United Community Banks, Inc.
UNITED COMMUNITY BANKS INC (Form: 425, Received: 04/27/2017 08:02:06)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

   

Date of Report (Date of earliest event reported): April 27, 2017

  

HCSB FINANCIAL CORPORATION

(Exact Name of Registrant As Specified in Its Charter)

 

South Carolina

(State or Other Jurisdiction of Incorporation)

 

000-26995   57-1079444
(Commission File Number)   (I.R.S. Employer Identification No.)
     
3640 Ralph Ellis Blvd, Loris, South Carolina   29569
(Address of Principal Executive Offices)   (Zip Code)

 

(843) 756-6333

(Registrant's Telephone Number, Including Area Code)

  

Not Applicable

(Former Name or Former Address, if Changed Since Last Report.)

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 
 

Item 2.02. Results of Operations and Financial Condition.

 

On April 27, 2017, HCSB Financial Corporation (the “Company”) issued a press release announcing its financial results for the period ended March 31, 2017. A copy of the press release is attached hereto as Exhibit 99.1.

 

Additional Information and Where to Find It

This communication is being made in respect of the Merger involving the Company and United Community Banks, Inc. (“United”). Investors and security holders are urged to carefully review and consider each of United’s and the Company’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by United with the SEC may be obtained free of charge at United’s website at http://www.ucbi.com or at the SEC’s website at http://www.sec.gov. These documents may also be obtained free of charge from United by requesting them in writing to Investor Relations, United Community Banks, Inc., 125 Highway 515 East, Blairsville, Georgia 30514-0398, or by telephone to Investor Relations at (706) 781-2265. The documents filed by the Company with the SEC may be obtained free of charge at the Company’s website at https://www.hcsbaccess.com, or at the SEC’s website at http://www.sec.gov. These documents may also be obtained free of charge from the Company by requesting them in writing to HCSB Financial Corporation, 3640 Ralph Ellis Blvd., Loris, South Carolina 29569 Attn: Jan H. Hollar, or by telephone to Mrs. Hollar at (843) 716-6117.

United plans to file a registration statement on Form S-4 with the Securities and Exchange Commission to register the shares of United’s common stock that will be issued to the Company’s shareholders in connection with the proposed merger. The registration statement will include a joint proxy statement of the Company and prospectus of United and other relevant materials in connection with the proposed merger. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE INTO THE REGISTRATION STATEMENT OR JOINT PROXY/PROSPECTUS BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. A definitive joint proxy statement/prospectus will be sent to the shareholders of the Company seeking the required shareholder approval. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from United or the Company as described above.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Participants in the Merger Solicitation

United, the Company, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s shareholders in connection with the proposed merger. Information regarding the directors and executive officers of United and their ownership of United common stock is set forth in its 2016 Annual Report on Form 10-K, definitive proxy statement for United’s 2017 annual meeting of shareholders, as filed with the Securities and Exchange Commission on March 24, 2017, and other documents subsequently filed by United with the SEC. Information regarding the directors and executive officers of the Company and their ownership of the Company’s common stock is set forth in its Definitive Proxy Statement on Form DEF14A filed on June 20, 2016 and other documents subsequently filed by the Company with the SEC. Such information will also be included in the registration statement and joint proxy statement/prospectus for the Company’s special meeting of shareholders, which will be filed by United with the SEC. Additional information regarding the interests of such participants will be included in the registration statement and joint proxy statement/prospectus and other relevant documents regarding the proposed merger filed with the SEC when they become available. Free copies of these documents may be obtained as described above.

 

Item 8.01. Other Events.

 

The information set forth in Item 2.02 is incorporated by reference in this Item 8.01.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
Number   
Description
   
99.1 Press Release dated April 27, 2017

 

 
 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

     
  HCSB FINANCIAL CORPORATION
     
Dated: April 27, 2017 By:  /s/ Jan  H. Hollar
    Name:  Jan H. Hollar
    Title:  Chief Executive Officer

 

 

LOGO

For Immediate Release

HCSB Financial Corporation Announces First Quarter 2017

Financial Results

 

Loris, SC, April 27, 2017----HCSB Financial Corporation, (the “Company”) (OTCQB: HCFB), the holding company for Horry County State Bank (the “Bank”), announced today financial results for the first quarter ended March 31, 2017. The Company announced net income of $293,000, or $0.00 per common share, for the first quarter of 2017, compared to net income of $1.4 million, or $0.00 per common share for the fourth quarter of 2016.

