Coastal Banking Company in Beaufort, S.C., has become the latest community bank to take advantage of a new law that relieves small banks from the burden of filing financial reports with the Securities and Exchange Commission.
Coastal, with $478 million of assets, said it has filed all the necessary documents to deregister its thinly traded shares and expects approval within 90 days. Paul R. Garrigues, Coastal's chief financial officer, said the move will save the company roughly $200,000 a year in accounting, legal and administrative associated with filing quarterly financial statements and other documents with the SEC.
"In addition to the significant yearly cost savings, deregistering our shares also will enable senior management to focus more on the day-to-day management of the bank, as opposed to the considerable time necessary to manage compliance with SEC reporting requirements," Garrigues said in a news release.
Several other small banks have also taken steps to deregister from the SEC since President Obama signed the Jumpstart Our Business Startups, or JOBS, Act into law last month. The law includes a provision that lets banks suspend SEC reporting if they have fewer than 1,200 shareholders. It also raises the threshold for registering with the SEC from 500 shareholders to 2,000 shareholders.
Community banks have been clamoring for the changes for years, arguing that the reporting requirements are redundant because they already report similar financials to their primarily regulators.
Also many banks had intentionally stayed below the 500-shareholder threshold to avoid SEC registration, which limited their options for raising capital.