Main Street Banks Inc. said Wednesday that it would charge off $2.6 million of problem loans this quarter, resulting in a 30% to 36% drop in its projected second-quarter earnings per share.
The $2.3 billion-asset Atlanta company said an external review of a former loan officer's portfolio led to the chargeoffs. Its chief financial officer, Samuel B. Hay 3d, said he does not expect any more losses to emerge from this portfolio.
In addition, the company said it is changing its credit administration and credit review structure, including increasing loan review personnel and installing new software to improve loan management.
Main Street expects earnings per share for the second quarter to drop 12 cents to 14 cents a share, to between 25 and 27 cents; earnings for the year are expected to be $1.40 to $1.46 a share. Analysts had estimated 39 cents a share for the second quarter.
Though the problem loans are the cause for the bulk of Main Street's earnings adjustment, the company attributed 4 cents per share of the drop to additional tax provisions and the closing of its loan settlement services subsidiary.
