2003 Earnings Per Share Growth of 9%
BALTIMORE, Jan. 21 /PRNewswire-FirstCall/ -- Provident Bankshares
Corporation (Nasdaq: PBKS), the parent company of Provident Bank, today
reported $14.2 million in net income, or $0.56 per diluted share, for the
fourth quarter of 2003. Full year 2003 net income was $51.5 million, or $2.05
per diluted share. Earnings per share increased 9% for the year.
Growth in core loans and deposits, and strong asset quality, drove
Provident's solid performance for the quarter and for the year. Average core
consumer and commercial loan balances and consumer and commercial demand
deposit balances all showed double-digit growth. These solid results were
driven by the Company's continued successful execution of its key strategies
to grow its regional banking business while furthering its expansion into the
vibrant Virginia and metropolitan Washington markets.
Fourth Quarter Financial Highlights
-- Net income was $14.2 million, up 7% from the fourth quarter 2002
-- Diluted earnings per share were $0.56, a 6% increase over the 2002
quarter
-- Return on average assets was 1.10%
-- Return on average common equity was 17.50%
-- Average core loans increased $268 million, or 15%, from the fourth
quarter of 2002, while average non-core loans decreased 15%, or $126
million
-- Average core deposits increased $85 million from the 2002 fourth
quarter, and average non-core deposits decreased $201 million
-- Non-interest income (excluding net gains and losses) grew $1.4
million, or 6%, from the fourth quarter 2002
-- The efficiency ratio was 63.27%, down from 68.40% in the fourth
quarter 2002
-- Net charge-offs were $1.4 million, a decline of 45% from the fourth
quarter 2002
-- Capital ratios remained strong, with a leverage ratio of 8.44% and
total risk-based capital of 15.32%
Fourth Quarter Results
Provident Bankshares reported net income for the quarter ended
December 31, 2003 of $14.2 million, or $0.56 per diluted share. This compares
to net income of $13.3 million, or $0.53 per diluted share for the fourth
quarter 2002. Pre-tax earnings were $21.5 million, a 12% increase over the
fourth quarter 2002. Return on average assets was 1.10%, and return on
average common equity was 17.50%. The net interest margin was 3.21%, up from
3.04% in the fourth quarter 2002.
The Company's continued successful execution of its strategy to grow core
loans and deposits was evident, as average core loans increased $268 million,
or 15%, and average core deposits increased $85 million, or 3%, over the
fourth quarter 2002. The increase in core deposits was led by a 15% increase
in average demand deposit account balances for the same period. Core loans
include all loans except purchased loans, participations outside the Bank's
defined market area, and Provident-originated loans from discontinued product
lines. Provident's core deposits include all deposits except brokered
deposits.
Average total loans increased 5% to $2.7 billion, and average total
deposits decreased 4% to $3.1 billion, compared to the fourth quarter 2002.
Average non-core loans decreased $126 million, or 15%, and average non-core
deposits decreased $201 million, or 46%, from the fourth quarter 2002.
Provident continued to post solid fee income growth. Non-interest income,
excluding net gains, was $24.3 million, a 6% increase over the fourth quarter
2002. Total deposit service fees increased 6% over the fourth quarter 2002 and
were driven by the growth in commercial and consumer deposit accounts. As a
result of the new debit card interchange structure, Mastermoney debit card
revenues decreased in line with expectations, but were replaced by income from
other sources.
Asset quality continued to be strong. Total non-performing loans at
December 31, 2003 were $22.3 million, an increase of $1.2 million from
December 31, 2002. Net charge-offs declined 45%, from $2.6 million to
$1.4 million, and the allowance for loan losses to total loans was 1.28% at
December 31, 2003. Eighty-six percent of the non-performing loans are secured
by residential real estate.
Capital ratios remained sound. During the quarter, the Company issued
$71 million of floating rate Trust Preferred securities in contemplation of
its settlement of the pending Southern Financial merger. As a result, the
leverage ratio increased to 8.44%, compared to 7.47% in the fourth quarter of
2002. Total risk-based capital increased to 15.32% from 12.70% at fourth
quarter end 2002.
