Categories : Stock Offering


In a Press release and filing with the SEC on Friday Dec. 17, United Bank and Trust announced that it had completed its capital raise activity.  To read the details of the capital raise conclusion, click the blue link.

The press release said that the bank sold almost 7.6 Million shares of new stock at a price of $2.50 raising about $17.2 M after expenses.

Sandler O'Neill was the underwriter, I wonder who it lined up to buy the additional shares.

A few notes:

  • It appears that the bank could not have raised enough capital with just under 5 Million shares of stock it had before the capital raise.  So it needed the extra shares that shareholders approved.
  • If just a few people (banks, larger shareholders) bought the additional shares, they could in effect take over the bank, because 7.6 M shares is larger than the 5 M shares outstanding before the capital raise.  What if these 7.6M shares will be bought by a bank that wants to get into this area?  It could be a cheap way to do that. 
  • Going out on a limb, it wouldn't surprise me to see a few top people at the bank leave soon (within the next year), either for retirement or to pursue other opportunities. 

In a few days, I'll look at their new capital structure, and see what improvements may be there.

Again, all this would not have been necessary, if the bank had not made terrible loans, for which it had to take loan loss expense.  This is why those top people may leave: to convince the new owners (if there are only a few new owners) that the bank was truly making a break with the past and moving out the people who put it in a bad position in the first place.

It seems that a year ago I wrote that the bank may need to raise capital.  Last year at its meeting in December, the bank broached that subject, I felt vindicated.  Now a year later, I was proven right, though I wish for shareholder's sake, I had been wrong. 

I still feel like the reason this happened is because the bank felt it had to expand, and it expanded into a county that it really didn't understand.  The bank made some number of loans to people it shouldn't have.  It also appears that the source of most of the CLD loan losses were from Washtenaw county.

And now the bank has $17M more with which to make bad loans in Washtenaw county. 

Through it all, UBT is not even a Tecumseh Bank anymore.  It's an Ann Arbor bank.

If anyone has any thoughts, feel free to opine.

 Posted on : December 20, 2010
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