondary markets to Fannie Mae and others. In 1999, we opened a call center to better and more efficiently serve our customers. In 2001, we consolidated our corporate headquarters, loan processing and training facilities into a single 36,000 square foot building in Franklin, North Carolina.Franklin.

We have sought to improvefocus upon continual improvement of our level of service and overall efficiencies through the use of technology, offering online banking for retail customers, which we market asMacon eCom; online banking for businesses, which we market asMacon eCorp; mobile banking; remote deposit capture; and remotemobile deposit capture. We also provide investment services through ouran affiliation with Morgan Stanley/Smith Barney,an independent broker/dealer firm, merchant credit card services for business customers, and ATM services.

Recently, in anticipation of our mutual-to-stock conversion, we added two experienced bankers to supplement our executive management team, W. David Sweatt, Executive Chairman of the Bank, and Gary L. Brown, our First Vice President and Chief Credit Officer. We hired Mr. Sweatt and Mr. Brown because of their experience with commercial lending, resolving problem assets, working with regulatory agreements, and running public companies. Mr. Sweatt has 30 years of banking experience, having held a number of senior executive and operational positions, including chairman, president and chief executive officer, within a variety of financial institutions throughout the Southeast. Mr. Brown has 34 years of banking experience, including president and chief executive officer of a community bank, and most recently, post closing asset manager in the Division of Resolutions and Receiverships of the Federal Deposit Insurance Corporation, Jacksonville, Florida.

We remainare committed to supporting our local communities and offering personal, one-on-one service to our customers. Our employees, officers and directors personally know many of our customers, live within the communities we serve, and play key roles in community organizations. In addition, we sponsor numerous local community events and strive to be a good corporate citizen in all of the communities that we serve. We believe we have a loyal base of employees. Our employees have an average of over nine yearsyears’ service with the Bank. More than one in sixfour of our employees have served the Bank for over 2015 years. We believe that the longevity ofthis employee-service commitment is critical to maintaining personal relationships with our customers. Such longevity of service is exemplified by our President and Chief Executive Officer, Roger D. Plemens, who has served the Bank since 1978, in various capacities, including as a mortgage officer, a manager of mortgage lending, and the chief lending officer. Our guiding principle is simple. We are committed to maintaining our culture of community banking and focused upon bringing value to our customers through innovations, technology, products and services of the 21^st century.

Recent Operating Challenges and Losses.History.We grew significantly Along with other community banks in western North Carolina, we experienced rapid expansion in the last decade, increasingperiod leading up to the onset of the recession in 2007, based on the growth enjoyed by the local housing market and economy, and increases in real estate values as a consequence of the attractiveness of our markets as retirement and second home destinations. The majority of our loan portfolio from $333.5 million at December 31, 2000, to a high of $832.6 million at December 31, 2007, before declining to $690.8 million at March 31, 2011. Ourgrowth during this period was represented by construction and development loans, grew from $12.2 million at December 31, 2000,many of which were collateralized by retirement and vacation developments. As a consequence, we and other community banks serving western North Carolina developed a high concentration of construction and development loans.

As compared with the United States generally, the effects of the recession in western North Carolina were amplified and lengthened by the region’s greater reliance on tourism and retirement and vacation real estate development. Unemployment in the region increased to $298.3 million at December 31, 2007, before declining to $154.8 million at March 31, 2011, representing the majorityrecord levels and both residential and commercial real estate values were adversely impacted. Our market concentration in western North Carolina, coupled with our high concentration of our loan growth. Many of these construction and development loans, were collateralized by developments for second homes. As the national housing bubble burst, the value of the collateral for our construction and development loans and our other loans declined. The decline in real estate values and impact of the recession resulted in a significant levelour experiencing prolonged elevated levels of loan defaults.

Accordingly, our level ofdefaults and non-performing assets, increased from $4.6 million at December 31, 2000, to $8.0 million at December 31, 2007, and to $96.7 million at March 31, 2011.

The recent increase in our level of non-performing assets resulted in largesignificant loan loss provisions, large loan losses and high REO expenses. During the three years ended December 31, 2010increased expense as we managed our troubled assets. As a consequence, between 2009 and the quarter ended March 31, 2011, we recorded aggregate net losses of $24.5million. These losses were driven by cumulative provisions for loan losses of $56.8$48.0 million, over the same period. Our total equity has decreased from $88.7 million at December 31, 2008 to $56.3 million at March 31, 2011. The increase in non-performing assets has also negatively impacted our operations by reducing our level of earning assetscapital declined and increasing our level of operating expenses to manage these problem assets. Furthermore, due to our increased risk profile, we increased our level of liquidity, which effectively reduced our net interest income.total assets by $203.8 million in the aggregate.

As a result of the increase in our non-performing assets, the decrease in our equity capital, and other factors, we have received anThis led to increased level of scrutiny from our banking regulators. As described in the section entitled “– Memoranda of Understanding” on page,In 2010, the Bank and Bancorp, have eachrespectively, entered into a Memorandummemorandum of Understanding,understanding, or MOU, with their respective banking regulators. The Bank has agreedregulators; followed, in 2012, by a consent order and written agreement, respectively. See the section entitled “Supervision and Regulation – Regulatory Agreements” on page     .

Aggressive Action. We have aggressively sought to among other things, increase itsaddress these regulatory capital, reduce linesconcerns and resolve the asset quality difficulties brought on by the recession. As illustrated by the following table, since December 31, 2009, we have:

Between 2000 and 2013, we increased our share of the combined deposits of all banks and thrifts operating in our primary market area from 9.49% in 2000 to 15.2% in 2013, and now lead all but one of our competitors in total risk-based capital ratiodeposits within our primary market area. The following tables show our deposit market share within the Bank’s primary market area, as of 11.55%.June 30, 2013, the most recent publicly reported figures.

We have developed an operating strategy to reposition the Bank so that it may return to sustained profitability and explore opportunities for growth. However, weWe need a significant amount of capital to execute this strategy, and we cannot raise this level of capital as a mutual financial institution. We have considered current market conditions and the amount of capital needed in deciding to conduct the conversion at this time, and have established the following three-partfour-part operating strategy in order to effectively and efficiently use the proceeds from the offering.

Pursue Opportunities in Existing Markets.

Address Current Challenges.Our first priority is to reduce our level of non-performing and classified assets both in the aggregate and as a percentage of total assets. We also want to be in full compliance with our MOUs as quickly as possible.

Improve asset quality.As described in the section entitled “” on page, our non-performing assets have increased during the current adverse credit cycle and were $96.7 million or 10.36% of our total assets at March 31, 2011. During 2010, management appointed an experienced special assets manager and reassigned employees as support staff to increase collection efforts, expedite foreclosure actions, and liquidate real estate owned. We are aggressively addressing our level of non-performing assets through write-downs, collections, modifications and sales of non-performing loans and the sale of properties once they become real estate owned by the Bank. For the years 2007 through 2010 and through March 31, 2011, we have recorded cumulative net charge-offs of approximately $46.0 million. We are taking proactive steps to resolve our non-performing loans, including negotiating repayment plans, loan modifications and loan extensions with our borrowers when appropriate, working with developers to promote discounted sales events to increase sales and accepting short payoffs on delinquent loans, particularly when such payoffs result in a smaller loss to us than foreclosure. In late 2010, management increased the frequency for problem loan appraisals to six to 12 month intervals, from 12 to 24 months, which resulted in additional loan write-downs. In 2010 and the first quarter of 2011, the Bank liquidated $28.7 million in real estate owned based on loan values at the time of foreclosure, realizing $15.9 million in net proceeds or 55.3% of the foreclosed loan balances. The Bank’s current real estate owned portfolio is comparably valued at 59.8% of loan value at the time of foreclosure. In addition to continuing to pursue the above steps to improve our asset quality, we may consider bulk sales of non-performing assets in order to expedite our strategy for improving asset quality, although we have no firm plans to do so at this time.

We have taken several actions to improve our credit administration practices and reduce the risk in our loan portfolio. We also added experienced personnel, including Gary Brown who was appointed Chief Credit Officer in February, 2011, to our loan department to enable us to better identify problem loans in a timely manner and reduce our exposure to a further deterioration in asset quality. Also, since 2008, we have regularly engaged an independent loan review consulting firm to perform a review of our loan portfolio. The Bank has added new support systems that have improved our underwriting global cash flow analysis, portfolio credit risk assessment, risk grade migration, and loan loss allowance calculation. We have made an effort to reduce our exposure to riskier types of loan structures and collateral both through

asking borrowers to pledge additional collateral and by reducing certain segments of our loan portfolio. We have reduced our construction and other construction and land development loan portfolio from $298.3 million at December 31, 2007 to $154.8 million at March 31, 2011.

Compliance with Memoranda of Understanding.As described in the section entitled “– Memoranda of Understanding” on page, we have taken and continue to take prompt and aggressive action to respond to the issues raised in the Memoranda, including submitting quarterly reports to our banking regulators. Except for the elevated capital requirements, which we anticipate we will satisfy once the conversion is completed, we believe that we are generally in compliance with the Memoranda. However, the Memoranda will each remain in effect until modified, terminated, lifted, suspended or set aside by the applicable banking regulators, and no assurance can be given as to the time that either of the Memoranda will be terminated. While we will seek to demonstrate as soon as possible to our banking regulators that we have fully complied with the requirements of the Memoranda and that they should be terminated, we expect that the Memoranda will remain in effect for the immediate future.

Restore Profitability.Until the current adverse credit cycle, the Bank enjoyed a long history of strong earnings, continuously reporting a profit every year from 1982 through 2008. While we expect to record losses as we continue to resolve non-performing assets, we are focused on returning to profitability.

Improve our net interest margin.Net interest income is our largest source of revenue. Our net interest margin has declined over the past four years. The increase in non-earning assets, especially non-accrual loans and real estate owned, has factored into this decline. We have also maintained an elevated level of liquidity as a result of reduced loan demand in recent periods, which has contributed to our reduced net interest margin. We believe that our net interest margin will improve as we resolve non-performing assets and invest those proceeds into earning assets. Additionally, we took the step of prepaying $42.5 million of high-cost Federal Home Loan Bank advances in the first quarter of 2011, which we anticipate will result in an increase in net interest income. Finally, we are working to further improve our base of core deposits and lower our cost of funds.

Increase noninterest income.The majority of the Bank’s noninterest income is the result of our mortgage banking business and customer service fees. We believe that we have the opportunity to increase noninterest income by adding additional lines of business. We have plans to become an active lender of Small Business Administration, or SBA, loans and would hope to sell the SBA guaranteed portion of those loans at a gain. We also believe that expanding our focus on small business and private banking customers will increase our opportunities to earn noninterest income.

Continue history of operating expense discipline. Our core efficiency ratio for the quarter ended March 31, 2011 was 67.7%, reflecting the increased expense related to resolving non-performing assets. Historically we have operated more efficiently on a core basis. For the five years 2006 through 2010, our average core efficiency ratio was under 60.0%. This success is the result of a disciplined approach to spending. We have also leveraged technology to drive efficiency throughout our organization. We recently renegotiated our data processing contract and are planning to convert to a debit card processing platform, which we anticipate will result in substantial savings in 2011, and in future years. While our level of core operating expenses will increase as a public company and we will continue to incur expenses to resolve non-performing assets, we are committed to carefully managing expenses.

