SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1994
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9018
METROPOLITAN FINANCIAL CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 45-0388518
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(State of Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
333 SOUTH 7TH STREET, MINNEAPOLIS, MINNESOTA 55402
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (612) 399-6000
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Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practical date.
Common Stock, $.01 Par Value--31,311,900 shares,
excluding shares held in treasury,
as of July 31, 1994
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INDEX
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PART I. FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of
Condition--June 30, 1994, December 31, 1993, and June 30, 1993............ 1
Condensed Consolidated Statements of Income--Three and six months ended
June 30, 1994 and 1993.................................................... 2
Condensed Consolidated Statements of Changes in
Shareholders' Equity--Six months ended June 30, 1994...................... 3
Condensed Consolidated Statements of Cash Flows--Six
months ended June 30, 1994 and 1993....................................... 4
Notes to Condensed Consolidated Financial Statements--June 30, 1994....... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. 8
PART II. OTHER INFORMATION PAGE
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Item 1. Legal Proceedings......................................................... 17
Item 6. Exhibits and Reports on Form 8-K.......................................... 17
Signatures........................................................ 18
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
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JUNE 30, DECEMBER 31, JUNE 30,
1994 1993 1993
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ASSETS
Cash and due from banks $ 74,362 $ 85,084 $ 78,899
Short-term interest bearing deposits 44,451 82,364 81,453
Loans held-for-sale 38,571 60,645 109,352
Securities available-for-sale 616,889 813,293 243,748
Investment securities (market: June
30, 1994-$49,000; June 30, 1993-
$189,362) 50,000 -- 184,719
Mortgage-backed securities (market:
June 30, 1994-$1,500,463; December 31,
1993-$954,908; June 30, 1993-$1,647,228) 1,552,743 943,193 1,615,012
Loans (net of allowance: June 30,
1994-$40,266; December 31, 1993-$42,905;
June 30, 1993-$45,838) 5,161,966 4,585,410 4,136,763
Federal Home Loan Bank stock, at cost 82,169 59,719 72,702
Accrued interest 44,968 36,817 41,665
Real estate (net of allowance: June
30, 1994-$5,876; December 31, 1993-
$9,533; June 30, 1993-$8,474) 42,507 56,110 65,237
Office properties and equipment 101,658 91,632 79,085
Goodwill 88,954 61,517 61,093
Deferred taxes 56,987 53,089 45,668
Other assets 58,299 77,912 89,874
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TOTAL ASSETS $8,014,524 $7,006,785 $6,905,270
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LIABILITIES
Transaction and passbook deposits $1,542,527 $1,560,667 $1,549,193
Certificates 4,088,468 3,793,968 3,931,069
Federal Home Loan Bank advances 1,480,495 921,801 707,473
Reverse repurchase agreements 162,000 -- --
Other borrowings 118,148 133,159 140,167
Accrued interest 51,205 42,485 47,938
Other liabilities 69,164 50,322 56,478
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TOTAL LIABILITIES 7,512,007 6,502,402 6,432,318
SHAREHOLDERS' EQUITY
Preferred stock, par value $.01 per
share; authorized - 10,000,000 shares;
issued - 488,750 shares 5 5 5
Common stock, par value $.01 per
share; authorized - 60,000,000 shares;
issued June 30, 1994 - 32,492,678
shares; December 31, 1993 - 31,992,275
shares; June 30, 1993 - 30,918,555
shares 325 320 309
Additional paid-in capital 237,225 231,881 171,818
Retained earnings 294,266 280,813 302,398
Net unrealized (losses) gains on
securities available-for-sale (net
of tax) (8,414) 4,209 --
Less cost of common stock in
treasury - 1,339,238 shares at
June 30, 1994; 813,522 shares at
December 31, 1993; 121,734 shares
at June 30, 1993 (20,890) (12,845) (1,578)
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TOTAL SHAREHOLDERS' EQUITY 502,517 504,383 472,952
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $8,014,524 $7,006,785 $6,905,270
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See notes to condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share data)
(Unaudited)
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THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1994 1993 1994 1993
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INTEREST INCOME
Mortgage-backed securities $ 24,589 $ 31,882 $ 47,281 $ 64,051
Loans 106,106 79,338 201,284 153,895
Investments 4,681 4,406 8,838 9,753
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135,376 115,626 257,403 227,699
INTEREST EXPENSE
Transaction and passbook deposits 7,834 6,858 14,884 14,896
Certificates 49,023 50,503 95,672 101,583
Federal Home Loan Bank advances 18,298 6,725 30,977 10,353
Reverse repurchase agreements 1,714 -- 2,323 --
Other borrowings 2,334 3,001 4,809 6,333
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79,203 67,087 148,665 133,165
NET INTEREST INCOME 56,173 48,539 108,738 94,534
Provision for loan losses 3,000 2,400 5,575 3,900
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 53,173 46,139 103,163 90,634
NONINTEREST INCOME
(Losses)/gains related to mortgage
banking activities (253) 3,452 94 3,977
Mortgage loan servicing fees (expense) 2,959 (240) 5,085 1,949
