Only two of the seven savings and loan associations in the District of Columbia reported a profit last year, according to the most recent financial statements filed with the Federal Home Loan Bank Board.

Three quarters of Virginia thrift institutions surveyed and three quarters of all 56 federally insured savings and loan associations in Maryland were making a profit during the 1984 fourth quarter, but their average earnings were below those for the industry, the bank board data show.

Thrift industry executives say the health of most savings and loans has improved this year because of lower interest rates. High rates have been the main cause of the industry's ailments because they force savings and loans to pay higher interest on deposits than they collect on old mortgages that were issued when rates were lower.

The financial statements show that as a group, the District thrifts lost $23.7 million during 1984. Only Washington Federal Savings and Loan and OBA Federal Savings & Loan made money.

Virginia's savings and loans earned total profits of $31.5 million for the year, while annual profits added up to $15.9 million for Maryland associations insured by the Federal Savings and Loan Insurance Corp.

Financial reports covering the second half of 1984 were supplied to The Washington Post by the Federal Home Loan Bank Board under a Freedom of Information Act request. The reports include all the federally insured thrifts in D.C. and Maryland and 26 in Virginia that do business in the Washington area or have assets of more than $100 million.

The Bank Board reports show that a substantial part of the 1984 profits reported by area institutions were produced by a special, one-time subsidy last year from the Federal Home Loan Banks, which nationally distributed $600 million worth of stock dividends in the Federal Home Loan Mortgage Corp. to individual savings and loans to improve their balance sheets.

The stock dividend accounted for 41 percent of all the profits of Maryland thrifts plus one third of the earnings in Virginia last year. The federal help trimmed $2.6 million from the losses of the D.C. S&Ls.

The weak condition of the local thrift industry is shown when the profits and losses for the year are compared with the total amount of money the associations control, a financial yardstick known as return on assets.

The D.C. associations lost 66 cents on every $100 of assets last year. The Maryland S&Ls earned 15 cents on every $100 of assets and those in Virginia made 17 cents. Nationally, the thrift industry averaged 19 cents of profit per $100 in assets. According to the Federal Deposit Insurance Corp., the average return on assets of all commercial banks in 1984 was 65 cents per $100 in assets.

According to the reports provided by the Bank Board, more than one-third of the federally insured savings and loans in the Washington region do not meet regulators' minimum net worth standards. Net worth is what a business has left when the value of what it owes -- its liabilities -- is subtracted from the value of what it owns -- its assets.

A recent study by a group of economists for the Bank Board said low net worth is the strongest indicator that a savings and loan is likely to be in trouble, but not necessarily a sign that an institution is going to fail.

Thomas J. Owen, chairman of Perpetual American FSB, said net worth "doesn't mean a thing as long as you pay your bills and cash flow sustains the operations." Perpetual American is the largest thrift institution in the Washington area with assets of $3.8 billion and it has a healthy net worth equal to about 5 percent of its liabilities. Perpetual was formerly a savings and loan but since July 1984 it has been a federal savings bank, chartered by the FHLBB.

The Bank Board reports show that Washington's Capital City Federal Savings and Loan and Northern Virginia Savings and Loan of Arlington lost so much money that last month the federal government bailed them out. FSLIC arranged a merger of the two S&L's with the Philadelphia Savings Fund Society at an estimated cost to FSLIC of $79.4 million over the next few years.

Capital City had assets of $377 million and liabilities of $401 million as of Dec. 31, 1984, while Northern Virginia had assets of $265 million and debts of $270 million at year end, the Bank Board reports show. Both were allowed to continue operating for several years until federal regulators worked out a rescue plan.

The FSLIC now is seeking someone to take over Family Savings and Loan of Springfield, which as of Dec. 31 had assets of $55 million and liabilities of $69 million.

Harry Messner, vice president of Family, said the institution's troubles are the result of a low-yielding loan portfolio. In the past three years FSLIC has made four or five attempts to find a merger partner for Family. The latest effort was in February, but Messner said he did not know if the government had found a partner yet. In the meantime, Messner said that Family is still losing money but at a slower rate.

Another association reporting a negative net worth, according to the Bank Board reports is Germania Federal Savings & Loan, a Baltimore association with assets of $42,132,000 and liabilties of $42,284,000. Donald S. Quinn, executive vice president, attributed Germania's negative net worth to low-rate mortgages and the high rates paid for savings. He said talks continue with federal regulators about a possible merger, but nothing has been done. Quinn said Germania started to go into the black last month.

The FSLIC protects depositors in all D.C. and Virginia associations because both jurisdictions require all S&Ls to be federally chartered and thus automatically covered by federal insurance. In Maryland, FSLIC last year insured 56 of the more than 150 state and federally chartered associations. Many more have rushed for the federal umbrella since the collapse of the private Maryland Savings-Share Insurance Corp. two weeks ago.

All FSLIC members are required by regulation to have a minimum net worth equal to 3 percent of their liabilities as protection against losses. But the bank board has not enforced that law since interest rates escalated several years ago and has allowed several hundred associations to drop below that minimum in recent years. So many S&Ls have fallen below the 3 percent minimum that FSLIC says it could not afford the cost of merging them with financially stronger institutions.