Increase Small Business and Private Banking Customer Focus and Explore Growth Opportunities.As we implement our operating strategy, we will work to diversify our customer base, and explore various growth opportunities, including those described below. We have no current arrangements or agreements concerning any specific growth opportunities at this time.

Increase small business and private banking customer focus.We believe that we can enhance our franchise value by increasing our focus on small business and private banking customers. We believe that small business and private banking customers value the personalized service that has been our hallmark. These customers also present attractive loan and deposit opportunities that will allow us to diversify our loan portfolio and further increase our level of core deposits. The new members of our management team have substantial experience targeting these types of banking customers. We have enhanced training for our existing lenders in commercial and industrial, and SBA lending. Additionally, we will hire lenders, relationship officers and credit officers experienced in these areas as we grow these lines of business.

Expand into larger, contiguous markets. We are located in close proximity to a number of larger markets with attractive growth opportunities. Many of these markets have a high number of attractive small business and private banking customers. In addition to diversifying our customer mix, these markets would provide geographic diversification for our lending collateral. For instance, we have existing branch offices located near Asheville, North Carolina (30 minutes traveling

time along I-26), northwest of Spartanburg, South Carolina (30 minutes traveling time along I-26); and northwest of Greenville, South Carolina (1 hour traveling time along I-26 and I-85). We are also located near Atlanta, Georgia (2 hours), Chattanooga, Tennessee (1.5 hours), Knoxville, Tennessee (2 hours) and Johnson City, Tennessee (1.5 hours).

Capitalize on market disruption.We anticipate that both current and expected consolidation within the banking industry and the increasing number of troubled banks will give rise to attractive growth opportunities. As a result of mergers between banks and recent bank failures, we believe that many customers and bankers may become dissatisfied with their new bank. Many banks do not have sufficient capital to make new loans and are having to cut back on customer service as they focus on managing their problems. We believe that these challenges will result in customer dissatisfaction, which will present us with a better opportunity to do business with these customers. Additionally, we believe that bankers will be dissatisfied with their current employers, and we will have the opportunity to hire away experienced personnel. We believe that we have the appropriate infrastructure and management depth to accommodate future growth, including our use of technology, mortgage loan production operations, call center, and corporate headquarters with centralized loan processing and training facilities.

Organic growth.We are well-established in our primary market area, leading our competitors inwith a 38.0% deposit market share as of June 30, 2010, according to the most recent publicly reported figures. We believe that this solid market position will allow us to continue to increase our market share. We also believe our core strengthin Macon County and a 15.2% share in our primary market will enable us toarea. We believe that we have a solid platform from which we can increase our existing market share and grow into adjacent areas. We have experience opening offices in new markets, having successfully entered new markets in the 1990’s and 2000’s. We are already making loans in a number of adjacent counties, some of which have similar demographics to our primary market area. We will consider opportunities as they arise to open loan production offices or branch offices in adjacent markets, particularly markets in which we have lending experience.

Future acquisition opportunities.Capitalize on market disruption. While we are currently focused on repositioning the BankThe recession has adversely affected our competitor community banks in the near term, we expect to be able to consider acquisition opportunitieswestern North Carolina. Since 2007, many of our competitors have undergone changes in the future. Smaller banks may struggle to support anticipated compliance costs resulting from the adoption of last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act. Additionally, smaller banks have fewer ways to raise the capital they need to address current problems and support growth.name, management or ownership. We believe that these two factors will leadchanges, coupled with resulting key personnel changes, reorganizations and branch closures have been disruptive to many smaller banksof their existing customer relationships, and that many customers and bankers are dissatisfied with their bank. By contrast, during this period we have maintained stable customer relations through our long-serving employees and established branch network, as evidenced by our leading deposit market share.

We believe that we have a unique opportunity to seek a merger partner. Additionally,attract new customers and hire additional experienced personnel from our competitors. We believe that we expecthave the appropriate infrastructure and management depth to see other banks sell branches either to shrink their balance sheet or toaccommodate future growth, including our use of technology, mortgage loan production operations, call center, and corporate headquarters with centralized loan processing and training facilities.

Diversify Geography and Product Mix and Explore Growth Opportunities.

Increase our small and middle market commercial banking business. We believe that we can enhance our franchise value by increasing our focus on coresmall and middle market businesses. Our current loan portfolio is heavily dependent on real estate in western North Carolina, and the majority of the Bank’s noninterest income is the result of our residential mortgage banking business and retail customer service fees. Our goal is to expand our commercial banking services to small- and medium-sized businesses to further diversify our risk profile and increase our noninterest income by attracting additional commercial deposit accounts and adding additional lines of business, including SBA lending and commercial banking.

Explore lending opportunities in larger, contiguous markets. We are located in close proximity to a number of larger markets with attractive growth opportunities, including Asheville and Charlotte, North Carolina, and Greenville, South Carolina. Many of these markets have a high number of small business and private banking customers. In addition to diversifying our customer mix, these markets would provide geographic diversification for our lending collateral.

Continue to Improve Asset Quality.While asset quality has improved significantly over the last several years, at December 31, 2013 classified (including substandard loans, real estate owned and real estate held for investment) and nonperforming assets remain elevated, at $60.0 million and $26.1 million, respectively (down from highs of $134.7 million and $82.0 million, respectively, at December 31, 2010). Although we believe that the majority of losses from defaults and problem assets are behind us, resolution of the remaining classified and nonperforming assets is likely to result in some level of additional losses. Additionally, for so long as we remain subject to a consent order and a written agreement with our banking regulators we will carefully evaluate any future acquisition opportunitybe subject to understandheightened regulatory scrutiny and restrictions on our business. As soon as possible following the potential impacts, both positive and negative, alongconversion, we will seek to demonstrate to our banking regulators that we have fully complied with the risksrequirements of these regulatory agreements and that they should be terminated. If we are successful and the regulatory agreements are terminated, we will be able to pursue certain attractive business opportunities that are currently prohibited, such as the establishment of loan production offices. See the section entitled “Supervision and Regulation – Regulatory Agreements” on page     .

Improve Profitability.

Continue to reduce problem asset expenses and losses. As illustrated in the table below, the Bank has experienced a declining level of loan loss provisions and losses from the valuation and sale of real estate owned, or REO. Based on the reduced level of problem assets, the Bank expects this declining trend of expenses and losses to continue.

		2013				2012				2011
Provision for loan losses		$	4,358			$	7,878				24,116
REO valuation and loss on sale			4,256				3,292			$	6,681
Real Estate Owned Expense			1,356				2,156			$	2,332
Total		$	9,970			$	13,326				33,129

Grow net interest income.Net interest income is our largest source of revenue and is dependent on a combination of volume, mix and interest rates of interest earning assets and liabilities. As illustrated in the table below, during 2013, the benefit from an improvement in interest rate spread was more than offset by a reduction in volume. With the benefit of additional capital, we intend to increase loan volumes in the future which will have a positive impact on our level of net interest income. As discussed above, we intend to diversify our current geography and product mix by expanding our commercial banking operations in markets outside of western North Carolina.

Continue history of strong core earnings.Our headquarters in western North Carolina provides a low cost environment for operating many of the core functions of the Bank. In addition, we carefully monitor and control our spending and heavily utilize technology to drive efficiencies. These actions have generally resulted in a core efficiency ratio under 70% as illustrated in the table below. While our level of core operating expenses will increase as a public company, planned growth in net interest income and noninterest income as discussed above will help to mitigate any transaction.increase in our efficiency ratio.

Our operating expense discipline, combined with our focus on maintaining a healthy net interest margin, has resulted in core earnings of $9.7 million and $10.0 million in 2013 and 2012, respectively, as detailed in the table below. We utilize a core efficiency ratio and core earnings measurement as a means of measuring our operating expenses and earnings prior to the effect of credit-related costs and non-recurring gains and losses. For additional information on the use of these measurements, which are not calculated in accordance with accounting principles generally accepted in the United States see “Selected Consolidated Financial and Other Data” on page     .

		2013				2012				2011
(Dollars in thousands)
Core efficiency ratio			68.1	%			65.4	%			70.5	%
Core earnings, before taxes		$	9,672			$	9,954			$	6,888

For further information about our reasons for the conversion and offering, please see “–“The Conversion – Reasons for the Conversion” on page.

Terms of the Conversion and the Offering

Under the plan of conversion, Bancorp will merge with and into Macon Financial,Entegra, and, in doing so, will convert from a mutual form of organization to a stock form of organization. Upon the completion of the conversion, Bancorp will cease to exist, and the Bank will become a wholly-owned subsidiary of Macon Financial, which will be renamed “Macon Bancorp.”Entegra. In connection with the conversion, Macon FinancialEntegra is offering between 4,250,0003,655,000 and 5,750,0004,945,000 shares of common stock to eligible depositors and borrowers of the Bank in a “subscription offering,” and, if shares remain available, to the general public in a “community offering.” To the extent shares remain available after the community offering, we may also offer for sale, shares of common stock to the general public in a “syndicated offering,” managed by Raymond JamesSandler O’Neill & Associates, Inc.Partners, L.P. The number of shares of common stock to be sold may be increased up to 6,612,5005,686,750 to reflect regulatory considerations, changes in market and financial conditions, and/or demand for the common stock. Unless the number of shares of common stock to be offered is increased to more than 6,612,5005,686,750 or decreased to less than 4,250,0003,655,000 or the offering is extended beyond [],            ], subscribers will not have the opportunity to change or cancel their stock orders.

The purchase price of each share of common stock to be issued in the offering is $10.00. All investors will pay the same purchase price per share. Investors will not be charged a commission to purchase shares of common stock in the offering.

Persons Who May Order Shares of Common Stock in the Offering

We are offering the shares of common stock in a “subscription offering” in the following descending order of priority:

Shares of common stock not purchased in the subscription offering may be offered for sale in a “community offering” to members of the general public, with a preference given to natural persons residing in Buncombe, Clay, Cherokee, Graham, Haywood, Henderson, Jackson, Macon, Polk, Swain and Transylvania Counties, North Carolina, and Rabun County, Georgia. The community offering may begin concurrently with, during or promptly after the subscription offering as we may determine at any time. If shares remain available for sale following the subscription offering or community offering, we also may offer for sale shares of common stock through a “syndicated offering” managed by Raymond JamesSandler O’Neill & Associates, Inc.Partners, L.P. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated offering.

To ensure a proper allocation of stock, each subscriber eligible to purchase stock in the subscription offering must list on his, her or its stock order form all loans and/or deposit accounts in which he, she or it had an ownership interest at the applicable eligibility date(s). Failure to list all loans and accounts, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final.

If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first, in the order of priority, to subscribers in the subscription offering before any shares are allocated in the community offering and, in turn, the syndicated offering.

For a detailed description of the offering, including share allocation procedures, please see “The Conversion” on page.

How We Determined the Offering Range

The amount of common stock that we are offering is based on an independent appraisal of Macon Financial’sthe estimated market value of Entegra assuming the conversion and the offering are completed. RP Financial, L.C.,LC, our independent appraiser, has estimated that, as of May 13, 2011, theFebruary 14, 2014, this market value was $50.0 million. The market value constitutes theranged from $36.6 million to $49.5 million, with a midpoint of a valuation range, with a minimum of $42.5 million and a maximum of $57.5$43.0 million. Based on this valuation and a $10.00 per share price, the number of shares of common stock being offered for sale ranges from 3,655,000 shares to 4,945,000 shares. We may sell up to 5,686,750 shares of common stock (up to a market value the offering ranges from a minimum of 4,250,000$56.9 million) because of demand for shares to a maximum of 5,750,000 shares, with a midpoint of 5,000,000 shares. To reflect regulatory considerations,or changes in market conditions. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.

