Provident's quarterly net soars 43% Stockholders told bank will remain independent

April 18, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

In yesterday's editions, the payout that the Provident Bancshares Corp. chairman and chief executive, Carl W. Stearn, could receive if he voluntarily leaves the company within a year after an acquisition was reported incorrectly. In fact, Mr. Stearn could receive approximately $180,000.

The Sun regrets the error.

Provident Bankshares Corp.'s net income shot up 43 percent in the first quarter as earnings were driven by strong increases for consumer loans, and fee-generating products and services.

Net income for the quarter that ended March 31, 1996, was $5.3 million, or 64 cents a share, compared to $3.7 million, or 46 cents a share, for the first quarter of the prior year.

FOR THE RECORD - CORRECTION

The per-share figures for March 1995 were restated to reflect a 5 percent stock dividend issued during the second quarter of 1995.

"I'm impressed, but they have got plenty of room to go," said Nelson M. Polun, a stockbroker with Prudential Securities Inc., which holds shares in the company.

"I'm not disappointed in the progress but given their size in the market they have much more potential in earnings," Mr. Polun said.

The company's stock closed at $33 a share yesterday, up 25 cents.

Provident, which has $2.7 billion in assets, experienced a sizable increase in two key measures of performance.

The company's return on assets was 84 percent, compared with 67 percent a year ago. And its return on equity was 11.81 percent, compared with 9.39 percent. Those ratios still lag the industry's, which were 1.17 percent and 14.68 percent respectively at year-end 1995.

The earnings were released after the company's annual meeting, where Carl W. Stearn, chairman and chief executive, was questioned by a stockholder on how the company intends to remain independent.

Mr. Stearn said the plan is to keep making money and developing new products and services.

"Our approach is to manage the bank as an independent bank. Our future is entirely in our hands," he said.

After the meeting, Mr. Stearn said the company has had talks with other institutions about selling the bank, but he declined to give details. "I don't think we are unique," he said.

The bank's proxy statement contains an agreement that would protect Mr. Stearn, Peter M. Martin, president and chief operating officer; and James R. Wallis, chief financial officer, in case of a takeover.

Under the three-year agreement, if the executives quit within one year following an acquisition, they would receive a payout equal to six times their current taxable compensation for each month ++ they worked, the proxy said.

Mr. Stearn received $466,597 in salary and bonus in 1995. If he quit within a year after an acquisition he could get a payout of nearly $2.8 million.

Mr. Stearn said the agreement is not a "poison pill," or a measure used to deter an acquisition.

"It is a way of compensating management if we are acquired," he said.

In the first quarter, Provident's loans jumped 9.2 percent to $1.4 billion, compared with $1.3 billion a year ago. Average consumer loans have grown $318 million since March 31, 1995.

Income from fee-based services, new accounts and income from mortgage banking operations grew 57 percent exclusive of $5.1 million in gains on securities sold during the first quarter of 1996, the bank said.

The bank wrote off $5.3 million in loans, up from $93,000 the same time a year ago.

The increase was related to the deterioration of a single commercial loan, the company said.

Pub Date: 4/18/96

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