SCHEDULE 14-A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.__)

Filed by the Registrant /X/
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Check the appropriate box:
/_/ Preliminary Proxy Statement
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/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

PROVIDENT BANKSHARES CORPORATION
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paid previously. Identify the previous filing by registration statement
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PROVIDENT BANKSHARES CORPORATION
114 EAST LEXINGTON STREET
BALTIMORE, MARYLAND 21202
----------------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 16, 2003

----------------------------------

The annual meeting of shareholders of Provident Bankshares Corporation
("Provident"), the holding company for Provident Bank, will be held on April 16,
2003 at 10:00 a.m., local time, at the offices of Provident, 114 East Lexington
Street, Baltimore, Maryland 21202.

The purpose of the annual meeting is to consider and vote upon the
following matters:

1. The election of six directors to a three-year term of office;
2. The approval of an amendment to the Provident Bankshares
Corporation Amended and Restated Stock Option Plan to increase the
aggregate number of shares of common stock authorized for issuance
under the plan by 1,000,000;
3. The ratification of the appointment of KPMG LLP as independent
auditors of Provident for the fiscal year ending December 31,
2003; and
4. Such other matters as may properly come before the annual
meeting and at any adjournments thereof, including whether or not
to adjourn the meeting.

NOTE: The Board of Directors is not aware of any other business to come
before the meeting.

Only shareholders of record at the close of business on February 24,
2003 are entitled to receive notice of the meeting and to vote at the meeting
and any adjournment or postponement of the meeting.

Please complete and sign the enclosed form of proxy, which is solicited
by the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Peter M. Martin

Peter M. Martin
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

Baltimore, Maryland
March 10, 2003

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE PROVIDENT THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.

PROVIDENT BANKSHARES CORPORATION

-----------------------

PROXY STATEMENT

-----------------------

This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Provident Bankshares
Corporation ("Provident" or the "Company") to be used at the annual meeting of
shareholders of the Company. Provident is the holding company for Provident Bank
("Provident Bank" or the "Bank"). The annual meeting will be held on April 16,
2003 at 10:00 a.m., local time, at Provident's offices at 114 East Lexington
Street, Baltimore, Maryland 21202. The 2002 Annual Report to Shareholders,
including the consolidated financial statements of the Company for the fiscal
year ended December 31, 2002, accompanies this proxy statement, which is first
being mailed to shareholders on or about March 10, 2003.

VOTING AND PROXY PROCEDURE

WHO CAN VOTE AT THE MEETING

You are entitled to vote your Provident common stock if the records of
the Company show that you held your shares as of the close of business on
February 24, 2003. As of the close of business on that date, a total of
24,387,808 shares of Provident common stock were outstanding and entitled to
vote. Each share of common stock has one vote.

ATTENDING AND VOTING AT THE MEETING

If you are a beneficial owner of Provident common stock held by a
broker, bank or other nominee (I.E., in "street name"), you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of Provident common stock held in street name in person at the
meeting, you will have to get a written proxy in your name from the broker, bank
or other nominee who holds your shares.

VOTE REQUIRED

The annual meeting will be held only if there is a quorum. A quorum
exists if a majority of the outstanding shares of common stock entitled to vote
is represented at the meeting. If you return valid proxy instructions or attend
the meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received voting instructions from the beneficial owner. Under Maryland corporate
law and Provident's Articles of Incorporation and Bylaws, proxies specifying an
abstention as to a proposal will cause the shares to be counted toward a quorum,
but not counted as voting for or against the proposal.

In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election. In voting on the approval of the amendment to the Provident
Bankshares Corporation Amended and Restated Stock Option Plan and/or the
ratification of the appointment of KPMG LLP as independent auditors, you may
vote in favor of the proposal, vote against the proposal or abstain from voting.
These matters will be decided by the affirmative vote of a majority of the votes
cast at the annual meeting. On these matters, abstentions and broker non-votes
will have no effect on the voting.

VOTING BY PROXY

The Board of Directors of Provident is sending you this proxy statement
for the purpose of requesting that you allow your shares of Provident common
stock to be represented at the annual meeting by the persons named in the
enclosed proxy card. All shares of Provident common stock represented at the
meeting by properly executed proxies will be voted in accordance with the
instructions indicated on the proxy card. If you sign, date and return a proxy
card without giving voting instructions, your shares will be voted as
recommended by the Company's Board of Directors. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR, FOR APPROVAL OF THE
AMENDMENT TO THE PROVIDENT BANKSHARES CORPORATION AMENDED AND RESTATED STOCK
OPTION PLAN AND FOR RATIFICATION OF KPMG LLP AS INDEPENDENT AUDITORS.

If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their own judgment to determine how to vote your shares. This includes a motion
to adjourn or postpone the meeting in order to solicit additional proxies. If
the annual meeting is adjourned or postponed, your Provident common stock may be
voted by the persons named in the proxy card on the new meeting date as well,
unless you have revoked your proxy. The Company does not know of any other
matters to be presented at the meeting.

You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Secretary of the
Company in writing before your common stock has been voted at the annual
meeting, deliver a later dated proxy, or attend the meeting and vote your shares
in person. Attendance at the annual meeting will not in itself revoke your
proxy.

If your Provident common stock is held in "street name," you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker or bank may allow you to
deliver your voting instructions via the telephone or the Internet. Please see
the instruction form provided by your broker, bank or other nominee that
accompanies this proxy statement.

Provident will pay the cost of solicitation of proxies on behalf of its
management. In addition to the solicitation of proxies by mail, Innisfree M&A
Incorporated, a proxy solicitation firm, will assist Provident in soliciting
proxies for the annual meeting for a fee of $15,000, plus out-of-pocket
expenses. Proxies may also be solicited personally or by telephone by directors,
officers and other employees of Provident and Provident Bank, without additional
compensation. Provident will also request persons, firms and corporations
holding shares in their names, or in the names of their nominees, which are
beneficially owned by others, to send proxy materials to, and obtain proxies
from, such beneficial owners, and will reimburse such persons for their
reasonable expenses in doing so.

STOCK OWNERSHIP

The following table provides information as of February 24, 2003, with
respect to persons known by the Company to be the beneficial owners of more than
5% of the Company's outstanding common stock. A person may be considered to own
any shares of common stock over which he or she has, directly or indirectly,
sole or shared voting or investing power.

