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Union Bankshares Corp. raises millions through common stock offering Date published: 9/16/2009
BY BILL FREEHLING
Union Bankshares Corp. has another $59 million worth of capital to work with as it looks to expand its growing business. The Bowling Green-based bank announced last week it was raising the capital through the sale of additional shares of common stock. About 4.7 million shares were sold last week, and the transactions close today. The bank allowed the underwriters to buy an additional 15 percent of the new shares issued to cover over-allotments, so that could lead to another roughly $9 million raised and 700,000 common stock shares sold. CEO William Beale said the capital raise was "very much an offensive move" for Union Bankshares. It could allow the acquisition of additional Virginia banks, possibly to include ones taken over by the FDIC. The FDIC has taken over 92 failed banks in the U.S. so far this year, but none has been in Virginia. Beale said he'd "be surprised" if no banks in the state fail. Beale also noted that the bank has started to see economic improvements in Virginia, and he expects those to continue into 2010. Having the additional capital will allow Union Bankshares--the parent of Union Bank & Trust--to expand its business. The capital could also let Union Bankshares redeem the $59 million it borrowed from the U.S. Treasury Capital Purchase Program in December. Beale said the bank will decide whether to apply to redeem the loan by the end of the year. The bank must pay a 5 percent annual dividend on the preferred shares, and had paid about $1.5 million to the government through June 30. Beale noted that having the government loan on the bank's books has its drawbacks--including the cost of satisfying the reporting requirements and the inability to set compensation levels independently. Most of the new common stock shares were sold to institutional investors such as mutual funds. About 20 percent went to individual investors. Union Bankshares, which trades on the Nasdaq under the symbol UBSH, had about 13 million common stock shares outstanding before the capital raise. The new shares sold expanded that total by more than a third.
I'm pretty sure he had to take the $....why would every bank around him take it and them not....that wouldn't make sense.
While Mr. Beale talks about growing the business, he later
says the bank has not payed back $59M of government
TARP funds. Interesting. A second wave of bank loan
defaults is on the way as developers take a walk on the
lender. Meanwhile, bank loan portfolios are obscured from
the general public and only percentages of loans in default
are reported. It is encouraging however, that the bank can
raise capital.
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