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Mellon to shed three units
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January 15, 1999: 1:43 p.m. ET
Credit card, processing and mortgage unit sales to cut balance sheet by $4B
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NEW YORK (CNNfn) - Mellon Bank Corp. is selling three non-core business units, including its credit card portfolio, as part of a new restructuring plan to minimize risk and focus on high profit-growth operations.
Mellon Bank (MEL) said it will sell its mortgage business, credit card portfolio and Network Services transaction processing unit. The company, however, will retain its jumbo, large-balance mortgage loan business, which caters to private banking and private asset management customers.
Proceeds from the sale will be used to buy back 10 million shares of Mellon's common stock.
"While mortgage, credit card and Network Services do not fit with Mellon's competitive strengths and long-range focus, each has strong product and customer positions that offer greater potential in the hands of organizations better positioned to leverage their strengths," said Mellon Chairman and Chief Executive Martin G. McGuinn, who shook up management earlier this month. "Our commitment to being the best-performing financial services company requires that we continually evaluate our lines of business against the key objectives of our strategy."
The sale of those operations, expected to close in the third quarter, should reduce Mellon's balance sheet by more than $4 billion.
"Taking these steps is consistent with our focus on sustainable earnings growth and returns, not balance sheet size," McGuinn said. "In particular, the sales of the credit card and mortgage businesses will reduce our exposure to higher-risk assets and reduce potential earnings volatility by eliminating approximately $3.5 billion in loans and mortgage servicing rights from Mellon's balance sheet."
For the fourth quarter, ended Dec. 31, Mellon Bank also reported net income applicable to common stock of $222 million, or 84 cents per diluted share. In the year-ago quarter, the bank earned $191 million, or 75 cents a share.
Total net income for the year reached $861 million, or $3.25 per share, compared with $750 million, or $2.88 a share, in 1997.
Shares of Mellon Bank were up 2-3/4 at 67-7/8 Friday afternoon on the New York Stock Exchange. 
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Mellon Bank
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