Crestar reports a record quarter Stock buyback also announced

July 12, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Crestar Financial Corp. earned a record $56.7 million in the second quarter, and the Richmond-based company said yesterday that it will buy back 3.4 million shares of its stock.

Crestar earned $1.31 a share in the quarter ended June 30, vs. $1.18 a share in the same quarter in 1995.

Earnings were bolstered by gains from securities sales as well as from fees generated from mortgages and consumer deposit accounts.

"I think the quarter was a good quarter," said Eugene S. Putnam Jr., head of investor relations with Crestar.

"It was viewed positively by Wall Street. We were only down an eighth while the market was trampled."

Crestar's shares closed at $52.75, down 12.5 cents in a day when both banking issues and stocks in general were pounded.

Crestar, which has $18.5 billion in assets, earned $112.2 million for the first half of the year, up 11 percent from the same period in 1995. Earnings per share were $2.58 compared with $2.32 in 1995.

Richard G. Tilghman, Crestar's chairman and chief executive, said in a release that the company is seeing improvement in consumer credit quality. He said he believes that credit card delinquencies are at or near a peak.

Although the banking industry has been churning out record profits, more and more consumer loans, especially credit cards, are not being paid back on time.

Crestar's troubled assets declined by 9 percent, to $88.8 million, in the second quarter of 1996, down from $97.7 million at the corresponding time a year ago.

The company, however, wrote off $23.8 million in bad loans in the second quarter, of which $20.2 million involved credit card loans. The amount written off in the quarter nearly doubled the $12.3 million written off in the second quarter in 1995.

Vernon Plack, a banking analyst with Scott & Stringfellow, a Richmond-based brokerage firm, said Crestar's performance was solid, but not "flashy."

"They are managing their expenses very well," he said. "Business has been good."

Expenses were up 3 percent in the second quarter of 1996 to $158.7 million because of increased commissions paid for mortgage originations and Crestar's acquisition of 10 Mellon Bank branches in the first quarter.

Crestar has been an active buyer in Virginia and Maryland. It got a foothold in Baltimore last year when it acquired Loyola Capital Corp., the city's last large savings and loan, with $2.5 billion in assets.

As are other banks, Crestar is awash in capital and is looking for ways to leverage the funds. The company said it will buy back 3.4 million shares over the next 18 months because its capital base is growing, and loans, in part, are not keeping pace.

Total loans slipped 4 percent to $11.4 billion for the first half of 1996 from the corresponding period in 1995.

Pub Date: 7/12/96

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