Quarter Reflects Record High Loan Levels and Marked Improvement in Cost
Control
BALTIMORE, Oct. 18 /PRNewswire-FirstCall/ -- Provident Bankshares
Corporation (Nasdaq: PBKS), the parent company of Provident Bank, reported
$16.0 million in net income, or $0.50 per diluted share, for the quarter
ended September 30, 2007. Total end of period loans exceeded the $4 billion
threshold for the first time in company history. Also, the Board of
Directors of Provident Bankshares has declared the fifty-sixth consecutive
quarterly dividend increase.
Provident continues to maintain a strong focus on the metropolitan
areas of Baltimore, Maryland; Washington, DC; and Richmond, Virginia. The
vibrant regional economy, which has been characterized by employment and
household growth, provides a wealth of opportunity for acquiring and
expanding consumer and business banking relationships. In the third quarter
of 2007, average loans grew by $199.1 million, or 5%, over the same period
a year ago. Average commercial business loans increased by 14%, or $100.0
million, and average commercial real estate loans by 11%, or $142.9
million, compared to the same quarter a year ago. Average home equity loans
grew by 7%, or $67.2 million. Average customer deposits grew by $52.6
million, or 2%, compared to the third quarter of 2006.
The Bank made significant progress with its corporate efficiency
program, "Winning the Provident Way" (WPW). The assessment phase of WPW has
been completed, and implementation is underway. Evidencing the success of
WPW, non- interest expense did not increase from the second quarter of 2007
and was essentially unchanged from the prior year's quarter. During the
quarter, the Bank realized a gain of $4.9 million for the sale of the
deposits and facilities of six branches. These branches held total deposits
of $43.3 million.
As announced on October 2, 2007, the Bank placed a $4.1 million
commercial loan on non-performing status and provided a specific reserve
for the full loan amount during the third quarter 2007. Despite the
addition to non-accrual status associated with this commercial loan,
overall credit quality is considered sound as evidenced by the net
charge-offs to average loans ratio of 0.20% and an allowance for loan
losses to total loans of 1.27%.
"The banking industry is facing challenges of more moderate revenue
growth and a return to historically normal credit costs," said Gary N.
Geisel, Chairman and CEO. "At Provident, our objective for 2007 has been to
remain focused on factors within our control - executing our key strategies
while also improving efficiency; I am extremely pleased with our success in
these areas."
Third Quarter Results Compared to Same Period of 2006
Net income for the quarter ending September 30, 2007 was $16.0 million,
or $0.50 per diluted share, compared to $20.4 million in net income, or
$0.62 per diluted share, for the quarter ended September 30, 2006. The
decline in net income was primarily due to an increase in the Bank's loan
loss provision and a reduction in total revenues. The loan loss provision
was $6.5 million higher than the same quarter of 2006, due to overall loan
growth and the previously described $4.1 million specific reserve. Net
interest income was 7% lower than the same quarter of 2006 due to extremely
competitive pricing for deposits and loans and the continuing shift of low
cost deposits from customer checking and savings accounts to significantly
higher cost certificates of deposit. Average total demand deposit account
balances declined by $102.8 million, and average total savings balances
declined by $88.4 million, while average total customer certificate of
deposit account balances increased by $236.1 million.
Despite the challenging environment, the Bank's strategy of acquiring,
expanding and retaining customer relationships is evident in the third
quarter's growth in average deposit and loan balances. Growth in consumer
and commercial deposit accounts resulted in $3.6 billion in average
customer deposits, an increase of 2%. Average total loan balances grew by
5%, or $199.1 million, due to the Bank's increased lending to consumers,
businesses and developers in the region. Home equity, commercial business
and commercial real estate demonstrated strong average loan growth of 7%,
14% and 11%, respectively.
Deposit service fees declined by $540 thousand, or 2%, due to a
flattening of checking account generation. Commissions and fees increased
by $124 thousand, or 8%, reflecting the Bank's continued success with
annuity and mutual fund sales.
Total non-interest expense was well controlled, reflecting no increase
from the third quarter of 2006, despite the inclusion of $1.8 million in
costs for one-time restructuring activities related to WPW and higher legal
fees. WPW has resulted in a 3.5% decline in salary and benefit costs from
the third quarter of 2006.
