An impaired loan has erased Chemung Financial's narrow fourth-quarter profit.
The $1.7 billion-asset company said in a press release Monday that it had to add nearly $4 million to its loan-loss allowance after it received adverse information about a longstanding commercial relationship. The development turned what had been an $800,000 profit into a $2.2 million loss.
The Elmira, N.Y., company said it learned of an issue with the loan after it reported its quarterly results on Feb. 15.
“We are disappointed by the additional provision," Anders Tomson, the company's chairman and CEO, said in the release. "However, we will continue to vigorously pursue recovery of the loans identified."
Chemung disclosed very little about the customer, other than noting that it was in a region west of the Catskill Mountains. The company said it now has a special reserve of $4.9 million to cover two lending relationships in the region that have a total of eight commercial loans.
The revised $6.3 million loan-loss provision represents a sharp increase from the $400,000 that Chemung set aside a year earlier. The loan-loss allowance at Dec. 31 totaled $21.2 million, or 1.6% of total loans.
“In spite of the increase in our provision, we are proud of the progress we made in 2017,” Tomson said.
Total loans rose 9% last year, to $1.3 billion, while revenue rose by 5.4%, to $77.5 million.
Chemung’s restatement comes less than two years after a lease dispute involving one of its branches in Ithaca, N.Y., forced the company to revise quarterly results.