Midsize Southeast Banks Thriving on the Basics

Loan growth and improved margins paved the way for solid first-quarter earnings at many midsize regional banks in the Southeast.

Compared to the superregionals, the smaller companies did less engineering with share buybacks, sticking to fundamental banking for their bottom-line results, said analysts.

"It's sort of what you see is what you get," said Anthony R. Davis, an analyst at Dean Witter Discover.

The upbeat earnings reports are good news for the rest of 1997, analysts said.

"It was another good quarter and an indication that the earnings momentum for this year for southeast banks is going to be pretty strong," said Kathryn H. Bissette, an analyst at Sterne, Agee & Leach Inc.

Birmingham, Ala.-based South-Trust Corp., with $27.4 billion of assets, reported net income of $70.9 million, up 23%. On a per share basis, net income of 72 cents was a penny below the consensus estimate. Interest income was up 26%, to $510.7 million.

At Southern National Corp. in Winston-Salem, N.C., which has $22.1 billion of assets, net income totaled $83.1 million, up 15.6%. Earnings per share of 74 cents were 2 cents above the consensus.

Southern National reported a 24% increase in noninterest income after a push to market insurance and investment products. Loans grew 8%.

Crestar Financial Corp., a $22 billion-asset company based in Richmond, Va., recorded net income of $71.8 million, up 10%. It earned 64 cents per share, a penny off the analysts' estimate.

Loans grew 3%, to $14.2 billion, while net interest income jumped 4%, to $222.2 million.

The $19.8 billion-asset Regions Financial Corp., Birmingham, Ala., earned $68.7 million, up 30%. Profits per share totaled $1.04, 1 cent below analysts' estimate.

Loans were up 19%, pushing total revenues up 13%.

Also based in Birmingham, Amsouth Bancorp. reported a 15.7% earnings gain, to $54.6 million. Earnings per share were 98 cents, 5 cents ahead of the estimate.

Solid revenue growth and cost containment characterized the quarter, as total loans grew 5%, to $12.1 billion. Net interest income was $167.2 million, up 6% before loan-loss provisions. Noninterest income totaled $63.7 million, up 15.7%.

In Memphis, Union Planters Corp. earned $59.2 million, a 25% gain. Earnings per share at the $14.9 billion-asset company were 84 cents, 3 cents above the consensus.

An increase in average loan volume of more than 8% fueled results. Net interest income increased 5.1%, to $155.3 million.

Another Memphis company, First Tennessee National Corp., earned $38.6 million, up 3%. Earnings per share of 60 cents met the analysts' estimate.

Net interest income increased 10%, to $116.6 million, while the net interest margin jumped to 4.24%, from 3.94%. Fee income grew only 2% but contributed 55% of total revenues.

Compass Bancshares, Birmingham, reported net income of $36 million, down 6% because of an extraordinary gain in the first quarter of 1996. On an operating basis, earnings were up 11%.

Profits of 56 cents per share were 1 cent below the consensus. Loan growth of 16% fueled operating earnings, while noninterest income increased 14%.

Signet Banking Corp., Richmond, earned $33.1 million, up 6%. Earnings per share of 54 cents were a penny above the estimate. Loans grew 7%, to $6.2 billion.

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