Provident Bankshares Corporation Reports Record Earnings for 2005 Third Quarter

21 October 2005

Provident Bankshares
Corporation (Nasdaq: PBKS), the parent company of Provident Bank, announced
record earnings of $0.60 per diluted share for the three months ended
September 30, 2005. This is an increase of 11% compared to $0.54 per share in
the third quarter 2004, and 9% compared to $0.55 in the second quarter 2005.
The third quarter was another of continued improvement in the quality as
well as quantity of earnings. Revenue, excluding net gains, grew at an 11%
annual rate and was the key factor in the period's record results. Revenue
growth was led by deposit service fees that grew 10% over the second quarter.
Despite the challenges presented by a flattening yield curve, the Company
continued to produce quarterly improvement in net interest margin. Through the
nine months ended September 2005, net interest margin is now 25 basis points
higher than the same period last year. Credit conditions remain ideal with
charge-offs at extremely low levels.
"We have remained disciplined in keeping the focus on our core business,"
said Gary N. Geisel, Chairman and CEO, "and the results continue to
demonstrate the viability of that strategy. This quarter's performance can be
attributed to the work of the entire Provident team."
Return on assets was 1.26%, and return on common equity was 12.53%. Asset
quality remained strong, as non-performing assets to loans were 0.73% and
charge-offs to average loans were 0.15% for the quarter.

Third Quarter Financial Highlights
Results for the third quarter 2005 compared to the third quarter 2004:
- Net income increased 11%, to $20 million
- Net interest margin was 3.61%, up from 3.51%
- Return on assets increased to 1.26%, up from 1.12%
- Return on common equity was 12.53%, compared to 11.98%
- Non-interest income, excluding net gains (losses), grew 11%
- Commercial deposits increased 6%
- Home equity lending increased 32% and real estate construction lending
grew 35%
- Asset quality remained strong as net charge-offs as a percentage of
average loans were 15 basis points, compared to 30 basis points
- Capital ratios remained strong with a leverage ratio of 8.25% and total
risk-based capital ratio of 11.87%.

Third Quarter Results
Provident Bankshares reported net income for the quarter ending September
30, 2005 of $20 million, an 11% increase over the third quarter of 2004.
Earnings per diluted share were $0.60, an increase of 11% over the 2004 third
quarter. The financial results reflect the company's continued balance sheet
transition and its focus on core business segments.
Average total loans (excluding average originated and acquired residential
mortgage loans, which declined $212 million) increased $316 million, or 11%,
over the third quarter of 2004, resulting in net average loan growth of $104
million. Leading the growth were average home equity loans, which increased
$203 million, or 32%, and average commercial and real estate loans, which
increased $145 million, or 9%, compared to the same period last year.
Average deposit balances declined slightly compared to the second quarter
of 2005, but several categories of customer deposits experienced healthy
growth. Average commercial deposit balances increased 6%, compared to the
third quarter of 2004, led by growth in commercial demand deposit accounts of
$87 million, or 16% over the same period of last year.
Excluding net gains, non-interest income grew 11% to $29 million, up from
$26.5 million in the third quarter of 2004, due primarily to increases in
deposit service charges. This represents an increase of 7% since the second
quarter of 2005.
Non-interest expense rose by 7% to $51 million, compared to $48 million in
third quarter 2004. Much of this can be attributed to increases in costs
associated with incentive programs due to high levels of production in both
consumer and commercial lending and costs related to regulatory compliance
obligations. As a result, the efficiency ratio was 63.6% for the third
quarter.
Total non-performing loans at September 30, 2005 were $25.5 million,
compared with $27.4 million at September 30, 2004. Net charge-offs declined by
48% to $1.4 million, down from $2.6 million for the 2004 third quarter. The
allowance for loan losses, at 1.26% of period-end loans, was a 1.80 multiple
of non-performing loans.
Capital ratios continue to be strong, with a leverage ratio of 8.25% and a
total risk-based capital ratio of 11.87% at September 30, 2005. These compare
to 8.24% and 13.38%, respectively, at September 30, 2004.

