Second National to rebuild its capital


Second National Federal Savings Bank, the savings and loan headquartered in Salisbury and Annapolis, has received approval from the federal Office of Thrift Supervision on its plan to rebuild its capital.

On Jan. 18, the thrift announced that it had fallen below two of the three capital levels required by the federal government. Capital is essentially the amount of assets left over after liabilities and deposits are subtracted.

Henry A. Berliner, president and chief executive officer of Second National, said the savings and loan plans to increase its capital ratios using normal operating profits and by shrinking the size of the thrift from $1.7 billion to $1.6 billion in assets with the sale of mortgage securities and the normal maturing of commercial loans. The plan does not involve additional investments in the thrift, he said.

The thrift has 37 offices in Maryland, Delaware, Pennsylvania, Virginia and Washington.

"The board of directors and management are extremely gratified that Second National received swift approval of its plan to achieve capital compliance, a plan based upon prudent, conservative and realistic policies and projections," Berliner said.

Second National lost $12.5 million, or $1.82 a share, during the first nine months of 1990 compared with a net income of $7.1 million, or 97 cents a share, for the same period in 1989. Much of the loss was due to additional loan-loss reserves required by the government because of souring commercial real estate loans.

While fourth quarter results have yet to be released, Second National expects to be adding another $10 million to its loan-loss reserves and will be writing off about $8.5 million in commercial real estate loans.

Under the federal law, thrifts must meet standards in three forms of capital: tangible, core and risk. Tangible capital, which is common stock and retained earnings, has to be 1.5 percent of assets. Core capital, which is tangible capital plus goodwill, is set at 3 percent. The third standard is risk capital, which measures the riskiness of a thrift's assets. That standard is set at 7.2 percent.

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