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): April 26, 2023

PROVIDENT FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act:

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. [   ]

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Item 2.02  Results of Operations and Financial Condition

On April 26, 2023, Provident Financial Holdings, Inc. (“Corporation”), the holding company for Provident Savings Bank, F.S.B., distributed its financial results for the quarter ended March 31, 2023. 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 April 26, 2023, the Corporation posted its Investor Presentation for the quarter ended March 31, 2023 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

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.

PROVIDENT FINANCIAL HOLDINGS REPORTS

THIRD QUARTER FISCAL 2023 RESULTS

Net Income of $2.32 Million in the March 2023 Quarter

Net Interest Margin Expanded 39 Basis Points in Comparison

to the Same Quarter Last Year

Loans Held for Investment Increased 15% from June 30, 2022 to $1.08 Billion

Total Deposits Increased 3% from June 30, 2022 to $983.0 Million

Strong Asset Quality with Non-Performing Assets to Total Assets Ratio of 0.07%

Non-Interest Expenses Remained Well-Controlled

Riverside, Calif. – April 26, 2023 – Provident Financial Holdings, Inc. (“Company”), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced third quarter earnings for the fiscal year ending June 30, 2023.

For the quarter ended March 31, 2023, the Company reported net income of $2.32 million, or $0.33 per diluted share (on 7.15 million average diluted shares outstanding), up 37 percent from net income of $1.70 million, or $0.23 per diluted share (on 7.41 million average diluted shares outstanding), in the comparable period a year ago. The increase in earnings was primarily attributable to a $1.86 million increase in net interest income, partly offset by an $814,000 change to the provision for loan losses to a $169,000 provision for loan losses this quarter in contrast to a $645,000 recovery from the allowance for loan losses in the same quarter last year and a $133,000 decrease in non-interest income.

“We are pleased with our recent financial results particularly when evaluated against the backdrop of recent industry turmoil.  Our community banking organization is well-capitalized, profitable, regulatorily compliant and built on a strong financial foundation.  We primarily make loans on homes and apartment buildings and offer checking accounts, savings accounts, and certificates of deposit to individuals, families and small businesses,” said Craig G. Blunden, Chairman and Chief Executive Officer of the Company. “Our community banking focus is conservative, easily understood and has served and is expected to continue to serve our local customers and communities very well for many, many years,” concluded Blunden.

Return on average assets for the third quarter of fiscal 2023 was 0.72 percent, up from 0.57 percent for the same period of fiscal 2022; and return on average stockholders’ equity for the third

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quarter of fiscal 2023 was 7.12 percent, up from 5.33 percent for the comparable period of fiscal 2022.

On a sequential quarter basis, the $2.32 million net income for the third quarter of fiscal 2023 reflects a two percent decrease from $2.37 million in the second quarter of fiscal 2023. The decrease was primarily attributable to a $126,000 increase in non-interest expenses, partly offset by a $16,000 increase in net interest income, a $22,000 decrease in the provision for loan losses and a $25,000 increase in non-interest income. Diluted earnings per share for the third quarter of fiscal 2023 were $0.33 per share, unchanged from the second quarter of fiscal 2023. Return on average assets was 0.72 percent for the third quarter of fiscal 2023, slightly lower than the 0.75 percent in the second quarter of fiscal 2023; and return on average stockholders’ equity for the third quarter of fiscal 2023 was 7.12 percent, slightly lower than the 7.27 percent for the second quarter of fiscal 2023.

For the nine months ended March 31, 2023, net income increased $154,000, or two percent, to $6.78 million from $6.63 million in the comparable period ended March 31, 2022. Diluted earnings per share for the nine months ended March 31, 2023 increased six percent to $0.94 per share (on 7.23 million average diluted shares outstanding) from $0.89 per share (on 7.49 million average diluted shares outstanding) for the comparable nine-month period last year. The increase in earnings was primarily attributable to a $4.66 million increase in net interest income, partly offset by a $2.48 million change in the provision for loan losses to a $430,000 provision for loan losses in the nine months ended March 31, 2023 in contrast to a $2.05 million recovery from the allowance for loan losses in the comparable period last year, a $1.19 million increase in non-interest expense (primarily attributable to the $1.20 million employee retention tax credit recorded in the first quarter of fiscal 2022 and not replicated in the current fiscal year to date) and a $611,000 decrease in non-interest income (mainly a decrease in loan prepayment fees).

