Board Elects Gary N. Geisel Chairman and Chief Executive Officer,
Succeeding Peter M. Martin upon His Retirement;
Kevin G. Byrnes Elected President and Chief Operating Officer
BALTIMORE, April 16 /PRNewswire-FirstCall/ --
Provident Bankshares Corporation (Nasdaq: PBKS), the parent company of
Provident Bank, today reported $11.8 million in net income or $0.47 per
diluted share, for the first quarter of 2003. Also today, Provident's Board
of Directors elected Gary N. Geisel Chairman and Chief Executive Officer,
succeeding Peter M. Martin who retired effective today after thirteen years
with the Company. Kevin G. Byrnes was elected to succeed Geisel as President
and Chief Operating Officer.
Strong credit quality and growth in non-interest income drove Provident's
solid performance for the first quarter of 2003. Average core consumer and
commercial loan balances, commercial deposit balances, and deposit service
fees all showed double-digit growth over the first quarter of 2002. The
Company continued to focus on its key strategies to grow its regional banking
business and continue expansion into the vibrant Washington metropolitan
region, while maintaining strong asset quality.
First Quarter Financial Highlights
-- Diluted earnings per share met analyst consensus expectations at
$0.47, a 7% increase from the $0.44 posted in first quarter 2002
-- Net income was $11.8 million for the quarter, up from $11.5 million
reported in the same quarter last year
-- Return on average common equity was 15.81%, up from 15.76% in the
first quarter 2002
-- Return on average assets was 0.98%, up from 0.96% in first quarter
2002
-- Average core loans increased $169 million, or 11%, from the 2002
quarter
-- Average core deposits increased $146 million, or 6%, from the 2002
first quarter
-- Non-interest income (excluding net gains) grew 8% from the comparable
period in 2002
-- Asset quality remained strong as non-performing loans declined
$2.4 million, or 10%, from one year ago
-- Capital ratios remained strong, with the leverage ratio at 7.51% and
total risk-based capital at 13.23%
First Quarter Results
Provident Bankshares reported net income for the quarter ending March 31,
2003 of $11.8 million, or $0.47 per diluted share. This represents an
earnings per share increase of 7% over the first quarter 2002.
Return on average common equity was 15.81% for the first quarter 2003, up
from 15.76% in the same quarter a year ago. Return on average assets was
0.98%, up from 0.96% for the comparable period last year.
The net interest margin on a tax equivalent basis was 3.18%, compared to
3.30% for the first quarter 2002.
Total average loans and deposits decreased 9% and 5%, respectively, versus
the first quarter 2002, as non-core assets and liabilities continued to
decline. Average non-core loans decreased 35% over the 2002 first quarter,
and average non-core deposits decreased 45% for the same period. In line with
Provident's strategy to focus on core banking operations, core loans and
deposits again increased compared to the first quarter 2002. Average core
loans increased $169 million, or 11%, from the same quarter last year.
Average core deposits increased $146 million, up 6% over the first quarter
2002.
Core loans are loans originated by Provident and participations in our
defined market area. Non-core loans are purchased loans, participations
outside our defined market area, and Provident-originated loans from
discontinued product lines. Provident's core deposits include all deposits
except brokered deposits and deposits related to discontinued product lines.
Non-interest income grew to $22.6 million from $20.2 million in the first
quarter 2002. Provident continued to post solid fee income growth. Total
deposit service fees increased $1.6 million, or 10%, over the 2002 first
quarter and were driven by growth in commercial and consumer deposit accounts.
Asset quality remained strong. Total non-performing loans at March 31,
2003 were $21.6 million, down $2.4 million, or 10%, from the same quarter last
year. Net charge-offs declined 23%, from $3.0 million to $2.4 million, and
the allowance for loan losses to loans was 1.32% at the close of the quarter.
Substantially all of the non-performing loans were secured by residential real
estate.
The company continued to build on a stronger balance sheet, with capital
ratios remaining sound. The leverage ratio increased to 7.51%, compared to
7.40% in the first quarter of 2002. Total risk-based capital increased to
13.23% from 11.72% at first quarter end 2002.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.23 per share. This is the thirty-
ninth consecutive quarterly dividend increase. The quarterly cash dividend
will be paid on May 9, 2003 to stockholders of record at the close of business
on April 28, 2003.
