Provident Financial Holdings, Inc. (NASDAQ:PROV) Q2 2023 Earnings Conference Call January 30, 2023 12:00 PM ET Company Participants Craig Blunden - Chairman & CEO Conference Call Participants Operator Ladies and gentlemen, thank you for standing by. Welcome to the Provident Financial Holdings Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] ...

Table of Contents For the quarterly period ended September 30, 2022 [ ]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 specified in its charter) Delaware 33-0704889 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (State or other jurisdiction of incorporation o ...

Provident Financial Holdings, Inc. (NASDAQ:PROV) Q1 2023 Earnings Conference Call October 26, 2022 12:00 PM ET Company Participants Craig Blunden - Chairman & CEO Donavon Ternes - President, Chief Operating & Chief Financial Officer Conference Call Participants Nick Cucharale - Piper Sandler Tim Coffey - Janney Operator Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter Earnings Call. At this time, all participants are in a listen-only mode. And later we will conduct a questio ...

For the fiscal year ended June 30, 2022 OR 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 ☐ 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 | | | --- | --- | | (State or othe ...

Provident Financial Holdings, Inc. (NASDAQ:PROV) Q4 2022 Earnings Conference Call July 27, 2022 ET Company Participants Craig Blunden - Chairman & Chief Executive Officer Donavon Ternes - President, Chief Operating & Chief Financial Officer Conference Call Participants Nick Cucharale - Piper Sandler Tim Coffey - Janney Operator Ladies and gentlemen, thank you for standing by. Welcome to the Provident Financial Holdings Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-o ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%201%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited interim condensed consolidated financial information, including statements, management's discussion, market risk, and controls [Financial Statements](index=4&type=section&id=ITEM%201%20-%20Financial%20Statements) This section presents the unaudited interim condensed consolidated financial statements, including financial condition, operations, equity, and cash flows, with detailed notes [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Financial Condition (in thousands) | Metric | March 31, 2022 | June 30, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,187,834** | **$1,183,596** | | Loans held for investment, net | $893,563 | $850,960 | | Investment securities | $198,523 | $226,893 | | Cash and cash equivalents | $60,121 | $70,270 | | **Total Liabilities** | **$1,060,217** | **$1,056,316** | | Total deposits | $963,500 | $937,973 | | Borrowings | $80,000 | $100,983 | | **Total Stockholders' Equity** | **$127,617** | **$127,280** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income over specific periods Consolidated Operations Highlights (in thousands, except per share data) | Metric | Quarter Ended Mar 31, 2022 | Quarter Ended Mar 31, 2021 | Nine Months Ended Mar 31, 2022 | Nine Months Ended Mar 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $7,538 | $7,457 | $23,089 | $23,261 | | (Recovery) provision for loan losses | ($645) | ($200) | ($2,051) | $59 | | Non-interest Income | $1,114 | $1,199 | $3,551 | $3,332 | | Non-interest Expense | $6,899 | $6,909 | $19,466 | $20,810 | | **Net Income** | **$1,699** | **$1,561** | **$6,630** | **$4,222** | | **Diluted EPS** | **$0.23** | **$0.21** | **$0.89** | **$0.56** | - Net income for the nine months ended March 31, 2022, was significantly boosted by a **$1.2 million** credit from the Employee Retention Tax Credit (ERTC), which reduced salaries and employee benefits expense[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement tracks changes in the company's equity over time, including net income, dividends, and stock repurchases - The company paid cash dividends of **$0.14 per share** in the quarter ended March 31, 2022, consistent with the prior year's quarter[16](index=16&type=chunk)[17](index=17&type=chunk) - For the nine months ended March 31, 2022, the company repurchased **221,797 shares** of treasury stock for **$3.74 million**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary for Nine Months Ended March 31 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,355 | $9,025 | | Net cash used for investing activities | ($15,181) | ($60,862) | | Net cash (used for) provided by financing activities | ($2,323) | $7,432 | | **Net decrease in cash and cash equivalents** | **($10,149)** | **($44,405)** | - The primary use of cash in investing activities for the nine months ended March 31, 2022, was a net increase in loans held for investment of **$42.1 million**. In the prior year period, the company had a net decrease in loans and significant purchases of investment securities[24](index=24&type=chunk) [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and breakdowns of the financial data presented in the consolidated financial statements - Gross loans held for investment increased to **$892.5 million** at March 31, 2022, from **$852.1 million** at June 30, 2021, with single-family and multi-family loans comprising the largest segments[45](index=45&type=chunk) Allowance for Loan Losses Activity (in thousands) | Period | Beginning Balance | (Recovery) Provision | Net Recoveries (Charge-offs) | Ending Balance | | :--- | :--- | :--- | :--- | :--- | | **Q3 2022** | $6,608 | ($645) | $6 | $5,969 | | **9M 2022** | $7,587 | ($2,051) | $433 | $5,969 | - Non-performing loans on non-accrual status decreased significantly to **$2.2 million** at March 31, 2022, from **$9.4 million** at June 30, 2021, indicating improved asset quality[54](index=54&type=chunk)[55](index=55&type=chunk) - On April 28, 2022, the Board of Directors declared a quarterly cash dividend of **$0.14 per share** and authorized a new stock repurchase plan for up to **5%** of the company's common stock[145](index=145&type=chunk)[146](index=146&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=58&type=section&id=ITEM%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operating results, including analyses of asset quality, liquidity, and capital resources [Executive Summary and Operating Strategy](index=62&type=section&id=Executive%20Summary%20and%20Operating%20Strategy) This section outlines the Corporation's strategic goals, focusing on asset growth and optimizing the deposit mix - The Corporation's operating strategy focuses on moderately increasing total assets by growing its loan portfolio, particularly in single-family, multi-family, and commercial real estate loans[160](index=160&type=chunk) - A key strategic goal is to improve the net interest margin by shifting the deposit mix from higher-cost time deposits to lower-cost checking and savings accounts[160](index=160&type=chunk) [Comparison of Financial Condition](index=64&type=section&id=Comparison%20of%20Financial%20Condition%20at%20March%2031,%202022%20and%20June%2030,%202021) This section compares the company's financial position at