1
EXHIBIT 99.1
[PROVIDENT BANKSHARES CORPORATION]
NEWS RELEASE CONTACT
MEDIA: LILLIAN KILLROY (410) 277-2833
INVESTMENT COMMUNITY: MELISSA P. KELLY (410) 277-2080
PROVIDENT BANKSHARES CORPORATION ANNOUNCES
SOLID EARNINGS GROWTH FOR FIRST QUARTER 2006
CONTINUED MARGIN EXPANSION CONTRIBUTES TO RISE IN NET INCOME
BALTIMORE: (April 20, 2006) - Provident Bankshares Corporation (NASDAQ: PBKS),
the parent company of Provident Bank, reported net income of $18.3 million, or
$0.55 per diluted share, for the first quarter of 2006.
The financial results of the first quarter reflect the Company's continued
improvement in financial fundamentals through the consistent execution of the
Bank's key strategies and transition of the balance sheet. In the first quarter
of 2006, net income increased 16% from the same quarter of 2005. Provident
continued to shift from wholesale to core banking activities during the first
quarter of 2006, and the net interest margin improved to 3.72%, compared to
3.46% in the first quarter of 2005. As a result of strong lending activity, the
Company was able to reduce investment securities by 11% from the same period of
2005. Average deposit balances grew by $258 million led by strong growth in both
consumer and commercial deposits. Asset quality remained strong in the first
quarter of 2006, with the ratio of net loan charge-offs to average loans
declining to 0.13%, compared to 0.24% for the same period last year.
FIRST QUARTER FINANCIAL HIGHLIGHTS
Results for the first quarter 2006 compared to first quarter 2005:
o Return on assets increased to 1.17% from 0.99%
o Return on average common equity improved to 11.40% from 10.32%
o Net interest margin improved to 3.72% from 3.46%
o Average home equity and total commercial loans increased 26% and 12%,
respectively
o Average total deposits increased 7% to $4 billion
o Net charge-offs as a percentage of average loans improved to 13 basis points
from 24 basis points
o Capital ratios remained strong with a leverage ratio of 8.54%, and a total
risk-based capital ratio of 12.34%
"The execution of our key strategies and the vibrancy of our regional market
have enabled us to deliver solid results on a consistent basis. Due to the
seasonality of our business, our earnings per share is slightly short of
consensus for the quarter, and this is as we expected. We are pleased with our
performance, and continue to agree with the consensus estimate for full year
2006" said Chairman and CEO Gary N. Geisel.
2
DIVIDEND DECLARED
Provident Bankshares announced today that its Board of Directors has declared an
increased quarterly cash dividend of $0.29 per share. This is the fiftieth
consecutive quarterly dividend increase. The quarterly cash dividend will be
paid on May 12, 2006 to stockholders of record at the close of business on May
1, 2006.
FIRST QUARTER RESULTS
Provident Bankshares reported net income of $18.3 million, or $0.55 per diluted
share, for the first quarter of 2006, as compared to $15.8 million in net
income, or $0.47 per diluted share in the same period last year.
The Company's experience and expertise in real estate lending resulted in first
quarter 2006 growth in average home equity loans of $189 million, or 26%, and
growth in average commercial real estate loans of $206 million, or 20%, from
first quarter 2005. The growth in these categories of loans offset planned
reductions in average originated and acquired residential loans and investments
of $200 million and $248 million, respectively, from first quarter 2005.
Growth in average deposits was driven by both consumer and commercial customers.
Commercial clients in the Greater Washington and Central Virginia regions were a
particularly strong source of the deposit growth from first quarter 2005 to
first quarter 2006, contributing $88 million of net deposit growth.
Fee income from commissions, deposit and loan accounts increased 14% from first
quarter 2005, to $25 million in first quarter 2006. Non-interest expense
increased 11% in first quarter 2006, driven primarily by compensation,
healthcare and regulatory compliance cost increases.
EXECUTION OF KEY BUSINESS STRATEGIES
The Bank's current business strategies are listed below:
o Maximize Provident's position as the right size bank in the marketplace
o Grow and deepen consumer and small business relationships in Maryland
and Virginia
o Grow and deepen commercial and real estate relationships in Maryland and
Virginia
o Move from a product driven organization to a customer relationship focused
sales culture
o Create a high performance culture that focuses on employee development and
retention
During the first quarter of 2006, significant progress was made in all of these
areas. Provident had notable success with growing and deepening relationships
across the major markets of Greater Baltimore, Greater Washington and Central
Virginia. This is evident in the growth of customer deposit and loan balances.
