Company Continues to Post Increased Earnings on Stronger Balance Sheet
BALTIMORE, April 17 /PRNewswire-FirstCall/ -- Provident Bankshares
Corporation (Nasdaq: PBKS), the parent company of Provident Bank, today
reported $11.5 million in net income or $0.44 per diluted share for the first
quarter of 2002, compared with $10.2 million, or $0.37 per share for the same
quarter last year.
Continued execution of the Company's long-term plan to focus on growing
core businesses, improving asset quality and controlling costs has resulted in
significantly improved margins, return on equity, return on assets and
earnings per share over the prior year's first quarter.
First Quarter Financial Highlights
-- Net income was $11.5 million for the quarter, and diluted earnings
per share was $0.44
-- Return on average common equity was 15.76%, up from 15.06% in the
2001 first quarter
-- Return on average assets was 0.96%, up significantly from 0.86% in
first quarter 2001
-- Non-interest income (excluding securities gains) grew 16% from the
comparable period in 2001 and comprised 35% of total quarterly
revenue
-- The net interest margin improved significantly to 3.30% from 2.95% in
the first quarter of 2001
-- Asset quality remained strong as non-performing loans declined 12.4%
from one year ago and the allowance for loan losses ended the quarter
at 1.30% of total loans
-- Average core deposits increased $119 million, or 5%, from the 2001
first quarter
-- Average core loans increased $206 million, or 15% from the same
quarter last year
-- The cash dividend increased to $0.21 per share
First Quarter Results
Provident Bankshares reported net income for the quarter ended March 31,
2002 of $11.5 million, or $0.44 per diluted share. The 2001 first quarter
earnings were affected by the one-time transition charge during that quarter
of $1.2 million (or $0.04 per share) associated with the company's adoption of
Financial Accounting Standards No. 133 "Accounting of Derivative Instruments
and Hedging Activities." Excluding this one-time charge, earnings per share
still increased a solid 7.3% over last year.
Return on average common equity was 15.76% for the first quarter 2002, up
from 15.06% in the same quarter a year ago. Return on average assets was
0.96%, up significantly from 0.86% for the comparable period last year.
Management's strategy to reduce wholesale assets and liabilities while
growing core business lines has resulted in an improved net interest margin,
return on assets, return on equity and earnings per share.
The net interest margin expanded to 3.30%, compared with 2.95% in the 2001
first quarter. Tax-equivalent net interest income for the 2002 first quarter
was down $632 thousand, or 1.7%, from one year ago. This net interest income
decline is the result of the Company's continuing strategic reduction in
wholesale assets and liabilities associated with improved leverage ratios and
stock repurchase.
Continued solid performance from core business operations, combined with a
resilient local economy, drove growth in average core loans and average core
deposits again in the first quarter. Average core loans increased
$206 million, or 15%, compared to first quarter 2001. Led by a 21% increase
in average non-interest bearing demand deposits, average core deposits
increased 5% from the same quarter last year.
Asset quality continues to be strong. At March 31, 2002, total non-
performing assets were $24 million, down 12.4% from the same quarter last
year. Net charge-offs declined 58% and the allowance for loan losses to total
loans is 1.30% at the end of the first quarter. This allowance includes a
$1.3 million recovery from loan losses in the acquired loan portfolio that was
applied to the loan loss reserve.
Fee income generation continued at historical levels. Total non-interest
income (excluding securities gains) was up $2.7 million, or 16%, for the first
quarter of 2002, and comprised 35% 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 17% and
commercial deposit service fees were up more than 26% from one year ago.
There were $167 thousand in net securities gains during the 2002 first
quarter, compared with $6 million in the same period a year ago.
Reflecting the Company's continued focus on operating expense control,
non-interest expense was $36.4 million in the first quarter of 2002, an
increase of just 2.2% over the $35.6 million in the same quarter last year.
The leverage ratio increased to 7.40%, compared with 6.52% in the first
quarter of 2001. Risk based capital increased to 11.72% from 9.91% last year.
Provident repurchased 124,500 shares of common stock during the quarter,
leaving 958,731 shares available under the current Share Repurchase Program.
At March 31, 2002, stockholders' equity was $282 million and book value per
share was $11.24.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.21 per share. This quarterly cash
dividend will be paid on May 10, 2002 to stockholders of record at the close
of business on April 29, 2002. Management has elected to increase the cash
dividend in this quarter, as it has for each of the previous 34 consecutive
quarters.