different reporting dates, highlighting changes in assets, liabilities, and equity - Total assets increased slightly to **$1.19 billion** at March 31, 2022, from **$1.18 billion** at June 30, 2021, driven by a **5%** increase in loans held for investment to **$893.6 million**[166](index=166&type=chunk)[170](index=170&type=chunk) - Total deposits grew by **3%** to **$963.5 million**, reflecting a **5%** increase in transaction accounts, while higher-cost time deposits decreased by **9%**, consistent with the company's strategy[174](index=174&type=chunk) - Total borrowings decreased by **21%** to **$80.0 million** due to prepayment and maturities of long-term FHLB advances[175](index=175&type=chunk) [Comparison of Operating Results](index=68&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Quarters%20and%20Nine%20Months%20Ended%20March%2031,%202022%20and%202021) This section analyzes the company's financial performance over different periods, focusing on revenue, expenses, and profitability metrics Key Performance Metrics | Metric | Q3 FY22 | Q3 FY21 | 9M FY22 | 9M FY21 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in millions) | $1.7 | $1.6 | $6.6 | $4.2 | | Diluted EPS | $0.23 | $0.21 | $0.89 | $0.56 | | ROA | 0.57% | 0.53% | 0.74% | 0.48% | | ROE | 5.33% | 4.99% | 6.94% | 4.51% | - The **57%** increase in net income for the first nine months of fiscal 2022 was primarily driven by a **$2.1 million** recovery from the allowance for loan losses and a **$1.3 million** decrease in non-interest expenses[179](index=179&type=chunk) - Net interest margin for the nine-month period decreased by **5 basis points** to **2.65%** compared to the prior year, as the decrease in the average yield on interest-earning assets outpaced the decrease in the cost of funds[185](index=185&type=chunk) - Non-interest expense for the nine months decreased by **6%**, mainly due to a **$1.2 million** credit for the Employee Retention Tax Credit (ERTC) recorded in the first quarter[227](index=227&type=chunk)[228](index=228&type=chunk) [Asset Quality](index=81&type=section&id=Asset%20Quality) This section assesses the credit risk within the loan portfolio and the adequacy of the allowance for loan losses - Asset quality showed significant improvement, with non-performing loans (net) decreasing by **77%** to **$2.0 million** at March 31, 2022, from **$8.6 million** at June 30, 2021[218](index=218&type=chunk)[232](index=232&type=chunk) Asset Quality Ratios | Ratio | March 31, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Non-performing loans / Loans held for investment | 0.22% | 1.02% | | Allowance for loan losses / Gross loans | 0.66% | 0.88% | - Total classified assets, a broader measure of credit risk, decreased to **$2.8 million** from **$10.4 million** at June 30, 2021[239](index=239&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section evaluates the company's ability to meet its financial obligations and maintain sufficient capital levels - The Corporation maintains a strong liquidity position with primary funding from deposits and access to significant borrowing capacity, including **$321.4 million** from the FHLB and a **$168.4 million** discount window facility at the Federal Reserve[241](index=241&type=chunk)[244](index=244&type=chunk) - The Bank exceeded all regulatory capital requirements at March 31, 2022, and was categorized as **'well-capitalized'** under OCC regulations[249](index=249&type=chunk) Bank Capital Ratios as of March 31, 2022 | Ratio | Actual | Well-Capitalized Minimum | | :--- | :--- | :--- | | Tier 1 leverage capital | 10.27% | 5.00% | | CET1 capital | 19.32% | 6.50% | | Total capital | 20.29% | 10.00% | [Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=ITEM%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the Corporation's management of market risk, primarily interest rate risk, using NPV sensitivity and gap analysis to measure exposure to interest rate fluctuations - The Corporation uses an internal interest rate risk model to measure the change in Net Portfolio Value (NPV) under various interest rate scenarios[256](index=256&type=chunk) Net Portfolio Value (NPV) Sensitivity as of March 31, 2022 | Change in Rates | Change in NPV (in thousands) | | :--- | :--- | | +300 bp | $100,718 | | +200 bp | $72,672 | | +100 bp | $39,533 | | -100 bp | ($9,935) | - The company's net interest income simulation model indicates an asset-sensitive position, projecting a **0.73%** increase in net interest income over 12 months with a **+100 basis point** rate shock as of March 31, 2022[270](index=270&type=chunk)[271](index=271&type=chunk) [Controls and Procedures](index=57&type=section&id=ITEM%204%20-%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Corporation's disclosure controls and procedures were effective as of March 31, 2022. No material changes to internal control over financial reporting occurred during the quarter - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2022[276](index=276&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the Corporation's internal controls[277](index=277&type=chunk) [PART II - OTHER INFORMATION](index=57&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information, including legal proceedings, risk factors, and details on equity security sales and use of proceeds [Legal Proceedings](index=57&type=section&id=ITEM%201%20-%20Legal%20Proceedings) The Corporation is involved in various claims and lawsuits in the ordinary course of business but is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition - The Corporation is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition, operations, or cash flows[278](index=278&type=chunk) [Risk Factors](index=57&type=section&id=ITEM%201A%20-%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended June 30, 2021 - There have been no material changes in the risk factors previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended June 30, 2021[279](index=279&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=ITEM%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activity during the quarter. The company purchased 69,271 shares under its publicly announced plan at an average price of $16.69 per share Share Repurchases in Q3 FY2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2022 | 20,376 | $16.86 | | February 2022 | 17,213 | $16.82 | | March 2022 | 31,682 | $16.50 | | **Total** | **69,271** | **$16.69** | - As of March 31, 2022, **45,036 shares** remained available for purchase under the April 2020 stock repurchase plan, which was set to expire on April 27, 2022[282](index=282&type=chunk)

Provident Financial Holdings, Inc. (NASDAQ:PROV) Q3 2022 Earnings Conference Call April 27, 2022 12:00 PM ET Company Participants Craig Blunden – Chairman & Chief Executive Officer Donavon Ternes – President, Chief Operating & Chief Financial Officer Conference Call Participants Nicholas Cucharale – Piper Sandler Timothy Coffey – Janney Montgomery Scott LLC Operator Ladies and gentlemen, thank you for standing by. And welcome to the Third Quarter Earnings Call. At this time, all lines are in a listen-only m ...