In the first quarter of 2006, average commercial deposits increased 18% over the
first quarter of 2005. During the same period, home equity average balances
increased by 26% and total commercial loan balances increased $205 million, a
12% increase.
OUTLOOK FOR THE FUTURE
Commenting on the future for Provident Bankshares, Chairman and CEO Gary N.
Geisel added, "Our business lines are producing excellent results, and I am
especially pleased with the growth in deposits, non-interest income, home equity
and commercial lending. This momentum, along with our unique position as the
right sized bank in this growing region, will be factors for our continued
success."
3
ABOUT PROVIDENT BANKSHARES CORPORATION
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 153 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.
----------------
WEBCAST INFORMATION
Provident Bankshares Corporation's first quarter earnings teleconference will be
webcast at 10:00 AM ET on Thursday, April 20, 2006. The conference call will
include a discussion of the Company's first quarter 2006 results of operations
and may include forward-looking information. The conference call will be
simultaneously webcast at www.provbank.com and archived through May 5, 2006. To
----------------
listen to the conference call, please go to the Company's website at least 15
minutes early to register, download, and install any necessary software. When in
the Company's website, click on the link to "About Provident" and "Investor
Relations" and look under "Upcoming Events" and then click on the link to
"Provident Bankshares Corporation First Quarter 2006 Results" audio webcast and
download Real Player or Media Player as necessary. An audio replay of the
teleconference will be available through May 5, 2006 by dialing 1-888-286-8010,
passcode 99995014; the international dial-in number is 617-801-6888.
FORWARD-LOOKING STATEMENTS
THIS PRESS RELEASE, AS WELL AS OTHER WRITTEN COMMUNICATIONS MADE FROM TIME TO
TIME BY PROVIDENT BANKSHARES CORPORATION AND ITS SUBSIDIARIES (THE "COMPANY")
(INCLUDING, WITHOUT LIMITATION, THE COMPANY'S 2005 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 USING U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
("GAAP"); REVENUE GROWTH IN RETAIL 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 YEAR ENDED DECEMBER 31,
2005 UNDER THE HEADINGS "FORWARD-LOOKING STATEMENTS" AND "ITEM 1A. RISK
FACTORS," PREVAILING ECONOMIC CONDITIONS, EITHER NATIONALLY OR LOCALLY IN SOME
OR ALL AREAS IN WHICH THE COMPANY CONDUCTS BUSINESS OR CONDITIONS IN THE
SECURITIES MARKETS OR THE BANKING INDUSTRY; CHANGES IN INTEREST RATES, DEPOSIT
FLOWS, LOAN DEMAND, REAL ESTATE VALUES AND COMPETITION, WHICH CAN MATERIALLY
AFFECT, AMONG OTHER THINGS,
4
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 THE QUALITY OR
COMPOSITION OF THE LOAN OR INVESTMENT PORTFOLIOS; THE COMPANY'S ABILITY TO
SUCCESSFULLY INTEGRATE ANY ASSETS, LIABILITIES, CUSTOMERS, SYSTEMS AND
MANAGEMENT PERSONNEL THE COMPANY MAY ACQUIRE INTO ITS OPERATIONS AND ITS ABILITY
TO REALIZE RELATED REVENUE SYNERGIES AND COST SAVINGS WITHIN EXPECTED TIME
FRAMES; THE COMPANY'S TIMELY DEVELOPMENT OF NEW AND COMPETITIVE PRODUCTS OR
SERVICES IN A CHANGING ENVIRONMENT, AND THE ACCEPTANCE OF SUCH PRODUCTS OR
SERVICES BY CUSTOMERS; OPERATIONAL ISSUES AND/OR CAPITAL SPENDING NECESSITATED
BY THE POTENTIAL NEED TO ADAPT TO INDUSTRY CHANGES IN INFORMATION TECHNOLOGY
SYSTEMS, ON WHICH IT IS HIGHLY DEPENDENT; 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
MERGERS AND RELATED INTEGRATION AND RESTRUCTURING ACTIVITIES; CONDITIONS IN THE
SECURITIES MARKETS OR THE BANKING INDUSTRY; CHANGES IN THE QUALITY OR
COMPOSITION OF THE INVESTMENT PORTFOLIO; LITIGATION LIABILITIES, INCLUDING
COSTS, EXPENSES, SETTLEMENTS AND JUDGMENTS; OR THE OUTCOME OF OTHER MATTERS
BEFORE REGULATORY AGENCIES, WHETHER PENDING OR COMMENCING IN THE FUTURE; AND
OTHER ECONOMIC, COMPETITIVE, GOVERNMENTAL, REGULATORY AND TECHNOLOGICAL FACTORS
AFFECTING THE COMPANY'S OPERATIONS, PRICING, PRODUCTS AND SERVICES.
