Net Income of $1.90 Million in the September 2024 Quarter, Down 3% from the Sequential Quarter and Up 8% from the Comparable Quarter Last Year Net Interest Margin of 2.84% in the September 2024 Quarter, Up 10 Basis Points from the Sequential Quarter and Down Four Basis Points from the Comparable Quarter Last Year Loans Held for Investment of $1.05 Billion at September 30, 2024, Unchanged from June 30, 2024 Total Deposits of $863.9 Million at September 30, 2024, Down 3% from June 30, 2024 Non-Performing Asse ...

RIVERSIDE, Calif., Sept. 26, 2024 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. ("Company"), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B., today announced that the Company's Board of Directors authorized an extension of the September 28, 2023 Stock Repurchase Plan ("Plan") for a period of one year or until completed, whichever occurs first. There are 99,968 shares currently available to be purchased under the Plan. The Corporation will purchase the shares from time to tim ...

PROVIDENT FINANCIAL HOLDINGS REPORTS FOURTH QUARTER AND FISCAL YEAR 2024 RESULTS Net Income of $1.95 Million in the June 2024 Quarter Exhibit 99.1 3756 Central Avenue NEWS RELEASE Riverside, CA 92506 (951) 686-6060 Net Interest Margin of 2.74% in the June 2024 Quarter Loans Held for Investment of $1.05 Billion at June 30, 2024, Down 2% from June 30, 2023 Total Deposits of $888.3 Million at June 30, 2024, Down 7% from June 30, 2023 Non-Performing Assets to Total Assets Ratio of 0.20% at June 30, 2024 Non-Int ...

Core Points - Provident Financial Holdings, Inc. announced a quarterly cash dividend of $0.14 per share [1] - Shareholders of common stock as of August 15, 2024, will be eligible for the dividend [1] - The dividend payment is scheduled for September 5, 2024 [1] Summary by Category Dividend Announcement - The Board of Directors declared a cash dividend of $0.14 per share [1] - The record date for shareholders is August 15, 2024 [1] - Payment date for the dividend is set for September 5, 2024 [1]

Core Viewpoint - Provident Financial Holdings, Inc. will announce its earnings for the fourth quarter and fiscal year 2024 on July 29, 2024, prior to market opening [1] Group 1: Earnings Announcement - The earnings release will be distributed before the market opens on July 29, 2024 [1] - The company will host a conference call for institutional investors and bank analysts on July 30, 2024, at 9:00 a.m. Pacific Time to discuss the financial results [1] Group 2: Conference Call Details - Access to the conference call can be obtained by dialing 1-800-715-9871 and referencing Conference ID number 7361828 [1] - An audio replay of the conference call will be available until August 6, 2024, by dialing 1-800-770-2030 and referencing the same Conference ID number [1]

Financial Performance - Net income for the quarter ended March 31, 2024, was $1,495 thousand, down 35.6% from $2,323 thousand in the same quarter of 2023[13]. - Basic earnings per share for the quarter ended March 31, 2024, was $0.22, down from $0.33 in the same quarter of 2023, a decrease of 33.3%[13]. - Net income for the nine months ended March 31, 2024, was $5,398 million, compared to $6,784 million for the same period in 2023, reflecting a decrease of approximately 20.5%[24]. - Total comprehensive income for the quarter ended March 31, 2024, was $1,494 million, down from $2,331 million in the same quarter of 2023[15]. - Total non-interest income for the nine months ended March 31, 2024, was $2,474 million, a decrease of 16% from $2,940 million in the same period of 2023[13]. Asset and Liability Management - Total assets decreased from $1,332,948 thousand as of June 30, 2023, to $1,290,047 thousand as of March 31, 2024, representing a decline of approximately 3.2%[10]. - Total deposits decreased from $950,571 thousand as of June 30, 2023, to $908,122 thousand as of March 31, 2024, a decrease of 4.5%[10]. - Cash and cash equivalents decreased from $65,849 thousand as of June 30, 2023, to $51,731 thousand as of March 31, 2024, a decline of 21.4%[10]. - The corporation's total stockholders' equity slightly decreased from $129,687,000 as of June 30, 2023, to $129,506,000 as of March 31, 2024, reflecting a decrease of about 0.14%[10]. - The total loans held for investment, net of fair value adjustments, was $1,065.8 million as of March 31, 2024, a decrease from $1,077.6 million as of June 30, 2023[56]. Income and Expense Analysis - Total interest income increased to $13,807 thousand for the quarter ended March 31, 2024, compared to $12,008 thousand for the same quarter in 2023, reflecting a growth of 14.9%[13]. - Total non-interest income decreased to $848 thousand for the quarter ended March 31, 