Realty commission income 11,162 10,901 17,468 16,280
Title closing fees 3,176 4,401 5,378 6,275
Service charges on deposit accounts 3,435 2,957 6,514 4,842
Financial services income 2,150 803 3,985 1,505
Other income 2,093 1,455 3,744 2,648
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24,722 23,729 42,268 37,476
NONINTEREST EXPENSE
Compensation and related items 22,636 18,405 42,387 38,568
Occupancy 6,775 5,855 13,249 11,719
Data processing 3,087 2,605 5,946 5,353
Advertising 3,595 2,582 6,537 5,491
Deposit insurance premium 3,343 2,454 6,445 4,826
Amortization of goodwill 1,410 1,021 2,445 2,037
Real estate owned 399 1,758 1,313 3,510
Other general and administrative 13,365 10,452 24,172 23,050
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54,610 45,132 102,494 94,554
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INCOME BEFORE INCOME TAXES 23,285 24,736 42,937 33,556
Income tax expense 8,845 9,582 16,312 3,115
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NET INCOME $ 14,440 $ 15,154 $ 26,625 $ 30,441
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EARNINGS PER SHARE:
Primary $0.44 $0.47 $0.81 $0.95
Fully diluted $0.44 $0.47 $0.81 $0.95
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See notes to condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Amounts in thousands, except share and per share data)
(Unaudited)
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Net
Unrealized
Gains (Losses)
Additional On Securities Total
Preferred Stock Common Stock Paid-in Retained Available- Treasury Stock Shareholders'
Shares Amount Shares Amount Capital Earnings For-Sale Shares Amount Equity
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BALANCE 488,750 $ 5 31,992,275 $32O $231,881 $280,813 $ 4,209 (813,522) $(12,845) $504,383
DECEMBER 31, 1993
Issuance of common stock 195,125 2 3,137 3,139
Stock options exercised 145,363 1 1,453 1,454
Warrants exercised 159,915 2 754 756
Net treasury stock acquired (525,716) (8,045) (8,045)
Net unrealized losses on
securities available-for-sale (12,623) (12,623)
Dividends declared:
Preferred (702) (702)
Common-$.40 per share (12,470) (12,470)
Net income 26,625 26,625
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BALANCE 488,750 $ 5 32,492,678 $325 $237,225 $294,266 $ (8,414) (1,339,238) $(20,890) $502,517
JUNE 30, 1994
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See notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
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Six Months Ended June 30,
1994 1993
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OPERATING ACTIVITIES
Net Income $ 26,625 $ 30,441
Reconciliation to cash provided by
operating activities:
Net amortization of loan fees,
discounts and premiums 14,319 14,845
Provision for loan losses 5,575 3,900
Decrease in deferred tax asset 7,922 2,952
Depreciation and amortization 5,292 4,330
Amortization of goodwill 2,445 2,038
Net change in trading securities (138,514) (120,553)
Increase in accrued interest
receivable (5,518) (2,033)
Increase in accrued interest
payable 5,666 3,299
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NET CASH USED BY OPERATING
ACTIVITIES (76,188) (60,781)
INVESTING ACTIVITIES
Acquisitions of subsidiaries, net of
cash received (49,794) 8,888
Increase in loans (335,244) (388,143)
Purchase of:
Loans (466,417) (100,013)
Investment securities
available-for-sale (79,950) --
Investment securities
held-to-maturity (50,000) --
Mortgage-backed securities
held-to-maturity (233,446) (290,053)
Proceeds from the maturity of
investment securities:
Available-for-sale 108,182 --
Held-to-maturity -- 250,043
Proceeds from the sale of:
Mortgage-backed securities
available-for-sale 242,407 --
Loans held-for-sale 34,768 62,084
Real estate 31,367 16,362
Principal repayments of
mortgage-backed securities:
Available-for-sale 123,112 7,892
Held-to-maturity 183,330 243,615
Other investing activities 12,011 10,076
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NET CASH USED BY INVESTING
ACTIVITIES (479,674) (179,249)
FINANCING ACTIVITIES
Net increase (decrease) in:
Short-term borrowings 162,000 --
Deposits (157,685) (227,622)
Purchase of deposits 11,080 --
Proceeds from:
Federal Home Loan Bank advances 942,000 515,000
Issuance of common stock 3,139 4,734
Exercise of common stock options
and warrants 1,755 1,847
Purchase of treasury stock (8,045) (636)
Repayment of:
Federal Home Loan Bank advances (427,782) (108,519)
Other borrowings (15,011) (26,179)
Cash dividends (13,172) (6,467)
Other financing activities 8,948 (4,635)
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 507,227 147,523
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NET DECREASE IN CASH AND CASH
EQUIVALENTS (48,635) (92,507)
Cash and Cash equivalents at
beginning of year 167,448 252,859
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ENDING CASH AND CASH EQUIVALENTS $ 118,813 $ 160,352
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See notes to condensed consolidated financial statements.
4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulations S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals and periodic changes in estimates) considered
necessary for a fair presentation have been included.
Operating results for the three and six months ended June 30, 1994, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1994. Amounts in 1993 have been reclassified to conform to the
current period presentation. For further information, refer to the consolidated
financial statements and footnotes thereto included in the annual report on Form
10-K for the year ended December 31, 1993.