The appraisal is based in part on Macon Bancorp’s financial condition and financial conditions, and/or demand forresults of operations, the pro forma effect of the additional capital raised by the sale of shares of common stock the market value can be increased to $66.1 million, andin the offering, can be increased to 6,612,500 shares.

RP Financial advised our Board of Directors that the appraisal was prepared in conformance with the regulatory appraisal methodology. That methodology requires a valuation based onand an analysis of the trading pricesa peer group of comparable public companies whose stocks haveten publicly traded for at least one year prior to the valuation date.savings institutions that RP Financial, selected a group of 11LC, considers comparable public companies for this analysis that comprised the peer group for valuation purposes. Consistent with applicable appraisal guidelines, the appraisal applied three primary methodologies: the pro forma price-to-book value approach applied to both reported book value and tangible book value; the pro forma price-to-earnings approach applied to reported and core earnings; and the pro forma price-to-assets approach. Based on RP Financial’s belief that asset size is not a strong determinant of market value, RP Financial did not place significant weight on the pro forma price-to-assets approach in reaching its conclusions. Since Bancorp’s price-to-earning multiples were not meaningful due to its negative pro forma earnings, RP Financial placed the greatest emphasis on the price-to-book and price-to-tangible book approaches in estimating pro forma market value. The market value ratios applied in the three methodologies were based upon the current market valuations of the peer group companies identified by RP Financial, subject to valuation adjustments applied by RP Financial to account for differences between us and the peer group. Downward adjustments were applied in the valuation for financial condition and profitability, growth and viability of earnings, our primary market area, capacity to pay dividends, marketing of the common stock and the effect of government regulations and regulatory reform. No adjustment was applied in the valuation for liquidity of the common stock. The downward valuation adjustments considered, among other factors, less favorable asset quality, weaker earnings, the Bank MOU, the Bancorp MOU and our primary market area (lower per capita income and higher unemployment) versus the peer group and the valuation considerations applied by potential investors in

purchasing a newly issued stock that has no prior trading history in a volatile market for thrift and savings bank common stock.us.

The appraisal peer group consists of the following 10 companies, with the asset sizes as of MarchDecember 31, 2011,2013, unless otherwise stated.

Pulaski Financial Corp. (PULB)			NASDAQ			Saint Louis, MO		$	1,294
Franklin Financial Corp. (FRNK)			NASDAQ			Glen Allen, VA		$	1,075
ASB Bancorp Inc (ASBB)			NASDAQ			Asheville, NC		$	733
First Savings Financial Group (FSFG)			NASDAQ			Clarksville, IN		$	687
First Clover Leaf Financial Corp. (FCLF)			NASDAQ			Edwardsville, IL		$	647	(1)
Cheviot Financial (CHEV)			NASDAQ			Cheviot, OH		$	587
United Community Bancorp (UCBA)			NASDAQ			Lawrenceburg, IN		$	512
Wayne Savings Bancshares (WAYN)			NASDAQ			Wooster, OH		$	410

The following table presents a summary of selected pricing ratios for us and our peer group companiesEntegra (on a pro forma basis). The pricing ratios and the peer group companies identified by RP Financial, LC. Ratios for the peer group are based on earningsequity and other informationearnings as of andor for the 12twelve months ended MarchDecember 31, 2011,2013 (or the last twelve months for which data are available) and stock price information as of May 13, 2011,February 14, 2014. Ratios for Entegra are based on equity as reflected in RP Financial’s appraisal report, dated May 13, 2011,of December 31, 2013 and net income for the number of shares assumed to be outstanding as described in “Pro Forma Data.” Compared to the average pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 25.7% on a price-to-book value basis and a discount of 31.7% on a price-to-tangible book value basis.year ended December 31, 2013. Compared to the median pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 24.5%27.4% on a price-to-book value basis and a discount of 38.0%31.9% on a price-to-tangible book value basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group on a book value and tangible book value basis.

WeOur Board of Directors carefully reviewed RP Financial’s appraisal report, including the information provided to usmethodology and assumptions used by RP Financial, throughand determined that the appraisal process, but did not make any determination regarding whether prior standard mutual-to-stock conversions have been undervalued. Instead, we engaged RP Financial to help us understand regulatory guidance as it applies to the appraisalvaluation range was reasonable and to adviseadequate. The purchase price of $10.00 per share was determined by our Board of Directors, as to how much capital we wouldtaking into account that the common stock should be required to raise underoffered in a manner that will achieve the regulatory appraisal guidelines.widest distribution of the common stock and the desired liquidity in the common stock after the offering.

RP Financial will update the independent appraisal prior to the completion of the conversion. If the estimated appraised value, including offering shares, changes to either below $42.5$36.6 million or above $66.1$56.9 million, we will resolicit persons who submitted stock orders, giving them an opportunity to change or cancel their orders. See “–“The Conversion – Share Pricing and Number of Shares to be Issued” on page     .

The independent appraisal does not indicate per share market value. You should not assume or expect that theour valuation of RP Financial as indicated in the appraisal described above means that, after the conversion and the offering, our shares of

common stock will trade at or above the $10.00 offering price. Furthermore, the pricing ratios presented above were utilized by RP Financial to estimate our market value and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location.

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, including a comparison of selected pro forma pricing ratios compared to pricing ratios of the peer group, see “–“The Conversion – Share Pricing and Number of Shares to be Issued” on page.

Limits on How Much Common Stock You May Purchase

The minimum number of shares of common stock that may be purchased is 25. Generally, no individual may purchase more than 75,00030,000 shares ($750,000)300,000) of common stock in any single category of the offering,i.e., the subscription offering, the community offering or the syndicated offering; or 125,00050,000 shares ($1,250,000)500,000) of common stock in all categories of the offering. If any of the following persons purchases shares of common stock, then, unless the maximum purchase limitations are increased, their purchases, in all categories of the offering, when combined with your purchases, cannot exceed 125,00050,000 shares ($1,250,000)500,000):

See the detailed descriptions of “acting in concert,” “affiliate”concert” and “associate” in “–“The Conversion – Limitations on Common Stock Purchases” on page.

We may decrease or increase the purchase limitations to not more than 4.99%at any time with the approval of the shares issued inBoard of Governors of the offering.Federal Reserve System and the North Carolina Commissioner of Banks. In the event that the maximum purchase limitation is increased to 4.99%, this limitation may be further increased to 9.99%, provided that orders for common stock exceeding 4.99% shall not exceed in the aggregate 10% of the shares of common stock issued in the offering. See “–“The Conversion – Limitations on Common Stock Purchases” on page.

How You May Purchase Shares of Common Stock

In the subscription offering and community offering, you may pay for your shares only by:

We will not lend funds to anyone for the purpose of purchasing shares of common stock in the offering. Additionally, you may not submit a check drawn on a Macon Bank line of credit to pay for shares of common stock. Please do not submit cash.

You can subscribe for shares of common stock in the offering by delivering a signed and completed original stock order form, together with full payment or authorization to withdraw from one or more of your Macon Bank deposit accounts, so that it is received (not postmarked) before 4:00 p.m., Eastern Daylight Time, on [expiration date], which is the expiration of the offering period. You may submit your stock order form by mail using the order reply envelope provided or by overnight courier to our Stock Information Center, at the address indicated on the order form. We will not accept faxed order forms. Other than our Stock Information Center, we will not accept stock order forms at our banking offices.

Personal checks will be immediately cashed, so the funds must be available within the account when your stock order form is received by us. Subscription funds submitted by check or money order will be held in a segregated account at Macon Bank until completion or termination of the offering. We will pay interest calculated at the Bank’s tier 1 statement savings rate from the date those funds are received until completion or termination of the offering. Withdrawals from certificate of deposit accounts to purchase common stock in the offering may be made without incurring an early withdrawal penalty. All funds authorized for withdrawal from deposit accounts with the Bank must be available within the deposit accounts at the time the stock order form is received. A hold will be placed on the amount of funds designated on your stock order form. Those funds will be unavailable to you during the offering; however, the funds will not be withdrawn from the accounts until the offering is completed and will continue to earn interest at the applicable contractual deposit account rate until the completion of the offering.

You may be able to subscribe for shares of common stock using funds in your individual retirement account or other retirement account. If you wish to use some or all of the funds in your individual retirement account held at the Bank or other retirement accounts held at the Bank to purchase our common stock, the applicable funds must first be transferred to a self-directed account maintained by an independent trustee, such as a brokerage firm, and the purchase must be made through that account. Because individual circumstances differ and processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before [expiration date], the expiration of the offering period, for assistance with purchases using funds from any retirement account held at the Bank or any retirement account that you may haveelsewhere. Whether you may use such funds for the purchase of shares in the

offering may depend on time constraints and, possibly, limitations imposed by the brokerage firm or institution where your funds are held.

See “– Procedure for Purchasing Shares” on pagefor a complete description of how to purchase shares in the offering.

Deadline for Orders of Common Stock

The deadline for purchasing shares of common stock in the offering is 4:00 p.m., Eastern Daylight Time, on[, 2011]2014]. Your stock order form, with full payment, must bereceived(not postmarked) by 4:00 p.m., Eastern Daylight Time on[, 2011]2014].

Although we will make reasonable attempts to provide a prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 4:00 p.m., Eastern Daylight Time, on[, 2011]2014], whether or not we have been able to locate each person entitled to subscription rights.

See “– Procedure for Purchasing Shares” on page 129 for a complete description of how to purchase shares in the offering.

Delivery of Shares of Common Stock in the Subscription and Community Offerings

Information regardingAll shares of common stock sold will be issued in book entry form. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock issued in the subscription and community offerings or in any syndicated offering will be mailed by regular mailour transfer agent to the persons entitled thereto at the stock registration address noted by them on thetheir stock order form,forms as soon as practicable following consummation of the conversion and offering. We expect trading in the stock to begin on the day of completion of the conversion and offering.offering or the next business day. The conversion and offering are expected to be completed as soon as practicable following satisfaction of the conditions described above in “– Conditions to Completion of the Conversion and the Offering.”It is possible that until this informationa statement reflecting ownership of shares of common stock is available and delivered to purchasers, maypurchasers might not be able to sell the shares of common stock that they ordered,purchased, even though the common stock will have begun trading.In order Your ability to reduce non-essential costs, we do not intend to issue paper stock certificates, unless a shareholder specifically requests a paper stock certificate. Instead, except for shareholders who specifically request a paper stock certificate, the holdingssell your shares of each shareholder will be recorded in “book entry” form on our records and we will issue shareholders a written statement, containing all of the information usually provided in the certificate.

After-Market Stock Price Performance Provided by Independent Appraiser

The following table presents stock price performance information for all reported standard mutual-to-stock conversions completed between January 1, 2010 and May 13, 2011. None of these companies was included in the group of 11 comparable public companies utilized in RP Financial’s valuation analysis.

