Trustbank Savings FSB of McLean said yesterday it lost $18.8 million in the fiscal year ended March 31, principally because it increased the reserves it maintains to cover losses from loans that go bad.

Trustbank, formerly known as Dominion Federal Savings and Loan Association, lost $17.3 million in the previous fiscal year, also mostly due to additions to bad-debt reserves. Edward C. Allen, chief financial officer, said the company hopes the bad-loan problem -- concentrated in areas related to real estate -- is behind it.

The savings bank's total assets fell to $2.1 billion from $2.2 billion on March 31, 1989. Most of 1990's loss came in the last quarter of the fiscal year, when the thrift increased its bad-debt reserves by $16 million and posted a loss of $16 million.

Chairman William L. Walde said in a statement that the addition to reserves "reflects a more conservative approach to real estate loan valuation. The majority of the savings bank's loans are in the mid-Atlantic region. Like other lenders, we believe it is prudent to strengthen our loss reserves at this time."

Trustbank operates 38 retail branches in the region, as well as subsidiaries that engage in mortgage origination, real estate appraisal, security and insurance brokerage services and real estate development, management and syndication.