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 HANCOCK, Mich., Dec. 30 /PRNewswire/ -- D&N Financial Corporation (NASDAQ-Common: DNFC, Warrants: DNFCW) announced the successful completion of its rights offering. Pursuant to the offering, the company sold 1,003,219 units, which resulted in the issuance of 3,009,657 shares of common stock and 1,003,219 warrants. The offering raised over $22.8 million, with net proceeds to the company of approximately $21.5 million. First Albany Corporation and Roney & Co. acted as dealer managers for the offering.
 "We are tremendously pleased with the response from our stockholders," said George J. Butvilas, president and chief executive officer of D&N. "The additional capital raised in the offering will keep the bank in compliance with all fully phased-in capital requirements and allow us to return to our long-term growth strategy."
 Holders of D&N Financial Corp. common stock received one right for every five shares held as of Nov. 4, 1993. Each right was exercisable to purchase one unit consisting of three shares of common stock and one warrant at a price of $22.75. The warrants have an exercise price of $8.25 and may be exercised at any time on or before Dec. 31, 1996. Of the net proceeds, the company will retain approximately $750,000 for general corporate purposes and working capital. The remaining proceeds will be used to increase the overall capital levels and fund long-term growth plans for the company's sole subsidiary, D&N Bank.
 D&N also announced that it plans to adopt an accounting change in the fourth quarter which will eliminate most of the goodwill remaining on its books. The move will reduce D&N's annual goodwill amortization expense.
 "This accounting change will result in a non-cash cumulative adjustment to our balance sheet," said Butvilas. "This will mean that the fourth-quarter and year-end results will reflect the write-off of approximately $34 million of goodwill."
 The goodwill arose from the acquisition of First Federal Savings & Loan Association of Flint in 1982 and has been amortized on a straight line basis since that time. At the time of the acquisition, the goodwill was placed on a 40-year amortization schedule; that was accelerated to a 25-year schedule when the company had its initial public offering in 1985. Prior to 1989, financial institutions were allowed to include goodwill in capital calculations. However, under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), institutions were required to phase out goodwill from tangible capital calculations over five years, ending in 1994.
 The adoption of the preferred accounting treatment for goodwill under FASB 72 will not affect the company's tangible book value, since goodwill is not included in the tangible capital calculation. However, going forward, the company's earnings per share, return on assets and return on equity will benefit by the reduction of the amortization expense for the goodwill.
 The company also announced that in the fourth quarter, it is prepaying approximately $42 million in fixed-rate Federal Home Loan Bank advances at a cost of approximately $2.5 million. The action is expected to improve the company's net interest income in 1994, 1995 and 1996. The advances being prepaid carry interest rates ranging from 5.5 percent to 12 percent.
 D&N Financial Corp., through its subsidiary, D&N Bank, fsb, has 37 financial services offices throughout Michigan's Upper Peninsula, northeastern Wisconsin and mid-Michigan. D&N is the third largest savings bank in Michigan and the largest financial institution headquartered in the Upper Peninsula. D&N Financial Corp. common stock and warrants are traded on the NASDAQ Stock Market under the symbols DNFC and DNFCW, respectively.
 -0- 12/30/93
 /CONTACT: Joann C. Cadwell, director of investor relations, 906-487-6225, or Kenneth R. Janson, chief financial officer, 906-487-6258, both of D&N Financial Corporation/

CO: D&N Financial Corporation ST: Michigan IN: FIN SU:

KE-KT -- DE006 -- 8080 12/30/93 14:00 EST
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Publication:PR Newswire
Date:Dec 30, 1993

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