Provident Bankshares Corp., the parent company of Provident Bank, said positive financial results during the first quarter of 2006 were fueled by a number of factors ? mainly increased lending activity and growth in deposits.
The Baltimore-based company reported Thursday a 16 percent increase in net income for the first quarter of 2006. Total net income was $18.3 million, or 55 cents per diluted share, compared with $15.8 million, or 47 cents per diluted share, for the same quarter in 2005.
According to Gary N. Geisel, the company?s chairman and chief executive, Provident?s experience in real estate lending resulted in growth in average home equity loans and commercial real estate loans, which ultimately benefited the company?s bottom line during the first quarter. Average home equity loans grew by 26 percent to $189 million and commercial loans were up 20 percent to $206 million. Meanwhile, average total deposits increased 7 percent to $4 million.
“If you?re growing the balance sheet with 7 percent growth in deposits, 12 percent increase in commercial [lending] and a 26 percent in home equity loans, it?s a huge benefit to net income and margins.”
Geisel added that in addition to the increases in lending and deposits, the company?s location in the mid-Atlantic region also fueled growth in net income.
“We?re certainly blessed with a good regional economy,” Geisel said.
“We?re doing business from Baltimore to Washington to Richmond, which is one of the most attractive markets in the country.”
But, while bank officials said they were pleased with the first-quarter results, Collyn B. Gilbert, an analyst Florham Park, N.J. based- Ryan Beck & Co., hesitated to call the report positive.
“I would think it was one of the more negative earning reports coming out of these guys in a while,” she said.
“But, you can?t ignore the fact that these guys have developed a very attractive franchise [business] in a highly coveted market, which should help support a higher valuation of its shares.”
A growing Dividend
» In other news: Provident also announced Thursday that its Board of Directors has declared an increased quarterly cash dividend of 29 cents per share, marking the fifth consecutive quarterly dividend increase.
» The quarterly dividend will be paid on May 12, to stockholders of record at the close of business on May 1.
