41% Earnings Increase Over 2004 First Quarter
Solid Financial Fundamentals Drive Increase
BALTIMORE, April 21 /PRNewswire-FirstCall/ -- Provident Bankshares
Corporation (Nasdaq: PBKS), the parent company of Provident Bank, today
reported $18.1 million in net income or $0.54 per diluted share, for the first
quarter of 2005. The basis for financial comparison includes the impact of
the Southern Financial Bancorp, Inc. merger for the first quarter of 2005.
Provident's continued focus on financial fundamentals produced strong
results for the quarter. Net interest margin increased to 3.58% for the 2005
first quarter, a 39 basis point increase over the prior year's quarter. Asset
quality remained strong, as non-performing assets to loans were 0.70% and
charge-offs to average loans were 0.24% for the quarter. Returns on assets
and equity were 1.14% and 11.85%, respectively, and the efficiency ratio
improved to 62.0% for the quarter. The financial results reflect the
continued balance sheet transition towards growing loans and deposits in its
business segments. The Company's commitment to its business strategies in the
key markets of Baltimore, Washington and Richmond coupled with the impact of
the Southern Financial merger, led to increases in average loans and deposits
of 26% and 23%, respectively, over the first quarter of 2004. The April 30,
2004 strategic merger of Southern Financial Bancorp, Inc. added 30 branches in
the Northern Virginia, Richmond, Charlottesville and Washington D.C. areas.
First Quarter Financial Highlights
(Basis for financial comparison includes Southern Financial Bancorp, Inc.
merger for the first quarter of 2005)
-- Net income increased 41%, to $18.1 million, over the 2004 first
quarter
-- Net interest margin improved to 3.58%, up from 3.19% for the 2004
first quarter
-- Return on assets increased to 1.14%, up from 0.99% for the 2004 first
quarter
-- Return on common equity was 11.85%, a decline originated from the
Southern Financial merger
-- Asset quality remains strong as net charge-offs as a percentage of
average loans were 24 basis points, compared to 26 basis points last
year
-- Capital ratios remain strong with a leverage ratio of 7.93% and total
risk-based capital ratio of 12.29%
-- Average loans increased $733 million, or 26%, from the 2004 first
quarter
-- Average deposits increased $695 million, or 23%, from the 2004 first
quarter
-- Non-interest income grew 7% from the comparable period in 2004
First Quarter Results
Provident Bankshares reported net income for the quarter ending March 31,
2005 of $18.1 million, an increase of 41% over the first quarter of 2004.
Earnings per diluted share were $0.54, an increase of 6% over the 2004 first
quarter. Solid loan growth in key business segments and the accretive effects
of the Southern Financial merger fueled first quarter results. Improved
earnings included increased net interest income, non-interest income and a
lower loan loss provision, which was partially offset by increased non-
interest expenses and provision for income taxes. Non-interest expenses
included the impact of $1.4 million in professional fees for 2004 activities
related to Sarbanes-Oxley compliance. Also included in non-interest expenses
was a reduction of $1.5 million primarily related to retiree medical benefits.
Average loans increased 26%, or $733 million over the first quarter of
2004. Consumer and commercial loans increased 8% and 55%, respectively,
driven by continued emphasis on the key business segments. Average home
equity loans increased $206 million, or 40%, more than offsetting reductions
in marine lending and purchased residential loans. Average commercial real
estate loans increased $318 million, or 45%, while commercial business loans
increased $285 million, or 72%. The addition of loans acquired from the
Southern Financial merger contributed to the growth in the commercial product
segments.
Average deposits increased $695 million, or 23%, over the same quarter
last year. Demand accounts represented the largest increase of $294 million,
or 29%. Average money market, savings, and time deposits accounts represented
the remaining increase over the prior year's quarter. Average brokered
deposits also increased over the 2004 first quarter, driven by an increase in
callable brokered deposits acquired in the merger, as well as brokered
deposits issued during the year as a less expensive alternative to borrowing.
