John Marshall Bankreported March 31 that it will incur an impairment related to a $4.2 million lendingrelationship due to the unexpected termination of the borrower's business in March.
The lending relationship with the company is made up of threeloans. Two of the loans, totaling $1.6 million, are "well secured" byreal estate which is in the process of liquidation, and no impairment is expectedwith respect to these two loans, according to a news release.
The remaining commercial loan, with a balance of $2.6 million,is secured by receivables, inventory, equipment and intangible assets. Based ona preliminary assessment of the collateral value on the loan, the range of impairmentis estimated to be between $1.9 million and $2.6 million.
John Marshall Bank noted in the news release that while no specificestimate of impairment can be made as of March 31, the bank's current estimate ofimpairment is $2.5 million, which will be recognized as a provision to its allowancefor loan and lease losses during the first quarter. As additional information becomesavailable, and prior to releasing financial results for the three months endingMarch 31, an adjustment to the estimated impairment will be made as indicated byJohn Marshall Bank's ongoing efforts to liquidate collateral.