Gainesville, Georgia-based GB&T Bancshares, Inc., a seven-bank holding company, announced last week that it will increase its allowance for loan losses “through an additional provision of approximately $9.7 million in the fourth quarter ended December 31, 2006.” The company in a press release stated the after-tax effect of the measure is expected to result in a loss of $5.9 million in fourth quarter income.

“The increase in the allowance for loan losses arises out of a recent examination conducted by the Federal Deposit Insurance Corporation (“FDIC”) at one of the company’s wholly-owned banking subsidiaries, HomeTown Bank of Villa Rica, and relates primarily to several loan relationships originated by the president of that bank in which it is apparent that this officer did not follow numerous bank loan policies and procedures, including loan approval authorities, collateral requirements, inadequate documentation, and other underwriting guidelines,” the company said in a press release.
The company went on to say the “officer is no longer employed by the bank. GB&T says it has conducted a review of all loans within the officer’s portfolio and does not expect further significant adjustments or reclassifications to the loan portfolio. Meanwhile, the company continues to tighten its internal controls and underwriting procedures.