It would appear The Greenville News has decided to go easy on hometown banking company The South Financial Group. How else do you explain the kid glove treatment the company received earlier this week when South Financial held its annual meeting in Greenville?
Under the headline “South Financial CEO resolves to meet economic challenges,” The News begins its story by stating that South Financial “… like nearly all financial institutions, is facing its most challenging environment and ‘change is needed,’ the company’s chief executive told shareholders Tuesday.”
The story continued by reporting that Chief Executive Lynn Harton said that while there maybe some 500 bank failures nationwide in the current economic downturn, South Financial “has taken steps to strengthen its capital base and maintained its liquidity position, with unused secured borrowing capacity of $3.9 billion on March 31, so it can survive the current crisis.”
“South Financial must ‘navigate through this,’ Harton told the shareholders.
The story devotes just three paragraphs to South Financial’s performance last year, stating it has posted “five straight quarters of operating losses, including a first-quarter loss of $90.8 million, or $1.10 per diluted share.”
“We’ve underperformed,” The News quoted Harton, in what has to be one of the major understatements of the year, adding that the company has struggled under the weight of its real estate portfolio in Florida, where it operates Mercantile Bank.
The story also reported on South Financial possibly selling its corporate campus along Interstate-85 and later added that it will continue to focus on credit management, reduce costs and set clear performance targets. The report concluded with results of shareholder voting.
Incredible. It’s as someone completely unfamiliar with South Financial’s dismal performance in 2008 did the reporting, or better yet, the company itself wrote the story. Here’s a little of what was left out:
- Company founder and Chief Executive Mack Whittle saw the writing on the wall as South Financial’s losses mounted and its stock tanked. He took a lucrative golden parachute worth at least $12 million, drawing the attention of regulators and political leaders;
- Whittle “retired” earlier than he’d originally planned so that South Financial could get in on $347 million in federal bailout money, funds that might have been in jeopardy if he’d gotten the rich payout after the application had been received;
- As part of a settlement involving a pair of shareholder lawsuits related to Whittle’s golden parachute, South Financial was forced to enact significant corporate governance reforms and Whittle had to resign from the company’s board;
- South Financial lost $569 million in 2008;
- Its stock price fell from $15.67 a share to $4.31. It closed at $1.85 Thursday and had been below $1 earlier this year.
Nothing big, right?
One has to wonder if South Financial, whose subsidiary Carolina First Bank is among The Greenville News’ major advertisers, has threatened to pull its ads if the paper doesn’t go easy on the company.
That seems incredibly far fetched, but then again, so does a story on a hometown company’s annual meeting that fails to mention the departure of the disgraced CEO, shareholder lawsuits, $347 million in federal bailout money, a $569 million annual loss and the fact that the company stock lost nearly 90 percent of its value during the previous 17 months.