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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
SEC FILE NUMBER: 0-24626
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CUSIP NUMBER: 216844 100
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(Check One): [X] Form 10-K [ ] Form 20-F [ ] Form 11-K [ ] Form 10-Q
[ ] Form 10-D [ ] Form N-SAR [ ] Form N-CSR
For Period Ended: DECEMBER 31, 2008
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[ ] Transition Report on Form 10-K [ ] Transition Report on Form 10-Q
[ ] Transition Report on Form 20-F [ ] Transition Report on Form N-SAR
[ ] Transition Report on Form 11-K
For the Transition Period Ended:
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READ INSTRUCTION (ON BACK PAGE) BEFORE PREPARING FORM. PLEASE PRINT OR
TYPE.
NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE COMMISSION
HAS VERIFIED ANY INFORMATION CONTAINED HEREIN.
If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:
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PART I - REGISTRANT INFORMATION
Full name of Registrant COOPERATIVE BANKSHARES, INC.
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Former Name if Applicable
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Address of Principal Executive Office (Street and Number) 201 MARKET STREET
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City, State and Zip Code WILMINGTON, NORTH CAROLINA 28401
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PART II - RULE 12b-25 (b) AND (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate).
(a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or
expense;
[ ] (b) The subject annual report, semi-annual report, transition
report on Form 10-K, Form 20-F, Form 11-K, Form N-SAR or Form
N-CSR, or portion thereof, will be filed on or before the
fifteenth calendar day following the prescribed due date; or
the subject quarterly report or transition report on Form 10-Q
or subject distribution report on Form 10-D, or portion
thereof, will be filed on or before the fifth calendar day
following the prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
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PART III - NARRATIVE
State below in reasonable detail why the Form 10-K, 20-F, 11-K, 10-Q,
10-D, N-SAR, N-CSR, or the transition report or portion thereof, could not be
filed within the prescribed time period.
(Attach extra sheets if needed.)
Cooperative Bankshares, Inc. ("Bankshares," "we," "our" or the
"Company") determined that it was unable to file its Annual Report on Form 10-K
for the year ended December 31, 2008 (the "Form 10-K") with the U.S. Securities
and Exchange Commission (the "SEC") by the March 31, 2009 due date. This notice
contains selected preliminary unaudited financial information about our results
of operations for such period which is subject to change in our Form 10-K.
We are not able to file a timely Form 10-K because we have not
completed our consolidated financial statements and related disclosures for the
year ended December 31, 2008. The deterioration of the economy in general, the
securities markets as well the real estate markets in which the Company conducts
its business specifically, have resulted in additional accounting complexities
and disclosures and has caused the Company to (1) have a third-party perform an
independent assessment of its loan portfolio and the level of its allowance for
loan losses; (2) have a third-party perform an independent impairment analysis
of its goodwill asset; (3) undertake various actions designed to improve its
capital position and to engage an investment banker and financial advisors to
assist with both this effort as well as to evaluate the Company's strategic
options, including a possible sale or merger of the Company; and (4) determine
the necessity of establishing a valuation allowance with respect to its $13.5
million deferred tax asset.
As previously reported in the Company's Form 8-K filed with the SEC on
March 18, 2009, the Company's wholly owned subsidiary, Cooperative Bank (the
"Bank"), entered into a Stipulation and Consent to the Issuance of an Order to
Cease and Desist with the Federal Deposit Insurance Corporation (the "FDIC") and
the North Carolina Commissioner of Banks (the "Commissioner"), whereby the Bank
consented to the issuance of an Order to Cease and Desist (the "Order")
promulgated by the FDIC and the Commissioner. Under the terms of the Order, the
Bank is required to prepare and submit various written plans and/or reports to
the FDIC and the Commissioner and to undertake a number of other corrective
actions, which actions are more fully discussed in the aforementioned Form 8-K.
The combination of these events has resulted in the Company being
required to expend substantial additional time and effort in order to complete
its financial statements and for its independent auditors to complete their
external audit of the Company's financial statements. The Company currently
anticipates filing its Form 10-K for the year ended December 31, 2008 with the
SEC in April 2009.
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PART IV -- OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
TODD L. SAMMONS (910) 343-0181
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(Name) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d)
of the Securities Exchange Act of 1934 or Section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If answer is no,
identify report(s). [ X ] Yes [ ] No
(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject report or
portion thereof? [ X ] Yes [ ] No
If so: attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the reasons why a
reasonable estimate of the results cannot be made.
