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Real estate and banking mogul B.F. Saul II is halfway in the lifeboat, but his feet are still in the water. And the sharks are still circling.
Saul's main asset, Chevy Chase Federal Savings Bank, the biggest thrift in Maryland, managed to sell $75 million in preferred stock, curing Chevy Chase's capital squeeze and putting it out of the regulatory danger zone as it tries to whittle away more than $500 million worth of bad assets.
That put Saul in the lifeboat.
But the B.F. Saul Real Estate Investment Trust, Saul's private real estate investment vehicle and owner of 80 percent of Chevy Chase's stock, is still overboard.
The weakening performance of its commercial properties and its over-leveraged condition could spell trouble for Saul, irrespective of the fortunes of Chevy Chase FSB.
ASSET PROBLEMS
Proceeds from the preferred stock offering will put Chevy Chase securely in the ranks of the region's better-capitalized financial institutions.
With the preferred stock on its books, the bank's risk-based total capital will be more than 10 percent of total assets, up from less than 6 percent two years ago. Regulations require an 8 percent risk-based ratio.
That's no small feat, considering Chevy Chase's asset problems. At last count, more than 11 percent of the thrift's assets were not performing, most of them in the form of five huge residential developments in Montgomery County and Loudoun County, Va.
But home sales at the units have been brisk, and Chevy Chase's home equity and credit card operations are profitable.
The thrift has had consistent earnings, with one quarterly blip in the last year. It earned...