Hull Federal Savings put under supervision

Posted: 9:31 am Wed, September 1, 2010
By Ben Mook

Hull Federal Savings Bank, a 99-year-old single-branch thrift in Baltimore, is now operating under federal supervision after regulators found it had been engaging in unsafe or unsound practices.

Hull Bank agreed Wednesday to the terms of the supervisory agreement with the Office of Thrift Supervision. Under the agreement, the bank agreed to maintain its capital levels, and will have to submit a plan within 60 days on how it plans to accomplish this. Hull also agreed to shore up its process for appraising property and submit multiple reports to the OTS about how it handles bad loans and other issues.

The OTS stipulated that Hull must use certified, licensed appraisers and ensure the appraisal process is independent of the loan process.

BauerFinancial Inc., a Coral Gables, Fla.-based bank rating agency, has Hull Federal rated at two-stars, or problematic. BauerFinancial President Karen Dorway said while the supervisory agreement points out some problems at Hull, it did not call for drastic changes such as a management shake-up.

“This is not one of the more stringent supervisory agreements,” Dorway said. “But a supervisory agreement is always a serious matter.”

Dorway said 921 of the country’s 7,819 banks are operating under some form of supervisory agreement.

The bank has $26.7 million in assets and recorded a $458,000 net loss for the first six months of 2010. Six percent of its loans are listed as non-current.

Hull Bank officials did not return calls Wednesday.

The bank did post some promising statistics in the second-quarter. Hull remains well capitalized, according to the Federal Deposit Insurance Corp.’s definition. The bank also reported no loans that were more than 90 days late, and past-due loans on the books dropped from $2.8 million at the end of March to $1.5 million at the end of June.

“They’re still well capitalized and the past-due loans have come down significantly,” Dorway said. “Those are promising signs.”

Hull was founded and has operated in Baltimore’s Locust Point neighborhood since January 1911. Hull is one of the few remaining single-branch banks in the state. Going against the grain of technological offerings like online banking, Hull lacks a website and is headquartered in a nondescript building that carries a bare minimum of signage.

The number of small, one-branch neighborhood banks in Maryland like Hull has dwindled over the years due to mergers, sales and economic crises like the savings and loan scandal of the 1980s. As a result, the FDIC lists just 13 single-branch institutions in the state.

Two single branch banks, Bay National Bank, of Lutherville and Ideal Federal Savings Bank, of Baltimore, were closed by federal regulators this year. Bay National’s deposits were assumed by the newly formed Bay Bank FSB, while the FDIC authorized the payout of Ideal’s deposits after it was unable to find a buyer.

Hull Federal Savings Bank, a 99-year-old single-branch thrift located in Baltimore City, is now operating under federal supervision after regulators found it had been engaging in unsafe or unsound practices.

Hull, which has three employees and $26.7 million in assets, agreed Tuesday to the terms of the supervisory agreement with the Office of Thrift Supervision.

The bank recorded a $458,000 net loss in the second quarter of 2010 and has 6 percent of its loan listed as non-current.

Among the terms of the agreement is one requiring the bank ensure it has adequate capital. The bank will have to submit a plan within 60 days on how it plans to do this.

Regulators are also requiring that the bank address its property appraisal practices. The OTS stipulated that Hull must use certified, licensed appraisers and ensure the appraisal process is independent of the loan process.