In the third quarter of fiscal 2023, net interest income increased $1.86 million, or 25 percent, to $9.40 million from $7.54 million for the same quarter last year. The increase in net interest income was primarily due to a higher net interest margin due to a shift in the composition of interest-earning assets towards higher yielding loans held for investment and an increase in the average yield on interest-earning assets reflecting recent increases in the targeted federal funds rate, partly offset by increases in the average cost of interest-bearing liabilities. The net interest margin during the third quarter of fiscal 2023 increased 39 basis points to 3.00 percent from 2.61 percent in the same quarter last year. The average yield on interest-earning assets increased 97 basis points to 3.83 percent in the third quarter of fiscal 2023 from 2.86 percent in the same quarter last year while the average cost of interest-bearing liabilities increased by 65 basis points to 0.93 percent in the third quarter of fiscal 2023 from 0.28 percent in the same quarter last year. The average balance of interest-earning assets increased by nine percent to $1.25 billion in the third quarter of fiscal 2023 from $1.16 billion in the same quarter last year. This increase was attributable to the increase in the average balance of loans receivable, partly offset by decreases in the average balance of investment securities and interest-earning deposits.

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Interest income on loans receivable increased by $3.45 million, or 45 percent, to $11.03 million in the third quarter of fiscal 2023 from $7.58 million in the same quarter of fiscal 2022. The increase was due to a higher average balance and, to a lesser extent, a higher average loan yield. The average balance of loans receivable increased by $196.1 million, or 23 percent, to $1.05 billion in the third quarter of fiscal 2023 from $858.3 million in the same quarter last year. Total loans originated and purchased for investment in the third quarter of fiscal 2023 were $53.9 million, down 43 percent from $94.0 million in the same quarter last year. Loan principal payments received in the third quarter of fiscal 2023 were $17.5 million, down 67 percent from $53.6 million in the same quarter last year. The average yield on loans receivable increased by 65 basis points to 4.18 percent in the third quarter of fiscal 2023 from 3.53 percent in the same quarter last year. Net deferred loan cost amortization in the third quarter of fiscal 2023 decreased 54 percent to $228,000 from $496,000 in the same quarter last year, attributable primarily to fewer loan payoffs. Adjustable-rate loans of approximately $97.4 million were repriced upward in the third quarter of fiscal 2023 by approximately 137 basis points from a weighted average rate of 4.77 percent to 6.14 percent.

Interest income from investment securities increased $33,000, or six percent, to $548,000 in the third quarter of fiscal 2023 from $515,000 for the same quarter of fiscal 2022. This increase was attributable to a higher average yield, partly offset by a lower average balance. The average yield on investment securities increased 30 basis points to 1.31 percent in the third quarter of fiscal 2023 from 1.01 percent for the same quarter last year. The increase in the average investment securities yield was primarily attributable to a lower premium amortization during the current quarter in comparison to the same quarter last year ($181,000 vs. $328,000) attributable to a lower total principal repayment ($6.9 million vs. $12.3 million) and, to a lesser extent, the upward repricing of adjustable-rate mortgage-backed securities. The average balance of investment securities decreased by $35.5 million, or 17 percent, to $167.7 million in the third quarter of fiscal 2023 from $203.2 million in the same quarter last year.

In the third quarter of fiscal 2023, the Federal Home Loan Bank – San Francisco (“FHLB”) distributed a $146,000 cash dividend to the Bank on its FHLB stock, up 19 percent from $123,000 in the same quarter last year. The average balance of FHLB – San Francisco stock in the third quarter of fiscal 2023 was $8.2 million, virtually unchanged from the same quarter of fiscal 2022 while the average yield increased by 106 basis points to 7.09 percent in the third quarter of fiscal 2023 from 6.03 percent in the same quarter last year.

