3rd-quarter earnings at MNC $4.5 million

October 16, 1992|By David Conn | David Conn,Staff Writer

MNC Financial Inc., its balance sheet glowing from a large cash infusion, reported yesterday earnings of $4.5 million in the third quarter -- its first undisputed operating profit of the year.

The cash infusion, which was not counted in earnings, came from a $200 million investment in MNC by NationsBank Corp., a Charlotte, N.C., company that has signed an agreement giving it the right to acquire MNC within the next five years for a price of at least $14 a share.

MNC had no securities gains but still managed to report a 3-cent-a-share profit during the quarter.

The company earned $2 million in the second quarter and lost $59.5 million in the third quarter of last year.

Expenses were down 10 percent compared with last year's, and net interest income, fueled by the continuing drop in interest rates, was more than 16 percent higher than in the third quarter of 1991 and almost 10 percent higher than in the second quarter of this year.

"They were better than I expected," Alex. Brown analyst John Heffern said of MNC's numbers. "There were operating profits, and that's a good sign."

Stock market reaction to MNC's earnings was mild. The company's shares closed at $10.875, up 25 cents, on the New York Stock Exchange.

NationsBank has indicated that it is likely to buy MNC if the Baltimore company can significantly reduce its large portfolio of troubled assets, most of them commercial real estate loans. As of Sept. 30, the company said, those bad assets stood at $1.25 billion, down from $1.39 billion three months earlier and $1.86 billion at their peak in the third quarter of 1991.

During the third quarter, the company added $37 million to its reserves for loan losses, compared with $42 million in the second quarter and $46 million in the first quarter.

Despite the reduction, the company had to classify about $158 million in assets as non-performing during the quarter, compared with about $122 million in the second quarter, and $135 million in the first.

At the same time, MNC restructured or recovered about $200 million from previously non-performing loans, charged $77 million against its reserve for loan losses and deducted more than $26 million from earnings because of foreclosed assets and their expenses.

MNC Financial Inc.

Three months ended 9/30/92

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

'92 ...4,539,000... ... ... 0.03

'91 ...(59,480,000) ... ... (0.70)

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

Annualized return on assets '92 ... ...0.11%

'91 ... ...1.24%

Addition to allowance... ... Net

... ..for loan losses... ... charge-offs

'92 ..37,354,000... ... ... 76,810,000

'91 ..75,344,000... ... ... 66,114,000

% change -50.4.. ... ... ... ...+16.1

Nine months ended 9/30/92

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

'92... 7,626,000... ... ... 0.03 TC '91...12,218,000... ... ... 0.08

% change -37.6... .... ... ...-62.5

* Return on assets based on average assets, not assets at quarter-end.

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