Full Year Earnings Per Share Growth up 21%
BALTIMORE, Jan. 15 /PRNewswire-FirstCall/ --
Provident Bankshares Corporation (Nasdaq: PBKS), the parent company of
Provident Bank, today reported $13.3 million in net income or $0.53 per
diluted share for the fourth quarter of 2002. This represents 10% growth in
diluted earnings per share for the quarter ending December 31, 2002, with EPS
growth for the year 2002 at 21%.
The Company continued to execute its key strategy to increase its
presence, customer base and delivery network throughout the Baltimore-
Washington corridor. Solid performance from core banking operations continued
to drive revenue growth, as fee income increased and asset quality remained
strong. The Company also saw strengthened capital and contained expense
growth.
Fourth Quarter Financial Highlights
-- Net income was $13.3 million for the quarter, up 7% from $12.4 million
reported in the same quarter last year
-- Diluted earnings per share were $0.53, up 10% from $0.48 in the 2001
fourth quarter
-- Return on average common equity was 17.69%, up from 16.73% in the 2001
fourth quarter
-- Return on average assets was 1.09%, up from 1.00% in the fourth quarter
2001
-- Net interest margin grew to 3.04%, up from 2.82% during the same
quarter last year
-- Average core deposits increased $170 million, or 7%, from the 2001
fourth quarter
-- Average core loans increased $204 million, or 13%, from the same
quarter last year
-- Non-interest income (excluding securities gains) grew 12% from the
comparable period in 2001 and comprised 40% of total quarterly revenue
-- Asset quality remained strong as non-performing loans declined 27% from
one year ago
Fourth Quarter Results
Provident Bankshares reported net income for the quarter ending
December 31, 2002 of $13.3 million, or $0.53 per diluted share. Earnings per
share increased 10% over the fourth quarter of 2001. Net income for the
fourth quarter was up 7% from the $12.4 million reported for the 2001 fourth
quarter.
Return on average common equity was 17.69% for the fourth quarter 2002, up
from 16.73% in the same quarter a year ago. Return on average assets was
1.09%, up from 1.00% for the comparable period last year.
The net interest margin was 3.04%, up from 2.82% for the fourth quarter
2001.
Consistent with Provident's strategy to focus on core banking operations,
core loans and deposits again increased during the quarter. Average core
deposits increased $170 million, up 7% over the fourth quarter 2001. Average
non-core deposits (primarily brokered deposits) decreased $356 million, or
45%, for the same period. Average core loans increased $204 million, or 13%,
from the same quarter last year, while non-core consumer loans and national
syndicated loans decreased 35% and 30%, respectively, from the fourth quarter
2001. Provident continued its strategy to move from non-core assets and
liabilities to core.
Non-interest income (excluding net gains) increased 12% from the fourth
quarter 2001, to $22.9 million from $20.4 million. Non-interest income
comprised 40% of Provident's quarterly revenue. These increases continued to
be fueled by strong retail and commercial checking account growth, with
deposit fees up 12% over the fourth quarter 2001.
Asset quality remained strong. At December 31, 2002, total non-performing
loans were $21.1 million, down $7.7 million, or 27%, from the same quarter
last year. Net charge offs declined 9% and the allowance for loan losses to
loans was 1.31% at the close of the quarter. Substantially all of the non-
performing loans were secured by residential real estate.
Provident repurchased 390,000 shares of common stock during the fourth
quarter. At December 31, 2002, stockholders' equity was $315.6 million. The
leverage ratio was 7.47% and book value per share was $12.96.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.225 per share. This quarterly cash
dividend will be paid on February 7, 2003 to stockholders of record at the
close of business on January 27, 2003.
Stock Repurchase Program Extended
Provident Bankshares Board of Directors also approved an extension of its
stock repurchase program, which was initiated in September 1998. Provident
had previously purchased 7,145,535 shares of common stock under this program.
The Board's action will enable Provident to repurchase up to one million
additional shares of its current outstanding common stock. Repurchases will
be made from time to time, depending upon market conditions and subject to
compliance with all applicable securities laws.
