An activist shareholder is calling on Baltimore's Provident Bankshares to find a buyer.

In documents filed with the Securities and Exchange Commission last Friday, investor Jerry Shearer said he is afraid that Provident might miss its chance if does not sell soon.

Consolidation is "leaving the laggards out of touch and far behind," wrote Mr. Shearer, who owns about 2% of the company. "Unless shareholders make their wishes known, Provident is very likely to be left far behind with its franchise value worth less and less."

Mr. Shearer urged shareholders to call Peter M. Martin, the $4 billion- asset banking company's chairman and chief executive, and urge him to sell.

But Mr. Martin took exception to Mr. Shearer's letter, insisting that his company is looking out for its shareholders.

"Our policy is to run this place as if we were going to be here forever," Mr. Martin said in an interview, "but if an attractive offer comes along, we present it to our shareholders. That has never changed."

In his letter to shareholders, Mr. Shearer, managing partner of Mid- Atlantic Investors, Columbia, S.C., complained that Provident's return on assets falls well below that of other midsize banks. Provident returned 0.97% on assets in the second quarter, compared with 1.63% for BB&T Corp., 1.44% for First Virginia Corp., and 1.53% for PNC Bank Corp., he said.

He said he is also worried that Provident risks missing out on merger opportunities. He mentioned "street talk" that had the bank in talks to sell itself to Richmond, Va.-based Crestar Financial Corp. last April. Crestar has since sold itself to SunTrust Banks Inc., Atlanta.

"Provident runs the risk of having potential acquirers disappear," Mr. Shearer wrote. This is "a significant risk to shareholders that this shareholder believes management doesn't comprehend."

Mr. Martin's response: "He uses return on assets when most of the industry agrees return on equity and earnings per share are better measures of performance."

Through the first quarter, Provident returned 13.87% on equity, compared to the Maryland bank average of 12.63%, according to Federal Deposit Insurance Corp. data. And Provident's return on assets is up from 0.91% in the second quarter of 1997, according to the same data.

Still, should the company decide to sell, Mr. Martin said, he is confident there will be buyers.

"I have been in this business for 34 years, and there are still how many commercial banks in this country?" he asked. "I know that is his premise, but I don't understand it."

Angelina Billion, an analyst at Johnston, Lemon & Co. in Washington, said Provident has "steadily improving fundamentals," and she rates it "outperform."

However, "they are in an attractive market, and they would be a good fit for a lot of the newcomers to the market," such as BB&T and SunTrust. Winston-Salem, N.C.-based BB&T has already announced a string of deals in the Washington area.

Provident has more than 40 branches in Maryland and southern Pennsylvania. Its main presence is in Greater Baltimore, but it did enter the Washington suburbs last year when it bought Citizens Savings Bank of Gaithersburg, Md.

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