Profits at S.C.'s Anchor to Be 30% Off Estimate

Anchor Financial Corp. of Myrtle Beach, S.C., said this week that it would miss fourth-quarter estimates due to loan losses stemming from its acquisition of Bailey Financial Corp. in Clinton, S.C.The $1.2 billion-asset company also cited margin pressures and business disruption from Hurricanes Floyd and Irene.

Anchor, parent of Anchor Bank, said its fourth-quarter earnings per share would fall between 35 to 38 cents - about 30% short of its original projections. That prompted Sandler O'Neill & Partners in New York to cut 1999 full-year earnings-per-share estimate by nine cents, to $1.77, while First Union Capital Markets in Richmond dropped its estimate 13 cents, to $1.76.

Anchor said its net loan losses would amount to $1.75 million, of which $1.3 million is related to Bailey's loan portfolio. Stephen L. Chryst, chairman and chief executive officer of Anchor, said the level of losses was higher than expected but that Anchor does not next year's earnings to be affected.

"We are taking the conservative approach in recognizing these losses in the fourth quarter," said Mr. Chryst.

- Matt Andrejczak

Ill. Bank to Reimburse Customers in Bias Case

Federal regulators have cracked down on a suburban Chicago bank that allegedly discriminated against certain borrowers by charging higher loan rates.In documents made public this week, the Federal Reserve Bank of Chicago ordered Foxdale Bank in South Elgin, Ill., to identify indirect consumer loan borrowers who received "more onerous loan terms" than other customers during a two-year period and repay the overcharges.

Neither the Fed nor Foxdale would describe which borrowers were discriminated against.

Regulators said $45 million-asset Foxdale must also bring itself into compliance with the Equal Credit Opportunity Act and Housing and Urban Development credit regulations.

Marianne Luczak, Foxdale's chief financial officer, said the bank is complying with regulators' orders and was "happy to enter into the agreement."

"We're progressing toward the goals that we've mutually identified," Ms. Luczak said.

Foxdale must reimburse customers for the difference between the rates they paid and the lower rates they qualified for.

Regulators also ordered the bank to appoint an officer by Dec. 17 to administer a consumer-protection compliance program. In addition, the bank must train employees on compliance with consumer-protection laws.

- Craig Woker

Houston Bank Predicts 4Q Profit Shortfall

A Houston banking company said its fourth-quarter earnings will fall short of expectations because it plans to charge off $1.8 million of loans.MetroCorp Bancshares, which has $651 million of assets, said this week that it expects to charge off two big loans to the oil services sector, which account for most of the $1.8 million. The company had participated in the loans with the Export Import Bank of the United States and the U.S. Small Business Administration.

MetroCorp said the move should push quarterly earnings to between 17 and 19 cents per share, compared with analysts' estimates of 26 cents. For the year, the bank revised its expectations down, to $1 to $1.02 per share, compared with analysts' estimates of $1.09.

The energy sector was plagued by low oil and natural gas prices for much of this year, but prices recently rebounded. However, the oil services industry, which sells equipment and performs repairs for producers, has not yet rebounded. MetroCorp said it is closely monitoring other loans to that sector.

"Some loans are performing, and some are questionable," said Ruth E. Ransom, MetroCorp's chief financial officer. "That industry is having tough times right now. The oil services industry is always the last to recover in the energy sector."

Following the chargeoff, the bank plans to move $2.1 million into its loan-loss reserves so that its reserves total 1.5% of total loans, compared with 1.42% currently.

-Craig Woker

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