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EXHIBIT 99.1
CONTACT:
Media - Lillian Kilroy (410) 277-2833
Investment Community - Patricia Ferrick (703) 352-2583
PROVIDENT BANKSHARES CORPORATION ANNOUNCES
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6% EARNINGS PER SHARE INCREASE FOR 2005 FIRST QUARTER
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41% EARNINGS INCREASE OVER 2004 FIRST QUARTER
SOLID FINANCIAL FUNDAMENTALS DRIVE INCREASE
BALTIMORE: (April 21, 2005) - Provident Bankshares Corporation (NASDAQ:PBKS),
the parent company of Provident Bank, today reported $18.1 million in net income
or $0.54 per diluted share, for the first quarter of 2005. The basis for
financial comparison includes the impact of the Southern Financial Bancorp, Inc.
merger for the first quarter of 2005.
Provident's continued focus on financial fundamentals produced strong results
for the quarter. Net interest margin increased to 3.58% for the 2005 first
quarter, a 39 basis point increase over the prior year's quarter. Asset quality
remained strong, as non-performing assets to loans were 0.70% and charge-offs to
average loans were 0.24% for the quarter. Returns on assets and equity were
1.14% and 11.85%, respectively, and the efficiency ratio improved to 62.0% for
the quarter. The financial results reflect the continued balance sheet
transition towards growing loans and deposits in its business segments. The
Company's commitment to its business strategies in the key markets of Baltimore,
Washington and Richmond coupled with the impact of the Southern Financial
merger, led to increases in average loans and deposits of 26% and 23%,
respectively, over the first quarter of 2004. The April 30, 2004 strategic
merger of Southern Financial Bancorp, Inc. added 30 branches in the Northern
Virginia, Richmond, Charlottesville and Washington D.C. areas.
FIRST QUARTER FINANCIAL HIGHLIGHTS
(BASIS FOR FINANCIAL COMPARISON INCLUDES SOUTHERN FINANCIAL BANCORP, INC. MERGER
FOR THE FIRST QUARTER OF 2005)
- -- Net income increased 41%, to $18.1 million, over the 2004 first quarter
- -- Net interest margin improved to 3.58%, up from 3.19% for the 2004 first
quarter
- -- Return on assets increased to 1.14%, up from 0.99% for the 2004 first
quarter
- -- Return on common equity was 11.85%, a decline originated from the Southern
Financial merger
- -- Asset quality remains strong as net charge-offs as a percentage of average
loans were 24 basis points, compared to 26 basis points last year
- -- Capital ratios remain strong with a leverage ratio of 7.93% and total
risk-based capital ratio of 12.29%
- -- Average loans increased $733 million, or 26%, from the 2004 first quarter
- -- Average deposits increased $695 million, or 23%, from the 2004 first quarter
- -- Non-interest income grew 7% from the comparable period in 2004
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FIRST QUARTER RESULTS
Provident Bankshares reported net income for the quarter ending March 31, 2005
of $18.1 million, an increase of 41% over the first quarter of 2004. Earnings
per diluted share were $0.54, an increase of 6% over the 2004 first quarter.
Solid loan growth in key business segments and the accretive effects of the
Southern Financial merger fueled first quarter results. Improved earnings
included increased net interest income, non-interest income and a lower loan
loss provision, which was partially offset by increased non-interest expenses
and provision for income taxes. Non-interest expenses included the impact of
$1.4 million in professional fees for 2004 activities related to Sarbanes-Oxley
compliance. Also included in non-interest expenses was a reduction of $1.5
million primarily related to retiree medical benefits.
Average loans increased 26%, or $733 million over the first quarter of 2004.
Consumer and commercial loans increased 8% and 55%, respectively, driven by
continued emphasis on the key business segments. Average home equity loans
increased $206 million, or 40%, more than offsetting reductions in marine
lending and purchased residential loans. Average commercial real estate loans
increased $318 million, or 45%, while commercial business loans increased $285
million, or 72%. The addition of loans acquired from the Southern Financial
merger contributed to the growth in the commercial product segments.
