Strong Core Business Growth Continues
While Company Addresses WorldCom Bond Loss
BALTIMORE, July 17 /PRNewswire-FirstCall/ --
Provident Bankshares Corporation (Nasdaq: PBKS), the parent company of
Provident Bank, today reported $10.4 million in net income or $0.40 per
diluted share for the second quarter of 2002.
This quarter saw continued focus on the Company's strategic business plans
that resulted in strong performance from core business lines as well as marked
deposit and loan growth, solid asset quality and improved capital over the
2001 second quarter.
During the period, Provident wrote $10 million in WorldCom Inc. bonds down
to market value. This action, after gains from other securities transactions
during the quarter, resulted in a pre-tax $2.4 million net loss in the
investment portfolio that impacted quarterly earnings per share by $0.06.
Despite this write-down in the investment portfolio, management remains
comfortable that the Company will meet the analysts' consensus estimate of
$1.80-$1.85 earnings per share for 2002.
Second Quarter Financial Highlights
-- Net income was $10.4 million for the quarter, compared with $8.0
million in the 2001 second quarter and diluted earnings per share were
$0.40, a change from the $0.30 reported in the second quarter of 2001
-- Return on average common equity increased to 13.87% from 11.16% in the
2001 second quarter
-- Return on average assets was 0.86%, improved from 0.63% in the same
quarter last year
-- Non-interest income (excluding net gains/ losses) grew 18% from the
comparable period in 2001. At $21.7 million, non-interest income
comprised 38% of total quarterly revenue.
-- Net interest margin of 3.17% was improved from the 2.89% posted in the
second quarter of 2001
-- Asset quality remained strong as non-performing loans declined 19% from
one year ago and the allowance for loan losses ended the quarter at
1.31% of total loans
-- Average core deposits increased $148 million, or 6%, from the 2001
second quarter and average core loans grew $177 million, or 12%, from
the same quarter last year
-- The cash dividend increased to $0.215 per share
Second Quarter Results
Provident Bankshares reported net income for the quarter ended June 30,
2002 of $10.4 million, or $0.40 per diluted share.
Return on average common equity was 13.87% for the second quarter 2002.
Return on average assets was 0.86%, up from 0.63% for the comparable period
last year.
The net interest margin for the quarter was 3.17%, compared with 2.89% in
the 2001 second quarter. Tax-equivalent net interest income for the 2002
second quarter was up $1.3 million.
Continued solid performance from core business operations drove growth in
average core loans and average core deposits again in the second quarter.
Average core loans increased $177 million, or 12%, compared to second quarter
2001. Led by a 25% increase in average non-interest bearing demand deposits,
average core deposits increased 6% from the same quarter last year.
Asset quality continued to be strong. At June 30, 2002, total non-
performing loans were $22.7 million. Net charge-offs for the quarter were $3.1
million, and the allowance for loan losses to total loans was 1.31%.
Fee income for the second quarter remained strong. Total non-interest
income (excluding net gains/losses) was up $3.3 million compared to the prior
year quarter, or 18%, for the period and comprised 38% of Provident's total
quarterly revenue. Continued strong retail and commercial checking account
growth drove this increase, with income from retail deposit fees up 17% and
commercial deposit service fees up more than 23% from one year ago.
Due to the previously disclosed write-down of WorldCom Inc. bonds held in
the Company's investment portfolio, there were $2.4 million in pre-tax net
securities losses during the 2002 second quarter.
Reflecting the Company's continued focus on operating expense control,
non-interest expense decreased 1.0% to $37.8 million for the second quarter of
2002, down from $38.1 million in the same quarter last year.
The leverage ratio was 7.44% for the 2002 second quarter, compared with
6.90% last year. Risk based capital increased to 12.13%, up from 10.14% in
the 2001 quarter. At June 30, 2002, stockholders' equity was $302 million and
book value per share was $12.02.
Provident repurchased 166,800 shares of common stock during the period,
leaving 791,931 shares available under the current Share Repurchase Program.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.215 per share. This quarterly cash
dividend will be paid on August 9, 2002 to stockholders of record at the close
of business on July 29, 2002. Management has elected to increase the cash
dividend this quarter, as it has for each of the previous 35 consecutive
quarters.
