A headline in last Wednesday's Sun incorrectly indicated that earnings at First Maryland Bancorp. had plunged in the quarter ended Sept. 30. Actually, the holding company's operating income was up slightly from 1989 levels.
Third-quarter earnings were down at three banking companies that control some of Maryland's biggest banks, the three companies said yesterday.
Earnings at Richmond, Va.-based Signet Banking Corp., C&S/Sovran Corp., based in Atlanta, and First Maryland Bancorp, of Baltimore, were all down. First Maryland, however, came the closest to matching its 1989 third-quarter performance.
The three companies cited different reasons for the earnings decline.
* Signet Banking Corp., the parent of Signet Bank of Maryland, said it earned $4.5 million, or 17 cents a share, in the quarter that ended Sept. 30. That's down 83.8 percent from a $27.8 million profit in the third quarter of 1989.
FOR THE RECORD - CORRECTION
.` Signet blamed real estate loan
problems. The company added $24.7 million to its reserves against loan losses and classified $67 million in assets as non-performing. Most of the newly non-performing assets represent loans whose payments are more than 90 days past due.
* C&S/Sovran Corp., parent of Sovran Bank of Maryland, said it earned $30.2 million, or 23 cents a share in the quarter. The company, which was formed by the Sept. 1 merger of the Citizens & Southern Corp. and Sovran Financial Corp., said its comparable earnings from the third quarter of last year were $126.9 million, or 94 cents a share.
C&S/Sovran blamed the merger. The company took $90 million in non-recurring charges during the quarter. "Substantially all of the restructuring costs result from the integration of the two companies," C&S/Sovran Chairman Bennett A. Brown said. "The payback from these actions [will be] impressive."
* First Maryland said it earned $16.3 million during the quarter, down from $19.9 million in the same quarter a year ago. First Maryland, parent of First National Bank of Maryland, said business was pretty good during the quarter -- its earnings only fell because it had a non-recurring $4 million gain in the third quarter of 1989. Other than that, earnings rose slightly. First Maryland does not report its earnings on a per-share basis because its shares aren't publicly traded. It is owned by Allied Irish Banks PLC of Dublin.
The results at C&S/Sovran and Signet were below analysts' forecasts, but Wall Street paid the news little heed. Each stock fell 12.5 cents yesterday in New York Stock Exchange trading, Signet closing at $9.75 a share and C&S/Sovran at $16.375 a share.
The small dips in the stocks were mildly surprising. Analysts' estimates of Signet's likely earnings had ranged from 35 cents to $1.04 a share and averaged 81 cents instead of the 17 cents reported yesterday; estimates of C&S/Sovran's likely earnings ranged from 31 cents to $1.25 a share, with an average estimate at 98 cents, instead of the 23 cents reported.
What analysts call "downside surprises" are often punished by sharper stock drops. But Kyle Prechtl Legg, a banking analyst at Alex. Brown & Sons Inc., said Signet's stock was hurt less because investors knew the situation with its real estate loans was uncertain.
Ms. Legg said she had been estimating that Signet would earn 50 to 55 cents a share for the quarter, but
recently she had told clients she was doubtful earnings would be that high.
Among the three banks, only Signet reported major additions in its delinquent loans. Ms. Legg called the company's $67 million increase in non-performing assets "pretty hefty."