Provident Bankshares Corp. in Baltimore swung to a loss in the third quarter after taking a $24.6 million impairment charge on investment securities that have sharply declined in value.
The $6.4 billion-asset company, which posted a profit of $16 million, or 50 cents a share, in the year-earlier period, said Monday that it lost $5.4 million, or 21 cents a share. Steep writedowns on its holdings in mortgage-backed and trust-preferred securities also led to a loss in the first quarter and forced Provident to restate second-quarter earnings.
On the loan side, Provident reported modest increases in chargeoffs and delinquencies and warned of "elevated" credit costs over the next few quarters as real estate conditions in its markets continue to weaken. As of Sept. 30, 0.95% of its loans were not performing, up from 0.59% three months earlier, largely because of problems collecting on two residential construction loans totaling $15.8 million, Provident said.
Provident also announced Monday that it is eligible for a cash infusion from the Treasury Department and that its board would weigh whether to participate in the $250 billion Capital Purchase Program. The company is considered to be well capitalized.