SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------------
Date of Report (Date of earliest event reported): November 7, 2005
PROVIDENT BANKSHARES CORPORATION
(Exact name of registrant as specified in charter)
MARYLAND 0-16421 52-1518642
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
114 EAST LEXINGTON STREET, BALTIMORE, MARYLAND 21202
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (410) 277-7000
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
The information included in item 4.02(a) of this Form 8-K is incorporated
herein by reference.
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
-------------------------------------------------------------------
AUDIT REPORT OR COMPLETED INTERIM REVIEW
----------------------------------------
(a) On November 7, 2005, management of Provident Bankshares Corporation
("Provident"or the "Company") determined that Provident's financial statements
for the quarters ended June 30, 2005 and March 31, 2005, as well as the summary
financial information for the third quarter ended September 30, 2005 disclosed
in the Company's earnings release dated October 20, 2005, should no longer be
relied upon as a result of the accounting treatment applied by Provident to
interest rate swaps associated with Provident's interest rate risk hedging
program. Subsequently, management made a similar determination with respect to
the financial statements for the year ended December 31, 2004.
Since 2003, Provident has entered into various interest rate swaps to
hedge the interest rate risk inherent in certain of its brokered CDs, borrowings
and Junior Subordinated Debentures. Since inception of the hedging program,
Provident has applied the "short-cut method" of hedge accounting under Financial
Accounting Standards ("FAS") 133 to account for the swaps. Provident, in
consultation with its independent accountants KPMG LLP, has determined that
these swaps did not qualify for the short-cut method.
As a consequence of not qualifying for short-cut hedge accounting, the
changes in the fair value of the interest rate swaps between reporting periods
should have been reported as gains or losses in the income statement. Because
the Company was not eligible to use short-cut hedge accounting for these swaps,
the Company's previously issued financial statements for the quarters ended June
30, 2005 and March 31, 2005 and for the year ended December 31, 2004 must be
restated, and the previously announced financial information for the quarter
ended September 30, 2005 must be revised, to reflect the required accounting
treatment. The inability to use hedge accounting for prior periods relates to
matters of documentation or complex interpretation rather than to the
effectiveness or management of the hedges.
Provident has re-designated these interest rate swaps as hedges
utilizing the "long haul" method of effectiveness testing, and as a result,
believes it will apply hedge accounting treatment for these swaps for future
periods and that these hedges will be effective.
Unrelated to the above, Provident will revise its accounting relative
to an executive severance agreement applicable to the quarter ended June 30,
2005.
Provident intends to file its Form 10-Q for the period ended September
30, 2005 as soon as possible. Provident also intends to file amended Quarterly
Reports on Form 10-Q for the periods ended June 30, 2005, March 31, 2005, and an
amended Annual Report on Form 10-K for the year ended December 31, 2004, to
reflect the accounting adjustments described herein and include the restated
financial statements for each period covered by each such report. As a result of
these restatements, Provident's management evaluated its prior conclusions
regarding the effectiveness of Provident's disclosure controls and procedures
and
-2-
internal control over financial reporting. Based on that evaluation, Provident's
management concluded that a material weakness existed in Provident's internal
control over financial reporting and that Provident's disclosure controls and
procedures were not effective as of each period affected by a restatement.
Management and the Audit Committee have discussed the matters disclosed
in this Form 8-K with KPMG LLP, who served as Provident's independent registered
public accounting firm for all affected periods, regarding the matters disclosed
in this Form 8-K and in reaching the conclusion to restate the financial
statements for the above-mentioned periods.
ITEM 8.01 OTHER INFORMATION
-----------------
On November 10, 2005, Provident issued a press release to announce a
delay in the filing of its Form 10-Q for the quarter ended September 30, 2005.
The press release dated November 10, 2005 is attached as Exhibit 99.1 and
incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND OTHER EXHIBITS
---------------------------------------
Exhibit 99.1 Press Release dated November 10, 2005
-3-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROVIDENT BANKSHARES CORPORATION
/s/ Gary N. Geisel
-----------------------------------------
Gary N. Geisel
Chairman of the Board and Chief Executive
Officer
Date: November 14, 2005