As if local banks didn't have enough problems -- with the sagging real estate market and increased scrutiny from government regulators depressing earnings and senior executives -- they're facing yet another threat: a burst of lawsuits from borrowers and shareholders who claim they've been mistreated or misled.

Riggs National Corp., parent firm of Riggs National Bank; Washington Bancorporation, parent of the National Bank of Washington; and MNC Financial Inc., parent of American Security, Maryland National and Equitable banks, all find themselves facing legal action from disgruntled customers or stockholders.

The raft of lawsuits stems largely from the financial institutions' real estate lending. By recognizing losses on soured loans to satisfy regulators, the bankers have run afoul of shareholders caught off guard by the sharp hits to earnings and bank stocks.

And by retreating from the weak local real estate market, the banks and savings and loans have angered borrowers who find it hard to obtain funding from institutions that were willing to lend them money just a few months ago.

One angry developer contends that a bank financed his purchase of some land with two older office buildings on it and then pulled the rug out from under him by reneging on a pledge to lend him funds to improve the property.

David Kuney, an attorney for one of the disgruntled developers, acknowledged that the cases may be a tough sell in Washington, where relatively few lender liability cases have ever gone to

court. But he said there may be many more such cases on the way.

"Washington is sort of waking up to lender liability for the first time," he said. "As the credit crunch gets worse, and banks get into trouble, we're going to be seeing more and more of them, without question."

It's not strictly a local phenomenon. Banks and savings and loans around the nation are finding themselves facing similar suits for similar reasons as they tighten up their lending practices and move to clean up their books.

At the very least, the litigation could cost the banks and thrifts millions of dollars in legal fees. At worst, if precedents in other states are any guide, the legal actions could result in multimillion-dollar damage awards against the institutions.

Either way, experts say, the suits could force bankers to become even more cautious in their business practices.

For their part, many local bankers say they think most of the lawsuits are frivolous and a costly disruption to their business.

"We've got plenty of other things to worry about," said one local banker who asked not to be identified. "These lawsuits are a nuisance. They couldn't come at a worse time."

But as more and more Washington area institutions are forced to rein in their lending and revise their profit statements, the race to the courthouse will continue, warned Jerry D. Hawke, an attorney at the law firm of Arnold & Porter who specializes in cases involving banks.

"Whenever you get a downturn in the economy, you are going to get these kinds of actions," Hawke said, adding that similar waves of legal actions have swept through the Southwest and New England, where faltering economies have hit banks and thrifts hard.

Hawke said the most worrisome suits are those alleging that banks and thrifts have pulled the plug on borrowers who claim they werepromised a loan. Such lender liability suits in Texas courts have resulted in multimillion-dollar damage awards to borrowers -- awards often far exceeding the amount of the loans in question.

But despite such potential liability, area bankers have made no bones about their retreat from various markets. Frightened by harsh criticism from federal bank examiners who have been reviewing their loan portfolios since mid-March, local lenders have said they are cutting off customers they would have funded just months ago.

"It's hard to know who your sympathy should be with in cases like this," Hawke said. "You've got a borrower who's already started a construction project who gets cut off in midstream and stands to suffer real losses. One could argue in retrospect that {the bank} shouldn't have made the loan in the first place. But it's very different when you're in midstream."

Maryland builder Dennis Leapley knows that firsthand. Leapley has sued Riggs National Bank of Washington for $22 million, contending that the bank reneged on its promise to finance the development of some property with two older office buildings on it near the Inner Harbor section of Baltimore. Leapley said he already had completed two successful projects with backing from Riggs.

According to Leapley, a Riggs loan officer gave him assurances in early 1988 that financing would be available for the Baltimore project. In October 1988, the bank approved a $3.8 million acquisition loan for the site, but then refused to provide a promised $12.7 million construction loan nine months later, according to the lawsuit.

In his suit, Leapley said he was told by a senior loan officer from the bank last July that his loan application was not even going to be submitted to the bank's loan committee "because 'unofficially' Riggs had gotten out of the real estate market, was not making any loans for commercial developments, and in fact, had not made such a loan since March 1989."

