Meritor to Sell Fla. Thrift for $35 Million
Meritor Savings Bank said it would complete the divestiture of noncore businesses by selling its Florida savings and loan to an investor group for about $35 million.
With the transaction, Philadelphia-based Meritor becomes one of the few major thrifts left standing after pursuing the ill-fated strategy of expansion through supervisory acquisitions in the early 1980s.
The deals exposed acquiring thrifts to unfamiliar real estate markets and loaded them with regulatory goodwill, an intangible asset that couldn't be counted toward capital under the 1989 thrift reform law.
Empire of America and Goldome, both of Buffalo, proved unable to rebound from a similar strategic move. Northeast Savings of Hartford, Conn., is still recovering from its problems.
Meritor's Florida unit based in Winter Haven, Meritor Savings FA, has $1.3 billion of assets and 43 branches in central Florida and the District of Columbia. It will be sold to WMG Holding Co., a group of individual investors.
Meritor said it will book a loss of $28 million, including $23 million as the result of writing off goodwill.
Revival on Capital Side
But the sale will "substantially improve Meritor's regulatory capital position," said chairman Roger S. Hillas.
Primary capital will rise to 10.23% of assets from 8.46%; the risk-based capital ratio will swell to 12.4% from 11.35%, and the leverage ratio will improve to 8.13%, from 6.64%, the bank estimated.
Watch on Nonperformers
One investment banker, who declined to be quoted by name, said the bank still faces a "difficult, not critical" problem with nonperforming assets at 6.2% of total assets at midyear.
Mr. Hillas joined the bank in 1988, vowing to implement the strategy that shrank Meritor to $6 billion in assets, from $17.2 billion.
Among the units shed as part of the shrinkage were branches in the Philadelphia area with $5 billion of assets, sold in 1990 to Mellon Bank; three profitable mortgage-banking subsidiaries; and a $2 billion asset consumer finance unit.