For Immediate Release

HCSB Financial Corporation Announces Removal of Regulatory Consent Order and Third Quarter 2016 Financial Results

 

Loris, SC, October 27, 2016----HCSB Financial Corporation (the “Company”), the holding company for Horry County State Bank (the “Bank”), announced today that the Bank received notification on October 26, 2016 from the Federal Deposit Insurance Corporation and the South Carolina State Board of Financial Institutions (the “Supervisory Authorities”) that the Consent Order previously entered into with the Bank on February 10, 2011 was terminated. “We are pleased with the removal of the Consent Order and believe this reflects the hard work of management and our employees over the past several years. This demonstrates the Bank’s return to a healthy financial condition.” commented Jan Hollar, Chief Executive Officer of the Company and the Bank. Although the Consent Order has been terminated, certain regulatory requirements and restrictions remain, including requirements to continue to improve credit quality and earnings, restriction prohibiting dividend payments without prior approval from Supervisory Authorities, and the maintenance of a specified leverage capital ratio.

The Company also announced financial results for the third quarter ended September 30, 2016, including net losses per share available to common shareholders of $0.00 per share, a decrease from earnings of $0.03 per share at the end of the second quarter of 2016.

“The third quarter has been yet another quarter of progress at Horry County State Bank. We are pleased with our significant reduction in nonperforming assets following the completion of our asset disposition plan. The completion of this plan did result in some one-time legal costs which impacted our profitability this quarter, but we believe that with these costs now behind us, we can look toward positive earnings in the fourth quarter. We continue to see an uptick in our loan production, as we add quality, in-market commercial loans to our portfolio, and our asset quality is in line with our internal goals. The key focus areas for our team as we finish out 2016 are quality loan production, continued improvement in asset quality, and meaningful earnings per share,” remarked Jan Hollar, Chief Executive Officer of the Company and the Bank.

Financial Highlights

During the third quarter, the Company reported a net loss of $1.8 million, as the Company continued its efforts to reduce nonperforming assets. The previously announced asset disposition plan was substantially completed in the third quarter of 2016, which resulted in additional losses of $1.4 million from the write down of other real estate owned (“OREO”) and loss on sale of loans. The additional losses taken on OREO resulted from the resolution of a group of properties for which the Bank was not comfortable with potential risks associated with carrying the properties. Net interest income for the third quarter was up $59,000 from the second quarter of 2016 and noninterest expense was down $2.9 million quarter-over-quarter as the net cost of operation of OREO decreased $1.9 million and professional fee decreased $648,000.

The Company saw loan growth of $10.1 million, or 5%, for the third quarter of 2016 as loan production continues to be a key management focus. Total deposits remained flat and totaled $323.3 million at September 30, 2016, compared to $323.2 million at June 30, 2016, as a slight increase in core deposits was offset by a decrease in internet- based time deposits.

 

 

Interest Income and Net Interest Margin

Net interest income was up quarter over quarter, totaling $2.5 million for the third quarter of 2016 as compared to $2.4 million in the second quarter of 2016, led by increased interest income on loans and investment securities. Net interest margin decreased 4 basis points to 2.80% for the quarter ended September 30, 2016 from 2.84% for the quarter ended June 30, 2016. The decrease in net interest margin is primarily the result of a 27 basis point decrease in yield on securities as more than $10 million in higher yielding bonds were called during the past four months. This decrease in yield on securities was partially offset by an increase in yield on interest-bearing deposits.

Non-Interest Income

Non-interest income was $334,000 in the third quarter of 2016 compared to $19.5 million in the second quarter of 2016. The second quarter included $19.1 million of gains on the extinguishment of debt related to the settlement of subordinated debt. Included in non-interest income for the third quarter was a $153,000 gain on sale of securities, as compared to a loss on sale of securities of $102,000 in the second quarter of 2016 and a $224,000 loss on sale of assets recorded in the third quarter related to the bulk sale of nonperforming loans announced in the second quarter. Excluding the gain on extinguishment of debt, loss on sale of assets and gain (loss) on the sale of securities for each quarter, non-interest income decreased $35,000 in the third quarter of 2016 as compared to the second quarter of 2016 due to lower ATM and other fee income.