2024, from $981 thousand in the same quarter of 2023, a decline of 13.5%[13]. - Total non-interest expense increased to $7,168 thousand for the quarter ended March 31, 2024, compared to $6,924 thousand for the same quarter in 2023, an increase of 3.5%[13]. - Total interest expense for the quarter ended March 31, 2024, was $5,248 million, an increase of 101% from $2,607 million in the same quarter of 2023[13]. - The provision for credit losses for the quarter was $108,000, compared to a recovery of $35,000 in the same quarter of the previous year[84]. Credit Losses and Allowance Management - The allowance for credit losses (ACL) on loans increased to $7,108,000 as of March 31, 2024, up from $6,001,000 in the previous year[84]. - The ACL on loans as a percentage of gross loans held for investment rose to 0.67% for the quarter ended March 31, 2024, compared to 0.56% for the same period in 2023[84]. - The Corporation recognized a one-time increase of $1.2 million to its Allowance for Credit Losses (ACL) upon implementing CECL on July 1, 2023[71]. - The provision for credit losses included a recovery of $136,000 for single-family loans, while multi-family loans experienced a charge of $41,000[88]. - The total allowance for credit losses (ACL) at the end of the period increased to $7,108,000 from $7,000,000 at the beginning of the period, reflecting a provision for credit losses of $108,000[88]. Investment Securities and Fair Value - Total investment securities as of March 31, 2024, were valued at $137.924 million, with an unrealized loss of $15.8 million, compared to an unrealized loss of $18.9 million as of June 30, 2023[46]. - The fair value of loans held for investment at fair value is $1,054,000 as of March 31, 2024, reflecting management's estimates of specific credit risk attributes[124]. - The total fair value measurement using significant other unobservable inputs for the quarter ended March 31, 2023, was $1,458,000[125]. - The fair value of investment securities available for sale increased from $2,155,000 on June 30, 2023, to $1,935,000 on March 31, 2024[123]. - The total gains or losses included in earnings for Level 3 assets for the quarter ended March 31, 2024, show a loss of $28,000[124]. Dividends and Stock Repurchase - The company paid cash dividends of $0.14 per share in the quarter ended March 31, 2024[17]. - The Corporation's stock repurchase plan authorized the purchase of up to 350,353 shares as of September 28, 2023, with 237,592 shares remaining available for purchase as of March 31, 2024[155]. - During the quarter ended March 31, 2024, the Corporation repurchased 50,051 shares at a weighted average cost of $13.99 per share[155]. - A quarterly cash dividend of $0.14 per share was declared on April 25, 2024, payable on June 6, 2024[156]. - The average cost per share for stock repurchases over the nine months ended March 31, 2024, was $13.06[155].

Financial Data and Key Metrics Changes - The company originated $18.2 million of loans held for investment in Q3 2024, a decrease from $20.2 million in the prior quarter [16] - Net interest margin declined by 4 basis points to 2.74% for the quarter ended March 31, 2024, due to an increase in the cost of total interest-bearing liabilities [5] - The allowance for credit losses to gross loans held for investment increased to 67 basis points at March 31, 2024, from 65 basis points on December 31, 2023 [18] Business Line Data and Key Metrics Changes - Loans held for investment decreased by approximately $10 million compared to the previous quarter, with declines in single-family, multifamily, and commercial real estate loans [17] - New loan production is being originated at higher mortgage interest rates, with adjustable rate loans adjusting to higher rates [6] - The company recorded a $124,000 provision for credit losses in Q3 2024, primarily due to a longer estimated life of the single-family loan portfolio [18] Market Data and Key Metrics Changes - Many real estate investors have reduced their activity due to higher mortgage and interest rates, leading to increased consumer demand for adjustable rate mortgage products [3] - The company has $41.8 million in office-related commercial real estate loans, representing 3.9% of the loans held for investment portfolio [4] - The company expects loan originations in the June 2024 quarter to be similar to the current quarter, at the lower end of the recent range of $18 million to $75 million [3] Company Strategy and Development Direction - The company is focusing on operating efficiencies to lower operating expenses, maintaining a stable run rate of approximately $7.2 million per quarter [7] - The short-term strategy for balance sheet management is