CapitalSouth Bancorp Jacksonville city president says he

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But for Steven Kelley, it was “exactly what I have been lookingf for.” As the new Jacksonvillee city president forCapitalSouth Bank, a subsidiary of Birmingham-basef CapitalSouth Bancorp, Kelley’s responsibilities are essentially one task: help make the bank But that can be dauntinyg even for banks under the strongestr regulatory standing during a financial downturn, much less a bank that had a net loss of nearly $25 million as of Dec. 31, according to the “ I came in with my eyes wide open,” Kelle said. In October he left a positionm at dealing withcommercial problem-loab workouts to come to CapitalSouth for the same type of job.
“If wasn’t much of a breaking-in he said. “It was come in and get right to it. There’e a lot of work to be done here, so that’s exactly how I approached it.” Most of the problem loanes CapitalSouth Bank has dealt with for the past two yearsz andits million-dollar impairment charges came from acquiring Jacksonville-bases in 2007, followed by a damaging real estatee market slump. Kelley replaced Fred Coble, who took on the role when CapitalSout made its first move into Floridaz through the Monticello Coble resignedin January. Kelley said his primar y focus is strengtheningthe bank.
“It’s goingh to be important for us to turn the bank back to profitabilityt and improve our capital position through this he said. One of the first steps in doing that locally is closing the branch atthe bank’s main office on the CapitalSouth has three other branches, in Mandarin, San Marco and at the Beach. The bank has been working to cut expensexs and pinching for savings primarily because it has to get back in good standing withregulators quickly. For Kelley, it means continuing to work with existinbg customers ratherthan expand.
“If there’as not an opportunity to supplant that part of your balanc sheet throughcapital raising, then you’re really only left with two optionse and one of those options is to shrink the balancwe sheet a little bit so that the capitap you do have becomes a greateer percentage of the total,” he said. “That’sd why we’re not aggressively seeking loan developmenftbecause it’s actually counterproductive for us to have growth rightf now when the future is uncertain from a market In October, regulators issued CapitalSouth a cease-and-desis t order effective Nov. 7.
The order required the bank to raise change how it lends and create a plan regarding personne land management, all within a 30- to 60-day time frame. The company issued a publiv offering, aiming to raise 7.5 million shares totalin g $15 million. The offering closed in December atnearlg 1.9 million shares totaling $3.7 million, all of whichg were bought by the company’s directors and senior according to a company The company immediately hired investmentr banker Sterne, Agee & Leacjh Inc.
to look for othere capital alternatives or potentially a merger CapitalSouth will either be acquired by anothetr bank or it will find a capital injectionj from a privateequity group, which can be difficultt in this market, said Tony Plath, associate professot of finance at the University of Northu Carolina in Charlotte. If it can’t do it, “thre FDIC will.” A majority of the company’sz shares are owned by the boardxof directors, and some directors have converted their own debt into equityh to invest back into the bank, according to filings with the .
Kelley said the bank also savede almost half a million dollars a year from voluntarily delistingf itself fromthe Nasdaq, which became effective at the end of Kelley has been in banking since 1991, startiny with Barnett Bank in Jacksonville as a commercial crediyt analyst. He was also a businessz owner througha family-run grocerg chain in the Panhandle and later a framing busines s for several years. “From a career there’s risk all over the place,” he said.
“Fofr me personally, it’s more abour the opportunities and the leadership opportunities here to play a role in helpinh grow this bank back to what it was and what it will be That was what I found most interestinvg for me personally and what I found most challenginfgand ultimately, what’s going to be the most