THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, April 28, 1995 TAG: 9504280498
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Short : 41 lines
Blaming a smaller spread between the cost of funds and the yields on its loans and investments, Bank of Suffolk said its net income for the March 31 quarter fell almost 14 percent.
The Suffolk bank said it earned $293,000 in this year's January-through-March period, down from $339,000 in the comparable three months of 1994.
Per-share earnings fell 33 percent to 32 cents from 48 cents because the bank had more shares outstanding during the recent quarter.
The Suffolk bank's earnings contrasted with the first-quarter results at several other Hampton Roads banks, where earnings were bolstered by strong loan demand and smaller provisions for loan losses.
The Bank of Suffolk's largest source of earnings, its net interest income, rose 5 percent to $956,000 in the recent quarter. However, its income from non-interest sources tumbled 39 percent to $44,000 from $72,000 in the year-earlier period.
The bank attributed part of the decline in net interest income to a narrower spread between the cost of funds and the yield on its loans and investments. Its net interest margin, a measure of this spread, dropped to 4.31 percent in the latest period from 4.41 percent in the comparable three months of 1994.
The bank also said it decided to take some losses on investment securities during the quarter so it could reinvest those funds at higher yields. Like many banks and thrifts, the Bank of Suffolk's portfolio of investment securities was hurt last year by steadily rising interest rates, which reduced the value of securities.
The bank's return on average assets, a yardstick for bank profitability, was still a respectable 1.33 percent for the quarter. This was down from an unusually high 1.63 percent return in the first quarter of 1994. by CNB