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Analysts say Barnett may cut dividend

Like a car whose engine is overheating, Barnett Banks Inc. may soon need to pull off the road and check under its hood. That's the image conjured by a few Barnett watchers, analysts who predict the banking company's weak flow of earnings cannot sustain its current stock dividend. They are forecasting the possibility of a substantial dividend cut before the end of this year.

Analyst Charles Peabody of Kidder, Peabody in New York said that if Barnett has a particularly weak second quarter, with earnings near 25 cents a share, it would mean earnings in four of the last six quarters have not kept up with dividend payouts.

In the first quarter, Barnett earned 28 cents per share. Second-quarter earnings will be made public in July.

In 1990, Barnett paid a cash dividend of $1.29, or about 32.25 cents per share per quarter.

Barnett, based in Jacksonville, already has said it will take a quarterly charge of $6-million, about 6 cents a share, from marking down the value of some securities it holds in its portfolio.

"We look for at least a 40 percent cut in the dividend in 1991," stated Peabody in a recent analysis of Barnett.

The internal troubles that will surface at Barnett are why the company opted to drop out of the race to bid for struggling Southeast Banking Corp. of Miami, Peabody said in a recent report on Barnett.

Stephen A. Hansel, Barnett's senior executive vice president and chief financial officer, disputed the idea of a dividend cut. "We've made our position clear," he said in a telephone interview.

Federal bank regulators have grown especially sensitive to banks paying dividends that cannot be supported by earnings.

Another analyst, Nancy Bush of Brown Brothers Harriman in New York, said that if Barnett has one or two more quarters where they are "just scraping along," they may have to show regulators they can earn enough to pay the dividend and more.

Hansel maintained that Peabody and Bush "are two analysts that do not follow our company closely by our standards" and argued there are other analysts who are more bullish on Barnett's prospects.

Fred Meinke said he is in the middle range of analyst views on Barnett. The Raymond James & Associates analyst sees another weak quarter ending June 30 for the banking company. But he does not expect a dividend cut by Barnett management nor one required by regulators.

Barnett's stock closed Tuesday up 37{ cents at $30.62{ a share on the New York Stock Exchange.

"The real story on Barnett is whether it stabilizes its non-performing assets in the second quarter of the year. The jury is still out," said Meinke. His stock recommendation: neutral. "I am willing to wait and watch to see how things unfold."

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