Appalachian Bancshares Inc. in Ellijay, Ga., has cut another deal to exchange its subordinated debt for common shares.
The $1.2 billion-asset company said Tuesday in a filing with the Securities and Exchange Commission that it exchanged $1.1 million of fixed-rate subordinated notes for 2.2 million shares of common stock in a deal with seven investors, including one board member. In a similar deal in October with seven board members, the company exchanged $3 million of the debt for 6 million shares.
The deals move the capital from a Tier 2 position to a Tier 1 position. The shares are valued at 50 cents each.
The Federal Deposit Insurance Corp. had warned the two-bank holding company that it was at risk of failure if one of its subsidiary banks, Appalachian Community Bank, was unable to satisfy a regulatory order to raise capital. The order required a total risk-based capital ratio of 10% and a leverage ratio of 8%.
Since the April order, the bank's ratios have continued to decline. On Sept. 30 its total risk-based capital ratio was 4.98% and its leverage ratio was 2.14%, according to the FDIC.