Provident Bankshares — Investor Presentation (November 2007)
49 slides from Provident Bankshares's investor presentation, Nov 8, 2007
Slide 1: Provident Bankshares Corporation November 2007
PROVIDENT BANKSHARES C O R P O R A T I O N November 2007 PROVIDENT BANKSHARES C O R P O R A T I O N November 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 • Value Proposition Agenda
Slide 4: Introduction
Introduction – Headquartered in Baltimore, Maryland – Total assets of $6.4 billion (as of 9/30/07) – 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
Banking Office Network 2007 142 Branches Green dots are in-store, red triangles are traditional locations Banking Office Network 2007 142 Branches
Slide 7: Regional Overview
Regional Overview Regional Overview
Slide 8: Boise (15.42%)Boise (15.42%)Boise (15.42%) Boise (15.42%)Boise (15.42%) Boise (15.42%)Boise (15.42%)Boise (15.42%) Re…
Boise (15.42%)Boise (15.42%)Boise (15.42%) Boise (15.42%)Boise (15.42%) Boise (15.42%)Boise (15.42%)Boise (15.42%) Reno (14.55%)Reno (14.55%)Reno (14.55%) Reno (14.55%)Reno (14.55%) Reno (14.55%)Reno (14.55%)Reno (14.55%) Seattle (6.32%)Seattle (6.32%)Seattle (6.32%) Seattle (6.32%)Seattle (6.32%) S
Slide 9: Virginia
Source: Bureau of Labor Statistics 5.4 Illinois 41 4.3 New Jersey 23 5.4 Oregon 41 4.4 Georgia 25 3.2 Nebraska 8 5.0 Nevada 37 4.0 Tennessee 19 2.6 Utah 2 7.4 Michigan 51 4.9 Indiana 34 3.8 New Mexico 14 6.3 Alaska 50 4.8 North Carolina 32 3.8 Louisiana 14 5.9 Mississippi 49 4.8 Maine 32 3.8 Colorad
Slide 10: Employment Growth, August 2007 vs. August 2006, 15 Largest Metro Areas
Employment Growth, August 2007 vs. August 2006, 15 Largest Metro Areas -40 -20 0 20 40 60 80 Baltimore-Washington: +52,800 Source: Bureau of Labor Statistics Employment Growth, August 2007 vs. August 2006, 15 Largest Metro Areas
Slide 11: Office Vacancy Rates Among Select Metro Areas, 2007Q3
Office Vacancy Rates Among Select Metro Areas, 2007Q3 7.6% 8.6% 11.3% 11.9% 12.4% 13.0% 13.0% 17.7% 5% 7% 9% 11% 13% 15% 17% 19% Source: Delta Associates Office Vacancy Rates Among Select Metro Areas, 2007Q3
Slide 12: 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 13: Provident Bank Mission and Core Values
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 14: 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 15: 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 16: Provident's Transformations
Provident’s Transformations Commercial Business Line Market Expansion Provident’s Transformations High Quality Balance Sheet
Slide 17: Balance Sheet Transformation: Our Progress and Plans
Balance Sheet Transformation Our Progress and Plans 38% 22% 40% Originated & Acquired Residential Loans (Non-Core) Investment Securities Commercial & Consumer Loans (Core) 25% 75% % of Earnings Assets Total Earnings Opportunity = $6 million 67% 5% 28% 12/31/01 09/30/07 Opportunity Balance Sheet Tran
Slide 18: Investment Portfolio
Investment Portfolio 3% 28% 8% 21% 40% U.S. Govt AAA AA A Other Allocation Quality 9% 10% 37% 44% Mortgage Back Securities Asset Backed Securities Other Securities Municipal Securities Note: there are no subprime assets in the investment portfolio Investment Portfolio As of 09/30/07
Slide 19: Provident's Transformations
Provident’s Transformations High Quality Balance Sheet Market Expansion Provident’s Transformations Commercial Business Line
Slide 20: 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 21: Loan Portfolio
Loan Portfolio 36% 57% 7% Consumer Loans Commercial Loans Acquired & Originated Residential Loans 20% 37% 9% 26% 7% 1% Commercial Real Estate Commercial Loans Marine Home Equity Originated & Acquired Residential Loans Other Consumer 3Q07 Loan Portfolio $3,973,745 $3,973,745
Slide 22: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio 27% 31% 42% Residential Construction Commercial Construction Commercial Mortgage 59% 41% Baltimore Metro Washington Metro Commercial Real Estate Portfolio
