THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, October 22, 1994 TAG: 9410220256
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Short : 44 lines
Virginia Beach Federal Savings Bank's parent posted another loss Friday as its troubles with derivatives spilled over into the third quarter.
Virginia Beach Federal Financial Corp. lost $331,000, or 7 cents per share, in the quarter ended Sept. 30. It made $20,000 in the period a year ago.
Much of the loss can be attributed to a $210,000 charge it took to cover the decline in market value of a complicated interest-rate swap.
The thrift holding company has since hedged against the swap. ``We've taken steps to avoid any additional losses,'' said Dennis R. Stewart, Virginia Beach Federal's chief financial officer.
Virginia Beach Federal took pre-tax losses of nearly $2 million in the first half of the year as a result of the swap. It entered into the swap a year ago to maintain an interest-rate spread between some of its assets and liabilities.
It also lost $306,000 on the sales of securities in the third quarter.
Virginia Beach Federal is one the region's largest locally based financial institutions with assets of $740.2 million and deposits of $501.2 million as of Sept. 30.
Despite its difficulties in the securities market, there were encouraging signs for the thrift in the third quarter.
Its net interest income, the difference between what it makes on loans and pays on deposits, increased 25 percent as most of a costly portfolio of high-cost deposits matured and were removed from its books. The certificates of deposit had interest rates in excess of 12 percent.
It reduced its portfolio of nonperforming loans by $3.4 million in the quarter to $10.9 million, or about 1.5 percent of total assets at Sept. 30. That's a vast improvement over the $18.3 million of bad loans it had Dec. 31.
Virginia Beach Federal also plans to open a 10th office in early 1995. It will be its second in Chesapeake. by CNB