<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For Quarter Ended Commission File Number
September 30, 1996 0-16421
PROVIDENT BANKSHARES CORPORATION
--------------------------------
(Exact Name of Registrant as Specified in its Charter)
Maryland 52-1518642
- ------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification
Number)
114 East Lexington Street, Baltimore, Maryland 21202
----------------------------------------------------
(Address of Principal Executive Offices)
(410) 281-7000
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of The Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, par value $1.00 per share, 8,459,492 shares outstanding at
November 1, 1996.
<PAGE>2
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Condition--
September 30, 1996 and 1995 and December 31, 1995 3
Consolidated Statement of Income--
Three and Nine Months Ended September 30, 1996 and 1995 4
Consolidated Statement of Cash Flows--
Nine Months Ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition 10
PART II - OTHER INFORMATION 14
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 15
EXHIBIT INDEX 16
2
<PAGE>3
PART I. FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF CONDITION
Provident Bankshares Corporation and Subsidiaries
<TABLE>
<CAPTION>
September 30 December 31 September 30
(dollars in thousands) 1996 1995 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and Due From Banks $ 47,549 $ 49,891 $ 50,124
Short-Term Investments 6,755 2,710 3,523
Mortgage Loans Held for Sale 54,116 86,326 87,995
Securities Available for Sale 871,062 1,017,697 356,695
Securities Held to Maturity (Market Value $31,372, $31,018
and $434,869 at September 30, 1996, December 31, 1995,
and September 30, 1995, respectively) 32,148 31,420 424,738
Loans:
Consumer 1,075,038 778,467 725,639
Commercial Business 235,686 205,876 184,128
Real Estate -- Construction 118,727 77,896 63,887
Real Estate -- Mortgage 278,676 270,549 552,627
- ------------------------------------------------------------------------------------------------------
Total Loans 1,708,127 1,332,788 1,526,281
Less: Allowance for Loan Losses 23,370 21,462 21,100
- ------------------------------------------------------------------------------------------------------
Net Loans 1,684,757 1,311,326 1,505,181
- ------------------------------------------------------------------------------------------------------
Premises and Equipment, Net 32,368 33,059 31,034
Accrued Interest Receivable 19,317 16,778 15,981
Other Assets 25,273 13,754 23,745
- ------------------------------------------------------------------------------------------------------
Total Assets $ 2,773,345 $ 2,562,961 $ 2,499,016
======================================================================================================
LIABILITIES
Deposits:
Noninterest-Bearing $ 141,517 $ 132,479 $ 121,256
Interest-Bearing 1,567,606 1,436,860 1,416,354
- ------------------------------------------------------------------------------------------------------
Total Deposits 1,709,123 1,569,339 1,537,610
- ------------------------------------------------------------------------------------------------------
Short-Term Borrowings 571,761 517,641 501,785
Long-Term Debt 276,738 267,865 262,917
Other Liabilities 27,286 23,708 25,563
- ------------------------------------------------------------------------------------------------------
Total Liabilities 2,584,908 2,378,553 2,327,875
- ------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock (Par Value $1.00) Authorized 30,000,000 Shares,
Issued 8,686,909, 8,125,403 and 8,112,480 Shares at
September 30, 1996, December 31, 1995 and September 30,
1995, respectively 8,687 8,125 8,112
Capital Surplus 94,552 78,951 78,721
Retained Earnings 92,735 93,031 89,138
Net Unrealized Gain (Loss) on Debt Securities (5,047) 6,791 (2,340)
Treasury Stock at Cost--228,066 Shares at September 30, 1996,
December 31, 1995 and September 30, 1995 (2,490) (2,490) (2,490)
- ------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 188,437 184,408 171,141
- ------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 2,773,345 $ 2,562,961 $ 2,499,016
======================================================================================================
</TABLE>
3
<PAGE>4
CONSOLIDATED STATEMENT OF INCOME
Provident Bankshares Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
- -----------------------------------------------------------------------------------------------------
(in thousands, except per share data) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 34,981 $ 30,992 $ 96,784 $ 86,013
Interest on Securities 15,440 14,358 47,876 44,381
Tax-Advantaged Interest 586 383 2,087 1,270
Interest on Short-Term Investments 98 69 179 192
- -----------------------------------------------------------------------------------------------------
Total Interest Income 51,105 45,802 146,926 131,856
- -----------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on Deposits 16,643 14,346 47,153 41,171
Interest on Short-Term Borrowings 7,018 7,307 20,295 20,483
Interest on Long-Term Debt 4,185 3,408 11,839 9,221