Dividend Declared
Provident Bankshares announced today that its Board of Directors has
declared a quarterly cash dividend of $0.28 per share. This is the forty-
eighth consecutive quarterly dividend increase. The quarterly cash dividend
will be paid on November 11, 2005 to stockholders of record at the close of
business on October 31, 2005.

Execution of Key Business Strategies
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 individuals, families, small businesses
and mid-sized companies throughout our chosen markets. The Bank's current
business strategies are listed below, followed by a few highlights on progress
to date:
- Maximize Provident's position as the right size bank in the marketplace
- Grow and deepen consumer and small business relationships in Maryland
and Virginia
- Grow and deepen commercial and real estate relationships in Maryland
and Virginia
- Move from a product driven organization to a customer relationship
focused sales culture
- Create a high performance culture that focuses on employee development
and retention

The recent introduction of Health Savings Accounts and other new products
is evidence of Provident's commitment to be the right size bank for the
Baltimore, Washington and Richmond regions. The way of doing business is
changing as the Bank's sales culture initiative gains momentum. A number of
program recommendations have been implemented and results of a recent survey
indicated that the majority of employees are actively engaged in building a
culture that is focused on deepening customer relationships.

Outlook for the Future
Commenting on the future for Provident Bankshares, Chairman and CEO Gary
N. Geisel added, "The third quarter results put us on a track to finish 2005
near the upper end of the range of analysts' estimates."

About Provident Bankshares Corporation
Provident Bankshares Corporation is the holding company for Provident
Bank, the second largest independent commercial bank headquartered in
Maryland. With $6.4 billion in assets, Provident serves individuals and
businesses in the key urban areas of Baltimore, Washington and Richmond
through a network of 151 offices in Maryland, Virginia, and southern York
County, PA. Provident Bank also offers related financial services through
wholly owned subsidiaries. Securities brokerage, investment management and
related insurance services are available through Provident Investment Center
and leases through Court Square Leasing and Provident Lease Corp. Visit
Provident on the web at http://www.provbank.com.

Webcast Information
Provident Bankshares Corporation's third quarter earnings teleconference
will be webcast at 10:00 AM ET on Thursday, October 20, 2005. The conference
call will include a discussion of the Company's third quarter 2005 results of
operations and may include forward-looking information. The conference call
will be simultaneously webcast at http://www.provbank.com and archived through
November 3, 2005. To listen to the conference call, please go to the
Company's website at least 15 minutes early to register, download, and install
any necessary software. When in the Company's website, click on the link to
"About Provident" and "Investor Relations" and look under "Upcoming Events"
and then click on the link to "Provident Bankshares Corporation Third Quarter
2005 Results" audio webcast and download Real Player or Media Player as
necessary. An audio replay of the teleconference will be available through
November 3, 2005 by dialing 1-888-286-8010, passcode 17832697.

