<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
June 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, 8,449,682 shares outstanding at August
5, 1996.
<PAGE> 2
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
-----------------
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Financial Condition--
June 30, 1996 and 1995 and December 31, 1995 3
Consolidated Statement of Income--
Three and Six Months Ended June 30, 1996 and 1995 4
Consolidated Statement of Cash Flows--
Six Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 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>
June 30 December 31 June 30
(dollars in thousands) 1996 1995 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and Due From Banks $ 57,247 $ 49,891 $ 53,369
Short-Term Investments 1,058 2,710 5,945
Mortgage Loans Held for Sale 96,906 86,326 69,470
Securities Available for Sale 895,338 1,017,697 422,536
Investment Securities (Market Value $31,430, $31,018 and
$443,568 at June 30, 1996, December 31, 1995, and
June 30, 1995, respectively) 32,347 31,420 433,634
Loans:
Consumer 964,712 778,467 609,862
Commercial Business 226,608 205,876 180,627
Real Estate -- Construction 117,879 77,896 63,542
Real Estate -- Mortgage 262,758 270,549 551,808
- -------------------------------------------------------------------------------------------------------------------------------
Total Loans 1,571,957 1,332,788 1,405,839
Less: Allowance for Loan Losses 21,733 21,462 20,931
- -------------------------------------------------------------------------------------------------------------------------------
Net Loans 1,550,224 1,311,326 1,384,908
- -------------------------------------------------------------------------------------------------------------------------------
Premises and Equipment, Net 32,978 33,059 29,942
Accrued Interest Receivable 18,114 16,778 15,033
Other Assets 18,669 13,754 33,945
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 2,702,881 $ 2,562,961 $ 2,448,782
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
Noninterest-Bearing $ 143,759 $ 132,479 $ 128,276
Interest-Bearing 1,603,964 1,436,860 1,367,851
- -------------------------------------------------------------------------------------------------------------------------------
Total Deposits 1,747,723 1,569,339 1,496,127
- -------------------------------------------------------------------------------------------------------------------------------
Short-Term Borrowings 455,929 517,641 518,275
Long-Term Debt 284,508 267,865 242,950
Other Liabilities 32,935 23,708 27,023
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,521,095 2,378,553 2,284,375
- -------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock (Par Value $1.00) Authorized 30,000,000 Shares,
Issued 8,655,385, 8,125,403 and 8,025,785 Shares at June 30, 1996,
December 31, 1995 and June 30, 1995, respectively 8,655 8,125 8,026
Capital Surplus 93,842 78,951 76,665
Retained Earnings 88,645 93,031 85,505
Net Unrealized Gain (Loss) on Debt Securities (6,866) 6,791 (3,299)
Treasury Stock at Cost -- 228,066 Shares at June 30, 1996,
December 31, 1995 and June 30, 1995 (2,490) (2,490) (2,490)
- -------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 181,786 184,408 164,407
- -------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 2,702,881 $ 2,562,961 $ 2,448,782
===============================================================================================================================
</TABLE>
3
<PAGE> 4
CONSOLIDATED STATEMENT OF INCOME
Provident Bankshares Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
- --------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data) 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 32,342 $ 28,753 $ 61,803 $ 55,021
Interest on Securities 15,690 15,115 32,436 30,023
Tax-Advantaged Interest 749 448 1,501 887
Interest on Short-Term Investments 44 50 81 123
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 48,825 44,366 95,821 86,054
- --------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on Deposits 15,441 13,952 30,510 26,825
Interest on Short-Term Borrowings 6,776 6,741 13,277 13,176
Interest on Long-Term Debt 3,918 3,201 7,654 5,813
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 26,135 23,894 51,441 45,814
- --------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 22,690 20,472 44,380 40,240
Less: Provision for Loan Losses 375 245 5,775 245
- --------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 22,315 20,227 38,605 39,995
- --------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service Charges on Deposit Accounts 4,581 2,988 8,196 5,350
