Fifty federally insured savings and loan associations in the Washington-Baltimore area suffered total operating losses of over $100 million in 1981, with losses for the second half of the year twice as large as those of the first six months, according to a new report by the Federal Home Loan Bank Board.

Of 50 federal S&Ls analyzed by the board in the Washington-Baltimore area, only three--all located in Virginia--were operating in the black at the end of 1981. The three institutions were Mount Vernon Savings and Loan, Dominion Federal Savings and Loan, and McLean Savings and Loan.

Industry officials say the drain is continuing this year and will not ease until interest rates come down or government assistance is granted.

The general trend notwithstanding, state chartered S&Ls insured by Maryland Savings-Share Insurance Corp. (MSSIC) were generally profitable last year.

Savings and loans, of course, are only one of many American industries that have fallen victim to high interest rates. Yet the government has a big stake in the fate of savings institutions because it insures deposits up to $100,000 per account. The Reagan administration and Congress recently declared that they would stand behind those guarantees.

If large losses do not directly affect depositors, they do affect the institutions. Bank board data show that District and Virginia S&Ls fared somewhat worse than the national average during the second half of 1981. Collectively, federal S&Ls lost 97 cents per $100 of assets. D.C. S&Ls lost $1.53; Virginia S&Ls, $1; and Maryland S&Ls, 91 cents.

During the first quarter of 1982, the profit picture worsened. Nationally, savings and loans lost $1.18 per $100. In the District, the ratio was $1.62, and in Virginia, $1.21. There was a slight improvement in Maryland as losses dropped to 87 cents.

As a result of the losses, there were further drops in net worth or reserves. Nationally, the net worth of S&Ls slipped another $1.9 billion to $25.6 billion in the first quarter of 1982. In this region, D.C. S&Ls dropped by $21 million to $260.1 million. Nine months ago, they had a net worth of $321.8 million. If that rate of loss were sustained, they could continue to operate for 12 years.

The figures for all the federally insured S&Ls in the state of Maryland show a $19 million decline in the first quarter, bringing total net worth to $407 million. For all the federally insured S&Ls in Virginia, the decline amounted to $33 million, lowering total net worth to $373 million.

Despite this poor performance, Washington-Baltimore area S&Ls as a whole still have reserves well in excess of those required by law. This means that the majority can withstand comparable losses for several years without exhausting their net worth. (Changes in net worth--assets minus liabilities--are the result of what generally is considered the equivalent of net earnings in this industry.)

Federal law requires a ratio of 3 percent net worth to insured deposits. When an S&L's ratio falls to 2 percent, federal regulators monitor the situation closely and often begin the process that ends with the troubled association being merged out of existence. During the last six months of 1981, the average ratio of reserves to deposits nationwide was 5.43 percent. D.C. S&Ls had a ratio of 7.83 percent; all federally insured Maryland S&Ls, 6.42 percent; and all federally insured Virginia S&Ls, 4.92 percent.

Those with reserve ratios of 2 percent or less were Independence in the District, Family Savings and Loan and Northern Virginia Savings and Loan in Virginia and Guardian Federal in Maryland. Last week, the two Virginia associations announced moves to improve their financial conditions. Family agreed to sell just over half its assets to a Richmond S&L in exchange for a cash payment of $600,000. Northern Virginia plans to sell four branch offices to the Bank of Virginia for $7.75 million. Guardian Federal is expected to announce a merger soon.

Another more speculative and therefore controversial way of measuring an institution's viability is by calculating how long it can sustain current losses before its net worth is reduced to zero or, in other words, before its liabilities equal its assets. By this measure, the Virginia S&Ls mentioned above would have been technically bankrupt within a year to 15 months without cash infusions.

There are other area S&Ls that sustained very heavy losses during the last half of 1981. Dividing their remaining reserves by the losses gives the number of half-years the S&L could continue to operate while sustaining the same losses. On this scale, Washington Federal, Home Federal and Capital City in the District would hit zero net worth within two years. Washington Federal is seeking $4 million to $5 million in government aid to merge with Guardian Federal in a move that would give Washington Federal an entree to the affluent suburbs. However, Guardian announced last week that it would make an announcement this week on a merger partner, which may or may not be Washington Federal. See story above. Home Federal is due to be absorbed by Interstate next August.

National Permanent had the largest loss--$16.4 million--of any of the 50 S&Ls surveyed, but its own losses were aggravated by its merger last year with Eastern Liberty, which had a $2 million loss. National Permanent's operating losses were nevertheless larger than management had predicted, according to its president, Edgar Peterson.

The reason for the poor results can be found in the fact that there is such a difference between what it costs S&Ls to get money and what they earn on loans made. In the mid-Atlantic region, the cost of funds in the second half of 1981 was 11.31 percent, whereas the average yield on mortgage portfolios was 9.98 percent. That was at a time when new mortgages were being made at around 17 percent.

Surrounded by a sea of red ink, Mount Vernon Savings and Loan stands out like a Rock of Gibraltar. During the first quarter, Mount Vernon had a profit of $467,000 because of a 2 percentage point spread between its cost of funds and the yield on its portfolio. Deposits were up to $95 million; assets to $171 million and mortgage loans to $101 million. Fifteen months ago, Mount Vernon was a $15 million association with a portfolio yield of 9.8 percent.

