THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, October 19, 1994 TAG: 9410190395
SECTION: BUSINESS PAGE: D01 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 54 lines
Signet Banking Corp.'s earnings plunged 92.4 percent in the third quarter as it took special charges to prepare for the restructuring that will break off its profitable credit card operation.
The special charges amounted to $82.6 million to pay for previously announced layoffs and consolidations as well as buy out certain data processing contracts in the credit card business.
The Richmond-based banking company said that if it hadn't taken the charge, it would have earned $57.2 million, or 98 cents per share, in the third quarter, an increase of 25 percent from the year-earlier period.
The banking company will take an additional $8 million to $10 million of charges in the fourth quarter to cover the consolidation of office space in Richmond, Washington and Baltimore, a spokeswoman said.
Signet said Tuesday that it made $3.5 million, or 5 cents per share, in the quarter ended Sept. 30, down from $45.8 million, or 80 cents per share, last year.
Signet operates three banks with 250 branches in Virginia, Maryland and Washington. It has 27 branches in Hampton Roads. It had assets of $11 billion on Sept. 30, down from $11.7 billion a year ago.
Signet announced in July that it would spin off part of its profitable credit card operation to shareholders. Signet has named its proposed credit card spinoff Capital One Financial Corp. and expects to spin the unit off in the first quarter of 1995.
At the time it also announced a restructuring of its core banking operation to improve its profitability. The restructuring entailed eliminating 800 of 6,000 jobs before the end of 1994 and 200 more jobs in 1995.
Signet said in July it would take a substantial charge to third-quarter earnings to cover the cost of the restructuring and the spinoff. Part of the charge will go to pay for early-retirement offers and other employee-severance programs.
``These special pre-tax charges will launch our program to improve profitability and increase operating efficiency,'' said Robert M. Freeman, Signet chairman and chief executive, in a prepared statement.
``Independent of these special charges,'' Freeman added, ``the fundamentals of the company were encouraging.''
He cited consumer loan growth, an increased net interest margin and reductions in the bank's portfolio of bad loans and foreclosed real estate.
The stock market, anticipating the charges, hardly reacted. In trading on the New York Stock Exchange, Signet's stock rose 1/8 to $34 a share.
KEYWORDS: SIGNET BANKING CORP.
by CNB