Sale of subsidiary boost earnings in quarter for MNC

April 19, 1991|By Peter H. Frank

Thanks to the hefty proceeds from the sale of its credit-card subsidiary, MNC Financial Inc. turned in a strong performance during the first quarter this year as its formerly mounting pile of troubled loans showed signs of easing.

MNC, the state's largest banking company, reported that it earned $154 million through the first three months of the year, reflecting in large part a $444 million payment it received for MBNA Corp. in January, when it sold its credit-card unit to the public.

For analysts, yesterday's results were a mixed bag of pleasant surprises and some worrisome signs. While the amount of MNC's problem real estate loans actually fell during the three months, in contrast to other area banks, the company would have lost money during the period if not for the sale of MBNA.

Overall, the company, parent of Maryland National Bank and American Security Bank, said it would have virtually broken even for the period had it not set aside $165 million to cover the possibility that further troubles could surface in its large real estate loan portfolio.

"Given what we've experienced over the past three quarters, the level of non-performing assets seems to have leveled off at least temporarily, which is certainly wonderful news," David S. Penn, a banking analyst at Legg Mason Inc., said. "The question really is, where do we go from here? Is this an anomaly? Or is this for real?"

Mr. Penn said he would wait for the results from the second quarter before considering changing his neutral rating on MNC stock.

MNC, traded on the New York Stock Exchange, closed yesterday at $5.375 a share, up 25 cents.

Most analysts concentrated their attention on the banking company's level of troubled loans -- the primary culprit that battered MNC last year, when it lost $440 million.

MNC also said yesterday that the amount of soured loans and repossessed assets on its books declined 1.6 percent, to $1.8 billion, during the first quarter.

Three months ended 3/31/91

..... ..... ..... Income..... ..... ..... Share

'91..... ..... ..... 153,987,000..... ..... 1.75

'90..... ..... ..... 6,189,000 ...... ..... 0.05

..... ..... .....Assets..... ..... ..... Deposits

'91..... ..... .....19,961,249,000.. ..... 15,597,429,000

'90..... ..... .....25,411,934,000.. ..... 17,219,423,000

Loan portfolio

Three months ended 3/31/91

..... ..... .....Loans outstanding..... ..... Net charge-offs

'91..... ..... .....12,386,033,000 ...... ..... 105,545,000

'90..... ..... .....15,470,057,000 ...... ..... 69,511,000

..... ..... ....Addition to allowance. ..... Allowance

..... ..... .....for loan losses....... ..... for loan losses

'91..... ..... .....164,776,000.... ..... ..... 875,494,000

'90..... ..... .....134,939,000.... ..... ..... 403,509,000

%change ..... ..... ..... ....--.... ..... ..... ..... ....--

Figures for 1990 are not directly comparable to this year's first quarter because they have not been restated to account for the sale of various subsidiaries during the past 12 months.

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