Housing Downturn Prompts Provident Writedown
Troubles in the mortgage and housing markets have hit another local financial services business. Provident Bankshares said today that it would take an after-tax charge of $28.9 million in the fourth quarter to account for write downs in the value of real estate-backed securities in its investment portfolio.
The Baltimore-based parent company of Provident Bank also said it will record a $3.6 million charge to cover an expected in increase in losses on real estate and construction loans. Provident shares plunged 11 percent, to close at $16.81, their lowest level in more than seven years. In a statement, the company blamed the write downs on a housing downturn that has roiled financial markets and battered many banking and mortgage companies.
"Our actions reflect the challenges that Provident and banks across the country are facing on two fronts," said Chairman and Chief Executive Gary N. Geisel. "First, on a national level, the lack of liquidity of certain bond investments that are tied to the residential housing market and the resulting accounting adjustments that are required. And second, on a regional level, anticipating the impact of the continuing slowdown of the housing sector on our loan portfolio."
The company is scheduled to release full-year financial results on Thursday. Provident has nearly 150 branches throughout the Washington, Baltimore and Richmond markets. Many of those branches are located in stores, including Shoppers Food Warehouse.
-- Mike Shepard
January 11, 2008; 6:41 PM ET
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