Thrifts are federal savings associations, which include federal savings banks and savings and loans. They lend more in residential real estate than other banks, which means they are suffering more in this downturn.

Net income as percentage of assets at local thrifts last year was 60 percent lower than that of local non-thrift banks. Two-thirds of local thrifts were in the red in the fourth quarter, and 27 percent have been under a regulatory enforcement action during the past year.

“No question. Times have been hard,” said Arnie Danielson, chairman of Vienna-based Danielson Capital, an investment bank that specializes in community banks. “If the real estate market goes down, thrifts are much more exposed than most banks.”

Thrifts also tend to run leaner with lower overhead and thinner profit margins. As a result, beefing up reserves to account for the surge of troubled loans has been especially painful, Danielson said.

Historically, the loans made by thrifts tended to be home mortgages. But lending restrictions once imposed on thrifts have been eased over the years, and today many operate like national banks, heavily involved in commercial real estate and construction and land development loans. Still, home mortgages make up an average of 61 percent of local thrifts’ loans portfolios.

The Washington area has 12 thrifts, ranging in size from Prince George’s Federal Savings Bank with $94 million in assets to Chevy Chase Bank with $16 billion.

Chevy Chase was acquired by Capital One Financial Corp. in February but still operates as a federal savings bank under Capital One’s umbrella, although not for long.

Chevy Chase applied to convert to a national bank charter and merge that new charter with Capital One’s national bank.

Two other local thrifts, Independence Federal Savings Bank and Colombo Bank, have a pending merger expected to close in the next few months.

Greater Atlantic Bank has desperately been looking for a merger partner since its deal to be acquired by a West Virginia bank fell apart in December. Analysts expect that in the not-too-distant future it will be acquired or seized by regulators for violating capital requirements.

Those three deals would leave Washington with about half as many thrifts as it had 10 years ago, a trend that also has played out nationally since the early 1990s.

Danielson says there are fewer thrifts these days because the ones that get acquired are not being replaced by new thrifts.

Only three of the 23 local banks formed in the past 10 years were thrifts, and two of those were set up by thrift veteran Ernie Tressler. He opened his most recent thrift, 1st Commonwealth Bank of Virginia, in Arlington on March 16.

Tressler aside, bankers who haven’t come from thrifts see little upside to starting one, Danielson said. “There are no pluses to thrifts. There’s no advantage. They’re really yesterday’s type of organization.”

Bert Ely, a banking consultant with Alexandria-based Ely & Co., agrees that the decline of thrifts will continue. And eventually, there will be growing pressure to get rid of the thrift bank charter entirely, though it’s hard to say when that might happen, he said.

Not all thrifts have performed poorly. At American Bank, for example, earnings rose 13 percent in 2008 to $3.7 million.

And “we’re having a much better year in 2009 than we did in 2008,” said CEO Jim Plack.

His bank, which has grown quickly the past few years, sees the downturn as an opportunity to buy troubled institutions, Plack said.

American Bank has, however, seen its own share of troubles. The bank was hit with a cease and desist order from its regulator in September for “unsafe and unsound banking practices.”

Plack said the bank has complied with the order and expects to “be through it sooner rather than later.”

 SOURCE: Washington Business Journal