NUMBER OF SHARES PERCENT OF COMMON
NAME AND ADDRESS OWNED STOCK OUTSTANDING
- ---------------- --------------------- ----------------------

T. Rowe Price Associates, Inc. 1,510,667(1) 6.2%
100 E. Pratt Street
Baltimore, Maryland 21202

Barclays Global Investors, NA. 1,263,962(2) 5.2%
Barclays Global Fund Advisors
Barclays Capital Investments
45 Fremont St., 17th Floor
San Francisco, California 94105

Putnam, LLC. d/b/a Putnam Investments 1,230,002(3) 5.0%
Putnam Investment Management, LLC.
The Putnam Advisory Company, LLC.
One Post Office Square
Boston, Massachusetts 02109

and

Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036

- -------------------------

(1) Based on information filed in a Schedule 13G with the U.S. Securities
and Exchange Commission on February 11, 2003. These securities are owned by
various individual and institutional investors for which T. Rowe Price
Associates, Inc. ("Price Associates") serves as investment adviser with
power to direct investments and/or sole power to vote the securities. For
purposes of the reporting requirements of the Securities Exchange Act of
1934, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities.
(2) Based on information filed in Schedule 13G with the U.S. Securities and
Exchange Commission on February 13, 2003, and includes shares held by each
of Barclays Global Investors, N.A., Barclays Global Fund Advisors and
Barclays Capital Investments. The shares reported are reported to be held
by the company in trust accounts for the economic benefit of the
beneficiaries of those accounts. Barclays Global Investors, NA., Barclays
Global Fund Advisors and Barclays Capital Investments filed a joint
Schedule 13G to report such beneficial holdings together with the following
entities, each of which reported that it did not individually beneficially
own any shares of Provident common stock: Barclays Global Investors, Ltd,
Barclays Life Assurance Company Limited, Barclays Bank PLC, Barclays
Capital Securities Limited, Barclays Private Bank & Trust (Isle of Man)
Limited, Barclays Private Bank and Trust (Jersey) Limited, Barclays Bank
Trust Company Limited, Barclays Private Bank and Trust Limited (Sussie) and
Barclays Trust and Banking Company (Japan) Limited.
(3) Based on information filed in a Schedule 13G with the U.S. Securities
and Exchange Commission on February 14, 2003, and includes shares held by
each of Putnam Investment Management, LLC and Putnam Investments. Putnam
Investments, which is a wholly owned subsidiary of Marsh & McLennan
Companies, Inc., wholly owns two registered investment advisers: Putnam
Investment Management, LLC., which is the investment adviser to the Putnam
family of mutual funds and The Putnam Advisory Companies, LLC., which is
the investment advisor to Putnam's institutional clients. Both subsidiaries
have dispository power over the shares as investment managers, but each of
the mutual fund's trustees have voting power over the shares held by each
fund, and The Putnam Advisory Company, LLC. has shared voting power over
the shares held by the institutional clients. Pursuant to Rule 13d-4, Marsh
& McLennan and Putnam Investment Management, LLC declared that the filing
of the Schedule 13G is not to be deemed an admission by either or both of
them that they are, for the purposes of Section 13(d) or 13(g) the
beneficial owner of any securities covered by the Schedule 13G, and further
stated that neither of them have any power to vote or dispose of, or direct
the voting or disposition of, any of the securities covered by the Schedule
13G.

The following table provides information about the shares of Provident
common stock that may be considered to be owned by each director, nominee or
named executive officer of Provident and by all its directors and executive
officers as a group as of February 24, 2003. Unless otherwise indicated, each of
the named individuals has sole voting power and sole investment power with
respect to the shares shown.

NUMBER NUMBER OF
OF SHARES SHARES THAT MAY BE
OWNED ACQUIRED WITHIN 60 PERCENT OF
(EXCLUDING DAYS BY EXERCISING COMMON STOCK
NAME OPTIONS) OPTIONS OUTSTANDING(10)(11)
---- ---------- ----------------------- -------------------
DIRECTORS

Melvin A. Bilal........................................... 731 17,575 *
Thomas S. Bozzuto......................................... 5,392 14,297 *
Kevin G. Byrnes........................................... 2,000 0 *
Ward B. Coe, III, Esquire................................. 764(1) 19,873 *
Charles W. Cole, Jr....................................... 4,498 18,981 *
Pierce B. Dunn............................................ 43,551(2) 20,389 *
Enos K. Fry............................................... 8,528(3) 42,523 *
Gary N. Geisel............................................ 12,204(4) 110,198 *
Mark K. Joseph............................................ 12,426 20,389 *
Barbara B. Lucas.......................................... 2,915 19,873 *
Peter M. Martin........................................... 138,128(5) 87,000 *
Frederick W. Meier, Jr.................................... 4,220 12,213 *
Sister Rosemarie Nassif................................... 1,401 19,112 *
Francis G. Riggs.......................................... 85,457(6) 17,575 *
Sheila K. Riggs........................................... 47,234(7) 17,575 *
Carl W. Stearn............................................ 42,181 59,893 *
Donald E. Wilson.......................................... 100 2,500 *
NAMED EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
Richard J. Oppitz......................................... 10,260(8) 32,495 *
Dennis A. Starliper....................................... 25,709(9) 35,829 *
All directors and executive officers as a group
(19 persons)..................................... 445,911 568,290 4.2%

- ----------------------------
(1) Includes 700 shares held as trustee for mother's trust.
(2) Includes 135 shares held by spouse; 1,903 shares held as custodian; and
29,302 shares held as trustee.
(3) Includes 6,977 shares held in 401(k) plan and 911 shares held by spouse.
(4) Includes 4,471 shares held in 401(k) plan.
(5) Includes 9,738 shares held in 401(k) plan.
(6) Includes 13,269 shares held as custodian.
(7) Includes 2,424 shares held as custodian.
(8) Includes 8,959 shares held in 401(k) plan.
(9) Includes 23,289 shares held in 401(k) plan.
(10) Less than 1%, unless otherwise indicated.
(11) Percentages with respect to each person or group of persons have been
calculated on the basis of 24,387,808 shares of Provident's common stock,
the number of shares of the Company's common stock outstanding and
entitled to vote as of February 24, 2003, plus the number of shares of
the Company's common stock which such person or group of persons has the
right to acquire within 60 days after February 24, 2003 by the exercise
of stock options.

4
7

PROPOSAL 1. ELECTION OF DIRECTORS

Provident's Board of Directors consists of 17 directors, of which 13 are
independent directors and four are members of management. The Board is divided
into three classes with three-year staggered terms, with approximately one-third
of the directors elected each year. The Board of Directors' nominees for
election this year, to serve for a three-year term, or until their respective
successors have been elected and qualified, are Pierce B. Dunn, Mark K. Joseph,
Peter M. Martin, Sheila K. Riggs, Kevin G. Byrnes and Donald E. Wilson.

If any nominee is unable to serve or declines to serve for any reason, it
is intended that proxies will be voted for the election of the balance of those
nominees named and for such other persons as may be designated by the present
Board of Directors. The Board has no reason to believe that any of the persons
named will be unable or unwilling to serve. No person being nominated as a
director is being proposed for election pursuant to any agreement or
understanding between any such person and the Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES NAMED IN THIS PROXY STATEMENT.

INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND CERTAIN
EXECUTIVE OFFICERS

Information regarding the nominees for election at the annual meeting, as
well as information regarding the continuing directors whose terms expire in
2004 and 2005, is provided below. Unless otherwise stated, each nominee has held
his or her current occupation for the last five years. The age indicated in each
nominee's biography is as of December 31, 2002. The indicated period for service
as a director includes service as a director of Provident Bank.

NOMINEES FOR ELECTION OF DIRECTORS

PIERCE B. DUNN is Chairman of the Board of MIRCON, Inc., an environmental
and engineering company. Mr. Dunn serves as Chairperson of Provident's Audit
Committee. Age 52. Director since 1987.

