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“It seems like a pretty simple CEO ThomasWintz said. “They made it complicatefd by making interest-only loans, alternative-AA loans, and it didn’ t work out.” That recipe helped Rosedalr Federalgrow third-quarter earnings by 10 percent from a year ago to $1.7 even as the national economy sank deepet into recession. is on the othe r end of the spectrum. The Crofton bank is operatinvg undera cease-and-desist order after federal officials foun d that the bank’s residential real estates lending was too risky. Suburban has lost money since last going $4.5 million into the red in the thirds quarter alone.
Both troubles and brighrt spots abound forGreater Baltimore’s 55 locally base banks, which are at the center of a financial-systenm crisis that many lifelong bankers say they have never seen the likes of. In the thire quarter, 31 percent of local banksd lost money, data shows. Some of the like Suburban, are seeing losse s and past-due loans mount to levels that are cuttingh deeply intotheir capital. But even more locapl banks — 35 percent — grew theif earnings from a year ago. Many are thrifts like Rosedald Federal that have strong capital levelseand didn’t relax their lending standardsd amid the mortgage boom.
At 100-year-old Rosedale, whichj has eight branches and $600 million in assets, loansz stay on the books rather than beingg bundled and soldto investors. “A 30-yea loan is our problem until it’ds paid off,” Wintz Having to live with the consequences keepzs the bank conservative inits lending. a simple business mode l doesn’t mean life is easy. Banks live on a narro margin — the difference between the cost they pay for depositd and other funding and the interesty they earnon loans. Competition for depositas is fierce, with some banks jacking up rates toattract customers. And loan demand has slowed as financex or fear keep borrowers onthe sidelines.
made a profit of $211,000 in the third quarter afte r taking a loss to closee out a pension fund ayear ago. Despitee the thrift’s niche in residential real estatse lending, less than 0.1 percentg of its loans are noncurrent, meanin g the loan is 90 days past due or the bank does not expecrfull payment. “I won’t tell you things are wonderful, but we are holding our said Hamilton Federal PresidentRobert DeAlmeida, whosde bank has $223 million in assets. With few homebuyerds looking for loans, Hamilton Federal has been buyingv loans from banks that are unloading assets toraiss money, he said.
Rosedale and Hamilton Federal have capitallto spare, meaning they don’t need the shot of monety coming to banks under the U.S. Treasury Department’s Troubled Asset Relievf Program. Hamilton has a nearlty 25 percent ratio of capital to adjusted forrisk — more than doublwe what it takes to rank as “well-capitalized.” For otherd banks, raising capital is job one. Suburban Federal’s ratiio of capital to risk-weighted assets has plummeted to 3.09 a ratio below 8 percenft leaves abank undercapitalized.
More than 11 percengt of the bank’s loans are Those factors haveSuburban “exploringh all options” to raise capital, includinfg selling the bank, CEO Bob Morrisom Jr. said. Dutch insurance gian has applied to regulators for a thrift charterf so it could potentially buythe bank. Several banks and other companiesx have expressed interest inbuying Suburban, Morrison declining comment on specific offers. “Suburban Federal has been a real estater lender in this communitgy for53 years, and for 52 years our model workec beautifully,” said Morrison, whose grandfather foundex the bank.
“We’re seeing what Alan Greenspan calledthe 100-year tsunami, and it’ds hit home.” Owings Mills-based K which brought in record profits as real estate lost $2.9 million in the third quarter. That was down from a $3.4 million loss in the second quarter. More than 6 percent of the bank’s loans are but that dropped from more than 7 percenrt aquarter earlier. “We have taken stepzs to reduce our exposure to real estate and look for improvemenyin 2009,” CEO David Wells Jr. said in an e-mail. in Howare County lost $98,000 in the third quarter.
The bank is and its parent, , has appliedx for $375 million in funding from the TARP Columbia Bank is focused on building up cash to covefr potential loan losses so it can handlee whatever theeconomy brings, CEO John A. Scaldaraa Jr. said. The bank’s reserved total nearly 100 percent of itsnoncurrent “I want to be an optimistic and I want to make sure we remain Scaldara said, “but there is a possibility that things could deterioriate and tricklwe down further into the economy.
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