Year to Date Performance Compared to Same Period of 2006
Net income for the nine months ending September 30, 2007 was $47.6
million, or $1.48 per diluted share, compared to net income of $58.7
million, or $1.77 per diluted share, for the nine months ending September
30, 2006. The decline in year over year net income was partly due to the
lower net interest income that resulted from pricing pressures and the
change in deposit mix. Year-to-date net income has also been reduced by
Management's decision to increase the provision for loan losses in the
second quarter of 2007, following the charge-off of a $3.5 million
commercial business loan. The provision for loan losses was also increased
due to overall loan growth and the previously discussed commercial loan
that was placed on non-accrual status in the third quarter.
Total average loans increased by $181.6 million, or 5%. Growth
categories included $72.6 million in home equity loans, $153.4 million in
commercial real estate and $82.1 million in commercial business loans. The
growth in these products more than offset expected declines in marine
lending and run-off in portfolios of discontinued loan products. Average
customer deposits increased by $41.1 million, or 1%, led by growth in
certificates of deposit. Deposit service fees, commissions and loan fees
for the nine months ending September 30, 2007, increased by $685 thousand
to $75.7 million.
Non-interest expense for the first nine months of 2007 totaled $160.1
million, which is less than a 1% increase over the same period of 2006.
Year- to-date 2007 non-interest expense includes $4.6 million in charges
related to restructuring, consulting and legal fees while the same period
of the prior year included $1.3 million for settlement of litigation.
Excluding these items, non-interest expense would have declined by $2.5
million. The cost of salaries and benefits are $1.1 million lower than the
same period of 2006.
Third Quarter Results Compared to Second Quarter of 2007
Third quarter earnings of $16.0 million, or $0.50 per diluted share,
was 3% higher than the second quarter 2007 earnings, which totaled $15.5
million, or $0.48 per diluted share. Both the second and third quarter 2007
earnings included the effects of an increased provision for loan losses.
The current quarter ending September 30, 2007, also includes the $4.9
million gain on the sale of branches previously noted.
Net interest income was reduced to $47.8 million, as customer deposits
continued to move from checking and savings accounts to higher cost
certificates of deposits. Deposit service fees, commissions and loan fees
declined by $946 thousand.
Non-interest expense was well controlled, totaling $52.7 million,
compared to $52.6 million in the second quarter. Restructuring activities
and consulting associated with WPW totaled $844 thousand in the third
quarter and $1.2 million in the second quarter. The third quarter also
included $954 thousand in legal fees and settlement costs.
Average customer deposits declined by $112.3 million, or 3%, driven by
a $75.8 million decrease in checking accounts and $40.3 million in savings
accounts. The Bank continues to expand loan relationships within the
region; average total loans increased by $70.2 million, or 2%, on a linked
quarter basis, with much of the improvement due to home equity, commercial
real estate and commercial business loan growth.
Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared an increased quarterly cash dividend of $0.32 per share. This is
the fifty-sixth consecutive quarterly dividend increase. The quarterly cash
dividend will be paid on November 9, 2007 to stockholders of record at the
close of business on October 29, 2007.
About Provident Bankshares Corporation
Provident Bankshares Corporation is the holding company for Provident
Bank, the largest independent commercial bank headquartered in Maryland.
With $6.4 billion in assets, Provident serves individuals and businesses in
the key metropolitan areas of Baltimore, Washington and Richmond through a
current branch network of 142 offices in Maryland, Virginia, and southern
York County, Pennsylvania. 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. Visit
Provident on the web at http://www.provbank.com.
Webcast Information
Provident Bankshares Corporation's third quarter earnings
teleconference will be webcast at 10 a.m. ET on October 18, 2007. The
conference call will include a discussion of the Company's third quarter
2007 results of operations and may include forward-looking information. The
conference call will be simultaneously webcast at http://www.provbank.com and
archived through November 1, 2007. To listen to the conference call, please
go to the Company's website to register, download and install any necessary
software. When in the Company's website, follow these links:
-- About Provident
-- Investor Relations
-- Upcoming Events
-- Provident Bankshares Corporation Third Quarter 2007 Results
Audio Webcast
An audio replay of the teleconference will be available through
November 1, 2007 by dialing 1-888-286-8010, passcode 73120770; the
international dial- in number is 617-801-6888.
Forward-looking Statements
This press release, as well as other written communications made from
time to time by Provident Bankshares Corporation and its subsidiaries (the
"Company") 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, revenue
growth in retail 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. No forward-looking
statement can be guaranteed, and actual results may differ from those
projected. The Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
events or otherwise. Forward-looking statements in this release should be
evaluated together with the uncertainties that affect the Company's
business, particularly those mentioned under the headings "Forward -Looking
Statements" and "Item 1A. Risk Factors" in the Company's Form 10-K for the
year ended December 31, 2006, and its reports on Forms 10-Q and 8-K, which
the Company incorporates by reference.
