UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 28, 2020

PROVIDENT FINANCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
000-28304
33-0704889
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)

3756 Central Avenue, Riverside, California
92506
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:  (951) 686-6060

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
 
[   ]      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act  
            (17 CFR 240.14d-2(b))
 
[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act  
            (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $.01 per share
Trading Symbol(s)
PROV
Name of each exchange on which registered
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]



Item 2.02  Results of Operations and Financial Condition

On July 28, 2020, Provident Financial Holdings, Inc. (“Corporation”), the holding company for Provident Savings Bank, F.S.B., distributed its quarterly results for the quarter ended June 30, 2020. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01  Regulation FD Disclosure.

On July 28, 2020, the Corporation posted its Investor Presentation for the quarter ended June 30, 2020 on the Corporation’s website, www.myprovident.com, under Presentations in the Investor Relations section.  A copy of the Investor Presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits

(d)
Exhibits

The following exhibits are being furnished herewith and this list shall constitute the exhibit index:











SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  July 28, 2020
PROVIDENT FINANCIAL HOLDINGS, INC.
 
 
 
 
 
/s/ Donavon P. Ternes                                         
 
Donavon P. Ternes
President, Chief Operating Officer and 
Chief Financial Officer
(Principal Financial and Accounting Officer)
   












Exhibit 99.1
 
 
 
 
3756 Central Avenue
Riverside, CA 92506
(951) 686-6060
NEWS RELEASE




PROVIDENT FINANCIAL HOLDINGS REPORTS
FOURTH QUARTER AND FISCAL 2020 RESULTS


Company Reports Net Income of $1.58 Million in the June 2020 Quarter, up 101% from the June 2019 Quarter

Non-Interest Expense Declines by 32% in the June 2020 Quarter from the June 2019 Quarter

Loans Held for Investment Increase 3% to $902.8 Million from June 30, 2019

Total Deposits Increase 6% to $893.0 Million from June 30, 2019

Non-Performing Assets Decrease 21% to $4.9 Million at June 30, 2020 in Comparison to $6.2 Million at June 30, 2019


Riverside, Calif. – July 28, 2020 – Provident Financial Holdings, Inc. (“Company”), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced fourth quarter and full year earnings results for the fiscal year ended June 30, 2020.
            For the quarter ended June 30, 2020, the Company reported net income of $1.58 million, or $0.21 per diluted share (on 7.49 million average diluted shares outstanding), up from net income of $787,000, or $0.10 per diluted share (on 7.63 million average diluted shares outstanding), in the comparable period a year ago. Compared to the same quarter last year, the increase in earnings was primarily attributable to lower non-interest expenses (mainly, lower salaries and employee benefits expenses related to fewer employees and reduced incentive compensation and lower equipment expenses resulting
Page 1 of 20

 
 
   
   
from the scaling back of saleable single-family loan originations), partly offset by lower net interest income and a higher provision for loan losses.
“Provident is profitable, strongly capitalized and well-positioned to serve the residents and businesses of the Inland Empire.  We have been able to navigate the COVID-19 pandemic reasonably well and we will continue to operate the Company in a prudent manner,” said Craig G. Blunden, Chairman and Chief Executive Officer of the Company.  “I specifically wish to recognize and thank our employees who are working diligently to support our customers and communities under unprecedented circumstances,” said Mr. Blunden.
Return on average assets for the fourth quarter of fiscal 2020 was 0.55 percent, up from 0.29 percent for the same period of fiscal 2019; and return on average stockholders’ equity for the fourth quarter of fiscal 2020 was 5.14 percent, up from 2.60 percent for the comparable period of fiscal 2019.
On a sequential quarter basis, the $1.58 million net income for the fourth quarter of fiscal 2020 reflects a 38 percent increase from $1.14 million in the third quarter of fiscal 2020. The increase in earnings for the fourth quarter of fiscal 2020 compared to the third quarter of fiscal 2020 was primarily attributable to decreases of $902,000 in non-interest expenses and $426,000 in the provision for loan losses, partly offset by a $600,000 reduction in net interest income. Diluted earnings per share for the fourth quarter of fiscal 2020 were $0.21 per share, up 40 percent from the $0.15 per share during the third quarter of fiscal 2020. Return on average assets was 0.55 percent for the fourth quarter of fiscal 2020 compared to 0.41 percent in the third quarter of fiscal 2020;

Page 2 of 20

 
 
   
   
 and return on average stockholders’ equity for the fourth quarter of fiscal 2020 was 5.14 percent, compared to 3.70 percent for the third quarter of fiscal 2020.
For the fiscal year ended June 30, 2020 net income increased $3.27 million, or 74 percent, to $7.69 million from $4.42 million in the comparable period ended June 30, 2019; and diluted earnings per share for the fiscal year ended June 30, 2020 increased 74 percent to $1.01 per share (on 7.58 million average diluted shares outstanding) from $0.58 per share (on 7.60 million average diluted shares outstanding) for the comparable 12-month period last year. Compared to the same period last year, the increase in earnings was primarily attributable to a $16.34 million decrease in non-interest expense, partly offset by a $7.99 million decrease in non-interest income (mainly, a $7.27 million decrease in the gain on sale of loans), a $1.77 million decrease in net interest income and a $1.59 million change in the provision for loan losses to a $1.12 million provision from a $475,000 recovery. The decrease in non-interest expense was mainly attributable to the scaling back of saleable single-family loan originations resulting in an $11.24 million decrease in salaries and employee benefits expenses (primarily related to fewer employees and lower incentive compensation), a $1.57 million decrease in premises and occupancy expenses, a $1.35 million decrease in equipment expenses and a $1.19 million decrease in other operating expenses (primarily decreases in loan origination related expenses).
Net interest income decreased $1.08 million, or 12 percent, to $8.29 million in the fourth quarter of fiscal 2020 from $9.37 million for the same quarter of fiscal 2019, attributable to a decrease in the net interest margin, partly offset by a higher average interest-earning assets balance. The net interest margin during the fourth quarter of fiscal

