Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 17, 1991 TAG: 9104170392
SECTION: VIRGINIA PAGE: A/1 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Medium
The Roanoke-based banking company returned to profitability in the period, reporting net income of $5.5 million, or 14 cents per share. It was the first gain for the bank since the second quarter of 1990.
Dominion had a loss of $14 million, or 38 cents per share, during the same period last year. For 1990 as a whole, Dominion lost $37 million, or $1.02 per share.
The company earned 60 cents per share in the first quarter of 1989.
After the profit was announced, the price of a share of Dominion stock rose 38 cents, from $8.88 at the close Monday to $9.25 at Tuesday's closing. Richard Wertz, assistant manager at A.G. Edwards & Sons in Roanoke, said volume was 169,700 shares, which is high for Dominion.
Dominion shareholders filled Mill Mountain Theatre for the bank's annual meeting Tuesday. But the only non-management speaker was Sam Nackley of Roanoke, who urged directors to cut management salaries - as they had cut the dividend - by half. Nackley said he and his family own nearly 5,000 shares.
Chairman Warner Dalhouse replied that the company's 36 principal officers had taken pay cuts of 18 to 20 percent and that he received 21.5 percent less pay last year than the year before.
The bank said 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.'s assessment for deposit insurance and an increase in costs related to handling problematic real estate loans were partially offset by decreases in employee-related expenses and marketing costs.
"There were not any real surprises in the numbers," said Guy W. Ford, who follows Dominion for Scott & Stringfellow Investment Corp. in Norfolk.
Non-performing assets remained at "uncomfortably high levels," Ford said, "but the trend shows there is a slowing rate of increase." He said he was encouraged because the situation appears to have stabilized.
David West, industry analyst for Davenport & Co. in Richmond, said the Dominion report was "pretty much in line with what I was looking for," meaning a modest profit. West said the market is encouraged because Dominion more than earned its new dividend level of 11 cents per share.
Henry J. Coffey Jr., banking specialist with J.C. Bradford & Co. in Nashville, Tenn., said earnings were "in line with expectations." He had predicted a quarterly return of about 15 cents.
The fact that Dominion was able to keep non-performing assets to less than 10 percent was "very encouraging," he said.
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, which included formation of a single Virginia bank, restructuring of management along lines of business rather than geography.
Dominion kept costs down with a 10 percent reduction in employment and with a salary freeze. Earlier this year, directors also reduced the quarterly dividend, from 22 cents to 11 cents per share.
Dominion's balance sheet continued to reflect the economic downturn. 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, down 4.6 percent from a year earlier. However, deposits rose 3.8 percent over the year, to $8 billion.
At the end of the quarter, non-performing 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.
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 filled when it opens in a few months.
So will the quarters it is leasing in Dominion Tower, under construction in downtown Roanoke. That is despite a decision to postpone moving the corporation's executive offices into the building until 1992.
David Caudill, president of the bank holding company, said the decline in the stock price from last year's high of $20.25 per share to a record low this year of $4.88 reflected an industrywide 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.
by CNB