Provident Financial Group, Inc.
Announces Higher Fourth Quarter Credit Costs
Cincinnati, Ohio, January 3, 2002 - Provident Financial Group, Inc.
(Nasdaq: PFGI) announced today that its fourth quarter 2001 earnings
would be reduced by $49.0 million after tax, or 97 cents per share, due
to higher than previously expected credit costs.
A significant portion of the increase relates to continuing
developments in the airline industry, which was significantly impacted
as a result of the tragic events of September 11. Additionally, as the
economy continues to weaken, Provident believes it is important to
build reserve levels and continue to be aggressive with charge-offs.
The components of the higher credit costs, which total approximately
$75.0 million on a pretax basis, are as follows: $30.0 million in
charge-offs related to airline industry exposures; $30.0 million to
strengthen reserves in light of the weaker economic environment; and
$15.0 million of higher commercial charge-offs.
Provident's President and Chief Executive Officer, Robert L. Hoverson,
commented, "By taking these actions we believe we are being very
proactive in dealing with our exposure to the airline industry. We are
also further strengthening our loan loss reserve ratio to more than
2.25 percent--a move we feel is prudent due to the uncertain economic
environment."
The impact of these actions will result in a projected loss in the
fourth quarter of approximately $29.0 million or 57 cents per share,
with earnings for the full year ending December 31, 2001 at
approximately $23.0 million or 46 cents per share.
For the fiscal year 2002, earnings per share are projected to be
between $2.30 and $2.60. This revised earnings guidance relates to
concerns with the economic environment, its impact on business volumes
and credit performance, as well as the difficulties associated with
predicting when the economy will recover.
Safe Harbor Statement
This news release contains certain forward-looking statements that are
subject to numerous assumptions, risks or uncertainties. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. Actual results could differ materially from
those contained in or implied by such forward-looking statements for a
variety of factors including: sharp and/or rapid changes in interest
rates; significant changes in the anticipated economic scenario which
could materially change anticipated credit quality trends; the ability
to generate loans and leases; significant cost, delay in, or inability
to execute strategic initiatives designed to grow revenues and/or
manage expenses; consummation of significant business combinations or
divestitures; and significant changes in accounting, tax, or regulatory
practices or requirements and factors noted in connection with forward
looking statements. Additionally, borrowers could suffer unanticipated
losses without regard to general economic conditions. The result of
these and other factors could cause differences from expectations in
the level of defaults, changes in the risk characteristics of the loan
and lease portfolio, and changes in the provision for loan and lease
losses. Forward-looking statements speak only as of the date made.
Provident undertakes no obligations to update any forward-looking
statements to reflect events or circumstances arising after the date on
which they are made.
About Provident Financial Group, Inc.
Provident Financial Group, Inc., a Cincinnati-based company with $15.3
billion in on-balance sheet assets and $19.7 billion in managed assets,
provides full-service retail and commercial banking operations
regionally and nationally through its main subsidiary, The Provident
Bank. Additional company information is available at
http://www.provident-financial.com.
Conference Call
Provident will host a conference call to discuss the contents of this
news release today, January 3, 2002, at 10:00 a.m. ET. The call can be
accessed by calling 1-877-818-4511. A replay of the call will be
available through Tuesday, January 8, 2002 by calling 1-800-642-1687
(passcode 282 2391).
For further information, please contact:
Christopher J. Carey
Executive Vice President and Chief Financial Officer
513-639-4644 / 800-851-9521
e-mail: InvestorRelations@provident-financial.com
