Metropolitan Mortgage & Securities Co., the big Spokane-based financial-services company, has posted a loss applicable to common shareholders of about $12.2 million for its 2000 fiscal year that ended Sept. 30.
The loss represented a sharp downturn from the previous year, when the company reported net income of $12.6 million. The company had reported a $12.4 million loss through the first three quarters of its most recent year.
In documents filed with the U.S. Securities and Exchange Commission, the company blamed the fiscal-year loss on several factors, including a reduction in income tax benefits, an increase in loss provisions and valuation adjustments, and an increase in other operating expenses such as salaries and commissions.
Julie Shiflett, Metropolitans controller, says the loss included a more than $10 million write-down related to residential loan-origination activities that the company plans to discontinue. She says the company expects to see increased profitability as it focuses more on other areas, such as commercial lending, property development, and insurance.
In the SEC filing, the company said its earnings for the year were insufficientby about $17.4 millionto cover its fixed costs, including preferred-stock dividend requirements. Its net income the previous year, although sizable, was made possible by a reduction of $17.9 million in income taxes and income allocated for minority shareholders. Without it, earnings would have fallen short of covering fixed costs and preferred-stock benefits.
Metropolitan laid off about 90 workers, or about 15 percent of its work force, last week in an anticipated move stemming from a downturn in the national residential mortgage-banking industry that the company claims has reduced its profitability. It had laid off another 40 workers last May.
The latest job cuts were spread across several areas of the company, but were concentrated in Metwest Mortgage Services Inc., a residential mortgage-lending subsidiary.
Metropolitan had informed employees in November that it was exploring a number of options for its residential mortgage-lending operation, including entering into a joint venture with some other company, selling the business, or shutting it down.
It announced earlier this month, before the latest round of layoffs, that it hadnt yet decided the fate of that operation, but that it planned to begin focusing on more profitable lines of business, including those Shiflett mentioned.
Metropolitan is the parent company of nine active subsidiary corporations with a combined more than $1.1 billion in assets and annual revenues of more than $170 million. Founded in 1953 by C. Paul Sandifur Sr., it offers a range of financial services and investment products nationwide.
Diversified in recent years
For many years, Metropolitans core business has been buying real estate mortgages at a discount from mortgage holders who want to liquidate their positions. The company often holds the mortgages it buys and derives income from them over time as mortgagees make their payments.
In recent years, the company has diversified into buying other types of cash-flow instruments, including lottery winnings, structured settlements, and annuities. It also began originating residential loans through relationships with other lenders and loan brokers throughout the Western U.S.
It has faced increasing competition in those arenas, however, including from some much larger companies.
Separately, Summit Securities Inc., a Spokane-based affiliate of Metropolitan, reported net income applicable to common shareholders of about $2.1 million for the latest fiscal year, up slightly from the previous year, on revenues of about $50 million.
Summit Securities is controlled by C. Paul Sandifur Jr., who also is controlling shareholder in Metropolitan.
Summit Securities owns two insurance companies, Old Standard Life Insurance Co. and Old West Annuity & Life Insurance Co.; a securities broker-dealer, Metropolitan Investment Securities Inc.; and a property development services company, Summit Property Development Inc., that collectively employ about 40 people.
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