Interest income from interest-earning deposits, primarily cash deposited at the Federal Reserve Bank of San Francisco, was $286,000 in the third quarter of fiscal 2023, up 633 percent from $39,000 in the same quarter of fiscal 2022. The increase was due to a higher average yield, partly offset by a lower average balance. The average yield earned on interest-earning deposits in the third quarter of fiscal 2023 was 4.65 percent, up 447 basis points from 0.18 percent in the same quarter last year. The average balance of the Company’s interest-earning deposits decreased $61.4 million, or 71 percent, to $24.6 million in the third quarter of fiscal 2023 from $86.0 million in the same quarter last year primarily due to the utilization of excess funds for loan portfolio growth.

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Interest expense on deposits for the third quarter of fiscal 2023 was $879,000, a 221 percent increase from $274,000 for the same period last year. The increase in interest expense on deposits was attributable to a higher weighted average cost. The average cost of deposits was 0.37 percent in the third quarter of fiscal 2023, up 25 basis points from 0.12 percent in the same quarter last year. The average balance of deposits decreased slightly to $962.0 million in the third quarter of fiscal 2023 from $963.1 million in the same quarter last year.

Transaction account balances or “core deposits” decreased $57.4 million, or seven percent, to $777.0 million at March 31, 2023 from $834.4 million at June 30, 2022 while time deposits increased $85.0 million, or 70 percent, to $206.1 million at March 31, 2023 from $121.1 million at June 30, 2022. The increase in time deposits was due to a $95.3 million increase in brokered certificates of deposit. As of March 31, 2023, brokered certificates of deposit totaled $95.3 million with a weighted average cost of 4.37 percent (including broker fees).

Interest expense on borrowings, consisting of FHLB – San Francisco advances, for the third quarter of fiscal 2023 increased $1.28 million, or 287 percent, to $1.73 million from $446,000 for the same period last year. The increase in interest expense on borrowings was primarily the result of a higher average balance and, to a lesser extent, a higher average cost. The average balance of borrowings increased by $96.5 million, or 121 percent, to $176.5 million in the third quarter of fiscal 2023 from $80.0 million in the same quarter last year and the average cost of borrowings increased by 171 basis points to 3.97 percent in the third quarter of fiscal 2023 from 2.26 percent in the same quarter last year.

At March 31, 2023, the Bank has approximately $228.6 million of remaining borrowing capacity at the FHLB – San Francisco. Additionally, the Bank has an unused secured borrowing facility of approximately $135.8 million with the Federal Reserve Bank of San Francisco and an unused unsecured federal funds borrowing facility of $50.0 million with its correspondent bank.

The Bank continues to work with both the FHLB - San Francisco and Federal Reserve Bank of San Francisco to ensure that borrowing capacity is continuously reviewed and updated in order to be accessed seamlessly should the need arise. This includes establishing accounts and pledging assets as needed in order to maximize borrowing capacity and liquidity.

During the third quarter of fiscal 2023, the Company recorded a provision for loan losses of $169,000, as compared to a $645,000 recovery from the allowance for loan losses recorded during the same period last year and the $191,000 provision for loan losses recorded in the second quarter of fiscal 2023 (sequential quarter). The provision for loan losses primarily reflects an increase in loans held for investment in the third quarter of fiscal 2023 while the overall loan credit quality remains very strong.

Non-performing assets, comprised solely of non-performing loans with underlying collateral located in California, decreased $478,000 or 34 percent to $945,000, or 0.07 percent of total assets, at March 31, 2023, compared to $1.4 million, or 0.12 percent of total assets, at June 30, 2022. The non-performing loans at March 31, 2023 are comprised of five single-family loans, 

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The allowance for loan losses was $6.0 million, or 0.56 percent of gross loans held for investment, at March 31, 2023, up from the $5.6 million, or 0.59 percent of gross loans held for investment, at June 30, 2022. 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 March 31, 2023 under the incurred loss methodology.

