Union Financial Reports Loss, Restructuring

Union Financial Bancshares Inc., Union, S.C., has reported a loss of $1.2 million for the quarter ended Dec. 31 as a result of a balance sheet restructuring.The restructuring consisted of the sale of $31.3 million in mortgage-backed securities at a loss of $695,000; the prepayment of $5.0 million of Federal Home Loan Bank advances at a penalty of $381,000; and the writedown of $100,000 of mortgage servicing rights (because the company no longer services mortgage loans). Union Financial was able to prepay the FHLBank borrowings as well as not renew an additional $6.0 million in borrowings because of an increase in deposits of $22.7 million. The reason for the restructuring was the conversion of its Provident Community Bank subsidiary from a thrift to a national bank.