Crestar earns $82.7 million in 4th quarter for 17% gain 'Very acceptable' growth in consumer business, loans noted


January 15, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Crestar Financial Corp. said yesterday that it made $82.7 million in the fourth quarter as the Richmond, Va.-based banking company benefited from a steady stream of new loans and fees from services.

Crestar's earnings -- the equivalent of 75 cents a share for the period ended Dec. 31 -- were 17 percent higher than last year's fourth-quarter results of $70.7 million, or 63 cents a share, excluding a one-time charge of $32.5 million for the acquisition of Laurel-based Citizens Bancorp. After the charge, net income in the 1996 quarter was $38.2 million, or 34 cents a share.

"We saw good growth in our commercial businesses, we saw very acceptable growth in our consumer business, and we absolutely had what we feel are very good earnings," said Eugene S. Putnam Jr., Crestar's head of investor relations.

For the year, Crestar's net income was $309.8 million, or $2.80 a share, compared with net income of $218.3 million, or $1.97 a share, for the previous year.

Net income in 1996 was reduced by $43.4 million because of charges associated with the Citizens acquisition and a one-time charge for recapitalizing the savings and loan industry's insurance fund, the company said.

Crestar's share price rose 25 cents in trading yesterday to close at $54.375.

The company's earnings were on target with analysts' estimates.

"This is a quarter with very few surprises," said Sean Ryan, a bank analyst with New York-based Bear Stearns & Co. "I'd be surprised if there was a surprise."

Crestar fueled its net income with gains in service charges on deposits, new mortgage loans and profits from its private banking unit, which caters to wealthy individuals.

Total income from these and other areas that generate fee income jumped 50 percent in the quarter to $110.8 million from the same time a year earlier. For the full year, net interest income increased 26 percent to $421.4 million.

Loan demand was also strong as loans grew 12 percent to $15.7 billion in 1997.

"Twelve percent loan growth -- we would take that year in and year out," Putnam said.

Crestar is Virginia's largest independently owned banking company, with $24.9 billion in assets. It operates 566 banking offices in Virginia, Maryland and the District of Columbia.

In Maryland, Crestar has $6 billion in assets and 119 branches, including 35 that are under its Baltimore-based regional headquarters.

Crestar has built its Baltimore operations with several acquisitions in recent years, including Loyola Capital Corp., in 1995; Citizens in 1996; and American National Bancorp Inc. in 1997.

Although many midsize banks like Crestar have been sold in recent years because of intense competition and high prices offered by other institutions, Ryan sees little pressure on the company to relinquish its independence.

PTC "I think they hold their destiny in their hands," he said. "I don't think midsized banks like Crestar are under any strategic pressure to sell."

Pub Date: 1/15/98

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