NOTE B -- INCOME TAXES
Income tax expense (benefit) consisted of the following:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(In thousands) 1994 1993 1994 1993
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CURRENT
Federal $3,441 $ 126 $6,556 $ 73
State 961 (275) 1,834 91
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4,402 (149) 8,390 164
DEFERRED
Federal 4,111 7,901 7,041 675
State 332 1,830 881 2,276
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4,443 9,731 7,922 2,951
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$8,845 $9,582 $16,312 $3,115
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The provision for federal income taxes differs from that computed at the statutory corporate tax
rate as follows:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(In thousands) 1994 1993 1994 1993
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Tax statutory rate $8,149 $8,410 $15,027 $ 11,409
State income taxes, net of federal
benefit 1,299 1,373 2,356 1,904
Change in the deferred tax asset
valuation allowance -- -- -- (10,000)
Tax effect of:
Amortization of goodwill 362 347 724 693
Other, net (965) (548) (1,795) (891)
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$8,845 $9,582 $16,312 $ 3,115
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5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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The components of and changes in the net deferred tax asset were as follows:
Effect of
Deferred Acquisitions
December 31, (Expense) and Other June 30,
(In thousands) 1993 Benefit Transactions 1994
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Loan fees and discounts $ 5,526 $ (2,518) $ -- $ 3,008
Discounts on loans and
mortgage-backed securities 9,377 (529) (898) 7,950
Bad debt deduction 7,220 (2,443) 1,159 5,936
Federal Home Loan Bank stock dividends (6,366) 1,560 (1,138) (5,944)
Other 1,878 2,895 8,092 12,865
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Net temporary differences 17,635 (1,035) 7,215 23,815
Carryforwards:
Federal regular tax operating loss
carryforwards 15,778 (11,658) 375 4,495
Federal regular tax operating loss
carryforwards acquired in purchase
business combinations 1,377 (711) 3,701 4,367
State regular tax operating loss
carryforwards 3,644 (130) 24 3,538
State regular tax operating loss
carryforwards acquired in purchase
business combinations 4,709 (908) -- 3,801
Federal ATM credit carryforwards 9,946 6,520 505 16,971
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Total carryforwards 35,454 (6,887) 4,605 33,172
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$53,089 $ (7,922) $11,820 $56,987
Less: Valuation allowance -- -- -- --
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Deferred tax asset $53,089 $ (7,922) $11,820 $56,987
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The adjustments to the net deferred tax asset in 1994 identified as the "Effect
of acquisitions and other transactions" result primarily from the acquisition of
Rocky Mountain Financial Corporation, the exercise of compensatory stock
options, and changes in deferred taxes associated with changes in unrealized
gains/losses associated with securities available-for-sale.
A valuation allowance is provided when it is more likely than not, that some
small portion of the deferred tax asset will not be realized. The Company
previously established a valuation allowance for a portion of the operating loss
carryforwards as a result of unresolved matters with taxing authorities. During
1993, certain tax issues were resolved which were previously considered in
management's assessment of the valuation allowance. As a result, the Company
reduced the valuation allowance by $10 million during the first quarter of 1993.
The remaining $6.5 million valuation allowance was eliminated in the last half
of 1993. Approximately $10.6 million of the change in the deferred tax asset
valuation allowance ($10 million in first quarter 1993) was allocated as a
reduction of income tax expense.
At June 30, 1994, the Company had the following net operating loss carryforwards
available for income tax purposes:
Expiration
(Dollars in thousands) Date Amount
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Federal regular tax
operating loss carryforwards
acquired through business
combinations 1995-2002 $11,786
Federal regular tax operating
loss carryforwards from
other than business
combinations 2005 12,807
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24,593
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Federal AMT operating loss
carryforwards 1995-2002 $13,137
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6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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NOTE C -- ACQUISITIONS
On March 25, 1994, Metropolitan Federal Bank (the "Bank") completed the
acquisition of Rocky Mountain Financial Corporation ("RMFC"), and its federally
chartered thrift subsidiary Rocky Mountain Bank, fsb ("Rocky Mountain"),
Cheyenne, Wyoming. Pursuant to the stock purchase agreement, the Bank purchased
all of the outstanding stock of RMFC, which was liquidated and dissolved and
Rocky Mountain was merged into the Bank. Total consideration of $64.2 million
was paid in cash to stockholders of RMFC, after consideration of approximately
$3.0 million of transaction expenses. The transaction was accounted for as a
purchase. Rocky Mountain had assets of $537 million and deposits of $428
million as of March 25, 1994.
The results of operations of RMFC and Rocky Mountain for the period March 26,
1994 through June 30, 1994 have been included in the Company's consolidated
results for the six months ended June 30, 1994.
In addition, on March 11, 1994, the Bank completed the acquisition of $12.5
million in deposits of two branches of Pioneer Federal Savings and Loan
Association, a failed thrift in Kansas.
Unaudited pro forma income and income per share information as if RMFC and Rocky
Mountain had been combined with the Company at the beginning of each of the
respective periods is as follows:
Three Months Ended Six Months Ended
(Amounts in thousands, June 30, June 30,
except per share data) 1994 1993 1994 1993
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Net Interest Income $56,173 $53,210 $112,594 $103,543
Net Income 14,440 17,415 27,500 34,759
Per Share Data:
Primary $ 0.44 $ 0.54 $ 0.85 $ 1.10
Diluted $ 0.44 $ 0.54 $ 0.85 $ 1.10
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NOTE D -- DEFINITIVE AGREEMENT
On July 21, 1994, the Company announced that it had signed a definitive purchase
agreement to be acquired by First Bank System, Inc. ("FBS"). FBS will exchange
.6803 shares of FBS common stock for each common share of the Company resulting
in a per share price of $24.66. In addition, each outstanding share of Series B
preferred stock of the Company will be converted into the right to receive
$27.00 (plus accumulated and unpaid dividends) in cash and the outstanding
warrants to purchase 249,100 shares of common stock of the Company will be
converted to warrants to purchase 169,642 shares of FBS common stock at $6.96
per share. The exchange ratio for common stock of the Company is subject to
change based upon changes in FBS stock price under certain circumstances. The
aggregate purchase price is approximately $800 million and either company can
terminate the agreement if the average price of FBS common stock is less than
$29.50 during a specified period. In addition, the Company has issued FBS an
option to purchase up to 19.9% of the outstanding shares of the Company's common
stock under certain circumstances. The transaction is expected to close in the
first quarter of 1995, pending regulatory and shareholder approval, and will be
accounted for as a pooling of interests.
