When TIB Financial Corp. sold to a group of former Bank of America executives recently, the Naples-based parent of TIB Bank did so by issuing millions of new shares. The new shares diluted existing shareholders and gave North American Financial Holdings control of 99% of the company. Now under North American's control, TIB has asked for shareholder approval to authorize as many as 5 billion shares for “future purposes” at the upcoming annual meeting, securities filing show.
It's a good sign because it suggests the bank has big plans to grow. Indeed, executives have said they plan to use the bank as a springboard for future growth.
But with TIB's stock trading at about 30 cents on the Nasdaq market (symbol: TIBB), the new issuance would push TIB out of that market and into penny stock category. So the company will ask that shareholders approve a reverse stock split in the range of 10-for-1 to 100-for-1, depending on the stock price.
While stock splits don't change the total value of an enterprise, they have a way of generating investor interest.