1
EXHIBIT 99.1
PRESS RELEASE
PROVIDENT BANKSHARES CORPORATION ANNOUNCES 7% EPS GROWTH FOR FIRST QUARTER 2003
Wednesday April 16, 12:24 pm ET
BOARD ELECTS GARY N. GEISEL CHAIRMAN AND CHIEF EXECUTIVE OFFICER, SUCCEEDING
PETER M. MARTIN UPON HIS RETIREMENT; KEVIN G. BYRNES ELECTED PRESIDENT AND CHIEF
OPERATING OFFICER
BALTIMORE, April 16/PRNewswire-FirstCall/ -- Provident Bankshares Corporation
(Nasdaq: PBKS - News), the parent company of Provident Bank, today reported
---- ----
$11.8 million in net income or $0.47 per diluted share, for the first quarter of
2003. Also today, Provident's Board of Directors elected Gary N. Geisel Chairman
and Chief Executive Officer, succeeding Peter M. Martin who retired effective
today after thirteen years with the Company. Kevin G. Byrnes was elected to
succeed Geisel as President and Chief Operating Officer.
Strong credit quality and growth in non-interest income drove Provident's solid
performance for the first quarter of 2003. Average core consumer and commercial
loan balances, commercial deposit balances, and deposit service fees all showed
double-digit growth over the first quarter of 2002. The Company continued to
focus on its key strategies to grow its regional banking business and continue
expansion into the vibrant Washington metropolitan region, while maintaining
strong asset quality.
FIRST QUARTER FINANCIAL HIGHLIGHTS
-- Diluted earnings per share met analyst consensus expectations at
$0.47, a 7% increase from the $0.44 posted in first quarter 2002
-- Net income was $11.8 million for the quarter, up from $11.5 million
reported in the same quarter last year
-- Return on average common equity was 15.81%, up from 15.76% in the
first quarter 2002
-- Return on average assets was 0.98%, up from 0.96% in first quarter
2002
-- Average core loans increased $169 million, or 11%, from the 2002
quarter
-- Average core deposits increased $146 million, or 6%, from the 2002
first quarter
-- Non-interest income (excluding net gains) grew 8% from the
comparable period in 2002
-- Asset quality remained strong as non-performing loans declined $2.4
million, or 10%, from one year ago
-- Capital ratios remained strong, with the leverage ratio at 7.51%
and total risk-based capital at 13.23%
2
FIRST QUARTER RESULTS
Provident Bankshares reported net income for the quarter ending March 31, 2003
of $11.8 million, or $0.47 per diluted share. This represents an earnings per
share increase of 7% over the first quarter 2002.
Return on average common equity was 15.81% for the first quarter 2003, up from
15.76% in the same quarter a year ago. Return on average assets was 0.98%, up
from 0.96% for the comparable period last year.
The net interest margin on a tax equivalent basis was 3.18%, compared to 3.30%
for the first quarter 2002.
Total average loans and deposits decreased 9% and 5%, respectively, versus the
first quarter 2002, as non-core assets and liabilities continued to decline.
Average non-core loans decreased 35% over the 2002 first quarter, and average
non-core deposits decreased 45% for the same period. In line with Provident's
strategy to focus on core banking operations, core loans and deposits again
increased compared to the first quarter 2002. Average core loans increased $169
million, or 11%, from the same quarter last year. Average core deposits
increased $146 million, up 6% over the first quarter 2002.
Core loans are loans originated by Provident and participations in our defined
market area. Non-core loans are purchased loans, participations outside our
defined market area, and Provident-originated loans from discontinued product
lines. Provident's core deposits include all deposits except brokered deposits
and deposits related to discontinued product lines.
Non-interest income grew to $22.6 million from $20.2 million in the first
quarter 2002. Provident continued to post solid fee income growth. Total deposit
service fees increased $1.6 million, or 10%, over the 2002 first quarter and
were driven by growth in commercial and consumer deposit accounts.