The Company expects that its results of operations for the year ended
December 31, 2008 will be significantly different from the results of operations
for the year ended December 31, 2007. The Company expects to report a loss for
fiscal 2008, currently estimated as of the date hereof to amount to
approximately $30.6 million, compared to net income of $8.1 million for fiscal
2007. The loss for 2008 is primarily a result of an estimated provision for loan
losses of $35.7 million, an estimated loss on investments of $9.6 million (which
includes an other-than-temporary impairment charge on available for sale
securities of $9.1 million), estimated goodwill impairment charges of $5.5
million, and estimated lower interest income on loans primarily as a result of
the repricing downward of the yields on the Bank's loans due to the rate changes
implemented by the Board of Governors of the Federal Reserve System combined
with a substantial increase in nonperforming loans, which are expected to be
$80.5 million at December 31, 2008 compared to $5.6 million at December 31,
2007. Actual results for December 31, 2008 may reflect a larger loss than is
estimated above. In particular, the Company may record a larger provision for
loan losses than as estimated above and/or a valuation allowance on its $13.5
million deferred tax asset. Additionally, because of the Company's cumulative
losses and its liquidity and capital positions, the Bank's state and federal
banking regulators may take additional significant regulatory action against the
Bank that could, among other things, materially adversely impact the Company's
shareholders.
As previously reported, the Company believes that it needs to raise a
minimum of $25.0 million of additional capital, assuming no material increase in
the estimated loss for 2008 and no materials change in the amount and
composition of its risk-weighed assets or its capital position, in order to be
capitalized at the levels required by the Order. Also as previously reported,
the Company has engaged an investment banker and financial advisors to assist
with its capital raising efforts and to evaluate the Company's strategic
options. While these efforts remain ongoing, to date, the Company has neither
raised additional capital, nor entered into a binding agreement to raise any
additional capital, nor agreed to a sale, and no assurances can be made as to
when or whether the foregoing will occur, or if a potential acquiror will be
identified. If the Company is unable to enter into a binding agreement to raise
sufficient capital or an agreement pursuant to which it would be acquired, the
Company, in connection with the issuance of its audited consolidated financial
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statements for the year ended December 31, 2008, expects receiving from its
independent auditor an opinion expressing substantial doubt about its ability to
continue as a going concern.
Note Regarding Forward-Looking Statements
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This document, as well as other written communications made from time
to time by Cooperative Bankshares, Inc. and subsidiaries and oral communications
made from time to time by authorized officers of the Company, may contain
statements relating to the future results of the Company (including certain
projections, such as earnings projections, necessary tax provisions, and
business trends) that are considered "forward looking statements" as defined in
the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Such
forward-looking statements may be identified by the use of such words as
"intend," "believe," "expect," "should," "planned," "estimated," and
"potential." For these statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the PSLRA. The Company's
ability to predict future results is inherently uncertain and the Company
cautions you that a number of important factors could cause actual results to
differ materially from those currently anticipated in any forward-looking
statement. These factors include but are not limited to:
o Recent and future bail-out actions by the government;
o A further slowdown in the national and North Carolina economies;
o A further deterioration in asset values locally and nationwide;
o The volatility of rate sensitive deposits;
o Changes in the regulatory environment;
o Governmental action as a result of our inability to comply with
regulatory orders and agreements;
o Increasing competitive pressure in the banking industry;
o Operational risks including data processing system failures or fraud;
o Asset/liability matching risks and liquidity risks;
o Continued access to liquidity sources;
o Changes in our borrowers' performance on loans;
o Changes in critical accounting policies and judgments;
o Changes in accounting policies or procedures as may be required by the
Financial Accounting o Standards Board or other regulatory agencies;
o Changes in the equity and debt securities markets;
o The effect of additional provisions for loan losses;
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o The effect of an impairment charge on our deferred tax asset;
o Fluctuations in our stock price;
o The success and timing of implementation of our business strategies;
o The impact of reputation risk created by these developments on such
matters as business generation o and retention, funding and liquidity;
o The impact of regulatory restrictions on our ability to receive
dividends from our subsidiaries; and
o Political developments, wars or other hostilities may disrupt or
increase volatility in securities or otherwise affect economic
conditions.
The consequences of these factors, any of which could hurt our
business, could include, among others:
o Because of the Company's cumulative losses and its liquidity and
capital positions, the FDIC and/or the Commissioner may take additional
significant regulatory action against the Bank;
o Our inability to continue to operate as a going concern;
o Increased loan delinquencies;
o An escalation in problem assets and foreclosures;
o A decline in demand for our products and services;
o A reduction in the value of the collateral for loans made by us,
especially real estate, which, in turn would likely reduce our
customers' borrowing power and the value of assets and collateral
o associated with our existing loans;
o A reduction in the value of certain assets held by us;
o An inability to meet our liquidity needs;
o An inability to raise capital to comply with the requirements of our
regulators and for continued o support of operations;
o An inability to make or defer payments on our trust preferred
securities; and
o An inability to engage in certain lines of business.
Stockholders are cautioned not to place undue reliance on such
statements, which speak only as of the date of those documents. All subsequent
written and oral forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by the cautionary
statements above. Except to the extent required by applicable law or regulation,
the Company does not undertake any obligation to update any forward-looking
statement to reflect circumstances or events that occur after the date the
forward-looking statements are made.
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COOPERATIVE BANKSHARES, INC.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date April 1, 2009 By: /s/ Todd L. Sammons
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Todd L. Sammons
Chief Financial Officer and Interim
President and Chief Executive Officer
INSTRUCTIONS: The form may be signed by an executive officer of the registrant
or by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.