conservative, with a focus on slowing loan portfolio growth due to tighter liquidity conditions and an inverted yield curve [21] - The company believes maintaining cash dividends and prudent capital returns through stock buybacks is important for capital management [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underwriting characteristics of borrowers and collateral despite concerns regarding commercial real estate loans [4] - The company anticipates that current pressure on the net interest margin may soon subside due to opportunities to reprice maturing wholesale funding downward [20] - Management indicated that they could grow the loan portfolio when market conditions are favorable, but are currently cautious due to the inverted yield curve [41] Other Important Information - The company distributed approximately $2.9 million in cash dividends and repurchased about $2 million worth of common stock for the fiscal year-to-date [33] - The total interest-bearing liabilities composition improved with a decrease in the average balance of deposits and borrowings [8] Q&A Session All Questions and Answers Question: Why not replace FHLB advances with brokered CDs for a lower rate? - Management stated that while it is an option, they have chosen not to do so at this point due to the current composition of wholesale funding being appropriate from a risk standpoint [12] Question: Will there be a step-up in expenses in the fourth quarter? - Management indicated that they do not expect a large deviation from the $7.2 million run rate, with true-up items coming in at the end of the fiscal year [13] Question: Is there pent-up demand from real estate investors? - Management expressed uncertainty about pent-up demand, noting that it is sensitive to interest rates, but they believe they could grow the loan portfolio when conditions are right [41]

[Q3 FY2024 Earnings Release](index=1&type=section&id=PROVIDENT%20FINANCIAL%20HOLDINGS%20REPORTS%20THIRD%20QUARTER%20FISCAL%20YEAR%202024%20RESULTS) This section summarizes Provident Financial Holdings' third-quarter fiscal year 2024 results, highlighting key financial performance, condition, and detailed analysis [Performance Summary](index=1&type=section&id=1.1_Performance_Summary) Provident Financial Holdings reported a net income of $1.49 million for the third quarter of fiscal 2024, a 36% decrease year-over-year and a 30% decrease sequentially, primarily due to lower net interest income and increased credit loss provisions Q3 FY2024 Key Financial Results | Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | Q2 FY2024 | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income | $1.49 million | $2.32 million | -36% | $2.14 million | -30% | | Diluted EPS | $0.22 | $0.33 | -33% | $0.31 | -29% | | Return on Average Assets (ROA) | 0.47% | 0.72% | -25 bps | 0.66% | -19 bps | | Return on Average Equity (ROE) | 4.57% | 7.12% | -255 bps | 6.56% | -199 bps | - Management's current strategy focuses on patience amid economic uncertainty, managing operating expenses, maintaining sound credit and interest rate risk, and executing the common stock repurchase program[5](index=5&type=chunk) - For the nine months ended March 31, 2024, net income was **$5.40 million**, a **20% decrease** from **$6.78 million** in the prior year period, with diluted EPS at **$0.77**, down **18%** from **$0.94**[9](index=9&type=chunk) [Financial Condition Overview](index=1&type=section&id=1.2_Financial_Condition_Overview) As of March 31, 2024, total assets stood at $1.29 billion, with loans held for investment at $1.07 billion and total deposits at $908.1 million, while maintaining a strong liquidity position of approximately $491.9 million Balance Sheet Highlights (as of March 31, 2024) | Metric | Value | Change from June 30, 2023 | | :--- | :--- | :--- | | Total Assets | $1.29 Billion | -3% | | Loans Held for Investment | $1.07 Billion | -1% | | Total Deposits | $908.1 Million | -5% | | Non-Performing Assets to Total Assets | 0.17% | +7 bps | - The company has significant available liquidity, including **$269.2 million** from the FHLB, **$172.7 million** from the Federal Reserve Bank, and a **$50.0 million** unsecured facility, totaling **$491.9 million**[19](index=19&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=1.3_Detailed_Financial_Analysis) The company's financial performance was impacted by a compressed net interest margin of 2.74%, rising interest expenses, a provision for credit losses, increased non-interest expenses, and a higher efficiency ratio of 76.20% [Net Interest Income and Margin](index=2&type=section&id=1.3.1_Net_Interest_Income_and_Margin) Net interest income for Q3 FY2024 was $8.56 million, a 9% decrease from the prior year, as