The net interest margin, on a tax-equivalent basis, increased 39 basis
points to 3.58% and was driven by continued solid growth in lending
activities. Loan growth of $733 million drove average earning assets up to
$5.7 billion during the quarter. The yield on earning assets correspondingly
increased as a result of the loan growth which more than offset the increase
in funding costs. In addition, higher yielding investment securities were
purchased with proceeds from sales of investment securities during the
quarter.
Non-interest income grew 7% to $25.3 million, up from $23.6 million in the
first quarter 2004. Deposit fee income increased 4%, reflecting increases in
consumer and commercial deposit fees. As with many of our peers, consumer
deposit fees are being negatively impacted by decreases in checking
transactions and decreases in NSF activity during the quarter. Debit card fee
income, which increased 39%, drove consumer deposit fee income higher during
the quarter. Other non-interest income included $1.5 million of life
insurance proceeds. Further, as part of the continued balance sheet
transition, sales of investment securities and debt extinguishment resulted in
net losses during the quarter. The proceeds from the sales were used to
purchase investment securities at higher yields.
Total non-performing loans at March 31, 2005 were $23.2 million, compared
with $18.9 million at March 31, 2004, reflecting an impact from the Southern
Financial merger. Net charge-offs increased to $2.1 million, up from $1.8
million for the 2004 first quarter. The allowance for loan losses, at 1.29%
of period-end loans, was a 1.97 multiple of non-performing loans and a 5.35
multiple of net charge-offs.
Capital ratios continue to be strong, with a leverage ratio of 7.93% and a
total risk-based capital ratio of 12.29% at March 31, 2005. These compare to
8.56% and 15.38%, respectively, at March 31, 2004. As planned for the first
quarter, the Company redeemed $30 million of trust preferred securities which
qualified for regulatory capital.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.27 per share. This is the forty-
sixth consecutive quarterly dividend increase. The quarterly cash dividend
will be paid on May 13, 2005 to stockholders of record at the close of
business on May 2, 2005.
Management Comment
Commenting on the Company's first quarter performance, Chairman and CEO,
Gary N. Geisel said, "Our first quarter results are right on plan. We are
committed to building a strong regional bank focused on the vibrant markets of
Baltimore, Washington and Richmond."
Virginia Franchise
Provident's Virginia franchise continues to be a significant component of
its business focus. For the quarter, consumer and commercial deposits in the
Washington metropolitan and Virginia markets increased 54% and 104%,
respectively, representing increases in all deposit categories. The 30
branches added from the Southern Financial merger facilitated the growth in
deposits for the year. The Virginia franchise has grown to 83 branches, or
56% of total branches, in the key metropolitan markets of Washington and
Richmond.
Average consumer loan balances increased 87% and commercial loan balances
more than doubled from the 2004 first quarter in the Virginia/Washington metro
markets. This growth emphasizes the Company's commitment to the Virginia
market as well as the benefits of the merger.
Execution of Key Business Strategies
Provident's key business strategies provide the Company with a unique
opportunity in its marketplace. An overview of the strategies for the year
and some accomplishments to date are discussed below:
-- Maximize Provident's position as the right size bank in the
marketplace
Provident's position as the second largest bank headquartered in
Maryland provides a unique opportunity as the "right size" bank in its
footprint. The Company provides the service of a small institution
combined with the convenience and wide array of products and services
that a strong regional bank offers. In addition, the 60 in-store
branches throughout its footprint reinforce its right size strategy
through convenient hours and full product service. Provident
currently has 149 branches concentrated in the Baltimore-Washington
corridor and beyond to Richmond, Virginia.
-- Grow and deepen consumer and small business relationships in Maryland
and Virginia
Consumer banking provided the Company's entry into commercial banking
and continues to be an important component of its business strategy.
Average consumer loan balances increased $130 million, or 8%, over the
prior year quarter. Home equity loans averaged $725 million, and
increased 40% over the prior year. The strong growth in home equity
lending was partially offset by declines in marine loans and purchased
residential loans totaling $93 million. This shift indicates the
Company's focus on its key business segments. Residential mortgage
loans also increased $23 million over the prior year quarter as a
result of loans acquired from Southern Financial.