FBS is a regional bank holding company headquartered in Minneapolis with assets
of $25.9 billion. FBS provides complete financial services to individuals and
institutions through nine banks and other financial service companies with 220
offices primarily in Minnesota, Colorado, Illinois, Montana, North Dakota, South
Dakota, and Wisconsin.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
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THE COMPANY
Metropolitan Financial Corporation (the "Company") is a regional financial
services holding company. The Company's mission is to be the premier provider
of community financial and home ownership services throughout its markets by
offering exceptional value to its customers, resulting in profitable growth,
fulfilling careers and community enhancement. The primary operations of the
Company are in North Dakota, Minnesota, Nebraska, Iowa, Kansas, South Dakota,
Wisconsin, Wyoming and Arizona.
The Company operates an FDIC insured consumer savings bank, Metropolitan Federal
Bank, fsb (the "Bank"), which concentrates on the traditional thrift business of
soliciting deposits and making residential mortgage and other secured consumer
loans. The Company's residential real estate brokerage subsidiary, Edina
Realty, Inc. ("Edina Realty"), and title company subsidiary, Equity Title
Services ("Equity Title"), are among Minnesota's largest providers of their
respective services. Edina Realty and Equity Title conduct their business in
Minnesota and western Wisconsin. Certain financial services products like
annuities, uninsured investments, such as mutual funds, and insurance are
provided to customers through a subsidiary operating as Metropolitan Financial
Services ("MFS").
RECENT ACQUISITIONS
On March 25, 1994, the Bank completed the acquisition of Rocky Mountain
Financial Corporation ("RMFC") and its bank subsidiary, Rocky Mountain Bank, fsb
("Rocky Mountain"). Rocky Mountain had assets and deposits of approximately
$537 million and $428 million at March 25, 1994, respectively. The Bank paid
RMFC shareholders approximately $64.2 million in cash as consideration after
payment of approximately $3.0 million of transaction expenses.
On March 11, 1994, the Bank completed the acquisition of approximately $12.5
million in deposits of two branches of Pioneer Federal Savings and Loan
Association, a failed thrift in Kansas.
DEFINITIVE AGREEMENT
On July 21, 1994, the Company announced that it had signed a definitive purchase
agreement to be acquired by First Bank System, Inc. ("FBS"). FBS is a regional
bank holding company headquartered in Minneapolis with assets of $25.9 billion.
The Companies, had previously announced on July 1, 1994 that they had signed a
letter of intent. FBS will exchange .6803 shares of FBS common stock for each
common share of the Company resulting in a per share price of $24.66 based upon
FBS closing stock price of $36.25 on July 20, 1994. In addition, each
outstanding share of Series B preferred stock of the Company will be converted
into the right to receive $27.00 (plus accumulated and unpaid dividends) in cash
and the outstanding warrants to purchase 249,100 shares of common stock of the
Company will be converted into warrants to purchase 169,642 shares of FBS common
stock at $6.96 per share. The exchange ratio for common stock of the Company is
subject to change based upon changes in FBS stock price under certain
circumstances. The aggregate purchase price is approximately $800 million. The
exchange ratio will be adjusted if the average of the closing price of FBS
common stock is less than $33.00 for the 20 trading days ending three business
days prior to the last date of both companies meetings of shareholders. In that
event, the exchange ratio would be multiplied by the quotient of $33.00 divided
by the average price. In addition, if the average price is greater than $40.50,
the exchange ratio would be adjusted by multiplying the ratio by the quotient of
$40.50 divided by the average price. Either company can terminate the agreement
if the average price of FBS common stock is less than $29.50. In addition, the
Company has issued FBS an option to purchase up to 19.9% of the outstanding
shares of the Company's common stock under certain circumstances.
The transaction is expected to close in the first quarter of 1995, pending
regulatory and shareholder approval, and would be accounted for as pooling of
interests.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
(Unaudited)
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RESULTS OF OPERATIONS
OVERVIEW. The Company earned net income of $14.4 million or $0.44 per fully
diluted share for the quarter ended June 30, 1994, compared to $15.2 million or
$0.47 per share for the second quarter of 1993. The results of the second
quarter of 1993 reflect gains related to mortgage banking activities of $3.5
million compared to a $.3 million loss in the second quarter of 1994. Earnings
for the first six months of 1994 totaled $26.6 million or $0.81 per share,
compared with $30.4 million, or $0.95 per share in the first half of 1993. The
current year results are fully taxed while the prior year results include a tax
benefit of $10 million, or $.32 per share, recognized in the first quarter of
1993 associated with a reduction of the deferred tax asset valuation allowance.
The reduction of the valuation allowance resulted from the favorable resolution
of a number of outstanding tax issues raised by the Internal Revenue Service for
which the Company had previously established reserves.
NET INTEREST INCOME. The Company earned net interest income of $56.2 million
for the second quarter of 1994, an increase of $7.6 million or 15.7 percent from
the $48.5 million for the same period in 1993. The improvement in net interest
income from the second quarter of 1993 reflects increases in the residential
mortgage and consumer loan portfolios from acquisitions and wholesale purchases
offset by decreases in the net interest margin. Average earning assets in the
second quarter of 1994 increased to $7.4 billion, up from $6.0 billion a year
ago. Single family mortgage loan production during the second quarter of 1994
totaled $331.4 million compared with $457.7 million in the second quarter of
1993 reflecting a softening of the real estate market as interest rates have
increased.
The net interest margin was 3.02 percent in the second quarter of 1994 compared
with 3.15 percent in the first quarter of 1994 and 3.24 percent in the second
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.
During the first quarter of 1994, mortgage loan prepayments began to decrease as
market interest rates began to climb. While the decrease in mortgage loan
prepayments continued during the second quarter of 1994, the rise in interest
rates resulted in increased rates paid on retail deposits and FHLB borrowings in
advance of related increases in loan yields as reflected in the lower net
interest margin.
The increase in average earning assets from the second quarter of 1993 to the
second quarter of 1994 increased net interest income by $11.5 million. The
decrease in the net interest margin from 3.24 percent in the second quarter of
1993 to 3.02 percent during the same quarter in 1994 had an offsetting impact of
reducing net interest income by $3.9 million.
