Rhode Island: A cautionary tale for SC

For all grief South Carolina Democrats give Gov. Mark Sanford about the Palmetto State’s economy, it’s important to remember that things are worse, sometimes much worse, in other states.

Take Rhode Island. According to a story in The Economist, “People are leaving the state in droves to find jobs. Others are being taxed out. The state government has been putting more pressure on a dwindling pool of taxpayers. The state has only 1 million residents, of whom only 465,000 are working. Some 8,300 families, with incomes of around $485 million subject to tax, left the state between 2005 and 2006.”

Rhode Island has a budget gap of $372 million for the year that ends on June 30th, among the highest in the country, according to Council of State Governments. 

The future looks even bleaker, The Economist reported. Revenue collections are down by $13.8 million. The Rhode Island Public Expenditure Council, an independent research group, says the state faces long-term deficits over the next decade.

The 2011 fiscal year will probably show a $156 million deficit. The gap will continue to widen to a potentially crippling $482 million in 2014.

The Tax Foundation, a non-partisan public-education outfit based in Washington, DC, has consistently judged Rhode Island’s tax climate to be one of the worst in the country.

Just how bad is the economy in “Little Rhody?” Pretty bad, according to The Economist:

“Today almost no homes … are being built in Rhode Island. Only 16 permits for single-family dwellings were issued in February in the whole state. In March 633 homes were in foreclosure. The job front looks even worse. Last September Rhode Island had the highest unemployment rate in the country, exceeding even Michigan. In March the rate was the sixth-highest in the country, 10.5%, compared with 8.5% nationally.

“Almost every sector has been affected. Jobs are so scarce that 200 people turned up recently at a job fair hosted by Foxy Lady, a Providence strip club. But the current misery comes on top of long-term decline. The state’s once thriving manufacturing industry has been fading for decades, with production slowing and working hours cut. Manufacturing lay-offs were persistent, even during good times; and good times have not been seen in the state for almost two years. Rhode Island entered the recession six months before the rest of the country.”

All of which is food for thought the next time the anti-Sanfordites take the governor to task for his strict adherence to fiscal conservatism.

Paying down debt, laying the groundwork for a sound business environment and trying to set aside money for a “rainy day” doesn’t win you a lot of fans in the legislature, but it sure beats the heck out of watching your state become an economic wasteland.

First Reliance sees profits plummet

First Reliance Bancshares of Florence, SC, saw its net income drop sharply during first quarter 2009, to $13,865 from $826,123 during the same period in 2008.

The company’s provision for loan losses rose to $1.3 million from $501,603 in 2008, according to information filed with the Securities and Exchange Commission.

The net result available to shareholders was a loss of $58,403, representing a loss of 2 cents a share.

“The commercial and real estate construction industry in our coastal region has been the hardest hit causing us to be prudent and build up our loan loss provisions,” Chief Executive Rick Saunders said in a statement. “We are taking a very conservative approach to our business until we see more consistent and positive trends in our communities’ economic indicators.”

First Reliance stock closed Tuesday at $4.50 a share. The company’s 52-week high is $12.90.

Beach First posts $5 million loss

The slumping economy has been hard on the Myrtle Beach real estate market, so it should come as no surprise that Beach First National Bancshares is feeling the impact of the downturn.

The Myrtle Beach-based parent of Beach First National Bank lost $4,958,314 during the first quarter of 2009, compared to a gain of $883,713 a year earlier. For all of 2008, Beach First lost $3.7 million. 

Total non-performing assets rose to $34.4 million by March 31, 2009, compared to $6.7 million a year earlier. Total non-performing assets as a percentage of total assets now stands at 4.73 percent and non-performing loans as a percentage of total loans is more than 5.25 percent, according to information filed with the Securities and Exchange Commission.

“It was a difficult first quarter for Beach First as we continued to work through the challenges of the economic crisis which began about 18 months ago,” Chief Executive Walt Standish said in a statement. “The coastal South Carolina markets have been significantly hard hit by declining real estate values that have impacted our customers and in turn, our results.

“We have taken significant steps to improve our performance, continuing to increase the reserve for loan losses and implementing cost control measures,” he added.

Beach First stock closed Tuesday at $3.05 a share. It’s traded as high as $12.07 over the past year.