MNC Financial Inc. marked a much-awaited return to profitability yesterday, posting first-quarter income of more than $1 million, though much of it came from selling off assets.
"Give them credit for absolutely terrific progress in stabilizing the company," said John Heffern, a banking analyst at Alex. Brown Inc.
Excluding the asset sales, MNC "was still unprofitable," he said, "but less so than in previous quarters."
The company, which owns Maryland National Bank and American Security Bank, reported a profit of $1.1 million, about a penny a share, for the three months that ended March 31, compared with a profit of $154 million, or $1.75 a share, in the same period a year ago. There are 89 million shares outstanding.
The company's bottom line was helped by gains of $35 million from the sale of investment securities and $6 million from the sale of part of MNC's mortgage-servicing portfolio.
"The securities gains certainly were part of the first-quarter results," Chief Executive Frank P. Bramble said in an interview, -- "but there were very, very solid results with regard to operations."
Last year's first-quarter profit came from the $444 million sale of the company's credit card business, MBNA Corp. MNC, the state's largest bank holding company, lost $82.4 million in the fourth quarter of 1991 and $70 million for the full year.
At the end of the quarter, MNC's bad loans and foreclosed real estate accounted for 15.56 percent of all its loans and foreclosed real estate, down from 16.11 percent at the end of last year. That compared with a year-end ratio of only 4.5 percent for the 45 banks that comprise Alex. Brown's regional bank group, Mr. Heffern said, but he said MNC's improvement was encouraging. MNC's non-performing assets fell to $1.6 billion from $1.8 billion a year ago. The company had $9.7 billion in net loans on March 31.
Problem loans accounted for 9.94 percent of all loans at the end of the first quarter, Mr. Heffern said, down from 10.92 percent at the end of last year and 10.36 percent as of March 31, 1991. MNC's capital ratios were above regulatory minimums, the company reported.
"We feel that we can continue to solve our non-performing asset problems," Mr. Bramble said, as long as the economy doesn't deteriorate.
The past 12 months also saw a 15 percent drop in the level of reserves for problem loans, to $742.1 million from $875.5 million a year earlier. In the recent quarter, the company added $46.4 million -- an amount that is deducted from earnings -- to those reserves, down from $164.8 million a year ago.