Average deposits increased $695 million, or 23%, over the same quarter last
year. Demand accounts represented the largest increase of $294 million, or 29%.
Average money market, savings, and time deposits accounts represented the
remaining increase over the prior year's quarter. Average brokered deposits also
increased over the 2004 first quarter, driven by an increase in callable
brokered deposits acquired in the merger, as well as brokered deposits issued
during the year as a less expensive alternative to borrowing.
The net interest margin, on a tax-equivalent basis, increased 39 basis points to
3.58% and was driven by continued solid growth in lending activities. Loan
growth of $733 million drove average earning assets up to $5.7 billion during
the quarter. The yield on earning assets correspondingly increased as a result
of the loan growth which more than offset the increase in funding costs. In
addition, higher yielding investment securities were purchased with proceeds
from sales of investment securities during the quarter.
Non-interest income grew 7% to $25.3 million, up from $23.6 million in the first
quarter 2004. Deposit fee income increased 4%, reflecting increases in consumer
and commercial deposit fees. As with many of our peers, consumer deposit fees
are being negatively impacted by decreases in checking transactions and
decreases in NSF activity during the quarter. Debit card fee income, which
increased 39%, drove consumer deposit fee income higher during the quarter.
Other non-interest income included $1.5 million of life insurance proceeds.
Further, as part of the continued balance sheet transition, sales of investment
securities and debt extinguishment resulted in net losses during the quarter.
The proceeds from the sales were used to purchase investment securities at
higher yields.
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Total non-performing loans at March 31, 2005 were $23.2 million, compared with
$18.9 million at March 31, 2004, reflecting an impact from the Southern
Financial merger. Net charge-offs increased to $2.1 million, up from $1.8
million for the 2004 first quarter. The allowance for loan losses, at 1.29% of
period-end loans, was a 1.97 multiple of non-performing loans and a 5.35
multiple of net charge-offs.
Capital ratios continue to be strong, with a leverage ratio of 7.93% and a total
risk-based capital ratio of 12.29% at March 31, 2005. These compare to 8.56% and
15.38%, respectively, at March 31, 2004. As planned for the first quarter, the
Company redeemed $30 million of trust preferred securities which qualified for
regulatory capital.
DIVIDEND DECLARED
Provident Bankshares announced today that its Board of Directors has declared a
quarterly cash dividend of $0.27 per share. This is the forty-sixth consecutive
quarterly dividend increase. The quarterly cash dividend will be paid on May 13,
2005 to stockholders of record at the close of business on May 2, 2005.
MANAGEMENT COMMENT
Commenting on the Company's first quarter performance, Chairman and CEO, Gary N.
Geisel said, "Our first quarter results are right on plan. We are committed to
building a strong regional bank focused on the vibrant markets of Baltimore,
Washington and Richmond."
VIRGINIA FRANCHISE
Provident's Virginia franchise continues to be a significant component of its
business focus. For the quarter, consumer and commercial deposits in the
Washington metropolitan and Virginia markets increased 54% and 104%,
respectively, representing increases in all deposit categories. The 30 branches
added from the Southern Financial merger facilitated the growth in deposits for
the year. The Virginia franchise has grown to 83 branches, or 56% of total
branches, in the key metropolitan markets of Washington and Richmond.
Average consumer loan balances increased 87% and commercial loan balances more
than doubled from the 2004 first quarter in the Virginia/Washington metro
markets. This growth emphasizes the Company's commitment to the Virginia market
as well as the benefits of the merger.
EXECUTION OF KEY BUSINESS STRATEGIES
Provident's key business strategies provide the Company with a unique
opportunity in its marketplace. An overview of the strategies for the year and
some accomplishments to date are discussed below:
- -- MAXIMIZE PROVIDENT'S POSITION AS THE RIGHT SIZE BANK IN THE MARKETPLACE
Provident's position as the second largest bank headquartered in Maryland
provides a unique opportunity as the "right size" bank in its footprint.
The Company provides the service of a small institution combined with the
convenience and wide array of products and services that a strong regional
bank offers. In addition, the 60 in-store branches throughout its
footprint reinforce its right size strategy through convenient hours and
full product service. Provident currently has 149 branches concentrated in
the Baltimore-Washington corridor and beyond to Richmond, Virginia.
