[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]

Financial Performance - Net income for the quarter ended September 30, 2023, was $1,762 thousand, down from $2,090 thousand in the same quarter of 2022, reflecting a decrease of about 15.7%[13]. - Basic earnings per share decreased from $0.29 in the quarter ended September 30, 2022, to $0.25 in the quarter ended September 30, 2023, a decline of approximately 13.8%[13]. - Total non-interest income for the quarter ended September 30, 2023, was $751 thousand, a decrease of 25.1% from $1,003 thousand in the same quarter of 2022[13]. - Total non-interest expense was $6,856 million, a slight decrease from $6,941 million year-over-year[13]. - Cash dividends of $0.14 per share were paid in the quarter ended September 30, 2023[16]. Asset and Liability Changes - Total assets decreased from $1,332,948 thousand as of June 30, 2023, to $1,313,115 thousand as of September 30, 2023, representing a decline of approximately 1.5%[10]. - Total liabilities decreased to $1,183,910,000 as of September 30, 2023, compared to $1,203,261,000 as of June 30, 2023, a decrease of 1.6%[10]. - Total stockholders' equity decreased from $129,687 thousand as of June 30, 2023, to $129,205 thousand as of September 30, 2023, a decline of about 0.4%[10]. - Total deposits decreased from $950,571 thousand as of June 30, 2023, to $931,131 thousand as of September 30, 2023, a decline of approximately 2.0%[10]. Interest Income and Expenses - Total interest income increased to $13,342 thousand for the quarter ended September 30, 2023, compared to $9,898 thousand for the same quarter in 2022, marking a growth of approximately 34.9%[13]. - Net interest income after provision for credit losses was $8,594 thousand for the quarter ended September 30, 2023, compared to $8,895 thousand for the same quarter in 2022, a decrease of about 3.4%[13]. Credit Loss Provisions - The provision for credit losses increased to $545 thousand for the quarter ended September 30, 2023, compared to $70 thousand for the same quarter in 2022, indicating a significant rise in credit loss provisions[13]. - The allowance for credit losses (ACL) on loans increased by $1,197,000 due to the adoption of the current expected credit loss (CECL) methodology[29]. - The ACL as a percentage of gross loans held for investment rose to 0.72% in Q3 2023 from 0.57% in Q3 2022[68]. - The provision for credit losses for Q3 2023 was $536,000, compared to $70,000 in Q3 2022, indicating a significant increase in provisions[68]. Loan Portfolio - Total loans held for investment, net, decreased from $1.077629 billion on June 30, 2023, to $1.072170 billion on September 30, 2023, a decrease of about 0.5%[48]. - The total gross loans held for investment amounted to $1.070468 billion as of September 30, 2023[49]. - Single-family mortgage loans increased slightly from $518.821 million to $521.576 million, reflecting a growth of approximately 0.5%[48]. - Multi-family mortgage loans decreased from $461.113 million to $457.351 million, a decline of about 0.6%[48]. Investment Securities - The total investment securities held to maturity amounted to $147,574,000, with an estimated fair value of $126,851,000, indicating a significant unrealized loss[37]. - The total fair value of investment securities decreased from $137.696 million to $128.941 million, a decrease of approximately 6.3%[47]. - The Corporation held investments with an unrealized loss position of $20.8 million as of September 30, 2023, compared to $18.9 million at June 30, 2023[40]. - The fair value of investment securities available for sale totaled $2.09 million as of September 30, 2023, compared to $2.155 million as of June 30, 2023[103]. Non-Performing Loans - Non-performing loans totaled $1,408,000 as of September 30, 2023, down from $1,422,000 as of June 30, 2023[70]. - The average recorded investment in non-performing loans for the quarter ended September 30, 2023, was $1.4 million, compared to $1.1 million for the same quarter in 2022[80]. - The total single-family loans with a related allowance were $1,433,000, with a net recorded investment of $1,361,000 after accounting for charge-offs[76]. - The total current period charge-offs were reported as zero across all loan categories[53]. Cash Flow and Financing Activities - Net cash provided by operating activities increased to $3,364,000, up from $2,262,000 year-over-year[21]. - Net cash used for financing activities was $(20,916,000), a significant decrease from $58,076,000 in the previous year, indicating a shift in financing strategy[21]. - The net decrease in cash and cash equivalents for the quarter was $(7,871,000), contrasting with an increase of $15,287,000 in the same quarter of the previous year[21]. Regulatory and Methodological Changes - The Corporation adopted ASC 326 on July 1, 2023, which impacted the ACL calculation methodology, transitioning to the Current Expected Credit Loss (CECL) model[68]. - The transition from LIBOR to SOFR indices for loans held for investment was completed by September 30, 2023[25]. - The qualitative portion of reserves on collectively evaluated loans is determined using management judgment, reflecting various risk factors[60].

