MELLON <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.