Restrictions on Subsidiary Dividends, Loans, or Advances

12 Months Ended

Dec. 31, 2015

Restrictions on Subsidiary Dividends, Loans, or Advances

Restrictions on Subsidiary Dividends, Loans, or Advances

Note 16—Restrictions on Subsidiary Dividends, Loans, or Advances

The Company pays cash dividends to shareholders from its assets, which are mainly provided by dividends from its banking subsidiary. However, certain restrictions exist regarding the ability of its subsidiary to transfer funds to the Company in form of cash dividends, loans or advances. The approval of the South Carolina Board of Financial Institutions (“SCBFI”) is required to pay dividends that exceed current year’s net income. The Federal Reserve Board, the OCC, and the FDIC have issued policy statements which provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.

During January 2013, the Bank requested and received approval, from the SCBFI, to pay a special dividend of $5.0 million to the Company in order to provide working capital and the funds needed to pay the quarterly dividend to its shareholders in February of 2013. In January 2014, the Bank requested and received approval from the SCBFI to pay a special dividend of $31.4 million. These funds were used to redeem $65.0 million of outstanding preferred stock.  In January 2015, the Bank paid a special dividend to the Company of $45.0 million for which SCBFI approval was not required.  These funds were used to redeem $46.3 million in trust preferred securities.

Under Federal Reserve regulations, the bank is also limited as to the amount it may lend to the Company. The maximum amount available for transfer from the bank to the Company in the form of loans or advances was approximately $108.9 million and $107.0 million at December 31, 2015 and 2014, respectively.