Mortgage Banking Activities 3,209 1,331 6,509 3,440
Commissions and Fees 785 506 1,538 1,167
Net Securities Gains (Losses) (65) (2,776) 5,005 (2,776)
Other Non-Interest Income 1,130 4,859 2,234 5,321
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 9,640 6,908 23,482 12,502
- --------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and Employee Benefits 12,149 10,670 24,272 20,775
Occupancy Expense, Net 1,928 1,868 3,943 3,719
Furniture and Equipment Expense 1,576 1,320 3,078 2,578
External Processing Fees 2,421 1,789 4,709 3,450
Other Non-Interest Expense 4,827 5,138 8,782 10,043
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 22,901 20,785 44,784 40,565
- --------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES 9,054 6,350 17,303 11,932
Income Tax Expense 3,449 1,945 6,393 3,817
- --------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 5,605 $ 4,405 $ 10,910 $ 8,115
==========================================================================================================================
NET INCOME PER SHARE $ 0.64 $ 0.52 $ 1.25 $ 0.95
==========================================================================================================================
</TABLE>
4
<PAGE> 5
CONSOLIDATED STATEMENT OF CASH FLOWS
Provident Bankshares Corporation and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended June 30
- ---------------------------------------------------------------------------------------------------------------------
(in thousands) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 10,910 $ 8,115
Adjustments to Reconcile Net Income to
Net Cash Provided (Used) by Operating Activities:
Depreciation and Amortization 3,277 2,616
Provision for Loan Losses 5,775 245
Provision for Deferred Income Tax Benefit (631) (663)
Realized Net Securities (Gains) Losses (5,005) 2,776
Loans Originated or
Acquired and Held for Sale (227,192) (161,759)
Proceeds from Sales of Loans 219,423 137,697
Loss (Gain) on Sales of Loans (2,811) 138
Other Operating Activities 10,222 4,494
- --------------------------------------------------------------------------------------------------------------------
Total Adjustments 3,058 (14,456)
- --------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 13,968 (6,341)
- --------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Principal Collections and Maturities of Securities Available for Sale 106,549 44,790
Principal Collections and Maturities of Securities Held to Maturity 2,876 20,345
Proceeds on Sales of Securities Available for Sale 188,378 142,014
Purchases of Securities Held to Maturity (3,832) (11,346)
Purchases of Securities Available for Sale (190,477) (185,096)
Loan Originations and Purchases
Less Principal Collections (242,734) (132,897)
Purchases of Premises and Equipment (2,464) (2,624)
- --------------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (141,704) (124,814)
- --------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net Increase in Deposits 178,384 47,550
Net Increase (Decrease) in Short-Term Borrowings (61,712) 39,025
Proceeds from Long-Term Debt 56,750 55,750
Payments and Maturities of Long-Term Debt (40,107) --
Issuance of Common Stock 2,891 2,679
Cash Dividends on Common Stock (2,766) (1,909)
- --------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 133,440 143,095
- --------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 5,704 11,940
Cash and Cash Equivalents at Beginning of Year 52,601 47,374
- --------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 58,305 $ 59,314
====================================================================================================================
SUPPLEMENTAL DISCLOSURES
- --------------------------------------------------------------------------------------------------------------------
Interest Paid, Net of Amount Capitalized $ 29,668 $ 23,925
Income Taxes Paid (Received) 8,122 3,054
Stock Dividend 12,530 8,278
</TABLE>
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
JUNE 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 six month period ended June 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 six month periods ended June 30, 1996
(8,781,634 and 8,756,709 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 $.54 and $1.00 for the three
and six month periods ended June 30, 1995. For the three and six month periods
ended June 30, 1996, respective dividends of $.18 and $.35, 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
investment securities and, accordingly, are carried at cost adjusted for
amortization of premiums and accretion of discounts using the interest method.
