Loan Portfolio

While being first has its advantages, it is not always something to brag about.That point was driven home recently as three of the region's largest banks topped a list of banks in the country that appear to be most vulnerable to a softening real estate market, according to figures from Bear, Stearns & Co. in New York.By leading the nation in their concentration of construction loans, MNC Financial Inc., Riggs National Corp. and Signet Banking Corp. had the dubious honor of capturing more of the most lucrative -- yet risky -- areas of lending than other majorbanking companies relative to their total loan portfolio.

Shares of Provident Bankshares Corp. fell 11 percent yesterday after the bank said it will write off $28.9 million of its real estate investment trust portfolio, making it the latest victim of the nation's declining housing and credit markets. In a related move, the Baltimore-based bank also said it is increasing its provision for bad loans by $6 million in the fourth quarter in recognition of the region's slumping housing market. The bank said it has only limited exposure to the subprime mortgage business in its loan portfolio.

MNC Financial Inc. said yesterday that it would cut back its international banking business as part of a broader restructuring to downsize the bank. It will lay off as many as 30 people and close offices in Hong Kong, Brazil and Luxembourg.The company, whose international division once had nearly 100 employees, has already closed a London office.Hugh A. Woltzen, MNC Executive vice president, said the company has been scaling back its international business for several months and plans to concentrate its future international RTC business on providing letters of credit and other fee-based services.

Mercantile Bankshares Corp., Maryland's largest independent bank, reported yesterday that its net income climbed 25 percent as its loan portfolio and deposits grew. The bank earned $71 million during the third quarter that ended in September, or 86 cents a share, compared with $56.8 million, or 71 cents a share, in the corresponding period last year. Those results beat Wall Street estimates by 3 cents, according to a survey of analysts by Thomson Financial. Mercantile stock slipped 45 cents, or less than 1 percent, to close at $54.80 on the Nasdaq stock market.

Profits at the parent company of Carrollton Bank rose last year as it increased its loan portfolio, decreased additions to loan loss reserves and boosted its income from fees, said Bud Kretzschmar, director of marketing for the bank.Total assets at the Baltimore bank holding company, which has seven branches, increased 4 percent, and its deposits grew 4.26 percent. Loans increased nearly 20 percent over the past 12 months, to $112.1 million as of Dec. 31. The company declined to release quarterly figures.

A federal judge in Baltimore has dismissed three lawsuits by disgruntled shareholders of MNC Financial Inc., saying the plaintiffs hadn't proved that the company's failure to disclose problems in its loan portfolio in late 1989 and early 1990 added up to fraud.U.S. District Judge J. Frederick Motz said the plaintiffs were never able to show anything more than a general suspicion that MNC officials, including former chief executive Alan P. Hoblitzell Jr., had knowingly concealed that MNC's real estate loan portfolio was deteriorating.

Shares of Provident Bankshares Corp. fell 11 percent yesterday after the bank said it will write off $28.9 million of its real estate investment trust portfolio, making it the latest victim of the nation's declining housing and credit markets. In a related move, the Baltimore-based bank also said it is increasing its provision for bad loans by $6 million in the fourth quarter in recognition of the region's slumping housing market. The bank said it has only limited exposure to the subprime mortgage business in its loan portfolio.

A cleansing fourth-quarter real estate write-down by Richmond-based Signet Banking Corp. gave way to a first-quarter profit of $22 million, the company said yesterday.Signet, which owns Signet Bank/Maryland, said its "accelerated real estate asset reduction program" at the end of last year, which translated to a $165 million provision for loan losses, rid the company of enough bad real estate loans to allow for a profitable first quarter this year.The asset reduction program "has enabled Signet to return to more normal earnings by significantly reducing the effects of the real estate problems which have plagued us for the past two years," Signet Chairman and Chief Executive Robert M. Freeman said in a statement.

Mercantile Bankshares Corp., Maryland's largest independent bank, reported yesterday that its net income climbed 25 percent as its loan portfolio and deposits grew. The bank earned $71 million during the third quarter that ended in September, or 86 cents a share, compared with $56.8 million, or 71 cents a share, in the corresponding period last year. Those results beat Wall Street estimates by 3 cents, according to a survey of analysts by Thomson Financial. Mercantile stock slipped 45 cents, or less than 1 percent, to close at $54.80 on the Nasdaq stock market.

Two Baltimore-area investors have sued sagging MNC Financial Inc. and former chairman Alan P. Hoblitzell Jr. for allegedly misrepresenting the company's financial health and causing shareholders to lose large amounts of money as the company's stock price plummeted in recent months.The suit, seeking unspecified damages, was filed in U.S. District Court here this week by Robert B. Kelm of Towson and Christopher Trikeriotis of Baltimore.It charges MNC and Hoblitzell, who recently retired with a $1.1 million severance payment and at least $400,000 a year in retirement benefits, with violating federal securities laws, negligence and misrepresenting the quality of the company's rapidly-deteriorating loan portfolio.

