Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 7, 1990 TAG: 9004070070
SECTION: BUSINESS PAGE: A7 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Medium
Dominion is the first bank in Virginia to be examinated under tighter federal standards for the banking industry.
Chairman Warner Dalhouse said Friday he expects a requirement for a significant increase in loan loss reserves because that has happened at other banks under federal review.
Dominion usually releases first quarter results just in advance of its annual meeting, scheduled this year for April 17.
Rather than release and amend its report, Dalhouse said, Dominion will wait until the examiniation is complete in early May.
Dominion said in a statement that the comptroller believes slower economic conditions and weaker real estate markets throughout the country have increased risks and potential losses.
Based on results at other banks, the statement said, "significant increases in non-performing loans and loan loss reserved may be required at Dominion."
It said this would result in reductions in first quarter and 1990 earnings.
No figures were available Friday.
Henry J. Coffey Jr. of Nashville, banking analyst for J.C. Bradford & Co., said the situation is being felt throughout the banking industry.
He said it doesn't affect Dominion's fundamental soundness.
Dalhouse said that any money assigned to reserves will not be lost to the bank. Instead of becoming a profit, the money will go into capital.
Dalhouse said Dominion doesn't expect sizable loan losses. If that's the case, he said, less money can be devoted to reserves in the future and profits would rise.
About 13 percent of Dominion's portfolio is in construction related loans.
Some two-thirds of that amount is in single-family residential loans, which are generally stable.
Dalhouse said about 95 percent of Dominion's loans are in its own market areas of Virginia and the Mid-Atlantic region. He said the region's economy is among the healthiest.
The newspaper American Banker reported Thursday that the comptoller had invited senior regulators, industry analysts and accountants to a meeting in Washington to discuss the examinations.
The newspaper quoted accountants who attended the meeting as saying they believe real estate portfolios are being held to higher standards.
Many banks complained that even some current loans are being classified as non-performing.
Loan loss reserve requirements in other states have been high.
Midlantic Corp. of New Jersey reported Friday that its provision of $110 million would wipe out virtually all of its first quarter earnings.
PNC Financial of Philadelphia said it expects its loan loss provision to equal 3 percent of total loans.
All bank stocks have fallen sharply in recent weeks.
by CNB