Howard Savings Bank said Friday that it could not meet the conditions of a regulatory enforcement action, renewing speculation that the New Jersey thrift will be closed.

A host of companies, including Bank of New York Co. and First Fidelity Bancorp., were said to be looking at Howard, which has $3.5 billion in assets. Sources said it was unlikely that anyone would acquire the thrift without government assistance.

Spokesmen for Bank of New York and First Fidelity declined to comment.

Throwing in the Towel?

"What Howard is saying with this announcement is, 'Go ahead and seize us, we can't do it,'" said Jerome Baron, an analyst at Buckingham Research Group, a New York investment concern. Mr. Baron speculated that Howard could be seized in a matter of weeks.

Howard's already battered stock had fallen 75%, or 56 cents, to 37.5 cents in late trading Friday. The stock traded as high as $23.25 in 1989.

In its news release, Howard said New Jersey's banking department had issued a cease and desist order requiring the thrift to increase its leverage capital ratio to 4% by Sept. 30. A cease and desists order is among the most serious enforcements actions in bank regulators' arsenal.

Howard's leverage capital ratio at the end of the second quarter was 1.53%. The company said that given its level of nonperforming assets and current economic conditions, it "does not have the ability to reach the leverage capital within the time required."

Spokesman for the state banking department and the Federal Deposit Insurance Corp. declined to comment.

Fall from Grace

Like many banks in the Northeast, Howard's troubles stem from overzealous lending to real estate developers. Once one of the premier companies in New Jersey, its nonperforming assets at June 30 represent 25% of loans and foreclosed real estate.

The company has posted losses for 10 consecutive quarters, including a $26.3 million loss for the first half of 1992.

Still, with many of its 67 branches in affluent neighborhoods, Livingston-based Howard could make an attractive target for a host of expansion-minded banks.

Desirable Network

Analyst said they expect several companies will consider making a bid for Howard. Along with Bank of New York and First Fidelity, they named Chase Manhattan Corp., Chemical Banking Corp., and National Westminster Bancorp, all of New York; Princeton, N.J.-based UJB Financial Corp., Philadelphia-based CoreStates Financial Corp.; and Pittsburgh-based PNC Financial Corp.

For Chemical, First Fidelity, NatWest, and UJB, Howard would augment already large presences in the state. Bank of New York, CoreStates, and PNC could expand in an area they have long coveted.

Drastic Steps

Howard has taken aggressive measures to right itself during the past two years. It brought in new management, laid off 35% of its work force, and sold four branches and other assets to generate cash. The company employs 1,300 people.

Howard has been talked about as a seizure candidate for some time. Aside from having a huge portfolio of bad assets and dangerously low capital levels, Howard's management publicly acknowledged earlier this year the company's future was cloudy.

"Failure to meet the regulatory requirements and capital targets" raises substantial doubts about the bank's ability to continue as a going concern," the company's management said in Howard's 1991 annual report.

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