Core Banking Businesses Continue to Drive Strong Revenue Performance
BALTIMORE, April 18 /PRNewswire/ --
Provident Bankshares Corporation (Nasdaq: PBKS), the parent company of
Provident Bank, the second largest independent commercial bank headquartered
in Maryland, today reported operating earnings of $11.7 million or $.45 per
share.
These solid operating results were driven by the strong performance of the
Company's core banking businesses. The quarter was highlighted by a 26.2%
increase in fee income, a 12.4% growth in average core deposits, a 31.4%
increase in average commercial real estate loans and continued focus on
operating expense control, which limited growth in non-interest expense to
2.4%.
First Quarter Financial Highlights
-- Earnings per share (diluted) were $.45
-- Operating earnings were $11.7 million for the quarter
-- Return on average common equity was 15.34% for the quarter
-- Average core deposits increased 12.4%
-- Average core loans increased $164 million or 12.7%
-- Cash dividend was increased to $.19 per share
-- Non-interest income (excluding securities gains) grew 23.0% for the
quarter compared to first quarter 2000 and comprised 32% of
Provident's total income (net of securities gains) for the quarter
First Quarter Strategic Highlights
-- Increased average core deposits $273 million or 12.4% from the first
quarter of 2000
-- Increased fee income 26.2%, up from $11.8 million in first quarter
2000
-- Direct consumer loan production increased 64% over first quarter 2000
-- Expanded commercial business with commercial deposits up $27.1 million
or 13.2% and average commercial loans bankwide were up $106 million
or 14.1% compared to first quarter 2000
-- Opened more than 21,000 retail checking accounts during the quarter, a
4.50% increase from first quarter 2000
-- Repurchased 1.6 million shares during the quarter under the current
stock buyback program, including more than 1.4 million PBKS shares
held by Mid-Atlantic Investors and its affiliates
First Quarter Operating Results
Provident Bankshares today reported operating earnings for the quarter
ended March 31, 2001 of $11.7 million, or $.45 per share on a diluted basis.
This is an increase of 7.9% from $10.9 million, or $.40 per diluted share in
the 2000 comparable quarter.
As a result of a one-time transition adjustment of $1.2 million (net of
taxes) for Statement of Financial Accounting Standards No. 133 "Accounting of
Derivative Instruments and Hedging Activities," net income is $10.6 million,
or $.40 per diluted share.
The Company, like many institutions, adopted these new mandatory
accounting standards in the first quarter of 2001.
Exclusive of accounting change, return on average common equity was 15.34%
for the first quarter 2001, compared to 14.72% in the same quarter a year ago
and 15.42% from the prior quarter. Return on average assets was .88% for the
quarter ending March 31, 2001, compared to .90% for the quarter ending
March 31, 2000 and .89% for the quarter ending December 31, 2000.
Net interest margin for the 2001 first quarter was 2.91%, a decrease from
3.04% in the fourth quarter of 2000. This margin decline was largely the
result of two one-time events: the reclassification of trust preferred stock
interest from non-interest expense to interest expense, and the accelerated
reversal of $1.4 million in accrued interest to comply with the new FFIEC
policy for consumer credit that required the reclassification of previously
unclassified second mortgages as non-performing loans.
Non-interest income (excluding securities gains) was up $3.3 million or
23.0% for the 2001 first quarter. There were $6.0 million in securities gains
during the 2001 first quarter compared to $79 thousand in the same period a
year ago. Securities gains were taken mainly as part of Provident's program
to hedge accelerated prepayments on the second mortgage portfolio as well as
to fund the sale of a non-performing health care credit.
Core banking operations continued to show solid revenue growth driven by
Provident's strength in attracting and retaining customers, generating fee
income and acquiring core deposits.
Led by a strong increase in deposit service fees associated with
Provident's continued growth in retail and commercial checking accounts, non-
interest income from core business operations was up $3.3 million or 23.0% for
the quarter ending March 31, 2001. Income from deposit service fees was up
more than $3.3 million or 31.5% from one year ago.
Average loans and deposits showed strong growth in first quarter 2001
compared to 2000. Average core loans increased $164 million or 12.7%. Led by
a strong increase in non-interest bearing demand deposits, average core
deposits increased 12.4% from the first quarter of 2000.
