Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, July 18, 1990 TAG: 9007180117
SECTION: BUSINESS PAGE: A-3 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Medium
The new policy accompanied the Roanoke-based company's report that it earned $20.3 million or 53 cents a share during the second quarter, compared with $23.2 million or 61 cents in 1989's second quarter.
For the first half, however, Dominion reported net income of $6.4 million or 15 cents a share, well short of the $46.6 million or $1.21 a share in the corresponding period of 1989.
The six-month report reflects a first-quarter loss of $13.9 million that was due to a $70 million increase in reserves to offset losses for bad loans. That action followed a review of the bank's real estate portfolio under tighter federal standards.
Dominion, however, exceeds the technical ratios that now comprise government standards for testing financial strength.
Its 8.1 percent primary capital ratio compares to the government requirement of 6 percent, while the risk-based capital ratio of 9.5 percent compares with the 7.25 percent going into effect at the end of the year.
Dominion Chairman Warner Dalhouse said the new plan, adopted Tuesday by the company's board of directors, will assure credit policies are consistent throughout its multistate system.
E. Glenn Bowman, senior vice president and treasurer, said that Dominion's local banks operated autonomously in handling commercial loans in the past.
The board has now authorized a common standard of credit and lending criteria throughout Dominion's system, Bowman said.
Loans marketed and produced at local banks will be subject to credit review by a committee of the holding company. Bowman said this review will be centralized in Roanoke.
He said the credit review will be independent of commercial loan production so that all banks will operate under the same rules.
The plan is designed to monitor and control Dominion's credit risks. Dalhouse said it is expected to identify more quickly the impact of changing economic and market conditions.
Bowman said there's no question that commercial lending is slowing from last year.
The credit-monitoring plan should improve the quality of earning assets and assure compliance with regulatory requirements.
Dalhouse also said several studies initiated last year should be completed by the end of the summer. They involve long-range strategic planning, corporate structure, branch and product profitability, employee productivity and cost control.
Bowman said the studies should result in cost savings, but the amount is unknown.
Dominion reported assets of $10.3 billion at the end of June, up 9.2 percent from a year earlier. Deposits rose 8.1 percent to $7.8 billion, while loans were up 6.2 percent to $7.1 billion.
Return on average assets was 0.8 percent compared to the usual industry goal of 1 percent. The bank's return on equity was 13.4 percent.
The board declared the company's regular quarterly dividend of 22 cents a share, payable Sept. 10 to stockholders of record Aug. 10.
by CNB