Provident Financial Services in Jersey City, N.J., will take a hit to quarterly earnings after getting more bad news about a large commercial borrower.
The $9.7 billion-asset company disclosed earlier this year that the unnamed borrower had filed for bankruptcy protection. Provident said it learned during the bankruptcy proceedings that the borrower had overstated the value of assets it pledged as collateral for a $15.4 million loan.
Provident, which had already reserved $2.5 million to cover losses tied to the loan, warned that it had to set aside more funds in the second quarter. It said the added provision will likely lower its second-quarter profit by up to $9.3 million, or 14 cents a share.
Provident said its overall credit quality remains strong and that the issue does not signify any widespread deterioration in its loan book.