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Dallas hedge fund Clover Partners is causing Texas-size headaches for two small Massachusetts thrifts, Hampden Bancorp and Chicopee Bancorp.
September 9
Chicopee Bancorp (CBNK) in Massachusetts said it expects to report a second-quarter loss due to a spike in its loan-loss provision.
The $600 million-asset company said in a press release Thursday that it will likely report a $1.9 million pretax loss in the quarter after recording a $2.8 million provision.
The expected provision resulted from "unrelated additional chargeoffs for two previously disclosed problem loans" and a $1.5 million chargeoff on a $4.7 million commercial real estate loan backed by a property whose value declined. Chicopee said it had restructured the commercial real estate loan, which it placed on nonaccrual, and that it is working with the borrower to reduce exposure through sales of existing units.
The company also said it charged off roughly $360,000 tied to a $4.5 million commercial loan relationship where the borrowers are suspected of making fraudulent representations about the collateral securing the loan. Chicopee said it has initiated legal proceedings against the principals of the borrower and is conducting a review and investigation, including the use of forensic accountants.
Finally, the company said its provision also reflects $445,000 set aside to cover a $3.4 million nonperforming loan; Chicopee has begun foreclosure proceedings on the collateral.
These developments are expected to increase Chicopee's nonperforming loans by 6% from a year earlier, to roughly $11 million, or 2.12% of total loans, at June 30. Chicopee also said it has about $1.2 million in other real estate owned.
The company said it still expects to remain "well capitalized" at June 30.
Chicopee, which has six branches in western Massachusetts, will release its quarterly results during the week of July 21.
