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CRESTAR FINANCIAL SENIOR DEBT RAISED TO 'BBB+' FROM 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Nov. 25 ~PRNewswire~ -- Crestar Financial Corp.'s 7.75 percent senior debentures due 1997 are raised to 'BBB+' from 'BBB' by Fitch. The upgrade reflects improvement in Crestar's operating earnings and the significant reduction in nonperforming assets (NPAs) during the past twelve months. Also, the company's strong capital and liquidity positions will allow it to participate in further industry consolidation.
 Problem asset resolutions are not expected to accelerate due to the oversupply of commercial real estate in the Washington, D.C. area and the large number of similar properties being marketed by other area banks and the RTC. However, Crestar's operating results will steadily improve as credit-related expenses continue to decline. The credit trend is improving.
 Following the January 1992 acquisition of Perpetual Savings Bank, core deposits account for more than 95 percent of total deposits and volatile funds have declined to 14 percent of total liabilities from 21 percent at year-end 1991 and 30 percent at year-end 1990. As of Sept. 30, highly liquid assets (including the unpledged portion of the securities portfolio) exceeded volatile liabilities by $2.0 billion. In addition, Crestar's strong capital ratios will enable it to take advantage of acquisition opportunities. Following the issue of 3.45 million common shares in October, Crestar's pro-forma Sept. 30 tangible common, Tier 1, and leverage capital ratios were 6.8 percent, 9.9 percent, and 7.6 percent, respectively.
 While Crestar's loan portfolio appeared more immune than other large Virginia banks to declines in local real estate markets during the early phases of the recession, asset quality deteriorated in 1991. By midyear 1991, NPAs and delinquencies were 6.5 percent of loans and foreclosed properties, up from 3.8 percent six months earlier. Crestar was downgraded to 'BBB' from 'A-' in August 1991 reflecting the inadequacy of the loan loss reserve and the likelihood that future earnings would be largely consumed by credit-related charges. Loan loss provisions and foreclosed property expenses resulted in a return on assets (ROA) of only 0.17 percent for 1991's second half.
 Since then, Crestar's NPA ratio came down steadily and earnings began to improve. Although foreclosed properties, net of reserves, grew by $100 million since midyear 1991, its total NPA ratio declined 179 basis points to 3.9 percent during the twelve months ended Sept. 30. NPAs and 90-day delinquencies declined $191 million, or 40 percent, during the same period, while reserve coverage of problem assets rose to 73 percent. Also, despite the increase in other real estate expenses, net profitability has improved due to lower provisions, a widening net interest margin, and growth in non-interest income. As a result, Crestar's third quarter 1992 ROA was 0.74 percent, boosting the year-to- date return to 0.59 percent.
 -0- 11~25~92
 ~CONTACT: Christopher M. Siedman, 212-908-0524, or Scott J. O'Donnell, 212-908-0531, both of Fitch~


CO: Crestar Financial Corporation ST: Virginia IN: FIN SU: RTG

WB -- NY032 -- 1519 11~25~92 12:50 EST
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Publication:PR Newswire
Date:Nov 25, 1992
Words:494
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