Maryland Gov. Harry Hughes said today that the state had "pretty much resolved" federal regulators' concerns about the sale of the Silver Spring-based First Maryland Savings and Loan and that he expects one of four bidders to complete a deal to buy the crippled thrift by May 15.
In a related development today, the state's highest court upheld the state's plan to return more than $569 million beginning next month to depositors in the defunct Old Court Savings & Loan Association of Baltimore.
The United Wire, Metal and Machine Workers union, which has $17.5 million in pension funds tied up in Old Court, had challenged Hughes' depositor payout plan because it favors smaller depositors by making payments in $5,000 increments. About $110 million will be paid out in the next 30 days to 17,000 depositors, Hughes said today.
The continuing "economic" negotiations for the sale of First Maryland, Hughes said, are being conducted with Yorkridge-Calvert Savings of Baltimore, the Philadelphia Saving Fund Society and two other financial institutions that he declined to name.
The long-awaited sale would mark a symbolic victory for Hughes, who has battled the statewide S&L crisis for 11 months. In March, Hughes announced the sale of Community Savings and Loan of Bethesda to Mellon Bank Corp. of Pittsburgh.
Earlier, the state also sold Merrit Commercial Savings and Loan of Baltimore and two smaller institutions to the Chase Manhattan Corp. The state has been unable to sell Old Court. That institution triggered the crisis when depositor runs began there last May, and it has been in receivership since November.
Hughes has said since January that the First Maryland sale is imminent. "Every deal has taken longer than we expected," he said today at his weekly news conference. "They are very complicated arrangements, and we really are not selling a very good product."
In a related matter today, officers of the Beltsville-based John Hanson Savings & Loan Inc. redeemed $11.25 million worth of net worth certificates that the state had purchased to help the thrift qualify for federal insurance. Net worth certificates are in effect IOUs to the government that Hanson and other thrifts have used to improve their cash position and qualify for federal insurance.
John Hanson redeemed the certificates by selling 3 million shares of stock earlier this month at $7 per share. John Hanson also paid the state a net total of nearly $100,000 on the bond anticipation notes.
The repayment, Hughes said, "demonstrates clearly that the state actions to resolve the savings and loan crisis in Maryland are effective" and that the industry will soon be a healthy one.