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]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) For the quarterly period ended September 30, 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 specified in its charter) (State or other jurisdiction of incorporation or organization) 3756 ...

Provident Financial Holdings, Inc. (NASDAQ:PROV) Q1 2022 Earnings Conference Call October 27, 2021 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 Ben Gerlinger - Hovde Group Tim Coffey - Janney Rob Cook - PRV Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are design ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) Provident Financial Holdings, Inc. operates as a Southern California community bank with **$1.18 billion** in assets as of June 30, 2021, focusing on deposits and real estate loans while navigating regulatory oversight and COVID-19 impacts Consolidated Financial Highlights as of June 30, 2021 | Metric | Amount (Millions) | | :--- | :--- | | Total Assets | $1,180 | | Total Deposits | $938.0 | | Stockholders' Equity | $127.3 | - The company's primary business activities consist of community banking, investment services, and trustee services for real estate transactions, with revenues derived principally from interest on its loan and investment portfolios[13](index=13&type=chunk)[14](index=14&type=chunk) - The COVID-19 pandemic has significantly affected the company's communities, customers, and operations, leading to operational changes and uncertainties regarding its ultimate adverse impact[16](index=16&type=chunk) [Subsequent Events](index=6&type=section&id=Subsequent%20Events) Details events occurring after the reporting period, including a declared cash dividend - On July 22, 2021, the Board of Directors declared a cash dividend of **$0.14 per share**, which was paid on September 2, 2021[18](index=18&type=chunk) [Market Area](index=6&type=section&id=Market%20Area) The Bank operates **13 full-service offices** primarily in the Inland Empire, where it is the largest independent community bank - The Bank operates **13 full-service banking offices**, primarily in Riverside and San Bernardino counties (the "Inland Empire"), and is the largest independent community bank headquartered in Riverside County[19](index=19&type=chunk) - In June 2021, the unemployment rate in the Inland Empire was **7.9%**, higher than the national average of **5.9%** but significantly lower than the **13.3%** rate in June 2020. The median home price in the Inland Empire was **$525,000**, up **28%** from June 2020[20](index=20&type=chunk)[21](index=21&type=chunk) [Lending Activities](index=8&type=section&id=Lending%20Activities) The Bank's **$851.0 million** loan portfolio, primarily multi-family and single-family mortgages, is concentrated in California with a high proportion of adjustable-rate loans - Net loans held for investment were **$851.0 million** at June 30, 2021, a decrease from **$902.8 million** at June 30, 2020. The portfolio is primarily composed of multi-family (**56.9%**) and single-family (**31.5%**) mortgage loans[27](index=27&type=chunk)[29](index=29&type=chunk)[36](index=36&type=chunk)[47](index=47&type=chunk) Composition of Loans Held for Investment (Gross) | Loan Type | Amount at June 30, 2021 ($ thousands) | % of Total | Amount at June 30, 2020 ($ thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Single family | $268,272 | 31.48% | $298,810 | 33.04% | | Multi family | $484,408 | 56.85% | $491,903 | 54.38% | | Commercial real estate | $95,279 | 11.18% | $105,235 | 11.64% | | Construction | $3,040 | 0.36% | $7,801 | 0.86% | | Other mortgage loans | $139 | 0.02% | $143 | 0.02% | | Commercial business loans | $849 | 0.10% | $480 | 0.05% | | Consumer loans | $95 | 0.01% | $94 | 0.01% | | **Total** | **$852,082** | **100.00%** | **$904,466** | **100.00%** | - At June 30, 2021, **96%** of loans held for investment due after one year had floating or adjustable interest rates, which helps mitigate interest rate risk[32](index=32&type=chunk) - The Bank's real estate secured loans are geographically concentrated in California, with **53%** in Southern California (excluding the Inland Empire), **27%** in other parts of California, and **20%** in the Inland Empire as of June 30, 2021[34](index=34&type=chunk) Loan Originations, Purchases, and Repayments (Fiscal Year) | Activity | 2021 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | Total loans originated for investment | 214,954 | 106,044 | | Total loans purchased for investment | 16,909 | 142,077 | | Loan principal repayments | (281,477) | (228,250) | [Loan Servicing](index=23&type=section&id=Loan%20Servicing) The Bank's loan servicing portfolio for others significantly decreased, leading to an impairment reserve on servicing assets - The Bank's loan servicing portfolio for others decreased by **42%** to **$50.4 million** at June 30, 2021, from **$86.5 million** at June 30, 2020, primarily due to loan prepayments[73](index=73&type=chunk) - Servicing assets had a carrying value of **$384,000** and a fair value of **$208,000** at June 30, 2021, with a required impairment reserve of **$176,000**[76](index=76&type=chunk) [Delinquencies and Classified Assets](index=25&type=section&id=Delinquencies%20and%20Classified%20Assets) Non-performing assets increased, primarily due to COVID-19 related loan forbearance, while total classified assets decreased Non-Performing Assets Summary | Metric | June 30, 2021 ($ million) | June 30, 2020 ($ million) | | :--- | :--- | :--- | | Total Non-Performing Assets | $8.6 | $4.9 | | As a % of Total Assets | 0.73% | 0.42% | | Total Non-Performing Loans | $8.6 | $4.9 | | As a % of Net Loans | 1.02% | 0.55% | - The outstanding balance of troubled debt restructurings (TDRs) increased to **$7.9 million** (**23 loans**) at June 30, 2021, from **$2.6 million** (**8 loans**) at June 30, 2020. The increase was primarily due to **19 COVID-19 related forbearance loans** being downgraded when their deferrals were extended beyond six months[85](index=85&type=chunk)[86](index=86&type=chunk)[369](index=369&type=chunk) - Total classified assets, including special mention loans, decreased by **26%** to **$10.4 million** at June 30, 2021, from **$14.1 million** at June 30, 2020[91](index=91&type=chunk) Allowance for Loan Losses Activity (Fiscal Year) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | Allowance at beginning of period | $8,265 | $7,076 | | (Recovery) provision for loan losses | ($708) | $1,119 | | Net recoveries (charge-offs) | $30 | $70 | | **Allowance at end of period** | **$7,587** | **$8,265** | | **Allowance as a % of gross loans** | **0.88%** | **0.91%** | [Investment Securities Activities](index=35&type=section&id=Investment%20Securities%20Activities) The investment securities portfolio significantly increased to **$226.9 million**, primarily due to mortgage-backed securities purchases, with most held to maturity - The investment securities portfolio increased to **$226.9 million** at June 30, 2021, from **$123.3 million** at June 30, 2020, primarily due to the purchase of **$158.0 million** in mortgage-backed securities[108](index=108&type=chunk) Investment Securities Composition | Security Type | Amortized Cost at June 30, 2021 ($ thousands) | % of Total | Amortized Cost at June 30, 2020 ($ thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Held to maturity | $223,306 | 98.4% | $118,627 | 96.3% | | Available for sale | $3,494 | 1.6% | $4,583 | 3.7% | | **Total** | **$226,800** | **100.0%** | **$123,210** | **100.0%** | [Deposit Activities and Other Sources of Funds](index=37&type=section&id=Deposit%20Activities%20and%20Other%20Sources%20of%20Funds) Total deposits grew with a strategic shift towards lower-cost transaction accounts, while FHLB borrowings decreased - Total deposits grew to **$938.0 million** at June 30, 2021. The deposit mix shifted towards lower-cost transaction accounts, which comprised **85%** of total deposits, up from **81%** in the prior year, while time deposits decreased to **15%** from **19%**[115](index=115&type=chunk)[350](index=350&type=chunk) Deposit Composition as of June 30, 2021 | Deposit Type | Balance ($ thousands) | % of Total | | :--- | :--- | :--- | | Non interest-bearing checking | $123,179 | 13.13% | | Interest-bearing checking | $327,388 | 34.90% | | Savings accounts | $307,299 | 32.76% | | Money market accounts | $39,670 | 4.23% | | Time deposits | $140,437 | 14.98% | | **Total Deposits** | **$937,973** | **100.00%** | - Borrowings from the FHLB – San Francisco decreased to **$101.0 million** at June 30, 2021, from **$141.0 million** a year prior. The Bank maintained significant additional borrowing capacity[119](index=119&type=chunk)[121](index=121&type=chunk) [Subsidiary Activities](index=42&type=section&id=Subsidiary%20Activities) The Bank operates three wholly-owned subsidiaries, with two currently inactive - The Bank has three wholly owned subsidiaries: Provident Financial Corp (PFC), which acts as a trustee and holds real estate; Profed Mortgage, Inc.; and First Service Corporation. The latter two are currently inactive[127](index=127&type=chunk) [Regulation](index=44&type=section&id=Regulation) The Corporation and Bank are extensively regulated by the OCC, FDIC, and Federal Reserve, with the Bank categorized as "well capitalized" - The Bank is primarily regulated by the Office of the Comptroller of the Currency (OCC) and the FDIC. The Corporation, as a savings and loan holding company, is regulated by the Federal Reserve Board (FRB)[132](index=132&type=chunk) - As of June 30, 2021, the Bank met the Qualified Thrift Lender (QTL) test, with **90.3%** of its portfolio assets in qualified thrift investments[149](index=149&type=chunk) - The Bank was categorized as "well capitalized" under the regulatory framework for prompt corrective action as of June 30, 2021, exceeding all minimum capital requirements[153](index=153&type=chunk)[156](index=156&type=chunk) [Taxation](index=58&type=section&id=Taxation) The Corporation and Bank are subject to federal and state income taxes, with a pre-1988 bad debt reserve that could be subject to recapture - The Corporation and Bank are subject to federal and state income taxes. The Tax Cuts and Jobs Act of 2017 reduced the corporate federal income tax rate to a flat **21%**[190](index=190&type=chunk) - As of June 30, 2021, the Bank had a pre-1988 bad debt reserve for tax purposes of approximately **$9.0 million**, which would be subject to recapture into taxable income if certain non-dividend distributions were made[191](index=191&type=chunk) [Employees and Human Capital](index=60&type=section&id=Employees%20and%20Human%20Capital) The Bank had **161 full-time equivalent employees** as of June 30, 2021, with a predominantly female workforce and long average tenure - As of June 30, 2021, the Bank had **161 full-time equivalent employees**. Approximately **75%** of the workforce was female, and the average tenure was **10.1 years**[198](index=198&type=chunk)[199](index=199&type=chunk) [Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse and significant risks, including macroeconomic, credit, market, regulatory, and operational challenges, particularly those stemming from its concentrated market and the ongoing COVID-19 pandemic - The COVID-19 pandemic has adversely impacted business operations and is expected to negatively affect financial results, with the ultimate impact remaining highly uncertain[215](index=215&type=chunk) - The business is heavily dependent on the Southern California economy, and a regional downturn could increase loan delinquencies, reduce collateral values, and decrease demand for products and services[223](index=223&type=chunk)[224](index=224&type=chunk) - Multi-family and commercial real estate loans, which constitute **68.0%** of the loan portfolio, involve higher principal amounts and greater credit risk than single-family loans[231](index=231&type=chunk)[233](index=233&type=chunk) - Fluctuating interest rates pose a significant risk to profitability by impacting net interest income, the value of the securities portfolio, and borrowers' ability to repay adjustable-rate loans[248](index=248&type=chunk)[249](index=249&type=chunk) - The company faces cybersecurity risks, including potential breaches of its information systems, which could jeopardize confidential information, cause operational interruptions, and result in financial losses or reputational damage[261](index=261&type=chunk)[263](index=263&type=chunk) - The planned discontinuation of the LIBOR interest rate index, to which a majority of the company's loans are tied, creates uncertainty and may result in significant transition expenses and potential disputes with customers[273](index=273&type=chunk)[274](index=274&type=chunk) [Unresolved Staff Comments](index=89&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[289](index=289&type=chunk) [Properties](index=89&type=section&id=Item%202.