Securities losses and other charges hammered earnings at Central Fidelity Banks Inc., which lost $1.4 million in the fourth quarter, compared with a gain of $25.7 million a year earlier.
Analysts had anticipated a $29 million securities hit. But Central Fidelity's earnings per share of negative 4 cents still came in lower than Wall Street expected, because of about $7 million in charges.
"It was an effort on their part to clean all the skeletons out of the closet so that they could position themselves for a rebound in 1995," said analyst Vernon Plack, with Richmond, Va.-based Scott & Stringfellow Inc. "It makes perfect sense. No one really expected a lot out of them in the fourth quarter."
Like so many banks across the country, Richmond-based Central Fidelity was forced to restructure its securities portfolio in the face of rising interest rates. It sold $500 million of low-yielding fixed-rate securities during the fourth quarter in order to reinvest the proceeds in higher- yielding adjustable-rate instruments, producing a $28.7 million loss.
But Central Fidelity also took $7.4 million in nonrecurring charges during the quarter to cover a potpourri of items: foreclosed real estate, a franchise tax adjustment, and employee relocations.
Central Fidelity reported full-year earnings of $85 million, or $2.17 a share, down 17% from 1993's $103 million. This unfortunate performance ends 19 years of consecutive earnings gains at the $10 billion-asset bank.
Something similar occurred at First Virginia Banks Inc., which suffered from margin tightening toward the end of the year. Earnings at the Falls Church-based bank declined for both the quarter and the year, breaking a three-year streak of record profits.
First Virginia, with $8 billion in assets, reported $27.8 million in fourth-quarter net income, down 4% from the year-ago period. Earnings per share of 88 cents were 2 cents below consensus estimates.
For the year, First Virginia earned $113.2 million, a 2% drop from 1993's $116 million, which included special gains from the sale of securities and mortgage servicing rights.
BB&T Financial Corp. and Southern National Corp. released earnings Wednesday, one day after the Federal Reserve Board approved the merger of the two North Carolina-based banks, which is scheduled to close on Feb. 28.
BB&T and Southern National reported both their individual and joint earnings. Wilson-based BB&T earned $32.3 million in the fourth quarter, or 88 cents a share, up 19% over the year-ago quarter. Southern National, Winston-Salem, reported $28.7 million in net income, or 59 cents a share, compared with a $61.4 million merger-related loss in 1993's fourth quarter.
When combined, BB&T and Southern National will form a $19.8 billion- asset company under the Southern National name. Assuming the merger had taken place in the fourth quarter, unaudited calculations show the "new" Southern National would have closed the year with earnings of $236 million.
Rising interest rates provided a boost to earnings at Deposit Guaranty Corp., Jackson, Miss., which posted a $2.5 million gain on the sale of securities and an improved net interest margin in the quarter. Net income rose to $18.6 million, up 13% from $16.4 million in the year-ago quarter.
Deposit Guaranty, which has $5.1 billion of assets, also benefited from a negative loan-loss provision of $1.4 million.