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, 2021 [ ]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 ...

Financial Data and Key Metrics Changes - In Q2 2022, the company originated and purchased $65.3 million of loans held for investment, an increase from $60.9 million in the prior quarter [7] - Loan principal payments and payoffs increased to $72.5 million from $53.9 million in the previous quarter [7] - Loans held for investment decreased by approximately 1% compared to the previous quarter, with a notable decline in multifamily and commercial real estate loans [10] - Non-performing assets decreased significantly to $2.8 million from $6.6 million in the previous quarter [10][11] - The allowance for loan losses to gross loans held for investment decreased to 77 basis points from 86 basis points [12] Business Line Data and Key Metrics Changes - The company experienced a shift in loan payoffs, with more multifamily payoffs in the December quarter compared to single-family payoffs [24] - Underwriting standards have gradually returned to pre-pandemic levels, with a cautious approach towards commercial real estate, particularly in retail and office sectors [25] - The pipelines for single-family and multifamily loans are similar in size to the previous quarter, suggesting stable origination and purchase volumes [9] Market Data and Key Metrics Changes - Competition for loan originations remains elevated, particularly in the multifamily and commercial real estate sectors [8] - The refinance market is expected to slow down, impacting overall loan activity [27] - The company has seen increased activity in purchased loans, although no purchases were executed in the December quarter [27] Company Strategy and Development Direction - The company aims to leverage its balance sheet with prudent loan portfolio growth while redeploying excess liquidity into government-sponsored mortgage-backed securities [17] - Maintaining cash dividends is prioritized over stock buyback activities, although stock repurchases were made under the April 2020 program [18] - The company is focused on operational efficiencies to lower operating expenses [15] Management's Comments on Operating Environment and Future Outlook - Management noted that current credit quality is strong, with minimal early-stage delinquencies and a significant reduction in non-performing assets [10][11] - There is potential for further reduction in the allowance for loan losses as the economic environment improves [39] - The company is prepared for potential interest rate hikes, which could positively impact net interest margins [36] Other Important Information - The company has not adopted the Current Expected Credit Loss (CECL) model, making comparisons with CECL adopters challenging [12] - The FTE count increased slightly to 170 from 166 year-over-year [16] Q&A Session Summary Question: Were the payoffs related to rate hikes? - Management indicated it is difficult to determine, but noted a shift in the mix of payoffs with more multifamily payoffs in the December quarter [24] Question: Have underwriting standards returned to pre-pandemic levels? - Management confirmed that underwriting standards have gradually improved over the past year, with current caution in commercial real estate [25] Question: What is the current market activity for loans? - Management observed good pipeline activity, particularly in multifamily and commercial real estate, but noted the refinance market is expected to slow [27] Question: How is the company addressing wage pressures? - Management acknowledged wage pressures and indicated ongoing wage increases based on market surveys [29] Question: What was the amount of securities purchases in the March quarter? - Management reported $15 million in purchases during the December quarter, keeping cash balances flat [34] Question: What is the outlook for multifamily loan activity? - Management noted competitive conditions in the multifamily sector, with origination volumes expected to increase if purchase packages can be secured [37] Question: Is there room to drive down the coverage ratio? - Management indicated there is potential for reduction in the allowance for loan losses as the pandemic-related components are adjusted [39]

PART 1 - FINANCIAL INFORMATION [ITEM 1 - Financial Statements](index=4&type=section&id=ITEM%201%20-%20Financial%20Statements) This section presents Provident Financial Holdings, Inc.'s unaudited interim condensed consolidated financial statements and notes for the quarter ended September 30, 2021 [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at September 30, 2021, and June 30, 2021 Condensed Consolidated Statements of Financial Condition (In Thousands) | (In Thousands, Except Share Information) | September 30, 2021 | June 30, 2021 | | :-------------------------------------- | :------------------ | :------------- | | **Assets** | | | | Cash and cash equivalents | $88,249 | $70,270 | | Investment securities - held to maturity, at cost | $205,821 | $223,306 | | Investment securities - available for sale, at fair value | $3,316 | $3,587 | | Loans held for investment, net | $859,035 | $850,960 | | Total assets | $1,192,281 | $1,183,596 | | **Liabilities** | | | | Non interest-bearing deposits | $120,883 | $123,179 | | Interest-bearing deposits | $835,859 | $814,794 | | Total deposits | $956,742 | $937,973 | | Borrowings | $90,000 | $100,983 | | Total liabilities | $1,064,046 | $1,056,316 | | **Stockholders' equity** | | | | Total stockholders' equity | $128,235 | $127,280 | | Total liabilities and stockholders' equity | $1,192,281 | $1,183,596 | - Total assets increased by **$8.7 million (1%)** to **$1.19 billion** at September 30, 2021, primarily driven by increases in cash and cash equivalents and loans held for investment, partially offset by a decrease in investment securities[10](index=10&type=chunk)[153](index=153&type=chunk) - Total deposits increased by **$18.7 million (2%)** to **$956.7 million**, mainly due to increases in transaction accounts, partly offset by a decrease in higher-cost time deposits[10](index=10&type=chunk)[159](index=159&type=chunk) - Total stockholders' equity increased by **$955,000 (1%)** to **$128.2 million**, primarily from net income, partly offset by cash dividends and stock repurchases[10](index=10&type=chunk)[161](index=161&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income for the quarters ended September 30, 2021, and 2020 Condensed Consolidated Statements of Operations (In Thousands, Except Per Share Information) | (In Thousands, Except Per Share Information) | Quarter Ended Sep 30, 2021 | Quarter Ended Sep 30, 2020 | | :------------------------------------------- | :------------------------- | :------------------------- | | Total interest income | $8,746 | $9,519 | | Total interest expense | $858 | $1,353 | | Net interest income | $7,888 | $8,166 | | (Recovery) provision for loan losses | $(339) | $220 | | Net interest income, after (recovery) provision for loan losses | $8,227 | $7,946 | | Total non-interest income | $1,069 | $1,159 | | Total non-interest expense | $5,668 | $6,985 | | Income before income taxes | $3,628 | $2,120 | | Provision for income taxes | $961 | $635 | | Net income | $2,667 | $1,485 | | Basic earnings per share | $0.35 | $0.20 | | Diluted earnings per share | $0.35 | $0.20 | | Cash dividends per share | $0.14 | $0.14 | - Net income for Q1 fiscal 2022 increased by **$1.2 million (80%)** to **$2.7 million**, compared to $1.5 million in Q1 fiscal 2021[12](index=12&type=chunk)[163](index=163&type=chunk) - Diluted earnings per share rose to **$0.35** in Q1 fiscal 2022 from $0.20 in Q1 fiscal 2021, a **75% increase**[12](index=12&type=chunk)[164](index=164&type=chunk) - Net interest income decreased by **$278,000 (3%)** to **$7.9 million**, primarily due to a lower net interest margin, despite a higher average interest-earning asset balance[12](index=12&type=chunk)[165](index=165&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income components for the quarters ended September 30, 2021, and 2020 Condensed Consolidated Statements of Comprehensive Income (In Thousands) | (In Thousands) | For the Quarter Ended Sep 30, 2021 | For the Quarter Ended Sep 30, 2020 | | :------------- | :--------------------------------- | :--------------------------------- | | Net income | $2,667 | $1,485 | | Other comprehensive loss, before income tax benefit | $(9) | $(7) | | Income tax benefit | $(3) | $(2) | | Other comprehensive loss | $(6) | $(5) | | Total comprehensive income | $2,661 | $1,480 | - Total comprehensive income increased to **$2.66 million** for the quarter ended September 30, 2021, from $1.48 million in the prior year, reflecting the increase in net income[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in stockholders' equity, including net income, dividends, and stock repurchases, for the quarter ended September 30, 2021 Changes in Stockholders' Equity (In Thousands) | (In Thousands) | Balance at June 30, 2021 | Net Income | Other Comprehensive Loss | Purchase of Treasury Stock | Cash Dividends | Balance at Sep 30, 2021 | | :------------- | :----------------------- | :--------- | :----------------------- | :------------------------- | :------------- | :---------------------- | | Total Equity | $127,280 | $2,667 | $(6) | $(851) | $(1,056) | $128,235 | - Stockholders' equity increased by **$955,000** from June 30, 2021, to September 30, 2021, primarily due to net income of **$2.67 million**, partially offset by **$1.06 million** in cash dividends and **$851,000** in treasury stock purchases[16](index=16&type=chunk)[161](index=161&type=chunk) - Cash dividends of **$0.14 per share** were paid in both the quarter ended September 30, 2021, and September 30, 2020[16](index=16&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash flows from operating, investing, and financing activities for the quarters ended September 30, 2021, and 2020 Condensed Consolidated Statements of Cash Flows (In Thousands) | (In Thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $3,047 | $3,048 | | Net cash used for investing activities | $9,053 | $(58,215) | | Net cash provided by financing activities | $5,879 | $5,600 | | Net increase (decrease) in cash and cash equivalents | $17,979 | $(49,567) | | Cash and cash equivalents at end of year | $88,249 | $66,467 | - Net cash provided by investing activities significantly improved to **$9.05 million** in Q1 fiscal 2022 from a net use of $58.22 million in Q1 fiscal 2021, primarily due to a net decrease in loans held for investment and principal payments from investment securities[20](index=20&type=chunk) - Net cash provided by financing activities increased to **$5.88 million**, driven by a net increase in deposits, partially offset by repayments of borrowings and treasury stock purchases[20](index=20&type=chunk) - Cash and cash equivalents at the end of the period increased by **$17.98 million** to **$88.25 million**, a significant reversal from a $49.57 million decrease in the prior year[20](index=20&type=chunk) [Notes to Unaudited Interim Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional detail and context for the interim condensed consolidated financial statements [Note 1: Basis of Presentation](index=11&type=section&id=Note%201%3A%20Basis%20of%20Presentation) This note describes the basis for preparing the unaudited interim condensed consolidated financial statements - The unaudited interim condensed consolidated financial statements reflect all necessary adjustments for a fair statement of operations and should be read in conjunction with the Corporation's Annual Report on Form 10-K for the year ended June 30, 2021[22](index=22&type=chunk) [Note 2: Accounting Standard Updates ("ASU")](index=11&type=section&id=Note%202%3A%20Accounting%20Standard%20Updates%20(%22ASU%22)) This note addresses recent accounting standard updates and their impact on the financial statements - There have been no material accounting standard updates or changes in their adoption status since the Corporation's Annual Report on Form 10-K for the year ended June 30, 2021[23](index=23&type=chunk) [Note 3: Earnings Per Share](index=11&type=section&id=Note%203%3A%20Earnings%20Per%20Share) This note details the computation of basic and diluted earnings per share for the reporting periods Basic and Diluted EPS Computations (In Thousands, Except Earnings Per Share) | (In Thousands, Except Earnings Per Share) | For the Quarter Ended Sep 30, 2021 | For the Quarter Ended Sep 30, 2020 | | :---------------------------------------- | :--------------------------------- | :--------------------------------- | | Net income – numerator | $2,667 | $1,485 | | Weighted-average shares (basic) | 7,530 | 7,436 | | Adjusted weighted-average shares (diluted) | 7,575 | 7,457 | | Basic earnings per share | $0.35 | $0.20 | | Diluted earnings per share | $0.35 | $0.20 | - As of September 30, 2021, **116,000 shares** from outstanding stock options and **101,250 shares** from restricted stock awards were excluded from diluted EPS computation due to their anti-dilutive effect[25](index=25&type=chunk) [Note 4: Investment Securities](index=12&type=section&id=Note%204%3A%20Investment%20Securities) This note provides information on the Corporation's investment securities, including held-to-maturity and available-for-sale portfolios Investment Securities Summary (In Thousands) | (In Thousands) | September 