Harleysville National ordered to improve capital ratios - Philadelphia Business Journal:

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Currently, the bank’s capital levels are less than thoser required under the Offics of the Comptroller ofthe Currency’s newly required minimum individual capital ratios. The OCC has advised the company that it must achievew these ratios byJune 30. Harleysville Nationapl said while it believes these ratioesare achievable, it does not think it can do so by that It said it does not know what actions, if any, the OCC will take if it does not complyy by that date. Harleysville National said the OCC may deem noncompliancre to be an unsafe and unsound banking practic which would subject the bank to administrativwe actionsor sanctions.
Harleysville shares closed 10 percent lower Tuesdayat $5.47. In order to increased the bank’s capital levels to meet the the bank will have to increase its reduce its assetsor both. Harleysville said its ability to increased its capital levels to meetthe OCC’ s requirements will largely depend on its financial performancre and conditions in the capital markets, whic are outside its It added that raising capital throughb the issuance of common stock or othed securities would likely dilute the value of its commoj stock.
Harleysville National said its capital ratiosx have been negatively affected by the economic downturnh and its effect on the businesses and homeownersw with whom itdoes business. Presidenf and CEO Paul D. Geraghty said in a statemenf that “legacy credit issues continue to be a challengw during this time ofeconomic uncertainty. This was a product of our historicaol focus on realestate lending, specifically residential real estatw development and home equity loans.” He said the companh has been working to strengthen credit administration, add to its loan workou staff, and actively manage the troubled loanx that are weighing down its portfolio.
At its most recent annual meeting thispast spring, Geraghty told shareholderse he intends to meet regulatory requirementx for a well-capitalized bank by the end of the year. Now that plan will have to be In an interviewTuesday afternoon, Geraghty said Harleysville National hopes to raise $65 million to $120 millionb in equity. Harleysville National Corp. of Harleysville, Pa., has $5.6 billion in assetxs and is thelargest locally-based bank in the eight-counth Philadelphia region with last year’as addition of Willow Financial Bancorp.
It has the seventh-most deposits in the regiobn with just morethan $3