%20Properties) The Bank operates **13 retail offices** (six owned, seven leased) primarily in Riverside County, with property and equipment valued at **$7.3 million** net book value - The Bank operates **13 retail banking offices**, with **12** in Riverside County and **one** in San Bernardino County. **Six** of these properties are owned, and **seven** are leased[290](index=290&type=chunk) [Legal Proceedings](index=89&type=section&id=Item%203.%20Legal%20Proceedings) The Corporation is not a party to any pending legal proceedings expected to have a material adverse effect on its financial condition or operations - 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[291](index=291&type=chunk) [Mine Safety Disclosures](index=89&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Corporation - Not applicable[292](index=292&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=89&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Corporation's common stock trades on NASDAQ under PROV, with a policy of quarterly cash dividends and recent share repurchases - The Corporation's common stock trades on the NASDAQ Global Select Market under the symbol **PROV**. As of June 30, 2021, there were **7,436,315 shares outstanding** held by **436 shareholders of record**[294](index=294&type=chunk) - The Board of Directors has declared quarterly cash dividends consecutively since September 2002. A dividend of **$0.14 per share** was declared on July 22, 2021[295](index=295&type=chunk)[297](index=297&type=chunk) Common Stock Purchases - Q4 FY2021 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2021 | 5,581 | $16.23 | | May 2021 | 35,254 | $16.47 | | June 2021 | 40,993 | $17.48 | | **Total Q4** | **81,828** | **$16.96** | - As of June 30, 2021, **266,833 shares** remained available for future purchases under the April 2020 stock repurchase plan[298](index=298&type=chunk) [Selected Financial Data](index=92&type=section&id=Item%206.%20Selected%20Financial%20Data) This section incorporates the "Financial Highlights" from the Corporation's Annual Report to Shareholders by reference [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=93&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal year 2021 net income decreased to **$7.6 million** due to lower net interest income, offset by a loan loss recovery and reduced non-interest expense, with assets growing to **$1.18 billion** and deposits shifting to lower-cost accounts [Comparison of Financial Condition at June 30, 2021 and 2020](index=104&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202021%20and%202020) Total assets increased to **$1.18 billion** due to higher investment securities, offset by decreased loans and cash, while deposits grew with a shift to lower-cost funding - Total assets increased by **$6.8 million** (**1%**) to **$1.18 billion**, primarily due to a **$103.6 million** (**84%**) increase in investment securities, offset by a **$51.8 million** (**6%**) decrease in loans held for investment and a **$45.7 million** (**39%**) decrease in cash[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk) - Total deposits increased by **$45.0 million** (**5%**) to **$938.0 million**, with transaction accounts growing by **10%** while time deposits decreased by **17%**, reflecting a strategic shift to lower-cost funding[350](index=350&type=chunk) - Borrowings decreased by **$40.0 million** (**28%**) to **$101.0 million** due to scheduled maturities and prepayments of FHLB advances[351](index=351&type=chunk) [Comparison of Operating Results for the Years Ended June 30, 2021 and 2020](index=106&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Years%20Ended%20June%2030%2C%202021%20and%202020) Net income slightly decreased due to lower net interest income, largely offset by a loan loss recovery and reduced non-interest expenses, including an ERTC credit Key Operating Results (Fiscal