Crestar Financial Corp. reported yesterday that third-quarter earnings rose 12 percent to a record $88.9 million, aided by the sale of credit-card loans, strong growth in services that charge customers fees, and fewer problem loans.
Richmond, Va.-based Crestar, which employs about 700 people in Baltimore, hit Wall Street estimates, making 78 cents per diluted share for the three months that ended Sept. 30, up 10 percent from the corresponding period in 1997, according to a survey conducted by Zacks Investment Research.
"I think their earnings are excellent," said Joan T. Goodman, a bank analyst at Chicago-based Pershing, a division of Donaldson Lufkin & Jenrette Inc. "Everything looks good."
Net income for the first nine months of the year jumped 15 percent to $261.2 million for the same period a year earlier. Crestar made $2.30 per diluted share, up 13 percent from the 1997 period.
Shares of Crestar closed at $61, up 62.5 cents.
In July, Crestar agreed to be acquired by Atlanta-based SunTrust Banks Inc. in a transaction valued at $7 billion. Combined, the companies will have $86 billion in assets with about 1,100 branches in six states, including Maryland and the District of Columbia.
Crestar will operate as a wholly owned subsidiary of SunTrust and will retain its management and keep its name for two years. That means Maryland operations will be largely untouched, executives have said.
Also in July, Crestar sold $576 million of credit-card loans to Fleet Financial Group for a pre-tax gain of $54 million. It spent $43.5 million of the money on merger-related personnel costs and to restructure its consumer lending operations and delivery systems. The remaining $10.5 million was posted as income in the third quarter.
"The sale of a portion of our bank-card portfolio enabled us to dramatically improve credit quality," said Richard G. Tilghman, Crestar's chairman and chief executive. He said that "despite the volatility of the stock market, our basic business continued to produce solid results during the quarter."
Income from fee-generating businesses, such as service charges on deposit accounts, trust and investment advisory income and mortgage income, rose 12 percent for the first nine months of 1998 to $342.4 million.
Crestar's loan portfolio had few problems, with the company writing off $9.1 million in bad loans during the quarter, compared with $20 million for the same period in 1997.
Pub Date: 10/14/98