A spokesman for Riggs refused to comment on the case, which has not yet been scheduled for trial. But Riggs said in court papers that it never promised to make Leapley the construction loan.

"I know they would have made these loans under different circumstances," Leapley said in an interview, referring to the recent slowdown in the local real estate market. "But our position is that we had an agreement. And they broke that."

"If they hadn't made any promises, believe me, I wouldn't be fighting," he said. "But I started work knowing that I had guarantees, and then they didn't deliver."

Last week a judge turned down Leapley's request for a preliminary injunction that would have required Riggs to lend him the money and would have prevented the bank from seizing the property he purchased.

Another real estate suit is pending against National Bank of Washington. Gary and Ann Grimm, a McLean couple who have built numerous residential developments in the Virginia and Maryland suburbs, have sued NBW for $45 million, alleging that the bank "delayed and thwarted" the Grimms' attempts to renegotiate $8 million of loans on which they had defaulted. The bank had sued the Grimms to collect on the loans.

"The bank made promises to work out the problems," said David Kuney, the Grimms' attorney. "But they never lived up to those agreements."

The Grimms allege that NBW officials sought to delay as long as possible the restructuring of the loans because altering loan terms would have depressed the value of the bank's assets and made NBW a less attractive buyout target.

NBW's parent firm, Washington Bancorporation (WBC), has been looking for a buyer for more than two years and has been negotiating with several interested parties in recent months.

WBC Chairman John M. Toups declined to comment on the Grimm case. But he said he believed the bank "has conducted itself absolutely appropriately with all of the parties we have loaned to."

Gary Grimm, who has long been involved in residential development in the region, is not likely to abandon his fight easily. He helped found real estate giant NV Homes in 1979 and since 1973 has developed thousands of homes.

Kuney said the key to cases such as the Grimms' and Leapley's is good faith.

"The judge has to go beyond the terms of the papers and agreements," he said. "If the bank makes promises and creates an atmosphere of goodwill, and the borrowers perceive that they've gotten a commitment, then the bank can't just disregard that."

The banks aren't under attack solely from their customers. They're also facing suits from angry shareholders who have seen the value of their holdings plummet as banks have written off millions of dollars in bad loans in recent months to please federal regulators.

The shareholder suits generally allege that bank officials have concealed the true financial conditions of their institutions and that the recent disclosures came too late.

Hawke blames the comptroller of the currency's crackdown on real estate lending for this latest wave of suits, saying federal bank examiners are setting up banks for this litigation by forcing bankers to recognize losses in their portfolios and shore up cash reserves.

Hawke warned that such suits may be followed by actions by the Securities and Exchange Commission, which enforces financial-disclosure laws for publicly held firms.

MNC Financial and NBW, which have both recently announced sharp increases in nonperforming loans, already are facing this type of litigation. And Hawke said dozens of other lenders along the East Coast are fighting similar battles.

The majority of these suits, including the highest profile local cases, have been filed by the Haverford, Pa., law firm of Greenfield & Chimicles, which specializes in shareholder suits. Over the past 15 years, the firm has taken about 50 banks and thrifts to court.

Although some banking lawyers refer to the firm as "ambulance chasers," others say Greenfield & Chimicles has set new standards for legally twisting the arms of corporate executives until they ante up cash for shareholders.

And the firm may have an extra weapon these days in its actions against the financial institutions.

According to Hawke, the bankers' defenses are being hobbled by statements by Comptroller of the Currency Robert Clarke that bank examinations are no more rigorous today than they were a year ago. That could make it more difficult for the banks to argue that they have properly disclosed their lending problems all along and are only making new disclosures these days because of new banking standards.

But local bankers say they believe they will prevail in court. Dan Finney, spokesman for MNC, said, "We intend to defend ourselves vigorously. We're very confident of the actions we've been taking."

Similarly, a spokesman for Washington Bancorporation said, "We believe we have taken prudent actions. We're very confident."

But lawyers say the banks' optimism may be misplaced. Until the various cases wend their way through the courts, Hawke and others said, no one will know just how much trouble the current round of suits will bring.endquad