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
September 30,
2007 2006 % Change
SUMMARY INCOME STATEMENTS:
Net interest income $47,837 $51,214 (6.6)%
Provision for loan losses 7,494 954 -
Non-interest income 35,303 31,500 12.1
Net gains 4,902 373 -
Derivative gains (losses) 204 643 (68.3)
Non-interest income, excluding total
gains (losses) 30,197 30,484 (0.9)
Total revenue, excluding total gains
(losses) 78,034 81,698 (4.5)
Non-interest expense 52,685 52,614 0.1
Restructuring activities 111 - -
Non-interest expense, excluding
restructuring 52,574 52,614 (0.1)
Income tax expense 6,993 8,707 (19.7)
Net income 15,968 20,439 (21.9)
SHARE DATA:
Basic earnings per share $0.50 $0.63 (20.6)%
Diluted earnings per share 0.50 0.62 (19.4)
Cash dividends paid per share 0.315 0.295 6.8
Book value per share 19.10 19.79 (3.5)
Weighted average shares - basic 31,931,837 32,632,516 (2.1)
Weighted average shares - diluted 32,091,566 33,037,479 (2.9)
Common shares outstanding 31,974,520 32,680,266 (2.2)
SELECTED RATIOS:
Return on average assets 1.00% 1.26%
Return on average equity 10.27 12.81
Return on average common equity 9.82 12.34
Net yield on average earning assets
(t/e basis) 3.45 3.61
Efficiency ratio (excludes
restructuring activities) 66.67 63.93
Leverage ratio 8.74 8.58
Tier I risk-based capital ratio 10.76 11.18
Total risk-based capital ratio 11.82 12.13
Tangible common equity ratio 6.50 6.50
END OF PERIOD BALANCES:
Investment securities portfolio $1,559,599 $1,889,954 (17.5)%
Total loans 4,047,715 3,768,027 7.4
Assets 6,364,010 6,410,291 (0.7)
Deposits 4,206,741 4,131,702 1.8
Stockholders' equity 610,721 646,886 (5.6)
Common stockholders' equity 657,286 663,758 (1.0)
AVERAGE BALANCES:
Investment securities portfolio $1,609,766 $1,908,566 (15.7)%
Loans:
Originated and acquired residential
mortgage 298,019 373,568 (20.2)
Home equity 1,050,442 983,288 6.8
Other consumer 386,750 422,094 (8.4)
Commercial real estate 1,434,997 1,292,143 11.1
Commercial business 803,537 703,523 14.2
Total loans 3,973,745 3,774,616 5.3
Earning assets 5,596,734 5,701,946 (1.8)
Assets 6,279,353 6,406,772 (2.0)
Deposits:
Noninterest-bearing 709,492 759,874 (6.6)
Interest-bearing 3,375,739 3,264,255 3.4
Total deposits 4,085,231 4,024,129 1.5
Stockholders' equity 617,043 632,886 (2.5)
Common stockholders' equity 644,896 657,158 (1.9)
Three Months Ended
June 30,
2007 % Change
SUMMARY INCOME STATEMENTS:
Net interest income $48,548 (1.5)%
Provision for loan losses 4,792 56.4
Non-interest income 31,085 13.6
Net gains 420 -
Derivative gains (losses) (557) (136.6)
Non-interest income, excluding total
gains (losses) 31,222 (3.3)
Total revenue, excluding total gains
(losses) 79,770 (2.2)
Non-interest expense 52,628 0.1
Restructuring activities 481 (76.9)
Non-interest expense, excluding
restructuring 52,147 0.8
Income tax expense 6,691 4.5
Net income 15,522 2.9
SHARE DATA:
Basic earnings per share $0.48 4.2%
Diluted earnings per share 0.48 4.2
Cash dividends paid per share 0.310 1.6
Book value per share 19.34 (1.2)
Weighted average shares - basic 32,128,061 (0.6)
Weighted average shares - diluted 32,396,244 (0.9)
Common shares outstanding 32,268,128 (0.9)
SELECTED RATIOS:
Return on average assets 1.00 %
Return on average equity 9.80
Return on average common equity 9.66
Net yield on average earning assets
(t/e basis) 3.57
Efficiency ratio (excludes
restructuring activities) 64.84
Leverage ratio 8.85
Tier I risk-based capital ratio 11.06
Total risk-based capital ratio 12.03