Total average consumer deposits increased 13%. Average consumer
demand account balances increased 18%, from $670 million in the 2004
first quarter, to $793 million in 2005. Average consumer certificates
of deposit increased 18% and average consumer money market and savings
deposits increased 6% over the prior year quarter. Small business
loans and deposits increased significantly from the 2004 first quarter
and are included in the commercial banking totals.
-- Grow and deepen commercial and real estate relationships in Maryland
and Virginia
Commercial banking is the other key component to the Company's
regional presence in its market area. Average commercial and real
estate loans increased 72% and 45%, respectively. Commercial mortgage
loans and commercial and residential construction loans each posted
increases during the quarter. Commercial deposits increased 48% over
the prior year quarter with average demand account balances, money
market balances and certificates of deposit representing the areas of
growth. The increase in the commercial loan and deposit portfolios
over the 2004 first quarter also reflects the benefits derived from
Southern Financial's focus on commercial banking in Virginia.
-- Move from a product driven organization to a customer relationship
focused sales culture
The Company's transition to a customer relationship driven sales
culture requires deepening relationships through cross-sell and the
continuing emphasis on retention of valued customers. The Company has
segmented its customers to better understand and anticipate their
financial needs and provide Provident's sales force with a targeted
approach to customers and prospects. The successful execution of this
strategy will be centered on the right size bank commitment -
providing the service of a small institution combined with the
convenience and wide array of products and services that a strong
regional bank offers.
-- Create a high performance culture that focuses on employee
development and retention
Provident has always placed a high priority on its employees and has
approached employee development and training with renewed emphasis.
Their development is viewed as a critical part of executing its
strategy as the right size bank and transforming the Company's sales
culture. The focus is on the employee's development and their
approach with Provident's customers.
Outlook for the Future
Commenting on the future for Provident Bankshares, Chairman and CEO Gary
N. Geisel added, "2005 will be a year where we continue to execute against our
key strategies and to build the 'right size' bank for our consumer, commercial
and small business customers."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $6.4 billion in assets, Provident serves individuals and
businesses in the key urban areas of Baltimore, Washington and Richmond
through a network of 149 offices in Maryland, 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 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. (ET) on Thursday, April 21, 2005.
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 28, 2005. An audio replay of the webcast will also
be available during the same period, at 1-888-286-8010, passcode 21029757.
Supplemental financial information will be posted on the Provident website
today 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 2004 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 earnings growth determined by using U.S. generally accepted
accounting principles ("GAAP"); 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: the
factors identified in the Company's Form 10-K for the fiscal year ended
December 31, 2004 under the headings "Forward-Looking Statements" and "Risk
Factors"; prevailing economic and geopolitical 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. 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 share data)
Three Months Ended
March 31,
2005 2004 % Change
SUMMARY OF OPERATIONS:
Net income $18,108 $12,875 40.6 %
Net interest income 50,321 38,723 30.0
