Company Posts Solid Earnings as Revenue Momentum
From Core Banking Operations Continues
BALTIMORE, Jan. 16 /PRNewswire-FirstCall/ --
Provident Bankshares Corporation (Nasdaq: PBKS), the parent company of
Provident Bank, today reported 13.3% growth in net income and a 23% increase
in diluted earnings per share for the quarter ending December 31, 2001. The
Company remained committed to its business strategy to increase its presence,
customer base and delivery network throughout the Baltimore-Washington
corridor. As a result, solid performance from core banking operations
continued to drive revenue growth.
Fourth Quarter Financial Highlights
-- Net income was $12.4 million for the quarter, up 13.3% from
$11.0 million reported in the same quarter last year
-- Diluted earnings per share were $.48, up 23% from $.39 in the 2000
fourth quarter aided by the strategic use of the Company's repurchase
program
-- Return on average common equity was 16.73%, up from 13.61% in the 2000
fourth quarter
-- Return on average assets was 1.00%, up significantly from 0.78% in
fourth quarter 2000
-- Average core deposits increased $114 million, or 4.6%, from the 2000
fourth quarter
-- Average core loans increased $188 million, or 13.2% from the same
quarter last year
-- Non-interest income (excluding securities gains) grew 10.6% from the
comparable period in 2000 and comprised 36% of total quarterly
revenue
-- Asset quality remained solid as non-performing loans declined 14.6%
from one year ago
Fourth Quarter Results
Provident Bankshares reported net income for the quarter ended
December 31, 2001 of $12.4 million, or $.48 per diluted share. Earnings per
share were up 23% over the fourth quarter of 2000. Net income for the fourth
quarter was up 13.3% from the $11.0 million in the 2000 fourth quarter.
Return on average common equity was 16.73% for fourth quarter 2001, up
significantly from 13.61% in the same quarter a year ago. Return on average
assets was 1.00%, also up significantly from 0.78% for the comparable period
last year.
Consistent with Provident's strategy to focus on core banking operations,
the Company continued to shrink the wholesale segment of its balance sheet
during the quarter. As a result, average loans were down $511 million and
average deposits were down $592 million from the same quarter last year,
despite continued strong growth in the company's core loans and deposits.
Continued solid performance from core business operations drove growth in
average core loans and average core deposits again in the fourth quarter.
Average core loans increased $188 million, or 13.2%, compared to fourth
quarter 2000. Led by a 16.3% increase in average non-interest bearing demand
deposits, average core deposits increased 4.6% from the same quarter last
year.
Tax-equivalent net interest income for the 2001 fourth quarter was down
$6.4 million, or 16%, from one year ago. Much of this decline in net interest
income is the result of the Company's strategic reduction in wholesale assets
and liabilities. The net interest margin for the quarter was 2.82%, down
slightly from 2.90% in the same quarter last year. Increased pay-off volume
in the Company's acquired second mortgage loan portfolio and the associated
premium write-offs drove this decline in margin.
At December 31, 2001, total non-performing assets were $32.0 million, down
$4.4 million, or 12%, from the same quarter last year. Net charge offs
declined 34.2% and the allowance for loan losses to non-performing loans
increased to 120%.
Total non-interest income (excluding securities gains) was up
$2.0 million, or 10.6%, for the fourth quarter of 2001 and comprised 36% of
Provident's total revenue for the quarter. Provident's continued strong
retail and commercial checking account growth drove this increase. Income
from retail deposit fees was up 14.8% and commercial deposit service fees were
up more than 33% from one year ago. There were $3.7 million in net securities
gains during the 2001 fourth quarter compared with $641 thousand in the same
period a year ago.
Reflecting the Company's continued focus on operating expense management,
non-interest expense was $36.2 million in the fourth quarter of 2001, down
3.2% from $37.4 million in the same quarter last year.
Provident repurchased 553,000 shares of common stock during the fourth
quarter. At December 31, 2001, stockholders' equity was $286 million. The
leverage ratio was 7.13% and book value per share was $11.40.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $.205 per share. This quarterly cash
dividend will be paid on February 15, 2002 to stockholders of record at the
close of business on January 28, 2002.
