BELLEVUE, Wash., Aug. 3, 2015 (GLOBE NEWSWIRE) -- Foundation Bancorp, Inc. ("Foundation") (OTCQB:FDNB), the holding company for Foundation Bank ("Bank"), today announced that its second quarter results will include a $2.9 million increase in its provision for loan losses in response to the discovery of fraudulent activity by one of its Washington-based customers. As a result, the net loss for the first half of 2015 is expected to be in the range of $0.25 to $0.30 per diluted share, compared to earnings of $0.25 per diluted share in the first half of 2014.
"The core operating performance of the Bank has been solid year-to-date, so we are very disappointed to be faced with fraudulent activity by one of our local customers," said Diane Dewbrey, President and CEO. "We decided to reserve against this credit immediately by charging off the full $2.9 million loan, although we are hopeful of recovering all or a portion of the loss from our insurance coverage. We will aggressively pursue all collection efforts, while we perform a thorough investigation, however, no assurance can be given that we will collect any of the loan proceeds."
The borrower used fraudulent financial statements and bank statements, which were discovered about 60 days after the loan was originated. Foundation is filing a claim with its insurance company which asks to be reimbursed as a result of this fraud. While the loan is secured with accounts receivable and inventory, the collateral for the loan may not be satisfactory to insure the repayment of the loan since these also appear to be fraudulent. Further investigation of these assets is also underway.
The second-quarter provision for loan losses was $3.0 million compared to no provision in the second quarter of 2014. Foundation expects to report full operating results for the second quarter of 2015 later this week.
About the Company
Foundation Bancorp (FDNB) is a bank holding company based in Bellevue, Washington, that operates Foundation Bank, a locally-owned, full service, state chartered commercial bank. Foundation Bank has been serving the greater Puget Sound region since 2000.
Safe Harbor Statement. This release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include the value of the collateral securing the loan, whether any of the loan proceeds will be collected from the borrower or the from the insurance claim or other business operations including but not limited to changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices; levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors. The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Diane Dewbrey, President & CEO 425 691 5011 www.foundationbank.comSource:Foundation Bancorp