2nd National reports $20.2 million loss Official calls '92 'a critical year'

March 21, 1992|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

Second National Bancorporation said yesterday that it lost $20.2 million during the last three months of 1991, wiping out the capital boost it got from restructuring its debt last year.

"1992 is a critical year," said William T. Russell III, chief financial officer of the company, parent of the Annapolis-based, Eastern Shore-oriented Second National Federal Savings Bank. But he added, "outside of the loan loss reserve [additions] we are still a break-even company or better and some are not. That gives us some time."

The company said its $20.2 million loss was caused by a $21.1 million addition to reserves that the thrift maintains to protect itself against loans that sour. That followed a $29.7 million addition to reserves in the third quarter and come as larger banks are reporting that loan problems have reached a plateau. Mr. Russell said the third-quarter provision grew out of an examination by federal regulators. The latest addition to reserves grew out of an examination of its books by the accounting firm of KPMG Peat Marwick.

The provision was prompted partly by economic conditions that continued to deteriorate after the federal exam and partly out of the accountants' conservative approach to auditing, Mr. Russell said.

The thrift added about $16 million to loan loss reserves based on Peat Marwick's input, Mr. Russell said. That loss offset the $14.6 million improvement in core and tangible capital levels the company gained by restructuring subordinated debt held by an institutional investor last year, the company said.

Mr. Russell said Second National has not settled on a plan to recoup the lost capital. He said that a plan might include sales of assets, including mortgages and mortgage-backed securities, which have been trading at about book value in the bond market because of the recent fall in interest rates. About half of the latest additions to the loan loss reserves come from about 10 problem loans, Mr. Russell said, while the rest of the losses are spread broadly across the company's loan portfolio of more than $1 billion.

Three months ended 12/31/91

.. .. .. .. .. .. Income.. .. .. .Share

'91.. .. .. .. .. (20,200,000). ..(2.74)

'90 .. .. .. .. ..(6,000,000).. ..(0.80)

% change .. .. .. ..NA.. .. .. .. ..NA

.. .. .. .. .. .. Assets.. .. .. .. Deposits

'91 .. .. .. .. .. 1,655,000,000 .. 1,250,000,000

'90 .. .. .. .. .. 1,755,000,000.. .1,212,000,000

change .. .. .. . -.5.7.. .. .. ..+3.1

Twelve months ended 12/31/91

.. .. .. .. .. Income.. .. .. .. .. Share

'91 .. .. .. .. (41,600,000).. .. .. (5.65)

'90 .. .. .. .. (19,400,000).. .. .. (2.64)

% change .. .. .. NA .. .. .. .. .. NA

Loan portfolio

Three months ended 12/31/91

.. .. .. .. .. Loans outstanding.. .Net charge-offs

'91 .. .. .. .. Not available .. .. Not available

'90 .. .. .. .. Not available .. .. Not available

% change.. .. .. .. N/A .. .. .. .. N/A

.. .. .. .. .. .Addition to allowance .. ..Allowance

.. .. .. .. .. .for loan losses .. .. .. ..for loan losses

'91 .. .. .. .. .. 54,900,000 .. .. .. .. .49,200,000

'90 .. .. .. .. .. 36,800,000 .. .. .. .. .43,600,000

% change .. .. .. .. +49.2 .. .. .. .. .. .+12.8

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