FNSC hired gun: Facts be damned

In the year leading up to the collapse of First National Bank of the South there were several things you could count on: Parent company First National Bancshares was going to lose money hand over fist; First National’s stock price was going to continue its long downward spiral; and company spokesman Reed Byrum was going to spout off feel-good quotes that had little bearing on reality.

First National Bank of the South was finally seized by regulators on July 16. Its Spartanburg-based parent had lost nearly $94 million during the previous nine quarters.

But you would have been hard pressed to get an accurate reading of the bank’s situation from the comments made on behalf of the company by Byrum, an outside public relations professional who operates Byrum Innovation Group.

In mid-May, after First National posted a $5.4 million loss, its ninth consecutive quarterly deficit, Byrum told the Spartanburg Herald-Journal that there was cause for optimism. 

“We realize that even though we have weathered a lot, there are still some storms out there,” he said. “But we are heartened by what we’re seeing.”

In April, Byrum told the Herald-Journal that First National Bank of the South was “fully prepared to satisfy” a multi-million-dollar loan that had been restructured because of company difficulties “as soon as the modification agreement is approved by regulators.”

“This is something we expected, and now we are just awaiting regulatory approval,” he said. “We look forward to it and to keeping the dialogue going with regulators.”

In mid-March, Byrum downplayed the fact that First National had missed its deadline to repay that same multi-million-loan, to Nexity Bank of Alabama.

“First National spokesman Reed Byrum said Monday was a ‘soft deadline’ and the bank was ‘continuing dialogue’ to extend the due date. He said the bank was prepared to fully satisfy the loan,” the Herald-Journal reported.

Byrum was at his saccharine-sweet best in January when First National announced it had revised the Nexity loan, a move forced by the company’s growing financial problems.

“There’s a new atmosphere around here,” he told the Herald-Journal. “All of these things are starting to come together. It’s a very exciting time for the bank.”

Exciting if you were shorting FNSC stock; otherwise, not so much. 

When at the end of 2009 First National was threatened with delisting by Nasdaq because of its slumping stock price, Byrum blamed the time of year and industry woes, but added that the company planned to roll up its sleeves and do what it could to get back in the exchange’s good graces.

“December is an anomalous month for stock trading, and that was certainly a challenge,” he told the Spartanburg paper in early January. “The banking industry has seen its stock devalued over the last year, and this isn’t an uncommon occurrence. We plan to work hard to get our stock price above the $1 mark.”

Byrum was a bit more obtuse when it was reported last September that First National Bank of the South had shuttered its wholesale lending division. 

“It was nonstrategic to the strategy of Bank of the South,” he told financial publication SNL Bank and Thrift Daily.

Losing tens of millions of dollars annually was likely “nonstrategic,” as well, but Byrum didn’t address that point.

However, it was practically candy canes and rainbows in late July when the Herald-Journal reported that First National had submitted a confidential three-year capital plan as required by its agreement with the Office of the Comptroller of the Currency.

The company would significantly dilute its stock in an attempt to raise money and keep its head above water financially, according to the publication.

“We’re still very optimistic that we will be able move forward,” Byrum said. “(The increase in common shares) will put the bank in a better position to improve capital ratios and give it more flexibility to meet its future needs.”

Finally, Byrum played the ol’ looking-out-for-the-wellbeing-of-customers-and-shareholders card in June 2009 when it was revealed First National had entered into an agreement with the Federal Reserve Bank of Richmond.

“There is nothing significantly new,” Byrum said. “This is one of the commitments that we are making for the safety and stability of our depositors and shareholders.”

Perhaps at some point during the past year, particularly when it became apparent that First National would be lucky if it lasted through 2010, Byrum would have done everyone a favor if he’d simply kept his mouth shut, rather than essentially mislead shareholders with unduly optimistic comments.

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