Tangible common equity ratio 6.63
END OF PERIOD BALANCES:
Investment securities portfolio $1,580,508 (1.3)%
Total loans 3,928,086 3.0
Assets 6,263,379 1.6
Deposits 4,188,288 0.4
Stockholders' equity 624,167 (2.2)
Common stockholders' equity 659,852 (0.4)
AVERAGE BALANCES:
Investment securities portfolio $1,609,654 -%
Loans:
Originated and acquired residential
mortgage 311,122 (4.2)
Home equity 1,014,915 3.5
Other consumer 394,611 (2.0)
Commercial real estate 1,407,768 1.9
Commercial business 775,142 3.7
Total loans 3,903,558 1.8
Earning assets 5,528,392 1.2
Assets 6,215,193 1.0
Deposits:
Noninterest-bearing 743,185 (4.5)
Interest-bearing 3,425,771 (1.5)
Total deposits 4,168,956 (2.0)
Stockholders' equity 635,352 (2.9)
Common stockholders' equity 644,237 0.1
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per share data)
Nine Months Ended
September 30,
2007 2006 % Change
SUMMARY INCOME STATEMENTS:
Net interest income $145,320 $155,035 (6.3)%
Provision for loan losses 13,338 2,096 -
Non-interest income 96,257 90,944 5.8
Net gains 6,525 1,116 -
Derivative losses (416) (514) (19.1)
Non-interest income, excluding total
gains (losses) 90,148 90,342 (0.2)
Total revenue, excluding total gains
(losses) 235,468 245,377 (4.0)
Non-interest expense 160,081 159,200 0.6
Restructuring activities 1,459 - -
Non-interest expense, excluding
restructuring 158,622 159,200 (0.4)
Income tax expense 20,554 25,963 (20.8)
Net income 47,604 58,720 (18.9)
SHARE DATA:
Basic earnings per share $1.48 $1.79 (17.3)%
Diluted earnings per share 1.48 1.77 (16.4)
Cash dividends paid per share 0.930 0.870 6.9
Book value per share 19.10 19.79 (3.5)
Weighted average shares - basic 32,063,333 32,791,209 (2.2)
Weighted average shares - diluted 32,259,491 33,194,655 (2.8)
Common shares outstanding 31,974,520 32,680,266 (2.2)
SELECTED RATIOS:
Return on average assets 1.02% 1.23%
Return on average equity 10.14 12.45
Return on average common equity 9.90 12.03
Net yield on average earning assets
(t/e basis) 3.55 3.69
Efficiency ratio (excludes
restructuring activities) 66.76 64.48
Leverage ratio 8.74 8.58
Tier I risk-based capital ratio 10.76 11.18
Total risk-based capital ratio 11.82 12.13
Tangible common equity ratio 6.50 6.50
END OF PERIOD BALANCES:
Investment securities portfolio $1,559,599 $1,889,954 (17.5)%
Total loans 4,047,715 3,768,027 7.4
Assets 6,364,010 6,410,291 (0.7)
Deposits 4,206,741 4,131,702 1.8
Stockholders' equity 610,721 646,886 (5.6)
Common stockholders' equity 657,286 663,758 (1.0)
AVERAGE BALANCES:
Investment securities portfolio $1,627,388 $1,917,697 (15.1)%
Loans:
Originated and acquired residential
mortgage 311,406 405,214 (23.2)
Home equity 1,020,822 948,202 7.7
Other consumer 394,051 426,734 (7.7)
Commercial real estate 1,416,920 1,263,564 12.1
Commercial business 773,392 691,325 11.9
Total loans 3,916,591 3,735,039 4.9
Earning assets 5,558,459 5,670,509 (2.0)
Assets 6,243,179 6,372,546 (2.0)
Deposits:
Noninterest-bearing 725,771 783,774 (7.4)
Interest-bearing 3,390,757 3,249,687 4.3
Total deposits 4,116,528 4,033,461 2.1
Stockholders' equity 627,408 630,468 (0.5)
Common stockholders' equity 643,008 652,821 (1.5)
SOURCE Provident Bankshares Corporation
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Related links:
http://www.provbank.com
http://www.prnewswire.com/comp/721938.html /
CONTACT:
Media, Vicki Cox, +1-410-277-2063, Investment
Community, Melissa P. Kelly, +1-410-277-2080, both of Provident
Bankshares Corporation
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