Provident Bankshares Corp. reported yesterday a 13 percent increase in fourth-quarter net profit, propelled by higher income from checking accounts and deposit service fees coupled with securities gains and lower expenses.
The state's second-largest independently owned banking company made $12.4 million in the quarter that ended Dec. 31, compared with $10.98 million in the corresponding period a year earlier.
Provident made 48 cents per diluted share in the quarter, up 23 percent, compared with 39 cents per diluted share a year earlier. The results beat Wall Street analysts' estimates by 5 cents, according to Zacks Investment Research, which surveyed four analysts.
Shares of Provident declined 27 cents, to close at $24.54 on the Nasdaq stock market.
"I think the quarter went very well," said Peter M. Martin, chairman and chief executive of the Baltimore banking company. "Our credit quality is good given what is happening around the country. I am pleased with that."
Profit in the quarter was boosted by a 26 percent increase in non-interest income - income from fees banks charge customers for services - totaling $24.4 million, compared with $19.4 million in the fourth quarter in 2000.
The company also had $3.7 million in net securities gains in the quarter, compared with $641,000 a year earlier. Martin said that the securities gains were not taken to boost the bottom line, but to offset lower interest income that the bank would have received from mortgage loans that were refinanced at lower rates.
Holly M. Clark, an analyst at Scott & Stringfellow Inc. in Richmond, Va., said the securities gains added about 10 cents to Provident's earnings per share.
Provident also kept a lid on expenses in the quarter, which declined 3.2 percent to $36.2 million in the quarter from a year ago.
Provident's fourth-quarter net interest income - income generated primarily from loans - fell 16.3 percent to $32.9 million in the quarter. The decline was a result of the company's efforts to reduce the amount of loans and deposits it buys from other financial institutions.
As a result, Provident's assets fell 10.9 percent during the year to $4.9 billion from 2000. Loans fell 16.8 percent to $2.8 billion over the same period, and deposits fell 15.1 percent to $3.4 billion.
For the full year, Provident's profit was up 4.4 percent to $41.5 million, or $1.56 diluted earnings per share.
Martin said he is looking for ways to expand the company. Provident operates 100 branches in Maryland, Northern Virginia and Pennsylvania, and it plans to add 12 branches this year.