No further hits, Provident says

Baltimore's Provident Bankshares Corp. said yesterday that it does not expect write-downs in its real estate securities portfolio beyond those that were mostly responsible for its $15.5 million fourth-quarter loss.

Maryland's largest independent bank was hurt in the three months that ended Dec. 31 by a $28.9 million noncash charge against its securities portfolio. The portfolio has no exposure to the subprime market but has been nonetheless hurt by plummeting values of mortgage-related investments.


Fourth-quarter earnings took a hit of 91 cents per share, resulting in a net loss of 49 cents per diluted share, the bank said yesterday. That's compared with a profit of $11.3 million, or 34 cents per diluted share, in the year-ago period.

"We don't expect the value to go down further," Gary N. Geisel, Provident chairman and chief executive, said in an interview last night. "We feel like we looked at the thing from every side, and we feel good about the conservative approach we took."


In the fourth quarter, Provident also increased its provision for bad loans by $6 million to reflect the region's slumping housing market. The bank said it has only limited exposure to the subprime mortgage business in its loan portfolio.

Provident wrote down its investments in eight real estate investment trust securities after Fitch Ratings sharply downgraded a large segment of the national pooled REIT securities market last month. The bank wrote down the securities to a current value of $18.6 million, from $66 million.

Each of the eight securities are current on interest and principal payments, said the bank, which informed investors of the coming write-down last week.

"For that particular block of securities, they've already written them down like 70 percent. I suspect that's plenty," said Jeff Davis, an analyst at FTN Midwest Research in Nashville, Tenn., who does not own Provident shares.

Provident's average loans grew 8 percent in the fourth quarter compared with the quarter last year.

Net interest income - the difference between interest and dividends earned from loans and securities, and the interest paid on deposits and other liabilities - declined 7 percent to $45.9 million, from $49.3 million in the year-ago period.

Shares of Provident rose 88 cents to close yesterday at $17.31. The bank's earnings were released after the market closed.