METROPOLITAN FINANCIAL CORPORATION
Condensed Consolidated Statements of Income
- --------------------------------------------------------------------------------------------------
(In thousands) Three Months Ended Twelve Months Ended
(Unaudited) December 31, December 31, December 31, December 31,
1994 1993 1994 1993
- --------------------------------------------------------------------------------------------------
Interest Income
Mortgage-backed securities $ 35,258 $ 27,495 $ 117,347 $122,649
Loans 102,139 89,825 403,493 331,921
Investments 5,660 4,130 20,183 18,156
- --------------------------------------------------------------------------------------------------
143,057 121,450 541,023 472,726
Interest Expense
Transaction and passbook deposits 7,566 7,284 30,163 29,559
Certificates 53,370 48,683 200,317 202,260
Federal Home Loan Bank advances 20,263 11,342 70,873 31,522
Reverse purchase agreements 5,437 0 11,872 0
Other borrowings 2,326 2,642 9,435 11,271
- --------------------------------------------------------------------------------------------------
88,962 69,951 322,660 274,612
Net Interest Income 54,095 51,499 218,363 198,114
Provision for loan losses 21,060 1,872 30,635 7,859
- --------------------------------------------------------------------------------------------------
Net Interest Income After Provision
For Loan Losses 33,035 49,627 187,728 190,255
Noninterest Income
(Losses)/Gains related to securities
sales (118,293) 8,269 (118,419) 16,271
Mortgage loan servicing fees 2,828 348 10,908 3,826
Realty commission income 7,463 8,398 35,225 35,350
Title closing fees 1,890 3,547 9,992 13,706
Service charges on deposit accounts 3,132 3,601 12,816 11,450
Financial services income 1,875 1,888 8,346 4,587
Other income 1,347 1,294 6,102 4,647
- --------------------------------------------------------------------------------------------------
(99,758) 27,345 (35,030) 89,837
Noninterest Expense
Compensation and related items 20,418 20,046 84,619 77,871
Occupancy 6,776 6,464 27,440 24,459
Data processing 3,531 2,743 12,584 10,476
Advertising 2,698 2,918 12,728 11,856
Deposit insurance premium 3,250 3,188 12,423 11,099
Amortization of goodwill 1,401 1,023 5,256 4,083
Real estate owned 2,611 1,491 4,278 6,684
Merger and integration 121,361 0 122,720 0
Other general and administrative 11,263 13,042 60,607 47,105
- --------------------------------------------------------------------------------------------------
173,309 50,915 342,655 193,633
- --------------------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes (240,032) 26,057 (189,957) 86,459
Income tax (benefit) expense (91,479) 8,207 (72,447) 21,285
- --------------------------------------------------------------------------------------------------
Net Income (Loss) $(148,553) $ 17,850 $(117,510) $ 65,174
- --------------------------------------------------------------------------------------------------
METROPOLITAN FINANCIAL CORPORATION
Condensed Consolidated Statements of Condition
(Dollars in thousands, except share and per share data) December 31, December 31,
(Unaudited) 1994 1993
- -----------------------------------------------------------------------------------------
Assets
Cash and due from banks $ 85,964 $ 85,084
Short-term interest bearing deposits 28,210 82,364
Loans held-for-sale 35,031 60,645
Debt securities available-for-sale 2,043,223 813,293
Investment securities -- --
Mortgage-backed securities (market: December 31, 1993-
$954,908); -- 943,193
Loans (net of allowance: December 31, 1994-$40,925;
December 31, 1993-$42,905) 5,225,078 4,585,410
Federal Home Loan Bank stock, at cost 87,772 59,719
Accrued interest 45,099 36,817
Real estate (net of allowance: December 31, 1994-$3,000
December 31, 1993-$9,533) 24,842 56,110
Office properties and equipment 88,355 91,632
Goodwill 86,717 61,517
Deferred taxes 146,696 53,089
Other assets 47,298 77,912
- -----------------------------------------------------------------------------------------
Total Assets $ 7,944,285 $ 7,006,785
- -----------------------------------------------------------------------------------------
Liabilities
Transaction and passbook deposits $ 1,368,361 $ 1,560,667
Certificates 4,097,062 3,793,968
Federal Home Loan Bank advances 1,385,496 921,801
Reverse repurchase agreements 403,849 --
Other borrowings 112,604 133,159
Accrued interest 54,802 42,485
Other liabilities 174,508 50,322
- -----------------------------------------------------------------------------------------
Total Liabilities 7,596,682 6,502,402
Shareholders' Equity
Preferred stock, par value $.01 per share; authorized -
10,000,000 shares; issued - 488,750 5 5
Common stock, par value $.01 per share; authorized -
60,000,000 shares; issued December 31, 1994-33,421,888
shares, December 31, 1993-31,992,275 shares 334 320
Additional paid-in capital 250,572 231,881
Retained earnings 136,758 280,813
Net unrealized (losses) gains on securities
available-for-sale (net of tax) (12,241) 4,209
Less cost of common stock in treasury-1,641,049 shares at
December 31, 1994, 813,522 shares at December 31, 1993 (27,825) (12,845)
- -----------------------------------------------------------------------------------------
Total Shareholders' Equity 347,603 504,383
- -----------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $7,944,285 $ 7,006,785
- -----------------------------------------------------------------------------------------
Metropolitan Financial Corporation
Notes to Condensed Consolidated Statements
Metropolitan Financial Corporation ("the Company") incurred a net loss of
$148.5 million for the fourth quarter and a net loss of $117.5 million for the
year ended December 31, 1994. Included in the fourth quarter results were
after-tax net losses of $73.2 million related to securities available for sale
and after-tax credit and merger related expenses of $86.8 million recorded in
connection with the Company's merger with First Bank System, Inc. ("FBS"). As
previously announced, included in the third quarter results were net after-tax
charges of $9.5 million related to the tentative settlement of two class-action
lawsuits and expenses related to the planned merger. Excluding these
nonrecurring items, net earnings for the fourth quarter and the year were $11.5
million and $52.5 million, respectively.
In December 1994, the Company's Board of Directors approved a plan to sell
investment securities to align the interest rate risk profile of the Company's
investment portfolio with the parameters of the FBS asset/liability management
policies.
Also, in December 1994, the Board approved a merger and integration plan
implemented in connection with the Company's merger with FBS. The Merger
related charges were recorded to provide for certain costs and expenses relating
to the planned merger, and to reflect the plans of FBS with respect to the
conduct of the Company's business, including the anticipated timing of and
strategies for the disposition of problem assets. The merger and integration
charges totaled $121.4 million including severance and related charges of $56.5
million, writedowns of premises and equipment of $19.6 million and other charges
for integration and system conversions of $46.5 million.
On July 21, 1994, Metropolitan Financial Corporation and First Bank System
(NYSE: FBS) signed a definitive agreement for FBS to acquire Metropolitan
Financial Corporation. The transaction, which received regulatory approvals
from the Federal Reserve Board and the Office of Thrift Supervision in December
of 1994, will close on January 24, 1995.