UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): May 12, 2010
CORNERSTONE BANCORP
Incorporated under the Commission File No. 000-51950 I.R.S. Employer
laws of South Carolina Identification No.
57-1077978
1670 East Main Street
Easley, South Carolina 29640
Telephone: (864) 306-1444
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))
Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
On May 12, 2010, Cornerstone National Bank, the wholly-owned subsidiary
of Cornerstone Bancorp, entered into a formal agreement with the Office of the
Comptroller of the Currency (the "OCC") for the bank to take various actions
with respect to the operation of the bank. The actions include:
(a) creation of a committee of the bank's board of directors to
monitor compliance with the agreement and make quarterly reports
to the board of directors and the OCC;
(b) assessment and evaluation of management and members of the board;
(c) development, implementation and adherence to a written program to
improve the bank's loan portfolio management;
(d) protection of its interest in its criticized assets (those assets
classified as "loss," "doubtful," "substandard," or "special
mention" by internal or external loan review or examination), and
adoption, implementation and adherence to a written program
designed to eliminate the basis of the criticism, as well as
restricting further extensions of credit to borrowers whose loans
are subject to criticism;
(e) adoption, implementation and adherence to a written concentration
management program that appropriately identifies and manages
concentrations of credit risk;
(f) development and implementation of a written strategy to reduce
commercial real estate concentrations;
(g) adoption, implementation and adherence to a strategic plan, and
adoption, implementation and adherence to a capital program and a
profit plan consistent with the strategic plan;
(h) ensuring that the level of liquidity at the bank is sufficient to
sustain the bank's current operations and withstand any
anticipated or extraordinary demand; and
(i) obtaining a determination of no supervisory objection from the
OCC before accepting brokered deposits.
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Additionally, the bank is required by the agreement to submit numerous
periodic reports to the OCC regarding various aspects of the foregoing actions.
The agreement resulted from the OCC's examination of the bank begun in
the fourth quarter of 2009. Since the early part of 2009, the bank has
experienced an increase in criticized assets as the economy in the bank's
primary lending areas has come under increasing downward pressure. The
substantive actions called for by the agreement should strengthen the bank and
make it more efficient in the long-term. Implementation of the agreement will
increase the bank's administrative costs somewhat in the near-term, but the
amount of such increase is not expected to be material to the Registrant.
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SIGNATURE
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.
CORNERSTONE BANCORP
(Registrant)
Date: May 17, 2010 By: /s/ J. Rodger Anthony
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J. Rodger Anthony
President and Chief Executive Officer
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