MARK K. JOSEPH is Chairman and Chief Executive Officer of Municipal
Mortgage and Equity, LLC (Muni Mae), a real estate finance company. Mr. Joseph
is also the founding Chairman of the Board of The Shelter Group, a real estate
development, property and asset management company. Age 64. Director since 1993.

PETER M. MARTIN has been Chairman of the Board and Chief Executive
Officer of Provident and Provident Bank since 1998. Mr. Martin also served as
President of Provident and Provident Bank from 1990 until January 2001 and has
been employed by Provident and Provident Bank since 1990. Age 65. Director since
1990.

SHEILA K. RIGGS is the Chairman of the Maryland Health and Higher
Educational Facilities Authority, which issues bonds to finance health care and
higher education facilities. Mrs. Riggs serves as Chairperson of Provident's
Compensation Committee. Age 59. Director since 1982.

KEVIN G. BYRNES joined Provident in 2002 as Senior Executive Vice
President. Previously, he was Regional Executive in charge of the upstate
operations of Chase Manhattan Bank in Rochester, New York. Age 55. Director
since 2002.

DONALD E. WILSON is Vice President for Medical Affairs of the University
of Maryland and Dean of the School of Medicine. Age 67. Director since 2002.

DIRECTORS CONTINUING IN OFFICE

The following directors have terms ending in 2004:

MELVIN A. BILAL is an attorney engaged in the private practice of law.
Formerly, he served as President of Bilal Consulting. Previously, Mr. Bilal was
the owner and Managing Executive of the Bilal Group, Inc., a provider of long
and short term staffing needs. Prior to holding this position, he was President
and founder of Security America Services, Inc., a security consulting firm. Age
60. Director since 1992.

WARD B. COE, III is a partner in the law firm of Whiteford, Taylor &
Preston, LLP. Age 57. Director since 1997.

FREDERICK W. MEIER, JR. is President of Lord Baltimore Capital Corp.,
formerly ATAPCO Capital Management Group. Prior to being elected to this
position in 1996, Mr. Meier was an Executive Vice President of First Maryland
Bancorp and First National Bank of Maryland. Age 59. Director since 1997.

SISTER ROSEMARIE NASSIF is President of Holy Names College, Oakland,
California. Previously, Sister Nassif was Executive Director of the Fund for
Educational Excellence. Prior to this position, she was President of the College
of Notre Dame of Maryland. Age 61. Director since 1992. Sister Nassif has
advised the Board of Directors of her intention to retire from the Board
following the annual meeting of shareholders.

GARY N. GEISEL has been President and Chief Operating Officer (COO) of
Provident and Provident Bank since January 2001. Before becoming President and
COO, Mr. Geisel had been a member of Provident Bank's Office of the Chairman
since its creation in 1999 and Group Manager, Community Banking, of Provident
Bank since 1997. Prior to joining Provident Bank, Mr. Geisel was an executive
officer with Citizens Bank of Maryland. Age 54. Director since 2001.

The following directors have terms ending in 2005:

THOMAS S. BOZZUTO is Chief Executive Officer of The Bozzuto Group, a
full-service residential development company located in Greenbelt, Maryland. Mr.
Bozzuto serves as Chairperson of Provident's Nominating Committee. Age 56.
Director since 1998.

CHARLES W. COLE, JR. is Chairman of the Board of Legg Mason Trust F.S.B.
and was previously Vice Chairman of the Board and Managing Director of Brown
Investment Advisory and Trust Co. Prior to that position, Mr. Cole was the
President and Chief Executive Officer of First Maryland Bancorp and the First
National Bank of Maryland. Age 67. Director since 1995.

BARBARA B. LUCAS is Senior Vice President and Corporate Secretary of The
Black & Decker Corporation. Age 57. Director since 1996.

FRANCIS G. RIGGS is Executive Vice President and a director of Riggs,
Counselman, Michaels & Downes, Inc., an insurance brokerage company. Age 65.
Director since 1972.

CARL W. STEARN served as Chairman of the Board and Chief Executive
Officer of Provident and Provident Bank prior to his retirement in 1998. He
serves as Chairperson of Provident's Executive Committee. Age 70. Director since
1990. Mr. Stearn will reach his seventieth birthday before the upcoming annual
meeting of stockholders. Therefore, consistent with Provident's Bylaws, Mr.
Stearn has advised the Board of Directors of his intention to retire from the
Board following the annual meeting of shareholders.

ENOS K. FRY has been Group Manager, Washington Metro Area, of Provident
Bank since 1997. Prior to joining Provident Bank, he served in various executive
capacities with Citizens Savings Bank, F.S.B., including President, director and
Vice Chairman of the Board, until Citizens Savings was acquired by Provident
Bank in 1997. Age 59. Director since 1997.

NAMED EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS

RICHARD J. OPPITZ is an Executive Vice President of Provident Bank.
Previously, Mr. Oppitz served as a member of Provident Bank's Office of the
Chairman, Group Manager, Commercial Banking and Managing Director, Credit
Administration Division. Age 56.

DENNIS A. STARLIPER is Executive Vice President and Chief Financial
Officer of Provident and Provident Bank. Previously, Mr. Starliper served as a
Group Manager, Treasurer and Managing Director, Treasury Division, of Provident
Bank. Age 56.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
OF THE BOARD OF DIRECTORS

The Board of Directors of Provident conducts business through meetings
and the activities of the Board and its committees. The Board of Directors
generally meets on a monthly basis and may have additional meetings as needed.
During the fiscal year ended December 31, 2002, the Board of Directors held 12
meetings. The Company has been reviewing its corporate governance policies and
practices. This includes comparing its current policies and practices to
policies and practices suggested by various groups or authorities active in
corporate governance and practices of other public companies. Based upon this
review, the Company expects to adopt any changes that the Board of Directors
believes are the best corporate governance policies and practices for the
Company. The Company will adopt changes, as appropriate, to comply with the
Sarbanes-Oxley Act of 2002 and any rule changes made by the Securities and
Exchange Commission and the Nasdaq National Market.

All of the directors of the Company attended at least 75% of the total
number of Board meetings held and committee meetings on which such directors
served during the fiscal year ended December 31, 2002. The Board of Directors of
the Company and Bank maintain committees, the nature and composition of which
are described below.

AUDIT COMMITTEE. The Audit Committee consists of Messrs. Dunn, Coe, Cole,
Joseph and Meier. The committee reviews and reports to the Board of Directors on
examinations of Provident Bank and its subsidiaries by regulatory authorities,
recommends the independent auditor for appointment by the Boards of Provident
and Provident Bank, reviews the scope of the work of the independent auditor and
their reports, and reviews the activities and actions of the Bank's internal
auditors. The Audit Committee met eight times during 2002.

COMPENSATION COMMITTEE. The Compensation Committee consists of Mrs.
Riggs, Mrs. Lucas, Sister Nassif and Messrs. Bozzuto, Cole, Dunn and Riggs. The
committee reviews and determines salaries and other benefits for executive and
senior management of Provident and its subsidiaries, reviews and determines
employees to whom stock options are to be granted and the terms of such grants,
and reviews the selection of officers who participate in incentive and other
compensatory plans and arrangements. The Compensation Committee met five times
during 2002.