Provident elected not to declare an additional stock dividend, as it has
from time to time. Management will continue to regularly evaluate the merit
of a stock dividend given current and prospective earnings, capital needs and
economic conditions.
Management Comment
Commenting on the Company's first quarter performance, Chairman and CEO
Peter M. Martin said, "I am pleased with our performance, particularly the
continued success of our core banking operations. Provident's first quarter
results show solid asset quality and strong core revenue generated through
growth in core deposits, core loans and fee income. The improved margin,
capital position and loan loss reserve further strengthen our balance sheet.
These strong first quarter results show continued progress toward our long-
term financial goals and the success of our business plans."
Core Business Strategies Continue to Drive Solid Results
Commitment to core business strategies produced positive results in the
first quarter and positions Provident for solid performance throughout 2002.
Provident's core business strategies are:
-- Broaden presence and customer base in the Washington metro area
The Company continued to see steady growth in this key expansion market.
Thirty-one percent of all new retail checking accounts opened during the
quarter were opened in the Washington metro area. Total branch deposits in the
market were up 7.6% for the quarter and continue to comprise more than 20% of
total retail deposits. Much of the quarterly growth came from in-store
branches in Northern Virginia and Prince Georges' County where new accounts
were up 18.5% and retail deposits were up 103% for the quarter. Total branch
banking fee income generated in the Washington region also increased 45.4%
over the same quarter last year. On the commercial side of the business,
first quarter 2002 saw a 19% increase in core commercial loan balances and a
53.6% increase in average core commercial deposit balances for the Washington
metro market.
-- Grow commercial business in the Baltimore-Washington corridor
Solid loan growth and a significant increase in core deposits highlighted
the first quarter performance of Provident's Commercial Banking Group. Average
core commercial loan balances increased $48 million, or 6%, over the same
quarter last year. Average core commercial deposits were up 33.2% for the
quarter, with average core commercial deposits for the Baltimore metro
commercial unit up 32.1%. Commercial deposit service fees grew 55.4% during
the period. The bank's subsidiary, Provident Lease Corp., also posted
commercial loan/lease growth of 28.3% compared to first quarter 2001.
-- 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 during the quarter
with $93.2 million in new direct loan production, a 34% increase over the same
period last year. Led by solid increases in home equity line and loan
products, consumer loan balances were also up $47.4 million, or 14%, for the
quarter. At March 31, 2002, Provident had more than 267,000 personal checking
accounts, an increase of 6.4% from the same period last year. Overall branch
banking fee income was up 15.3%. Provident's focus on the small business
market also continued to yield positive results. New business checking
account openings increased 123.5% from first quarter 2001, while business
account retention improved by 36.3%.
-- Improve efficiencies and productivity
Non-interest expense for the 2002 first quarter grew 2.2% over the first
quarter of 2001, reflecting Provident's continued focus on expense
containment. The Company will continue to contain expenses in 2002 within the
constraints of its plans to open 10 to 12 new branches. This cost
containment effort is evident in the efficiency ratio that declined to 63.93%
from 69.13% the previous quarter.
-- Continue branch expansion into vibrant, high-growth markets
Provident closed two low-performing branches during the first quarter and
will deploy these resources in the new branches scheduled for 2002. The
expansion branches contributed the bulk of this quarter's growth by adding
$49 million in deposit account balances during the quarter.
Provident now has one third of its branches in the attractive Washington
suburbs and plans to open 10 to 12 new branches in 2002. These new offices
will be evenly split between in-store and traditional branches and all new
locations are targeted for the Washington-metro area.
Outlook for the Future
Commenting on the future for Provident Bankshares, Chairman and CEO Peter
M. Martin added, "Our strong first quarter should provide momentum for a
successful year. We plan to further expand our delivery network to broaden
our market presence and deepen our customer base in the Baltimore-Washington
corridor. To complement our success in retail banking, we will continue to
build our commercial banking business throughout our market areas.
As our wholesale assets and liabilities further decline and are replaced
with more profitable core loans and deposits, we expect our key ratios to
continue to improve. 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' 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
98 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. (EST) on Thursday, April 18,
2002. Log on to http://www.provbank.com. The teleconference will be recorded and a
replay will be available on the company's website until April 24, 2002. 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.
