Apparent Frauds Cited as Mercury S&L; Profits Dip
Stung by one-time losses stemming from two apparently fraudulent transactions, Mercury Savings & Loan Assn. said Wednesday that its net earnings for 1986 dipped 15% to $9.4 million from a record $11.1 million in 1985. The Huntington Beach-based thrift said fourth-quarter net earnings fell 98% to $84,000 from $5 million a year earlier.
Mercury said that during the fourth quarter it set aside $24.6 million for losses on loan and real estate transactions, including $17 million to cover one-time losses for several apparently fraudulent transactions that took place before 1985.
Leonard Shane, Mercury’s chairman, said one set of transactions under investigation by law enforcement officials involved a senior Mercury loan officer in Northern California who “acted in an apparently fraudulent manner.” Those transactions totaled about $9 million, Shane said.
A second set of possibly illegal transactions worth about $8 million involved a Southern California builder who may have used fraudulent documentation to obtain loans, Shane said. That case is under investigation by law enforcement officials, he added.
Without the loss provisions, Mercury posted 1986 pretax earnings of $39.2 million, up 96% from $20 million in 1985. Fourth-quarter pretax earnings increased 87% to $21.3 million from $11.4 million a year earlier.
At the end of 1986, Mercury’s total assets stood at $2.36 billion, up 8% from $2.15 billion at the end of 1985.