funding costs outpaced asset yields, compressing the net interest margin by 26 basis points to 2.74% Net Interest Margin Analysis (Q3 FY2024 vs Q3 FY2023) | Metric | Q3 FY2024 | Q3 FY2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $8.56 million | $9.40 million | -9% | | Net Interest Margin | 2.74% | 3.00% | -26 bps | | Avg. Yield on Earning Assets | 4.41% | 3.83% | +58 bps | | Avg. Cost of Interest-Bearing Liabilities | 1.86% | 0.93% | +93 bps | - Interest income on loans increased by **15% YoY** to **$12.68 million**, driven by a **56 basis point increase** in the average loan yield to **4.74%**[11](index=11&type=chunk) - Interest expense on deposits surged **204% YoY** to **$2.68 million**, as the average cost of deposits rose **81 basis points** to **1.18%**, largely due to an increase in higher-costing time deposits[16](index=16&type=chunk) - Interest expense on FHLB borrowings increased **49% YoY** to **$2.57 million**, due to a higher average balance and a **66 basis point increase** in the average cost to **4.63%**[18](index=18&type=chunk) [Provision for Credit Losses and Asset Quality](index=4&type=section&id=1.3.2_Provision_for_Credit_Losses_and_Asset_Quality) A provision for credit losses of $124,000 was recorded in Q3 FY2024, contrasting with a recovery in the prior quarter, primarily due to a longer estimated life of the single-family loan portfolio, while non-performing assets increased to $2.3 million - The provision for credit losses was primarily attributed to a longer estimated life of the single-family loan portfolio resulting from higher market interest rates and lower prepayment estimates[21](index=21&type=chunk) Asset Quality Indicators | Metric | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Non-Performing Assets | $2.3 million | $1.3 million | | Non-Performing Assets / Total Assets | 0.17% | 0.10% | | Allowance for Credit Losses / Gross Loans | 0.67% | 0.55% | - The allowance for credit losses increased from **$5.9 million** at June 30, 2023, to **$7.1 million** at March 31, 2024, primarily due to a **$1.2 million increase** upon the adoption of the CECL methodology on July 1, 2023[25](index=25&type=chunk) [Non-Interest Income and Expense](index=5&type=section&id=1.3.3_Non-Interest_Income_and_Expense) Non-interest income decreased 14% year-over-year to $848,000, while non-interest expense increased 4% to $7.17 million, leading to a deteriorated efficiency ratio of 76.20% - Non-interest income decreased primarily due to lower deposit account fees, card and processing fees, and other non-interest income[26](index=26&type=chunk) - Non-interest expense increased mainly due to higher salaries and employee benefits, equipment, and professional expenses[27](index=27&type=chunk) Efficiency Ratio | Period | Efficiency Ratio | | :--- | :--- | | Q3 FY2024 | 76.20% | | Q2 FY2024 | 76.11% | | Q3 FY2023 | 66.69% | [Capital Management](index=6&type=section&id=1.3.4_Capital_Management) The company continued its capital return strategy by repurchasing 50,051 shares of common stock at an average price of $13.99 per share during the quarter, with 237,592 shares remaining available for repurchase - During the quarter ended March 31, 2024, the Company repurchased **50,051 shares** of common stock at an average cost of **$13.99 per share**[31](index=31&type=chunk) - **237,592 shares** remain available for future purchase under the current stock repurchase program, which expires on September 28, 2024[31](index=31&type=chunk) [Consolidated Financial Statements & Highlights](index=8&type=section&id=Consolidated_Financial_Statements) This section presents the consolidated financial statements and key highlights, including balance sheet, income statement, loan and deposit compositions, asset quality, and capital ratios [Condensed Consolidated Statements of Financial Condition](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) The balance sheet shows total assets of $1.29 billion as of March 31, 2024, a decrease from $1.33 billion at June 30, 2023, primarily due to lower total deposits, while total stockholders' equity remained stable Balance Sheet Summary (in thousands) | Account | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Total Assets | $1,290,047 | $1,332,948 | | Loans held for investment, net | $1,065,761 | $1,077,629 | | Total Deposits | $908,122 | $950,571 | | Borrowings | $235,000 | $235,009 | | Total Stockholders' Equity | $129,506 | $129,687 | [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 FY2024, net interest income was $8.56 million, down from $9.40 million in the prior-year quarter, with total non-interest expense exceeding non-interest income, resulting in a net income of $1.49 million after provisions and taxes