First National cuts deal on Nexity loan

Troubled financial services company First National Bancshares said Thursday it had entered into a loan modification and settlement agreement with Nexity Bank regarding nearly $10 million First National owes Nexity.

According to information filed with the US Securities and Exchange Commission, Spartanburg-based First National agreed on March 26, 2010, to the extension of its loan modification and settlement agreement with Birmingham, Ala.-based Nexity.

Although the outstanding principal balance on First National’s loan from Nexity is more than $9.6 million, the amended settlement agreement extends First National’s ability to pay a discounted sum of $3.5 million, plus accumulated 2010 interest in full satisfaction of the loan.

First National is in full compliance with all the provisions of the loan agreement with Nexity, according to the filing. Both banks now await final regulatory approval of their amended settlement agreement.

“Pursuant to the terms of the Amendment, on March 26, 2010, the Company remitted to the Lender via wire transfer $147,827.38 to satisfy interest owed to the Lender for the quarter ended December 31, 2009,” according to the SEC filing. ”The Lender agreed to extend the Payment Date (as defined in the Settlement Agreement) to June 15, 2010, by which date the Company may pay the Lender the sum of $3,500,000, plus accrued interest, in full settlement of the Loan, subject to regulatory approval.”

First National is struggling to remain viable. It lost $43.7 million in 2009 and $44.8 million in 2008.

Subsidiary First National Bank of the South entered into a consent order with the Office of the Comptroller of the Currency last April which, among other things, contained a requirement that it achieve and maintain minimum capital requirements that exceed the minimum regulatory capital ratios for “well capitalized” banks by Aug. 25, 2009.

As of Nov. 25, 2009, the bank was notified by the OCC that it was significantly undercapitalized.

First National’s independent registered public accounting firm stated in its March 9, 2010, report that the uncertainty raises substantial doubt about the company’s ability to “continue as a going concern.”

First National is trading for 64 cents a share.

Profiles in Courage: SC Senate style

“If this bill is vetoed – when it’s vetoed – I’m voting with the governor.”

- Sen. Jake Knotts, R-Lexington, in explaining why he was voting against a cigarette tax. Knotts said the proceeds should be spent on health care only, not on economic development or education.

The above is from Thursday’s State newspaper, in its political briefs section.

But if you turn to the publication’s story about the state Senate approving a 50-cent tax increase on a carton of cigarettes, it would appear Sen. Knotts is singing a different tune.

The story explains that amid debate Wednesday, Sen. John Land, D-Clarendon, got the Senate to approve using $3.5 million from the proposed new tax revenue to fund infrastructure along I-95.

Knotts responded by warning lawmakers he could only vote for the tax hike if proceeds went to cover pure health care problems caused by smoking.

But when Land’s proposal got a surprising nod of approval from fellow lawmakers, Knotts asked for money to complete a road linking the Columbia Metropolitan Airport to I-26, The State reported.

Way to stand by your beliefs, Sen. Knotts. 

Of course, Knotts isn’t alone in playing the “Me, too!” game when it comes to allocating tax revenues. Far too many elected officials are willing to essentially sell their votes to get money or some other perk for their districts.

There’s considerable debate over whether South Carolina should raise its cigarette tax or not. But doing so under the pretext of improving the state’s health care infrastructure and helping those in need, then tacking on a bunch of pork projects is both disingenuous and despicable.