EXHIBIT 99.1
[PROVIDENT BANKSHARES CORPORATION LETTERHEAD]
NEWS RELEASE
PROVIDENT BANKSHARES ANNOUNCES 2006 RESULTS
YEAR OF STRONG GROWTH IN CHALLENGING ENVIRONMENT
BALTIMORE: (January 18, 2007) - Provident Bankshares Corporation (NASDAQ: PBKS),
the parent company of Provident Bank, reported $70.0 million in net income, or
$2.12 per diluted share, for 2006, compared to $73.0 million in net income, or
$2.17 per diluted share, for 2005. For the fourth quarter of 2006, the Company
reported $11.3 million, or $0.34 per diluted share, which included a $5.0
million, or $0.15 per diluted share, non-recurring charge associated with a
securities and debt reduction transaction. Excluding the effects of this
non-recurring charge, the Bank's net income would have been $75.0 million, or
$2.27 per diluted share, for 2006.
Consistent execution by all lines of business produced growth in loans, deposits
and fee income in 2006. The Company produced higher quality earnings and
improvement in the net interest margin in a challenging banking environment. In
addition, credit conditions were ideal and contributed to a continued decline in
net charge-off rates.
"I believe we demonstrated the perseverance to stay focused on our key
strategies in a challenging 2006," said Chairman and CEO Gary N. Geisel. "We
made the right decisions to strengthen our position as the right size bank in
the market."
2006 HIGHLIGHTS
Results of full year 2006 compared to 2005:
o Net interest margin increased to 3.64% from 3.52%
o Average consumer home equity loans increased $157.0 million, or 20%
o Average residential construction loans increased $185.4 million, or 56%
o Average total loans increased $148.4 million, or 4%
o Average total customer deposits increased $28 million, or 1%
o Service charge income increased 6% to $94 million
o Net charge-offs as a percentage of average loans improved to 0.12% from 0.15%
o Non-performing loans declined by $5.9 million, or 23%
o Allowance to non-performing loans remained strong at 229.15%
2006 FULL YEAR RESULTS
Total average deposits have increased by $142.9 million, or 4%. Growth in money
market accounts and certificates of deposit offset expected declines in demand
deposit accounts and savings as customers shifted deposit balances to products
with higher return and less liquidity due to the current interest rate
environment.
Total average loans grew by $148.4 million, or 4%, with excellent growth in the
Bank's key portfolios -- home equity by 20%, commercial real estate by 16%, and
commercial business by 5%.
"The Bank's culture has been shifting from a product focus to one based on
customer relationships," said Geisel, "and strong business line results for 2006
speak to the success of this approach.
Loan growth has been funded in part by reductions in the Bank's investment
portfolio and originated and acquired loan portfolio. In 2006, average
investments were reduced by 7%, or $148.0 million, and acquired loans declined
by 32%, or $155.3 million. In addition, short and long-term debt was reduced by
10% in aggregate, or $180 million.
Deposit service charges, commissions and loan fees increased by $6.6 million, or
7%, in 2006. Credit quality continues to be excellent; net charge-offs as a
percentage of total average loans declined to 0.12% in 2006, compared to 0.15%
in 2005.
FOURTH QUARTER 2006
Provident Bankshares reported net income of $11.3 million, or $0.34 per diluted
share, for the fourth quarter of 2006, compared to net income of $19.0 million
and $0.57 per diluted share in the same period a year ago. In a move designed to
mitigate the effects of the flat yield curve and to better position the bank for
future performance, the Company on December 1, 2006 announced the sale of $183
million of mortgage-backed securities. This sale resulted in a charge to fourth
quarter 2006 earnings of $5.0 million, or $0.15 per share.
The Company expects incremental benefits in net interest margin, return on
assets, return on equity and earnings per share in 2007, with these improvements
continuing into the future.
Additional measures to counter the effects of the difficult operating
environment were announced by the Bank on December 1, 2006. Short-term cost
savings measures are being implemented, and outside professional resources have
completed the initial stages of a review of all lines of business and internal
operating processes in order to achieve improved efficiencies. This
comprehensive program is anticipated to result in additional revenue and reduced
expenses as early as the third quarter of 2007.
OUTLOOK FOR THE FUTURE
"We have taken the necessary steps to meet this demanding environment, which
most in the industry believe will extend well into 2007," said Geisel. "I look
forward to updating our shareholders, customers and employees on our progress
with our revenue and expense initiatives during the year. I believe that we are
well-positioned for future success, and I anticipate earnings for 2007 to be
within the range of analysts' estimates."
DIVIDEND DECLARED
Provident Bankshares announced today that its Board of Directors has declared an
increased quarterly cash dividend of $0.305 per share. This is the fifty-third
consecutive quarterly dividend increase. The quarterly cash dividend will be
paid on February 9, 2007 to stockholders of record at the close of business on
January 29, 2007.
