Financial Performance - Net income for the quarter ended September 30, 2025, was $1,681 thousand, a decrease of 11.5% compared to $1,900 thousand for the same quarter in 2024[12]. - Basic earnings per share for the quarter ended September 30, 2025, was $0.26, compared to $0.28 for the same quarter in 2024, a decrease of 7.1%[12]. - The corporation reported a net income of $1,681,000 for the quarter ended September 30, 2025, compared to $1,900,000 for the same quarter in 2024, indicating a decrease of 11.6%[133]. - The corporation's diluted earnings per share for the quarter ended September 30, 2025, was $0.25, down from $0.28 in the same quarter of 2024, a decline of 10.7%[133]. - Total non-interest income decreased to $813 thousand for the quarter ended September 30, 2025, down from $899 thousand in the same quarter of 2024, a decline of 9.6%[12]. - Total non-interest expense increased to $7,634,000, up 1.48% from $7,523,000 year-over-year[12]. Assets and Liabilities - As of September 30, 2025, total assets decreased to $1,230,807 thousand from $1,245,613 thousand as of June 30, 2025, representing a decline of approximately 1.2%[10]. - Total liabilities decreased to $1,102,437 thousand as of September 30, 2025, from $1,117,068 thousand as of June 30, 2025, a reduction of approximately 1.3%[10]. - The company’s total stockholders' equity as of September 30, 2025, was $128,370 thousand, down from $128,545 thousand as of June 30, 2025, reflecting a decrease of 0.1%[10]. - Cash and cash equivalents at the end of the period were $49,407,000, a decrease from $48,193,000 year-over-year[20]. Interest Income and Expenses - Total interest income increased slightly to $14,146 thousand for the quarter ended September 30, 2025, compared to $14,075 thousand for the same quarter in 2024, reflecting a growth of 0.5%[12]. - Net interest income after recovery of credit losses rose to $9,556 thousand for the quarter ended September 30, 2025, up from $9,313 thousand in the same quarter of 2024, indicating a year-over-year increase of 2.6%[12]. - Cash paid for interest was $5,652,000, slightly up from $5,608,000 in the same quarter of 2024[20]. Credit Losses and Allowance - The allowance for credit losses (ACL) is calculated quarterly, reflecting management's estimates based on historical loss rates and current economic conditions[53]. - The total recoveries for the quarter were reported as $0, indicating no recoveries during this period[64]. - The ACL on loans as a percentage of gross loans held for investment is 0.56%, down from 0.61% in the previous year[64]. - The provision for credit losses is adjusted quarterly to maintain the ACL at appropriate levels based on historical loss experience and current conditions[62]. - The total current period gross charge-offs were reported as $1,365,000, indicating a significant increase compared to previous periods[51]. Loan Portfolio - Total loans held for investment amounted to $1,037,825,000, with single-family loans at $549,535,000, multi-family loans at $415,175,000, and commercial real estate loans at $71,010,000[38]. - Loans held for investment, net of fair value adjustments, totaled $1,041.8 million as of September 30, 2025, slightly down from $1,045.7 million on June 30, 2025[37]. - The total balance of non-owner occupied loans was $60,754,000, with 21% in Inland Empire and 48% in Southern California[43]. - The total commercial real estate portfolio amounted to $72,766,000, with 54% in Southern California and 27% in other regions[46]. Non-Performing Loans - As of September 30, 2025, the total recorded investment in non-performing loans was $1.892 million, down from $1.421 million on June 30, 2025, indicating a decrease in non-performing loans[71][73]. - The average recorded investment in non-performing loans for the quarter ended September 30, 2025, was $1.4 million, compared to $2.4 million for the same quarter in 2024, reflecting a significant reduction[75]. - Interest income recognized from non-performing loans for the quarter ended September 30, 2025, was $24,000, down from $39,000 in the same quarter of 2024[75][76]. Investment Securities - Total investment securities amounted to $105,401,000 as of September 30, 2025, with a fair value of $96,198,000, reflecting unrealized losses of $9,365,000[30]. - The total investment securities held to maturity amounted to $103,877,000, with a fair value of $94,654,000, reflecting unrealized losses of $9,365,000[30]. - The fair value of investment securities available for sale was $1,544,000 as of September 30, 2025, with $1,469,000 classified under Level 2[99]. Dividends and Shareholder Returns - Cash dividends of $0.14 per share were paid in the quarter ended September 30, 2025[15]. - The corporation's cash dividend declared on October 23, 2025, is $0.14 per share, payable on December 4, 2025[134].

Financial Data and Key Metrics Changes - In Q1 2026, the company originated $29.6 million in loans held for investment, a 1% increase from $29.4 million in the previous quarter [5] - Loan principal payments and payoffs decreased by 18% to $34.5 million from $42 million in the previous quarter [5] - Nonperforming assets increased to $1.9 million from $1.4 million in the previous quarter [6] - The allowance for credit losses to gross loans held for investment decreased to 56 basis points from 62 basis points [7] - Net interest margin increased by six basis points to 3% compared to 2.94% in the previous quarter [8] Business Line Data and Key Metrics Changes - Loans held for investment decreased by approximately $4 million, with declines in multifamily and commercial real estate loans, partially offset by an increase in single-family loans [6] - The weighted average rate of loans originated in September was 6.62%, compared to 5.2% for loans held for investment as of September 30, 2025 [9] Market Data and Key Metrics Changes - The company has approximately $107 million of loans repricing in December, expected to increase to a weighted average interest rate of 6.89% [10] - The average cost of deposits increased to 1.34%, while the cost of borrowing also increased to 4.59% [9] Company Strategy and Development Direction - The company is focusing on prudent adjustments to underwriting requirements to encourage higher loan origination volume [6] - The short-term strategy for balance sheet management is more growth-oriented than the previous fiscal year, with a disciplined loan growth approach [12] - The company aims to maintain cash dividends and has repurchased approximately 67,000 shares of common stock [13] Management's Comments on Operating Environment and Future Outlook - Management noted that real estate investors remain cautious due to market uncertainties, although there has been an increase in activity as mortgage interest rates decline [5] - The company expects modest or moderate net interest margin expansion in the upcoming quarters [20] - Management is optimistic about the potential for refinance activity due to declining mortgage interest rates [16] Other Important Information - Operating expenses remained unchanged at $7.6 million, representing a normalized run rate [12] - The company distributed $921,000 in cash dividends and repurchased approximately $1.1 million worth of common stock in the first quarter [14] Q&A Session Summary Question: Challenges in loan growth trajectory for 2026 - Management acknowledged hesitancy among borrowers in multifamily and commercial real estate due to higher mortgage rates, but noted that declining rates could present more opportunities [16] Question: Expectation for margin expansion - Management indicated that it is reasonable to expect margin expansion similar to the previous quarter, citing a growth in net interest margin from 2.74% to 3% over the past year [20] Question: Impact of lower interest rates on loan portfolio - Management explained that lower interest rates could lead to increased refinance activity, shortening the average life of the loan portfolio and potentially impacting credit loss provisions [22][24]

myprovident.com Safe Harbor Statement This presentation 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 various risks and uncertainties. When considering these forward-looking sta ...

