With a regulatory deadline looming, the battered Federal Trust Corp. in Sanford, Fla., has decided to offer shares of its common stock to the public, instead of going through with a previously announced rights offering.
"We believe that this new offering structure will assist us in more quickly raising capital," Dennis T. Ward, the $640 million-asset company's president and chief executive officer, said in a press release issued after the market closed Monday.
Federal Trust must raise $30 million to $35 million of capital by Sept. 30 or find a buyer, under a cease-and-desist order from the Office of Thrift Supervision.
A preliminary prospectus filed with the Securities and Exchange Commission said it had intended to sell common shares for 95 cents each in the rights offering. The company's shares dropped below that price a month ago, and they were trading at 50 cents late Tuesday.
Federal Trust said it expects to enter standby purchase agreements to support the new stock offering. For the terminated rights offering it had such agreements with Patriot Financial Partners, Sidhu Advisors, and Keefe Ventures Fund.
The company lost $2.8 million in the second quarter, according to preliminary results reported July 25. It had a $3.6 million loss a year earlier and a $2.2 million loss the previous quarter.
Its second-quarter nonperforming assets increased 105% from a year earlier and 16% from the previous quarter, to $69 million, or roughly 11% of total assets.
The company said in the earnings release that it is making "significant progress" on developing a workout strategy for its problem loans.