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 Three Months
(tax-equivalent Ended March 31, Ended December 31,
basis) 2002 2001 % Change 2001 % Change
SUMMARY OF OPERATIONS
Interest Income $75,249 $98,149 (23.3) % $76,258 (1.3) %
Interest Expense 38,386 60,654 (36.7) 43,321 (11.4)
Net Interest
Income 36,863 37,495 (1.7) 32,937 11.9
Provision for
Loan Losses 3,600 8,175 (56.0) 2,770 30.0
Net Interest Income
after Provision
for Loan Losses 33,263 29,320 13.4 30,167 10.3
Non-Interest
Income 20,176 23,249 (13.2) 24,385 (17.3)
Non-Interest
Expense 36,359 35,590 2.2 36,181 0.5
Income Before
Income Taxes 17,080 16,979 0.6 18,371 (7.0)
Income Tax
Expense 5,394 5,399 (0.1) 5,731 (5.9)
Less: Tax-Equivalent
Adjustment 211 255 (17.3) 205 2.9
Income Before
Cumulative Effect of
Change in Accounting
Principle 11,475 11,325 1.3 12,435 (7.7)
Cumulative Effect
of Change in Accounting
Principle, Net* -- (1,160) -- -- --
Net Income $11,475 $10,165 12.9 $12,435 (7.7)
PER SHARE
Basic
Income Before Cumulative
Effect of Change in
Accounting
Principle $0.46 $0.43 7.0 $0.49 (6.1)
Net Income 0.46 0.39 17.9 0.49 (6.1)
Diluted
Income Before
Cumulative Effect of
Change in Accounting
Principle 0.44 0.41 7.3 0.48 (8.3)
Net Income 0.44 0.37 18.9 0.48 (8.3)
Cash Dividends Paid 0.205 0.176 16.5 0.200 2.5
Stockholders'
Equity 11.24 11.74 (4.3) 11.40 (1.4)
Common Shares
Outstanding 25,128,323 24,400,891 3.0 25,111,592 0.1
Weighted Average
Shares --
Basic 25,116,990 26,344,820 (4.7) 25,368,674 (1.0)
Weighted Average
Shares --
Diluted 25,967,036 27,310,689 (4.9) 26,158,395 (0.7)
PROFITABILITY RATIOS**
Return on
Average Assets 0.96 % 0.86 % 1.00 %
Return on
Average Equity 15.98 15.39 16.33
Return on Average
Common Equity 15.76 15.06 16.73
Net Yield on Average
Earning Assets
(t/e basis) 3.30 2.95 2.82
Efficiency Ratio 63.93 64.97 69.13
CAPITAL RATIOS
AT PERIOD END
Leverage Ratio 7.40 % 6.52 % 7.13 %
Risk-Based Tier
I Capital Ratio 10.67 8.91 10.10
Risk-Based
Total Capital
Ratio 11.72 9.91 11.09
ASSET QUALITY
Non-Performing
Loans $23,994 $27,399 (12.4) % $28,839 (16.8) %
Loans Past Due
90 Days or More 13,581 15,689 (13.4) 10,818 25.5
Allowance for
Loan Losses 35,164 39,307 (10.5) 34,611 1.6
Net Charge-offs 3,047 7,242 (57.9) 2,863 6.4
Non-Performing
Loans to Loans 0.89 % 0.83 % 1.04 %
Allowance for Loan
Losses to Loans 1.30 1.19 1.25
Net Charge-Offs
to Average Loans 0.45 0.87 0.40
Allowance for
Loan Losses to
Non-Performing
Loans 146.55 143.46 120.01
AVERAGE BALANCES
Investment Securities
Portfolio $1,776,733 $1,765,615 0.6 % $1,789,725 (0.7)%
Loans 2,738,691 3,381,953 (19.0) 2,837,183 (3.5)
Earning Assets 4,530,290 5,160,774 (12.2) 4,641,007 (2.4)
Assets 4,840,237 5,377,446 (10.0) 4,950,459 (2.2)
Deposits 3,328,693 3,842,611 (13.4) 3,363,413 (1.0)
Stockholders'
Equity 291,287 298,524 (2.4) 302,110 (3.6)
Common Equity 295,302 304,935 (3.2) 294,962 0.1
* 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
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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 Corporation
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