S&Ls Are Seeking Federal Coverage; 10 Pennsylvania Institutions Slated to Leave State's Private Insurance System
Newman, A. Joseph, Jr., American Banker
HARRISBURG, Pa. -- Ten privately insured savings and loan associations in Pennsylvania either have applied for federal deposit insurance or are expected to do so soon, according to Pamela Hathaway, executive vice president of the Pennsylvania Savings Association Insurance Corp.
Eight of the S&Ls have deposits in excess of $5 million, she said, and thus are required by the private insurer to seek federal insurance by the end of March, unless this deadline is extended, or face a $100-a-day fine. Combined, their deposits total $142 million.
Two smaller associations with cobined deposits of $5.4 million also have applied for federal coverage. Deposits of the 10 thrifts, totaling $147.4 million, represent about 60% of the deposits now covered by the private insurer.
If all 10 qualify for federal coverage, the number of the private insurer's members would drop to 55, all below $5 million in deposits. Most do not qualify for federal insurance because they don't operate full time in groundfloor offices.
The exodus of the largest S&Ls from the private system follows a compromise between legislators and the state Department of Banking. Initially, the department, prodded by Gov. Richard Thornburgh, sought to require all S&Ls to seek federal insurance directly or via merger.
The state Senate, however, in October amended an administration bill to exempt S&Ls with deposits under $5 million. The Banking Department agreed to the amendment. The bill is still in the House business and commerce committee. …