Magazine article American Banker

Meridan Lowers Its Earnings Expectations, Dismaying Forecasters

Magazine article American Banker

Meridan Lowers Its Earnings Expectations, Dismaying Forecasters

Article excerpt

Bank analysts expressed dismay and disappointment in the wake of Meridian Bancorp's acknowledgement that it will report third-quarter earnings at least 15% lower than expected.

At the same time, the Reading, Pa.-based bank said it would take an $8 million restructuring charge in the third quarter as it consolidates its mortgage origination and servicing subsidiary, Meridian Mortgage Corp.

Consensus estimates for the bank's third-quarter net income were running at about 80 cents per share, or $46 million, according to David Sparks, the bank' s vice chairman and chief financial officer. Meridian said Wednesday that earnings w'fil come in between 62 cents and 67 cents per share, or between $36 million and $39 million.

Meridian earned 60 cents per share in the same period last year, or $34.6 million.

Analysts lamented the sudden weakening in Meridian's earnings expectations, particularly because it follows a less than stellar second quarter. The bank reported earnings of 70 cents per share, or $40.7 million, a 6% drop from the 75 cents per share, or $43.5 million, it showed at Jane 30, 1993.

"This management had been relatively bullish about its outlook on eammgs for the third quarter," said Dennis Laplante, an analyst at FoxPitt Kelton. "A couple of months later they come back and take the additional hits. Right now, Meridian has a credibility problem."

The bank's stock price dropped $1.125 to $27 after the announcement Wednesday, but then recovered slightly to close Thursday's trading at $27. …

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