THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, April 10, 1996 TAG: 9604100342
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 51 lines
Stung by a scheme that was supposed to provide computers for a secret Philip Morris project, Signet Banking Corp. said Tuesday it had restated its 1995 results and reported lower earnings for the year.
Signet said its revised results included a pre-tax charge of $35 million related to the loan fraud, which came to light in March.
After accounting for the fraud-related charge, Signet said its 1995 net income totaled $111.08 million. That was down 26 percent from its 1994 net income of $149.83 million.
Its revised per-share earnings for 1995 were $1.86, compared with $2.59 in 1994.
Earlier this year, Signet reported 1995 net income of $133.8 million and $118.3 million after adjusting for the February 1995 spinoff of its credit-card operation, Capital One Financial Corp.
Signet's stock closed Tuesday at 25 1/4, up 1/8.
Signet also pushed back the date of its 1996 shareholders' meeting to May 28, citing the need for additional time to report its restated results. Its annual meeting initially had been scheduled for April 23.
Signet, which had $81 million in loans outstanding in the fraudulent scheme, said it based the size of its $35 million charge on reports of how much of the borrower's funds have been frozen.
In late March, the FBI received court approval to freeze $200 million in assets that apparently came from the $323.5 million that Signet and other banks lent to Edward J. Reiners.
Reiners, a former employee of tobacco and consumer-products manufacturer Philip Morris Cos., allegedly persuaded Signet and other banks to finance computer leases for a secret research project that he said Philip Morris was conducting overseas.
The two-year-old scheme came to light last month when an officer at one of the participating banks, Long Term Credit Bank of Japan, sought more information about the loan documentation. In her reply to the bank, a Philip Morris officer said Reiners was not employed by Philip Morris and that her signature on the documents had been forged.
Reiners and an accomplice were arrested by the FBI on March 19 and charged with bank fraud.
Among the other banks that allegedly suffered losses on loans to Reiners were Charlotte-based NationsBank Corp., CoreStates Bank in Philadelphia, and a U.S. unit of Bank of Montreal. by CNB