Compass Point Downgrades Provident Financial To Neutral

In a report published Thursday, analysts at Compass Point downgraded Provident Financial Holdings, Inc. (NASDAQ: PROV), while raising the price target to $18. The downgrade follows the release of the company's FY3Q15 results.

Provident Financial reported its 3Q EPS ahead of the consensus and the estimates, with gain on sale spreads offsetting the higher mortgage production volumes. Continued reserve release and the improvement in the efficiency ratio also boosted the results.

"Core community banking trends continue to improve and strategic policy initiatives should improve broad volume and profitability trends for mortgage lenders such as PROV in 2015," the analysts said.

Compass Point expects the company to report strong FY4Q15 results, driven by strong fundamentals, as well as continuing capital returns and momentum in the mortgage banking segment. The EPS estimates for the year have been increased, based on the strength in mortgage banking.

Provident Financial has increased its quarterly dividend from $0.11 to $0.12, while authorizing a share buyback program of 5 percent or about 451,000 shares.