NOMINATING COMMITTEE. The Nominating Committee consists of Mr. Bozzuto,
Mrs. Lucas and Messrs. Bilal, Coe and Fry. The committee nominates persons for
election to the Board of Directors of Provident and Provident Bank. The
Nominating Committee will consider shareholder recommendations submitted to it
in writing in care of Provident in accordance with the Company's Bylaws. The
Nominating Committee met three times during 2002.

DIRECTORS' COMPENSATION

Each outside director of Provident and Provident Bank receives an annual
retainer of $14,000 for service as director. Each outside director also receives
a fee of $1,000 for attendance at regular or special Board meetings, except that
a single fee is paid if the Provident and Provident Bank Board meetings are held
on the same day. Finally, outside directors who are members of Board committees
receive a fee of $1,000 for attendance at committee meetings, while the
chairpersons of such committees receive a fee of $1,150 for attendance at
committee meetings.

Provident and Provident Bank have a deferred compensation plan for
non-employee directors. Each year, a director may elect to defer payment of all
or part of the director's fees for that year until the individual ceases to be a
director. Interest is accrued on the deferred amount at the prime rate. Payment
of the deferred amount may be made to the director or to his or her beneficiary.
In addition, non-employee directors are eligible to receive options under the
Provident Bankshares Corporation Amended and Restated Stock Option Plan (the
"Stock Option Plan"). The Non-Employee Directors' Severance Plan provides that
if a director's service is terminated following a "change in control" (as
defined in the Plan) of Provident or the Bank, the director will be entitled to
receive a payment equal to five times the director's annual retainer.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following information is furnished for the Chief Executive Officer
and all other executive officers of Provident and Provident Bank employed during
the fiscal year by the Company and the Bank who received salary and bonus in
excess of $100,000 during fiscal 2002. These persons are sometimes referred to
in this proxy statement as the "named executive officers."

ANNUAL COMPENSATION
----------------------------------------

OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITIONS YEAR ($) ($) ($) (#) ($)(2)
- ------------------------------------------ ------- ----------- ----------- --------------- ------------- --------------

Peter M. Martin 2002 $530,000 $265,000 $2,950 20,000 $59,448
Chairman of the Board and 2001 500,000 0 2,641(1) -- 94,739
Chief Executive Officer of Provident 2000 465,000 146,000 2,336(1) 42,000 82,552
and Provident Bank

Gary N. Geisel 2002 $328,600 $164,300 $ -- 15,000 $8,250
President and Chief Operating Officer 2001 310,000 0 -- 52,500 7,650
of Provident and Provident Bank 2000 248,600 53,000 -- 21,000 7,650
--

Richard J. Oppitz 2002 $256,732 $77,020 $ -- 15,000 $8,250
Executive Vice President, 2001 248,050 0 -- -- 7,650
Consumer Banking 2000 225,500 44,000 -- 21,000 6,119
Provident Bank

Dennis A. Starliper 2002 $238,695 $95,475 $ -- 20,000 $7,071
Chief Financial Officer of Provident 2001 229,515 0 -- -- 7,148
and Executive Vice President and Chief 2000 208,650 41,000 -- 12,600 6,831
Financial Officer of Provident Bank

- ----------------------------
(1) Represents grossed-up reimbursement for the tax effect of reportable
incremental imputed income for the split dollar insurance agreements.
(2) The amounts shown in this column for the last fiscal year are derived from
the following figures for Mr. Martin: $8,250 of employer-provided
contributions under the Bank's 401(k) plan, and $51,198 in economic value
of Bank-paid split-dollar life insurance premiums. The amounts shown for
Messrs. Geisel, Oppitz and Starliper were employer-provided contributions
under the Bank's 401(k) plan.

CHANGE IN CONTROL AGREEMENTS

Provident and Provident Bank have entered into change in control
agreements with Messrs. Martin, Geisel, Oppitz and Starliper. Each agreement is
extended on a daily basis unless written notice of non-renewal is given by the
Board of Directors. The agreements provide that if involuntary termination or,
under certain circumstances, voluntary termination follows a change in control
of the Company or the Bank, the executive officer is entitled to receive a
severance payment equal to three times his average annual compensation for the
five most recent taxable years preceding termination. The Company or the Bank
would also continue and pay for life, health and disability coverage for 36
months following termination. Payments to the executive officer under the
agreements are paid by the Company to the extent that payments (or other
benefits) are not paid by the Bank. Notwithstanding that both the Company and
the Bank change in control agreements provide for a severance payment in the
event of a change in control, no duplicate payments would be made under the
agreements.

STOCK OPTION GRANTS

The following table lists all grants of options under the Stock Option
Plan to the named executive officers for fiscal year 2002 and contains certain
information about potential value of those options based upon certain
assumptions as to the appreciation of the Company's stock over the life of the
option.

OPTIONS GRANTS IN LAST FISCAL YEAR

% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS EXERCISE ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO OR STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES BASE FOR OPTIONS(1)
OPTIONS IN PRICE EXPIRATION ----------------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
- -------------------- ------------- ------------ ----------- ------------ ----------------------------

Peter M. Martin 20,000 4.9% $24.68 01/16/12 $310,400 $786,800

Gary N. Geisel 15,000 3.7% $24.68 01/16/12 $232,800 $590,100

Richard J. Oppitz 15,000 3.7% $24.68 01/16/12 $232,800 $590,100

Dennis A. Starliper 20,000 4.9% $24.68 01/16/12 $310,400 $786,800

- -----------------------------
(1) One half of Mr. Martin's options were fully vested and exercisable as of
January 16, 2002. The remaining half became fully vested and exercisable
as of January 16, 2003. The options granted to Messrs Geisel, Oppitz and
Starliper became exercisable in three equal installments commencing on
January 16, 2003. Under the Stock Option Plan, all options become
immediately exercisable upon optionee's termination of employment due to
death or disability or upon a change in control.

(2) The dollar gains under these columns result from calculations required by
the Securities and Exchange Commission's ("SEC") rules and are not
intended to forecast future price appreciation of the common stock. It is
important to note that options have value only if the stock price
increases above the exercise price shown in the table during the effective
option period. In order for the executive to realize the potential values
set forth in the 5% and 10% columns in the table, the price per share of
Provident's common stock would be approximately $40.20 and $64.02,
respectively, as of the expiration date of the options.

STOCK OPTION EXERCISES AND HOLDINGS

The following table reflects all stock option exercises by the named
executive officers during fiscal year 2002 and includes the number of shares
covered by all remaining unexercised stock options as of December 31, 2002. Also
reported are the values for "in-the-money" options which represent the
difference between the exercise price of any such remaining unexercised options
and the year-end market price of the common stock.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUE

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS
END (#) AT FISCAL YEAR END ($)(1)
------------------------- -----------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------ ------------ ----------- ------------- ----------- --------------

Peter M. Martin 27,543 $393,589 77,000 65,125 $458,700 $271,215

Gary N. Geisel 16,000 161,680 76,517 78,244 328,643 226,610

Richard J. Oppitz 25,527 266,247 25,064 51,994 85,451 167,810

Dennis A. Starliper 6,000 93,162 27,947 25,416 197,950 19,320

- --------------------------------
(1) The closing price of the common stock on December 31, 2002 (the last
trading day of 2002) was $23.11.