- -----------------------------------------------------------------------------------------------------
Total Interest Expense 27,846 25,061 79,287 70,875
- -----------------------------------------------------------------------------------------------------
Net Interest Income 23,259 20,741 67,639 60,981
Less: Provision for Loan Losses 1,838 300 7,613 545
- -----------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 21,421 20,441 60,026 60,436
- -----------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service Charges on Deposit Accounts 4,888 3,508 13,084 8,858
Mortgage Banking Activities 4,807 2,075 11,316 5,515
Commissions and Fees 734 455 2,272 1,622
Net Securities Gains (Losses) 42 19 5,047 (2,757)
Other Non-Interest Income 1,181 1,642 3,415 6,963
- -----------------------------------------------------------------------------------------------------
Total Non-Interest Income 11,652 7,699 35,134 20,201
- -----------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and Employee Benefits 12,219 11,017 36,491 31,792
Occupancy Expense, Net 2,081 2,033 6,024 5,752
Furniture and Equipment Expense 1,632 1,346 4,710 3,924
External Processing Fees 2,750 1,910 7,459 5,360
Other Non-Interest Expense 4,840 4,194 13,622 14,237
- -----------------------------------------------------------------------------------------------------
Total Non-Interest Expense 23,522 20,500 68,306 61,065
- -----------------------------------------------------------------------------------------------------
Income Before Taxes 9,551 7,640 26,854 19,572
Income Tax Expense 3,646 2,830 10,039 6,647
- -----------------------------------------------------------------------------------------------------
Net Income $ 5,905 $ 4,810 $ 16,815 $ 12,925
- -----------------------------------------------------------------------------------------------------
Net Income Per Share $ 0.67 $ 0.56 $ 1.92 $ 1.51
- -----------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>5
CONSOLIDATED STATEMENT OF CASH FLOWS
Provident Bankshares Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended September 30
- ---------------------------------------------------------------------------------------------------------
(in thousands) 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 16,815 $ 12,925
Adjustments to Reconcile Net Income to
Net Cash Provided (Used) by Operating Activities:
Depreciation and Amortization 4,937 3,965
Provision for Loan Losses 7,613 545
Provision for Deferred Income Tax (Benefit) (495) 8,486
Realized Net Securities (Gains) Losses (5,047) 2,757
Loans Originated or
Acquired and Held for Sale (358,760) (274,283)
Proceeds from Sales of Loans 395,120 231,988
Gain on Sales of Loans (4,150) (154)
Other Operating Activities (6,957) 2,215
- ---------------------------------------------------------------------------------------------------------
Total Adjustments 32,261 (24,481)
- ---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 49,076 (11,556)
- ---------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Principal Collections and Maturities of Securities Available for Sale 137,087 75,871
Principal Collections and Maturities of Securities Held to Maturity 3,277 37,163
Proceeds on Sales of Securities Available for Sale 232,693 177,923
Purchases of Securities Held to Maturity (4,047) (18,924)
Purchases of Securities Available for Sale (238,117) (185,096)
Loan Originations and Purchases
Less Principal Collections (376,859) (253,247)
Purchases of Premises and Equipment (3,236) (4,881)
- ---------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (249,202) (171,191)
- ---------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net Increase in Deposits 139,784 89,033
Net Increase in Short-Term Borrowings 54,120 22,535
Proceeds from Long-Term Debt 131,750 90,750
Payments and Maturities of Long-Term Debt (122,877) (15,033)
Issuance of Common Stock 3,633 4,821
Cash Dividends on Common Stock (4,581) (3,086)
- ---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 201,829 189,020
- ---------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,703 6,273
Cash and Cash Equivalents at Beginning of Year 52,601 47,374
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 54,304 $ 53,647
=========================================================================================================
SUPPLEMENTAL DISCLOSURES
- ---------------------------------------------------------------------------------------------------------
Interest Paid, Net of Amount Capitalized $ 44,139 $ 38,671
Income Taxes Paid (Received) 11,752 (5,373)
Stock Dividend 12,530 8,278
</TABLE>
5
<PAGE>6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
SEPTEMBER 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of only normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine month period ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996. For further information, refer to the consolidated financial statements
and notes thereto included in the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1995 as filed with the Securities and Exchange
Commission on March 18, 1996.
