Mellon to buy 8 branches of Standard Federal thrift

November 18, 1992|By David Conn | David Conn,Staff Writer

Mellon Bank Corp. agreed yesterday to buy eight branches of Standard Federal Savings Association, a Gaithersburg savings and loan, from the Resolution Trust Corp., the federal agency that took over the thrift nearly a month ago.

Mellon will buy the eight branches and the $300 million in deposits held by them for a premium of 4 percent, the RTC said, or about $12 million.

In August, Mellon announced it had signed a definitive agreement to buy the eight branches. But the acquisition was still pending when Standard was taken into the government's hands.

In a statement yesterday, Mellon said it and the RTC "have agreed to honor the terms and conditions" of the previously announced agreement. "Both before and after the agreement, deposits remain insured by the FDIC," Mellon said. The transaction is expected to be completed early next month.

The deal, which includes two branches in Prince George's County and six in Montgomery County, more than doubles Mellon's presence in the Maryland suburbs of Washington.

When Standard Federal was put into receivership by the federal Office of Thrift Supervision, the thrift had $1.8 billion in assets and $882 million in deposits at 18 branches. It employs more than 2,000 people, including about 1,300 at its mortgage servicing unit in Frederick.

Standard was one of the nation's largest mortgage servicers, with a $36 billion portfolio of serviced mortgages as of June 30. It was the mortgage servicing rights that got Standard into trouble. The recent pace of mortgage refinancings reduced both the income derived from servicing, and the market value of the servicing contracts.

When the value of those contracts fell, so did the company's capital, which is the financial cushion banks and thrifts keep in reserve to protect shareholders and the federal government against possible losses.

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