Page 3 of 20

 
 
   
   
2020 decreased 57 basis points to 2.95 percent from 3.52 percent in the same quarter last year, primarily due to a decrease in the average yield of interest-earning assets, partly offset by a much smaller decrease in the average cost of interest-bearing liabilities. The average yield on interest-earning assets decreased by 60 basis points to 3.46 percent in the fourth quarter of fiscal 2020 from 4.06 percent in the same quarter last year reflecting in part recent significant decreases in the targeted Federal Funds Rate; while the average cost of interest-bearing liabilities decreased by three basis points to 0.57 percent in the fourth quarter of fiscal 2020 from 0.60 percent in the same quarter last year. The average balance of interest-earning assets increased by $58.1 million, or five percent, to $1.12 billion in the fourth quarter of fiscal 2020 from $1.06 billion in the same quarter last year. The average balance of interest-bearing liabilities increased by $58.0 million, or six percent, to $1.01 billion in the fourth quarter of fiscal 2020 from $955.5 million in the same quarter last year.
The average balance of loans receivable (including loans held for sale in the prior year) increased by $14.7 million, or two percent, to $894.5 million in the fourth quarter of fiscal 2020 from $879.8 million in the same quarter of fiscal 2019, due to an increase in loans held for investment, partly offset by a decrease in loans held for sale. There were no loans held for sale during the fourth quarter of fiscal 2020. The average yield on loans receivable decreased by 27 basis points to 4.08 percent in the fourth quarter of fiscal 2020 from an average yield of 4.35 percent in the same quarter of fiscal 2019. Net deferred loan cost amortization in the fourth quarter of fiscal 2020 increased 22% to $495,000 from $405,000 in the same quarter of fiscal 2019 due primarily to higher loan payoffs. Total loans originated and purchased for investment in the fourth quarter of fiscal 2020

Page 4 of 20

 
 
   
   
were $44.2 million, down 14 percent from $51.2 million in the same quarter of fiscal 2019. Loan principal payments received in the fourth quarter of fiscal 2020 were $56.5 million, up three percent from $54.8 million in the same quarter of fiscal 2019.
The average balance of investment securities decreased by $19.7 million, or 19 percent, to $85.3 million in the fourth quarter of fiscal 2020 from $105.0 million in the same quarter of fiscal 2019. The average yield on investment securities decreased 36 basis points to 2.16 percent in the fourth quarter of fiscal 2020 from 2.52 percent for the same quarter of fiscal 2019. The decrease in the average yield was primarily attributable to investment purchases with a lower average yield, partly offset by a lower premium amortization ($110,000 vs. $148,000).  During the fourth quarter of fiscal 2020, the Bank purchased investment securities totaling $54.1 million with an average yield of approximately 1.16%.
In the fourth quarter of fiscal 2020, the Federal Home Loan Bank – San Francisco (“FHLB”) distributed a $102,000 cash dividend to the Bank on its FHLB stock, down 28 percent from $142,000 in the same quarter last year.
    The average balance of the Company’s interest-earning deposits, primarily cash with the Federal Reserve Bank of San Francisco, increased $63.3 million, or 88 percent, to $135.1 million in the fourth quarter of fiscal 2020 from $71.8 million in the same quarter of fiscal 2019. The average yield earned on interest-earning deposits in the fourth quarter of fiscal 2020 was 0.11 percent, down 224 basis points from 2.35 percent in the same quarter of fiscal 2019 largely as a result of decreases in the targeted Federal Funds Rate since July 2019.

Page 5 of 20

 
 
   
   
Average deposits increased $21.2 million, or two percent, to $875.6 million in the fourth quarter of fiscal 2020 from $854.4 million in the same quarter of fiscal 2019, primarily due to increases in transaction accounts resulting primarily from government assistance programs related to the COVID-19 pandemic, partly offset by a managed run-off of higher cost time deposits. The average cost of deposits improved, decreasing by six basis points to 0.30 percent in the fourth quarter of fiscal 2020 from 0.36 percent in the same quarter last year.
Transaction account balances or “core deposits” increased $74.9 million, or 12 percent, to $723.0 million at June 30, 2020 from $648.1 million at June 30, 2019, while time deposits decreased $23.1 million, or 12 percent, to $170.0 million at June 30, 2020 from $193.1 million at June 30, 2019.
The average balance of borrowings, which consisted of FHLB advances, increased $36.8 million, or 36 percent, to $137.9 million while the average cost of borrowings decreased 33 basis points to 2.32 percent in the fourth quarter of fiscal 2020, compared to an average balance of $101.1 million with an average cost of 2.65 percent in the same quarter of fiscal 2019. The increase in the average balance of borrowings was primarily due to new borrowings with a lower average cost obtained during fiscal 2020.
During the fourth quarter of fiscal 2020, the Company recorded a provision for loan losses of $448,000, in contrast to a $25,000 recovery from the allowance for loan losses recorded during the same period of fiscal 2019 but lower than the provision for loan losses of $874,000 recorded in the third quarter of fiscal 2020 (sequential quarter).  The provision for loan losses in the June 2020 and March 2020 quarters was primarily due to a qualitative component established in our allowance for loan losses methodology