This Press Release, as well as other written communications made from time
to time by Provident Bankshares Corporation and subsidiaries (the "Company")
(including, without limitation, the Company's 2004 Annual Report to
Stockholders) and oral communications made from time to time by authorized
officers of the Company, may contain statements relating to the future results
of the Company (including certain projections and business trends) that are
considered "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements may
be identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned," "estimated," "intend" and "potential." Examples of
forward-looking statements include, but are not limited to, possible or
assumed estimates with respect to the financial condition, expected or
anticipated revenue, and results of operations and business of the Company,
including earnings growth determined by using U.S. generally accepted
accounting principles ("GAAP"); revenue growth in consumer banking, lending
and other areas; origination volume in the Company's consumer, commercial and
other lending businesses; asset quality and levels of non-performing assets;
current and future capital management programs; non-interest income levels,
including fees from services and product sales; tangible capital generation;
market share; expense levels; and other business operations and strategies.
For these statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the PSLRA.
The Company cautions you that a number of important factors could cause
actual results to differ materially from those currently anticipated in any
forward-looking statement. Such factors include, but are not limited to: the
factors identified in the Company's Form 10-K for the fiscal year ended
December 31, 2004 under the headings "Forward-Looking Statements" and "Risk
Factors"; prevailing economic and geopolitical conditions; changes in interest
rates, loan demand, real estate values and competition, which can materially
affect, among other things, consumer banking revenues, revenues from sales on
non-deposit investment products, origination levels in the Company's lending
businesses and the level of defaults, losses and prepayments on loans made by
the Company, whether held in portfolio or sold in the secondary markets;
changes in accounting principles, policies, and guidelines; changes in any
applicable law, rule, regulation or practice with respect to tax or legal
issues; risks and uncertainties related to acquisitions and related
integration and restructuring activities; conditions in the securities markets
or the banking industry; changes in the quality or composition of the
investment portfolio; litigation liabilities, including costs, expenses,
settlements and judgments; or the outcome of other matters before regulatory
agencies, whether pending or commencing in the future; and other economic,
competitive, governmental, regulatory and technological factors affecting the
Company's operations, pricing, products and services. Additionally, the timing
and occurrence or non-occurrence of events may be subject to circumstances
beyond the Company's control. Readers are cautioned not to place undue
reliance on these forward-looking statements which are made as of the date of
this report, and, except as may be required by applicable law or regulation,
the Company assumes no obligation to update the forward-looking statements or
to update the reasons why actual results could differ from those projected in
the forward-looking statements.
In the event that any non-GAAP financial information is described in any
written communication, including this press release, or in our teleconference,
please refer to the supplemental financial tables included with this release
and on our website for the GAAP reconciliation of this information.

TABLES FOLLOW

PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per share data)

Three Months Ended Three Months Ended
September 30, June 30,
2005 2004 % Change 2005 % Change
SUMMARY INCOME
STATEMENTS:
Net interest income $50,977 $50,312 1.3% $50,755 0.4%
Provision for loan
losses 826 2,107 (60.8) 2,222 (62.8)
Non-interest income 30,336 26,985 12.4 28,189 7.6
Net gains 884 464 90.5 706 25.2
Non-interest income,
excluding net gains 29,452 26,521 11.1 27,483 7.2
Total revenue,
excluding net gains 80,429 76,833 4.7 78,238 2.8
Non-interest expense 51,255 48,007 6.8 49,826 2.9
Merger expense - 1,110 - - -
Non-interest expense,
excluding merger
expense 51,255 46,897 9.3 49,826 2.9
Income tax expense 9,196 9,131 0.7 8,458 8.7
Net income 20,036 18,052 11.0 18,438 8.7

SHARE DATA:
Basic earnings per
share $0.61 $0.55 10.9% $0.56 8.9%
Diluted earnings per
share 0.60 0.54 11.1 0.55 9.1
Cash dividends paid
per share 0.275 0.255 7.8 0.270 1.9
Book value per share 19.10 18.39 3.9 19.06 0.2
Weighted average
shares - basic 32,939,059 33,037,793 (0.3) 32,938,762 0.0
Weighted average
shares - diluted 33,640,029 33,663,248 (0.1) 33,524,779 0.3
Common shares
outstanding 32,963,053 33,076,217 (0.3) 32,865,817 0.3

SELECTED RATIOS:
Return on average
assets 1.26% 1.12% 1.15%
Return on average
equity 12.62 12.04 11.91
Return on average
common equity 12.53 11.98 11.82
Net yield on average
earning assets (t/e
basis) 3.61 3.51 3.58
Efficiency ratio 63.62 60.89 62.21
Leverage ratio 8.25 8.24 7.98
Tier I risk-based
capital ratio 10.86 12.23 10.98
Total risk-based
capital ratio 11.87 13.38 12.02

END OF PERIOD BALANCES:
Investment
securities
portfolio $1,941,014 $2,194,401 (11.5)% $2,058,074 (5.7)%
Total loans 3,666,758 3,520,266 4.2 3,623,791 1.2
Assets 6,403,907 6,396,815 0.1 6,407,388 (0.1)
Deposits 3,978,446 3,897,258 2.1 4,037,828 (1.5)
Stockholders' equity 629,491 608,242 3.5 626,546 0.5
Common stockholders'
equity 640,277 608,702 5.2 628,036 1.9