PENSION PLANS

The following table sets forth the estimated annual pension benefits
payable to a participant at normal retirement age (age 65) under Provident
Bank's Pension Plan, based on both the remuneration that is covered under this
plan and years of service with Provident and its subsidiaries.

YEARS OF SERVICE
-----------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------- -------------- --------------- --------------- ----------------- ----------------

$125,000 $26,250 $35,000 $43,750 $43,750 $43,750
150,000 31,500 42,000 52,500 52,500 52,500
175,000 36,750 49,000 61,250 61,250 61,250
200,000 42,000 56,000 70,000 70,000 70,000
225,000 47,250 63,000 78,750 78,750 78,750
250,000 52,500 70,000 87,500 87,500 87,500
275,000 57,750 77,000 96,250 96,250 96,250
300,000 63,000 84,000 105,000 105,000 105,000
325,000 68,250 91,000 113,750 113,750 113,750
350,000 73,500 98,000 122,500 122,500 122,500
375,000 78,750 105,000 131,250 131,250 131,250
400,000 84,000 112,000 140,000 140,000 140,000
425,000 89,250 119,000 148,750 148,750 148,750
450,000 94,500 126,000 157,500 157,500 157,500

This table reflects the annual benefits payable at the executive
officer's 65th birthday in the form of an annuity for the executive officer's
life with a 15-year guarantee in favor of the executive officer's spouse. Under
this form, should the executive officer die within 15 years after the benefits
start, the executive's surviving spouse, if any, will continue to receive the
same pension benefits until the end of that 15-year period. The table also
reflects the maximum benefits payable under the Provident Bank of Maryland
Pension Plan, a tax-qualified, funded plan and certain supplemental retirement
income agreements providing 50% of the excess (unfunded benefits). The benefits
reflected in the table are offset or reduced by 100% of the executive officer's
estimated primary Social Security benefit.

The following table sets forth the respective years of service credited
for Pension Plan purposes as of December 31, 2002, and the estimated years of
service at the respective normal retirement dates for the named executive
officers.

YEARS OF
SERVICE YEARS OF SERVICE
NAME AT 12/31/02 AT NORMAL RETIREMENT
- -------- ---------------- ----------------------

Peter M. Martin 12.8 13.4

Gary N. Geisel 5.2 16.6

Richard J. Oppitz 9.8 18.8

Dennis A. Starliper 17.5 26.5

Provident also has supplemental retirement income agreements with
Messrs. Martin and Geisel. Mr. Martin's agreement will pay Mr. Martin 72.3% of
70% of his final pay, reduced by Social Security and the age-65 benefit accrued
under the Bank's Pension Plan, and then proportionately reduced for years of
service less than 25. Mr. Geisel's agreement will pay 70% of his final pay,
reduced by Social Security, the age-65 benefit accrued under the Bank's Pension
Plan, and then proportionately reduced for each year Mr. Geisel's retirement
precedes age 65.

THE FOLLOWING REPORTS OF THE COMPENSATION COMMITTEE AND AUDIT COMMITTEE
AND THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY
ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), EXCEPT TO THE EXTENT
THAT PROVIDENT SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND
SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.

REPORT OF THE COMPENSATION COMMITTEE

COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Recommendations regarding
all of the components of the compensation of Provident's Chairman and Chief
Executive Officer are made by the Board's seven member Compensation Committee
to, and are approved by, the Board of Directors. The Board of Directors did not
reject or modify in any material way any of the recommendations of the
Compensation Committee during fiscal year 2002. Each member of the Compensation
Committee is a non-employee director. The following report has been prepared by
the Compensation Committee and addresses the compensation policies of Provident
for 2002 as they affected Mr. Martin, the Chairman and Chief Executive Officer,
and other named executive officers.

EXECUTIVE OFFICER COMPENSATION POLICIES AND OBJECTIVES. The policies
and objectives of the Compensation Committee are designed to assist Provident
and its subsidiaries in attracting and retaining qualified executives, to
recognize individual contributions toward the achievement of short and long-term
performance goals and to align closely the financial interests of the senior
managers of Provident and its subsidiaries with those of its shareholders. In
furtherance of these objectives, Provident maintains a compensation program for
executive officers that consists of both cash and equity-based compensation.
From time to time the Compensation Committee retains independent compensation
consultants to work with it on executive compensation matters. The Compensation
Committee also has access to competitive data regarding executive compensation
levels and practices.

Salary levels for all employees, including executive officers, are set
so as to reflect the duties and levels of responsibilities inherent in the
position and to reflect competitive conditions in the banking business in the
Company's market area. Comparative salaries paid by other financial institutions
are considered in establishing the salary for a given position. The Compensation
Committee also utilizes surveys prepared by trade groups and independent
benefits consultants. Base salaries for all employees, including the executive
officers, are reviewed annually by the Compensation Committee, taking into
account the competitive level of pay as reflected in the surveys consulted. In
setting base salaries, the Compensation Committee also considers a number of
factors relating to the particular executive, including individual performance,
job responsibilities, level of experience, ability and knowledge of the job.
These factors are considered subjectively in the aggregate and none of the
factors is accorded a specific weight.

EXECUTIVE COMPENSATION PROGRAMS AND RELATIONSHIP TO PERFORMANCE. The
annual compensation of Provident's named executive officers consists of a base
salary and an annual bonus. In the case of Messrs. Martin and Geisel, this
annual bonus is determined under the terms of the Provident Bankshares
Corporation Executive Incentive Plan ("EIP") and, in the case of Messrs.
Starliper and Oppitz, the Executive Vice Presidents Incentive Plan ("EVIP"). The
Compensation Committee

establishes, on an annual basis, the base salary of the Chief Executive Officer,
generally based upon a review of the performance of the Chief Executive Officer
during the prior year and competitive data for that position. The Chief
Executive Officer recommends to the Compensation Committee a salary level for
the other named executive officers based upon a performance review of each
executive officer. The Compensation Committee also approves the eligibility of
key executives to receive bonus awards under the EIP, the EVIP and other Company
sponsored incentive plans and is responsible for the granting of options under
the Stock Option Plan.

EXECUTIVE INCENTIVE PLAN AND EXECUTIVE VICE PRESIDENTS INCENTIVE PLAN.
Under the EIP and the EVIP an incentive bonus may be paid to executives in part
based upon the financial performance of the Company and in part based upon the
performance of the individual eligible to be awarded bonuses under the Plan. For
purposes of establishing the criteria for the corporate performance-based
portion of an incentive bonus award, three after-tax net income targets for the
upcoming year are established: threshold, budget and maximum. Additionally, the
Compensation Committee sets a percentage of base salary to be eligible to be
received as incentive compensation at each of the threshold, budget and maximum
targets. If after-tax net income reaches the threshold, budget or maximum
targets, participants will automatically receive 75% of the designated
percentage of base salary as corporate performance-based incentive compensation.
In the event that after-tax net income is less than the threshold after-tax net
income target, no corporate performance-based incentive compensation is payable.
The remaining 25% of the incentive bonus award is discretionary based on
individual performance as compared to goals outlined in the EIP and the EVIP;
namely: management of the Company with emphasis on development and retention of
key personnel; implementation of new initiatives; financial progress in addition
to net earnings; and risk management. The Compensation Committee reviews the
terms of the EIP and EVIP each year to assure that, in operation, they are
furthering the Committee's compensation policy objectives. Incentive
compensation earned under the EIP and the EVIP is paid within one month of the
end of the fiscal year. Payment of all or any part of the incentive compensation
earned under the EIP and the EVIP may be deferred.

