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HCBF: shareholders of HCSB Financial Corp. (HCFB) will receive 0.0050 shares of United Community Banks (UCBI) common stock and fractional shares will receive cash in accordance with the terms and conditions of the merger agreement.
FINRA deleted symbol:
http://otce.finra.org/DLDeletions
Horry County State Bank names new CEO, announces $45 million deal
http://www.myhorrynews.com/news/business/article_a8205560-e14a-11e5-91ba-9b33b4e91405.html
How Healthy is This Bank?
http://banktracker.investigativereportingworkshop.org/banks/south-carolina/loris/horry-county-state-bank/
Health Rating From Deposit Accounts C-
https://www.depositaccounts.com/banks/horry-county-state-bank.html
I'm not sure why their troubled assets suddenly vanished. I guess I'll give HCFB a call next week and see what happened.
I'll be taking a second look. The troubled asset ratio in the past kept me from looking at this seriously. Did they have a fire sale the past year or just finally bite the bullet and write off the REO?
Horry County State Bank - HCFB
http://banktracker.investigativereportingworkshop.org/banks/south-carolina/loris/horry-county-state-bank/
Horry County SB(HCFB) up to Speed with it's Regulatory Obligations
Some interesting Shareholder disclosure in this filing:
http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=164420
About 50% of the OS is accounted for in this Filing.
Have not looked at it recently. Or instead of closing doors, they get bought out at a price between the bid and ask
I get the feeling that HCFB is going to live but certainly wouldn't pay .51, the pps as of this post, for a share. Just as soon as I did that the FDIC would slam their doors shut the very next day. Even with the improving quarterly reports this bank still has a 100 mile long row to hoe.
I have done some bid sitting on four or five different occasions but I can assure you there is no way I would pay .68 a share. HCFB epitomizes the phrase, "living on a prayer".
Quite the spread.
HCFB had a profit of $685,000 for the first quarter of 2014.
HCFB had a profit of $431,000 for the fourth quarter. This old corpse seems to be breathing fairly well.
HCFB had a profit of $46,000 for the 2nd quarter which was the first sign of life the bank has shown in a while. I think I'll keep checking on Horry Ciunty State Bank every now and then
Stockholder Sues Horry County State Bank
August 17, 2012 8:50 PMViews: 645
Stockholder Sues Horry County State Bank for Illegal Insider Trading
By Paul Gable
Robert Shelley of Myrtle Beach, a shareholder in Horry County State Bank, recently filed a lawsuit against Horry County State Bank and its holding corporation HCSB Financial Corporation.
In the lawsuit, Shelley alleges he was contacted by employees of the bank in September 2009, a teller and later a bank officer, offering to sell him shares in the bank. Shelley further alleges that he was not provided a prospectus, as required by state law, and was not informed that the bank was in severe financial distress due to a large portfolio of defaulting real estate loans.
Shelley first became a shareholder in HCSB several years prior to 2009 after having been a bank customer for a number of years.
“I inquired several times about purchasing stock, but none was available,” Shelley said. “I knew the bank was making money and the stock was doing well early in the decade.”
Finally some stock became available and Shelley purchased his first shares, in 2007, at $26 per share.
HCSB is a small, closely held corporation. Its stock is not traded publicly on an exchange, but is offered through a transfer agent when a current stockholder decides to sell some of his shares.
According to online records of stock transactions for HCSB, bank stock began 2007 at $41 per share. In February 2007, the bank was doing well and the stock split two for one in February 2007. By the second half of 2007, the stock price was a stable $26 per share.
Still believing the bank to be growing and doing well in 2009, Shelley thought he was getting a deal when he was offered 1,000 shares at $24 per share in July 2009 and 2,192 shares at $18 per share in October 2009.
Shelley said he was first contacted by a teller and later by a bank officer about purchasing the available stock. He inquired who was selling the stock but was told ‘they didn’t know.’
