By Jeff McKinney
The Cincinnati Enquirer
As expected, a big expense to substantially cut its number of bad loans and reduce credit risk caused a drop in second-quarter profits at Provident Financial Group Inc.
The Cincinnati-based parent of Provident Bank said it earned $13.2 million, or 26 cents a share, down from $23.2 million, or 46 cents a share, in last year's second quarter.
The drop was tied to a $26.9 million after-tax loss that Provident took from the sale of $471 million of sub-prime residential mortgage loans, something that will greatly improve asset quality. Provident sold the loans at a $40.1 million discount.
The bank also realized a $12.7 million gain from the sale of its merchant services business, a unit that was generating about $1 million in quarterly revenue.
Not including those transactions, Provident's second-quarter profit rose 17 percent to $27.4 million, or 54 cents a share. That was in line with Wall Street analysts' consensus second-quarter earnings estimates.
It also said third-quarter profits will be greatly helped by the sale of its 13 branches in Florida to a unit of the Royal Bank of Canada. That deal will bring the bank an after-tax gain of $47 million when it closes in the third quarter.
Provident earnings come about a week after the banking company announced numerous moves to boost profits, reduce its credit risk and focus on growing its core Midwestern banking unit, which includes 65 branches mainly in Cincinnati, Northern Kentucky and Dayton.
"Our second-quarter operating earnings performance was within the range of our expectations," Robert L. Hoverson, Provident's president and chief executive officer, said.
Provident is Cincinnati's second-largest bank based on assets, behind Fifth Third.
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