Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, April 16, 1991 TAG: 9104160619
SECTION: VIRGINIA PAGE: A/1 EDITION: EVENING
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Long
Dominion had a loss of $14 million or 38 cents a share during the same period last year. For 1990 as a whole, Dominion lost $37 million or $1.02 a share.
The quarterly results were announced at the annual meeting of Dominion shareholders at Center in the Square.
The bank said, however, that its first-quarter results reflected continuing problems with the quality of its assets. Its net interest margin, provision for credit losses and expenses all affected its earnings, Dominion said.
Yet the bank's non-interest expenses rose by only 2.5 percent. Dominion said an increase in the Federal Deposit Insurance Corp. assessment for deposit insurance and costs related to handling problem real estate loans were partially offset by decreases in employee-related expenses and marketing costs.
Chairman Warner Dalhouse, in a prepared statement, said the company's performance "continues to be restrained by the sluggish economy and our high level of non-performing assets."
He attributed gains to tighter control over expenses and to the strategic plan adopted last year that included formation of a single Virginia bank, restructuring of management along lines of business rather than geography. Also, Dominion profited from a 10 percent reduction in employment and a salary freeze.
Directors also reduced the quarterly dividend earlier this year from 22 cents to 11 cents a share.
Dalhouse said, "Our efforts are beginning to show up in Dominion's financial results, and that is a very positive validation of our new strategies."
Dominion's balance sheet continued to reflect the economic downtown. Assets on March 31 totaled $10.1 billion, down slightly from the $10.2 billion one year earlier.
At the end of the first quarter, loans stood at $6.7 billion, a decrease of 4.6 percent from a year earlier. Deposits, on the other hand, rose 3.8 percent over the year to $8 billion.
Stockholders' equity was $562 million, resulting in a March 31 book value of $14.32 a common share. The price of the stock closed Monday at $8.75 a share.
At the end of the quarter, nonperforming assets, those for which the bank earned no income, were valued at $361 million, up $26 million since Dec. 31 and up $153 million since March 31, 1990.
Non-performing loans totaled $245 million and foreclosed properties amounted to $116 million at the end of the last quarter.
The allowance for credit losses was $230 million or 94 percent of non-performing loans. Net charge-offs for the quarter were $34 million or 2 percent of average loans.
Dalhouse said Dominion's new strategic restructuring proceeded on schedule during the first quarter.
Dominion's five former Virginia banks were consolidated at Roanoke, resulting in an $8 billion organization with an equity base of $443 million. It serves 200 offices throughout the state.
Dalhouse said about two-thirds of anticipated staff reductions have been made, and the rest will be made in the next few months. The company is eliminating about 550 positions statewide.
But Dalhouse told the stockholders that the addition to its operations center at Hollins should be almost completely filled when it opens a few months hence.
So will the quarters it is leasing in the new Dominion Tower, under construction in downtown Roanoke. That's despite a decision to postpone moving the corporation's executive offices into the building until 1992.
Dalhouse said that's because the company is centralizing its operations in Roanoke, increasing its employment here. He also noted that the space is less expensive than offices formerly leased in other parts of the state.
His remarks prepared for the shareholder meeting centered around the corporate reorganization plan put into effect last year.
David Caudill, president of the holding company, said the decline in the stock price from last year's high of $20.25 a share to a record low this year of $4.88 a share reflected an industry-wide deterioration in credit quality and earnings.
Caudill said those factors were aggravated by short-selling, or speculative, programs by a number of brokerage and investment firms.
The bank believes, he said, "that the short-selling of our stock peaked at several times the normal position, representing not only an extremely pessimistic marketplace, but also creating a grossly exaggerated depressant on our stock price."
Caudill said institutional ownership of its 38 million outstanding shares peaked in the fourth quarter of 1989 at about 32 percent, then declined to an estimated 22 percent at the end of last year.
"But lower interest rates, renewed consumer confidence and expectations for a shorter, less-severe recession have provided renewed interest in bank stocks during the early months of this year," Caudill said.
Most regional bank stocks bounced back from their January lows, he said, with Dominion trading recently at about $9 a share.
by CNB