1
SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Provident Bankshares Corporation
--------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Paul M. Aguggia, Muldoon, Murphy & Faucette LLP
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
................................................................
2) Aggregate number of securities to which transaction applies:
................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
................................................................
4) Proposed maximum aggregate value of transaction:
................................................................
5) Total fee paid:
................................................................
2
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
............................................
2) Form, Schedule or Registration Statement No.:
............................................
3) Filing Party:
............................................
4) Date Filed:
............................................
3
AN IMPORTANT MESSAGE FOR PROVIDENT STOCKHOLDERS:
o SUPPORT YOUR BOARD'S CONTINUING EFFORTS TO BUILD VALUE
o VOTE AGAINST PROPOSAL 3 SEEKING THE SALE OF THE BANK
o DO NOT BE MISLED INTO SACRIFICING THE VALUE OF YOUR
PROVIDENT INVESTMENT
March 31, 2000
Dear Provident Stockholder:
Your vote at our upcoming Annual Meeting of Stockholders, scheduled for April
19, 2000, is particularly important this year. I strongly urge you to sign, date
and return the enclosed WHITE proxy card today in the enclosed, postage paid
envelope.
At the Meeting, stockholders will vote on the election of Directors (Proposal 1)
and approval of the selection of PricewaterhouseCoopers LLP as independent
auditors for 2000 (Proposal 2). In addition, Mid-Atlantic Investors, a dissident
stockholder well known for purchasing a small percentage of a bank's stock and
then agitating for its quick sale, has submitted a proposal seeking the
immediate sale of our company.
Your Board opposes this proposal. As described below, your Board believes (1)
that its strategic plan continues to build the intrinsic value of the Bank,
(2) that the decline in the Bank's stock price is attributable to a broad
industry-wide decline in bank stock prices, not something specific to Provident
and (3) that the Mid-Atlantic proposal is ill-conceived and harmful to the best
interests of most stockholders and would deprive them of the full potential of
their investment.
o YOUR BOARD'S STRATEGIC PLAN CONTINUES TO BUILD INTRINSIC VALUE DURING A
PERIOD OF LOW BANK STOCK PRICES
Your Board's Strategic Plan to build the intrinsic value of the Bank is showing
strong results. Earnings growth exceeded 13% in the 1999 fiscal year and
earnings per share increased 13.6%, exceeding analysts' expectations. Indicative
of this growth, our deposit market share increased for the sixth consecutive
year, from 5.1% to 5.9%, while competing banks saw their deposit market share
decline or stay flat.
4
Our increase in market share is attributable to our innovative "hub and spoke"
strategy of increasing traditional and in-store branches through partnerships
with Wal-Mart, Shoppers Food Warehouse and Metro Foods. These partnerships allow
cost-effective expansion into prime locations. Our branch expansion will
continue in the lucrative Montgomery County and Northern Virginia markets in
2000.
Needless to say, we are disappointed that after all our hard work the stock
price does not reflect these strong results and the soundness of our strategy.
We are not alone in that regard - 75% of bank stocks have experienced declines
since the Fall of 1999.
The consensus among analysts and the financial press is that the general decline
in bank stocks is largely attributable to interest rate concerns, disappointing
financial results reported by acquisitive banks integrating their merger
partners and the diversion of investor interest to high-tech stocks. We share
those views and also believe that this industry-wide decline is not reflective
of the industry's inherent value.
Under such circumstances, we continue to believe it is prudent to concentrate on
building the value of our business. We strongly believe that an immediate sale
will deprive the stockholders of the true, inherent value of the Bank.
To support your Board's efforts to build long term stockholder value, sign, date
and return the enclosed WHITE proxy card with a vote AGAINST Proposal 3. Do not
return Mid-Atlantic's green proxy card, even as a protest.
