First National okays massive stock dilution

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Shareholders of First National Bancshares have approved increasing the number of authorized common shares from 10 million to 100 million.

The move was taken to help the bank raise additional capital to absorb the potential losses associated with the disposition of subsidiary First National Bank of the South’s nonperforming assets and to increase capital levels to meet the standards set forth by the Office of the Comptroller of the Currency.

According to a June 15 filing with the US Securities and Exchange Commission, “Additional common shares may be issued by the company in connection with equity financing to raise capital, current or future equity compensation plans for the company’s directors, officers, and employees, and other corporate purposes.”

First National is struggling to keep its head above water. The Spartanburg, SC-based company lost $44.8 million last year and another $1.36 million during the first three months of 2009.

First Nationla has yet to release its earnings report for the most recent quarter.

As of March 31, 2009, First National reported nonperforming assets of $73.9 million, compared to $25.6 million year earlier.

Stock in First National is trading for around 75 cents a share.

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