Page 6 of 20

 
 
   
   

 in response to the COVID-19 pandemic and its continued and forecast adverse economic impact.
Non-performing assets, with underlying collateral located in California, decreased $1.3 million, or 21 percent, to $4.9 million, or 0.42 percent of total assets, at June 30, 2020, compared to $6.2 million, or 0.57 percent of total assets, at June 30, 2019. The non-performing loans at June 30, 2020 are comprised of 18 single-family loans ($4.9 million) and one commercial business loan ($31,000). At both June 30, 2020 and June 30, 2019, there was no real estate owned.
Net loan recoveries for the quarter ended June 30, 2020 were $7,000 or 0.00 percent (annualized) of average loans receivable, in contrast to net loan recoveries of $21,000 or 0.01 percent (annualized) of average loans receivable for the quarter ended June 30, 2019 and net loan recoveries of $15,000 or 0.01 percent (annualized) of average loans receivable for the quarter ended March 31, 2020 (sequential quarter).
Classified assets at June 30, 2020 were $14.1 million, comprised of $8.6 million of loans in the special mention category, $5.5 million of loans in the substandard category and no real estate owned; while classified assets at June 30, 2019 were $16.2 million, comprised of $8.6 million of loans in the special mention category, $7.6 million of loans in the substandard category and no real estate owned.
For the quarter ended June 30, 2020, two new loans were restructured from their original terms and classified as restructured loans. The outstanding balance of restructured loans at June 30, 2020 was $2.6 million (eight loans), down 32 percent from $3.8 million (eight loans) at June 30, 2019. As of June 30, 2020, all of the restructured

Page 7 of 20

 
 
   
   

loans were classified as substandard non-accrual. As of June 30, 2020, 65% or $1.7 million of the restructured loans have a current payment status.
The Bank has received numerous requests from borrowers for some type of payment relief due to the COVID-19 pandemic. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these restructurings are not considered to be troubled debt restructurings at June 30, 2020 pursuant to applicable accounting guidance. The primary method of relief is to allow the borrower to defer loan payments for up to six months, although we have also waived late fees and suspended foreclosure proceedings. As of June 30, 2020, there were 48 single-family loans in forbearance with outstanding balances of approximately $19.9 million or 2.20 percent of gross loans held for investment and five multi-family and commercial real estate loans in forbearance with outstanding balances of approximately $2.7 million or 0.29 percent of gross loans held for investment.  Interest income is recognized during the forbearance period unless the loans are classified as non-performing.  After the payment deferral period (up to six months), scheduled loan payments will once again become due and payable.  The forbearance amount will be due and payable in full as a balloon payment at the end of the loan term or sooner if the loan becomes due and payable in full at an earlier date. In addition, as of June 30, 2020, the Bank had pending requests for payment relief for an additional seven loans totaling approximately $3.0 million. The Company believes the steps it is taking are necessary to effectively manage the loan portfolio and assist its customers through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic.

Page 8 of 20

 
 
   
   

The allowance for loan losses was $8.3 million at June 30, 2020, or 0.91 percent of gross loans held for investment, compared to $7.1 million at June 30, 2019, or 0.80 percent of gross loans held for investment. Management believes that, based on currently available information, the allowance for loan losses is sufficient to absorb potential losses inherent in loans held for investment at June 30, 2020 under the incurred loss methodology.
Non-interest income decreased by $310,000, or 24 percent, to $1.01 million in the fourth quarter of fiscal 2020 from $1.32 million in the same period of fiscal 2019, primarily due to decreases in deposit account fees and card and processing fees reflecting reduced transactions as a result of the COVID-19 pandemic. On a sequential quarter basis, non-interest income decreased $96,000, or nine percent, primarily as a result of a decrease in deposit account fees.
Non-interest expenses decreased $3.06 million, or 32 percent, to $6.60 million in the fourth quarter of fiscal 2020 from $9.66 million in the same quarter last year resulting primarily from the scaling back of saleable single-family loan originations.  The decrease was due primarily to lower salaries and employee benefits expenses resulting from fewer employees and lower incentive compensation and, to a lesser extent, reductions in equipment expenses, premises and occupancy expenses and professional expenses. On a sequential quarter basis, non-interest expenses decreased $902,000 or 12 percent to $6.60 million from $7.51 million, primarily due to lower salaries and employee benefits expenses resulting from fewer employees and lower incentive compensation.

Page 9 of 20

 
 
   
   

The Company’s efficiency ratio in the fourth quarter of fiscal 2020 was 71 percent, improving from 90 percent in the same quarter last year and 75 percent in the third quarter of fiscal 2020 (sequential quarter).
The Company’s provision for income tax was $660,000 for the fourth quarter of fiscal 2020, up 148 percent from $266,000 in the same quarter last year primarily due to higher pre-tax income. The effective tax rate in the fourth quarter of fiscal 2020 was 29.41%. The Company believes that the tax provision recorded in the fourth quarter of fiscal 2020 reflects its current federal and state income tax obligations.
The Company did not repurchase any shares of its common stock during the quarter ended June 30, 2020. As of June 30, 2020, a total of 371,815 shares or 100 percent of the shares authorized for repurchase under the April 2020 stock repurchase plan are available to purchase.
The Bank currently operates 13 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire).
The Company will host a conference call for institutional investors and bank analysts on Wednesday, July 29, 2020 at 9:00 a.m. (Pacific) to discuss its financial results.  The conference call can be accessed by dialing 1-844-291-6362 and referencing access code number 6176327.  An audio replay of the conference call will be available through Wednesday, August 5, 2020 by dialing 1-866-207-1041 and referencing access code number 2795378.
For more financial information about the Company please visit the website at www.myprovident.com and click on the “Investor Relations” section.

