Baltimore's Provident Bankshares is counting on supermarket branching to raise its profile in the bustling Washington suburbs.

Provident, with $4.9 billion of assets, said it will open 16 full- service branches in Richfood Holdings Inc. supermarkets in the next two years. The agreement gives Provident entry into Prince Georges County, Md., and fast-growing northern Virginia.

Peter M. Martin, Provident's president and chief executive officer, said his company has been looking into an area of Virginia about 50 miles from Baltimore because of the success it has had originating real estate loans there.

"We have customers who have told us they would love to see us with branches there," he said.

The bank intends to use the supermarket branches to build a retail customer base in the area, then build stand-alone offices where appropriate.

Though most banking companies choose to extend branch networks in the reverse order, Provident's strategy can work, a consultant said. John W. Garnett, chief executive officer at International Banking Technologies in Norcross, Ga., said a bank entering an area through established stores can benefit from what he calls "the halo effect."

"If you have a good retail partner, it is an advantage," said Mr. Garnett, an in-store expert with more than 450 bank clients. "By going into an existing store, the bank gains the implied endorsement of the supermarket chain they are entering."

Supermarket banking, a hot trend only a few years ago, has come under fire recently from some observers who say the branches do not create enough loan volume to make them profitable. But Provident says the strategy has worked well in the Baltimore area, where it has 20 in-store branches.

The company said its average supermarket branch became profitable within 18 months of opening and every one has been profitable after two years. Mr. Martin attributed this success to the bank's sending employees into supermarket aisles to solicit business, rather than keeping them behind desks waiting for customers.

"The key is that we approach it like a retail business," Mr. Martin said. "We want people out there selling."

"Provident does perhaps the best job of any bank in the country when it comes to supermarket branching," Mr. Garnett said. "They are very aggressive in their marketing and sales approach."

Analysts said it is important for Provident to expand beyond Baltimore. With the "tremendous amount of wealth in northern Virginia, that is the natural place for Provident to look," said Vernon C. Plack, an analyst at Scott & Stringfellow Inc. in Richmond, Va.

But the Maryland company should expect plenty of competition. BB&T Corp. of Winston-Salem, N.C., for example, used a string of mergers last year to build a solid foothold in the Washington suburbs. And United Bankshares of Parkersburg, W.Va., bought Fairfax, Va.-based George Mason Bankshares last year for its piece of the market.

To be successful, Provident must apply the skills it developed in its early in-store branches, Mr. Plack said.

"Even in a crowded market, good service will win you business," he said. "That is what they are counting on."

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