The weighted average rate paid on interest bearing liabilities decreased 25
basis points to 4.33 percent for the quarter ended June 30, 1994, as compared
with the second quarter of 1993, while yields earned on interest bearing assets
decreased 44 basis points to 7.28 percent during the same period. Growth in
equity has also increased the net interest margin as it has effectively provided
funds for earning assets with no direct cost.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
(Unaudited)
- - ---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------
Three Months Ended June 30, 1994 Six Months Ended June 30, 1994
vs. Same Period in 1993 vs. Same Period in 1993
-------------------------------------------------------------------
Increase (Decrease) Due to Increase (Decrease) Due to
(In thousands) Volume Rate Total Volume Rate Total
- - ---------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Mortgage-backed securities $(5,392) $(1,901) $(7,293) $(12,135) $ (4,635) $(16,770)
Loans 34,590 (7,822) 26,768 64,875 (17,486) 47,389
Investments and other (291) 566 275 (1,780) 865 (915)
- - ---------------------------------------------------------------------------------------------------------------
Total Interest Income 28,907 (9,157) 19,750 50,960 (21,256) 29,704
INTEREST EXPENSE
Transaction and passbook deposits 778 198 976 1,227 (1,239) (12)
Certificates 4,543 (6,023) (1,480) 5,930 (11,841) (5,911)
Federal Home Loan Bank advances 10,804 769 11,573 20,227 397 20,624
Reverse repurchase agreements 1,714 -- 1,714 2,323 -- 2,323
Other borrowings (420) (247) (667) (730) (794) (1,524)
- - ---------------------------------------------------------------------------------------------------------------
Total Interest Expense 17,419 (5,303) 12,116 28,977 (13,477) 15,500
- - ---------------------------------------------------------------------------------------------------------------
INCREASE IN NET INTEREST INCOME $11,488 $(3,854) $ 7,634 $21,983 $ (7,779) $ 14,204
===============================================================================================================
The Rate/Volume Analysis presents the dollar amount of changes in interest
income and interest expense for interest earning assets and interest bearing
liabilities. The table distinguishes between the changes related to average
outstanding balances (changes in volume holding the average interest rate
constant) and changes related to average interest rates (changes in average
interest rates holding the initial balance constant). Changes in rate/volume
(changes in rate times the changes in volume) are allocated ratably between
the rate and volume variances.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
(Unaudited)
- - --------------------------------------------------------------------------------
YIELDS EARNED AND RATES PAID. The following table presents for the periods
indicated average interest earning assets and the related interest income, and
average interest bearing liabilities and the related interest expense, expressed
both in dollars and percentages.
Three Months Ended June 30,
1994 1993
-----------------------------------------------------------
Yields Yields
(Dollars in thousands) Average and Average and
(Unaudited) Balance Interest Rates Balance Interest Rates
- - ----------------------------------------------------------------------------------------
ASSETS
Mortgage-backed
securities $1,533,850 $ 24,589 6.41% $1,864,472 $ 31,882 6.84%
Loans 5,603,647 106,106 7.57 3,806,293 79,338 8.34
Investment securities and
other interest earning
assets 300,793 4,681 6.22 321,146 4,406 5.49
- - ----------------------------------------------------------------------------------------
Total Interest
Earning Assets 7,438,290 135,376 7.28 5,991,911 115,626 7.72
Cash and due from banks 76,418 67,387
Other assets 437,501 361,524
---------- ----------
TOTAL ASSETS $7,952,209 $6,420,822
---------- ----------
LIABILITIES & SHAREHOLDERS'
EQUITY
Transaction and
passbook deposits $1,619,976 $ 7,834 1.93% $1,461,258 $ 6,858 1.88%
Certificates 4,050,308 49,023 4.84 3,703,678 50,503 5.45
Federal Home Loan Bank
advances 1,365,591 18,298 5.36 555,503 6,725 4.84
Reverse repurchase
agreements 165,428 1,714 4.14 -- -- --
Other borrowings 119,831 2,334 7.79 140,960 3,001 8.52
- - ----------------------------------------------------------------------------------------
Total Interest
Bearing Liabilities 7,321,134 79,203 4.33 5,861,399 67,087 4.58
Other liabilities 129,352 105,487
Shareholders' equity 501,723 453,936
---------- ----------
TOTAL LIABILITIES
& SHAREHOLDERS'
EQUITY $7,952,209 $6,420,822
---------- ----------
NET INTEREST INCOME $ 56,173 $ 48,539
GROSS INTEREST MARGIN 2.95% 3.14%
NET INTEREST MARGIN 3.02% 3.24%
Six Months Ended June 30,
1994 1993
-----------------------------------------------------------
Yields Yields
(Dollars in thousands) Average and Average and
(Unaudited) Balance Interest Rates Balance Interest Rates
- - -----------------------------------------------------------------------------------------
ASSETS
Mortgage-backed
securities $1,472,741 $ 47,281 6.42% $1,842,263 $ 64,051 6.95%
Loans 5,287,036 201,284 7.61 3,614,158 153,895 8.52
Investment securities and
other interest earning
assets 301,332 8,838 5.87 364,325 9,753 5.35
- - -----------------------------------------------------------------------------------------
Total Interest
Earning Assets 7,061,109 257,403 7.29 5,820,746 227,699 7.84
Cash and due from banks 73,279 62,558
Other assets 405,058 388,226
---------- ----------
TOTAL ASSETS $7,539,446 $6,271,530
---------- ----------
LIABILITIES & SHAREHOLDERS'
EQUITY
Transaction and
passbook deposits $1,570,957 $ 14,884 1.89% $1,445,676 $ 14,896 2.06%
Certificates 3,918,695 95,672 4.88 3,691,751 101,583 5.50
Federal Home Loan Bank
advances 1,184,399 30,977 5.23 410,489 10,353 5.04
Reverse repurchase
agreements 117,978 2,323 3.94 -- -- --
Other borrowings 124,201 4,809 7.74 148,917 6,333 8.51
- - ----------------------------------------------------------------------------------------
Total Interest
Bearing Liabilities 6,916,230 148,665 4.30 5,696,833 133,165 4.71
Other liabilities 119,913 131,800
Shareholders' equity 503,303 442,897
---------- ----------
TOTAL LIABILITIES
& SHAREHOLDERS'
EQUITY $7,539,446 $6,271,530
---------- ----------
NET INTEREST INCOME $108,738 $ 94,534
GROSS INTEREST MARGIN 2.99% 3.13%
NET INTEREST MARGIN 3.08% 3.25%
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
(Unaudited)
- - --------------------------------------------------------------------------------
ASSET AND LIABILITY MANAGEMENT. The Company is subject to interest rate risk to
the extent that its interest earning assets reprice or mature differently than
its interest bearing liabilities. The Company manages interest rate risk
through production of interest earning assets with repricing or maturity
characteristics similar to its retail deposit funding source, as well as
concentrating on the gathering of retail deposits which match the repricing and
maturity characteristics of the assets produced. This strategy emphasizes the
production of fifteen year fixed rate, five and seven year balloon and
adjustable rate mortgage loans and consumer loans. The Company augments its
interest rate risk management strategy by purchasing assets or borrowing funds
with comparable maturity and repricing characteristics to its loans or deposits.