Management Transition
In other Board action, Gary N. Geisel was elected Chairman and Chief
Executive Officer, succeeding Peter M. Martin, who retired as Chairman and CEO
effective today. Martin will remain on the Board of Directors of Provident
Bankshares and Provident Bank. Kevin G. Byrnes, Senior Executive Vice
President, was elected President and Chief Operating Officer to succeed
Geisel.
Geisel joined Provident in 1997 as Group Manager of Community Banking. In
1999, he was promoted to the three-member Office of the Chairman and then was
promoted to President and Chief Operating Officer in January 2001. With more
than 30 years in banking, Geisel led Provident's expansion into the Washington
Metropolitan market, and directed the 1997 acquisition of Montgomery County-
based Citizens Savings Bank, as well as the Company's in-store branch
expansion and network growth into the Northern Virginia market.
Byrnes joined Provident as Senior Executive Vice President in November
2002. He also brings with him more than 30 years of banking experience, with
extensive background in consumer, commercial and real estate lending.
Formerly with J.P. Morgan Chase & Co., and its predecessor Chase Manhattan
Bank, he spent four years as President and Chief Executive Officer of Chase
Bank of Maryland. He was promoted to the Chase New York market in 1992, where
he served as Senior Vice President and Regional Executive for the Long Island
and Upstate regions.
Management Comment
Commenting on the Company's first quarter performance, Chairman and CEO
Gary N. Geisel said, "We are very pleased with Provident's performance.
Despite the harsh winter this year and the seasonality of our business, our
first quarter results are solid and on plan. Provident's credit quality
remains strong and our performance reflects continued success in growing core
loans and deposits, as well as non-interest income. Our results also reflect
our ongoing commitment to our key business strategies. These strategies are
working for us, and our first quarter results position us to perform well for
the quarters to come."
Key Business Strategies Continue to Drive Results
Continued commitment to its key business strategies enabled Provident to
post positive results in the first quarter, despite challenging regional
weather, economic uncertainty, and the tenuous geopolitical situation. The
bank is well positioned for solid performance throughout 2003. Provident's
key business strategies are:
-- Broaden presence and customer base in the Washington metro market and
expand branch network in vibrant markets
Provident continued to grow the Company's presence in the key
Washington metropolitan region. Two branches were opened in this
market during the quarter, bringing the total to 44. Average consumer
DDA balances in this region increased 21% over the first quarter 2002.
Consumer banking fee income in this market increased 20% over 2002.
Average commercial deposits in the Washington metropolitan area
increased 63% over the first quarter 2002.
During the first quarter, four ATM Plus locations were opened in
Baltimore Super Fresh stores. These branches are staffed by a sales
associate that assists customers with their new loan, deposit,
investment and insurance needs. An ATM and video kiosk allows
customers to handle their transactional needs. This increased the
Provident network to a total of 113 offices at the end of the quarter.
-- Grow commercial business in the Baltimore-Washington corridor
Average core commercial deposits were up $113 million, or 39%, over
the 2002 first quarter, as Provident continued to grow its commercial
customer base. This growth was driven by a 46% increase in average
commercial DDA account balances for the same period.
Average core commercial loans increased $81 million, or 10%, over the
first quarter 2002. Revenue from commercial loan products continued
to grow, with commercial loan fees increasing 12% over the 2002 first
quarter.
-- Focus resources on growth in core business lines
Core banking operations continued to drive Provident's positive
results. Average core loans now comprise 70% of total loans, up
$169 million, or 10%, over the first quarter 2002.
Average core consumer loan balances increased $88 million, or 12%,
over the 2002 first quarter. Provident's expertise in marine and home
equity lending were evident as average marine loan and home equity
line balances increased 21% and 20%, respectively, over the same
quarter last year. The non-core consumer loan portfolio declined
$383 million, or 35%, from the first quarter of 2002.
Average core commercial loans increased 10%, or $81 million, from the
2002 first quarter and the average non-core commercial loan portfolio
continued to decrease, averaging $50 million for the quarter, down 34%
from the same quarter in 2002.
Average core deposits continued their steady growth, increasing
$146 million, or 6%. While core certificate of deposit balances
decreased 13%, core DDA balances increased 23%. Non-core deposits
posted a significant decline of $327 million, or 45%. Average core
deposits now represent 87% of total deposits, up from 78% in the first
quarter 2002.
Asset quality continued to be strong, with non-performing loans
decreasing $2.4 million to $21.6 million at March 31, 2003. Net
charge-offs also decreased to $2.4 million, or a 23% decline from the
quarter ending March 31, 2002.
