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MARGARETTEN FINANCIAL $250M SHELF SENIOR DEBT RATED 'BBB+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, March 30 /PRNewswire/ -- Margaretten Financial Corp.'s $250 million shelf registration for senior debt is rated "BBB+" by Fitch. Subordinated debt issued under the shelf is rated "BBB" and preferred stock "BBB-". The debt will be used for general corporate purposes, which may include replacing outstanding debt. The ratings are based on the company's sound balance sheet, solid management experience, and strong profitability. Offsetting these positives are the rapid servicing growth through acquisition and cyclical nature of the business. The credit trend is stable.
 Margaretten, which was spun off from Primerica in an initial public offering in February 1992, has been operating as a mortgage bank since 1969. Margaretten is one of the largest FHA/VA mortgage originators and maintains a portfolio comprised 46 percent FHA/VA and 54 percent conventional loans. While operating under its former parent company, Margaretten sold most of its servicing, maintaining a relatively small servicing portfolio. As an independent company, Margaretten's strategy is to build its servicing portfolio, which has increased to $14.4 billion as of December 1992 from $3.9 billion a year earlier. Growth was achieved primarily through a $7.6 billion NationsBanc portfolio acquisition and strong retail originations.
 Retail production is a source of strength for the company, which operates 63 branches nationwide. Retail production of $6 billion in 1992 represented roughly 2.9 times 1992 runoff. The company plans to build this source of originations through existing networks, recognizing the cyclical nature of the business. To further diversify its origination sources, Margaretten is continuing to expand its correspondent and wholesale networks.
 The company maintains a highly liquid balance sheet with the majority of its assets, mortgage loans, sold forward to one of the government agencies. The company's servicing assets are reflected conservatively on the balance sheet at 109 basis points as of December 1992, leaving the company with some off-balance sheet value. Leverage has been reduced to 4.87 times as of December 1992 from 7.67 times a year earlier and is expected to remain moderate. The company's funding sources will become further diversified with proposed public debt offerings.
 The company's delinquency and foreclosure rate of 6.21 percent is higher than industry averages, reflecting the sizable FHA/VA portfolio. The company's recourse is limited to roughly $300 million, which was mostly acquired through the NationsBanc portfolio and should runoff fairly rapidly.
 Net income was $25.8 million in 1992, up 51 percent from 1991 and its return on equity was 16.4 percent. Revenue from servicing has strengthened and is expected to continue to increase as a percent of net revenue as the company builds its servicing portfolio. The company's 1992 cash flow was solid at $42.9 million, reflecting high amortization of capitalized servicing.
 -0- 3/30/93
 /CONTACT: Teri L. Seelig, 212-908-0638, or Nancy E. Stroker, 212-908-0533, both of Fitch/
 (MRG)


CO: Margaretten Financial Corp. ST: New Jersey IN: FIN SU: RTG

GK -- NY067 -- 1106 03/30/93 13:57 EST
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Publication:PR Newswire
Date:Mar 30, 1993
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