30, 2021 | June 30, 2021 | | :------------- | :----------------- | :------------ | | Held to maturity (Amortized Cost) | $205,821 | $223,306 | | Available for sale (Fair Value) | $3,316 | $3,587 | | Total investment securities | $209,137 | $226,893 | - Total investment securities decreased by **$17.8 million (8%)** to **$209.1 million** at September 30, 2021, primarily due to scheduled and accelerated principal payments on mortgage-backed securities[31](index=31&type=chunk)[155](index=155&type=chunk) - The Corporation held investments with unrealized losses of **$1.1 million** at September 30, 2021, an increase from $810,000 at June 30, 2021, primarily due to changes in interest rates[32](index=32&type=chunk)[34](index=34&type=chunk) - No impairment losses were recorded as the Corporation did not intend to sell securities and expected to recover amortized cost prior to sale[35](index=35&type=chunk) [Note 5: Loans Held for Investment](index=16&type=section&id=Note%205%3A%20Loans%20Held%20for%20Investment) This note details the composition of loans held for investment, allowance for loan losses, and asset quality metrics Loans Held for Investment, Gross (In Thousands) | (In Thousands) | September 30, 2021 | June 30, 2021 | | :------------- | :----------------- | :------------ | | Single-family | $274,970 | $268,272 | | Multi-family | $489,550 | $484,408 | | Commercial real estate | $91,779 | $95,279 | | Construction | $2,574 | $3,040 | | Total loans held for investment, gross | $859,959 | $852,082 | - Loans held for investment, net, increased by **$8.0 million (1%)** to **$859.0 million** at September 30, 2021, primarily due to increases in single-family and multi-family loans[37](index=37&type=chunk)[156](index=156&type=chunk) Allowance for Loan Losses (In Thousands) | (Dollars in Thousands) | Quarter Ended Sep 30, 2021 | Quarter Ended Sep 30, 2020 | | :--------------------- | :------------------------- | :------------------------- | | Allowance at beginning of period | $7,587 | $8,265 | | (Recovery) provision for loan losses | $(339) | $220 | | Net recoveries (charge-offs) | $165 | $5 | | Balance at end of period | $7,413 | $8,490 | | Allowance for loan losses as a percentage of gross loans held for investment | 0.86% | 0.95% | - The Corporation recorded a recovery from the allowance for loan losses of **$339,000** in Q1 fiscal 2022, compared to a provision of $220,000 in Q1 fiscal 2021, reflecting improved credit quality and non-performing loan payoffs[46](index=46&type=chunk)[180](index=180&type=chunk) - Non-performing loans, net of allowance, decreased by **23%** to **$6.6 million** at September 30, 2021, from $8.6 million at June 30, 2021[52](index=52&type=chunk)[54](index=54&type=chunk)[181](index=181&type=chunk)[191](index=191&type=chunk) - As of September 30, 2021, only one single-family forbearance loan remained with an outstanding balance of **$308,000**, representing **0.04% of total loans**, indicating a significant reduction in COVID-19 related payment relief[58](index=58&type=chunk)[150](index=150&type=chunk) [Note 6: Derivative and Other Financial Instruments with Off-Balance Sheet Risks](index=32&type=section&id=Note%206%3A%20Derivative%20and%20Other%20Financial%20Instruments%20with%20Off-Balance%20Sheet%20Risks) This note describes the Corporation's commitments to extend credit and other off-balance sheet financial instruments Commitments to Extend Credit (In Thousands) | Commitments (In Thousands) | September 30, 2021 | June 30, 2021 | | :------------------------- | :----------------- | :------------ | | Undisbursed loan funds – Construction loans | $3,763 | $4,479 | | Undisbursed lines of credit – Commercial business loans | $441 | $460 | | Undisbursed lines of credit – Consumer loans | $415 | $425 | | Commitments to extend credit on loans to be held for investment | $22,508 | $21,887 | | Total | $27,127 | $27,251 | - Total commitments to extend credit were **$27.1 million** at September 30, 2021, slightly down from $27.25 million at June 30, 2021[74](index=74&type=chunk) Recourse Liability (In Thousands) | Recourse Liability (In Thousands) | Quarter Ended Sep 30, 2021 | Quarter Ended Sep 30, 2020 | | :-------------------------------- | :------------------------- | :------------------------- | | Balance, beginning of the period | $200 | $270 | | Provision for recourse liability | $0 | $100 | | Balance, end of the period | $200 | $370 | - The recourse liability for loans sold to FHLB – San Francisco and other investors remained at **$200,000** at September 30, 2021, with no new provision for recourse liability during the quarter[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Note 7: Fair Value of Financial Instruments](index=34&type=section&id=Note%207%3A%20Fair%20Value%20of%20Financial%20Instruments) This note explains the methodologies and disclosures for fair value measurements of financial instruments - The Corporation measures financial assets and liabilities at fair value on a recurring basis, including investment securities available for sale, loans held for investment at fair value, and interest-only strips[87](index=87&type=chunk) Fair Value Measurement at September 30, 2021 (In Thousands) | (In Thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :------ | :------ | :------ | :---- | | Investment securities - available for sale | $0 | $3,166 | $150 | $3,316 | | Loans held for investment, at fair value | $0 | $0 | $1,577 | $1,577 | | Interest-only strips | $0 | $0 | $9 | $9 | | Total assets | $0 | $3,166 | $1,736 | $4,902 | - Non-performing loans and mortgage servicing assets are measured at fair value on a nonrecurring basis, with non-performing loans totaling **$6.62 million** and mortgage servicing assets at **$132,000** at September 30, 2021[87](index=87&type=chunk)[99](index=99&type=chunk) - Valuation techniques for Level 3 assets include market comparable pricing for CMOs, relative value analysis for loans held for investment, discounted cash flow for restructured non-performing loans and mortgage servicing assets, and relative value analysis for other non-performing loans[100](index=100&type=chunk) [Note 8: Reclassification Adjustment of Accumulated Other Comprehensive Income ("AOCI")](index=43&type=section&id=Note%208%3A%20Reclassification%20Adjustment%20of%20Accumulated%20Other%20Comprehensive%20Income%20(%22AOCI%22)) This note details changes in accumulated other comprehensive income and related reclassification adjustments Changes in AOCI (In Thousands, Net of Statutory Taxes) | (Dollars In Thousands, Net of Statutory Taxes) | For the Quarter Ended Sep 30, 2021 | | :--------------------------------------------- | :--------------------------------- | | Beginning balance at