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Safe-Harbor Statement

This press release contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to the Company’s financial condition, liquidity, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially from the results anticipated or implied by our forward-looking statements include, but are not limited  to the effect of the COVID-19 pandemic, including on Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes,; including as a result of the COVID-19 pandemic; and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (“SEC”) - which are available on our website at www.myprovident.com and on the SEC’s website at www.sec.gov. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements whether as a result of new information, future events or otherwise. These risks could cause our actual results for fiscal 2021 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us and could negatively affect our operating and stock price performance


Contacts:
Craig G. Blunden
Donavon P. Ternes
 
Chairman and
President, Chief Operating Officer,
 
Chief Executive Officer and Chief Financial Officer
 

 







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PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Financial Condition
(Unaudited –In Thousands, Except Share Information)

 
   
June 30,
   
March 31,
   
December 31,
   
September 30,
   
June 30,
 
   
2020
   
2020
   
2019
   
2019
   
2019
 
Assets
                             
Cash and cash equivalents
 
$
116,034
   
$
84,250
   
$
48,233
   
$
54,515
   
$
70,632
 
Investment securities – held to maturity, at
   cost
   
118,627
     
69,482
     
77,161
     
85,088
     
94,090
 
Investment securities - available for sale, at
   fair value
   
4,717
     
4,828
     
5,237
     
5,517
     
5,969
 
Loans held for investment, net of allowance
   for loan losses of $8,265; $7,810; $6,921;
   $6,929 and $7,076, respectively; includes
   $2,258; $3,835; $4,173; $4,386 and $5,094
   at fair value, respectively
   
902,796
     
914,307
     
941,729
     
924,314
     
879,925
 
Accrued interest receivable
   
3,271
     
3,154
     
3,292
     
3,380
     
3,424
 
FHLB – San Francisco stock
   
7,970
     
8,199
     
8,199
     
8,199
     
8,199
 
Premises and equipment, net
   
10,254
     
10,606
     
10,967
     
11,215
     
8,226
 
Prepaid expenses and other assets
   
13,168
     
12,741
     
12,569
     
13,068
     
14,385
 
                                         
Total assets
 
$
1,176,837
   
$
1,107,567
   
$
1,107,387
   
$
1,105,296
   
$
1,084,850
 
                                         
Liabilities and Stockholders’ Equity
                                       
Liabilities:
                                       
Non interest-bearing deposits
 
$
118,771
   
$
86,585
   
$
85,846
   
$
85,338
   
$
90,184
 
Interest-bearing deposits
   
774,198
     
749,246
     
747,804
     
746,398
     
751,087
 
Total deposits
   
892,969
     
835,831
     
833,650
     
831,736
     
841,271
 
                                         
Borrowings
   
141,047
     
131,070
     
131,085
     
131,092
     
101,107
 
Accounts payable, accrued interest and other
   liabilities
   
18,845
     
17,508
     
18,876
     
20,299
     
21,831
 
Total liabilities
   
1,052,861
     
984,409
     
983,611
     
983,127
     
964,209
 
                                         
Stockholders’ equity:
                                       
Preferred stock, $.01 par value (2,000,000
   shares authorized; none issued and
   outstanding)
                                       
   
-
     
-
     
-
     
-
     
-
 
Common stock, $.01 par value (40,000,000
   shares authorized; 18,097,615; 18,097,615;
   18,097,615; 18,091,865 and 18,081,365
   shares issued, respectively; 7,436,315;
   7,436,315; 7,483,071; 7,479,682 and
   7,486,106 shares outstanding, respectively)
                                       
                                       
   
181
     
181
     
181
     
181
     
181
 
Additional paid-in capital
   
95,593
     
95,355
     
95,118
     
94,795
     
94,351
 
Retained earnings
   
194,345
     
193,802
     
193,704
     
192,354
     
190,839
 
Treasury stock at cost (10,661,300;
   10,661,300; 10,614,544; 10,612,183 and
   10,595,259 shares, respectively)
                                       
   
(166,247
)
   
(166,247
)
   
(165,360
)
   
(165,309
)
   
(164,891
)
Accumulated other comprehensive income, net of tax
   
104
     
67
     
133
     
148
     
161
 
                                         
Total stockholders’ equity
   
123,976
     
123,158
     
123,776
     
122,169
     
120,641
 
                                         
Total liabilities and stockholders’ equity
 
$
1,176,837
   
$
1,107,567
   
$
1,107,387
   
$
1,105,296
   
$
1,084,850
 



Page 12 of 20

 
 
   
   

PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited - In Thousands, Except Earnings Per Share)

 
   
Quarter Ended
June 30,
   
Fiscal Year Ended
June 30,
 
 
   
2020
   
2019
   
2020
   
2019
 
Interest income:
                       
     Loans receivable, net
 

$  9,128
   

$   9,576
   

$   39,145
   

$  40,092
 
     Investment securities
   
461
     
661
     
2,120
     
2,042
 
     FHLB – San Francisco stock
   
102
     
142
     
534
     
707
 
     Interest-earning deposits
   
36
     
426
     
657
     
1,537
 
     Total interest income
   
9,727
     
10,805
     
42,456
     
44,378
 
                                 
Interest expense:
                               
