Provident's earnings rise 16% in quarter

But results miss forecasts and stock tumbles $1.75

April 21, 2006|By LAURA SMITHERMAN | LAURA SMITHERMAN,SUN REPORTER

Provident Bankshares Corp. reported yesterday that first-quarter profit jumped 16 percent as home-equity and commercial real estate lending increased, but those results missed Wall Street forecasts and the stock posted its biggest one-day percentage drop in nearly two years.

The second-largest independent bank in Maryland had net income of $18.3 million, or 55 cents per share, compared with $15.8 million, or 47 cents per share, a year ago. The latest results were three pennies shy of the 58 cents per share forecast by analysts, according to Thomson Financial.

The stock fell $1.75, or 4.7 percent, to $35.32 on the Nasdaq stock market.

Chairman and Chief Executive Gary N. Geisel said the bank, based in Baltimore, is still on course to meet earnings forecasts for the year of about $2.50 per share. He said the first-quarter number fell short because analysts failed to take into account how steeply the bank's revenue from consumer checking and other fees would decline after the winter holiday season, when consumer spending is heightened. Provident gets more of its revenue from such fees compared to some of its peers.

"I couldn't be happier. I think we're right on track," Geisel said in an interview.

The bank's assets dipped slightly to $6.3 billion as it continued to trim its investment portfolio and concentrate on building a portfolio of loans extended in the region.

Total loans were up 5 percent to $3.7 billion over last year, while deposits grew 6 percent in the past year to $4.2 billion at the end of March.

With the bank's expansion into Virginia and other areas, Provident recently named three new regional presidents of its major metropolitan markets, including John King in Baltimore, Hugh Newton in Washington and Kevin Walsh in central Virginia.

"We've been a local bank for 120 years in the greater Baltimore region, and as we expand we don't want to lose that local focus," King said.

"My role is to understand what the community needs are and what the customer needs are, and that includes the commercial side," he said.

Separately, the bank disclosed in its annual report filed with the Securities and Exchange Commission that a former employee is seeking about $6 million for an alleged breach of contract.

The employee, David J. McCarthy, last year left Provident subsidiary Court Square Leasing Corp., an equipment leasing company based in Malvern, Pa., where he served as president.

Provident denies the allegation. McCarthy couldn't be reached for comment.

"We feel like we parted for good legal and business reasons, and obviously there is a disagreement about that," Geisel said.

laura.smitherman@baltsun.com

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