Asset quality remained strong. Total non-performing loans at March 31, 2003 were
$21.6 million, down $2.4 million, or 10%, from the same quarter last year. Net
charge offs declined 23%, from $3.0 million to $2.4 million, and the allowance
for loan losses to loans was 1.32% at the close of the quarter. Substantially
all of the non-performing loans were secured by residential real estate.
The company continued to build on a stronger balance sheet, with capital ratios
remaining sound. The leverage ratio increased to 7.51%, compared to 7.40% in the
first quarter of 2002. Total risk-based capital increased to 13.23% from 11.72%
at first quarter end 2002.
2
3
DIVIDEND DECLARED
Provident Bankshares announced today that its Board of Directors has declared a
quarterly cash dividend of $0.23 per share. This is the thirty-ninth consecutive
quarterly dividend increase. The quarterly cash dividend will be paid on May 9,
2003 to stockholders of record at the close of business on April 28, 2003.
MANAGEMENT TRANSITION
In other Board action, Gary N. Geisel was elected Chairman and Chief Executive
Officer, succeeding Peter M. Martin, who retired as Chairman and CEO effective
today. Martin will remain on the Board of Directors of Provident Bankshares and
Provident Bank. Kevin G. Byrnes, Senior Executive Vice President, was elected
President and Chief Operating Officer to succeed Geisel.
Geisel joined Provident in 1997 as Group Manager of Community Banking. In 1999,
he was promoted to the three-member Office of the Chairman and then was promoted
to President and Chief Operating Officer in January 2001. With more than 30
years in banking, Geisel led Provident's expansion into the Washington
Metropolitan market, and directed the 1997 acquisition of Montgomery
County-based Citizens Savings Bank, as well as the Company's in-store branch
expansion and network growth into the Northern Virginia market.
Byrnes joined Provident as Senior Executive Vice President in November 2002. He
also brings with him more than 30 years of banking experience, with extensive
background in consumer, commercial and real estate lending. Formerly with J.P.
Morgan Chase & Co., and its predecessor Chase Manhattan Bank, he spent four
years as President and Chief Executive Officer of Chase Bank of Maryland. He was
promoted to the Chase New York market in 1992, where he served as Senior Vice
President and Regional Executive for the Long Island and Upstate regions.
MANAGEMENT COMMENT
Commenting on the Company's first quarter performance, Chairman and CEO Gary N.
Geisel said, "We are very pleased with Provident's performance. Despite the
harsh winter this year and the seasonality of our business, our first quarter
results are solid and on plan. Provident's credit quality remains strong and our
performance reflects continued success in growing core loans and deposits, as
well as non-interest income. Our results also reflect our ongoing commitment to
our key business strategies. These strategies are working for us, and our first
quarter results position us to perform well for the quarters to come."
KEY BUSINESS STRATEGIES CONTINUE TO DRIVE RESULTS
Continued commitment to its key business strategies enabled Provident to post
positive results in the first quarter, despite challenging regional weather,
economic uncertainty, and the tenuous geopolitical situation. The bank is well
positioned for solid performance throughout 2003. Provident's key business
strategies are:
3
4
-- BROADEN PRESENCE AND CUSTOMER BASE IN THE WASHINGTON METRO MARKET
AND EXPAND BRANCH NETWORK IN VIBRANT MARKETS
Provident continued to grow the Company's presence in the key
Washington metropolitan region. Two branches were opened in this
market during the quarter, bringing the total to 44. Average
consumer DDA balances in this region increased 21% over the first
quarter 2002. Consumer banking fee income in this market increased
20% over 2002. Average commercial deposits in the Washington
metropolitan area increased 63% over the first quarter 2002.
During the first quarter, four ATM Plus locations were opened in
Baltimore Super Fresh stores. These branches are staffed by a sales
associate that assists customers with their new loan, deposit,
investment and insurance needs. An ATM and video kiosk allows
customers to handle their transactional needs. This increased the
Provident network to a total of 113 offices at the end of the
quarter.
-- GROW COMMERCIAL BUSINESS IN THE BALTIMORE-WASHINGTON CORRIDOR
Average commercial deposits were up $113 million, or 39%, over the
2002 first quarter, as Provident continued to grow its commercial
customer base. This growth was driven by a 46% increase in average
commercial DDA account balances for the same period.