Mutual-to-Stock Conversion Offerings with Closing Dates

between January 1, 2010 and May 13, 2011

Stock price performance is affected by many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience and ability of management, historical and anticipated operating results, the nature and quality of the company’s assets, and the company’s market area. None of the companies listed in the table above are exactly similar to us. The pricing ratios for their offerings were different from the pricing ratios for our common stock and the market conditions in which these offerings were completed were, in most cases, different from current market conditions. The performance of these stocksbefore receiving your statement will depend on arrangements you may not be indicative of how our stock will perform.make with a brokerage firm.

There can be no assurance that our stock price will not trade below $10.00 per share, as has been the case for many mutual-to-stock conversions. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the section entitled “Risk Factors” beginning on page 13.

Steps We May Take If We Do Not Receive Orders for the Minimum Number of Shares

If we do not receive orders for at least 4,250,0003,655,000 shares of common stock, we may take the following steps to issue the minimum number of shares of common stock in the offering range:

If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount, will be given the opportunity to increase their subscription up to the then-applicable limit.

Possible Change in the Offering Range

RP Financial will update its appraisal before we complete the offering. Without further notice to you, the number of shares of common stock to be sold may be increased up to 6,612,5005,686,750 to reflect regulatory considerations, changes in market

and financial conditions, and/or demand for the common stock. If our pro forma market value at that time is either below $42.5$36.6 million or above $66.1$56.9 million, then we may:

In the event that we extend the offering and conduct a resolicitation, we will notify subscribers of the extension of time and of the rights of subscribers to maintain, change or cancel their stock orders within a specified period. If a subscriber does not respond during the period, his, her or its stock order will be canceled and payment will be returned promptly, with interest calculated at the Bank’s tier 1 statement savings rate, and deposit account withdrawal authorizations will be canceled.

Possible Termination of the Offering

We may terminate the offering at any time and for any reason prior to the special meeting of voting members that is being called to vote upon the conversion, and at any time after member approval, and any required approval of the North Carolina Commissioner of Banks and the Board of Governors of the Federal Reserve System. If we terminate the offering, we will promptly return your funds with interest calculated at the Bank’s tier 1 statement savings rate, and we will cancel deposit account withdrawal authorizations.

How We Intend to Use the Proceeds From the Offering

We intend to invest up to 90%85% of the net proceeds from the offering in the Bank as capital and retain the remainder of the net proceeds from the offering. Therefore, assuming we sell 5,750,000 shares of common stock in the offering, and we have net proceeds of $54.3 million, we intend to invest up to $48.8 million in the Bank and retain the remaining $5.4 million of the net proceeds.for future use.

The following table summarizes how we intend to use the net proceeds from the offering, based on the sale of shares at the minimum, midpoint, maximum and adjusted maximum of the offering range:

Subject to receiving any necessary regulatory approvals, we may use the funds we retain for investments,to invest in securities issued by the U.S. Government, U.S. Government agencies and/or U.S. Government sponsored enterprises, mortgage-backed securities and equities, collateralized mortgage obligations and municipal securities; to resume payment of dividends on our trust preferred securities, as well as previously deferred dividends and interest; to pay cash dividends to shareholders; to repurchase shares of our common stockstock; and for other general corporate purposes. Additionally,Initially, we do not intend to pay cash dividends, and, under current federal regulations, subject to limited exceptions, we may not repurchase shares of our common stock during the first year following the conversion. The Bank may use the proceeds it receives from Macon FinancialEntegra to support increased lendingstrengthen its capital position; to fund new loans; to repay borrowings; to invest in securities issued by the U.S. Government, U.S. Government agencies and/or U.S. Government sponsored enterprises, mortgage-backed securities and equities, collateralized mortgage obligations and municipal securities; to expand its banking franchise by establishing or acquiring new branches, or by acquiring other productsfinancial institutions or other financial services companies; and services.for other general corporate purposes.

We do not have any other current plans, intentions or understandings concerning investments, dividends, share repurchases or other specific uses of the funds. Nor do we currently have any plans, agreements or understanding to make any acquisitions or material dispositions.

Please see the section entitled “How We Intend to Use the Proceeds from the Offering” on pagefor more information on the proposed use of the proceeds from the offering.

You May Not Sell or Transfer Your Subscription Rights

You may not sell or transfer your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the shares of common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription rights. When completing your stock order form, you should not add the name(s) of persons who do not have subscription rights or who qualify in a lower subscription offering priority than you do. In addition, the stock order form requires that you list all loans and deposit accounts, giving all names on each loan and account and the account number at the applicable eligibility record date. Your failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation.subscription rights.

Purchases by Officers and Directors

We expect our directors and executive officers, together with their associates, to subscribe for 152,000220,000 shares ($1.52.2 million) of common stock in the offering, or 3.5%6.0% of the shares to be sold at the minimum of the offering range. The purchase price paid by our directors and executive officers for their shares will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering.

See “Subscriptions by Directors and Executive Officers” on pagefor more information on the proposed purchases of our shares of common stock by our directors and executive officers.

Benefits to Management and Potential Dilution to Shareholders Following the Conversion

The plan of conversion permitsWe intend to adopt the Bank’s tax-qualified employeefollowing benefit plans (if any)and employment agreements:

Future Stock-based Benefit Plans. We intend to purchase shares of common stock in the subscription offering. However, no employee benefit plans will participate in the offering.

Our current intention is to adoptimplement one or more stock-based benefit plans no earlier than 12six months after completion of the conversion. Shareholder approvalconversion and offering. We will submit these plans to our shareholders for their approval. If we implement the plans within one year after the conversion, the plans must be approved by a majority of the total votes eligible to be cast by our shareholders. If we implement the plans more than one year after the conversion, they must be approved only by a majority of the total votes cast. If we implement the plans within one year after the conversion, we intend to grant stock options in an amount up to 7% of the number of shares sold in the offering and restricted stock awards in an amount equal to 3% of the shares sold in the offering. Stock options will be granted at an exercise price equal to 100% of the fair market value of our common stock on the option grant date. Shares of restricted stock will be awarded at no cost to the recipients. We will incur additional compensation expense as a result of these plans will be required. Sharesplans. See “Pro Forma Data” on page             for suchan illustration of the effects of these plans. The stock-based benefit plans may be issued outaward a greater number of authorized but unissued shares or repurchased shares and/or may be purchased inoptions and restricted stock awards if the open market.plans are adopted after one year from the date of the completion of

the conversion. We have not yet determined when we will present the plans for shareholder approval and we have not yet determined the number of shares that would be reserved for issuance under these plans. The plans will comply with all applicable Federal Reserve regulations.

In additionPotential Dilution And Increased Compensation Costs Related To Stock-based Benefit Plans. The following table summarizes the number of shares of common stock and the aggregate value of grants that are expected to be available under the proposed stock-based benefit plans (assuming the stock-based benefit plans that weare implemented within one year following completion of the conversion). The stock-based benefit plans may adopt,award a greater number of options and restricted stock awards if the plans are adopted more than one year after completion of the conversion.

The table shows the dilution to shareholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in the open market.

Employment Agreements; Severance and Non-Competition Agreements. Upon completion of the conversion, we intend to enter into employment and change of control agreements with Roger D. Plemens, our President and Chief Executive Officer, Ryan M. Scaggs, our Chief Operating Officer, and David A. Bright, our Chief Financial Officer; and severance and non-competition agreements with certain ofCarolyn H. Huscusson, our executiveChief Retail Officer, Bobby D. Sanders, II, our Chief Credit Administration Officer, Laura W. Clark, our Chief Risk Officer, and other officers.Marcia J. Ringle our Corporate Secretary. See “–“Our Business – Executive Officer Compensation” and “–“Our Business – Benefits to be Considered Following Completion of the Conversion” on pagefor a further discussion of these agreements, including their terms and potential costs, as well as a description of other benefits arrangements. In addition, for further information with respect to the expenses related to the stock-based benefit plans, see “Risk Factors – The implementation of stock-based benefit plans may dilute your ownership interest and increase our costs, which will reduce our income,” on pageand “–“Our Business – Benefits to be Considered Following Completion of the Conversion” on page.

Market for Common Stock

We expect that our common stock will be listed for trading on the NASDAQ Global Market under the symbol “.“ENFC.” Raymond JamesAfter shares of our common stock begin trading, you may contact a stock broker to buy or sell shares. There can be no assurance that persons purchasing our common stock in the offering will be able to sell their shares at or above the $10.00 offering price, and brokerage firms typically charge commissions related to the purchase or sale of securities. Sandler O’Neill & Associates, Inc.Partners, L.P. currently intends to make a market in the shares of our common stock, but is under no obligation to do so. See “– Market“Market for the Common Stock” on page.

Our Policy Regarding Dividends

Following completion of the offering, our Board of Directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. Under the Bancorp MOU,terms of the written agreement, we may not declare or pay any dividends without the prior approval of the Federal Reserve Bank of Richmond. Initially, we do not intend to pay any cash dividends following the offering. The payment and amount of any future dividend payments will depend upon a number of factors.

For further information, see “Our Policy Regarding Dividends” on page.

Tax Consequences

As a general matter, the conversion will not be a taxable transaction for federal or state income tax purposes to Macon Financial,Entegra, Bancorp, the Bank, or persons eligible to subscribe in the subscription offering. See “–“The Conversion – Material Income Tax Consequences” on pagefor additional information.

Conditions to Completion of the Conversion and the Offering

We cannot complete the conversion and the offering unless:

Emerging Growth Company Status

The Jumpstart Our Business Startups Act, or JOBS Act, which was signed into law on April 5, 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.0 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” We qualify as an “emerging growth company” and believe that we will continue to qualify as an “emerging growth company” for five years from the completion of the stock offering.

As an “emerging growth company,” we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. As of December 31, 2013, there is not a significant difference in the presentation of our financial statements as compared to other public companies as a result of this transition guidance.

Additionally, we are in the process of evaluating the benefits of relying on the reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company” we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) hold non-binding shareholder votes regarding annual executive compensation or executive compensation payable in connection with a merger or similar corporate transaction, (iv) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (v) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. However, we will also not be subject to the auditor attestation requirement or additional executive compensation disclosures so long as we remain a “smaller reporting company” under Securities and Exchange Commission regulations (generally less than $75 million of voting and non-voting equity held by non-affiliates).

We could remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.0 billion, (ii) the date that we become a “large accelerated filer” as defined inRule 12b-2 under the Securities Exchange Act of 1934, as amended, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.

How You Can Obtain Additional Information

Our branch office personnel may not assist with investment-related questions about the offering. If you have any questions regarding the conversion or the offering, please call our Stock Information Center, toll free, at (    )     -     , Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern Daylight Time. The Stock Information Center will be closed on weekends and bank holidays.

TO ENSURE THAT EACH PERSON RECEIVES A PROSPECTUS AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF [, 2011]2014], NO PROSPECTUS WILL BE MAILED OR HAND-DELIVERED ANY LATER THAN FIVE DAYS OR TWO DAYS, RESPECTIVELY, PRIOR TO [, 2011]2014].

RISK FACTORS

You should consider carefully the following risk factors in evaluating an investment in our shares of common stock.

