Provident's net profit up 9% for quarter

Performance surpasses projections by analysts

January 18, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

Propelled by an increase in deposits, fees and commercial loans, Provident Bankshares Corp. saw its fourth-quarter profit increase by 9 percent and beat analysts' estimates, the Baltimore-based company said yesterday.

The parent of Provident Bank reported net income of $12.6 million for the three months that ended Dec. 31. Earnings per share were 47 cents, up from 42 cents in the fourth quarter of 1999.

Analysts, on average, were expecting earnings per share of 44 cents.

"The theme for the fourth quarter was that we're back on track, and the theme this quarter is that we've built up some speed here," said Peter M. Martin, chairman and chief executive officer.

Deposits in the quarter rose 5.5 percent to $4 billion while non-interest income - fees for items such as bounced checks or ATM transactions - was up 33 percent to $19.5 million.

Commercial loans were up 19 percent to $872 million.

"It's fair to say that they've definitely made some improvements," said analyst Holly Clark of BB&T Capital Markets. "2000 for the banking industry overall was a pretty tough year, and they got through it in some aspects better than their peers, but there's still room for improvement."

For the year, Provident's net income grew 1.5 percent to $44.8 million, or $1.67 a share, compared with a profit of $44 million - $1.60 a share - for 1999. Analysts had expected 2000 EPS of $1.60.

The state's second-largest independent commercial bank increased its provision for bad loans by $13 million in the second quarter because of an anticipated write-off of a $15 million delinquent loan to Integrated Health Services and the sale of a $15 million loan made to Genesis Health Ventures of Pennsylvania. Both companies have filed for Chapter 11 bankruptcy.

As of Dec. 31, Provident had assets of $5.5 billion - up 8 percent over the year-end of 1999 - and deposits of $3.95 billion, a rise of 4 percent. It opened 15 branches in 2000.

Provident's shares closed down 94 cents yesterday at $22.06, but that's still a huge improvement over the $16 the stock was trading at 52 weeks ago.

"You had investors say two years ago that they were buying the stock in hopes of a takeover, but now they're interested in the fundamental story, which in our opinion is very strong," said Collyn Bement Gilbert, an analyst at Ferris Baker Watts, who had predicted earnings of 47 cents and rates the stock a buy. "We're very pleased with the quarter."

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