Provident Financial Upped to Strong Buy - Analyst Blog

On Aug 3, Zacks Investment Research upgraded Provident Financial Holdings, Inc. ( PROV ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Provident Financial has been witnessing rising earnings estimates following the announcement of strong fiscal fourth-quarter 2013 results. Moreover, this regional bank holding company has delivered positive earnings surprises in 3 of the last 4 quarters with an average surprise of 26.5%.

Provident Financial reported fiscal fourth-quarter 2013 results on Jul 30. Earnings per share beat the Zacks Consensus Estimate by 8.9% and the year-ago figure by 25.6%. Results benefited from higher non-interest income, partially offset by a drop in net interest income and higher expenses.

Net interest income fell 20.2% year over year to $7.6 million but non-interest income increased 10.3% to $17.6 million. However, non-interest expense rose 9.6% to $17.5 million.

Further, asset quality improved during the quarter. Recovery for loan losses was $1.5 million compared to provision for loan losses of $2.5 million in the year-ago quarter. Further, allowance for loan losses declined to $14.9 million, down 30.5% from the prior-year quarter.

Along with the earnings announcement, Provident Financial's board of directors declared a quarterly dividend of 10 cents per share, rising 42.9% from the prior quarter's payout. The new dividend will be paid on Sep 10, 2013, to shareholders of record as of Aug 21.

Moreover, during the last 7 days, the Zacks Consensus Estimate for 2014 increased 23.3% to $1.85 per share.

A positive earnings surprise, favourable estimate revisions and a dividend hike made way for the rank upgrade.

Other Stocks to Consider

While we prefer Provident Financial, other banks carrying a Zacks Rank #1 include Enterprise Financial Services Corp. ( EFSC ), Firstbank Corporation ( FBMI ) and First Interstate Bancsystem Inc. ( FIBK ).

ENTERPRISE FINL (EFSC): Free Stock Analysis Report

FIRSTBANK ALMA (FBMI): Free Stock Analysis Report

FIRST INTST MT (FIBK): Free Stock Analysis Report

PROVIDENT FINL (PROV): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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