Michigan National Corp. has decided to search for a new president and steer an independent course, the company's top executive said.
Robert J. Mylod, chairman and chief executive of the struggling company, which has $10.5 billion of assets, said in an interview that he and the board decided to look outside the company for a president, who will also be chief operating officer of Michigan National.
The president's post has been vacant since 1990.
Mr. Mylod, 53, said he and the board jointly decided it was time to fill the president's post, explaining that growing managerial demands made it "inappropriate" for him to continue alone.
'I'm Still the CEO'
At the same time, Mr. Mylod emphasized he is not contemplating leaving his post.
"I'm still the CEO, and Michigan National has a bright future," he said.
Michigan, National's second-quarter net income plunged 16% over the year-earlier period to $16.15 million, for a 0.62% return on assets. In this year's first quarter, the company lost $44.8 million.
The company's recent problems included heavy refinancing activity that required it to accelerate amortization of its servicing portfolio.
Michigan National's board has given lengthy consideration to seeking a buyer, but recently rejected that option, Mr. Mylod said.
|A Course of Independence'
"We decided to steer a course of independence," the executive said. "[The board] wanted to get that issue clear in our heads before seeking a president."
Analysts expressed support for the stance, saying it does not make sense to sell the Farmington Hills-based company in its current state of disrepair.
However, most believe the company is stalling for time. They foresee a slow turnaround for Michigan National, predicting it eventually will be acquired.
Problem Assets Linger
"Longer-term, it is difficult to picture Michigan National as a survivor in the banking industry consolidation, especially within the context of a slow-growth economy," said Fred Cummings, a banking analyst with McDonald & Co. in Cleveland.
A Modest Premium
Though credit quality has improved at the company, problem assets still equaled an unwieldy 4.15% of gross loans at midyear.
The banking company's stock recently has been trading at a modest 15% premium over book value. In late trading Wednesday, its shares rose $1.625 to $59.875.
Mr. Mylod said the search for a president began in earnest about a week ago. He noted that the new executive's arrival will allow him to devote fuller attention to corporate strategy.
To Promote Bank's Strengths
He said he will try to promote Michigan National's strengths in middle-market commercial lending and consumer banking.
But Mr. Cummings, the analyst, said it might take until 1995 for Mr. Mylod to deliver a benchmark 1% return on assets and 15% return on equity.
Michigan National's return on assets for 1992 was 0.56% ROA, well below the average of 1.09% for 28 Midwest regional banking companies tracked by Keefe, Bruyette & Woods Inc.