“Our Company is proud that we continue to deliver on our objectives from a year ago. We received notification that the Written Agreement issued by the Federal Reserve has been removed, we had another quarter of core earnings, strong loan growth and we have a promising outlook for 2017.” remarked Jan Hollar, Chief Executive Officer of the Company and the Bank. “We are also excited to announce a merger with United Community Banks, Inc. (UCBI) headquartered in Blairsville, GA with regional headquarters in Greenville, SC. This partnership will allow us to offer expanded products and services to our customers throughout the Myrtle Beach MSA and improve total banking relationships.”

Financial Highlights

During the first quarter of 2017, the Company reported net income of $293,000, as compared to net income of $1.4 million in the fourth quarter of 2016 and a net loss of $3.7 million in the first quarter of 2016. Net income, excluding provision for loan losses and income tax expense (non-GAAP), for the quarter ended March 31, 2017 was $293,000, an increase of $264,000 as compared to net income, excluding provision for loan losses and income tax benefit (non-GAAP), of $29,000 for the fourth quarter of 2016. Noninterest expense continued to decrease in the first quarter and was down $144,000 quarter-over-quarter as the net cost of operation of other real estate owned (“OREO”) decreased $102,000 and salary and employee benefit costs decreased $56,000 as compared to the fourth quarter of 2016.

The Company saw strong loan growth of $13.9 million, or 6%, for the first quarter of 2017 and totaled $229.0 million at March 31, 2017. Total deposits increased $9.1 million, or 3%, and totaled $322.3 million at March 31, 2017, compared to $313.3 million at December 31, 2016, as non-interest bearing demand accounts increased $2.3 million and interest-bearing accounts increased $26.4 million. Time deposits decreased $19.7 million, as management continued to focus on reducing the Company’s internet-based time deposits which were not renewed at maturity.

 
 

Interest Income and Net Interest Margin

Net interest income increased $119,000, or 5%, quarter over quarter, totaling $2.6 million for the first quarter of 2017 as compared to $2.5 million for the fourth quarter of 2016 and $1.9 million in the first quarter of 2016. Net interest margin increased 22 basis points to 3.08% for the quarter ended March 31, 2017 from 2.86% for the quarter ended December 31, 2016. The increase in net interest margin is primarily the result of a 6 basis point increase in yields on loans, a 9 basis point increase in yields on investment securities, and a 27 basis point increase in yields on interest-bearing deposits held with other financial institutions. The cost of liabilities also decreased as the cost of long-term borrowings decreased 32 basis points due to refinancing of certain Federal Home Loan Bank advances in the fourth quarter of 2016. The cost of deposits remained stable in the first quarter of 2017. Net interest margin for the first quarter of 2016 was 2.4% as the cost of borrowings were 5.91% due to outstanding subordinated debt and trust preferred securities that were redeemed in the second quarter of 2016.

Non-Interest Income

Non-interest income was $413,000 in the first quarter of 2017 compared to $412,000 in the fourth quarter of 2016 and $416,000 in the first quarter of 2016. There were no gains or losses on the sale of assets or securities in the first quarter of 2017 or the fourth quarter of 2016, while the Company recorded $17,000 in gains on the sale of securities in the first quarter of 2016.

Non-Interest Expense

Non-interest expense was $2.7 million in the first quarter of 2017 compared to $2.9 million in the fourth quarter of 2016 and $4.2 million in the first quarter of 2016. Decreases in non-interest expense from the fourth quarter of 2016 to the first quarter of 2017 were due primarily to a $56,000 decrease in compensation expense due to a decrease in employees and a $102,000 decrease in net cost of operation of other real estate owned as the company recorded gains on the sale of OREO and was released from a previously recorded liability. Partially offsetting these decreases was an increase in legal and professional fees, which increased $66,000 from the fourth quarter of 2016 to the first quarter of 2017.

Asset Quality

Overall asset quality continued to improve in the first quarter of 2017, as the Bank’s classified assets to Tier 1 capital ratio decreased to 36.6% at March 31, 2017. This compares to a classified assets to Tier 1 capital ratio of 46.4% and 336.9% at December 31, 2016 and March 31, 2016, respectively. OREO decreased by $270,000 during the quarter to $2.6 million at March 31, 2017 due to the sale of a property. Nonperforming loans decreased by $110,000 to $1.9 million at March 31, 2017. The ratio of nonperforming assets to total assets was 1.18% at March 31, 2017 as compared to 1.31% at December 31, 2016 and the ratio of nonperforming loans to total loans was 0.84% at the end of the first quarter of 2017 as compared to 0.94% at the end of the fourth quarter of 2016.