Southern Financial Bancorp Merger
On November 3, Provident Bankshares Corporation and Southern Financial
Bancorp, Inc. announced a strategic merger which will strengthen Provident's
commercial banking market position in Virginia and metropolitan Washington,
and expand the Company's presence into central and eastern Virginia.
Transition and integration activities are in process and on schedule, as are
the necessary SEC and regulatory filings and notices. The transaction is
expected to close in the second calendar quarter of 2004.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.245 per share. This is the forty-
first consecutive quarterly dividend increase. The quarterly cash dividend
will be paid on February 13, 2004 to stockholders of record at the close of
business on February 2, 2004.
Management Comment
Commenting on the Company's fourth quarter performance, Chairman and CEO
Gary N. Geisel said, "I am very pleased with the steady growth and
contribution of our core banking businesses. Consistent double-digit
increases in core loans, combined with our focus on low cost deposits,
continued to yield positive results. We are experiencing revenue growth in
commercial and consumer business lines across both the Maryland and Virginia
markets, and at the same time we continue to maintain strong credit quality.
The result of the consistent execution of our key strategies is seen in the
steady improvement in all of our financial fundamentals - return on assets,
return on equity, net interest margin and efficiency ratio."
2003 Full Year Results
For the full year ended December 31, 2003, net income totaled
$51.5 million, an increase of 7% over the 2002 year. Diluted earnings per
share were $2.05, a 9% increase over the prior year. Return on average assets
was 1.03%, up from 1.00% posted in 2002, and return on average common equity
was 16.47% versus 16.22% in 2002. Net interest margin was 3.21%, up from
3.14% last year.
Continued Execution of Key Business Strategies
Provident's successful execution of its key business strategies continued
to drive results for the year:
* Broaden presence and customer base in Virginia and metropolitan
Washington and expand branch network in vibrant markets
Provident continued to expand its presence and increase its customer
base in the key Virginia and metropolitan Washington region. Average
consumer demand deposit balances in the region increased 27% over
2002. Consumer deposit fee income in this market increased 22% over
the prior year. Average commercial deposit balances in the Washington
metropolitan area increased 46% for the period, led by a 60% increase
in demand deposit balances. Average core commercial loan balances in
the region increased 13% over 2002.
The Company's northern Virginia branches continued their positive
contribution. In 2003, 33% of all new consumer checking accounts came
from this market, and more than 28% of all consumer checking accounts
are located in these branches. Northern Virginia branches contributed
22% of all branch consumer loan originations in 2003.
There are now 118 offices in the Provident banking network, with 51 in
Virginia or metropolitan Washington. Of the seven branches scheduled
to open in 2004, five are planned for this market. The merger with
Southern Financial Bank will add 33 traditional branches in Virginia
and the District of Columbia to our network.
* Grow commercial business in Maryland and Virginia
Commercial loans and deposits continued to increase at double-digit
rates. Average core commercial deposits were up $102 million, or 28%,
over 2002. This growth was driven by a 36% increase in average
commercial demand deposit account balances for the year. Average core
commercial loans increased $104 million, or 12%, since 2002, led by a
36% increase in average residential construction balances and a 24%
increase in average commercial mortgage balances.
* Focus resources on growth in core business lines
Overall, core loan and deposit growth continued to be strong. Average
core loans now comprise 72% of total loans, up from 62% in 2002.
Average core deposits represent 90% of total deposits, up from 82% in
the previous year.
Average core consumer loan balances increased $110 million, or 14%,
from 2002. During the year, average marine loan balances increased
16%, and average home equity loan and line balances increased 15%. The
non-core consumer loan portfolio declined $245 million, or 26%, from
last year.