Many savings and loans that meet the 3 percent minimum net worth required by law are not as healthy as they look because of the regulatory accounting rules drafted by the Bank Board.

The Bank Board has traditionally allowed some thrifts to boost their net worth by counting as assets many things that do not qualify under generally accepted accounting principles (GAAP) -- the rules by which other businesses keep their books.

The Bank Board has given 80 savings associations $85.7 million in "net worth certificates" which cannot be bought or sold or turned into cash but which can be counted as part of net worth for regulatory purposes.

S&Ls also are allowed to defer losses when they sell something for less than its original value. Many associations have unloaded millions of dollars' worth of old low-interest mortgages, selling them for well under their face value. Normal accounting would require reporting an immediate loss on such sales, but Bank Board rules allow thrifts to spread the loss over several years and count the deferred losses as an asset.

For example, the FSLIC-insured associations in Maryland report an average net worth of 4 percent based on regulatory accounting rules but only 1.1 percent under generally accepted accounting principles. Nationally, the average net worth under regulatory accounting practices (RAP) is 3.86 percent and 2.84 percent under GAAP.

Regulatory accounting practices apply to all savings institutions, but institutions which issue stock also use generally accepted accounting practices to determine the equity of their shareholders. Mutual savings institutions, however, do not use GAAP.

Seven Maryland savings associations that meet the 3 percent minimum on a regulatory accounting basis would fall below the standards on GAAP. For example, Baltimore Federal Savings and Loan, the biggest-FSLIC member in the state, shows a regulatory net worth of $50.4 million (3.4 percent of liabilities), but a negative net worth of $40.6 million (-2.7 percent) under GAAP.

The Virginia associations covered in the Bank Board report show an average net worth ratio of 3.2 percent by regulatory accounting but only 2.5 percent by GAAP. Suburban Savings & Loan of Annandale and Commonwealth Savings & Loan of Manassas meet the 3 percent minimum under regulatory accounting but would not under GAAP.

In the District only Washington Federal with a net worth ratio of 3.2 percent and OBA, whose net worth ratio is 10.3 percent exceed the federal minimum and the ratio for Washington Federal drops to 1.2 percent under generally accepted accounting principles.

Washington Federal is the most profitable S&L in the District, and Chairman William Sinclair is one of many thrift executives who contend low net worth is not a problem so long as an association has enough cash to meet expenses.

Washington Federal makes money, he explained, because it has largely abandoned the traditional S&L business to become a mortgage banker -- a firm that makes loans, then sells them to other investors. That business enabled Washington Federal to make 65 cents profit on each $100 of assets last year -- three times the industry average.

The $15 million difference between the regulatory and GAAP net worth represents the amount Washington Federal lost when it sold its older low-interest loans, Sinclair explained.

The Bank Board financial statements show that 16 local institutions that report a positive net worth based on regulatory accounting show a negative net worth when their books are balanced by generally accepted accounting principles. They include 11 Maryland S&Ls, four in Virginia and Washington's National Permanent Bank -- another S&L turned FSB.

National Permanent reports assets of $1.15 billion and liabilities of $1.14 billion on a regulatory accounting basis for a net worth of $8.6 million or 0.8 percent. But National Permanent carries $55 million worth of "good will" on its books plus millions more in deferred losses from the sale of low-interest mortgages. Under conventional accounting, National Permanent's liabilities exceed its assets by more than $84 million.

National Permanent lost $12.4 million in fiscal 1984, but turned a $712,000 profit in the first quarter of 1985, which ended Feb. 28, chief financial officer Clayton Keel said. This was National Permanent's first profit since 1982. The $4.5 million loss in the final quarter of last year included $1 million from trading in the highly risky Treasury bill futures market. "Interest rates went against us," said Keel, who added the bank has since closed out its futures trading.

Edgar Peterson, chief executive officer of National Permanent, said the negative GAAP net worth ratio resulted in part from deferred losses dating back to 1982 when it sold $200 million worth of loans at discount prices. Peterson said that because National Permanent was not a stock association, GAAP accounting was not applicable.

Columbia First Federal Savings and Loan of Washington also reported multimillion-dollar losses. It dropped almost $1 million in the third quarter of last year, another $2.4 million in the fourth quarter and an additional $294,000 in the first three months of 1985.

C. Malcolm West, executive vice president, said Columbia First had to sell a troubled town-house project in Northeast Washington -- Channing Court -- and was required to reduce the value of an office building it owned, adding to the losses.

Dominion Federal Savings & Loan in McLean, the largest S&L in Virginia, made $13.6 million in profits last year. Its year-end return on assets was 1.3 percent. First quarter 1985 earnings were about $3 million.

The two healthiest S&Ls in the metropolitan area, in terms of their net worth ratios, are the two newest: Maximum Savings Association of Chevy Chase and Sunrise Federal Savings and Loan of Fairfax. Both are privately held stock corporations, owned by investors. Both began operations in 1984. Sunrise concentrates on single-family residential loans, which it sells in the secondary market. Maximum, on the other hand, does some construction loans and has about 10 percent of its assets in commercial lending.