Income Statement Summary - Quarter Ended March 31 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Net Interest Income | $8,559 | $9,401 | | Provision for credit losses | $124 | $169 | | Non-interest income | $848 | $981 | | Non-interest expense | $7,168 | $6,924 | | **Net Income** | **$1,495** | **$2,323** | Sequential Quarter Income Statement Summary (in thousands) | Account | Q3 2024 (ended 3/31/24) | Q2 2024 (ended 12/31/23) | | :--- | :--- | :--- | | Net Interest Income | $8,559 | $8,774 | | Provision for (recovery of) credit losses | $124 | $(720) | | Non-interest income | $848 | $875 | | Non-interest expense | $7,168 | $7,344 | | **Net Income** | **$1,495** | **$2,141** | [Financial Highlights](index=14&type=section&id=Financial%20Highlights) This section provides detailed tables on key performance ratios, loan originations, asset quality, capital adequacy, and the composition of major balance sheet accounts, highlighting profitability declines and strong regulatory capital [Loan Origination and Composition](index=14&type=section&id=3.3.1_Loan_Origination_and_Composition) Total loans originated for investment in Q3 FY2024 were $18.2 million, a 66% decrease year-over-year, with single-family loans seeing the largest drop, while the total loan portfolio of $1.06 billion is primarily composed of single-family and multi-family mortgages Total Loans Originated for Investment (in thousands) | Loan Type | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Single-family | $8,946 | $39,543 | | Multi-family | $5,865 | $10,660 | | Commercial real estate | $2,172 | $3,422 | | **Total** | **$18,233** | **$53,885** | Loans Held for Investment Composition (as of March 31, 2024, in thousands) | Loan Type | Balance | Weighted Avg. Rate | | :--- | :--- | :--- | | Single-family | $517,039 | 4.39% | | Multi-family | $457,401 | 5.14% | | Commercial real estate | $83,136 | 6.36% | | **Total** | **$1,063,315** | **4.89%** | [Deposit and Borrowing Composition](index=18&type=section&id=3.3.2_Deposit_and_Borrowing_Composition) As of March 31, 2024, total deposits were $908.1 million, with a notable shift towards higher-cost time deposits, including an increase in brokered CDs, while total borrowings stood at $235.0 million Deposit Composition (as of March 31, 2024 vs 2023, in thousands) | Deposit Type | Balance 2024 | Balance 2023 | | :--- | :--- | :--- | | Non interest-bearing | $91,708 | $108,479 | | Interest-bearing Checking | $275,920 | $325,077 | | Savings | $247,847 | $305,403 | | Time deposits | $265,932 | $206,069 | | **Total Deposits** | **$908,122** | **$983,046** | - Brokered CDs included in time deposits totaled **$130.9 million** with a weighted average cost of **5.19%** at March 31, 2024, up from **$95.3 million** with a cost of **4.37%** a year prior[55](index=55&type=chunk) [Asset Quality and Capital Ratios](index=16&type=section&id=3.3.3_Asset_Quality_and_Capital_Ratios) Asset quality weakened, with non-performing loans increasing to $2.25 million (0.21% of net loans) at March 31, 2024, though the Bank's regulatory capital ratios remain strong and well above requirements Asset Quality Ratios | Ratio | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Non-performing loans to loans held for investment, net | 0.21% | 0.09% | | Non-performing assets to total assets | 0.17% | 0.07% | | Allowance for credit losses to gross loans | 0.67% | 0.56% | Bank Regulatory Capital Ratios (as of March 31, 2024) | Ratio | Value | | :--- | :--- | | Tier 1 leverage ratio | 9.70% | | Common equity tier 1 capital ratio | 18.77% | | Tier 1 risk-based capital ratio | 18.77% | | Total risk-based capital ratio | 19.85% |

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201%20-%20Financial%20Statements.) This section presents the unaudited interim condensed consolidated financial statements, including the adoption of the CECL standard and its impact on the allowance for credit losses [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) Total assets decreased by **2%** to **$1.30 billion**, driven by lower cash and investment securities, while deposits fell by **4%** and borrowings increased by **3%** Condensed Consolidated Statements of Financial Condition (in thousands) | | Dec 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$1,301,093** | **$1,332,948** | | Cash and cash equivalents | $46,878 | $65,849 | | Investment securities | $143,688 | $156,492 | | Loans held for investment, net | $1,075,765 | $1,077,629 | | **Total Liabilities** | **$1,171,432** | **$1,203,261** | | Total deposits | $911,980 | $950,571 | | Borrowings | $242,500 | $235,009 | | **Total Stockholders' Equity** | **$129,661** | **$129,687** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income