Average core commercial loans increased 12%, or $104 million, from the
prior year, and the average non-core national syndicated loan
portfolio continued to decline, averaging $31 million for the year,
down 47% from 2002. At the end of 2003, outstanding balances for non-
core national syndicated loans were less than $23 million, or less
than 1% of total loans.
Average core deposits increased $133 million, or 5%, over 2002.
Average certificate of deposit balances decreased $117 million, or
14%, while demand deposit balances increased $172 million, or 22%.
Brokered deposits declined $259 million from the prior year, a 45%
decline. This change in deposit mix continued to contribute positively
to the net interest margin.
* Improve financial fundamentals
The changing composition of the balance sheet and Provident's ongoing
commitment to the achievement of the key strategies continued to drive
improvement in the Company's financial fundamentals. Net interest
margin for the year was 3.21% versus 3.14% in 2002, despite the
continued low interest rate environment. Return on average assets was
1.03%, and return on average common equity was 16.47%.
Non-interest income, excluding net gains, grew 7% from 2002, as
Provident was able to overcome the impact of a $2.2 million reduction
in Mastermoney interchange fees, a result of the new debit card
interchange structure announced by Mastercard in August 2003. Asset
quality continued to be strong, with non-performing loans of $22.3
million at the end of the year. Net charge-offs for 2003 were $7.6
million, representing 0.29% of total average loans. This compared to
charge-offs in 2002 of $11 million, or 0.41% of average total loans.
The allowance for loan losses as a percent of total loans was 1.28% at
the end of the year.
Outlook for the Future
Commenting on the future for Provident Bankshares, Chairman and CEO Gary
N. Geisel added, "We are extremely pleased with our performance in 2003. The
successful execution of our key strategies continues to drive improvement in
our financial fundamentals.
We are also very excited about our prospects for growth in 2004. Our
pending merger with Southern Financial provides an excellent strategic fit.
The merger clearly takes to a new level our emphasis on regional expansion,
commercial business relationship development, and core loan and deposit
growth.
The addition of Southern Financial is an important element of our
expansion strategy. Bringing the Southern branches into our existing branch
network provides a tremendous opportunity for us to capitalize on our strength
in attracting consumer loan and low cost consumer deposit accounts.
In addition, Provident is well positioned to take advantage of the
improving economy. We do not have a significant investment in the mortgage
business, and will not be impacted by the waning mortgage market as many
institutions will. At the same time, we are located in one of the most
vibrant areas of the country, and have a strong commercial banking
organization in place to serve the multitude of businesses in the region as
they expand.
We remain committed to enhancing earnings growth, while at the same time
emphasizing key metrics such as return on assets and equity, margin and
efficiency. We are confident in Provident's ability to meet current analyst
EPS consensus estimates of $2.22 for the full year 2004."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $5.2 billion in assets, Provident serves individuals and
businesses in the Baltimore-Washington corridor through a network of 118
banking offices in Maryland, Northern Virginia, and southern York County, PA.
Provident Bank also offers related financial services through wholly owned
subsidiaries. Securities brokerage, investment management and related
insurance services are available through Provident Investment Company 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. (ET) on Thursday, January 22,
2004. The webcast can be accessed on the Provident website at
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. A replay of the webcast will be available
until January 31, 2004. An audio replay of the webcast will also be available
until 11:59 p.m. January 28, 2004 at 1-800-428-6051, passcode ID 322604.
Supplemental financial information will be posted on the Provident website
today and can be accessed by selecting the link to Corporate Information and
Investor Relations and then selecting the link to Financial Reports.
Provident Bankshares Corporation and Southern Financial Bancorp, Inc. will
be filing a joint proxy statement/prospectus and other relevant documents
concerning the merger with the United States Securities and Exchange
Commission (the "SEC").
WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY
OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION.
Investors will be able to obtain these documents free of charge at the
SEC's web site (http://www.sec.gov). In addition, documents filed with the SEC by
Provident Bankshares Corporation will be available free of charge from the
Investor Relations Department at Provident Bankshares Corporation, 114 East
Lexington Street, Baltimore, Maryland 21202. Documents filed with the SEC by
Southern Financial Bancorp, Inc. will be available free of charge from the
Investor Relations Department at Southern Financial Bancorp, Inc., 37 East
Main Street, Warrenton, Virginia 20186.