Risks Related to Our Business

The Bank is subject to the Bank MOUa Consent Order and Bancorp is subject to the Bancorp MOU (together, the “Memoranda”)a Written Agreement, which require elevated capital ratios and other actions; failure to comply with the terms of the MemorandaRegulatory Agreements may result in adverse consequences.In accordance with the terms of2012, the Bank MOU,entered into a Stipulation to the Bank has agreed to, among other things, (1) increase regulatory capital to achieve and maintainIssuance of a Tier I Leverage Capital ratio of not less than 8% and a Total Risk-Based Capital ratio of not less than 12%, (2) develop specific plans and proposals for the reduction and improvement of lines of credit which are subject to adverse classification, (3) review its overall liquidity objectives and develop plans and procedures aimed at reducing reliance on volatile liabilities to fund longer term assets, (4) establish and maintain an adequate allowance for loan losses, and (5) approve an enhanced loan loss reserve policy to incorporate recommendations ofConsent Order with the Federal Deposit Insurance Corporation (“FDIC”) and the North Carolina Commissioner of Banks (“Commissioner,” and together with the FDIC, the “Bank Supervisory Authorities”) agreeing to the issuance of a consent order (the “Consent Order”). Also in 2012, Bancorp entered into a written agreement (the “Written Agreement”) with the Federal Reserve Bank of Richmond (“FRB”).

In accordance with the terms of the Consent Order, the Bank has agreed to, among other things, (i) submit a written capital plan, (ii) reduce classified assets, (iii) reduce lines of credit subject to adverse classification, (iv) maintain a tier 1 leverage capital ratio of not less than 8.0%, and a total risk-based capital ratio of not less than 11.0%, (v) reduce concentrations of credit, (vi) establish and maintain a fully funded allowance for loan losses, and (vii) not accept, renew, or rollover any brokered deposits, without the prior regulatory approval. In addition, the Bank must obtain regulatory approval prior to paying any dividends to Bancorp. The Bank MOUConsent Order will remain in effect until modified, terminated, lifted, suspended or set aside by the Bank Supervisory Authorities.

Under the Bancorp MOU,Written Agreement, Bancorp has agreed to, among other things, (1)(i) not declare or pay any dividends, including payments on its trust preferred securities, without the prior approval of the Federal Reserve Bank of Richmond (“FRB”), (2)FRB, (ii) not directly or indirectly take dividends or any other form of payments representing a reduction in capital from the Bank without the prior written approval of the FRB, (3)(iii) not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the FRB, (4)(iv) preserve ourits cash assets and not dissipate those assets except for the benefit of the Bank, and (5)(v) take appropriate steps to ensure that the Bank complies with any order, or other supervisory action entered into with the Bank’s federal and state regulators. The Bancorp MOUWritten Agreement will remain in effect until modified, terminated, lifted, suspended or set aside by the FRB.

Bancorp and the Bank have taken and continue to take prompt and aggressive action to respond to the issues raised in the Memoranda.Consent Order and the Written Agreement (together, the “Regulatory Agreements”). A material failure to comply with the terms of the MemorandaRegulatory Agreements could subject Bancorp or the Bank to additional regulatory actions, including a consent order or other action, and further regulation, which may have a material adverse effect on our future business, results of operations, financial condition and financial condition.the value of our common stock. For additional information regarding the Memoranda,Regulatory Agreements, see “– Memoranda of Understanding”“Supervision and Regulation – Regulatory Agreements” on page.

We must raise sufficient capital to comply with the elevated capital requirements of the Bank MOU.Consent Order. The resulting capital cushion may not be sufficient to absorb additional loan losses and maintain such compliance.As part of the Bank MOU,Consent Order, the Bank Supervisory Authorities require the Bank to maintain a Tier I Leverage Capitaltier 1 leverage capital ratio of not less than 8%8.0% and a Total Risk-Based Capitaltotal risk-based capital ratio of not less than 12%11.0%. At MarchDecember 31, 2011,2013, the Bank had a Tier I Leverage Capitaltier 1 leverage capital ratio of 7.07%7.02%, and a Total Risk-Based Capitaltotal risk-based capital ratio of 11.55%11.97%. Even though we expect the Bank to exceed these higher capital requirements after the offering, its capital cushion may not be sufficient to cover future losses. At the minimum offering, the Bank’s pro forma Total Risk-Based Capitaltotal risk-based capital ratio is expected to be 16.61% with17.38%, reflecting a capital cushion of $31.9$33.0 million in excess of the required capital level. Any increased provision expenses to fund its allowance for loan losses and increased real estate liquidation expenses will negatively impact the Bank’s capital cushion. If the Bank’s capital cushion is impacted such that its capital ratios do not comply with the requirements of the Bank MOU,Consent Order, the Bank Supervisory Authorities could take additional enforcement action against the Bank, including the imposition of monetary penalties, as well as further operating restrictions.

We initially will not pay dividends or repurchase our common stock after the offering.Under the Bancorp MOU, we may not declare or pay any dividends without the prior approval of the FRB. Following the conversion and offering, we initially will not pay dividends on our common stock and will not repurchase our common stock, which may negatively impact our stock price. For further information, see “Our Policy Regarding Dividends” on page.

We recorded losses in the last three months and last two full fiscal years and losses may continue in the future, which may negatively impact our stock price. During the three months ended March 31, 2011, and the years ended December 31, 2010 and 2009, we recorded net losses of $8.9 million, $14.3 million and $7.8 million, respectively. These losses were primarily due to provisions for loan losses of $9.8 million, $18.9 million and $21.9 million, respectively. Another contributing factor has been our high levels of non-performing assets, for which we do not record interest income. These assets totaled $96.7 million at March 31, 2011; $97.1 million at December 31, 2010; and $66.5 million at December 31, 2009. Our ability to return to profitability will depend, in part, on reducing the amount of our provision for loan losses and other expenses, and reducing our level of non-performing assets. Continued losses may negatively impact our stock price.

We may not be requiredable to increase the valuation allowance againstutilize all of our deferred tax assets.asset.As of MarchDecember 31, 2011,2013, we had neta gross deferred tax assetsasset of $17.4 million before a valuation allowance. During 2010, we reached a three-year pre-tax cumulative loss position. Under accounting principles generally accepted in the United States (“GAAP”), a cumulative loss position is considered significant evidence which makes it very difficult for us to rely on future earnings as a reliable source of future taxable income to realize deferred tax assets. Accordingly, we$26.8 million. We have established a valuation allowance againstfor our net deferred tax assets as of March 31, 2011, totaling $11.8 million because we believe that it is not likely that all of these assets will be realized. This valuation allowance resulted in an unreservedasset to reduce its net carrying value to $4.2 million. Our ability to use our deferred tax asset, of $5.6 million at March 31, 2011. In determiningincluding the amountreversal or partial release of the valuation allowance, we consideredis dependent on our ability to generate future earnings within the reversaloperating loss carry-forward periods, which are generally 20 years. Some or all of our deferred tax liabilities, and the abilityasset could expire unused if we are unable to carry back losses to prior years. This process required significant judgment by management about matters that are by nature uncertain. It is likely we will need to increase our valuation allowancegenerate taxable income in the coming quarters asfuture sufficient to utilize the deferred tax asset, or we work through someenter into transactions that limit our right to use it. If a material portion of our problem assets, whichdeferred tax asset expires unused, it could have a material adverse effect on our future business, results of operations, financial condition and financial condition.the value of our common stock. Our ability to realize the deferred tax asset is periodically reviewed and the valuation allowance is adjusted accordingly.

Our estimate for losses in our loan portfolio may be inadequate, which would cause our results of operations and financial condition to be adversely affected.We maintain an allowance for loan losses, which is a reserve established through a provision for possible loan losses charged to our expenses and represents management’s best estimate of probable losses within our existing portfolio of loans. Our allowance for loan losses amounted to $20.9 million at March 31, 2011, as compared to $17.2$14.3 million at December 31, 2010.2013, as compared to $14.9 million at December 31, 2012. The level of the allowance reflects management’s estimates and judgments as to specific credit risks, evaluation of industry concentrations, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio, which have been increasing in light of recent economic conditions. The determination of the appropriate level of the allowance for loan

losses inherently involves a high degree of subjectivity and requires management to make significant estimates of current credit risks and future trends, all of which may undergo material changes. An independent third party recently reviewed a significant portion of our loans, completing its review in January of 2011. Based on its estimates using the highest range of potential losses, our expense relating to the additional provision for loan losses could be increased substantially. In addition, we anticipate that bank regulatory agencies will review our allowance for loan losses during our next examination, and may require an increase in the provision for possible loan losses or the recognition of further loan charge-offs. Finally, the

appointment of a new Chief Credit Officer in February of 2011 may result in changes to our loan loss methodology and increases in our provisions for loan losses. Any such increases may have a material adverse effect on our future business, results of operations, financial condition and the value of our common stock.

Our construction and land development, commercial real estate and home equity and line ofloans generally carry greater credit lending may expose usrisk than one- to a greater risk of loss and hurt our earnings and profitability.four-family residential mortgage loans.Historically, our business strategy has centered, in part, on offering construction and land development,At December 31, 2013, we had commercial and home equity and line of credit loans secured by real estate in order to expand our net interest margin.loans of $155.6 million, or 29.7% of total loans. These types of loans generally have higher risk-adjusted returns and shorter maturities than traditional one- to four-family residential mortgage loans. At March 31, 2011, construction and landAlso, many of our borrowers have more than one of these types of loans outstanding. Consequently, an adverse development commercial, and home equity loans and lineswith respect to one loan or one credit relationship can expose us to a significantly greater risk of credit secured by real estate totaled $430.5 million, which represented 62.3% of total loans. Such loans increase our credit risk profile relativeloss compared to other financial institutions that have higher concentrations ofan adverse development with respect to a one- to four-family loans.

Loansresidential mortgage loan. Further, loans secured by commercial or land development real estate properties are generally for larger amounts and involve a greater degree of risk than one- to four-family residential mortgage loans. Payments on loans secured by these properties generally are often dependent on the income produced by the underlying properties which, in turn, depends on the successful operation and management of the properties. Accordingly, repayment of these loans is subject to adverse conditions in the real estate market or the local economy. If loans that are collateralized by commercial real estate become troubled and the value of the collateral has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for loan losses which would in turn adversely affect our operating results and financial condition. While we seek to minimize these risks in a variety of ways, there can be no assurance that these measures will protect against credit-related losses.

Our significant concentration of construction financing may expose us to a greater risk of loss and hurt our earnings and profitability. At December 31, 2013, we had other construction and land loans of $64.9 million, or 12.4 % of total loans and one-to four-family residential construction loans of $9.0 million or 1.7% of total loans outstanding to finance construction and land development. These loans are dependent on the successful completion of the projects they finance, however, in recent years many construction and development projects in our primary market area have not been completed in a timely manner, if at all.

Construction financing typically involves a higher degree of credit risk than financing on improved, owner-occupied real estate. Risk of loss on a construction loan is largely dependent upon the accuracy of the initial estimate of the property’s value at completion of construction and the bid price and estimated cost (including interest) of construction. If the estimate of construction costs proves to be inaccurate, we may be required to advance funds beyond the amount originally committed to permit completion of the project. If the estimate of the value proves to be inaccurate, we may be confronted, at or prior to the maturity of the loan, with a project whose value is insufficient to assure full repayment. When lending to builders, the cost of construction breakdown is provided by the builder, as well as supported by the appraisal. Although our underwriting criteria are designed to evaluate and minimize the risks of each construction loan, there can be no guarantee that these practices will safeguard against material delinquencies and losses to our operations.

