EXHIBIT 99
Provident Financial Group Announces Strategic Repositioning
Continuing to Lower Risk Profile While Sharpening Focus on Core Midwest Franchise
Cincinnati, July 10, 2003 - Provident Financial Group, Inc. (Nasdaq: PFGI)
announced today a number of strategic actions taken late in the second quarter
to further align its core businesses with its corporate operating strategy. The
company further reduced its risk profile through the sale of $471 million of
subprime residential mortgage loans, and also sold its Merchant Services
business, a payment solutions provider for credit and debit card acceptance
programs. The company has also agreed to sell its Florida franchise to RBC
Centura Bank, a wholly-owned subsidiary of Royal Bank of Canada (NYSE, TSE: RY).
Under the agreement, Provident will sell its 13 branches to RBC Centura, which
includes approximately $750 million in deposits and $350 million in loans. The
transaction, which is subject to regulatory approvals, is expected to close in
the third quarter of this year.
Provident sold the subprime residential mortgage loans at a $40.0 million net
discount, and will realize a gain of $19.0 million from the sale of its Merchant
Services business. The company will also realize a gain from the sale of its
Florida franchise of approximately $70.0 million after offsets from goodwill and
transaction costs. The aggregate impact of these actions will result in a gain
of approximately $49.0 million and the aggregate dilutive impact to earnings
going forward will be no more than one percent. The chart below outlines the
estimated pre-tax and after-tax impact of these transactions to second and third
quarter earnings.
Pre-Tax After-Tax
----------- ---------------------
Gain/(Loss) (Gain/(Loss) EPS
----------- ------------ -------
Second Quarter 2003 Transactions
Sale of $471 million subprime
residential mortgage loans $ (40.0)* $ (26.8) $(0.53)
Sale of Merchant Services Business 19.0 12.7 0.25
---------- ----------- ------
Impact to Second Quarter 2003 Earnings (21.0) (14.1) (0.28)
---------- ----------- ------
Third Quarter 2003 Transaction
Sale of Florida Franchise 70.0 47.0 0.93
---------- ----------- ------
Impact to Third Quarter 2003 Earnings 70.0 47.0 0.93
---------- ----------- ------
Aggregate Impact to Earnings $ 49.0 $ 32.9 $ 0.65
========== =========== ======
* net of $16 million of allowance utilization
Robert L. Hoverson, Provident's President and Chief Executive Officer commented,
"These actions will further reduce credit risk and earnings volatility and
improve capital while allowing us to focus more on our core Midwest retail and
commercial banking franchise. Removing these subprime mortgage loans from our
balance sheet significantly improves our credit quality metrics, including
lowering the level of non-performing assets. These subprime mortgages loans
represented approximately five percent of our total loan portfolio, and
approximately $53 million, or 26 percent of non-performing assets. We will
continue to pursue opportunities to reduce risk exposures and reposition or exit
businesses that are not in line with our corporate operating strategy."
-1-
UBS Investment Bank acted as the Advisor to Provident for the sale of both the
Merchant Service business and the Florida franchise.
Second Quarter 2003 Earnings and Further Discussion of Today's News Release
Provident expects to release second quarter 2003 financial results next
Wednesday, July 16, 2003, prior to market opening. A conference call and webcast
is also scheduled for next Wednesday, July 16, 2003, at 2:00 p.m (ET) to discuss
earnings. The contents of today's news release, including further details on the
impact of these transactions, will also be discussed on next week's conference
call.
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 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. is a bank holding company located in Cincinnati,
Ohio. Its main subsidiary, The Provident Bank, provides a diverse line of
banking and financial products, services and solutions through retail banking
offices located in Southwestern Ohio, Northern Kentucky and the West Coast of
Florida, and through commercial lending offices located throughout Ohio and
surrounding states. 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. Provident has served
the financial needs of its customers for 100 years, and currently 3,400
associates serve approximately 500,000 customers. At March 31, 2003, Provident
Financial Group had $9.2 billion in loans outstanding, $10.7 billion in
deposits, and assets of $17.7 billion. Provident Financial Group's common stock
trades on the Nasdaq Stock Market under the symbol PFGI.
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
