There's bad blood at South Carolina's Orangeburg National Bank.
Ever since Orangeburg's chief executive, J. Donald Collier, died a year ago shareholders have bee at each other's throats. Mr. Collier's widow, Barbara; daughter, Jean; and son-in-law, Oliver G. Wood, Jr., are pitted against Hugo Sims Jr.
Mr. Sims, Orangeburg's chairman, became chief executive after the death of Mr. Collier, the bank's first president.
The Colliers and other dissidents argue that Mr. Sims, a former attorney and congressman who is the $65 million-asset bank's largest shareholder, is not qualified to be CEO. They also charge that he is trying to gain voting control by forming a holding company.
|Turned into an Ego Trip'
"It's a tragedy this bank is being turned into an ego trip," said Mr. Wood, 56, a professor of banking and finance at the University of South Carolina who is the second-largest shareholder.
"I'm 71 years old," Mr. Sims retorts. "I'm not interested in controlling the bank. He's [Mr. Wood] been trying to find something wrong with the bank for a couple of years. He's got one of those ego things."
The infighting demonstrates the emotional issues small banks must confront as they grow and change their structure.
Mr. Sims landed a haymaker in April, when stockholders voted 70% of their shares in support of forming a holding company called Community Bankshares Inc. to acquire Orangeburg.
Has Fed's Approval
Bank officials say the holding company will be in place by July and will help thwart unfriendly takeovers while enabling Orangeburg to expand into other businesses or make acquisitions.
This month, the Federal Reserve Board voted in favor of the holding company despite letters from Mr. Wood and other dissidents complaining that the bank officers lack experience and are already receiving excessively high directors fees.
In his Jan. 8 letter to the Fed, Mr. Wood said William W. Traynham, who is due to become president of the holding company, lacks experience. Mr. Traynham, however, has been with Orangeburg since its inception in 1987. He had been comptroller of a school district on whose board Mr. Sims served.
Mr. Wood also noted that bank president Michael Wolfe is just 35. However, Mr. Wolfe spent eight years at NCNB Corp., now NationsBank.
Mr. Sims said both men are exceptional bankers. Under their leadership, the bank earned $580,000 in 1992, with a 1.03% return on average assets.
Bank directors are paid $600 a month, down from the $1,000 they were making in 1991 when Mr. Wood complained.
Mr. Wood feels they are still overpaid. He surveyed 27 South Carolina banks and found that those of similar size pay $200 to $300 a month.
Mr. Sims said the directors have earned every penny by helping raise millions of dollars in bank capital over the years, and by using their expertise to defray other costs, such as the recent purchase of a branch office.
Mr. Wood has other problems with the bank's management. He complained in an interview that the bank made a loan to Mr. Sims' sons and has given his daughter a job.
"You've just got an old-fashioned dictatorship," Mr. Wood said.
In June 1990, a $349,951 unsecured loan was made to a partnership formed to raise striped bass for commercial sale. Two of the five general partners are Mr. Sims' sons. The loan, made at an interest rate equal to prime, had an outstanding balance of $128,000 in March and matures in July.
The loan was past due, according to Orangeburg's March proxy and prospecturs, but is currently performing, and the bank has recently secured it with a mortgage on property that has an estimated value of $65,000.
Mr. Sims, noting that he did not vote on the loan, said he is confident it will be repaid in full. He also acknowledged he has hired his daughter, who works on the bank's computers. He says she is college educated, qualified for the job, and does not work directly under him.
Mr. Wood said he expects to sell his 28,000 shares, and doesn't plan to take any additional action against the bank in the aftermath of the Fed's ruling.
Said Mr. Wood: "School's out."