Two weeks after calling off a capital-raising effort, Tidelands Bancshares Inc. in Mount Pleasant, S.C., said it plans to reduce its size.
The $760 million-asset company said Thursday that it is trying to sell the majority of its investment portfolio by June 30. After the sale it would be 28% smaller, with assets of about $550 million, it said.
Robert E. "Chip" Coffee Jr., Tidelands' president and chief executive officer, said in an interview Thursday that the company expanded the investment portfolio as it added six branches between April 2007 and July 2008. With low loan demand, it turned to investments such as mortgage-backed securities.
"It turned out to be a fortunate move for us," Coffee said. "We can downsize, hopefully book a fairly nice gain on the sale and not have to do anything to damage our franchise."
Although the company's Tidelands Bank unit was well capitalized at the end of the first quarter, the bank was placed under a memorandum of understanding by the South Carolina Banking Department and the Federal Deposit Insurance Corp. in November.
The informal order calls for the bank to boost its leverage ratio to 8%. On March 31 the ratio was 6.36%.
"We wanted to bring ourselves in compliance with all the regulatory ratios," Coffee said.
On May 18 the company announced it was withdrawing a $35 million stock offering because of unfavorable market conditions.
Along with the sale of the investment portfolio, Tidelands said in the release that it plans to reduce its noncore funding, including brokered deposits and borrowings.