Signet's earnings rose 17% in quarter 52 cents a share disappoints some

Banking

April 19, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

A surge in consumer loans helped push Signet Banking Corp.'s first-quarter net income up 17 percent, the Richmond, Va.-based company said yesterday.

Signet reported net income of $31.2 million, or 52 cents a share for the quarter ended March 31, compared with $26.7 million, or 45 cents a share for the first quarter of 1995.

Analysts weren't bowled over by the numbers, even though the $12 billion-asset banking company's overall profitability ratios were good.

"It was an OK number," said Michael Coiro, an analyst with Johnston, Lemon & Co. in Washington. "It wasn't bad."

Mr. Coiro said he had expected Signet to earn $2.40 a share for 1996, instead of the $2.08 pace the company is on. He said he will likely reduce his estimates.

"There are just a couple of trends that lead me to believe their earnings growth will be a little bit slower," he said. "Commercial loan growth wasn't quite as attractive as I had hoped."

Commercial loans grew to $3 billion, up nearly 17 percent from a year ago, but they were flat from the prior quarter ended Dec. 31. Average loans fell 4.1 percent to $5.6 billion in the 1996 quarter from a year ago.

But the company had dramatic growth in its "managed" consumer loan portfolio, which grew $352 million in the quarter and was fueled by its "loan by check" product.

Signet began test-marketing loan by check in 1994, which a consumer receives in the mail for a certain amount that can be used with no questions asked. Recipients who use the money repay the bank with interest.

Robert M. Freeman, Signet's chairman and chief executive, said "stepped-up marketing of our consumer loan by check contributed to substantial growth in the loan portfolio during the quarter."

However, Mr. Freeman said the product's growth will slow in the coming months as the company assesses the economy.

Moshe A. Orenbuch, a banking analyst with Sanford C. Bernstein & Co. in New York, said the move is a prudent one.

"They are making sure they don't get caught up in the overall consumer debt problems" that have hurt other banks, Mr. Orenbuch said.

Signet wrote off $14.5 million in loans in the quarter and said nonperforming assets dropped $7 million to $47.2 million.

Signet restated its 1995 earnings earlier this month to reflect a pretax $35 million charge related to an alleged loan scheme that bilked Signet and six other banks out of $323.5 million.

Signet said the write-off decreased its 1995 earnings by 17 percent to $111 million, or $1.86 a share. The bank had reported earnings of $133.8 million, or $2.24 a share, in January.

Mason-Dixon Bancshares

Fast-growing Mason-Dixon Bancshares Inc. earned $2.1 million in the first quarter, up 28 percent from a year ago, the banking company said yesterday.

Earnings per share were 39 cents in the quarter ended March 31, 1996, compared with 37 cents in the first quarter of 1995.

The Westminster-based company's assets rose 52.9 percent to $794.8 million, in part because of its acquisition of Towson-based Bank of Maryland. Mason-Dixon's loans grew 81 percent to $351.8 million, and deposits were up nearly 60 percent to $613.3 million.

Mason-Dixon is the parent company of Carroll County Bank and Trust in Westminster and Bank of Maryland. The subsidiaries operate 22 banking offices.

Pub Date: 4/19/96

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