Provident 3rd-quarter profit up 1.3%, beating estimates

CEO pleased with bank's `very balanced growth'

October 16, 2003|By Paul Adams | Paul Adams,SUN STAFF

Provident Bankshares Corp. reported a 1.3 percent increase in third-quarter profit yesterday, beating analyst estimates by a penny in a quarter that saw many regional banks struggle with low interest rates.

Net income for the quarter was $13.3 million, or 53 cents per share, compared with $13.1 million, or 52 cents per share, in the third-quarter last year. The bank's shares fell 45 cents to $30.46 per share in trading yesterday.

The modest increase in profit came as the bank promoted its growing commercial loan portfolio, improved income from fees and continued expansion into the Washington-area market, where it gets more than a third of its commercial loan business.

"If you drill down, the thing that's most pleasing is that we're showing very balanced growth in virtually all of our business lines," said Gary N. Geisel, chairman and chief executive.

The bank continued to shed loans and deposits to noncore customers outside of the region in favor of increasing its focus on middle-income customers and small- to medium-size businesses within the Baltimore-Washington corridor.

Noncore loans declined by 25 percent, while loans in Provident's core market climbed 14 percent.

Similarly, average noncore deposits fell 46 percent, while core deposits grew by 6 percent.

The reduction of noncore assets, which tend to yield lower profits than core assets, helped the bank slightly increase its average profit from loans despite continued low interest rates.

"It's a business plan that really seems to be working for them," said Henry J. Coffey Jr., an analyst with Ferris, Baker Watts Inc. "They just keep delivering."

Coffey said the bank seems to be on a roll in the competitive Washington market, which includes Northern Virginia and counties that ring the metropolitan area.

Geisel said the bank will continue to focus its growth toward Washington, where it plans to open four branches in the fourth quarter.

The bank also said its board increased its quarterly dividend by a half-cent to 24 cents per share, which will be paid Nov. 7 to shareholders of record on Oct. 27.

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