SC Bancorp Shareholders Seek to Boost Value

Shareholders of SC Bancorp, apparently distressed by the bank holding company’s stagnant earnings and stock price, are discussing ways to boost their fortunes, according to a document filed Monday with the U.S. Securities and Exchange Commission.

The principals of Basswood Partners LP in Paramus, N.J., which owns 9.5% of SC Bancorp, are talking with other shareholders and “other parties” about “methods for enhancing shareholder value,” the document states.

The language that Basswood used “usually reflects a shareholder desire to find a merger partner to create a new business plan for operating efficiency or to augment management,” said banking industry consultant Edward J. Carpenter of Irvine.

“There are only three ways of increasing value: add to management, create strong operating efficiencies or sell the company,” he said.

Banks the size of Southern California Bank, which has more than $450 million in loans and other assets, are attractive takeover targets for aggressive buyers on the prowl to build a regional operation quickly. For nearly two years, both local and out-of-state bankers have been buying Orange County banks.

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Executives at SC Bancorp, which owns Southern California Bank, one of Orange County’s largest community banks, have been aware of Basswood’s desires.

“Our shareholders expect a pretty strong return on their investment, and some have voiced the expectation that we could be doing better,” said Bruce Roat, the company’s chief financial officer. But corporate officials don’t know much about Basswood’s talks with shareholders and others, he said.

Executives at Basswood, which manages a bank investment fund, couldn’t be reached for comment.

The investment firm said early last September that it had bought 6.3% of SC Bancorp, which was believed at the time to be one of the most underpriced bank stocks in Orange County. Its stock had hit a 12-month low of $4.75 a share in August.

But at the end of September, the bank announced a major restructuring that resulted in a $2.8-million charge against earnings for restructuring costs and for loan loss reserves. It lost $908,000 for the third quarter, but ended 1995 with a modest profit of $869,000.

Basswood continued to buy stock, and the price hit a 12-month high of $7.25 a share in April. The stock closed Monday at $6.625 a share, up 12.5 cents from Friday’s close on the American Stock Exchange.