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EXHIBIT 99.1
CONTACT:
Media - Lillian Kilroy (410) 277-2833
Investment Community - Josie Porterfield (410) 277-2889
PROVIDENT BANKSHARES CORPORATION ANNOUNCES
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NET INCOME OF $13.3 MILLION FOR THIRD QUARTER 2003
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CONTINUED EXECUTION OF KEY STRATEGIES DRIVES RESULTS
BALTIMORE: (October 15, 2003) - Provident Bankshares Corporation (NASDAQ:PBKS),
the parent company of Provident Bank, today reported $13.3 million in net
income, or $0.53 per diluted share, for the third quarter of 2003.
Continued growth in core loans and deposits, strong asset quality, and fee
revenue growth drove Provident's solid performance for the quarter. Average core
consumer and commercial loan balances and consumer and commercial demand deposit
balances all showed double-digit growth over the third quarter 2002, as the
Company demonstrated the successful execution of its key strategies to grow its
regional banking business while expanding into the vibrant Washington
metropolitan region.
THIRD QUARTER FINANCIAL HIGHLIGHTS
o Diluted earnings per share of $0.53 exceeded analyst consensus expectations
of $0.52
o Net income was $13.3 million for the quarter
o Return on average assets was 1.06%
o Return on average common equity was 16.63%
o Average core loans increased $235 million, or 14%, from the third quarter
of 2002, while average non-core loans decreased $237 million, or 25%
o Average core deposits increased $152 million, or 6%, from the 2002 third
quarter, and average non-core deposits decreased $237 million, or 46%
o Non-interest income (excluding net gains and losses) grew 8% from the third
quarter 2002
o Net charge-offs were $2 million, a decline of 12% over the third
quarter 2002
o Capital ratios remained strong, with a leverage ratio of 7.61%
and total risk-based capital of 13.11%
THIRD QUARTER RESULTS
Provident Bankshares reported net income for the quarter ending September 30,
2003 of $13.3 million, or $0.53 per diluted share, exceeding analyst consensus
expectations of $0.52 per diluted share. This compares to net income of $13.1
million, or $0.52 per diluted share for the third quarter 2002. Pre-tax earnings
were $20.4 million, a 6% increase over the third quarter 2002. Return on average
assets was 1.06%, and return on average common equity was 16.63%. The net
interest margin expanded to 3.26%, up from 3.04% in the third quarter 2002.
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The Company continued to execute its strategy to grow core loans and deposits,
as average core loans increased $235 million, or 14%, and average core deposits
increased $152 million, or 6%, over the third quarter 2002. Core loans include
all loans except purchased loans, participations outside the Bank's defined
market area, and Provident-originated loans from discontinued product lines.
Provident's core deposits include all deposits except brokered deposits.
Total average loans remained at $2.6 billion, and total average deposits
decreased $85 million, or 3%, versus the third quarter 2002, as the planned
reduction of non-core assets and funding continued. Average non-core loans and
non-core deposits each decreased $237 million, or 25% and 46%, respectively,
from the same period.
Non-interest income, excluding net gains, grew to $23.9 million from $21.7
million in the third quarter 2002. Provident continued to post solid fee income
growth. Total deposit service fees increased 6% over the third quarter 2002 and
were driven by the growth in commercial and consumer deposit accounts. As the
result of the new debit card interchange structure, Mastermoney debit card
revenues decreased in line with expectations, but were replaced by other sources
as planned.
Asset quality remained strong. Total non-performing loans at September 30, 2003
were $20 million, in line with the same quarter last year. Net charge-offs
declined 12%, from $2.3 million to $2 million, and the allowance for loan losses
to loans was 1.30% at the close of the quarter. Substantially all of the
non-performing loans continue to be 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 7.61%, compared to 7.43% in the
third quarter of 2002. Total risk-based capital increased to 13.11% from 12.42%
at third quarter end 2002.
Provident repurchased 277,716 shares of common stock during the third quarter,
leaving 722,284 shares remaining under the current repurchase program.
DIVIDEND DECLARED
Provident Bankshares announced today that its Board of Directors has declared a
quarterly cash dividend of $0.24 per share. This is the fortieth consecutive
quarterly dividend increase. The quarterly cash dividend will be paid on
November 7, 2003 to stockholders of record at the close of business on October
27, 2003.
MANAGEMENT COMMENT
Commenting on the Company's third quarter performance, Chairman and CEO Gary N.
Geisel said, "I couldn't be more pleased with Provident's performance this
quarter. Our continued growth in core loans and deposits, combined with the
planned reduction of non-core assets and liabilities, is yielding positive
results. We continue to experience revenue growth in commercial and consumer
business lines across both the Baltimore and Washington markets, and at the same
time continue to maintain strong credit quality. The result is solid, consistent
improvement in all of our financial fundamentals - return on assets, return on
equity, net interest margin and efficiency ratio."