Slide 23: Commercial Loan Growth
2002 2003 2004 2005 2006 1Q07 2Q07 3Q07 Baltimore VA/Wash Commercial Loan Growth Average Balances (millions) $924 $997 CAGR Loans 21% $1,477 $1,776 $1,982 $2,183 $2,149 $2,239 Commercial Loan Growth
Slide 24: Consumer Loan Growth
$0 $250 $500 $750 $1,000 $1,250 $1,500 2002 2003 2004 2005 2006 1Q07 2Q07 3Q07 Baltimore VA/Wash Consumer Loan Growth $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 $1,437 Consumer L
Slide 25: Provident Loan Portfolio Comparison to National Averages
Provident Loan Portfolio Comparison to National Averages National Avg. Provident % Loans 30-89 Days Past Due .79 .50 % Loans 90+ Days Past Due .86 .67 Net charge-offs to Loans & Leases 29 BP (first two quarters of 2007) 27 BP (6 months annualized) Provident Loan Portfolio Comparison to National Aver
Slide 26: Non Performing Assets / Total Loans
Non Performing Assets / Total Loans 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% 1.03% 1.01% .93% .97% 1.05% .95% .90% .92% .77% .89% .84% .77% .70% .67% .73% .74% .76% .70% .68% .57% .61% .58% .67% 2007 Non Performing Assets / Total Loans
Slide 27: Consumer Loan Portfolio Key Facts
Consumer Loan Portfolio Key Facts • Provident does not retain residential mortgage products • Home equity portfolio average FICO of 729. Average loan-to-value of 69% and debt-to-income of 28% at origination. • Limited subprime exposure (11%) in the home equity portfolio – Subprime defined as < 660 F
Slide 28: Customer Deposits
Customer Deposits 22% 78% Consumer Deposits Commercial Deposits 34% 16% 34% 16% Savings Deposits Time Deposits Demand Deposits MM Deposits 3Q07 Customer Deposits $3,556,390 $3,556,390
Slide 29: Commercial Deposit/Repo Growth
$0 $250 $500 $750 $1,000 $1,250 $1,500 2002 2003 2004 2005 2006 1Q07 2Q07 3Q07 Baltimore VA/Wash Commercial Deposit/Repo Growth Average Balances (millions) $579 $680 (Excludes Money Market CDs) $983 CAGR Deposits 19% $1,144 $1,142 $1,065 $1,095 $1,099 Commercial Deposit/Repo Growth
Slide 30: Solid Fee Income Growth
Solid Fee Income Growth 74,955 86,394 92,752 100,840 119,726 112,072 188 210 216 219 245 266 $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 Fee Incom
Slide 31: Provident's Transformations
Provident’s Transformations High Quality Balance Sheet Commercial Business Line Provident’s Transformations Market Expansion
Slide 32: Strategic Priorities
Strategic Priorities Expand delivery via de novo branches and select acquisitions within the footprint Strategic Priorities
Slide 33: Virginia and Washington Metro Expansion
BRANCH NETWORK Virginia And Washington Metro Expansion 44 15 51 15 53 24 59 32 66 35 65 43 66 51 67 82 67 85 66 86 66 84 71 78 70 79 70 1996 1997 1998 1999 2000 2001 2002 2003 2004 3Q05 2005 2006 1Q07 2Q07 Washington Metro/VA Baltimore Virginia And Washington Metro Expansion
Slide 34: Virginia Opportunity
$1,554,459 $3,351,462 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 Virginia Opportunity • Build relationships with existing customers • We have 47 “new” branches in Virginia Maryland Branches Virginia Branches $8,022,525 $25,215,071 $0 $5,000,000 $10,000,000 $15,000,000 $20,0
Slide 35: 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 36: Provident Bankshares' Value Proposition
Provident Bankshares’ Value Proposition Provident Bankshares’ Value Proposition
Slide 37: Provident's Value Proposition
Provident’s Value Proposition • Provident trades at a discount to both Regional and Mid-Cap peers Source: SNL Financial and FactSet. Market data as of October 30, 2007. Regional Peers include: FULT, NPBC, SASR, SNBC, SUSQ, UBSI and VCBI. Mid-Cap Peers include: HBAN, FHN, ASBC, TCB, CNB, CYN, CBSH, B
Slide 38: Provident's Value Proposition – Valuation Comparison