The lawsuit alleges the stock was being sold by officers and directors of the bank who knew the difficult financial situation the bank faced. The suit alleges not only Shelley, but also other shareholders, were contacted by bank employees and offered stock from bank officers and directors.
Shortly after Shelley’s purchase, the bank’s stock began a long decline as news of the bank’s financial difficulties began to leak out. According to bank records, the last sale of stock occurred in April 2012 when 855 shares were sold for $0.25 (25 cents) per share.
Shelley and the other shareholders of HCSB now hold essentially worthless stock. However, it is the knowledge and belief that insiders aware of the bank’s precarious financial situation (officers and directors) were dumping their personal stock holdings to avoid huge financial loss. If these allegations are true, they represent insider trading in its purest form, which is totally illegal under state and federal law. The officers of Enron did exactly the same thing in the months before the company was exposed as worthless.
Since his lawsuit was filed last month, Shelley said his attorney, Gene Connell of Kelaher, Connell and Connor, PC, was contacted by agents from the U.S. Department of the Treasury. Shelley said he and Connell met with Treasury agents recently.
According to sources familiar with the bank, HCSB received $12.5 million from the U.S. Government in bank bailout funds in 2009. It is this transaction combined with the allegations of insider trading by bank officers and directors that has stirred the interest of Treasury agents.
Shelley is the named plaintiff in the lawsuit both individually and as the class representative for a class action lawsuit. Any HCSB shareholders who wish to join the class action may contact attorney Gene Connell by e-mailing gconnell@classactlaw.net or by calling his Surfside Beach office at 843-238-5648.
Civil Action # 2012-CP-26-5546
U.S. attorney, S.C. attorney general investigating Horry County State Bank’s securities deals
Published: December 1, 2012
By David Wren — dwren@thesunnews.com
MYRTLE BEACH — Federal and state authorities have launched investigations into Horry County State Bank following allegations that the Loris-based financial institution violated securities laws.
The investigations were noted in the financially struggling bank’s third-quarter report filed last week with the U.S. Securities and Exchange Commission. Horry County State Bank said in the report that the U.S. Attorney’s office served a subpoena on Oct. 4 seeking documents related to the bank’s sale of subordinated debt notes to investors. The S.C. Attorney General’s office served a subpoena on Nov. 7 seeking a wide range of documents including those related to the subordinated debt notes as well as the offering and sale of company stock.
The state Attorney General also wants the bank to turn over minutes of meetings of the bank’s shareholders and board of directors plus documents related to board members, officers, shareholders and employees of Horry County State Bank.
The bank said in the report that it is working closely with federal and state authorities to provide them with the requested documents.
Jimmy Clarkson, the bank’s chief executive officer, told The Sun News he cannot comment on the investigations or any pending legal matters.
“It is our policy not to discuss ongoing litigations of any nature,” Clarkson said. “We are cooperating fully with the appropriate authorities, and we are confident that their investigations will prove no wrongdoing on our part.”
Separately, the U.S. Treasury Department has sent a representative to monitor the bank’s monthly board meetings because the bank has failed to start repaying nearly $12.9 million it received in 2009 under the Troubled Asset Relief Program, or TARP. The Treasury Department’s representative attended the bank’s June and July meetings, according to the quarterly report. The Treasury Department has the option to appoint two members to the bank’s board of directors for the coming year, but the agency has not yet told the bank whether it intends to do that, the report stated.
Mark Powell, spokesman for the S.C. Attorney General’s office, confirmed that agency’s investigation, saying the probe focuses on “activities involving securities issues at the bank.” Powell said further comment would be inappropriate since the investigation is ongoing.
Beth Drake, spokeswoman for the U.S. Attorney’s office in Columbia, said the agency does not comment on pending investigations.
Pending lawsuits outline accusations
The investigations appear to be related to a trio of civil lawsuits filed against the bank this year. Two of those lawsuits involve the bank’s sale of subordinated debt notes in 2010 while the third – a proposed class-action lawsuit – involves the bank’s sale of company stock.
