SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of
Report (date of earliest event reported): January 7, 2010
ATLANTIC BANCGROUP,
INC.
(Exact
name of registrant as specified in its charter)
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Florida
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001-15061
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59-3543956
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(State
or other jurisdiction
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Commission
File Number
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(I.R.S.
Employer
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Of
incorporation)
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Identification
No.)
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1315
South Third Street
Jacksonville Beach, Florida
32250
(address
of principal executive offices)
Registrant’s
telephone number: (904) 247-9494
EXPLANATORY
NOTE
This
Amended Form 8-K is being filed to provide additional information concerning the
previously disclosed Consent Order entered into by Atlantic BancGroup, Inc,’s
wholly-owned subsidiary, Oceanside Bank.
ITEM
1.01. Entry into a Material Definitive
Agreement.
Effective January 7, 2010, Oceanside
Bank (the “Bank”), a wholly-owned subsidiary of Atlantic BancGroup, Inc. (the
“Company”) entered into a Stipulation to the Issuance of a Consent Order
(“Stipulation”) with the Federal Deposit Insurance Corporation (the “FDIC”) and
the Florida Office of Financial Regulation (the “OFR”). Pursuant to the
Stipulation, the Bank has consented, without admitting or denying any charges of
unsafe or unsound banking practices or violations of law or regulation, to the
issuance of a Consent Order by the FDIC and the OFR, also effective as of
January 7, 2010.
The Consent Order represents an
agreement among the Bank, the FDIC and the OFR as to areas of the Bank’s
operations that warrant improvement and presents a plan for making those
improvements. The Consent Order imposes no fines or penalties on the
Bank.
Pursuant to the Consent Order, the
Bank’s Board of Directors is required increase its participation in the affairs
of the Bank. This participation shall include comprehensive, documented meetings
to be held no less frequently than monthly. The Bank must also develop, submit
for comment to the FDIC and the OFR, and approve a management plan for the
purpose of providing qualified management for the Bank. Prior to the entry of
the Consent Order, the Board conducted such meetings, but will now require more
detailed management reports. The Board is in the process of developing a
management plan and evaluating the structure and composition of current Bank
management. The Board has also developed an education plan for
itself.
During the life of the Consent Order,
the Bank shall not add any individual to the Bank’s Board of Directors or employ
any individual as a senior executive officer without the prior non-objection of
the FDIC and the OFR. The Bank has been subject to this requirement since 2008;
therefore, this requirement will have no affect on the Bank’s
operations.
Within 90 days of the effective date of
the Consent Order and, thereafter, during the life of the Consent Order, the
Bank shall achieve and maintain a Tier 1 Leverage Capital Ratio of not less than
8% and a Total Risk Based Capital Ratio of not less than 11%. In the event such
ratios fall below such levels, the Bank shall notify the FDIC and the OFR and
shall increase capital in an amount sufficient to reach the required ratios
within 90 days of such notice. At December 31, 2009, the Bank’s Tier 1 Leverage
Capital Ratio was 4.06% and its Total Risk Based Capital Ratio was 7.68%. The
Company is exploring strategic alternatives intended to result in attaining such
capital ratios, but uncertain regarding its ability to reach those levels by the
April 7, 2010 deadline.
The Bank
shall also be required to maintain a fully funded Allowance for Loan and Lease
Losses (“ALLL”), the adequacy of which shall be satisfactory to the FDIC and the
OFR. The Board of Directors shall review the adequacy of the ALLL and establish
a comprehensive policy for determining the adequacy of the ALLL consistent with
regulatory policies. A deficiency in the ALLL shall be remedied in the calendar
quarter it is discovered. The Bank’s policy for determining the adequacy of the
Bank’s ALLL and its implementation shall be satisfactory to the Supervisory
Authorities as determined at subsequent examinations and/or visitations. The
Bank has always endeavored to maintain a fully funded, adequate ALLL. Regulatory
review of the ALLL has not always been consistent from examination/visitation to
examination/visitation and has not always seemed to be in accordance with
generally accepted accounting principles or written regulatory guidance or
regulations, so the Bank anticipates possibly being requested to make further
adjustments to the ALLL depending on the affiliation (FDIC or OFR), identity, or
attitudes of future examination or visitation staff. As of the date of the
Consent Order, the Bank believes its ALLL is adequate.
Pursuant to the Consent Order, the Bank
must review, revise and adopt its written liquidity, contingency funding and
funds management policy to provide effective guidance and control over the
Bank’s funds management activities. The Bank must also implement adequate models
for managing liquidity; and, calculate monthly the liquidity and dependency
ratios. The Bank has revised such policies and is refining its practices and
procedures in these areas. The Bank expects that these actions will improve the
Bank’s liquidity, contingency funding and funds management
practices.
Throughout the life of the Consent
Order, the Bank shall not accept, renew, or rollover any brokered deposit, and
comply with the restrictions on the effective yields on deposits exceeding
national averages. The Bank has not accepted, renewed or rolled over any
brokered deposits since July 2009; therefore, that restriction is not expected
to alter the Bank’s current deposit gathering activities. With respect to the
yield limitations, it is possible
that the
Bank could experience a decrease in deposit inflows, or the migration of current
deposits to competitor institutions, if other institutions offer higher interest
rates than those permitted to be offered by the Bank.
While the Consent Order is in effect,
the Bank shall notify the FDIC and the OFR, at least, 60 days prior to
undertaking asset growth in excess of 10% or more per annum or initiating
material changes in asset or liability composition. The Bank anticipates no such
changes.
