Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, March 27, 1991 TAG: 9103270041
SECTION: BUSINESS PAGE: A-3 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Medium
The move prompted stock of Richmond-based Signet to bounce upward, confirming expectations of investors and analysts.
The board of Signet Banking Corp. reduced its quarterly dividend from 39 cents to 20 cents a share. The new rate is payable April 25 to stockholders of record April 5.
Chairman Robert M. Freeman said Signet expects to be profitable for the first quarter but not at a level to maintain the former dividend rate.
Anthony Davis, who follows the stock for Wheat First Securities in Richmond, said Signet's stock rose 1 1/2 points on the news before falling back by 3/4. The stock ended the day's trading at $13.125 a share.
"We expected it," Davis said of the dividend cut. "The world expected it. The stock reacted positively." He said investors were encouraged by Signet's statement that it will be profitable for the first quarter.
All bank stocks were up Tuesday, he said, particularly the super-regionals.
Henry J. Coffey Jr., who follows the stock for J.C. Bradford & Co. in Nashville, said Signet barely earned enough money to pay its former dividend in 1990. He interpreted Freeman's statement to mean that Signet in 1991 will not earn the old level equal to $1.56 a share.
Also, regulators are encouraging banks that are not earning their dividends to lower the amounts they pay to stockholders, he noted.
Cutting the dividend was "prudent," Coffey said, because of Signet's exposure in the Northern Virginia commercial real estate market.
That market is still sinking, and Coffey said all banks doing business there are "seeing serious deterioration in their loans."
He attributed the rise in the stock of Signet and many other banks to a broad gain in the market Tuesday.
Signet also announced that it had completed sale of $500 million in credit card debts in a private transaction.
by CNB