On an April afternoon in 1983, top regulators of Maryland's savings and loan industry met privately at the Washington home of a former employe of First Maryland Savings and Loan Inc., who told them that the Silver Spring thrift had issued what he believed were risky loans that, cumulatively, exceeded state limits and could spell disaster for the association and its depositors.

Thomas P. FitzGibbon Jr. spent several hours that day trying to convince the regulators -- two men from the state agency that oversaw 102 Maryland thrifts and two from the private corporation that insured those associations -- that some of First Maryland's lending practices were so risky that the state should order a halt to them, according to three persons who attended the meeting.

But FitzGibbon, who had recently left his job as vice president of First Maryland's mortgage corporation after a dispute with association president Julian M. Seidel, failed. As one state official familiar with the thrift's operations recalled, "There were a lot of profits for First Maryland then. Given the profits, drastic action didn't seem warranted."

Today, though, as the crisis that shook Maryland's $10 billion savings and loan industry in May reverberates through First Maryland and other thrifts, several state officials and industry experts say they fear that First Maryland's past practices -- including some that FitzGibbon brought to the attention of the state -- have reduced the corporation's reserves of working capital it needs to win federal deposit insurance. If large thrifts such as First Maryland don't obtain federal insurance by the end of the year, the state may merge or liquidate them.

Seidel acknowledged that First Maryland will have a "tough" time meeting stringent requirements for federal insurance, but said the thrift he founded in 1974 is "viable, solvent and profitable" today. In fact, Seidel said, new deposits helped push net profits to nearly $1 million for May and June.

Seidel stressed that First Maryland has adequate cash to handle the day-to-day business and withdrawals of its 40,000 account holders.

Records of First Maryland transactions in Frederick and Montgomery counties, as well as internal association and state government documents, show the association undertook questionable real estate ventures and loans, including the construction of its $14.6 million headquarters in Silver Spring; loans totaling more than $1.5 million from First Maryland and its subsidiary to a partnership in which Seidel had formerly held a 45 percent interest; loans totaling $238,960 to a company managed by a First Maryland director; and violations of industry regulations that drew reprimands from the state but were never halted.

These records, coupled with documents Seidel filed in federal court in 1982 during a personal bankruptcy proceeding, offer a rare glimpse into the inner workings of a savings and loan normally shielded by state privacy laws and the clubby nature of a thrift industry that, in the words of one S&L officer, "has been virtually unregulated for the past decade."

On the surface, the twin stories of First Maryland and Seidel are tales of unqualified success. It was Seidel, described by his colleagues as a shrewd businessman and consummate deal-maker, who in 10 years transformed First Maryland from a $20 million company housed in a trailer in Anne Arundel County to a corporation with comfortably furnished offices that reported assets of $443 million earlier this year, making it the seventh largest thrift in the state.

In the process, Seidel, 51, survived a nasty public battle for control of First Maryland in the late 1970s, unusually high turnover among employes and an involuntary bankruptcy petition -- engineered by rival First Maryland officers during the takeover battle -- in which Seidel stated that along with his assets, he had personal debts of more than $5 million owed to 50 creditors.

"The main thing you have to understand about Julian is that First Maryland is his baby," said Irving H. Berman, a former First Maryland officer and Seidel admirer who has worked on and off for the corporation since its earliest days in the mid-1970s.

"Nothing is more important to him than keeping that thing and watching it grow," Berman added. "Julian has been knocked down before but always seems to bounce back."

In the early 1980s, First Maryland and many other thrifts in the state reported remarkable increases in assets, fueled largely by high numbers of commercial real estate loans rather than the single-family residential mortgages that had been the traditional mainstay of the savings and loan industry.

Commercial real estate and land development loans often were risky because they required a savings and loan institution to advance large amounts of cash and then wait months or even years before being repaid.

But because thrifts could charge high interest rates on those loans, they also held the promise of enormous profits.

"After suffering in the bad economic times of 1980-81, a lot of associations, First Maryland included, saw these loans as their salvation," said one state official and expert on the S&L industry who asked not to be identified by name.

But even as First Maryland's reported assets soared -- $30 million in 1981, nearly $80 million in 1982, and more than $200 million by early 1984 -- some employes, such as FitzGibbon, as well as state regulators, complained that First Maryland issued several questionable loans and failed to maintain a large enough cushion of capital that could be used to defray heavy losses.

For instance, in December 1982, Charles C. Hogg II, an officer in the Maryland Savings-Share Insurance Corp. (MSSIC), the now-defunct private insurer of all 102 state-chartered thrifts, warned First Maryland in a letter that it was in "significant" violation of a MSSIC rule limiting commercial loans to 40 percent of an S&L's total deposits, according to state officials and former First Maryland officers.

At the time of Hogg's letter, First Maryland had more than 55 percent of its deposit base in commercial real estate loans and more than 30 percent in construction loans, thus violating another MSSIC rule limiting such loans to 25 percent of deposits, sources said.

Less than six months later, Hogg, accompanied by another MSSIC official and Charles H. Brown Jr., director of the state Division of Savings and Loan Associations, gathered at Thomas FitzGibbon's apartment to hear FitzGibbon also complain about First Maryland's high rate of commercial and construction lending.

Hogg, Brown and the other regulators "really felt that the S&L was going heavy into rather speculative ventures," recalled Berman, who also attended the meeting.

"The state didn't feel it was getting satisfaction from Julian. Some of the documentation on First Maryland loans was very sloppy. The state wondered whether things there were on the up and up. They were worried and didn't know what to do."

In January 1984, Brown wrote a memorandum to his boss that said, in part: "The association, although having a board of directors, is operated by Seidel with apparently little input or interference from the board.

