Second National Federal Savings Bank, the second-largest thrift in Maryland, said yesterday it had fallen below two of three capital levels required by federal regulators while significantly boosting the amount set aside to cover further losses in its loan portfolio.
The thrift, with $1.75 billion in assets, said it would add $7 million to its general loan loss reserves for the fourth quarter as its non-performing loans jumped by 60 percent, to about $150 million, during the three-month period.
The company also said it would write off $8.5 million in failed loans at the end of the year, boosting write-offs for the year to more than $8.6 million. Second National has not yet released its year-end results.
With headquarters in Salisbury and Annapolis, Second National operates 41 branches in four states and the District of Columbia.
As a result of the capital deficiencies, Second National said, it will file a plan next week with the Office of Thrift Supervision, the federal agency that oversees the nation's savings and loans, outlining how the company intends to meet regulatory capital requirements.
Capital is roughly the amount of money a bank or thrift would have after paying all depositors and creditors. Federal regulators require financial institutions to maintain a minimum amount of capital to protect against losses at the institution and the industry's insurance funds.
In a prepared statement, Henry A. Berliner Jr., Second National's president and chief executive, said he expects the thrift to meet its capital requirements by 1994.
"In the present recessionary economy, management and the board feel it is important to raise general loan reserves to the present level of $28 million after writing off a total of over $8.6 million in 1990," Mr. Berliner said.
"At year-end, non-performing loans stood at approximately $150 million. We expect many of these troubled loans to improve materially over the next 18 months."