Finally, when considered necessary and cost effective, the Company uses hedging
instruments, such as interest rate caps and swaps, to reduce its exposure to
interest rate risk.
An industry gauge of exposure to interest rate risk is the one year interest
rate sensitivity "gap" (the difference between interest earning assets and
interest bearing liabilities maturing or repricing within one year). See table
below. The Company mitigates its exposure to interest rate risk by striving to
maintain a neutral "gap" between the maturities of its interest earning assets
and interest bearing liabilities. This strategy results in a stable net
interest margin in periods of either rising or falling interest rates.
Maturing or Repricing in
-------------------------------------------------------------
1 Year Over 1 to Over 3 to Over 5
(Dollars in thousands) or Less 3 Years 5 Years Years Total
- - -------------------------------------------------------------------------------------------------------
INTEREST EARNING ASSETS
Mortgage-backed securities
Fixed rate $ 277,214 $ 433,077 $ 318,667 $ 444,560 $1,473,518
Adjustable rate 524,579 -- -- -- 524,579
- - -------------------------------------------------------------------------------------------------------
801,793 433,077 318,667 444,560 1,998,097
Loans
Real estate
Fixed rate 332,343 500,388 407,728 1,038,610 2,279,069
Adjustable rate 1,022,658 111,965 -- -- 1,134,623
Consumer and other 782,443 889,229 65,288 90,151 1,827,111
Investment securities and other 261,323 63,126 14,840 8,866 348,155
- - -------------------------------------------------------------------------------------------------------
3,200,560 1,997,785 806,523 1,582,187 7,587,055
INTEREST BEARING LIABILITIES
Transaction and savings accounts 757,056 174,122 174,472 436,877 1,542,527
Certificate accounts 2,523,437 1,092,475 164,864 307,692 4,088,468
Borrowings 667,422 598,322 345,867 149,032 1,760,643
- - -------------------------------------------------------------------------------------------------------
3,947,915 1,864,919 685,203 893,601 7,391,638
- - -------------------------------------------------------------------------------------------------------
Net Gap (747,355) 132,866 121,320 688,586 $ 195,417
- - -------------------------------------------------------------------------------------------------------
Cumulative Gap $ (747,355) $ (614,489) $(493,169) $ 195,417 --
- - -------------------------------------------------------------------------------------------------------
Cumulative ratio of interest earning
assets to interest bearing
liabilities 81.07% 89.43% 92.41% 102.64%
Cumulative ratio of Gap to total
interest earning assets (9.85)% (8.10)% (6.50)% 2.58%
- - -------------------------------------------------------------------------------------------------------
Major balance sheet categories in the preceding table are based on estimated
mortgage loan and mortgage-backed securities prepayment rates ranging from 4% to
45% depending on maturity and yield. Assets available-for-sale are included in
the 1 year or less category if there is a firm sale commitment outstanding.
Assets available-for-sale without a firm commitment are based on their
contractual maturity considering amortization and prepayments. Passbook savings
and checking account balances assume a 10% annual decay rate and money market
demand and tiered rate savings accounts are included in the one year or less
category. Loan balances, which are prior to discounts and the allowance for
loan losses, include non-accrual loans.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
(Unaudited)
- - --------------------------------------------------------------------------------
PROVISION FOR LOAN LOSSES. The provision for loan losses reflects management's
estimate of the allowance for loan losses necessary to provide for anticipated
credit losses. The provision for loan losses was $3.0 million in the second
quarter of 1994 compared with $2.4 million in the second quarter of 1993. The
increase in the provision reflects overall increases in the loan portfolio of
$1.0 billion, or 24.8 percent, from a year ago. The Company anticipates further
growth in the loan portfolio and commensurate increases in the provision
throughout the remainder of 1994. Also, see Nonperforming Assets and Allowance
for Loan Losses.
