Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 6, 1990 TAG: 9003062133
SECTION: BUSINESS PAGE: B5 EDITION: EVENING
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
Security Federal had been scrambling in recent months to improve its position by seeking more capital, but it was placed in receivership Friday under the Resolution Trust Corp., a federal agency created last year to rescue troubled S&Ls.
The bank was expected to open as usual today. A note explaining the receivership was placed on the doors of branch offices late Friday. Deposits are still insured up to $100,000.
"The key is business is as usual," said Edwin Brooks, president of Security Federal, which has been in operation for 35 years. "There are no changes."
Security Federal officials had been working with federal regulators for months to avoid being placed in receivership, Brooks said.
Security Federal had trouble meeting two requirements set forth under the new legislation: having proper levels of tangible capital and core capital as a percentage of assets, Brooks said.
Those guidelines were toughened to make S&Ls boost their levels of working capital so they could cover expenses and surprise costs, such as foreclosures related to loan problems.
Throughout the industry, thrifts are working to meet the same two capital requirements. Even the healthiest have been affected by the tougher rules.
Under the receivership plan, Brooks and the other employees have retained their positions in the new company, called Security Federal Savings Association. The new S&L was created to assume deposits, assets and liabilities of the old thrift, which had $398 million in assets and $241 million in deposits in 31,253 accounts, Brooks said.
Brooks said an investor has signed a letter of intent to pump enough capital into the company to get it out of the danger zone. Part of the deal, he said, is to convert Security Federal from a mutual association to a stock-owned savings bank.
This is the second Richmond area thrift to be taken over by federal regulators in recent months. A similar action was taken against Seasons Savings Bank in October.
"We're hoping there will be a fast resolution," Brooks said. "We do have the investor who is waiting for the approval from the feds."
Brooks said he could not discuss further who the investor is or how much he planned to put in.
Mutual thrifts are owned by the customers and generally don't have large reserve funds to shift during emergency times.
If the application for an investor is approved, Brooks said, the thrift will meet the capital standards required under the tougher regulations. He said he cannot predict how long the approval process could take.
by CNB