Provident Financial Holdings, Inc.
) reported solid fiscal first-quarter results in late October,
which included a positive earnings surprise of nearly 85%. This
Zacks #1 Rank (Strong Buy) bank holding company has now beaten
earnings estimates in three of the last four quarters with an
average overperformance of 32.5%. Moreover, with a P/B multiple of
just 1.2, the stock looks attractive for value investors.
Impressive Q1 Results
On October 25, Provident Financial reported fiscal first quarter
earnings of 72 cents per share, outpacing the Zacks Consensus
Estimate by 84.6% and the year-ago earnings by 260.0%. The
better-than-expected results were driven by significant top-line
growth, partly offset by higher expenses.
Net interest income edged up 1.6% from the year-ago quarter to $8.9
million. Similarly, net interest margin expanded 17 basis points
(bps) to 2.96%. Non-interest income jumped drastically and reached
$22.2 million, primarily driven by higher gains on the sale of
loans. Yet, non-interest expenses escalated 40.8% to $17.3 million
as a result of higher salaries and employee benefit costs.
Provident Financial witnessed a decent improvement in its asset
quality during the quarter. As of September 30, 2012, allowance for
loan losses was $20.1 million, down 30.0% year over year. Net
charge-offs were 0.72% to average loans receivable, falling 32 bps
from the prior-year quarter.
Earnings Estimates Advancing
Over the last 60 days, the Zacks Consensus Estimate for fiscal 2013
surged 67.7% to $2.18 per share as the sole estimate moved higher.
This reflects year-over-year growth of 127.1%. For fiscal 2014, the
estimate moved north over the same time frame, helping the Zacks
Consensus Estimate improve 16.7% to $1.40.
Valuation Looks Attractive
Along with an attractive P/B multiple, Provident Financial has a
forward P/E ratio of 7.6 (a P/E ratio under 15.0 and P/B ratio
below 3.0 generally indicate value). Moreover, the company has a
trailing 12-month ROE of 11.8%, compared with the peer group
average of 6.3%. This implies that the company reinvests its
earnings more efficiently than its industry peers.
Headquartered in Riverside, California, Provident Financial is the
holding company of Provident Savings Bank F.S.B. The company
provides financial services to retail consumers and small to
mid-sized businesses and has 15 retail/business banking offices in
Riverside County and San Bernardino County. Founded in 1956, the
company has a market cap of about $178.0 million. Other Zacks #1
Rank (Strong Buy) firms in the same industry include HomeStreet,
) and Flagstar Bancorp Inc. (
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