Signet, Provident close books on prosperous '92

January 21, 1993|By David Conn | David Conn,Staff Writer

Signet Banking Corp. and Provident Bankshares Corp. joined their money-center brethren yesterday in reporting sharply higher earnings and improved asset quality, wrapping up one of the best years in the industry's history.

Banks in the Baltimore-Washington area, like many others, were enjoying a double shot of good news as both lower interest rates and a gradually improving economy returned them to mostly good health.

MNC Financial Inc.'s news Tuesday that its earnings far surpassed analysts' expectations was followed by reports nearly strong yesterday from Richmond-based Signet and Baltimore's Provident. Signet also announced an increase in its quarterly dividend.

"Some of the numbers are just really extraordinary," Legg Mason Inc. analyst David B. Sochol said of the region's banks. "They're all benefiting from the lower deposit costs, higher margins, lower costs from asset quality."

Bankers at some point, however, must wean themselves from safe U.S. securities and begin trying to make money from commercial loans, Mr. Sochol pointed out. "Everyone's hoping and praying for the seamless and smooth transition from investment securities to loans," he said.

Signet, after spending more than a year on its Accelerated Real Estate Asset Reduction Program, reported fourth-quarter earnings of $31.8 million, or $1.13 a share, in contrast to a loss of $51.7 million, or $1.91 a share, a year earlier.

For all of 1992, the company earned $109.2 million, or $3.92 a share, in contrast to a loss of $25.7 million, or 95 cents a share, in 1991.

Profits in both periods were about 10 cents a share more than analysts expected.

At the same time, nonperforming assets fell nearly by half, ending the year at $181.1 million, or 1.5 percent of the total $12.1 billion in assets. The company has 236 offices in Virginia, Maryland and Washington.

More than anything else, the 92 percent drop in the amount added to loan-loss reserves, to $14 million from $179 million a year ago, contributed to the turnaround.

"In addition to the benefits received from the significantly lower level of nonperforming assets, Signet's performance reflected improved net interest margins, growth in noninterest sources of revenue and expense control," Chairman and Chief Executive Officer Robert M. Freeman said in a statement.

For Provident, a 154 percent increase in fourth-quarter earnings also came from healthier assets and from lower interest rates. Much of those gains, however, were offset by higher operating expenses, some of which came from a mortgage company acquisition last year, and by lower noninterest income.

The company earned $1.6 million, or 25 cents a share, in the fourth quarter, compared with $626,000, or 10 cents a share, a year ago. For the full year, Provident earned $4.2 million, or 67 cents a share, representing a 45 percent increase over 1991 profits of $2.9 million, or 48 cents a share.

Nonperforming assets fell 54 percent in '92, to $15.7 million, and the bank reduced its loan-loss provision to $1.7 million in the fourth quarter, from $11.5 million in '91.

Provident's board yesterday also raised the company's quarterly dividend to 6 cents a share. It was cut in half, to 5 cents, in April 1991. The new dividend will be paid Feb. 12 to stockholders of record on Feb. 1.

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