PBKS Provident Bankshares (MM)

Company Reports $15.1 Million in Earnings and Stable Loan Quality BALTIMORE, July 17 /PRNewswire-FirstCall/ -- Provident Bankshares Corporation (NASDAQ:PBKS), the parent company of Provident Bank, today reported net income of $15.1 million, or $0.41 per diluted share, for the quarter ended June 30, 2008. Return on average assets rose to 0.96% and return on average equity rose to 10.65%, for the quarter ended June 30, 2008 as compared to (1.10)% and (12.73)% for the quarter ended March 31, 2008. As a result of the second quarter's earnings and capital issuance, the Company's tangible capital ratio rose from 4.20% to 5.03%, the total risk based capital ratio rose from 10.33% to 12.83%, and Tier 1 capital rose from 9.23% to 10.68%, when compared to the quarter ended March 31, 2008. "I believe the second quarter results demonstrate the benefit of continued adherence to our key strategies while facing the challenges of unstable financial markets," said Gary N. Geisel, Chairman and CEO. "We took the necessary steps to position ourselves to handle these uncertain market conditions. The increased capital and profitable core banking operation contributed during the quarter." During the second quarter of 2008, the Company's loan portfolio showed no significant deterioration in its credit quality. Compared to the first quarter of 2008, non-performing loans as a percentage of total loans decreased to 0.59% from 0.73%. This decline is mainly due to three foreclosed properties transferred to the other real estate owned category in the second quarter of 2008. Loan delinquencies greater than 90 days as a percentage of total loans declined to 0.17% from 0.20%. Charge-offs as a percentage of total loans increased slightly to 0.33% from 0.30%. Economic conditions in Provident's regional footprint continue to hold up reasonably well as compared to other regional markets. Unemployment levels for May 2008 were 4.1% for Baltimore, 4.0% for the Richmond area and 3.5% for the Washington-Arlington-Alexandria area. These levels were well below the 5.2% for the National rate. Average unsold housing inventories in the Mid- Atlantic region remained stable for the second quarter of 2008. Investment Portfolio During the second quarter of 2008, the Company recorded a $4.1 million write-down associated with two non-agency mortgage-backed securities, one of which was partially written down in the prior quarter. During the second quarter 2008, the REIT trust preferred securities portfolio required no additional write-downs. Credit performance of the Company's bank trust preferred securities portfolio remained satisfactory at June 30, 2008. As announced on July 3, 2008, $346.7 million of these securities were transferred from the available for sale to the held to maturity category to reduce the potential risk of additional volatility to the Company's capital. Second Quarter Results Compared to Same Period of 2007 Net income for the quarter ended June 30, 2008 was $15.1 million, or $0.41 per diluted share, compared to $15.5 million in net income, or $0.48 per diluted share, for the quarter ended June 30, 2007. The $425 thousand decline in net income was due to an increase in the Company's provision for loan losses of $1.6 million, a decline of $2.5 million in net interest income and an impairment charge on investment securities of $4.1 million. As a prudent step, management decided to increase the provision for loan losses due to the current market conditions. More than offsetting these declines were a $2.3 million improvement in non-interest expense and an $8.7 million gain from the sale of shares in MasterCard in the second quarter of 2008. The improvement in non-interest expense was primarily the result of the Company's previously announced corporate-wide efficiency and infrastructure initiatives. In the second quarter of 2008, average total loans grew $294.8 million, or 8% over the same period a year ago, primarily due to an increase in average commercial business loans, which increased $142.6 million, or 18%. Outlook Chairman Geisel observed, "We believe that the current economic pressures will most likely continue through the remainder of 2008 and most of 2009. Provident has and will continue to position itself to navigate the challenges faced by all financial institutions. By remaining focused on our key strategies, Provident's plan is to emerge as an even stronger regional bank when stability returns to the market." Dividend Declared Provident Bankshares announced today that its Board of Directors has declared a quarterly cash dividend of $0.11 per share. The quarterly cash dividend will be paid on August 8, 2008, to common stockholders of record at the close of business on July 28, 2008. The Board of Directors also declared a quarterly dividend of $29.72 per