Strong Core Business Growth and Solid Asset Quality Drove Results
BALTIMORE, Oct. 16 /PRNewswire-FirstCall/ --
Provident Bankshares Corporation (Nasdaq: PBKS), the parent company of
Provident Bank, today reported $13.1 million in net income, or $0.52 per
diluted share, for the third quarter of 2002.
This quarter was marked by continued strong growth in the Company's core
deposits and loans as Provident continued to focus on its key strategies. Fee
income continues to grow as Provident expands the franchise into the vibrant
Washington suburbs. Asset quality continues to be a strong point for the
company.
Third Quarter Financial Highlights
-- Net income was $13.1 million for the quarter, compared with
$10.8 million in the 2001 third quarter and diluted earnings per share
were $0.52, a 27% increase from the $0.41 reported in the third
quarter of 2001.
-- Return on average common equity increased to 17.54%, up from 14.73%
reported in the 2001 third quarter.
-- Return on average assets was 1.07%, improved from 0.85% in the same
quarter last year, and the second earnings period in 2002 with an ROA
above 1.00%.
-- Non-interest income (excluding net gains) grew 15% from the comparable
period in 2001. At $22.0 million, non-interest income comprised 39%
of total quarterly revenue.
-- Net interest margin of 3.04% improved from the 2.91% posted in the
third quarter of 2001.
-- Asset quality remained strong as non-performing loans declined 29%
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
third quarter and average core loans grew $189 million, or 13%, from
the same quarter last year.
-- The cash dividend declared today increased to $0.22 per share.
Third Quarter Results
Provident Bankshares reported net income of $13.1 million for the quarter
ended September 30, 2002, or $0.52 per diluted share.
Return on average common equity increased to 17.54% for the third quarter
2002. Return on average assets improved to 1.07%.
The net interest margin for the quarter was 3.04%, up from 2.91% in the
2001 third quarter.
Continued solid performance from core business operations drove growth in
average core loans and average core deposits again in the third quarter.
Average core loans increased $189 million, or 13%, compared to third quarter
2001. Led by a 27% increase in average non-interest bearing demand deposits,
average core deposits increased 6% from the same quarter last year.
Asset quality remained strong. At September 30, 2002, total non-
performing loans were $20.3 million. Net charge-offs for the quarter were
$2.3 million, and the allowance for loan losses to total loans was 1.31%.
Fee income for the third quarter increased 15%. Total non-interest income
(excluding net gains) was up $2.9 million compared to the same period last
year and comprised 39% of Provident's total quarterly revenue. Continued
strong retail and commercial checking account growth drove this increase, with
income from deposit fees up 21% from one year ago.
Non-interest expense increased 4% to $37.5 million for the third quarter
of 2002 while branch expansion continued. The efficiency ratio declined
slightly to 65.76%.
The leverage ratio was 7.43% for the 2002 third quarter, compared with
7.04% reported in the third quarter of 2001. Risk based capital increased to
12.42%, up from 10.51% in the 2001 quarter. At September 30, 2002,
stockholders' equity was $311 million and book value per share was $12.59.
Provident repurchased 398,100 shares of common stock during the period,
leaving 393,831 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 $0.22 per share. This quarterly cash
dividend will be paid on November 8, 2002, to stockholders of record at the
close of business on October 28, 2002. Management has elected to increase the
cash dividend this quarter, as it has for each of the previous 36 consecutive
quarters.
Management Comment
Commenting on the Company's third quarter performance, Chairman and CEO
Peter M. Martin said, "We are very pleased to report growth in earnings again
this quarter. Provident continued strong asset quality and posted revenue
increases generated through growth in core deposits, core loans and fee
income. These solid third 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 third quarter and is expected to drive solid
performance into the fourth quarter of 2002. Provident's core business
strategies are as follows:
-- 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. Customers in the Washington metro area
opened thirty-six percent of all new retail checking accounts opened during
the quarter. Total branch deposits in the Washington market were up 10.2% for
the quarter and comprise more than 26% of total retail deposits. Total branch
banking fee income generated in the Washington region increased 41% over the
same quarter last year. Thirty-seven of Provident's 101 branches are located
in the Washington Metro area.
