The leaders of Franklin Synergy Bank are charging off $7.5 million of their exposure to a large loan relationship they share with a group of other lenders.
Franklin Synergy’s parent company, Franklin Financial Network, earlier this year booked a loss provision of $3.5 million due to the unidentified borrower’s failure to keep up with its principal and interest payments. At the time, the 12-year-old bank reclassified its exposure with that company to “doubtful” from “substandard” but things have gotten worse since: Late last week, executives said in a filing with the Securities and Exchange Commission that they needed to charge off $7.5 million as well as grow their loss reserve for the shared national credit to $6.3 million.
“The circumstances related to the SNC defaults are fluid, and the company intends to address events as they develop,” the SEC filing reads.
Bank officials, who will report their second-quarter results Wednesday afternoon, told the Home Page sister publication the Nashville Post they could not provide further information about the borrower, citing regulatory and customer privacy requirements.
Franklin Financial’s exposure to shared national credits — loans of more than $100 million shared by at least three banks — totaled $230 million at the end of March, with about $107 million of that being in health care. That amounted to about 8 percent of the company’s total loan book.
At the end of the first quarter, Franklin Financial’s loan portfolio was in fine shape: Only $11.9 million, or 0.28 percent of total assets, were deemed to be non-performing.
Shares of the company were essentially flat at $27.30 in Tuesday afternoon trading. So far this year, they have risen slightly.