Provident's profit jumps 14.2% percent

Demand for products, consumer loans boost 3rd-quarter earnings

Banking

October 21, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Provident Bankshares Corp.'s profit rose 14.2 percent in the third quarter, propelled by strong demand for consumer loans and banking products, the company said yesterday.

Provident made $11.3 million in the quarter that ended Sept. 30, compared with $9.9 million for the corresponding period in 1998. The year-ago figure was boosted by $1.6 million in net securities gains.

The company made 43 cents per diluted share, up 16 percent from the prior year. The results beat analysts' estimates by a penny, according to Zacks Investment Research, which surveyed five analysts who follow the company.

"Overall, they did very well. They were slightly better than I expected," said Claus W. Hirsch, an analyst at Corinthian Partners LLC, a New York-based brokerage and investment banking firm. "They are growing, but they are certainly not growing explosively. That is partly from the area they are in, and partly because they are conservative guys."

Despite the positive news, Provident's shares slipped yesterday along with many other bank stocks, and closed at $20.375, down 6.25 cents. The stock has fallen 12.46 percent year-to-date.

"I think it is a terrific value," Hirsch said. "At some point I would not be surprised if somebody makes a pass at them."

Profit in the quarter was driven by interest and fees on loans, which rose 13.5 percent to $67.1 million, and by service charges on deposit accounts, which were up 18.8 percent to $9 million.

For the first nine months, net income was up 12.8 percent to $32.6 million, or $1.24 per diluted share, compared with $28.9 million, or $1.08 per diluted share, a year earlier. Last year, the company booked $3.5 million in net securities gains, compared with $312,000 for the nine months this year.

"We think we are doing pretty well. We have had 24 consecutive good quarters," said Peter M. Martin, Provident's chairman and chief executive officer.

Provident, the state's second-largest independently owned banking company, said assets rose 2.4 percent to $4.9 billion in the first nine months of the year. Loans were up 6.8 percent to $3.3 billion, and deposits jumped 13 percent to $3.7 billion.

Deposit growth was especially strong with the company opening nearly 16,000 new retail checking accounts in the quarter.

Provident's board of directors approved an increase in the quarterly cash dividend yesterday to 16 cents per share, up 3.2 percent from the dividend in June.

Pub Date: 10/21/99

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