Stock Alert for Ambac Financial Group Inc. (ABK)
  • Stock Alert for Ambac Financial Group Inc. (ABK)
  • Stock Alert for Ambac Financial Group Inc. (ABK)
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    Atlantic Southern Financial Group Inc. ($ASFN) Spikes 50%

    Atlantic Southern Financial Group Inc. ($ASFN) Spikes 50%

    Shares of Atlantic Southern Financial Group, Inc. (NASDAQ: ASFN) surged more than 50% in today’s trading as the small-cap stock reached a high of $5.43 mid-day. Atlantic Southern Financial Group is a Macon, Georgia-based bank holding company, with a fully owned subsidiary, Atlantic Southern Bank. The small-cap stock was up by 47.05% to $4.34, at last check, with volume up from daily average of 21,000 to 1.05 million.

    According to the company’s 10k filing made on March 31 with the SEC, Atlantic Southern Financial Group’s and Atlantic Southern Bank’s capital have been significantly depleted due to the recession. In 2009, the company had made a loss of $59.2 million, primarily due to increases in provision for credit losses. The company also says in the filing that the uncertainty about the economic recovery makes any prediction about turning profitable again difficult.

    On September 11, 2009, the bank entered into an Order to Cease and Desist with the Georgia Department of Banking and Finance and the FDIC under which the bank is required to increase its capital and maintain certain regulatory capital ratios. The 10k also mentions that the company’s existing capital resources may not meet the requirements for the foreseeable future.

    Following this, on April 19, the company filed an 8k. According to the 8k filed with SEC, Atlantic Southern Financial Group entered into a written agreement with the Federal Reserve Bank of Atlanta and the Georgia Department of Banking and Finance. The 8k says that the agreement has been designed to enhance the company’s ability to act as source of strength to the bank. All the requirements in the agreement are similar to those made in the Order to Cease and Desist, which the company had earlier entered into with Georgia Department and FDIC. This includes no dividend payments without prior written consent from Federal Reserve and Georgia Department.

    Apart from these, there is no significant news to explain the rally in the small-cap stock today. In fact, if the company raises additional equity then this would dilute the stake of existing shareholders and this should have a negative impact on the stock. So, the only thing that can explain the great deal of interest in the small-cap stock is investor speculation as the company looks to raise additional capital.

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