Provident Financial Group, Inc. Announces Restatement of
Operating Results for Years 1997 through 2002
Cincinnati, March 5, 2003 - Provident Financial Group, Inc. announced today a
restatement to its operating results for the years 1997 through 2002.
The restatement of previously reported operating results is attributed to
errors in the accounting for nine auto lease financing transactions originated
between 1997 and 1999.
The errors that existed in the accounting for these transactions were first
discovered by the company's finance staff in connection with the testing and
installation of a financial model that identified differences in income that
was originally recorded, compared with the income generated by the financial
model. The company then notified its independent auditors and bank regulators
and has reported all relevant information to its board of directors and audit
committee. The company has been working closely with its independent auditors
since the accounting errors were first discovered.
A review of the accounting for the nine transactions also concluded that none
of the transactions should have been reported off-balance sheet as a sale and
lease back of operating leases. The appropriate accounting was to report the
transactions as financing leases with all assets and related liabilities
included on the balance sheet. As a result, the company will also be restating
its balance sheets for the years 1997 through 2002 to include the nine auto
lease financing transactions.
Christopher J. Carey, Executive Vice President and Chief Financial Officer of
Provident, stated, "The restatement announced today is attributable solely to
errors in the accounting for the nine auto lease transactions that were
originated between 1997 and 1999. All auto lease transactions originated
beginning in 2000 and thereafter were structured and treated as financing
leases and have been included on our balance sheet. We also reviewed the
accounting for each of the subsequent transactions and concluded that they
were accounted for correctly."
The previously announced earnings per share outlook for 2003 was between $2.50
and $2.70. As a result of the evaluation of the estimated impact of the auto
lease financing transactions, the revised earnings per share outlook is
between $2.30 and $2.50. The company's expectation is that the impact of this
matter will be significantly less in 2004 and in future years.
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The chart below shows as reported and restated net income and diluted earnings
per share for the years 1997 through 2002.
Net Income and Diluted Earnings Per Share
($ in millions, except per share data)
Year Ended December 31,
2002 2001 2000 1999 1998 1997
------------------------------------------------------------------------------------
As Reported
Net Income $ 119.4 $ 23.3 $ 73.6 $ 150.9 $ 122.4 $ 114.7
Earnings Per Share $ 2.35 $ 0.45 $ 1.46 $ 3.08 $ 2.48 $ 2.38
Restated
Net Income $ 99.3 $ 3.2 $ 57.7 $ 139.6 $ 120.4 $ 113.8
Earnings Per Share $ 1.96 $ 0.05 $ 1.15 $ 2.85 $ 2.44 $ 2.36
Variance
Net Income $ (20.1) $ (20.1) $ (15.9) $ (11.3) $ (2.0) $ (0.9)
Earnings Per Share $ (0.39) $ (0.40) $ (0.31) $ (0.23) $ (0.04) $ (0.02)
The chart below shows as reported and restated end of period assets for the years 1997 through 2002.
End of Period Assets
($ in millions)
Year Ended December 31,
2002 2001 2000 1999 1998 1997
------------------------------------------------------------------------------------
As Reported
Total Assets $16,721.2 $15,573.6 $ 13,857.4 $ 10,537.9 $8,949.7 $7,946.6
Restated
Total Assets $17,534.4 $16,540.0 $ 14,982.5 $ 11,821.1 $9,581.4 $8,269.4
Variance
Total Assets $ 813.2 $ 966.4 $ 1,125.1 $ 1,283.2 $ 631.7 $ 322.8
The total risk based capital ratio at December 31, 2002 on a restated basis
was 11.69% compared with the originally reported 12.17%.
Forward-Looking Statements This news release contains certain forward-looking
statements that are subject to numerous assumptions, risks or uncertainties.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements. Actual results could differ materially from
those contained in or implied by such forward-looking statements for a variety
of factors including: sharp and/or rapid changes in interest rates;
significant changes in the anticipated economic scenario which could
materially change anticipated credit quality trends; the ability to generate
loans and leases; significant cost, delay in, or inability to execute
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strategic initiatives designed to grow revenues and/or manage expenses;
consummation of significant business combinations or divestitures; and
significant changes in accounting, tax, or regulatory practices or
requirements and factors noted in connection with forward-looking statements.
Additionally, borrowers could suffer unanticipated losses without regard to
general economic conditions. The result of these and other factors could cause
differences from expectations in the level of defaults, changes in the risk
characteristics of the loan and lease portfolio, and changes in the provision
for loan and lease losses. Forward-looking statements speak only as of the
date made. Provident undertakes no obligations to update any forward-looking
statements to reflect events or circumstances arising after the date on which
they are made.
About Provident Financial Group, Inc.
Provident Financial Group, Inc. (Nasdaq: PFGI) is a bank holding company
located in Cincinnati, Ohio. Its main subsidiary, The Provident Bank, provides
a diverse line of banking and financial products and services regionally;
selected business activities are also conducted nationally. Consumer, small
business, and investment products and services are offered through a network
of retail financial centers located primarily within Southwestern Ohio and
Northern Kentucky. Provident also has a growing presence on the West Coast of
Florida with 13 retail financial centers. Commercial banking products and
services are offered through nine regional offices. Customers have access to
banking services 24-hours a day through Provident's extensive network of ATMs,
Telebank, a telephone customer service center, and the internet at
www.providentbank.com. At December 31, 2002, Provident Financial Group had
$11.3 billion in loans outstanding, $9.8 billion in deposits, and assets of
$17.5 billion. Provident has served the financial needs of its customers for
100 years, and currently 3,400 Provident associates serve approximately
600,000 customers. Provident Financial Group's common stock trades on the
Nasdaq Stock Market under the symbol PFGI.
Conference Call
A conference call will be held today (Wednesday, March 5, 2003) at 11:00 a.m.
(ET) to discuss the contents of this news release. The call can be accessed by
calling 1-877-818-4511. A replay of the call will be available through Monday,
March 10, 2003 by calling 1-800-642-1687 (passcode 131 20).
For further information, please contact:
Christopher J. Carey
Executive Vice President and Chief Financial Officer
1-513-639-4644 / 1-800-851-9521
e-mail: IR@PROVIDENT-FINANCIAL.COM
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