Chevy Chase Savings and Loan, by far the largest of the 102 privately insured Maryland thrifts placed under restrictions on withdrawals in the state's S&L crisis, received conditional approval for a change to federal insurance yesterday and may resume normal operations as soon as today.
A senior Chevy Chase official said the institution's board hoped to complete by today the few remaining "technical" steps required for acceptance by the Federal Home Loan Bank Board. Gov. Harry Hughes' order limiting withdrawals at the privately insured thrifts to $1,000 per account per month does not apply to federally insured S&Ls.
Chevy Chase, part of the financial empire of its president, real estate magnate B. Francis Saul II, has $2.3 billion in assets, more than one-quarter of the total assets of all the affected institutions. It is also the second-largest savings institution in the Washington area. A return to unrestricted operations at its 25 branches would ease much of the inconvenience facing customers whose funds have been tied up.
"Well, happy day," said Robert G. Mueller, a savings account customer at Chevy Chase's main office at 8401 Connecticut Ave. Mueller was withdrawing funds to make an investment, not because of the crisis, he said. "It thrills me," said another customer, Sara Huff. "When I first heard about Chevy Chase on the news, I panicked."
A return to normal operations at Chevy Chase by itself would go a long way toward dispelling the cloud that has hung over Maryland savings institutions since last weekend when a run forced the state to take control of Old Court Savings and Loan in Baltimore. Chevy Chase had applied to be federally insured last August, long before either the bank holiday declared in March for savings and loans in Ohio or the current Maryland crisis.
Once Chevy Chase is formally a participant in the Federal Savings and Loan Insurance Corp., its individual accounts will be insured up to $100,000. Chevy Chase officials said they may have to raise minimum balances on some kinds of accounts as part of the arrangement, but no final decisions have been made.
In the 15 years since it was established, Chevy Chase has grown from an obscure one-office institution by marketing itself aggressively and paying consistently high interest rates to depositors -- although not as high as some other Maryland savings and loans such as Old Court.
With the formal completion April 1 of its acquisition of and merger with Government Services Savings and Loan, Chevy Chase raised its asset base to $2.3 billion. From Baltimore to Richmond, only Perpetual American Bank, with assets of nearly $3.8 billion, is a larger savings and loan.
Chevy Chase has been profitable through a long period of trouble for the savings and loan industry nationwide. In acquiring Government Services in 1982 in a voluntary merger, Chevy Chase took on a money loser, but it was in a period when many federally insured thrifts in the area were also in the red.
Today Chevy Chase's asset base is nearly six times what it was at the end of 1977, and it reported net income last year of $16.17 million.
One reason is that Chevy Chase has never really had to stand on its own. Chevy Chase's main office is in the building that also houses the rest of Saul's enterprises. The interlocking network can and does offer a wide range of financial services that most S&Ls traditionally could not match: insurance, mortgage banking, conventional loans, retail bank services such as checking, and now even a travel agency. The S&L established Manor Travel agency as a wholly owned subsidiary in February, and is waiving the fee on the purchase of travelers checks for Manor customers as a marketing tactic to familiarize the travel agency's customers with the savings and loan.
According to a senior Chevy Chase official, more than 60 percent of the assets of the merged Chevy Chase-Government Services S&L are in conventional mortgage loans, which are easily marketable should cash be needed. Chevy Chase alone had an additional $320 million in cash and marketable mortgage-backed securities as of the end of last year.
One reason for the continued growth and strength of Chevy Chase during a nationwide S&L shakeout, a senior official of the company said, is that as a state-chartered, privately insured thrift, Chevy Chase was "able to pay market interest rates at a very important time when federally insured institutions were losing money hand over fist to money-market mutual funds."
Martha Gravlee, spokeswoman for the Federal Home Loan Bank Board, said applications for coverage have been received from nine other S&Ls now covered by the privately financed Maryland Savings-Share Insurance Corp.