Asset Quality

During the third quarter, asset quality improved significantly due to the implementation of the asset disposition plan that was put in place following the close of the capital raise in the second quarter. OREO decreased by $3.2 million during the quarter to $4.0 million at September 30, 2016 due to the write down and sale of several properties. Nonperforming loans, including nonperforming loans held for sale, decreased by $3.4 million to $931,000 at September 30, 2016 as the asset disposition plan was completed in the third quarter. The ratio of nonperforming assets to total assets dropped to 1.30% at September 30, 2016, as compared to 3.03% at June 30, 2016 and the ratio of nonperforming loans to total loans dropped to 0.45% at the end of the third quarter of 2016 as compared to 2.18% at the end of the second quarter of 2016.

Allowance for Loan Losses

At September 30, 2016, the allowance for loan losses was $4.7 million, compared to $4.5 million at June 30, 2016. As a percentage of total loans held-for-investment, the allowance for loan losses was 2.24% in the third quarter of 2016, down slightly from 2.26% in the second quarter of 2016. The decrease in the allowance for loan losses as a percent of total loans was a reflection of improved levels of past dues. Out of the $4.7 million in total allowance for loan losses at September 30, 2016, specific allowances for impaired loans accounted for $788,000 as compared to $845,000 in the second quarter due to the sale and resolution of nonperforming loans.

 

 

Balance Sheet and Capital

Total assets decreased $913,000 during the third quarter of 2016, while gross loans (including loans held-for-sale) increased $10.1 million compared to the second quarter of 2016 as the Company saw solid loan production during the quarter. Total deposits remained flat and totaled $323.3 million at September 30, 2016, compared to $323.2 million at June 30, 2016, as an increase in money market and NOW deposits was offset by a decrease in time deposits which primarily resulted from the maturity of $8.1 million in internet-based time deposits.

As of September 30, 2016 the Bank’s leverage ratio, Common Equity Tier 1 ratio (CET1), Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.38%, 15.08%, 15.08% and 16.34%, 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 OTC Pink under the symbol “HCFB”.

SAFE HARBOR

 

This news release contains forward-looking statements, as defined by the federal securities laws, including statement about the Company’s financial outlook and business environment. Forward looking statements generally include words such as “expects,” “projects,” “anticipates,” “believes,” “estimates,” “strategy,” “plan,” “potential,” and other similar expressions. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward-Looking Statements” on pages 1-2 and in the section entitled “Risk Factors” of the Company’s annual report on Form 10-K filed with the SEC for the year ended December 31, 2015. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements.

 

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
   September 30,  June 30,  March 31,  December 31,  September 30,
   2016  2016  2016  2015*  2015
   ($ in thousands)
ASSETS                         
Cash and due from banks  $31,174   $64,024   $41,652   $22,137   $29,185 
Investment securities available for sale   111,581    80,969    83,205    89,701    84,291 
Nonmarketable equity securities   1,090    1,090    1,276    1,330    1,330 
Loans held for sale   —      4,280    —      —      —   
Loans   209,176    199,072    199,635    209,367    219,982 
Allowance for loan losses   (4,676)   (4,492)   (3,719)   (4,601)   (5,021)
Net loans   204,500    194,580    195,916    204,766    214,961 
                          
Premises and equipment, net   14,456    14,591    15,758    15,917    16,069 
Assets held-for-sale   —      768    —      —      —   
Other real estate owned   4,032    7,256    11,270    13,624    18,510 
Bank-owned life insurance   11,562    11,481    11,400    11,319    11,239 
Other assets   2,712    3,441    2,886    2,629    2,962 
                          
Total assets  $381,107   $382,480   $363,363   $361,423   $378,547 
                          
LIABILITIES AND SHAREHOLDERS’ EQUITY                         
                          
Deposits:                         
Demand noninterest-bearing  $47,060   $44,077   $40,227   $40,182   $45,135 
Money market, NOW and savings   125,785    119,191    122,613    116,678    121,965 
Time deposits   150,505    159,974    172,621    173,971    180,514 
Total deposits   323,350    323,242    335,461    330,831    347,614 
                          
Short-term borrowings   1,662    1,659    1,248    1,716    1,119 
Long-term debt   17,000    17,000    34,141    34,138    34,248 
Accrued expenses and other liabilities   2,502    3,312    7,161    6,988    6,741 
Total liabilities   344,514    345,213    378,011    373,673    389,722 
                          
Shareholders’ equity:                         
Preferred stock   —      9    12,895    12,895    12,895 
Common stock   4,958    3,633    38    38    38 
Warrants   —      —      1,012    1,012    1,012 
Additional paid-in capital   82,051    81,903    30,220    30,220    30,214 
Retained deficit   (49,961)   (48,177)   (58,090)   (54,807)   (54,398)
Accumulated other comprehensive loss   (455)   (101)   (723)   (1,608)   (936)
Total shareholders’ equity   36,593    37,267    (14,648)   (12,250)   (11,175)
                          
Total liabilities and shareholders’ equity  $381,107   $382,480   $363,363   $361,423   $378,547 
                          
Common shares issued and outstanding   495,763,940    363,314,783    3,846,340    3,846,340    3,816,340 

 

*   Derived from audited financial statements.