Management Comment
Commenting on the Company's fourth quarter performance, Chairman and CEO
Peter M. Martin said, "I am very pleased with the steady growth and
profitability of our core banking operations. Provident's fourth quarter
results show solid asset quality and continued revenue momentum from growth in
core deposits, core loans and fee income. We remain committed to our strategy
of decreasing non-core business activities while we increase earnings from our
core operations. The successful implementation of this strategy has produced
positive growth in ROA, ROE and EPS which is evidence of Provident's
significant progress toward our long-term business goals."
12-Month Results
For the 12 months ended December 31, 2002, net income totaled
$48.3 million, up 17% from $41.5 million for 2001 and diluted earnings per
share were $1.88, up from $1.56 for the prior year. Return on average common
equity for the year was 16.22%, up from 14.45% for 2001. Return on average
assets was 1.00%, up significantly from the 0.83% reported in 2001. Net
interest margin for the year was 3.14%, up from 2.89% last year.
During 2002, Provident continued to use its stock buyback authority to
enhance shareholder value by strategically purchasing shares in the open
market. The Corporation repurchased a total of 1,079,400 shares in 2002.
Continued Focus on Key Strategies Leads to Solid 2002 Results
Provident's continued focus on its core business strategies resulted again
in positive revenue momentum for the year. The strategies are:
-- Broaden presence and customer base in the Washington metro market
Provident continued to be successful in its efforts to grow the Company's
presence in this key market. Seven of Provident's net nine branches opened
during 2002 were located in this market. At year-end, 43 of Provident's 109
branches were located here, with a total of 53 expected in the region by year-
end 2003. Thirty-five percent of all new retail checking accounts opened in
2002 were opened in Washington metropolitan branches. Twenty-seven thousand
new retail checking accounts were opened in the region in 2002. Retail
deposits in the region were up 4% in 2002 and now comprise 26% of total retail
deposits. Retail banking fee income in this market increased 34% over 2001.
-- Grow commercial business in the Baltimore-Washington corridor
Provident continued to grow its commercial customer base. Average
commercial deposits were up $103 million, or 40%, for the year. Much of this
increase was led by non-interest bearing DDA accounts which increased 45%, or
$67 million.
Average core commercial loans increased $89 million, or 11%, over the
fourth quarter 2001. Revenue from loan and deposit products continued to
grow, with commercial DDA fees posting a gain of 21% over 2001, and commercial
loan fees increasing 48% for the year.
Asset quality remained strong, with non-performing commercial loans
decreasing $3.2 million to $0.7 million at December 31, 2002.
-- Focus resources on growth in core business lines
Core banking operations continued to drive Provident's solid performance.
Average core loans increased $200 million, or 14%, for the year and now
comprise 62% of total loans, up significantly from 47% in 2001.
Consumer loan demand remained high, with average core consumer loan
balances increasing $134 million, or 20%, over 2001. This growth was led by
increases in average marine loan balances, which posted a 33% increase and
average home equity line balances, which grew 21%. The non-core consumer loan
portfolio (comprised mainly of acquired home equity loans and runoff
portfolios) declined $606 million, or 39%, from 2001 levels.
Average core commercial loans increased 8%, or $66 million, from 2001, and
the average non-core syndicated loan portfolio decreased to $67 million, down
20% from 2001.
Average core deposits increased $147 million, or 6%, while non-core
deposits posted a significant decline of $468 million, or 45%. Average core
deposits now represent 82% of total deposits, up from 71% in 2001.
-- Improve efficiencies and productivity
Operating expenses grew only 3.7% over 2001, despite the growth of the
branch network, which grew by a net 9 branches in 2002. This reflects the
Company's continued emphasis on controlling costs. Provident will continue to
contain expenses in 2003 within the constraints of its plans to open 13 new
branches during the year.
Outlook for 2003
Commenting on the future for Provident Bankshares, Chairman and CEO Peter
M. Martin added, "In 2002, our positive results were again driven by solid
asset quality and growth of our core business operations and customer base
throughout the Baltimore-Washington area. We continued to reduce our volume
of non-core business and to transition our balance sheet to look more like a
typical regional bank.
