Waccamaw Bank has received some news that boosts the bank’s overall health by improving its capital ratios.
A ruling January 27 from the Federal Reserve’s Board of Governors overturns an earlier Fed decision that disallowed some capital raised by Waccamaw Bank in late 2010.
“That decision put us in a precarious situation,” said Geoffrey Hopkins, Waccamaw Bank president.
The bank appealed, but its appeal was denied twice. However the Board of Governors viewed the case differently, creating a “much healthier position” for Waccamaw as it attempts to increase its capital base, according to Hopkins.
The capital involved is Tier 1 capital, the core measure of a bank's financial strength, from a regulator’s point of view. This is money that can be used in a flexible manner to absorb losses incurred through operations and/or loans, Hopkins said.
“We’ve been given a lifeline, although we are not out of the woods,” Hopkins said. “The bank still faces a lot of challenges.”
On December 2, the Fed sent Waccamaw a “Prompt Corrective Action” directive, defining Waccamaw as “critically undercapitalized” and giving the bank until January 6 to take steps to increase its working capital. The recent Board of Governors’ decision on Waccamaw’s Tier 1 capital removes the bank from its status as critically undercapitalized.
“This is a true miracle,” Hopkins said. “I have never known the board to reverse such a decision. But it gives us time to explore opportunities for capitalization.”
Waccamaw Bankshares is also proceeding with the sale of its 11 branches in Brunswick and New Hanover counties in North Carolina and in Horry County, S.C. to First Bank. That sale is pending regulatory approval and is expected to close in the next few months.
Waccamaw Bank will retain five locations in its core markets: Whiteville, Tabor City, Chadbourn and Elizabethtown, N.C. and Heath Springs, S.C.
