Troubled Mercury S&L; Names New Chief

Leonard Shane, chairman and managing officer of Mercury Savings & Loan since its founding 26 years ago, relinquished part of his duties Tuesday when the beleaguered Huntington Beach-based S&L; named a new managing officer to run daily operations.

Michael A. Durkin, hired in November as the institution’s senior executive vice president and chief lending officer, was promoted to the positions of president and chief executive, or managing officer, effective immediately.

Shane, 67, remains as Mercury’s chairman. While Shane had always been the institution’s managing officer, two others had stints as president, including his son William.

Shane said the appointment of Durkin, 52, a former chief deputy commissioner of the California Department of Savings and Loans, is part of his long-planned “diminution” in his role at the S&L;, which has $2 billion in assets but is now insolvent and under strict regulatory operating orders.

“I do not refer to this as a retirement because it is not,” Shane said.

Shane said the appointment of Durkin was not in response to any orders from federal regulators, who last month told the S&L; to stop making new loans and new investments. Regulators declined comment.

Shane has said previously that he wanted to retire early this year. He also has said he would continue to fight to rescue the S&L.;

Mercury slipped into insolvency last month when it devalued $60.7 million in loans outstanding to the owners of the Irvine Marriott and the Tulsa Marriott hotels. It also continued to post losses from accounting adjustments that have plagued the S&L; for a year.

The S&L; posted a $13.8-million loss for 1988 and an additional $5.4-million loss for the first nine months last year. Although Mercury hasn’t disclosed financial results for the fourth quarter of 1989, it did say the total fourth-quarter writedown from the Marriott loans and the accounting adjustments will be about $32 million.

Durkin is a veteran of the thrift industry.

“Durkin is a seasoned executive who has had considerable experience working on turnarounds of large S&Ls;,” said Edward J. Carpenter, an industry consultant from Santa Ana. “Regulators like him very much.”