AVERAGE BALANCES:
Investment
securities
portfolio $1,964,137 $2,176,770 (9.8)% $2,119,140 (7.3)%
Loans:
Originated and
acquired
residential
mortgage 541,096 752,686 (28.1) 603,975 (10.4)
Home equity 831,987 628,990 32.3 772,541 7.7
Other consumer 460,956 493,569 (6.6) 462,768 (0.4)
Commercial real
estate 1,138,889 973,138 17.0 1,059,130 7.5
Commercial
business 662,337 682,948 (3.0) 676,863 (2.1)
Total loans 3,635,265 3,531,331 2.9 3,575,277 1.7
Earning assets 5,611,735 5,724,978 (2.0) 5,710,257 (1.7)
Assets 6,328,173 6,403,309 (1.2) 6,421,046 (1.4)
Deposits:
Noninterest-
bearing 814,400 797,625 2.1 817,408 (0.4)
Interest-bearing 3,097,502 3,162,298 (2.0) 3,114,806 (0.6)
Total deposits 3,911,902 3,959,923 (1.2) 3,932,214 (0.5)
Stockholders' equity 630,055 596,316 5.7 620,951 1.5
Common stockholders'
equity 634,559 599,233 5.9 625,693 1.4

PROVIDENT BANKSHARES CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(dollars in thousands, except per share data)
Nine Months Ended
September 30,
2005 2004 % Change
SUMMARY INCOME STATEMENTS:
Net interest income $152,053 $134,384 13.1 %
Provision for loan losses 4,623 6,029 (23.3)
Non-interest income 83,810 68,144 23.0
Net gains (losses) 814 (6,597) (112.3)
Non-interest income, excluding net
gains (losses) 82,996 74,741 11.0
Total revenue, excluding net gains
(losses) 235,049 209,125 12.4
Non-interest expense 148,555 134,777 10.2
Merger expense - 3,266 -
Non-interest expense, excluding merger
expense 148,555 131,511 13.0
Income tax expense 26,103 20,295 28.6
Net income 56,582 41,427 36.6

SHARE DATA:
Basic earnings per share $1.72 $1.41 22.0 %
Diluted earnings per share 1.68 1.38 21.7
Cash dividends paid per share 0.810 0.750 8.0
Book value per share 19.10 18.39 3.9
Weighted average shares - basic 32,971,081 29,338,683 12.4
Weighted average shares - diluted 33,662,348 29,960,728 12.4
Common shares outstanding 32,963,053 33,076,217 (0.3)

SELECTED RATIOS:
Return on average assets 1.18 % 0.94 %
Return on average equity 12.14 11.62
Return on average common equity 12.08 11.51
Net yield on average earning assets
(t/e basis) 3.59 3.34
Efficiency ratio 62.62 62.71
Leverage ratio 8.25 8.24
Tier I risk-based capital ratio 10.86 12.23
Total risk-based capital ratio 11.87 13.38

END OF PERIOD BALANCES:
Investment securities portfolio $1,941,014 $2,194,401 (11.5)%
Total loans 3,666,758 3,520,266 4.2
Assets 6,403,907 6,396,815 0.1
Deposits 3,978,446 3,897,258 2.1
Stockholders' equity 629,491 608,242 3.5
Common stockholders' equity 640,277 608,702 5.2

AVERAGE BALANCES:
Investment securities portfolio $2,083,665 $2,164,723 (3.7)%
Loans:
Originated and acquired residential
mortgage 594,610 721,774 (17.6)
Home equity 776,815 573,778 35.4
Other consumer 464,911 500,300 (7.1)
Commercial real estate 1,075,188 858,695 25.2
Commercial business 672,403 558,253 20.4
Total loans 3,583,927 3,212,800 11.6
Earning assets 5,681,895 5,393,054 5.4
Assets 6,391,298 5,917,784 8.0
Deposits:
Noninterest-bearing 805,273 706,120 14.0
Interest-bearing 3,064,034 2,911,957 5.2
Total deposits 3,869,307 3,618,077 6.9
Stockholders' equity 622,935 476,084 30.8
Common stockholders' equity 626,408 480,617 30.3