Magazine article American Banker

Midlantic Posts Loss, Will Chop 2,000 Jobs

Magazine article American Banker

Midlantic Posts Loss, Will Chop 2,000 Jobs

Article excerpt

Ailing Midlantic Corp. reported Thursday that it lost $29 million in the first quarter and said it planned to eliminate 2,000 jobs, or about 28% of its work force, during the next five months.

Although the loss was expected, the job cuts planned are more than 30% greater than disclosed by a company official last month.

Midlantic said the reductions and other measures would cut the company's annual operating cost by about 18% or %100 million.

Hard on Morale

"That's a significant [job] cut," said Gerard Cassidy, an analyst at Tucker Anthony Inc. in Portland, Maine. "It will be difficult to do that and keep morale up."

Midlantic's stock price was unchanged Thursday, at $7.875 a share.

Although the survival of Edison, N.J.-based Midlantic is by no means assured, the first-quarter results contained some positive signs.

Nonperforming assets fell 3%, to $1.757 billion, from the fourth quarter level - the second consecutive quarterly drop.

However, Midlantic's nonperforming assets still account for a mammoth 14% of loans and foreclosed real estate.

Meanwhile, the company deposit base has remained stable, and its leverage capital ratio, while thin at 3.4%, is not at a dangerous level.

Midlantic's first-quarter loss included a $25 million charge to pay severance costs. Helping off-set the charge was a $12 million gain from the sale of securities and a $10 million gain from the sale of the company's mortgage subsidiary.

Loss Provision Drops

The company, which has $17. …

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