     Checking and money market deposits
   
91
     
101
     
424
     
428
 
     Savings deposits
   
100
     
135
     
496
     
572
 
     Time deposits
   
452
     
530
     
2,023
     
2,381
 
     Borrowings
   
794
     
669
     
3,112
     
2,827
 
     Total interest expense
   
1,437
     
1,435
     
6,055
     
6,208
 
                                 
Net interest income
   
8,290
     
9,370
     
36,401
     
38,170
 
Provision (recovery) for loan losses
   
448
     
(25
)
   
1,119
     
(475
)
Net interest income, after provision (recovery)
  for loan losses
   
7,842
     
9,395
     
35,282
     
38,645
 
                                 
Non-interest income:
                               
     Loan servicing and other fees
   
188
     
188
     
819
     
1,051
 
     (Loss) gain on sale of loans, net
   
(17
)
   
21
     
(132
)
   
7,135
 
     Deposit account fees
   
289
     
443
     
1,610
     
1,928
 
     Card and processing fees
   
333
     
405
     
1,454
     
1,568
 
     Other
   
212
     
258
     
769
     
829
 
     Total non-interest income
   
1,005
     
1,315
     
4,520
     
12,511
 
                                 
Non-interest expense:
                               
     Salaries and employee benefits
   
3,963
     
5,396
     
18,913
     
30,149
 
     Premises and occupancy
   
862
     
1,133
     
3,465
     
5,038
 
     Equipment
   
274
     
1,141
     
1,129
     
2,474
 
     Professional expenses
   
349
     
493
     
1,439
     
1,864
 
     Sales and marketing expenses
   
267
     
312
     
773
     
980
 
     Deposit insurance premiums and regulatory
        assessments
   
130
     
129
     
227
     
590
 
     Other
   
758
     
1,053
     
2,954
     
4,141
 
     Total non-interest expense
   
6,603
     
9,657
     
28,900
     
45,236
 
                                 
Income before taxes
   
2,244
     
1,053
     
10,902
     
5,920
 
Provision for income taxes
   
660
     
266
     
3,213
     
1,503
 
     Net income
 

$   1,584
   

$     787
   

$    7,689
   

$    4,417
 
                                 
Basic earnings per share
 

$  0.21
   

$  0.10
   

$  1.03
   

$  0.59
 
Diluted earnings per share
 

$  0.21
   

$  0.10
   

$  1.01
   

$  0.58
 
Cash dividends per share
 

$  0.14
   

$  0.14
   

$  0.56
   

$  0.56
 


Page 13 of 20

 
 
   
   

PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations – Sequential Quarters
(Unaudited – In Thousands, Except Share Information)

 

    Quarter Ended
   
June 30,
   
March 31,
   
December 31,
   
September 30,
   
June 30,
 
   
2020
   
2020
   
2019
   
2019
   
2019
 
Interest income:
                             
     Loans receivable, net
 

$    9,128
   

$    9,622
   

$    10,320
   

$    10,075
   

$    9,576
 
     Investment securities
   
461
     
478

   
567
     
614
     
661
 
     FHLB – San Francisco stock
   
102
     
144
     
145
     
143
     
142
 
     Interest-earning deposits
   
36
     
186
     
189
     
246
     
426
 
Total interest income
   
9,727
     
10,430
     
11,221
     
11,078
     
10,805
 
                                         
Interest expense:
                                       
     Checking and money market deposits
   
91
     
106
     
117
     
110
     
101
 
     Savings deposits
   
100
     
131
     
131
     
134
     
135
 
     Time deposits
   
452
     
509
     
530
     
532
     
530
 
     Borrowings
   
794
     
794
     
804
     
720
     
669
 
Total interest expense
   
1,437
     
1,540
     
1,582
     
1,496
     
1,435
 
                                         
Net interest income
   
8,290
     
8,890
     
9,639
     
9,582
     
9,370
 
Provision (recovery) for loan losses
   
448
     
874
     
(22
)
   
(181
)
   
(25
)
Net interest income, after provision (recovery) for
   loan losses
   
7,842
     
8,016
     
9,661
     
9,763
     
9,395
 
                                         
Non-interest income:
                                       
     Loan servicing and other fees
   
188
     
131
     
367
     
133
     
188
 
     (Loss) gain on sale of loans, net
   
(17
)
   
14
     
(43
)
   
(86
)
   
21
 
     Deposit account fees
   
289
     
423
     
451
     
447
     
443
 
     Card and processing fees
   
333
     
360
     
371
     
390
     
405
 
     Other
   
212
     
173
     
198
     
186
     
258
 
Total non-interest income
   
1,005
     
1,101
     
1,344
     
1,070
     
1,315
 
                                         
Non-interest expense:
                                       
     Salaries and employee benefits
   
3,963
     
4,966
     
4,999
     
4,985
     
5,396
 
     Premises and occupancy
   
862
     
845
     
880
     
878
     
1,133
 
     Equipment
   
274
     
314
     
262
     
279
     
1,141
 
     Professional expenses
   
349
     
351
     
331
     
408
     
493
 
     Sales and marketing expenses
   
267
     
177
     
212
     
117
     
312
 
 Deposit insurance premiums and regulatory
   assessments
   
130
     
54
     
59
     
(16
)
   
