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MIDLANTIC CORPORATION RATINGS UPGRADED BY DUFF & PHELPS

 CHICAGO, Nov. 22 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has upgraded the ratings of Midlantic Corporation its second tier holding company, Midlantic Banks Inc., and its two principal subsidiary banks, Midlantic National Bank and Continental Bank (PA). The senior debt of Midlantic Corporation and Midlantic Banks Inc., is raised to `BB+' (Double-B-Plus) from `BB' (Double-B) and the subordinated debt rating is raised to `BB' (Double-B) from `BB-' (Double-B-Minus). The long-term senior debt rating of Continental Bank is raised to the investment grade level of `BBB-' (Triple-B-Minus) from `BB+' (Double-B-Plus) while the short-term rating is reaffirmed at Duff 3. The long-term senior debt rating of Midlantic National Bank is raised to `BB+' (Double-B-Plus) from `BB' (Double-B) and the short-term rating is reaffirmed at Duff 3.
 The rating upgrades reflect the continuing improvement in balance sheet measures and core profitability. Capital ratios have been bolstered through equity issuance, disposition of non-strategic assets, and more recently through the retention of earnings. Stockholders' equity equaled 7.88 percent of assets at Sept. 30, 1993, compared with 5.48 percent one year earlier. Tangible common equity was a sturdy 6.74 percent at the close of the third quarter. Problem assets have been sharply reduced over the last year with non-performing assets totaling $742 million, 8.49 percent of loans and other real estate owned, at Sept. 30, 1993, compared with $855 million, 9.70 percent, and $1,456 million, 13.54 percent, three months and twelve months earlier, respectively. Importantly, non-performing assets have declined from 92 percent of equity plus loan loss reserves at Sept. 30, 1992 to 48 percent one year later. The loan loss reserve equaled a large 107 percent of nonaccrual loans at Sept. 30, 1993. While asset quality has improved significantly, problem asset levels remain high and will likely require a prolonged workout period with a continuation of large charge-offs.
 Profitability has strengthened over recent quarters with third quarter net income of $46.9 million (including a $15 million tax benefit) which equaled a return on assets of 1.37 percent. Basic earnings, normalized pretax earnings before asset quality charges, equaled 1.64 percent for the third quarter compared with 1.57 percent and 1.21 percent in the second quarter of 1993 and third quarter 1992, respectively. This recovery in profitability should permit Midlantic to produce a relatively solid level of earnings while still adding moderately to its reserve.
 -0- 11/22/93
 /CONTACT: Charles J. Orabutt, Jr., CPA, CFA of Duff & Phelps Credit Rating Co., 312-368-3153/
 (MIDL)


CO: Midlantic Corporation ST: Illinois IN: FIN SU: RTG

MP-PS -- NY063 -- 6823 11/22/93 12:58 EST
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Publication:PR Newswire
Date:Nov 22, 1993
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