The high cost of restructuring flattened fourth-quarter profits at Cleveland-based KeyCorp, while other large banks reporting earnings Thursday showed gains on rising revenue and low expenses.

Bank of Boston Corp. reported record net income of $142 million for the quarter, up 17% from the year-earlier period.

Analysts credited the success partly to a decline of more than 300 basis points in operating expense ratios - to 56.5%

Bankers Trust New York Corp. relied on a $145 million pretax gain from the sale of Northwest Airlines Corp. stock to post a 25% increase in fourth quarter earnings, to $126 million.

But analysts were deeply disappointed with the results, particularly because Bankers Trust is still laboring under the cloud of problems related to the sale of derivatives to corporate customers.

Bankers Trust took an unexpected charge of $51 million in the quarter for legal settlements from old derivative transactions which reduced trading results by nearly 3% for the year to $96 million.

"This quarter marks the end of a difficult year for Bankers Trust," chairman Charles S. Sanford Jr. and president and chief executive Frank N. Newman said in a joint statement.

Raphael Soifer, a banking analyst at Brown Brothers Harriman & Co., said that trading results were weaker than expected, but noted that "corporate finance went gangbusters" and the $59 million in revenues from client finance business - including underwriting, private placements, and syndications - was the bank's best result since 1989.

Others saw less to cheer about. "Bankers Trust was uniformly neutral to disappointing and trading was lackluster," said Diane Glossman, a banking analyst with Salomon Brothers Inc.

Standard & Poor's Ratings Group also said Thursday that it was putting the bank on credit watch with negative implications.

KeyCorp reported fourth-quarter earnings of $207 million, a 6% increase over the year-earlier period. For the year, the Cleveland-based company reported a 3% decline in earnings, to $825 million.

Officials at the $66 billion-asset company said the results were attributable to a major restructuring, which includes organizing the company into four major business units.

"It was a transition year," said Thomas Maier, an analyst with Everen Securities in Chicago. "They've been taking the cost savings out of the merger (with Society Corp in 1994) and spending it on becoming a national consumer finance company, marketing and brand name recognition."

KeyCorp spent $20 million in the fourth quarter for strategic initiatives, an increase from $11 million spent in the third quarter. The company also took a $25 million pretax charge for obsolete software.

Economic sluggishness in Southern California and Hawaii appeared to constrain earnings growth at two institutions.

Chatsworth, Calif.-based Great Western Financial Corp., the country's second-biggest thrift, reported fourth-quarter earnings of $98.6 million, up 11%.

The thrift benefited from widening interest margins, declining expenses, and growth in fees and commissions.

But officials warned that like other lenders they are seeing an increase in consumer debt problems.

Honolulu-based Bancorp Hawaii, the state's biggest bank with assets of $13.2 billion, reported fourth quarter earnings of $32.1 million, up 88% from the year-earlier period but down about 2.5% from the previous quarter. The bank reported late Wednesday after markets had closed.

Loans outstanding grew 3.3% in the quarter, while net interest income increased $2 million. Net chargeoffs declined 5 basis points in the quarter to an enviably low 0.15% of loans.

The quarter-to-quarter earnings decline of about $800,000 reflected a $2 million decline in noninterest income and a $3.6 million increase in noninterest expenses.

Meanwhile, in the Southeast, Signet Banking Corp. reported fourth quarter earnings in line with Wall Street expectations. But continuing losses in a direct mail loan solicitation forced the company to more than double its loan-loss provision.

Signet, which is based in Richmond, Va., earned $31.8 million in the quarter, or 53 cents a share, a penny over consensus estimates. Comparisons with the year-earlier period, when the bank earned $42.9 million, are not meaningful because the latter quarter included results from the now- divested credit card subsidiary, Capital One Financial Corp.

Excluding Capital One, Signet's earnings increased 80%.

The improvement in core earnings occurred despite a doubling of the loan-loss provision for a second consecutive quarter - to $18.6 million. Net chargeoffs jumped 20% from the third quarter, to $15.6 million.

Chief financial officer Wallace B. Millner 3d attributed the credit problems to the company's innovative "loan-by-check" program, a direct mail campaign in which selected customers in 40 states receive preapproved checks, averaging $7,500, that can be cashed at their local banks. Cashing the check commits the customer to repaying the loan at a specified interest rate.

Mr. Millner reiterated Thursday that Signet stands by the loan-by-check program and expects to double the portfolio this year. But he also warned that the ratio of losses in the two test solicitations "is going to be fairly ugly" as the high-risk balances decline as a percentage of the overall loan-by-check portfolio.

That loss ratio reached 19.5% in the fourth quarter, compared to only 2% for the rest of the loan-by-check portfolio, which comprises higher quality loans.

Meanwhile, earnings at Signet's Richmond-based rival Crestar Financial Corp. fell 43% in the fourth quarter to $26.3 million due to $29 million in acquisition-related charges. Crestar, which has $18.3 billion of assets, acquired $2.5 billion-asset Loyola Capital Corp., a Baltimore-based thrift, in December.

Excluding the Loyola charges, Crestar's earnings increased 19% in the quarter, to $55.6 million, or $1.28 a share, which was right in line with consensus estimates.

