Bank of Virginia Co. earnings were depressed in the first quarter and will continue to be affected adversely in 1980 by the nation's volatile financial climate, the holding company's chairman said today.
Those Bank of Virginia earnings dropped 11.3 percent, and on a per-share basis decreased by 24 percent, said company Chairman Frederick Deane Jr. It was the first per share earnings decrease since the third quarter of 1976, which was during the last recession.
To help bring in revenues, the company plans no new hirings, although no layoffs are planned, plus increases in checking-account service charges and loan fees, Deane said.
Changes in the state's usury laws effective July 1 will help some, too. However, Deane told company shareholders that second-quarter earnings aren't expected to be much better.
"Our earnings decline in a symptom of the difficult environment faced by all banks, although it affects differently structured banks with different severity," Deane said.
Bank of Virginia has been hurt severely because a great proportion at its activity is in consumer business, Deane said. The chairman also took the occasion to blast President Carter's economic policies for aggravating inflation and the economic environment.
"President Carter's fourth anti-inflation program is actually inflationary in nature for the remainder of this year, and only mildly anti-inflationary thereafter," Deane said.
As a result of Carter's tight credit controls to fight inflation, Bank of Virginia already has "severely restricted" the issuance of new credit cards and the raising of credit limits, Deane said.
The bank also has stopped making over-the-counter installment loans to nonbank customers until July and is making single-payment loans to bank customers which can be coverted to installment loans after July when some state usury ceilings will be lifted.
"I cannot promise you that we will have a better second quarter than the first," Deane told the shareholders, who suprisingly asked no questions after his gloomy forecast. "By the third quarter, we may find some relief on the interest cost side. Recession may be clear enough and strong enough to cause the Federal Reserve to ease the pressure on credit, bringing substantially lower rates."
For the quarter, income before securities transaction was $3.3 million (60 cents a share) compared with $3.7 million (79 cents) for the same time last year.
While earnings "are a disappointment," Deane said that assets rose 12 percent from $2.1 billion to $2.3 billion, and deposits have increased 13 percent from $1.2 billion to $1.4 billion. Loans also increased during the quarter by 11 percent, from $1.5 billion to $1.7 billion, Deane said.