In 2003, we will remain committed to implementation of our successful
business strategies. We will further expand our delivery network to broaden
our market presence and deepen our customer base throughout the Baltimore-
Washington corridor. We will also continue to build our commercial banking
business in this market to complement our success in retail banking.
We are comfortable with the analysts' consensus EPS projections for 2003.
With the sustained growth and increased profitability of our core banking
operations, we expect our key ratios to continue to improve. Provident
remains well positioned for the future and I am confident in our management
team's ability to continue the success we have enjoyed."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $4.9 billion in assets, Provident serves individuals and
businesses in the dynamic Baltimore-Washington corridor through a network of
109 offices in Maryland, Northern Virginia, and southern York County, PA.
Provident Bank also offers related financial services through wholly owned
subsidiaries. Mutual funds, annuities and insurance products are available
through Provident Investment Center and leases through Court Square Leasing
and Provident Lease Corp. Visit Provident on the web at http://www.provbank.com.
Special Note: Provident Bankshares Corporation's fourth quarter earnings
teleconference will be webcast at 10:00 a.m. (EST) on Thursday, January 16,
2003. Log on to http://www.provbank.com. The webcast will include discussions of
the most recent quarter's results of operations and may include forward-
looking information such as guidance on future results. The annual
stockholders meeting for Provident Bankshares Corporation will be held on
Wednesday, April 16, 2003, at 10:00 a.m., at Provident Bankshares Corporate
Headquarters, 114 East Lexington Street, Baltimore, Maryland.
Statements contained in this Press Release that are not historical facts
are forward-looking statements, as the term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of factors, which
include, but are not limited to, factors discussed in documents filed by the
Company with the Securities and Exchange Commission from time to time.
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
(dollars in thousands, except per
share data) Three Months Ended December 31,
2002 2001 % Change
SUMMARY OF OPERATIONS
Net Income $13,285 $12,435 6.8 %
Net Interest Income 34,238 32,732 4.6
Provision for Loan Losses 1,425 2,770 (48.6)
Non-Interest Income (excluding net
gains) 22,919 20,398 12.4
Net Gains 2,600 3,643 (28.6)
Non-Interest Expense 39,227 35,837 9.5
Income Tax Expense 5,820 5,731 1.6
SHARE DATA
Basic Earnings Per Share $0.54 $0.49 10.2 %
Diluted Earnings Per Share 0.53 0.48 10.4
Cash Dividends Paid Per Share 0.22 0.20 10.0
Book Value Per Share 12.96 11.40 13.7
Weighted Average Shares -- Basic 24,480,847 25,368,674 (3.5)
Weighted Average Shares -- Diluted 25,102,701 26,158,395 (4.0)
Common Shares Outstanding 24,363,636 25,111,592 (3.0)
END OF PERIOD BALANCES
Investment Securities Portfolio $1,993,229 $1,804,234 10.5 %
Total Loans 2,560,563 2,776,893 (7.8)
Total Assets 4,890,722 4,899,717 (0.2)
Deposits 3,187,966 3,356,047 (5.0)
Stockholders' Equity 315,635 286,282 10.3
Common Equity 300,715 292,740 2.7
AVERAGE BALANCES
Investment Securities Portfolio $1,893,255 $1,789,725 5.8 %
Loans:
Core Consumer 833,790 718,589 16.0
