Today, another bank in Georgia fights for its survival. The bank is Appalachian Bancshares (ticker APAB) based in Ellijay, Georgia. Tracy R. Newton, the Director, President and Chief Executive Officer of Appalachian filed a 13D today with the SEC stating that he now owns approximately 9.17% of shares outstanding.
Newton came by his extra shares after he and his bank “executed an agreement to issue 857,142 shares of the Company common stock in exchange for $428,571 aggregate principal amount of Appalachian Community Bank Fixed Rate Subordinated Notes, due September 30, 2015.” Though on the surface this is a very commendable action on the part of Newton, giving up his fixed rate notes in exchange for common equity, but I have a feeling that this action is not going to matter in the long run.
Taking a look at the loan portfolio (as reported 6/30/09) of Appalachian, we see construction and development loans make up 44.09% of the total, an amount that is six times the national average. And of course, the C&D portfolio looks extremely bad. Total delinquency is 12.99% versus a national average of 4.2% and the non-accrual rate is 20.6% versus a national average of 12.10%. Commercial real estate and commercial and industrial loans also make up an additional 24.65% of the total portfolio, and these loans are only slightly less worse than the C&D side.
Additionally, Appalachian has a Texas Ratio of 221.26 (a figure greater than 100 and its more likely the institution will be taken over), negative returns on equity and assets for the each of the past four quarters, and its Tier 1 and Total risk-based capital ratios are rather small at 5.21 and 7.26 respectively.
Again, its commendable the CEO is being so nice to his bank, and I hope everything works out, but the situation looks like a band-aid for a gunshot to the stomach. (click image for larger size)
0 Response to “Appalachian Bancshares Fights for Survival”