 

 

 

HCSB Financial Corporation

Condensed Consolidated Income Statement (Unaudited)

 

  At or For the Three Months Ended
  September 30,  June 30,  March 31,  December 31,  September 30, 
  2016  2016  2016  2015  2015 
  ($ in thousands, except per share amounts)
Interest income                         
Loans, including fees  $2,667   $2,581   $2,483   $2,753   $3,088 
Investment securities   426    386    461    479    506 
Nonmarketable equity securities   11    14    14    14    8 
Interest on deposits at banks   68    73    31    14    16 
Total interest income   3,172    3,054    2,989    3,260    3,618 
Interest expense                         
Money market, NOW and savings deposits   115    100    96    98    108 
Time deposits   403    412    427    450    487 
Borrowings   150    97    523    518    510 
Total interest expense   668    609    1,046    1,066    1,105 
Net interest income   2,504    2,445    1,943    2,194    2,513 
Provision for loan losses   —      3,560    1,424    —      —   
Net interest income (loss) after provision   2,504    (1,115)   519    2,194    2,513 
Noninterest income                         
Service charges on deposit accounts   188    189    161    163    197 
Mortgage banking income   7    —      —      6    50 
Income from bank-owned life insurance   110    110    110    109    109 
Gain (loss) on sale of securities available for sale   153    (102)   17    —      20 
Gain (loss) on sale of assets   (224)   —      —      (4)   736 
Gain on extinguishment of debt   —      19,115    —      —      —   
Other noninterest income   100    141    128    149    231 
Total noninterest income   334    19,453    416    423    1,343 
Noninterest expenses                         
Salaries and employee benefits   1,648    1,668    1,286    1,228    1,330 
Occupancy and equipment   493    486    499    493    558 
Legal and professional fees   428    1,076    215    494    488 
FDIC insurance   204    206    309    320    346 
Loss on disposal of fixed assets   —      247    —      —      —   
Net cost of operation of other real estate owned   1,392    3,273    1,564    167    382 
Other noninterest expense   457    549    345    364    349 
Total noninterest expenses   4,622    7,505    4,218    3,066    3,453 
Income (loss) before income taxes   (1,784)   10,833    (3,283)   (449)   403 
Income tax expense (benefit)   —      920    —      (40)   35 
Net income (loss)   (1,784)   9,913    (3,283)   (409)   368 
Preferred dividends   —      —      (398)   (405)   (514)
Net income (loss) available to common shareholders  $(1,784)  $9,913   $(3,681)  $(814)  $(146)
                          
Earnings per common share, fully diluted  $(0.00)  $0.03   $(0.96)  $(0.21)  $(0.04)
Weighted average diluted common shares   411,085,981    319,862,554    3,846,340    3,846,340    3,816,340 

 

 

 

HCSB Financial Corporation

Average Balance Sheets and Net Interest Analysis (Unaudited)

 

   For the Three Months Ended
   September 30, 2016  September 30, 2015
   Average  Income/  Yield/  Average  Income/  Yield/
   Balance  Expense  Rate (2)  Balance  Expense  Rate (2)
Assets  ($ in thousands)
Interest-earning assets:                              
Loans and loans held for sale (1)  $204,634   $2,667    5.18%  $226,162   $3,088    5.42%
Interest-bearing deposits   51,270    68    0.53%   31,796    16    0.20%
Investment securities   98,153    426    1.74%   89,388    506    2.26%
Other interest-earning assets   1,090    11    4.01%   1,144    8    2.77%
                               
Total interest-earning assets   355,147    3,172    3.55%   348,490    3,618    4.12%
                               
Allowance for loan losses   (4,518)             (5,573)          
Cash and due from banks   1,806              1,787           
Premises and equipment   14,544              17,742           
Other assets   21,030              32,444           
                               
Total assets  $388,009             $394,890           
                               
Liabilities and shareholders’ equity                              
Interest-bearing liabilities:                              
Interest-bearing demand  $40,423   $17    0.17%  $39,904   $15    0.15%
Money market, NOW and savings   86,089    98    0.45%   87,517    93    0.42%
Time deposits   155,542    403    1.03%   189,101    487    1.02%
Total interest-bearing deposits   282,054    518    0.73%   316,522    595    0.75%
Short-term borrowings   1,773    1    0.22%   1,203    1    0.33%
Long-term debt   17,000    149    3.49%   34,248    509    5.90%
Total borrowed funds   18,773    150    3.18%   35,451    510    5.71%
                               