Core Commercial & Industrial 316,922 280,535 13.0
Core Commercial Real Estate 584,369 531,601 9.9
Total Core Loans 1,735,081 1,530,725 13.4
Non-Core Consumer 798,920 1,227,072 (34.9)
National Syndicated Loans 55,405 79,386 (30.2)
Total Non-Core Loans 854,325 1,306,458 (34.6)
Total Loans 2,589,406 2,837,183 (8.7)
Earning Assets 4,494,344 4,641,007 (3.2)
Total Assets 4,811,441 4,950,459 (2.8)
Core Deposits 2,738,050 2,567,905 6.6
Non-Core Deposits 439,194 795,508 (44.8)
Total Deposits 3,177,244 3,363,413 (5.5)
Stockholders' Equity 307,468 302,110 1.8
Common Equity 298,019 294,962 1.0
SELECTED RATIOS*
Return on Average Assets 1.09 % 1.00 %
Return on Average Equity 17.14 16.33
Return on Average Common Equity 17.69 16.73
Net Yield on Average Earning Assets
(t/e basis) 3.04 2.82
Efficiency Ratio 68.40 68.88
Leverage Ratio 7.47 7.13
Tier I Risk-Based Capital Ratio 11.64 10.10
Total Risk-Based Capital Ratio 12.73 11.09
ASSET QUALITY
Non-Performing Assets $24,929 $31,964 (22.0)%
Non-Performing Loans 21,133 28,839 (26.7)
Loans Past Due 90 Days or More 14,828 10,818 37.1
Allowance for Loan Losses 33,425 34,611 (3.4)
Net Charge-offs 2,615 2,863 (8.7)
Non-Performing Loans to Loans 0.83 % 1.04 %
Allowance for Loan Losses to Loans 1.31 1.25
Net Charge-Offs to Average Loans 0.40 0.40
Allowance for Loan Losses to
Non-Performing Loans 158.16 120.01
(dollars in thousands, except per Three Months
share data) Ended September 30,
2002 % Change
SUMMARY OF OPERATIONS
Net Income $13,140 1.1 %
Net Interest Income 34,764 (1.5)
Provision for Loan Losses 2,150 (33.7)
Non-Interest Income (excluding net
gains) 22,029 4.0
Net Gains 1,997 30.2
Non-Interest Expense 37,471 4.7
Income Tax Expense 6,029 (3.5)
SHARE DATA
Basic Earnings Per Share $0.53 1.9 %
Diluted Earnings Per Share 0.52 1.9
Cash Dividends Paid Per Share 0.215 2.3
Book Value Per Share 12.59 2.9
Weighted Average Shares -- Basic 24,839,708 (1.4)
Weighted Average Shares -- Diluted 25,492,725 (1.5)
Common Shares Outstanding 24,733,718 (1.5)
END OF PERIOD BALANCES
Investment Securities Portfolio $1,916,868 4.0 %
Total Loans 2,635,325 (2.8)
Total Assets 4,899,172 (0.2)
Deposits 3,233,415 (1.4)
Stockholders' Equity 311,380 1.4
Common Equity 300,942 (0.1)
AVERAGE BALANCES
Investment Securities Portfolio $1,914,305 (1.1)%
Loans:
Core Consumer 811,417 2.8
Core Commercial & Industrial 307,548 3.0
Core Commercial Real Estate 560,292 4.3
Total Core Loans 1,679,257 3.3
Non-Core Consumer 895,848 (10.8)
National Syndicated Loans 67,102 (17.4)
Total Non-Core Loans 962,950 (11.3)
Total Loans 2,642,207 (2.0)
Earning Assets 4,565,184 (1.6)
Total Assets 4,860,787 (1.0)
Core Deposits 2,714,538 0.9
Non-Core Deposits 522,509 (15.9)
Total Deposits 3,237,047 (1.8)
Stockholders' Equity 304,793 0.9
Common Equity 297,280 0.2
SELECTED RATIOS*
Return on Average Assets 1.07 %
Return on Average Equity 17.10
Return on Average Common Equity 17.54
Net Yield on Average Earning Assets
(t/e basis) 3.04
Efficiency Ratio 65.76
Leverage Ratio 7.43
Tier I Risk-Based Capital Ratio 11.33
Total Risk-Based Capital Ratio 12.42
ASSET QUALITY
Non-Performing Assets $24,450 2.0 %
Non-Performing Loans 20,345 3.9
Loans Past Due 90 Days or More 15,739 (5.8)
Allowance for Loan Losses 34,615 (3.4)
Net Charge-offs 2,254 16.0
Non-Performing Loans to Loans 0.77 %
Allowance for Loan Losses to Loans 1.31
Net Charge-Offs to Average Loans 0.34
Allowance for Loan Losses to
Non-Performing Loans 170.14