decreased for Q2 and six months of FY2024 due to net interest margin compression, partially offset by a recovery of credit losses Key Operating Results (in thousands, except per share data) | Metric | Qtr Ended Dec 31, 2023 | Qtr Ended Dec 31, 2022 | Six Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $8,774 | $9,385 | $17,913 | $18,350 | | (Recovery of) Provision for Credit Losses | ($720) | $191 | ($175) | $261 | | Net Income | $2,141 | $2,371 | $3,903 | $4,461 | | Diluted EPS | $0.31 | $0.33 | $0.56 | $0.61 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity slightly decreased due to dividends, stock repurchases, and CECL adoption, largely offset by net income Changes in Stockholders' Equity (Six Months Ended Dec 31, 2023, in thousands) | Description | Amount | | :--- | :--- | | Balance at June 30, 2023 | $129,687 | | Net Income | $3,903 | | Adoption of CECL standard | ($824) | | Purchase of treasury stock | ($1,257) | | Cash dividends ($0.28/share) | ($1,957) | | Other, net | $59 | | **Balance at Dec 31, 2023** | **$129,661** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased for the six months ended December 31, 2023, primarily due to financing outflows partially offset by operating and investing activities Cash Flow Summary (Six Months Ended Dec 31, in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,458 | $5,212 | | Net cash provided by (used for) investing activities | $11,885 | ($84,364) | | Net cash (used for) provided by financing activities | ($34,314) | $80,578 | | **Net (decrease) increase in cash and cash equivalents** | **($18,971)** | **$1,426** | [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including the CECL standard adoption, investment securities, loans, fair value measurements, and stock repurchase programs - The Corporation adopted the CECL standard (ASC 326) on July 1, 2023. The transition resulted in a **$1.2 million** increase in the Allowance for Credit Losses (ACL), which was recorded as an **$824,000** decrease to retained earnings, net of tax[32](index=32&type=chunk) - As of December 31, 2023, the company held investment securities with **unrealized losses of $15.3 million**, primarily due to changes in interest rates rather than credit quality. The company has the ability and intent to hold these securities to maturity[43](index=43&type=chunk)[45](index=45&type=chunk) - On September 28, 2023, the Board approved a new stock repurchase plan for up to **350,353 shares**. During the quarter ended December 31, 2023, the company repurchased **62,710 shares** at an average price of **$11.96 per share**[145](index=145&type=chunk)[147](index=147&type=chunk) - On January 25, 2024, the Board of Directors declared a quarterly cash dividend of **$0.14 per share**, payable on March 7, 2024[149](index=149&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=57&type=section&id=ITEM%202%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations:) Management discusses financial condition and operating results, highlighting decreased net income due to net interest margin compression and the adoption of the CECL methodology [Comparison of Financial Condition](index=63&type=section&id=Comparison%20of%20Financial%20Condition%20at%20December%2031%2C%202023%20and%20June%2030%2C%202023) Total assets decreased by **2%** to **$1.30 billion**, driven by lower cash and investment securities, while deposits fell by **4%** and borrowings increased by **3%** - Total assets decreased by **$31.9 million (2%)** to **$1.30 billion**, primarily from a **$18.9 million** decrease in cash and a **$12.8 million** decrease in investment securities[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Total deposits decreased by **$38.6 million (4%)** to **$912.0 million**, as customers sought higher interest rates elsewhere. Core deposits fell by **$72.0 million**, while time deposits increased by **$33.4 million**[177](index=177&type=chunk)[178](index=178&type=chunk) - Total borrowings increased by **$7.5 million (3%)** to **$242.5 million** to augment the decline in deposits[179](index=179&type=chunk) [Comparison of Operating Results](index=65&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Quarters%20and%20Six%20Months%20Ended) Net income decreased for Q2 and six months of FY2024 due to net interest margin compression, partially offset by a recovery of credit losses Key Performance Metrics | Metric | Q2 FY2024 | Q2 FY2023 | Six Months FY2024 | Six Months FY2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in millions) | $2.1 | $2.4 | $3.9 | $4.5 | | Diluted EPS | $0.31 | $0.33 | $0.56 | $0.61 | | Return on Average Assets | 0.66% | 0.75% | 0.60% | 0.72% | | Return on Average Equity | 6.56% | 7.27% | 5.98% | 6.85% | | Net