Metropolitan Mortgage & Securities Co., of Spokane, has returned to profitabilityat least on paperfollowing a business downturn that led to several consecutive quarters of financial losses, extensive job cuts, other cost-slashing measures, and a strategic shift toward more profitable lines of business.
The company reported net income of slightly more than $5 million for its third fiscal quarter ended June 30, which was up sharply from a nearly $16 million loss in the same quarter last year. However, the gain was due in large part to an $18.8 million tax benefit. The company continued to show an operating loss, although at $13.4 million it was down sharply from the $24.5 million operating loss in the year-earlier period.
A Metropolitan affiliate, Summit Securities Inc., also showed strong improvement, posting net income of about $1.4 million for the latest quarter, compared with a $1 million loss in the year-earlier period.
Were starting to realize the benefits of the long-term growth plans that Metropolitan has developed, says Erik Skaggs, company spokesman.
Certainly theres more work to do, he says, but the company has identified five areas of business that it believes are key to its future, from buying seller-financed real estate loansits longtime core businessto commercial lending and property development, and, Were really hitting the market full bore.
Metropolitans revenues of $27.9 million for the latest quarter were down about $140,000 from the year-earlier period, but its expenses of $41.3 million were more than $11 million lower, which allowed the company to make up considerable financial ground. That left the company with the $13.4 million loss before income taxes and what it calls minority interest. Reduced investment losses were a key contributor to that improvement.
The $18.8 million benefit for income taxes, combined with a $358,000 loss by consolidated subsidiaries allocated to minority stockholders, then enabled the company to show the $5 million in earnings for the quarter.
For the first nine months of its current fiscal year, the company reported a loss of $13.3 million on $83.1 million in revenues, compared with a loss of $17.2 million on $114.2 million in revenues for the year-earlier period.
Metropolitan announced late last year that it had begun shifting resources away from the then-stagnant residential-mortgage lending market to more promising areas of business due to softness in the loan-origination market. In April, as part of a revised strategic plan, it announced that it had sold the servicing rights to more than $1.8 billion in mortgages to a large, Florida-based company. In addition to those moves, Metropolitan decided to get out of equipment leasing, a line of business in which it had suffered losses.
Exiting those areas of business caused the company to reduce its number of full-time equivalent employees to about 360 as of the end of the last quarter, down from about 630 a year earlier, its latest quarterly report says.
Metropolitan now has about $1.33 billion in assets, up from about $1.25 billion a year ago, and last year had revenues of about $171 million. Summit Securities has about $423 million in assets, up from $359 million a year ago, and last year had revenues of about $49 million. Paul Sandifur Jr. is majority owner of both companies, which together have about six active subsidiaries.
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