Financial Performance - Net income for the first quarter of fiscal 2026 was $1.68 million, up 3% from the previous quarter but down 12% from the same quarter last year[2]. - Net interest income increased by $314,000, or 4%, to $8.93 million compared to the same quarter last year[6]. - Non-interest income decreased by 10% to $813,000, primarily due to a decline in other non-interest income[21]. - Net income for the quarter was $1,681,000, a decline from $1,900,000 year-over-year, which is a decrease of 11.6%[39]. - Basic earnings per share decreased to $0.26 from $0.28 in the same quarter last year, a decline of 7.1%[41]. - The efficiency ratio improved to 78.35% from 79.06% year-over-year, indicating better cost management[41]. Interest and Loans - Net interest margin increased to 3.00%, up six basis points from the previous quarter and up 16 basis points from the same quarter last year[1]. - Interest income on loans receivable increased by 1% to $13.13 million, with an average loan yield rising to 5.05%[7]. - Total loans originated for investment increased to $29,640,000, compared to $28,949,000 in the same quarter of 2024, a growth of 2.4%[41]. - The net interest margin improved to 3.00% from 2.84% year-over-year, reflecting enhanced interest income generation[41]. - Total loans originated for investment reached $29.640 million in the quarter ended September 30, 2025, up from $28.949 million in the same quarter last year, representing an increase of 2.39%[43]. Assets and Deposits - Total assets as of September 30, 2025, were $1,230,807,000, a decrease from $1,245,613,000 as of June 30, 2025[35]. - Total deposits decreased by 2% to $874.8 million compared to the previous quarter[1]. - Total deposits as of September 30, 2025, were $874,839,000, down from $888,772,000 as of June 30, 2025, reflecting a decrease of approximately 1.05%[35]. - Total investment securities held to maturity decreased to $103.877 million as of September 30, 2025, from $124.268 million a year earlier[45]. - The company reported total deposits of $884.9 million, slightly up from $880.6 million in the previous year, with an interest rate of 1.34%[52]. Non-Performing Assets - Non-performing assets to total assets ratio rose to 0.15%, up from 0.11% in the previous quarter[1]. - Non-performing loans to loans held for investment increased to 0.18% as of September 30, 2025, compared to 0.14% as of June 30, 2025[45]. - Non-performing loans totaled $1.9 million as of September 30, 2025, an increase from $2.1 million a year earlier[54]. Equity and Stock Repurchase - Total stockholders' equity as of September 30, 2025, was $128,370,000, a slight decrease from $128,545,000 as of June 30, 2025[35]. - The Company repurchased 66,707 shares of its common stock at an average cost of $15.75 per share during the quarter ended September 30, 2025[26]. - As of September 30, 2025, a total of 150,321 shares remained available for future purchase under the Company's current repurchase program[26]. Tax and Expenses - The provision for income taxes was $1.05 million, up 34% from the same quarter last year, with an effective tax rate of 38.5%[25]. - Non-interest expense increased by 1% to $7.63 million, driven by higher salaries and employee benefits[23]. - The allowance for credit losses was $5,780,000 as of September 30, 2025, indicating a slight decrease from $6,424,000 as of June 30, 2025[35]. Conference Call and Future Outlook - The Company will host a conference call for institutional investors and bank analysts on October 29, 2025, to discuss its financial results[27]. - An audio replay of the conference call will be available until November 5, 2025[28].

Core Viewpoint - Provident Financial reported quarterly earnings of $0.25 per share, missing the Zacks Consensus Estimate of $0.29 per share, representing a -13.79% earnings surprise [1] - The company has struggled to meet earnings expectations, surpassing consensus EPS estimates only once in the last four quarters [2] Financial Performance - Revenues for the quarter ended September 2025 were $9.74 million, missing the Zacks Consensus Estimate by 5.41%, compared to $9.52 million in the same quarter last year [2] - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $10.55 million, and for the current fiscal year, it is $1.19 on revenues of $41.9 million [7] Stock Performance - Provident Financial shares have declined approximately 1.3% year-to-date, while the S&P 500 has gained 16.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Industry Outlook - The Financial - Savings and Loan industry is currently in the top 36% of Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Core Points - The company reported a net income of $1.68 million for the quarter ended September 30, 2025, which is a 3% increase from the previous quarter but a 12% decrease from the same quarter last year [3][4][41] - The net interest margin improved to 3.00%, up six basis points from the previous quarter and up 16 basis points from the same quarter last year [3][6][41] - Total loans held for investment decreased slightly to $1.04 billion from $1.05 billion at the end of the previous quarter [3][8] - Total deposits were $874.8 million, down 2% from the previous quarter [3][12] Financial Performance - The company’s return on average assets was 0.55%, compared to 0.53% in the previous quarter and 0.61% in the same quarter last year [5][41] - Return on average stockholders' equity was 5.17%, up from 5.01% in the previous quarter but down from 5.78% in the same quarter last year [5][41] - Net interest income increased by $314,000, or 4%, to $8.93 million compared to the same quarter last year, driven by a higher net interest margin [6][41] Loan and Deposit Trends - Interest income on loans receivable increased by $108,000, or 1%, to $13.13 million, primarily due to a higher average loan yield [7][41] - The average yield on loans receivable increased by eight basis points to 5.05% [7][41] - Total loans originated for investment were $29.6 million, a 2% increase from the same quarter last year [8][41] Non-Interest Income and Expenses - Non-interest income decreased by $86,000, or 10%, to $813,000, primarily due to a decline in other non-interest income [20][41] - Non-interest expense increased by $111,000, or 1%, to $7.63 million, mainly due to higher salaries and employee benefits [21][41] - The efficiency ratio improved to 78.35% from 79.08% in the same quarter last year, reflecting higher net interest income [22][41] Tax and Shareholder Returns - The provision for income taxes was $1.05 million, up 34% from the same quarter last year [23][41] - The effective tax rate increased to 38.5% compared to 29.3% in the same quarter last year [24][41] - The company repurchased 66,707 shares at an average cost of $15.75 per share during the quarter [24][41]

Group 1 - The bank has not experienced growth for a long time and is primarily exposed to residential mortgages, with a roughly equal split between single-family and multi-family properties in Southern California [1] - The investment strategy focuses on long-only investments, evaluating companies from an operational and buy-and-hold perspective, rather than market-driven dynamics [1] - The articles emphasize the importance of understanding the long-term earnings potential of companies and the competitive dynamics within their industries [1] Group 2 - The investment philosophy suggests that only a small fraction of companies should be considered a buy at any given time, with most recommendations being holds [1] - Hold articles are intended to provide valuable information for future investors and introduce a healthy skepticism in a generally bullish market [1]

