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MICHIGAN NATIONAL REPORTS SECOND QUARTER EARNINGS OF $16.1 MILLION; PLANS TO EXPAND MANAGEMENT TEAM

 FARMINGTON HILLS, Mich., July 21 /PRNewswire/ -- Michigan National Corporation (NASDAQ-NMS: MNCO) today announced earnings for the second quarter of $16.1 million, or $1.00 per share. Net income for the same period last year was $19.2 million, or $1.28 per share.
 Earnings continue to be pressured by unprecedented mortgage refinancing activity and the resulting accelerated prepayments in the corporation's mortgage servicing portfolio. The corporation continues to aggressively address the effect of these prepayment trends through accelerated amortization of its purchased mortgage servicing rights (PMSR) and excess service fees (ESF) assets. PMSR amortization in the second quarter 1993 was $21.6 million, $14.8 million greater than last year's second quarter. ESF amortization expense was $4.3 million, $2.2 million greater than last year.
 Net income for the three months ended June 30, 1993, includes a $7.2 million one-time gain on the sale of mortgage servicing rights. Partially offsetting this one-time gain was the recognition of a $4.6 million one-time write-down of the assets of the corporation's Dallas, Texas, subsidiary, Banc A, due to a longer than expected sales cycle for bank software products.
 Robert J. Mylod, chairman and chief executive officer, said, "As part of the repositioning of its mortgage banking business, the corporation sold the servicing rights for mortgage loans with principal balances of approximately $2.2 billion. After eliminating approximately $19 million of related PMSRs, the sale resulted in a gain of $7.2 million. The mortgage banking business is now less reliant on acquired servicing and its earnings will be less volatile as a result."
 PMSR assets were $62.5 million at June 30, 1993, a 66 percent decrease from
last year's June 30 asset balance of $186.0 million. ESF assets were $12.5 million at June 30, 1993, a 44 percent decrease from last year's asset balance of $22.3 million. The sale of servicing rights referred to above, which resulted in the elimination of approximately $19 million of PMSRs, contributed to this decrease in assets.
 The corporation is currently estimating no tax expense in 1993 for financial accounting purposes, principally due to the increased PMSR and ESF amortization expense, which has the effect of significantly reducing the percentage of projected financial taxable income to total pre-tax financial income.
 Commenting further, Mr. Mylod said, "Other than in the mortgage banking business, various performance indicators in the corporation's core businesses improved over last year's second quarter."
 The net interest margin percentage (NIM) improved 25 basis points to 4.74 percent for the three months ended June 30, 1993, from 4.49 percent for the same period last year. The stronger margin is attributable to effective off-balance sheet interest rate risk management, more favorable asset/liability mix, more aggressive retail deposit pricing, reduced levels of non-performing assets and increased demand deposit balances. The increase in demand deposits is attributable, in part, to mortgage refinancing pay-offs which are held as non-interest bearing deposits until remitted to investors, which generally occurs on the fifteenth day of the month following pay-off.
 Improvements in credit quality continued and as a result, the corporation's provision for possible credit losses for the second quarter 1993 decreased to $12.5 million from $18.4 million in the same period last year. Net charge-offs for the first six months of 1993 were $16.0 million, down $9.8 million, or 38 percent, from the same period last year. At June 30, 1993, performing watch credits were $478 million, down $216 million, or 31 percent, from a high of $694 million a year ago; and total non-performing assets were $293 million, down $33 million, or 10 percent, from $326 million at June 30, 1992. The allowance for possible credit losses as a percentage of non-performing loans increased to 114 percent at June 30, 1993, from 91 percent at June 30, 1992, and the allowance as a percentage of loans increased to 2.68 percent from 2.50 percent over the same period. The allowance as a percentage of non-performing loans of 114 percent dropped from 120 percent at March 31, 1993, due to an increase in non-performing loans to $163 million at June 30, 1993, from $149 million at March 31, 1993. However, total non-performing assets of $293 million at June 30, 1993, were slightly lower than the March 31, 1993, level of $296 million.
