Signet blames loss on added reserves

January 22, 1992|By Timothy J. Mullaney

Signet Banking Corp. reported a $51.7 million loss in its fourth quarter as the bank followed through on a December promise to add an extra $165 million to loan loss reserves.

The Richmond, Va., bank holding company, which owns Signet Bank/Maryland, also said it plans to sell a quarter of its bad real estate assets this year.

The extra loan loss cushion caused the company to lose $1.91 a share, in the last three months of 1991. The quarter closed the books on a year in which the company lost $25.7 million, in contrast to a profit of $41.4 million in 1990.

"I didn't find anything notably different [in the announcement] than what we had been led to believe in December," said Anthony Davis, who follows Signet for Wheat First Securities Inc. in Richmond.

Signet's stock didn't react to the news because the results weren't announced until 4 p.m., as the market closed. The stock closed at $25.125 a share, up 12.5 cents.

Signet Bank/Maryland has $3.4 billion in assets and more than 90 branches in the state.

Signet also said it would try to close out $400 million of repossessed real estate and real estate-related loans this year -- by selling them, writing them down, or by having borrowers repay their loans.

That figure represents about 25 percent of Signet's total commercial real estate loans, which originally was split between construction loans and mortgages on commercial buildings, ,X Signet Treasurer David L. Brantley said. He said about half of Signet's $1.5 billion in real estate-backed loans and properties are related to projects in Maryland.

This year's planned $400 million asset sale is part of a plan to sell about half of the company's real estate assets, Mr. Brantley said.

"On a long-term basis, we're going to be much smaller in the real estate business," he said. Up to half the assets slated for weeding out are performing loans, he said, as the bank decides which developers it wants to deal with over the long haul and cuts out business people the bank thinks have weaker prospects -- even if they have paid their loans so far.

Mr. Brantley said the $165 million special addition to loan loss reserves raises Signet's total reserve to $329 million, or 99 percent of the current value of its non-performing assets. Overall, the company added $179.3 million to its reserves for possible loan losses during the quarter, including the special addition.

He said the bank thinks the reserve is big enough to cover any losses. The company might be willing to finance the sale of some properties to new developers, although "it's something we don't prefer to do," he said.

'Three months ending 12/31/91

.. .. .. .. .. .. .. Income.. .. .. .. .. .. Share

'91.. .. .. .. ..(51,692,000).. .. .. .. .(1.91)

'90.. .. .. .. .. 6,820,000. .. .. .. .. .. 0.26

% change.. .. .. .. .. N/A.. .. .. .. .. .. .. N/A

Assets Deposits

'91.. .. .. .. ..11,238,800,000.. .. .. 8,480,538,000

.. .. .. ..11,405,324,000.. .. .. 8,344,130,000

change.. .. .. .. .. -1.5.. .. .. .. .. .. .. +1.6

Twelve months ending 12/31/91

.. .. .. .. .. .. .. .Income.. .. .. .. .. .. .. Share

'91.. .. .. .. .. (25,747,000)... .. .. .. ..(0.95)

'90.. .. .. .. .. .41,378,000 .. .. .. .. .. ..1.56

% change.. .. .. .. .. N/A.. .. .. .. .. .. .. .. N/A

Loan portfolio

Three months ending 12/31/91

Loans outstanding Net charge-offs

'91 .. .. .. .. .. ..5,883,662,000.. .. .. Not announced

'90.. .. .. .. .. .. .6,444,990,000.. .. .. Not announced

% change.. .. .. .. .. ..-8.7.. .. .. .. .. .. .. . N/A

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.