Average core commercial loans increased $81 million, or 10%, over
the first quarter 2002. Revenue from commercial loan products
continued to grow, with commercial loan fees increasing 12% over the
2002 first quarter.
-- FOCUS RESOURCES ON GROWTH IN CORE BUSINESS LINES
Core banking operations continued to drive Provident's positive
results. Average core loans now comprise 70% of total loans, up $169
million, or 10%, over the first quarter 2002.
Average core consumer loan balances increased $88 million, or 12%,
over the 2002 first quarter. Provident's expertise in marine and
home equity lending were evident as average marine loan and home
equity line balances increased 21% and 20%, respectively, over the
same quarter last year. The non-core consumer loan portfolio
declined $383 million, or 35%, from the first quarter of 2002.
Average core commercial loans increased 10%, or $81 million, from
the 2002 first quarter and the average non-core commercial loan
portfolio continued to decrease, averaging $50 million for the
quarter, down 34% from the same quarter in 2002.
Average core deposits continued their steady growth, increasing $146
million, or 6%. While core certificate of deposit balances decreased
13%, core DDA balances increased 23%. Non-core deposits posted a
significant decline of $327 million, or 45%. Average core deposits
now represent 87% of total deposits, up from 78% in the first
quarter 2002.
Asset quality continued to be strong, with non-performing loans
decreasing $2.4 million to $21.6 million at March 31, 2003. Net
charge-offs also decreased to $2.4 million, or a 23% decline from
the quarter ending March 31, 2002.
4
5
-- IMPROVE FINANCIAL FUNDAMENTALS
Return on average assets was 0.98%, up from 0.96% in the first
quarter 2002, and return on common equity was 15.81%, up from 15.76%
for the first quarter last year. The leverage ratio was 7.51% and
total risk-based capital was 13.23%.
OUTLOOK FOR THE FUTURE
Commenting on the future for Provident Bankshares, Chairman and CEO Gary N.
Geisel added, " Peter M. Martin retired today as our Chairman and CEO. We will
all miss him personally, but Pete prepared Provident well for the future. Over
the last few years, he and I worked together to recast our business strategy and
assemble an experienced and talented management team to execute our plans. Our
strategies form a solid foundation for our Company and our continued
achievements will underscore the success of these plans.
Provident is well positioned to take advantage of our unique competitive
opportunities and to expand during times of market disruption. We are optimistic
about the stability of the economic environment across our vibrant and diverse
region. We also remain confident in Provident's ability to exceed analyst EPS
consensus estimates for the full year 2003."
Provident Bankshares Corporation is the holding company for Provident Bank, the
second largest independent commercial bank headquartered in Maryland. With $5.0
billion in assets, Provident serves individuals and businesses in the dynamic
Baltimore-Washington corridor through a network of 113 offices in Maryland,
Northern Virginia, and southern York County, PA. Provident Bank also offers
related financial services through wholly owned subsidiaries. Mutual funds,
annuities and insurance products are available through Provident Investment
Center and leases through Court Square Leasing and Provident Lease Corp. Visit
Provident on the web at www.provbank.com.
----------------
5
6
SPECIAL NOTE: Provident Bankshares Corporation's first quarter earnings
teleconference will be webcast at 10:00 a.m. (EDT) on Thursday, April 17, 2003.
The webcast can be accessed on the Provident website at www.provbank.com. The
webcast will include discussions of the most recent quarter's results of
operations and may include forward-looking information such as guidance on
future results. A replay of the webcast will be available until April 30, 2003.
An audio replay of the webcast will also be available until 11:59 p.m. April 23,
2003 at 1-800-428-6051, passcode ID 287786. Supplemental financial information
will be posted on the Provident website today and on Thursday April 17 in
conjunction with the webcast and can be accessed by selecting the link to
Corporate Information and Investor Relations and then selecting the link to
Financial Reports.