All three of the lawsuits allege that Horry County State Bank did not properly disclose its financial problems to potential investors, as required by state and federal law. The subordinated debt notes were sold just months before the Federal Deposit Insurance Corp. ordered the bank to raise capital or face a possible shutdown. The bank remains under that consent order and has not been able to raise sufficient capital to meet the FDIC’s requirements.
According to the first two lawsuits, Horry County State Bank recruited wealthy investors to purchase subordinated debt notes – an investment that has a lower priority for repayment than other debts the bank owed, including the TARP funds – to help raise $15 million in capital. Horry County State Bank promised investors that if they purchased $1 million worth of notes, the bank would lend 90 percent of the money back to them. The notes were to pay 9 percent interest semi-annually while money the bank loaned back to investors carried a 6 percent annual interest rate.
Vaughn Stanaland, developer of the Devaun Park real estate project in Calabash, N.C., said in his lawsuit that he was recruited to invest in the notes during a meeting the bank arranged at the Surf Golf & Beach Club in North Myrtle Beach. Stanaland – who already had loans from the bank totaling $6.2 million for the Devaun Park project – agreed to invest $1 million in the notes because he relied on the bank’s promise to loan most of the money back to him, according to the lawsuit.
As the $6.2 million in loans were about to mature in 2011, Stanaland asked the bank for his 90 percent loan, court documents show. The bank refused to give him the money, offering a $250,000 loan instead. Stanaland claims the bank’s failure to give him the 90 percent loan as previously agreed left him without enough money to repay or renew his existing loans. The bank has since filed a foreclosure lawsuit on the Devaun Park property.
Richard Lovelace, Stanaland’s lawyer, said he cannot comment on the pending lawsuit.
A similar lawsuit was filed by Samuel and Pamela Thomas, who claim they invested $2 million in the notes based on the bank’s promise to lend 90 percent of the money back to them. The Thomases say they were misled into investing because the bank failed to follow through on its promise. That lawsuit is now in arbitration.
David Gundling, the lawyer representing the Thomases, could not be reached for comment.
A third lawsuit, filed by Robert Shelley, alleges that bank employees solicited Shelley and others to purchase company stock without disclosing the bank’s true financial condition. Shelley is seeking class-action status for anyone who purchased bank stock between July 1, 2009 and Dec. 31, 2011. That lawsuit is pending and a class has not yet been certified.
Gene Connell, the lawyer who filed the class-action lawsuit, said bank officers called customers such as Shelley to ask them if they were interested in purchasing bank stock.
“They would ask them to buy stock and tell them that everything was going great at the bank,” Connell said, adding that the bank did not provide a prospectus or any other financial documentation to the customers.
When customers agreed to the sales pitch, the money used to purchase the stock was debited from their bank accounts, according to the lawsuit. The bank’s stock – which is traded on the over-the-counter bulletin board – sold for about $9 per share before the FDIC’s consent order was issued in February 2011. The stock was trading at 31 cents per share on Friday.
Connell said he believes the civil lawsuits “might be a part of the catalyst” for the investigations by federal and state authorities.
TARP payment deferrals
Horry County State Bank said in its third-quarter filing that it “has engaged legal counsel for the litigation and intends to vigorously defend itself.”
The outcome of the lawsuits and investigations, however, could further damage the bank’s financial condition.
“Given the company’s current troubled financial condition, any expenses incurred by the company for defense costs, governmental sanctions or settlement or other litigation awards could have a material adverse effect on the company’s financial condition,” the bank stated in its quarterly report.
Horry County State Bank has recorded losses totaling $32.4 million since the FDIC issued its consent order. That amount includes a nearly $3.7 million loss recorded during the third quarter of this year, which ended Sept. 30. The bank is considered “significantly undercapitalized” by FDIC standards and Clarkson has said the bank must raise at least $13.2 million to become “adequately capitalized,” as required by the consent order.