[PART I](index=4&type=section&id=PART%20I) [Item 1. Business](index=4&type=section&id=Item%201.%20Business) The Corporation operates as a holding company for Provident Savings Bank, F.S.B., providing community banking, investment, and trustee services in Southern California, with consolidated assets of $1.25 billion at June 30, 2025 - The Corporation's core business is community banking via Provident Savings Bank, F.S.B., serving Southern California's Inland Empire region[14](index=14&type=chunk) Consolidated Financial Highlights (June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | | :--------------------- | :------------ | :------------ | | Total Assets | $1.25 billion | $1.27 billion | | Total Deposits | $888.8 million | $888.3 million | | Stockholders' Equity | $128.5 million | $129.9 million | [General](index=4&type=section&id=General) Provident Financial Holdings, Inc. is the holding company for Provident Savings Bank, F.S.B., providing community banking, investment, and trustee services, with $1.25 billion in assets at June 30, 2025 - The Corporation primarily operates through its wholly-owned subsidiary, Provident Savings Bank, F.S.B., regulated by the OCC and FDIC[12](index=12&type=chunk)[13](index=13&type=chunk) - The Bank's activities encompass community banking, investment services, and real estate trustee services, generating revenue from loan interest, investments, and banking fees[14](index=14&type=chunk)[15](index=15&type=chunk) Consolidated Financial Position (June 30, 2025) | Metric | Amount (Millions) | | :------------------- | :---------------- | | Total Assets | $1,250 | | Total Deposits | $888.8 | | Stockholders' Equity | $128.5 | [Subsequent Event](index=4&type=section&id=Subsequent%20Event) The Board declared a cash dividend of $0.14 per share on July 24, 2025, payable September 4, 2025 - A cash dividend of **$0.14 per share** was declared on July 24, 2025, scheduled for payment on September 4, 2025[17](index=17&type=chunk) [Market Area](index=6&type=section&id=Market%20Area) The Bank operates 13 offices in Southern California's Inland Empire, facing a 5.9% unemployment rate and modest economic growth, with slight declines in the housing market - The Bank's primary market is Southern California's Inland Empire, operating **13 full-service banking offices** in Riverside and San Bernardino counties[18](index=18&type=chunk) Unemployment Rates (June 2025 vs. June 2024) | Region | June 2025 | June 2024 | | :------------- | :-------- | :-------- | | Inland Empire | 5.9% | 5.3% | | California | 5.4% | 5.2% | | Nationwide | 4.1% | 4.1% | - Inland Empire economic growth is projected to modestly increase in 2025, outperforming California but not the national economy, supported by consumer credit and logistics[20](index=20&type=chunk) California Housing Market Data (June 2025 vs. June 2024) | Metric | June 2025 | June 2024 | YoY Change | | :-------------------------------- | :---------- | :---------- | :--------- | | Seasonally Adjusted Annualized Sales | 264,260 | 264,960 | -0.3% | | Median Home Price | $899,560 | $900,720 | -0.1% | [Competition](index=6&type=section&id=Competition) The Bank faces intense competition from larger financial institutions and non-banking entities with superior resources, potentially limiting its growth and profitability - The Bank operates in a highly competitive market, facing larger national and regional commercial banks, credit unions, and non-banking entities[22](index=22&type=chunk)[23](index=23&type=chunk) - Larger competitors possess superior financial and marketing resources, potentially constraining the Bank's future growth and profitability[24](index=24&type=chunk) [Reportable Segments](index=8&type=section&id=Reportable%20Segments) The Corporation evaluates financial performance on a company-wide basis, thus operating as a single reportable segment - The Corporation operates as a **single operating and reportable segment**, with financial performance assessed on a corporation-wide basis[25](index=25&type=chunk) [Internet Website](index=8&type=section&id=Internet%20Website) The Corporation provides SEC filings (10-K, 10-Q, 8-K) free of charge on its website, though this information is not incorporated into the Form 10-K - The Corporation provides SEC filings (10-K, 10-Q, 8-K) free of charge on its website (www.myprovident.com) and through the SEC's website (www.sec.gov)[26](index=26&type=chunk) [Lending Activities](index=8&type=section&id=Lending%20Activities) The Bank primarily originates single-family, multi-family, and commercial real estate loans, with net loans of $1.05 billion (84% of assets) at June 30, 2025, and a 62% increase in originations for fiscal 2025 - The Bank's lending focuses on single-family, multi-family, and commercial real estate loans, with net loans held for investment at **$1.05 billion** (**84% of total assets**) as of June 30, 2025[27](index=27&type=chunk) Composition of Loans Held for Investment (June 30, 2025 vs. 2024) | Loan Type | June 30, 2025 (Millions) | June 30, 2025 (Percent) | June 30, 2024 (Millions) | June 30, 2024 (Percent) | | :-------------------- | :----------------------- | :---------------------- | :----------------------- | :---------------------- | | Single-family | $544.4 | 52.23% | $518.1 | 49.30% | | Multi-family | $423.4 | 40.62% | $445.2 | 42.36% | | Commercial real estate| $72.8 | 6.98% | $83.3 | 7.93% | | Construction | $0.4 | 0.04% | $2.7 | 0.26% | | Other | $0.1 | 0.01% | $0.1 | 0.01% | | Commercial business | $1.3 | 0.12% | $1.4 | 0.13% | | Consumer | $0.1 | —% | $0.1 | 0.01% | | **Total Gross Loans** | **$1,042.4** | **100.00%** | **$1,050.8** | **100.00%** | Loan Originations for Investment (Fiscal Year Ended June 30) | Loan Type | 2025 (Millions) | 2024 (Millions) | | :-------------------- | :-------------- | :-------------- | | Single-family | $92.5 | $40.9 | | Multi-family | $25.1 | $22.1 | | Commercial real estate| $3.8 | $9.8 | | Construction | $0.7 | $1.5 | | Commercial business | $0.6 | $1.3 | | **Total** | **$122.7** | **$75.5** | [Loan Servicing](index=23&type=section&id=Loan%20Servicing) The Bank services $34.4 million in loans for other investors, earning fees, with servicing assets amortized and an impairment reserve of $151,000 at June 30, 2025 - The Bank services loans for other investors, earning fees for payment collection and loan management[75](index=75&type=chunk) Loan Servicing Portfolio and Impairment Reserve (June 30) | Metric | June 30, 2025 (Millions) | June 30, 2024 (Millions) | | :-------------------------------- | :----------------------- | :----------------------- | | Loans serviced for others | $34.4 | $34.6 | | Servicing assets carrying value | $0.3 | $0.3 | | Servicing assets fair value | $0.1 | $0.1 | | Required impairment reserve | $0.2 | $0.2 | [Asset Quality](index=23&type=section&id=Asset%20Quality) Asset quality improved in fiscal 2025, with non-performing assets decreasing to $1.4 million (0.11% of total assets) and ACL on loans decreasing by 9% to $6.4 million Non-Performing Assets (June 30) | Metric | June 30, 2025 (Millions) | June 30, 2024 (Millions) | | :----------------------------------------- | :----------------------- | :----------------------- | | Total non-performing assets, net | $1.4 | $2.6 | | Non-performing loans as % of net loans | 0.14% | 0.25% | | Non-performing assets as % of total assets | 0.11% | 0.20% | Allowance for Credit Losses (ACL) on Loans (June 30) | Metric | June 30, 2025 (Millions) | June 30, 2024 (Millions) | | :----------------------------------------- | :----------------------- | :----------------------- | | ACL on loans | $6.4 | $7.1 | | ACL on loans as % of gross loans | 0.62% | 0.67% | - The Bank reported **no charge-offs or recoveries** across all loan categories in fiscal years 2025 and 2024[38](index=38&type=chunk)[54](index=54&type=chunk)[64](index=64&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk)[90](index=90&type=chunk) [Investment Securities Activities](index=30&type=section&id=Investment%20Securities%20Activities) The Bank's investment portfolio decreased by 16% to $111.0 million at June 30, 2025, with $10.4 million in unrealized losses primarily due to interest rate changes, not credit risk - The Bank's investment policy prioritizes liquidity, complements lending, and seeks favorable returns while managing interest rate and credit risk[93](index=93&type=chunk) Investment Securities Portfolio (June 30) | Metric | June 30, 2025 (Millions) | June 30, 2024 (Millions) | YoY