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).
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