The directors, executive officers, and certain other members of management
of Provident Bankshares Corporation and Southern Financial Bancorp, Inc. may
be soliciting proxies in favor of the merger from the companies' respective
shareholders. For information about these directors, executive officers, and
members of management, shareholders are asked to refer to the most recent
proxy statements issued by the respective companies, which are available on
their web sites and at the addresses provided in the preceding paragraph.
This Press Release, as well as other written communications made from time
to time by Provident Bankshares Corporation and subsidiaries (the "Company")
(including, without limitation, the Company's 2002 Annual Report to
Stockholders) and oral communications made from time to time by authorized
officers of the Company, may contain statements relating to the future results
of the Company (including certain projections and business trends) that are
considered "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements may be
identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned," "estimated," "intend," "project" and "potential."
Examples of forward-looking statements include, but are not limited to,
possible or assumed estimates with respect to the financial condition,
expected or anticipated revenue, and results of operations and business of the
Company, including with respect to earnings growth (on both accounting
principles generally accepted in the United States of America (GAAP) and cash
basis); revenue growth in consumer banking, lending and other areas;
origination volume in the Company's consumer, commercial and other lending
businesses; asset quality and levels of non-performing assets; current and
future capital management programs; non-interest income levels, including fees
from services and product sales; tangible capital generation; market share;
expense levels; the proposed merger with Southern Financial Bancorp, Inc.; and
other business operations and strategies. For these statements, the Company
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Act of 1995.
The Company cautions you that a number of important factors could cause
actual results to differ materially from those currently anticipated in any
forward-looking statement. Such factors include, but are not limited to:
prevailing economic conditions; changes in interest rates, loan demand, real
estate values and competition, which can materially affect, among other
things, consumer banking revenues, revenues from sales on non-deposit
investment products, origination levels in the Company's lending businesses
and the level of defaults, losses and prepayments on loans made by the
Company, whether held in portfolio or sold in the secondary markets; changes
in accounting principles, policies, and guidelines; changes in any applicable
law, rule, regulation or practice with respect to tax or legal issues; risks
and uncertainties related to acquisitions and related integration and
restructuring activities; and other economic, competitive, governmental,
regulatory and technological factors affecting the Company's operations,
pricing, products and services. The following factors, among others, could
cause the actual results of the Southern Financial merger to differ materially
from the expectations stated in this release, the associated conference call
and web cast and in prior statements: the ability of the companies to obtain
the required shareholder or regulatory approvals of the merger; the ability of
the companies to consummate the merger; the ability of Southern Financial to
timely complete its acquisition of Essex Bancorp, Inc.; the ability to
successfully integrate the companies following the merger; a materially
adverse change in the financial condition of either company; the ability to
fully realize the expected cost savings and revenues; and the ability to
realize the expected cost savings and revenues on a timely basis. Other
factors that could cause the actual results of the merger to differ materially
from current expectations include a change in economic conditions; changes in
interest rates, deposit flows, loan demand, real estate values, and
competition; changes in accounting principles, policies, or guidelines;
changes in legislation and regulation; and other economic, competitive,
governmental, regulatory, geopolitical, and technological factors affecting
the companies' operations, pricing, and services. Readers are cautioned not to
place undue reliance on these forward looking statements which
are made as of the date of this report, and, except as may be required by
applicable law or regulation, the Company assumes no obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements.
In the event that any non-GAAP financial information is described in any
written communication, including this press release, or in our teleconference,
please refer to the supplemental financial tables included with this release
and on our website for the GAAP reconciliation of this information.