 
 

Allowance for Loan Losses

At March 31, 2017, the allowance for loan losses was $3.7 million, compared to $3.8 million at December 31, 2016. As a percentage of total loans held-for-investment, the allowance for loan losses was 1.62% as of March 31, 2017, down from 1.74% at December 31, 2016. Overall, the decrease in the allowance for loan losses as a percentage of total loans was due to a decrease in specific reserves. Out of the $3.7 million in total allowance for loan losses at March 31, 2017, specific allowances for impaired loans accounted for $593,000 as compared to $643,000 in the fourth quarter of 2016.

Balance Sheet and Capital

Total assets increased $8.7 million during the first quarter of 2017, as gross loans (including loans held-for-sale) increased $13.9 million compared to the fourth quarter of 2016. Total deposits also increased $9.1 million and totaled $322.3 million at March 31, 2017, compared to $313.3 million at December 31, 2016.

As of March 31, 2017 the Bank’s leverage ratio, Common Equity Tier 1 ratio (CET1), Tier 1 risk-based capital ratio, and total risk-based capital ratio were 10.08%, 14.69%, 14.69% and 15.94%, respectively.

About HCSB Financial Corporation

HCSB Financial Corporation is the holding company for Horry County State Bank, a full-service community bank providing services in eight branches across Horry County, South Carolina. Horry County State Bank’s website is www.hcsbaccess.com . HSCB shares are quoted on the OTCQB tier of the OTC Markets Group, Inc. under the symbol “HCFB”.

Caution About 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, goals, projections and expectations, and are thus prospective. Such forward-looking 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. Such risks, uncertainties and other factors, include, among others, the following: (1) the businesses of United Community Banks, Inc. (“United”) and the Company may not be integrated successfully or such integration may take longer to accomplish than expected; (2) the expected cost savings and any revenue synergies from the merger may not be fully realized within the expected timeframes or at all; (3) disruption from the merger may make it more difficult to maintain relationships with clients, associates, or suppliers; (4) the required governmental approvals of the merger may not be obtained on the anticipated proposed terms and schedule or at all; (5) the Company’s shareholders may not approve the merger; (6) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (7) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the company’s loan portfolio and allowance for loan losses; (8) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (9) changes in the U.S. legal and regulatory framework; (10) adverse conditions in the stock market, the public debt markets and other capital markets (including changes in interest rate conditions) could have a negative impact on the company; (11) technology and cybersercurity risks, including potential business disruptions, reputational risks, and financial losses, associated with potential attacks on or failures by our computer systems and computer systems of our vendors and other third parties; and (12) risks, uncertainties and other factors disclosed in our most recent Annual Report on Form 10-K filed with the SEC, or in any of our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed with the SEC since the end of the fiscal year covered by our most recently filed Annual Report on Form 10-K, which are available at the SEC’s Internet site (http://www.sec.gov).

 
 

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. 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. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Additional Information and Where to Find It

 

Investors and security holders are urged to carefully review and consider each of United’s and the Company’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by United with the SEC may be obtained free of charge at United’s website at http://www.ucbi.com or at the SEC’s website at http://www.sec.gov. These documents may also be obtained free of charge from United by requesting them in writing to Investor Relations, United Community Banks, Inc., 125 Highway 515 East, Blairsville, Georgia 30514-0398, or by telephone to Investor Relations at (706) 781-2265. The documents filed by the Company with the SEC may be obtained free of charge at the Company’s website at https://www.hcsbaccess.com, or at the SEC’s website at http://www.sec.gov. These documents may also be obtained free of charge from the Company by requesting them in writing to HCSB Financial Corporation, 3640 Ralph Ellis Blvd., Loris, South Carolina 29569 Attn: Jan H. Hollar, or by telephone to Mrs. Hollar at (843) 716-6117.

 

United plans to file a registration statement on Form S-4 with the Securities and Exchange Commission to register the shares of United’s common stock that will be issued to the Company’s shareholders in connection with the proposed merger. The registration statement will include a joint proxy statement of the Company and prospectus of United and other relevant materials in connection with the proposed merger. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE INTO THE REGISTRATION STATEMENT OR JOINT PROXY/PROSPECTUS BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. A definitive joint proxy statement/prospectus will be sent to the shareholders of the Company seeking the required shareholder approval. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from United or the Company as described above.

