Momentum of Core Businesses Produces Strong Results
BALTIMORE, July 21 /PRNewswire-FirstCall/ -- Provident Bankshares
Corporation (Nasdaq: PBKS), the parent company of Provident Bank, today
reported $18.4 million in net income or $0.55 per diluted share, for the
second quarter of 2005.
Results for the quarter included a one-time after-tax adjustment of
$699,000, or $0.02 per diluted share, to reflect the cumulative impact of a
modification of the Company's accounting practices related to leased
facilities. Like many other publicly-traded companies that have a significant
number of leased facilities, the Company is conforming its method of
accounting for rent expense for leases that contain fixed escalations in rent
payments, in order to be consistent with accounting guidance. While the lease
accounting adjustment accelerates rent expense from future periods, it does
not affect historical or future cash flows or the timing or amounts of rent
payments.
Provident's continued focus on financial fundamentals produced strong
results for the quarter. Net interest margin was 3.58%, as compared to 3.31%
for the same quarter last year. Return on assets was 1.15%, and return on
common equity was 11.82%. The efficiency ratio improved to 62.2% for the
quarter. Excluding the impact of the lease accounting adjustment, return on
assets would have been 1.20%, and return on common equity would have been
12.27%. Asset quality remained strong, as non-performing assets to loans were
0.67% and charge-offs to average loans were 0.14% for the quarter. The
financial results reflect the continued balance sheet transition toward
growing loans and deposits in core business segments.
The basis for financial comparison includes the impact of the Southern
Financial Bancorp, Inc. merger for two months of the second quarter of 2004
and the entire second quarter of 2005.
Second Quarter Financial Highlights
-- Net income increased 76%, to $18.4 million, over the 2004 second
quarter
-- Net interest margin was 3.58%, up from 3.31% the same quarter of last
year
-- Return on assets increased to 1.15%, up from 0.69% for the 2004 second
quarter
-- Return on common equity was 11.82%, as compared 8.30% for the same
quarter of last year
-- Non-interest income, excluding net gains (losses), grew 8% from the
comparable period in 2004
-- Average loans increased $282 million, or 9%, from the 2004 second
quarter
-- Average deposits increased $113 million, or 3%, from the 2004 second
quarter
-- Asset quality remained strong as net charge-offs as a percentage of
average loans were 14 basis points, compared to 25 basis points last
year
-- Capital ratios remained strong with a leverage ratio of 7.98% and
total risk-based capital ratio of 12.02%
Second Quarter Results
Provident Bankshares reported net income for the quarter ending June 30,
2005 of $18.4 million, a 76% increase over the second quarter of 2004.
Earnings per diluted share were $0.55, an increase of 62% over the 2004 second
quarter.
Average total loans increased 9%, or $282 million, over the second quarter
of 2004. This total included a planned decline in purchased residential loans.
Average home equity loans increased $199.8 million, or 35%, as compared to the
same quarter last year, more than offsetting planned reductions in marine
loans of $22 million and reductions in other consumer loans of $14 million.
Average commercial business and real estate loans increased $248 million, or
17%.
Average deposits increased $113 million, or 3%, over the same quarter last
year. This growth comprised balance increases in consumer money market and
demand deposit accounts and in commercial demand deposit accounts. Overall,
demand deposit accounts grew by 11% with an increase of $139 million over the
second quarter of 2004.
The execution of the Bank's plan to focus on loans and deposits from core
business segments resulted in a $5.4 million increase in net interest income,
a 12% improvement over the same quarter of 2004.
Non-interest income, excluding gains, grew 8% to $27 million, up from $25
million in the second quarter of 2004, due to increases in deposit service
fees, loan fees and commissions.
Total non-performing loans at June 30, 2005 fell to $22.5 million,
compared with $29.7 million at June 30, 2004. Net charge-offs declined by 38%
to $1.3 million, from $2.1 million for the 2004 second quarter. The allowance
for loan losses, at 1.29% of period-end loans, was a 2.07 multiple of non-
performing loans.
Capital ratios continue to be strong, with a leverage ratio of 7.98% and a
total risk-based capital ratio of 12.02% at June 30, 2005. These compare to
8.50% and 13.23%, respectively, at June 30, 2004. The difference in capital
levels is due to the planned reduction in trust preferred securities which
were called in accordance with their terms in the first and second quarters.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.275 per share. This is the forty-
seventh consecutive quarterly dividend increase. The quarterly cash dividend
will be paid on August 12, 2005 to stockholders of record at the close of
business on August 1, 2005.
Management Comment
Commenting on the Company's performance, Chairman and CEO Gary N. Geisel
said, "Despite the accounting adjustment for property leases, we are very
pleased with the results of the quarter. Our current growth across all
business lines is proof that Provident is meeting and exceeding the
expectations of consumers and businesses every day in the Baltimore,
Washington and Richmond metropolitan areas."
