BALTIMORE, Oct. 15 /PRNewswire-FirstCall/ -- Provident Bankshares
Corporation (Nasdaq: PBKS), the parent company of Provident Bank, today
reported $13.3 million in net income, or $0.53 per diluted share, for the
third quarter of 2003.
Continued growth in core loans and deposits, strong asset quality, and fee
revenue growth drove Provident's solid performance for the quarter. Average
core consumer and commercial loan balances and consumer and commercial demand
deposit balances all showed double-digit growth over the third quarter 2002,
as the Company demonstrated the successful execution of its key strategies to
grow its regional banking business while expanding into the vibrant Washington
metropolitan region.
Third Quarter Financial Highlights
-- Diluted earnings per share of $0.53 exceeded analyst consensus
expectations of $0.52
-- Net income was $13.3 million for the quarter
-- Return on average assets was 1.06%
-- Return on average common equity was 16.63%
-- Average core loans increased $235 million, or 14%, from the third
quarter of 2002, while average non-core loans decreased $237 million,
or 25%
-- Average core deposits increased $152 million, or 6%, from the 2002
third quarter, and average non-core deposits decreased $237 million,
or 46%
-- Non-interest income (excluding net gains and losses) grew 8% from the
third quarter 2002
-- Net charge-offs were $2 million, a decline of 12% over the third
quarter 2002
-- Capital ratios remained strong, with a leverage ratio of 7.61% and
total risk-based capital of 13.11%
Third Quarter Results
Provident Bankshares reported net income for the quarter ending
September 30, 2003 of $13.3 million, or $0.53 per diluted share, exceeding
analyst consensus expectations of $0.52 per diluted share. This compares to
net income of $13.1 million, or $0.52 per diluted share for the third quarter
2002. Pre-tax earnings were $20.4 million, a 6% increase over the third
quarter 2002. Return on average assets was 1.06%, and return on average
common equity was 16.63%. The net interest margin expanded to 3.26%, up from
3.04% in the third quarter 2002.
The Company continued to execute its strategy to grow core loans and
deposits, as average core loans increased $235 million, or 14%, and average
core deposits increased $152 million, or 6%, over the third quarter 2002.
Core loans include all loans except purchased loans, participations outside
the Bank's defined market area, and Provident-originated loans from
discontinued product lines. Provident's core deposits include all deposits
except brokered deposits.
Total average loans remained at $2.6 billion, and total average deposits
decreased $85 million, or 3%, versus the third quarter 2002, as the planned
reduction of non-core assets and funding continued. Average non-core loans
and non-core deposits each decreased $237 million, or 25% and 46%,
respectively, from the same period.
Non-interest income, excluding net gains, grew to $23.9 million from
$21.7 million in the third quarter 2002. Provident continued to post solid
fee income growth. Total deposit service fees increased 6% over the third
quarter 2002 and were driven by the growth in commercial and consumer deposit
accounts. As the result of the new debit card interchange structure,
Mastermoney debit card revenues decreased in line with expectations, but were
replaced by other sources as planned.
Asset quality remained strong. Total non-performing loans at
September 30, 2003 were $20 million, in line with the same quarter last year.
Net charge-offs declined 12%, from $2.3 million to $2 million, and the
allowance for loan losses to loans was 1.30% at the close of the quarter.
Substantially all of the non-performing loans continue to be secured by
residential real estate.
The Company continued to build on a stronger balance sheet, with capital
ratios remaining sound. The leverage ratio increased to 7.61%, compared to
7.43% in the third quarter of 2002. Total risk-based capital increased to
13.11% from 12.42% at third quarter end 2002.
Provident repurchased 277,716 shares of common stock during the third
quarter, leaving 722,284 shares remaining under the current repurchase
program.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.24 per share. This is the fortieth
consecutive quarterly dividend increase. The quarterly cash dividend will be
paid on November 7, 2003 to stockholders of record at the close of business on
October 27, 2003.