STOCK OPTION PLAN. Long-term incentives for the named executive
officers are provided through the Stock Option Plan. The Stock Option Plan
authorizes the issuance of non-qualified stock options to key officers and
certain employees of Provident and its subsidiaries. Subject to the general
limits prescribed by the Stock Option Plan, the Compensation Committee has the
authority to determine the individuals to whom stock options are awarded, the
terms of the options and the number of shares subject to each option. Although
the Compensation Committee's decisions are discretionary and no specific formula
is used in the decision-making, the number of options granted is based generally
upon position level and performance. Through the award of stock options, the
objective of aligning the long-range interests of the executive officers with
those of the shareholders is met by providing the executive officers with the
opportunity to build a meaningful ownership stake in Provident.

OTHER COMPENSATION PLANS. The named executive officers participate in
the Company's health and welfare and qualified retirement plans on the same
terms as non-executive employees who meet the applicable eligibility criteria,
subject to any legal limitations on the amounts that may be contributed or the
benefits that may be payable under these plans.

In addition to the qualified retirement plans, Provident has entered
into supplemental retirement agreements with Messrs. Martin and Geisel which,
for Mr. Martin, will pay 72.3% of 70% of final pay, reduced by Social Security
and the age-65 benefit accrued under the Bank's Pension Plan, and then
proportionately reduced for less than 25 years of service. Mr. Geisel's
agreement will pay 70% of final pay, reduced by Social Security, the age-65
benefit accrued under the Bank's Pension Plan, and then proportionately reduced
for each year Mr. Geisel's retirement precedes age 65. The supplemental
retirement agreements are unfunded, so that amounts payable represent unsecured
liabilities of the Bank, subject to the claims of secured creditors. The Bank
has also purchased four insurance policies on the life

of Mr. Martin. Two policies are split-dollar arrangements, subject to collateral
assignment agreements. The other two are corporate-owned life insurance
policies. The Bank has purchased one corporate-owned life insurance policy on
the life of Mr. Geisel.

CHIEF EXECUTIVE OFFICER COMPENSATION. The Compensation Committee set
Mr. Martin's base compensation for fiscal year 2002 at $530,000, in a manner
consistent with the base salary guidelines applied to executive officers of the
Company as described above. In recognition of Mr. Martin's contribution to the
successful implementation of measures to improve the financial performance of
Provident Bank, the earnings growth and the increase in the return on and amount
of shareholder equity, the Compensation Committee increased Mr. Martin's base
salary for 2002, which represents a 6% increase over his 2001 base salary. For
Mr. Martin's 2002 bonus, the Compensation Committee recognized, among other
accomplishments, the Bank's net income, earnings per share, return on assets,
return on equity, succession planning and management transition in 2002. The
threshold target for 2002 was met, resulting in a formula and performance driven
pay out of $265,000. See "--EXECUTIVE COMPENSATION PROGRAMS AND RELATIONSHIP TO
PERFORMANCE "and "--EXECUTIVE INCENTIVE PLAN AND EXECUTIVE VICE PRESIDENTS
INCENTIVE PLAN."

COMPENSATION OF OTHER NAMED EXECUTIVE OFFICERS. Decisions regarding the
base salaries of the other named executive officers are communicated to the
Compensation Committee by the Chief Executive Officer. The decisions as to the
salaries of the other named executive officers are based upon a review of their
performance during the prior year provided by the Chief Executive Officer. The
Compensation Committee did not reject or modify in any material way any of the
decisions of the Chief Executive Officer concerning the base salaries of the
other named executive officers for 2002.

SUBMITTED BY THE COMPENSATION COMMITTEE OF THE PROVIDENT BANKSHARES
CORPORATION BOARD OF DIRECTORS

SHEILA K. RIGGS (CHAIRPERSON)
THOMAS S. BOZZUTO
CHARLES W. COLE, JR.
PIERCE B. DUNN
BARBARA B. LUCAS
SISTER ROSEMARIE NASSIF
FRANCIS G. RIGGS

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No executive officer of the Company or the Bank serves or has served as
a member of the compensation committee of another entity, one of whose executive
officers serves on the Compensation Committee of the Company or the Bank. No
executive officer of the Company or the Bank serves or has served as a director
of another entity, one of whose executive officers serves on the Compensation
Committee of the Company or the Bank.

PERFORMANCE GRAPH

The SEC requires that Provident include in this proxy statement a
line-graph comparing cumulative shareholder returns as of December 31 for each
of the last five years among the common stock, a broad market index and either a
nationally-recognized industry standard or an index of peer companies selected
by Provident, assuming in each case both an initial $100 investment and
reinvestment of dividends. Consistent with past practice, the Board of Directors
has selected the Nasdaq Market Index as the relevant broad market index because
prices for the common stock are quoted on the Nasdaq National Market.
Additionally, the Board of Directors has selected the Middle Atlantic Banks
Index as the relevant industry standard because such index consists of financial
institutions which are headquartered in the mid-Atlantic region and the Board
believes that such institutions generally possess assets, liabilities and
operations more similar to those of Provident and its subsidiaries than other
publicly-available indices.

COMPARATIVE TOTAL RETURNS
PROVIDENT BANKSHARES CORPORATION, THE NASDAQ MARKET INDEX AND
THE MG INDEX FOR THE MID-ATLANTIC REGION

[STOCK PERFORMANCE GRAPH APPEARS HERE]

- -------------------------------------------------------------------------------------------------------------------
Summary

12/31/97 12/31/98 12/31/99 12/29/00 12/31/01 12/31/02
-------- -------- -------- -------- -------- --------

Provident Bankshares Corporation $100.00 $ 83.29 $ 62.46 $ 82.79 $ 104.77 $ 103.33
Nasdaq Market Index $100.00 $ 141.04 $ 248.76 $ 156.35 $ 124.64 $ 86.94
MG Index For The Mid-Atlantic Region $100.00 $ 110.07 $ 87.10 $ 98.57 $ 101.65 $ 97.21
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indices are reweighted daily, using the market capitalization on
the previous trading day. C. If the monthly interval, based on the fiscal
year-end is not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on December 31, 1997.

- -------------------------------------------------------------------------------------------------------------------

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires
Provident's executive officers and directors, and persons who own more than 10%
of any registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Executive officers, directors
and greater than 10% shareholders are required by regulation to furnish the
Company with copies of all Section 16(a) reports they file.

Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of the Company's
executive officers and directors has complied with applicable reporting
requirements for transactions in Provident's common stock during the fiscal year
ended December 31, 2002.

