The Tellers Tell: How Big and Small Banks Are Coping

The Tellers Tell: How Big and Small Banks Are Coping - 3/19/2009

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

The Tellers Tell: How Big and Small Banks Are Coping, As Citi Ponders A Reverse Stock Split, Regional Banks Tally Impairments In Their Financial Reports.
Stephen Taub and Roy Harris

CFO.com. March 19, 2009
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EXCERPT: As Citigroup announced plans to file for a possible reverse split to expand the number of shares of its depressed common stock, financial institutions at the other end of the spectrum weighed problems of their own in the balance. Embattled Citi did not provide much detail in a regulatory filing on Thursday. But it did say that it is considering "effecting a reverse stock split" at some time prior to June 30, 2010, at one of seven reverse split ratios: 1-for-2, 1-for-5, 1-for-10, 1-for-15, 1-for-20, 1-for 25, or 1-for-30. Investors who have bid up shares of Citi and other financial stocks in the recent stock market rally liked the announcement, driving up its stock more than 3 percent in premarket trading. It closed at $3.08 on Wednesday. Among the advantages of a reverse split in such a situation are that it heads off a possible delisting from the New York Stock Exchange, which recently suspended its minimum stock price requirement to allow trading to continue. More shares also could be used for compensation purposes. Further, a reverse split also could enable institutions to buy the shares, since many can't own stocks selling below $5. And, of course, a higher stock price could provide psychological support for investors, who are not accustomed to seeing such a large bank trade for the equivalent of an ATM user fee. For these reasons, Citi is probably not the only company considering a reverse split, or at least increasing authorized shares while plans for further issuance are developed. One other financial services institution being mentioned in that regard: Morgan Stanley. In other banking news, small banks FNB United Corp., NewBridge Bancorp, Bancorp Inc., and First Busey Corp. announced taking goodwill impairment charges.

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