Shares of Omni Financial Services Inc. plunged Friday after the Atlanta company delayed its fourth-quarter and full-year earnings reports and said that it had discovered "lending policy violations and internal control deficiencies" in its inner city lending division.
The $877 million-asset Omni also said late Thursday that it would suspend its 5-cent quarterly dividend and its stock repurchase program so it can preserve capital for the problem loans.
Connie Perrine, Omni's chief financial officer, said in an interview Friday that an internal loan review is mostly completed, and that the company expects to report earnings within the next few weeks.
"We are delaying just to make sure we have everything perfect," Ms. Perrine said. "We are taking the time to make sure our allowance for loan loss is correct."
The slowing economy was partially to blame for problem loans, but "if the model had been followed properly, there wouldn't be this issue," she said. The people who made the problem loans "were doing a little more aggressive lending than is allowed by our policy."
Jeffrey Levine, the executive in charge of Omni's community development lending, was released from his contract in December, according to a Securities and Exchange Commission filing.
Citing Omni's fourth-quarter call report, Sandler O'Neill & Partners LP said Friday that Omni's nonaccrual loans at Dec. 31 had more than doubled from just three months earlier, to $35 million.
Stephen M. Klein, Omni's chairman and chief executive officer, said in a press release Thursday that his company has improved its loan review and approval process.
Omni's shares dropped 24.3% Friday, to $2.71.
