StellarOne Corp. is increasing its loan-loss reserve due to some problematic real-estate loans in the Smith Mountain Lake area.
The bank, which has branches throughout the Fredericksburg area, said in a news release this week that it is provisioning for loan losses of about $6 million for the third quarter.
That was due to an increase in nonperforming loans related to "certain acquisition and development projects in Smith Mountain Lake." The projects are located in the Bedford County area near Roanoke and Lynchburg.
That portfolio accounted for about $50 million, or 2.2 percent of the company's outstanding loan portfolio as of Sept. 30.
StellarOne also announced that it will record a pre-tax charge of $280,000 for a small position in Fannie Mae preferred stock. The bank will announce third-quarter earnings Oct. 29.
In a statement, StellarOne CEO O.R. Barham Jr. said the loan-loss provision is a result of the bank's efforts to reduce exposure in the acquisition and development part of its loan portfolio, particularly at Smith Mountain Lake, which it called "the primary risk in our portfolio." He said the charges would have little impact on the bank's "strong capital levels."
StellarOne customers in the Fredericksburg area had about $189 million in deposits as of June 30, according to the Federal Deposit Insurance Corp. That includes the city and Caroline, King George, Stafford and Spotsylvania counties.
That tally made StellarOne the sixth-largest bank by deposits in the area. It trailed only BB&T, Union Bank & Trust, Wachovia, PNC and SunTrust, in that order.
Bill Freehling: 540/374-5405
Email: bfreehling@freelancestar.com