NONINTEREST INCOME. Noninterest income in the second quarter of 1994 was $24.7
million, an increase of $1.0 million, or 4.2 percent, from the second quarter of
1993. Excluding net gains and losses associated with mortgage banking
activities, noninterest income in the second quarter increased $4.7 million, or
23.2 percent. Gains associated with mortgage banking activities totaled $3.5
million in the second quarter of 1993 compared with losses of $0.3 million
recorded in the current year's second quarter reflecting the effect of rising
interest rates. The current quarter results include $1.8 million of noninterest
income from the acquired operations of Western Financial Corporation, Eureka
Savings Bank and Rocky Mountain Financial Corporation. These acquisitions were
completed on June 11, 1993, August 6, 1993 and March 25, 1994, respectively.
Realty commissions from the Company's real estate brokerage subsidiary, Edina
Realty, were $11.2 million, up 2.4 percent from the second quarter of 1993. The
increase reflects acquisitions during the past year. Edina Realty continues to
be one of the largest residential real estate brokerage companies in the Twin
Cities, of Minneapolis and St. Paul, participating in more than 40 percent of
all residential real estate transactions.
Title closing fees from the title services subsidiary, Equity Title, declined to
$3.2 million from $4.4 million a year ago reflecting the softening of the real
estate market. Financial services income from the sale of mutual funds and
annuities totaled $2.2 million, up 167.8 percent from the second quarter of
1993. Service charges on deposit accounts and other income were $5.5 million,
an increase of 25.3 percent from a year ago. The increase is a result of
acquisitions and the strategic evaluation of fees and implementation of a new
fee structure for deposit accounts.
NONINTEREST EXPENSE. Noninterest expense in the second quarter of 1994 was
$54.6 million compared with $45.1 million in the second quarter of 1993.
Included in the second quarter of 1994 are expenses of $5.6 million related to
operations of recent bank acquisitions. 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, was 59 percent in the second quarter of 1994, compared with
55 percent in the first quarter of 1994 and 54 percent in the second quarter of
1993.
Compensation, occupancy, data processing, advertising and amortization of
goodwill expense increased $7.0 million, or 23.1 percent, reflecting the
acquisitions during the past year. Deposit insurance premiums increased $0.9
million reflecting deposit growth associated with acquisitions, as the rate paid
for insurance premiums has remained constant. Real estate owned expense
declined $1.4 million as a result of improved results from certain income-
producing properties as well as a reduction in charge-offs. Other general and
administrative expenses increased $2.9 million, or 27.9 percent, primarily
reflecting the effect of acquisitions.
Included in the first six months of 1993 was a one-time charge of $4.0 million
related to the closing of 17 retail bank offices and other reorganization
activities.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
(Unaudited)
- - --------------------------------------------------------------------------------
INCOME TAXES. The provision for income taxes was $8.8 million in the second
quarter of 1994 compared with $9.6 million in the second quarter of 1993. The
provision for income taxes for the first six months of 1994 was $16.3 million
compared with $3.1 million (which included a $10 million tax benefit recognized
in the first half 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.
LOAN PORTFOLIO. The Company's loan portfolio totaled $5.2 billion at June 30,
1994, an increase of $577 million from December 31, 1993. The increase is due
to new production of residential mortgage and consumer loans, as well as the
addition of loans through acquisition offset by the securitization of
approximately $500 million of 15 year fixed rate loans into mortgage-backed
securities.
Consumer loan origination and origination of first mortgage loans for the
purchase or construction of one to four family residential property continue to
be the main emphasis of the Company. Of the $577 million increase in loans in
1994, $162 million related to residential real estate mortgage loans and $421
million related to consumer loans. The Company's current policy is to sell all
agency conforming 30-year fixed rate mortgage loans, thus significantly reducing
interest rate risk.
The Company generally maintains the servicing rights on mortgage loans sold to
preserve the customer relationship, create opportunities to cross sell other
banking services and generate fee income.
June 30, December 31,
(In thousands) 1994 1993
- - ---------------------------------------------------------------
Real Estate:
Residential (One to four family) $2,862,050 $2,700,214
Commercial 497,300 513,870
Construction 15,772 12,185
Commercial 13,681 6,402
Manufactured home 38,545 41,797
Consumer and other 1,774,884 1,353,847
- - ---------------------------------------------------------------
5,202,232 4,628,315
Less:
Allowance for loan losses 40,266 42,905
- - ---------------------------------------------------------------
$5,161,966 $4,585,410
- - ---------------------------------------------------------------
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
(Unaudited)
- - --------------------------------------------------------------------------------
NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES. Nonperforming assets are
non accruing loans and real estate owned. The Company places loans on a
nonaccrual status when the loans are contractually delinquent more than 90 days.
The table below presents a summary of nonperforming assets at the dates
indicated.
Nonperforming assets at June 30, 1994, totaled $84.1 million, a decrease of
$31.3 million, or 27.1 percent from the $115.4 million total reported at
December 31, 1993. The decrease is principally related to the sale or
disposition of commercial real estate.
The allowance for loan losses at June 30, 1994, remained relatively consistent
with year end 1993 at $40.3 million. The allowance for loan losses as
percentage of nonperforming loans increased from 70.0 percent at December 31,
1993 to 92.7 percent at June 30, 1994. Nonperforming loans to total loans and
nonperforming assets to total assets decreased to .84 percent and 1.05 percent,
respectively, at June 30, 1994 from 1.32 percent and 1.65 percent at year end
1993, respectively. Charge-offs associated with consumer loans increased to
$3.3 million for the second quarter of 1994 due principally to increases in the
consumer loan portfolio, principally in the indirect auto portfolio.
MORTGAGE-BACKED SECURITIES AND AVAILABLE-FOR-SALE SECURITIES. Mortgage-backed
securities held for investment totaled $1.6 billion at June 30, 1994, compared
to $.9 billion at December 31, 1993. The increase in mortgage-backed securities
relates to wholesale purchases of adjustable rate mortgage-backed securities
during the first quarter of 1994 and the securitization of approximately $500
million of fixed rate residential mortgage loans as FNMA securities. Securities
available-for-sale decreased slightly from year end 1993 to $0.6 billion at June
30, 1994, principally as a result of the settlement of certain sales
transactions executed in the fourth quarter of 1993.