-- Improve financial fundamentals
Return on average assets was 0.98%, up from 0.96% in the first quarter
2002, and return on common equity was 15.81%, up from 15.76% for the
first quarter last year. The leverage ratio was 7.51% and total risk-
based capital was 13.23%.
Outlook for the Future
Commenting on the future for Provident Bankshares, Chairman and CEO Gary
N. Geisel added, "Peter M. Martin retired today as our Chairman and CEO. We
will all miss him personally, but Pete prepared Provident well for the future.
Over the last few years, he and I worked together to recast our business
strategy and assemble an experienced and talented management team to execute
our plans. Our strategies form a solid foundation for our Company and our
continued achievements will underscore the success of these plans.
Provident is well positioned to take advantage of our unique competitive
opportunities and to expand during times of market disruption. We are
optimistic about the stability of the economic environment across our vibrant
and diverse region. We also remain confident in Provident's ability to exceed
analyst EPS consensus estimates for the full year 2003."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $5.0 billion in assets, Provident serves individuals and
businesses in the dynamic Baltimore-Washington corridor through a network of
113 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 first quarter earnings
teleconference will be webcast at 10:00 a.m. (EDT) on Thursday, April 17,
2003. 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 April 30, 2003. An audio replay of the webcast will also be available
until 11:59 p.m. April 23, 2003 at 1-800-428-6051, passcode ID 287786.
Supplemental financial information will be posted on the Provident website
today and on Thursday, April 17 in conjunction with the webcast and can be
accessed by selecting the link to Corporate Information and Investor Relations
and then selecting the link to Financial Reports.
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" as defined in the Private Securities
Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements
may be identified by the use of such words as "believe," "expect,"
"anticipate," "should," "planned," "estimated," "intend" 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; 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 PSLRA.
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 forward-looking statements 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.
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
Three Months
(dollars in thousands, Three Months Ended Ended
except per share data) March 31, December 31,
% %
2003 2002 Change 2002 Change
SUMMARY OF OPERATIONS
Net Income $11,785 $11,475 2.7% $13,285 (11.3)%
Net Interest Income 35,627 36,652 (2.8) 34,238 4.1
Provision for Loan
Losses 1,760 3,600 (51.1) 1,425 23.5
Non-Interest Income 22,591 20,200 11.8 25,519 (11.5)
Net Gains 1,247 431 189.3 2,600 (52.0)
Non-Interest Income
(excluding net
gains) 21,344 19,769 8.0 22,919 (6.9)
Non-Interest Expense 39,050 36,383 7.3 39,227 (0.5)
Income Tax Expense 5,623 5,394 4.2 5,820 (3.4)
SHARE DATA
Basic Earnings
Per Share $0.48 $0.46 4.3% $0.54 (11.1)%
Diluted Earnings
Per Share 0.47 0.44 6.8 0.53 (11.3)
Cash Dividends Paid
Per Share 0.225 0.205 9.8 0.220 2.3
Book Value Per Share 13.27 11.24 18.1 12.96 2.4
Weighted Average
Shares --
Basic 24,384,142 25,116,990 (2.9) 24,480,847 (0.4)
Weighted Average
Shares
-- Diluted 25,053,638 25,967,036 (3.5) 25,102,701 (0.2)
Common Shares
Outstanding 24,408,774 25,128,323 (2.9) 24,363,636 0.2
END OF PERIOD BALANCES
Investment Securities
Portfolio $2,229,246 $1,936,021 15.1% $1,993,229 11.8%
Total Loans 2,462,022 2,708,533 (9.1) 2,560,563 (3.8)
Total Assets 5,013,492 4,945,445 1.4 4,890,722 2.5
Deposits 3,273,017 3,434,394 (4.7) 3,187,966 2.7
Stockholders' Equity 323,988 282,374 14.7 315,635 2.6