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- -- GROW AND DEEPEN CONSUMER AND SMALL BUSINESS RELATIONSHIPS IN MARYLAND
AND VIRGINIA Consumer banking provided the Company's entry into commercial
banking and continues to be an important component of its business
strategy. Average consumer loan balances increased $130 million, or 8%,
over the prior year quarter. Home equity loans averaged $725 million, and
increased 40% over the prior year. The strong growth in home equity lending
was partially offset by declines in marine loans and purchased residential
loans totaling $93 million. This shift indicates the Company's focus on its
key business segments. Residential mortgage loans also increased $23
million over the prior year quarter as a result of loans acquired from
Southern Financial.
Total average consumer deposits increased 13%. Average consumer demand
account balances increased 18%, from $670 million in the 2004 first
quarter, to $793 million in 2005. Average consumer certificates of deposit
increased 18% and average consumer money market and savings deposits
increased 6% over the prior year quarter. Small business loans and deposits
increased significantly from the 2004 first quarter and are included in the
commercial banking totals.
- -- GROW AND DEEPEN COMMERCIAL AND REAL ESTATE RELATIONSHIPS IN MARYLAND
AND VIRGINIA Commercial banking is the other key component to the Company's
regional presence in its market area. Average commercial and real estate
loans increased 72% and 45%, respectively. Commercial mortgage loans and
commercial and residential construction loans each posted increases during
the quarter. Commercial deposits increased 48% over the prior year quarter
with average demand account balances, money market balances and
certificates of deposit representing the areas of growth. The increase in
the commercial loan and deposit portfolios over the 2004 first quarter also
reflects the benefits derived from Southern Financial's focus on commercial
banking in Virginia.
- -- MOVE FROM A PRODUCT DRIVEN ORGANIZATION TO A CUSTOMER RELATIONSHIP
FOCUSED SALES CULTURE The Company's transition to a customer relationship
driven sales culture requires deepening relationships through cross-sell
and the continuing emphasis on retention of valued customers. The Company
has segmented its customers to better understand and anticipate their
financial needs and provide Provident's sales force with a targeted
approach to customers and prospects. The successful execution of this
strategy will be centered on the right size bank commitment - providing
the service of a small institution combined with the convenience and wide
array of products and services that a strong regional bank offers.
- -- CREATE A HIGH PERFORMANCE CULTURE THAT FOCUSES ON EMPLOYEE DEVELOPMENT
AND RETENTION Provident has always placed a high priority on its employees
and has approached employee development and training with renewed
emphasis. Their development is viewed as a critical part of executing its
strategy as the right size bank and transforming the Company's sales
culture. The focus is on the employee's development and their approach
with Provident's customers.
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OUTLOOK FOR THE FUTURE
Commenting on the future for Provident Bankshares, Chairman and CEO Gary N.
Geisel added, "2005 will be a year where we continue to execute against our key
strategies and to build the `right size' bank for our consumer, commercial and
small business customers."
Provident Bankshares Corporation is the holding company for Provident Bank, the
second largest independent commercial bank headquartered in Maryland. With $6.4
billion in assets, Provident serves individuals and businesses in the key urban
areas of Baltimore, Washington and Richmond through a network of 149 offices in
Maryland, Virginia, and southern York County, PA. Provident Bank also offers
related financial services through wholly owned subsidiaries. Securities
brokerage, investment management and related insurance services 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.
SPECIAL NOTE: Provident Bankshares Corporation's first quarter earnings
teleconference will be webcast at 10:00 a.m. (ET) on Thursday, April 21, 2005.
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 28, 2005.
An audio replay of the webcast will also be available during the same period, at
1-888-286-8010, passcode 21029757. Supplemental financial information will be
posted on the Provident website today 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.
