Solid profits posted by 3 bank firms Low rates, growth in economy credited

EARNINGS

April 22, 1993|By David Conn | David Conn,Staff Writer

Three Baltimore banking companies, beneficiaries of low interest rates and a slowly recovering economy that has sent fewer borrowers into default on loans, reported strong first-quarter profits yesterday.

The three were Baltimore Bancorp, which continued to put its devastating 1991 far behind; Provident Bankshares Corp., which increased its dividend in response to its improved numbers; and First Maryland Bancorp, whose profits rose sharply.

But except for Provident, loan growth was nonexistent. As a result, some analysts are wondering how long the banks can ride the low rates to higher profits.

According to Legg Mason analyst David Sochol, the industry's earnings come from rising net interest margins -- the difference between the average interest rate banks earn from borrowers and the rate they pay depositors, Also, as nonperforming assets decline, most banks are setting aside smaller amounts to reserve against loan losses.

"On the flip side, loan growth was lower than what I was looking for, and expenses were higher," and that could bode poorly for the industry's prospects a year from now, Mr. Sochol said.

Baltimore Bancorp

Baltimore Bancorp has rebounded since the depths of its troubles, when it lost more than $125 million in 1991. The company reported its fifth consecutive quarterly profit yesterday.

Although down from last year's comparable quarter, income for the parent of the Bank of Baltimore was $4.9 million, or 35 cents a share, in the three months that ended March 31, compared with $5.1 million, or 40 cents a share, a year earlier.

Excluding the amount set aside for problem loans and one-time events -- such as securities gains, other asset sales and a $1.75 million settlement of a class-action shareholders' lawsuit -- earnings rose to $7.8 million, from $7.5 million a year ago.

Provident Bankshares Corp.

Provident was among the only Baltimore banking firms that increased lending compared with a year ago. That, and a sharply higher net interest margin, helped boost first-quarter profits by 165 percent, to $1.6 million, or 25 cents a share, from $606,000, or 10 cents a share a year ago.

At the company's stockholders' meeting yesterday, President PeterMartin said the 16 percent increase in loans from last year came primarily from consumer borrowing and residential construction lending.

A 57 percent drop in nonperforming assets and past-due loans allowed Provident to reduce its provision for loan losses by 38 percent, to $865,000, in the first quarter. That amount is deducted from earnings.

Although Chairman Carl Stearn told a shareholder yesterday that Provident was not considering a stock repurchase program, the board voted later in the day to increase the quarterly common stock dividend, to 7 cents, from 6 cents a share.

First Maryland Bancorp

The parent of the First National Bank of Maryland reported earnings of $28.5 million, 42 percent higher than the $20 million earned in the first quarter of 1992. First Maryland is wholly owned by Allied Irish Group plc., of Dublin, which does not report per-share figures for its subsidiaries.

Like Baltimore Bancorp, First Maryland's improvement came largely from low interest rates and an improvement in credit quality.

Baltimore Bancorp

.. .. .. .. .. ..Ticker.. .. .. .. .. .. .. .. Yesterday's

.. .. .. .. .. ..Symbol.. .. .. ... .. .. . .. Cls.. .. ..Chg.

. . .. . .. .. ..BBB.. .. .. .. .. .. .. .. .. 8 1/8 .. .. .. Unch.

Period ended

March 31 .. .. .. 1st qtr.. .. .. ..Year ago .. .. ..Chg.

Net Income .. .. .$4,880 .. .. .. ..$5,102.. .... ..-4.4%

Primary EPS .. .. $0.35 .. .. .. .. $0.40 .. .. .. .-12.5%

Annualized return

on avg. assets .. 0.83% .. .. .. .. 0.65%

Add. to allowance

for loan losses ..$6,000.. .. .. .. $4,881 .. .. .. +22.9%

.. .. .. .. .. .. Balances as of

.. .. .. .. .. .. 3/31/93.. .. ..3/31/92 .. .. .. ..

Assets.. .. .. .. $2,353,297.. ..$3,108,552.. .. .. -24.3%

Deposits.. .. .. . $2,156,351.. ..$2,854,498.. .. ..-24.5%

Loans outst.. .. ..$1,459,342.. ..$1,692,137.. .. ..-13.8%

Loan loss

reserve .. .. .. ..$60,549 .. .. .$80,669 .. .. .. .-24.9%

Figures in thousands (except per share data.)

Provident Bankshares Corp.

.. .. .. .. .. .. ..Ticker .. .. .. .. .. .. Yesterday's

.. .. .. .. .. ... .Symbol.. .. ... .. .. .. Cls.. .. .. ..Chg.

.. .. .. .. .. .. ..PBKS .. .. .. ... .. .. . 14 1/2 .. .. .. ...- 1/2

Period ended

March 31 .. .. .. 1st qtr... .. .. .Year ago .Chg.

Net Income .. .. .$1,603 .. .. .. ..$606 +164. 5%

Primary EPS .. .. $0.25 .. .. .. .. $0.10 +150.0%

Annualized return

on avg. s .. .. 0.39%.. .. .. .. .. 0.16%

Add. to allowance

for loan losses.. $865.. .. .. .. ..$1,250..-30.8%

Figures in thousands (except per share data.)

First Maryland Bancorp

.. .. .. .. .. ..Ticker.. .. .. .. .. .. .. Yesterday's

.. .. .. .. .. ..Symbol .. .. .. .. .. .. ..Cls.. .. .. Chg.

... .. .. .. .. .NA.. .. .. .. .. .. .. .. .. .. ... .. NA

Period ended

March 31 .. .. 1st qtr.. .. .. .. Year ago.. .. .. ... Chg.

Net Income.. ..$28,462.. .. .. .. $19,987.. .. .. .. .. +42.4%

Primary EPS .. -- .. .. .. ...-- .. .. .. .... ... ... .. ..-

Annualized return

on avg. assets .. 1.27% .. .. .. ..0.90%

Add. to allowance

for loan losses ..$12,565.. .. ... $14,308.. .. .. .. ..-12.2%

Figures in thousands (except per share data)

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