Provident Bank reserves $4M for overdue loan
Provident Bank has set aside a $4.1 million reserve from earnings for a commercial loan that is in default, the bank said in an Oct. 2 filing with the Securities and Exchange Commission.
The move will offset most of Provident’s gain from selling six of its Virginia branches to Union Bankshares, the company said.
Provident did not name the borrower on the loan, but said it recently placed the loan on “non-accrual” status after the borrower’s CEO was indicted in federal court. Provident said in its SEC filing that it is “aggressively pursuing its rights and remedies” with the loan, and is evaluating the value of the accounts receivable and inventory that secured the loan.
Provident’s decision to set aside the reserve comes as many banks are already struggling to turn a profit in a challenging interest rate environment. Provident’s second-quarter earnings fell by 23 percent from the same period in 2006.
