Government Services Savings and Loan officials are said to be "absolutely delighted" with a merger agreement they signed Tuesday with Chevy Chase Savings and Loan Association.
In fact, GSSL President Alexander R.M. Boyle said, directors of the Bethesda-based S&L are "ecstatic."
The joy at GSSL has been dampened, however, by indications of concern among some depositors and stockholders. They wonder how bad the S&L's financial problems are and whether operating losses of the past two years forced a desperate search for a merger partner.
The agreement between GSSL and Chevy Chase is voluntary rather than the result of any condition imposed by state regulatory authorities. In fact, all but three of the many mergers in metropolitan Washington over the past year have been voluntary.
Typically, officials involved in those mergers said they combined their institutions--beset by industrywide operating losses and shrinking net worth--to ensure strength in the face of growing competition in the financial services industry.
Why then, has Government Services' decision to merge raised so many questions? The fact that it is one of the few publicly held stock associations in the region may account for part of it.
On the other hand, GSSL stockholders need look no further than their own group as a cause for public concern about the company's relative stability.
By publicly airing their differences in a bitter struggle for control of the board last year andChevy Chase apparently believes that it's worth the risk to pay $10 a share for a company . . . trading in the $2-to-$3 range. threatening to fire the president if they succeeded, some dissident shareholders gave the impression that GSSL was a basket case.
Dissidents grumped over plans to sell valuable property that GSSL owned in Bethesda and excoriated management for its handling of the company, implying that different management could reverse a losing trend.
A compromise that gave the dissidents four seats on the board last year should "stop the flow of funds" caused by uncertainty about the institution and reassure investors, Chairman E.A. Baker noted after his group forced a showdown.
Operating losses continued, however, just as they have throughout the S&L industry, which has been hard-pressed by high interest rates. And even if there had been a change in management, it's doubtful that the losses would have stopped in the present high-interest-rate cycle. They haven't stopped at many S&Ls regardless of size, as government reports have shown.
Unlike a majority of the state-chartered S&Ls in Maryland, GSSL is a public stock company and must report its operating results, exposing it to more scrutiny.
Other state-chartered S&Ls are protected by state law from disclosing their results. Conversely, the Federal Home Loan Bank Board makes public the condition of federally insured S&Ls semiannually.
It's worth noting in that regard that only four of the 44 federally insured S&Ls with offices in this area finished 1981 in the black.
Although normally reluctant to comment on a member's status, MSSIC officials were emphatic yesterday in dismissing all notions that Government Services was about to fail before it found a merger partner.
"The fact that they operated at an operating loss does not mean they are ready to go under," declared Ralph K. Holmes, MSSIC vice president. "We're concerned that they're operating at a loss, but they're improving," Holmes insisted.
Chevy Chase President B. Francis Saul has been unavailable for comment but industry sources doubt that he would risk the purchase of a failing S&L.
Chevy Chase apparently believes that it's worth the risk to pay $10 a share for a company whose stock has been trading in the $2-to-$3 range. It apparently concluded further that with assets of more than $400 million, Government Services is a sound investment.
Besides, by taking over GSSL, Chevy Chase can expand its market coverage by picking up eight offices in areas it hasn't penetrated.
But Chevy Chase, like several other suitors, rushed in with offers only after a Virginia real estate firm offered GSSL $6 a share for its stock and a guarantee of a minimum $3 a share to each stockholder from GSSL's sale of property last year.
Government Services raised further questions about its future even as it appeared that a merger had been sealed with Equity Programs Investment Corp. Barely a week had elapsed before it called off the deal and signed a pact with Chevy Chase.
"We're a public company ,and we have to do what's best for our stockholders," Boyle said.
Wednesday's Capital Commerce column was not intended to suggest that all banks in Network Exchange are charging fees for certain ATM transactions. While some banks are considering charging their customers fees for transactions at ATMs owned by other banks in the same network, only Suburban Bank has adopted the policy.