O MID-ATLANTIC'S "SELL THE COMPANY PROPOSAL" - ILL-CONCEIVED AND HARMFUL TO
THE BEST INTERESTS OF THE STOCKHOLDERS
Your Board unanimously believes that Mid-Atlantic's proposal is ill-conceived
and harmful to the best interests of the stockholders because it would deprive
them of the true, inherent value of their stock.
The adoption of Mid-Atlantic's proposal could also harm the stockholders by
creating uncertainty concerning Provident's future. Such uncertainty could harm
our ability to conduct day to day business operations, including our ability to
retain and attract customers and employees.
Stockholders should not be misled into supporting such a harmful proposal by
hypothetical benefits from hypothetical sales. You can not cash a hypothetical
check. Your Board, however, is addressing and meeting the real world challenges
of the current banking environment in its efforts to build long-term stockholder
value.
Stockholders should protect the future value of their investment in Provident by
signing, dating and returning the enclosed WHITE proxy card with a vote AGAINST
Proposal 3.
o MID-ATLANTIC'S "SELL THE COMPANY" PROPOSAL: WHAT IS MID-ATLANTIC'S REAL
MOTIVATION?(ALMOST 600,000 SHARES BOUGHT ON MARGIN IN TWELVE DAYS
5
Mid-Atlantic seeks to portray itself as a stockholder with interests similar to
other stockholders. But is it? Consider that Mid-Atlantic borrowed heavily on
margin to buy almost 600,000 of its Provident shares in only 12 trading days in
late January and early February of this year.
WE BELIEVE THAT THESE INVESTMENT TECHNIQUES MOTIVATE, IF NOT REQUIRE,
MID-ATLANTIC TO FORCE A FAST SALE OF YOUR BANK AT ANY PRICE, REGARDLESS OF THE
POTENTIAL LONG-TERM VALUE OF YOUR BANK.
o THE RECORD SHOWS YOUR BOARD KNOWS HOW TO DELIVER STOCKHOLDER VALUE, WHILE
MID-ATLANTIC'S MR. ZUCKER DOES NOT
The real issue is how best to deliver maximum value to stockholders.
Mid-Atlantic's proxy identifies Mr. Jerry Zucker as a co-partner of
Mid-Atlantic. Mr. Zucker is also President, Chairman and Chief Executive Officer
of Polymer Group, Inc. (PGI), a publicly traded company.
The chart below shows the performance of PGI since the beginning of the year.
PGI STOCK HAS LOST 45% OF ITS VALUE SINCE JANUARY 26, 2000, THE DAY ON WHICH MR.
ZUCKER AND MR. SHEARER STARTED BUYING 600,000 PROVIDENT SHARES ON MARGIN IN
TWELVE TRADING DAYS. Perhaps Mr. Zucker should concentrate on building value for
his stockholders, rather than try to deprive Provident stockholders of the
future value of their stock in his pursuit of a quick, leveraged profit.
Please support your Board's continuing efforts to build stockholder value by
signing, dating and returning the enclosed WHITE proxy card in the postage paid
envelope provided. If you have already voted a green proxy card, you have every
right to change your mind and vote a WHITE proxy card. Remember, only your
latest dated validly executed proxy card counts!
Thank you for your consideration and support.
/s/ Peter M. Martin
- ----------------------
Peter M. Martin
Chairman of the Board, President
and Chief Executive Officer
6
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK OR BROKER, ONLY
THAT ORGANIZATION CAN VOTE YOUR SHARES. PLEASE DIRECT THE
PERSON RESPONSIBLE FOR YOUR ACCOUNT TO EXECUTE ON YOUR
BEHALF A WHITE PROXY CARD WITH A VOTE FOR PROPOSALS 1 AND 2
AND AGAINST PROPOSAL 3.
PLEASE NOTE THAT INTERNET AND TELEPHONE VOTING ARE NO LONGER
AVAILABLE.
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE, PLEASE
CONTACT OUR PROXY SOLICITOR:
INNISFREE M&A INCORPORATED
TOLL FREE -- 1-888-750-5834
501 MADISON AVENUE
20TH FLOOR
NEW YORK, NY 10022