While the Consent Order is in effect,
the Bank shall not declare or pay dividends, interest payments on subordinated
debentures or any other form of payment representing a reduction in capital
without the prior written approval of the Supervisory Authorities. The Bank has
not made any payments on its subordinated debentures since June 2009 and has not
paid a dividend to the Company since April 2009. Therefore, this restriction is
not expected to affect the Bank’s operations.
While the Consent Order remains in
effect, the Bank shall, within 30 days of the receipt of any official Report of
Examination, eliminate from its books any remaining balance of any assets
classified “Loss” and 50% percent of those classified “Doubtful”, unless
otherwise approved in writing by the FDIC and the OFR. Within 60 days from the
effective date of the Consent Order, the Bank shall formulate a plan, subject to
approval by the FDIC and the OFR, to reduce the Bank’s risk exposure in each
asset, or relationship in excess of $500,000 classified “Substandard” by the
FDIC in November 2008. The Bank had made such adjustments prior to entry of the
Consent Order and the Bank has been attempting to reduce its risk exposure in
all “Substandard” assets. Therefore, these requirements are not expected to
affect the Bank’s operations.
The Bank
shall also reduce the aggregate balance of assets classified “Substandard” by
the FDIC in November 2008, in accordance with the following schedule: (i) within
90 days to not more than 100% of Tier 1 capital plus the ALLL; (ii) within 180
days to not more than 85% of Tier 1 capital plus the ALLL; (iii) within 270 days
to not more than 60% of Tier 1 capital plus the ALLL; and (iv) Within 360 days
to not more than 50% of Tier 1 capital plus the ALLL. The Bank is on schedule to
meet the first and second targeted goals. The Bank anticipates needing to
increase its Tier 1 capital or successfully work out an appropriate amount of
“Substandard” assets to meet the third and fourth targeted ratios. Bank
management is actively trying to reduce the amount of “Substandard” assets and
the Company is exploring strategic alternatives intended to result in increasing
the Bank’s Tier 1 capital.
Beginning with the effective date of
the Consent Order, the Bank shall not extend any credit to, or for the benefit
of, any borrower who has a loan that has been charged off or classified “Loss”
or “Doubtful” and is uncollected. Additionally, during the life of the Consent
Order, the Bank shall not extend, directly or indirectly, any additional credit
to, or for the benefit of, any borrower who has a loan or other extension of
credit from the Bank that has been classified “Substandard”, and is uncollected,
unless the Bank documents that such extension of credit is in the Bank’s best
interest. Prior to, and following, the entry of the Consent Order, the Bank had,
and has, no intention of extending credit to such borrowers in violation of
these requirement. Accordingly, such requirement will not affect the Bank’s
operations.
Within 30 days from the effective date
of the Consent Order, the Bank will engage a loan review analyst who shall
review all loans exceeding $500,000. The Bank has engaged an outside loan review
analyst. The results of its review are expected to assist the Bank in working
out classified assets and may result in positive or negative changes to certain
loan classifications.
Within 60 days from the effective date
of the Consent Order, the Bank shall revise, adopt, and implement a written
lending, underwriting and collection policy to provide effective guidance and
control over the Bank’s lending function. In addition, the Bank shall obtain
adequate and current documentation for all loans in the Bank’s loan portfolio.
Within 30 days from the effective date of the Consent Order, the Board shall
adopt and implement a policy limiting the use of loan interest reserves to
certain types of loans. The Bank has consistently obtained adequate and current
documentation for its loans. The Bank has developed the required policies, which
are expected to assist management in improving the management of the relevant
aspects of the Bank’s operations.
Within 60
days from the effective date of the Consent Order, the Bank shall perform a risk
segmentation analysis with respect to the any other concentration deemed
important by the Bank. The plan shall establish appropriate commercial real
estate (“CRE”) lending risk limits and monitor concentrations of risk in
relation to capital. The Bank is in the process of performing this analysis.
Based on the level of attention the Bank has paid to its CRE lending program,
including the cessation of CRE lending in January 2009, this analysis is not
expected to have any impact on the Bank’s operations. It may, however, result in
positive or negative changes to certain loan classifications.
Within 30 days from the effective date
of the Consent Order, the Bank shall formulate and fully implement a written
plan and a comprehensive budget. Within 60 days from the effective date of the
Consent Order, the Bank
shall prepare and submit to the FDIC
and the OFR for comment a business strategic plan covering the overall operation
of the Bank. The Bank has prepared a strategic plan and budget and submitted
them as required. Since the Bank has prepared a strategic plan and budget each
year since opening, this requirement is not expected to change the nature of the
Bank’s operations.
Within 30 days of the end of each
calendar quarter following the effective date of the Consent Order, the Bank
shall furnish written progress reports to the FDIC and the OFR detailing the
form, manner, and results of any actions taken to secure compliance. The Bank
will prepare and submit such reports. This is expected to have minimal impact on
the Bank’s operations and financial results.
ITEM
8.01. Other Events.
On January 13, 2010, Atlantic
BancGroup, Inc. issued a press release concerning the Consent Order. A copy of
the press release is furnished with this report as Exhibit 99.1
ITEM
9.01. Financial Statements and Exhibits.
(c)
Exhibits.
The
following exhibits are being filed or furnished with this Report (and are
incorporated by reference from the Company’s Form 8-K filed on January 13,
2010):
10.9 Stipulation
to Entry of Consent Order and Consent Order.
99.1 Press
Release (solely furnished and not filed for purposes of Item 9.01).
Date: April
9, 2010
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Atlantic BancGroup,
Inc.
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(Registrant)
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By:
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/s/ Barry W.
Chandler
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Barry
W. Chandler
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Principal
Executive Officer
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Atlantic Bancgrp. (MM) (NASDAQ:ATBC)
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