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METROPOLITAN FINANCIAL CORPORATION REPORTS FIRST QUARTER EARNINGS

 MINNEAPOLIS, April 19 /PRNewswire/ -- Metropolitan Financial Corporation (NYSE: MFC) today reported net income of $12.2 million in the first quarter of 1994 compared with $15.3 million in the first quarter of 1993. Pretax income increased to $19.7 million, up $10.9 million, or 123.9 percent, from the first quarter last year. The current quarter's results are fully taxed compared with a net tax credit of $6.5 million (which included a $10 million tax benefit) recognized in the first quarter of 1993. On a per share basis, earnings were $.37 per share in the first quarter of 1994 compared with $.48 per share in the prior year which included tax benefits of $.32 per share.
 The company reported a record level of net interest income in the first quarter of 1994 of $52.6 million, an increase of 14.3 percent from the first quarter of 1993. Net interest margin for the quarter was 3.15 percent, unchanged from 3.15 percent in the fourth quarter of 1993 and down from 3.26 percent a year ago. Total assets increased to $7.9 billion at March 31, 1994 from $7.0 billion at year-end 1993. The majority of the increase in assets reflects the completion of the Rocky Mountain Financial Corporation acquisition in March 1994.
 Metropolitan Financial Corporation's Chairman and Chief Executive Officer, Norman M. Jones said, "Over the last year we have laid the foundation for consistent internal balance sheet growth. Products and systems developed and implemented in 1993 and earlier this year are demonstrating the franchise's ability to generate assets in a very competitive environment. In addition to contributing to a sharp improvement in operating earnings this quarter over the first quarter of 1993, this foundation, combined with the stable nature of our deposit base, should serve to enhance profitability and shareholder value in the quarters to come."
 During the first quarter of 1994, the company's board of directors announced a 100 percent increase in its quarterly cash dividend to $.20 per share. Based on the closing price of the common stock on April 18, 1994, this dividend represents a yield of 4.7 percent.
 Metropolitan Financial Corporation completed two acquisitions during the first quarter. On March 25, 1994, the acquisition of Rocky Mountain Financial Corporation and its banking subsidiary, Rocky Mountain bank, F.S.B., was completed. Rocky Mountain was the second largest financial institution in the state of Wyoming with 14 branches located throughout the state. It has assets of $516 million and deposits of $422 million. The transaction was accounted for as a purchase and marks Metropolitan's entry into its ninth state. Also during the quarter, Metropolitan announced it had been the successful bidder for $12.5 million in deposits of two branches of Pioneer Federal Savings & Loan Association, a failed thrift in Kansas.
 The improvement in net interest income of $6.6 million, or 14.4 percent, from the first quarter of 1993 reflects an increase in the residential mortgage and consumer loan portfolios from acquisitions and wholesale purchases. Single family mortgage loan production during the first quarter of 1994 totaled $280 million compared with $212 million in the first quarter of 1993. Average earning assets in the first quarter of 1994 increased to $6.7 billion, up from $5.7 billion a year ago.
 Net interest margin was 3.15 percent in the first quarter of 1994, unchanged from 3.15 percent in the fourth quarter of 1993. Net interest margin was 3.26 percent the first quarter of 1993. The net interest margin began to narrow a year ago reflecting reduced average yields on earning assets resulting from the high rate of prepayments in the mortgage-backed securities and mortgage loan portfolios which continued into the first two months of the current quarter. With the recent increase in interest rates, a reduced level of mortgage prepayments is expected in future quarters.
 The provision for loan losses was $2.6 million in the first quarter of 1994 compared with $1.5 million in the first quarter of 1993. The increase in the provision reflects an overall increase in the loan portfolio of $1.9 billion, or 54.0 percent, from a year ago. The company anticipates further growth in the loan portfolio and commensurate increases in the provision throughout the year.
 The allowance for loan losses was $42.8 million at March 31, 1994 compared with $42.9 million at December 31, 1993 and $35.8 at March 31, 1993. Reserve coverage of nonperforming loans was 102 percent at the end of the first quarter of 1994.
 Nonperforming assets at March 31, 1994 declined to $98.8 million, down $16.6 million, or 14.4 percent, from $115.4 million at December 31, 1993. The ratio of nonperforming assets to total assets declined to 1.26 percent at the end of first quarter 1994 from 1.65 percent at year- end 1993.
 Noninterest income in the first quarter of 1994 was $17.5 million, an increase of $3.8 million, or 27.6 percent, from the first quarter of 1993. Realty commissions from the company's real estate brokerage subsidiary, Edina Realty, were up 17.2 percent to $6.3 million reflecting continued strength of the real estate market and acquisitions during the past year. Title closing fees from the title services subsidiary, Equity Title, were up 17.5 percent to $2.2 million. Financial services income from the sale of mutual funds and annuities was up 161.4 percent to $1.8 million. Service charges on deposits accounts and other income increased 53.7 percent to $4.7 million.
