An article Wednesday on the acquisition of Friendship Savings and Loan by Chase Manhattan Corp. incorrectly identified another Maryland savings and loan association purchased by Chase Manhattan Corp. Chase purchased Chesapeake Savings and Loan of Annapolis prior to the Friendship acquisition.
Chase Manhattan Corp. formally announced yesterday that it will acquire a Bethesda savings and loan company, completing the second leg of a three-part deal designed to establish Chase Manhattan as a formidable financial power in Maryland in advance of the scheduled arrival of interstate banking.
In a joint statement, spokesmen for Chase Manhattan of New York, the nation's third-largest bank, and Friendship Savings and Loan Association announced the plan to take over the Bethesda thrift, which currently lists $307 million in assets and has four branches in Montgomery County.
The deal would give Friendship's shareholders, a small group, $20 million worth of long-term mortgages now held by the S&L.
Chase's acquisition of Friendship and its purchase of Community Savings and Loan Association of Annapolis, which was announced a week ago, are contingent on the passage of a new banking law by the Maryland General Assembly that would permit Chase to convert the thrifts to commercial bank branches. The acquisitions also require state and federal regulatory approval.
The legislature is expected to take up that measure only when Chase completes its continuing negotiations to take over a third institution, the troubled Merritt Commercial Savings and Loan of Baltimore. Merritt has been under state conservatorship since May, when reports of alleged improprieties at the Old Court Savings and Loan Association triggered a statewide thrift crisis.
Industry sources said they expect the deal with Merritt, first reported as pending a month ago, to be completed within one to two weeks. Then Gov. Harry Hughes would likely call the legislature into special session in late September or early October.
"Obviously we wouldn't call a special session if Merritt is not included in there," said one official in the Hughes administration. "It doesn't fly without Merritt in the package."
For the Hughes administration, whose efforts to dig out of a four-month-old thrift industry crisis were set back last week by the imposition of temporary withdrawal freezes at two Washington area savings and loan companies, yesterday's announcement came as welcome relief.
"It's extremely good news and certainly a step in the right direction," said Thomas H. Maddux, Hughes' secretary of economic and community development. Maddux described the negotiations involving Merritt, whose purchase would remove a major headache for state officials, as "continuing and on track."
Friendship's stockholders, who would receive $20 million worth of the thrift's mortgages in the deal with Chase Manhattan, are dominated by President E. Mitchell Fry Jr. and Board Chairman Anthony C. Koones. Neither Fry nor a Chase spokesman would describe the sale arrangement in detail, but industry sources said the mortgages are former federal loans carrying interest rates of 6 and 7 percent that have about 25 years left to maturity.
House of Delegates Speaker Benjamin L. Cardin (D-Baltimore) predicted yesterday that the legislature will approve a new banking law if the Chase-Merritt negotiations are successful, but promised legislators they would get a "good look" at the deal before being called into session.
Last winter the assembly enacted legislation, dubbed the Citicorp bill, that permits the giant New York Citicorp bank and other out-of-state banks entry into the Maryland market next July providing they meet certain investment and job creation requirements. With the legislature's approval, Chase's acquisition of the three savings and loans would give it a head start on Citicorp.
In a related development, Hughes named a permanent director yesterday for the Maryland Deposit Insurance Fund (MDIF), the state agency created in May by the legislature to replace the Maryland Savings-Share Insurance Corp., the private insurer of state-chartered thrifts.
Hughes appointed Melville S. Brown, a 41-year-old banking consultant from Miami, who was described by a spokesman for the governor as an experienced banking industry troubleshooter.
Before becoming a consultant, Brown was president of the Transatlantic Bank of Coral Gables, Fla., and an executive with the Biscayne Bank of Miami, Mellon Bank International and the Wells Fargo Bank. He holds an advanced degree from the Thunderbird Graduate School for International Management of Phoenix.
Brown, who will be paid $66,500 a year, will take over MDIF from acting fund director Frederick Dewberry after Labor Day. Dewberry will resume his duties as secretary of the Department of Licensing and Regulation.
MDIF guarantees deposits of up to $100,000 per account at those thrifts that have not yet won federal insurance. Of the 102 state-chartered thrifts in existence in May, when the state's savings and loan crisis began, 21 have obtained federal insurance.