Provident's earnings are up 27% More loans contribute to second-quarter gain

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

Sparked by increases in loans, Provident Bankshares Corp. said yesterday that earnings grew a robust 27 percent in the second quarter to $5.6 million.

On a per share basis, the Baltimore-based banking company earned 64 cents a share compared with 52 cents for the same period in 1995.

For the year to date, Provident's earnings jumped to $10.9 million, or $1.25 a share, marking a 34 percent increase from 1995's $8.1 million, or 95 cents a share.

"We think it is going to be a good year and we are on track to hit our targets," said James R. Wallis, Provident's chief financial officer. "We see the rest of the year moving along at the same rate."

Provident's stock closed yesterday at $32.25, up 50 cents.

The company said its average balance of outstanding loans grew 11.5 percent to $1.5 billion in the quarter. Growth was particularly strong in consumer lending, which jumped 63 percent to $862 million in the first half of 1996 compared with 1995, largely because of auto and boat loans. Provident also beefed up its loan portfolio by buying $98 million in loans from other banks from June 1995 to June 1996, Wallis said.

"We've had some good internal loan growth, too," Wallis said. "It hasn't been easy. We've had our share of success, but the competition is very stiff."

Provident's average balance of deposits grew to $1.7 billion in the quarter, up 11 percent from the same period in 1995. The company said it is drawing more customers because of its free checking account product. It is also drawing more business from branches it has opened in supermarkets and from offices it has opened that cash checks.

"Clearly it was a strong quarter," said Harold R. Schroeder, a banking analyst with New York-based Keefe Bruyette & Woods. "All of the signs look positive."

Frank Barkocy, an analyst with Josephthal Lyon & Ross Inc., said Provident has continued to build its franchise with a steady streak of earnings gains.

Troubled loans, however, grew $5.4 million from Dec. 31, 1995, at quarter's end to $20.2 million, an increase the company attributed to its growth in consumer lending and a rise in residential mortgage delinquencies.

Provident is a well capitalized institution with $185.4 million in stockholder equity, and the company has $21.7 million set aside for potential loan losses.

Pub Date: 7/18/96

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