quarter has been ordered by federal regulators to change its lending practices and diversify its portfolio.

Belmont Bancorp. of Bridgeport, Ohio, said in a letter to shareholders last week that it has agreed to the orders from the Office of the Comptroller of the Currency and the Federal Reserve Bank of Cleveland.

Belmont, the $399 million-asset parent of Belmont National Bank, said it had been expecting regulators to act after it reported a $945,000 loss in the second quarter and boosted its loan-loss provision to $1.9 million. The loss occurred after a large commercial customer defaulted on a loan.

The company now must identify any other problem loan, said chairman and interim chief executive officer W. Quay Mull 2d in the letter. Its board of directors will also be responsible for improving capital levels by March 31 and must develop a three-year strategic plan and install a process to recruit and evaluate senior management.

The company must also get regulatory approval before borrowing money or reinstating the dividend, which was suspended when the loan defaulted. --

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