Available for sale securities 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 June 30 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------------------------------------------------------
GROSS GROSS
AMORITIZED 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 $ 15,726 $ -- $ -- $ 15,726
Mortgage-Backed Securities 16,621 -- 917 15,704
- -----------------------------------------------------------------------------------------------------------------------
Total Securities Held to Maturity 32,347 -- 917 31,430
- -----------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and Government
Agencies and Corporations 27,163 60 11 27,212
Mortgage-Backed Securities 815,995 3,217 14,813 804,399
Municipal Securities 11,550 229 181 11,598
Other Debt Securities 52,021 390 282 52,129
- -----------------------------------------------------------------------------------------------------------------------
Total Securities Available for Sale 906,729 3,896 15,287 895,338
- -----------------------------------------------------------------------------------------------------------------------
Total Investment Securities Portfolio $ 939,076 $ 3,896 $ 16,204 $ 926,768
=======================================================================================================================
June 30, 1995
-------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------------------------------------------------------------------
SECURITIES HELD TO MATURITY
U.S. Treasury and Government
Agencies and Corporations $ 13,398 $ -- $ -- $ 13,398
Mortgage-Backed Securities 411,761 10,625 872 421,514
Municipal Securities 8,475 286 105 8,656
- -----------------------------------------------------------------------------------------------------------------------
Total Securities Held to Maturity 433,634 10,911 977 443,568
- -----------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and Government
Agencies and Corporations $ 33,212 554 507 33,259
Mortgage-Backed Securities 235,878 3,636 2,040 237,474
Other Debt Securities 150,947 1,856 1,000 151,803
- -----------------------------------------------------------------------------------------------------------------------
Total Securities Available for Sale 420,037 6,046 3,547 422,536
- -----------------------------------------------------------------------------------------------------------------------
Total Investment Securities Portfolio $ 853,671 $ 16,957 $ 4,524 $ 866,104
=======================================================================================================================
</TABLE>
At June 30, 1996 a net unrealized loss of $6.9 million was reflected as a
separate component of Stockholders' Equity in the Consolidated Statement of
Condition as compared to a total 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 six months ended June 30, 1995 were accounted for under the original SFAS
No. 65. Therefore, results for the first six months of 1996 are not comparable
to the results for the first six months of 1995.
Originated loan servicing rights, net of accumulated amortization and
impairment at June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Mortgage
Servicing
Rights
- --------------------------------------------------------------------------------
<S> <C>
Balance at January 1, 1996 $ --
Additions 1,696
Amortization 116
Sales of Servicing Rights 990
- --------------------------------------------------------------------------------
Balance at June 30, 1996 $ 590
- --------------------------------------------------------------------------------
</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 27% increase in net income over the same period a year
ago. Net income for the quarter ended June 30, 1996 was $5.6 million, or $.64
per share, compared to $4.4 million or $.52 per share, for the second quarter of
the prior year. The higher earnings in 1996 were mainly due to loan growth and
increased fee income. Consumer loans outstanding grew $355 million as total
loans increased 11.8% to $1.57 billion. Total loans would have been higher
except for $281 million in residential mortgage loans that were securitized in
the fourth quarter of 1995. Non-interest income adjusted for nonrecurring items
increased 80% over the second quarter of 1995. The non-interest income increase
was 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 10.2% increase in operating expenses. There was a $375 thousand
provision for loan losses during the quarter with net charge-offs of $198
thousand.
NET INTEREST INCOME
- -------------------
Tax-equivalent net interest income was $22.9 million for the second quarter
of 1996 which represented a $2.2 million increase over the prior year. Growth in
average earning assets contributed $2.7 million to net interest income which was
partially offset by a 6 basis point drop in net interest margin.
Provident's interest income on earning assets rose $5.8 million from the
second quarter of 1995, the result of a $294 million expansion in average
earning asset balances offset in part by an 18 basis point decline in yield.
Earning asset growth was the result of increases of $354 million in consumer
loans, $44 million in commercial business loans and $50 million in real estate
construction and commercial mortgage loans. Investments increased $97 million.
Residential mortgage loans declined $293 million as the Corporation securitized
$281 million of residential real estate mortgage loans during the fourth quarter
of 1995. Mortgage loans held for sale increased $41 million. The decrease in the
yield was mainly attributable to the lower interest rate environment.