Management Comment
Commenting on the Company's third quarter performance, Chairman and CEO
Gary N. Geisel said, "I couldn't be more pleased with Provident's performance
this quarter. Our continued growth in core loans and deposits, combined with
the planned reduction of non-core assets and liabilities, is yielding positive
results. We continue to experience revenue growth in commercial and consumer
business lines across both the Baltimore and Washington markets, and at the
same time continue to maintain strong credit quality. The result is solid,
consistent improvement in all of our financial fundamentals - return on
assets, return on equity, net interest margin and efficiency ratio."
Continued Execution of Key Business Strategies
Successful execution of the Company's key business strategies continued to
drive results for the quarter. Provident's key business strategies are:
-- Broaden presence and customer base in the Washington metro market and
expand branch network in vibrant markets
Provident continued to expand its presence and increase its customer
base in the key Washington metropolitan region. Average consumer
demand deposit balances in the region increased 29% over the third
quarter 2002. Consumer deposit fee income in this market increased
22% over the 2002 third quarter. Average commercial deposit balances
in the Washington metropolitan area increased 54% over the third
quarter 2002, led by a 75% increase in demand deposit balances.
Average core commercial loan balances in the region increased 17% over
the same period in 2002.
There are now 114 offices in the Provident banking network, with 48 in
the Washington metropolitan region. One traditional branch and three
in-store branches are planned in the region during the fourth quarter
2003, and of the seven branches currently scheduled to open in 2004,
four are planned to be located in the Washington metropolitan region.
-- Grow commercial business in the Baltimore-Washington corridor
Commercial loans and deposits continued to increase at double-digit
rates. Average core commercial deposits were up $120 million, or 31%,
over the 2002 third quarter, as Provident continued to grow its
commercial customer base and expand its relationships with existing
customers. This growth was driven by a 44% increase in average
commercial demand deposit account balances for the period. Average
core commercial loans increased $117 million, or 14%, over the third
quarter 2002. The increases were seen in virtually every category -
residential construction balances increased 38%, commercial mortgage
balances 30%, and commercial business loan and lease balances 3%.
-- Focus resources on growth in core business lines
Core loan and deposit growth continued to be strong. Average core
loans now comprise 72% of total loans, up from 64% in the third
quarter 2002. Average core deposits represent 91% of total deposits,
up from 84% in the third quarter 2002.
Average core consumer loan balances increased $117 million, or 14%,
over the 2002 third quarter. During this period, average marine loan
balances increased 15%, and home equity loan and line balances
increased 17%. The non-core consumer loan portfolio declined
$201 million, or 22%, from the third quarter of 2002.
Average core commercial loans increased 14%, or $117 million, from the
2002 third quarter and the average non-core national syndicated loan
portfolio continued to decline, averaging $32 million for the quarter,
down 53% from the same quarter in 2002. At quarter end, outstanding
balances for non-core national syndicated loans were less than
$30 million.
Average core deposits increased $152 million, or 6%, from the third
quarter 2002. Certificate of deposit and IRA balances decreased
$119 million, or 17%, while demand deposit balances increased
$207 million, or 26%. Brokered deposits continued to mature,
declining $237 million from the third quarter 2002 to an average of
$282 million in the third quarter 2003, a 46% decline. This change in
deposit mix continued to contribute positively to net interest margin.
-- Improve financial fundamentals
The changing complexion of the balance sheet and continued commitment
to the achievement of the key strategies again drove improvement in
Provident's financial fundamentals. Net interest margin expanded from
3.04% in the third quarter 2002 to 3.26% in the third quarter 2003
despite a very challenging interest rate environment. Return on
average assets was 1.06%, and return on average common equity was
16.63%. The leverage ratio was 7.61% and total risk-based capital was
13.11%. As core loans and deposits represent a larger percentage of
the balance sheet, these fundamentals will continue to show
improvement.
Asset quality continued to be strong, with non-performing loans of
$20 million at the end of the quarter. Net charge-offs were
$2 million, representing 0.30% of total average loans. The allowance
for loan losses as a percent of total loans was 1.30% at the end of
the quarter.