share on its convertible preferred stock. Due to the timing of the issuance of the convertible preferred stock on April 14, 2008, this amount includes $25.00 for the current quarter and $4.72 for the prior quarter. This dividend will be paid on August 1, 2008, to preferred stockholders of record at the close of business on July 28, 2008. About Provident Bankshares Corporation Provident Bankshares Corporation is the holding company for Provident Bank, the largest independent commercial bank headquartered in Maryland. With $6.4 billion in assets, Provident serves individuals and businesses in the key metropolitan areas of Baltimore, Washington and Richmond through a current branch network of 142 offices in Maryland, Virginia, and southern York County, Pennsylvania. Provident Bank also offers related financial services through wholly owned subsidiaries. Securities brokerage, investment management and related insurance services are available through Provident Investment Company and leases through Court Square Leasing. Visit Provident on the web at http://www.provbank.com/. Webcast Information Provident Bankshares Corporation's second quarter earnings teleconference will be webcast at 2 p.m. ET on July 17, 2008. The conference call will include a discussion of the Company's second quarter 2008 results of operations and may include forward-looking information. The conference call will be simultaneously webcast at http://www.provbank.com/ and archived through July 24, 2008. 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: -- About Provident -- Investor Relations -- Upcoming Events -- Provident Bankshares Corporation Second Quarter 2008 Results Audio Webcast An audio replay of the teleconference will be available July 17, 2008 at 4:00 p.m. through July 24, 2008 by dialing 1-888-286-8010, passcode 33918877; 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, 2007, 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. TABLES FOLLOW PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES FINANCIAL SUMMARY (dollars in thousands, except per share data) Three Months Ended June 30, 2008 2007 % Change SUMMARY NON-GAAP INCOME STATEMENTS: Net interest income $46,003 $48,548 (5.2)% Provision for loan losses 6,400 4,792 33.6 Non-interest income (loss) 33,014 31,085 6.2 Impairment on investment securities (4,051) - - Net gains (losses) 8,151 420 - Non-interest income, excluding total gains (losses) 28,914 30,665 (5.7) Total revenue, excluding total gains (losses) 74,917 79,213 (5.4) Non-interest expense 50,373 52,628 (4.3) Restructuring activities (34) 481 (107.1) Non-interest expense, excluding restructuring 50,407 52,147 (3.3) Income tax expense (benefit) 7,147 6,691 6.8 Net income (loss) 15,097 15,522 (2.7) Beneficial conversion feature - preferred stock 1,463 - - Net income (loss) available to common stockholders 13,634 15,522 (12.2) SHARE DATA: Basic earnings (loss) per share $0.42 $0.48 (12.5)% Diluted earnings (loss) per share 0.41 0.48 (14.6) Cash dividends paid per common share 0.110 0.310 (64.5) Book value per common share 15.55 19.34 (19.6) Weighted average shares - basic 32,789,883 32,128,061 2.1 Weighted average shares - diluted 37,075,320 32,396,244 14.4 Common shares outstanding 33,172,640 32,268,128 2.8 SELECTED RATIOS: Return on average assets 0.96 % 1.00 % Return on average equity 10.65 9.80 Return on average common equity 8.98 9.66 Net yield on average earning assets (t/e basis) 3.28 3.57 Efficiency ratio (excludes restructuring activities) 66.57 65.30 Leverage ratio 8.75 8.85 Tier I risk-based capital ratio 10.68 11.06 Total risk-based capital ratio 12.83 12.03 Tangible common equity ratio 5.89 6.63 END OF PERIOD BALANCES: Investment securities portfolio $1,379,303 $1,580,508 (12.7)% Total loans 4,202,407 3,928,086 7.0 Assets 6,375,894 6,263,379 1.8 Deposits 4,360,480 4,188,288 4.1 Stockholders' equity 567,005 624,167 (9.2) Common stockholders' equity 619,877 659,852 (6.1) AVERAGE BALANCES: Investment securities portfolio $1,535,289 $1,609,654 (4.6)% Loans: Originated and acquired residential mortgage 274,357 311,122 (11.8) Home equity 1,089,274 1,014,915 7.3 Other consumer 383,834 394,611 (2.7) Commercial real estate 1,533,109 1,407,768 8.9 Commercial business 917,765 775,142 18.4 Total loans 4,198,339 3,903,558 7.6 Earning assets 5,746,572 5,528,392 3.9 Assets 6,436,121 6,215,193 3.6 Deposits: Noninterest-bearing 665,638 743,185 (10.4) Interest-bearing 3,642,386 3,425,771 6.3 Total deposits 4,308,024 4,168,956 3.3 Stockholders' equity 570,177 635,352 (10.3) Common stockholders' equity 610,483 644,237 (5.2) Three Months Ended March 31, 2008 % Change SUMMARY NON-GAAP INCOME STATEMENTS: Net interest income $44,989 2.3 % Provision for loan losses 3,114 105.5 Non-interest income (loss) (15,124) - Impairment on investment securities (42,655) (90.5) Net