Freedom Financial Hldgs. Inc. (FDVA)

[Enterprising Investor]

Freedom Bank extends public stock offering, delays rights offering (12/01/14)

Freedom Bank of Virginia has extended its $4 million public stock offering until Dec. 12, which means postponing a $3 million rights offering among existing shareholders that was set to begin Dec. 8.

Whether the changing dates are minor hiccups or hint at bigger issues depends on who you ask.

Freedom Bank CEO Craig Underhill told me he's been pleased with the response to the public offering, which he says has included shareholders from several recently acquired banks in the area.

"A lot of community bank stock got converted to cash," he said.

The public sale, launched in early November, was to have remained open until Nov. 28 or fully subscribed, whichever came first. The bank announced the extension the day before Thanksgiving, or two days before the original deadline.

Underhill said some investors needed more time due to the holiday and because of questions about buying stock through their retirement accounts. He said he is not worried about the shifting dates sowing confusion among potential investors.

"We are talking with them directly," he said.

Allan Bach, an analyst with Dogwood Research, which follows Freedom Bank, said the changing dates are "a little unusual," but he added that "a lot of community banks run into hiccups and unforeseen circumstances."

Lew Sosnowik, an analyst with Bethesda-based Koonce Securities who does not follow Freedom Bank, said the delays could indicate other difficulties, since banks typically want to raise capital as quickly and as inexpensively as possible.

In August, Freedom announced a $5 million rights offering. That amount was scaled back by $2 million with the addition of the public offering. The new start date for the rights offering will be decided by midweek, Underhill said, and extend into the new year.

The projected $7 million total in capital will be used to fuel growth at the Fairfax-based bank. Freedom had total assets of $305.2 million as of Sept. 30, up 13.1 percent from the same period last year. The bank reported a 5.7 percent increase in net profit to $1.3 million.

"Community bank stocks have been treading water throughout much of 2014 as bank investors have grappled between fairly attractive valuation levels and the pressures of the tough interest rate and regulatory environments," Bach wrote in a Nov. 4 investor relations report about Freedom Bank. The bank's shares were trading at just over 1.2 times book value, "which does not appear to be stretched given the bank's growth prospects, sustained profitability levels and minimal credit quality issues."

Freedom stock was priced at $8.45 in early trading Monday. The shares of common stock are priced at $9 per share. The rights offering also will be at $9 per share and include two-year warrants for the same price.

In September, Freedom (OTCQX: FDVA) switched trading platforms within OTC Markets Group as a way to increase the bank's visibility and transparency ahead of the stock offerings.

http://www.bizjournals.com/washington/blog/2014/12/freedom-bank-extends-public-stock-offering.html?page=all