The third quarter of 2002 saw a 6.3% increase in core commercial loan
balances for the Washington metro area and a 110% 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
Asset quality remains strong, and demand for loan products is steady.
The growth in commercial business was driven largely by increases in the
Baltimore commercial and industrial (C&I) loan areas. Commercial construction
loans continue to be in demand in the Baltimore-Washington corridor.
Average core commercial loan balances increased $68 million, or 10%, over
the same quarter last year. Average core commercial deposits were up
$81 million, or 65%, for the quarter, led by non-interest bearing deposit
accounts. Commercial deposit service fees grew 6% during the period.
-- Focus resources on growth in core business lines
Core banking operations continued to show solid growth, performance and
revenue increase. Overall, core loan balances increased 13% over the 2001
third quarter.
Demand for consumer loans remains high, with an overall increase in loan
balances of 18% year over year, led by increases in the marine and home equity
loan products.
The average non-core acquired consumer loan portfolio stood at
$613 million at the end of the third quarter, declining by $246 million, or
29%, from the same quarter last year.
Commercial loans grew 15% year over year, while non-core syndicated loans
declined by $15 million, or 18%, during this same period. The non-core
syndicated loan portfolio stood at less than $61 million at the end of the
2002 third quarter, as a result of Provident's focus on lending within the
bank's market areas.
Provident's small business deposit products continue to be attractive to
the commercial market, as evidenced by a 29% increase in balances over the
third quarter of 2001, and a corresponding 21% increase in fee income derived
from these products.
-- Improve efficiencies and productivity
Non-interest expense for the 2002 third quarter increased 4% over the same
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 10 new branches before the end of the fourth
quarter.
-- Continue branch expansion into vibrant, high-growth markets
During the quarter, Provident opened one new in-store branch and relocated
a traditional branch into a larger, remodeled space. This brings the total
number of branches to 101.
Provident now has one third of its branches in the attractive Washington
suburbs. Eight of the ten branches planned for the fourth quarter of 2002
will be located in the vibrant Washington suburbs. With its current expansion
plans, Provident is scheduled to have a branch network of 111 branches by
year-end.
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
provides 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. Much of this growth is planned for the
fourth quarter of this year. 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. Our asset quality remains strong, our fee
income and customer base continues to grow, and we are comfortable with the
upper range of analysts' 2002 earnings per share estimates."
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $4.9 billion in assets, Provident serves individuals and
businesses in the dynamic Baltimore-Washington corridor through a network of
101 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 third quarter earnings
teleconference will be Webcast at 10:00 a.m. (EDT) on Thursday, October 17,
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 October 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.