 

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

 

Participants in the Merger Solicitation

 

United, the Company, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s shareholders in connection with the proposed merger. Information regarding the directors and executive officers of United and their ownership of United common stock is set forth in its 2016 Annual Report on Form 10-K, definitive proxy statement for United’s 2017 annual meeting of shareholders, as filed with the Securities and Exchange Commission on March 24, 2017, and other documents subsequently filed by United with the SEC. Information regarding the directors and executive officers of the Company and their ownership of the Company’s common stock is set forth in its Definitive Proxy Statement on Form DEF14A filed on June 20, 2016 and other documents subsequently filed by the Company with the SEC. Such information will also be included in the registration statement and joint proxy statement/prospectus for the Company’s special meeting of shareholders, which will be filed by United with the SEC. Additional information regarding the interests of such participants will be included in the registration statement and joint proxy statement/prospectus and other relevant documents regarding the proposed merger filed with the SEC when they become available. Free copies of these documents may be obtained as described above.

 

For additional information contact:

 

Jennifer W. Harris

Chief Financial Officer

(843) 716-6407

jharris@horrycountystatebank.com

 
 

HCSB Financial Corporation

Condensed Consolidated Balance Sheet (Unaudited)

                       

    As of  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2017     2016*     2016     2016     2016  
    ($ in thousands)  
ASSETS                                        
Cash and due from banks   $ 22,190     $ 25,429     $ 31,174     $ 64,024     $ 41,652  
Investment securities available-for-sale     104,341       106,529       111,581       80,969       83,205  
Nonmarketable equity securities     1,359       1,345       1,090       1,090       1,276  
Loans held-for-sale                       4,280        
Loans     229,033       215,112       209,176       199,072       199,635  
Allowance for loan losses     (3,717 )     (3,750 )     (4,676 )     (4,492 )     (3,719 )
Net loans     225,316       211,362       204,500       194,580       195,916  
                                         
Premises and equipment, net     14,182       14,314       14,456       14,591       15,758  
Assets held-for-sale                       768        
Other real estate owned     2,617       2,887       4,032       7,256       11,270  
Bank-owned life insurance     11,721       11,643       11,562       11,481       11,400  
Deferred tax assets     20,569       19,646       16,270       16,270       19,587  
Valuation allowance for deferred tax assets     (20,569 )     (19,646 )     (16,270 )     (16,270 )     (19,587 )
Other assets     2,288       2,425       2,712       3,441       2,886  
                                         
Total assets   $ 384,014     $ 375,934     $ 381,107     $ 382,480     $ 363,363  
                                         
LIABILITIES AND SHAREHOLDERS’ EQUITY                                        
                                         
Deposits:                                        
Demand noninterest-bearing   $ 43,666     $ 41,324     $ 47,060     $ 44,077     $ 40,227  
Money market, NOW and savings     152,109       125,714       125,785       119,191       122,613  
Time deposits     126,563       146,231       150,505       159,974       172,621  
Total deposits     322,338       313,269       323,350       323,242       335,461  
                                         
Short-term borrowings     848       1,983       1,662       1,659       1,248  
Long-term debt     24,000       24,000       17,000       17,000       34,141  
Accrued expenses and other liabilities     716       1,355       2,502       3,312       7,161  
Total liabilities     347,902       340,607       344,514       345,213       378,011  
                                         
Shareholders’ equity:                                        
Preferred stock                       9       12,895  
Common stock     4,958       4,958       4,958       3,633       38  
Warrants                             1,012  
Additional paid-in capital     68,550       68,411       68,273       81,903       30,220  
Retained deficit     (34,490 )     (34,783 )     (36,183 )     (48,177 )     (58,090 )
Accumulated other comprehensive loss     (2,906 )     (3,259 )     (455 )     (101 )     (723 )
Total shareholders’ equity     36,112       35,327       36,593       37,267       (14,648 )
                                         
Total liabilities and shareholders’ equity   $ 384,014     $ 375,934     $ 381,107     $ 382,480     $ 363,363  
                                         
Common shares issued and outstanding     495,763,940       495,763,940       495,763,940       363,314,783       3,846,340  

 

* Derived from audited financial statements.