Financial Data and Key Metrics Changes - In Q1 2024, the company originated $18.5 million in loans held for investment, a decline from $24.3 million in the prior quarter [6] - Loan principal payments and payoffs were $23 million, down from $25.1 million in the previous quarter [7] - Nonperforming assets increased slightly to $1.4 million from $1.3 million [11] - The allowance for credit losses to gross loans held for investment increased to 72 basis points from 55 basis points [12] - Net interest margin remained unchanged at 2.88% [13] Business Line Data and Key Metrics Changes - Loans held for investment declined by $5.5 million compared to the previous quarter, with declines in multifamily and commercial real estate, partially offset by growth in single-family and construction loans [10] - The average cost of deposits increased by 18 basis points to 80 basis points [14] - Operating expenses decreased to $6.9 million, lower than the stable run rate of $7.2 million due to no bonus expense accruals [17] Market Data and Key Metrics Changes - The company is experiencing more consumer demand for single-family adjustable-rate mortgage products due to higher fixed-rate mortgage interest rates [8] - The average yield on total interest-earning assets increased by 17 basis points [13] Company Strategy and Development Direction - The company plans to adopt a more conservative strategy for balance sheet management, slowing loan portfolio growth due to tighter liquidity conditions [18] - The company is focused on maintaining cash dividends and responsible capital management through stock buyback programs [20] Management's Comments on Operating Environment and Future Outlook - Management noted that current credit quality is holding up well despite concerns regarding commercial real estate loans [11] - The company expects loan origination volumes in the December 2023 quarter to be similar to the current quarter, at the lower end of the recent range [9] - Management indicated that the environment has stabilized, and there may be opportunities for muted growth in the loan portfolio [55] Other Important Information - The company adopted CECL on July 1, 2023, resulting in a $1.2 million increase in the allowance for credit losses [12] - The company repurchased approximately 36,000 shares of common stock in the September 2023 quarter [20] Q&A Session Summary Question: Impact of higher interest rates on provision - Management indicated that the provision increased due to the longer estimated life of the loan portfolio, with expectations of prepayment speeds declining [30][31] Question: Emerging credit quality trends - Management noted that they are not currently seeing lease-up issues in their commercial real estate portfolio, with a focus on suburban markets [42] Question: Future expense run rate - Management confirmed that the expected run rate for operating expenses is approximately $7.2 million per quarter, with no anticipated step-up [50][51] Question: Loan portfolio growth expectations - Management expects muted growth in the loan portfolio, with potential for some growth if the environment stabilizes further [54][55]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 000-28304 | PROVIDENT FINANCIAL HOLDINGS, INC. | | --- | (Exact name of registrant as specified in its charter) | Delaware | | 33-0704889 | | --- | --- | -- ...

Provident Financial Holdings Inc. (NASDAQ:PROV) Q4 2023 Earnings Conference Call July 25, 2023 12:00 PM ET Company Participants Craig Blunden - Chairman & CEO Donavon Ternes - President, COO & CFO Conference Call Participants Andrew Liesch - Piper Sandler Operator Ladies and gentlemen, good afternoon. Thank you for standing by, and welcome to the Provident Financial Holdings Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. At this time, I' ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ ✓ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _________________ Commission File Number 000-28304 PROVIDENT FINANCIAL HOLDINGS, INC. (Exact name of registrant as spe ...

Provident Financial Holdings Inc. (NASDAQ:PROV) Q3 2023 Results Conference Call April 27, 2023 12:00 PM ET Company Participants Craig Blunden - Chairman & CEO Donavon Ternes - President, COO, CFO & Corporate Secretary Conference Call Participants Tim Coffey - Janney Operator Ladies and gentlemen, thank you for standing by. Welcome to the Provident Financial Holdings Third Quarter Earnings Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conferen ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ ✓ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _________________ PROVIDENT FINANCIAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delawar ...