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
Three Months Ended Three Months
(dollars in thousands, September 30, Ended June 30,
except per share data)
(tax-equivalent
basis) 2002 2001 % Change 2002 % Change
SUMMARY OF
OPERATIONS
Interest Income $67,436 $85,561 (21.2) % $72,479 (7.0) %
Interest Expense 32,481 50,645 (35.9) 36,409 (10.8)
Net Interest Income 34,955 34,916 0.1 36,070 (3.1)
Provision for
Loan Losses 2,150 2,100 2.4 2,650 (18.9)
Net Interest Income
after Provision
for Loan Losses 32,805 32,816 0.0 33,420 (1.8)
Non-Interest
Income 24,026 19,408 23.8 19,435 23.6
Non-Interest
Expense 37,471 36,128 3.7 37,780 (0.8)
Income Before
Income Taxes 19,360 16,096 20.3 15,075 28.4
Income Tax
Expense 6,029 5,030 19.9 4,470 34.9
Less: Tax-Equivalent
Adjustment 191 236 (19.1) 200 (4.5)
Income Before
Cumulative Effect
of Change in
Accounting
Principle 13,140 10,830 21.3 10,405 26.3
Cumulative Effect
of Change
in Accounting
Principle, Net - - - - -
Net Income $13,140 $10,830 21.3 $10,405 26.3
PER SHARE
Basic
Income Before
Cumulative Effect of
Change in Accounting
Principle $0.53 $0.42 26.2 % $0.41 29.3 %
Net Income 0.53 0.42 26.2 0.41 29.3
Diluted
Income Before
Cumulative Effect of
Change in Accounting
Principle 0.52 0.41 26.8 0.40 30.0
Net Income 0.52 0.41 26.8 0.40 30.0
Cash Dividends
Paid 0.215 0.195 10.3 0.210 2.4
Stockholders'
Equity 12.59 11.94 5.4 12.02 4.7
Common Shares
Outstanding 24,733,718 25,644,906 (3.6) 25,102,347 (1.5)
Weighted Average
Shares
-- Basic 24,839,708 25,666,305 (3.2) 25,150,841 (1.2)
Weighted Average
Shares
-- Diluted 25,492,725 26,460,569 (3.7) 25,974,869 (1.9)
PROFITABILITY RATIOS
Return on
Average Assets 1.07 % 0.85 % 0.86 %
Return on
Average Equity 17.10 14.68 14.22
Return on Average
Common Equity 17.54 14.73 13.87
Net Yield on Average
Earning Assets
(t/e basis) 3.04 2.91 3.17
Efficiency Ratio 65.76 66.84 65.42
CAPITAL RATIOS
AT PERIOD END
Leverage Ratio 7.43 % 7.04 % 7.44 %
Risk-Based
Tier I Capital
Ratio 11.33 9.57 11.06
Risk-Based Total
Capital Ratio 12.42 10.51 12.13
ASSET QUALITY
Non-Performing
Loans $ 20,345 $ 28,810 (29.4) % $22,701 (10.4) %
Loans Past Due
90 Days or More 15,739 11,847 32.9 12,602 24.9
Allowance for
Loan Losses 34,615 34,704 (0.3) 34,719 (0.3)
Net Charge-offs 2,254 2,706 (16.7) 3,095 (27.2)
Non-Performing
Loans to Loans 0.77 % 0.99 % 0.86 %
Allowance for
Loan Losses
to Loans 1.31 1.20 1.31
Net Charge-Offs
to Average Loans 0.34 0.36 0.47
Allowance for
Loan Losses to
Non-Performing
Loans 170.14 120.46 152.94
AVERAGE BALANCES
Investment
Securities
Portfolio $1,914,305 $1,813,221 5.6 % $1,890,814 1.2 %
Loans:
Core Consumer 811,417 686,814 18.1 784,135 3.5
Core Commercial
& Industrial 307,548 265,659 15.8 297,365 3.4
Core Commercial
Real Estate 560,292 537,785 4.2 532,783 5.2
Total Core
Loans 1,679,257 1,490,258 12.7 1,614,283 4.0
Non-Core
Consumer 895,848 1,372,395 (34.7) 978,203 (8.4)
National Syndicated
Loans 67,102 78,812 (14.9) 74,391 (9.8)
Total Non-Core
Loans 962,950 1,451,207 (33.6) 1,052,594 (8.5)
Total Loans 2,642,207 2,941,465 (10.2) 2,666,877 (0.9)
Earning Assets 4,565,184 4,765,385 (4.2) 4,565,239 0.0
Total Assets 4,860,787 5,068,051 (4.1) 4,870,143 (0.2)
Core Deposits 2,714,538 2,566,477 5.8 2,700,052 0.5
Non-Core Deposits
(including Broker
