Mellon Bank Corp. picked its new generation of top managers on Friday, ending a long-running succession drama that in recent months has fueled speculation about the bank's ability to remain independent.
Vice chairman Martin G. McGuinn, 55, will succeed Frank V. Cahouet, 65, as chairman and chief executive officer of Mellon Bank on April 1 and of the holding company on Dec. 31.
In tandem moves, vice chairman Christopher M. "Kip" Condron, 50, will become president and chief operating officer of the bank and the holding company.
"I think it's a positive move for the corporation. They can now focus on managing the company and moving it forward," said Joseph Duwan, a banking analyst with Keefe, Bruyette & Woods Inc.
The management plan, unveiled after the market closed, capped an eventful day for $44.9 billion-asset Mellon, which is based in Pittsburgh.
Earlier in the day, the market was abuzz with chatter, fueled by a Business Week report, that Mellon would renew merger talks with Bank of New York. The banks, which broke off discussions for a merger of equals last month, declined to comment. Analysts-many of whom spoke longingly of such a deal in the morning-generally conceded by early evening that the prospects looked remote.
Last fall, merger talks with CoreStates Financial Corp. broke off in part because of management succession issues.
Mellon also reported that its fourth-quarter earnings jumped 7%, to $191 million, fed by rapid growth in its trust and asset management operations.
Earnings per share of 75 cents were right in line with analysts' estimates. Revenues from areas outside traditional lending were up 24%, to $707 million.
Mellon said 66% of its fourth-quarter revenues came from fee-based businesses, up 6 percentage points from the same period a year earlier.
"We continued our strong revenue growth performance in the fourth quarter, which helped us to achieve outstanding results in 1997," said Mr. Cahouet. Mellon's stock was up $1.9375 Friday, to $60.375. +++
Mellon Bank Corp. Pittsburgh Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $191.0 $179.0 Per share 0.75 0.67 ROA 1.75% 1.81% ROE 21.20% 20.90% Net interest margin 4.07% 4.20% Net interest income 361.0 371.0 Noninterest income 707.0 569.0 Noninterest expense 722.0 559.0 Loss provision 73.0 80.0 Net chargeoffs 41.0 36.0 Year to Date 1997 1996 Net income $750.0 $689.0 Per share 2.88 2.58 ROA 1.80% 1.74% ROE 21.50% 20.40% Net interest margin 4.24% 4.26% Net interest income 1,467.0 1,478.0 Noninterest income 2,418.0 2,023.0 Noninterest expense 2,509.7 2,195.0 Loss provision 148.0 155.0 Net chargeoffs 136.0 124.0 Balance Sheet 12/31/97 12/31/96 Assets $44,892.0 $42,596.0 Deposits 31,305.0 31,374.0 Loans 29,142.0 27,393.0 Reserve/nonp. loans 356% 559% Nonperf. loans/loans 0.46% 0.35% Nonperf. assets/assets 0.40% 0.41% Nonperf. assets/loans + OREO 0.62% 0.63% Leverage cap. ratio 8.00%* 8.31% Tier 1 cap. ratio 7.70%* 8.38% Tier 1+2 cap. ratio 12.70%* 13.58% *Estimated ===