Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 18, 1990 TAG: 9004180159
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Medium
David Caudill said, however, that Dominion will continue lending to builders, contractors, real estate buyers and other customers when it makes good business sense.
He and Chairman Warner Dalhouse described for Dominion shareholders the impact of its current federal audit during Tuesday's annual meeting at Center in the Square in Roanoke.
Dominion has delayed reporting its first-quarter results until completion of the audit in mid-May. It is the first bank in Virginia to be examined under the new real estate loan standards.
Dalhouse told stockholders that Dominion expects a requirement for an increase in loan loss reserves. This would reduce income for the quarter and the year.
Caudill said he could not envision any "reasonable, logical environment" that would eliminate real estate lending by Dominion or other major regional banks.
He said the current economic and regulatory situation dictates that the bank look more closely at its customers and markets.
That's no different from what the bank does regularly, Caudill said. Any rise in vacancy rates signifies that lending should be tightened until demand balances with supply.
Even in less robust markets than today's, Caudill said, people continue to build and buy homes, offices and stores.
Dalhouse said the result of the audit will be a one-time event with some higher levels of classified loans and a shift of earnings to the reserve.
The shift would not be a loss, Dalhouse said, because the money becomes a form of capital.
The new audits, he said, will impress on all banks the importance of highly sophisticated credit policies and monitoring systems.
He described for stockholders a current study by outside consultants "to keep us honest and give us a broader perspective."
The study, he said, covers strategies, mix of services, organization, productivity, priorities and operating procedures.
Longer-term, he said, is another strategic study of Dominion's market places, competition, services, deposit mix and other factors.
"We just want to be sure we're not clinging to ideas we had when we were a $3 billion company that may no longer be appropriate as we move toward being a $15 billion company," Dalhouse said.
He told stockholders that its location is an advantage for Dominion.
The Mid-Atlantic region and Virginia are "unparalleled" as a market, he said. The area has a favorable business environment and high quality-of-life rankings.
The Roanoke Valley is at the lower end of the growth range, he said, but offers lower operating costs, high productivity and good quality of life.
Those factors, according to Dalhouse, prompted expansion of its operations center at Hollins and its commitment to lease in the proposed Dominion Tower downtown.
by CNB