As expected, the San Diego-based parent of...

As expected, the San Diego-based parent of First National Bank reported a huge second-quarter loss due to a previously announced loss on the sale of its mortgage loan servicing portfolio, costs related to the closing of two of its six branches and a litigation allowance. The bank also said it missed a July 31 deadline imposed by regulators to raise its capital levels.

The $19.9-million loss was due mainly to a $17.1-million loss associated with the discontinued mortgage operations. On July 2, First National announced it expected a quarterly loss in the $18- to $19-million range as a result of selling the mortgage loan portfolio to BancPlus Mortgage of San Antonio, Tex.

The bank holding company also announced last month that it would lay off 100 employees of the mortgage banking operation. For the year to date, First National’s net loss totals $25 million. First National Corp. shares closed at $2.625, unchanged on American Stock Exchange trading.

The bank was able to reduce its non-performing assets to $37 million from $38.2 million over the quarter.

But because the bank shrunk its assets to $463 million as of June 30, from $566.8 million on March 31, the bad assets jumped to 8% of total assets, up from 6.5% of assets March 31.

The bank has submitted its strategic plan and capital plan to the Office of the Comptroller of the Currency.

The plan calls for a drastic downsizing of the bank to $325 million in total assets by the end of 1992.