Amid the opulent surroundings of the Engineering Society's mansion on Mount Vernon Place, officials of Signet Banking Corp. talked about the hard times in the world of money.
"1990 was certainly not a pretty year," Robert M. Freeman, chairman and chief executive officer of Signet, said at the company's annual meeting yesterday.
During 1990, Signet, a bank holding company, saw its net income plummet by 66.4 percent to $41.4 million, or $1.56 a share.
This earnings decline continued into the first quarter of this year when net income dropped by 76.4 percent to $6.4 million, or 24 cents per share.
Still, unlike some other banks whose earnings also declined, Signet continued to be profitable.
Yet, Freeman said the company has taken the necessary steps to stem the damage from a souring real estate market and a poor economy.
"I think we are well on course as we wade through this difficult lending environment," he said.
The bank's strategy for dealing with the downturn includes controlling costs, aggressive deposit promotions, the addition of new credit card accounts, reducing the bank's workforce and cutting its dividend from 29 cents to 20 cents a share.
Of Richmond-based Signet's 234 branches, 92 are in Maryland and the remainder in Virginia and Washington.
As with other banks, the slump in the commercial real estate market is the main reason for Signet's plight.
Bad commercial real estate loans accounted for 73 percent of Signet's non-performing and foreclosed properties at the end of last year.
The figure was 76 percent by the end of the first quarter.
The biggest concentration of these loans are in the Washington metropolitan area, Freeman said.
In 1988, there were indications that the commercial real estate market was overheated and Signet put a cap on the amount of such loans it was making, Freeman said.
While this spared Signet some of the anguish experienced by other banks, the company still had a significant commercial real estate portfolio.
"We took the right action, but it was too late," Freeman said after the meeting.
As part of its effort to cut costs, Signet has reduced its workforce from 6,700 to 5,800 since 1988.