* Exclusive of cumulative effect of change in accounting principle
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
(dollars in
thousands, except per
share data) Twelve Months Ended December 31,
2002 2001 % Change
SUMMARY OF OPERATIONS
Net Income $48,305 $41,465 16.5 %
Net Interest Income 141,524 139,161 1.7
Provision for Loan Losses 9,825 17,940 (45.2)
Non-Interest Income (excluding net
gains) 86,394 74,955 15.3
Net Gains 2,786 11,727 (76.2)
Non-Interest Expense 150,861 145,478 3.7
Income Tax Expense 21,713 19,800 9.7
SHARE DATA
Basic Earnings Per Share $1.94 $1.61 20.5 %
Diluted Earnings Per Share 1.88 1.56 20.5
Cash Dividends Paid Per Share 0.85 0.752 13.0
Book Value Per Share 12.96 11.40 13.7
Weighted Average Shares -- Basic 24,895,543 25,766,912 (3.4)
Weighted Average Shares -- Diluted 25,630,985 26,661,753 (3.9)
Common Shares Outstanding 24,363,636 25,111,592 (3.0)
END OF PERIOD BALANCES
Investment Securities
Portfolio $1,993,229 $1,804,234 10.5 %
Total Loans 2,560,563 2,776,893 (7.8)
Total Assets 4,890,722 4,899,717 (0.2)
Deposits 3,187,966 3,356,047 (5.0)
Stockholders' Equity 315,635 286,282 10.3
Common Equity 300,715 292,740 2.7
AVERAGE BALANCES
Investment Securities
Portfolio $1,869,220 $1,750,954 6.8 %
Loans:
Core Consumer 796,843 662,828 20.2
Core Commercial & Industrial 303,342 265,389 14.3
Core Commercial Real Estate 552,844 525,276 5.2
Total Core Loans 1,653,029 1,453,493 13.7
Non-Core Consumer 938,344 1,544,732 (39.3)
National Syndicated Loans 67,466 84,790 (20.4)
Total Non-Core Loans 1,005,810 1,629,522 (38.3)
Total Loans 2,658,839 3,083,015 (13.8)
Earning Assets 4,538,737 4,846,745 (6.4)
Total Assets 4,845,615 5,128,978 (5.5)
Core Deposits 2,688,908 2,542,132 5.8
Non-Core Deposits 580,095 1,048,381 (44.7)
Total Deposits 3,269,003 3,590,513 (9.0)
Stockholders' Equity 299,333 293,953 1.8
Common Equity 297,881 295,076 1.0
SELECTED RATIOS*
Return on Average Assets 1.00 % 0.83 %
Return on Average Equity 16.14 14.50
Return on Average Common Equity 16.22 14.45
Net Yield on Average Earning Assets
(t/e basis) 3.14 2.89
Efficiency Ratio 65.96 67.02
Leverage Ratio 7.47 7.13
Tier I Risk-Based Capital Ratio 11.64 10.10
Total Risk-Based Capital Ratio 12.73 11.09
ASSET QUALITY
Non-Performing Assets $24,929 $31,964 (22.0)%
Non-Performing Loans 21,133 28,839 (26.7)
Loans Past Due 90 Days or More 14,828 10,818 37.1
Allowance for Loan Losses 33,425 34,611 (3.4)
Net Charge-offs 11,011 21,013 (47.6)
Non-Performing Loans to
Loans 0.83 % 1.04 %
Allowance for Loan Losses to Loans 1.31 1.25
Net Charge-Offs to Average Loans 0.41 0.68
Allowance for Loan Losses to
Non-Performing Loans 158.16 120.01
* Exclusive of cumulative effect of change in accounting principle
CONSOLIDATED STATEMENT OF INCOME
Provident Bankshares Corporation and Subsidiaries
Three Months Ended Twelve Months Ended
December 31, December 31,
(dollars in thousands, except per
share data) 2002 2001 2002 2001
Interest Income
Interest and Fees on Loans $39,265 $48,945 $174,672 $231,573
Interest on Securities 22,745 26,556 100,468 114,036
Tax-Advantaged Interest 465 492 1,816 2,176
Interest on Short-Term Investments 9 60 90 309
Total Interest Income 62,484 76,053 277,046 348,094
Interest Expense
Interest on Deposits 16,748 28,744 83,013 142,642
Interest on Short-Term Borrowings 1,722 2,077 6,338 12,462
Interest on Long-Term Borrowings 9,776 12,500 46,171 53,829
Total Interest Expense 28,246 43,321 135,522 208,933
