Earnings of First Mariner, Sandy Spring dip

October 18, 2006|By Laura Smitherman | Laura Smitherman,Sun reporter

First Mariner Bancorp and Sandy Spring Bancorp, two of Maryland's largest independent banks, reported slumping earnings yesterday as the housing market slowed demand for residential mortgages and development loans, and as interest rates remained at levels that make it harder for banks to profit.

Baltimore-based First Mariner announced that its third-quarter net income declined 8 percent to $2 million, or 31 cents a share, from $2.2 million, or 34 cents a share, a year ago.

Edwin F. Hale Sr., chairman and chief executive officer, blamed an "overall real estate slowdown" and noted that accruing loans that were 90 days or more past due jumped to $8 million from $1.3 million last year.

"Everybody has been slowing down," Hale said. "We've been bumping around for last three or four months, but we may have found a bottom. There's a chance that things will pick up again for building in the spring."

Residential construction loans fell $22 million, or 17 percent, while mortgage-loan originations totaled $309 million during the quarter, $115 million less than in the year-earlier period.

Deposits grew 5 percent to $917 million, and assets were little changed at $1.4 billion.

Olney-based Sandy Spring said its quarterly net income slid 14 percent to $8.1 million, or 55 cents a share, from $9.5 million, or 64 cents a share, a year earlier.

Hunter R. Hollar, president and CEO, noted the flattening yield curve - meaning the difference between short-term and long-term interest rates has narrowed. That hurts banks that pay one rate on deposits and earn another rate on loans.

Total assets increased 9 percent to $2.6 billion, and customer funding sources including deposits grew 6 percent to $2.1 billion. Residential mortgage loans on the bank's balance sheet fell $18 million, or 4 percent, but residential construction loans increased $32 million to $173 million.

Hollar said the bank's pipeline of loans to developers has shrunk and that has not been reflected on its financial reports. "Clearly, the developers are taking a wait-and-see attitude," he said.

laura.smitherman@baltsun.com

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