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 community bank
combined with the convenience and wide array of products and services
that a strong regional bank offers. This is evident in the feedback
received in the Bank's regular customer surveys and focus groups. In
addition, the 62 in-store branches throughout its footprint reinforce
its right size strategy through convenient extended and weekend hours
of more than 60 per week and full product service. Provident
currently has 152 branches concentrated in the Baltimore-Washington
corridor, extending to Richmond, Virginia.
-- Grow and deepen consumer and small business relationships in Maryland
and Virginia
The Bank is continually expanding consumer and small business market
and wallet share. Customers are open to expanding their relationships
with the Bank, because they value the high level of personal service
they receive at Provident. Consumers also understand and appreciate
the convenience of Provident's products, as shown by debit card usage
trends. In the second quarter of 2005, MasterMoney purchases
increased by 15% over the same period of last year, and Business
Debit Card purchases increased by 18%.
Home equity lending was also an area of significant growth during the
second quarter. Provident experienced a 35% increase in average home
equity balances for the quarter as compared to the second quarter of
2004.
The Bank's small business activities are gaining momentum due to the
strong partnership between the Small Business Group, the branch
network and the Bank's sales call center, Provident Direct. The
Bank's small business customers have available a number of
specialists ready to assist them on-site at the business, in the
branch office or on the telephone.
-- Grow and deepen commercial and real estate relationships in Maryland
and Virginia
In addition to providing customized banking solutions to commercial
entities, Provident is an established and steady presence in the real
estate lending arena. The satisfaction of our current clients leads
to expanded relationships and often opens the doors of prospective
customers.
For the quarter, commercial deposits in the Baltimore metropolitan /
Maryland area grew 8%, and commercial deposits in the Washington
metropolitan and Virginia markets increased 5% over the second
quarter of 2004, due to growth in savings and demand deposit account
categories. As compared to the 2004 second quarter, commercial loan
balances grew 12% in the Baltimore region, and by 21% in the
Virginia/Washington metro area due to robust activity in both
commercial business and real estate lending.
-- 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-selling and
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 community bank 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 is
approaching employee development and training with renewed emphasis.
Employee development is viewed as a critical part of executing
Provident's strategy as the right size bank and transforming the
Company's sales culture.
Outlook for the Future
Commenting on the future for Provident Bankshares, Chairman and CEO Gary
N. Geisel added, "Given the continued momentum of our consumer and commercial
lines of business, we are right on track for our expectations for 2005. The
key to our success is providing our retail, small business, commercial and
real estate customers with a wide array of services, coupled with the personal
service that they deserve and expect. That is what our right size bank
strategy is all about."
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 152 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 second quarter earnings
teleconference will be webcast at 10:00 AM ET on Thursday, July 21, 2005. The
conference call will include a discussion of the Company's second quarter 2005
results of operations and may include forward-looking information. The
conference call will be simultaneously webcast at http://www.provbank.com and
archived through July 28, 2005. To listen to the conference call, please go
to the Company's website at least 15 minutes early to register, download, and
install any necessary software. When in the Company's website, click on the
link to "About Provident" and "Investor Relations" and look under "Upcoming
Events" and then click on the link to "Provident Bankshares Corporation Second
Quarter 2005 Results" audio webcast and download Real Player or Media Player
as necessary. An audio replay of the teleconference will be available through
July 28, 2005 by dialing 1-888-286-8010, passcode 20949121.
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.
TABLES FOLLOW
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per share data)
Three Months Ended Three Months Ended
June 30, March 31,
2005 2004 % Change 2005 % Change
SUMMARY INCOME
STATEMENTS:
Net interest income $50,755 $45,349 11.9 % $50,321 0.9 %
Provision for
loan losses 2,222 1,530 45.2 1,575 41.1
Non-interest income 28,189 17,576 60.4 25,285 11.5
Net gains (losses) 706 (7,877) (109.0) (776) (191.0)
Non-interest income,
excluding net gains
(losses) 27,483 25,453 8.0 26,061 5.5
Non-interest expense 49,826 46,161 7.9 47,474 5.0
Merger expense - 1,972 - - -
Non-interest expense,
excluding merger
expense 49,826 44,189 12.8 47,474 5.0
Income tax expense 8,458 4,734 78.7 8,449 0.1
Net income 18,438 10,500 75.6 18,108 1.8
SHARE DATA:
Basic earnings
per share $0.56 $0.35 60.0 % $0.55 1.8 %
Diluted earnings
per share 0.55 0.34 61.8 0.54 1.9
Cash dividends paid
per share 0.270 0.250 8.0 0.265 1.9
Book value per share 19.06 17.66 7.9 18.55 2.8
Weighted average
shares - basic 32,938,762 30,263,438 8.8 33,029,444 (0.3)
Weighted average
shares - diluted 33,524,779 30,812,528 8.8 33,720,433 (0.6)
Common shares
outstanding 32,865,817 32,997,873 (0.4) 33,062,288 (0.6)
SELECTED RATIOS:
Return on average
assets 1.15 % 0.69 % 1.14 %
Return on average
equity 11.91 8.46 11.89
Return on average
common equity 11.82 8.30 11.87
Net yield on average
earning assets
(t/e basis) 3.58 3.31 3.58
Efficiency ratio 62.21 62.24 62.00
Leverage ratio 7.98 8.50 7.93
Tier I risk-based
capital ratio 10.98 12.07 11.25
Total risk-based
capital ratio 12.02 13.23 12.31
END OF PERIOD BALANCES:
Investment securities
portfolio $2,058,074 $2,175,961 (5.4)% $2,145,381 (4.1)%
Total loans 3,623,791 3,519,519 3.0 3,541,175 2.3
Assets 6,407,388 6,423,052 (0.2) 6,423,685 (0.3)
Deposits 4,037,828 4,130,502 (2.2) 3,927,077 2.8
Stockholders' equity 626,546 582,877 7.5 613,379 2.1
Common stockholders'
equity 628,036 597,052 5.2 624,840 0.5
AVERAGE BALANCES:
Investment securities
portfolio $2,119,140 $2,223,952 (4.7)% $2,169,979 (2.3)%
Loans:
Residential
real estate 1,376,516 1,306,016 5.4 1,364,566 0.9
Other consumer 462,768 499,341 (7.3) 471,141 (1.8)
Commercial
real estate 1,059,130 893,331 18.6 1,026,306 3.2
Commercial
business 676,863 594,828 13.8 678,183 (0.2)
Total loans 3,575,277 3,293,516 8.6 3,540,196 1.0
Earning assets 5,710,257 5,541,428 3.0 5,724,939 (0.3)
Assets 6,421,046 6,113,920 5.0 6,425,748 (0.1)
Deposits:
Noninterest-bearing 817,408 752,198 8.7 783,673 4.3
Interest-bearing 3,114,806 3,067,141 1.6 2,978,489 4.6
Total deposits 3,932,214 3,819,339 3.0 3,762,162 4.5
Stockholders' equity 620,951 499,078 24.4 617,664 0.5
Common stockholders'
equity 625,693 508,892 23.0 618,799 1.1
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per share data) Six Months Ended
June 30,
2005 2004 % Change
SUMMARY INCOME STATEMENTS:
Net interest income $101,076 $84,072 20.2 %
Provision for loan losses 3,797 3,922 (3.2)
Non-interest income 53,474 41,159 29.9
Net gains (losses) (70) (7,061) (99.0)
Non-interest income, excluding net
gains (losses) 53,544 48,220 11.0
Non-interest expense 97,300 86,770 12.1
Merger expense - 2,156 -
Non-interest expense, excluding
merger expense 97,300 84,614 15.0
Income tax expense 16,907 11,164 51.4
Net income 36,546 23,375 56.3
SHARE DATA:
Basic earnings per share $1.11 $0.85 30.6 %
Diluted earnings per share 1.09 0.83 31.3
Cash dividends paid per share 0.535 0.495 8.1
Book value per share 19.06 17.66 7.9
Weighted average shares - basic 32,984,013 27,465,996 20.1
Weighted average shares - diluted 33,616,247 28,086,337 19.7
Common shares outstanding 32,865,817 32,997,873 (0.4)
SELECTED RATIOS:
Return on average assets 1.15 % 0.83 %
Return on average equity 11.90 11.32
Return on average common equity 11.84 11.17
Net yield on average earning assets
(t/e basis) 3.58 3.25
Efficiency ratio 62.11 63.77
Leverage ratio 7.98 8.50
Tier I risk-based capital ratio 10.98 12.07
Total risk-based capital ratio 12.02 13.23
END OF PERIOD BALANCES:
Investment securities portfolio $2,058,074 $2,175,961 (5.4)%
Total loans 3,623,791 3,519,519 3.0
Assets 6,407,388 6,423,052 (0.2)
Deposits 4,037,828 4,130,502 (2.2)
Stockholders' equity 626,546 582,877 7.5
Common stockholders' equity 628,036 597,052 5.2
AVERAGE BALANCES:
Investment securities portfolio $2,144,419 $2,158,635 (0.7)%
Loans:
Residential real estate 1,370,575 1,252,016 9.5
Other consumer 466,931 503,703 (7.3)
Commercial real estate 1,042,808 800,845 30.2
Commercial business 677,519 495,221 36.8
Total loans 3,557,833 3,051,785 16.6
Earning assets 5,717,557 5,225,271 9.4
Assets 6,423,384 5,672,355 13.2
Deposits:
Noninterest-bearing 800,634 659,865 21.3
Interest-bearing 3,047,023 2,785,410 9.4
Total deposits 3,847,657 3,445,275 11.7
Stockholders' equity 619,317 415,310 49.1
Common stockholders' equity 622,265 420,660 47.9
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 - Vicki Cox, +1-410-277-2063; or
Investment Community - Melissa Kelly, +1-410-277-2080, both of
Provident Bankshares Corporation
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