Metropolitan Mortgage posts $14.1 million loss
Spokane company absorbs transition costs, remains confident in strategic planJune 1st, 2001
Metropolitan Mortgage & Securities Co., of Spokane, has reported a net loss of about $14.1 million for its second fiscal quarter ended March 31, down sharply from net income of about $455,000 for the year-earlier period. The loss was on revenues of about $21.9 million, down from revenues of $47.4 million in the same quarter last year.
The company attributed the downturn to a number of factors, including sizable investment losses, lower gains on the sales of receivables, and increases in loss provisions and certain operating and underwriting expenses.
Separately, Summit Securities Inc., a Spokane-based affiliate of Metropolitan Mortgage, has reported a net loss of about $2.8 million on $8.3 million in revenues for the most recent quarter, compared with net income of about $2.9 million on $14 million in revenues in the same quarter last year. It said its loss was due mostly to a loss on investments and to an increase in provision for losses.
A Metropolitan spokesman, Erik Skaggs, says the quarterly losses reflect transition costs related to a recent shift in business focus, a one-time writedown from the sale of nonproducing bonds, and the general stock market decline, since a portion of Metropolitans and Summits equity investments are managed by large-fund managers.
Despite the red ink, Skaggs says, We feel we have a very good business strategy in place. Were very optimistic about the course weve set and the strategies weve implemented.
Metropolitan announced late last year that it had begun shifting resources away from the then-stagnant residential-mortgage lending market to more profitable lines of business, such as commercial lending, property development, insurance, and buying seller-financed real estate loansits longtime core business.
Since then, weve repriced ourselves in the seller-financed industry to pick up more business, Skaggs says. He adds that one of Metropolitans chief competitors, The Associates, recently quit that market, so were moving quickly to increase our market share.
In April, as part of its new strategic plan, Metropolitan announced that it had sold the servicing rights to more than $1.8 billion in mortgages to a large Florida-based company.
Metropolitans de-emphasis of residential-loan originations and loan-servicing activities, together with other streamlining efforts, have caused the overall number of people that it and its affiliate companies employ to fall off steeplyto about 440 currently, down from more than 700 a year ago.
We are a company that will have fewer employees, but comparable and growing assets, Skaggs says.
Metropolitan Mortgage currently has about $1.1 billion in assets, and last year had revenues of about $171 million. Summit Securities has about $359 million in assets, 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.