129
 
     Other
   
758
     
798
     
811
     
587
     
1,053
 
Total non-interest expense
   
6,603
     
7,505
     
7,554
     
7,238
     
9,657
 
                                         
Income before taxes
   
2,244
     
1,612
     
3,451
     
3,595
     
1,053
 
Provision for income taxes
   
660
     
467
     
1,053
     
1,033
     
266
 
Net income
 

$    1,584
   

$    1,145
   

$    2,398
   

$    2,562
   

$       787
 
                                         
Basic earnings per share
 

$  0.21
   

$  0.15
   

$  0.32
   

$  0.34
   

$   0.10
 
Diluted earnings per share
 

$  0.21
   

$  0.15
   

$  0.31
   

$  0.33
   

$   0.10
 
Cash dividends per share
 

$  0.14
   

$  0.14
   

$  0.14
   

$  0.14
   

$   0.14
 


Page 14 of 20

 
 
   
   


PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands, Except Share Information)

 
   
Quarter Ended
June 30,
   
Fiscal Year Ended
June 30,
 
   
2020
   
2019
   
2020
   
2019
 
SELECTED FINANCIAL RATIOS:
                       
Return on average assets
   
0.55
%
   
0.29
%
   
0.69
%
   
0.39
%
Return on average stockholders’ equity
   
5.14
%
   
2.60
%
   
6.26
%
   
3.63
%
Stockholders’ equity to total assets
   
10.53
%
   
11.12
%
   
10.53
%
   
11.12
%
Net interest spread
   
2.89
%
   
3.46
%
   
3.30
%
   
3.40
%
Net interest margin
   
2.95
%
   
3.52
%
   
3.36
%
   
3.47
%
Efficiency ratio
   
71.04
%
   
90.38
%
   
70.62
%
   
89.26
%
Average interest-earning assets to average
   interest-bearing liabilities
   
110.80
%
   
111.45
%
   
111.32
%
   
111.14
%
                                 
SELECTED FINANCIAL DATA:
                               
Basic earnings per share
 

$    0.21
   

$   0.10
   

$   1.03
   

$   0.59
 
Diluted earnings per share
 

$    0.21
   

$   0.10
   

$   1.01
   

$   0.58
 
Book value per share
 

$  16.67
   

$ 16.12
   

$ 16.67
   

$ 16.12
 
Shares used for basic EPS computation
   
7,436,315
     
7,496,457
     
7,467,577
     
7,484,925
 
Shares used for diluted EPS computation
   
7,485,019
     
7,626,661
     
7,576,182
     
7,596,268
 
Total shares issued and outstanding
   
7,436,315
     
7,486,106
     
7,436,315
     
7,486,106
 
                                 
LOANS ORIGINATED AND PURCHASED
FOR INVESTMENT:
                               
Mortgage Loans:
                               
Single-family
 

$  11,206
   

$  31,982
   

$  107,160
   

$   88,666
 
Multi-family
   
32,876
     
14,513
     
122,366
     
58,836
 
Commercial real estate
   
-
     
2,882
     
14,468
     
16,559
 
Construction
   
-
     
1,846
     
3,983
     
7,159
 
Other
   
143
     
1,846
     
143
     
7,159
 
Consumer loans
   
-
     
-
     
1
     
-
 
   Total loans originated and purchased for
      investment
 

$  44,225
   

$   51,223
   

$  248,121
   

$  171,220
 
                                 
LOANS ORIGINATED FOR SALE:
                               
Retail originations
 

$            -
   

$     9,593
   

$              -
   

$  296,992
 
Wholesale originations
   
-
     
4,057
     
-
     
170,102
 
   Total loans originated for sale
 

$            -
   

$   13,650
   

$              -
   

$  467,094
 
                                 
LOANS SOLD:
                               
Servicing released
 

$            -
   

$   40,956
   

$              -
   

$  551,754
 
Servicing retained
   
-
     
2,003
     
-
     
7,196
 
   Total loans sold
 

$            -
   

$   42,959
   

$              -
   

$  558,950
 

Page 15 of 20

 
 
   
   

PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands, Except Share Information)

 
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
 
   
06/30/20
   
03/31/20
   
12/31/19
   
09/30/19
   
06/30/19
 
SELECTED FINANCIAL RATIOS:
                             
Return on average assets
   
0.55
%
   
0.41
%
   
0.87
%
   
0.95
%
   
0.29
%
Return on average stockholders’ equity
   
5.14
%
   
3.70
%
   
7.81
%
   
8.46
%
   
2.60
%
Stockholders’ equity to total assets
   
10.53
%
   
11.12
%
   
11.18
%
   
11.05
%
   
11.12
%
Net interest spread
   
2.89
%
   
3.23
%
   
3.53
%
   
3.58
%
   
3.46
%
Net interest margin
   
2.95
%
   
3.30
%
   
3.59
%
   
3.64
%
   
3.52
%
Efficiency ratio
   
71.04
%
   
75.12
%
   
68.78
%
   
67.95
%
   
90.38
%
Average interest-earning assets to average
   interest-bearing liabilities
   
110.80
%
   
111.39
%
   
111.43
%
   
111.61
%
   
111.45
%
                                         
SELECTED FINANCIAL DATA:
                                       
Basic earnings per share
 

$    0.21
   

$    0.15
   

$     0.32
   

$    0.34
   

$    0.10
 
Diluted earnings per share
 

$    0.21
   

$    0.15
   

$     0.31
   

$    0.33
   

$    0.10
 
Book value per share
 

$  16.67
   

$  16.56
   

$   16.54
   

$  16.33
   

$  16.12
 
Average shares used for basic EPS
   
7,436,315
     
7,468,932
     
7,482,300
     
7,482,435
     
7,496,457
 
Average shares used for diluted EPS
   
7,485,019
     
7,590,348
     
7,658,050
     
7,647,763
     
7,626,661
 
Total shares issued and outstanding
   
7,436,315
     
7,436,315
     
7,483,071
     
7,479,682
     
7,486,106
 
                                         
LOANS ORIGINATED AND PURCHASED
FOR INVESTMENT:
                                       
