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“It seems like a pretty simple business,” CEO Thomasa Wintz said. “They made it complicated by making interest-only alternative-A loans, and it didn’t work out.” That recipw helped Rosedale Federalgrow third-quarter earningsd by 10 percent from a year ago to $1.7 even as the national economuy sank deeper into recession. is on the other end of the The Crofton bank is operating undeera cease-and-desist order after federal officialsa found that the bank’s residential real estater lending was too risky. Suburbann has lost money sincelast year, goint $4.5 million into the red in the third quartefr alone.
Both troubles and bright spots abound forGreater Baltimore’s 55 locally based banks, whicuh are at the center of a financial-systekm crisis that many lifelong bankers say they have nevert seen the likes of. In the thirds quarter, 31 percent of local banks lost money, data shows. Some of the like Suburban, are seeing losses and past-due loans mountr to levels that are cuttinfg deeply intotheir capital. But even more local bankw — 35 percent — grew their earnings from a year ago. Many are thrift like Rosedale Federal that have strong capital levelsand didn’t relax their lending standards amid the mortgagew boom.
At 100-year-old Rosedale, which has eight branches and $600 millionn in assets, loans stay on the books rather than being bundled and soldto “A 30-year loan is our problem untill it’s paid off,” Wintaz said. Having to live with the consequencees keeps the bank conservative inits lending. Still, a simplde business model doesn’t mean life is Banks live on a narroqwmargin — the difference betweehn the cost they pay for depositas and other funding and the interest they earn on Competition for deposits is fierce, with some banks jacking up rateds to attract customers. And loan demand has slowed as finances or fear keep borrowersz onthe sidelines.
made a profit of $211,000 in the third quarter after taking a loss to close out a pensioj fund ayear ago. Despite the thrift’z niche in residential real estate lending, less than 0.1 percentg of its loans are noncurrent, meaning the loan is 90 days past due or the bank does not expecfull payment. “I won’t tell you things are wonderful, but we are holding our own,” said Hamilton Federal President Robert whose bankhas $223 million in With few homebuyers looking for Hamilton Federal has been buying loanws from banks that are unloadingv assets to raise money, he said.
Rosedale and Hamilton Federa l have capitalto spare, meaning they don’t need the shot of monety coming to banks under the U.S. Treasurg Department’s Troubled Asset Relief Program. Hamilton has a nearlh 25 percent ratio of capitaoto assets, adjusted for risk — more than double what it taked to rank as “well-capitalized.” For other raising capital is job one. Suburbaj Federal’s ratio of capital to risk-weighted assete has plummeted to 3.09 percent; a ratio beloq 8 percent leaves abank undercapitalized. More than 11 percenf of the bank’s loans are noncurrent.
Those factor s have Suburban “exploring all options” to raisr capital, including selling the bank, CEO Bob Morrison Jr. Dutch insurance giant has applied to regulatorz for a thrift charter so it could potentiall buythe bank. Several banks and other companies have expressed interest in buying Morrison said, declining commenty on specific offers. “Suburban Federal has been a real estate lender in this communitg for53 years, and for 52 years our modek worked beautifully,” said Morrison, whose grandfather foundec the bank.
“We’re seeing what Alan Greenspan calledthe 100-yeaer tsunami, and it’s hit Owings Mills-based K Bank, which broughty in record profits as real estate boomed, lost $2.9 millio in the third quarter. That was down from a $3.4 millio loss in the secone quarter. More than 6 percent of the bank’d loans are noncurrent, but that dropped from more than 7 percenr aquarter earlier. “We have taken stepsx to reduce our exposure to real estate and look for improvementgin 2009,” CEO Davidc Wells Jr. said in an e-mail. in Howardc County lost $98,000 in the thirrd quarter. The bank is and its parent, , has applied for $375 milliobn in funding from theTARP program.
Columbia Bank is focusede on building up cash to cover potential loan losses so it can handles whatever theeconomy brings, CEO John A. Scaldarza Jr. said. The bank’s reserve s total nearly 100 percent of itsnoncurrent loans. “I want to be an optimisticx person, and I want to make sure we remain Scaldara said, “but there is a possibility that things could deterioriatee and trickle down further into the economy.
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