Capital Requirements

Second National Federal Savings Bank, the second-largest thrift in Maryland, said yesterday it had fallen below two of three capital levels required by federal regulators while significantly boosting the amount set aside to cover further losses in its loan portfolio.The thrift, with $1.75 billion in assets, said it would add $7 million to its general loan loss reserves for the fourth quarter as its non-performing loans jumped by 60 percent, to about $150 million, during the three-month period.

In an effort to raise money to comply with the requirements of intense federal supervision, Baltimore's 1st Mariner Bank said Tuesday it sold 95 percent of its consumer finance unit to a private equity firm for $10.5 million. The sale was the bank's "first and major step" in increasing its capital, Chairman and CEO Edwin F. Hale Sr. said in a statement. But the sale's proceeds are only about half of what the company has said it needs between now and July to meet targets established by regulators.

PRESIDENT Bush's move to loosen bank capital requirements is bad policy and a sign of escalating political panic. The Republican panic is understandable; the usual measures to stimulate a recovery are not working and a double-dip recession could make the 1992 election a real horse race.Normally, the government has two anti-recession medicines: bigger deficits or looser money. But this time deficit spending is out of the question, since the federal deficit is already enormous. On the monetary front, the administration has been leaning on the Federal Reserve to open the money spigot.

As part of an effort to improve Maryland's business climate, Gov. Parris N. Glendening yesterday signed an executive order requiring state agencies to justify regulations whenever they are stricter than federal rules.The order will not prevent agencies from adopting regulations tougher than federal standards, but could make it more difficult. The written justification will be reviewed by agency heads, the governor and a legislative committee with authority over rule-making before new regulations can be adopted.

ANNAPOLIS -- A bill to require insurance companies to increase dramatically the amount of capital they must hold, part of a package of insurance legislation submitted by the Schaefer administration, passed the House Economic Matters Committee yesterday.If past experience holds, the committee's favorable vote means the bill is almost certain to pass the House.The same package of bills was introduced in the Senate, where the Finance Committee held a hearing on the legislation this week.The House committee debated but decided not to vote yesterday on the rest of the governor's bills, which would target fraud committed against insurers and would strengthen the insurance commissioner's hand to go after insurance companies flirting with insolvency.

A number of the thrifts that had low ratings in the second quarter of 1991, according to IDC Financial Publishing Inc., have made changes since the data in the chart at right was collected.* Irvington FS&LA. The savings and loan, which has been operating under a capital plan approved by the Office of Thrift Supervision since April, is now exploring a private placement of stock to bolster capital to meet requirements of new federal laws, President William J. Ottey said.* Second National FSB. This subsidiary of Second National Bancorporation has submitted a revised capital plan to the OTS and is awaiting approval.

Second National Federal Savings Bank, a struggling thrift based in Annapolis and Salisbury, said yesterday that it lost $5.5 million, or 80 cents a share, during last year's fourth quarter after making a large provision to its reserves for souring loans.The company, which has seen its portfolio of loans badly deteriorate in the past year, said that it added $10.5 million during the last three months of 1990 to its pool of funds used to cover the costs of bad loans. That compared with a similar addition of $555,000 for the same period a year earlier, when the S&L earned $2.4 million, or 32 cents a share.

The third quarter of 1992 marked a positive turning point for Maryland's thrifts, according to IDC Financial Publishing Inc., a Wisconsin research firm whose ratings are shown below.Ironically, it was the federal takeover of two of the state's largest savings banks that contributed most to the third-quarter's overall score of 134, up from 117 in the second quarter.Standard F.S.B. in Gaithersburg was taken over Oct. 21, and Second National F.S.B. of Salisbury was seized on Dec. 4. But IDC removed both of their ratings from the chart as of the third quarter.

A number of the thrifts that had low ratings in the third quarter of 1991, according to IDC Financial Publishing Inc., have made changes since the data in the chart were collected.* Citizens Savings FSB. This thrift reported a profit of $1.5 million for the fourth quarter of last year, in contrast to a loss of $978,000 for the prior quarter.In the first quarter of this year, the Silver Spring-based institution earned $377,000, compared with $27,000 a year earlier. Citizens also said it signed a plan with federal regulators in December that outlined how it intends to meet all capital requirements by the end of this year.

Perpetual Financial Corp., continuing its long bout with souring real estate loans, said yesterday it expects an additional loss of $31 million for the quarter just ended and warned that it could fall below regulatory capital requirements if its losses continue unabated.The latest report for the company -- the largest thrift in the Virginia-Maryland-Washington region -- continued this year's unbroken string of troubling financial reports. Not including its latest losses, Perpetual, based in Vienna, Va., had lost $67.3 million during the first three quarters of its fiscal year.

