First Annapolis Federal Savings Bank, Maryland's seventh largest savings association, was taken over yesterday by federal regulators after an unsuccessful two-year struggle to put its financial house in order.

Although based in Annapolis, First Annapolis operates 21 branches across the state in Prince George's, Anne Arundel, Calvert, St. Mary's and Charles counties.

It will be renamed and will operate under the supervision of the Resolution Trust Corp., the agency created to handle failed thrifts.

Federal regulators said yesterday the new entity, First Federal Savings Bank of Annapolis, will remain open for business as usual, and customers with deposits up to $100,000 will not be affected by the takeover.

Patricia Forsyth, spokeswoman for the Office of Thrift Supervision (OTS), the thrift regulatory agency, said the government's action was prompted by "unsafe and unsound operations."

First Annapolis, which has $732.1 million in assets, was consistently losing money, and its loan portfolio was ladened with loans unlikely to be repaid in full. The thrift now is insolvent, with liabilities exceeding its assets by about $7 million.

First Annapolis wound up last year with $11.3 million in losses. It lost another $14.4 million in the first two months of 1990.

As a result of those and earlier operating losses, First Annapolis had depleted all of its capital, the cash investment provided by its stockholders to provide a financial cushion for the thrift and its depositors.

In recent months, the thrift's executives have been negotiating with the OTS for approval of a plan to replenish its capital and meet regulatory guidelines. But Forsyth said the thrift would be unable to meet the stricter capital standards now set by the federal government, at least without some government subsidy.

The Resolution Trust Corp. has placed William Haley, an RTC manager, in charge of the thrift's operations until a new buyer for the thrift is found or its loans, deposits and branches can be sold separately.

First Annapolis has been operating under a consent decree by the Federal Home Loan Bank of Atlanta since 1987. That year, the thrift received a $12 million injection of capital from several Annapolis investors, which was enough to keep the thrift financially above water. It has been struggling ever since to clear up problem loans and investments and return to profitability.

Last October, the thrift dismissed 25 employees and closed four of its six Baltimore-area offices. The dismissals were part of a cost-cutting effort expected to reduce operating expenses by $2 million a year.

However, banking executives familiar with the thrift's operations said the reductions did little to stem the growing losses from First Annapolis's investments. The thrift made millions of dollars in commercial real estate loans, which are now troubled, and participated in many joint venture operations -- a practice now forbidden in the thrift industry.

The thrift also got in trouble with what are known as "loan sales" -- an accounting gimmick that allows thrifts to realize profits from buying good loans but avoid recognizing losses when selling bad ones. Over time, the sales, which are now banned, depleted the thrift's capital base.