Investors in Tidelands Bancshares Inc. have approved a proposal allowing the company to sell more stock to help raise as much as $35 million.
The Mount Pleasant-based owner of Tidelands Bank now can issue up to 75 million of its common shares, up from the previous limit of 10 million.
The proposal was put to a vote at the company's shareholders' meeting on Monday. Results were released Tuesday in a filing with the U.S. Securities and Exchange Commission.
More than 3.27 million votes were in favor of increasing the amount of stock the company can sell. That works out to about 86 percent of the nearly 3.8 million total votes cast.
"I think that's a pretty good endorsement that we're doing the right thing," said Robert E. Coffee, president and chief executive officer of Tidelands.
The bank sought the approval from investors to sell more shares in large part because it has been directed to raise cash under a "memorandum of understanding" it reached last November with the Federal Deposit Insurance Corp. and the S.C. Banking Department. That came after a key capital ratio at Tidelands fell short of what regulators wanted.
The bank last month submitted a plan to raise $35 million to boost its capital base. The timing of the stock sale, which is being underwritten by Sandler O'Neill + Partners, was not available Tuesday.
"We believe a strengthened capital position will provide us with the flexibility to address our nonperforming assets ... as well as positioning us to take advantage of long-term strategic opportunities that may become available to us after our financial condition and economic conditions improve," Tidelands said in a filing with the SEC.
The bank owner has about 4.3 million shares outstanding. If more stock is issued, current investors would see their stakes diluted unless they maintain them at existing levels.
Shares of Tidelands rose Tuesday, closing 9 cents higher at $2.49.
Like many banks, Tidelands still is smarting from the prolonged recession and the downturn in the coastal real estate market.
Its loss for 2009 more than doubled to $11.2 million, up from a $5 million deficit the previous year, as it had to set aside more money to cover potential loan losses.
Contact John McDermott at 937-5572 or email@example.com.