ADDITIONALLY, THE TIMING AND OCCURRENCE OR NON-OCCURRENCE OF EVENTS MAY BE
SUBJECT TO CIRCUMSTANCES BEYOND THE COMPANY'S CONTROL. 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
5
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(DOLLARS IN THOUSANDS,EXCEPT PER SHARE DATA) Three Months Ended Three Months Ended
March 31, December 31,
---------------------------------------- --------------------------
2006 2005 % Change 2005 % Change
------------- ------------- ---------- ------------- -----------
SUMMARY INCOME STATEMENTS:
Net interest income $ 51,248 $ 48,716 5.2 % $ 50,508 1.5 %
Provision for loan losses 318 1,575 (79.8) 400 (20.5)
Non-interest income 28,225 23,044 22.5 28,544 (1.1)
Net gains (losses) 540 (776) (169.6) 478 13.0
Derivative gains (losses) (603) (3,820) (84.2) (1,261) (52.2)
Non-interest income, excluding total gains (losses) 28,288 27,640 2.3 29,327 (3.5)
Total revenue, excluding total gains (losses) 79,536 76,356 4.2 79,835 (0.4)
Non-interest expense 52,791 47,474 11.2 51,657 2.2
Income tax expense 8,106 6,961 16.4 8,025 1.0
Net income 18,258 15,750 15.9 18,970 (3.8)
SHARE DATA:
Basic earnings per share $ 0.55 $ 0.48 14.6 % $ 0.58 (5.2)%
Diluted earnings per share 0.55 0.47 17.0 0.57 (3.5)
Cash dividends paid per share 0.285 0.265 7.5 0.280 1.8
Book value per share 19.11 18.50 3.3 19.14 (0.2)
Weighted average shares - basic 32,948,119 33,029,444 (0.2) 32,904,879 0.1
Weighted average shares - diluted 33,364,813 33,720,433 (1.1) 33,560,110 (0.6)
Common shares outstanding 32,974,784 33,062,288 (0.3) 32,933,118 0.1
SELECTED RATIOS:
Return on average assets 1.17 % 0.99 % 1.19 %
Return on average equity 11.71 10.33 12.06
Return on average common equity 11.40 10.32 11.77
Net yield on average earning assets (t/e basis) 3.72 3.46 3.59
Efficiency ratio 66.01 62.02 64.51
Leverage ratio 8.54 7.91 8.40
Tier I risk-based capital ratio 11.35 11.24 10.97
Total risk-based capital ratio 12.34 12.30 11.97
Tangible common equity ratio 6.41 5.78 6.27
END OF PERIOD BALANCES:
Investment securities portfolio $ 1,916,653 $ 2,145,381 (10.7)% $ 1,905,355 0.6 %
Total loans 3,713,169 3,541,175 4.9 3,695,381 0.5
Assets 6,372,434 6,424,682 (0.8) 6,355,926 0.3
Deposits 4,162,439 3,928,886 5.9 4,124,467 0.9
Stockholders' equity 630,196 611,537 3.1 630,495 0.0
Common stockholders' equity 656,770 624,137 5.2 647,778 1.4
AVERAGE BALANCES:
Investment securities portfolio $ 1,921,879 $ 2,169,979 (11.4)% $ 1,927,955 (0.3)%
Loans:
Originated and acquired residential mortgage 439,513 639,845 (31.3) 479,884 (8.4)
Home equity 914,182 724,721 26.1 879,598 3.9
Other consumer 437,227 471,141 (7.2) 450,264 (2.9)
Commercial real estate 1,232,269 1,026,136 20.1 1,210,952 1.8
Commercial business 677,346 678,183 (0.1) 649,191 4.3
Total loans 3,700,537 3,540,026 4.5 3,669,889 0.8
Earning assets 5,638,368 5,724,769 (1.5) 5,614,502 0.4
Assets 6,337,658 6,432,971 (1.5) 6,330,442 0.1
Deposits:
Noninterest-bearing 791,615 783,673 1.0 816,635 (3.1)
Interest-bearing 3,222,234 2,972,333 8.4 3,200,304 0.7
Total deposits 4,013,849 3,756,006 6.9 4,016,939 (0.1)
Stockholders' equity 632,515 618,617 2.2 623,954 1.4
Common stockholders' equity 649,280 618,768 4.9 639,588 1.5