Common Equity 307,862 298,136 3.3 300,715 2.4
AVERAGE BALANCES
Investment Securities
Portfolio $2,049,951 $1,776,733 15.4% $1,893,255 8.3%
Loans:
Core Consumer 845,072 757,026 11.6 833,790 1.4
Core Commercial &
Industrial 342,097 322,226 6.2 349,790 (2.2)
Core Commercial
Real Estate 561,085 499,927 12.2 551,501 1.7
Total Core Loans 1,748,254 1,579,179 10.7 1,735,081 0.8
Non-Core Consumer 701,449 1,084,003 (35.3) 798,920 (12.2)
National Syndicated
Loans 49,845 75,509 (34.0) 55,405 (10.0)
Total Non-Core
Loans* 751,294 1,159,512 (35.2) 854,325 (12.1)
Total Loans 2,499,548 2,738,691 (8.7) 2,589,406 (3.5)
Earning Assets 4,560,447 4,530,290 0.7 4,494,344 1.5
Total Assets 4,883,827 4,840,237 0.9 4,811,441 1.5
Core Deposits 2,746,865 2,601,206 5.6 2,738,050 0.3
Non-Core Deposits
(Brokered Deposits) 400,303 727,487 (45.0) 439,194 (8.9)
Total Deposits 3,147,168 3,328,693 (5.5) 3,177,244 (0.9)
Stockholders' Equity 318,157 291,287 9.2 307,468 3.5
Common Equity 302,380 295,302 2.4 298,019 1.5
SELECTED RATIOS
Return on Average
Assets 0.98% 0.96% 1.09%
Return on Average
Equity 15.02 15.98 17.14
Return on Average
Common Equity 15.81 15.76 17.69
Net Yield on Average
Earning Assets
(tax-equivalent) 3.18 3.30 3.04
Efficiency Ratio 68.33 64.24 68.40
Leverage Ratio 7.51 7.40 7.47
Tier I Risk-Based
Capital Ratio 12.15 10.67 11.62
Total Risk-Based
Capital Ratio 13.23 11.72 12.70
* Includes purchased loans, syndicated loans outside the Bank's normal
lending area and loans from discontinued product lines.
PROVIDENT BANKSHARES
ASSET QUALITY DETAIL
(dollars in thousands) 03/31/2003 03/31/2002 12/31/2002
LOAN PORTFOLIO
Home Equity-Acquired $500,487 $683,771 $545,323
Other Consumer 874,705 845,030 881,151
Total Consumer 1,375,192 1,528,801 1,426,474
Commercial Business 364,403 355,576 376,065
Real Estate - Construction - Residential 131,872 104,915 119,732
- Commercial 196,247 216,017 238,344
Real Estate - Mortgage - Residential 140,208 274,222 168,869
- Commercial 254,100 229,002 231,079
TOTAL LOANS $2,462,022 $2,708,533 $2,560,563
NON-PERFORMING ASSETS
Home Equity-Acquired $17,510 $18,680 $18,070
Other Consumer 493 469 460
Commercial Business 493 77 514
Real Estate - Construction - Residential - 215 136
- Commercial - - -
Real Estate - Mortgage - Residential 3,141 4,553 1,953
- Commercial - - -
Total Non-Accrual Loans 21,637 23,994 21,133
Total Renegotiated Loans - - -
TOTAL NON-PERFORMING LOANS 21,637 23,994 21,133
Total Other Assets
and Real Estate Owned 4,155 3,938 3,796
TOTAL NON-PERFORMING ASSETS $25,792 $27,932 $24,929
90-DAY DELINQUENCIES
Home Equity-Acquired $6,229 $6,186 $5,108
Other Consumer 430 1,419 1,023
Commercial Business 407 221 320
Real Estate - Construction - Residential 136 - -
- Commercial - - -
Real Estate - Mortgage - Residential 5,466 5,755 8,377
- Commercial - - -
TOTAL 90-DAY DELINQUENCIES $12,668 $13,581 $14,828
ASSET QUALITY RATIOS
Non-Performing Loans to Loans 0.88% 0.89% 0.83%
Non-Performing Assets to Loans 1.05% 1.03% 0.97%
Allowance for Loan Losses to Loans 1.32% 1.30% 1.31%
Net Charge-Offs to Average Loans 0.38% 0.45% 0.40%
Allowance for Loan Losses to Loans to
Non-Performing Loans 150.49% 146.55% 158.16%
Three Months Three Months
Ended Ended
ANALYSIS OF ALLOWANCE March 31, December 31,
FOR LOAN LOSSES 2003 2002 2002
Balance at Beginning of Period $33,425 $34,611 $34,615
Provision for Loan Losses 1,760 3,600 1,425
Transfer to Other Liabilities (262) - -
Less: Loans Charged-Off, Net of Recoveries
Home Equity-Acquired 1,898 1,903 1,612
Other Consumer 390 347 380
Commercial Business 122 789 517
Real Estate - Construction - Residential - - -
- Commercial - - -
Real Estate - Mortgage - Residential (49) 14 106
- Commercial - (6) -
Net Charge-Offs 2,361 3,047 2,615
BALANCE AT END OF PERIOD $32,562 $35,164 $33,425
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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