The Company's commitment to expense control was evidenced by a 2.4%
increase in non-interest expense, up $849 thousand from the same quarter last
year. Expansion branches (open less than eighteen months) continued their
progress toward break-even status, recording $955 thousand in net fee income
growth during the quarter while limiting operating expense growth to just over
$1 million.
Provident continued to use its stock buyback authority to strategically
purchase shares in the open market to enhance stockholder value. The Company
repurchased 1.6 million shares during the quarter, including all of the
1,407,157 PBKS shares held by Mid-Atlantic Investors and its affiliates. This
transaction accelerated the completion of a substantial portion of the
Company's share repurchase program within the price range approved by its
Board of Directors in December 2000. The Company has remaining authority to
repurchase up to 920,000 of common stock under the current repurchase program.
Asset Quality
The Company remains confident of its asset quality based on regular
monitoring of all its loan portfolios. As a result of this management
process, the Company took the following actions during the quarter.
Provident continued to reduce its syndicated health care portfolio by
selling its remaining position in a previously reported non-performing
healthcare credit. To further limit its exposure to syndicated credits, the
Company also elected to sell a large national credit that had been performing
as agreed at face value.
A one-time addition of $12 million was made to non-performing loans to
conform to a new FFIEC policy on consumer loans. While there has been no
change in the underlying fundamentals of Provident's consumer loan portfolio,
the new FFIEC policy required the reclassification of previously unclassified
second mortgages as non-performing loans.
At March 31, 2001, the allowance for loan losses stood at $42.8 million.
Dividend Declared
Provident Bankshares also announced today that its Board of Directors has
declared a quarterly cash dividend of $.19 per share. This quarterly cash
dividend will be paid on May 11, 2001 to stockholders of record at the close
of business on April 30, 2001.
In addition, the Board declared a stock dividend of 5% per share. This
stock dividend will also be paid on May 11, 2001, subsequent to the cash
dividend, to stockholders of record at the close of business on April 30,
2001.
Management Comment
Commenting on the first quarter, Provident Bankshares Chairman and CEO
Peter M. Martin said, "I'm pleased with the performance of our core banking
units. Their continued growth and solid earnings results provided significant
revenue momentum for our operations this quarter.
"We continue to focus efforts on our most profitable business lines. We
also launched a number of new business initiatives this quarter as part of our
specific core banking growth strategies."
New Business Initiatives
Provident's Baltimore Commercial Banking team embarked on a significant
prospect-calling program during the quarter. Teams of commercial lenders
traveled the Baltimore metro market to increase market awareness, qualify
prospects and acquire new customers. The target businesses for the call blitz
had revenues of $5 million or greater, and loan needs of $250,000 and up.
Over 500 calls were made during the quarter as the first step towards
intensifying efforts to attain a larger portion of the commercial market
share.
Provident also took steps to become a significant player in the small
business banking arena. A new small business unit was finalized and staffed
during the quarter with highly experienced employees from the organization.
An expanded product mix, including new business checking products, will enable
Provident to meet a complete range of financial needs for the small business
customer.
Provident will continue to expand its branch network into attractive
markets this year. Six branches are due to open in 2001, with four scheduled
for the dynamic Northern Virginia area. During this quarter, expansion
branches deposits grew to $69 million compared to $9.4 million at the close of
the first quarter of 2000. Fee income from expansion branches totaled more
than $1.3 million for the quarter, up 293% from $326 thousand for the same
period last year. Expansion branches contributed 17% of bankwide fee income
and added 31% of total retail banking fee income.
A retooled home equity product line generated over $9.2 million of new
lines during the quarter, an 88% increase from first quarter 2000. Provident
produced $71 million in consumer loans during the first quarter of 2001, a 64%
increase over first quarter 2000.