THIS PRESS RELEASE, AS WELL AS OTHER WRITTEN COMMUNICATIONS MADE FROM TIME TO
TIME BY PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES (THE "COMPANY")
(INCLUDING, WITHOUT LIMITATION, THE COMPANY'S 2002 ANNUAL REPORT TO
STOCKHOLDERS) AND ORAL COMMUNICATIONS MADE FROM TIME TO TIME BY AUTHORIZED
OFFICERS OF THE COMPANY, MAY CONTAIN STATEMENTS RELATING TO THE FUTURE RESULTS
OF THE COMPANY (INCLUDING CERTAIN PROJECTIONS AND BUSINESS TRENDS) THAT ARE
CONSIDERED "FORWARD-LOOKING STATEMENTS" AS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 (THE PSLRA). SUCH FORWARD-LOOKING STATEMENTS MAY
BE IDENTIFIED BY THE USE OF SUCH WORDS AS "BELIEVE," "EXPECT," "ANTICIPATE,"
"SHOULD," "PLANNED," "ESTIMATED," "INTEND" AND "POTENTIAL." EXAMPLES OF
FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, POSSIBLE OR ASSUMED
ESTIMATES WITH RESPECT TO THE FINANCIAL CONDITION, EXPECTED OR ANTICIPATED
REVENUE, AND RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY, INCLUDING WITH
RESPECT TO EARNINGS GROWTH (ON BOTH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN
THE UNITED STATES OF AMERICA (GAAP) AND CASH BASIS); REVENUE GROWTH IN CONSUMER
BANKING, LENDING AND OTHER AREAS; ORIGINATION VOLUME IN THE COMPANY'S CONSUMER,
COMMERCIAL AND OTHER LENDING BUSINESSES; ASSET QUALITY AND LEVELS OF
NON-PERFORMING ASSETS; CURRENT AND FUTURE CAPITAL MANAGEMENT PROGRAMS;
NON-INTEREST INCOME LEVELS, INCLUDING FEES FROM SERVICES AND PRODUCT SALES;
TANGIBLE CAPITAL GENERATION; MARKET SHARE; EXPENSE LEVELS; AND OTHER BUSINESS
OPERATIONS AND STRATEGIES. FOR THESE STATEMENTS, THE COMPANY CLAIMS THE
PROTECTION OF THE SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS CONTAINED IN THE
PSLRA.
THE COMPANY CAUTIONS YOU THAT A NUMBER OF IMPORTANT FACTORS COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED IN ANY
FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO:
PREVAILING ECONOMIC CONDITIONS; CHANGES IN INTEREST RATES, LOAN DEMAND, REAL
ESTATE VALUES AND COMPETITION, WHICH CAN MATERIALLY AFFECT, AMONG OTHER THINGS,
CONSUMER BANKING REVENUES, REVENUES FROM SALES ON NON-DEPOSIT INVESTMENT
PRODUCTS, ORIGINATION LEVELS IN THE COMPANY'S LENDING BUSINESSES AND THE LEVEL
OF DEFAULTS, LOSSES AND PREPAYMENTS ON LOANS MADE BY THE COMPANY, WHETHER HELD
IN PORTFOLIO OR SOLD IN THE SECONDARY MARKETS; CHANGES IN ACCOUNTING PRINCIPLES,
POLICIES, AND GUIDELINES; CHANGES IN ANY APPLICABLE LAW, RULE, REGULATION OR
PRACTICE WITH RESPECT TO TAX OR LEGAL ISSUES; RISKS AND UNCERTAINTIES RELATED TO
ACQUISITIONS AND RELATED INTEGRATION AND RESTRUCTURING ACTIVITIES; AND OTHER
ECONOMIC, COMPETITIVE, GOVERNMENTAL, REGULATORY AND TECHNOLOGICAL FACTORS
AFFECTING THE COMPANY'S OPERATIONS, PRICING, PRODUCTS AND SERVICES. THE
FORWARD-LOOKING STATEMENTS ARE MADE AS OF THE DATE OF THIS REPORT, AND, EXCEPT
AS MAY BE REQUIRED BY APPLICABLE LAW OR REGULATION, THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE THE FORWARD-LOOKING STATEMENTS OR TO UPDATE THE REASONS WHY
ACTUAL RESULTS COULD DIFFER FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS.