6
<PAGE>7
NOTE B - EARNINGS PER SHARE
Net income per share is based on the number of weighted average common
shares outstanding for the three and nine month periods ended September 30, 1996
(8,808,011 and 8,774,548 shares respectively) which includes common stock
equivalents resulting from outstanding stock options. The results for 1995 have
been given retroactive treatment to the beginning of the year for the May 10,
1996 and May 12, 1995 stock dividends. Exclusive of the retroactive restatement
for the stock dividends, earnings per share were $.58 and $1.58 for the three
and nine month periods ended September 30, 1995. For the three and nine month
periods ended September 30, 1996, respective dividends of $.19 and $.52, per
common share were declared and paid.
NOTE C - INVESTMENT SECURITIES
Effective December 31, 1993 the Corporation adopted Statement of
Financial Accounting Standards No. 115 "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS No. 115"). Under SFAS No. 115, the investment
portfolio is divided among three categories: investment securities, securities
available for sale and trading account securities. Debt securities that the
Corporation has the intent and ability to hold to maturity are included in
securities held to maturity and, accordingly, are carried at cost adjusted for
amortization of premiums and accretion of discounts using the interest method.
Securities available for sale are reported at fair value with any unrealized
appreciation or depreciation in value reported directly as a separate component
of stockholders' equity as an unrealized gain or loss on debt securities which
is reflected net of applicable taxes, and therefore, has no effect on the
reported earnings of the Corporation.
7
<PAGE>8
The aggregate amortized cost and market values of the investment
securities portfolio at September 30 were as follows:
<TABLE>
<CAPTION>
September 30, 1996
-----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
(in thousands) Cost Gains Losses Value
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
U.S. Treasury and Government
Agencies and Corporations $ 15,941 $ -- $ -- $ 15,941
Mortgage-Backed Securities 16,207 -- 776 15,431
- -----------------------------------------------------------------------------------------
Total Securities Held to Maturity 32,148 -- 776 31,372
- -----------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and Government
Agencies and Corporations 5,011 16 -- 5,027
Mortgage-Backed Securities 827,165 3,513 12,139 818,539
Municipal Securities 11,550 255 138 11,667
Other Debt Securities 30,674 79 49 30,704
Equity Securities 5,010 115 -- 5,125
- -----------------------------------------------------------------------------------------
Total Securities Available for Sale 879,410 3,978 12,326 871,062
- -----------------------------------------------------------------------------------------
Total Investment Securities Portfolio $ 911,558 $ 3,978 $ 13,102 $ 902,434
=========================================================================================
September 30, 1995
-----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
(in thousands) Cost Gains Losses Value
- -----------------------------------------------------------------------------------------
SECURITIES HELD TO MATURITY
U.S. Treasury and Government
Agencies and Corporations $ 13,146 $ -- $ -- $ 13,146
Mortgage-Backed Securities 403,117 10,776 929 412,964
Municipal Securities 8,475 340 56 8,759
- -----------------------------------------------------------------------------------------
Total Securities Held to Maturity 424,738 11,116 985 434,869
- -----------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and Government
Agencies and Corporations 27,235 512 475 27,272
Mortgage-Backed Securities 211,955 3,549 492 215,012
Other Debt Securities 113,799 1,513 901 114,411
- -----------------------------------------------------------------------------------------
Total Securities Available for Sale 352,989 5,574 1,868 356,695
- -----------------------------------------------------------------------------------------
Total Investment Securities Portfolio $ 777,727 $ 16,690 $ 2,853 $ 791,564
=========================================================================================
</TABLE>
At September 30, 1996 a net unrealized loss of $5.0 million was reflected
as a separate component of Stockholders' Equity in the Consolidated Statement of
Condition as compared to a net unrealized gain of $6.8 million on Securities
Available for Sale at December 31, 1995. For details regarding investment
securities at December 31, 1995, refer to Note 3 of the Consolidated Financial
Statements incorporated in the Corporation's 10-K filed March 18, 1996.
