A federal regulatory agency is requiring Annapolis-based Severn Savings Bank to revise its policies in the face of a mounting number of problem loans.

The Office of Thrift Supervision entered into agreements with Severn Savings Bank so it can monitor "the progress we are making" in reducing bad loans, said Alan Hyatt, president and chief executive officer of the bank.

Hyatt said he argued against the agreement because the bank is well capitalized and working on its own to reduce the number of bad loans on its books.

As of Sept. 30, the bank's regulatory capital ratios "continued to exceed the...