Old Stone Writes Off Millions in Bad Loans
PROVIDENCE, R.I. (AP) _ The recession in the real estate industry caught up with Old Stone Corp. Monday, as the Rhode Island thrift announced it would write off $94 million to cover bad loans and souring development projects.
The thrift also said it would suspend its 20-cents-a-share quarterly dividend and said its president and chief executive officer had resigned.
The writeoff will result in a ″significant loss″ for the third quarter, although the company did not say how much that would be.
The news sent Old Stone stock down $1.50 to $3.75 a share in over-the- counter trading.
The announcement was the first sign of the gravity of Old Stone’s problems. Less than two weeks ago it abruptly pulled out of a deal to buy and reopen five banks and credit unions that have been closed for nine months because of Rhode Island’s banking crisis.
Old Stone said then that the federal Office of Thrift Supervision was conducting an annual examination that would result in some extraordinary costs.
On Monday the company said it would write off $68 million in loan losses and foreclosed real estate; $21 million to lower the value of its joint- venture real estate deals; and $5 million for unspecified reasons.
The problems with bad loans were concentrated in Old Stone Corp.’s Providence subsidiary, said spokeswoman Patricia Pyne, not with subsidiary banks in North Carolina and California.
James V. Rosati, 41, was elected president and chief executive of the bank’s parent company. He replaces Theodore W. Barnes, 59, whom Old Stone said was retiring.
Old Stone also said it would submit a plan to the OTS for bringing its capital ratios back to regulatory standards. It said it expected to sign a formal agreement with regulators governing internal loan review and other procedures.