Provident Bankshares Corp.'s fourth-quarter loss grew to $26.7 million, or 88 cents a share, largely because of an accounting charge and an increase in funds set aside for loan losses, the Baltimore-based company reported yesterday.
In the corresponding quarter a year ago, Provident lost $15.5 million, or 49 cents a share.
"As we anticipated, the deterioration in economic conditions during the fourth quarter had a significant impact on our investment and loan portfolios," Chairman and Chief Executive Officer Gary N. Geisel said in a statement.
For the year, Provident lost $39.5 million or $1.38 per share. In 2007, Provident posted a profit of $32.1 million, or $1 a share.
Provident is Maryland's largest independent bank and last month agreed to be acquired by rival M&T; Bank Corp. of Buffalo, N.Y., in a stock swap, which at the time of the announcement was worth $401 million or $10.50 a share. That deal, which Geisel has said was necessary because Provident expected "significant challenges" in the quarters ahead, is set to close between April and June.
In the past year, Provident took a series of charges related to the declining value of its mortgage-related securities and other investments. In the fourth quarter, the pretax noncash accounting charge amounted to $32.7 million.
Provident also increased its provision for loan losses in the quarter to $21.5 million, reflecting the rise of charge-offs and nonperforming loans because of the weak economy, the company said.
Collyn Bement Gilbert, a senior bank analyst with Stifel Nicolaus & Co., said the boost in the loan loss provision was a surprise.
Total nonperforming loans reached 1.94 percent of all loans, about double the 0.95 percent at the end of September. The company blamed the deterioration in the residential real estate construction, commercial business and commercial mortgage portfolios.
Last year, Provident received about $151million from the government's Troubled Asset Relief Program. Since receiving the money, Geisel said, the bank increased its lending by about $68 million.
Total loans at the end of the fourth quarter reached $4.3 billion, up 3.4 percent from a year earlier. Deposits jumped nearly 14 percent to $4.75 billion. Assets ticked up slightly to $6.57 billion.
The company's stock yesterday rose 16 cents, or almost 3 percent, to close at $6.27 a share.