Total interest expense was $2.2 million above a year ago, the combined
result of a decrease of 12 basis points in the average rate paid and a $257
million increase in the average
10
<PAGE> 11
outstanding balance of interest-bearing liabilities. Included in this increase
were $79 million in brokered deposits, $15 million in certificates of deposit,
$29 million in interest bearing demand deposits, $28 million in savings and
money market deposits and $107 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 $340
thousand and interest expense has been reduced by $323 thousand, for a net
decrease of $17 thousand for the quarter ending June 30, 1996. For the six
months ending June 30, 1996, interest income has been decreased by $624 thousand
and interest expense has been reduced $940 thousand for an increase in net
interest income of $316 thousand. Amortization of closed positions reduced
interest income by $261 thousand and increased interest expense $123 thousand
for the current quarter. For the six months ending June 30, 1996, amortization
of closed positions decreased interest income $522 thousand and increased
interest expense $206 thousand. The forward yield curve indicates that
short-term rates will increase by 100 basis points and long term rates will
increase 25 basis points over the next twelve months. The Corporation's analysis
indicates that if management did not adjust its June 30, 1996 off-balance sheet
positions and the forward yield curve assumptions becomes reality, off-balance
sheet positions would increase net interest income by $123 thousand over the
next twelve months. This compares to a decrease in net interest income of $1.5
million should interest rates remain the same.
PROVISION FOR LOAN LOSSES
- -------------------------
The Corporation recorded a $375 thousand provision for loan losses for the
quarter. Net charge-offs were $198 thousand compared to net charge-offs of $114
thousand for the second quarter of 1995. The Corporation continues to emphasize
loan quality and closely monitors potential problem credits. 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 June 30, 1996 was
$21.7 million, up slightly from the $20.9 million a year ago. At June 30, 1996,
the allowance represented 1.38% of total loans and 112% of non-performing and
past due loans. Total non-performing and past due loans were $19.4 million at
June 30, 1996 compared to $10.1 million at June 30, 1995. Residential mortgage
loans represented $10.1 million of total non-performing loans at June 30, 1996,
$6.4 million of which are insured or guaranteed by the United States Government.
Also contributing to the rise was the increase in consumer loans outstanding of
$355 million from the second quarter, 1995.
11
<PAGE> 12
NON-INTEREST INCOME
- -------------------
Non-interest income totaled $9.6 million in the second quarter of 1996
compared to $6.9 million in 1995. Net of non-recurring items, non-interest
income increased 80%. This increase was driven by fee based services on higher
account volume and mortgage banking income. The mortgage originations were $119
million for the second quarter of 1996 compared to $104 million for the second
quarter of 1995. Deposit service fees continued their upward trend, increasing
53% over the prior year following a 28% rise in the number of retail demand
deposit accounts from the second quarter of 1995 and a change in the fee
structure.
NON-INTEREST EXPENSE
- --------------------
Second quarter non-interest expense of $22.9 million was 10% or $2.1
million higher than a year ago. Salaries and benefits rose 14% largely the
result of increased mortgage banking activities and additional supermarket
branch locations.
Occupancy costs increased $60 thousand or 3.2% over last year and
furniture and equipment expense increased $256 thousand resulting from branch
network expansion and upgrades of technology.
External processing fees increased $632 thousand due to increased account
volume. All other expenses decreased a total of $311 thousand mainly benefiting
from the reduction of the FDIC insurance premium.
INCOME TAXES
- ------------
Provident recorded income tax expense of $3.4 million based on income
before taxes of $9.1 million, an effective tax rate of 38.1%. During the second
quarter of 1995, Provident recorded tax expense of $1.9 million on pre-tax
income of $6.4 million, an effective tax rate of 30.6%. The increase in the
effective tax rate from 30.6% for 1995 to 38.1% for 1996 is primarily due to a
federal tax benefit received during the second quarter of 1995.