At March 31, 2011, we had

Repayment of our commercial business loans of $154.8 million, or 22.4% of total loans, outstanding to finance construction and land development. Construction and land development loans areis primarily dependent on the successful completioncash flows of the projects they finance, however,borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in many cases such constructionvalue. We offer different types of commercial loans to a variety of small- to medium-sized businesses, and development projectsintend to increase our commercial business loan portfolio in the future. The types of commercial loans offered are business lines of credit and term equipment financing. Our commercial business loans are primarily underwritten based on the cash flow of the borrowers and secondarily on the underlying collateral, including real estate. The borrowers’ cash flow may be unpredictable, and collateral securing these loans may fluctuate in value. Some of our primary market areacommercial business loans are not being completedcollateralized by equipment, inventory, accounts receivable or other business assets, and the liquidation of collateral in a timely manner, if at all.the event of default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories may be obsolete or of limited use. As of December 31, 2013, our commercial business loans totaled $8.3 million, or 1.6% of our total loan portfolio.

Our high level of home equity loans and line of credit lending may expose us to increased credit risk.At December 31, 2013, we had home equity loans and lines of credit of $56.8 million, or 10.9% of total loans. Home equity loans and lines of credit typically involve a greater degree of risk than one- to four-family residential mortgage loans. Equity line lending allows customer to access an amount up to his, her or its line of credit limit for the term specified in their agreement. At the expiration of the term of an equity line, a customer may have the entire principal balance outstanding as opposed to a one- to four-family residential mortgage loan where the principal is disbursed entirely at closing and amortizes throughout the term of the loan. We cannot predict when and to what extent our customers will access their equity lines. While we seek to minimize this risk in a variety of ways, including attempting to employ conservative underwriting criteria, there can be no assurance that these measures will protect against credit-related losses.

Repayment of our commercial business loans is primarily dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value.We offer different types of commercial loans to a variety of small to medium-sized businesses, and intend to increase our commercial business loan portfolio in the future. The types of commercial loans offered are business lines of credit and term equipment financing. Our commercial business loans are primarily underwritten based on the cash flow of the borrowers and secondarily on the underlying collateral, including real estate. The borrowers’ cash flow may be unpredictable, and collateral securing these loans may fluctuate in value. Some of our commercial business loans are collateralized by equipment, inventory, accounts receivable or other business assets, and the liquidation of collateral in the event of default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories may be obsolete or of limited use.

As of March 31, 2011, our commercial business loans totaled $15.1 million, or 2.2% of our total loan portfolio. Non-accruing commercial business loans totaled $0.9 million and $1.1 million as of March 31, 2011 and December 31, 2010, respectively.

Our lending on vacant land may expose us to a greater risk of loss and may have an adverse effect on results of operations.A portion of our residential and commercial lending is secured by vacant or unimproved land. Loans secured by

vacant or unimproved land are generally more risky than loans secured by improved property for one- to four-family residential mortgage loans. Since vacant or unimproved land is generally held by the borrower for investment purposes or future use, payments on loans secured by vacant or unimproved land will typically rank lower in priority to the borrower than a loan the borrower may have on their primary residence or business. At March 31, 2011, loans secured by vacant or unimproved property totaled $44.4 million, or 6.4% of our loan portfolio. These loans are susceptible to adverse conditions in the real estate market and local economy.

We continue to hold and acquire a significant amount of other real estate, which has led to increased operating expenses and vulnerability to additional declines in real property values.We foreclose on and take title to real estate serving as collateral for many of our loans as part of our business. Real estate owned by us and not used in the ordinary course of our operations is referred to as “real estate owned” or “REO.” At MarchDecember 31, 2011,2013, we had REO with an aggregate book value of $23.5$10.5 million, and real estate held for investment of $2.5 million compared to $21.5$19.8 million and $0.0 million at December 31, 2010.2012, respectively. We obtain appraisals prior to taking title to real estate and periodically thereafter. However, due toin the continuedevent of a deterioration in real estate prices in our market areas, there can be no assurance that such valuations will reflect the amount which may be paid by a willing purchaser in an arms-length transaction at the time of the final sale. Moreover, we cannot assure investors that the losses associated with REO will not exceed the estimated amounts, which would adversely affect future results of our operations.

The calculation for the adequacy of write-downs of our REO is based on several factors, including the appraised value of the real property, economic conditions in the property’s sub-market, comparable sales, current buyer demand, availability of financing, entitlement and development obligations and costs and historic loss experience. All of these factors have caused furthersignificant write-downs in recent periodsyears and can change without notice based on market and economic conditions. HighElevated levels of non-performing assets indicate that REO balances will continue to be highsignificant for the foreseeable future. IncreasedHigher REO balances have led to greater expenses as we incur costs to manage and dispose of the properties. We expect that our earnings will continue to be negatively affected by various expenses associated with REO, including personnel costs, insurance and

taxes, completion and repair costs, valuation adjustments and other expenses associated with property ownership, as well as by the funding costs associated with assets that are tied up in REO. Moreover, our ability to sell REO is affected by public perception that banks are inclined to accept large discounts from market value in order to quickly liquidate properties. Any furthermaterial decrease in market prices may lead to further REO write-downs, with a corresponding expense in our statement of operations. Further write-downs on REO or an inability to sell REO properties could have a material adverse effect on our future business, results of operations, financial condition and financial conditions.the value of our common stock. Furthermore, the management and resolution of non-performing assets, which include REO, increases our costs and requires significant commitments of time from our management and directors, which can be detrimental to the performance of their other responsibilities. The expenses associated with REO and any further property write-downs could have a material adverse effect on our future business, results of operations, financial condition and resultsthe value of operations.our common stock.

A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business.A significant portion of our loan portfolio is secured by real estate. As of MarchDecember 31, 2011,2013, approximately 97%97.7% of our loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. A continued weakening of the real estate market in our market areas could continue to result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on our profitability and asset quality. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earningsresults of operations, financial condition and shareholders’ equitythe value of our common stock could be adversely affected. The declines in home prices in the markets we serve, along with the reduced availability of mortgage credit, also may result in increases in delinquencies and losses in our portfolio of loans related to residential real estate construction and development. Further declines in home prices coupled with a deepened economic recession and continued rises in unemployment levels could drive losses beyond that which is provided for in our allowance for loan losses. In that event, our earnings could be adversely affected.

Additionally, recent weakness in the secondary market for residential lending could have an adverse impact on our profitability. Significant ongoing disruptions in the secondary market for residential mortgage loans have limited the market for and liquidity of most mortgage loans other than conforming Fannie Mae and Freddie Mac loans. The effects of ongoing mortgage market challenges, combined with the ongoing correction in residential real estate market prices and reduced levels of home sales, could result in further price reductions in single family home values, adversely affecting the value of collateral securing mortgage loans held, mortgage loan originations and gains on sale of mortgage loans. Continued declines in real estate values and home sales volumes, and financial stress on borrowers as a result of job losses or other factors, could have further adverse effects on our borrowers that result in higher delinquencies and greater charge-offs in future periods, which could adversely affect our financial condition or results of operations.

Continued and sustained deterioration in the housing sector and related markets and prolonged elevated unemployment levels may adversely affect our business and financial results. During 2009 and much of 2010, general economic conditions continued to worsen nationally as well as in our market areas. Our lending business is tied, in large part, to the real estate market. Declines in home prices and increases in foreclosures and unemployment have adversely impacted the credit performance of real estate related loans, resulting in the write-down of asset values. The continuing housing slump has resulted in reduced demand for the construction of new housing, further declines in home prices, and increased delinquencies on construction, residential and commercial mortgage loans. The ongoing concern about the stability of the financial markets in general has caused many lenders to reduce or cease providing funding to borrowers. These conditions may also cause a further reduction in loan demand, and increases in our non-performing assets, net charge-offs and provisions for loan losses. A worsening of these negative economic conditions could adversely impact our prospects for growth and asset valuations and could result in a decrease in our interest income and a material increase in our provision for loan losses.

Concentration of collateral in our primary market area which has recently experienced declines in valuations, may increase the risk of increased non-performing assets. Our primary market area consists of the Westernwestern North Carolina counties of Cherokee, Henderson, Jackson, Macon, Polk and Transylvania. At MarchDecember 31, 2011,2013, approximately $506.8$426.7 million, or 73.4%81.5%, of our loans were secured by real estate located within this area. Declines in the valuations of real estate within our primary market area have adversely impacted the credit performance of real estate related loans, resulting in the write-down of asset values and an increase in non-performing assets. According to the multiple listing service (MLS) data available for the Franklin, North Carolina area, the median sales price for existing single family homes in this area decreased from $182,071 in 2007 to $135,224 in 2010. We believe that this change in median sales prices is indicative of changes throughout our primary market area. By contrast, the median sales price for existing homes in the U.S. decreased from $217,900 in 2007 to $173,100 in 2010. A continued decline in real estate values in our primary market area would lower the value of the collateral securing loans on properties in this area, and may increase our level of non-performing assets.

High loan-to-value ratiosIncome from secondary mortgage market operations is volatile, and we may incur losses with respect to our secondary mortgage market operations that could negatively affect our earnings.A key component of our existing business is to sell in the secondary market longer term, conforming fixed-rate residential mortgage loans that we originate, earning non-interest income in the form of gains on sale. When interest rates rise, the demand for mortgage loans tends to fall and may reduce the number of loans we can originate for sale. Weak or deteriorating economic conditions also tend to reduce loan demand. Although we originate, and intend to continue originating, loans on a significant portion of our other construction“best efforts” basis, and landwe sell, and residential construction loan portfolio exposeintend to continue selling, most loans in the secondary market with limited or no recourse, we are required, and will continue to be required, to give customary representations and warranties to the buyers relating to compliance with applicable law. If we breach those representations and warranties, the buyers will be able to require us to greater risk of loss. Many of our loans have high loan-to-value ratios,i.e. 85% and above for residential construction loans, 75% and above for land development and lotrepurchase the loans and commercial land loans, and 65%and above for undeveloped land loans. At March 31, 2011, approximately $28.0 million, or 18% ofwe may incur a loss on the repurchase that could negatively affect our other construction and land and residential construction loans had high loan-to-value ratios, and we had commitments to extend an additional $0.5 million related to these loans. Because real estate values have declined in our market areas, many of our loans that once were below the regulatory thresholds now exceed these loan-to-value thresholds. Loans with high loan-to-value ratios are more sensitive to declining property values than those with lower loan-to-value ratios and, therefore, experience a higher incidence of default and severity of losses. In addition, if our borrowers sell the properties, they may be unable to repay their loans in full from the proceeds of the sales. Furthermore, most of our acquisition, development and construction loans have adjustable interest rates. As a result, these loans may experience a higher rate of default in a rising interest rate environment due to the loans repricing upward as market rates rise. For these reasons, these loans may experience higher rates of delinquencies, defaults and losses.earnings.

