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MARGARETTEN FINANCIAL CORP. 'BBB+' SENIOR NOTES AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Sept. 13 /PRNewswire/ -- Margaretten Financial Corp.'s 'BBB+' senior debt, 'BBB' convertible subordinate shelf registration, and 'BBB-' preferred shelf registration are affirmed by Fitch. The action follows Friday's announcement that the company will take a $60 million charge against third-quarter earnings. The credit trend remains stable.
 The charge results from higher current and projected loan prepayments based on the disaggregated cash flow method of evaluating purchased mortgage servicing rights compared to a portfolio basis. Of the $60 million charge, $35 million results from current impairment to certain pools in the servicing portfolio due to accelerated prepayments during 1993. The remaining $25 million will be a provision for further accelerated prepayments that would impair its purchased mortgage servicing rights. After the accounting charge and provision, Margaretten Financial expects to report a loss in the third quarter and roughly break-even earnings for the year. However, cash flow, which is unaffected by these noncash charges, remains good. For 1993's first six months, cash flow was $39.1 million compared with $16.8 million in the same period 1992.
 Margaretten Financial maintains a $15.3 billion servicing portfolio as of June 30 and originations remain strong with $4.8 billion of production or 2.2x runoff for the six months ended June 30. Following this charge, the company's servicing asset, as reflected on the balance sheet, will be reduced to a conservative 75 basis points compared with 109 basis points at Dec. 31, 1992.
 Also, Margaretten Financial plans to issue up to $40 million of preferred stock for possible servicing portfolio acquisitions and to initiate repurchase of up to two million shares of common stock. Leverage will remain moderate.
 -0- 9/13/93
 /CONTACT: Teri L. Seelig, 212-908-0638 or Felix Huang, 212-908-0621, both of Fitch/


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

WB -- NY060 -- 1302 09/13/93 12:22 EDT
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Publication:PR Newswire
Date:Sep 13, 1993
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