Meritor's Losses Grow More Manageable
PHILADELPHIA -- Meritor Savings Bank reported a significantly smaller loss for the second quarter but said nonperforming loans remain a nagging problem.
The latest loss -- $17 million, or 49 cents a share -- compared with a loss of $136.8 million, or $3.90 a share, in the second quarter of 1990.
The 1990 period was marked by Meritor's sale of most of its branches to Mellon Bank Corp., other restructuring costs, and a higher provision for possible credit losses.
Meritor has reduced to $6.4 billion in assets from $12 billion at yearend 1989. It cut its loss for the first six months of this year to $30.4 million, or 87 cents a share, from $166 million, or $4.73 a share, in 1990.
Drop in Net Interest Income
With interest-earning assets down to $5.9 billion in the second quarter from $9 billion a year earlier, net interest income fell to $19.6 million from $22.4 million.
Noninterest expense declined to $31.2 million in the second quarter from $43.6 million, as a result of the sale of operations and other restructuring moves. Meritor is left with 29 banking offices. The loss provision, $11 million in the latest period, compared with $5.4 million in the first quarter of 1991 and $42.5 million in the second quarter of 1990.
Nonperforming assets on June 30 -- nonaccruing loans, renegotiated loans, and foreclosed real estate -- amounted to $396 million, virtually unchanged from $399 million on March 31 and up from $359 million at midyear 1990. After the second quarter, $57 million in loans to real estate partnerships were moved to nonaccrual.
"The high level of nonperforming assets continues to be a serious drain on earnings," said Meritor chairman Roger S. Hillas. He said weaknesses in the economy, particularly in real estate, "continue to put pressure on our loan portfolio. This has contributed to higher-than-expected levels of nonperforming assets."
Meritor has commenced a tender offer for its outstanding 12% subordinated capital notes, following a previous program that expired in March. Its common stock was down 6.25 cents Wednesday afternoon to 87.5 cents a share.