Provident’s Value Proposition – Valuation Comparison • Provident has, until recently, traded in line with its peers from a Price / NTM perspective Price/NTM Earnings PBKS Mid-Cap Banks Differential Regional Peers Differential Current 11.7x 13.5x (1.8x) 13.1x (1.4x) 1 Year Avg 14.0x 13.9x 0.2x 14.1x
Slide 39: Provident's Value Proposition – Public Comparable Valuation
Provident’s Value Proposition – Public Comparable Valuation • Provident, at approximately $25 per share, is trading at a discount to its peer group based on earnings and in terms of book value and deposit premium Price/ 2007 EPS 2008 EPS Tangible Book Deposit Premium PBKS Multiples 12.3x 11.6x 2.2x
Slide 40: Provident's Value Proposition
$53,154 $56,627 $62,237 $67,470 U.S. Average Mid-Cap Peers Regional Peers Provident Provident’s Value Proposition • Provident Operates in Very Attractive Markets in Terms of Income Growth and Wealth 17.15% 17.59% 17.67% 17.83% Mid-Cap Peers U.S. Average Regional Peers Provident Source: SNL Financial
Slide 41: Provident's Value Proposition
Provident’s Value Proposition • Mid-Atlantic Market attractive due to high income and income growth, offset by below average population growth; PBKS has been one of few banks able to grow its franchise (deposits) at rates significantly in excess of its markets’ population growth Source: SNL Financia
Slide 42: Provident's Value Proposition
Provident’s Value Proposition • Provident Has Effectively Managed its Net Interest Margin, Achieving Margin Expansion While Others Have Witnessed Significant Compression 2004-2007 YTD 2005-2007 YTD Provident Bankshares 21 3 Avg. of Regional Peers (17) (29) Avg. of Mid-Cap Banks (14) (13) Avg. of U.S
Slide 43: Provident's Value Proposition – Funding Mix
Provident’s Value Proposition – Funding Mix Core Deposits / Loans (9/30/07) Cost of Deposits 82.3% 91.6% 96.3% Mid-Cap Peers Regional Peers Provident 2.98% 1.49% 2.35% 2.76% 2.58% 2.06% 1.38% 1.13% 2.56% 1.68% 1.19% 0.95% 0.80% 1.60% 2.40% 3.20% 2004 2005 2006 3Q '07 YTD Source: SNL Financial and co
Slide 44: Provident's Value Proposition – Revenue & Expense Analysis
Provident’s Value Proposition – Revenue & Expense Analysis Fee Income as % of Revenues YTD Expense Growth 22.8% 36.3% 36.0% 37.0% 38.9% 24.3% 22.3% 24.0% 35.9% 35.0% 35.3% 36.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% 40.0% 2004 2005 2006 3Q '07 Source: SNL Financial and company
Slide 45: Winning the Provident Way
WPW Winning the Provident Way $1.6 $1.2 $7.6 $14.5 $4.0 $1.5 Branch Rationalization Fee Activities Functional Efficiencies 2007 $10.4MM Benefit 2008 $20MM Benefit WPW Winning the Provident Way
Slide 46: Provident's Value Proposition – Asset Quality
Provident’s Value Proposition – Asset Quality NCOs / Avg. Loans 0.27% 0.15% 0.12% 0.20% 0.20% 0.10% 0.05% 0.07% 0.33% 0.18% 0.16% 0.21% 0.00% 0.10% 0.20% 0.30% 0.40% 2004 2005 2006 3Q '07 Source: SNL Financial and company filings. Regional Peers include: FULT, NPBC, SASR, SNBC, SUSQ, UBSI and VCBI.
Slide 47: Provident's Value Proposition – Capital Returned to Shareholders
Provident’s Value Proposition – Capital Returned to Shareholders Dividend Growth 4% 9% 9% 8% 7% 5% 5% 6% 10% 14% 10% 11% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2003/2002 2004/2003 2005/2004 2006/2005 Source: SNL Financial and company filings. Regional Peers include: FULT, NPBC, SASR, SNBC, SUSQ
Slide 48: Provident's Value Proposition – Relative Valuation and Growth
Provident’s Value Proposition – Relative Valuation and Growth Price / 2008 EPS Long Term Growth P/E to Growth (PEG) Source: FactSet. Data as of October 31, 2007. Regional Peers include: FULT, NPBC, SASR, SNBC, SUSQ, UBSI and VCBI. Mid-Cap Peers include: HBAN, FHN, ASBC, TCB, CNB, CYN, CBSH, BOKF, BO
Slide 49: Contact
www.provbank.com Contact Media : Vicki Cox (410) 277 - 2063 Investment Community : Dennis Starliper (410) 277 - 2705 C O R P O R A T I O N PROVIDENT BANKSHARES C O R P O R A T I O N PROVIDENT BANKSHARES
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