A North Carolina-based bank is anticipating a significant credit loss as a result of loans made in violation of the bank's lending policies.
FNB Financial Services Corp. announced that its management is conducting a special investigation into loans made in the company's Harrisonburg, Va. region. The loans were reportedly made in violation of bank lending policies and procedures.
In addition to management, internal audit personnel and independent consulting firms, FNB said the questionable loans have been reviewed by federal banking regulators.
"Management of the bank anticipates that a significant additional provision to the bank's allowance for credit losses will be recorded in the financial results for the year ending December 31, 2005," the statement said. "The amount of such provision cannot be specified at this time."
FNB, parent of FNB Southeast Mortgage Corp., does expect to determine the charge by the end of this month.