6
7
PROVIDENT BANKSHARES CORPORATION
FINANCIAL SUMMARY
(dollars in thousands, except per share data)
Three Months
Three Months Ended March 31, Ended December 31,
--------------------------------------- ----------------------------
2003 2002 % Change 2002 % Change
------------ ------------ ---------- --------------- -----------
SUMMARY OF OPERATIONS
Net Income $ 11,785 $ 11,475 2.7% $ 13,285 (11.3)%
Net Interest Income 35,627 36,652 (2.8) 34,238 4.1
Provision for Loan Losses 1,760 3,600 (51.1) 1,425 23.5
Non-Interest Income 22,591 20,200 11.8 25,519 (11.5)
Net Gains 1,247 431 189.3 2,600 (52.0)
Non-Interest Income (excluding net gains) 21,344 19,769 8.0 22,919 (6.9)
Non-Interest Expense 39,050 36,383 7.3 39,227 (0.5)
Income Tax Expense 5,623 5,394 4.2 5,820 (3.4)
SHARE DATA
Basic Earnings Per Share $ 0.48 $ 0.46 4.3% $ 0.54 (11.1)%
Diluted Earnings Per Share 0.47 0.44 6.8 0.53 (11.3)
Cash Dividends Paid Per Share 0.225 0.205 9.8 0.220 2.3
Book Value Per Share 13.27 11.24 18.1 12.96 2.4
Weighted Average Shares -- Basic 24,384,142 25,116,990 (2.9) 24,480,847 (0.4)
Weighted Average Shares -- Diluted 25,053,638 25,967,036 (3.5) 25,102,701 (0.2)
Common Shares Outstanding 24,408,774 25,128,323 (2.9) 24,363,636 0.2
END OF PERIOD BALANCES
Investment Securities Portfolio $ 2,229,246 $ 1,936,021 15.1% $ 1,993,229 11.8%
Total Loans 2,462,022 2,708,533 (9.1) 2,560,563 (3.8)
Total Assets 5,013,492 4,945,445 1.4 4,890,722 2.5
Deposits 3,273,017 3,434,394 (4.7) 3,187,966 2.7
Stockholders' Equity 323,988 282,374 14.7 315,635 2.6
Common Equity 307,862 298,136 3.3 300,715 2.4
AVERAGE BALANCES
Investment Securities Portfolio $ 2,049,951 $ 1,776,733 15.4% $ 1,893,255 8.3%
Loans:
Core Consumer 845,072 757,026 11.6 833,790 1.4
Core Commercial & Industrial 342,097 322,226 6.2 349,790 (2.2)
Core Commercial Real Estate 561,085 499,927 12.2 551,501 1.7
Total Core Loans 1,748,254 1,579,179 10.7 1,735,081 0.8
Non-Core Consumer 701,449 1,084,003 (35.3) 798,920 (12.2)
National Syndicated Loans 49,845 75,509 (34.0) 55,405 (10.0)
Total Non-Core Loans* 751,294 1,159,512 (35.2) 854,325 (12.1)
Total Loans 2,499,548 2,738,691 (8.7) 2,589,406 (3.5)
Earning Assets 4,560,447 4,530,290 0.7 4,494,344 1.5
Total Assets 4,883,827 4,840,237 0.9 4,811,441 1.5
Core Deposits 2,746,865 2,601,206 5.6 2,738,050 0.3
Non-Core Deposits (Brokered Deposits) 400,303 727,487 (45.0) 439,194 (8.9)
Total Deposits 3,147,168 3,328,693 (5.5) 3,177,244 (0.9)
Stockholders' Equity 318,157 291,287 9.2 307,468 3.5
Common Equity 302,380 295,302 2.4 298,019 1.5
SELECTED RATIOS
Return on Average Assets 0.98% 0.96% 1.09%
Return on Average Equity 15.02 15.98 17.14
Return on Average Common Equity 15.81 15.76 17.69
Net Yield on Average Earning Assets (tax-equivalent) 3.18 3.30 3.04
Efficiency Ratio 68.33 64.24 68.40
Leverage Ratio 7.51 7.40 7.47
Tier I Risk-Based Capital Ratio 12.15 10.67 11.62
Total Risk-Based Capital Ratio 13.23 11.72 12.70
* Includes purchased loans, syndicated loans outside the Bank's normal lending area and loans from discontinued product lines.