SOURCES OF FUNDS. Deposits at June 30, 1994, totaled $5.6 billion, an increase
of $276 million or 5.2 percent from the December 31, 1993 total of $5.4 billion.
The increase is due to the acquisition of Rocky Mountain offset by general
deposit outflow as a result of depositors reinvesting their funds in mutual
funds and other non FDIC insured instruments, consistent with current industry
experience.
June 30, December 31,
(In thousands) 1994 1993
- - ---------------------------------------------------
NONPERFORMING LOANS:
Single family $14,906 $ 15,150
Commercial real estate 20,183 42,330
Non real estate 8,354 3,810
- - ---------------------------------------------------
43,443 61,290
REAL ESTATE OWNED:
Single family 5,214 6,857
Commercial real estate 35,456 47,277
- - ---------------------------------------------------
40,670 54,134
- - ---------------------------------------------------
$84,113 $115,424
- - ---------------------------------------------------
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
(Unaudited)
- - --------------------------------------------------------------------------------
CAPITAL ADEQUACY. Shareholders' equity decreased to $502,517 million at June
30, 1994, a decrease of $1.9 million from December 31, 1993. The decrease
related to the recording of an unrealized loss associated with securities
available-for-sale as a result of increases in interest rates and,
correspondingly, decreases in the market values. Shareholders' equity as a
percentage of assets was 6.3 percent at June 30, 1994. Common shareholders'
equity at June 30, 1994 was $490,298 million or $15.74 per share compared with
$492,164 or $15.79 per share at December 31, 1993. Under minimum regulatory
capital regulations issued by the OTS, thrift institutions are required to meet
the following three capital requirements.
TANGIBLE CAPITAL REQUIREMENT. Generally, this requirement measures capital
adequacy after consideration of the effect of intangibles, purchased servicing
assets and other factors on the financial statements. Tangible capital must
meet or exceed 1.50 percent of tangible assets, as defined in the regulations.
CORE CAPITAL REQUIREMENT. This measure permits thrifts to include in tangible
capital supervisory goodwill (goodwill related to certain acquisitions prior to
1989) on a declining basis through 1994 and core deposit intangibles. The core
capital of a thrift must meet or exceed 3.00 percent of assets.
RISK-BASED CAPITAL REQUIREMENT. The risk-based capital ratio measures capital
adequacy taking into account the level of risk of an institution's assets. The
OTS has also issued a rule which would add, under certain circumstances, an
interest rate risk component which increases the risk-based capital requirement.
The Bank is currently not subject to any additional risk-based capital
requirements related to interest rate risk. As of December 31, 1993, a thrift's
risk-based capital must meet or exceed 8.00 percent of risk adjusted assets.
The Bank, including its subsidiaries, exceeded the fully phased-in capital
requirements at June, 30 1994, as detailed below.
METROPOLITAN
FEDERAL BANK, FSB JULY 1, 1994
AND SUBSIDIARIES REQUIREMENT
CAPITAL MEASURE CONSOLIDATED (FULLY PHASED IN)
- - -----------------------------------------------------------
TANGIBLE CAPITAL 5.45% 1.50%
CORE CAPITAL 5.82% 3.00%
RISK BASED CAPITAL 10.35% 8.00%
- - -----------------------------------------------------------
16
PART II. OTHER INFORMATION
- - --------------------------------------------------------------------------------
ITEM 1. PENDING LITIGATION.
Edina Realty, Inc. ("Edina"), Equity Title Services, Inc. ("Equity
Title") and the Company along with executives from each entity have been named
in three class action suits (two Federal and one in Minnesota State Court)
alleging that Edina failed to adequately disclose dual agency in instances where
Edina represented both buyer and seller in real estate transactions and forced
its customers to close their real estate transactions at its affiliate, Equity
Title. A definitive settlement of a non-material amount has been reached with
respect to the class action suit in Minnesota State Court (Dismuke vs. Edina
Realty).
No settlement or agreement has been reached with respect to the two class
action suits pending in Federal Court (Bokusky vs. Edina Realty, et al. and
Nitti vs. Equity Title, et al.). Combined settlement discussions addressing
both cases are ongoing. At the present time, management is not in a position to
determine whether the amount of any settlement would have a material adverse
effect on the Company's results of operations in any future reporting period.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
11.1 Computation of Net Income Per Common Share
(b) Reports on Form 8-K
During the quarter ended June, 30, 1994, there were no reports on
Form 8-K
The Company filed a report on Form 8-K, dated July 25, 1994,
reporting Item 5 "Other Events" relating to the definitive merger
agreement and stock option agreement signed by the Company and First
Bank System, Inc. on July 21, 1994.
17
SIGNATURES
- - --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
METROPOLITAN FINANCIAL CORPORATION
Date 08/12/94 /s/ Norman M. Jones
-------------- ---------------------------------------------
NORMAN M. JONES
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date 08/12/94 /s/ Steven B. Dewald
-------------- ---------------------------------------------
STEVEN B. DEWALD
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
Date 08/12/94 /s/ William T. Cox
-------------- ---------------------------------------------
WILLIAM T. COX
Senior Vice President and Controller
(Principal Accounting Officer)
18
METROPOLITAN FINANCIAL CORPORATION
EXHIBIT INDEX TO 10-Q
FOR QUARTER ENDED JUNE 30, 1994
Item No. Item Method of Filing
- - --------------------------------------------------------------------------------
11.1 Computation of Per Share Earnings Filed herewith.