THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, April 13, 1995 TAG: 9504130382
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 61 lines
Bolstered by strong loan demand, Crestar Financial Corp. and First Union Corp. reported improvements in their net income for the quarter ended March 31.
However, Central Fidelity Banks Inc. said its profits for the January-through-March period tumbled 12 percent, partly because the spread between the cost of its funds and the yield on loans and investments had narrowed.
Crestar, the Richmond-based parent of Crestar Bank, said its net income for the recent quarter rose 11 percent to a record $45.09 million, or $1.18 a share, because of robust loan growth, a wider net interest margin and stringent control of expenses.
In the year-earlier period, it earned $40.48 million, or $1.07 a share.
Crestar's first-quarter results were better than expected because the company held down the cost of its deposits and reduced its non-interest expenses, said Merrill Ross, a banking analyst with the securities firm Wheat First Butcher Singer.
Ross said she was surprised at the 3 percent reduction in Crestar's non-interest expenses because it materialized during a quarter in which the company acquired three financial institutions.
Helped by a 19 percent increase in net loans, Crestar's net interest income for the first quarter grew 8 percent.
The company's return on average assets, a widely used yardstick of bank profitability, was 1.30 percent, up from 1.22 percent for the comparable period in 1994.
Meanwhile, Charlotte-based First Union said its first-quarter net income rose 6.5 percent, partly because of greater non-interest income from mortgage banking and capital management.
First Union's net income for the recent quarter totaled $236.91 million, up from $222.46 million in the year-earlier period.
Per-share earnings were $1.32, up from $1.27.
At Central Fidelity, net income for the first quarter dropped to $25.72 million from $29.29 million in the March 31 quarter of 1994. Earnings per share were 65 cents, down from 75 cents.
Richmond-based Central Fidelity said strong growth in consumer loans fueled an 18 percent increase in loans. However, its net interest margin, on a tax-equivalent basis, narrowed to 3.64 percent in the recent quarter from 4.03 percent in last year's first quarter.
Meanwhile, income from fees and other non-interest sources plunged 49 percent, Central Fidelity said. That was because its income for the first quarter of 1994 included an $11.4 million gain on the sale of credit-card receivables and $6.4 million of gains on sales of securities, the company said.
One contribution to Central Fidelity's first-quarter results was a 12 percent reduction in non-interest expenses. However, its return on average assets still dropped to 1.03 percent from 1.28 percent for the comparable three months of 1994. by CNB