Deposits) 522,509 905,289 (42.3) 634,997 (17.7)
Total Deposits 3,237,047 3,471,766 (6.8) 3,335,049 (2.9)
Stockholders'
Equity 304,793 292,745 4.1 293,582 3.8
Common Equity 297,280 291,745 1.9 300,891 (1.2)
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
(dollars in
thousands,except per Nine Months Ended September 30,
share data)
(tax-equivalent basis) 2002 2001 % Change
SUMMARY OF OPERATIONS
Interest Income $215,164 $272,777 (21.1)%
Interest Expense 107,276 165,612 (35.2)
Net Interest Income 107,888 107,165 0.7
Provision for Loan Losses 8,400 15,170 (44.6)
Net Interest Income
after Provision
for Loan Losses 99,488 91,995 8.1
Non-Interest Income 63,661 62,641 1.6
Non-Interest Expense 111,634 109,641 1.8
Income Before Income
Taxes 51,515 44,995 14.5
Income Tax Expense 15,893 14,069 13.0
Less: Tax-Equivalent
Adjustment 602 736 (18.2)
Income Before Cumulative
Effect of
Change in Accounting
Principle 35,020 30,190 16.0
Cumulative Effect of
Change
in Accounting
Principle, Net* - (1,160) -
Net Income $35,020 $29,030 20.6
PER SHARE
Basic
Income Before
Cumulative Effect of
Change in Accounting
Principle $1.40 $1.16 20.7 %
Net Income 1.40 1.12 25.0
Diluted
Income Before
Cumulative Effect of
Change in Accounting
Principle 1.36 1.12 21.4
Net Income 1.36 1.08 25.9
Cash Dividends Paid 0.630 0.552 14.1
Stockholders' Equity 12.59 11.94 5.4
Common Shares
Outstanding 24,733,718 25,644,906 (3.6)
Weighted Average Shares -
- Basic 25,035,130 25,898,199 (3.3)
Weighted Average Shares -
- Diluted 25,807,292 26,828,482 (3.8)
PROFITABILITY RATIOS**
Return on Average Assets 0.96 % 0.78 %
Return on Average Equity 15.79 13.86
Return on Average Common
Equity 15.72 13.68
Net Yield on Average
Earning Assets (t/e
basis) 3.17 2.91
Efficiency Ratio 65.14 66.41
CAPITAL RATIOS AT PERIOD
END
Leverage Ratio 7.43 % 7.04 %
Risk-Based Tier I Capital
Ratio 11.33 9.57
Risk-Based Total Capital
Ratio 12.42 10.51
ASSET QUALITY
Non-Performing Loans $20,345 $28,810 (29.4)%
Loans Past Due 90 Days or
More 15,739 11,847 32.9
Allowance for Loan Losses 34,615 34,704 (0.3)
Net Charge-offs 8,396 18,150 (53.7)
Non-Performing Loans to
Loans 0.77 % 0.99 %
Allowance for Loan Losses
to Loans 1.31 1.20
Net Charge-Offs to
Average Loans 0.42 0.77
Allowance for Loan Losses
to
Non-Performing Loans 170.14 120.46
AVERAGE BALANCES
Investment Securities
Portfolio $1,861,120 $1,734,513 7.3 %
Loans:
Core Consumer 784,392 644,037 21.8
Core Commercial &
Industrial 298,770 260,211 14.8
Core Commercial Real
Estate 542,220 523,140 3.6
Total Core Loans 1,625,382 1,427,388 13.9
Non-Core Consumer 985,329 1,651,783 (40.3)
National Syndicated Loans 71,525 86,685 (17.5)
Total Non-Core Loans 1,056,854 1,738,468 (39.2)
Total Loans 2,682,236 3,165,856 (15.3)
Earning Assets 4,553,695 4,916,075 (7.4)
Total Assets 4,857,126 5,189,134 (6.4)
Core Deposits 2,672,347 2,533,446 5.5
Non-Core Deposits
(including Broker
Deposits) 627,580 1,133,596 (44.6)
Total Deposits 3,299,927 3,667,042 (10.0)
Stockholders' Equity 296,586 291,204 1.8
Common Equity 297,828 295,113 0.9
* 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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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 Corporation
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