8
<PAGE>9
NOTE D - MORTGAGE SERVICING RIGHTS
The Corporation adopted the provisions of Statement of Financial
Accounting Standards No. 122 "Accounting for Mortgage Servicing Rights" ("SFAS
No. 122") effective January 1, 1996. SFAS No. 122 requires that a portion of the
cost of originating a mortgage loan be allocated to the mortgage servicing right
based on its fair value of the servicing rights. The Corporation used the market
prices under comparable servicing sales contracts to determine the fair value of
the servicing rights created during the first quarter. SFAS No. 122 precludes
retroactive application to previously reported periods. Accordingly, amounts for
the nine months ended September 30, 1995 were accounted for under the original
SFAS No. 65. Therefore, results for the first nine months of 1996 are not
comparable to the results for the first nine months of 1995.
Originated loan servicing rights, net of accumulated amortization and
impairment at September 30, 1996 were as follows:
<TABLE>
<CAPTION>
Mortgage
Servicing
Rights
- ------------------------------------------------------------------
<S> <C>
Balance at January 1, 1996 $ --
Additions 2,633
Amortization 181
Sales of Servicing Rights 1,580
- ------------------------------------------------------------------
Balance at September 30, 1996 $ 872
- ------------------------------------------------------------------
</TABLE>
9
<PAGE>10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL REVIEW
EARNINGS SUMMARY
Provident recorded a 23% increase in net income over the same period a
year ago. Net income for the quarter ended September 30, 1996 was $5.9 million
or $.67 per share, compared to $4.8 million or $.56 per share for the third
quarter of the prior year. The higher earnings in 1996 were mainly due to loan
growth and increased fee income. Consumer loans outstanding grew $349 million as
total loans increased 11.9% to $1.71 billion. Total loans would have been higher
except for $281 million in residential mortgage loans that were securitized and
reclassified as investments in the fourth quarter of 1995. Non-interest income
increased 51% over the third quarter of 1995, driven by fee based services on
higher account volume and mortgage banking income. Higher account volume and
continued investment in business initiatives contributed to a 14.7% increase in
operating expenses. There was a $1.8 million provision for loan losses during
the quarter with net charge-offs of $201 thousand.
NET INTEREST INCOME
Resulting from growth in average earning assets, tax-equivalent net
interest income rose to $23.5 million for the third quarter of 1996, a $2.6
million increase over the prior year. Income growth was partially offset by a 1
basis point drop in net interest margin.
Provident's interest income on earning assets rose $5.3 million from the
third quarter of 1995, the result of a $301 million expansion in average earning
asset balances offset in part by a 7 basis point decline in yield. Growth in
total average earning assets was provided by increases of $374 million in
consumer loans, $53 million in commercial business loans, $54 million in real
estate construction and $8 million in commercial mortgage loans. Investments
increased $103 million. Residential mortgage loans declined $289 million as the
Corporation securitized $281 million of residential real estate mortgage loans
during the fourth quarter of 1995. The decrease in the yield was mainly
attributable to the lower interest rate environment.
10
<PAGE>11
Total interest expense was $2.8 million above a year ago, the combined
result of a decrease of 2 basis points in the average rate paid and a $253
million increase in the average outstanding balance of interest-bearing
liabilities. Included in this increase were $151 million in matched maturity
brokered deposits, $31 million in interest-bearing demand/money market deposits,
$23 million in savings and $50 million of borrowings.
As a result of off-balance sheet transactions undertaken to insulate the
bank from interest rate risks, interest income has been decreased by $513
thousand and interest expense has been increased by $89 thousand, for a net
decrease of $602 thousand for the quarter ending September 30, 1996. For the
nine months ending September 30, 1996, interest income has been decreased by
$1.65 million and interest expense has been reduced $646 thousand for a decrease
in net interest income of $1.0 million. Included in this net interest income
decrease were amortization of closed positions which reduced interest income by
$263 thousand and increased interest expense $275 thousand (a net decrease of
$538 thousand) for the current quarter and decreased interest income $783
thousand and increased interest expense $480 thousand ( a net decrease of $1.26
million) for the nine months ending September 30, 1996. Without the amortization
of closed positions, off-balance sheet positions reduced net interest income $64
thousand for the current quarter and increased net interest income $260 thousand
for the nine months ended September 30, 1996. The forward yield curve indicates
that short-term rates will increase by 50 basis points and long-term rates will
increase 25 basis points over the next twelve months. The Corporation's analysis
indicates that if management does not adjust its September 30, 1996 off-balance
sheet positions and the forward yield curve assumptions occur, off-balance sheet
positions would increase net interest income by $479 thousand over the next
twelve months. This compares to a decrease in net interest income of $2.5
million should interest rates remain unchanged.