 
 

HCSB Financial Corporation

Condensed Consolidated Income Statement (Unaudited) 

    At or For the Three Months Ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2017     2016     2016     2016     2016  
    ($ in thousands, except per share amounts)  
Interest income                                        
Loans, including fees   $ 2,724     $ 2,630     $ 2,667     $ 2,581     $ 2,483  
Investment securities     480       473       426       386       461  
Nonmarketable equity securities     15       13       11       14       14  
Interest on deposits at banks     40       37       68       73       31  
Total interest income     3,259       3,153       3,172       3,054       2,989  
Interest expense                                        
Money market, NOW and savings deposits     140       108       115       100       96  
Time deposits     346       385       403       412       427  
Borrowings     151       157       150       97       523  
Total interest expense     637       650       668       609       1,046  
Net interest income     2,622       2,503       2,504       2,445       1,943  
Provision for loan losses           (1,061 )           3,560       1,424  
Net interest income (loss) after provision     2,622       3,564       2,504       (1,115 )     519  
Noninterest income                                        
Service charges on deposit accounts     162       168       188       189       161  
Mortgage banking income     31       41       7              
Income from bank-owned life insurance     108       111       110       110       110  
Gain (loss) on sale of securities available for sale                 153       (102 )     17  
Loss on sale of assets                 (222 )            
Gain on extinguishment of debt                       19,115        
Other noninterest income     112       92       98       141       128  
Total noninterest income     413       412       334       19,453       416  
Noninterest expenses                                        
Salaries and employee benefits     1,560       1,616       1,638       1,668       1,286  
Occupancy and equipment     476       458       493       486       499  
Legal and professional fees     417       351       428       1,076       215  
FDIC insurance     44       21       204       206       309  
Impairment on assets held-for-sale                 1       247        
Net cost of operation of other real estate owned     (65 )     37       1,392       3,273       1,564  
Other noninterest expense     310       403       467       549       345  
Total noninterest expenses     2,742       2,886       4,622       7,505       4,218  
Income (loss) before income taxes     293       1,090       (1,784 )     10,833       (3,283 )
Income tax expense (benefit)           (310 )           920        
Net income (loss)     293       1,400       (1,784 )     9,913       (3,283 )
Preferred dividends                             (398 )
Gain on redemption of preferred shares                       13,778        
Net income (loss) available to common shareholders   $ 293     $ 1,400     $ (1,784 )   $ 23,691     $ (3,681 )
                                         
Earnings per common share, fully diluted   $ 0.00     $ 0.00     $ (0.00 )   $ 0.03     $ (0.96 )
Weighted average diluted common shares     469,054,565       508,945,190       411,085,981       319,862,554       3,846,340  
 
 

HCSB Financial Corporation

Average Balance Sheets and Net Interest Analysis (Unaudited)

    For the Three Months Ended  
    March 31, 2017     March 31, 2016  
    Average     Income/     Yield/     Average     Income/     Yield/  
    Balance     Expense     Rate (2)     Balance     Expense     Rate (2)  
  ($ in thousands)  
Assets      
Interest-earning assets:                                                
Loans and loans held for sale (1)   $ 218,316     $ 2,724       5.07 %   $ 205,314     $ 2,483       4.85 %
Interest-bearing deposits     20,662       40       0.79 %     26,037       31       0.48 %
Investment securities     105,773       480       1.82 %     86,902       461       2.12 %
Other interest-earning assets     1,346       15       4.53 %     1,142       14       4.92 %
                                                 
Total interest-earning assets     346,097       3,259       3.83 %     319,395       2,989       3.75 %
                                                 
Allowance for loan losses     (3,753 )                     (4,600 )                
Cash and due from banks     2,018                       1,768                  
Premises and equipment (net)     14,262                       15,855                  
Other assets     17,537                       27,705                  
                                                 
Total assets   $ 376,161                     $ 360,123                  
                                                 
Liabilities and shareholders’ equity                                                
Interest-bearing liabilities:                                                
Interest-bearing demand   $ 40,911     $ 13       0.13 %   $ 39,164     $ 17       0.17 %
Money market, NOW and savings     94,490       127       0.55 %     77,346       79       0.41 %
Time deposits     128,835       332       1.05 %     174,946       427       0.98 %
Brokered deposits     8,074       14       0.71 %                 0.00 %
Total interest-bearing deposits     272,310       486       0.73 %     291,456       523       0.72 %
Short-term borrowings     1,182       1       0.34 %     1,253             0.00 %
Long-term debt     24,000       150       2.54 %     34,248       523       6.13 %
Total borrowed funds     25,182       151       2.44 %     35,501       523       5.91 %
                                                 
Total interest-bearing liabilities     297,492       637       0.87 %     326,957       1,046       1.28 %
                                                 
Net interest rate spread             2,622       2.96 %             1,943       2.47 %
                                                 
Noninterest-bearing demand deposits     41,387                       37,889                  
Other liabilities     1,526                       7,133                  
Shareholders’ equity     35,756                       (11,856 )                
                                                 
Total liabilities and shareholders’ equity   $ 376,161                     $ 360,123                  
                                                 
Net interest margin                     3.08 %                     2.44 %

 

(1) Nonaccrual loans are included in the average loan balances.
(2) Yield rate calculated on Actual/Actual day count basis, except for yield on investments which is calculated on a 30/360 day count basis.
 
