Greer State shuffles leadership

By Dick Hughes  

APRIL 11, 2011 1:59 p.m. (0)

Kenneth M. Harper has resigned as chief executive officer, president and board member of Greer State Bank, which has recorded losses for three consecutive years.

The board of directors elected Dennis Hennett, 68, to return as president and CEO to succeed Harper, 46.  Hennett was CEO of Greer State from its beginning in 1988 until February 2008 when he stepped aside and was succeeded by Harper.

After he resigned as CEO, Hennett continued as a member of the board and served as a consultant at $6,250 a quarter.

Because the bank is operating under a consent order of the FDIC, Hennett’s appointment must be approved by regulators.  In the interim, the bank said, executive duties are being performed by Richard Medlock Jr., executive vice president and chief financial officer.

The bank said Harper’s resignation from all positions was voluntary, and Board Chairman Walter M. Burch thanked him for his service and efforts “on behalf of the bank and the Greer community.”

Hennett pledged to “return the bank to satisfactory levels of financial performance for our shareholders.”

Weighed down with real estate loans that went bad in the recession, Greer State has had a rough three years.  It had net losses of $7.9 million in 2010, $1 million in 2009 and $5.4 million in 2008. It had a profit of $2.6 million in 2007.

As of Dec. 31, the bank had recorded allowance for loan losses of $7.5 million. It also said it had potential problem loans of $27.6 million, up from $19.5 million the end of 2009.

“Eleven residential and land development loan relationships totaling approximately $9.8 million were included in the potential problem loans,” the bank said.

The company said while these borrowers are meeting payment terms, they “have current appraisals indicating the collateral values exceed the loan balances.”

With approval of the Federal Reserve Bank of Richmond, Greer State deferred quarterly payment of dividends on some preferred securities and on the $10 million in TARP preferred shares sold to the U.S. Treasury.  The dividends eventually must be paid, plus interest.

By deferring payment of the dividend due Treasury in February, the bank preserved $136,000 in capital. It had met TARP dividend payments until that time.

Greer State has maintained the higher capital ratios, with one exception, required by the FDIC under the consent order and that under better financial conditions would be considered well capitalized.

Its critical risk-based ratio was 10.75 percent the end of December. The FDIC wants 10 percent to be well capitalized in a distressed situation; 8 percent is considered well capitalized under normal conditions.  It also is above the required risk-to-weighted asset ratio but below the ratio measuring capital to average assets.

Greer State has assets of $448 million.  It has three offices in Greer and one in Taylors.