ATLANTA -- The earnings season eased smoothly into gear on Monday as five southeastern bank companies reported record quarterly gains while a sixth had its best quarter in more than two years.
Barnett Banks Inc., the nation's 18th-largest bank company, reported a 66% second-quarter gain over the year-earlier period to $104.2 million, or 99 cents a share.
Stock Gets a Boost
Propelled by cost cutting and improved credit quality, the Florida company bettered analysts' consensus estimate by 6 cents a share, according to First Call.
In afternoon trading, Barnett's stock rose 62.5 cents a share to $50.375.
Several smaller companies also reported strong quarters as credit costs and overhead shrank, compensating for commercial loan demand that remained sluggish.
SouthTrust Corp., the Birmingham, Ala.-based company with $13.7 billion of assets, said net income soared 36% to $37.2 million during the second quarter. Its Birmingham neighbor, $11.1 billion-asset Amsouth Bancorp., earned $35 million, up 41% from the second quarter of 1992.
First Virginia Banks Inc., a Falls Church-based company with $6.9 billion of assets, earned $29.2 million in the quarter, up 22% from 12 months earlier.
18% Rise for Synovus
Synovus Financial Corp., a Columbus, Ga.-based community-bank holding company with $5.4 billion of assets, reported an 18% jump to $17.9 million.
In New Orleans, Hibernia Corp. said it restored its earnings to a level last seen in 1990. The company, which has $4.7 billion of assets, reported a profit of $11.5 million, up from a slim $587,000 a year earlier.
Shares of SouthTrust rose 12.5 cents to$22.125, while Amsouth lost 87.5 cents to $35.875 a share.
First Virginia jumped 50 cents to $40 a share, while Synovus gained 12.5 cents to $18.625 a share in late afternoon trading.
BARNETT BANKS INC.
The Jacksonville, Fla.-based company has been preaching an expense-control story, and more than fulfilled its promise. Non-interest expense fell 9% to $378.5 million, from $418 million in last year's second quarter, mostly due to staff reductions and fewer writedowns of foreclosed commercial real estate.
Barnett had previously told analysts it was ahead of schedule on realizing cost savings from its recent merger with First Florida Banks Inc. The company has eliminated 2,700jobs among the two banks in the past 12 months, including 331 positions since March. It now has 19,006 employees.
Barnett also cut the two banks' branch system to 633 outposts from 742 at the time of merger.
The company's credit quality also continues to rebound. Barnett's loan-loss provision of $34.5 million was 20% lower than the $43.2 million set-aside in the first quarter, while net chargeoffs dropped 32% from the first quarter, to $34.5 million.
An aggressive markdown of nonperforming real estate allowed Barnett to sell $48 million of foreclosed properties during the second quarter, up from sales of $27 million during the first quarter.
Nonperforming assets fell 13% to $684 million during the second quarter.
Net interest and noninterest income remained healthy. Barnett's net yield on earning assets rose to 5.10% from 5.02% a year earlier. Noninterest income inched up 4% to $153 million.
Loans and deposits, however, continued to erode. Loans fell 3% to $26.2 billion from $27 billion in the year-ago quarter, while deposits fell a seasonal 2% to $32.4 billion, reflecting the summertime migration of many Florida residents to their homes in the north.
Barnett is pursuing a a "deliberate strategy" of repricing commercial credits and deemphasizing commercial realty lending, said the company's controller, Pat McCann, in explaining the loan drop.
Small Business, Consumers
He added that Barnett's strategy is to focus more on higher-margin small-business and consumer loans.
"We're focusing on trying to profitably price the relationships that we already have and that we're entering into," Mr. McCann said.
Barnett said its small-business lending initiative, begun last year, produced $80 million in loans in the first half
But it has not been enough to replace runoff elsewhere in the commercial portfolio, Mr. McCann said.
"Corporate customers are either paying down debt or able to find cheaper sources of funding," Mr. McCann said.Barnett Banks Inc.Jacksonville, Fla.Dollar amounts in millions (except per share)Second Quarter 2Q93 2Q92Net income $104.2 $62.6Per share .99 0.60ROA 1.11% 0.66%ROE 15.51% 10.07%Net interest margin 5.10% 5.02%Net interest income 427.9 428.1Noninterest income 152.5 146.3Noninterest expense 378.5 418.0Loss provision 34.5 51.6Net chargeoffs 34.5 55.2Year to Date 1993 1992Net income $196.5 $130.2Per share 1.87 1.26ROA 1.04% 0.69%ROE 14.83% 0.68%Net interest margin 5.11% 5.00%Net interest income 864.7 849.5Noninterest income 301.0 287.3Noninterest expense 773.3 818.2Loss provision 77.7 127.7Net chargeoffs 85.0 122.5Balance Sheet 6/39/93 6/39/92Assets $37,255.2 $37,723.0Deposits 32,416.1 33,062.4Loans 26,199.3 26,978.3Reserve/nonp. loans 134% 90%Nonperf. loans/loans 1.40% 2.36%Nonperf. asset/asset 1.84% 2.78%Leverage cap. ratio 6.73% 6.10%Tier 1 cap. ratio NA NATier 1+2 cap, ratio NA NA