Investment Banking - First CornerStone Bank

Transactions | Banking

Client: First CornerStone Bank
Industry: Banking
Transaction Type: Common Stock Offering
Role: Fairness Opinion

  • First CornerStone Bank has 6 additional branches servicing the market areas of Delaware County, Montgomery County, Chester County and Philadelphia County. Since its peak in assets of $223 million in 2009, the Bank has experienced mounting asset quality problems and been forced to write off a substantial amount of loans and bolster reserve levels to deal with remaining classified loans and non performing assets.
  • As the Bank’s leverage ratio at December 31, 2012 was 4.06% (which is considered “undercapitalized”), the Bank undertook a subscription rights offering in which shareholders were awarded non-transferable rights to purchase additional stock in the company.
  • Given the bank’s poor financial condition, the price for which existing shareholders would be permitted to purchase new shares in the Bank was significantly dilutive to non-participating shareholder’s ownership and per share values.
  • In recognition of the potentially adverse financial implication to shareholders which elected not to participate in the rights offering, Boenning provided a fairness opinion to such shareholders with regards to the price at which new shares could be purchased.