Hopkins Savings Bank under feds’ scrutiny

Concerned over the operation of Hopkins Federal Savings Bank, the Office of Thrift Supervision has placed the 90-year-old Highlandtown-based thrift under a supervisory agreement.

The Office of Thrift Supervision, the bank’s primary federal regulator, said the agreements with Hopkins and Hopkins Bancorp Inc., the bank’s holding company, were needed to address “unsafe or unsound” practices uncovered in a September 2010 examination.

The agreements, which were entered into on Monday, require the bank and holding company to revise policies on concentrations of credit, allowances for loan losses and limitations on loans to one borrower. The bank must complete written quarterly reports to the Office of Thrift Supervision outlining the steps taken to comply with the agreements.

Steven A. Cohen, president and CEO of Hopkins, said the bank’s executive management has already been addressing the concerns, since they were raised last year. He said in one instance, concerns about loans made to a single borrower were resolved in November.

“I think we’ve taken adequate steps to address these issues,” he said. “We’re very confident we can and will resolve any issues that were raised by the regulators.”

Hopkins Federal Savings Bank was founded in 1921 and has one branch in Highlandtown and a second in Pikesville.

The bank had $355 million in total assets as of the end of 2010. For the fourth quarter of 2010, Hopkins reported profits of $2.8 million compared to $1.09 million in the fourth quarter of 2009.

About $7.4 million of Hopkins’ total loans are in non-accrual status, meaning that interest payments have not been made for a sustained period. Reserves are usually set aside to cover those loan losses.

Hopkins is considered to be “well capitalized” by Federal Deposit Insurance Corp. guidelines. The bank has Tier 1 Leverage Capital ratio of 8.12 percent and a Total Risk-Based Capital ratio of 19.7 percent at the end of December. The Tier 1 Capital ratio is a bank’s core equity capital compared to its total assets; the Total Risk-Based Capital ratio is the requirement that banks keep a minimum ratio of estimated total capital to estimated risk-weighted assets. A bank is considered well capitalized with a ratio of at least 5 percent Tier 1 Leverage Capital and 10 percent Total Risk-Based Capital.

“We remain very well capitalized and have satisfactory liquidity,” Cohen said. “We’re putting things in place so we remain a well capitalized and solid bank.”