Franklin Financial Network in Franklin, Tenn., has set aside funds to cover potential losses tied to a shared national credit.
The $4.2 billion-asset company disclosed in a regulatory filing Monday that it established a $3.5 million reserve in the first quarter associated with an unnamed borrower.
Franklin said it was one of several lenders that received a notice after numerous defaults, including the failure to pay principal and interest in March. Often, such notices will trigger warnings from other banks.
As a result, Franklin downgraded its participation interest in the credit from “substandard” to “doubtful," and the loan was placed on nonaccrual status.
The company said it will provide more details when it reports earnings on April 24.