Future changes in interest rates could reduce our profits. Our ability to make a profit largely depends on our net interest income, which could be negatively affected by changes in interest rates. Net interest income is the difference between:

Timing differences that can result from our interest-earning assets not repricing at the same time as our interest-bearing liabilities can negatively impact our net interest income. In addition, the amount of change in interest-earning assets and interest-bearing liabilities can also vary and present a risk to the amount of net interest margin earned. We generally employ market indexes when making portfolio loans in order to reduce the interest rate risk in our loan portfolio. Those indexes may not move in tandem with changes in rates of our funding sources, depending on market demand. As part of our achieving a balanced earning asset portfolio and earning acceptable yields, we also invest in longer term fixed rate municipal securities and in securities which have issuer callable features. These securities could reduce our net interest income or lengthen the average life during periods of high interest rate volatility. We also employ forecasting models to measure and manage the risk within stated policy guidelines. Notwithstanding these tools and practices, we are not assured that we can reprice our assets commensurately to interest rate changes in our funding sources, particularly during periods of high interest rate volatility. The difference in the timing of repricing our assets and liabilities may result in a decline in our earnings.

As we take steps to implement our operating strategy, ourOur total loan balance may decline, which may negatively impact our net interest income. At MarchDecember 31, 2011,2013, our non-owner occupied commercial real estate and other construction and real estate loans totaled $253.0$138.3 million, or 35%26.4%, of our total loan portfolio. Since mid-2007, we have sought to reduce our concentration in this and otherthese higher risk loan categories. In the future, we intend to increase our focus on smallsmall- to medium-sized business and private banking customers. As we seek to change the mix of our loan portfolio and reduce our higher risk loan concentrations, it is possible that our total loan balance may decline, which in turn may negatively impact interest income.

Strong competition within our market areas may limit our growth and profitability.Competition in the banking and financial services industry is intense. In our market areas, we compete with credit unions, commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Some of our competitors have greater name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide. In addition, larger competitors may be able to price loans and deposits more aggressively than we do, which could affect our ability to grow and remain profitable on a long-term basis. Our profitability depends upon our continued ability to successfully compete in our market areas. If we must raise interest rates paid on deposits or lower interest rates charged on our loans, our net interest margin and profitability could be adversely affected. For additional information see “– Competition”“Our Business – General” on page.

The financial services industry could become even more competitive as a result of continuing technological changes and increasing consolidation. Technology has lowered barriers to entry and made it possible for non-banksnon-

banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.

We are subject to extensive regulation and oversight, and, depending upon the findings and determinations of our regulatory authorities, we may be required to make adjustments to our business, operations or financial position and could become subject to formal or informal regulatory action.We are subject to extensive regulation and supervision, including examination by federal and state banking regulators. Federal and state regulators have the ability to impose substantial sanctions, restrictions and requirements on us if they determine, upon conclusion of their examination or otherwise, violations of laws with which we must comply or weaknesses or failures with respect to general standards of safety and soundness, including, for example, in respect of any financial concerns that the regulators may identify and desire for us to address. Such enforcement may be formal or informal and can include directors’ resolutions, memoranda of understanding, consent orders, civil money penalties and termination of deposit insurance and bank closure. Enforcement actions may be taken regardless of the capital levels of the institutions, and regardless of prior examination findings. In particular, institutions that are not sufficiently capitalized in accordance with regulatory standards may also face capital directives or prompt corrective actions. Enforcement actions may require certain corrective steps (including staff additions or changes), impose limits on activities (such as lending, deposit taking, acquisitions, paying dividends or branching), prescribe lending parameters (such as loan types, volumes and terms) and require additional capital to be raised, any of which could adversely affect our financial condition and results of operations. The imposition of regulatory sanctions, including monetary penalties, may have a material impact on our financial condition and results of operations and/or damage our reputation. In addition, compliance with any such action could distract management’s attention from our operations, cause us to incur significant expenses, restrict us from engaging in potentially profitable activities and limit our ability to raise capital. See “– Memoranda of Understanding”“Supervision and Regulation – Regulatory Agreements” on page.

Financial reform legislation enacted by Congress in 2010 isand resulting regulations have increased, and are expected to continue to increase our costs of operations.In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). This new law has significantly changeschanged the currentstructure of the bank regulatory structuresystem and affects the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations, and to prepare numerous studies and reports for Congress. The federal agencies are given significant discretion in drafting the implementing rules and regulations. Although some of these regulations have been promulgated, or issued for comment in recent months, many of these requiredadditional regulations are still being drafted.expected to be issued in 2014 and thereafter. Consequently, many of the details and much of the impact of the Dodd-Frank Act may not be known for many months or years.

Certain provisions of the Dodd-Frank Act will have a near-term effect on us. For example, the federal prohibitions on paying interest on demand deposits will be eliminated on July 21, 2011, thus allowing businesses to have interest-bearing checking accounts. Depending on competitive responses, this significant change to existing law could have an adverse effect

on our interest expense and could adversely impact our ability to compete with larger financial institutions that have more diverse sources of revenues which may allow them to offer higher interest rates on certain types of demand deposit accounts.

The Dodd-Frank Act permanently increases the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2008, and noninterest bearing transaction accounts have unlimited deposit insurance through December 31, 2012. This increase will result in a larger amount of insured deposits, thereby possibly increasing the amounts of deposit insurance assessments imposed by the FDIC. The Dodd-Frank Act also broadened the base for insurance fund assessments by calculating the assessment owed by an institution in relation to its average consolidated total assets less its tangible equity capital. It also required that institutions having more than $10 billion in assets bear a disproportionate share of the assessments necessary to raise the FDIC’s reserve ratio to 1.35% of insured deposits by 2020. Although the broadening of the assessment base and the placing of a disproportionate share upon larger institutions have had a positive impact upon the deposit insurance expense of the Bank and other community financial institutions, there can be no assurance that a variety of factors, including the increase in insured deposits covered by FDIC deposit insurance, a continued high incidence of bank failures, and possible increases in the FDIC reserve ratio beyond 1.35%, will not cause the Bank’s deposit insurance expense to increase significantly in the future.

The Dodd-Frank Act requires publicly traded companies to provide shareholders a non-binding vote on executive compensation and so-called “golden parachute” payments, and authorizes the Securities and Exchange Commission (“SEC”) to promulgate rules that would allow shareholders to nominate their own candidates using a company’s proxy materials. The legislation also directs the Board of Governors of the Federal Reserve System (the “Federal Reserve”) to promulgate rules prohibiting excessive compensation paid to executives of banks and bank holding companies having more than $1.0 billion in assets, regardless of whether the company is publicly traded or not.

The Dodd-Frank Act creates acreated new Consumer Financial Protection Bureau (the “Bureau”) with broad powers to supervise and enforce consumer protection laws. The Bureau has broad rule-making authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive” acts and practices. The BureauIt also has examination and enforcement authority

over all banks and savings institutions with more than $10 billion in assets. Smaller banksBanks and savings institutions with $10 billion or less in assets will be examined by their applicable bank regulators. The Dodd-Frank Act also weakens the federal preemption rules that have been applicable for national banks and federal savings associations, and gives state attorneys general the ability to enforce federal consumer protection laws.

It is expected that the Dodd-Frank Act and the regulations it requires could increase the interest and operating expenses of the Bank and comparable financial institutions. It is also expected that a number of the provisions ofdifficult to quantify what specific impact the Dodd-Frank Act and related regulations couldhave had on the Bank to date and what impact yet to be written regulations will have on us in the future. However, it is expected that at a minimum these measures will increase our costs of doing business and increase our costs related to regulatory compliance, and may have a significant adverse effect on our lending activities, financial performance and operating flexibility.

We will become subject to more stringent capital requirements, which may adversely impact our return on equity, require us to raise additional capital, or constrain us from paying dividends or repurchasing shares.In July 2013, the mortgage loanBoard of Governors of the Federal Reserve System (the “Federal Reserve”) and small business loan activities ofthe FDIC approved new rules that will substantially amend the regulatory risk-based capital rules applicable to the Bank. The final rule implements the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act.

The final rule includes new minimum risk-based capital and leverage ratios, which will be effective for the Bank and other community financial institutions.Entegra on January 1, 2015, and revises the definition of what constitutes “capital” for purposes of calculating those ratios. The new minimum capital requirements will be: (i) a new common equity tier 1 capital ratio of 4.5%; (ii) a tier 1 to risk-based assets capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a tier 1 leverage ratio of 4%. These include restricting the methods by which the compensationrules also establish a “capital conservation buffer” of mortgage originators may be calculated; creating potential defenses to foreclose upon defaulted home mortgage loans not meeting characteristics established by federal banking regulators; limiting the ability of community financial institutions to originate2.5%, and sell certain types of home mortgages to securitizers of mortgage-backed securities; and requiring the collection and reporting of substantial data and certain types of small business loan applications. Although neither the possible increasewill result in the Bank’s interestfollowing minimum ratios: (i) a common equity tier 1 capital ratio of 7.0%, (ii) a tier 1 to risk-based assets capital ratio of 8.5%, and operating expenses, nor(iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement would be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that can be utilized for such actions.

The application of more stringent capital requirements for the Bank could, among other things, result in lower returns on equity, require the raising of additional capital, and result in regulatory actions constraining us from paying dividends or repurchasing shares if we were to be unable to comply with such requirements.

We initially will not pay dividends or repurchase our common stock after the offering.Under the Written Agreement, we may not declare or pay any onedividends or morerepurchase our common stock, without the prior approval of the other aspectsFRB. Following the conversion and offering, we initially will not pay dividends on our common stock and will not repurchase our common stock, which may negatively impact our stock price. Under current federal regulations, subject to certain exceptions, we may not repurchase shares of our common stock during the first year following the completion of the Dodd-Frank Act discussed above may have a material effect uponconversion. Further, Federal Reserve policy generally limits our future financial performance by themselves, the specific impact of the Dodd-Frank Act cannot be determined with specificity until after all required or otherwise proposed regulations are issued in final form. We believe that our operating income will be adversely affected, as will the operating income of other community financial institutions, in the future as a consequence of the implementation of the Dodd-Frank Act. Because of the current uncertainty about the schedule of implementation, the breadth of the regulations expectedability to be issued, and other similar factors, we cannot quantify the amount of any adverse impact.repurchase stock. For further information, see “Our Policy Regarding Dividends” on page     .

We depend on our management team to implement our business strategy and execute successful operations and we could be harmed by the loss of their services. We are dependent upon the services of our management

team. Our strategy and operations are directed by the executive management team. Any loss of the services of our President and Chief Executive Officer or other members of our management team could impact our ability to implement our business strategy, and have a material adverse effect on our future business, results of operations, financial condition and the value of our ability to compete in our markets.common stock.

The fair value of our investments could decline.As of MarchDecember 31, 2011,2013, approximately 88.1% of our entire investment portfolio was designated as available-for-sale. Unrealized gains and losses in the estimated value of the available-for-sale portfolio must be “marked to market” and reflected as a separate item in shareholders’ equity (net of tax) as accumulated other comprehensive income. Shareholders’ equity will continue to reflect the unrealized gains and losses (net of tax) of these investments. The fair value of our investment portfolio may decline, causing a corresponding decline in shareholders’ equity.

Continued or further declines in the value of certain investment securities could require write-downs, which would reduce our earnings.Our securities portfolio includes securities that have declined in value due to negative perceptions about the health of the municipal securities sector. A prolonged decline in the value of these or other securities could result in an other-than-temporary impairment write-down which would reduce our earnings.