Management Comment
Commenting on the Company's second quarter performance, Chairman and CEO
Peter M. Martin said, "We are very pleased with the performance of our core
business lines during the quarter. The write-down of WorldCom bonds, as a
result of that company's disclosure of accounting irregularities,
unfortunately diminished an extremely strong quarter. Provident posted
continued strong asset quality and revenue increases generated through growth
in core deposits, core loans and fee income. These solid second quarter
results show sustained progress toward our long-term financial goals and the
success of our strategic business plans."
Core Business Strategies Continue to Drive Solid Results
Commitment to the Company's business strategies continued to produce
positive core results in the second quarter and is expected to drive solid
performance throughout 2002.
-- Broaden presence and customer base in the Washington metro area
The Company continued to see steady growth in all of its markets with the
expansion area of Northern Virginia and the Maryland suburbs of Washington,
D.C. continuing to post strong growth. Thirty-six percent of all new retail
checking accounts opened during the quarter were opened by customers in the
Washington metro area. Total branch deposits in the market were up 7.2% for
the quarter and continue to comprise more than 25% of total retail deposits.
Total branch banking fee income generated in the Washington region increased
32% over the same quarter last year. Thirty-six of Provident's 99 branches
are located in the Washington Metro area.
The second quarter of 2002 saw an 8.3% increase in core commercial loan
balances and a 99% increase in average core commercial deposit balances for
the Washington metro market. These results were led by a significant increase
in non-interest bearing commercial deposit accounts.
-- Grow commercial business in the Baltimore-Washington corridor
Average core commercial loan balances increased $42 million, or 5%, over
the same quarter last year. Average core commercial deposits were up 38% for
the quarter, led by an increase in non-interest bearing commercial deposits.
Commercial deposit service fees grew 23% during the period.
-- Focus resources on growth in core business lines
Core banking operations continued to show solid growth, performance and
revenue increase. Consumer lending posted robust gains during the quarter,
led by solid increases in home equity line and loan products and in marine
lending. Core consumer loan balances were up $135.3 million, or 21%, for the
quarter. At June 30, 2002, Provident held more than 274,000 personal checking
accounts that drove an 18% increase in retail debit card income. Overall
branch banking fee income was up 17%.
Provident's focus on the small business market also continued to yield
positive results. Business checking account openings were up 28% and small
business deposits were up 23.5% from the same quarter last year.
Non-core syndicated loans declined by $7.9 million, or 10%, from the 2001
second quarter while the non-core acquired second mortgage loan portfolio also
declined by $433 million.
-- Improve efficiencies and productivity
Non-interest expense for the 2002 second quarter declined by 1% over the
second 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 six to eight additional new branches.
-- Continue branch expansion into vibrant, high-growth markets
During the quarter, Provident opened two new in-store branches in the
Washington Metro area, bringing the total number of branches to 99. Provident
also reached an agreement with BJ's Wholesale Club to become that company's
primary in-store partner in the Baltimore-Washington area.
Provident now has one-third of its branches in the attractive Washington
suburbs and plans to open an additional six to eight 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, "The strong growth in core business during the quarter should
provide the 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 plan to 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. We are comfortable with
analysts' consensus 2002 earnings per share estimates of $1.80-$1.85."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $5.1 billion in assets, Provident serves individuals and
businesses in the dynamic Baltimore-Washington corridor through a network of
99 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 second quarter earnings
teleconference will be Webcast at 10:00 a.m. (EDT) on Thursday, July 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 July 25, 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.
Caution Regarding Forward-Looking Statements
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. The words "anticipate," "believe,"
"estimate," "expect," "should," "will" and similar expressions are intended to
identify these forward-looking statements. 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,
including form 10K for the year ended 12/31/01 and Form 10Q for the most
recent quarter.