First Virginia Banks Inc., Falls Church, reported net income of $27.6 million, down 1% from $27.8 million in the fourth quarter of 1994 due to a business slowdown in the Washington-Baltimore area "caused by cutbacks in government spending and budget furloughs." First Virginia has $8.2 billion of assets.

Elsewhere, Wyomissing, Pa.-based Sovereign Bancorp posted a 32% increase in fourth quarter earnings - to $15.7 million - while Boston-based BayBanks reported a 23% increase, to $37.8 million. BayBanks agreed in December to be bought by Bank of Boston.

James R. Kraus, Brett Chase, Kenneth Cline, and Barton Crockett reported this story. +++

Bank of Boston Corp. Boston Dollar amounts in millions (except per share) Fourth Quarter 4Q95 4Q94 Net income $142.4 $120.8 Per share 1.17 1.01 ROA 1.22% 1.08% ROE 16.74% 16.86% Net interest margin 4.35% 4.39% Net interest income 441.8 433.4 Noninterest income 313.2 198.6 Noninterest expense 429.2 381.9 Loss provision 75.0 35.0 Net chargeoffs 43.9 31.3 Year to Date 1995 1994 Net income $541.0 $435.3 Per share 4.43 3.61 ROA 1.21% 1.01% ROE 17.14% 15.82% Net interest margin 4.45% 4.14% Net interest income 1,741.2 1,572.6 Noninterest income 1,091.2 828.0 Noninterest expense 1,597.7 1,479.3 Loss provision 250.0 130.0 Net chargeoffs 168.3 125.8 Balance Sheet 12/31/95 12/31/94 Assets $47,397.0 $44,630.0 Deposits 30,948.0 31,356.0 Loans 31,067.0 31,005.0 Reserve/nonp. loans 238% 186% Nonperf. loans/loans 1.00% 1.20% Nonperf. assets/assets 0.80% 1.00% Nonperf. assets/loans + OREO 1.20% 1.40% Leverage cap. ratio 7.40%* 6.50% Tier 1 cap. ratio 8.00%* 7.00% Tier 1+2 cap. ratio 12.80%* 12.20%

*Estimate

Bankers Trust Corp.

New York

Dollar amounts in millions (except per share) Fourth Quarter 4Q95 4Q94 Net income $126.0 $101.0 Per share 1.36 1.19 ROA 0.43% 0.38% ROE 10.57% 8.64% Net interest margin 0.98% 1.29% Net interest income 215.0 252.0 Noninterest income 739.0 624.0 Noninterest expense 758.0 709.0 Loss provision 10.0 8.0 Net chargeoffs 50.0 85.0 Year to Date 1995 1994 Net income $215.0 $615.0 Per share 2.03 7.17 ROA 0.20% 0.59% ROE 3.98% 13.48% Net interest margin 1.04% 1.64% Net interest income 858.0 1,255.0 Noninterest income 2,423.0 2,473.0 Noninterest expense 2,898.0 2,751.0 Loss provision 31.0 25.0 Net chargeoffs 291.0 97.0 Balance Sheet 12/31/95 12/31/94 Assets $104,002.0 $97,016.0 Deposits 25,708.0 24,939.0 Loans 12,633.0 12,501.0 Reserve/nonp. loans 133% 126% Nonperf. loans/loans 5.9% 8.0% Nonperf. assets/assets 1.1% 1.5% Nonperf. assets/loans + OREO 9.1% 11.1% Leverage cap. ratio 5.1%* 5.3% Tier 1 cap. ratio 8.5%* 9.1% Tier 1+2 cap. ratio 13.9%* 14.8%

*Estimate

KeyCorp Cleveland Dollar amounts in millions (except per share) Fourth Quarter 4Q95 4Q94 Net income $206.7 $193.8 Per share 0.86 0.79 ROA 1.23% 1.19% ROE 16.31% 16.61% Net interest margin 4.53% 4.60% Net interest income 674.2 680.3 Noninterest income 304.1 205.3 Noninterest expense 621.9 555.6 Loss provision 34.2 26.2 Net chargeoffs 34.3 20.8 Year to Date 1995 1994 Net income $825.0 $853.5 Per share 3.45 3.45 ROA 1.24% 1.36% ROE 17.35% 18.87% Net interest margin 4.47% 4.83% Net interest income 2,694.0 2,752.1 Noninterest income 933.0 882.6 Noninterest expense 2,311.6 2,167.2 Loss provision 100.5 125.2 Net chargeoffs 99.2 109.2 Balance Sheet 12/31/95 12/31/94 Assets $66,339.1 $66,801.2 Deposits 47,281.9 48,564.2 Loans 47,691.7 46,224.7 Reserve/nonp. loans 263.15% 324.27% Nonperf. loans/loans 0.70% 0.55% Nonperf. assets/assets 0.57% 0.51% Nonperf. assets/loans + OREO 0.79% 0.73% Leverage cap. ratio 6.22%* 6.63% Tier 1 cap. ratio 7.48%* 8.48% Tier 1+2 cap. ratio 10.73%* 11.62%

*Estimate ===

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