THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, July 14, 1994 TAG: 9407140701
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: By TOM SHEAN, STAFF WRITER
LENGTH: Medium: 67 lines
Two major banking companies in Virginia - Crestar Financial Corp. and Central Fidelity Banks Inc. - reported record second-quarter profits Wednesday, reflecting robust loan growth and reduced amounts of foreclosed real estate on their books.
Crestar, the Richmond-based parent of Crestar Bank, said its net income for the three months ended June 30 jumped to $42.6 million, a 27 percent increase from $33.7 million in the comparable quarter in 1993. Per-share earnings were $1.12, up from 88 cents in last year's second quarter.
Central Fidelity Banks said it earned $29.58 million in the April-through-June period, a 12 percent increase from $26.32 million in the second quarter of 1993. Earnings per share rose to 76 cents from 68 cents.
The earnings of both companies met analysts' expectations for the recent quarter, said David West, a banking analyst with the securities firm Davenport & Company of Virginia.
However, neither Crestar nor Central Fidelity broke out the results of their mortgage-lending activities, which probably suffered during the quarter as interest rates rose, West noted.
Crestar's shares closed Wednesday at 46 5/8, up 5/8, while Central Fidelity's stock advanced 1/8 to 32 1/4.
Crestar's net interest margin - a measure of the spread between a bank's cost of funds and the yield on its loans and investments - increased slightly to 4.76 percent from 4.73 percent in the year-earlier quarter. However, the company's net loans grew 19 percent to $8.36 billion from $7.01 billion at mid-1993.
Crestar's return on assets, a yardstick of bank profitability, was 1.25 percent for the recent quarter, up from 1.09 percent for 1993's second quarter.
Non-performing assets - the combination of troubled loans, rescheduled loans and foreclosed real estate - dropped to $1.04 million, or 1.19 percent of loans and foreclosed properties, from $162.8 million.
In addition, Crestar reduced the expense for maintaining its foreclosed properties to $884,000 in the latest quarter from $19.21 million in the 1993 second quarter.
``Crestar absorbed an Annapolis, Md., thrift and still showed a general improvement in their non-performers,'' West said.
In June, Crestar bought Annapolis Bancorp Inc., a thrift holding company with $300 million of assets, including $9.3 million of non-performing assets.
Central Fidelity, the Richmond-based parent of Central Fidelity Bank, said its return on average assets for the recent quarter rose to 1.26 percent from 1.19 percent in the year-earlier quarter.
However, Central Fidelity's net interest margin dropped to 3.85 percent from 4.13 percent in the 1993 second quarter. The decline reflected the company's use of more interest-sensitive borrowed funds and aggressive pursuit of new loans, said West.
Central Fidelity's loans jumped 27 percent from mid-1993, but its net interest income, the principal source of its earnings, slipped 1 percent from last year's second quarter.
Its second-quarter net income benefited from a smaller provision for loan losses. Central Fidelity's provision dropped in the recent quarter to $2.3 million from $12.51 million in the comparable period last year.
KEYWORDS: CRESTAR FINANCIAL CORP.
CENTRAL FIDELITY BANKS INC.
by CNB