THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, October 9, 1996 TAG: 9610090380
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: 51 lines
The parent of Virginia Beach Federal Savings Bank said Tuesday it expects to report a loss of about $1.3 million for the Sept. 30 quarter after accounting for a program that replenishes the insurance fund for thrift deposits.
Virginia Beach Federal Financial Corp. will pay a one-time assessment of slightly more than $2 million as part of the program, which will bolster the Federal Deposit Insurance Corp.'s Savings Association Insurance Fund, said Dennis R. Stewart, chief financial officer of Virginia Beach Federal and its parent.
However, Virginia Beach Federal's future earnings will be helped by another part of the FDIC plan that reduces what healthy thrifts will pay for deposit insurance, Stewart said.
The new plan calls for cutting the insurance premium to 6.3 cents for every $100 of deposits at financially strong thrifts. Thrifts currently pay 23 cents for every $100 of deposits for insurance of their deposits.
For Virginia Beach Federal, the reduction in insurance premiums would produce about $450,000 of after-tax savings, or about 10 cents a share, Stewart said.
The plan for protecting the thrift deposit insurance fund was part of a package of banking legislation signed by President Clinton last week. On Tuesday, the FDIC defined some of the rules for the assessments to be paid by thrifts and the level of future premiums.
The FDIC insures deposits at thrifts and commercial banks up to $100,000 per account. Deposits at commercial banks are backed by the FDIC's Bank Insurance Fund, while deposits at thrifts are protected by the separate Savings Association Insurance Fund.
In Norfolk, the parent of Life Savings Bank said it had not yet determined what impact the assessment will have on its third-quarter results. For Life, the amount of its assessment has been complicated by some accounting issues and by the company's acquisition of a Virginia Beach thrift, Seaboard Savings Bank, earlier this year, said Clarence Keel, a spokesman for Life and its parent, Life Bancorp Inc.
He said Life Bancorp expects to report its results for the recent quarter on Oct. 23.
Last week, the parent of Crestar Bank said its net income for the third quarter would be reduced by $12 million because of an assessment it must pay to the Savings Association Insurance Fund.
Richmond-based Crestar Financial Corp. said about 45 percent of its deposits were insured by the thrift insurance fund because it has acquired several thrifts in recent years. In late 1995, it bought a large thrift in Baltimore, Loyola Federal Savings Bank. by CNB