UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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PROVIDENT BANKSHARES CORPORATION
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(Name of Registrant as Specified In Its Charter)
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Reg. (S) 240.14a-101.
SEC 1913 (3-99)
PROVIDENT BANKSHARES
----------------------
CORPORATION
PROVIDENT BANKSHARES CORPORATION
(NASDAQ: PBKS)
. Total assets of $5.1 billion as of December 31, 1999
. Second largest commercial bank chartered in Maryland ranked by total asset
size
. Major presence in dynamic Baltimore-Washington corridor as well as Northern
Virginia; 83 banking offices
. 25 consecutive quarterly increases in core earnings
. Book value at December 31, 1999: $10.76 per share
1999
FINANCIAL HIGHLIGHTS
. Double digit earnings growth of 13.1%
. Growth in earnings per share of 13.6%
. Growth in average deposits of 11.7%
. Growth in non-interest income of 13.2%
. Exceeded EPS consensus estimate of $1.65 by $.02
. Improved operating efficiency by 3.6%
1999
PERFORMANCE FOR THE YEAR
($ in thousands, except per share data) 1999 1998 Growth
---- ---- ------
Net Income $44,150 $39,030 13.1%
Earnings Per Share $ 1.67 $ 1.47 13.6%
Return on Assets 0.90% 0.90%
Return on Common Equity 14.61% 13.99%
Net Interest Margin 3.13% 3.12%
RETAIL GROWTH STRATEGY
. Increasing market share with "hub and spoke" strategy
. In-store branches provide convenience with prime locations, extended hours
. In-store partners include Wal-Mart, Shoppers Food Warehouse and Metro Foods
. Traditional branches support network with drive-in banking, safe deposit
services and expanded commercial capabilities
. Provides platform to grow Commercial and Real Estate customer base
RETAIL GROWTH STRATEGY
[MAP APPEARS HERE]
Montgomery County/Northern Baltimore City/Baltimore County
Virginia . Household Growth - 1.9%
. Household Growth - 4.6% . Average Income - $61,500
. Average Income - $79,600 . Average Property Value - $103,000
. Average Property Value - $174,000
INCREASE DEPOSIT MARKET SHARE
Percent of Maryland Commercial Banks
[Graph Appears Here]
1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ----
3.1% 3.3% 3.7% 4.3% 4.6% 5.1% 5.9%
COMPETITION - MARKET SHARE
[Bar Graph Appears Here]
All Bank of Sun Chevy First
PBKS First America Trust Chase Mercantile Union
---- ----- ------- ----- ----- ---------- -----
1998 5.1% 11.4% 16.1% 9.0% 7.0% 3.5% 7.9%
1999 5.9% 11.7% 16.3% 8.6% 7.1% 3.2% 6.9%
INVESTMENT HIGHLIGHTS
. Valuable franchise in highly attractive markets
. Enhancing franchise value while improving profitability
. Well positioned in markets served
. Highly experienced senior management team
. Enhancing shareholder value
. Asset quality
VALUABLE FRANCHISE IN
HIGHLY ATTRACTIVE MARKETS
. 83 Branches as of December 31, 1999
. Branches located in metropolitan Baltimore, affluent Maryland suburbs of
Washington, D.C., Southern Pennsylvania and Northern Virginia
ENHANCING FRANCHISE VALUE
WHILE IMPROVING PROFITABILITY
. Partnerships with Wal-Mart, Shoppers Food Warehouse and Metro Foods allowing
cost effective expansion into prime locations
. Break-even on in-store locations: 18 months on average
. Traditional branches support in-store expansion
. Branch expansion will support commercial calling effort
WELL POSITIONED IN
MARKETS SERVED
. Large enough to provide a full range of services
-- Commercial lending
-- Cash Management services
-- Provident Investment Center, Inc.