Outlook for the Future
Commenting on the future for Provident Bankshares, Chairman and CEO
Gary N. Geisel added, "Another quarter of strong growth in core loans and
deposits has positioned us very well for the remainder of the year. We
continue to be pleased with the execution of our key strategies.
We are committed to enhancing earnings growth, while at the same time
emphasizing key metrics such as return on assets and equity, margin and
efficiency. We are confident in Provident's ability to exceed current analyst
EPS consensus estimates of $2.02 for the full year 2003."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $5.0 billion in assets, Provident serves individuals and
businesses in the Baltimore-Washington corridor through a network of
114 banking 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 Company 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 third quarter earnings
teleconference will be webcast at 10:00 a.m. (ET) on Thursday, October 16,
2003. 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 October 31, 2003. An audio replay of the webcast will also be available
until 11:59 p.m. October 23, 2003 at 1-800-428-6051, passcode ID 307076.
Supplemental financial information will be posted on the Provident website
today 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 2002 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 with respect to earnings growth (on both accounting
principles generally accepted in the United States of America (GAAP) and cash
basis); 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:
prevailing economic 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. The forward-looking statements 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
Three Months Ended
(dollars in thousands, except per
share data) September 30,
2003 2002 % Change
SUMMARY OF OPERATIONS:
Net income $13,308 $13,140 1.3 %
Net interest income 38,037 34,764 9.4
Provision for loan losses 2,950 2,150 37.2
Non-interest income 24,623 24,026 2.5
Net gains (losses) 746 1,997 (62.6)
Non-interest income (excluding net
gains/losses) 23,877 22,029 8.4
Non-interest expense 39,330 37,471 5.0
Income tax expense 7,072 6,029 17.3
SHARE DATA:
Basic earnings per share $0.54 $0.53 1.9
Diluted earnings per share 0.53 0.52 1.9
Cash dividends paid per share 0.235 0.215 9.3
Book value per share 12.93 12.59 2.7
Weighted average shares - basic 24,555,675 24,839,708 (1.1)
Weighted average shares - diluted 25,205,315 25,492,725 (1.1)
Common shares outstanding 24,483,143 24,733,718 (1.0)
END OF PERIOD BALANCES:
Investment securities portfolio $1,970,618 $1,916,868 2.8 %
Total loans 2,702,255 2,635,325 2.5
Assets 4,985,445 4,899,172 1.8
Deposits 3,087,906 3,233,415 (4.5)
Stockholders' equity 316,661 311,380 1.7
Common stockholders' equity 321,350 300,942 6.8
AVERAGE BALANCES:
Investment securities portfolio $1,993,040 $1,914,305 4.1 %
Loans:
Core consumer 928,730 811,417 14.5
Core commercial business 355,002 343,577 3.3
Core commercial real estate 630,095 524,259 20.2
Total core loans 1,913,827 1,679,253 14.0
Non-core consumer 694,637 895,848 (22.5)
National syndicated loans 31,499 67,103 (53.1)
Total non-core loans* 726,136 962,951 (24.6)
Total loans 2,639,963 2,642,204 (0.1)
Earning assets 4,648,407 4,565,181 1.8
Assets 4,984,959 4,860,787 2.6
Core deposits 2,869,728 2,717,922 5.6
Non-core deposits (brokered deposits) 282,405 519,125 (45.6)
Total deposits 3,152,133 3,237,047 (2.6)
Stockholders' equity 303,702 304,793 (0.4)
Common stockholders' equity 317,578 297,280 6.8
SELECTED RATIOS:
Return on average assets 1.06 % 1.07 %
Return on average equity 17.38 17.10
Return on average common equity 16.63 17.54
Net yield on average earning assets
(t/e basis) 3.26 3.04
Efficiency ratio 63.35 65.76
Leverage ratio 7.61 7.43
Tier I risk-based capital ratio 11.99 11.33
Total risk-based capital ratio 13.11 12.42
* Includes purchased loans, syndicated loans outside the Bank's normal
lending area and loans from discontinued product lines.
