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Exhibit 99.1
METROPOLITAN FINANCIAL CORP.
22901 MILL CREEK BOULEVARD
HIGHLAND HILLS, OH 44122
CONTACT: DONALD F. SMITH
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(216) 206-1217
FOR IMMEDIATE RELEASE
METROPOLITAN FINANCIAL CORP. REPORTS SECOND QUARTER LOSS
AND CAPITAL RAISING INITIATIVE
HIGHLAND HILLS, OHIO, AUGUST 3, 2001 -- Metropolitan Financial Corp.
(NASDAQ:METF), parent company of Metropolitan Bank and Trust Company, today
reported a loss for the quarter ended June 30, 2001. Net loss for the quarter
was $2,078,000 or $0.26 per common share compared to net income of $547,000 or
$0.07 per common share for the second quarter of 2000.
Net loss for the six months ended June 30, 2001 was $2,501,000 or $0.31 per
common share compared to net income of $1,154,000 or $0.14 for the six months
ended June 30, 2000. The loss was due primarily to increased loan loss
provisions, provisions for real estate owned, compression of the interest rate
spread, costs associated with a computer conversion and compensation and
occupancy expenses relating to new facilities opened during 2000 and the first
half of 2001.
The loan loss provision for the quarter and the six months ended June 30, 2001
was $3,145,000 and $4,200,000, respectively, compared to $1,600,000 and
$3,100,000 for the quarter and six months ended June 30, 2000, respectively, an
increase of 96.6% and 35.5%, respectively. This increase was made to reflect
credit issues as a result of a slowing economy and problems with specific
borrowers.
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As a result of the second quarter loan loss provision, the loan loss allowance
increased to $17,028,000 at June 30, 2001, an increase of 22.1%, from
$13,951,000 at December 31, 2000. Metropolitan Bank and Trust Company's (the
Bank) loan loss reserve as a percentage of total loans reached 1.39% at June 30,
2001 compared to 1.07% at December 31, 2000. The provision for real estate owned
was $600,000 for the second quarter ended June 30, 2001 and $700,000 for the six
months ended June 30, 2001 and will be used to make certain properties more
attractive for disposition.
"Despite the increase in non-performing assets which stem largely from our
commercial loan portfolios, the Bank's balance sheet remains invested primarily
in low risk assets," said Metropolitan CFO Donald F. Smith. "These assets
include cash deposits, high quality investment securities, residential mortgage
loans and seasoned loans secured by multi-family properties and comprise 54.8%
of our total assets," he added.
The interest rate spread for Metropolitan Financial Corp. (the Holding Company)
has decreased to 1.89% and 1.97% for the three month and six month periods,
respectively, ended June 30, 2001; compared to 2.38% and 2.32% for the three
month and six month periods, respectively, ended June 30, 2000.
In addition, the Holding Company and the Bank announced today that they have
agreed to certain actions under a Supervisory Agreement with the Office of
Thrift Supervision and the Ohio Department of Financial Institutions.
The Supervisory Agreement includes, among other things, an agreement by the
Holding Company to prepare and adopt a plan for raising capital that uses
sources other than increased debt or which requires additional dividends from
the Bank. The Supervisory Agreement does not prohibit the Holding Company from
making payments on its Trust Preferred Securities or other Holding Company
obligations.
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In addition, the Bank has entered into a separate supervisory agreement that
includes, among other things, the following requirements:
1. Development of a capital improvement and risk reduction plan by September
28, 2001. This plan is expected to increase the Bank's core and risk-based
capital from its present "adequately capitalized" status to "well
capitalized" by December 31, 2001;
2. Reduction in fixed assets;
3. Attain compliance with approved interest rate policy requirements, thus
reducing the Bank's interest rate risk;
4. Reduction in volatile funding sources, such as brokered and out-of-state
deposits;
5. Improving credit risk controls; and,
6. Restricting growth.
The supervisory agreements for the Holding Company and the Bank also contain
restrictions on adding, entering into employment contracts with, or making
golden parachute payments to directors and senior executive officers and in
changing position responsibilities of senior officers.
Additionally, the Holding Company announced that it has engaged Ryan, Beck & Co.
LLC, an investment banking firm specializing in community banks, as its
financial advisor to explore strategic alternatives including a
recapitalization, which could occur in the fourth quarter. Metropolitan
Chairman, CEO and majority shareholder Robert M. Kaye has indicated his
intention to invest a substantial amount of additional capital in connection
with any recapitalization.
"We are evaluating capital raising alternatives that could take the Bank to the
well-capitalized level by year-end," said Mr. Smith. "Currently, our risk-based
capital ratio is at 8.71% and the Bank is deemed to be adequately capitalized.
In order to be considered well capitalized, we have to increase that ratio to
10.0%," he added. The Bank is currently deemed well-capitalized in all other
categories.
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The Bank's primary business objective has been to increase core deposits. It has
done this by introducing new deposit products that have been well received in
the marketplace. These include on-line banking, a premium interest-bearing
checking account, a competitive money market account, and an array of other
competitively-priced deposit products.
Additionally, the Bank has initiated several actions that have resulted in:
o Increased fee income from mortgage originations and gains from the sale of
commercial real estate assets;
o Growth in the trust and financial services division, resulting in a 54%
year-to-date increase in assets under administration;
o A successful entry into the public funds market;
o Close to 80% occupancy level in the new corporate headquarters building;
and,
o Extension of the Bank's posting time so that all transactions made before
the close of 5 p.m. post that same day. Previously, transactions made after
3 p.m. posted the next business day.
Also, the Bank has initiated an aggressive expense management program that is
expected to have a positive impact on its efficiency ratio by year-end.