The third quarter of 1992 marked a positive turning point for Maryland's thrifts, according to IDC Financial Publishing Inc., a Wisconsin research firm whose ratings are shown below.Ironically, it was the federal takeover of two of the state's largest savings banks that contributed most to the third-quarter's overall score of 134, up from 117 in the second quarter.Standard F.S.B. in Gaithersburg was taken over Oct. 21, and Second National F.S.B. of Salisbury was seized on Dec. 4. But IDC removed both of their ratings from the chart as of the third quarter.

A number of the thrifts that had low ratings in the third quarter of 1991, according to IDC Financial Publishing Inc., have made changes since the data in the chart were collected.* Citizens Savings FSB. This thrift reported a profit of $1.5 million for the fourth quarter of last year, in contrast to a loss of $978,000 for the prior quarter.In the first quarter of this year, the Silver Spring-based institution earned $377,000, compared with $27,000 a year earlier. Citizens also said it signed a plan with federal regulators in December that outlined how it intends to meet all capital requirements by the end of this year.

A number of the thrifts that had low ratings in the second quarter of 1991, according to IDC Financial Publishing Inc., have made changes since the data in the chart at right was collected.* Irvington FS&LA. The savings and loan, which has been operating under a capital plan approved by the Office of Thrift Supervision since April, is now exploring a private placement of stock to bolster capital to meet requirements of new federal laws, President William J. Ottey said.* Second National FSB. This subsidiary of Second National Bancorporation has submitted a revised capital plan to the OTS and is awaiting approval.

PRESIDENT Bush's move to loosen bank capital requirements is bad policy and a sign of escalating political panic. The Republican panic is understandable; the usual measures to stimulate a recovery are not working and a double-dip recession could make the 1992 election a real horse race.Normally, the government has two anti-recession medicines: bigger deficits or looser money. But this time deficit spending is out of the question, since the federal deficit is already enormous. On the monetary front, the administration has been leaning on the Federal Reserve to open the money spigot.

Second National Federal Savings Bank, an Annapolis and Salisbury thrift that has been working to satisfy federal regulators' demands for more capital, announced yesterday that it had reached an agreement with two major debt holders that will boost capital and lower interest payments.Second National said that the holders of $27 million of debt had agreed to various concessions that will add more than $9.5 million to the bank's capital and help it begin to reach the federally required capital level of 3 percent of assets.

Second National Federal Savings Bank, a struggling thrift based in Annapolis and Salisbury, said yesterday that it lost $5.5 million, or 80 cents a share, during last year's fourth quarter after making a large provision to its reserves for souring loans.The company, which has seen its portfolio of loans badly deteriorate in the past year, said that it added $10.5 million during the last three months of 1990 to its pool of funds used to cover the costs of bad loans. That compared with a similar addition of $555,000 for the same period a year earlier, when the S&L earned $2.4 million, or 32 cents a share.

ANNAPOLIS -- A package of bills intended to protect Maryland citizens against insurance insolvencies eased through a Senate committee yesterday with hardly a hitch.HTC But because the bills, submitted on behalf of Gov. William Donald Schaefer, were amended slightly by the Senate Finance Committee before they were passed, the differences will have to be worked out with the committee's counterpart in the House, the Economic Matters Committee.The bills would:* Give Maryland's insurance commissioner broader authority to take control of a company threatened with insolvency and increase the examinations of insurers from at least one every five years to once every three years.

Second National Federal Savings Bank, an Annapolis and Salisbury thrift that has been working to satisfy federal regulators' demands for more capital, announced yesterday that it had reached an agreement with two major debt holders that will boost capital and lower interest payments.Second National said that the holders of $27 million of debt had agreed to various concessions that will add more than $9.5 million to the bank's capital and help it begin to reach the federally required capital level of 3 percent of assets.

ANNAPOLIS -- A package of bills intended to protect Maryland citizens against insurance insolvencies eased through a Senate committee yesterday with hardly a hitch.HTC But because the bills, submitted on behalf of Gov. William Donald Schaefer, were amended slightly by the Senate Finance Committee before they were passed, the differences will have to be worked out with the committee's counterpart in the House, the Economic Matters Committee.The bills would:* Give Maryland's insurance commissioner broader authority to take control of a company threatened with insolvency and increase the examinations of insurers from at least one every five years to once every three years.