Driven by good loan growth in its Florida markets and tight expense controls, Barnett Banks Inc. earned $125.4 million in the fourth quarter, up 11% from the year-ago period. Barnett's earnings of $1.21 per share beat Wall Street consensus estimates by one cent.

"They are a lot stronger than they look," said PaineWebber analyst Thomas D. McCandless. "It's pretty clear that after several years of declining revenues, they're on the verge of reaccelerating."

Revenues at the Jacksonville-based bank actually declined slightly in the fourth quarter, to $556 million, from $558 million in the third quarter. But all of that can be attributed to a $13 million securities loss, which reduced noninterest income.

Barnett, like many other banks, saw the value of its bond portfolio fall in the wake of last year's rising interest rates. Chief financial officer Charles W. "Chuck" Newman said Barnett sold $575 million of low-yielding bonds during the quarter in order to reinvest in higher-yielding instruments.

Securities losses are likely to be a major theme in bank earnings reports this quarter. SunTrust Banks Inc. revealed a minor $5 million portfolio loss on Tuesday, and other banks around the country have already said they will take larger hits.

Not including the securities loss, noninterest income at Barnett fell 3% to $142.7 million, from $147.7 million in the year-ago quarter. Mr. Newman attributed the shortfall to lower brokerage, trust, and mortgage banking fees.

Barnett's net interest margin fell 5 basis points from the third quarter to 4.80%. Mr. Newman said Barnett had been holding $2.8 billion in overnight-purchased funds, most of which ran off at yearend when the bank picked up $3.4 billion of cheaper deposits from an acquired thrift.

Another problem: Competitive pressures have held down loan yields in Florida at a time when deposit costs are rising, according to Mr. Newman.

Barnett's net interest income rose 3% from the year-ago quarter, to $426.2 million. Mr. Newman said the bank's loans, led by residential mortgages and automobile installment, grew 3% in the quarter, not including recent acquisitions.

Rigorous cost-cutting also helped, holding noninterest expense at $341.5 million, 5% below the 1993 level.

Net chargeoffs and the loan-loss provision both rose, by 49% and 36% respectively. But this reflected Barnett's decision to charge off three commercial real estate loans that had been reserved for in previous quarters. "It had no earnings impact," Mr. Newman said.

Meanwhile, Birmingham, Ala.-based SouthTrust Corp. said it had earned $45.4 million in the quarter, up 15% from $39.4 million in the year-ago period. SouthTrust, which has $16 billion of assets, also reported a record 1994, with full-year earnings of $173 million, up 15% from 1993. +++ Barnett Banks Inc. Jacksonville, Fla. Dollar amounts in millions (except per share) Fourth Quarter 4Q94 4Q93 Net income $125.4 $113.3 Per share 1.21 1.08 ROA 1.28% 1.22% ROE 16.66% 16.51% Net interest margin 4.80% 4.98% Net interest income 426.2 413.9 Noninterest income 129.8 147.0 Noninterest expense 341.5 359.2 Loss provision 25.6 18.9 Net chargeoffs 43.9 29.4 Full Year 1994 1993 Net income $488.0 $421.0 Per share 4.66 4.01 ROA 1.28% 1.13% ROE 16.70% 16.02% Net interest margin 4.87% 5.07% Net interest income 1,677.5 1,700.3 Noninterest income 542.6 599.0 Noninterest expense 1,364.2 1,501.0 Loss provision 74.0 120.4 Net changeoffs 92.3 141.8 Balance Sheet 12/94 12/93 Assets $41,278 $38,331 Deposits 35,109 32,634 Loans 28,521 25,930 Reserve/nonp. loans 250% 171% Nonperf. loans/loans0.70% 1.18% Nonperf. assets/assets0.70% 1.19% Leverage cap. ratio 6.97% 7.29% Tier 1 cap. ratio NA NA Tier 1+2 cap. ratio NA NA ===

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