Change | | :-------------------------------- | :----------------------- | :----------------------- | :--------- | | Total Investment Securities | $111.0 | $131.9 | -16% | | Unrealized Holding Losses | $10.4 | $15.8 | -34.2% | - Unrealized losses stem from interest rate changes, not credit quality, as most securities are U.S. government-guaranteed GSE obligations, intended to be held to maturity or cost recovery[98](index=98&type=chunk)[101](index=101&type=chunk)[506](index=506&type=chunk)[509](index=509&type=chunk) [Deposit Activities and Other Sources of Funds](index=33&type=section&id=Deposit%20Activities%20and%20Other%20Sources%20of%20Funds) Deposits and loan repayments are primary funding sources, supplemented by FHLB, FRB, and correspondent bank borrowings, with total deposits at $888.8 million and $474.8 million in available borrowing capacity at June 30, 2025 - Deposits and loan repayments serve as primary funding sources, supplemented by FHLB, FRB, and correspondent bank borrowings[102](index=102&type=chunk) Deposit Composition (June 30, 2025 vs. 2024) | Deposit Type | June 30, 2025 (Millions) | June 30, 2024 (Millions) | YoY Change (Millions) | | :------------------ | :----------------------- | :----------------------- | :-------------------- | | Transaction accounts| $576.5 | $614.5 | $(38.1) | | Time deposits | $312.3 | $273.9 | $38.4 | | **Total Deposits** | **$888.8** | **$888.3** | **$0.4** | Borrowings and Available Capacity (June 30, 2025) | Source | Outstanding (Millions) | Available Capacity (Millions) | | :-------------------------- | :--------------------- | :---------------------------- | | FHLB – San Francisco | $213.0 | $282.3 | | FRB of San Francisco | $0 | $142.5 | | Correspondent Bank | $0 | $50.0 | | **Total Available Capacity**| | **$474.8** | [Subsidiary Activities](index=38&type=section&id=Subsidiary%20Activities) The Bank has three wholly-owned subsidiaries, with Provident Financial Corp active in trustee services and real estate, and a total investment of $14,000 at June 30, 2025 - The Bank's wholly-owned subsidiaries include Provident Financial Corp (PFC), Profed Mortgage, Inc., and First Service Corporation[121](index=121&type=chunk) - PFC acts as a trustee for real estate transactions and holds real estate for investment, while other subsidiaries are inactive[121](index=121&type=chunk) Bank's Investment in Subsidiaries (June 30) | Metric | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :-------------------------- | :------------------------ | :------------------------ | | Total Investment in Subsidiaries | $14 | $8 | [Regulation](index=40&type=section&id=Regulation) The Corporation and Bank are extensively regulated by federal agencies, covering operations, capital, and consumer protection, with the Bank 'well capitalized' and meeting QTL requirements at June 30, 2025 - The Bank is extensively regulated by the OCC, FDIC, and FRB, covering operations, lending limits, deposit insurance, capital requirements, and consumer protection[124](index=124&type=chunk) Key Regulatory Compliance Metrics (June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Qualified Thrift Lender (QTL) Test | 93.0% | 92.3% | | OCC Annual Assessments (Thousands) | $167 | $179 | | FDIC Annual Assessments (Thousands)| $573 | $601 | - The Bank was categorized as **'well capitalized'** at June 30, 2025, exceeding all minimum regulatory capital requirements[150](index=150&type=chunk)[376](index=376&type=chunk) - The Corporation adopted the CECL accounting standard on July 1, 2023, resulting in a one-time **$824,000 net-of-tax charge** to retained earnings[148](index=148&type=chunk)[309](index=309&type=chunk) [Taxation](index=56&type=section&id=Taxation) The Corporation is subject to federal and state income taxation, with the Bank holding a $9.0 million pre-1988 bad debt reserve and paying $43,000 in excise tax on stock repurchases in fiscal 2025 - The Bank's bad debt deductions are based on specific charge-offs, holding a pre-1988 bad debt reserve of approximately **$9.0 million** for tax purposes[187](index=187&type=chunk) Tax-Related Financials (Fiscal Year Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | Excise Tax on Stock Repurchases | $43 | $26 | | Bank Cash Dividends to Provident | $9,000 | $7,000 | | Provident Cash Dividends to Shareholders | $3,800 | $3,887 | - The Corporation's net state tax rate in California was **8.6%** at June 30, 2025, and it is exempt from Delaware corporate income tax[194](index=194&type=chunk)[195](index=195&type=chunk) [Employees and Human Capital](index=58&type=section&id=Employees%20and%20Human%20Capital) As of June 30, 2025, the Bank had 163 full-time equivalent employees with an average tenure of 8.5 years, and a diverse workforce, though turnover slightly increased to 24.3% Employee Demographics and Tenure (June 30, 2025) | Metric | Value | | :-------------------- | :---- | | Full-time equivalent employees | 163 | | Female workforce | 69.8% | | Male workforce | 30.2% | | Average employee tenure | 8.5 years | Employee Turnover Rate (Fiscal Year Ended June 30) | Metric | 2025 | 2024 | | :------------- | :---- | :---- | | Turnover Rate | 24.3% | 23.3% | - The Bank offers market-competitive compensation, benefits, and development opportunities to attract and retain talent, fostering high employee loyalty[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) [Executive Officers](index=60&type=section&id=Executive%20Officers) The executive leadership team includes Donavon P. Ternes (President/CEO) and Peter C. Fan (SVP/CFO), alongside other experienced officers leading key banking divisions - Donavon P. Ternes serves as **President and Chief Executive Officer** for both the Corporation and the Bank[201](index=201&type=chunk)[203](index=203&type=chunk) - Peter C. Fan was appointed **Senior Vice President, Chief Financial Officer, and Corporate Secretary** effective May 12, 2025[201](index=201&type=chunk)[204](index=204&type=chunk) - Other key executive officers include Robert 'Scott' Ritter (SVP, Single-Family Division), David S. Weiant (SVP, Chief Lending Officer), and Gwendolyn L. Wertz (SVP, Retail Banking Division)[201](index=201&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) The Corporation faces significant risks from macroeconomic conditions, lending activities, interest rate fluctuations, extensive regulations, cybersecurity threats, and reliance on Bank dividends - Economic downturns, especially in Southern California, can adversely affect the business due to concentrated real estate loans[209](index=209&type=chunk) - Lending activities, particularly single-family (**52% of loans**) and multi-family/commercial real estate (**48% of loans**), carry significant credit risk from economic shifts or natural disasters like wildfires[216](index=216&type=chunk)[218](index=218&type=chunk)[229](index=229&type=chunk) - Fluctuating interest rates, monetary policy, and inflation can negatively impact net interest income, securities portfolio value, and overall profitability[215](index=215&type=chunk)[233](index=233&type=chunk)[237](index=237&type=chunk) - Extensive regulatory requirements (accounting, AML, cybersecurity, DEI/ESG) pose compliance and reputational risks, with non-compliance potentially leading to fines or sanctions[241](index=241&type=chunk)[244](index=244&type=chunk)[271](index=271&type=chunk)[273](index=273&type=chunk) - Cybersecurity threats, data breaches, fraud, and third-party vendor reliance are significant operational risks, potentially causing financial losses, reputational damage, and increased regulatory scrutiny[251](index=251&type=chunk)[252](index=252&type=chunk)[259](index=259&type=chunk) [Risks Related to Macroeconomic Conditions](index=61&type=section&id=Risks%20Related%20to%20Macroeconomic%20Conditions) The Corporation's performance is highly vulnerable to Southern California's economic conditions, with 64% of real estate loans concentrated there, and faces risks from policy changes and geopolitical tensions - Approximately **64% of real estate loans** are concentrated in Southern California, making