 

HCSB Financial Corporation

Selected Ratios (Unaudited)

 

    At or For the Three Months Ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2017     2016     2016     2016     2016  
    ($ in thousands, except per share amounts)  
Per Share Data:                                        
Basic Earnings (Loss) per Common Share   $ 0.00     $ 0.00     $ (0.00 )   $ 0.03     $ (0.96 )
Book value per common share (1)   $ 0.07     $ 0.07     $ 0.07     $ 0.10     $ (7.16 )
Common shares outstanding     495,763,940       495,763,940       495,763,940       363,314,783       3,846,340  
Weighted average dilutive common shares outstanding     469,054,565       508,945,190       411,085,981       319,862,554       3,846,340  
                                         
Selected Performance Ratios:                                        
Return on Average Assets     0.32 %     1.47 %     -1.85 %     11.07 %     -3.57 %
Return on Average Equity (2)     3.33 %     15.33 %     -19.92 %     -336.28 %     N/A  
Net interest margin (non-tax equivalent)     3.08 %     2.86 %     2.80 %     2.84 %     2.45 %
Non-interest Income as a % of Revenue     11.25 %     11.56 %     9.53 %     86.43 %     12.22 %
Non-interest Income as a % of Average Assets     0.11 %     0.11 %     0.09 %     5.40 %     0.11 %
Non-interest Expense as a % of Average Assets     0.73 %     0.76 %     1.20 %     2.08 %     1.14 %
                                         
Asset Quality:                                        
Past due 30-59 days (and still accruing)   $ 283     $ 888     $ 535     $ 636     $ 3,667  
Past due 60-89 days (and still accruing)     52       150       112       159       647  
Past due 90 days plus (and still accruing)                              
Nonaccrual loans     1,915       2,025       931       332       6,115  
Nonperforming loans     1,915       2,025       931       332       6,115  
Nonperforming loans held for sale (nonaccruing)                       4,012        
OREO     2,617       2,887       4,032       7,256       11,270  
Nonperforming assets     4,532       4,912       4,963       11,600       17,385  
                                         
Nonperforming loans to total loans     0.84 %     0.94 %     0.45 %     0.17 %     3.06 %
Nonperforming assets to total assets     1.18 %     1.31 %     1.30 %     3.03 %     4.78 %
Allowance to total loans held-for-investment     1.62 %     1.74 %     2.24 %     2.26 %     1.86 %
Allowance to nonperforming loans     194.10 %     185.19 %     502.26 %     1353.01 %     60.82 %
Allowance to nonperforming assets     82.02 %     76.34 %     94.22 %     38.72 %     21.39 %
Net charge-offs (recoveries) to average loans (annualized)     0.06 %     -0.26 %     -0.36 %     5.46 %     4.32 %
                                         
Capital Ratios (Bank):                                        
Common Equity Tier 1 (CET1) capital   $ 38,175     $ 37,721     $ 36,404     $ 38,114     $ 9,238  
Tier 1 capital     38,175       37,721       36,404       38,114       9,238  
Tier 2 capital     3,254       3,122       3,039       2,939       2,962  
Total risk based capital     41,429       40,843       39,443       41,053       12,200  
Risk weighted assets     259,836       249,122       241,456       233,528       236,204  
Average assets for leverage ratio     378,649       379,052       388,135       384,914       360,649  
                                         
Common Equity Tier 1 (CET1) ratio     14.69 %     15.14 %     15.08 %     16.32 %     3.91 %
Tier 1 ratio     14.69 %     15.14 %     15.08 %     16.32 %     3.91 %
Total risk based capital ratio     15.94 %     16.39 %     16.34 %     17.58 %     5.17 %
Tier 1 leverage ratio     10.08 %     9.95 %     9.38 %     9.90 %     2.56 %

                     

(1) Book value per share excludes non-voting preferred shares
(2) Ratio not applicable in prior periods due to negative equity