Exhibit 99.1
FOR FURTHER INFORMATION CONTACT:
Marcus Faust
Executive V.P. and Chief Financial Officer
216-206-1217
mfaust@metrobat.com
- -------------------
METROPOLITAN FINANCIAL CORP. ANNOUNCES ADJUSTMENT TO MORTGAGE
SERVICING RIGHTS VALUE AND ENGAGEMENT OF
RYAN BECK AS ITS FINANCIAL ADVISOR
Highland Hills, OH - September 20, 2002 - Metropolitan Financial Corp. (Nasdaq:
METF), parent company (the "Company") of Metropolitan Bank and Trust Company
(the "Bank"), today announced that it has determined that incorrect prepayment
speed assumptions were used in its internal methodology to estimate the market
value of its mortgage servicing rights during the eighteen month period ended
June 30, 2002. As a result of the discovery of this error, the Company engaged
an independent firm to value its mortgage servicing rights. Based on the results
of the independent valuation, the Company estimates that it overstated the value
of its mortgage servicing rights on its statement of condition by approximately
$5.0 million as of June 30, 2002. The Company intends to recalculate the current
market value of its mortgage servicing rights for each period affected.
Consequently, the Company will restate its earnings and capital positions to
reflect the after-tax effect of the adjustments as soon as they are finalized.
Due to a further decline in long-term interest rates since June 30, 2002, the
Company expects an additional negative impact on earnings from its mortgage loan
servicing activities during the third quarter of 2002. Based on an independent
valuation of mortgage servicing rights as of August 31, 2002, the Company
estimates that the asset value of its mortgage servicing rights has decreased by
an additional $3.5 million between June 30, 2002 and August 31, 2002. The
Company notes that long-term interest rates have declined further during
September 2002. Therefore, the net asset value of the Company's mortgage
servicing rights is likely to decrease by an additional amount for the month of
September. The after-tax effect on income for the quarter of this reduction in
value will be reflected in the Company's financial statements for the quarter
ending September 30, 2002.
Additionally, as previously announced, the Board of Directors of the Company has
initiated a process of exploring its strategic alternatives to maximize
stockholder value and has previously
1
authorized management to engage a financial advisor. The Company is announcing
today that it has engaged Ryan Beck & Co. LLC as its financial advisor.
In a separate development, the Company today announced that it refinanced the
$4.0 million commercial bank note, which the Company was obligated to repay on
December 31, 2002. The new loan is structured as a $5.0 million revolving line
of credit, which matures on December 31, 2003.
About the Company
- -----------------
Metropolitan Financial Corp. is a Unitary Thrift Holding Company headquartered
in Highland Hills, Ohio. Metropolitan Bank and Trust Company operates 24
full-service retail sales offices in the Cleveland metropolitan area of
northeastern Ohio and maintains six loan production offices throughout Ohio and
western Pennsylvania. To find out more about our products and services, please
visit our website at www.metrobat.com.
Forward-Looking Statement and Associated Risk Factors
- -----------------------------------------------------
This 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 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 weakening in the economy and other factors that would
materially impact credit quality trends, real estate lending and the ability of
Metropolitan Bank & Trust Company to generate loans; business and other factors
affecting the economic outlook of individual borrowers of Metropolitan Bank &
Trust and their ability to repay loans as agreed; the ability of Metropolitan
Financial Corp. and Metropolitan Bank & Trust Company to timely meet their
obligations under their respective supervisory agreements and the July 8, 2002,
Supervisory Directive; the status of relevant markets in which Metropolitan
Financial Corp. and Metropolitan Bank and Trust Company may sell various assets;
an increase in the dollar amount of non-performing loans held by Metropolitan
Bank and Trust Company; increased competition which raises rates paid on demand
and time deposits offered by Metropolitan Bank and Trust Company; adverse
developments in material collection and other lawsuits involving Metropolitan
Bank and Trust Company; 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; the ability of Metropolitan Bank and Trust
Company to continue to use the Federal Home Loan Bank as a source of liquidity;
and changes in accounting, tax or regulatory practices or requirements.
2