Citing an "immediate need to significantly improve performance," Michigan National Corp. on Wednesday said it hired Tandon Capital Associates Inc. to assist with an accelerated efficiency campaign.
The $10.1 billion-asset banking company, based in the Detroit suburb of Farmington Hills, said it wanted to lower its ratio of operating expenses to operating revenues to below 60% by the third quarter of 1995.
That compares with an efficiency ratio of 77% in the first quarter of 1994, according to figures published by Keefe, Bruyette & Woods Inc.
Analysts responded cautiously to the announcement, citing uncertainty about whether the revised cost-cutting goal could be achieved.
Analysts Uncertain Plan Will Work?
"That's quite a stretch from where the company is right now," said Henry C. Dickson, an analyst with Smith Barney Shearson.
Michigan National's stock fell by 75 cents on Wednesday, closing at $75 per share.
On an annual basis, the newly-announced efficiency campaign would boost pre-tax income by $65 million, Michigan National said, or more than $2.50 per share after taxes. That figure is sharply higher than the $35 million cost-cutting target unveiled earlier this year by Michigan National, which posted a 0.74% annualized return on assets in the first quarter.
Sharply criticized for its lagging financial performance, Michigan National has been casting about for ways to boost profitability. But speculation about a possible sale erupted recently after the company retained Keefe, Bruyette & Woods Inc. to act as its adviser.