PROVISION FOR LOAN LOSSES
The Corporation recorded a $1.8 million provision for loan losses for
the quarter. Net charge-offs were $201 thousand compared to net charge-offs of
$131 thousand for the third quarter of 1995. The Corporation continues to
emphasize loan quality and closely monitors potential problem credits.
11
<PAGE>12
Senior managers meet at least monthly to review the credit quality of
the loan portfolios and at least quarterly with executive management to review
the adequacy of the allowance for loan losses. The allowance for loan losses at
September 30, 1996 was $23.4 million, up from the $21.1 million a year ago. At
September 30, 1996, the allowance represented 1.37% of total loans and 190% of
non-performing loans. Total non-performing loans were $12.3 million at September
30, 1996 unchanged from September 30, 1995. Residential mortgage loans
represented $4.0 million while consumer loans represented $8.1 million of total
non-performing loans at September 30, 1996. Non-performing loans as a percent of
loans outstanding at September 30, 1996 were .72% compared to .81% at September
30, 1995.
NON-INTEREST INCOME
Non-interest income totaled $11.7 million in the third quarter of 1996
compared to $7.7 million in 1995. This increase was driven by fee based services
on higher account volume and mortgage banking income. Mortgage banking income
increased $2.7 million fueled by $2.03 million in gains from sales of mortgage
servicing rights. Mortgage originations were $98.1 million for the third quarter
of 1996 compared to $126 million for the third quarter of 1995. Deposit service
fees continued their upward trend, increasing 39% over the prior year following
a 24% rise in the number of retail demand deposit accounts from the third
quarter of 1995 and a change in the fee structure. Commercial deposit fees
increased 4% and commercial loan fees increased 30%, reflecting an increase in
loan originations and an intensified focus on commercial business development.
NON-INTEREST EXPENSE
Third quarter non-interest expense of $23.5 million was 14.7% or $3.0
million higher than a year ago. Salaries and benefits rose 10.9%, largely to
staff additional supermarket branch locations, check cashing facilities, and a
loan production office.
Occupancy costs increased $48 thousand or 2.4% over last year and
furniture and equipment expense increased $286 thousand required by branch
network expansion and upgrades of technology.
12
<PAGE>13
External processing fees increased $840 thousand due to increased
account volume. All other expenses increased a total of $646 thousand after an
FDIC insurance premium refund in the third quarter of 1995 and a one-time SAIF
premium of $90 thousand in the third quarter of 1996.
INCOME TAXES
Provident recorded income tax expense of $3.6 million on income before
taxes of $9.6 million, an effective tax rate of 38.2%. During the third quarter
of 1995, Provident's tax expense was $2.8 million on pre-tax income of $7.6
million, an effective tax rate of 37.0%. The increase in the effective tax rate
is primarily due to a federal tax benefit received during the third quarter of
1995.
FINANCIAL CONDITION
Total assets of the Corporation increased $210 million from December 31,
1995 to September 30, 1996 as loan balances increased $375 million. Consumer
loans were up $297 million, commercial business loans $30 million and real
estate construction loans $41 million. Securities available for sale declined
$147 million to help fund the loan growth and mortgage loans held for sale
decreased $32 million. Total deposits ended the quarter at $1.71 billion, an
increase of $140 million over the December 31, 1995 level. Non-interest bearing
deposits increased $9 million from December 31, 1995 while interest bearing
deposits increased $131 million. Borrowings increased $63 million from December
31, 1995 ending the quarter at $848 million.
At September 30, 1996, loans held for sale, investments available for
sale and investment securities maturing within one year totaled $925 million or
36% of total liabilities, compared to $1.10 billion or 46% as of December 31,
1995.