 Commenting on activity in the Texas and California bank subsidiaries, Mr. Mylod said, "The corporation's Texas banks continue to report strong earnings performance with a combined Return on Average Equity (ROE) and Return on Average Assets (ROA) of 16.44 percent and 1.18 percent, respectively, for the second quarter of 1993. Independence One Bank of California continues to build its presence in California. Its mortgage warehouse lending subsidiary acquired at a purchase premium of $400,000, is reporting strong performance with pre- tax earnings of $9.7 million since its April 1992 acquisition."
 The corporation also announced that it was taking steps to further strengthen its management team. Commenting on this initiative, Mr. Mylod said, "The planned addition of a President and Chief Operating Officer is recognition of the increasing complexity of Michigan National Corporation and the rapid pace of change in the banking industry."
 Michigan National Corporation is a diversified financial services corporation with total assets of $10.5 billion. It is a bank holding company and a savings and loan holding company.
 (Other key financial data is set forth in the following schedules.)
 CONSOLIDATED FINANCIAL HIGHLIGHTS
 Michigan National Corporation and Subsidiaries
 (Unaudited)
 Three Months Ended
 6/30/93 3/31/93 6/30/92
 OPERATING RESULTS (In Thousands)
 Interest income $177,591 $171,142 $199,971
 Interest expense 73,682 78,678 99,258
 Net interest income 103,909 92,464 100,713
 Provision for possible
 credit losses 12,494 12,506 18,418
 Non-interest income 62,919 51,427 51,462
 Non-interest expense 138,187 176,183 112,291
 Income (loss) before income tax
 expense 16,147 (44,798) 21,466
 Income tax provision (benefit) (1) 0 0 2,247
 Income (loss) before cumulative
 effect of a change in accounting
 principle 16,147 (44,798) 19,219
 Cumulative effect of a change in
 accounting principle (1) --- --- ---
 Net income (loss) (1) $16,147 ($44,798) $19,219
 PER COMMON SHARE
 Income (loss) before cumulative
 effect of a change in accounting
 principle $1.00 ($3.00) $1.28
 Cumulative effect of a change in
 accounting principle (1) --- --- ---
 Net income (loss) - primary and full $1.00 ($3.00) $1.28
 Cash dividends declared $0.50 $0.50 $0.50
 Book value end-of-period (1) $50.67 $50.11 $53.15
 Market value end-of-period $56.50 $60.00 $46.25
 Market value: high $61.63 $64.25 $51.00
 Market value: low $52.00 $50.00 $44.00
 SELECTED PERIOD-END BALANCES (In Millions)
 Total assets $10,542 $10,465 $10,635
 Earning assets 9,388 9,291 9,633
 Total loans and lease financing,
 net of unearned income 6,929 6,534 6,620
 Non-performing assets 293 296 326
 Deposits 8,613 8,582 8,639
 Long-term debt 81 82 93
 Shareholders' equity (1) 766 757 790
 CONSOLIDATED FINANCIAL HIGHLIGHTS
 Michigan National Corporation and Subsidiaries
 (Unaudited)
 Three Months Ended
 6/30/93 3/31/93 6/30/92
 SELECTED AVERAGE BALANCES (In Millions)
 Total assets $10,396 $10,160 $10,789
 Earning assets 9,255 9,117 9,768
 Total loans and lease financing,
 net of unearned income 6,742 6,477 6,786
 Deposits 8,718 8,550 8,852
 Long-term debt 82 82 94
 Shareholders' equity (1) 766 810 784
 SELECTED FINANCIAL RATIOS
 Return on average shareholders'
 equity (pct.) 8.44 (22.13) 9.80
 Return on average total assets (1) 0.62 (1.76) 0.71
 Average equity to average total asset 7.37 7.97 7.27
 Allowance to period-end loans 2.68 2.79 2.50
 Non-performing assets to period-end loans
 (net of unearned income) plus property
 from defaulted loans 4.15 4.44 4.82
 Net interest spread 3.95 3.67 3.73
 Net interest margin 4.74 4.38 4.49
 Equity to asset ratio (period end) 7.27 7.23 7.43
 Leverage ratio 6.97 7.13 7.02
 Tier 1 risk based capital ratio 8.90 9.13 9.76
 Total risk based capital ratio 11.10 11.36 12.04
 Dividend payout ratio (1) 50.00 N/M 39.06
 (1) Previously reported amounts for the three and six months ended
 June 30, 1993 have been restated for the effects of a change in
 accounting principle.