Mortgage Loans:
                                       
Single-family
 

$   11,206
   

$    9,654
   

$    52,671
   

$   33,629
   

$    31,982
 
Multi-family
   
32,876
     
12,850
     
20,164
     
56,476
     
14,513
 
Commercial real estate
   
-
     
5,570
     
6,479
     
2,419
     
2,882
 
Construction
   
-
     
774
     
2,313
     
896
     
1,846
 
Other
   
143
     
-
     
-
     
-
     
-
 
Consumer loans
   
-
     
-
     
1
     
-
     
-
 
   Total loans originated and purchased for
      investment
 

$   44,225
   

$  28,848
   

$    81,628
   

$    93,420
   

$    51,223
 
                                         
LOANS ORIGINATED FOR SALE:
                                       
Retail originations
 

$             -
   

$            -
   

$              -
   

$             -
   

$      9,593
 
Wholesale originations
   
-
     
-
     
-
     
-
     
4,057
 
   Total loans originated for sale
 

$             -
   

$            -
   

$              -
   

$             -
   

$    13,650
 
                                         
LOANS SOLD:
                                       
Servicing released
 

$             -
   

$            -
   

$              -
   

$             -
   

$    40,956
 
Servicing retained
   
-
     
-
     
-
     
-
     
2,003
 
   Total loans sold
 

$             -
   

$            -
   

$              -
   

$             -
   

$    42,959
 


Page 16 of 20

 
 
   
   

PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)

 
   
As of
   
As of
   
As of
   
As of
   
As of
 
   
06/30/20
   
03/31/20
   
12/31/19
   
09/30/19
   
06/30/19
 
ASSET QUALITY RATIOS AND
  DELINQUENT LOANS:
                             
Recourse reserve for loans sold
 

$    270
   

$     250
   

$      250
   

$      250
   

$       250
 
Allowance for loan losses
 

$ 8,265
   

$  7,810
   

$   6,921
   

$   6,929
   

$    7,076
 
Non-performing loans to loans held for
  investment, net
   
0.55
%
   
0.40
%
   
0.36
%
   
0.57
%
   
0.71
%
Non-performing assets to total assets
   
0.42
%
   
0.33
%
   
0.31
%
   
0.47
%
   
0.57
%
Allowance for loan losses to gross loans held
                                       
  for investment
   
0.91
%
   
0.85
%
   
0.73
%
   
0.74
%
   
0.80
%
Net loan charge-offs (recoveries) to average   
  loans receivable (annualized)
   
0.00
%
   
(0.01
)%
   
(0.01
)%
   
(0.02
)%
   
(0.01
)%
Non-performing loans
 

$ 4,924
   

$  3,635
   

$  3,427
   

$   5,230
   

$   6,218
 
Loans 30 to 89 days delinquent
 

$    219
   

$  2,827
   

$     986
   

$      990
   

$      665
 

   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
 
   
06/30/20
   
03/31/20
   
12/31/19
   
09/30/19
   
06/30/19
 
Provision (recovery) for loan losses
 

$       448
   

$         874
   

$        (22
)
 

$      (181
)
 

$       (25
)
Net loan charge-offs (recoveries)
 

$          (7
)
 

$          (15
)
 

$        (14
)
 

$        (34
)
 

$       (21
)
                                         
   
As of
   
As of
   
As of
   
As of
   
As of
 
   
06/30/20
   
03/31/20
   
12/31/19
   
09/30/19
   
06/30/19
 
REGULATORY CAPITAL RATIOS (BANK):
 
Tier 1 leverage ratio
   
10.13
%
   
10.36
%
   
10.24
%
   
10.21
%
   
10.50
%
Common equity tier 1 capital ratio
   
17.51
%
   
17.26
%
   
16.62
%
   
16.32
%
   
18.00
%
Tier 1 risk-based capital ratio
   
17.51
%
   
17.26
%
   
16.62
%
   
16.32
%
   
18.00
%
Total risk-based capital ratio
   
18.76
%
   
18.45
%
   
17.65
%
   
17.37
%
   
19.13
%
                                         

   
As of June 30,
 
   
2020
   
2019
 
   
Balance
   
Rate(1)
   
Balance
   
Rate(1)
 
INVESTMENT SECURITIES:
                       
Held to maturity:
                       
Certificates of deposit
 
$
800
     
1.53
%
 
$
800
     
2.63
%
U.S. SBA securities
   
2,064
     
0.60
     
2,896
     
2.85
 
U.S. government sponsored enterprise MBS
   
115,763
     
1.85
     
90,394
     
2.84
 
   Total investment securities held to maturity
 
$
118,627
     
1.83
%
 
$
94,090
     
2.84
%
                                 
Available for sale (at fair value):
                               
U.S. government agency MBS
 
$
2,943
     
3.32
%
 
$
3,613
     
3.86
%
U.S. government sponsored enterprise MBS
   
1,577
     
3.75
     
2,087
     
4.75
 
Private issue collateralized mortgage obligations
   
197
     
3.70
     
269
     
4.66
 
   Total investment securities available for sale
 
$
4,717
     
3.48
%
 
$
5,969
     
4.21
%
   
   Total investment securities
 
$
123,344
     
1.89
%
 
$
100,059
     
2.92
%
                                 
(1) The interest rate described in the rate column is the weighted-average interest rate or yield of all instruments, which are included in the balance of the respective line item.
 

