Crestar earnings rise 65% to record 71 cents a share in third quarter


October 10, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

Crestar Financial Corp.'s net income rose to a record $79.5 million in the third quarter, boosted by lower expenses, fewer problem credit card loans and several business lines that produced steady profits, the company said yesterday.

The company earned 71 cents a share in the quarter ended Sept. 30, up 65 percent, compared with 43 cents a share for the corresponding time a year earlier.

Crestar's net income for the first nine months of the year was $227.1 million, or $2.03 a share, compared with $180.1 million, or $1.61 a share.

Net income in the 1996 third quarter, however, was reduced by $10.9 million because of two one-time events. Excluding them, net income for the third quarter and first nine months of 1997 was up 35 percent and 19 percent, respectively.

"There were some highs and lows" in the quarter, said Edward R. Najarian, a banking analyst with Richmond, Va.-based Wheat First Butcher Singer. He said the company controlled expenses and reduced credit card problems, but revenue growth was "tepid."

Revenue grew to $313.3 million, up 5.8 percent in the quarter from the year-earlier period.

Najarian expects revenue to pick up in the fourth quarter as Crestar continues to cut bad credit card loans and reduces the number of high-priced certificates of deposit it acquired in a recent bank acquisition.

"We feel pretty good that this company is well positioned to continue to improve the bottom line with earnings growth of maybe another 3 cents for the fourth quarter," Najarian said.

Shares of Crestar dropped 31 cents yesterday, to $46.875.

Crestar is Virginia's largest independently owned banking company with $23.1 billion in assets. It operates 481 banking offices in Virginia, Maryland and the District of Columbia.

In Maryland, it has 115 branches and about $6 billion in assets. It operates 35 branches in the Baltimore region.

It has been building its Baltimore presence by acquiring Loyola Capital Corp., the city's largest savings and loan with $2.5 billion in assets, late in 1995. And in December, it snapped up Citizens Bancorp. of Laurel, which had $4.2 billion in assets. Last June, it agreed to buy American National Bancorp Inc., a Baltimore savings and loan with $505 million in assets.

Net income in the third quarter was driven by gains from service charges on deposit accounts, which brought in $30.9 million in interest income, up 6 percent from the year earlier; trust and investment advisory income, $19.3 million, up 15 percent; and mortgage income, $10.5 million, up 115 percent.

Crestar's assets rose 3 percent; loans grew 8 percent to $14.7 billion; and deposits fell 3 percent to $16.1 billion.

Crestar wrote off $16.9 million in credit card loans in the quarter, down 19 percent from $20.8 million in credit card loans it wrote off a year earlier.

Expenses fell 3 percent in the quarter to $172.5 million.

Pub Date: 10/10/97

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