United Security Bancshares Inc. of Thomasville, Ala., said that it has discovered evidence of potential fraud in a consumer finance unit.
The $659 million-asset company announced late Thursday that it had begun an internal investigation after detecting "irregularities in certain loan transactions" at its Acceptance Loan Co. subsidiary. The unit has 25 offices in Alabama and southeast Mississippi, according to the company's 2007 annual report.
In a press release, the company said that "the irregularities appear to be primarily limited to two ALC branches and largely related to the making of improper or fraudulent loans and the improper or fraudulent handling of repossessed automobiles."
The company has identified $3.8 million in potential losses. It earned $3 million in the first quarter. Two calls seeking comment Friday from United Security's president and chief executive officer, R. Terry Phillips, were not returned. In Thursday's release he said, "I want to assure our shareholders that we are taking this matter extremely seriously and are working diligently, along with outside experts, to perform a full and complete investigation."
United Security's shares fell 3.7% Friday, to $26.08, a 52-week low.