8
PROVIDENT BANKSHARES
ASSET QUALITY DETAIL
(dollars in thousands)
3/31/2003 3/31/2002 12/31/2002
---------------- ---------------- -----------------
LOAN PORTFOLIO
- --------------
Home Equity-Acquired $ 500,487 $ 683,771 $ 545,323
Other Consumer 874,705 845,030 881,151
---------------- ---------------- -----------------
Total Consumer 1,375,192 1,528,801 1,426,474
Commercial Business 364,403 355,576 376,065
Real Estate - Construction - Residential 131,872 104,915 119,732
- Commercial 196,247 216,017 238,344
Real Estate - Mortgage - Residential 140,208 274,222 168,869
- Commercial 254,100 229,002 231,079
---------------- ---------------- -----------------
TOTAL LOANS $ 2,462,022 $ 2,708,533 $ 2,560,563
================ ================ =================
NON-PERFORMING ASSETS
- ---------------------
Home Equity-Acquired $ 17,510 $ 18,680 $ 18,070
Other Consumer 493 469 460
Commercial Business 493 77 514
Real Estate - Construction - Residential - 215 136
- Commercial - - -
Real Estate - Mortgage - Residential 3,141 4,553 1,953
- Commercial - - -
---------------- ---------------- -----------------
TOTAL NON-ACCRUAL LOANS 21,637 23,994 21,133
TOTAL RENEGOTIATED LOANS - - -
---------------- ---------------- -----------------
TOTAL NON-PERFORMING LOANS 21,637 23,994 21,133
TOTAL OTHER ASSETS AND REAL ESTATE OWNED 4,155 3,938 3,796
---------------- ---------------- -----------------
TOTAL NON-PERFORMING ASSETS $ 25,792 $ 27,932 $ 24,929
================ ================ =================
90-DAY DELINQUENCIES
- --------------------
Home Equity-Acquired $ 6,229 $ 6,186 $ 5,108
Other Consumer 430 1,419 1,023
Commercial Business 407 221 320
Real Estate - Construction - Residential 136 - -
- Commercial - - -
Real Estate - Mortgage - Residential 5,466 5,755 8,377
- Commercial - - -
---------------- ---------------- -----------------
TOTAL 90-DAY DELINQUENCIES $ 12,668 $ 13,581 $ 14,828
================ ================ =================
ASSET QUALITY RATIOS
- --------------------
Non-Performing Loans to Loans 0.88% 0.89% 0.83%
Non-Performing Assets to Loans 1.05% 1.03% 0.97%
Allowance for Loan Losses to Loans 1.32% 1.30% 1.31%
Net Charge-Offs to Average Loans 0.38% 0.45% 0.40%
Allowance for Loan Losses to Loans to Non-Performing Loans 150.49% 146.55% 158.16%
Three Months
Three Months Ended March 31, Ended December 31,
--------------------------------- -----------------
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES 2003 2002 2002
- ------------------------------------- --------------- -------------- -----------------
Balance at Beginning of Period $ 33,425 $ 34,611 $ 34,615
Provision for Loan Losses 1,760 3,600 1,425
Transfer to Other Liabilities (262) - -
Less: Loans Charged-Off, Net of Recoveries
Home Equity-Acquired 1,898 1,903 1,612
Other Consumer 390 347 380
Commercial Business 122 789 517
Real Estate - Construction - Residential - - -
- Commercial - - -
Real Estate - Mortgage - Residential (49) 14 106
- Commercial - (6) -
--------------- --------------- ---------------
Net Charge-Offs 2,361 3,047 2,615
--------------- --------------- ---------------
BALANCE AT END OF PERIOD $ 32,562 $ 35,164 $ 33,425
=============== =============== ===============