gains (losses) (191) - Non-interest income, excluding total gains (losses) 27,722 4.3 Total revenue, excluding total gains (losses) 72,711 3.0 Non-interest expense 51,431 (2.1) Restructuring activities 74 (145.9) Non-interest expense, excluding restructuring 51,357 (1.8) Income tax expense (benefit) (7,058) - Net income (loss) (17,622) (185.7) Beneficial conversion feature - preferred stock - - Net income (loss) available to common stockholders (17,622) (177.4) SHARE DATA: Basic earnings (loss) per share $(0.56) (175.0)% Diluted earnings (loss) per share (0.56) (173.2) Cash dividends paid per common share 0.325 (66.2) Book value per common share 16.31 (4.7) Weighted average shares - basic 31,536,920 4.0 Weighted average shares - diluted 31,536,920 17.6 Common shares outstanding 31,737,501 4.5 SELECTED RATIOS: Return on average assets (1.10)% Return on average equity (12.73) Return on average common equity (11.43) Net yield on average earning assets (t/e basis) 3.17 Efficiency ratio (excludes restructuring activities) 69.72 Leverage ratio 7.45 Tier I risk-based capital ratio 9.23 Total risk-based capital ratio 10.33 Tangible common equity ratio 5.48 END OF PERIOD BALANCES: Investment securities portfolio $1,413,925 (2.4)% Total loans 4,202,677 - Assets 6,403,916 (0.4) Deposits 4,370,627 (0.2) Stockholders' equity 517,549 9.6 Common stockholders' equity 596,430 3.9 AVERAGE BALANCES: Investment securities portfolio $1,579,843 (2.8)% Loans: Originated and acquired residential mortgage 290,093 (5.4) Home equity 1,085,752 0.3 Other consumer 382,925 0.2 Commercial real estate 1,534,473 (0.1) Commercial business 936,933 (2.0) Total loans 4,230,176 (0.8) Earning assets 5,822,547 (1.3) Assets 6,511,329 (1.2) Deposits: Noninterest-bearing 643,161 3.5 Interest-bearing 3,589,587 1.5 Total deposits 4,232,748 1.8 Stockholders' equity 556,631 2.4 Common stockholders' equity 619,909 (1.5) PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES FINANCIAL SUMMARY (dollars in thousands, except per share data) Six Months Ended June 30, 2008 2007 % Change SUMMARY NON-GAAP INCOME STATEMENTS: Net interest income $90,992 $97,483 (6.7)% Provision for loan losses 9,514 5,844 62.8 Non-interest income 17,890 60,954 (70.6) Impairment on investment securities (46,706) - - Net gains 7,960 1,623 - Non-interest income, excluding total gains 56,636 59,331 (4.5) Total revenue, excluding total gains 147,628 156,814 (5.9) Non-interest expense 101,804 107,396 (5.2) Restructuring activities 40 1,348 (97.0) Non-interest expense, excluding restructuring 101,764 106,048 (4.0) Income tax expense 89 13,561 (99.3) Net income (loss) (2,525) 31,636 (108.0) Beneficial conversion feature - preferred stock 1,463 - - Net income (loss) available to common stockholders (3,988) 31,636 (112.6) SHARE DATA: Basic earnings (loss) per share $(0.12) $0.98 (112.2)% Diluted earnings (loss) per share (0.12) 0.98 (112.2) Cash dividends paid per common share 0.435 0.615 (29.3) Book value per common share 15.55 19.34 (19.6) Weighted average shares - basic 32,164,164 32,163,803 - Weighted average shares - diluted 32,164,164 32,440,326 (0.9) Common shares outstanding 33,172,640 32,268,128 2.8 SELECTED RATIOS: Return on average assets (0.08)% 1.03 % Return on average equity (0.90) 10.08 Return on average common equity (1.30) 9.94 Net yield on average earning assets (t/e basis) 3.22 3.60 Efficiency ratio (excludes restructuring activities) 68.12 67.07 Leverage ratio 8.75 8.85 Tier I risk-based capital ratio 10.68 11.06 Total risk-based capital ratio 12.83 12.03 Tangible common equity ratio 5.89 6.63 END OF PERIOD BALANCES: Investment securities portfolio $1,379,303 $1,580,508 (12.7)% Total loans 4,202,407 3,928,086 7.0 Assets 6,375,894 6,263,379 1.8 Deposits 4,360,480 4,188,288 4.1 Stockholders' equity 567,005 624,167 (9.2) Common stockholders' equity 619,877 659,852 (6.1) AVERAGE BALANCES: Investment securities portfolio $1,557,565 $1,636,346 (4.8)% Loans: Originated and acquired residential mortgage 282,225 318,211 (11.3) Home equity 1,087,513 1,005,768 8.1 Other consumer 383,380 397,762 (3.6) Commercial real estate 1,533,791 1,407,729 9.0 Commercial business 927,349 758,071 22.3 Total loans 4,214,258 3,887,541 8.4 Earning assets 5,784,560 5,539,005 4.4 Assets 6,473,725 6,224,792 4.0 Deposits: Noninterest-bearing 654,400 734,046 (10.9) Interest-bearing 3,615,987 3,398,391 6.4 Total deposits 4,270,387 4,132,437 3.3 Stockholders' equity 563,404 632,677 (10.9) Common stockholders' equity 615,196 642,049 (4.2) DATASOURCE: Provident Bankshares Corporation CONTACT: Media, Vicki Cox, +1-410-277-2063; Investors, Cheryl B. Ursida, +1-410-277-2080, both of Provident Bankshares Corporation Web site: http://www.provbank.com/ Company News On-Call: http://www.prnewswire.com/comp/721938.html

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