Provident's profit rose 14.2% in 4th quarter

Results beat estimates by a penny per share


January 20, 2000|By Bill Atkinson | Bill Atkinson,SUN STAFF

Provident Bankshares Corp.'s profit rose 14.2 percent in the fourth quarter, driven by healthy growth in deposits and consumer and commercial real estate loans, the company said yesterday.

Provident made $11.5 million in the quarter that ended Dec. 31, or 44 cents per diluted share, compared with $10.1 million, or 38 cents per diluted share, in the comparable period a year ago.

The results beat analysts' estimates by a penny, according to Zacks Investment Research, which surveyed three analysts who follow the Baltimore banking company.

"The numbers were fine," said Claus W. Hirsch, an analyst at Corinthian Partners LLC, a New York brokerage and investment banking firm. "They were exactly what I was looking for."

Hirsch said Provident's income grew briskly, even though it was not boosted by gains from the sale of securities. (The sale of securities last year netted $3.2 million that pumped up fourth-quarter profit.)

"That was a nice showing," he said.

The quarter was dampened by a delinquent $19.4 million loan to a health care company. The loan was classified as nonperforming in the quarter.

As a result, Provident's total nonperforming loans -- loans that are late on either interest or principal payments -- more than doubled to $28.9 million for the year, compared with $11.5 million as of Dec. 31, 1998.

Delinquent loans, however, represent just 0.91 percent of total loans.

Peter M. Martin, Provident's chairman and chief executive officer, declined to name the health care company, and said the loan was a small piece of a larger syndication involving about 40 banks.

"Obviously, there will be recovery of a portion of the loan," he said.

Martin was pleased with the company's overall performance.

Profit for the year rose 13.1 percent to $44.2 million, or $1.67 per diluted share, compared with profit of $39 million, or $1.47 per diluted share in 1998.

Net income in 1998 included $6.7 million in securities gains.

Provident continued to expand, opening 16 branches last year for a total of 83.

The company has 13 new branches on the drawing board for this year, six pinpointing the Northern Virginia market.

Assets grew 9 percent to $5.1 billion, and loans rose 2 percent to $3.2 billion, despite the sale of $100 million in adjustable mortgages and the packaging into securities of $400 million in second mortgages.

Deposits rose 11.4 percent to $3.8 billion.

Provident's stock closed at $16.4375, down 18.75 cents. The stock is down about 36 percent over the past 12 months.

"We think we are increasing the value of the franchise," Martin said.

"What I would really like to see in the year 2000 is for the financial services companies to get back in favor with the stock market."

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