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 6,066,135 shares of common stock under this program.
The Board's action will enable Provident to repurchase up to an additional one
million 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 remain pleased with the steady growth in both the
customer base and profitability of our core banking operations. We continue
to focus on our strategy to decrease wholesale business activities while we
improve earnings from our core operations. Provident's fourth quarter
performance shows solid asset quality and sustained positive core revenue
momentum generated through increases in core deposits, core loans and fee
income. These results are evidence of significant progress toward our long-
term goals and the success of our current business plans."
12 Month Results
For the 12 months ended December 31, 2001, income before extraordinary
items and the cumulative effect of the change in accounting principle totaled
$42.6 million, or $1.60 per diluted share. Net income totaled $41.5 million,
up 4.4% from $39.7 million for 2000 and diluted earnings per share were $1.56,
up from $1.41 for the same 12 months last year. Return on average common
equity for the year was 14.45%, up from 12.48% for 2000. The 2001 net
interest margin was 2.89%, down slightly from 2.93% in 2000. Return on
average assets was 0.83%, up from the 0.73% reported in 2000.
During 2001, 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 2.4 million shares in 2001.
Successful Business Strategies Lead to Solid 2001 Results
Provident's sustained focus on its five core business strategies resulted
in positive revenue momentum for the year. This strong showing points to
continued solid performance into 2002.
-- Broaden presence and customer base in the Washington metro market
Provident made gains in its goal to attract and retain customers in this
key expansion market. Thirty-two percent of all new checking accounts
opened in 2001 were opened in the Washington metro market. Over 25,000
accounts were opened, an increase of 24.6% from 2000. Much of this
growth came from in-store branches in Northern Virginia and Prince
Georges' County. The number of new accounts opened in those areas jumped
67.3%. Retail deposits in the Washington region were up 7.2% in 2001 and
now comprise 24% of total retail deposits. Total branch banking fee
income generated for 2001 in the Washington region jumped 56.5% over
2000.
-- Grow commercial business in the Baltimore-Washington corridor
2001 pointed the way towards continued revenue growth for Provident's
Commercial Banking Group. Driven by an increase in deposit service fees
of 82%, core commercial loan fees jumped 9% in 2001. Average commercial
deposits grew $35.0 million, or 13.3%, for the year. Average commercial
loans increased $79.0 million, or 9.9%, from year-end 2000. 2001 also
showed a 71.9% increase in loan/lease growth for Provident Lease Corp.
-- Focus resources on growth in core business lines
Core banking operations continued to show solid growth, performance and
revenue increase. Consumer lending posted strong gains in 2001 with
$191 million in new direct loan production, an 80.9% increase. Direct
consumer loan balances grew $45.0 million, or 12%, in 2001. This
increase was led by home equity and second mortgage loans where balances
were up $18 million. Provident's renewed emphasis on the small business
market continued to yield positive results. The Company's new business
checking product line showed a 69% increase in the number of accounts
opened in 2001 and new business debit cards issued jumped 83% for the
year. Provident also opened 79,870 new checking accounts in 2001, some
3,500 more than the prior year. Overall branch banking fee income was up
16.9%.
-- Improve efficiencies and productivity
Non-interest expense for the 2001 fourth quarter was down 3.2% from the
same quarter last year, and reflects Provident's continued focus on
controlling operating expenses and savings from unprofitable lines of
business exited last year. The Company will continue to contain expenses
in 2002 within the constraints of its plans to open 10 to 12 new
branches.
-- Continue Branch Expansion into Vibrant, High-Growth Markets
During 2001, Provident opened its 100th office and two other branches in
its key Northern Virginia expansion market. Provident now has one third
of its branches in the attractive Washington suburbs. Change to new
location and renovation schedules by its in-store partners slowed
Provident's network expansion in 2001. In 2002, the Company plans to
open 10 to 12 new branches. These new offices will be evenly split
between in-store and traditional branches and all new locations are
targeted to be within the Washington-metro area.
Outlook for 2002
Commenting on the future for Provident Bankshares, Chairman and CEO Peter
M. Martin added, "2001 saw the successful execution of our core business
plans. Our results were driven by solid asset quality and sustained positive
revenue momentum generated through increases in core deposits, core loans and
fee income. We reduced our volume of non-core business and continued to
transition our balance sheet to look more like a typical regional bank.