TABLES FOLLOW
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
(dollars in thousands, Three Months Three Months
except per share data) Ended June 30, Ended March 31,
(tax-equivalent basis) 2002 2001 % Change 2002 % Change
SUMMARY OF OPERATIONS
Interest Income $72,479 $89,067 (18.6)% $75,249 (3.7)%
Interest Expense 36,409 54,313 (33.0) 38,386 (5.2)
Net Interest Income 36,070 34,754 3.8 36,863 (2.2)
Provision for Loan
Losses 2,650 4,895 (45.9) 3,600 (26.4)
Net Interest Income
after Provision
for Loan Losses 33,420 29,859 11.9 33,263 0.5
Non-Interest Income 19,435 20,204 (3.8) 20,200 (3.8)
Non-Interest Expense 37,780 38,143 (1.0) 36,383 3.8
Income Before Income
Taxes 15,075 11,920 26.5 17,080 (11.7)
Income Tax Expense 4,470 3,640 22.8 5,394 (17.1)
Less: Tax-Equivalent
Adjustment 200 245 (18.4) 211 (5.2)
Income Before Cumulative
Effect of Change in
Accounting Principle 10,405 8,035 29.5 11,475 (9.3)
Cumulative Effect of
Change in Accounting
Principle, Net - - - - -
Net Income $10,405 $8,035 29.5 $11,475 (9.3)
PER SHARE
Basic
Income Before Cumulative
Effect of Change in
Accounting Principle $0.41 $0.31 32.3% $0.46 (10.9)%
Net Income 0.41 0.31 32.3 0.46 (10.9)
Diluted
Income Before Cumulative
Effect of Change in
Accounting Principle 0.40 0.30 33.3 0.44 (9.1)
Net Income 0.40 0.30 33.3 0.44 (9.1)
Cash Dividends Paid 0.210 0.181 16.0 0.205 2.4
Stockholders' Equity 12.02 11.13 8.0 11.24 6.9
Common Shares
Outstanding 25,102,347 25,672,753 (2.2) 25,128,323 (0.1)
Weighted Average
Shares -- Basic 25,150,841 25,545,605 (1.5) 25,116,990 0.1
Weighted Average
Shares --
Diluted 25,974,869 26,507,162 (2.0) 25,967,036 0.0
PROFITABILITY RATIOS
Return on Average
Assets 0.86% 0.63% 0.96%
Return on Average
Equity 14.22 11.41 15.98
Return on Average
Common Equity 13.87 11.16 15.76
Net Yield on Average
Earning Assets
(t/e basis) 3.17 2.89 3.30
Efficiency Ratio 65.42 67.56 63.93
CAPITAL RATIOS AT PERIOD END
Leverage Ratio 7.44% 6.90% 7.40%
Risk-Based Tier I
Capital Ratio 11.06 9.22 10.67
Risk-Based Total
Capital Ratio 12.13 10.14 11.72
ASSET QUALITY
Non-Performing Loans $22,701 $28,107 (19.2)% $23,994 (5.4)%
Loans Past Due 90 Days
or More 12,602 11,193 12.6 13,581 (7.2)
Allowance for Loan
Losses 34,719 35,310 (1.7) 35,164 (1.3)
Net Charge-offs 3,095 8,202 (62.3) 3,047 1.6
Non-Performing Loans
to Loans 0.86% 0.95% 0.89%
Allowance for Loan Losses
to Loans 1.31 1.19 1.30
Net Charge-Offs to
Average Loans 0.47 1.03 0.45
Allowance for Loan Losses
to Non-Performing
Loans 152.94 125.63 146.55
AVERAGE BALANCES
Investment Securities
Portfolio $1,890,814 $1,634,303 15.7% $1,776,733 6.4%
Loans:
Core Consumer 784,135 648,883 20.8 757,028 3.6
Core Commercial &
Industrial 297,365 264,781 12.3 286,318 3.9
Core Commercial
Real Estate 532,783 523,267 1.8 533,293 (0.1)
Total Core Loans 1,614,283 1,436,931 12.3 1,576,639 2.4
Non-Core Consumer 978,203 1,659,747 (41.1) 1,084,001 (9.8)
National Syndicated
Loans 74,391 82,317 (9.6) 78,051 (4.7)
Total Non-Core
Loans 1,052,594 1,742,064 (39.6) 1,162,052 (9.4)
Total Loans 2,666,877 3,178,995 (16.1) 2,738,691 (2.6)
Earning Assets 4,565,239 4,826,416 (5.4) 4,530,290 0.8
Total Assets 4,870,143 5,125,315 (5.0) 4,840,237 0.6
Core Deposits 2,700,052 2,552,465 5.8 2,601,207 3.8