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CONTINUED EXECUTION OF KEY BUSINESS STRATEGIES
Successful execution of the Company's key business strategies continued to drive
results for the quarter. Provident's key business strategies are:
o BROADEN PRESENCE AND CUSTOMER BASE IN THE WASHINGTON METRO MARKET AND
EXPAND BRANCH NETWORK IN VIBRANT MARKETS
Provident continued to expand its presence and increase its customer base
in the key Washington metropolitan region. Average consumer demand deposit
balances in the region increased 29% over the third quarter 2002. Consumer
deposit fee income in this market increased 22% over the 2002 third
quarter. Average commercial deposit balances in the Washington metropolitan
area increased 54% over the third quarter 2002, led by a 75% increase in
demand deposit balances. Average core commercial loan balances in the
region increased 17% over the same period in 2002.
There are now 114 offices in the Provident banking network, with 48 in the
Washington metropolitan region. One traditional branch and three in-store
branches are planned in the region during the fourth quarter 2003, and of
the seven branches currently scheduled to open in 2004, four are planned to
be located in the Washington metropolitan region.
o GROW COMMERCIAL BUSINESS IN THE BALTIMORE-WASHINGTON CORRIDOR
Commercial loans and deposits continued to increase at double-digit rates.
Average core commercial deposits were up $120 million, or 31%, over the
2002 third quarter, as Provident continued to grow its commercial customer
base and expand its relationships with existing customers. This growth was
driven by a 44% increase in average commercial demand deposit account
balances for the period. Average core commercial loans increased $117
million, or 14%, over the third quarter 2002. The increases were seen in
virtually every category - residential construction balances increased 38%,
commercial mortgage balances 30%, and commercial business loan and lease
balances 3%.
o FOCUS RESOURCES ON GROWTH IN CORE BUSINESS LINES
Core loan and deposit growth continued to be strong. Average core loans now
comprise 72% of total loans, up from 64% in the third quarter 2002. Average
core deposits represent 91% of total deposits, up from 84% in the third
quarter 2002.
Average core consumer loan balances increased $117 million, or 14%, over
the 2002 third quarter. During this period, average marine loan balances
increased 15%, and home equity loan and line balances increased 17%. The
non-core consumer loan portfolio declined $201 million, or 22%, from the
third quarter of 2002.
Average core commercial loans increased 14%, or $117 million, from the 2002
third quarter and the average non-core national syndicated loan portfolio
continued to decline, averaging $32 million for the quarter, down 53% from
the same quarter in 2002. At quarter end, outstanding balances for non-core
national syndicated loans were less than $30 million.
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Average core deposits increased $152 million, or 6%, from the third quarter
2002. Certificate of deposit and IRA balances decreased $119 million, or
17%, while demand deposit balances increased $207 million, or 26%. Brokered
deposits continued to mature, declining $237 million from the third quarter
2002 to an average of $282 million in the third quarter 2003, a 46%
decline. This change in deposit mix continued to contribute positively to
net interest margin.
o IMPROVE FINANCIAL FUNDAMENTALS
The changing complexion of the balance sheet and continued commitment to
the achievement of the key strategies again drove improvement in
Provident's financial fundamentals. Net interest margin expanded from
3.04% in the third quarter 2002 to 3.26% in the third quarter 2003 despite
a very challenging interest rate environment. Return on average assets was
1.06%, and return on average common equity was 16.63%. The leverage ratio
was 7.61% and total risk-based capital was 13.11%. As core loans and
deposits represent a larger percentage of the balance sheet, these
fundamentals will continue to show improvement.
Asset quality continued to be strong, with non-performing loans of $20
million at the end of the quarter. Net charge-offs were $2 million,
representing 0.30% of total average loans. The allowance for loan losses as
a percent of total loans was 1.30% at the end of the quarter.
OUTLOOK FOR THE FUTURE
Commenting on the future for Provident Bankshares, Chairman and CEO Gary N.
Geisel added, "Another quarter of strong growth in core loans and deposits has
positioned us very well for the remainder of the year. We continue to be pleased
with the execution of our key strategies.
We are committed to enhancing earnings growth, while at the same time
emphasizing key metrics such as return on assets and equity, margin and
efficiency. We are confident in Provident's ability to exceed current analyst
EPS consensus estimates of $2.02 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
Baltimore-Washington corridor through a network of 114 banking 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 Company and leases through Court Square Leasing and Provident Lease
Corp. Visit Provident on the web at www.provbank.com.
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SPECIAL NOTE: Provident Bankshares Corporation's third quarter earnings
teleconference will be webcast at 10:00 a.m. (ET) on Thursday, October 16, 2003.
The webcast can be accessed on the Provident website at www.provbank.com. The
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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 October 31,
2003. An audio replay of the webcast will also be available until 11:59 p.m.
October 23, 2003 at 1-800-428-6051, passcode ID 307076. Supplemental financial
information will be posted on the Provident website today and can be accessed by
selecting the link to Corporate Information and Investor Relations and then
selecting the link to Financial Reports.
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###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.
IN THE EVENT THAT ANY NON-GAAP FINANCIAL INFORMATION IS DESCRIBED IN ANY WRITTEN
COMMUNICATION, INCLUDING THIS PRESS RELEASE, OR IN OUR TELECONFERENCE, PLEASE
REFER TO THE SUPPLEMENTAL FINANCIAL TABLES INCLUDED WITH THIS RELEASE AND ON OUR
WEBSITE FOR THE GAAP RECONCILIATION OF THIS INFORMATION.
TABLES FOLLOW
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