Harvard Illinois Bancorp in Harvard, Ill., which recently disclosed that it had been exposed to a fraud scheme involving certain investments, has hired an investment bank to help it "evaluate strategic alternatives."

The $170 million-asset company said in a press release for third-quarter results that it has hired Sterne, Agee & Leach to help it explore strategic alternatives. Often, such a hiring is viewed as a precursor to a potential bank sale, though it can also be associated with raising capital.

Harvard attributed its decision to hire an investment bank to a $8.5 million loss it suffered from an $18.1 million, short-term investment made through Pennant Management in Milwaukee. The investment was allegedly backed by fraudulent, government-issued loans from First Farmer's Financial in Florida. Nikesh Patel, First Farmer's founder, was arrested in September for allegedly selling $179 million in fraudulent loans that the firm claimed were backed by the Department of Agriculture.

Harvard said in its release that the total value of the losses is still under review. "The value of the company's interest in the repurchase agreement as of Sep. 30 is subject to significant uncertainties," the release said, adding that the agreement is still under review by regulators.

Harvard Illinois reported a net loss of $5.2 million for the third quarter, largely because of the faulty investment.

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