First Fidelity Stocks Plummet In Wake Of Fourth-Quarter Loss Announcement
Dec. 14, 1988
NEWARK, N.J. (AP) _ First Fidelity Bancorp.'s stock plummeted Wednesday following the resignation of two top executives and an announcement that the big bank holding company expected a huge loss in the fourth quarter.
The company announced the departure of Harold W. Pote, its highly regarded president and chief executive officer, and Bernard J. Morgan, a vice chairman and chief executive of Fidelity Bank in Philadelphia, late Tuesday.
It also said it had fired Jean-Pierre Galy, a Fidelity Bank executive vice president and head of its international department, based in London.
Robert R. Ferguson Jr., First Fidelity's chairman, will assume Pote's duties.
At the same time Tuesday, the company said it expected to lose between $145 million and $190 million in the fourth quarter due to problem loans. The company earned about $210 million, or $3.62 per share, for the first nine months of 1988.
Ferguson sought to reassure investors and customers after the double-dose of negative news by issuing a statement promising, ''Our business and that of our constituent institutions is sound.
''We have one of the finest banking franchises in the country and within a short period of time our operating results will reflect that.''
But investors were wary nonetheless Wednesday.
In closing trading Wednesday on the New York Stock Exchange, First Fidelity's stock fell $8.50 per share to $27 in active trading.
Gregg Novek, an analyst with Ryan, Beck & Co. of West Orange, said the resignations ''have created a void in upper-level management in the firm that people perceive as a real problem.''
''There's no way to prevent all the activity,'' Novek said of Wednesday's trading. ''There are a lot of people who are looking at this as a very good buy right now and a lot who are washing their hands of the company.''
The projected fourth-quarter loss was attributed to certain commercial real estate loans and loans made to some international commercial customers, said Fidelity spokesman Paul J. Levine.
The losses in commercial and real estate projects were concentrated among a small number of borrowers at Fidelity Bank, the company's Philadelphia branch, with a large proportion of the problem loans made to a single borrower, the company said.
In its Wednesday editions, The Wall Street Journal identified the borrower as Historic Landmarks for Living Inc., a major renovator and syndicator of landmark buildings that is based in Philadelphia.
Neither Historic Landmarks spokeswoman Deb Addis nor Levine would comment on the report Wednesday.
The Journal said the loans in question predated the $1.3 billion merger completed in February 1988 of Newark-based First Fidelity Inc. and Philadelphia-based Fidelcor Inc.
The merger created one of the 20 largest bank holding companies in the nation with assets of $30 billion.