Provident Bankshares — FTN Midwest Small and Mid Cap Bank Conference 2007
57 slides from Provident Bankshares's conference presentation, Sep 6, 2007
Slide 1: FTN Midwest Small and Mid Cap Bank Conference
PROVIDENT BANKSHARES C O R P O R A T I O N FTN Midwest Small and Mid Cap Bank Conference September 6, 2007 PROVIDENT BANKSHARES C O R P O R A T I O N FTN Midwest Small and Mid Cap Bank Conference September 6, 2007 Exhibit 99.1
Slide 2: Forward-Looking Statements and Risk Factors
FORWARD-LOOKING STATEMENTS AND RISK FACTORS This presentation contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties, which may cause results to differ materially from those set forth in
Slide 3: Agenda
Agenda • Introduction • Regional Overview • Transformations - Market Expansion - Commercial Business Line - High Quality Balance Sheet • Outlook Agenda
Slide 4: Introduction
Introduction – Headquartered in Baltimore, Maryland – Total assets of $6.3 billion (as of 6/30/07) – Serves individuals, families, small businesses and larger companies in the metropolitan areas of Baltimore, DC and Richmond, VA – Over 1,700 employees Introduction
Slide 5: Provident Bank History
Introduction Provident Bank History • 1886 Founded as a Mutual Thrift • 1987 Converted to Commercial Bank • 1993 Retail Banking Expansion • 1997 Citizen’s Savings Bank Merger • 2004 Southern Financial Merger Introduction
Slide 6: Banking Office Network Branches
Banking Office Network 149 Branches Banking Office Network 149 Branches Green dots are in-store, red triangles are traditional locations.
Slide 7: Regional Overview
Regional Overview Regional Overview
Slide 8: National Growth Markets
Source: SNL Financial. Shaded counties represent top quartile markets based on projected population growth. Provident Bankshares Top Quartile Growth Markets National Growth Markets National Growth Markets
Slide 9: Footprint in High Growth Region
Footprint in High Growth Region Footprint in High Growth Region
Slide 10: Household Growth, 2000 vs. 2006, 15 Largest Metro Areas
Household Growth, 2000 vs. 2006 15 Largest Metro Areas -40 -10 20 50 80 110 140 170 200 230 260 Baltimore-Washington: +243,318 Source: DemographicsNow; U.S. Census Bureau Household Growth, 2000 vs. 2006 15 Largest Metro Areas
Slide 11: Unemployment Rates by State
Source: Bureau of Labor Statistics 5.2 Illinois 41 4.5 Connecticut 24 5.3 California 42 4.6 Georgia 25 3.2 Nebraska 8 5.0 Oklahoma 36 4.1 Tennessee 20 2.7 Montana 3 7.2 Michigan 51 4.9 New York 32 3.9 Louisiana 15 6.7 Mississippi 50 4.9 Nevada 32 3.9 Iowa 15 6.1 Alaska 49 4.9 Missouri 32 3.9 Florida
Slide 12: Employment Growth, July 2007 vs. July 2006
Employment Growth, July 2007 vs. July 2006, 15 Largest Metro Areas -20 0 20 40 60 80 100 Baltimore-Washington: +62,300 Source: Bureau of Labor Statistics Employment Growth, July 2007 vs. July 2006, 15 Largest Metro Areas
Slide 13: Largest 20 Metropolitan Areas by Median Household Income, 2006
Largest 20 Metropolitan Areas by Median Household Income, 2006 $57,008 Chicago, IL 8 $55,593 Philadelphia, PA 9 HH Income Metro Rank $55,552 Atlanta, GA 10 $59,281 New York, NY 7 $59,591 San Diego, CA 6 $60,663 Seattle, WA 5 $62,223 Minneapolis, MN 3 $64,144 Boston, MA 2 $49,765 St. Louis, MO 17 $46
Slide 14: Office Vacancy Rates Among Select Metro Areas
Office Vacancy Rates Among Select Metro Areas, Mid-year 2007 7.5% 9.1% 11.3% 11.4% 12.5% 12.6% 13.1% 17.4% 5% 7% 9% 11% 13% 15% 17% 19% Source: Delta Associates Office Vacancy Rates Among Select Metro Areas, Mid-year 2007
Slide 15: Lowest Apartment Vacancy Rates Among Major Metro Areas
Lowest Apartment Vacancy Rates Among Major Metro Areas, Year-End 2006 2.8% 2.9% 2.9% 2.9% 3.0% 5.1% 5.9% 6.0% 1% 2% 3% 4% 5% 6% 7% Source: Delta Associates Lowest Apartment Vacancy Rates Among Major Metro Areas, Year-End 2006