Homeowners aren't the only ones who would rue the day the housing bubble bursts. Officials at area banks who are struggling to keep up the pace of record-setting profits in recent years have relied upon a brisk business in home mortgages and commercial development. Those loans have helped banks improve their balance sheets in the face of nearly a dozen interest-rate boosts by the Federal Reserve over the past year. Investors and analysts are closely watching the quarterly earnings that banks across the country have begun reporting this week.

Despite a slow-growing economy, two local banks - Columbia Bancorp and First Mariner Bancorp - said yesterday that their third-quarter profits increased, driven in part by gains from loans and service fees. Columbia, the parent of Columbia Bank, made $2.7 million, or 38 cents per diluted share, in the quarter that ended Sept. 30, 34.2 percent more than in the comparable period a year earlier. Profit in the first nine months was $7.4 million, or $1.02 a diluted share, 20.4 percent more than in the comparable period last year.

Provident Bankshares Corp. said yesterday that its profit declined 11.3 percent in the second quarter because of losses and charges totaling $3.4 million related to second-mortgage loans, most of which were bought from an out-of-state company. The Baltimore banking company made $8.04 million, or 30 cents per diluted share, in the quarter that ended June 30, compared with $9.06 million, or 32 cents per diluted share, in the corresponding period a year earlier. Provident also restated earnings for the first quarter and for all of 2000 in the wake of an internal review of its $1.6 billion second-mortgage loan portfolio.

Stung by the bankruptcies of two large nursing home corporations, Provident Bankshares Corp. warned yesterday that second-quarter profit will be lower than expected, missing analysts' estimates. The Baltimore-based banking company said it made a $13 million addition to its provision for loan losses in the second quarter, which ended June 30, to absorb the expected write-down of a large portion of a $15 million delinquent health care loan. The provision, which boosts the company's reserve for bad loans to $47 million, also helps Provident absorb a loss of about $5 million on the sale of a second troubled health care loan.

NationsBank Corp.'s net income shot up 29 percent in the fourth quarter, driven by acquisitions and higher fees from investment banking, deposit accounts and brokerage operations, the company said yesterday.Net income rose to $818 million in the quarter that ended Dec. 31, 1997, or $1.15 a share, compared with $632 million, or $1.09 a share for the same period a year earlier.The earnings were boosted by several large acquisitions. Last year, Charlotte, N.C.-based NationsBank acquired Boatmen's Bancshares Inc. of St. Louis and San Francisco-based Montgomery Securities Inc.This month, it closed a deal to buy Barnett Banks Inc. of Jacksonville, Fla., for $15.5 billion in stock.

H. David Shumpert is a patient man.Like a mechanic rebuilding a classic car that has been set up on blocks, he has painstakingly put Bank of Maryland together, piece by piece, over nearly five years.Now he wants to see it run.Several key hires and a merger with Mason-Dixon Bancshares Inc. last summer have given Bank of Maryland not only the talent, but the money to become a formidable competitor among community banks.Shumpert's mission is single-minded -- expand the bank quickly and profitably by exploiting a niche that he believes the bigger banks can't serve as well: small business lending.

Despite a slow-growing economy, two local banks - Columbia Bancorp and First Mariner Bancorp - said yesterday that their third-quarter profits increased, driven in part by gains from loans and service fees. Columbia, the parent of Columbia Bank, made $2.7 million, or 38 cents per diluted share, in the quarter that ended Sept. 30, 34.2 percent more than in the comparable period a year earlier. Profit in the first nine months was $7.4 million, or $1.02 a diluted share, 20.4 percent more than in the comparable period last year.

Despite reporting a healthy jump in earnings during the first three months, Provident Bankshares Corp. cut its quarterly dividend in half yesterday, to 5 cents a share, saying the need to preserve capital was paramount in banking's currently troubled atmosphere.2 .... .... ....Income.... .... .... .... Share'91.... .... ....815,000.. .... .... .... 0.14'90.... .... ....654,000.. .... .... .... 0.11% change.... .... ..+24.6.. .... .... .... +27.3.... .... .... ....Assets.... .... .... Deposits'91.

A surge in consumer loans helped push Signet Banking Corp.'s first-quarter net income up 17 percent, the Richmond, Va.-based company said yesterday.Signet reported net income of $31.2 million, or 52 cents a share for the quarter ended March 31, compared with $26.7 million, or 45 cents a share for the first quarter of 1995.Analysts weren't bowled over by the numbers, even though the $12 billion-asset banking company's overall profitability ratios were good."It was an OK number," said Michael Coiro, an analyst with Johnston, Lemon & Co. in Washington.

All he needed was a $135,000 loan, Paul Barielle figured, and hTC he could turn his marine electronics and boat service company of four employees into one of the largest of its kind outside of South Florida.But a year ago, neither the banks nor the Small Business Administration was willing to take the risk. Mr. Barielle, 35, turned to the Anne Arundel Economic Development Corporation and its small-business loan program for the money."It's been wonderful, yet not intimidating, which often a bank can be," he said.