Magazine article American Banker

Michigan National Gets a 'Vote of Confidence.' (Capital Requirements)

Magazine article American Banker

Michigan National Gets a 'Vote of Confidence.' (Capital Requirements)

Article excerpt

Michigan National Gets a 'Vote of Confidence'

DETROIT -- In what it described as "a vote of confidence," Michigan National Corp. said regulators will no longer require some of its subsidiaries to back their assets with higher-than-normal capital levels.

Chairman and chief executive Robert J. Mylod said the lifting of the additional capital requirements will not have an immediate effect on the holding company's balance sheet. But he said the decision is "a major longterm milestone" for Bloomfield Hills-based Michigan National because "it is a statement by the [federal] regulators that a company that was perceived as having a variety of problems is now perceived as being a healthy bank."

Mr. Mylod said the move will improve the holding company company's credit ratings and make it easier and less costly to raise money in the capital markets.

Michigan National has no immediate plans to raise public capital, he said, but "we'll be reviewing that decision later in the summer."

Under Mr. Mylod, who became chairman early in 1985, Michigan National has been undergoing a major cost-cutting program. The bank holding company, Michigan's third largest, has taken steps to slash operating costs, including the closing of more than 70 branches.

The moves are starting to bear fruit. In early 1986, the company reported its net income for the first quarter as more than doubled. It went to $11 million, or 78 cents a primary share, from $5.2 million, or 42 cents a primary share, a year earlier.

Ken Puglisi, an analyst with Keefe, Bruyette & Woods Inc. …

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