Federal banking regulators have told Crofton-based Suburban Federal Savings Bank that it must be sold by Friday or face a possible government takeover.
The 53-year-old thrift has been trying to recover from losses on soured real-estate loans. In documents filed last week, the Office of Thrift Supervision ordered Suburban to merge with another institution or accept "appointment of a conservator or receiver."
If Suburban were to be seized, it would be the first bank to fail in Maryland since 1992, the tail end of the savings and loan crisis.
Suburban, which has seven branches and about $354 million in assets, was supposed to submit a binding merger agreement to the OTS by last Friday, but neither the regulator nor Suburban officials would say yesterday whether a plan was submitted.
"I cannot comment at this time," Robert L. Morrison Jr., Suburban's president and grandson of its founder, said in a phone interview yesterday. "However, the bank is in full compliance with the regulatory directive and is taking aggressive steps toward its recapitalization plan."
Janet Frank, an OTS spokeswoman, said the agency could not discuss pending cases.
Suburban accounts with less than $250,000 in them would be fully protected by federal deposit insurance if the bank fails. But amounts over $250,000 may not be protected.
It is unclear how many uninsured deposits Suburban has. As of Sept. 30, the bank had 660 accounts containing more than $100,000 - the amount that was the ceiling for deposit insurance before it was increased last year. Those accounts had $91 million in them, according to the Federal Deposit Insurance Corp.
Suburban had only $4 million in core capital remaining as of Sept. 30 after losing $4.2 million in the third quarter, according to financial statements filed with the FDIC. It should have $14 million in capital to meet minimum standards. The OTS notified Suburban on Nov. 7 that it was considered "critically undercapitalized," which required it to cooperate with regulators' efforts to find a buyer or close the bank, according to the order.
A week later, Dutch insurance company Aegon NV told federal regulators that it was exploring a bid for Suburban as a way to become eligible for the $700 billion bank bailout program. However, it withdrew its application in mid-December. Aegon, which has its North American headquarters in Baltimore, would have had to own a savings institution by the end of 2008 to access bailout funds.