TRANSACTIONS WITH MANAGEMENT

Periodically, Provident Bank may engage in lending transactions with
its officers and directors, as well as entities associated with such persons.
Such transactions are made in the ordinary course of business and on
substantially the same terms, including interest rate and collateral, as those
prevailing at the time for comparable transactions with other persons. Loans to
such persons do not involve more than the normal risk of collectibility or
present other unfavorable features.

Ward B. Coe, III is a director of Provident and Provident Bank. Mr. Coe
is a partner in the law firm of Whiteford, Taylor & Preston, LLP, which provided
legal services to Provident and Provident Bank during the fiscal year ended
December 31, 2002.

EMPLOYEE CODE OF CONDUCT

Since the Company's inception in 1987, it has had a Code of Conduct.
The Company requires all employees to adhere to the Code of Conduct in
addressing the legal and ethical issues encountered in conducting their work.
The Code of Conduct requires that the Company's employees avoid conflicts of
interest, comply with all laws and other legal requirements, conduct business in
an honest and ethical manner and otherwise act with integrity and in the
Company's best interest. The Company also provides training for its employees on
the Code of Conduct and their legal obligations.

Employees are required to report any conduct that they believe in good
faith to be an actual or apparent violation of the Code of Conduct. The
Sarbanes-Oxley Act of 2002 will require companies to have procedures to receive,
retain and treat complaints received regarding accounting, internal accounting
controls or auditing matters and to allow for the confidential and anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.

PROPOSAL 2. AMENDMENT OF THE PROVIDENT BANKSHARES CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN

Provident's shareholders are being asked to approve an amendment to the
Provident Bankshares Corporation Amended and Restated Stock Option Plan to
increase by 1,000,000 the number of shares of Provident common stock that the
Company may issue under the Plan. The Company's Board of Directors adopted the
amendment on January 15, 2003 subject to shareholder approval. As of the record
date, only 278,875 shares remained available under the Plan for the future grant
of options. The Company believes that an adequate reserve of shares available
for issuance under the Plan is necessary to enable the Company to compete
effectively with other financial institutions to attract and retain key
personnel and to secure the services of experienced and qualified persons as
directors.

The Company anticipates that, following the receipt of shareholder
approval of the amendment to increase the number of shares available under the
Plan, it will, from time to time, grant awards to eligible directors, officers
and other employees as part of the Company's overall compensation strategy.
However, the Company has not made any specific determinations regarding the
persons eligible to receive awards, the size of awards or the terms of awards.

SUMMARY OF THE STOCK OPTION PLAN

The following summary of the Stock Option Plan is qualified in its
entirety by the complete provisions of the Plan.

PARTICIPANTS. All directors, officers and other employees of Provident
and its subsidiaries are eligible to participate in the Stock Option Plan.

TYPES OF AWARDS. The Stock Option Plan authorizes the grant of
non-statutory stock options (each an "NSO") to participants. Non-statutory stock
options are stock options that do not meet the requirement of Section 422 of the
IRC.

ADMINISTRATION. The Compensation Committee administers the Stock Option
Plan. The Compensation Committee also determines the number of shares for which
options shall be granted, the price to be paid upon the exercise of each option
and the termination date of the options. All of the foregoing determinations are
subject to the approval of the Board of Directors.

NUMBER OF SHARES OF COMMON STOCK AVAILABLE. As noted above, only
278,875 shares currently remain available for issuance in connection with the
exercise of options under the Stock Option Plan. Subject to shareholder approval
of Proposal 2, the number of shares of common stock available for issuance under
the Plan will increase by 1,000,000. Any shares subject to an award which
expires or is terminated unexercised will again be available for issuance under
the Plan.

TERMS OF STOCK OPTION GRANTS. The exercise price of each stock option
grant will not be less than the fair market value of Provident's common stock on
the date of the grant. Options may be exercised in whole or in part once they
become exercisable.

If an option holder ceases to be a director, officer or employee of
Provident or its subsidiaries due to death or disability, all of the optionee's
options will immediately become fully exercisable and will remain so for a
period of 60 days from the date of termination of service, but in no event after
their respective expiration dates.

If an option holder ceases to be director, officer or employee of
Provident or its subsidiaries as a result of retirement, all of the optionee's
options that were fully exercisable on the date of termination of service will
remain exercisable until their respective termination dates. All of the
optionee's options that were not exercisable on that date will terminate
immediately.

If an optionee ceases to be a director, officer or employee of
Provident or its subsidiaries for any reason other than death, disability or
retirement, all of the optionee's options that were fully exercisable on the
date of termination of service will remain for a period of 30 days from the date
of termination of service, but in no event later than the termination period of
the option. All of the optionee's options that were not exercisable on the date
of termination will terminate immediately.

EFFECT OF A CHANGE IN CONTROL. In the event of a change in control (as
defined in the Plan) of the Company, each outstanding stock option grant will
become fully vested and immediately exercisable.

AMENDMENT OF THE PLAN. The Board of Directors may generally amend or
terminate the Plan at any time, provided that no amendment may adversely affect
the rights of an optionee.

FEDERAL INCOME TAX CONSEQUENCES. The following brief description of the
tax consequences of stock option grants under the Plan is based on federal
income tax laws currently in effect and does not purport to be a complete
description of such federal income tax consequences.

There are generally no federal income tax consequences either to the
optionee or to the Company upon the grant of an NSO. Upon the exercise of an
NSO, the excess of the date-of-exercise fair market value of the shares acquired
over the option price will generally be taxable to the optionee as ordinary
income and deductible by the Company, provided the Company properly withholds
taxes in respect of the exercise. This disposition of shares acquired upon the
exercise of an NSO will result in a capital gain or loss for the optionee, but
will have no tax consequences for the Company.

PAYOUT ALTERNATIVES. The Compensation Committee has the sole discretion
to determine the form of payment for the exercise of an option. The Committee
may indicate acceptable forms in the award agreement covering such options or
may reserve its decision to the time of exercise. No option is to be considered
exercised until payment in full is accepted by the Committee. The Committee may
permit the following forms of payment for options: (1) in cash or by certified
check; (2) through borrowed funds, to the extent permitted by law; or (3) by
tendering previously acquired shares of common stock. Any shares of common stock
tendered in payment of the exercise price of an option shall be valued at the
fair market value of the common stock on the date prior to the date of exercise.

ADJUSTMENTS. In the event of any change in the outstanding shares of
Provident's common stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off, reorganization, combination
or exchange of shares, or other similar corporate change, or other increase or
decrease in such shares without receipt or payment of consideration by
Provident, the Compensation Committee, in its discretion, may make such
adjustments to previously granted awards, to prevent dilution, diminution or
enlargement of the rights of the participants. All awards under the Stock Option
Plan shall be binding upon any successors or assigns of Provident.