IfLiquidity risk could impair our investment inability to fund operations and jeopardize our financial condition, results of operations and cash flows. Liquidity is essential to our business. Our ability to implement our business strategy will depend on our ability to obtain funding for loan originations, working capital, possible acquisitions and other general corporate purposes. An inability to raise funds through deposits, borrowings, securities sold under repurchase agreements, the common stocksale of theloans and other sources could have a substantial negative effect on our liquidity. From time to time we rely on deposits obtained through intermediaries, Federal Home Loan Bank (“FHLB”) of Atlanta is classified as other-than-temporarily impairedadvances, securities sold under agreements to repurchase and other wholesale funding sources to obtain the funds necessary to manage our balance sheet.

Our access to funding sources in amounts adequate to finance our activities or as permanently impaired, our earnings and shareholders’ equity could decrease. We own common stock of the FHLB of Atlanta. We hold this stockon terms which are acceptable to qualify for membership in the FHLB system and to be eligible to borrow funds under the FHLB of Atlanta’s credit advances program. The aggregate cost and fair value of our FHLB of Atlanta common stock as of March 31, 2011 was $11.0 million, based on its par value. There is no market for this stock.

Published reports indicate that certain member banks of the FHLB system may be subject to accounting rules and asset quality risks that could result in materially lower regulatory capital levels. In an extreme situation, it is possible that the capital of a FHLB, including the FHLB of Atlanta, could be substantially diminished or reduced to zero. Consequently, we believe that there is a risk that our investment in FHLB of Atlanta common stockus could be impaired at some timeby factors that affect us specifically or the financial services industry or economy in general, including a decrease in the future,level of our business activity as a result of a downturn in the markets in which our loans are concentrated or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and if this occurs, it would causeexpectations about the prospects for the financial services industry. To the extent we are not successful in obtaining such funding, we will be unable to implement our earningsstrategy as planned which could have a material adverse effect on our financial condition, results of operations and shareholders’ equity to decrease by the after-tax amount of the impairment charge.cash flows.

Changes in accounting standards could affect reported earnings.The accounting standard setters, including the Public Company Accounting Oversight Board (“PCAOB”), the Financial Accounting Standards Board (“FASB”), the SECSecurities and Exchange Commission (“SEC”) and other regulatory bodies, periodically change the financial accounting and reporting standards that governs or will govern, following the conversion, the preparation of our consolidated financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

The FASB is moving forward with its proposal to change the manner in which the allowance for credit losses is established and evaluated from the concept of incurred losses to that of expected losses. The effect of this change in accounting standard on our financial position and results of operations has not been quantified; however, if it results in a material increase in our allowance and future provisions for credit losses, this could have a material adverse effect on our financial condition and results of operations.

We are subject to environmental liability risk associated with our lending activities. A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations of enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our future business, results of operations, financial condition and resultsthe value of operations.our common stock.

Severe weather, natural disasters, acts of war or terrorism, and other external events could significantly impact our business.Severe weather, natural disasters, acts of war or terrorism, and other adverse external events could have a significant impact on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue, and/or cause us to incur additional expenses. Although management has established disaster recovery plans and procedures, the occurrence of any such event could have a material adverse effect on our future business, results of operations, financial condition and resultsthe value of operations.our common stock.

Risks Related to the Offering

Our ability to realize our deferred tax asset and deduct certain future losses could be limited if we experience an ownership change as defined in the Internal Revenue Code of 1986, as amended (“Code”). Section 382 of the Code may limit the benefit of both net operating losses incurred to date and future “built-in-losses” which may exist at the time of an “ownership change” for federal income tax purposes. A Section 382 “ownership change” occurs if a shareholder or a group of shareholders who are deemed to own at least 5% of our common stock increase their ownership in aggregate by more than 50% over their lowest ownership percentage within a testing period which is generally a rolling three-year period. If an “ownership change” occurs, Section 382 would impose an annual limit on the amount of losses we can use to reduce our taxable income equal to the product of the total value of our outstanding equity (potentially subject to certain adjustments) immediately prior to the “ownership change” and the federal long-term tax-exempt interest rate in effect for the month of the “ownership change.” A number of special rules apply to calculating this limit. The completion of this offering could cause us to experience an “ownership change” if more than 50% of the shares sold in the offering are sold to persons who are not members of Macon Bancorp. Even if we do not experience an “ownership change” immediately following the closing of the offering, the conversion and the offering

materially increase the risk that we could experience an “ownership change” in the future. In order to reduce the likelihood that future transactions in our common stock will result in an “ownership change”, we could adopt a shareholder rights plan to provide an economic disincentive for any person or group to become an owner, for relevant tax purposes, of 4.99% or more of our common stock. The relevant calculations under Section 382 are technical and highly complex. If an “ownership change” were to occur, it is possible that the limitations imposed could cause a net increase in our federal income tax liability and cause federal income taxes to be paid earlier than if such limitations were not in effect. An ownership change could also eliminate a portion of the federal tax loss carryforward if the limitation is low and causes our net operating losses to expire unutilized. Any such “ownership change” could have a material adverse effect on our future business, results of operations, financial condition and the value of our common stock.

We have broad discretion in using the net proceeds of the offering. Our failure to effectively use such proceeds could reduce our profits. We willintend to contribute up to 90%85% of the net proceeds to the Bank to strengthen its capital position and help expedite plans to dispose of adversely classified assets.position. Subject to the terms of the Bancorp MOU,Written Agreement requiring FRB approval, if it has not then been terminated, we may use the remaining net proceeds to pay dividends to shareholders, resume payments of dividends on our trust preferred securities, as well as previously deferred dividends and interest, repurchase shares of our common stock, purchase investment securities, make further investments in the Bank, acquire other financial services companies or for other general corporate purposes. Subject to the terms of the Consent Order, if it has not then been terminated, and any other required regulatory approvals, the Bank may use the proceeds it receives to fund new loans, establish or acquire new branches, purchase investment securities, reduce a portion of our borrowings, or for general corporate purposes. We have not identified specific amounts of proceeds for any of these purposes and we will have significant flexibility in determining the amount of net proceeds we apply to different uses and the timing of such applications. Our failure to utilize these funds effectively could reduce our profitability. We have not established a timetable

for the effective deployment of the proceeds and we cannot predict how long we will require to effectively deploy the proceeds.

The future price of our common stock may be less than the purchase price in the offering. If you purchase shares of common stock in the offering, you may not be able to sell them at or above the purchase price in the offering. The aggregate purchase price of the shares of common stock sold in the offering is determined by an independent, third-party appraisal. The appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. Following the completion of the offering, our aggregate pro forma market value will be based on the market trading price of the shares, and not the final, approved independent appraisal, which may result in our stock trading below the initial offering price of $10.00 per share.

Our return on equity will be low following the conversion and the offering. This could negatively affect the trading price of our shares of common stock. Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. Following the conversion and the offering, we expect our consolidated equity to be between $66.5 million at the minimum of the offering range and $86.0 million at the adjusted maximum of the offering range. Based upon our pro forma net income for the year ended December 31, 2013, and these pro forma equity levels, our return on equity would be -0.47% and -0.28% at the minimum and adjusted maximum of the offering range, respectively. We expect our return on equity to remain low until we are able to leverage the additional capital

we receive from the stock offering. Although we will be able to increase net interest income using proceeds of the stock offering, our return on equity will be negatively affected by higher expenses from the costs of being a public company and added expenses associated with the stock-based benefit plans we intend to adopt. Until we can increase our net interest income and noninterest income and leverage the capital raised in the stock offering, we expect our return on equity to remain low, which may reduce the value of our shares of common stock.

Our stock-based benefit plans will increase our costs, which will reduce our income.Our current intention is to adopt one or more stock-based benefit plans after the stock offering that would award participants shares of our common stock (at no cost to them) and/or options to purchase shares of our common stock. The number of shares of restricted stock or stock options reserved for issuance under any initial stock-based benefit plan will not exceed 3% and 7%, respectively, of our total outstanding shares, if these plans are adopted within 12 months after the completion of the conversion. We may grant shares of common stock and stock options in excess of these amounts provided the stock-based benefit plans are adopted more than one year following the conversion and the offering. Assuming a $10.00 per option exercise price and an estimated grant-date fair value of the options utilizing a Black-Scholes option pricing analysis of $3.33 per option granted, with the value amortized over a five-year vesting period, the corresponding annual pre-tax expense associated with the stock options would be $0.2 million at the adjusted maximum of the offering range. In addition, assuming that all shares of restricted stock are awarded at a price of $10.00 per share, and that the awards vest over a five-year period, the corresponding annual pre-tax expense associated with restricted stock awarded under a stock-based benefit plan would be $0.2 million at the adjusted maximum. However, if we grant shares of common stock or options in excess of these amounts, such grants would increase our costs further. The shares of restricted stock granted under a stock-based benefit plan will be expensed by us over their vesting period at the fair market value of the shares on the date they are awarded.

We have never issued capital stock and there is no guarantee that a liquid market will develop. We have never issued capital stock and there is no established market for our common stock. We expect that our common stock will be listed for trading on the NASDAQ Global Market under the symbol “,“ENFC,” subject to completion of the offering and compliance with certain conditions, including the presence of at least three registered and active market makers. Raymond JamesSandler O’Neill & Associates, Inc.Partners, L.P. (“Sandler O’Neill”) has advised us that it intends to make a market in shares of our common stock following the offering, but it is under no obligation to do so or to continue to do so once it begins. While we will attempt before completion of the offering to obtain commitments from at least two other broker-dealers to make a market in shares of our common stock, we may not be able to obtain such commitments. This would result in our common stock not being listed for trading on the NASDAQ Global Market, which could reduce the liquidity of our common stock.

Our ability to realize our deferred tax asset and deduct certain future losses could be limited if we experience an ownership change as defined in the Internal Revenue Code of 1986, as amended (“Code”). Section 382 of the Code may limit the benefit of both net operating losses incurred to date and future “built-in-losses” which exist at the time of an “ownership change.” A Section 382 “ownership change” occurs if a shareholder or a group of shareholders who are deemed to own at least 5% of our common stock increase their ownership by more than 50% over their lowest ownership percentage within a rolling three-year period. If an “ownership change” occurs, Section 382 would impose an annual limit on the amount of losses we can use to reduce our taxable income equal to the product of the total value of our outstanding equity immediately prior to the “ownership change” and the federal long-term tax-exempt interest rate in effect for the month of the “ownership change.” A number of special rules apply to calculating this limit. The limitations contained in Section 382 apply for a five-year period beginning on the date of the “ownership change” and any losses that are limited by Section 382 may be carried forward and reduce our future taxable income for up to 20 years, after which they expire. The completion of this offering could cause us to experience an “ownership change”. Even if we do not experience an “ownership change” immediately following the closing of the offering, the conversion and the offering materially increase the risk that we could experience an “ownership change” in the future. The relevant calculations under Section 382 are technical and highly complex. If an “ownership change” were to occur, it is possible that the limitations imposed could cause a net increase in our federal income tax liability and cause federal income taxes to be paid earlier than if such limitations were not in effect. Any such “ownership change” could have a material adverse effect on our results of operations and financial condition.

We will need to implement additional finance and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements. This will increase our operating expenses. In connection with the offering, we are becoming a public company. Following the conversion, federal securities laws and regulations of the SEC will require that we file annual, quarterly and current reports and that we maintain effective disclosure controls and procedures and internal control over financial reporting. We expect that the obligations of being a public company, including substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. These obligations will increase