Under an order from regulators to raise fresh capital, Central Federal Corp. in Fairlawn, Ohio, said in a Securities and Exchange Commission filing Friday that its shareholders have approved a plan to more than quadruple its number of outstanding shares.
The $276 million-asset parent of CFBank said shareholders voted Thursday to increase the number of common shares from 12 million to 50 million. They also approved the sale of a number of shares equal to more than 20% of its outstanding stock and to hold a reverse stock split in a ratio ranging from 1-for-2 to 1-for-5.
In August, Central Federal announced a common stock offering of up to $30 million that included $25 million in a rights offering at a subscription price of $1 per share. For every four shares purchased, buyers will receive a warrant to purchase an additional share.
The other $5 million of stock is reserved for a group of investors led by Timothy O'Dell, a former regional president at Fifth Third Bancorp. Under this agreement, the group will acquire shares at $1 per each and and receive warrants to buy additional shares. Columbus Business First reported Thursday that the investment group would own at least a 14.7% stake in the company.
O'Dell, a former central Ohio president at Fifth Third, will be named Central Federal's chief executive, according to Columbus Business First.
CFBank has been operating under a cease-and-desist order from the former Office of Thrift Supervision that requires it to maintain an 8% core capital ratio and 12% total risk-based capital ratio. As of June 30, its core capital ratio was 5.4% and its risk-based ratio was 10.1%.