Slide 16: Department of Defense Operations Relocating to the Region
Department of Defense Operations Relocating to the Region • Aberdeen Proving Ground • Fort Meade • Fort Detrick • National Naval Medical Center Source: U.S. Department of Defense All told, 40,000 – 60,000 jobs expected Department of Defense Operations Relocating to the Region
Slide 17: Provident Bank Mission
Introduction Provident Bank Mission Provident Bank’s mission is to exceed customer expectations by delivering superior service, products and banking convenience. Every employee’s commitment to serve our customers in this fashion will establish Provident Bank as the primary bank of choice of individu
Slide 18: Provident Bank Core Values
Introduction Provident Bank Core Values Integrity Excellence Caring Partnership Results Driven Introduction Provident Bank Core Values
Slide 19: Strategic Priorities
Strategic Priorities – Maximize Provident’s position as the ‘right size’ bank – Consistently execute a high performance, customer relationship focused sales culture – Sustain a culture that attracts and retains employees who provide the differentiating ‘Provident Way’ customer experience – Profitabl
Slide 20: Provident Bank Positioning Strategy
Provident Bank Positioning Strategy We will continue to provide the products and services of our largest competitors, while delivering the level of service found in only the best community banks. Provident Bank Positioning Strategy
Slide 21: Provident's Transformations
Provident’s Transformations Commercial Business Line Market Expansion Provident’s Transformations High Quality Balance Sheet
Slide 22: Financial Priorities
Financial Priorities I. Continued transformation of the balance sheet II. Sound asset quality III. Higher capital levels IV. Growth in earnings with improved quality of earnings Financial Priorities
Slide 23: Balance Sheet Transformation: Our Progress and Plans
Balance Sheet Transformation Our Progress and Plans Originated & Acquired Residential Loans (Non-Core) Investment Securities Commercial & Consumer Loans (Core) % of Earnings Assets 06/30/07 Opportunity Total Earnings Opportunity = $6 million 12/31/01 Balance Sheet Transformation Our Progress and Pla
Slide 24: Subprime Exposure
Subprime Exposure • There are no subprime assets in the investment portfolio • We do not retain residential mortgage products • Limited subprime exposure (12%) in the Home Equity portfolio – Subprime equals < 660 FICO – 99% Debt – to – Income < 50% – 98% Loan – to – Value < 90% – 2.66% Delinquency 3
Slide 25: WPW Winning the Provident Way
WPW Winning the Provident Way Branch Network Rationalization Fee Generation Activities Loan and Deposit Efficiencies WPW Winning the Provident Way
Slide 26: WPW Winning the Provident Way
WPW Winning the Provident Way Branch Rationalization Fee Activities Functional Efficiencies WPW Winning the Provident Way $7.6 $1.2 $1.6 9% 20% 71% 2007 $10.4MM Benefit 2008 $15-$20MM Benefit
Slide 27: Strategic Priorities
Strategic Priorities Expand delivery via de novo branches and select acquisitions within the footprint Strategic Priorities
Slide 28: Provident's Transformations
Provident’s Transformations High Quality Balance Sheet Market Expansion Provident’s Transformations Commercial Business Line
Slide 29: Strategic Priorities
Strategic Priorities Profitably grow and deepen customer relationships in all four key market segments: • commercial • commercial real estate • small business • consumer Strategic Priorities
Slide 30: Loan Portfolio
Loan Portfolio Consumer Loans Commercial Loans Acquired & Originated Residential 1% Commercial Real Estate Commercial Loans Marine Home Equity Originated & Acquired Residential Loans Other Consumer 2Q07 2Q07 Loan Portfolio 36% 56% 8% 20% 36% 9% 26% 8% $3,903,558 $3,903,558
Slide 31: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio Residential Construction Commercial Construction Commercial Mortgage Baltimore Metro Washington Metro Commercial Real Estate Portfolio 27% 32% 41% 42% 58%
Slide 32: Commercial Loan Growth
Commercial Loan Growth Average Balances (millions) 2002 2003 2004 2005 2006 1Q07 2Q07 Baltimore VA/Wash $924 $997 CAGR Loans 21% $1,477 $1,776 $1,982 $2,183 $2,149 Commercial Loan Growth
Slide 33: Consumer Loan Growth
Consumer Loan Growth 2002 2003 2004 2005 2006 1Q07 2Q07 Baltimore VA/Wash $797 $906 CAGR 2001-2006 Loans 15% ( includes SFFB in 2001 base) $1,089 $1,264 $1,382 (Loans exclude acquired residential) Average balances (millions) $1,397 $1,410 Consumer Loan Growth
Slide 34: Customer Deposits
Customer Deposits Consumer Deposits Commercial Deposits Savings Deposits Time Deposits Demand Deposits MM Deposits 2Q07 2Q07 Customer Deposits 22% 78% 33% 16% 35% 16% $3,668,693 $3,668,693
Slide 35: Commercial Deposit/Repo Growth
Commercial Deposit/Repo Growth Average Balances (millions) 2002 2003 2004 2005 2006 1Q07 2Q07 Baltimore VA/Wash $579 $680 (Excludes Money Market CDs) $983 CAGR Deposits 19% $1,144 $1,142 $1,065 $1,095 Commercial Deposit/Repo Growth
Slide 36: Consumer Deposit Growth
Consumer Deposit Growth Average Balances (millions) 2002 2003 2004 2005 2006 1Q07 2Q07 Baltimore VA/Wash $1,536 $1,682 $1,891 CAGR 2001-2006 Deposits 5% $1,940 $1,856 (Excludes CD/IRA) $1,760 $1,822 Consumer Deposit Growth
Slide 37: Solid Fee Income Growth
Solid Fee Income Growth $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2001 2002 2003 2004 2005 2006 $0 $50 $100 $150 $200 $250 $300 Fee Income Annual Fees per Account Solid Fee Income Growth 74,955 86,394 92,752 100,840 119,726 112,072 Fee Income CAGR = 9.82% Fees per
Slide 38: Provident's Transformations
Provident’s Transformations High Quality Balance Sheet Commercial Business Line Provident’s Transformations Market Expansion
Slide 39: Footprint in High Growth Region
Footprint in High Growth Region Footprint in High Growth Region
Slide 40: Provident Bank Branches
Provident Bank Branches 50 51 59 58 58 56 50 34 89 85 86 91 91 1996 1997* 1998 1999 2000 2001 2002 2003 2004* 2005 2006 1Q07 2Q07 Traditional In-Store/ATM Plus * 1997– Citizens Savings Bank acquisition *2004 – Southern Financial Provident Bank Branches
Slide 41: Virginia and Washington Metro Expansion
71 70 70 51 53 59 66 65 66 67 67 44 66 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1Q07 2Q07 Washington Metro/VA Baltimore BRANCH NETWORK Virginia And Washington Metro Expansion Virginia And Washington Metro Expansion
Slide 42: Virginia Opportunity
Virginia Opportunity • Build relationships with existing customers • We have 47 “new” branches in Virginia Maryland Branches Virginia Branches Deposits per Branch Loans per Branch Fee Income per Branch 2006 2006 2006 $8,022,525 $25,215,071 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,00
Slide 43: Branch Originated Business Loan Growth
Branch Originated Business Loan Growth $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 2005 2006 MD Branches VA/Wash Branches $93,324,616 $44,452,336 Branch Originated Business Loan Growth
Slide 44: Investment Portfolio
Investment Portfolio Mortgage Back Securities Asset Backed Securities Other Securities Municipal Securities U.S. Govt AAA AA A Other Investment Portfolio 9% 9% 38% 44% 1% 30% 9% 20% 40% Quality Allocation As of 06/30/07
Slide 45: Core Loan and Deposit Growth
Core Loan and Deposit Growth $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2002 2003 2004 2005 2006 1Q07 2Q07 CAGR Core Loans = 19% CAGR Total Assets = 7% Average balances ($ Millions) $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2002 2003 2004 2005 2006 1Q07 2Q07 CAGR Core Deposits = 7% Core
Slide 46: Peer Group Analysis
Peer Group Analysis Peer Group Analysis
Slide 47: Improved Asset Quality: Net Charge-Offs / Average Loans
Improved Asset Quality Net Charge-Offs / Average Loans 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 2002 2003 2004 2005 2006 1Q07 2Q07 Provident U.S. banks of $3-$10 bil. in assets Improved Asset Quality Net Charge-Offs / Average Loans 0.47% 0.15% 0.08% 0.12% 0.15% 0.27% 0.34% 0.46% 0.33% 0.24% 0.16% 0
Slide 48: Improved Asset Quality: Reserves / Loans
Improved Asset Quality Reserves / Loans 1.1% 1.2% 1.3% 1.4% 1.5% 2002 2003 2004 2005 2006 1Q07 2Q07 Provident U.S. banks of $3-$10 bil. in assets Improved Asset Quality Reserves / Loans 1.17% 1.17% 1.27% 1.30% 1.29% 1.17% 1.24% 1.19% 1.21% 1.19% 1.21% 1.30% 1.41% 1.40%
Slide 49: Higher Capital Levels: Tangible Common Equity Ratio
Higher Capital Levels Tangible Common Equity Ratio 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 2002 2003 2004 2005 2006 1Q07 2Q07 Provident U.S. banks of $3-$10 bil. in assets Higher Capital Levels Tangible Common Equity Ratio 5.97% 6.20% 5.57% 6.27% 6.50% 6.63% 6.55% 7.68% 7.13% 6.92% 6.84% 7.14% 7.00% 6.65
Slide 50: Earnings Growth With Improved Quality: Net Interest Margin
Earnings Growth With Improved Quality Net Interest Margin 2.8% 3.0% 3.2% 3.4% 3.6% 3.8% 4.0% 4.2% 4.4% 2002 2003 2004 2005 2006 1Q07 2Q07 Provident U.S. banks of $3-$10 bil. in assets Earnings Growth With Improved Quality Net Interest Margin 3.57% 3.62% 3.64% 3.52% 3.34% 3.21% 3.14% 3.72% 3.73% 3.86
Slide 51: Earnings Growth With Improved Quality: Return on Assets
Earnings Growth With Improved Quality Return on Assets 0.9% 1.1% 1.3% 2002 2003 2004 2005 2006 1Q07 2Q07 Provident U.S. banks of $3-$10 bil. in assets Earnings Growth With Improved Quality Return on Assets 1.00% 1.05% 1.14% 1.09% 1.00% 1.03% 1.02% 0.96% 1.02% 1.17% 1.18% 1.20% 1.16% 1.25%
Slide 52: Earnings Growth With Improved Quality: Return on Tangible Common Equity
Earnings Growth with Improved Quality Return on Tangible Common Equity 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 2002 2003 2004 2005 2006 1Q07 2Q07 Provident U.S. banks of $3-$10 bil. in assets Earnings Growth with Improved Quality Return on Tangible Common Equity 16.95% 17.88% 20.84% 19
Slide 53: Efficiency Ratio: Our Opportunity
Efficiency Ratio Our Opportunity 0% 10% 20% 30% 40% 50% 60% 70% 80% 2002 2003 2004 2005 2006 1Q07 2Q07 Provident U.S. banks of $3-$10 bil. in assets Efficiency Ratio Our Opportunity 62.72% 64.90% 65.47% 65.66% 63.39% 68.83% 64.84% 59.42% 56.82% 58.44% 58.47% 57.45% 57.86% 61.24%
Slide 54: Earnings Growth With Improved Quality: Earnings Per Share
Earnings Growth With Improved Quality Earnings Per Share $1.50 $1.70 $1.90 $2.10 $2.30 $2.50 2001 2002 2003 2004 2005 2006 PBKS Reported PBKS Operating Reported EPS CAGR = 8% Earnings Growth With Improved Quality Earnings Per Share $2.12 $2.17 $2.00 $2.05 $1.88 $1.56 $1.60 $1.88 $2.05 $2.27 $2.28 $2
Slide 55: Looking Ahead – The Industry
Looking Ahead – The Industry • Earnings growth challenging • Net interest margin pressured - Ongoing shift from low cost transaction accounts to higher cost deposit accounts • Rising costs due to over branching • Potential increase in credit costs Looking Ahead – The Industry
Slide 56: Looking Ahead - PBKS
Looking Ahead - PBKS • Vibrant regional economy • Sound credit • Excellent loan growth • Virginia opportunity • Deposit pricing challenges • Improve efficiency via WPW • Disciplined approach to expansion Looking Ahead - PBKS
Slide 57: Provident Bankshares Corporation Contact
PROVIDENT BANKSHARES C O R P O R A T I O N www.provbank.com Contact Media : Vicki Cox (410) 277-2063 Investment Community : Dennis Starliper (410) 277-2705 PROVIDENT BANKSHARES C O R P O R A T I O N
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