The FDIC classifies banks according to their capital ratios, which is the percentage of a bank’s capital to its risks. Adequately capitalized banks have a ratio of 8 percent or higher. Horry County State Bank’s ratio was 4.4 percent at the end of Sept. 30.
The bank had hoped to raise capital through a stock offering this year, but investors were not interested in purchasing any shares.
“We have not had any success to date in raising this capital, and there are no assurances that we will be able to raise this capital on a timely basis, or at all,” Clarkson said in the report filed with the SEC.
The amount of non-performing loans declined during the first nine months of this year to $52.5 million – or about 10.2 percent of assets – compared with $60.4 million for the same period a year ago. However, the percentage of loans classified as being on a watch list or worse increased to 34.5 percent of all loans by Sept. 30 compared to 32 percent at the end of last year.
Another consent order the bank signed last year with the Federal Reserve Bank of Richmond prohibits Horry County State Bank from repaying any TARP money until its capital levels improve.
Under the TARP program, the government essentially bought equity in the bank, receiving 12,895 shares of preferred stock in exchange for the nearly $12.9 million capital infusion. Horry County State Bank is supposed to pay the government a quarterly dividend on the stock of 5 percent for the first five years and 9 percent thereafter. That means the bank’s dividend payment amounts will almost double in 2014.
Horry County State Bank so far has deferred seven TARP payments totaling more than $1.1 million.
In addition to the stock offering, the bank has been looking for a merger partner as a possible way to raise capital. Clarkson, however, does not hold out much hope for that option.
“Given the lack of a market for bank mergers, particularly in the Southeast, as a result of the current economic and regulatory climate, and the lack of success the company has had to date in attempting to raise capital, there can be no assurances the company will either raise additional capital or find a merger partner,” he said in the third-quarter report.
Contact DAVID WREN at 626-0281.
Read more here: http://www.myrtlebeachonline.com/2012/12/01/3197000/us-attorney-sc-attorney-general.html#storylink=cpy
This article is from 2011. The bank remains under a Consent Order.
Horry County State Bank, regulators plan improvement process
Published: February 19, 2011
By Adva Saldinger — asaldinger@thesunnews.com
Horry County State Bank has to raise capital ratios, account for bad loans and evaluate its management and lending practices under a consent order the bank signed with federal and state regulators.
"[The consent order is] not the kiss of death by a long shot," said Jimmy Clarkson, the president and CEO of Horry County State Bank. "It drafts a plan for what areas need improvement and what the goals are and we had already put into place a majority of the plans that are in there and we intend to fully comply."
The real estate market collapse is the main cause of the Loris-based bank's problems as borrowers are unable to pay on real estate loans and the severely diminished values have forced the bank to take significant losses, Clarkson said.
"The real estate market in our community had a substantial demise in the last couple years and it's played a large role in people's economic problems ... and it spills over into banks," he said.
Clarkson said real estate is such a big part of the local economy that it was natural the bank would have a lot of real estate-backed loans.
Looking back, some of the problems may have been avoidable, but nobody expected the market to collapse like it did, he said.
Bank customers should not be concerned because their money is insured by the Federal Deposit Insurance Corp. and they won't see any changes as they do their business, Clarkson said. The FDIC insures up to $250,000 of deposit accounts per person per bank.
The bank's situation is serious, but it is not getting ready to sell out nor is it on the brink of failure, he said.
Some experts say that it is a challenge for a bank in HCSB's situation to meet the requirements and work its way out of the situation, but that there is a possibility.
"It's going to be extremely difficult for them to do it," said Byron Richardson, the president of bank consulting firm Bank Resources. "They've got an uphill battle [but] it can be done."
The consent agreement gives the bank 120 days to meet the requirements or possibly face further regulatory action.