"The level of capital and other actions required by the agreement with our
regulators is prudent to continue to support our mission as a community bank.
Our strategy is to grow the value of the Bank by increasing core deposits. We
are going to remain focused on deposit growth while aggressively reducing
costs," said Mr. Kaye. "As a result of these initiatives, we expect to report
improvement in our third and fourth quarter results, compared to the first half
of 2001," he added.
"We also do not anticipate opening any new retail locations during the next 12
months," Mr. Kaye said. "We have built several new retail sales offices in
growing markets during
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the last several years, and we are going to give those time to become more
established in the marketplace," he added.
The Bank anticipates that its cost of funds will likely decrease during the
remainder of 2001 as higher rate borrowings and CDs mature and are replaced by
less expensive funding. "Maturities of borrowings and CDs during the last six
months of 2001 amount to $415 million. We anticipate that the benefit of the
cost of fund reductions will exceed the impact of interest rate reductions on
assets," said Mr. Smith.
Further, the Bank anticipates maintaining its asset base at $1.7 billion or less
during the remainder of 2001. Loan origination in the Bank's core markets,
however, will remain active.
This news release contains forward-looking statements that are subject to
assumptions, risks and uncertainties. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include the words "believe," "expect," "anticipate," "likely,"
"intend," "plan," "estimate" or words of similar meaning, or future or
conditional verbs such as "will," "would," "should," "could" or "may." Actual
results could differ materially from those contained in or implied by such
forward-looking statements for a variety of factors including: changes in
interest rates; continued softening in the economy and other factors which would
materially impact credit quality trends, real estate leasing and the ability of
the Bank to generate loans; business and other factors affecting the economic
outlook of individual borrowers of the Bank and their ability to repay loans as
agreed; the ability of the Holding Company and the Bank to timely meet their
obligations under their respective supervisory agreements; delay in or inability
to execute strategic initiatives designed to grow revenues and/or manage
expenses; changes in law imposing new legal obligations or restrictions or
unfavorable resolution of litigation; and changes in accounting, tax or
regulatory practices or requirements. This news release does not constitute an
offer of any securities of the Holding Company, the Bank or any of their
affiliates for sale.
PROFILE OF METROPOLITAN FINANCIAL CORP.
Metropolitan Financial Corp. is a Unitary Thrift Holding Company headquartered
in Highland Hills, Ohio. Metropolitan Bank and Trust Company operates 24
full-service
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retail sales offices in northeastern Ohio and maintains eleven loan
origination offices throughout Ohio and western Pennsylvania. To find out more
about Metropolitan's products and services, please visit the Bank's Web site at
www.benicetoyourmoney.com.
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METROPOLITAN FINANCIAL CORP.
COMPARATIVE SUMMARY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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2001 2000 2001 2000
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NET INTEREST INCOME $ 8,404 $ 10,074 $ 17,493 $19,717
PROVISION FOR LOAN LOSSES 3,145 1,600 4,200 3,100
NET INTEREST INCOME AFTER PROVISION 5,259 8,474 13,293 16,617
NONINTEREST INCOME 4,311 2,165 6,731 4,280
NONINTEREST EXPENSE 12,553 9,827 23,771 19,186
INCOME (LOSS) BEFORE FEDERAL INCOME TAXES (2,983) 812 (3,747) 1,711
PROVISION (BENEFIT) FOR INCOME TAXES (905) 265 (1,246) 557
NET INCOME (LOSS) (2,078) 547 (2,501) 1,154
PER SHARE DATA(1):
Basic and diluted net income (loss) (0.26) 0.07 (0.31) 0.14
Book value 5.77 5.51 5.77 5.51
Tangible book value 5.45 5.22 5.45 5.22
Stock price 3.80 4.75 3.80 4.75
PERFORMANCE RATIOS:
Return on average assets (0.49)% 0.14 % (0.30)% 0.14 %
Return on average equity (17.52) 4.95 (10.40) 5.21
Interest rate spread 1.89 2.38 1.97 2.32
Net interest margin 2.14 2.62 2.24 2.58
Average interest-earning assets to
average interest-bearing liabilities 103.92 103.21 103.43 103.17
Noninterest expense to average assets 2.96 2.43 2.82 2.39
Efficiency ratio 107.95 80.32 104.24 80.81
(1)Common shares outstanding at June 30, 2001 and 2000 were 8,112,996 and
8,082,592, respectively. Weighted average common shares outstanding in the
second quarter, 2001 and year-to-date 2001 were 8,110,822 and 8,107,170,
respectively. Weighted average common shares outstanding in the second quarter,
2000 and year-to-date 2000 were 8,077,213 and 8,072,840, respectively.
JUNE 30, 2001 DEC. 31, 2000
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FINANCIAL CONDITION AT:
Total assets $1,691,247 $1,695,279
Loans receivable, net 1,206,309 1,286,823
Securities 114,989 54,886
Mortgage-backed securities available for sale 198,826 195,829
Loan servicing rights, net 22,474 20,597
Deposits 1,202,617 1,146,267
Borrowings 365,751 426,079
Trust Preferred Securities 43,750 43,750
Shareholders' equity 46,829 49,459
ASSET QUALITY RATIOS:
Nonperforming loans to total loans (2) 2.65 % 1.15 %
Nonperforming assets to total assets (2) 2.11 1.12
Allowance for losses on loans to total loans(2) 1.39 1.07
Net charge-offs to average loans 0.18 0.27
CAPITAL RATIOS:
Shareholders' equity to total assets 2.77 % 2.92 %
Tier 1 capital to total assets (3) 6.20 6.31
Tier 1 capital to risk-weighted assets (3) 7.90 8.45
(2) Ratios are calculated based on period end balances.
(3) Ratios are Metropolitan Bank & Trust only.