Solid Results from a Proven Performer
Commenting on the outlook for Provident Bankshares, Peter Martin said, "We
will continue to implement our successful core banking strategies with
specific goals in 2001 to meet our financial targets, enhance our commercial
banking businesses and continue our strong growth in core deposits and non-
interest income. I am confident we will meet the consensus earnings estimate
for 2001."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $5.3 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 its 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. on Thursday, April 19, 2001. Log
on to http://www.provbank.com. The webcast will involve discussions of the most
recent quarter's results of operations and may include forward-looking
information, such as guidance of 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 Ended March 31,
(tax-equivalent basis) 2001 2000 % Change
SUMMARY OF OPERATIONS
Interest Income $97,760 $98,255 (0.5)%
Interest Expense 60,654 57,595 5.3
Net Interest Income 37,106 40,660 (8.7)
Provision for Loan Losses 7,175 4,300 66.9
Net Interest Income after
Provision
for Loan Losses 29,931 36,360 (17.7)
Non-Interest Income 23,537 14,369 63.8
Non-Interest Expense 35,878 35,029 2.4
Income Before Income Taxes 17,590 15,700 12.0
Income Tax Expense 5,610 4,594 22.1
Less: Tax-Equivalent
Adjustment 255 241 5.8
Income Before Extraordinary
Item and Cumulative
Effect of Change in
Accounting Principle 11,725 10,865 7.9
Extraordinary Item -- Gain on
Debt Extinguishment, Net - 770 -
Cumulative Effect of Change
in Accounting Principle,
Net* (1,160) - -
Net Income $10,565 $11,635 (9.2)
PER SHARE
Basic
Income Before Extraordinary
Item and Cumulative
Effect of Change in
Accounting Principle $0.47 $0.41
Net Income 0.42 0.44
Diluted
Income Before Extraordinary
Item and Cumulative
Effect of Change in
Accounting Principle 0.45 0.40
Net Income 0.40 0.43
Cash Dividends Paid 0.185 0.157
Stockholders' Equity 11.97 10.94
Market Value (closing sales
price as
reported on the NASDAQ
Stock Market) 22.38 15.00
Common Shares Outstanding 24,400,891 25,073,952
Weighted Average Shares --
Basic 25,125,278 26,619,994
Weighted Average Shares --
Diluted 26,091,147 27,142,033
PROFITABILITY RATIOS**
Return on Average Assets 0.88 % 0.90 %
Return on Average Equity 15.66 17.33
Return on Average Common
Equity 15.34 14.72
Net Yield on Average Earning
Assets (t/e basis) 2.91 3.23
CAPITAL RATIOS AT MARCH 31
Leverage Ratio 6.62 % 7.44 %
Risk-Based Capital Ratios:
Tier I Capital Ratio 9.01 9.69
Total Capital Ratio 10.06 10.71
ASSET QUALITY
Non-Performing Loans $26,038 $26,000 0.1 %
Loans Past Due 90 Days or
More 27,576 28,512 (3.3)
Allowance for Loan Losses 42,832 41,051 4.3
Net Charge-offs 5,003 3,029 65.2
Non-Performing Loans to Loans 0.79 % 0.78 %
Allowance for Loan Losses to
Loans 1.29 1.23
Net Charge-Offs to Average
Loans 0.60 0.37
Allowance for Loan Losses to
Non-Performing Loans 164.50 157.89
AVERAGE BALANCES
Investment Securities
Portfolio $1,765,614 $1,738,383 1.6 %
Loans 3,390,557 3,275,491 3.5
Earning Assets 5,169,377 5,060,376 2.2
Assets 5,382,555 5,227,759 3.0
Deposits 3,842,611 3,791,779 1.3
Stockholders' Equity 303,633 270,069 12.4
Common Equity 310,044 318,010 (2.5)
SELECTED FINANCIAL DATA AT
PERIOD END
Investment Securities
Portfolio $1,639,388 $1,686,192 (2.8)%
Loans 3,314,795 3,348,247 (1.0)
Earning Assets 4,972,130 5,049,902 (1.5)
Assets 5,252,379 5,247,507 0.1
Deposits 3,808,215 3,782,312 0.7
Stockholders' Equity 292,035 274,405 6.4
Common Equity 295,931 319,089 (7.3)
* 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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Related links:
http://www.provbank.com
Company News On-Call:
http://www.prnewswire.com/comp/721938.html or fax,
800-758-5804, ext. 721938
CONTACT:
Media: Lillian Kilroy, 410-277-2833, or
Investors: Ellen Grossman, 410-277-2889, both of Provident
Bankshares
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