the Corporation highly vulnerable to regional economic downturns[209](index=209&type=chunk) - Economic deterioration could lead to higher loan delinquencies, increased ACL, slower foreclosed asset sales, and decreased demand for products and services[213](index=213&type=chunk) - U.S. immigration policy changes and global geopolitical tensions could disrupt regional industries, increase costs, and impair borrowers' repayment abilities[210](index=210&type=chunk)[211](index=211&type=chunk)[215](index=215&type=chunk) [Risks Related to our Lending Activities](index=63&type=section&id=Risks%20Related%20to%20our%20Lending%20Activities) The Bank's lending activities face significant credit risk from single-family (52%) and multi-family/commercial real estate (48%) loans, with potential for insufficient ACL and increased defaults from California wildfires - Single-family residential loans (**52% of portfolio**) are highly sensitive to regional economic conditions, with non-traditional loans carrying higher default risk[216](index=216&type=chunk)[217](index=217&type=chunk)[225](index=225&type=chunk) - Multi-family and commercial real estate loans (**48% of portfolio**) involve higher principal, are less liquid, and depend on property income, increasing credit risk and potential default losses[218](index=218&type=chunk)[219](index=219&type=chunk)[221](index=221&type=chunk) - The Allowance for Credit Losses (ACL) relies on subjective estimates; inaccuracies could lead to an insufficient allowance and negatively impact net income[224](index=224&type=chunk) - California wildfires pose ongoing risks, potentially increasing loan defaults, reducing repayment capacity, and impairing collateral values, requiring increased loan loss provisions[229](index=229&type=chunk) [Risks Related to Market and Interest Rate Changes](index=67&type=section&id=Risks%20Related%20to%20Market%20and%20Interest%20Rate%20Changes) The Corporation's profitability is highly sensitive to interest rate fluctuations, which can impact net interest income, deposit costs, mortgage default risk, and the fair value of the securities portfolio - Net interest income is highly sensitive to interest rate fluctuations, influenced by economic conditions and FRB policies[233](index=233&type=chunk) - Rising interest rates can increase deposit retention costs, reduce net interest income, and potentially increase default rates on adjustable-rate mortgage (ARM) loans[235](index=235&type=chunk)[236](index=236&type=chunk) - Interest rate changes directly impact the fair value of the securities portfolio, with unrealized losses on available-for-sale securities affecting stockholders' equity[237](index=237&type=chunk)[240](index=240&type=chunk) [Risks Related to Regulatory, Legal and Compliance Matters](index=69&type=section&id=Risks%20Related%20to%20Regulatory%2C%20Legal%20and%20Compliance%20Matters) The Corporation faces extensive regulatory, legal, and compliance risks, including CECL-driven earnings volatility, anti-money laundering non-compliance, evolving climate/DEI/ESG policies, and reliance on restricted Bank dividends - The CECL model, adopted July 1, 2023, introduces increased earnings volatility due to its reliance on macroeconomic forecasts for credit loss estimation[243](index=243&type=chunk) - Non-compliance with anti-money laundering laws (USA Patriot Act, Bank Secrecy Act) can result in significant fines, sanctions, and reputational harm[244](index=244&type=chunk) - Evolving federal policies on climate change and DEI/ESG initiatives may lead to reputational harm, increased compliance costs, litigation, or limitations on federal program participation[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - The Corporation's holding company revenue substantially depends on Bank dividends, which are subject to regulatory restrictions and the Bank's financial performance[274](index=274&type=chunk) [Risks Related to Cybersecurity, Data and Fraud](index=73&type=section&id=Risks%20Related%20to%20Cybersecurity%2C%20Data%20and%20Fraud) The Corporation faces significant cybersecurity, data breach, and fraud risks, with potential for financial losses and reputational damage, exacerbated by reliance on third-party vendors - Cybersecurity threats, including breaches, fraudulent access, and malware, pose significant risks to the Corporation's information systems and confidential data[251](index=251&type=chunk) - Data breaches involving third-party processors or payment systems can lead to liability for fraudulent transactions, fines, and reputational damage[252](index=252&type=chunk) - Reliance on external vendors for key business infrastructure components exposes the Corporation to risks of operational disruption from vendor failures or difficulties[258](index=258&type=chunk)[262](index=262&type=chunk) [Risks Related to Our Business and Industry Generally](index=77&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry%20Generally) The Corporation faces risks from ineffective liquidity management, reputational damage, the need for additional capital, rapid technological changes, natural disasters in California, and potential loan repurchase obligations - Ineffective liquidity management, due to funding disruptions or economic downturns, could significantly impair the Corporation's ability to finance operations and meet obligations[261](index=261&type=chunk) - Maintaining a strong reputation is vital; negative publicity or misconduct could result in customer loss, litigation, and increased regulation[263](index=263&type=chunk) - The Corporation may need to raise additional capital for growth or losses, but availability and cost are uncertain, potentially leading to dilution or adverse regulatory action[264](index=264&type=chunk)[265](index=265&type=chunk) - Rapid technological changes in financial services require substantial investment; failure to keep pace could result in a competitive disadvantage[266](index=266&type=chunk) - Geographic concentration in California exposes the Corporation to material losses from natural disasters affecting collateral values and borrower repayment capacity[267](index=267&type=chunk) [Item 1B. Unresolved Staff Comments](index=81&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The Corporation has no unresolved staff comments from the SEC - There are no unresolved staff comments[275](index=275&type=chunk) [Item 1C. Cybersecurity](index=81&type=section&id=Item%201C.%20Cybersecurity) The Corporation integrates cybersecurity risk management into its overall framework, with dedicated IT risk management, third-party experts, and Board oversight, as disclosed in this Form 10-K - Cybersecurity risk management is a fundamental part of the Corporation's overall risk framework, involving processes, assessments, and controls to identify and mitigate risks[276](index=276&type=chunk) - The information technology risk management department is led by a Chief Information Officer (CIO) and an Information Security Officer (ISO) with extensive cybersecurity expertise[278](index=278&type=chunk) - The Board of Directors, particularly the Audit Committee, oversees cybersecurity risk management, receiving regular reports to guide decisions and resource allocation[280](index=280&type=chunk) [Item 2. Properties](index=83&type=section&id=Item%202.%20Properties) At June 30, 2025, the Corporation's net book value of properties was $9.3 million, operating 13 retail banking offices (six owned, seven leased) in Southern California Properties and Equipment Net Book Value (June 30, 2025) | Metric | Amount (Millions) | | :-------------------------------- | :---------------- | | Net Book Value of Properties, etc. | $9.3 | - The Corporation operates **13 retail banking offices** in Riverside and San Bernardino counties, with six owned and seven leased[281](index=281&type=chunk) [Item 3. Legal Proceedings](index=83&type=section&id=Item%203.