Ailing Mercury S&L; Trims Its Staff by 10%

Beleaguered Mercury Savings & Loan, insolvent and operating under severe regulatory restrictions, said Friday that it laid off 70 employees, or 10% of its staff, effective immediately.

The Huntington Beach thrift, which has reduced assets 20% in the past year to about $2 billion, said the departures included its chief financial officer, Ronald Hansen, who resigned after seven years in that position.

Mercury Chairman Leonard Shane said the S&L; has not decided yet if Hansen will be replaced. His duties will be temporarily handled by Jack Klein, the S&L;’s chief operating officer.

The layoffs will mostly affect employees in the S&L;’s loan department and headquarters staffs. Federal regulators last month ordered Mercury to halt all new lending and investing.

Mercury also disclosed Friday that a shareholder, S. D. Wechsler of New York, has filed a class-action lawsuit against Mercury’s directors and top executives, including Shane, claiming fraud, deceit, misrepresentation of financial data, breach of fiduciary duties and violations of state and federal securities laws.

More specifically, the suit claims that Mercury failed to set aside enough reserves for loan losses, “improperly and aggressively” booked millions of dollars of revenue from gains on the sale of loans and, contrary to what it said in its annual reports, failed to prepare financial statements according to generally accepted accounting principles.

The suit, filed Tuesday in U.S. District Court in Santa Ana, does not specify the amount of damages sought.

It was filed on behalf of those who purchased Mercury stock between April 3, 1987, and Jan. 19, 1990.

Shane would not comment on the lawsuit, saying Mercury executives have not yet had time to review it thoroughly.

Trading in Mercury’s stock has been volatile the past two days. The price jumped 33% in heavy trading to $2 a share at Thursday’s close, and then dropped 37.5% to $1.25 a share on Friday.