That's different from what state and federal bank regulators said when they seized Meritor on Dec. 11, 1992. FDIC officials and Pennsylvania Secretary of Banking Sarah Hargrove both estimated then that shareholders would ultimately collect as much as 40 cents per share for their stock.
Meritor was seized after a long string of losses that eroded most of the 175-year-old institution's capital, leaving it insolvent in the eyes of the regulators. The FDIC, which insured the bank's deposits, sold the bank's 29 PSFS branches and many of its other assets to Mellon Bank Corp., which still operates most of the branches under the Mellon/PSFS name.
Mellon paid the FDIC $181 million, a record price for a failed bank of Meritor's size. So high was Mellon's offer - about twice what three other area banks bid - that the FDIC calculated it would be enough to reimburse fully the federal insurance fund and still have something left over for Meritor's other creditors, including stockholders.
That gave thousands of people who had invested in Meritor some hope that their losses would not be total, enough to fuel a small but continuing market in the stock as traders speculated on an eventual payout.
Whether such a payout takes place, however, will depend on how much the FDIC realizes from the sale of Meritor's remaining assets, mainly commercial loans and foreclosed real estate.
There were 54.6 million shares of Meritor outstanding at its demise. To pay out 40 cents a share, the FDIC would have to realize a net gain of about $21.8 million on the asset sales, as opposed to the $23.8 million loss in its latest estimate.
However, FDIC spokesman David Barr cautioned that stockholders should not give up hope just yet.
The projected loss is relatively small - less than 1 percent of Meritor's $3.5 billion in assets at the time of the takeover, Barr said. If the real- estate market improves or the FDIC is able to get better prices for its assets, it could swing back out of the red.
"A year from now, it can go back the other way," Barr said. "These (projections) are never written in stone until the receivership has been completed, and that's many years down the road."