%20Legal%20Proceedings) The Corporation is involved in routine legal proceedings but none are expected to have a material adverse effect on its financial condition, operations, or cash flows - The Corporation is involved in routine legal proceedings, but none are expected to have a material adverse effect on its financial condition, operations, or cash flows[282](index=282&type=chunk)[283](index=283&type=chunk) [Item 4. Mine Safety Disclosures](index=85&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Corporation - Mine Safety Disclosures are not applicable to the Corporation[285](index=285&type=chunk) [PART II](index=85&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=85&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Corporation's common stock trades on NASDAQ under 'PROV', with 405 shareholders of record, and a stock repurchase plan authorized for up to 334,773 shares - The Corporation's common stock trades on the NASDAQ Global Select Market under the symbol **'PROV'**[287](index=287&type=chunk) - The Board of Directors has declared quarterly cash dividends on common stock since September 30, 2002, with future payments subject to financial and regulatory factors[288](index=288&type=chunk) Stock Repurchase Activity (Q4 Fiscal 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Remaining Under Plan | | :----------------------------- | :--------------------- | :--------------------------- | :-------------------------- | | April 1, 2025 – April 30, 2025 | 32,672 | $14.37 | 260,460 | | May 1, 2025 – May 31, 2025 | 32,824 | $15.45 | 227,636 | | June 1, 2025 – June 30, 2025 | 10,608 | $15.59 | 217,028 | | **Total** | **76,104** | **$15.00** | **217,028** | Cumulative Total Shareholder Return (Indexed to $100 on June 30, 2020) | Date | PROV | NASDAQ Stock Index | NASDAQ Bank Index | | :--------- | :----- | :----------------- | :---------------- | | 6/30/2020 | $100.00 | $100.00 | $100.00 | | 6/30/2021 | $133.88 | $144.47 | $172.87 | | 6/30/2022 | $118.93 | $123.91 | $141.17 | | 6/30/2023 | $106.52 | $147.56 | $136.81 | | 6/30/2024 | $109.06 | $182.40 | $187.05 | | 6/30/2025 | $140.40 | $210.65 | $249.72 | [Item 6. [Reserved]](index=87&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=87&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income decreased by 15% to $6.3 million in fiscal 2025, driven by higher expenses and lower non-interest income, while total assets decreased by 2% to $1.25 billion Net Income and EPS (Fiscal Year Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change (Millions) | | :-------------------- | :-------------- | :-------------- | :-------------------- | | Net Income | $6.3 | $7.4 | $(1.1) |\n| Diluted EPS | $0.93 | $1.06 | $(0.13) | Key Performance Ratios (Fiscal Year Ended June 30) | Metric | 2025 | 2024 | | :-------------------- | :---- | :---- | | Efficiency Ratio | 79% | 73% | | Return on Average Assets | 0.50% | 0.57% | | Return on Average Stockholders' Equity | 4.79% | 5.62% | - The Corporation's operating strategy focuses on moderate asset growth, expanding diverse loan types, and optimizing the deposit mix towards lower-cost accounts to improve net interest margin[316](index=316&type=chunk) - Critical accounting estimates, including ACL and Provision for Income Taxes, involve significant management judgment and assumptions that can materially impact financial statements[307](index=307&type=chunk)[308](index=308&type=chunk)[311](index=311&type=chunk) [General](index=89&type=section&id=General) Provident Financial Holdings, Inc. operates as a single business segment through Provident Savings Bank, F.S.B., offering banking services and loans in California, facing risks from economic and regulatory changes - Provident Financial Holdings, Inc. operates as a **single business segment** through its subsidiary, Provident Savings Bank, F.S.B.[303](index=303&type=chunk) - The Bank's activities include deposit gathering, banking services, and originating various loan types, primarily in California[303](index=303&type=chunk) Consolidated Financial Position (June 30, 2025) | Metric | Amount (Millions) | | :------------------- | :---------------- | | Total Assets | $1,250 | | Total Deposits | $888.8 | | Stockholders' Equity | $128.5 | [Critical Accounting Estimates](index=91&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates, primarily for ACL and income taxes, involve significant judgment, with CECL adoption on July 1, 2023, resulting in a $1.2 million ACL increase and an $824,000 net-of-tax charge - Critical accounting estimates primarily relate to the Allowance for Credit Losses (ACL) on loans and investment securities, and the Provision for Income Taxes[307](index=307&type=chunk) - The Corporation adopted ASC 326 (CECL) on July 1, 2023, resulting in a one-time **$1.2 million increase** to its ACL and an **$824,000 net-of-tax charge** to retained earnings[309](index=309&type=chunk) - The ACL is maintained at a level sufficient for expected losses based on historical experience, current conditions, and reasonable forecasts, with quarterly adjustments[310](index=310&type=chunk) - Income tax accounting involves subjective assumptions and judgments regarding deferred tax assets and liabilities, with future realization dependent on projected taxable income[311](index=311&type=chunk) [Executive Summary and Operating Strategy](index=91&type=section&id=Executive%20Summary%20and%20Operating%20Strategy) Provident Savings Bank focuses on community banking in Southern California, aiming for moderate asset growth by expanding loans and optimizing deposits to improve net interest margin, while managing economic and wildfire risks - The Corporation's operating strategy aims for moderate growth by expanding its loan portfolio and optimizing its deposit mix towards lower-cost accounts[316](index=316&type=chunk) - The primary goal is to enhance core revenue by achieving a higher net interest margin and increasing net interest income[316](index=316&type=chunk) - The California economic environment, including real estate values and the office sector, poses heightened risks, mitigated by the Bank's prudent risk management and underwriting[319](index=319&type=chunk) - Ongoing California wildfire risks could elevate credit risk, potentially requiring higher provisions for loan losses, despite no material direct impact from recent events[320](index=320&type=chunk) [Comparison of Financial Condition at June 30, 2025 and 2024](index=95&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202025%20and%202024) At June 30, 2025, total assets decreased by 2% to $1.25 billion, driven by reductions in investment securities and loans, while deposits remained stable and borrowings decreased Key Financial Condition Changes (June 30, 2025 vs. 2024) | Metric | June 30, 2025 (Millions) | June 30, 2024 (Millions) | YoY Change (Millions) | YoY Change (%) | | :-------------------------- | :----------------------- | :----------------------- | :-------------------- | :------------- | | Total Assets | $1,250 | $1,272 | $(26.6) | -2% | | Cash & Cash Equivalents | $53.1 | $51.4 | $1.7 | 3% | | Investment Securities | $111.0 | $131.9 | $(20.9) | -16% | | Loans Held for Investment, net | $1,050 | $1,053 | $(7.2) | -1% | | Total Deposits | $888.8 | $888.3 | $0.4 | 0% | | Borrowings | $213.1 | $238.5 | $(25.4) | -11% | | Total Stockholders' Equity | $128.5 | $129.9 | $(1.4) | -1% | - Loan originations for investment increased by **62% to $122.7 million** in fiscal 2025, driven by higher loan prepayments[325](index=325&type=chunk) - Transaction accounts decreased by **6%**, while time deposits increased by **14%**, shifting the deposit mix[327](index=327&type=chunk) [Comparison of Operating Results for the Fiscal Years Ended June 30, 2025 and 2024](index=97&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Fiscal%20Years%20Ended%20June%2030%2C%202025%20and%202024) Net income decreased by 15% to $6.3 million in fiscal 2025, primarily due to increased non-interest expense and decreased non-interest income, despite higher net interest income and credit loss recovery Net Income and EPS (Fiscal Year Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change (Millions) | | :-------------------- | :-------------- | :-------------- | :-------------------- | | Net Income | $6.3 | $7.4 | $(1.1) | | Diluted EPS | $0.93 | $1.06 | $(0.13) | Net Interest Income and Margin (Fiscal Year Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change (Millions) | YoY Change (bps) | | :-------------------- | :-------------- | :-------------- | :-------------------- | :--------------- | | Net Interest Income | $35.5 | $34.9 | $0.5 | | | Net Interest Margin | 2.93% | 2.78% | | 15 | Non-Interest Income and Expense (Fiscal Year Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | YoY Change (Millions) | YoY Change (%) | | :-------------------- | :-------------- | :-------------- | :-------------------- | :------------- | | Non-Interest Income | $3.5 | $3.9 | $(0.4) | -10% | | Non-Interest Expense | $30.8 | $28.5 | $2.3 | 8% | Provision for (Recovery of) Credit Losses (Fiscal Year Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | Recovery of Credit Losses | $(666) | $(63) | [Average Balances, Interest and Average Yields/Costs](index=102&type=section&id=Average%20Balances%2C%20Interest%20and%20Average%20Yields%2FCosts) In fiscal 2025, average interest-earning assets and interest-bearing liabilities both decreased by 3%, while net interest margin improved by 15 bps to 2.93% due to higher loan yields Average Balances, Interest, and Yields/Costs (Fiscal Year Ended June 30) | Metric | 2025 Average Balance (Millions) | 2025 Interest (Millions) | 2025 Yield/Cost | 2024 Average Balance (Millions) | 2024 Interest (Millions) | 2024 Yield/Cost | | :-------------------------------- | :------------------------------ | :----------------------- | :-------------- | :------------------------------ | :----------------------- | :-------------- | | Loans receivable, net | $1,051.4 | $52.5 | 5.00% | $1,069.6 | $50.2 | 4.69% | | Investment securities | $121.4 | $1.9 | 1.53% | $144.5 | $2.1 | 1.43% | | Total interest-earning assets | $1,212.1 | $56.6 | 4.67% | $1,254.3 | $54.7 | 4.36% | | Total deposits | $881.7 | $11.2 | 1.27% | $916.1 | $9.7 | 1.06% | | Borrowings | $216.3 | $9.9 | 4.59% | $221.4 | $10.1 | 4.58% | | Total interest-bearing liabilities| $1,098.0 | $21.2 | 1.93% | $1,137.4 | $19.8 | 1.74% | | Net interest income | | $35.5 | | | $34.9 | | | Interest rate spread | | | 2.74% | | | 2.62% | | Net interest margin | | | 2.93% | | | 2.78% | [Rate/Volume Variance](index=103&type=section&id=Rate%2FVolume%20Variance) Net interest income increased by $546,000 in fiscal 2025, driven by a positive rate variance of $2.815 million, offsetting a negative volume variance of $2.191 million Rate/Volume Variance on Net Interest Income (Fiscal Year Ended June 30, 2025 vs. 2024) | (In Thousands) | Rate (Increase/Decrease) | Volume (Increase/Decrease) | Rate/Volume (Increase/Decrease) | Net (Increase/Decrease) | | :----------------------------------------- | :----------------------- | :------------------------- | :------------------------------ | :---------------------- | | Total net change in income on interest-earning assets | $3,180 | $(1,218) | $(68) | $1,894 | | Total net change in expense on interest-bearing liabilities | $365 | $973 | $10 | $1,348 | | **Net increase (decrease) in net interest income** | **$2,815** | **$(2,191)** | **$(78)** | **$546** | [Liquidity and Capital Resources](index=103&type=section&id=Liquidity%20and%20Capital%20Resources) The Bank's liquidity is sourced from deposits, loan repayments, and borrowings, with $53.1 million in cash and $474.8 million in available borrowing capacity, and remains 'well capitalized' at June 30, 2025 - The Bank's primary liquidity sources are deposits, loan repayments, and investment securities, supplemented by FHLB, FRB, and correspondent bank borrowings[363](index=363&type=chunk) Available Borrowing Capacity (June 30, 2025) | Source | Available Capacity (Millions) | | :-------------------------- | :---------------------------- | | FHLB – San Francisco | $282.3 | | FRB of San Francisco | $142.5 | | Correspondent Bank | $50.0 | | **Total Available Capacity**| **$474.8** | - The Bank's average liquidity ratio decreased to **8.9%** in Q4 fiscal 2025 from **16.6%** in Q4 fiscal 2024, but management deems it sufficient[369](index=369&type=chunk) - The Bank was **'well capitalized'** at June 30, 2025, with **Tier 1 Leverage Capital of 10.1%**, **CET1 Capital of 19.5%**, **Tier 1 Risk-based Capital of 19.5%**, and **Total Risk-based Capital of 20.5%**[376](index=376&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=107&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Corporation manages interest rate risk through its Asset-Liability Committee, using an internal model to assess NPV sensitivity, and was asset sensitive at June 30, 2025, with an improved NPV ratio of 12.15% - The Corporation's primary market risk is interest rate risk, managed by aligning repricing mismatches between assets and liabilities[377](index=377&type=chunk)[378](index=378&type=chunk) Estimated Changes in Net Portfolio Value (NPV) at June 30, 2025 (Millions) | Basis Points Change in Rates | NPV Change | NPV as Percentage of Portfolio Value Assets | | :--------------------------- | :--------- | :------------------------------------------ | | +300 bp | $(18.9) | 10.91% | | +200 bp | $(5.7) | 11.82% | | +100 bp | $1.0 | 12.25% | | - | $0 | 12.15% | | -100 bp | $(1.5) | 12.02% | | -200 bp | $(13.1) | 11.17% | | -300 bp | $(13.2) | 11.14% | - At June 30, 2025, the Corporation was asset sensitive, projecting increased net interest income in a rising rate environment (except at +300 bp) and decreased income in a falling rate environment over the next 12 months[395](index=395&type=chunk)[396](index=396&type=chunk) Net Interest Income Sensitivity to Rate Changes (Fiscal Year Ended June 30) | Basis Point (bp) Change in Rates | 2025 Change in Net Interest Income | 2024 Change in Net Interest Income | | :------------------------------- | :--------------------------------- | :--------------------------------- | | +300 bp | -1.35% | -8.12% | | +200 bp | +2.01% | -3.45% | | +100 bp | +2.23% | -0.51% | | -100 bp | -1.80% | -0.67% | | -200 bp | -3.24% | -1.15% | | -300 bp | -6.38% | -1.86% | [Item 8. Financial Statements and Supplementary Data](index=114&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the Consolidated Financial Statements and accompanying Notes by reference into this Form 10-K - The Consolidated Financial Statements and Notes are incorporated by reference[400](index=400&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=114&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[401](index=401&type=chunk) [Item 9A. Controls and Procedures](index=114&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2025, with no material changes during the quarter - The Corporation's disclosure controls and procedures were deemed effective at a reasonable assurance level as of June 30, 2025[402](index=402&type=chunk) - No material changes occurred in the Corporation's internal control over financial reporting during the quarter ended June 30, 2025[402](index=402&type=chunk) - Management concluded that the Corporation's internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[406](index=406&type=chunk) - The Corporation complied with federal laws and regulations pertaining to insider loans and dividend restrictions during the fiscal year ended June 30, 2025[407](index=407&type=chunk) [Item 9B. Other Information](index=117&type=section&id=Item%209B.%20Other%20Information) This section contains no additional information [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=117&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the Corporation - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[411](index=411&type=chunk) [PART III](index=117&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=117&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on Directors, Executive Officers, and Corporate Governance is incorporated by reference from the Proxy Statement, including the Code of Ethics and Audit Committee details - Information on Directors, Executive Officers, and Corporate Governance is incorporated by reference from the Proxy Statement[413](index=413&type=chunk)[414](index=414&type=chunk) - The Corporation maintains a Code of Ethics for all directors, officers, and employees, available on its website[415](index=415&type=chunk) - The Audit Committee comprises three independent directors, with Judy A. Carpenter designated as the audit committee financial expert[416](index=416&type=chunk) - No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[418](index=418&type=chunk) [Item 11. Executive Compensation](index=119&type=section&id=Item%2011.