Total interest-bearing liabilities   300,827    668    0.88%   351,973    1,105    1.25%
                               
Net interest rate spread        2,504    2.68%        2,513    2.87%
                               
Noninterest-bearing demand deposits   47,408              47,779           
Other liabilities   3,183              6,980           
Shareholders’ equity   36,591              (11,842)          
                               
Total liabilities and shareholders’ equity  $388,009             $394,890           
                               
Net interest margin             2.80%             2.86%

 

(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
   September 30,  June 30,  March 31,  December 31,  September 30,
   2016  2016  2016  2015  2015
   ($ in thousands, except per share amounts)
Per Share Data:               
Basic Earnings (Loss) per Common Share  $(0.00)  $0.03   $(0.96)  $(0.21)  $(0.04)
Book value per common share (1)  $0.07   $0.10   $(7.16)  $(6.59)  $(6.31)
Common shares outstanding   495,764,318    363,314,783    3,846,340    3,846,340    3,816,640 
Weighted average dilutive common shares outstanding   411,085,981    319,862,554    3,846,340    3,846,340    3,816,340 
                          
Selected Performance Ratios:                         
Return on Average Assets   -1.83%   10.36%   -3.67%   -0.44%   0.37%
Return on Average Equity (2)   -19.40%   111.93%   N/A    N/A    N/A 
Net interest margin (non-tax equivalent)   2.80%   2.84%   2.45%   2.66%   2.86%
Non-interest Income as a % of Revenue   9.53%   86.43%   12.22%   11.49%   27.07%
Non-interest Income as a % of Average Assets   0.09%   5.06%   0.12%   0.11%   0.34%
Non-interest Expense as a % of Average Assets   1.19%   1.95%   1.17%   0.83%   0.87%
                          
Asset Quality:                         
Past due 30-59 days (and still accruing)  $535   $636   $3,667   $3,897   $2,058 
Past due 60-89 days (and still accruing)   112    159    647    244    808 
Past due 90 days plus (and still accruing)   —      —      —      —      —   
Nonaccrual loans   931    332    6,115    8,742    6,792 
Nonperforming loans   931    332    6,115    8,742    6,792 
Nonperforming loans held for sale (nonaccruing)   —      4,012    —      —      —   
OREO   4,032    7,256    11,270    13,624    18,510 
Nonperforming assets   4,963    11,600    17,385    22,366    25,302 
                          
                          
Nonperforming loans to total loans   0.45%   2.18%   3.06%   4.18%   3.09%
Nonperforming assets to total assets   1.30%   3.03%   4.78%   6.19%   6.68%
Allowance to total loans held-for-investment   2.24%   2.26%   1.86%   2.20%   2.28%
Allowance to nonperforming loans   502.26%   103.41%   60.82%   52.63%   73.93%
Allowance to nonperforming assets   94.22%   38.72%   21.39%   20.57%   19.84%
Net charge-offs (recoveries) to average loans   4.13%   5.57%   4.52%   0.78%   1.02%
(annualized)                         
                          
Capital Ratios (Bank):                         
Common Equity Tier 1 (CET1) capital  $36,404   $38,114   $9,238   $12,135    12,169 
Tier 1 capital   36,404    38,114    9,238    12,135   $12,169 
Tier 2 capital   3,039    2,939    2,962    3,267    3,497 
Total risk based capital   39,443    41,053    12,200    15,402    15,666 
Risk weighted assets   241,456    233,528    236,204    260,024    278,214 
Average assets for leverage ratio   388,135    384,914    360,649    370,482    400,954 
                          
Common Equity Tier 1 (CET1) ratio   15.08%   16.32%   3.91%   4.67%   4.37%
Tier 1 ratio   15.08%   16.32%   3.91%   4.67%   4.37%
Total risk based capital ratio   16.34%   17.58%   5.17%   5.92%   5.63%
Tier 1 leverage ratio   9.38%   9.90%   2.56%   3.28%   3.04%

 

(1)Book value per share excludes non-voting preferred shares

 

(2)Ratio not applicable in prior periods due to negative equity

 

 


The following information was filed by Hcsb Financial Corp (HCFB) on Thursday, October 27, 2016 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

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Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
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Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

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Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
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See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

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