MNC earnings in 4th quarter best since '89 $35 million profit beats estimates

January 20, 1993|By David Conn | David Conn,Staff Writer

MNC Financial Inc., ending what could be called a year of rebuilding, reported yesterday that its fourth-quarter earnings were the best since 1989 and far exceeded most analysts' estimates.

The company, parent of Maryland National Bank and American Security Bank, said it earned $35.5 million, or 31 cents a share, for the three months that ended Dec. 31, in contrast to a loss of $82.4 million, or 96 cents a share, a year earlier.

For the full year, MNC earned $43.1 million, or 38 cents a share, which contrasts with a loss of $70.2 million, or 89 cents a share, in 1991.

The consensus among analysts projected MNC earning 4 cents a share in the fourth quarter. The company actually earned roughly 22 cents a share before including gains from the sale of securities.

MNC closed at $12.75 a share, up 25 cents, yesterday on volume five times greater than normal.

Although $16 million of the company's earnings came from securities sales, MNC showed a marked improvement in core profits, defined as operating income, excluding one-time gains and costs related to its loan problems.

"Our fourth-quarter performance reflects continuing improvement in asset quality and core earnings power," Chief Executive Officer Frank P. Bramble Sr. said. "It is important to note that net income for the period included a continuing improvement in core earnings."

By the company's definition, core earnings increased sharply in the fourth quarter, to $75 million from $28 million a year ago, and rose 4 percent from the $72 million earned in the third quarter last year.

Nonperforming assets, meanwhile, fell to $1.1 billion in the fourth quarter, or about 6.5 percent of assets, from $1.25 billion three months earlier. These troubled assets were at one point as high as $1.8 billion.

The decline came in spite of an additional $157 million in assets declared nonperforming during the period, about the same as in the third quarter and almost one-third higher than in the second quarter.

Still, the company felt confident enough about its credit quality to add only $31 million to its reserve for possible loan losses, down from $37 million in the third quarter and $115 million at the end of 1991. At the end of last year, the banking company's total reserve for possible loan losses was $602 million, or 93 percent of all nonperforming loans.

"They continue to make a lot of progress in improving their credit quality," said James Weber, an analyst at Johnston, Lemon & Co. in Washington. As the area's economy improves, MNC will be in a position to shift its money from short-term liquid investments into higher-paying commercial loans, he said.

"It looks like good progress," said Alex. Brown analyst John Heffern, "faster than what most people expected. If that trend continues, it would argue for NationsBank taking

over MNC sooner rather than later."

NationsBank Corp. of Charlotte, N.C., has an option to acquire MNC at any time before October 1995. NationsBank has indicated it would move forward with the merger when it is sure the benefits of the acquisition would take no more than a year to offset the initial cost.

Three months ended 12/31

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

'92 .. ..35,484,000 .. .. .. 0.31

'91 .. ..(82,419,000).. .. (0.96)

% change .. .. .. NA .. .. .. NA

Annualized return on assets '92 .. .. 0.84%

.. .. (1.89)%

Addition to allowance .. .. .. Net

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

'92.. .. 31,026,000 .. .. .. .. 75,319,000

.. 115,076,000.. .. .. .. 155,613,000

% change .. .. -73.0.. .. .. .. .. -51.6

Twelve months ended 12/31/92

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

'92.. .. 43,110,000 .. .. .. .. ..0.38

.. (70,201,000).. .. .. .. ..(0.89)

% change .. .. NA .. .. .. .. .. .. ..NA

Balances as of 12/31/92

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

'92.. .. .. 16,925,493,000.. .. .. 11,650,278,000

'91.. .. .. 17,438,171,000.. .. .. 13,892,661,000

% change .. .. -2.9 .. .. .. .. .. .. .. -16.1

.. .. .. .. .. .. Loans .. .. .. .. .. .. Allowance

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

'92.. .. .. .. .. 8,937,578,000 .. .. .. ..601,857,000

'91.. .. .. .. .. 10,355,203,000.. .. .. ..795,938,000

% change .. .. .. .. .. -13.7 .. .. .. .. .. ..-24.4

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