NONTRANSFERABILITY. No awards under the Stock Option Plan are
transferable by the recipient other than by will or the laws of descent and
distribution. With the consent of the Compensation Committee, an optionee may
designate a person or his or her estate as beneficiary of any award to which the
recipient would then be entitled, in the event of the death of the employee.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information about Company common stock
that may be issued upon exercise of options, warrants and rights under the
Company's equity compensation plan as of December 31, 2002, including the
Amended and Restated Stock Option Plan. The Company's stockholders have approved
this plan. PLAN CATEGORY

NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER EQUITY
BE ISSUED UPON EXERCISE EXERCISE PRICE OF COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN THE FIRST COLUMN)
- ---------------------------- ------------------------- --------------------- -------------------------------

Equity compensation plans
approved by security holders 2,401,447 $17.51 633,375

Equity compensation plans
not approved by security
holders N/A N/A N/A

Total 2,401,447 $17.51 633,375

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE PROPOSED AMENDMENT TO THE PROVIDENT BANKSHARES CORPORATION AMENDED AND
RESTATED STOCK OPTION PLAN.

PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Provident's independent auditors for the fiscal year ended December 31,
2002 were KPMG LLP. The Company's Board of Directors reappointed KPMG to
continue as independent auditors for the Company for the fiscal year ending
December 31, 2003, subject to ratification of such appointment by shareholders.
If shareholders do not ratify the appointment of KPMG LLP as independent
auditors, the Board of Directors may consider other independent auditors.

Representatives of KPMG LLP will be present at the annual meeting. They
will be given the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions from shareholders present
at the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS OF PROVIDENT.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Company's Board of Directors is composed of
five non-employee directors and operates under a written charter adopted by the
Board of Directors. The Board of Directors has determined that each Audit
Committee member is independent in accordance with the currently effective
listing standards of the Nasdaq Stock Market.

The Company's management is responsible for the Company's internal
controls and financial reporting process. The independent auditors are
responsible for performing an independent audit of the Company's consolidated
financial statements and issuing an opinion on the conformity of those financial
statements with generally accepted accounting principles. The Audit Committee
oversees the Company's internal controls and financial reporting process on
behalf of the Board of Directors.

In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States of
America, and the Audit Committee has reviewed and discussed the consolidated
financial statements with management and the independent auditors. The Audit
Committee discussed with the independent auditors matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication With Audit
Committees), including the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of the disclosures in the financial statements.

In addition, the Audit Committee has received the written disclosures
and the letter from the independent auditors required by the Independence
Standards Board Standard No. 1 (Independence Discussions With Audit Committees)
and has discussed with the independent auditors the auditors' independence from
the Company and its management. In concluding that the auditors are independent,
the Audit Committee considered, among other factors, whether the non-audit
services provided by the auditors were compatible with its independence.

The Audit Committee discussed with the Company's independent auditors
the overall scope and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting.

In performing all of these functions, the Audit Committee acts only in
an oversight capacity. In its oversight role, the Audit Committee relies on the
work and assurances of the Company's management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors who, in their report, express an opinion on the conformity of the
Company's financial statements to generally accepted accounting principles. The
Audit Committee's oversight does not provide it with an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions with management and the independent auditors do
not assure that the Company's financial statements are presented in accordance
with generally accepted accounting principles, that the audit of the Company's
financial statements has been carried out in accordance with generally accepted
auditing standards or that the Company's independent auditors are in fact
"independent."

In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the board has approved,
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002 for filing with
the Securities and Exchange Commission. The Audit Committee and the Board of
Directors also have approved, subject to stockholder ratification, the selection
of the Company's independent auditors.

PIERCE B. DUNN (CHAIRPERSON)
WARD B. COE, III, ESQUIRE
CHARLES W. COLE, JR.
MARK K. JOSEPH
FREDERICK W. MEIER, JR.

AUDIT FEES

The aggregate fees billed to Provident by KPMG LLP for the annual audit
and for the review of Provident's Forms 10-Q for the fiscal year 2002 totaled
$205,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

The aggregate fees billed to Provident by KPMG LLP for financial
information systems design and implementation during fiscal year 2002 totaled
$0.

ALL OTHER FEES

The aggregate fees billed to Provident by KPMG LLP for all other
non-audit services, including fees for tax-related services, during fiscal year
2002 totaled $106,384.

The Audit Committee believes that the provision of such non-audit
services by KPMG LLP was compatible with maintaining KPMG LLP's independence.

22
25

ADDITIONAL INFORMATION

SHAREHOLDER PROPOSALS

The Company must receive proposals that shareholders seek to include in
the proxy statement for the Company's next annual meeting no later than November
10, 2003. If next year's annual meeting is held on a date more than 30 calendar
days from April 16, 2004, a shareholder proposal must be received by a
reasonable time before the Company begins to print and mail its proxy
solicitation for such annual meeting. Any shareholder proposals will be subject
to the requirements of the proxy rules adopted by the SEC.

The Company's Bylaws provide that in order for a shareholder to make
nominations for the election of directors or proposals for business to be
brought before the annual meeting, a shareholder must deliver notice of such
nominations and/or proposals to the Corporate Secretary not less than 90 days
before the date of the annual meeting; provided that if less than 100 days'
notice or prior public disclosure of the date of the annual meeting is given to
shareholders, such notice must be delivered not later than the close of the
tenth day following the day on which notice of the date of the annual meeting
was mailed to shareholders or prior public disclosure of the meeting date was
made. A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Corporate Secretary at 114 East Lexington Street,
Baltimore, Maryland 21202.

Provident's Annual Report to Shareholders and Annual Report on Form
10-K accompany this proxy statement.

By Order of the Board of Directors

/s/ Peter M. Martin

PETER M. MARTIN
Chairman of the Board and
Chief Executive Officer

Baltimore, Maryland
March 10, 2003

PROVIDENT BANKSHARES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 2003
10:00 A.M. LOCAL TIME

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints the official proxy committee of the Board
of Directors of Provident Bankshares Corporation (the "Company"), each with full
power of substitution, to act as proxy for the undersigned, and to vote all
shares of common stock of the Company which the undersigned is entitled to vote
only at the Annual Meeting of Shareholders, to be held on April 16, 2003, at
10:00 a.m. local time, at the Company's offices at 114 East Lexington Street,
Baltimore, Maryland and at any and all adjournments thereof, with all of the
powers the undersigned would possess if personally present at such meeting as
follows:

1. The election as directors of all nominees listed (except as marked
to the contrary below).

FOR VOTE WITHHELD FOR ALL EXCEPT
|_| |_| |_|

Mark K. Joseph Pierce B. Dunn Kevin G. Byrnes
Peter M. Martin Sheila K. Riggs Donald E. Wilson

INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED
BELOW.

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2. The ratification of the amendment to the Provident Bankshares
Corporation Amended and Restated Stock Option Plan.

FOR AGAINST ABSTAIN
|_| |_| |_|

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3. The ratification of the appointment of KPMG LLP as independent
auditors of Provident Bankshares Corporation for the year ending
December 31, 2003.

FOR AGAINST ABSTAIN
|_| |_| |_|

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.

THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING WHETHER OR
NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT TO THE
ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.

PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.

Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder may sign but only one signature is
required.

Date ______________________ __________________________________________
Signature of Shareholder

The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Shareholders and of a
proxy statement dated March 10, 2003 and of the Annual Report to Shareholders.