Allfirst Financial says it earned $61.6 million in 1st half of year

Bank rebounds from loss of $4.3 million a year ago

assets, deposits, loans dip

August 01, 2002|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

Allfirst Financial Inc., still reeling from one of the worst banking scandals in history, reported yesterday that it earned $61.6 million in the first six months of the year while assets, deposits and loans fell.

The Baltimore-based bank said it would have earned $111.6 million if not for one-time charges for foreign exchange trading losses and fraud-related expenses plus an after-tax reserve of $15.5 million for a loan that is in doubt.

Allfirst declined to reveal the borrower of the loan, which totals $50 million. Analysts said it was made to WorldCom Inc., the telecommunications giant that has filed for bankruptcy.

In comparison, Allfirst lost $4.3 million in the first half of last year. The bank would have made $113 million in the first half of 2001 if not for one-time charges, including $98.3 million in trading losses.

In February, Allfirst revealed that it lost $691.2 million in foreign-exchange trading losses and blamed a rogue trader at the bank. The losses had gone undetected for five years.

"Given the events of the last six months, it's a good performance," said Maurice J. Crowley, chief financial officer. "Going forward, we want to do better than that, though."

In the first six months of the year, loans fell $87.6 million to $10.6 billion. Crowley said the decline was the result of the bank winding down its residential mortgage and indirect auto-leasing businesses.

Core deposits over that period dropped $834 million to $10 billion. That's because at the end of the year commercial deposits tend to build up and then quickly drop off at the beginning of the new year, Crowley said.

Assets over six months fell $1.5 billion to $17.3 billion. Among the factors contributing to the decline were the trading losses and the drop in commercial deposits, Crowley said.

Nonperforming loans rose to $135.5 million at the end of June, up $47 million from year-end. The bank set aside reserves for half of the $50 million loan that remains in doubt.

Also yesterday, Allfirst's parent, Allied Irish Banks PLC in Dublin, reported that it earned $689 million in the first half of this year, up from $657 for the corresponding period last year.

Those results were better than expected, analysts said.

"There were a few negative surprises in the U.S.," said Eamonn Hughes, an analyst with ABN AMRO Bank in Dublin. Among them was the $50 million loan, he said.

Despite those problems, Allied isn't prepared to sell Allfirst, Hughes said. "They said they were committed to U.S. regional banking so I assume they are not going to sell it," he said.

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