Non-interest income decreased by $133,000, or 12 percent, to $981,000 in the third quarter of fiscal 2023 from $1.11 million in the same period last year, primarily due to a decrease in loan servicing and other fees, attributable primarily to lower loan prepayment fees. On a sequential quarter basis, non-interest income increased $25,000 or three percent.

Non-interest expenses increased slightly to $6.92 million in the third quarter of fiscal 2023 from $6.90 million for the same quarter last year. The increase in the non-interest expenses in the third quarter of fiscal 2023 was primarily due to higher salaries and employee benefits and deposit insurance premiums, partly offset by lower equipment expenses, professional expenses and other operating expenses. On a sequential quarter basis, non-interest expenses increased by $126,000 or two percent to $6.92 million in the third quarter of fiscal 2023 from $6.80 million in the second quarter of fiscal 2023, primarily due to an increase in premises and occupancy expenses, deposit insurance premiums expense and other operating expenses, partly offset by a decrease in professional expenses (mainly a decrease in legal costs).

The Company’s efficiency ratio, defined as non-interest expense divided by the sum of net interest income and non-interest income, in the third quarter of fiscal 2023 was 66.69 percent, improving from 79.74 percent in the same quarter last year but slightly higher than the 65.74 percent in the second quarter of fiscal 2023 (sequential quarter). The improvement in the efficiency ratio was primarily due to higher total revenues during the current quarter, compared to the comparable quarter last year.

The Company’s provision for income taxes was $966,000 for the third quarter of fiscal 2023, up 38 percent from $699,000 in the same quarter last year primarily due to an increase in income before income taxes. The effective tax rate in the third quarter of fiscal 2023 was 29.4 percent as compared to 29.2 percent in the same quarter last year.

The Company repurchased 98,307 shares of its common stock with an average cost of $14.20 per share during the quarter ended March 31, 2023 pursuant to its April 2022 stock

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repurchase plan. As of March 31, 2023, a total of 113,038 shares or 31 percent of the shares authorized for repurchase under the plan remain available to purchase until the plan expires on April 28, 2023.

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 Thursday, April 27, 2023 at 9:00 a.m. (Pacific) to discuss its financial results.  The conference call can be accessed by dialing 1-877-692-8955 and referencing access code number 3665390.  An audio replay of the conference call will be available through Thursday, May 4, 2023 by dialing 1-866-207-1041 and referencing access code number 9361268.

For more financial information about the Company please visit the website at www.myprovident.com and click on the “Investor Relations” section.

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 potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing prices and supply chain disruptions, and any governmental or societal responses to new COVID-19 variants; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions, including the effects of inflation, and conditions within the securities markets; legislative and regulatory changes, including changes in banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules; and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other reports filed with and furnished to 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 2023 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.

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PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Financial Condition

(Unaudited –In Thousands, Except Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited - In Thousands, Except Earnings Per Share)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Operations – Sequential Quarters

(Unaudited – In Thousands, Except Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands, Except Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands, Except Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands)

(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.

PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands)

⁽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.

(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.

(2)	Includes uninsured deposits (adjusted lower by collateralized deposits) of approximately $177.8 million and $169.0 million at March 31, 2023 and 2022, respectively.

(3)	The average balance of deposit accounts was approximately $34 thousand and $31 thousand at March 31, 2023 and 2022, respectively.

(4)

The Bank had approximately $228.6 million and $321.4 million of remaining borrowing capacity at the FHLB – San Francisco, approximately $135.8 million and $168.4 million of borrowing capacity at the Federal Reserve Bank of San Francisco and $50.0 million and $67.0 million of borrowing capacity with its correspondent bank at March 31, 2023 and 2022, respectively.

PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands)

(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.

⁽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.

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PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands)

ASSET QUALITY: