<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD
COMMISSION FILE NUMBER 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
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(Address of Principal Executive Offices)
Not Applicable
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(Former Name, former Address and Former Fiscal Year
if Changed Since Last Report)
(410) 277-7000
-----------------------------------------
(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, 25,532,531 shares outstanding at July
27, 1999.
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PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Condition
June 30, 1999 and 1998 and December 31, 1998 3
Consolidated Statement of Income - Unaudited
Three and Six Months Ended June 30, 1999 and 1998 4
Consolidated Statement of Cash Flows - Unaudited
Six Months Ended June 30, 1999 and 1998 5
Notes to Consolidated Financial Statements - Unaudited 6
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition 9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 14
PART II - OTHER INFORMATION 14
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
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 16
EXHIBIT INDEX 17
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Statements contained in this Form 10-Q which are not historical facts are
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risk and uncertainties which could cause actual results to differ materially
from those projected. Such risk and uncertainties include potential changes in
interest rates, competitive factors in the financial services industry, general
economic conditions, the effect of new legislation and other risks detailed in
documents filed by the Company with the SEC from time to time.
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2
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PART I - FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF CONDITION
Provident Bankshares Corporation and Subsidiaries
<TABLE>
<CAPTION>
June 30, December 31, June 30,
(DOLLARS IN THOUSANDS) 1999 1998 1998
====================================================================================================================================
<S> <C> <C> <C>
ASSETS
Cash and Due From Banks $ 77,137 $ 74,365 $ 64,373
Short-Term Investments 2,628 198 399
Mortgage Loans Held for Sale 117,158 224,707 99,138
Securities Available for Sale 1,364,477 1,198,511 1,483,083
Loans:
Consumer 2,348,042 2,154,557 1,817,656
Commercial Business 403,783 375,930 314,791
Real Estate -- Construction 129,441 124,445 119,984
Real Estate -- Mortgage 353,760 445,279 496,844
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LOANS 3,235,026 3,100,211 2,749,275
Less: Allowance for Loan Losses 38,682 42,739 38,731
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOANS 3,196,344 3,057,472 2,710,544
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Premises and Equipment, Net 40,318 40,459 39,391
Accrued Interest Receivable 42,877 40,466 34,899
Other Assets 58,651 39,719 65,550
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TOTAL ASSETS $ 4,899,590 $ 4,675,897 $ 4,497,377
====================================================================================================================================
LIABILITIES
Deposits:
Noninterest-Bearing $ 266,826 $ 252,024 $ 230,156
Interest-Bearing 3,302,806 3,167,533 2,684,520
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Total Deposits 3,569,632 3,419,557 2,914,676
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Short-Term Borrowings 225,505 145,363 342,101
Long-Term Debt 742,025 735,239 780,503
Other Liabilities 39,763 40,423 132,923
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TOTAL LIABILITIES 4,576,925 4,340,582 4,170,203
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Corporation-Obligated Mandatorily Redeemable Capital Securities 39,250 39,238 39,289
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STOCKHOLDERS' EQUITY
Common Stock (Par Value $1.00) Authorized 100,000,000 Shares,
Issued 26,114,940, 24,811,256 and 24,736,963 Shares; at June 30,
1999, December 31, 1998 and June 30, 1998, respectively 26,115 24,811 24,737
Capital Surplus 202,032 172,239 171,161
Retained Earnings 87,793 103,496 90,203
Net Accumulated Other Comprehensive Income (21,323) 5,308 4,274
Treasury Stock at Cost - 591,266 Shares at June 30, 1999,
525,766 at December 31, 1998 and 228,066 at June 30, 1998 (11,202) (9,777) (2,490)
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TOTAL STOCKHOLDERS' EQUITY 283,415 296,077 287,885
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,899,590 $ 4,675,897 $ 4,497,377
====================================================================================================================================
These financial statements should be read in conjunction with the accompanying notes.
</TABLE>
3
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
Provident Bankshares Corporation and Subsidiaries
Three Months Ended Six Months Ended
June 30, June 30,
- ------------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
====================================================================================================================================
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 64,081 $ 56,743 $ 124,734 $ 112,823
Interest on Securities 21,310 19,815 41,401 36,494
Tax-Advantaged Interest 576 696 1,165 1,579
Interest on Short-Term Investments 21 30 60 84
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TOTAL INTEREST INCOME 85,988 77,284 167,360 150,980
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INTEREST EXPENSE
Interest on Deposits 36,197 31,153 70,598 61,200
Interest on Short-Term Borrowings 3,203 4,202 6,229 8,812
Interest on Long-Term Debt 10,165 9,739 20,369 17,038
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TOTAL INTEREST EXPENSE 49,565 45,094 97,196 87,050
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NET INTEREST INCOME 36,423 32,190 70,164 63,930
Less: Provision for Loan Losses 2,759 3,074 4,720 6,049
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 33,664 29,116 65,444 57,881
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NON-INTEREST INCOME
Service Charges on Deposit Accounts 8,408 7,379 15,946 13,637
Mortgage Banking Activities 2,630 3,995 6,634 5,579
Commissions and Fees 1,388 1,063 2,864 2,247
Net Securities Gains 375 725 312 1,934
Other Non-Interest Income 2,917 2,829 5,437 5,362
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TOTAL NON-INTEREST INCOME 15,718 15,991 31,193 28,759
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NON-INTEREST EXPENSE
Salaries and Employee Benefits 16,906 15,230 33,136 29,587
Occupancy Expense, Net 2,696 2,531 5,548 5,013
Furniture and Equipment Expense 2,061 1,931 4,218 3,841
External Processing Fees 3,728 3,549 7,429 6,807
Capital Securities Expense 835 690 1,671 690
Other Non-Interest Expense 6,704 6,730 13,108 12,344
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TOTAL NON-INTEREST EXPENSE 32,930 30,661 65,110 58,282
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Income Before Income Taxes 16,452 14,446 31,527 28,358
Income Tax Expense 5,462 4,721 10,212 9,328
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NET INCOME $ 10,990 $ 9,725 $ 21,315 $ 19,030
====================================================================================================================================
PER SHARE AMOUNTS:
Net Income -- Basic $ 0.43 $ 0.38 $ 0.83 $ 0.74
Net Income -- Diluted 0.42 0.36 0.81 0.71
====================================================================================================================================
These financial statements should be read in conjunction with the accompanying notes.
</TABLE>
4
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
Provident Bankshares Corporation and Subsidiaries
(IN THOUSANDS)
Six Months Ended June 30, 1999 1998
============================================================================================================
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 21,315 $ 19,030
Adjustments to Reconcile Net Income to
Net Cash Provided (Used) by Operating Activities:
Depreciation and Amortization 17,796 11,609
Provision for Loan Losses 4,720 6,049
Provision for Deferred Income Tax (Benefit) 3,142 (2,372)
Realized Net Securities Gains (312) (1,934)
Loans Originated or Acquired and Held for Sale (444,587) (399,420)
Proceeds from Sales of Loans 555,932 370,439
Gain on Sales of Loans (3,796) (3,232)
Other Operating Activities (2,987) (1,961)
- ------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 129,908 (20,822)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 151,223 (1,792)
- ------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Principal Collections and Maturities of Securities Available for Sale 118,336 116,548
Proceeds on Sales of Securities Available for Sale 22,820 252,798
Purchases of Securities Available for Sale (354,691) (813,592)
Loan Originations and Purchases Less Principal Collections (158,481) (57,551)
Purchases of Premises and Equipment (3,662) (5,385)
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NET CASH USED BY INVESTING ACTIVITIES (375,678) (507,182)
- ------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net Increase in Deposits 150,075 160,161
Net Increase (Decrease) in Short-Term Borrowings 80,142 (5,190)
Proceeds from Long-Term Debt 16,000 371,825
Payments and Maturities of Long-Term Debt (9,214) (60,399)
Proceeds from Capital Securities -- 39,289
Issuance of Common Stock 1,251 5,071
Purchase of Treasury Stock (1,425) --
Cash Dividends on Common Stock (7,172) (5,941)
- ------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 229,657 504,816
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,202 (4,158)
Cash and Cash Equivalents at Beginning of Year 74,563 68,930
- ------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 79,765 $ 64,772
============================================================================================================
SUPPLEMENTAL DISCLOSURES
- ------------------------------------------------------------------------------------------------------------
Interest Paid, Net of Amount Capitalized $ 63,182 $ 49,313
Income Taxes Paid 7,588 4,652
Stock Dividend 29,846 36,350
These financial statements should be read in conjunction with the accompanying notes.
</TABLE>
5
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
JUNE 30, 1999
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, 1999 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1999. For further information, refer to the consolidated financial statements
and notes thereto included in the Provident Bankshares Corporation
("Corporation") Annual Report on Form 10-K for the year ended December 31, 1998
as filed with the Securities and Exchange Commission on March 3, 1999.
NOTE B - PER SHARE INFORMATION
The Corporation adopted Statement of Financial Accounting Standards No.
128 - "Earnings Per Share" ("SFAS No. 128") on December 31, 1997. SFAS No. 128
required the Corporation to change its method of computing, presenting and
disclosing earnings per share information. All prior period data presented has
been restated to conform to the provisions of SFAS No. 128. The following table
presents a summary of per share data and amounts for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
- ----------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Qualifying Net Income $ 10,990 $ 9,725 $ 21,315 $ 19,030
Basic EPS Shares 25,584 25,712 25,534 25,633
Basic EPS $ 0.43 $ 0.38 $ 0.83 $ 0.74
- ----------------------------------------------------------------------------------------------------------
Dilutive Shares (principally stock options) 654 1,054 904 1,113
Diluted EPS Shares 26,238 26,766 26,438 26,746
Diluted EPS $ 0.42 $ 0.36 $ 0.81 $ 0.71
- ----------------------------------------------------------------------------------------------------------
</TABLE>
6
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<TABLE>
<CAPTION>
NOTE C - INVESTMENT SECURITIES
The aggregate amortized cost and market values of the investment securities
portfolio at June 30, were as follows:
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
(IN THOUSANDS) COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JUNE 30, 1999
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and Government
Agencies and Corporations $ 42, 654 $ -- $ 41 $ 42,613
Mortgage-Backed Securities 1,194,606 2,060 28,800 1,167,866
Municipal Securities 26,782 297 173 26,906
Trust Preferred Securities 131,888 67 8,532 123,423
Other Debt Securities 3,822 -- 153 3,669
- -----------------------------------------------------------------------------------------------------
Total Securities Available for Sale $ 1,399,752 $ 2,424 $ 37,699 $ 1,364,477
- -----------------------------------------------------------------------------------------------------
June 30, 1998
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and Government
Agencies and Corporations $ 45,287 $ 30 $ -- $ 45,317
Mortgage-Backed Securities 1,395,224 8,020 1,208 1,402,036
Municipal Securities 21,035 512 29 21,518
Other Debt Securities 14,467 -- 255 14,212
- -----------------------------------------------------------------------------------------------------
Total Securities Available for Sale $ 1,476,013 $ 8,562 $ 1,492 $ 1,483,083
- -----------------------------------------------------------------------------------------------------
</TABLE>
At June 30, 1999 a net unrealized loss of $21.3 million was reflected
as Net Accumulated Other Comprehensive Income which is reflected separately as a
component of Stockholders' Equity in the Consolidated Statement of Condition and
therefore has no effect on the financial results of the Corporation's
operations. This compares to a net unrealized gain of $4.3 million at June 30,
1998. For details regarding investment securities at December 31, 1998, refer to
Notes 1 and 4 of the Consolidated Financial Statements incorporated in the
Corporation's 10-K filed March 3, 1999.
NOTE D - SERVICING ASSETS
Effective January 1, 1997, the Corporation applies the provisions of
Statement of Financial Accounting Standards No. 125 - "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No.
125"). Under SFAS No. 125, the Corporation carries any retained interest in a
transferred asset on the Statement of Condition as a servicing asset. The
servicing assets represent the fair value of the servicing contracts associated
with the purchase or origination and subsequent securitization of the mortgage
loans. Servicing assets are amortized in proportion to and over the period of
estimated net servicing income. Servicing assets are evaluated periodically for
impairment based on their fair value and impairment, if any, is recognized
through a valuation allowance and a charge to operations. At June 30, 1999 a
valuation allowance was not required.
7
<PAGE> 8
<TABLE>
<CAPTION>
The following is an analysis of the servicing asset balance, net of
accumulated amortization, during the period ended June 30, 1999:
June 30,
(IN THOUSANDS) 1999
- ---------------------------------------------------------------------
<S> <C>
Balance at January 1, 1999 $2,608
Additions 9,459
Amortization 68
Sales of Servicing Assets 9,140
- ---------------------------------------------------------------------
Balance at June 30, 1999 $2,859
- ---------------------------------------------------------------------
</TABLE>
NOTE E - COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130") to establish requirements for the disclosure of
comprehensive income in financial statements. Comprehensive income is defined as
net income plus transactions and other occurrences which are the result of
nonowner changes in equity. For financial statements presented for the
Corporation, nonowner equity changes are only comprised of unrealized gains or
losses on available for sale debt securities that will be accumulated with net
income in determining comprehensive income. This statement does not impact the
historical financial results of the Corporation's operations and is effective
for years beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
Adoption of this standard did not have an impact on the Corporation's results of
operations. Changes in the balance of Net Accumulated Other Comprehensive Income
in the Stockholders' Equity section of the Statement of Condition are the direct
result of changes in the unrealized gains (losses) on available for sale debt
securities.
Presented below is a reconcilement of net income to comprehensive income
indicating the components of other comprehensive income.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
- ------------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $ 10,990 $ 9,725 $ 21,315 $ 19,030
Other Comprehensive Income:
Unrealized Holding Gain (Loss) on Debt Securities (29,412) 1,106 (43,743) 1,175
Less: Reclassification Adjustment for Gains
Included in Net Income 375 725 312 1,934
- ------------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income, Before Tax (29,787) 381 (44,055) (759)
Income Tax (Benefit) Related to Items of Other
Comprehensive Income (11,781) 150 (17,424) (300)
====================================================================================================================================
Other Comprehensive Income, After Tax (18,006) 231 (26,631) (459)
====================================================================================================================================
Comprehensive Income $ (7,016) $ 9,956 $ (5,316) $ 18,571
====================================================================================================================================
</TABLE>
8
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NOTE F - FUTURE ACCOUNTING DISCLOSURE REQUIREMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). The statement becomes
effective for fiscal years beginning after June 15, 2000 and will not be applied
retroactively. The statement establishes accounting and reporting standards for
derivative instruments and hedging activity. Under the standard, all derivatives
must be measured at fair value and recognized as either assets or liabilities in
the financial statements.
The accounting for changes in fair value (gains and losses) of a
derivative is dependent on the intended use of the derivative and its
designation. Derivatives may be used to: 1) hedge exposure to changes in the
fair value of a recognized asset or liability or a firm commitment, referred to
as a fair value hedge, 2) hedge exposure to variable cash flow of forecasted
transactions, referred to as a cash flow hedge, or 3) hedge foreign currency
exposure.
The Corporation only engages in fair value and cash flow hedges. In both
types of hedges, the effective portions of the hedges, if included in earnings,
would not affect corporate net income. Ineffective portions of hedges are
reported in and affect net earnings immediately. Derivatives not designed as a
hedging instrument have the changes in their fair value recognized in earnings
in the period of change. Management is currently assessing the potential impact
of SFAS No. 133 on future corporate operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL REVIEW
EARNINGS SUMMARY
Provident Bankshares Corporation recorded net income for the quarter ended
June 30, 1999 of $11.0 million or $.43 per share basic and $.42 diluted. Net
income for the quarter ended June 30, 1998 was $9.7 million or $.38 per share
basic and $.36 diluted. The higher earnings in 1999 were mainly due to higher
net interest income from continued loan growth. Average total loans outstanding
grew $464 million or 16.7% to $3.24 billion. Non-interest income, net of
securities gains, remained relatively flat from the second quarter of 1998.
Operating expenses increased 7.4 percent from the second quarter of 1998. This
increase is associated with continued network expansion and upgrading of branch
technology. There was a $2.8 million provision for loan losses during the
quarter with net charge-offs of $2.0 million.
NET INTEREST INCOME
Growth in average earning assets raised tax-equivalent net interest income
to $36.7 million for the second quarter of 1999, a $4.2 million increase over
the prior year. The net interest margin for the quarter declined 8 basis points
from the same quarter last year, primarily due to a greater proportion of
average earning assets in lower yielding investments and lower yielding consumer
loans. In the second quarter of 1998, the Corporation issued trust preferred
capital securities in anticipation of future loan growth and leveraged this
additional capital with investment securities. Net interest income improved
while the yield-cost spread narrowed.
9
<PAGE> 10
Provident's tax equivalent interest income rose $8.7 million from the
second quarter of 1998, the net result of a $643 million expansion in average
earning asset balances and a decline of 30 basis points in yield. Growth in
total average earning assets was provided by increases of $552 million in
consumer loans, $134 million in investment, $45 million in mortgage loans held
for sale and $80 million in commercial business loans. Real estate mortgages
decreased $138 million due to a $119 million residential loan sale during the
first quarter, 1999.
Total interest expense for the second quarter of 1999 was $4.5 million
above a year ago, the combined result of an increase of $605 million in the
average outstanding balance of interest-bearing liabilities offset in part by a
29 basis point drop in rate paid. Included in this increase were $463 million in
matched maturity brokered deposits, $89 million in interest bearing demand/money
market deposits and $40 million in money market certificates of deposits.
Savings declined $2.5 million and direct certificates of deposit increased $8.0
million. Borrowed money increased $21 million.
Management maintains an awareness of the short and long-term risk to
earnings presented by changing interest rates or their relationship to one
another. This is accomplished through the routine evaluation of several possible
change scenarios via simulation modeling. Certain scenarios, in management's
opinion, present the potential for unacceptable risk exposure to the stability
of future earnings, should they materialize. Accordingly, management acts to
mitigate identified risk through the use of financial derivatives. As a result
of financial derivative transactions undertaken to insulate the bank from
interest rate risks, net interest income decreased $591 thousand for the quarter
ending and $100 thousand for the six months ending June 30, 1999. Positions
maintained are routinely monitored and evaluated for effectiveness
For example, under one possible interest rate scenario, management was
assuming that short-term rates will increase by 65 basis points and long-term
rates will increase by 10 basis points over the next twelve months. The
Corporation's analysis indicates that if management does not adjust its June 30,
1999 off-balance sheet positions and the forward yield curve assumptions occur,
off-balance sheet positions, including amortization of closed positions, would
decrease net interest income by $1.33 million over the next twelve months. This
compares to a decrease of $1.96 million should interest rates remain unchanged.
Thus, if the forward yield curve assumptions occur, off-balance sheet positions
as of June 30, 1999 would improve net interest income $630 thousand over the
next twelve months.
PROVISION FOR LOAN LOSSES
The Corporation recorded a $2.8 million provision for loan losses, with
net charge-offs of $2.0 million for the second quarter of 1999, compared to a
provision of $3.1 million and net charge-offs of $2.1 million for the same
period of 1998. The decrease in the provision for loan losses was the result of
lower net charge-offs and a higher mix of lower risk consumer loans. 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, 1999 was $38.7 million, unchanged from June 30, 1998. At June
30, 1999, the allowance represented 1.20% of total loans and 479% of
non-performing loans. Total non-performing loans were $8.1 million at June 30,
1999, down from $13.7 million as of June 30, 1998. Non-performing loans declined
to .25% of loans outstanding as of June 30, 1999 from .50% as of June 30, 1998.
10
<PAGE> 11
NON-INTEREST INCOME
Non-interest income, exclusive of securities gains, totaled $15.3 million
in the second quarter of 1999, relatively the same as the second quarter of
1998. Deposit service fees driven by higher account volume increased $1.0
million, or 14%, while commission and fees increased $325 thousand, or 31%.
Income from mortgage banking activities decreased $1.4 million. Sales of
mortgage loans resulted in $1.2 million in gains for the second quarter of 1999
as compared to $2.6 million for the same period in 1998. Mortgage originations
totaled $226 million during the second quarter of 1999 compared to $218 million
during the same quarter of 1998.
Sale of securities resulted in a $375 thousand gain for the quarter
compared to $725 thousand gain for the same quarter in 1998.
NON-INTEREST EXPENSE
Second quarter non-interest expense was $32.9 million, compared to $30.7
million for the same period last year, an increase of 7.4%. Salaries and
benefits increased $1.7 million mainly related to merit increases and higher
health care costs. Occupancy costs increased $165 thousand over last year and
furniture and equipment expense increased $130 thousand. Branch network
expansion and upgrades of technology required these increases. External
processing fees increased $179 thousand due to increased account volume. During
the second quarter of 1998, $40 million of trust preferred capital securities
were issued resulting in $835 thousand in related expenses for the second
quarter of 1999, compared to $690 thousand in 1998. All other expenses decreased
a total of $26 thousand.
INCOME TAXES
Provident recorded income tax expense of $5.5 million on income before
taxes of $16.5 million, an effective tax rate of 33.2%. During the second
quarter of 1998, Provident's tax expense was $4.7 million on pre-tax income of
$14.4 million, an effective tax rate of 32.7%. The change in effective tax rate
is the result of lower state income tax benefit.
FINANCIAL REVIEW FOR SIX MONTHS ENDED JUNE 30, 1999 AND 1998
For the six months ending June 30, 1999, net income was $21.3 million or
$.83 per share basic and $.81 diluted compared to $19.0 million or $.74 per
share basic and $.71 per share diluted for the six months ended June 30, 1998.
This improvement in earnings was attributable to a $6.2 million rise in tax
equivalent net-interest income and a $2.4 million increase in non-interest
income. These increases more than offset a $6.8 million increase in operating
expense. The provision for loan losses declined $1.3 million compared to the
second quarter of 1998.
The $6.2 million increase in tax-equivalent net interest income for 1999
was the result of a $728 million increase in average earning assets over the
prior year. Net interest margin dropped by 24 basis points caused by a decline
of 50 basis points in yields and a 30 basis point decrease in costs on
interest-bearing liabilities.
The provision for loan losses decreased $1.3 million to $4.7 million in
1999. The allowance for loan losses ended the quarter at $38.7 million or 1.20%
of loans outstanding.
Non-interest income, excluding net securities gains, increased 15% to
$30.9 million. Deposit service charges rose $2.3 million over the prior year to
$15.9 million, mortgage banking activities were up $1.1 million to $6.6 million,
and commissions and fees were up 27% to $2.9 million. Net securities gains were
$312 thousand in 1999 and $1.9 million in 1998.
11
<PAGE> 12
Provident's non-interest expense, excluding capital securities expenses,
rose 10.2% in 1999 over 1998. Salaries and employee benefits increased $3.5
million attributable to merit increases, new branches, and incentives associated
with increased mortgage originations. Occupancy costs grew $535 thousand or
10.7% over 1998. Total furniture and equipment expense increased $377 thousand
due to upgrading of technology in the bank's office automation and branch
platform systems. External processing increased $622 thousand due to increased
account volumes. All other expenses increased $764 thousand, most of which is
associated with increased communication and professional fees.
Provident recorded an income tax expense of $10.2 million in 1999 based on
pre-tax income of $31.5 million, which represented an effective tax rate of
32.4%. This compares with a 32.9% effective tax rate for 1998.
IMPACT OF THE YEAR 2000 ISSUE
Management initiated the process of preparing computer systems and
applications for the Year 2000 in September 1996. The Year 2000 Issue is the
result of computer programs using two digits rather than four to define the
applicable year. Any of the Corporation's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions.
The Corporation has completed the testing phase using both internal and
external resources to test the software and hardware for Year 2000 compliance.
Testing did not lead to any adverse events.
The Corporation relies on M & I Data Services, Inc., a third party
processor for the majority of its data processing requirements. Provident worked
with all of its significant data processing software and hardware suppliers, to
make certain they will be Year 2000 compliant. A due diligence approach was used
to develop general risk control guidelines to assist in identifying material
customers, evaluating their preparedness, assessing Year 2000 customer risk and
implementing controls to manage the risk.
The total costs associated with becoming Year 2000 compliant are expected
to be less than $1.0 million and are not expected to have a material effect on
the results of operations. As of June 30, 1999, the Corporation had spent
approximately $742 thousand to become Year 2000 compliant. Money to fund Year
2000 compliance will come from normal operating cash flow. Expenses associated
with Year 2000 compliance will directly reduce otherwise reported net income of
the Corporation in the period incurred.
As an additional precaution, the Corporation has developed a contingency
plan in case of unanticipated problems within or outside of the corporation.
Management believes the contingency plan will permit Provident to continue to
operate until normal operations can be restored even if some systems fail. These
plans include the capability to process off-line and transport the data to our
third party processor by the most effective and efficient means available. These
procedures could require changing schedules and hiring of temporary staff, which
would increase the cost of the operations. The most reasonably likely worst case
Year 2000 scenarios foreseeable at this time would include the Bank temporarily
not being able to process, in some combination, various types of customer
transactions. Unanticipated problems of third parties (including loan customers)
resulting from Year 2000 issues could also have an undeterminable negative
impact on the Corporation.
The costs of the project are based on management's best estimates, which
were derived utilizing numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other factors. However, there can be no assurance that these estimates will be
achieved and actual results could differ from those plans. Specific factors that
might cause material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
12
<PAGE> 13
FINANCIAL CONDITION
Total assets of the Corporation increased $224 million from December 31,
1998 to June 30, 1999 as investments increased $166 million and loan balances
increased $135 million offset in part by lower loans held for sale. Consumer
loans were up $193 million and commercial business loans were up $28 million
from December 31, 1998. Real estate construction loans increased $5 million and
real estate mortgage loans declined $92 million. The sale of mortgage loans in
the first quarter contributed to the decline. Total deposits ended the quarter
at $3.6 billion, an increase of $150 million over the December 31, 1998 level.
Non-interest bearing deposits increased $15 million from December 31, 1998 while
interest-bearing deposits increased $135 million. Borrowings increased $87
million from December 31, 1998 ending the quarter at $968 million. In April
1998, the Corporation issued $40 million of trust preferred capital securities,
which were outstanding as of June 30, 1999. A subsidiary trust of the
Corporation issued these capital securities and the Corporation received the
proceeds by issuing junior subordinated debentures to the trust. These capital
securities are considered Tier 1 capital for regulatory purposes.
The primary sources of liquidity at June 30, 1999 were loans held for sale
and investments available for sale, which totaled $1.48 billion. This represents
32% of total liabilities compared to 33% at December 31, 1998.
At quarter-end, the leverage ratio was 7.07% and total stockholders'
equity represented 10.37% 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
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information regarding market risk at December 31, 1998, see
"Interest Sensitivity Management" and Note 12 to the Consolidated Financial
Statements in the Corporation's Form 10-K filed with the Commission on March 3,
1999. The market risk of the Corporation has not experienced any significant
changes as of June 30, 1999 from December 31, 1998. Additionally, refer to "Net
Interest Income" in Item 2 - Management's Discussion and Analysis of Results of
Operations and Financial Condition for additional quantitative and qualitative
discussions about market risk at June 30, 1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None.
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Provident Bankshares Corporation
was held on April 21, 1999.
PROPOSAL I
Election of Directors.
The following persons were elected as directors at the 1999
Annual Meeting of Stockholders. The corresponding votes for each
director and their terms of office which continue until the 2002
Annual Meeting of Stockholders is reflected below.
For % Withheld %
--- --- -------- ---
Thomas S. Bozzuto 17,281,001 79.7 4,401,510 20.3
Charles W. Cole, Jr. 17,376,985 80.1 4,305,526 19.9
Enos K. Fry 17,378,914 80.2 4,303,597 19.8
Herbert W. Jorgensen 17,371,165 80.1 4,311,346 19.9
Barbara B. Lucas 17,381,879 80.2 4,300,632 19.8
Francis G. Riggs 17,364,233 80.1 4,318,278 19.9
Carl W. Stearn 17,287,109 79.7 4,395,402 20.3
The following persons continue to serve as directors until the
2000 Annual Meeting of Stockholders: Dr. Calvin W. Burnett,
Pierce B. Dunn, Mark K. Joseph, Peter M. Martin, and Sheila K.
Riggs; until the 2001 Annual Meeting of Stockholders: Robert B.
Barnhill, Jr., Melvin A. Bilal, Ward B. Coe, III, Esquire,
Frederick W. Meier, Jr., and Sister Rosemarie Nassif.
PROPOSAL II
The stockholders ratified the selection of PricewaterhouseCoopers
LLP as independent auditors for 1999, with 17,942,278 (82.8%)
shares cast in favor, 141,231 (.6%) shares cast against and
3,599,002 (16.6%) abstaining.
OTHER MATTERS
A non-binding shareholder resolution to sell the company,
proposed by Mid-Atlantic Investors, was overwhelmingly defeated
with 15,912,558 (73.4%) shares cast against the Mid-Atlantic
proposal, 5,744,650 (26.5%) shares cast in favor and 25,304 (.1%)
abstaining.
14
<PAGE> 15
Item 5. Other Information - Change to Corporation By-Laws due to changes in
state law
Due to recent changes in Maryland law, Provident has
amended its By-Laws to provide that in order for a
shareholder proposal to be eligible for presentation at the
Corporation's annual meeting, timely notice thereof must be
received by the Corporation no later than the date
ninety (90) days prior to the meeting, in the manner and
form required by the Corporation's By-Laws.
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 (1)
(3.2) Third Amended and Restated By-Laws of Provident Bankshares
Corporation (2)
(4.1) Stockholder Protection Rights Plan, as amended (3)
(11) Statement re: Computation of Per Share Earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Corporation during the
quarter ended June 30, 1999.
(1) Incorporated by reference from Provident's Registration Statement on
Form S-3 (File No. 33-73162) filed with the Commission on August 18, 1994.
(2) Filed herein.
(3) Incorporated by reference from Provident's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998, filed with the Commission on
August 14, 1998.
15
<PAGE> 16
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, 1999 /s/ Peter M. Martin
-------------------
Peter M. Martin
President, Chairman and Chief Executive Officer
August 12, 1999 /s/ R. Wayne Hall
-----------------
R. Wayne Hall
Treasurer
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C> <C>
Exhibit Description Sequentially Numbered Page
- ------- ----------- --------------------------
(3.2) Third Amended and Restated By-Laws of Provident Bankshares Corporation
(11) Statement re: Computation of Per Share Earnings
(27) Financial Data Schedule
</TABLE>
17
<PAGE> 1
PROVIDENT BANKSHARES CORPORATION
THIRD AMENDED AND RESTATED BYLAWS
---------------------------------
ARTICLE I - OFFICES
-------------------
The principal office of the Corporation in Maryland shall be located at
114 East Lexington Street, Baltimore, Maryland 21202. The Corporation may have
such other offices, either within or without the State of Maryland as the Board
of Directors may designate or as the business of the Corporation may from time
to time require.
ARTICLE II - STOCKHOLDERS
-------------------------
Section 1 - ANNUAL MEETING
--------------
The annual meeting of the stockholders of the Corporation shall be held at
such time during April of each year as the Board of Directors shall, in their
discretion, fix. The business to be transacted at the annual meting shall
include the election of directors, consideration of the report of the President,
and any other business properly brought before the meeting in accordance with
Section 7(b).
Section 2 - SPECIAL MEETINGS
----------------
A special meeting of the stockholders may be called at any time for any
purpose or purposes by the Chairman of the Board, the President, or by a
majority of the Board of Directors and a special meeting of stockholders shall
be called by the Secretary of the Corporation upon the request in writing of the
holders of a majority of all shares outstanding and entitled to vote on the
business to be transacted at such meeting. Notwithstanding the first sentence of
this Section 2, the Secretary of the Corporation shall not be obligated to call
a special meeting of the stockholders requested by stockholders for the purpose
of taking any action that is non-binding or advisory in nature.
Section 3 - PLACE OF MEETING
----------------
The Board of Directors may designate any place, either within or without
the State of Maryland as the place of meeting for any annual or special meeting
of stockholders. If no designation is made, or if a special meeting be otherwise
called, the place of the meeting shall be the principal office of the
Corporation in Maryland.
Section 4 - NOTICE OF MEETING; WAIVER OF NOTICE
-----------------------------------
Not less than ten (10) days or more than ninety (90) days before the date
of every stockholders meeting, the Secretary shall give to each stockholder
entitled to vote at such meeting, written or printed notice stating the place,
date and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called, either by mail or by presenting it
<PAGE> 2
to him personally or by leaving it at his residence or usual place of business.
Notwithstanding the foregoing provisions, a written waiver of notice, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be equivalent to notice. Attendance of a person entitled to notice at a
meeting, in person or by proxy, shall constitute a waiver of notice of such
meeting, except when such person attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
Section 5 - QUORUM
------
At any meeting of stockholders, a majority of the shares entitled to vote
a the meeting, present in person or by proxy, shall constitute a quorum. The
affirmative vote of a majority of the shares present at a meeting of
stockholders, duly called and at which a quorum is present, shall be sufficient
to take or to authorize action upon any matter which may properly come before
the meeting unless more than a majority of votes is required by statute or by
the Certificate of Incorporation of the Corporation.
In the absence of a quorum a majority of the shares represented in person
or by proxy may adjourn the meeting from time to time not exceeding a total of
thirty (30) days without further notice other than that by announcement at such
meeting. At such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting
originally called. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 6 - ORGANIZATION
------------
The Chairman of the Board of the Corporation or, in his absence, the
President of the Corporation, or in his absence such person as the Board of
Directors may have designated or, in the absence of such a person, such person
as may be chosen by the holders of a majority of the shares entitled to vote who
are present, in person or by proxy, shall call to order any meeting of the
stockholders and act as chairman of the meeting. In the absence of the Secretary
of the Corporation, the secretary of the meeting shall be such person as the
chairman appoints.
Section 7 - CONDUCT OF BUSINESS
-------------------
(a) The chairman of any meeting of stockholders shall determine the order
of business and the procedures at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
The date and time of the opening and closing of the polls for each matter upon
which the stockholders will vote at the meeting shall be announced at the
meeting.
(b) At any annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) by or at the
direction of the Board of Directors or (ii)
2
<PAGE> 3
by any stockholder of the Corporation who is entitled to vote with respect
thereto and who complies with the notice procedures set forth in this Section
7(b). For business to be properly brought before an annual meeting by a
stockholder, the business must relate to a proper subject matter for stockholder
action and the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered or mailed to and received at the principal executive office of the
Corporation not less than ninety (90) days prior to the date of the annual
meeting; provided, however, that in the event that less than one hundred (100)
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the 10th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set forth as
to each matter such stockholder proposes to bring before the annual meeting (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
Corporation's capital stock that are beneficially owned by such stockholder,
(iv) a statement disclosing (I) whether such stockholder is acting with or on
behalf of any other person and (II) if applicable, the identity of such person,
and (v) any material interest of such stockholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
brought before or conducted at an annual meeting except in accordance with the
provisions of this Section 7(b). The Chairman of the Board or other person
presiding over the annual meeting shall, if the facts so warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 7(b) and, if he should so
determine, he shall so declare to the meeting and any such business so
determined to be not properly brought before the meeting shall not be
transacted.
(c) Only persons who are nominated in accordance with the procedures set
forth in these Bylaws shall be eligible for election as Directors. Nominations
of persons for election to the Board of Directors of the Corporation may be made
at a meeting of stockholders at which directors are to be elected only (i) by or
at the direction of the Board of Directors or (ii) by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 7(c). Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made by timely notice in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered or mailed
to and received at the principal executive office of the Corporation not less
than ninety (90) days prior to the date of the meeting; provided, however, that
in the event that less than one hundred (100) days' notice or prior disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (i) as to each person whom such stockholder proposes to
nominate for election or re-elections as a Director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a nominee
and
3
<PAGE> 4
to serving as a Director if elected); and (ii) as to the stockholder giving the
notice (x) the name and address, as they appear on the Corporation's books, of
such stockholder, (y) the class and number of shares of the Corporation's
Capital Stock that are beneficially owned by such stockholder, and (z) a
statement disclosing (I) whether such stockholder or any nominee thereof is
acting with or on behalf of any other person and (II) if applicable, the
identity of such person.
Section 8 - VOTING
------
Unless the Certificate of Incorporation provides for a greater or lesser
number of votes per share or limits or denies voting rights, each outstanding
share of stock, regardless of class, is entitled to one (1) vote on each matter
submitted to a vote at a meeting of stockholders.
Section 9 - PROXIES
-------
At all meetings of stockholders, a stockholder may vote the shares owned
of record by him either in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the Corporation before or a the time of the meeting.
No proxy shall be valid after eleven (11) months from the date of its execution,
unless otherwise provided in the proxy.
Section 10 - RESERVED
--------
Section 11 - CONDUCT OF VOTING
-----------------
At all meetings of stockholders, unless the voting is conducted by
inspectors, the proxies and ballots shall be received, and all questions
touching the qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman of the
meeting. If demanded by stockholders, present in person or by proxy, entitled to
cast ten percent (10%) in number of votes entitled to be cast, or if ordered by
the chairman, the voting shall be conducted by two inspectors, in which event
the proxies and ballots shall be received, and all questions touching the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes, shall be decided by such inspectors. Unless so demanded or
ordered, voting need not be conducted by inspectors. The stockholders at any
meeting may choose an inspector or inspectors to act at such meeting, and in
default or such election the chairman of the meeting may appoint an inspector or
inspectors. No candidate for election as a director at a meeting shall serve as
an inspector thereat.
ARTICLE III - DIRECTORS
-----------------------
Section 1 - GENERAL POWERS
--------------
The business and affairs of the Corporation shall be managed by its Board
of Directors. The Board of Directors may exercise all the powers of the
Corporation, except those conferred on or reserved to the stockholders by
statute or by the Certificate of Incorporation or the Bylaws. The Board may
adopt such rules and regulations for the conduct of their meetings and the
management
4
<PAGE> 5
of the Corporation as they may deem proper, and which are not inconsistent with
these Bylaws and with the Maryland General Corporation Law.
Section 2 - NUMBER
------
The number of directors of the Corporation shall be at least three (3);
provided, however, that a majority of the entire Board of Directors may be
resolution set the number of directors at such number as it may determine, but
such action shall not affect the tenure of office of any director. Each director
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal.
Section 3 - ELECTION AND TENURE
-------------------
(a) The directors shall be divided into three (3) classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 1991 annual meeting of stockholders, the term of office of the second class
to expire at the 1992 annual meeting of stockholders, and the term of office of
the third class to expire at the 1993 annual meeting of stockholders. At each
annual meeting of stockholders beginning in 1991, successors to the class of
directors whose term expires at that annual meeting shall be elected for a term
of three (3) years.
(b) Notwithstanding the provisions of Article III, Section 3(a) above, the
term of office of a director of the Corporation shall expire upon the date of
the annual meeting of stockholders immediately following the date on which the
director reaches sixty-eight (68) years of age, and upon the date of such annual
meeting of stockholders such individual shall cease to be a director of the
Corporation. The vacancy created by such expiration shall be filled in
accordance with Article III, Section 4.
Section 4 - VACANCIES
---------
Subject to the rights of the holders of any class or series of preferred
stock then outstanding, any vacancy in the Board of Directors, including one
occurring because of an increase in the authorized number of directors, shall be
filled by a majority vote of the remaining directors at any regular or special
meeting of the Board of Directors, but if a vacancy exists at the time of any
annual meeting of stockholders, such vacancy shall be filled by majority vote of
the shares entitled to vote at such meeting. An individual chosen to fill a
vacancy created by the death, removal, resignation or expiration of the term of
a director shall hold office for the remainder of the departed director's term
and until his successor is elected and qualified, or until his earlier
resignation or removal. An individual chosen to fill a vacancy created by an
increase in the authorized number of directors of the Corporation shall hold
office for such term as the Board of Directors shall specify in accordance with
Article III, Section 3(a), and in any event until his successor is elected and
qualified or until his earlier resignation or removal.
5
<PAGE> 6
Section 5 - REGULAR MEETINGS
----------------
The Board of Directors shall meet for the purposes of organization, the
election of officers and the transaction of other business after the close of
each meeting of stockholders at which a Board of Directors shall have been
elected. Other regular meetings of the Board of Directors shall be held at such
times and such places, either within or without the State of Maryland, as may be
designated from time to time by the Chief Executive Officer or by the Board of
Directors.
Section 6 - SPECIAL MEETINGS
----------------
Special meetings of the Board of Directors may be called by the Chairman
of the Board or by the Chief Executive Officer, or by a majority of the Board of
Directors in writing. The person or persons authorized to call special meetings
of the Board of Directors may fix any place, either within or without the State
of Maryland, as the place for holding the special meeting of the Board of
Directors called by them.
Section 7 - NOTICE
------
The Secretary shall give notice to each director of the time and place of
every regular or special meeting of the Board of Directors. Notice is given to a
director when it is delivered personally to him, left at his residence or usual
place of business, or sent by telephone or telegraph, at least 24 hours before
the time of the meeting, or in the alternative, when it is mailed to his address
as it appears on the records of the Corporation, at least 72 hours before the
time of the meeting. Any director may waive notice of any meeting either before
or after the holding thereof by written waiver filed with the records of the
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need by specified in the
notice or waiver of notice of such meeting.
Section 8 - TELEPHONIC MEETINGS
-------------------
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 8 shall constitute presence in person at such meeting.
Section 9 - QUORUM
------
A majority of the total number of directors shall constitute a quorum for
the transaction of business, but if less than such quorum is present at a
meeting, a majority of the directors present may adjourn the meeting without
further notice from time to time until a quorum shall attend. At any
6
<PAGE> 7
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 10 - MANNER OF ACTING
----------------
The vote of the majority of the directors present at a meeting at which a
quorum is present shall be the action of the Board of Directors unless the
concurrence of a greater proportion is required for such action by the
Certificate of Incorporation.
Section 11 - INFORMAL ACTION
---------------
Any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if a
written consent to such action is signed by all members of the Board of
Directors or the committee, as the case may be, and such written consent if
filed with the minutes of the proceedings of the Board of Directors.
Section 12 - REMOVAL OF DIRECTORS
--------------------
Any or all of the directors may be removed, at any time, but then only for
cause and then only by the affirmative vote of the holders of at least 80% of
the shares then entitled to vote at any election of directors.
Section 13 - RESIGNATION
-----------
A director may resign at any time by giving written notice to the Board,
the President or the Secretary of the Corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the Board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
Section 14 - COMPENSATION
------------
By resolution of the Board of Directors, a fixed sum and expenses, if any,
for attendance at each regular or special meeting of the Board of Directors or
of committees thereof, and other compensation for their services as such or on
such committees, may be paid to directors, as may compensation for such other
services as a director may render to the Corporation.
Section 15 - COMMITTEES
----------
The Board of Directors may, by resolution passed by a majority of the
entire Board, designate an executive committee, a nominating committee, an audit
committee, a compensation and human resources committee or other committees,
each committee to consist of two or more directors of the Corporation. The Board
may designate one or more directors as alternate members of any meeting of any
committee, who may replace any absent or disqualified member at any meeting of
any committee. A majority of the total number of committee members shall
constitute a quorum for the
7
<PAGE> 8
conduct of a committee's business and affairs, and the vote of a majority of the
members constituting said quorum shall be the act of that committee. In the
absence or disqualification of a member of a committee, the member or members
remaining and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the Board
of Directors to act as a member at the committee meeting in place of the absent
or disqualified committee member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; provided, however, that any such committee shall
have no power or authority with reference to (i) amending the Certificate of
Incorporation, (ii) adopting an agreement of merger or consolidation under Title
3 of the Maryland General Corporation Law, (iii) recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, (iv) recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, (v) declaring
dividends or distributions on stock, (vi) issuing stock other than as provided
by the Maryland General Corporation Law, or (vii) amending the Bylaws of the
Corporation.
ARTICLE IV - OFFICERS
---------------------
Section 1 - EXECUTIVE AND OTHER OFFICERS
----------------------------
The Corporation shall have a President, who shall be a director of the
Corporation, a Secretary and a Treasurer. It may also have a Chairman of the
Board, who shall be a director of the Corporation and shall be an executive
officer if he is designated as the chief executive officer of the Corporation.
The Board of Directors may designate who shall serve as chief executive officer,
having general supervision of the business and affairs of the Corporation, and
as chief operating officer, having supervision of the operations of the
Corporation; in the absence of a designation the President shall serve as chief
executive officer and chief operating officer. The Corporation may have one or
more Executive Vice-Presidents, one or more Assistant Vice-Presidents, one or
more Assistant Secretaries and one or more Assistant Treasurers. A person may
hold more than one office in the Corporation but may not serve concurrently as
Post President and Vice-President of the Corporation.
Section 2 - CHAIRMAN OF THE BOARD
---------------------
The Chairman of the Board, of one be elected, shall preside at all
meetings of the Board of Directors and of the stockholders at which he shall be
present. He shall have and may exercise such duties and powers as are from time
to time assigned to him by the Board of Directors.
8
<PAGE> 9
Section 3 - PRESIDENT
---------
In the absence of the Chairman of the Board, the President shall preside
at all meetings of the stockholders and of the Board of Directors at which he
shall be present; he may sign and execute, in the name of the Corporation, all
authorized deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
delegated to some other office or agent of the Corporation; and, in general, he
shall perform all duties usually performed by a president of a corporation and
such other duties as may from time to time be assigned to him by the Board of
Directors or by the chief executive officer of the Corporation.
Section 4 - EXECUTIVE VICE-PRESIDENTS
-------------------------
The Executive Vice-President or Executive Vice-Presidents, at the request
of the chief executive officer or the President or in the President's absence or
during his inability to act, shall perform the duties and exercise the functions
of the President, and when so acting shall have the powers of the President. If
there be more than one Executive Vice-President, the Board of Directors may
determine which one or more of the Executive Vice-Presidents shall perform any
of such duties or exercise any of such functions, or if such determination is
not made by the Board of Directors, the chief executive officer may make such
determination; otherwise any of the Executive Vice- Presidents may perform any
of such duties or exercise any of such functions. The Executive Vice- President
or Executive Vice-Presidents shall have such other powers and perform such other
duties, and have such additional descriptive designations in their titles (if
any), as may be assigned by the Board of Directors or the Chief Executive
Officer.
Section 5 - VICE-PRESIDENTS
---------------
In the absence of the Chairman of the Board, the chief executive officer
and the chief operating officer (if designated), all Executive Vice-Presidents,
and all Senior Vice-Presidents (if such office then exists), such Vice President
as may be designated from time to time by the Board of Directors shall be vested
with the powers of the President and shall perform his duties. In addition
thereto, all Vice Presidents shall perform such duties as may be assigned to
them by the Board of Directors, the Chairman of the Board, the chief executive
officer or the President.
Section 6 - SECRETARY
---------
The Secretary shall keep the minutes of the meetings of the stockholders,
of the Board of Directors and of any committees, in books provided for the
purpose; he shall see that all notices are duly given in accordance with the
provisions of the Bylaws or as required by law; he shall be custodian of the
records of the Corporation; he shall witness all documents on behalf of the
Corporation, the execution of which is duly authorized, see that the corporate
seal is affixed where such document is required to be under its seal, and, when
so affixed, may attest the same; and, in general, he shall perform all duties
incident to the office of a secretary of a corporation, and such other duties as
may from time to time be assigned to him by the Board of Directors or the
President.
9
<PAGE> 10
Section 7 - TREASURER
---------
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation, and shall deposit, or
cause to be deposited, in the name of the Corporation, all monies or other
valuable effects in such banks, trust companies or other depositories as shall,
from time to time, be selected by the Board of Directors. In general, he shall
perform all the duties incident to the office of a treasurer of a corporation,
and such other duties as may from time to time be assigned to him by the Board
of Directors, the chief executive officer or the President.
Section 8 - ASSISTANT OFFICERS
------------------
The Assistant Vice-Presidents shall have such duties as may from time to
time be assigned to them by the Board of Directors or the President. The
Assistant Secretaries shall have such duties as may from time to time be
assigned to them by the Board of Directors or the Secretary. The Assistant
Treasurers shall have such duties as may from time to time be assigned to them
by the Board of Directors or the Treasurer.
Section 9 - SUBORDINATE OFFICERS
--------------------
The Corporation may have such subordinate officers as the Board of
Directors may from time to time deem desirable. Each such officer shall hold
office for such period and perform such duties as the Board of Directors, the
President or the committee or officer designated pursuant to Article IV, Section
11 may prescribe.
Section 10 - COMPENSATION
------------
The Board of Directors shall have power to fix the salaries and other
compensation and remuneration, of whatever kind, of all officers of the
Corporation. It may authorize any committee or officer, upon whom the power of
appointing subordinate officers may have been conferred, to fix the salaries,
compensation and remuneration of such subordinate officers.
Section 11 - ELECTION, TENURE AND REMOVAL OF OFFICERS
----------------------------------------
The Board of Directors shall elect the officers. The Board of Directors
may from time to time authorize any committee or officer to appoint subordinate
officers. An officer serves for one year and until his successor is elected and
qualified. If the Board of Directors in its judgment finds that the best
interests of the Corporation will be served, it may remove any officer or agent
of the Corporation. The removal of an officer or agent does not prejudice any of
his contract rights. The Board of Directors (or any committee or officer
authorized by the Board of Directors) may fill a vacancy which occurs in any
office for the unexpired portion of the term of that office.
10
<PAGE> 11
ARTICLE V - STOCK
-----------------
Section 1 - CERTIFICATES FOR STOCK
----------------------
Each stockholder shall be entitled to certificates which represent and
certify the shares of stock he holds in the Corporation. Each stock certificate
shall include on its face the name of the Corporation, the name of the
stockholder and the class of stock and number of shares represented by the
certificate and be in such form, not inconsistent with law or with the
Certificate of Incorporation, as shall be approved by the Board of Directors or
any officer or officers designated for such purpose by resolution of the Board
of Directors. Each stock certificate shall be signed by the President, an
Executive Vice-President or the Chairman of the Board, and countersigned by the
Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Each certificate shall be sealed with the actual corporate seal or a facsimile
of it or in any other form and the signatures on each certificate may be either
manual or facsimile signatures. A certificate is valid and may be issued whether
or not an officer who signed it is still an officer of the Corporation when it
is issued.
Section 2 - TRANSFERS
---------
The Board of Directors shall have power and authority to make such rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of certificates of stock, and may appoint transfer agents and
registrars thereof. The duties of transfer agent and registrar may be combined.
Section 3 - RECORD DATE AND CLOSING OF TRANSFER BOOKS
-----------------------------------------
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
Section 4 - STOCK LEDGER
------------
The Corporation shall maintain a stock ledger which contains the name and
address of each stockholder and the number of shares of stock of each class
registered in the name of each stockholder. The stock ledger may be in written
form or in any other form which can be converted within a reasonable time into
written form for visual inspection. The original or a duplicate of the stock
ledger shall be kept at the offices of a transfer agent for the particular class
of stock, within or without the State of Maryland, or, if none, at the principal
office or the principal executive offices of the Corporation in the State of
Maryland.
11
<PAGE> 12
Section 5 - CERTIFICATION OF BENEFICIAL OWNERS
----------------------------------
The Board of Directors may adopt by resolution a procedure by which a
stockholder of the Corporation may certify in writing to the Corporation that
any shares of stock registered in the name of the stockholder are held for the
account of a specified person other than the stockholder. The resolution shall
set forth the class of stockholders who may certify; the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board considers necessary or desirable. On receipt of a certification which
complies with the procedure adopted by the Board in accordance with this
Section, the person specified in the certification is, for the purpose set forth
in the certification, the holder of record of the specified stock in place of
the stockholder who makes the certification.
Section 6 - LOST, STOLEN OR DESTROYED STOCK CERTIFICATES
--------------------------------------------
The Board of Directors of the Corporation may determine the conditions for
issuing a new stock certificate in place of one which is purportedly alleged to
have been lost, stolen or destroyed, or the Board of Directors may delegate such
power to any officer or officers of the Corporation. In its discretion, the
Board of Directors or such officer or officers may refuse to issue such new
certificate except upon the order of a court having jurisdiction in the
premises.
ARTICLE VI - FINANCE
--------------------
Section 1 - CHECKS, DRAFTS, ETC.
--------------------
All checks, drafts and orders for the payment of money, notes and other
evidences of indebtedness, issued in the name of the Corporation, shall, unless
otherwise provided by resolution of the Board of Directors, be signed by the
President, an Executive Vice-President or a Vice- President and countersigned by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
Section 2 - ANNUAL STATEMENT OF AFFAIRS
---------------------------
There shall be prepared annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial statement
of operations for the preceding fiscal year. The statement of affairs shall be
submitted at the annual meeting of the stockholders and, within twenty (20) days
after the meeting, placed on file at the Corporation's principal office. Such
statement shall be prepared or caused to be prepared by such executive officer
of the Corporation as may be designated in an additional or supplementary bylaw
adopted by the Board of Directors. If no other executive officer is so
designated, it shall be the duty of the President to prepare or cause to be
prepared such statement.
12
<PAGE> 13
Section 3 - FISCAL YEAR
-----------
The fiscal year of the Corporation shall commence on the first day of
January and end on the last day of December in each year.
ARTICLE VII - SUNDRY PROVISIONS
-------------------------------
Section 1 - BOOKS AND RECORDS
-----------------
The Corporation shall keep correct and complete books and records of its
accounts and transactions and minutes of the proceedings of its stockholders and
Board of Directors and of any executive or other committee when exercising any
of the powers of the Board of Directors. The books and records of the
Corporation may be in written form or in any other form which can be converted
within a reasonable time into written form for visual inspection. Minutes shall
be recorded in written form but may be maintained in the form of a reproduction.
Section 2 - CORPORATE SEAL
--------------
The Board of Directors shall provide a suitable seal, bearing the name of
the Corporation, which shall be in the charge of the Secretary. The Board of
Directors may authorize one or more duplicate seals and provide for the custody
thereof.
Section 3 - BONDS
-----
The Board of Directors may require any officer, agent or employee of the
Corporation to give a bond to the Corporation, conditioned upon the faithful
discharge of his duties, with one or more sureties and in such amount as may be
satisfactory to the Board of Directors.
Section 4 - VOTING UPON SHARES IN OTHER CORPORATIONS
----------------------------------------
Stock of other corporations or associations, registered in the name of the
Corporation, may be voted by the Chief Executive Officer, the President, an
Executive Vice-President or a proxy appointed by any of them. The Board of
Directors, however, may by resolution appoint some other person to vote such
shares, in which case such person shall be entitled to vote such shares upon the
production of a certified copy of such resolution.
Section 5 - MAIL
----
Any notice or other document which is required by these Bylaws to be
mailed shall be deposited in the United States mails, postage prepaid.
13
<PAGE> 14
Section 6 - EXECUTION OF DOCUMENTS
----------------------
A person who holds more than one office in the Corporation may not act in
more than one capacity to execute, acknowledge, or verify an instrument required
by law to be executed, acknowledged or verified by more than one officer.
Section 7 - AMENDMENT OF BYLAWS
-------------------
The Board of Directors shall have the power and authority to amend, alter
or repeal these Bylaws or any provision thereof, and may from time to time make
additional Bylaws.
ARTICLE VIII - INDEMNIFICATION
------------------------------
Section 1 - RIGHT TO INDEMNIFICATION
------------------------
Each person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of the
fact that he, or a person of whom he is the legal representative, is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise (including service with respect to employee benefit plans), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Maryland General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said Law permitted the Corporation to provide prior
to such amendment) against all expenses, liability and loss (including
attorney's fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith; provided, however, that the Corporation shall indemnify
-------- -------
any such person seeking indemnity in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. Such right to
indemnification under this Section shall be a contract right and shall include
the right of an officer or director to be paid by the Corporation expenses
incurred in defending any civil or criminal action, suit or proceeding in
advance of the final disposition of any such action, suit or proceeding, upon
the receipt by the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise.
Section 2 - RIGHT OF CLAIMANT TO BRING SUIT
-------------------------------
If a claim for indemnification or advancement of expenses under Section 1
is not paid in full by the Corporation within ninety (90) days after a written
claim for such has been received by the
14
<PAGE> 15
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking
has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Maryland General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to make a determination prior to
the commencement of such action that indemnification of the claimant is proper
in the circumstances because he meets the applicable standard of conduct set
forth in the Maryland General Corporation Law, nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant did not meet such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.
Section 3 - NON-EXCLUSIVITY OF RIGHTS
-------------------------
The rights conferred on any person by Sections 1 and 2 of this Article
VIII shall not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
Section 4 - INSURANCE
---------
The Corporation may maintain insurance, at its expense, to protect itself
and any such director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
Maryland General Corporation Law.
IN WITNESS WHEREOF, these Bylaws are hereby certified as the duly adopted
Bylaws of the Corporation on July 21, 1999.
/s/ Robert L. Davis
-----------------------------------
Corporate Secretary
15
<PAGE> 1
<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) 1999 1998 1999 1998
- ------------------------------------------------------------ ---------------------
Basic:
- ------
<S> <C> <C> <C> <C>
Average shares outstanding 25,584 25,712 25,534 25,633
========= ========= ========= =========
Net Income $ 10,990 $ 9,725 $ 21,315 $ 19,030
========= ========= ========= =========
Per Share Amount $ 0.43 $ 0.38 $ 0.83 $ 0.74
========= ========= ========= =========
Diluted:
- --------
Average shares outstanding 25,584 25,712 25,534 25,633
Net effect of dilutive stock options
based on the treasury stock method
using the average market price or
quarter end price, whichever is
greater 654 1,054 904 1,113
--------- --------- --------- ---------
Total Shares Outstanding 26,238 26,766 26,438 26,746
========= ========= ========= =========
Net Income $ 10,990 $ 9,725 $ 21,315 $ 19,030
========= ========= ========= =========
Per Share Amount $ 0.42 $ 0.36 $ 0.81 $ 0.71
--------- --------- --------- ---------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary 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
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 77,137
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,364,477
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 3,235,026
<ALLOWANCE> 38,682
<TOTAL-ASSETS> 4,899,590
<DEPOSITS> 3,569,632
<SHORT-TERM> 225,505
<LIABILITIES-OTHER> 39,763
<LONG-TERM> 742,025
39,250
0
<COMMON> 26,115
<OTHER-SE> 257,300
<TOTAL-LIABILITIES-AND-EQUITY> 4,899,590
<INTEREST-LOAN> 124,734
<INTEREST-INVEST> 41,401
<INTEREST-OTHER> 1,225
<INTEREST-TOTAL> 167,360
<INTEREST-DEPOSIT> 70,598
<INTEREST-EXPENSE> 97,196
<INTEREST-INCOME-NET> 70,164
<LOAN-LOSSES> 4,720
<SECURITIES-GAINS> 312
<EXPENSE-OTHER> 34,229
<INCOME-PRETAX> 31,527
<INCOME-PRE-EXTRAORDINARY> 31,527
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,315
<EPS-BASIC> 0.83
<EPS-DILUTED> 0.81
<YIELD-ACTUAL> 3.06
<LOANS-NON> 8,068
<LOANS-PAST> 31,806
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 42,739
<CHARGE-OFFS> 9,588
<RECOVERIES> 811
<ALLOWANCE-CLOSE> 38,682
<ALLOWANCE-DOMESTIC> 38,682
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