In 2002, we will continue to expand our delivery network to broaden our
market presence and deepen our customer base in the Baltimore-Washington
corridor. We also remain committed to building our commercial banking
business in this market to complement our success in retail banking.
As our wholesale assets and liabilities further decline and are replaced
with more profitable core loans and deposits, we expect our key ratios to
improve accordingly. Specifically, our 2002 performance targets include ROA
of 0.95% to 1.05% and ROE of 16% to 18%. Provident is well positioned for the
future and we are comfortable with analysts' consensus EPS projections for
2002."
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
100 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 4:00 p.m. (EST) on Wednesday, January 16,
2002. 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 17, 2002, 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)
(tax-equivalent basis)
Three Months Ended December 31,
2001 2000 % Change
SUMMARY OF OPERATIONS
Interest Income $76,258 $107,015 (28.7)%
Interest Expense 43,321 67,650 (36.0)
Net Interest Income 32,937 39,365 (16.3)
Provision for Loan Losses 2,770 5,257 (47.3)
Net Interest Income after
Provision for Loan Losses 30,167 34,108 (11.6)
Non-Interest Income 24,385 19,354 26.0
Non-Interest Expense 36,181 37,378 (3.2)
Income Before Income Taxes 18,371 16,084 14.2
Income Tax Expense 5,731 4,857 18.0
Less: Tax-Equivalent Adjustment 205 252 (18.7)
Income Before Extraordinary
Item and Cumulative Effect of
Change in Accounting Principle 12,435 10,975 13.3
Extraordinary Item -- Gain on
Debt Extinguishment, Net - - -
Cumulative Effect of Change
in Accounting Principle, Net* - - -
Net Income $12,435 $10,975 13.3
PER SHARE
Basic
Income Before Extraordinary
Item and Cumulative Effect
of Change in Accounting
Principle $0.49 $0.40
Net Income 0.49 0.40
Diluted
Income Before Extraordinary
Item and Cumulative Effect
of Change in Accounting
Principle 0.48 0.39
Net Income 0.48 0.39
Cash Dividends Paid 0.200 0.171
Stockholders' Equity
Market Value (closing sales
price as reported on the
Nasdaq Stock Market)
Common Shares Outstanding
Weighted Average Shares
-- Basic 25,368,674 27,419,036
Weighted Average Shares
-- Diluted 26,158,395 28,199,653
PROFITABILITY RATIOS**
Return on Average Assets 1.00% 0.78%
Return on Average Equity 16.33 14.90
Return on Average Common Equity 16.73 13.61
Net Yield on Average Earning
Assets (t/e basis) 2.82 2.90
CAPITAL RATIOS AT DECEMBER 31
Leverage Ratio
Risk-Based Capital Ratios:
Tier I Capital Ratio
Total Capital Ratio
ASSET QUALITY
Non-Performing Loans
Loans Past Due 90 Days or More
Allowance for Loan Losses
Net Charge-offs $2,863 $4,352 (34.2)%
Non-Performing Loans to Loans
Allowance for Loan Losses to Loans
Net Charge-Offs to Average Loans 0.40% 0.52%
Allowance for Loan Losses to
Non-Performing Loans
AVERAGE BALANCES
Investment Securities
Portfolio $1,789,725 $2,012,444 (11.1)%
Loans 2,837,183 3,347,848 (15.3)
Earning Assets 4,641,007 5,402,845 (14.1)
Assets 4,950,459 5,626,143 (12.0)
Deposits 3,363,413 3,955,499 (15.0)
Stockholders' Equity 302,110 293,071 3.1
Common Equity 294,962 320,865 (8.1)
SELECTED FINANCIAL DATA AT
PERIOD END
Investment Securities Portfolio
Loans
Earning Assets
Assets
Deposits
Stockholders' Equity
Common Equity
* Effective January 1, 2001, the Corporation adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
