GREENVILLE, S.C South Financial Group Inc. announced Friday that it is charging off a $3.4 million loan to a Minnesota video store.
The $5.1 billion-asset parent of Carolina First Bank said that the chargeoff is of the outstanding balance of a loan to Video Updates Inc., a St. Paul retailer that filed for Chapter 11 bankruptcy protection two weeks ago. South Financial had put the loan on nonaccrual status in the third quarter of last year.
Mary M. Gentry, South Financials treasurer, said that a chargeoff this big is rare for the community bank. South Financial does not normally lend outside its market area and only entered into this relationship after Video Updates bought a local video retailer that had a loan from South Financial, she said.
Relative to our other chargeoffs, this is a relatively high level, she said. But this is an unusual loan for us. Ms. Gentry would not comment on how the chargeoff would affect third-quarter earnings.