The problems the bank is having can be traced back to its loans, many more of which are in real estate than other similar banks, which has created earning problems and assets that aren't bringing money in, he said. But HCSB is not alone; many banks in similar markets are facing the same challenges, Richardson said.
The economic downturn and real estate market collapse has put a strain on many banks and several area banks are operating under regulatory orders. Plantation Federal based in Pawleys Island has been operating under a cease and desist order since June and Charleston-based Atlantic Bank and Trust signed a cease and desist order in January. Mount Pleasant-based Tidelands Bank has been operating under a consent agreement since December.
The regulatory agreements are sometimes the precursor to a bank's failure, as was the case with Myrtle Beach-based Beach First National Bank, which failed last year.
HCSB's consent order with the FDIC and the S.C. State Board of Financial Institutions requires the bank to raise capital ratios which can be done by getting more money, selling off assets or both.
The bank plans to take a combination of actions to raise its capital ratios, including selling off some of its assets like securities or land and raising capital, Clarkson said.
"We're looking to do some of all, we're not leaving any stone unturned," he said.
Clarkson didn't say how the bank might raise capital or what assets it would sell, but he said that several consultants have been hired to help come up with a plan.
The consent agreement also requires the bank to write down the total value of any loans that are rated a loss and 50 percent of loans classified as doubtful. Clarkson said the bank doesn't have any "loss" loans because it writes them down immediately and that the losses for most of the doubtful loans have already been taken into account.
The challenge for banks in this situation is that writing down the losses will reduce capital levels as the bank is also trying to raise capital, Richardson said. In the current economic environment, it is very difficult for banks to raise the capital they need to work through their problems, he said.
"The capital markets are dry - the only way a company is going to come in and give capital is if they get a great deal which means the shareholders are diluted pretty heavily," he said.
Richardson said that a merger or sale is also always an option in a situation like this, but would come at a significant cost to shareholders. Clarkson said that a merger is a possibility but is near the bottom of the list of solutions the bank is considering.
"We're going to address it very aggressively because we intend to be a survivor and not a seller," Clarkson said.
The consent order also requires the bank to assess management and staffing to ensure that the leadership is qualified. It calls on the bank's board to step up its oversight to monitor policies, correct violations and submit reports to the regulators.
A consultant has already come in and evaluated the bank's management, said Tommie Grainger, the chairman of the board of directors. He said he has full confidence in the bank's leadership, which was confirmed by the consultants.
At first the board was surprised at how widespread the problems were but that the management stepped up to address problems well before the consent order.
"We saw it. We were aware of it," Grainger said. "Our management team was smart enough to react and meet some of the challenges ahead of time."
The board has been more aware of the problems in the past three or four months and has gotten more involved, meeting more frequently and establishing additional committees to oversee challenging areas, he said.
"It was a concern but we are meeting the challenge," Grainger said. "I feel they are going to work through it, it won't be done overnight ... but we feel the challenges will be met."
How the bank meets its challenges will depend in part on the speed of the economic recovery, said Robert Burney, a banking and finance professor at Coastal Carolina University.
"It's a tough situation just because the market situation is not conducive to taking those actions," he said. "The real problem is the recovery is so painfully slow."
Richardson agreed, saying that Horry County will make a comeback.
"The longer they can hang on the more chance they have that the economy will improve and that they can restore the bank to safety and soundness," he said.
Community banks such as HCSB have an edge because they have better knowledge of the community, but that advantage also makes them more susceptible to problems in key local industries as a result of their focus, Burney said.
"[The Grand Strand] is still the kind of local or regional economy that's conducive to the success of local community institutions," Burney said. "I'm hopeful that the community will continue in the future to have true community institutions with a community focus."
Contact ADVA SALDINGER at 626-0317 or follow on Twitter @TSN_ASaldinger.
HCFB might have wee bit more than it's fair share of problems but it still has a "pulse". They have lost a ton of money in the past but appear to be going in the right direction. Assuming that they can maintain their northern trek, 2013 could prove to be a profitable year.
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