Three banks with Maryland operations reported modest gains in third-quarter profits yesterday, and one a small profit dip, as falling interest rates cut into the spreads between the rates banks pay for deposits and the rates they can command from borrowers.
First Maryland Bancorp, a unit of Allied Irish Banks PLC that is the parent of the First National Bank of Maryland, said its earnings rose 8.8 percent to $31 million. The Baltimore bank said its loan base is 11 percent bigger than last year at this time, driving interest income up by $3.7 million, enough to account for the entire profit gain.
The company also made a much smaller addition to its loan loss reserves than during the third quarter of 1994.
Signet Bankshares Corp. said its profits rose by 15 percent, to 50 cents a share or $30.1 million, a figure that was 2 cents a share lower than Wheat First Butcher Singer analyst Merrill Ross expected. She blamed bigger-than-expected loan loss reserves,
which Signet took in preparation for next month's launch of a marketing effort for a new installment-loan program aimed at consumer borrowers.
"The [loan loss] provision next quarter will probably double again," Ms. Ross said. "Then they'll be ready to launch in a serious way next year. They think they have extinguished the risk of the November solicitation.
Ms. Ross said, however, that Signet saw deposit rates falling more slowly than loan rates through most of the quarter. That cut the spread between Signet's loan revenues and its cost of funds, a key measure of a bank's success, to 4.96 percent from 5.14 percent.
Signet shares closed at $26.50, down $1.38. First Maryland shares, all of which belong to Allied Irish, are not publicly traded.
Among smaller banks, Carrollton Bancorp of Baltimore said its profits rose $3,000 to $528,000. Per-share profits worked out to 40 cents, the same as in last year's third quarter, because of lower interest rate margins. First Citizens Financial Corp. of Gaithersburg, parent of Citizens Savings Bank FSB, said its earnings fell to $1 million during the quarter from $1.1 million a year earlier.