Federal regulators this week began seeking buyers for National Permanent Bank as a way to restore financial health to the District's second-largest savings and loan, thrift officials said.

Regulators took the action even though 10 days ago they received a bailout plan from National Permanent management, who had proposed selling the thrift to a group of private investors who would infuse $30 million to $40 million in the S&L, management officials said.

National Permanent has lost money during the last four years. Last fall, it was permitted by the Federal Savings and Loan Insurance Corp. to boost its assets by $51.8 million with notes issued by FSLIC and, therefore, avoid a negative net worth.

Despite the adjustment, National Permanent's net worth -- the difference between assets and liabilities -- was only $1,000 at the end of last year when calculated according to accounting rules used by thrift regulators. That figure is far below the level normally required.

The financial picture would look worse if generally accepted accounting principles used by other types of businesses and the Securities and Exchange Commission were applied: The thrift's net worth would fall to a negative $80 million.

At a meeting Thursday at the Federal Home Loan Bank in Atlanta, which has jurisdiction over the District, regulators gave financial information about National Permanent to an undisclosed number of potential bidders who have expressed interest in buying a troubled thrift in the Washington area, National Permanent executives said.

The potential bidders, which could include institutions and individual investors, have several weeks to study National's finances and submit a plan for acquiring the institution.

Federal regulators then will weigh the bids against the plan offered by National Permanent's management and pick the proposal that requires the least amount of government assistance to restore the thrift to health.

"Regulators have three choices," said National Permanent's president and chief executive, Stuart A. McFarland. "They can liquidate, they can merge the thrift through bidding or they can pick our plan."

Despite National Permanent's financial problems, McFarland and regulators stressed that liquidation is an unlikely last resort for the thrift.

Doug Green, spokesman for the Federal Home Loan Bank Board, also stressed that, in general, an S&L can continue to honor withdrawals even if its net worth dips below zero. "An S&L with impaired net worth can continue to operate as long as its cash position remains good," he said.

The bank board referred specific questions about National Permanent to the thrift's executives.

The bank board would not reveal the names of the investors that attended Thursday's meeting, but banking industry executives say they included money-center banks from New York City, and possibly from California, as well as large regional banks from the Southeast.

Federal regulators can allow a bank to acquire a thrift and operate it as a thrift or a bank.

National Permanent had $840 million in customer deposits as of Dec. 31. Its real estate loans, which are almost all for residential homes, totaled $890 million. The thrift says that, while most of the loans are sound and eventually will be paid off, the income they generate is not coming in fast enough to offset operating costs.

John Harding, chief financial officer at National Permanent, said the thrift lost money every year since 1981. But he said the real crunch came last summer when private and government auditors forced the institution to write off $45 million in goodwill.

That forced the Federal Savings and Loan Insurance Corp. to boost the thrift's assets by $51.8 million to bring its net worth to the $1,000 level for the year ending Dec. 31.

FSLIC, which is the insurance subsidiary of the Federal Home Loan Bank Board, made the adjustment by issuing interest-bearing notes to National Permanent. FSLIC in return got income capital certificates, which are promises by the thrift to repay the money from future earnings. Critics of the bank board have said these asset adjustments amount to accounting tricks that merely disguise the underlying financial problems of an institution.

Although McFarland said the thrift's management has "firm commitments" from investors for as much as $40 million, some banking sources say the thrift could need at least twice that amount of money to correct its financial problems during the next few years. McFarland said he is more optimistic and that his plan could work without additional capital investments.

McFarland would not identify who would fund the rescue plan proposed by National Permanent management, describing them only as "a handful of investors from here and around the world."

McFarland said that, under the plan, National Permanent's operations would be cut into two subsidiaries, which would be owned by a newly created holding company.

He said that one subsidiary would get the $30 million to $40 million in cash raised through a private placement, and it would get the healthy, money-making assets of National.

He said the other subsidiary would get the thrift's money-losing operations, which would be managed until "they shrink out of existence."

The plan initially would require $4 million in additional notes from federal insurers to prop up the ailing subsidiary enough to keep a positive net worth, he said.

Additional federal funding would be needed in the future, the exact amount depending on how well the subsidiary performs, he said. "But it would still be less than what any publicly traded institution buying it will need," he said.

The board of National Permanent brought in McFarland last September in an effort to evaluate and try to solve the thrift's problems, McFarland said. McFarland was an officer with the Federal National Mortgage Association for four years.