At quarter-end, the leverage ratio was 7.10% and total stockholders'
equity represented 10.28% of risk adjusted assets. These ratios exceed the
minimum requirements of the current leverage capital and risk-based capital
standards established by regulatory agencies.
13
<PAGE>14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed as part of this report are listed below:
(3.1) Articles of Incorporation of Provident Bankshares
Corporation.*
(3.2) By-laws of Provident Bankshares Corporation, as amended.**
(11) Statement re: Computation of Per Share Earnings.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
There were no current reports on Form 8-K filed during the quarter
ended September 30, 1996.
* Incorporated by reference from Registrant's Registration Statement on Form
S-3 (File No. 33-73162) filed with the Commission on August 18, 1994.
** Incorporated by reference from Registrant's 1994 Annual Report on Form 10-K
(File No. 0-16421) filed with the Commission on February 17, 1995.
14
<PAGE>15
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 thereunto duly authorized.
PROVIDENT BANKSHARES CORPORATION
--------------------------------
Registrant
November 12, 1996 /s/ Peter M. Martin
-------------------
Peter M. Martin
President and Chief Operating Officer
November 12, 1996 /s/ R. Wayne Hall
-----------------
R. Wayne Hall
Treasurer
15
<PAGE>16
EXHIBIT INDEX
Exhibit Description Sequentially Numbered Page
- ------- ----------- --------------------------
(11) Statement re: Computation of Per Share Earnings 17
(27) Financial Data Schedule 18
16
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
(in thousands, except per share data) 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary:
- -------
Actual shares outstanding 8,459 7,884 8,459 7,884
------- ------- ------- -------
Average shares outstanding 8,447 8,245 8,413 8,174
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 346 402 336 376
------- ------- ------- -------
Total Shares Outstanding 8,793 8,647 8,749 8,550
------- ------- ------- -------
Net Income $ 5,905 $ 4,810 $16,815 $12,925
------- ------- ------- -------
Net Income Per Share $ 0.67 $ 0.56 $ 1.92 $ 1.51
------- ------- ------- -------
- ----------------------------------------------------------------------------------------
Fully Diluted:
- -------------
Actual shares outstanding 8,459 7,884 8,459 7,884
------- ------- ------- -------
Average shares outstanding 8,447 8,245 8,413 8,174
Net effect of dilutive stock options based
on the treasury stock method using the
average market price or quarter end price,
whichever is greater 361 409 362 409
------- ------- ------- -------
Total Shares Outstanding 8,808 8,654 8,775 8,583
------- ------- ------- -------
Net Income $ 5,905 $ 4,810 $16,815 $12,925
------- ------- ------- -------
Net Income Per Share $ 0.67 $ 0.56 $ 1.92 $ 1.51
------- ------- ------- -------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000818969
<NAME> PROVIDENT BANKSHARES CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 47,549
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 871,062
<INVESTMENTS-CARRYING> 32,148
<INVESTMENTS-MARKET> 31,372
<LOANS> 1,708,127
<ALLOWANCE> 23,370
<TOTAL-ASSETS> 2,773,345
<DEPOSITS> 1,709,123
<SHORT-TERM> 571,761
<LIABILITIES-OTHER> 27,286
<LONG-TERM> 276,738
0
0
<COMMON> 8,687
<OTHER-SE> 179,750
<TOTAL-LIABILITIES-AND-EQUITY> 2,773,345
<INTEREST-LOAN> 96,784
<INTEREST-INVEST> 50,142
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 146,926
<INTEREST-DEPOSIT> 47,153
<INTEREST-EXPENSE> 79,287
<INTEREST-INCOME-NET> 67,639
<LOAN-LOSSES> 7,613
<SECURITIES-GAINS> 5,047
<EXPENSE-OTHER> 38,219
<INCOME-PRETAX> 26,854
<INCOME-PRE-EXTRAORDINARY> 26,854
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,815
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.92
<YIELD-ACTUAL> 3.57
<LOANS-NON> 12,315
<LOANS-PAST> 8,393
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 21,462
<CHARGE-OFFS> 7,038
<RECOVERIES> 1,333
<ALLOWANCE-CLOSE> 20,370
<ALLOWANCE-DOMESTIC> 20,370
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
