Harleysville National Bank & Trust Co. has for decades been a steady lender to homebuilders in suburban Philadelphia, but now the inability of those builders to sell houses is straining the Montgomery County bank, chief executive Paul Geraghty said yesterday.

"I think in some respects we're feeling the effects of being such a strong lender collateralized by housing in our market area," Geraghty said.

Half of the bank's $3.6 billion in loans as of March 31 were backed by residential real estate through $1.5 billion in first mortgages and home-equity loans, in addition to $324 million in loans to residential builders, who accounted for a third of the bank's troubled loans.

Harleysville, the second-biggest bank based in the Philadelphia region, disclosed Monday that federal banking regulators had given it until the end of this month to boost its capital cushion to cover potential loan losses.

Geraghty said he expected to raise between $65 million and $120 million from private investors in the next three to eight weeks to move toward the tighter regulatory requirements. He said the bank would also sell certain assets to free capital.

Asked whether this regulatory dustup was a window for Harleysville - which recently bought two local rivals, East Penn Financial Corp. in 2007 and Willow Financial Corp. last year - to be taken over itself, Geraghty said: "My focus right now is raising capital."

Geraghty was emphatic that Harleysville's troubles were not caused by the acquisition of Willow, which was in disarray over a $6.2 million bookkeeping discrepancy.

A banking analyst said she thought Harleysville could recover. "This is a really strong management team, and I think they have a good board, too. They should be able to succeed," said Cassandra Torian, president and chief investment officer of Bell Rock Capital in Rehoboth Beach, Del.

Geraghty declined to name any of the homebuilders that were having trouble repaying loans. He said the bank has at least a dozen regional homebuilders in its portfolio.

Harleysville lent an unspecified amount of money to TH Properties L.P., which filed for bankruptcy protection in April, according to a court document. In its 2006 financial report, the bank said two residential real estate construction loans totaling $34.9 million had become troubled.

"There is nothing in the portfolio that was syndicated by an out-of-town bank for an out-of-town developer. These are people we know and stay in regular, direct contact with," Geraghty said.

Harleysville, which contributed to the $46.7 million bridge loan last year that helped get Boscov's out of bankruptcy, has 85 branches in eastern Pennsylvania.

Harleysville shares fell 59 cents or 9.74 percent to close at $5.47.