MELLON &lt;MEL> SEES LARGE FIRST-QUARTER LOSS

  Mellon Bank Corp said it expects
  to report a loss for the first quarter in the range of 55 mln
  to 65 mln dlrs or 2.13 to 2.15 dlrs a share.
      The company also said it intends to reduce its second
  quarter common stock dividend to 35 cts a share from 69 cts.
      Mellon said it will make a provision for loan losses in the
  first quarter of 175 mln dlrs, reflecting about 95 mln dlrs in
  charge-offs and 80 mln dlrs in additions to the loan-loss
  reserve.
      It will also put 310 mln dlrs in Brazilian loans on a cash
  basis, resulting in interest reversals of 10 mln dlrs.
      In the first quarter of 1986, Mellon earned 60.4 mln dlrs
  or 2.13 dlrs a share.
      Chairman David Barnes said the loan charge-offs and
  increased provisions address four areas of concern in the
  bank's wholesale lending portfolio - the energy sector,
  developing countries, some basic industrial companies and
  several commercial real estate businesses.
      Mellon said the loan loss reserve at the end of the first
  quarter is estimated to be 575 mln dlrs, or about 2.5 pct of
  the loan book, compared with 493.8 mln dlrs or 2.17 pct of
  total loans at the end of 1986.
      Mellon said its primary capital ratio at the end of the
  first quarter will be in line with the end-1986 figure of 7.23
  pct, well in excess of regulatory guidelines.
      Non-performing loans at quarter-end are estimated at 1.45
  billion dlrs, or 6.5 pct of the loan portfolio, compared with
  928 mln dlrs or 3.94 pct at the end of 1986.
      Barnes noted that Mellon has a bigger involvement in
  energy-based lending than many other banks. Because of the lack
  of a substantial recovery in energy prices this year,
  especially in natural gas prices, it was felt prudent to
  increase reserves and take losses on loans in this sector.
      "This action relates both to loans to companies directly
  involved in energy, as well as loans to real estate developers,
  home builders and financial institutions in the Southwestern
  United States," Barnes said.
      As for LDC loans, he said Mellon had removed about 80 mln
  dlrs in fully current Argentine loans from cash basis but had
  charged off about 20 mln dlrs in private-sector Mexican debt.
      He said Mellon, which was ordered in December to quit
  Brazil because of its refusal to renew some short-term credit
  lines, expects to participate in efforts to helpt Brazil and
  other sovereign borrowers to reschedule their debts.
      Loans to basic industries were not major contributors to
  the increase in non-performing assets or to first-quarter
  charge offs, but Mellon said it remains concerned about the
  absence of a strong recovery in steel and related industries.
      The increase in reserves, the dividend cut and continued
  management cost-cutting are aimed at ensuring that Mellon has
  the financial strength to deal with current uncertainties,
  Barnes said.
      "We cannot predict when the uncertainties that presently
  trouble us will end, but we are confident we are managing them
  aggressively," he added.
  