Interest Margin | 2.78% | 3.05% | 2.83% | 3.05% | - **Net interest income** decreased **7%** in Q2 FY2024 due to a **27 basis point** decline in **net interest margin** to **2.78%**, as the average cost of interest-bearing liabilities rose more significantly than the yield on interest-earning assets[187](index=187&type=chunk) - A **recovery of credit losses** of **$720,000** was recorded in Q2 FY2024, compared to a provision of **$191,000** in Q2 FY2023. This was mainly due to a shorter estimated loan portfolio life from changing interest rate and prepayment estimates[220](index=220&type=chunk) - Non-interest expense increased **8%** in Q2 FY2024 to **$7.3 million**, primarily due to higher salaries and employee benefits[231](index=231&type=chunk) [Asset Quality](index=82&type=section&id=Asset%20Quality) Asset quality remained stable with a slight increase in non-performing loans to **$1.8 million**, representing **0.16%** of loans held for investment Non-Performing Assets (in thousands) | Metric | Dec 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | | Total non-performing loans | $1,750 | $1,300 | | Real estate owned, net | $0 | $0 | | **Total non-performing assets** | **$1,750** | **$1,300** | | Non-performing loans as a % of loans held for investment, net | 0.16% | 0.12% | | Non-performing assets as a % of total assets | 0.13% | 0.10% | - Total classified assets, comprised of special mention and substandard loans, increased to **$2.6 million** at Dec 31, 2023 from **$2.4 million** at June 30, 2023[244](index=244&type=chunk) [Liquidity and Capital Resources](index=86&type=section&id=Liquidity%20and%20Capital%20Resources) The Corporation maintains adequate liquidity through deposits and borrowing facilities, remaining 'well-capitalized' with a **Tier 1 leverage ratio** of **9.48%** - Total available borrowing capacity was approximately **$499.5 million** at December 31, 2023, including **$266.5 million** from the FHLB and a **$183.0 million** discount window facility at the FRB[251](index=251&type=chunk)[252](index=252&type=chunk) - The Corporation (on an unconsolidated basis) had liquid assets of **$7.1 million** at December 31, 2023, to cover operating expenses and dividends[255](index=255&type=chunk) Bank Regulatory Capital Ratios (as of Dec 31, 2023) | Ratio | Actual | Minimum to Be Well Capitalized | | :--- | :--- | :--- | | Tier 1 leverage capital | 9.48% | 5.00% | | CET1 capital | 18.20% | 6.50% | | Tier 1 capital | 18.20% | 8.00% | | Total capital | 19.24% | 10.00% | [Quantitative and Qualitative Disclosures about Market Risk](index=92&type=section&id=ITEM%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Corporation manages interest rate risk by analyzing Net Portfolio Value (NPV) and Net Interest Income (NII) sensitivity under various rate scenarios Net Portfolio Value (NPV) Sensitivity Analysis (as of Dec 31, 2023) | Rate Change (bp) | NPV Change (in thousands) | Sensitivity Measure (bp change) | | :--- | :--- | :--- | | +300 | ($275) | 7 | | +200 | $884 | 12 | | +100 | $1,468 | 13 | | **Base Case** | **$119,961** | **—** | | -100 | ($5,410) | (41) | | -200 | ($18,577) | (137) | | -300 | ($15,025) | (115) | Net Interest Income (NII) Sensitivity Analysis (Next 12 Months) | Rate Change (bp) | Change in NII (Dec 31, 2023) | Change in NII (June 30, 2023) | | :--- | :--- | :--- | | +200 | -0.62% | -5.26% | | +100 | 0.57% | -1.95% | | -100 | -3.58% | 1.25% | | -200 | -7.51% | -0.59% | - The interest rate gap analysis as of December 31, 2023, shows a cumulative negative gap of **$110.3 million** for maturities under 12 months, indicating more liabilities than assets are scheduled to reprice in the short term[276](index=276&type=chunk) [Controls and Procedures](index=99&type=section&id=ITEM%204%20-%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were **effective** as of December 31, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were **effective** as of December 31, 2023[288](index=288&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[289](index=289&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=99&type=section&id=ITEM%201%20-%20Legal%20Proceedings) The Corporation is involved in various claims and lawsuits but expects no **material adverse effect** on its financial condition or operations - The Corporation is not party to any pending legal proceedings that it believes would have a **material adverse effect** on its financial condition, operations or cash flows[290](index=290&type=chunk) [Risk Factors](index=101&type=section&id=ITEM%201A%20-%20Risk%20Factors) No **material changes** to the risk factors previously disclosed in the Corporation's Annual Report on Form 10-K for the fiscal year ended June 30, 2023 - No **material changes** in risk factors were reported since the last Annual Report on Form 10-K[292](index=292&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=101&type=section&id=ITEM%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation repurchased **62,710 shares** of common stock at an average price of **$11.96 per share** under its publicly announced plan Equity Securities Purchases (Q2 FY2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2023 | 21,132 | $12.87 | | Nov 2023 | 38,026 | $11.50 | | Dec 2023 | 3,552 | $11.47 | | **Total** | **62,710** | **$11.96** | - On September 28, 2023, a new stock repurchase plan was approved, authorizing the purchase of **350,353 shares**. As of December 31, 2023, **287,643 shares** remain available for repurchase[293](index=293&type=chunk) [Other Information](index=101&type=section&id=ITEM%205%20-%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[298](index=298&type=chunk) [Exhibits](index=102&type=section&id=ITEM%206%20-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO and XBRL data files

Financial Data and Key Metrics Changes - In the most recent quarter, the company originated $20.2 million of loans held for investment, an increase from $18.5 million in the prior sequential quarter [3] - The net interest margin for the quarter ended December 31, 2023, declined by 10 basis points to 2.78% compared to the previous quarter, attributed to a 13 basis point increase in the average yield on total interest-earning assets and a 24 basis point increase in the cost of total interest-bearing liabilities [11] - Non-performing assets increased to $1.8 million from $1.4 million on September 30, 2023, while early-stage delinquency balances were $340,000 at December 31, 2023 [10] Business Line Data and Key Metrics Changes - Loans held for investment increased by $3.6 million compared to the September 30, 2023, ending balance sheet, with small increases in single-family, multifamily, commercial real estate, and construction loan categories [32] - The company reported $17.8 million of loan principal payments and payoffs, down from $23 million in the September 2023 quarter [31] - The average cost of deposits increased by 19 basis points to 99 basis points for the quarter ended December 31, 2023, compared to 80 basis points in the prior quarter [34] Market Data and Key Metrics Changes - The company noted a tightening of underwriting requirements and increased pricing across all product lines due to higher funding costs and tighter liquidity conditions [9] - There is a growing consumer demand for single-family adjustable-rate mortgage products as a result of higher fixed-rate mortgage interest rates [9] Company Strategy and Development Direction - The company is adopting a more conservative short-term strategy for balance sheet management, focusing on slowing the loan portfolio due to tighter liquidity conditions [37] - The management emphasized the importance of maintaining cash dividends and has distributed approximately $2 million of cash dividends to shareholders and repurchased approximately $1.2 million worth of common stock [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underwriting characteristics of borrowers and collateral, despite concerns regarding commercial real estate loans [5] - The company anticipates that the current pressure on the net interest margin may soon subside due to opportunities to reprice maturing wholesale funding downward [13] - Management indicated that the liquidity environment in the industry is expected to improve, which could provide opportunities for growth in 2024 [42] Other Important Information - The company recorded a $720,000 recovery of credit losses in the December 2023 quarter, primarily due to a decrease in the average life of the loan portfolio [33] - Operating expenses increased to $7.3 million in the December 2023 quarter, higher than the stable run rate of $7.2 million per quarter, mainly due to higher salaries and employee benefits expenses [36] Q&A Session Summary Question: Margin outlook with potential Fed rate cuts - Management noted that the balance sheet has a longer tail for assets repricing upward due to hybrid arms and that relief on the funding side is being observed [18][19] Question: Opportunities for growth in 2024 - Management highlighted that the liquidity environment is crucial for growth opportunities and that recent Fed comments suggest a potential for lower rates in 2024, which could improve deposit gathering [42][43] Question: Demand for mortgages and rate impacts - Management indicated that interest rates have already decreased, leading to increased activity, and further reductions could stimulate refinancing and loan activity [50]