Attached files
file | filename |
---|---|
8-K - SOUTHERN COMMUNITY FINANCIAL CORP | v211672_8k.htm |
EX-10.2 - SOUTHERN COMMUNITY FINANCIAL CORP | v211672_ex10-2.htm |
EX-10.1 - SOUTHERN COMMUNITY FINANCIAL CORP | v211672_ex10-1.htm |
Southern
Community enters into Consent Order with regulators; Bank’s
capital
position exceeds regulatory requirements
Winston-Salem,
North Carolina – (MARKET WIRE) 02/17/2011 – Southern Community Financial
Corporation (NASDAQ: SCMF) (NASDAQ: SCMFO) announced today that its wholly-owned
bank subsidiary, Southern Community Bank and Trust, has entered into a Consent
Order with the Federal Deposit Insurance Corporation and the State of North
Carolina Office of the Commissioner of Banks with certain requirements,
including reducing problem loans and maintaining current capital
levels.
“One of
the positives that came from our recent regulatory examination was the
recognition by regulators that we are in compliance with all regulatory capital
requirements,” said Chairman and CEO F. Scott Bauer. “Credit quality
has been a concern of ours for the past two years. Fortunately, we
have begun to see improvement over the last few quarters.”
Separately,
Southern Community has elected to defer dividend payments on its preferred stock
issued to the U.S. Department of Treasury and interest payments on both
outstanding issues of trust preferred securities.
The
Bank’s agreement with the regulators follows on the heels of one of the nation’s
worst economic periods since the Great Depression.
“The
banking industry continues to be challenged by the economic climate,” Bauer
said. “In the past two years, we have revamped our credit policies to
reduce our exposure and address future credit risk.”
“Our
Board and management team are committed to working closely with regulatory
agencies to continue to resolve the issues facing the Bank and meet all of the
terms and conditions of the agreement. For over two years, the
banking industry has been, and continues to be, particularly challenged by the
economic climate in our markets. We will continue to address those
challenges head-on. We will not be diverted from providing our
customers with the outstanding services and fast, friendly service to which they
are accustomed. Our management remains confident in our ability to overcome this
challenge and looks forward to emerging as an even stronger Bank than
before.”
Under the
agreement with the regulators, entered into on February 16, 2011, the Bank has
agreed, among other matters, to: (1) improve its credit risk exposure through
continued reductions in problem assets and continued enhancements to credit risk
management practices; (2) comply with regulatory capital requirements of 8% Tier
1 leverage capital and 11% total risk-based capital ratios; and (3) not accept
or renew any brokered deposits.
The
Company has given notice to the U.S. Treasury Department that it is suspending
the payment of regular quarterly cash dividends on the Company’s preferred stock
issued to the U.S. Treasury Department. The dividends will continue
to be accrued for payment in the future.
Additionally,
the Company has also elected to defer regularly scheduled interest payments on
both issues of junior subordinated debentures, relating to outstanding trust
preferred securities (TRUPS), having an outstanding principal amount of $45.9
million. Under the terms of the trust documents, the Company may
defer payments of interest for up to 20 consecutive quarterly periods without
default or penalty. The regularly scheduled interest payments will
continue to be accrued for payment in the future and reported as an expense for
financial statement purposes.
Together,
the deferral of interest payments on TRUPS and suspension of dividend payments
to the U.S. Treasury Department should preserve approximately $5.1 million per
year in bank level capital. While the Company has sufficient cash and liquidity
to pay the scheduled dividends on its TARP Preferred Stock and interest payments
on the TRUPS, these actions are taken: (1) to support and preserve its capital
position in light of uncertain economic conditions, (2) as a source of strength
for its subsidiary bank and (3) to lessen the need for raising any additional
capital. The Company intends to re-evaluate the deferral of these payments
periodically and, in consultation with its regulators, will consider reinstating
these payments when appropriate.
About
Southern Community Financial Corporation
Southern
Community Financial Corporation is headquartered in Winston-Salem, North
Carolina and is the holding company of Southern Community Bank and Trust, a
community bank with twenty-two banking offices throughout North
Carolina.
Southern
Community Financial Corporation’s common stock and trust preferred securities
are listed on the NASDAQ Global Select Market under the trading symbols SCMF and
SCMFO, respectively. Additional information about Southern Community
is available on our website at www.smallenoughtocare.com
(including the Form 8-K filed with the Securities and Exchange Commission) or by
email at investor.relations@smallenoughtocare.com.
Forward-Looking
Statements
Certain
statements in this news release contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995, such as
statements relating to future plans and expectations, and are thus
prospective. Such forward-looking statements include but are not
limited to (1) statements regarding potential future economic recovery, (2)
statements with respect to our plans, objectives, expectations, intentions and
other statements that are not historical facts, and (3) other statements
identified by words such as “believes,” “expects,” “anticipates,” “estimates,”
“intends,” “plans,” “targets” and “projects,” as well as similar
expressions. Such statements are subject to risks, uncertainties and
other factors which could cause actual results to differ materially from future
results expressed or implied by such forward-looking
statements. Although we believe that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove to
be inaccurate. Therefore, we can give no assurance that the results
contemplated in the forward-looking statements will be realized. The
inclusion of this forward-looking information should not be construed as a
representation by our Company or any person that the future events, plans or
expectations contemplated by our Company will be achieved.
All
subsequent written and oral forward-looking statements concerning the Company or
any person acting on its behalf is expressly qualified in its entirety by the
cautionary statements above. We do not undertake any obligation to
update any forward-looking statement to reflect circumstances or events that
occur after the date the forward-looking statements are made.
For
additional information:
F. Scott
Bauer - Chairman/CEO
James
Hastings, Executive Vice President/CFO
(336)
768-8500