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
Three Months Ended
(dollars in thousands, except per
share data) June 30,
2003 % Change
SUMMARY OF OPERATIONS:
Net income $12,195 9.1 %
Net interest income 36,799 3.4
Provision for loan losses 3,251 (9.3)
Non-interest income 16,360 50.5
Net gains (losses) (6,892) -
Non-interest income (excluding net
gains/losses) 23,252 2.7
Non-interest expense 40,300 (2.4)
Income tax expense (2,587) -
SHARE DATA:
Basic earnings per share $0.50 8.0 %
Diluted earnings per share 0.49 8.2
Cash dividends paid per share 0.230 2.2
Book value per share 13.47 (4.0)
Weighted average shares - basic 24,500,552 0.2
Weighted average shares - diluted 25,085,553 0.5
Common shares outstanding 24,565,237 (0.3)
END OF PERIOD BALANCES:
Investment securities portfolio $2,126,758 (7.3)%
Total loans 2,579,365 4.8
Assets 5,096,296 (2.2)
Deposits 3,347,974 (7.8)
Stockholders' equity 330,816 (4.3)
Common stockholders' equity 317,926 1.1
AVERAGE BALANCES:
Investment securities portfolio $2,132,288 (6.5)%
Loans:
Core consumer 866,789 7.1
Core commercial business 353,261 0.5
Core commercial real estate 579,714 8.7
Total core loans 1,799,764 6.3
Non-core consumer 674,381 3.0
National syndicated loans 37,066 (15.0)
Total non-core loans* 711,447 2.1
Total loans 2,511,211 5.1
Earning assets 4,657,849 (0.2)
Assets 4,998,848 (0.3)
Core deposits 2,856,004 0.5
Non-core deposits (brokered deposits) 356,908 (20.9)
Total deposits 3,212,912 (1.9)
Stockholders' equity 325,435 (6.7)
Common stockholders' equity 308,020 3.1
SELECTED RATIOS:
Return on average assets 0.98 %
Return on average equity 15.03
Return on average common equity 15.88
Net yield on average earning assets
(t/e basis) 3.18
Efficiency ratio 66.92
Leverage ratio 7.51
Tier I risk-based capital ratio 12.01
Total risk-based capital ratio 13.10
* Includes purchased loans, syndicated loans outside the Bank's normal
lending area and loans from discontinued product lines.
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
Nine Months Ended
(dollars in thousands, except per share
data) September 30,
2003 2002 % Change
SUMMARY OF OPERATIONS:
Net income $37,288 $35,020 6.5 %
Net interest income 110,463 107,286 3.0
Provision for loan losses 7,961 8,400 (5.2)
Non-interest income 63,574 63,661 (0.1)
Net gains (losses) (4,899) 186 -
Non-interest income (excluding net
gains/losses) 68,473 63,475 7.9
Non-interest expense 118,680 111,634 6.3
Income tax expense 10,108 15,893 (36.4)
SHARE DATA:
Basic earnings per share $1.52 $1.40 8.6 %
Diluted earnings per share 1.48 1.36 8.8
Cash dividends paid per share 0.690 0.630 9.5
Book value per share 12.93 12.59 2.7
Weighted average shares - basic 24,482,641 25,035,130 (2.2)
Weighted average shares - diluted 25,112,217 25,807,292 (2.7)
Common shares outstanding 24,483,143 24,733,718 (1.0)
END OF PERIOD BALANCES:
Investment securities portfolio $1,970,618 $1,916,868 2.8 %
Total loans 2,702,255 2,635,325 2.5
Assets 4,985,445 4,899,172 1.8
Deposits 3,087,906 3,233,415 (4.5)
Stockholders' equity 316,661 311,380 1.7
Common stockholders' equity 321,350 300,942 6.8
AVERAGE BALANCES:
Investment securities portfolio $2,058,218 $1,861,120 10.6 %
Loans:
Core consumer 880,503 784,392 12.3
Core commercial business 350,167 337,246 3.8
Core commercial real estate 590,551 503,740 17.2
Total core loans 1,821,221 1,625,378 12.0
Non-core consumer 690,130 985,328 (30.0)
National syndicated loans 39,403 71,530 (44.9)
Total non-core loans* 729,533 1,056,858 (31.0)
Total loans 2,550,754 2,682,236 (4.9)
Earning assets 4,622,555 4,553,695 1.5
Assets 4,956,247 4,857,126 2.0
Core deposits 2,825,403 2,676,389 5.6
Non-core deposits (brokered deposits) 345,355 623,538 (44.6)
Total deposits 3,170,758 3,299,927 (3.9)
Stockholders' equity 315,962 296,586 6.5
Common stockholders' equity 309,378 297,858 3.9
SELECTED RATIOS:
Return on average assets 1.00 % 0.96 %
Return on average equity 15.78 15.79
Return on average common equity 16.11 15.72
Net yield on average earning assets
(t/e basis) 3.21 3.17
Efficiency ratio 66.13 65.14
Leverage ratio 7.61 7.43
Tier I risk-based capital ratio 11.99 11.33
Total risk-based capital ratio 13.11 12.42
* Includes purchased loans, syndicated loans outside the Bank's normal
lending area and loans from discontinued product lines.