Year) | Metric | 2021 (Millions) | 2020 (Millions) | | :--- | :--- | :--- | | Net Income | $7.6 | $7.7 | | Diluted EPS | $1.00 | $1.01 | | Return on Average Assets | 0.64% | 0.69% | | Return on Average Stockholders' Equity | 6.05% | 6.26% | - Net interest income decreased by **$5.8 million** (**16%**) to **$30.6 million**, as the net interest margin fell **70 basis points** to **2.66%** due to a sharp decline in the average yield on interest-earning assets[355](index=355&type=chunk) - The company recorded a **$708,000 recovery** from the allowance for loan losses in fiscal 2021, compared to a **$1.1 million provision** in fiscal 2020. The recovery was driven by an improved economic outlook and a decrease in the loan portfolio[366](index=366&type=chunk) - Non-interest expense decreased by **$3.2 million** (**11%**) to **$25.7 million**, primarily due to a **$3.7 million** decrease in salaries and benefits, which included a **$2.4 million credit** from the Employee Retention Tax Credit (ERTC)[377](index=377&type=chunk)[378](index=378&type=chunk)[474](index=474&type=chunk) [Average Balances, Interest and Average Yields/Costs](index=113&type=section&id=Average%20Balances%2C%20Interest%20and%20Average%20Yields%2FCosts) The net interest margin compressed due to a significant decline in the average yield on interest-earning assets Net Interest Margin Analysis (Fiscal Year) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets | 3.06% | 3.92% | | Average Cost of Interest-Bearing Liabilities | 0.44% | 0.62% | | **Net Interest Spread** | **2.62%** | **3.30%** | | **Net Interest Margin** | **2.66%** | **3.36%** | [Liquidity and Capital Resources](index=117&type=section&id=Liquidity%20and%20Capital%20Resources) The Bank maintains strong liquidity through deposits, loan repayments, and FHLB advances, exceeding all minimum regulatory capital requirements - Primary sources of funds are deposits, loan repayments, and FHLB advances. At June 30, 2021, cash and cash equivalents were **$70.3 million**[391](index=391&type=chunk)[394](index=394&type=chunk) - The Bank maintained significant borrowing capacity, with **$296.8 million** available from the FHLB-San Francisco and a **$206.1 million** discount window facility at the Federal Reserve Bank[394](index=394&type=chunk) Bank Regulatory Capital Ratios as of June 30, 2021 | Ratio | Actual | Minimum to be Well Capitalized | | :--- | :--- | :--- | | Tier 1 Leverage Capital | 10.19% | 5.00% | | CET1 Capital | 18.58% | 6.50% | | Tier 1 Capital | 18.58% | 8.00% | | Total Capital | 19.76% | 10.00% | [Quantitative and Qualitative Disclosures about Market Risk](index=119&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Corporation manages interest rate risk, showing asset sensitivity where a **+100 basis point** rate shock is estimated to increase Net Portfolio Value by **$42.5 million** and Net Interest Income by **0.23%** Net Portfolio Value (NPV) Sensitivity Analysis as of June 30, 2021 | Rate Change (Basis Points) | Change in NPV ($ thousands) | NPV as % of Portfolio Value Assets | | :--- | :--- | :--- | | +300 bp | $102,842 | 19.50% | | +200 bp | $75,230 | 17.72% | | +100 bp | $42,534 | 15.53% | | Base Case | $0 | 12.54% | | -100 bp | ($17,691) | 11.25% | Net Interest Income (NII) Sensitivity Analysis (Next 12 Months) | Rate Change (Basis Points) | Change in NII (as of June 30, 2021) | | :--- | :--- | | +300 bp | +4.55% | | +200 bp | +2.06% | | +100 bp | +0.23% | | -100 bp | +0.22% | [Financial Statements and Supplementary Data](index=127&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the Consolidated Financial Statements and Notes to Consolidated Financial Statements by reference [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=127&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[419](index=419&type=chunk) [Controls and Procedures](index=127&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Corporation's disclosure controls and internal control over financial reporting were effective as of June 30, 2021 - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2021[421](index=421&type=chunk) - Management concluded that as of June 30, 2021, the Corporation's internal control over financial reporting was effective based on the criteria established in the Internal Control-Integrated Framework (2013)[425](index=425&type=chunk) [Other Information](index=130&type=section&id=Item%209B.