EX-99.1 3 l98426aexv99w1.txt EX-99.1 PRESS RELEASE 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 FOURTH QUARTER AND YEAR END RESULTS OF OPERATIONS - NET INCOME FOR THE FOURTH QUARTER OF $1.9 MILLION, OR $0.11 PER SHARE ON A FULLY DILUTED BASIS, RESULTING FROM INCREASED GAIN ON SALE OF LOANS AND INCREASED NET INTEREST INCOME - NET LOSS FOR THE YEAR AS A RESULT OF FIXED ASSET WRITE-DOWNS AND INCREASED AMORTIZATION AND IMPAIRMENT OF MORTGAGE SERVICING RIGHTS DUE TO CONTINUED DECLINES IN LONG-TERM INTEREST RATES - CORE DEPOSITS CONTINUE TO RISE, HAVING INCREASED 8.0% YEAR OVER YEAR - COMPANY IS IN COMPLIANCE WITH ALL REQUIREMENTS OF THE SUPERVISORY AGREEMENTS AND THE SUPERVISORY DIRECTIVE Highland Hills, OH - January 23, 2003 - Metropolitan Financial Corp. (Nasdaq: METF), parent company (the "Company") of Metropolitan Bank and Trust Company (the "Bank"), today announced results of operations for the quarter and year ended December 31, 2002. The Company had net income in the fourth quarter of $1.9 million, or $0.12 per basic share and $0.11 per fully diluted share, compared with a net loss of $1.6 million, or $0.20 per share, for the fourth quarter of 2001. For the year, the Company reported a net loss of $13.4 million, or $0.94 per share, compared to a net loss of $3.6 million, or $0.44 per share, for the year ended December 31, 2001. 2002 Results of Operations The net income for the fourth quarter was significantly impacted by positive gains on the sale of the Company's loans and securities in the normal course of business. The gain was $4.6 million for the quarter and $12.0 million for the year. Additionally, the Company significantly improved its net interest income in the fourth quarter of 2002. The Company said that the primary factor negatively impacting 2002 performance was the increased amortization and impairment of mortgage loan servicing rights as a result of the decline in long-term interest rates. Additionally, the Company wrote down certain fixed assets during the year, which also substantially contributed to the results in 2002. While net interest income after provision for loan losses for the year ended December 31, 2002 stayed relatively flat over the prior year, net interest income after provision for loan losses increased 45.1% for the fourth quarter over the fourth quarter of 2001. The interest rate spread was 2.24%, an increase of 53 basis points above the 1.71% interest rate spread for the year earlier quarter, even though average earning assets declined 6.3% from the fourth quarter of last year. Noninterest income for the year ended December 31, 2002, was $9.5 million, a decline of 30.6% from the year ended December 31, 2001. Much of the decline can be attributed to the continued effect of increased amortization and impairment of mortgage loan servicing rights in a declining interest rate environment. This increased the loss from mortgage loan servicing from $4.0 million for the year ended December 31, 2001 to $13.6 million for the year ended December 31, 2002. Excluding this increase in loan servicing losses, noninterest income increased to $19.2 million for the year ended December 31, 2002. Noninterest income for the fourth quarter of 2002 was $5.7 million, an increase of 137.8% from the fourth quarter of 2001. The increase is primarily attributable to an increase of $2.2 million in gains from the sale of loans and securities in the fourth quarter of 2002. Noninterest expense for the year increased by 22.1% from 2001. A significant portion of this increase can be attributed to $9.6 million in fixed asset write-downs, all of which were taken in the second and third quarter of 2002. Excluding these write-downs, noninterest expense only increased by 1.3%. For the fourth quarter of 2002, noninterest expense increased 1.4% compared to the prior year quarter. As evidence of the Company's decreasing reliance on higher cost funds, the Company's core deposits at December 31, 2002 increased 8.0% from December 31, 2001. Core deposits now make up 37.3% of total deposits compared to 31.7% at December 31, 2001. The Company has made progress during the quarter to address asset quality issues. The allowance for loan losses was $17.1 million, or 1.59% of total loans at December 31, 2002, compared with 1.49% of total loans at December 31, 2001. The Company's nonperforming loans as a percentage of total loans has decreased from 2.68% at December 31, 2001 to 2.52% at December 31, 2002. As of December 31, 2002, non-performing assets totaled $31.0 million, compared with $33.5 million at December 31, 2001. President and CEO Kenneth T. Koehler remarked, "As our fourth quarter results show, we saw significant improvement as indicated by an increase in net interest income after provision and noninterest income of 45.1% and 137.8%, respectively, over the fourth quarter of 2001, while our noninterest expense increased by only 1.4%. While the results of the fourth quarter were positive, a declining interest rate environment and its impact on our loan servicing business along with the fixed asset write-down have resulted in a loss for the year." "Additionally, the merger with Sky Financial will enable us to offer a wider range of products to our customers and continue to provide them with the great customer service to which they have become accustomed." During the quarter, the Company announced that it signed a merger agreement with Sky Financial Group, Inc (Nasdaq: SKYF). The merger is scheduled to be consummated during the second quarter of 2003 pending all required regulatory and shareholder approvals. 2 Mr. Koehler added that, despite the losses incurred this year, the Bank continues to meet the "well-capitalized" level in relation to all regulatory capital requirements. At December 31, 2002, total risk-based capital was 10.80%, compared with 9.27% at December 31, 2001. Status of Compliance with Supervisory Directive The Company also announced today that as of December 31, 2002, it is in compliance with the supervisory agreements issued in July 2001 and the supervisory directive from the OTS dated July 8, 2002. The Company has sold the $3.3 million of artwork that it was required to sell by December 31, 2002 as part of the directive. The OTS has granted an extension to the Company until June 30, 2003 regarding the required disposal of the fixed assets. 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. 3 METROPOLITAN FINANCIAL CORP. 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