Provident net income up 6.6% in 4th quarter to $14.2 million

Provident Bankshares Corp. reported a 6.6 percent increase in fourth-quarter net income yesterday, saying its commercial loans and core deposits grew.

The Baltimore-based bank reported net income of $14.2 million, or 56 cents per share, for the quarter that ended Dec. 31, compared with a profit of $13.3 million, or 53 cents per share, for the year-earlier period. The results beat analysts' estimates by a penny, according to Thomson First Call.


"It feels pretty good," said Gary N. Geisel, Provident's chairman and chief executive. " ... For banking, it's been a challenging year with this low-rate environment."

Provident's shares closed up 40 cents to $31.40 per share in trading on the Nasdaq stock market yesterday.


The bank, which has $5.2 billion in assets, is gearing up for a major expansion into Northern Virginia as a result of its acquisition of Warrenton, Va.-based Southern Financial Bancorp Inc. The $330 million deal, announced in November, will add $1.5 billion in assets and 33 offices to Provident's 116-office network.

The deal gives Provident, a historically consumer-oriented bank, a larger footprint in the lucrative Washington-Northern Virginia market. But analysts said the bank faces a challenge in integrating Southern Financial, which is primarily a commercial bank.

"From a geographical and strategic point of view, it makes sense," said Henry J. Coffey Jr., an analyst with Ferris, Baker Watts Inc. "I think the challenges are going to be integrating the two franchises and their different cultures together."

Provident has been on a mission to balance its commercial and consumer business.

"We're an emerging commercial bank," said Kevin G. Byrnes, Provident's president and chief operating officer. "We're starting to look pretty balanced."

Total loans increased nearly 9 percent to $2.7 billion in the fourth quarter, with loans in its core market up 15 percent. Non-core loans declined by a similar percentage. The bank's core deposits grew 5 percent to $2.8 billion.

For the year, Provident reported net income of $51.5 million, or $2.05 per share, compared with $48.3 million, or $1.88 per share, for all of 2002.