June 30, 2021 | $72 | | Other comprehensive loss before reclassifications | $(6) | | Ending balance at September 30, 2021 | $66 | - AOCI decreased from **$72,000** at June 30, 2021, to **$66,000** at September 30, 2021, primarily due to other comprehensive loss of $6,000[114](index=114&type=chunk) [Note 9: Revenue From Contracts With Customers](index=43&type=section&id=Note%209%3A%20Revenue%20From%20Contracts%20With%20Customers) This note disaggregates non-interest income from contracts with customers, excluding interest income - The largest portion of the Corporation's revenue is from interest income, which is outside the scope of ASC 606. All revenue within ASC 606 is recognized as non-interest income[115](index=115&type=chunk) Non-Interest Income Disaggregation (In Thousands) | Type of Services (In Thousands) | Quarter Ended Sep 30, 2021 | Quarter Ended Sep 30, 2020 | | :------------------------------ | :------------------------- | :------------------------- | | Loan servicing and other fees | $186 | $405 | | Deposit account fees | $312 | $310 | | Card and processing fees | $405 | $364 | | Other | $166 | $80 | | Total non-interest income | $1,069 | $1,159 | - Total non-interest income decreased by **$90,000 (8%)** to **$1.07 million**, primarily due to a **54% decrease** in loan servicing and other fees, driven by lower loan prepayment fees[118](index=118&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) [Note 10: Leases](index=45&type=section&id=Note%2010%3A%20Leases) This note provides information on the Corporation's operating lease assets, liabilities, and related expenses - The Corporation accounts for leases under ASC 842, recording liabilities for future lease obligations and right-of-use assets for underlying leased assets[123](index=123&type=chunk) Operating Lease Information (In Thousands) | (In Thousands) | As of Sep 30, 2021 | As of Jun 30, 2021 | | :------------- | :----------------- | :----------------- | | Operating lease right of use assets | $1,904 | $2,117 | | Operating lease liabilities | $1,970 | $2,192 | | Premises and occupancy expenses from operating leases (Qtr Ended Sep 30, 2021) | $200 | $199 | | Equipment expenses from operating leases (Qtr Ended Sep 30, 2021) | $23 | $12 | - Total lease expenses for the quarter ended September 30, 2021, were **$223,000**, an increase from $211,000 in the prior year[126](index=126&type=chunk) - The weighted average remaining lease term is **3.6 years** with a weighted average discount rate of **2.01%** as of September 30, 2021[128](index=128&type=chunk) [Note 11: Stock Repurchases](index=48&type=section&id=Note%2011%3A%20Stock%20Repurchases) This note details the Corporation's common stock repurchase activities during the reporting period - During Q1 fiscal 2022, the Corporation repurchased **49,764 shares** of common stock at a weighted average cost of **$17.10 per share** under its April 2020 stock repurchase plan[130](index=130&type=chunk)[162](index=162&type=chunk) - As of September 30, 2021, **217,069 shares** remained available for purchase under the plan, which expires on April 27, 2022[130](index=130&type=chunk)[205](index=205&type=chunk) [Note 12: Subsequent Events](index=48&type=section&id=Note%2012%3A%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On October 28, 2021, the Board of Directors declared a quarterly cash dividend of **$0.14 per share**, payable on December 9, 2021, to shareholders of record on November 18, 2021[131](index=131&type=chunk) [ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=ITEM%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Corporation's financial condition, operating results, and strategic initiatives [General](index=48&type=section&id=General) This section provides an overview of Provident Financial Holdings, Inc.'s operations and primary business activities - Provident Financial Holdings, Inc. operates through its wholly-owned subsidiary, Provident Savings Bank, F.S.B., a federally chartered stock savings bank headquartered in Riverside, California[132](index=132&type=chunk)[134](index=134&type=chunk) Key Financials at September 30, 2021 (In Millions) | Metric | Amount (Millions) | | :--------------- | :---------------- | | Total assets | $1.19 | | Total deposits | $956.7 | | Stockholders' equity | $128.2 | - The Bank's primary activities include attracting deposits from **13 banking locations** in Riverside and San Bernardino counties, California, and originating/purchasing various types of loans, primarily in Southern and Northern California[135](index=135&type=chunk) [Safe-Harbor Statement](index=50&type=section&id=Safe-Harbor%20Statement) This statement addresses forward-looking information and associated risks and uncertainties within the report - This section contains forward-looking statements subject to various risks and uncertainties, including the impact of the COVID-19 pandemic, credit risks, interest rate fluctuations, regulatory changes, and real estate market conditions[138](index=138&type=chunk)[140](index=140&type=chunk) [Critical Accounting Policies](index=52&type=section&id=Critical%20Accounting%20Policies) This section confirms no significant changes to the Corporation's critical accounting policies during the quarter - There have been no significant changes to the Corporation's critical accounting policies during the three months ended September 30, 2021, as previously disclosed in the 2021 Annual Report on Form 10-K[142](index=142&type=chunk) [Executive Summary and Operating Strategy](index=54&type=section&id=Executive%20Summary%20and%20Operating%20Strategy) This section outlines the Corporation's core business, strategic goals, and outlook for net interest income and margin - The Corporation's core business is community banking, focusing on deposits and investing in single-family, multi-family, and commercial real estate loans, with net interest income as the primary revenue source[143](index=143&type=chunk)[144](index=144&type=chunk) - The strategic goal for the next three years is to moderately increase total assets by growing various loan categories and to improve core revenue by decreasing time deposits and increasing lower-cost checking and savings accounts to enhance net interest margin[145](index=145&type=chunk) - Despite recent economic improvements, management anticipates continued compression in net interest income and net interest margin for the remainder of calendar 2021 and potentially longer[145](index=145&type=chunk) [COVID-19 Impact to the Corporation](index=54&type=section&id=COVID-19%20Impact%20to%20the%20Corporation) This section details the ongoing impact of the COVID-19 pandemic on the Corporation's operations and loan portfolio - As of September 30, 2021, all