PROVIDENT BANKSHARES
CORPORATION
Mid-Atlantic Super Community
Bank Conference
November 4, 2004
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
This presentation, and other written materials and oral statements made by management, may contain certain forward-looking statements, including those regarding the Company’s prospective performance, plans, strategies and expectations, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of said harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe future events, plans, strategies, and expectations of the Company, are generally identified by use of the words “plan,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or other similar expressions. The Company’s ability to predict results or the actual effects of its performance, plans, strategies and expectations, including those with respect to its merger with Southern Financial Bancorp, Inc., is inherently uncertain. Accordingly, actual results may differ materially from anticipated results.
The following factors, among others, could cause the actual results of the merger to differ materially from the expectations stated in this presentation: the ability to successfully integrate the companies following the merger, including the retention of key personnel; the ability to effect the proposed capital recovery and optimization plan; the ability to fully realize the expected cost savings and revenues; and the ability to realize the expected cost savings and revenues on a timely basis.
Factors that could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: changes in general economic conditions, interest rates, deposit flows, loan demand, real estate values, competition, and the demand for financial services and loan, deposit, and investment products in the Company’s local markets; changes in the quality or composition of the loan or investment portfolios; inability to successfully carry out marketing and/or expansion plans; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; war or terrorist activities; and other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting the Company’s operations, pricing, and services.
The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
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HISTORY
‘THE NEW PROVIDENT’
KEY STRATEGIES
INVESTMENT ATTRIBUTES
AGENDA
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MILESTONES
1886—Founded as a Mutual Thrift
1987—Converted to Commercial Bank
1993—Totally Free Checking/In-Store Branches
1997 – Citizen’s Savings Bank Merger
2004 – Southern Financial Merger
PROVIDENT BANKSHARES
CORPORATION
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THE NEW PROVIDENT What We Are
Consumer and Commercial Banking Focus
Access to Executive Management
430,000 Customer Relationships
149 Branches in the Key Urban Metropolitan areas of Baltimore, Washington and Richmond
The “Right Size” Bank
PROVIDENT BANKSHARES
CORPORATION
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THE “RIGHT SIZE” BANK
“We will continue to provide the products and services of our largest competitors, while delivering the level of service found in only the best community banks.”
PROVIDENT BANKSHARES
CORPORATION
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THE NEW PROVIDENT What We Are
Commercial and Consumer Banking Focused
Commercial
50% Commercial Business in Virginia
Small Business and Middle Market focus
Consumer
68% Consumer Business in Maryland
Convenient Access
Depth and Breadth of Value Oriented Products and Services
PROVIDENT BANKSHARES
CORPORATION
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THE NEW PROVIDENT FRANCHISE
Branches located in Maryland and
Virginia’s best markets
County Demographics
PBKS Branches4 - 8% Projected Growth+8% Projected Growth
County Demographics 8
WHAT WE ARE NOT
Trust Department
Mortgage Banking
Large Corporate Banking
International Banking
PROVIDENT BANKSHARES
CORPORATION
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KEY STRATEGIES
Broaden Presence and Customer Base in Washington Metro and Virginia
Grow Commercial Banking Franchise
in the Maryland and Virginia Markets
Grow Consumer Banking Franchise
in the Maryland and Virginia Markets
Improve Financial Fundamentals
PROVIDENT BANKSHARES
CORPORATION
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BROADEN PRESENCE AND CUSTOMER BASE IN WASHINGTON METRO AND VIRGINIA
PROVIDENT BANKSHARES
CORPORATION
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VIRGINIA AND WASHINGTON METRO EXPANSION
BRANCH NETWORK
83 98 100 109 118 149
59 66 65 66 67 66
24 32 35 43 51 83
1999 2000 2001 2002 2003 3Q04
VA/Wash Metro
Baltimore
TOTAL AWARENESS
30 40 50 60 70 80 90 100
3Q 00 3Q 01 3Q 02 3Q 03 3Q04
Baltimore Sub MD Virginia
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CHECKING BALANCE GROWTH VA/WASHINGTON METRO
Average Balances (millions)
CONSUMER
$81 $106 $134 $242 2001 2002 2003 3Q04
COMMERCIAL
$49 $100 $160 $318 2001 2002 2003 3Q04
CAGR Consumer 2001-3Q04* 20%
CAGR Commercial 2001-3Q04* 58%
*includes SFFB in 2001 base
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GROW COMMERCIAL BANKING FRANCHISE IN THE MARYLAND AND VIRGINIA MARKETS
PROVIDENT BANKSHARES
CORPORATION
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PROVIDENT BANKSHARES
CORPORATION
CORE COMMERCIAL LOAN AND DEPOSIT/REPO GROWTH
LOANS
$791 $856 $961 $1,619 2001 2002 2003 3Q04
DEPOSIT/REPO
(Excluding Brokered)
$426 $579 $680 $1,101 2001 2002 2003 3Q04
Baltimore VA/Wash