%20Executive%20Compensation) Executive and director compensation information is incorporated by reference from the Corporation's Proxy Statement - Executive and director compensation information is incorporated by reference from the Proxy Statement[420](index=420&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=119&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the Proxy Statement, with 373,650 securities to be issued under equity compensation plans at a weighted average exercise price of $15.51 - Security ownership information for beneficial owners and management is incorporated by reference from the Proxy Statement[421](index=421&type=chunk) - The Corporation is not aware of any arrangements that could lead to a change in control[421](index=421&type=chunk) Equity Compensation Plan Information (June 30, 2025) | Plan Category | Securities to Be Issued Upon Exercise | Weighted Average Exercise Price | Securities Remaining Available | | :-------------------------- | :------------------------------------ | :------------------------------ | :----------------------------- | | 2010 Equity Incentive Plan | 15,000 | $20.19 | — | | 2013 Equity Incentive Plan | 104,650 | $18.16 (Stock Options) | — | | 2022 Equity Incentive Plan | 254,000 | $13.25 (Stock Options) | 119,000 | | **Total** | **373,650** | **$15.51** | **119,000** | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the Corporation's Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement[424](index=424&type=chunk)[425](index=425&type=chunk) [Item 14. Principal Accountant Fees and Services](index=120&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the Corporation's Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the Proxy Statement[426](index=426&type=chunk) [PART IV](index=122&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=122&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed as part of this Form 10-K, with many incorporated by reference from previous SEC filings - The Consolidated Financial Statements are included starting on page 79 of this Form 10-K[428](index=428&type=chunk) - Financial statement schedules are omitted as the required information is inapplicable[428](index=428&type=chunk) - A detailed list of exhibits, including corporate governance documents, compensation agreements, and equity plans, is provided, with many incorporated by reference[429](index=429&type=chunk)[430](index=430&type=chunk) [Item 16. Form 10-K Summary](index=126&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[432](index=432&type=chunk)

Financial Data and Key Metrics Changes - In the fourth quarter, the company originated $29.4 million of loans held for investment, a 5% increase from $27.9 million in the prior quarter [5] - Loan principal payments and payoffs increased by 83% to $42 million from $23 million in the previous quarter [5] - The outstanding balance of loans held for investment decreased by $13.2 million from the previous quarter [9] - The net interest margin decreased by eight basis points to 2.94% compared to 3.02% in the prior quarter [9] - The average cost of deposits increased to 1.33%, up seven basis points, while the cost of borrowing increased to 4.58% [9] Business Line Data and Key Metrics Changes - Loans held for investment decreased primarily in multifamily, commercial real estate, and commercial business loans, partially offset by a small increase in single-family loans [6] - The company continues to see moderate activity in loans held for investment despite cautious behavior from real estate investors [6] - The weighted average rate of loans originated in June was 6.69%, compared to 5.16% for loans held for investment as of June 30, 2025 [10] Market Data and Key Metrics Changes - The company is monitoring commercial real estate loans, particularly those secured by office buildings, with a total exposure of $39.5 million, representing 3.8% of loans held for investment [7] - The company has approximately $117 million of loans repricing in September and $98 million repricing in December, both expected to increase by 15 basis points [11][27] Company Strategy and Development Direction - The company aims for disciplined growth of the loan portfolio, recognizing the shift in monetary policy and the reversal of the inverted yield curve [13] - The strategy includes maintaining cash dividends and utilizing stock buyback programs as a responsible capital management tool [15] - The company is focused on improving operating efficiencies to lower operating expenses, with a projected run rate of $7.6 million to $7.8 million per quarter for fiscal 2026 [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted that current credit quality remains strong, with nonperforming assets unchanged at $1.4 million [6] - The company is optimistic about the future, suggesting opportunities for expansion of the net interest margin in the upcoming quarters [12] - Management indicated that the mix of loans may shift based on performance, with a preference for a balanced portfolio of single-family and multifamily loans [19] Other Important Information - The company repurchased approximately 76,000 shares of common stock in June and distributed about $3.8 million in cash dividends to shareholders for the fiscal year [15][16] - The company has exceeded well-capitalized capital ratios, allowing for the execution of its business plan without complications [14] Q&A Session Summary Question: Has the recent uptick in prepayments shifted your view on portfolio mix or originations? - Management indicated that they prefer a 50% mix of single-family and multifamily loans but will adjust based on performance, noting recent strength in multifamily and commercial real estate [19] Question: Is there an efficiency ratio that you target? - Management stated that the current operating expense baseline can support future growth, and as the loan portfolio grows, the efficiency ratio is expected to improve over time [21] Question: Is the increased payout this quarter a function of increased competition? - Management responded that both pricing and structure are factors, with tighter underwriting characteristics contributing to credit quality [25] Question: What is the dollar value of loans repricing in the next two quarters? - Management confirmed approximately $117 million repricing in September and $98 million in December, with specific interest rates provided [27][28] Question: What is the seasonality of operating expenses? - Management noted that March typically sees higher operating expenses due to employer taxes, while July 1 sees merit increases impacting future quarters [28][29] Question: What is the range of the loan deposit ratio? - Management explained that a higher loan to deposit ratio is typical for their business model, with a recent reduction from the 120s to the mid-one teens [30][32]

Financial Performance - Net income decreased approximately 12%[17] - Pre-Provision, Pre-Tax Income decreased approximately 5%[17] - Net Interest Income decreased approximately 4%[17] - Non-Interest Income decreased approximately 3%[17] - Operating Expenses decreased approximately 3%[17] - Net Interest Margin decreased eight basis points to 2.94%[17] Balance Sheet & Asset Quality - Loans Held for Investment balance decreased approximately 1%[41] - Total Deposits balance decreased approximately 1%[41] - Total Borrowings balance decreased approximately 1%[41] - Non-Performing Assets to Total Assets Ratio was unchanged at 0.11%[60] Capital Management - The company purchased approximately 76,000 shares of common stock in the fourth quarter of fiscal 2025[90]