Bank branches are operating with normal hours, and most employees have returned to routine working environments[148](index=148&type=chunk) - Only one single-family forbearance loan, with an outstanding balance of **$308,000 (0.04% of total loans)**, remained under a COVID-19 related forbearance agreement, and there were no pending requests for payment relief[150](index=150&type=chunk) [Off-Balance Sheet Financing Arrangements](index=56&type=section&id=Off-Balance%20Sheet%20Financing%20Arrangements) This section discusses the Corporation's off-balance sheet activities, including commitments and derivative instruments - The Corporation engages in off-balance sheet activities, including commitments to extend credit and derivative financial instruments, which involve credit and interest-rate risk[152](index=152&type=chunk) - For detailed information on commitments and derivative financial instruments, refer to Note 6 of the Notes to Unaudited Interim Condensed Consolidated Financial Statements[152](index=152&type=chunk) [Comparison of Financial Condition at September 30, 2021 and June 30, 2021](index=56&type=section&id=Comparison%20of%20Financial%20Condition%20at%20September%2030%2C%202021%20and%20June%2030%2C%202021) This section analyzes changes in the Corporation's assets, liabilities, and equity between September 30, 2021, and June 30, 2021 - Total assets increased by **$8.7 million (1%)** to **$1.19 billion**, driven by a **$17.9 million** increase in cash and cash equivalents and an **$8.0 million** increase in loans held for investment, partially offset by a **$17.8 million** decrease in investment securities[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - Loans held for investment increased by **$8.0 million (1%)** to **$859.0 million**, with **$60.9 million** in originations (primarily single-family and multi-family loans) and **$53.9 million** in principal payments during Q1 fiscal 2022[156](index=156&type=chunk) - Total deposits increased by **$18.7 million (2%)** to **$956.7 million**, with transaction accounts rising by **$23.8 million (3%)** and time deposits decreasing by **$4.9 million (3%)**, reflecting a strategic shift towards lower-cost deposits[159](index=159&type=chunk) - Total borrowings decreased by **$11.0 million (11%)** to **$90.0 million** due to maturities of long-term borrowings[160](index=160&type=chunk) [Comparison of Operating Results for the Quarter Ended September 30, 2021 and 2020](index=59&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Quarter%20Ended%20September%2030%2C%202021%20and%202020) This section compares the Corporation's financial performance for the quarters ended September 30, 2021, and 2020 Key Operating Results Comparison (Q1 FY2022 vs Q1 FY2021) | Metric | Q1 FY2022 (Sep 30, 2021) | Q1 FY2021 (Sep 30, 2020) | Change (YoY) | | :------------------------- | :----------------------- | :----------------------- | :----------- | | Net Income | $2.7 million | $1.5 million | +80% | | Diluted EPS | $0.35 | $0.20 | +75% | | Efficiency Ratio | 63% | 75% | -12 pp | | Return on Average Assets | 0.89% | 0.50% | +39 bps | | Return on Average Equity | 8.39% | 4.78% | +361 bps | | Net Interest Income | $7.9 million | $8.2 million | -3% | | (Recovery) Provision for Loan Losses | $(339) thousand | $220 thousand | Improvement | | Total Non-Interest Expense | $5.7 million | $7.0 million | -19% | | Salaries and Employee Benefits | $3.1 million | $4.4 million | -30% | - The efficiency ratio improved to **63%** from 75%, and return on average assets increased to **0.89%** from 0.50% year-over-year[164](index=164&type=chunk) - Net interest income decreased by **$278,000 (3%)** due to a **13 basis point reduction** in net interest margin to **2.71%**, as the decrease in average yield on interest-earning assets outpaced the decrease in average cost of interest-bearing liabilities[165](index=165&type=chunk) - Total non-interest expense decreased by **$1.3 million (19%)**, primarily due to a **$1.2 million credit** from the Employee Retention Tax Credit (ERTC) which reduced salaries and employee benefits expense[187](index=187&type=chunk)[188](index=188&type=chunk) - The effective income tax rate decreased to **26.5%** from 30.0%, attributable to the non-taxable treatment of the ERTC for state tax purposes[190](index=190&type=chunk) [Asset Quality](index=65&type=section&id=Asset%20Quality) This section reviews the Corporation's asset quality, including non-performing loans and the allowance for loan losses Non-Performing Assets (In Thousands) | (In Thousands) | At Sep 30, 2021 | At Jun 30, 2021 | | :------------- | :-------------- | :-------------- | | Total non-performing loans | $6,616 | $8,646 | | Real estate owned, net | $0 | $0 | | Total non-performing assets | $6,616 | $8,646 | | Non-performing loans as a percentage of loans held for investment, net of allowance for loan losses | 0.77% | 1.02% | | Non-performing assets as a percentage of total assets | 0.55% | 0.73% | - Non-performing loans, net of allowance and fair value adjustments, decreased by **23%** to **$6.6 million** at September 30, 2021, from $8.6 million at June 30, 2021[191](index=191&type=chunk) - Total restructured loans remained at **$7.9 million**, but the portion classified as non-performing decreased to **$5.1 million (65%)** from $7.0 million (89%) at June 30, 2021[194](index=194&type=chunk) - The allowance for loan losses was **$7.4 million** at September 30, 2021, representing **0.86%** of gross loans held for investment, deemed sufficient by management[183](index=183&type=chunk)[184](index=184&type=chunk) [Loan Volume Activities](index=70&type=section&id=Loan%20Volume%20Activities) This section details the Corporation's loan origination, purchase, and payment volumes for the reporting periods Loan Origination and Purchase Volume (In Thousands) | (In Thousands) | Quarter Ended Sep 30, 2021 | Quarter Ended Sep 30, 2020 | | :------------- | :------------------------- | :------------------------- | | Loans originated for investment | $60,938 | $39,108 | | Loans purchased for investment | $0 | $8,938 | | Mortgage loan principal payments | $(53,859) | $(66,323) | | Net increase (decrease) in loans held for investment | $8,075 | $(17,843) | - Loans originated for investment increased to **$60.9 million** in Q1 fiscal 2022 from $39.1 million in Q1 fiscal 2021, primarily in single-family and multi-family mortgages[199](index=199&type=chunk) - The Corporation did not purchase any loans for investment in Q1 fiscal 2022, compared to $8.9 million in Q1 fiscal 2021[199](index=199&type=chunk) [Liquidity and Capital Resources](index=70&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Corporation's funding sources, liquidity position, and regulatory capital adequacy - Primary funding sources include deposits, loan payments, investment security maturities/sales, and FHLB – San Francisco advances[200](index=200&type=chunk) - Total cash and cash equivalents were **$88.2 million (7% of total assets)** at September 30, 2021, with **$305.8 million** in remaining FHLB borrowing facility and a **$189.8 million** discount window facility at the Federal Reserve Bank[204](index=204&type=chunk) Bank Capital Ratios at September 30, 2021 | Capital Ratio (Provident Savings Bank, F.S.B.) | Actual Ratio | Minimum for Capital Adequacy | Minimum to Be Well Capitalized | | :--------------------------------------------- | :----------- | :--------------------------- | :----------------------------- | | Tier 1 leverage capital | 9.81% | 4.00% | 5.00% | | CET1 capital | 18.90% | 7.00% | 6.50% | | Tier 1 capital | 18.90% | 8.50% | 8.00% | | Total capital | 20.12% | 10.50% | 10.00% | - The Bank exceeded all regulatory capital requirements and was categorized as **'well-capitalized'** at September 30, 2021[208](index=208&type=chunk) - The Bank paid a cash dividend of **$7.5 million** to the Corporation in Q1 fiscal 2022, while the Corporation paid **$1.1 million** in cash dividends to its shareholders[212](index=212&type=chunk) [Supplemental Information](index=73&type=section&id=Supplemental%20Information) This section provides additional financial metrics, including loans serviced for others and book value per share Supplemental Information (In Thousands) | Metric | At Sep 30, 2021 | At Jun 30, 2021 | At Sep 30, 2020 | | :------------------------- | :-------------- | :-------------- | :-------------- | | Loans serviced for others | $46,454 | $50,448 | $77,562 | | Book value per share | $17.12 | $16.88 | $16.75 | - Loans serviced for others decreased to **$46.45 million** at September 30, 2021, from $50.45 million at June 30, 2021[213](index=213&type=chunk) - Book value per share increased to **$17.12** at September 30, 2021, from $16.88 at June 30, 2021[213](index=213&type=chunk) [ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk](index=73&type=section&id=ITEM%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the Corporation's strategies and analyses for managing market risk, particularly interest rate risk - The Corporation aims to reduce exposure to fluctuating interest rates by managing the repricing mismatch between interest-earning assets and interest-bearing liabilities, primarily by increasing the interest-rate sensitivity of assets through new loan originations with adjustable rates[214](index=214&type=chunk)[215](index=215&type=chunk) - The Corporation uses an internal interest rate risk model to analyze NPV sensitivity under various interest rate scenarios (+/- 100, +200, +300 basis points)[217](index=217&type=chunk) NPV Sensitivity to Interest Rate Changes (September 30, 2021) | Basis Points Change in Rates | NPV Change (In Thousands) | NPV as Percentage of Portfolio Value Assets | | :--------------------------- | :------------------------ | :------------------------------------------ | | +300 bp | $107,227 | 19.44% | | +200 bp | $79,535 | 17.68% | | +100 bp | $45,118 | 15.41% | | -100 bp | $(23,627) | 10.55% | - At September 30, 2021, the Corporation was asset sensitive, projecting an increase in net interest income in a rising interest rate environment and a smaller increase in a falling rate environment over the subsequent 12-month period[234](index=234&type=chunk) [ITEM 4 - Controls and Procedures](index=81&type=section&id=ITEM%204%20-%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and reports on internal control over financial reporting - The Corporation's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2021[238](index=238&type=chunk) - No material changes occurred in the Corporation's internal control over financial reporting during the quarter ended September 30, 2021[239](index=239&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the Corporation is not a party to any material legal proceedings - The Corporation is not involved in any legal proceedings that are believed to have a material adverse effect on its financial condition, operations, or cash flows[242](index=242&type=chunk) [Item 1A. Risk Factors](index=83&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the annual report - No material changes in risk factors have occurred since the Corporation's Annual Report on Form 10-K for the year ended June 30, 2021[243](index=243&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Corporation's common stock repurchase activities during the quarter Equity Securities Purchases (Q1 FY2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan | Maximum Number of Shares that May Yet Be Purchased Under the Plan | | :--------------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------- | :---------------------------------------------------------------- | | July 1, 2021 – July 31, 2021 | — | $— | — | 266,833 | | August 1, 2021 – August 31, 2021 | 25,674 | $17.17 | 25,674 | 241,159 | | September 1, 2021 – September 30, 2021 | 24,090 | $17.02 | 24,090 | 217,069 | | Total | 49,764 | $17.10 | 49,764 | 217,069 | - The Corporation repurchased **49,764 shares** of its common stock at a weighted average cost of **$17.10 per share** during the quarter ended September 30, 2021[245](index=245&type=chunk) - As of September 30, 2021, **217,069 shares** remained available for purchase under the April 2020 stock repurchase plan, which expires on April 27, 2022[245](index=245&type=chunk) [Item 3. Defaults Upon Senior Securities](index=83&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as not applicable, indicating no defaults upon senior securities during the reporting period - This item is not applicable for the reporting period[247](index=247&type=chunk) [Item 4. Mine Safety Disclosures](index=83&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable, indicating no mine safety disclosures are required for the Corporation - This item is not applicable for the reporting period[248](index=248&type=chunk) [Item 5. Other Information](index=83&type=section&id=Item%205.%20Other%20Information) This item is marked as not applicable, indicating no other material information to disclose that is not covered elsewhere in the report - This item is not applicable for the reporting period[249](index=249&type=chunk) [Item 6. Exhibits](index=85&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, certifications, and XBRL-formatted financial statements - The exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, Form of Certificate of Common Stock, CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL-formatted financial statements[252](index=252&type=chunk)