GSA Daily Staff Report
Published Dec. 11, 2009

The South Financial Group must improve its stock price, which has fallen to 55 cents a share, or face delisting by the Nasdaq Stock Market.

The Greenville-based company said Thursday it received notice from the Nasdaq Stock Market on Dec. 4 that it is in noncompliance of minimum bid price requirements. Under those requirements, stock prices must not drop below $1 per share for more than 30 consecutive business days.

“This is a technical requirement of the Nasdaq stock market, and we’ll likely have close to a year to resolve it,” said South Financial CFO James Gordon, in a prepared statement. “We are actively monitoring our active stock price and will consider multiple options to comply with Nasdaq’s requirement.”

South Financial’s stock must trade above $1 for 10 consecutive business days, and the company has 180 days to make that happen, or until June 2. If South Financial is not in compliance by then, Nasdaq will send another notice.

At that point, South Financial could appeal the delisting to a Nasdaq hearings panel. Or, South Financial could receive a second 180-day grace period if it applies to transfer its listing to the Nasdaq Capital Market. South Financial stock currently trades at the Nasdaq Global Select Market.

TSFG stock last topped $1 on Oct. 21, closing at $1.01 per share. That was a 30% drop from the day before, when South Financial reported its third-quarter financial results after the market closed.

The company lost $340.8 million in the third quarter, the largest of seven consecutive quarterly losses dating to the beginning of 2008. Since the first quarter of 2008, South Financial has now lost $1.1 billion, including $543.1 million in the first three quarters of 2009. The company lost $562.5 million last year.

Bad loans and related costs continue to be the problem.

South Financial continues to deploy a turnaround strategy focused on improving capital, addressing problem credit, strengthening liquidity, reducing expenses and non-core loans and returning to its roots as a relationship-based bank, President and CEO Lynn Harton said during a previous interview with GSA Business.

In the third quarter, the bank reduced its nonperforming assets for the first time in this cycle, Harton noted. While doing so resulted in higher losses for the third quarter, it gives the bank a stronger footing for the future, he said.

The next day, the company released its third quarter financial results and the stock started to drop.