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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 2004 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
earnings growth determined by using U.S. generally accepted accounting
principles ("GAAP"); 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: the
factors identified in the Company's Form 10-K for the fiscal year ended December
31, 2004 under the headings "Forward-Looking Statements" and "Risk Factors";
prevailing economic and geopolitical 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. Readers are cautioned not to place undue reliance on these
forward-looking statements which 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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PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(DOLLARS IN THOUSANDS,EXCEPT PER SHARE DATA) Three Months Ended Three Months Ended
March 31, December 31,
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2005 2004 % Change 2004 % Change
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SUMMARY OF OPERATIONS:
Net income $ 18,108 $ 12,875 40.6 % $ 18,898 (4.2)%
Net interest income 50,321 38,723 30.0 50,971 (1.3)
Provision for loan losses 1,575 2,391 (34.1) 1,505 4.7
Non-interest income 25,285 23,583 7.2 26,923 (6.1)
Net gains (losses) (776) 816 (195.1) 824 (194.2)
Non-interest income, excluding net gains (losses) 26,061 22,767 14.5 26,099 (0.1)
Non-interest expense 47,474 40,610 16.9 48,951 (3.0)
Merger expense - 184 (100.0) 275 (100.0)
Non-interest expense, excluding merger expense 47,474 40,426 17.4 48,676 (2.5)
Income tax expense 8,449 6,430 31.4 8,540 (1.1)
SHARE DATA:
Basic earnings per share $ 0.55 $ 0.52 5.8 % $ 0.57 (3.5)%
Diluted earnings per share 0.54 0.51 5.9 0.56 (3.6)
Cash dividends paid per share 0.265 0.245 8.2 0.26 1.9
Book value per share 18.55 13.91 33.4 18.65 (0.5)
Weighted average shares - basic 33,029,444 24,664,213 33.9 33,161,703 (0.4)
Weighted average shares - diluted 33,720,433 25,350,116 33.0 33,941,261 (0.7)
Common shares outstanding 33,062,288 24,759,037 33.5 33,102,385 (0.1)
END OF PERIOD BALANCES:
Investment securities portfolio $ 2,145,381 $ 2,127,047 0.9 % $ 2,301,066 (6.8)%
Total loans 3,546,286 2,829,936 25.3 3,559,880 (0.4)
Assets 6,428,829 5,268,743 22.0 6,572,160 (2.2)
Deposits 3,932,188 3,202,318 22.8 3,782,000 4.0
Stockholders' equity 613,379 344,470 78.1 617,439 (0.7)
Common stockholders' equity 624,840 342,511 82.4 618,403 1.0
AVERAGE BALANCES:
Investment securities portfolio $ 2,169,979 $ 2,093,314 3.7 % $ 2,245,879 (3.4)%
Loans:
Residential real estate 1,364,566 1,198,015 13.9 1,365,614 (0.1)
Other consumer 471,141 508,067 (7.3) 482,613 (2.4)
Commercial real estate 1,026,306 708,358 44.9 992,584 3.4
Commercial business 680,837 395,614 72.1 663,491 2.6
Total loans 3,542,850 2,810,054 26.1 3,504,302 1.1
Earning assets 5,727,593 4,909,109 16.7 5,765,688 (0.7)
Assets 6,425,350 5,230,786 22.8 6,455,670 (0.5)
Deposits:
Noninterest-bearing 791,747 567,530 39.5 804,657 (1.6)
Interest-bearing 2,974,143 2,503,680 18.8 2,966,376 0.3
Total deposits 3,765,890 3,071,210 22.6 3,771,033 (0.1)
Stockholders' equity 618,604 331,538 86.6 615,101 0.6
Common stockholders' equity 619,739 332,423 86.4 613,219 1.1
SELECTED RATIOS:
Return on average assets 1.14 % 0.99 % 1.16 %
Return on average equity 11.87 15.62 12.22
Return on average common equity 11.85 15.58 12.26
Net yield on average earning assets (t/e basis) 3.58 3.19 3.53
Efficiency ratio 62.00 65.53 63.01
Leverage ratio 7.93 8.56 8.26
Tier I risk-based capital ratio 11.23 13.47 11.78
Total risk-based capital ratio 12.29 15.38 12.85
Contact:
Media - Lillian Kilroy, 410-277-2833
Investment Community - Patricia Ferrick, 703-352-2583
both of Provident Bankshares Corporation