Provident Bankshares profit falls 23% in 2Q

The Baltimore Sun

Provident Bankshares Corp., Maryland's largest independent bank, reported yesterday that profit dropped 23 percent in the second quarter, mostly because it charged off a $3.5 million commercial loan to a government contractor that failed to repay.

Chief Executive Officer Gary N. Geisel emphasized that the Baltimore bank, which outsources its residential-mortgage business, has not been hurt by the wave of defaults on subprime mortgages that is rattling the banking sector nationwide.

While Provident makes some home-equity and consumer loans that could be considered subprime, meaning the borrowers have poor credit histories, those are a "modest" part of the overall portfolio, he said.

Net income declined to $15.5 million, or 48 cents per share, from $20 million, or 60 cents per share, for the second quarter last year. Those results fell short of Wall Street expectations by 5 cents, according to analysts polled by Thomson Financial. Without the loan charge-off, the bank would have beaten the consensus forecast by 2 cents.

"Fundamentally it's a good earnings story for us," Geisel said, "and we don't want it to be overshadowed by one single loan charge-off."

Provident has been on a tear to reduce costs, selling six branches and consolidating seven others with nearby branches in recent months. At the same time, the loan portfolio grew 5 percent over last year to $3.9 billion at the end of the quarter while deposit growth was sluggish, rising about 1 percent to $4.2 billion.

Other local banks reporting quarterly earnings yesterday included:

Sandy Spring Bancorp, which operates 42 branches in Maryland and Northern Virginia. The Olney-based bank had net income of $8.2 million, or 51 cents per share, compared with $8.1 million, or 54 cents per share, a year ago. It also disclosed that one $14.4 million loan was past due, though the company said it doesn't expect to take a loss because the loan is secured by a residential development.

BCSB Bancorp, parent of Baltimore County Savings Bank, reported its first profit since revealing last year that it had been victimized by a check-kiting scheme that cost it $11 million. The bank had net income of $599,000, or 10 cents per share, compared with a $6.9 million loss, or $1.18 per share, for the quarter that ended June 30.

Patapsco Bancorp, another Baltimore bank, reported that its quarterly profit slipped to $329,000, or 17 cents per share, from $422,000, or 22 cents per share, a year ago. The bank's results were affected by costs related to its merger with Bradford Bancorp.

laura.smitherman@baltsun.com

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