WASHINGTON -- Thrift Executives in the Nation's capital used to snicker at Robert H. Halleck, president of Maryland Federal Bancorp.

He was missing the boat, they sniffed. While their thrifts were making a bundle off commercial real estate loans. Maryland Federal was scraping by making home loans.

But patience has paid off for the 50-year-old Mr. Halleck. The $845 million-asset thrift he runs in the Washington suburbs is posting the biggest profits in its 106-year history. Meantime, the executives who hitched their careers to commercial real estate have been bounced from the business.

Orders from the Board

"We knew we were probably doing everything wrong, but we knew how to do what we were doing," said Mr. Halleck, an engaging man who wears bow ties and is a voracious reader of espionage novels. "They [board members] were never tempted. The direction they gave me was: Don't even think about it."

The thrift earned $10.4 million for its fiscal year ended Feb. 28, 1993, up 74.5% from the prior year. For the first half of its fiscal 1994 year. which ended Aug. 31, it posted a 1. 50% return on average assets, and a 18% return on average equity,

Low interest rates, a surge in refinancings, and a stout net interest margin of 3.93% have bouyed earnings. But Maryland Federal is solid all the way around. Nonperforming loans were a mere $5.4 million for the first half of the fiscal year, or 0.64% of assets. Expenses have been squeezed to a minimum, and capital levels far exceed government requirements.

Enviable Efficiency Ratio

All of this boils down to an efficiency ratio of 40.2%, while most banks are in the 50% to 60% range.

"It is one of the best S&Ls you could ever find," said Daniel H. Abramowitz, a money manager with Hillson Financial Management, Hyattsville, Md., which owns 25.000 shares of the stock. "They are extremely healthy. They don't know anything about raw land deals."

"If you are an investor, you can sleep well at night," added Celia Martin, a thrift analyst with Friedman, Billings, Ramsey & Co., a Washington-based broker-dealer. "He [Mr. Halleck] runs a plain vanilla institution with a ton of equity."

The rap against Maryland Federal is that interest rates will eventually rise, margins will narrow, and profits will be cut.

"You control the things you can control -- expenses and credit quality," said Mr. Halleck, who is known for keeping a tight rein on overhead. "I can hear them [employees] squealing sometimes," he quipped.

Shareholders grumble that the stock is undervalued. After announcing a 21% increase in second-quarter earnings last week, Maryland Federal's stock fell a dollar to $26.50. Analysts expected higher earnings, which were crimped by commissions paid to loan originators.

"The underlying trends are positive," said Stephanie Giroux, a research analyst with Paine Webber Inc. who likes the thrift because its tangible and core capital ratios stand at 8.60%, versus the 1.50% tangible and 3.00% core required by the government.

"We are one of the most woefully underpriced thrift stocks," Mr. Halleck said. "We are trading at less than seven times earnings. That's ridiculous "

Mr. Halleck isn't going to do anything rash to pump up the stock price. His philosophy is to stick with what he knows -- single-family-home loans.

Constant Demand

"You've got a product that everybody is going to need forever in one way or another." he said. "Joe Sixpack is not going to pay cash for his house 30 years from now, he is going to need some way to finance it."

Maryland Federal books as many adjustable- and fixed-rate home loans as it can within 70 miles from its headquarters. It keeps the adjustables and sells the fixed-rate loans.

The thrift has turned up the juice on loan volume. Mr. Halleck hired six additional loan officers in the past year, for a total of 12. They work on commission, so if demand slackens the thrift won't be strapped paying salaries.

"They don't sell, they, don't eat." he said.

Few Delinquencies

In September, Maryland Federal booked $38 million in new loans, its best month ever. For the year, Mr. Halleck expects to book $240 million, compared with $211 million last year. About 70% of the new loans are refinancings.

"We are finally achieving loan volume that we should have had years ago," Mr. Halleck said. Problems are few and far between. As of Aug. 31, Maryland Federal had just 14 loans totaling $1.1 million that were 90 days past due.

Mr. Halleck has worked to create as little room for error as possible. Every loan over $500,000 must be approved by the thrift's seven-member board of directors. Not only does the board vote on the loan, but on occasion board members and senior officers pile into the thrift's company car, a 1992 Cadillac, and visit the properties.

"It looks like the Mafia coming to visit." Mr. Halleck said. Unlike other institutions, Maryland Federal's directors are not encouraged to bring loan business to the thrift. They are relied upon to set policy and provide a road map for the future.

"Their job is not to pick the telephone up and tell me to make a crappy loan to their son-in-law," Mr. Halleck said. "Their job is to put down the big footprint and make sure I walk along in my size eights."

But Mr. Halleck makes sure Maryland Federal abides by government laws. On his desk sits the thick examiner's handbook, which he reads once a year at his vacation home in Rehoboth Beach, Del. It contains everything he needs to know run the thrift. he says.

"He is really a stickler for following the regulations," said Ronald R. O'Brien, senior vice president of information systems. "We haven't gone off and done anything that was stupid."

A native Dubuque, Iowa, Mr. Halleck graduated in 1964 from Norwich University, a military school in Vermont, and went on for a master's degree in business from the University of North Carolina.

After a two-year stint in the Army, in 1967 Mr. Halleck joined Wachovia Corp., where he worked his way up to operations manager for credit cards. In 1969, he joined the marketing department of First Virginia Banks Inc., Falls Church, Va. Four years later, he became advertising manager of Maryland Federal.

Mr. Halleck was named president of the thrift under dire circumstances. Maryland Federal's president and chairman, Robert J. Smith, died of cancer in 1987.

"It was tough for me because I liked him a lot," Mr. Halleck said.

When he took over, Maryland Federal's performance was mediocre at best. In the early 1980s it had a four-year streak of losses. But it began posting profits in 1986, and has never stumbled.

Mr. Halleck says he doesn't have a sense of "impending doom" over the specter of rising interest rates.

"I just find it hard to believe we won't continue having good years," he said. "This is not a fluke."

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