A.G. Edwards Keeps 'Hold' on Provident Financial

Analyst Timothy Willi advises staying on the sidelines until the credit quality outlook becomes clearer

AG Edwards is keeping its hold on financial services company Provident Financial (PFGI ). Analyst Timothy Willi says the company's $0.97 a share after-tax charge is a result of higher credit costs. The main contributor relates to continued deterioration of airline-related portfolio as result of the September 11 events.

Willi notes that the total amount of charge-offs consist of the following: $30 million related to airline industry, $30 million to increase reserves, $15 million in higher commercial charge-offs. The company expects to post a $0.57 a share fourth quarter loss and earnings per share in 2001 of $0.46. Willi believes asset quality concerns will continue to weigh on NT EPS outlook and stock price. He elects to stay on sidelines until credit quality outlook becomes clearer.

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