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per Three Months Ended
share data) December 31,
2003 2002 % Change
SUMMARY OF OPERATIONS:
Net income $14,167 $13,285 6.6 %
Net interest income 38,417 34,238 12.2
Provision for loan losses 1,975 1,425 38.6
Non-interest income 24,799 25,519 (2.8)
Net gains (losses) 520 2,600 (80.0)
Non-interest income (excluding net
gains/losses) 24,279 22,919 5.9
Non-interest expense 39,767 39,227 1.4
Income tax expense 7,307 5,820 25.5
SHARE DATA:
Basic earnings per share $0.58 $0.54 7.4 %
Diluted earnings per share 0.56 0.53 5.7
Cash dividends paid per share 0.24 0.22 9.1
Book value per share 13.22 12.96 2.0
Weighted average shares - basic 24,530,346 24,480,847 0.2
Weighted average shares - diluted 25,227,584 25,102,701 0.5
Common shares outstanding 24,562,273 24,363,636 0.8
END OF PERIOD BALANCES:
Investment securities portfolio $2,086,510 $1,993,229 4.7 %
Total loans 2,784,546 2,560,563 8.7
Assets 5,207,848 4,890,722 6.5
Deposits 3,079,549 3,187,966 (3.4)
Stockholders' equity 324,765 315,635 2.9
Common stockholders' equity 331,354 300,715 10.2
AVERAGE BALANCES:
Investment securities portfolio $2,028,690 $1,893,256 7.2 %
Loans:
Core consumer 983,533 833,789 18.0
Core commercial business 352,016 349,791 0.6
Core commercial real estate 667,482 551,502 21.0
Total core loans 2,003,031 1,735,082 15.4
Non-core consumer 702,248 798,920 (12.1)
National syndicated loans 26,183 55,405 (52.7)
Total non-core loans* 728,431 854,325 (14.7)
Total loans 2,731,462 2,589,407 5.5
Earning assets 4,769,095 4,494,346 6.1
Assets 5,097,202 4,811,441 5.9
Core deposits 2,825,439 2,740,776 3.1
Non-core deposits (brokered deposits) 235,371 436,469 (46.1)
Total deposits 3,060,810 3,177,245 (3.7)
Stockholders' equity 311,838 307,468 1.4
Common stockholders' equity 321,249 298,019 7.8
SELECTED RATIOS:
Return on average assets 1.10 % 1.09 %
Return on average equity 18.02 17.14
Return on average common equity 17.50 17.69
Net yield on average earning assets
(t/e basis) 3.21 3.04
Efficiency ratio 63.27 68.40
Leverage ratio 8.44 7.47
Tier I risk-based capital ratio 13.19 11.62
Total risk-based capital ratio 15.32 12.70
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per Three Months Ended
share data) September 30,
2003 % Change
SUMMARY OF OPERATIONS:
Net income $13,308 6.5 %
Net interest income 38,037 1.0
Provision for loan losses 2,950 (33.1)
Non-interest income 24,623 0.7
Net gains (losses) 746 (30.3)
Non-interest income (excluding net
gains/losses) 23,877 1.7
Non-interest expense 39,330 1.1
Income tax expense 7,072 3.3
SHARE DATA:
Basic earnings per share $0.54 7.4 %
Diluted earnings per share 0.53 5.7
Cash dividends paid per share 0.235 2.1
Book value per share 12.93 2.2
Weighted average shares - basic 24,555,675 (0.1)
Weighted average shares - diluted 25,205,315 0.1
Common shares outstanding 24,483,143 0.3
END OF PERIOD BALANCES:
Investment securities portfolio $1,970,618 5.9 %
Total loans 2,702,255 3.0
Assets 4,985,445 4.5
Deposits 3,087,906 (0.3)
Stockholders' equity 316,661 2.6
Common stockholders' equity 321,350 3.1
AVERAGE BALANCES:
Investment securities portfolio $1,993,040 1.8 %
Loans:
Core consumer 928,730 5.9
Core commercial business 355,002 (0.8)
Core commercial real estate 630,095 5.9
Total core loans 1,913,827 4.7
Non-core consumer 694,637 1.1
National syndicated loans 31,499 (16.9)
Total non-core loans* 726,136 0.3
Total loans 2,639,963 3.5
Earning assets 4,648,407 2.6
Assets 4,984,959 2.3
Core deposits 2,869,728 (1.5)
Non-core deposits (brokered deposits) 282,405 (16.7)
Total deposits 3,152,133 (2.9)
Stockholders' equity 303,702 2.7
Common stockholders' equity 317,578 1.2
SELECTED RATIOS:
Return on average assets 1.06 %
Return on average equity 17.38
Return on average common equity 16.63
Net yield on average earning assets
(t/e basis) 3.26
Efficiency ratio 63.35
Leverage ratio 7.61
Tier I risk-based capital ratio 11.99
Total risk-based capital ratio 13.11
* Includes purchased loans, syndicated loans outside the Bank's normal
lending area and loans from discontinued product lines.
