Area banks report healthy 1st quarter

April 20, 1995|By David Conn | David Conn,Sun Staff Writer

Local and regional banks yesterday continued to indicate that the industry's health is strong, with Signet Banking Corp., Provident Bankshares Corp. and Bank Maryland Corp. all turning in strong first-quarter earnings.

Richmond, Va.-based Signet, in its first quarter without the credit card company that provided about two-thirds of its profits, saw a 48 percent rise in net income, not including the credit card business.

Provident, parent of the Provident Bank of Maryland, said first-quarter earnings were 42 percent higher than a year ago. And Bank Maryland saw profits rise a whopping 123 percent.

The story was much the same for regional and national banking companies across the country. BankAmerica Corp.'s profits rose 16 per cent, Norwest Corp.'s were up nearly 14 percent, Fleet Financial Group posted 17 percent higher earnings, and Republic New York Corp.'s profits rose nearly 10 percent.

Earlier this week, NationsBank Corp., First Fidelity Bancorp. and Baltimore's Loyola Capital Corp. all reported higher earnings in the first quarter.

For Signet, which lost a major profit source during the first quarter when it sold its credit card business to the public, earnings fell to $42.2 million, or 71 cents a share, from $53.1 million, or 93 cents a share, a year ago.

Excluding the impact of the Capital One Financial Corp. subsidiary, the spinoff of which was completed in February, Signet's earnings from its banking operations rose to $26.7 million, or 45 cents a share, from $18.0 million, or 31 cents a share a year ago. The company had $10.5 billion in assets at the end of March.

"Signet's results are indicative of the progress of the re-engineering program we instituted last summer as well as early success from our innovative approaches to business development," said Chairman and Chief Executive Officer Robert Freeman.

Those approaches include telemarketing and direct mail techniques borrowed from Capital One, based in Falls Church, Va.

Much of the first-quarter gain came from consumer lending, part of a new national marketing campaign. The company's net interest margin, which measures the spread between borrowing and lending rates, rose to 5.42 percent from 4.73 percent in the fourth quarter, not including the contribution from Capital One.

"The margin was very strong," said Vernon Plack, an analyst at Scott & Stringfellow in Richmond. "They've seen very good growth, especially in the [consumer] installment loan area."

Provident, with $2.3 billion in assets, likewise saw significant growth. Increased consumer, mortgage and commercial loans helped drive earnings to $3.7 million, or 48 cents a share, from $2.6 million, or 39 cents a share a year ago.

"The progress of the corporation is continuing and will continue throughout 1995," President and Chief Operating Officer Peter M. Martin told Provident's shareholders at the company's annual meeting yesterday morning, before the first-quarter numbers were announced.

Chairman and Chief Executive Officer Carl W. Stearn, in response to a shareholder's question, defended the company's subpar return on assets, which measures profitability relative to size. Provident's ROA was 0.67 percent at the end of the first quarter, compared with an industry average of more than 1.0 percent.

"We have increased our return on assets every year since we took over" in 1990, Mr. Stearn said. "We're engaged in the process of trying to convert this former savings bank into more of an earning commercial bank."

Towson-based Bank Maryland Corp., parent of the Bank of Maryland, said that first-quarter earnings rose to $277,000, or 13 cents a share, from $124,000, or 6 cents a share a year earlier.

The more than twofold gain came despite a one-time charge of $100,000 during the quarter to help pay for a branch closing and the relocation of another office.

Bank Maryland, which is being acquired by Westminster-based Mason-Dixon Bancshares Inc., attributed the growth to higher margins and a 10.3 percent rise in loans since last year. Also, the company recovered $62,000 from loans previously written off as unrecoverable, up from $20,000 a year ago.

Bank Maryland had $199.1 million in assets at the end of the quarter.

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