Washington Bancorporation, parent of the National Bank of Washington, yesterday laid off more than 150 employees, or 15 percent of its work force, one day after announcing that the bank company's future is in jeopardy.

Chairman John J. Mason said the layoffs, which affected all levels of personnel, reflected an agreement with federal regulators to shrink the size of the bank.

Investor reaction to the stream of bad news this week has been negative. Washington Bancorporation (WBC) stock, which has traded as high as $19 a share in the past year, fell $1.75 yesterday to close at $1.

Mason said Wednesday that the ability of Washington Bancorporation "to continue as an ongoing concern is in doubt." His statement followed the disclosure that National Bank of Washington (NBW) lost $80 million in the second quarter because of problems in its real estate loans, and that NBW and its parent company no longer meet federal requirements for capital, the cash cushion that bank owners provide to protect the federal deposit insurance fund from losses.

The bank is viable, Mason said, adding that he "didn't really believe that this 181-year-old institution is going to go away."

The decision to reduce personnel was made weeks ago but was announced to senior managers Wednesday afternoon, Mason said. Employees, including senior management, began receiving their pink slips immediately, he said.

"The layoffs took place in areas of the bank where we feel we can make reductions without compromising our business plan," Mason said. "Most were in areas of the bank where we don't want to concentrate our efforts," he said, citing the bank's stock brokerage and venture capital operations.

Employees said they were assured that the layoffs announced yesterday would not be followed by further cutbacks. However, many of them expressed doubt that the problems of the bank are over.

"The National Bank of Washington is not what it used to be," said a branch manager. "I don't think it will ever be the same again and I don't think it's all over yet."

The bank company noted on Wednesday that deposits at its banking subsidiaries continue to be insured by the Federal Deposit Insurance Corp. (FDIC) up to $100,000 per account. Although downtown branches appeared relatively calm yesterday, with no sign of large deposit withdrawals, tellers were fielding dozens of phone calls from customers concerned that their account balances exceeded the $100,000 limit for federal deposit insurance.

Mason said he was confident that there would be no significant deposit drain and he emphasized that the problems at the bank and at the holding company can be dealt with.

"The holding company {Washington Bancorporation} did default on its obligations and the creditors of the holding company were unsecured," he said. "But the bank {National Bank of Washington}, where the bulk of the net worth is, still remains viable. And even though it's no longer in compliance with capital standards, it is the judgment of the regulators that NBW is a viable institution with a positive net worth."

However, local banking consultants and lawyers said the decision by federal regulators to give Mason time to set his financial house in order does not necessarily mean that the Office of the Comptroller of the Currency (OCC), which regulates national banks, would refrain from stepping in later.

For the first time in its history, the OCC has the power to take over national banks and operate them "in conservatorship," in which the OCC takes control of the day-to-day operations of an institution through appointment of its own management, usually employees of the Federal Deposit Insurance Corp.

The agency, which received conservatorship powers as part of the savings and loan cleanup bill passed last August, has yet to use its new authority, which would give it the option of taking control of NBW even if the bank has a positive net worth.

Ellen Stockdale, spokeswoman for the OCC, said that if NBW is placed into conservatorship, it wouldn't have any affect on depositors.

"It becomes the same bank, just managed by different people," she said. "The idea behind it is simply to keep the bank alive and well until someone else can purchase it. It's an interim step, designed to stem future losses."

There are a number of guidelines the OCC follows when deciding whether to appoint a conservator, including whether the bank can meet the demands of depositors, whether the bank is operating in an unsound manner and whether federal assistance is needed to raise capital.

Stockdale said the OCC cannot actually close down a bank -- liquidating the bank and paying off depositors -- unless the institution becomes insolvent, which is not the case with WBC.

Mason said he does not believe regulators will take any action unless it is clear that the bank may drain the FDIC fund. "It's obvious to me that the concern of the regulators is the capital and the protection of the FDIC insurance fund," he said.

Mason said he is under no deadline to raise capital. But Stockdale said yesterday that the OCC is "sure that he understands that we expect the bank to be recapitalized as soon as possible."

The bank company also is facing a formal Securities and Exchange Commission inquiry into its commercial paper program and is under investigation by the U.S. attorney's office for possible money laundering. The company faces a number of shareholder lawsuits and lawsuits from creditors who lost money in WBC's commercial paper, or short-term debt.