FINANCIAL CONDITION
- -------------------
Total assets of the Corporation increased $140 million from December 31,
1995 to June 30, 1996 as loan balances increased $239 million. Consumer loans
were up $186 million, commercial business loans $21 million and real estate
construction loans $40 million while real estate mortgage loans declined $8
million. Securities available for sale and investment securities declined $121
million to support the above loan growth. In addition, mortgage loans held for
sale increased $11 million. Total deposits ended the quarter at $1.75 billion,
an increase of $178 million over the December 31, 1995 level. Non-interest
bearing deposits increased $11 million
12
<PAGE> 13
from December 31, 1995 while interest bearing deposits increased $167 million.
Borrowings decreased $45 million from December 31, 1995 ending the quarter at
$740 million.
At June 30, 1996, loans held for sale, investments available for sale and
investment securities maturing within one year totaled $993 million or 39% of
total liabilities, compared to $1.10 billion or 46% as of December 31, 1995.
At quarter-end, the leverage ratio was 7.09% and total stockholders' equity
represented 10.43% 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 June 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
August 12, 1996 Peter M. Martin
---------------
Peter M. Martin
President and Chief Operating Officer
August 12, 1996 R. Wayne Hall
-------------
R. Wayne Hall
Treasurer
15
<PAGE> 16
EXHIBIT INDEX
-------------
Exhibit Description
------- -----------
(11) Statement re: Computation of Per Share Earnings Filed herewith
(27) Financial Data Schedule Filed herewith
16
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
- --------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
(in thousands, except per share data) 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary:
- --------
Actual shares outstanding 8,427 8,198 8,427 8,198
===== ===== ===== =====
Average shares outstanding 8,421 8,125 8,396 8,112
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 356 385 349 379
---------- ---------- ---------- ----------
Total Shares Outstanding 8,777 8,510 8,745 8,491
===== ===== ===== =====
Net Income $ 5,605 $ 4,405 $ 10,910 $ 8,115
===== ===== ====== =====
Net Income Per Share $ 0.64 $ 0.52 $ 1.25 $ 0.96
==== ==== ==== ====
Fully Diluted:
- -------------
Actual shares outstanding 8,427 8,198 8,427 8,198
===== ===== ===== =====
Average shares outstanding 8,421 8,124 8,396 8,111
Net effect of dilutive stock options based
on the treasury stock method using the
average market price or quarter end price,
whichever is greater 361 400 361 400
---------- ---------- ---------- ----------
Total Shares Outstanding 8,782 8,524 8,757 8,511
===== ===== ===== =====
Net Income $ 5,605 $ 4,405 $ 10,910 $ 8,115
===== ===== ====== =====
Net Income Per Share $ 0.64 $ 0.52 $ 1.25 $ 0.95
==== ==== ==== ====
</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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 57,247
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 895,338
<INVESTMENTS-CARRYING> 32,347
<INVESTMENTS-MARKET> 31,430
<LOANS> 1,571,957
<ALLOWANCE> 21,733
<TOTAL-ASSETS> 2,702,881
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<LONG-TERM> 284,508
0
0
<COMMON> 8,655
<OTHER-SE> 173,131
<TOTAL-LIABILITIES-AND-EQUITY> 2,702,881
<INTEREST-LOAN> 61,803
<INTEREST-INVEST> 34,018
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 95,821
<INTEREST-DEPOSIT> 30,510
<INTEREST-EXPENSE> 51,441
<INTEREST-INCOME-NET> 44,380
<LOAN-LOSSES> 5,775
<SECURITIES-GAINS> 5,005
<EXPENSE-OTHER> 26,307
<INCOME-PRETAX> 17,303
<INCOME-PRE-EXTRAORDINARY> 17,303
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,910
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
<YIELD-ACTUAL> 3.59
<LOANS-NON> 12,977
<LOANS-PAST> 6,398
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 21,462
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<RECOVERIES> 776
<ALLOWANCE-CLOSE> 21,733
<ALLOWANCE-DOMESTIC> 21,733
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
