A sharp increase in consumer loans and higher income from banking products helped fuel a 41 percent increase in Provident Bankshares Corp.'s third-quarter earnings, the company said yesterday.
Provident earned $4.8 million in the quarter ended Sept. 30, and $12.9 million for the first nine months of the year, up 45 percent from a year ago.
"We have come a long way in five years," said Carl W. Stearn, Provident's chairman and chief executive, who noted that 1990 was the last time the company lost money. "It has been a very steady march upward."
But Mr. Stearn said there is room for improvement. Provident's earnings performance ratios -- return on equity and return on assets -- still lag peers.
"We still are not where we want to be in terms of ROA and ROE," he said.
Provident grew dramatically in loans, deposits and assets. Consumer loans grew $238 million as total loans jumped 21 percent to $1.5 billion in the quarter. In March, Provident started accepting loans from automobile dealerships, which added $100 million to the portfolio, Mr. Stearn said.
Income from services increased 14 percent to $7.7 million in the quarter, but remained flat for the nine-month period. Mr. Stearn said the company's consumer checking accounts helped build fee income in the quarter.
Provident decided to delay selling mortgage servicing rights in the quarter because reduced premiums paid to the Federal Deposit Insurance Corp. added $800,000 to the bottom line.
Mr. Stearn said the bank will sell the mortgage-servicing rights at a later date.
Provident's nonperforming assets, or loans that are 90 days late on principal and interest payments, increased $2.8 million in the quarter to $13.7 million because the bank made more consumer and home loans. Mr. Stearn said about half of the increase was due to mortgage loans, which are insured.
"We will collect them eventually," he said. "The other hunk is from basically retail consumer loans because of increases in volume. There is some deterioration nationwide in the consumer credit delinquency numbers."
Provident's assets grew nearly 25 percent to $2.5 billion, and deposits were up 15.5 percent to $1.5 billion.