Provision for loan losses 1,575 2,391 (34.1)
Non-interest income 25,285 23,583 7.2
Net gains (losses) (776) 816 (195.1)
Non-interest income, excluding net
gains (losses) 26,061 22,767 14.5
Non-interest expense 47,474 40,610 16.9
Merger expense - 184 (100.0)
Non-interest expense, excluding merger
expense 47,474 40,426 17.4
Income tax expense 8,449 6,430 31.4
SHARE DATA:
Basic earnings per share $0.55 $0.52 5.8 %
Diluted earnings per share 0.54 0.51 5.9
Cash dividends paid per share 0.265 0.245 8.2
Book value per share 18.55 13.91 33.4
Weighted average shares - basic 33,029,444 24,664,213 33.9
Weighted average shares - diluted 33,720,433 25,350,116 33.0
Common shares outstanding 33,062,288 24,759,037 33.5
END OF PERIOD BALANCES:
Investment securities portfolio $2,145,381 $2,127,047 0.9 %
Total loans 3,546,286 2,829,936 25.3
Assets 6,428,829 5,268,743 22.0
Deposits 3,932,188 3,202,318 22.8
Stockholders' equity 613,379 344,470 78.1
Common stockholders' equity 624,840 342,511 82.4
AVERAGE BALANCES:
Investment securities portfolio $2,169,979 $2,093,314 3.7 %
Loans:
Residential real estate 1,364,566 1,198,015 13.9
Other consumer 471,141 508,067 (7.3)
Commercial real estate 1,026,306 708,358 44.9
Commercial business 680,837 395,614 72.1
Total loans 3,542,850 2,810,054 26.1
Earning assets 5,727,593 4,909,109 16.7
Assets 6,425,350 5,230,786 22.8
Deposits:
Noninterest-bearing 791,747 567,530 39.5
Interest-bearing 2,974,143 2,503,680 18.8
Total deposits 3,765,890 3,071,210 22.6
Stockholders' equity 618,604 331,538 86.6
Common stockholders' equity 619,739 332,423 86.4
SELECTED RATIOS:
Return on average assets 1.14 % 0.99 %
Return on average equity 11.87 15.62
Return on average common equity 11.85 15.58
Net yield on average earning assets
(t/e basis) 3.58 3.19
Efficiency ratio 62.00 65.53
Leverage ratio 7.93 8.56
Tier I risk-based capital ratio 11.23 13.47
Total risk-based capital ratio 12.29 15.38
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per share data)
Three Months Ended
December 31,
2004 % Change
SUMMARY OF OPERATIONS:
Net income $18,898 (4.2)%
Net interest income 50,971 (1.3)
Provision for loan losses 1,505 4.7
Non-interest income 26,923 (6.1)
Net gains (losses) 824 (194.2)
Non-interest income, excluding net
gains (losses) 26,099 (0.1)
Non-interest expense 48,951 (3.0)
Merger expense 275 (100.0)
Non-interest expense, excluding
merger expense 48,676 (2.5)
Income tax expense 8,540 (1.1)
SHARE DATA:
Basic earnings per share $0.57 (3.5)%
Diluted earnings per share 0.56 (3.6)
Cash dividends paid per share 0.26 1.9
Book value per share 18.65 (0.5)
Weighted average shares - basic 33,161,703 (0.4)
Weighted average shares - diluted 33,941,261 (0.7)
Common shares outstanding 33,102,385 (0.1)
END OF PERIOD BALANCES:
Investment securities portfolio $2,301,066 (6.8)%
Total loans 3,559,880 (0.4)
Assets 6,572,160 (2.2)
Deposits 3,782,000 4.0
Stockholders' equity 617,439 (0.7)
Common stockholders' equity 618,403 1.0
AVERAGE BALANCES:
Investment securities portfolio $2,245,879 (3.4)%
Loans:
Residential real estate 1,365,614 (0.1)
Other consumer 482,613 (2.4)
Commercial real estate 992,584 3.4
Commercial business 663,491 2.6
Total loans 3,504,302 1.1
Earning assets 5,765,688 (0.7)
Assets 6,455,670 (0.5)
Deposits:
Noninterest-bearing 804,657 (1.6)
Interest-bearing 2,966,376 0.3
Total deposits 3,771,033 (0.1)
Stockholders' equity 615,101 0.6
Common stockholders' equity 613,219 1.1
SELECTED RATIOS:
Return on average assets 1.16 %
Return on average equity 12.22
Return on average common equity 12.26
Net yield on average earning assets
(t/e basis) 3.53
Efficiency ratio 63.01
Leverage ratio 8.26
Tier I risk-based capital ratio 11.78
Total risk-based capital ratio 12.85
SOURCE Provident Bankshares Corporation
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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 - Patricia Ferrick, +1-703-352-2583, both of
Provident Bankshares Corporation
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