Ex-CEO of failed thrift on Shore opens new unit

January 06, 1993|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer

A month after federal regulators seized Second Nationa Federal Savings Bank, the thrift's former president and chief executive officer has founded a mortgage brokerage in Annapolis, saying he plans to fill a home-financing gap on the Eastern Shore and in Southern Maryland and lower Delaware.

Henry A. Berliner Jr., former chief executive of Second National, the Eastern Shore's largest thrift, and nine other former employees opened National Mortgage Corp. Monday to resume a service that the failed thrift halted on Dec. 4, when the Resolution Trust Corp. took over.

Second National, like many thrifts caught up in the rapid lending of the late 1980s, had become burdened by losses as failed high-risk construction loans ate into capital, said Janis Smith, spokeswoman for the federal Office of Thrift Supervision. At the end of September, the thrift reported $230.8 million in troubled real estate loans, many for office and shopping center projects in Maryland, Virginia and Washington, she said.

The OTS placed the thrift in receivership after it failed to meet federally required levels for capital,which managers had tried to raise.

"They were not in a negative position, but they didn't have enough of a cash cushion or any prospect of bringing capital up without federal assistance," Ms. Smith said.

"Management had worked diligently to reduce non-performing assets," she said. "But they were still a drain on capital. It put the institution in a position where it wasn't able to be profitable."

In a step the RTC typically takes in stabilizing a thrift before selling it, regulators ceased all new residential mortgage lending at Second National, Mr. Berliner said yesterday. Second National had become the principal lender for resort homes on the Eastern Shore. The thrift, with nearly $1.6 billion in assets at the time it was taken over, had $1 billion in residential loans outstanding.

"The Realtor community expressed concern there wouldn't be anyone to fill that need," said Mr. Berliner, who formed National Mortgage with Linda D. Gannacone, the thrift's former senior vice president for residential lending. "We decided we have an opportunity to fill an obvious need, and we could fill it in the same way as with Second National," Mr. Berliner said.

Mr. Berliner will serve as National Mortgage's president, with Ms. Gannacone as executive vice president, and four former loan-origination officers working in the same capacity.

The new company, with offices in Annapolis, Ocean City and, within a month, in Rehoboth Beach, also employs six former administrative staff members. None are connected to Second National, Mr. Berliner said.

The mortgage brokerage, which will act as intermediary with banks rather than lend money, required no federal approval. The corporation, licensed by the state Department of Licensing and Regulation, had to post a $12,500 bond with the state, Mr. Berliner said.

"It's an unfair assumption to say that all former officers of a failed thrift have responsibility for the failure of that thrift," Ms. Smith said. "It does not mean necessarily that these persons are not qualified to operate their own mortgage brokerage."

Mr. Berliner had chaired a regional private sector advisory board to the RTC and served on two national RTC advisory boards. His Nov. 13 resignation letter from those three boards to Treasury Secretary Nicholas F. Brady did not mention the troubles his company was having with thrift regulators.

Mr. Berliner said he hopes his new company can take inspiration from its logo, a phoenix -- "the mythical bird which rose from its own ashes to greater glory."

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