Regulators Seize First Newport Bank : Thrifts: Bad loans took big toll on capital, federal officials say. The S&L;, the 26th such failure in county, will reopen Monday.

First Newport Bank, which recently changed its name from University Savings Bank, became the state’s third thrift failure this year as regulators declared the tiny savings and loan insolvent Friday and seized it.

The one-office thrift, with $35 million in assets, will reopen for business Monday as government-operated First Newport Federal Savings Bank. Deposits remain insured up to $100,000 in each account.

The federal Office of Thrift Supervision said the Newport Beach institution had no prospect of replenishing its capital, which was wiped out by losses on commercial, construction and other non-residential loans made by “inadequate former management.”

In July, the OTS forced out Thomas J. Bernard as chairman, president and chief executive. Another director stepped in as chairman, but no one was ever found to fill the other positions. The thrift had been operating under regulatory restrictions since then.

The S&L; reported an annual loss of $331,000 last year, but the OTS said the thrift actually lost $3.2 million. First Newport lost $96,000 in the first quarter this year and $129,000 in April alone, the agency said. In addition, 36% of its assets were classified as bad loans, the agency said.

The thrift’s liabilities exceeded its assets by $35,000, the OTS said.

The agency appointed the Resolution Trust Corp., charged with liquidating failed thrifts, to operate First Newport and sell its assets.

Founded in Fresno six years ago, University Savings opened an office in Newport Beach in 1989 and soon had an identity crisis. It couldn’t decide whether Fresno or Newport Beach was its primary service area. The headquarters’ office seemed to fluctuate between the two.

After Bernard was forced out, the thrift sold the Fresno office and put its hope for a revival on the Orange County market.

First Newport is the 26th Orange County thrift to fail since the wave of regulatory takeovers began in the 1980s. No county in the state has had more S&L; failures.

A week ago, the OTS seized another Orange County thrift, San Clemente Savings Bank, which the agency had been trying to market as a solvent institution for the previous four months.

In January, the OTS seized Advanced Federal Savings Bank in Northridge.