Area banks report strong ending to '94

January 19, 1995|By Kim Clark | Kim Clark,Sun Staff Writer

Area banks reported stronger earnings in the final three months of 1994, but analysts warned that the recent pattern of heady increases may be moderating.

Provident Bankshares Corp. announced yesterday that its net profits jumped 43 percent over the last quarter of 1993, and Loyola Capital Corp. reported a 35 percent increase.

First Maryland Bancorp, parent of First National Bank of Maryland, said its profits were up 2.7 percent.

And First Fidelity Bancorp, which acquired Baltimore Bancorp last year, reported that its quarterly profits rose 11 percent.

Banks, rebounding from a real estate crunch, have seen earnings soar in the last two years, said Vernon C. Plack, who follows local bank stocks for Scott & Stringfellow in Richmond, Va. But that can't last much longer, he predicted.

"We've been spoiled in the last couple of years," he said. From now on, "you'll see decent growth. Earnings will be up a little bit, but it will be nothing dramatic."

Because Maryland's economic recovery has lagged behind that of other regions -- especially the Southeast -- banks here are having a harder time, he said.

Provident

Fourth-quarter profits jumped $1.1 million to $3.6 million, helped by a 12 percent gain in interest income. Annual earnings rose 54 percent from 1993, to $12.5 million.

Carl W. Stearn, Provident's chief executive officer, said that the rising interest rates have slightly cut the bank's net margin. But it was still a healthy 3.7 percent, he said.

Mr. Stearn said he has doubts about predictions of slower profit growth for 1995.

"That seems to be the general view of the banking industry," he said. But he said he expects Provident "to continue to have satisfactory increases in earnings."

Loyola

Fourth-quarter profits jumped by more than one-third to $4.2 million. And annual profits rose $2.7 million to $15 million, thanks to the company's strong portfolio of adjustable rate mortgages, said company spokesman James V. McAveney.

Because of rising rates, Loyola's net interest margin rose slightly -- from 2.85 percent at the end of 1993 to 3 percent last month, he said.

And while many are concerned that rising rates will cut off demand for loans, Mr. McAveney said Loyola still has plenty of applications waiting to go to closing in the first quarter of 1995.

Although the bank's return on its assets is a comparatively low two-thirds of 1 percent, Mr. McAveney said Loyola's returns never match the 1 or 1.5 percent returns often reported by commercial banks.

In a related development, Loyola's board of directors voted yesterday to increase the bank's dividend 2 cents to 12 cents per share.

First Maryland

The state's second largest banking company said its profits rose $800,000 from the last quarter of 1993 to $28.5 million in the final quarter of 1994. But for the year, earnings were down 2 percent to $111.1 million, primarily because the amount the bank paid in interest rose faster than what it received.

The company also saw declines in mortgage banking income.

Frank P. Bramble, president of the division of Allied Irish Group PLC of Dublin, Ireland, said the performance was "especially satisfying" in light of the company's restructuring and Maryland's slow recovery.

First Fidelity Bancorp

Earnings for the Lawrenceville, N.J.-based bank in the fourth quarter were $115.6 million, up 11 percent from the 1993 quarter.

The results for the banking company, which announced yesterday that it would eliminate 1,000 jobs, including 500 in Baltimore, matched most analysts' estimates.

"While the quarter was on target, in some respects it was a little weaker than we had anticipated," said Mary P. Quinn, an analyst at Keefe, Bruyette & Woods in New York.

For the year, the company said, it earned $451.1 million, up 13 percent from 1993.

Loyola Capital

Corp.

B8Baltimore .... ... ... ..Ticker ... ... ... Yesterday's

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

.... ... ... ... ... ... LOYC .... ... ... .. 19 3/4 + 1/4

Period ended

12/31 .... ... ... ... .. 4th qtr. .... ... .. Year ago ... Chg.

Net Income .... ... ... . $4,152 .... ... .... $3,084 ... +34.6%

EPS* .... ... ... ... ... $0.48 .... ... ... . $0.36 ... .+33.3%

Annualized return

on assets .... ... ... ...0.69% ... ... ... . 0.54%

Add. to allowance

for loan losses .... ... .$150 .... ... ... ..$655 ... .. -77.1

.... ... ... ... ... ... 12 mos. .... ... Year ago ... Chg.

Net Income .... ... ... $15,039 .... ... $12,265 ... +22.6%

EPS* ... ... ... ... .. $1.73 .... ... ..$1.42 ... . +21.8%

Annualized

return on assets .... .. 0.65% .... ... .0.62%

Add. to allowance

for loan losses .... ... $660 .... ... ..$3,085 ... -78.6

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

.... ... ... ... ... 12/31/94 .... ... .... 12/31/93

Assets .... ... ... $2,468,541 .... ... . $2,366,516 ... +4.3%

Deposits .... ... $1,465,630 .... ... ... $1,424,794 ... +2.9%

Loans outst. .... $1,952,272 .... ... ... $1,591,207 ... +22.7%

Loan loss

reserve .... ... $25,038 .... ... ... ... $26,400 ... .. -5.2%

* Fully diluted

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