Metropolitan Federal Savings and Loan Association of Bethesda was selected by federal officials yesterday to take over financially troubled County Federal Savings and Loan Association of Rockville.
The bid made by the $265 million Bethesda thrift was chosen by the Federal Savings and Loan Insurance Corp. over those from four other, larger associations in the District and Maryland. The unsuccessful bidders were Perpetual American and Washington Federal of the District, Baltimore Federal and First Federal of Annapolis.
Last March the Federal Home Loan Bank Board redrafted its policy against interstate mergers to allow them in the case of failing associations. It was anticipated than that County Federal might become the first interstate merger in a generation, due to the eagerness of District thrifts to branch out into the affluent suburbs.
However, if negotiations with Metropolitan fall through, FSLIC could still turn to the other thrifts. In a supervisory or involuntary merger of this type, the government agency choose the offer that will cost the government the least amount of money. The size of the bid is not made public.
Metropolitan's senior vice president, Wallace L. Davis, refused to confirm or deny the selection, saying he would not comment on the merger "while it is under negotiation." All of the other bidders did confirm that someone else had gotten the nod. Government officials also refused comment.
County's president, Robert N. Reeves, said he had "no feeling one way or the other" about being taken over by a Maryland or a District thrift. "We're just happy the Bank Board has made a decision."
Metropolitan is a financially strong institution with $18 million in reserves, well above the 4 percent requirement set by the government. It has 15 branch offices in eastern Maryland County, which has seven offices, refused to make any financial information available.
S&L executives who assessed the merger candidate's position, estimated its loan losses at $6 million to $7 million. Operating losses were reportedly calculated at $20 million, due to the rise in interest rates.
Depositors who have money with County have no cause for worry. Under a supervisory merger, the association's accounts will be transferred automatically overnight to Metropolitan without any interruption in service or in availability of funds. It is not known now how long the merger process will last.