Page 17 of 20

 
 
   
   

PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)

 
   
As of June 30,
 
   
2020
   
2019
 
   
Balance
   
Rate(1)
   
Balance
   
Rate(1)
 
LOANS HELD FOR INVESTMENT:
                       
Held to maturity:
                       
Single-family (1 to 4 units)
 
$
298,810
     
4.04
%
 
$
324,952
     
4.50
%
Multi-family (5 or more units)
   
491,903
     
4.24
     
439,041
     
4.52
 
Commercial real estate
   
105,235
     
4.75
     
111,928
     
4.92
 
Construction
   
7,801
     
6.35
     
4,638
     
7.34
 
Other
   
143
     
5.25
     
167
     
6.50
 
Commercial business
   
480
     
5.99
     
478
     
6.72
 
Consumer
   
94
     
15.00
     
134
     
15.50
 
   Total loans held for investment
   
904,466
     
4.25
%
   
881,338
     
4.58
%
                                 
Advance payments of escrows
   
68
             
53
         
Deferred loan costs, net
   
6,527
             
5,610
         
Allowance for loan losses
   
(8,265
)
           
(7,076
)
       
   Total loans held for investment, net
 
$
902,796
           
$
879,925
         
                                 
Purchased loans serviced by others included above
 
$
23,899
     
3.71
%
 
$
33,934
     
3.78
%
                                 
(1) The interest rate described in the rate column is the weighted-average interest rate or yield of all instruments, which are included in the balance of the respective line item.
 

   
As of June 30,
 
   
2020
   
2019
 
   
Balance
   
Rate(1)
   
Balance
   
Rate(1)
 
DEPOSITS:
                       
Checking accounts – non interest-bearing
 
$
118,771
     
-
%
 
$
90,184
     
-
%
Checking accounts – interest-bearing
   
290,463
     
0.10
     
257,909
     
0.12
 
Savings accounts
   
273,769
     
0.13
     
264,387
     
0.20
 
Money market accounts
   
39,989
     
0.22
     
35,646
     
0.28
 
Time deposits
   
169,977
     
0.95
     
193,145
     
1.12
 
   Total deposits
 
$
892,969
     
0.26
%
 
$
841,271
     
0.37
%
                                 
BORROWINGS:
                               
Overnight
 
$
-
     
-
%
 
$
-
     
-
%
Three months or less
   
-
     
-
     
-
     
-
 
Over three to six months
   
15,000
     
2.62
     
-
     
-
 
Over six months to one year
   
15,000
     
2.52
     
-
     
-
 
Over one year to two years
   
31,047
     
1.90
     
20,000
     
3.85
 
Over two years to three years
   
30,000
     
1.92
     
21,107
     
2.06
 
Over three years to four years
   
30,000
     
2.25
     
10,000
     
2.25
 
Over four years to five years
   
20,000
     
2.70
     
30,000
     
2.25
 
Over five years
   
-
     
-
     
20,000
     
2.70
 
   Total borrowings
 
$
141,047
     
2.23
%
 
$
101,107
     
2.62
%
   
(1) The interest rate described in the rate column is the weighted-average interest rate or cost of all instruments, which are included in the balance of the respective line item.
 

Page 18 of 20

 
 
   
   

PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)

 
   
Quarter Ended
   
Quarter Ended
 
   
June 30, 2020
   
June 30, 2019
 
   
Balance
   
Rate(1)
   
Balance
   
Rate(1)
 
SELECTED AVERAGE BALANCE SHEETS:
                       
Held to maturity:
                       
Loans receivable, net (2)
 
$
894,522
     
4.08
%
 
$
879,835
     
4.35
%
Investment securities
   
85,255
     
2.16
     
105,024
     
2.52
 
FHLB – San Francisco stock
   
8,020
     
5.09
     
8,199
     
6.93
 
Interest-earning deposits
   
135,138
     
0.11
     
71,768
     
2.35
 
Total interest-earning assets
 
$
1,122,935
     
3.46
%
 
$
1,064,826
     
4.06
%
Total assets
 
$
1,154,834
           
$
1,095,818
         
                                 
Deposits
 
$
875,628
     
0.30
%
 
$
854,359
     
0.36
%
Borrowings
   
137,871
     
2.32
     
101,112
     
2.65
 
Total interest-bearing liabilities
 
$
1,013,499
     
0.57
%
 
$
955,471
     
0.60
%
Total stockholders’ equity
 
$
123,256
           
$
121,129
         
                                 
(1) The interest rate described in the rate column is the weighted-average interest rate or yield/cost of all instruments, which are included in the balance of the respective line item.
 
(2) Includes loans held for sale at fair value for the quarter ended June 30, 2019.
 
   
   
Fiscal Year Ended
   
Fiscal Year Ended
 
   
June 30, 2020
   
June 30, 2019
 
   
Balance
   
Rate(1)
   
Balance
   
Rate(1)
 
SELECTED AVERAGE BALANCE SHEETS:
                               
Held to maturity:
                               
Loans receivable, net (2)
 
$
915,353
     
4.28
%
 
$
926,003
     
4.33
%
Investment securities
   
86,761
     
2.44
     
97,870
     
2.09
 
FHLB – San Francisco stock
   
8,155
     
6.55
     
8,199
     
8.62
 
Interest-earning deposits
   
71,766
     
0.90
     
67,816
     
2.24
 
Total interest-earning assets
 
$
1,082,035
     
3.92
   
$
1,099,888
     
4.03
%
Total assets
 
$
1,113,755