York-area thrift, even though a fifth of its assets are nonperforming. New Rochelle-based River Bank America reported a net loss of $2.8 million for the third quarter, with nonperforming assets of $288 million, or 18.9% of total assets. The thrift also declared a $1.3 million dividend on its non-cumulative preferred stock, bringing the total loss on common shares up to $4.1 million. But that's actually an improvement for the $1.5 billion-asset thrift, which reported a loss of $5.9 million in the same quarter of 1994 and which once had bad assets of about $400 million or 28.8% of the total. And River Bank reported a Tier 1 leverage capital ratio of 5.69% at Sept. 30, above the 5.50% required by regulators. The thrift exceeded its capital requirements by $2.8 million, with $85.3 million in total equity. In response, the Federal Deposit Insurance Corp. and the state banking department replaced the four-year-old cease-and-desist order with a less rigid memorandum of understanding, still maintaining the 5.50% capital requirement. "We're delighted with that," said Jerome R. McDougal, River Bank chairman and president. "That gives us a lot more latitude than it has before and it recognizes the fact that we are making real progress." FDIC and state officials could not be reached for comment. Thrift officials attributed the third-quarter loss to a $3.3 million provision for loan losses and a $1.1 million charge for severance and other costs connected to a downsizing that cut staff by about 35%. But Mr. McDougal said the thrift is now operating "at a break-even basis" despite additional loan-loss provisions he expects will be necessary in future quarters. The latest non-operating costs were offset by the reversal of a $2 million reserve following the thrift's settlement in October of tax claims with the state. River Bank had been appealing a ruling that the thrift owed $1.8 million in state taxes for 1985 and 1986, based on the state's disallowance of deductions for bad debt reserves. The thrift had also accrued additional charges for interest and penalties, boosting the total to $4 million. But after the thrift's accountants warned that it could also be assessed for 1987 through 1989 on the same basis, River Bank agreed to pay $2 million to settle the case. The state, in turn, agreed not to assess any additional taxes for other years, allowing the thrift to reverse the remaining reserves. The savings bank's nonperforming assets actually dropped by only $500,000 from June because reductions of $16.7 million were balanced by additions of $16.3 million, including planned construction advances and new nonperforming loans. But the bank grew in size in the same period, bringing the percentage of nonperforming assets to total assets down from 19.7% at June 30. River Bank has avoided bulk sales of nonperforming assets during the last couple of years, preferring to sell the assets piecemeal when the market yields better prices. "Not only are we making progress, but we're making better progress in terms of the realized prices for the nonperformers that we're disposing of because the market's getting better," Mr. McDougal said. The strategy of working through troubled real estate developments, using the bank's money to fund completion or even improvements before marketing the asset for sale, is risky but not untried. Several thrifts in California and the Mid-Atlantic have successfully pursued the strategy with regulator acquiescence.

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