Bradford Ordered To Sell

U.s. Says Bank Must Merge With Another Or Sell Its Assets By Aug. 24

Bank Had 1st-quarter Loss Of $13.9 Million

August 06, 2009|By Lorraine Mirabella | Lorraine Mirabella,

Baltimore-based Bradford Bank, which had been placed under federal supervision in February, must merge with or be acquired by another financial institution or sell itself by Aug. 24, according to a federal regulatory document.

The Office of Thrift Supervision, in an order dated July 24, issued a "prompt corrective action directive" against the bank, requiring it to complete a merger, acquisition or sale of its assets and liabilities to another financial institution within 30 days.

The OTS had issued a "cease and desist" order against the bank in February, when regulators said Bradford pursued "an aggressive growth strategy that was poorly planned and executed, unsupported by adequate and appropriate levels of capital."

The latest order gives the bank 15 days, or until Saturday, to submit a binding merger or acquisition agreement to the OTS, unless that deadline is extended by the regulators.

Dallas R. Arthur, Bradford's president, was unavailable Wednesday. A spokesman for OTS said the office does not comment on pending orders. He confirmed that the bank remains open.

"It's certainly a pretty serious order," said Bert Ely, an Alexandria, Va.,-based banking consultant. "And lurking in the background would be a government takeover and failure of the institution if they aren't able to raise additional capital or find a buyer."

But Ely said that deadlines set in such orders are often extended or modified, depending on progress made.

"The big question is how good a handle do the Bradford folks have on the potential losses in their loan portfolio," Ely said. "It is extremely difficult for banks to raise capital or to find a buyer in this banking environment."

Bradford bank, headquartered on York Road in Towson, has nine branches in the Baltimore area, with $462 million in assets and $389 million in deposits at the end of March, according to the latest available quarterly report filed with the OTS. The bank lost $13.9 million in the first quarter, double the loss from all of last year, according to the filing.

Bradford is among several local banks suffering in the collapse of the real estate market. Regulators had shut down Suburban Federal Savings Bank of Crofton in late January, Maryland's first bank failure in 17 years, after it failed to make changes ordered by the federal government. In February, the OTS issued a "cease and desist" order to Eastern Savings Bank of Hunt Valley, the region's second-largest locally owned institution, as well as to Bradford. At that time, regulators ordered Bradford to stop originating commercial, construction and nonresidential real estate loans.

Bradford filed papers last fall to conduct a stock offering but has been stymied by the poor market.

Nationwide, 69 banks have failed since the beginning of the year. According to the FDIC, 26 banks failed last year, and three failed in 2007.

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