Average Balances (millions)
See slides 36 and 37 for reconciliation of core items
CAGR 2001-3Q04* Loans 17%
CAGR 2001-3Q04* Deposits 33%
*includes SFFB in 2001 base
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COMMERCIAL LOANS
Total Commercial Loans $1.7 Billion
3Q04
C&I 35%
Leases 6%
Mortgage 29%
Residential Construction 13%
Commercial Construction 17%
Based on Average Balances
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GROW CONSUMER BANKING FRANCHISE IN MARYLAND AND VIRGINIA MARKETS
PROVIDENT BANKSHARES
CORPORATION
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CORE CONSUMER LOAN AND DEPOSIT/REPO GROWTH
LOANS
$663 $797 $906 $1,115 2001 2002 2003 3Q04
Baltimore VA/Wash
Average Balances (millions)
See slides 36 and 37 for reconciliation of core items
DEPOSITS
(Excluding CD/IRA)
2001 2002 2003 3Q04
$1,394 $1,536 $1,682 $1,978
CAGR 2001-3Q04* Loans 16%
CAGR 2001-3Q04* Deposits 10%
*includes SFFB in 2001 base
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CONSUMER LOANS
Total Consumer Loans
$1.9 Billion
3Q04
Marine 24%
Other 3%
Home Equity 34%
Residential 39%
Based on Average Balances
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PROVIDENT’S IN-STORE DIFFERENCE
*PEOPLE* *PARTNERS
*PRODUCT* *PROGRAM
PROVIDENT BANK BRANCHES
TRADITIONAL/IN-STORE
58 58 89 59 56 36 34 34 51 50 50 37 34 60 59 51 42 42 33 15 18 10 10 5 8
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Sep-04
Traditional
In-Store/ATM Plus
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CONSUMER DDA FEES ANNUAL FEES PER ACCOUNT
0 50000 100000 150000 200000 250000 300000
1995 1996 1997 1998 1999 2000 2001 2002 2003
3q04
$0 $50 $100 $150 $200
Accounts on Hand Average
Fee Income Per Consumer DDA
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IMPROVE FINANCIAL
FUNDAMENTALS
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CORPORATION
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THE NEW PROVIDENT
TRANSFORMED BALANCE SHEET
HIGHER ABSOLUTE EARNINGS
IMPROVED EARNINGS QUALITY
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COMPONENT OF EARNING ASSET
Investment Securities Core Loans Non-Core Loans
2001
36% 34% 30%
3Q04
48% 14% 38% 25
FUNDING TO EARNING ASSETS
Core Dep Brokered Dep Borrowings
2001
25% 22% 53%
3Q04
31% 6% 63% 26
CORE LOANS TO TOTAL LOANS
Commercial Loans CAGR 17%*
Consumer Loans CAGR 16%*
Non-Core Commercial Consumer
2001
*Includes SFFB in 2001 base
53% 21% 26% 3Q04 22% 32% 46% 27
ASSET QUALITY IMPROVEMENT
$ in millions
NON PERFORMING LOANS
TO LOANS
Period End
1.04% $28.8
0.83% $21.1
0.80% $22.3
0.78% $27.4
2001 2002 2003 3Q04
NET CHARGE OFFS TO AVERAGE LOANS
Annualized
0.68% $21.0
0.41% $11.0
0.29% $7.6
0.21% $2.2
2001 2002 2003 3Q04
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PERFORMANCE RESULTS
Net Interest Margin
2.9% 3.5% 3Q04 2001
Return on Assets
1.12% 0.81% 3Q04 2001
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PERFORMANCE FACTORS
Increase in Total Revenue
vs Non-interest Expenses
43%
30%
3Q04
2001
Total Revenue
Non-int Expenses*
Efficiency Ratio
2001 Qtrly Average vs 3Q04
67.6%
61.4%
3Q04
2001
*Non-interest expenses exclude $1.1 million of merger related expenses in 3Q04
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PERFORMANCE RESULTS
Leverage Capital Ratio
8.30%
7.13%
3Q04
2001
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EARNINGS PER SHARE
$1.56 $1.88 $2.05 $0.40 $0.49 $0.41 $0.52 $0.53 $0.54 $0.48 $0.53 $0.56 $0.37 $0.44 $0.47 $0.51 $0.31 $0.52*
2001 2002 2003 2004
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
* Excludes loss on securities of $.18 diluted EPS
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DIVIDEND TREND
3.3% 3.6% 3.5% 3.4%
$0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20
2001 2002 2003 2004
0.00% 0.75% 1.50% 2.25% 3.00% 3.75% 4.50% 5.25% 6.00%
Cash Dividend
Dividend Yield
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Equity Summary
Total Return Comparison
Through 9/30/04
29.74% 90.61% 28.45% 51.08% 40.09% 56.15% 3.85% 13.05%
Since 12/31/00
Since 12/31/01
Since 12/31/02
Since 12/31/03
SNL Bank
PBKS
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INVESTMENT ATTRIBUTES
Core balance sheet momentum
Effective expansion strategy
Growing market share in attractive markets
Stable and improving credit quality
Experienced management team
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CORPORATION
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DEFINITIONS
Core Loans
Originated by Provident; participations in our defined market area
Core Consumer includes home equity loans and lines, marine, other installment loans
Core Commercial includes real estate, commercial loans and lines and leases
Non-Core Loans
Purchased loans; participations outside our defined market area; discontinued product lines
Core Deposits
All deposits except brokered deposits
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RECONCILIATION
(averages in billions)
LOANS
Core $ 1.50 $ 1.70 $ 1.90 $ 2.70
Non Core 1.60 1.01 0.70 0.80
Total Loans $ 3.10 $ 2.71 $ 2.60 $ 3.50
DEPOSITS
Core $ 2.50 $ 2.69 $ 2.83 $ 3.62
Brokered 1.04 0.58 0.32 0.34
Total Deposits $ 3.54 $ 3.27 $ 3.14 $ 3.96
2001
2002
2003
3Q04
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PROVIDENT BANKSHARES
CORPORATION
(www.provbank.com)
Contact:
Media: Lillian Kilroy: (410) 277-2833
Investment Community: Tricia Ferrick: (703) 352-2583
PROVIDENT BANKSHARES
CORPORATION
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