Maryland Gov. Harry Hughes and a federal banking official indicated today that the negotiations to sell the crippled First Maryland Savings and Loan Association have cleared a key bureaucratic hurdle.
While stressing that the sale of the Silver Spring thrift is by no means final, Hughes and Marti Badila, a spokeswoman for the Federal Home Loan Bank Board in Washington, said the negotiations were progressing after a two-month impasse.
One source familiar with the negotiations said the top two officers of Yorkridge-Calvert Savings and Loan of Baltimore had agreed to relinquish control of Yorkridge to independent management to satisfy federal concerns about their planned purchase of First Maryland. Yorkridge-Calvert offered in December to buy First Maryland, a thrift with 35,000 depositors who have no access to $281 million in deposits.
Hughes hinted at the Yorkridge-Calvert concession at a State House news conference today, saying that the focus of federal officials was "improvement of management" at Yorkridge. "The real negotiation . . . has been confined to the Yorkridge structure," he said.
Hughes is eager to sell First Maryland, which has a $26 million deficit, to reduce the state government's liability in the nine-month-old thrift crisis. First Maryland has been under state control since Nov. 20, and the state is also pursuing other potential buyers for the Silver Spring association.
Badila quoted Frank S.G. Haas, a senior member of the board's staff, as saying, "The [merger] application is going to move forward."
"The issues that were holding it up have been resolved," added Badila. "Everything is going to move forward."
Hughes administration officials have grown increasingly frustrated by the pace of negotiations over the proposed merger, which must be approved by the bank board. Federal officials at the bank board's regional office in Atlanta have told Maryland officials that they were concerned that Yorkridge-Calvert would be severely weakened by acquiring First Maryland.
A source familiar with the negotiations said an agreement by Yorkridge President Melvin Berger and thrift Chairman Marvin Rosenthal to relinquish control of the association was pivotal in the bank board's decision to move negotiations from Atlanta to Washington, a sign that the talks have reached a new phase.
In a related development, Hughes described as "very much alive" the proposed sale of Community Savings and Loan Association, which has a $162 million debt, to Meritor Savings Bank of Arlington. Like First Maryland, Community is under state control and its 27,000 customers have virtually no access to their $332 million in deposits.
Hughes, who is under increasing pressure from legislative leaders to consummate the sales of First Maryland and Community, said today he hopes those transactions can be completed within a month.
"I wish I had the authority to say, you know, if you don't do it by 12 o'clock Monday, forget it," said Hughes, but Maryland's savings and loan crisis "doesn't quite lend itself to that kind of certainty."