** Exclusive of cumulative effect of change in accounting principle
(dollars in thousands, except per share data)
(tax-equivalent basis)
Twelve Months Ended December 31,
2001 2000 % Change
SUMMARY OF OPERATIONS
Interest Income $349,035 $413,681 (15.6)%
Interest Expense 208,933 258,677 (19.2)
Net Interest Income 140,102 155,004 (9.6)
Provision for Loan Losses 17,940 29,877 (40.0)
Net Interest Income after
Provision for Loan Losses 122,162 125,127 (2.4)
Non-Interest Income 87,427 75,080 16.4
Non-Interest Expense 146,223 142,470 2.6
Income Before Income Taxes 63,366 57,737 9.7
Income Tax Expense 19,800 17,819 11.1
Less: Tax-Equivalent Adjustment 941 983 (4.3)
Income Before Extraordinary Item
and Cumulative Effect of Change
in Accounting Principle 42,625 38,935 9.5
Extraordinary Item -- Gain on Debt
Extinguishment, Net - 770 -
Cumulative Effect of Change
in Accounting Principle, Net* (1,160) - -
Net Income $41,465 $39,705 4.4
PER SHARE
Basic
Income Before Extraordinary
Item and Cumulative Effect of
Change in Accounting Principle $1.65 $1.42
Net Income 1.61 1.44
Diluted
Income Before Extraordinary Item
and Cumulative Effect of Change
in Accounting Principle 1.60 1.39
Net Income 1.56 1.41
Cash Dividends Paid 0.752 0.642
Stockholders' Equity 11.40 12.01
Market Value (closing sales price
as reported on the Nasdaq Stock
Market) 24.30 19.88
Common Shares Outstanding 25,111,592 25,846,974
Weighted Average Shares
-- Basic 25,766,912 27,489,629
Weighted Average Shares
-- Diluted 26,661,753 28,084,325
PROFITABILITY RATIOS**
Return on Average Assets 0.83% 0.73%
Return on Average Equity 14.50 14.40
Return on Average Common Equity 14.45 12.48
Net Yield on Average Earning
Assets (t/e basis) 2.89 2.93
CAPITAL RATIOS AT DECEMBER 31
Leverage Ratio 7.13% 6.77%
Risk-Based Capital Ratios:
Tier I Capital Ratio 10.10 9.37
Total Capital Ratio 11.09 10.31
ASSET QUALITY
Non-Performing Loans $28,839 $33,760 (14.6)%
Loans Past Due 90 Days or More 10,818 16,749 (35.4)
Allowance for Loan Losses 34,611 38,374 (9.8)
Net Charge-offs 21,013 27,402 (23.3)
Non-Performing Loans to Loans 1.04% 1.01%
Allowance for Loan Losses to Loans 1.25 1.15
Net Charge-Offs to Average Loans 0.68 0.81
Allowance for Loan Losses to
Non-Performing Loans 120.01 113.67
AVERAGE BALANCES
Investment Securities Portfolio $1,750,954 $1,857,508 (5.7)%
Loans 3,083,015 3,390,692 (9.1)
Earning Assets 4,846,745 5,291,162 (8.4)
Assets 5,128,978 5,482,746 (6.5)
Deposits 3,590,513 3,866,552 (7.1)
Stockholders' Equity 293,953 275,769 6.6
Common Equity 295,076 318,108 (7.2)
SELECTED FINANCIAL DATA AT
PERIOD END
Investment Securities Portfolio $1,804,234 $1,876,509 (3.9)%
Loans 2,776,893 3,338,194 (16.8)
Earning Assets 4,599,857 5,235,324 (12.1)
Assets 4,899,717 5,499,443 (10.9)
Deposits 3,356,047 3,954,770 (15.1)
Stockholders' Equity 286,282 310,306 (7.7)
Common Equity 292,740 321,001 (8.8)
* Effective January 1, 2001, the Corporation adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
** Exclusive of cumulative effect of change in accounting principle
SOURCE Provident Bankshares Corporation
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http://www.provbank.com
Company News On-Call:
http://www.prnewswire.com/gh/cnoc/comp/721938.html
CONTACT:
Media: Lillian Kilroy, +1-410-277-2833, or
Investment Community: Ellen Grossman, +1-410-277-2889, both of
Provident Bankshares
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