Its new president, James F. Russell, aggressively pushed sales of $100,000 "jumbo" certificates because, as he said, these were the only type of deposit on which rates were unregulated. Today, 82 percent of the S&L's funds are in jumbos, a much higher ratio than the national average. On the lending side, Russell has actively marketed variable rate mortgages, concentrated on financing homes under $100,000 and required builders to buy down mortgage rates to an effective 12 or 13 percent level.

Another success story is Dominion Federal. It had a $995,000 profit during the first quarter, following a profitable year. During the second half of 1981, Dominion borrowed heavily from the Federal Home Loan Bank to finance its mortgage activity. According to William L. Walde, Dominion's president, he succeeded where others failed because he sold off to investors every loan he made. He also was the first to sell Prince George's County mortgage-backed bonds. He hedged his position in the Ginnie Mae market, and held down costs. He declined to be more specific because "others will steal my thunder."

As for state chartered S&Ls insured by MSSIC, the private insurer reported their total net worth increased in the second half of 1981 by $10.5 million. As a percentage of savings, net worth decreased slightly to 5.03 percent. The 105 MSSIC-insured S&Ls had deposits of $2.5 billion at year-end. This is the direct result of the ability of state chartered S&Ls to pay higher rates on deposits than federally chartered or insured S&Ls. The insurance fund has assets of $83.9 million and a central reserve fund of $30.9 million plus a $97 million line of credit from banks. MSSIC has a $1.25 million loss reserve. In 1980-'81, it paid out nearly $3 million to facilitate a merger between one troubled S&L and another MSSIC member.

There are economists in the Reagan administration and elsewhere who contend that net worth is not the critical measurement for S&Ls; rather it is liquidity. This school of thought holds that institutions can continue to operate at essentially zero net worth provided they have adequate cash. Total S&L deposits nationwide, as of March 31, 1982, amounted to $523.8 billion. However, S&Ls have experienced a considerable drain on deposits in the past two years as savers sought higher yields in money market funds or greater perceived safety in commercial banks. The rate of outflow seems to have slowed this year, possibly because of deposits in Individual Retirement Accounts.

Nationwide, the net outflow, or excess of withdrawals over deposits without interest credited, amounted to $11.1 billion in the first half of 1981; $14.3 billion in the second half, yet just $754 million in the first quarter of 1982. District S&Ls suffered a net loss in deposits of $418 million last year; $36 million in the first quarter of 1982. Maryland S&Ls lost $567 million in deposits in 1981; $38 million this year. Virginia deposits dropped by $336 million last year, but increased by $1 million during the first three months of 1982. ortgage activity plunged, as high interest rates and high prices deterred buyers. Federal S&Ls made $52.4 billion in housing loans; this year, activity in the first quarter was $9 billion, or $36 billion on an annual basis. In the District, $587 million in loans were made in 1981; thus far activity amounts to $89 million, or about 40 percent less on an annual basis. In Maryland, the figures are, respectively, $1.1 billion and $136 million, down 50 percent, and in Virginia, $1.2 billion and $237 million, down a third.

Although interest rates have inched down since last fall, they have not gone down far enough to give the savings industry any relief from its current plight. Six weeks ago, FHLBB Chairman Richard T. Pratt predicted that if interest rates remain at current levels, some 400 S&Ls will exhaust their net worth this year. Andrew S. Carron of the Brookings Institution says that 1,100 institutions are "not viable over the long run." That amounts to a fourth of the industry.

Many proposals have been floated to help the industry, and many have been rejected as being unnecessary, unacceptable or too costly. Once again, a consensus seems to be developing that some type of emergency assistance is essential to the survival of the industry in anything like its present form. The focus at the moment is on a capital infusion guaranteed by the government that would prop up the net worth of S&Ls, mutual savings banks and other depository institutions until interest rates subside. This would be done with notes instead of cash. The government would have to come up with cash only in cases in which an institution is liquidated.

A House banking subcommittee recently approved legislation that would bring viable S&Ls' net worth up to 2 percent for two years provided the S&Ls invest at least 60 percent of new deposits in housing. The bank board favors a more limited approach that would infuse capital on a sliding scale as determined by federal regulators. Basket cases need not apply. There is no provision for a link with housing.

The Reagan administration is thought to favor the bank board's approach. It opposes additional standby funds for the Federal Savings and Loan Insurance Corp., the government agency that insures deposits and often gives aid to S&Ls willing to absorb troubled S&Ls. But the FSLIC may soon be forced to ask Congress for help. The Senate Banking Committee is working on a bill combining the bank board's capital infusion plan with more asset powers for S&Ls and more flexibility for regulators to effect mergers. Hearings will be held this month with a vote possibly by late June.

"I have mixed emotions about government guarantees," said Russell of Mount Vernon Savings and Loan. He admits that big institutions cannot effect the kind of overnight turnaround he managed. Russell offers two suggestions for the ailing industry: let S&Ls sell off their portfolios at deep discounts and run on negative net worth temporarily, or split them into small associations of perhaps $30 million each and allow them to start over because, in his opinion, merging them into ever larger S&Ls is like "transplanting cancer." If that doesn't work, he concludes, "then fold them."

Walde, of Dominion Federal, calls for total deregulation of assets and liabilities and consolidation of weaker institutions. Income capital certificates may be a good thing for problem S&Ls, but what it really takes nowadays to survive is an entrepreneurial spirit. "It takes long hours, an aggressive stand, a lot of worry to be successful," he added.