East: Under pressure
Serving on the board of directors has proven a lucrative business at First South Bank, a Washington, N.C.-based community bank with $885 million in assets. Too lucrative, says Greenville insurance-company owner Phil Lewis, whose recent shareholder resolution presses the bank’s board to “achieve a sale, merger or other disposition of the company,” according to a filing with the Securities and Exchange Commission. After the bank protested, the SEC ruled the resolution must be considered at First South’s annual meeting on May 26.
Lewis’ SEC filing contends that First South has modest profits, high expenses and an ineffectual board. First South’s arc mirrors many North Carolina community banks, except it has remained independent while several others with assets of less than $1 billion have sold out to larger rivals. The bank’s share price increased about sixfold between 2000 and mid-2006. Profit peaked at $17 million in 2007.
But the ensuing recession hammered eastern North Carolina and First South’s loan portfolio. Thomas Vann, who had led the bank since 1975, retired in 2012. First South reported a $10 million loss that year. While the bank has recovered along with the economy, earning $4.7 million last year, its stock trades at about the same level as 2001.
Over the years, First South increased the maximum age of a director from 70 to 85, enabling members Frederick Howdy and Linley Gibbs Jr., both 84; Charles Parker Jr., 79; and Marshall Singleton, 76, to remain on the board. (Gibbs retired in March.) Six directors were paid fees of $45,000 to $56,000 in 2015, while Parker, Singleton and Frederick Holscher received additional deferred compensation of about $140,000. Southern Pines-based First Bancorp, triple First South’s size, paid its directors $37,000 to $44,000 last year.
Lewis also criticizes retirement plans enabling larger gains for veteran directors. Holscher, 67, a Beaufort County lawyer who has been on the board since 1985, is in line for more than $1.1 million of deferred compensation.
In its proxy response, First South called Lewis’ proposal “ill-advised and unwarranted” and said it would cause uncertainty and possible employee defections and lost business. CEO Bruce Elder rebuffs Lewis’ view that the directors lack banking expertise. “The board has navigated various economic conditions that the bank has faced over the last decades. To say there is no experience is misguided.”
East Carolina University wants to prove it can keep up with the big boys of college sports, announcing plans for a $55 million renovation to Dowdy-Ficklen Stadium. The project will add 1,000 premium seats on the football stadium’s south side, including 670 in a new club level with a lounge and guest suites. Plans also call for a new press box and an 8,000-square-foot Field Level Club. The renovations will be financed through fundraising and sales of new premium seat tickets. Construction is expected to be complete before the 2018 home opener.
ELM CITY – Nexans will close its local plant and lay off all 103 employees by June 30. The Paris-based company has made cable for the aerospace and defense industries at the Wilson County plant since 1956.
KINSTON – UNC Health Care will enter a management-services agreement with the 261-bed Lenoir Memorial Hospital. The Chapel Hill-based health care system entered a similar agreement with Goldsboro’s Wayne Memorial Hospital in December.
WILMINGTON – Jack Barto will retire as CEO of New Hanover Regional Medical Center by June 2017. Barto has led the 769-bed hospital since 2004. Chief Operating Officer John Gizdic, 46, will succeed him.
WILMINGTON – AAIPharma Services/Cambridge Major Laboratories rebranded as Alcami. Based here since 1986, AAIPharma merged with Germantown, Wis.-based CML in 2013. The pharmaceutical-services company is undertaking a $15.8 million expansion of its local headquarters and labs, expected to be complete in 2019.
WILMINGTON – Paul Townend was named associate vice chancellor and dean of undergraduate studies at UNC Wilmington. A graduate of Colgate University with a master’s and Ph.D. from the University of Chicago, he has been an associate professor and chairman of the Department of History since 2008.
WHITEVILLE – Nicholasville, Ky.-based R.J. Corman Railroad Group began rail service from here to Myrtle Beach, S.C. Corman last year paid $13.9 million for 89 miles of the line, which was previously owned by Carolina Southern and had been idle since 2011. Columbus County provided $1.8 million in incentives for Corman to purchase the railroad.