-- Internet Banking
-- Leasing companies
. Small enough to be flexible in a world of financial giants
-- Local decision makers
E-COMMERCE CAPABILITIES
[PICTURE APPEARS HERE]
. Web site
-- Open accounts
-- Loan applications
-- Mortgage loans
. PC Banking
. Internet Banking
. Debit Cards
-- Retail and commercial
HIGHLY EXPERIENCED
MANAGEMENT TEAM
Peter M. Martin
Chief Executive Officer
. 33 years banking experience
. CEO: April 1998
. President of Provident Bank: February 1990 - April 1998
Richard J. Oppitz Gary N. Geisel John F. Novak
Office of the Chair Office of the Chair Office of the Chair
. 28 years banking experience with . 29 years banking experience with . 26 years banking experience
executive positions in retail executive positions in retail banking
banking, commercial lending and . 13 years with Equitable Bank,
credit administration . 5 years with Equitable Bank, Baltimore, Maryland, as Senior
Baltimore, Maryland Vice President in charge of
. 6 years with Provident Bank Consumer Lending
. 7 years with Citizens Bank,
. 16 years with Equitable Bank, Laurel, Maryland
Baltimore, Maryland
ENHANCING SHAREHOLDER VALUE
. 25 consecutive quarters of increased core earnings
. 25 consecutive quarters of dividend increases
. Stock buy-back strategy
ASSET QUALITY
[Bar Graph Appears Here] [Bar Graph Appears Here]
ALLOWANCE TO LOANS
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
1.57% 1.35% 1.36% 1.38% 1.26%
NON-PERFORMING TO LOANS
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
0.90% 0.84% 0.36% 0.37% 0.91%
LOANS OUTSTANDING 12/32/99
[Pie Graph Appears Here]
Consumer Commercial Commercial Real Estate Residential Mortgage
- -------- ---------- ----------------------- --------------------
70% 11% 12% 7%
CONSERVATIVE BALANCE
SHEET MANAGEMENT
. Strong internal growth
. Acquired loan strategy
. Alternate Investment
. Seasoned staff
. Broker/dealer relationships
. Strong returns
PROVIDENT BANK
FINANCIAL
STRENGTH
STRATEGIC FINANCIAL OBJECTIVES
. Sustainable Quality Revenue
. EPS Growth
. Increasing Returns on Invested Capital
STABILITY OF EARNINGS
10 Year UST
2 Year UST
3 Month LIBOR
CAPITAL MARKETS
1st Qtr 96 2nd Qtr 96 3rd Qtr 96 4th Qtr 96 1st Qtr 97 2nd Qtr 97 3rd Qtr 97 4th Qtr 97
10 Year US 6.33% 6.71% 6.70% 6.42% 6.90% 6.50% 6.10% 5.74%
2 Year US 5.76% 6.11% 6.10% 5.87% 6.42% 6.07% 5.78% 5.65%
3 Month LIBOR 5.47% 5.58% 5.63% 5.56% 5.77% 5.78% 5.77% 5.81%
1st Qtr 98 2nd Qtr 98 3rd Qtr 98 4th Qtr 98 1st Qtr 99 2nd Qtr 99 3rd Qtr 99 4th Qtr 99
6.65% 5.45% 4.42% 4.65% 5.24% 5.78% 5.88% 6.44%
5.56% 5.47% 4.27% 4.53% 4.99% 5.51% 5.60% 6.21%
5.71% 5.69% 5.31% 5.07% 5.00% 5.37% 6.08% 6.00%
EARNINGS PER SHARE
1st Qtr 96 2nd Qtr 96 3rd Qtr 96 4th Qtr 96 1st Qtr 97 2nd Qtr 97 3rd Qtr 97 4th Qtr 97
EPS 0.253 0.263 0.281 0.298 0.307 0.313 0.345 0.333
1st Qtr 98 2nd Qtr 98 3rd Qtr 98 4th Qtr 98 1st Qtr 99 2nd Qtr 99 3rd Qtr 99
0.352 0.362 0.371 0.381 0.390 0.420 0.430
[LINE AND BAR GRAPHS APPEAR HERE]
NET INCOME
4Q93 1Q94 2Q94 3Q94 4Q94 1Q95 2Q95 3Q95
2.1 2.5 2.6 2.9 3.4 3.6 3.7 4.4
4Q95 1Q96 2Q96 3Q96 4Q96 1Q97 2Q97 3Q97 4Q97
4.8 5.1 6.4 6.8 5.4 7.7 7.9 8 8.7
1Q98 2Q98 3Q98 4Q98 1Q99 2Q99 3Q99 4Q99
9 9.3 9.7 10.1 10.3 10.9 11.3 11.5
[LINE GRAPH APPEARS HERE]
GROWTH IN EARNINGS PER SHARE
[BAR GRAPH APPEARS HERE]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
$0.88 $1.02 1.30* $1.47 $1.67
*exclusive of merger related expenses
RETURN ON COMMON EQUITY
[BAR GRAPH APPEARS HERE]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
9.6% 10.9% 11.4% 13.3% 14.0% 14.6%
EFFICIENCY RATIO
[BAR GRAPH APPEARS HERE]
Branch Expansion
1996: 44 Branches
1997: 66 Branches
1998: 68 Branches
1999: 83 Branches
1996 1997 1998 1999*
----- ----- ----- -----
PBKS 66.76 65.30 65.80 63.40
PEER 57.72 56.72 55.91 55.74
*Note: Peer though Sept. 1999
AVERAGE ASSETS
($ in billions)
[BAR GRAPH APPEARS HERE]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
$2.96 $3.32 $3.65 $4.35 $4.91
Annualized growth rate 12.8%
AVERAGE LOANS
($ in billions)
[BAR GRAPH APPEARS HERE]
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
$1.82 $2.02 $2.44 $2.88 $3.26
Annualized growth rate 13.2%
CORE DEPOSITS
[Bar Chart Appears Here]
($ in billions)
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
$2.05 $2.28 $2.74 $3.41 $3.81
Annualized growth rate 11.7%
INVESTMENT HIGHLIGHTS
. Valuable franchise in highly attractive markets
. Enhancing franchise value while improving profitability
. Well positioned in markets served
. Highly experienced senior management team
. Enhancing shareholder value
. Asset quality
PROVIDENT BANKSHARES
----------------------
CORPORATION