"We have been concerned about their operations," Brown continued in the memo, a copy of which was obtained by The Washington Post, "particularly the dealings of Seidel, so much so that . . . we had the entire board of directors in for a supervisory conference. The conference covered the investments made by the association, all of which were engineered by Seidel."

As a result of that supervisory conference in 1983, Brown's division and First Maryland reached an agreement under which MSSIC and the state would scrutinize the savings and loan's commercial loans, particularly those made for projects outside Maryland, according to Berman and state officials.

Yet, despite the increased review by regulators, First Maryland was again cited by MSSIC for violating the 40 percent limit on commercial loans and the 25 percent limit on construction loans.

A MSSIC report shows that from January to July 1984, First Maryland had commercial loans ranging from 63.99 percent to 74.06 percent and construction loans ranging from 30.64 to 44.95 percent. In August 1984, those infractions prompted Paul V. Trice Jr., a senior vice president of MSSIC, to send a letter to Seidel directing him to "cease and desist" from violating the lending limits, according to MSSIC records.

In interviews earlier this year, Seidel said First Maryland's percentage of commercial loans had risen because residential loans had been scarce, and he insisted that those loans did not threaten the association's solvency.

Nevertheless, one state official who has negotiated directly with First Maryland officers as they have tried to obtain federal insurance said Seidel was again told this year "to change his ways."

"The message was: 'Make more home mortgages, document your loans better and improve your system of risk evaluation,' " said the official, who asked not to be identified by name.

Both state officials and Seidel say First Maryland is taking some of those steps.

One series of loans that state officials and Seidel associates say showed an unusually close link between the savings and loan and one of Seidel's real estate ventures involved the development of about 50 acres outside Frederick, Md., into a town house development known as Willowdale.

The project began when Seidel and Saul Bernstein formed Willowdale Associates Inc. and bought the land in late 1972 for $271,269, according to land records on file at the Frederick County courthouse.

In October 1975, Maryland National Bank, a giant Baltimore financial institution, loaned Willowdale Associates $2.2 million to construct the town houses.

Then, in December 1981, First Maryland entered into an agreement with Willowdale Associates, and assumed responsibility for $850,000 of the $2.2 million loan, according to Frederick land records.

One month later, in a personal financial statement he filed with the U.S. Bankruptcy Court in Rockville, Seidel reported a 45 percent interest in Willowdale Associates and listed Maryland National Bank as a creditor seeking $750,000 payment toward the initial $2.2 million loan.

Later, in the summer of 1982, First Maryland Financial Services Corp., a subsidiary of the savings and loan, loaned Willowdale Associates $135,000, according to land records.

Then, in June 1983, First Maryland loaned Willowdale Associates $1.4 million in additional financing for the Frederick town houses, according to records.

In response to written questions submitted by The Post this week, Seidel said that he "had no interest in the Willowdale Associates partnership when the loans were made." Seidel added that Brown's regulatory division was informed of that fact and that the First Maryland loans had since been "paid in full." Other sources confirm the loans were repaid and say First Maryland made a profit on the Willowdale venture.

Also in 1982, First Maryland's loan committee approved five loans to a Florida company headed by Richard Tadjer, a First Maryland director who was also a member of the loan committee.

According to loan committee minutes dated Feb. 8, 1982, and obtained by The Post this week, the loan committee approved $238,960 in loans to Tradewinds Associates, a business entity listing Tadjer as its "principal."

While such "insider" loans are widely regarded by state regulators as unorthodox, they are permitted once the state savings and loan division reviews and approves them. Brown said he was uncertain whether the Tradewinds loan received the required division approval.

Seidel said the loan was approved by the state and is now pending because Tadjer died after First Maryland approved the loan.

One construction loan that Seidel said has posed some problems for First Maryland in its attempt to win federal deposit insurance was made in 1983 for construction of new company headquarters at 8737 Colesville Rd. in Silver Spring.

In April 1982, First Maryland loaned $1.2 million to Colspring Associates, the developer, to begin work on the building, acccording to records on file in the Montgomery County Courthouse.

That loan was increased to $1.4 million a year later and in July 1983, First Maryland made an $11 million loan to finance construction of the 12-story building, according to county land records.

Last November, the construction loan also was increased, this time to $13.2 million, because of unforeseen "modifications and change orders," Seidel said. The building was finished early this year and is still 40 percent vacant, Seidel added.

In an interview earlier this month, Seidel said state officials have disputed First Maryland's claim that the property is worth $20 million, saying instead its true value is about $13 million. The state Department of Assessment and Taxation lists the value of the property as about $12.8 million.

The value of the Silver Spring headquarters and that of First Maryland's other assets are crucial to Seidel as his corporation's fiscal health is evaluated by state and federal officials.

If, as state officials have suggested, the value of a major property such as the Colesville Road building is less than First Maryland states, that could call into question the strength of loans made for it and other commercial properties, officials said.

Seidel, who has nurtured First Maryland through good times and bad, says he is certain his corporation will obtain federal deposit insurance and survive.

In the meantime, First Maryland's 40,000 account holders have guaranteed access to their deposits; money deposited before May 14 is subject to a $1,000 per month withdrawal limit imposed by Maryland Gov. Harry Hughes, but there is no such restriction on deposits made after that date, Seidel said.

"We have received the full support of the governor and the state of Maryland during this time," Seidel said in a prepared statement.

Others in the savings and loan industry say First Maryland's penchant in the early 1980s for risky but often profitable commercial loans may come back to haunt the corporation.

In considering First Maryland's current loan portfolio, federal officials "simply won't allow the kinds of 'go-go' loans that Julian and we here used to make," said one officer of another large Montgomery County association.

"Like a lot of us, Julian has a tough road to hoe. But absolutely, he is a survivor. If First Maryland makes it, it will be because of Julian."