Net Interest Income 34,238 32,732 141,524 139,161
Less: Provision for Loan Losses 1,425 2,770 9,825 17,940
Net Interest Income after
Provision for Loan Losses 32,813 29,962 131,699 121,221
Non-Interest Income
Service Charges on Deposit Accounts 18,820 16,751 70,710 60,331
Commissions and Fees 1,081 1,176 4,823 4,836
Net Gains 2,600 3,643 2,786 11,727
Other Non-Interest Income 3,018 2,471 10,861 9,788
Total Non-Interest Income 25,519 24,041 89,180 86,682
Non-Interest Expense
Salaries and Employee Benefits 19,682 17,086 74,215 70,307
Occupancy Expense, Net 3,671 3,574 14,447 13,634
Furniture and Equipment Expense 2,826 2,595 10,970 10,249
External Processing Fees 5,069 4,661 20,202 16,867
Other Non-Interest Expense 7,979 7,921 31,027 34,421
Total Non-Interest Expense 39,227 35,837 150,861 145,478
Income before Income Taxes 19,105 18,166 70,018 62,425
Income Tax Expense 5,820 5,731 21,713 19,800
Income before Cumulative Effect of
Change in Accounting Principle 13,285 12,435 48,305 42,625
Cumulative Effect of Change
in Accounting Principle, Net* - - - (1,160)
Net Income $13,285 $12,435 $48,305 $41,465
Basic Earnings Per Share
Income before Cumulative Effect of
Change in Accounting Principle $0.54 $0.49 $1.94 $1.65
Cumulative Effect of Change
in Accounting Principle, Net* - - - (0.04)
Net Income $0.54 $0.49 $1.94 $1.61
Diluted Earnings Per Share
Income before Cumulative Effect of
Change in Accounting Principle $0.53 $0.48 $1.88 $1.60
Cumulative Effect of Change
in Accounting Principle, Net* - - - (0.04)
Net Income $0.53 $0.48 $1.88 $1.56
* Effective January 1, 2001, the Corporation adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
CONSOLIDATED STATEMENT OF CONDITION
Provident Bankshares Corporation and Subsidiaries
(dollars in thousands, except share December 31, December 31,
amounts) 2002 2001
Assets
Cash and Due From Banks $145,063 $105,986
Short-Term Investments 3,129 11,798
Mortgage Loans Held for Sale 8,899 6,932
Securities Available for Sale 1,993,229 1,804,234
Loans 2,560,563 2,776,893
Less: Allowance for Loan Losses 33,425 34,611
Net Loans 2,527,138 2,742,282
Premises and Equipment, Net 47,031 45,687
Accrued Interest Receivable 28,101 34,057
Intangible Assets 9,340 9,747
Other Assets 128,792 138,994
Total Assets $4,890,722 $4,899,717
Liabilities
Deposits:
Noninterest-Bearing $492,661 $384,009
Interest-Bearing 2,695,305 2,972,038
Total Deposits 3,187,966 3,356,047
Short-Term Borrowings 539,758 366,321
Long-Term Debt 814,546 860,106
Other Liabilities 32,817 30,961
Total Liabilities 4,575,087 4,613,435
Stockholders' Equity
Common Stock (par value $1.00)
authorized 100,000,000 shares;
issued 31,737,237 and 31,405,793
shares
at December 31, 2002 and 2001,
respectively 31,737 31,406
Capital Surplus 289,698 284,457
Retained Earnings 124,862 97,749
Net Accumulated Other Comprehensive
Income (Loss) 14,920 (6,458)
Treasury Stock at Cost - 7,373,601
and 6,294,201
shares at December 31, 2002 and
2001, respectively (145,582) (120,872)
Total Stockholders' Equity 315,635 286,282
Total Liabilities and Stockholders'
Equity $4,890,722 $4,899,717
SOURCE Provident Bankshares Corporation
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CONTACT:
Media: Lillian Kilroy, +1-410-277-2833 or
Investment Community: Josie Porterfield, +1-410-277-2889, both
of Provident Bankshares Corporation
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