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
ASSET QUALITY DETAIL
September 30, September 30, June 30,
(dollars in thousands) 2003 2002 2003
Loan Portfolio:
Acquired residential mortgage $584,886 $599,010 $541,166
Other consumer 977,758 873,607 913,838
Total consumer 1,562,644 1,472,617 1,455,004
Commercial business 374,888 373,646 379,920
Residential real estate construction 160,519 112,438 136,996
Commercial real estate construction 201,906 237,055 208,286
Residential real estate mortgage 90,268 208,304 111,486
Commercial real estate mortgage 312,030 231,265 287,673
Total loans $2,702,255 $2,635,325 $2,579,365
Non-Performing Assets:
Acquired residential mortgage $16,122 $16,626 $15,507
Other consumer 266 642 420
Commercial business 1,810 88 533
Residential real estate construction 134 213 135
Commercial real estate construction - - -
Residential real estate mortgage 2,002 2,776 2,104
Commercial real estate mortgage - - 735
Total non-accrual loans 20,334 20,345 19,434
Total renegotiated loans - - -
Total non-performing loans 20,334 20,345 19,434
Total Other Assets and Real Estate
Owned 3,916 4,105 5,132
Total non-performing assets $24,250 $24,450 $24,566
90-Day Delinquencies:
Acquired residential mortgage $4,276 $5,601 $5,353
Other consumer 723 1,391 373
Commercial business 380 648 380
Residential real estate construction - - -
Commercial real estate construction - - -
Residential real estate mortgage 5,899 8,099 6,414
Commercial real estate mortgage - - -
Total 90-day delinquencies $11,278 $15,739 $12,520
Asset Quality Ratios:
Non-performing loans to loans 0.75% 0.77% 0.75%
Non-performing assets to loans 0.90% 0.93% 0.95%
Allowance for loan losses to loans 1.30% 1.31% 1.32%
Net charge-offs in quarter to average
loans 0.30% 0.34% 0.28%
Allowance for loan losses to non-
performing loans 172.16% 170.14% 175.19%
Three Months
Three Months Ended Ended
September 30, June 30,
Analysis of Allowance for Loan
Losses: 2003 2002 2003
Balance at beginning of period $34,047 $34,719 $32,562
Provision for loan losses 2,950 2,150 3,251
Transfer to other liabilities - - -
Less loans charged-off, net of
recoveries:
Acquired residential mortgage 1,346 2,394 1,497
Other consumer 440 264 132
Commercial business 195 (331) 137
Residential real estate construction - - -
Commercial real estate construction - - -
Residential real estate mortgage 10 65 -
Commercial real estate mortgage - (138) -
Net charge-offs 1,991 2,254 1,766
Balance at end of period $35,006 $34,615 $34,047
SOURCE Provident Bankshares Corporation
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http://www.provbank.com
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CONTACT:
Media - Lillian Kilroy, +1-410-277-2833, or
Investment Community - Josie Porterfield, +1-410-277-2889
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