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per share Twelve Months Ended
data) December 31,
2003 2002 % Change
SUMMARY OF OPERATIONS:
Net income $51,455 $48,305 6.5 %
Net interest income 148,880 141,524 5.2
Provision for loan losses 9,936 9,825 1.1
Non-interest income 88,373 89,180 (0.9)
Net gains (losses) (4,379) 2,786 -
Non-interest income (excluding net
gains/losses) 92,752 86,394 7.4
Non-interest expense 158,447 150,861 5.0
Income tax expense 17,415 21,713 (19.8)
SHARE DATA:
Basic earnings per share $2.10 $1.94 8.2 %
Diluted earnings per share 2.05 1.88 9.0
Cash dividends paid per share 0.93 0.85 9.4
Book value per share 13.22 12.96 2.0
Weighted average shares - basic 24,494,659 24,895,543 (1.6)
Weighted average shares - diluted 25,142,075 25,630,985 (1.9)
Common shares outstanding 24,562,273 24,363,636 0.8
END OF PERIOD BALANCES:
Investment securities portfolio $2,086,510 $1,993,229 4.7 %
Total loans 2,784,546 2,560,563 8.7
Assets 5,207,848 4,890,722 6.5
Deposits 3,079,549 3,187,966 (3.4)
Stockholders' equity 324,765 315,635 2.9
Common stockholders' equity 331,354 300,715 10.2
AVERAGE BALANCES:
Investment securities portfolio $2,050,774 $1,869,220 9.7 %
Loans:
Core consumer 906,473 796,843 13.8
Core commercial business 350,633 337,689 3.8
Core commercial real estate 609,941 518,497 17.6
Total core loans 1,867,047 1,653,029 12.9
Non-core consumer 693,184 938,344 (26.1)
National syndicated loans 36,071 67,466 (46.5)
Total non-core loans* 729,255 1,005,810 (27.5)
Total loans 2,596,302 2,658,839 (2.4)
Earning assets 4,659,491 4,538,737 2.7
Assets 4,991,775 4,845,615 3.0
Core deposits 2,825,412 2,692,617 4.9
Non-core deposits (brokered deposits) 317,632 576,386 (44.9)
Total deposits 3,143,044 3,269,003 (3.9)
Stockholders' equity 314,490 299,333 5.1
Common stockholders' equity 312,371 297,882 4.9
SELECTED RATIOS:
Return on average assets 1.03 % 1.00 %
Return on average equity 16.36 16.14
Return on average common equity 16.47 16.22
Net yield on average earning assets
(t/e basis) 3.21 3.14
Efficiency ratio 65.39 65.96
Leverage ratio 8.44 7.47
Tier I risk-based capital ratio 13.19 11.62
Total risk-based capital ratio 15.32 12.70
* Includes purchased loans, syndicated loans outside the Bank's normal
lending area and loans from discontinued product lines.
SOURCE Provident Bankshares Corporation
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Related links:
http://www.provbank.com
Company News On-Call:
http://www.prnewswire.com/comp/721938.html
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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