 Noninterest expense in the first quarter of 1994 was $47.9 million compared with $49.4 million in the first quarter of 1993. Included in the first quarter of 1993 is a one-time charge of $4.0 million related to the closing of 17 retail bank offices and other reorganization activities. Excluding this charge, noninterest expense increased $2.5 million, or 5.5 percent, from the prior year's first quarter reflecting the banking and real estate brokerage acquisition activity. The bank-only efficiency ratio, defined as noninterest expense less amortization of goodwill and real estate expense as a percent of net interest income before the provision for loan losses and noninterest income, improved to 55 percent in the first quarter of 1994, down from 56 percent in the fourth quarter of 1993 and 62 percent in the first quarter of 1993.
 Compensation, occupancy, data processing, advertising and amortization of goodwill expense increased $361,000, or 1.1 percent, reflecting the acquisition during the past year of Eureka Savings Bank and Western Financial Corporation and its subsidiary, Columbia Savings Association F.A. Both companies were located in Kansas and had combined assets of $813 million. Deposit insurance premiums increased $730,000 reflecting deposit growth associated with acquisitions, as the rate paid for insurance premiums has remained constant. Real estate owned expense declined $838,000 as a result of improved results from certain income-producing properties as well as a reduction in charge- offs.
 The provision for income taxes was $7.5 million in the first quarter of 1994 compared with a net tax credit of $6.5 million (which included a $10 million tax benefit) recognized in the first quarter of 1993. The $10 million benefit in the first quarter of 1993 resulted from the favorable resolution of a number of outstanding tax issues raised by the Internal Revenue Service for which the company had earlier established reserves.
 Total assets at March 31, 1994 were $7.9 billion, up from $7.0 billion at December 31, 1993 and $6.2 billion at March 31, 1993. Deposits totaled $5.7 billion at March 31, 1994 compared with $5.4 billion at December 31, 1993 and $5.1 billion at March 31, 1993. Average equity to average assets increased slightly to 7.07 percent at the end of the first quarter of 1994 compared to 7.05 percent a year ago. Tangible capital, core capital and risk-based capital on March 31, 1994 were 5.61 percent, 5.99 percent, and 10.34 percent, respectively.
 Metropolitan Financial Corporation is a leading regional financial services holding company headquartered in Minneapolis with assets of $7.9 billion. Metropolitan Federal Bank, the company's full service consumer savings bank, operates more than 200 offices in North Dakota, Minnesota, Iowa, Nebraska, Kansas, Wyoming, South Dakota, Wisconsin and Arizona. MFC provides real estate brokerage services in Minnesota and Wisconsin through its Edina Realty, Inc. subsidiary with 59 locations and more than 2,000 sales associates. The company's Equity Title Services subsidiary offers title closing services with eight offices in Minnesota and Wisconsin.
 METROPOLITAN FINANCIAL CORPORATION
 Selected Consolidated Operations Data and Ratios
 (Dollar amounts in thousands, except per share data)
 (Unaudited)
 Three Months Ended
 3/31/94 3/31/93
 Operations Data
 Interest income $122,027 $112,073
 Interest expense 69,462 66,078
 Net interest income 52,565 45,995
 Provision for loan losses 2,575 1,500
 Net gains on sale of assets 347 525
 Other noninterest income 17,199 13,222
 Noninterest expense 47,884 49,422
 Income before income taxes 19,652 8,820
 Income taxes 7,467 (6,467)
 Net income $12,185 $15,287
 Earnings per share:
 Primary $0.37 $0.49
 Fully diluted $0.37 $0.48
 Ratios
 Return on average assets 0.68% 1.00%
 Return on average equity 9.68 14.16
 Average equity to average assets 7.07 7.05
 Net interest margin 3.15 3.26
 Operating expense/average assets 2.69 3.23
 Nonperforming assets to total
 assets 1.26 1.48
 March 31, December 31,
 1994 1993
 Financial Condition
 Total assets $7,854,845 $7,006,785
 Loans 5,511,164 4,646,055
 Mortgage-backed securities 1,102,019 943,193
 Securities available-for-sale 604,406 813,293
 Deposits 5,697,741 5,354,635
 Shareholders' equity 499,237 504,383
 Nonperforming assets 98,819 115,424
 Book value per common share 15.75 15.79
 Tangible book value per common
 share 12.94 13.81
 Market value per common share $16.00 $16.50
 Capitalizations Metropolitan Federal
 Bank, fsb
 Tangible capital 5.61% 6.73%
 Core capital 5.99% 7.17%
 Risk based capital 10.34% 13.06%
 -0- 4/19/94
 /CONTACT: William Bartkowski, chief administrative officer, 612-399-6000; or Patricia Henning, investor relations, 612-399-6045/
 (MFC)


CO: Metropolitan Financial Corporation ST: Minnesota IN: FIN SU: ERN

CP-DB -- MN013 -- 8195 04/19/94 13:05 EDT
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Date:Apr 19, 1994
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