2 Baltimore banks see earnings jump


Baltimore banking companies continued to pick up the pace in the third quarter, as increased lending and lower expenses from bad loans drove profits higher than a year ago.

For First Maryland Bancorp, parent of the First National Bank of Maryland, a 7 percent increase in earnings was due mainly to a sharp drop in the amount of money set aside to cover future loan problems.

Provident Bankshares Corp., meanwhile, saw profits shoot up 62 percent over a year ago. The company, parent of Provident Bank of Maryland, enjoyed higher profit margins on more loans and raised its income from nonlending sources, such as mortgage banking.

"It looks like a really good quarter," said analyst Annette Volosin, of McConnell, Budd & Downes Inc., in Morristown, N.J. "They've been having pretty good lending growth."

First Maryland, Maryland's second largest banking company, earned $28.5 million during the third quarter, which ended Sept. 30, compared with $26.7 million last year. The company's parent, Allied Irish Banks PLC, in Dublin, does not report per-share earnings for its units.

The third-quarter earnings also were better than in the second quarter, when profits dropped 9.5 percent compared with the second quarter of 1993.

"We are pleased with the solid and continuing growth in First Maryland's earnings for each succeeding quarter of 1994," President and Chief Executive Officer Frank P. Bramble Sr. said.

The biggest component in the company's earnings gain was the loan-loss provision, an amount deducted from earnings and added to reserves to cover future loan problems. Because of continued improvement in the quality of its loans, First Maryland cut its provision to $6 million during the quarter, from $13 million a year ago.

Revenues from loans and investments were flat, as were the costs of deposits and other borrowings. The "vast majority" of the company's income from nonlending sources came from a one-time transaction, the sale of six branches and two other facilities in Allegany County, according to spokesman Ron McGuirk.

Provident's earnings strength came from a broad base of sources, including consumer and commercial loans, higher profits on those loans, mortgage banking fees, and lower expenses from soured loans.

"They don't seem to be having any problems," said Ms. Volosin, of McConnell, Budd & Downes.

Provident earned $3.4 million, or 50 cents a share, during the third quarter, compared with $2.1 million, or 32 cents a share in last year's third quarter.

The company's assets were up 9 percent since last year. And its profit margin from lending and deposit activities rose to 4.13 percent from 3.84 percent last year.

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