Shares of Provident Bank have fallen almost 70 percent since the beginning of the year. 1st Mariner stock has lost more than 80 percent of its value. Sandy Spring Bank is down 30 percent.
Reason to panic? For investors, maybe, but for the average bank customer, probably not, experts said.
Despite the heavy hits to their stock price, local banks said everyday operations and the security of money deposited by regular customers aren’t at risk. But sliding stock prices can drive some depositors to panic and to cut back or pull their business.
“For the average person, seeing that your bank is losing 80 percent of its stock, even if your money’s insured, it might make you worry,” said Jim Sinegal, an analyst covering local banks for Chicago-based Morningstar. “Even for a well-capitalized bank, the perception is important.”
Since Jan. 2, the first trading day of the year, Provident stock has fallen 69 percent, closing Friday at $6.62 per share after beginning the year at $21.43.
Shares of 1st Mariner Bancorp stock are down 84 percent, from $5.89 at the beginning of the year to close Friday at 97 cents a share.
Olney-based Sandy Spring Bancorp’s stock closed Friday at $19.50 a share, down 30 percent from $27.70 in January.
Though his bank’s stock trades below $1, 1st Mariner Bank Chairman and Chief Executive Officer Ed Hale said its book value — the total value of its assets and business — would work out to more than $8 a share.
“Why is it trading at a dollar? It’s just a reflection of what’s out there today,” Hale said. “Everybody’s down, call anyone.”
A decreased stock price can also make it difficult for banks to raise funds, Sinegal said. That makes efforts such as the Treasury Department’s Capital Placement Program, which looks to encourage healthy banks to lend by investing federal dollars in them, more attractive.
Locally, Provident Bank has accepted $151 million from the program, and Sandy Spring received $83 million.
“We don’t think that the fluctuation in our stock price has had much impact on our operations,” Provident spokeswoman Vicki Cox said in a statement. “Our core banking operations, meaning our lending and deposit gathering efforts, have remained very stable this year.”