Non-Core Deposits
(including Broker
Deposits) 634,997 1,138,360 (44.2) 727,486 (12.7)
Total Deposits 3,335,049 3,690,825 (9.6) 3,328,693 0.2
Stockholders' Equity 293,582 282,418 4.0 291,287 0.8
Common Equity 300,891 288,814 4.2 295,302 1.9
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
(dollars in thousands,
except per share data) Six Months Ended June 30,
(tax-equivalent basis) 2002 2001 % Change
SUMMARY OF OPERATIONS
Interest Income $147,728 $187,216 (21.1)%
Interest Expense 74,795 114,967 (34.9)
Net Interest Income 72,933 72,249 0.9
Provision for Loan Losses 6,250 13,070 (52.2)
Net Interest Income after
Provision for Loan Losses 66,683 59,179 12.7
Non-Interest Income 39,635 43,233 (8.3)
Non-Interest Expense 74,163 73,513 0.9
Income Before Income Taxes 32,155 28,899 11.3
Income Tax Expense 9,864 9,039 9.1
Less: Tax-Equivalent Adjustment 411 500 (17.8)
Income Before Cumulative Effect of
Change in Accounting Principle 21,880 19,360 13.0
Cumulative Effect of Change
in Accounting Principle, Net* - (1,160) -
Net Income $21,880 $18,200 20.2
PER SHARE
Basic
Income Before Cumulative Effect of
Change in Accounting Principle $0.87 $0.74 17.6%
Net Income 0.87 0.70 24.3
Diluted
Income Before Cumulative Effect of
Change in Accounting Principle 0.84 0.71 18.3
Net Income 0.84 0.67 25.4
Cash Dividends Paid 0.415 0.357 16.2
Stockholders' Equity 12.02 11.13 8.0
Common Shares Outstanding 25,102,347 25,672,753 (2.2)
Weighted Average Shares
-- Basic 25,134,009 25,989,507 (3.3)
Weighted Average Shares
-- Diluted 25,970,676 26,990,150 (3.8)
PROFITABILITY RATIOS**
Return on Average Assets 0.91% 0.74%
Return on Average Equity 15.09 13.44
Return on Average Common Equity 14.80 13.15
Net Yield on Average Earning
Assets (t/e basis) 3.23 2.92
Efficiency Ratio 64.84 66.20
CAPITAL RATIOS AT PERIOD END
Leverage Ratio 7.44% 6.90%
Risk-Based Tier I Capital Ratio 11.06 9.22
Risk-Based Total Capital Ratio 12.13 10.14
ASSET QUALITY
Non-Performing Loans $22,701 $28,107 (19.2)%
Loans Past Due 90 Days or More 12,602 11,193 12.6
Allowance for Loan Losses 34,719 35,310 (1.7)
Net Charge-offs 6,142 15,444 (60.2)
Non-Performing Loans to Loans 0.86% 0.95%
Allowance for Loan Losses to Loans 1.31 1.19
Net Charge-Offs to Average Loans 0.46 0.95
Allowance for Loan Losses to
Non-Performing Loans 152.94 125.63
AVERAGE BALANCES
Investment Securities Portfolio $1,834,088 $1,699,597 7.9%
Loans:
Core Consumer 770,656 622,294 23.8
Core Commercial & Industrial 291,872 257,554 13.3
Core Commercial Real Estate 533,037 515,697 3.4
Total Core Loans 1,595,565 1,395,545 14.3
Non-Core Consumer 1,030,811 1,793,792 (42.5)
National Syndicated Loans 76,211 90,575 (15.9)
Total Non-Core Loans 1,107,022 1,884,367 (41.3)
Total Loans 2,702,587 3,279,912 (17.6)
Earning Assets 4,547,862 4,992,670 (8.9)
Total Assets 4,855,274 5,250,682 (7.5)
Core Deposits 2,650,902 2,516,657 5.3
Non-Core Deposits (including
Broker Deposits) 680,986 1,249,640 (45.5)
Total Deposits 3,331,888 3,766,297 (11.5)
Stockholders' Equity 292,443 290,426 0.7
Common Equity 298,115 296,830 0.4
* 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/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
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