SHARE REPURCHASE AUTHORIZED
The Company today announced that the Company's Board of Directors has approved
the repurchase of up to 5% of the Company's outstanding common stock, or
approximately 1.6 million shares. The program will commence immediately.
Repurchases, which will be conducted through open market purchases or privately
negotiated transactions, will be made from time to time depending on market
conditions and other factors.
ANNUAL MEETING ANNOUNCED
Provident Bankshares announced today that the Corporation's annual meeting of
stockholders will be held on May 16, 2007.
ABOUT PROVIDENT BANKSHARES CORPORATION
Provident Bankshares Corporation is the holding company for Provident Bank,
currently the second largest independent commercial bank headquartered in
Maryland. With $6.3 billion in assets, Provident serves individuals and
businesses in the key metropolitan areas of Baltimore, Washington and Richmond
through a network of 155 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 fourth quarter earnings teleconference will
be webcast at 10 a.m. ET on Thursday, January 18, 2007. The conference call will
include a discussion of the Company's fourth 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 February 1,
2007. To listen to the conference call, please go to the Company's website to
register, download and install any necessary software. When in the Company's
website, follow these links:
o About Provident
o Investor Relations
o Upcoming Events
o Provident Bankshares Corporation Fourth Quarter 2006
Results Audio Webcast
An audio replay of the teleconference will be available through February 1, 2007
by dialing 1-888-286-8010, passcode 22798103; 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")
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, 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. NO FORWARD-LOOKING STATEMENT
CAN BE GUARANTEED, AND ACTUAL RESULTS MAY DIFFER FROM THOSE PROJECTED. THE
COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE ANY FORWARD-LOOKING
STATEMENT, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
FORWARD-LOOKING STATEMENTS IN THIS RELEASE SHOULD BE EVALUATED TOGETHER WITH THE
UNCERTAINTIES THAT AFFECT THE COMPANY'S BUSINESS, PARTICULARLY THOSE MENTIONED
UNDER THE HEADINGS "FORWARD -LOOKING STATEMENTS" AND "ITEM 1A. RISK FACTORS" IN
THE COMPANY'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2005, AND ITS REPORTS ON
FORMS 10-Q AND 8-K, WHICH THE COMPANY INCORPORATES BY REFERENCE.
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.
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(DOLLARS IN THOUSANDS,EXCEPT PER SHARE DATA)
Three Months Ended Three Months Ended
December 31, September 30,
---------------------------------------- --------------------------
2006 2005 % Change 2006 % Change
------------- ------------ --------- ------------ -----------
SUMMARY INCOME STATEMENTS:
Net interest income $ 49,280 $ 50,508 (2.4)% $ 51,088 (3.5)%
Provision for loan losses 1,877 400 369.3 954 96.8
Non-interest income 22,414 28,544 (21.5) 31,626 (29.1)
Net gains (losses) (7,542) 478 - 373 -
Derivative losses (19) (1,261) (98.5) 643 (103.0)
Non-interest income, excluding total gains (losses) 29,975 29,327 2.2 30,610 (2.1)
Total revenue, excluding total gains (losses) 79,255 79,835 (0.7) 81,698 (3.0)
Non-interest expense 55,379 51,657 7.2 52,614 5.3
Income tax expense 3,155 8,025 (60.7) 8,707 (63.8)
Net income 11,283 18,970 (40.5) 20,439 (44.8)
SHARE DATA:
Basic earnings per share $ 0.35 $ 0.58 (39.7)% $ 0.63 (44.4)%
Diluted earnings per share 0.34 0.57 (40.4) 0.62 (45.2)
Cash dividends paid per share 0.300 0.280 7.1 0.295 1.7
Book value per share 19.52 19.14 2.0 19.79 (1.4)
Weighted average shares - basic 32,573,415 32,904,879 (1.0) 32,632,516 (0.2)
Weighted average shares - diluted 32,887,017 33,560,110 (2.0) 33,037,479 (0.5)
Common shares outstanding 32,433,387 32,933,118 (1.5) 32,680,266 (0.8)
SELECTED RATIOS:
Return on average assets 0.70 % 1.19 % 1.26 %
Return on average equity 6.89 12.06 12.81
Return on average common equity 6.78 11.77 12.34
Net yield on average earning assets (t/e basis) 3.50 3.59 3.60
Efficiency ratio 69.32 64.51 63.93
Leverage ratio 8.53 8.40 8.58
Tier I risk-based capital ratio 10.90 10.97 11.18
Total risk-based capital ratio 11.85 11.97 12.13
Tangible common equity ratio 6.50 6.27 6.50
END OF PERIOD BALANCES:
Investment securities portfolio $ 1,684,962 $ 1,905,355 (11.6)% $ 1,889,954 (10.8)%
Total loans 3,865,492 3,695,381 4.6 3,768,027 2.6
Assets 6,296,494 6,355,926 (0.9) 6,410,291 (1.8)
Deposits 4,140,112 4,124,467 0.4 4,131,702 0.2
Stockholders' equity 633,154 630,495 0.4 646,886 (2.1)
Common stockholders' equity 655,739 647,778 1.2 663,758 (1.2)
AVERAGE BALANCES:
Investment securities portfolio $ 1,833,442 $ 1,927,955 (4.9)% $ 1,908,566 (3.9)%
Loans:
Originated and acquired residential mortgage 344,201 479,884 (28.3) 373,568 (7.9)
Home equity 993,942 879,598 13.0 983,288 1.1
Other consumer 409,401 450,264 (9.1) 422,094 (3.0)
Commercial real estate 1,348,307 1,210,952 11.3 1,292,143 4.3
Commercial business 714,037 649,191 10.0 703,523 1.5
Total loans 3,809,888 3,669,889 3.8 3,774,616 0.9
Earning assets 5,663,261 5,614,502 0.9 5,701,946 (0.7)
Assets 6,372,161 6,330,442 0.7 6,406,772 (0.5)
Deposits:
Noninterest-bearing 742,494 816,635 (9.1) 759,874 (2.3)
Interest-bearing 3,337,785 3,200,304 4.3 3,264,255 2.3
Total deposits 4,080,279 4,016,939 1.6 4,024,129 1.4
Stockholders' equity 649,859 623,954 4.2 632,886 2.7
Common stockholders' equity 660,342 639,588 3.2 657,158 0.5
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(DOLLARS IN THOUSANDS,EXCEPT PER SHARE DATA)
Twelve Months Ended
December 31,
------------------------------------------
2006 2005 % Change
------------- ------------- ----------
SUMMARY INCOME STATEMENTS:
Net interest income $ 204,003 $ 198,710 2.7 %
Provision for loan losses 3,973 5,023 (20.9)
Non-interest income 113,670 112,509 1.0
Net gains (losses) (6,426) 1,292 -
Derivative losses (533) (4,367) (87.8)
Non-interest income, excluding total gains (losses) 120,629 115,584 4.4
Total revenue, excluding total gains (losses) 324,632 314,294 3.3
Non-interest expense 214,579 200,737 6.9
Income tax expense 29,118 32,509 (10.4)
Net income 70,003 72,950 (4.0)
SHARE DATA:
Basic earnings per share $ 2.14 $ 2.21 (3.2)%
Diluted earnings per share 2.12 2.17 (2.3)
Cash dividends paid per share 1.17 1.09 7.3
Book value per share 19.52 19.14 2.0
Weighted average shares - basic 32,727,420 32,956,055 (0.7)
Weighted average shares - diluted 33,082,089 33,655,673 (1.7)
Common shares outstanding 32,433,387 32,933,118 (1.5)
SELECTED RATIOS:
Return on average assets 1.09 % 1.14 %
Return on average equity 11.02 11.70
Return on average common equity 10.71 11.59
Net yield on average earning assets (t/e basis) 3.64 3.52
Efficiency ratio 65.66 63.39
Leverage ratio 8.53 8.40
Tier I risk-based capital ratio 10.90 10.97
Total risk-based capital ratio 11.85 11.97
Tangible common equity ratio 6.50 6.27
END OF PERIOD BALANCES:
Investment securities portfolio $ 1,684,962 $ 1,905,355 (11.6)%
Total loans 3,865,492 3,695,381 4.6
Assets 6,296,494 6,355,926 (0.9)
Deposits 4,140,112 4,124,467 0.4
Stockholders' equity 633,154 630,495 0.4
Common stockholders' equity 655,739 647,778 1.2
AVERAGE BALANCES:
Investment securities portfolio $ 1,896,460 $ 2,044,417 (7.2)%
Loans:
Originated and acquired residential mortgage 389,836 565,693 (31.1)
Home equity 959,731 802,723 19.6
Other consumer 422,364 461,219 (8.4)
Commercial real estate 1,284,924 1,109,272 15.8
Commercial business 697,050 666,552 4.6
Total loans 3,753,905 3,605,459 4.1
Earning assets 5,668,682 5,664,773 0.1
Assets 6,375,183 6,381,398 (0.1)
Deposits:
Noninterest-bearing 773,369 808,137 (4.3)
Interest-bearing 3,271,892 3,094,212 5.7
Total deposits 4,045,261 3,902,349 3.7
Stockholders' equity 635,356 623,319 1.9
Common stockholders' equity 653,822 629,354 3.9