Despite being counted among South Carolina’s most troubled financial service companies, First National Bancshares has seen its stock price rise precipitously – relatively speaking – over the past few days.
Monday, Spartanburg-based First National saw its stock jump 65 cents, or 84 percent, to $1.43 in extremely heavy trading. Nearly 500,000 shares traded hands, compared to average daily volume of less than 14,000.
Last Friday, First National, the parent of First National Bank of the South, was trading for less than 60 cents a share before it closed at 78 cents. It then opened Monday at 89 cents and continued upward the rest of the day.
It’s unclear what’s been driving the company’s stock price upward. There have been no recent filings with the US Securities and Exchange Commission, no press releases or news stories about First National and no indication on the company’s Yahoo! message board that there’s been a change in fortune for the struggling bank company.
Last month First National announced 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, 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.
According to information released at that time, both institutions were awaiting final regulatory approval of their amended settlement agreement. Perhaps anticipation of that approval is what is driving First National’s stock price up. Or maybe an investor has been lined up to give the company a much-needed transfusion of cash.
No matter what, the company has a long way to go before it’s out of trouble. 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.”