 CONSOLIDATED FINANCIAL HIGHLIGHTS
 Michigan National Corporation and Subsidiaries
 (Unaudited)
 Six Months Ended
 6/30/93 6/30/92
 OPERATING RESULTS (In Thousands)
 Interest income $348,735 $401,507
 Interest expense 152,361 204,303
 Net interest income 196,374 197,204
 Provision for possible credit losses 25,000 36,782
 Non-interest income 114,346 105,108
 Non-interest expense 314,371 224,915
 Income (loss) before income tax expense (28,651) 40,615
 Income tax provision (benefit) (1) 0 4,252
 Income (loss) before cumulative effect of
 a change in accounting principle (28,651) 36,363
 Cumulative effect of a change in
 accounting principle (1) --- 6,265
 Net income (loss) (1) ($28,651) $42,628
 PER COMMON SHARE
 Income (loss) before cumulative effect of
 a change in accounting principle ($1.91) $2.42
 Cumulative effect of a change in
 accounting principle (1) --- $0.42
 Net income (loss) - primary and fully diluted ($1.91) $2.84
 Cash dividends declared $1.00 $1.00
 Book value end-of-period (1) $50.67 $53.15
 Market value end-of-period $56.50 $46.25
 Market value: high $64.25 $52.00
 Market value: low $50.00 $40.25
 SELECTED PERIOD-END BALANCES (In Millions)
 Total assets $10,542 $10,635
 Earning assets 9,388 9,633
 Total loans and lease financing,
 net of unearned income 6,929 6,620
 Non-performing assets 293 326
 Deposits 8,613 8,639
 Long-term debt 81 93
 Shareholders' equity (1) 766 790
 CONSOLIDATED FINANCIAL HIGHLIGHTS
 Michigan National Corporation and Subsidiaries
 (UNAUDITED)
 Six Months Ended
 6/30/93 6/30/92
 SELECTED AVERAGE BALANCES (In Millions)
 Total assets $10,279 $10,689
 Earning assets 9,185 9,657
 Total loans and lease financing,
 net of unearned income 6,609 6,751
 Deposits 8,634 8,764
 Long-term debt 82 93
 Shareholders' equity (1) 788 779
 SELECTED FINANCIAL RATIOS
 Return on average shareholders'
 equity (pct.) (1) (7.27) 10.95
 Return on average total assets (1) (0.56) 0.80
 Average equity to average total assets (1) 7.67 7.29
 Allowance to period-end loans 2.68 2.50
 Non-performing assets to period-end loans
 (net of unearned income) plus property from
 defaulted loans 4.15 4.82
 Net interest spread 3.81 3.71
 Net interest margin 4.56 4.47
 Equity to asset ratio (period end) (1) 7.27 7.43
 Leverage ratio 6.97 7.01
 Tier 1 risk based capital ratio 8.90 9.80
 Total risk based capital ratio 11.10 12.08
 Dividend payout ratio (1) N/M 35.21
 (1) Previously reported amounts for the three and six months ended
 June 30, 1992 have been restated for the effects of a change in
 accounting principle.
 -0- 7/21/93
 /CONTACT: Ariadne Magoulias, Public Relations, 313-473-3428, or Vernon Patterson, Investor Relations, 313-473-3076, both of Michigan National Corporation/
 (MNCO)


CO: Michigan National Corporation ST: Michigan IN: FIN SU: ERN

JG-KE -- DE021 -- 4122 07/21/93 16:21 EDT
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Date:Jul 21, 1993
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