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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): February 13, 2009
COOPERATIVE BANKSHARES, INC.
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(Exact name of registrant as specified in charter)
NORTH CAROLINA 0-24626 56-1886527
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
201 MARKET STREET, WILMINGTON, NORTH CAROLINA 28401
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (910) 343-0181
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 8.01 OTHER EVENTS.
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Cooperative Bank (the "Bank"), the wholly owned subsidiary of
Cooperative Bankshares, Inc. (the "Company"), has been notified by the Federal
Deposit Insurance Corporation (the "FDIC") that, based on the tentative findings
of the FDIC and North Carolina Commissioner of Banks, the Bank is considered to
be in "troubled condition". As a result, the Bank is required to provide the
FDIC with prior notification for any additions to the Board or senior executive
management of the Bank. The Bank was also notified by the FDIC that the Bank's
capital ratios as of December 31, 2008 render the Bank "undercapitalized"
pursuant to Part 325 of the FDIC Rules and Regulations. Accordingly, the Bank is
now subject to restrictions on asset growth, dividends, other capital
distributions and management fees. These restrictions will generally prevent the
Bank, as an undercapitalized institution, from allowing its average total assets
during any calendar quarter to exceed its average total assets during the
preceding calendar quarter except in limited circumstances. Additionally, these
restrictions will generally prohibit the Bank from making any capital
distribution or dividend or paying any management fee to any individual having
control of the Bank so long as it remains "undercapitalized" under applicable
FDIC regulations. The Bank will also be required to file a written capital
restoration plan with the FDIC Regional Director within 45 days including all of
the required information set forth in Section 38(e)(2)(B) of the Federal Deposit
Insurance Act.
In addition, the Bank may not accept, renew or roll over any brokered
deposit. The Bank may also not solicit deposits by offering an effective yield
that exceeds by more than 75 basis points the prevailing effective yields on
insured deposits of comparable maturity in the Bank's normal market area or in
the market area in which such deposits are being solicited.
The Bank has also been verbally informed by the Federal Home Loan Bank
of Atlanta (the "FHLB") that it has reduced its FHLB line of credit from $181.3
million to $168.1 million, which, as of the date of this report, is the amount
currently outstanding.
The Company has also been notified by the Federal Reserve Bank of
Richmond (the "FRB") that the overall condition of the Company and the Bank is
less than satisfactory. As a result, prior to the payment of any capital
distribution, such as stockholder dividends, or the payment of any debt service,
including payments related to any outstanding trust preferred securities, the
Company must obtain prior written approval from the FRB. Additionally, the
Company will be required to comply with (i) the provisions of Section 32 of the
Federal Deposit Insurance Act and Section 225.71 of the Rules and Regulations of
the Board of Governors of the Federal Reserve System with respect to the
appointment of any new Company directors or the hiring or change in position of
any Company senior executive officer and (ii) the restrictions on making "golden
parachute" payments set forth in Section 18(k) of the Federal Deposit Insurance
Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COOPERATIVE BANKSHARES, INC.
/s/ Todd L. Sammons
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Todd L. Sammons
Interim President and Chief Executive
Officer and Chief Financial Officer
Date: February 13, 2009