%20Other%20Information) This item is not applicable PART III [Directors, Executive Officers and Corporate Governance](index=130&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors is incorporated by reference from the Proxy Statement, and the company has a Code of Ethics and an audit committee with a financial expert - Information regarding the Board of Directors is incorporated by reference from the Proxy Statement[431](index=431&type=chunk) - The Corporation has adopted a Code of Ethics and has a designated audit committee financial expert, Joseph P. Barr[433](index=433&type=chunk)[434](index=434&type=chunk) [Executive Compensation](index=130&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's Proxy Statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=132&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the company's Proxy Statement Equity Compensation Plan Information as of June 30, 2021 | Plan Category | Securities to Be Issued Upon Exercise (a) | Weighted-Average Exercise Price (b) | Securities Available for Future Issuance (c) | | :--- | :--- | :--- | :--- | | **Equity compensation plans approved by security holders** | | | | | Stock Options | 417,000 | $16.22 | 57,500 | | Restricted Stock | 101,250 | N/A | 62,750 | | **Total** | **518,250** | **$16.22** | **120,250** | [Certain Relationships and Related Transactions, and Director Independence](index=134&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's Proxy Statement [Principal Accountant Fees and Services](index=134&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's Proxy Statement PART IV [Exhibits, Financial Statement Schedules](index=134&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K, including corporate governance and employment documents Consolidated Financial Statements [Notes to Consolidated Financial Statements](index=148&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the Corporation's accounting policies and financial data, covering loan loss allowance, investment securities, loan portfolio credit quality, deposits, borrowings, regulatory capital, and fair value measurements [Note 2: Investment Securities](index=160&type=section&id=Note%202%3A%20Investment%20Securities) This note provides a detailed breakdown of the investment securities portfolio by type, amortized cost, and estimated fair value Investment Securities by Type as of June 30, 2021 | Security Type | Amortized Cost ($ thousands) | Estimated Fair Value ($ thousands) | | :--- | :--- | :--- | | **Held to maturity** | | | | U.S. government sponsored enterprise MBS | $220,448 | $221,847 | | U.S. SBA securities | $1,858 | $1,874 | | Certificate of deposits | $1,000 | $1,000 | | **Available for sale** | | | | U.S. government agency MBS | $2,146 | $2,222 | | U.S. government sponsored enterprise MBS | $1,197 | $1,211 | | Private issue CMO | $151 | $154 | | **Total** | **$226,800** | **$228,308** | [Note 3: Loans Held for Investment](index=164&type=section&id=Note%203%3A%20Loans%20Held%20for%20Investment) This note details the loan portfolio by risk category and provides an update on COVID-19 related loan forbearance status Loan Portfolio by Risk Category as of June 30, 2021 | Risk Category | Amount ($ thousands) | % of Total | | :--- | :--- | :--- | | Pass | $840,908 | 98.69% | | Special Mention | $1,767 | 0.21% | | Substandard | $9,407 | 1.10% | | **Total** | **$852,082** | **100.00%** | COVID-19 Loan Forbearance Status as of June 30, 2021 | Loan Type | Forbearance Granted (Amount) ($ thousands) | Forbearance Remaining (Amount) ($ thousands) | | :--- | :--- | :--- | | Single-family loans | $23,551,000 | $897,000 | | Multi-family loans | $2,321,000 | $0 | | Commercial real estate loans | $2,000,000 | $945,000 | | **Total** | **$27,872,000** | **$1,842,000** | - As of June 30, 2021, **four loans** with a total balance of **$1.8 million** remained in forbearance under the CARES Act. The company ceased offering new forbearance relief on March 31, 2021[561](index=561&type=chunk)[564](index=564&type=chunk) [Note 7: Deposits](index=186&type=section&id=Note%207%3A%20Deposits) This note provides a breakdown of time deposit maturities as of June 30, 2021 Maturities of Time Deposits as of June 30, 2021 | Maturity Period | Amount ($ thousands) | | :--- | :--- | | One year or less | $76,705 | | Over one to two years | $37,687 | | Over two to five years | $25,646 | | Over five years | $399 | | **Total** | **$140,437** | [Note 12: Incentive Plans](index=198&type=section&id=Note%2012%3A%20Incentive%20Plans) This note details the activity for stock options and restricted stock under the company's incentive plans for fiscal year 2021 Stock Option Activity (Fiscal Year 2021) | Activity | Shares | Weighted-Average Exercise Price | | :--- | :--- | :--- | | Outstanding at June 30, 2020 | 554,500 | $14.07 | | Exercised | (132,000) | $7.43 | | Forfeited | (5,500) | $10.68 | | **Outstanding at June 30, 2021** | **417,000** | **$16.22** | Restricted Stock Activity (Fiscal Year 2021) | Activity | Shares | Weighted-Average Award Date Fair Value | | :--- | :--- | :--- | | Unvested at June 30, 2020 | 225,500 | $18.55 | | Vested | (112,750) | $18.53 | | Forfeited | (11,500) | $18.57 | | **Unvested at June 30, 2021** | **101,250** | **$18.57** | [Note 16: Fair Value of Financial Instruments](index=204&type=section&id=Note%2016%3A%20Fair%20Value%20of%20Financial%20Instruments) This note provides a breakdown of assets measured at fair value on both a recurring and nonrecurring basis, categorized by fair value hierarchy levels Assets Measured at Fair Value on a Recurring Basis (June 30, 2021) | Asset Type | Level 1 ($ thousands) | Level 2 ($ thousands) | Level 3 ($ thousands) | Total ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Investment securities - available for sale | $0 | $3,433 | $154 | $3,587 | | Loans held for investment, at fair value | $0 | $0 | $1,874 | $1,874 | | Interest-only strips | $0 | $0 | $10 | $10 | | **Total** | **$0** | **$3,433** | **$2,038** | **$5,471** | Assets Measured at Fair Value on a Nonrecurring Basis (June 30, 2021) | Asset Type | Level 2 ($ thousands) | Level 3 ($ thousands) | Total ($ thousands) | | :--- | :--- | :--- | :--- | | Non-performing loans | $899 | $7,747 | $8,646 | | Mortgage servicing assets | $0 | $208 | $208 | | **Total** | **$899** | **$7,955** | **$8,854** |

Financial Data and Key Metrics Changes - In Q4 2021, the company originated and purchased $93.3 million of loans held for investment, an increase from $61 million in the prior sequential quarter [5] - Nonperforming assets decreased to $8.6 million from $9.8 million on March 31, 2021 [7] - The allowance for loan losses to gross loans held for investment decreased to 88 basis points from 98 basis points [8] - The net interest margin compressed by 6 basis points to 2.54% due to a decrease in the average yield on total interest-bearing assets [8][9] Business Line Data and Key Metrics Changes - Loans held for investment increased by approximately 1% compared to March 31, 2021, with increases in single-family and multifamily loan categories [6] - The company recorded a $767,000 negative provision for loan losses in the June 2021 quarter [8] - The average cost of deposits decreased by 2 basis points to 15 basis points [9] Market Data and Key Metrics Changes - The purchase market remains active but is constrained by low inventory, with demand for single-family products being robust [15] - Refinance activity began to slow in the June quarter but has since grown as mortgage rates have decreased [14] 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 [11][12] - Maintaining cash dividends is prioritized over stock buyback activity, although stock repurchase remains a valid capital management tool [12][22] Management's Comments on Operating Environment and Future Outlook - Management expressed that current health protocols may have a minor impact on loan originations, but overall market activity remains strong [24][25] - The company believes that the lending environment is normalizing back to pre-pandemic levels, despite challenges in the purchase market [15][24] Other Important Information - The company recorded a $2.4 million credit for the employee retention tax credit in the June 2021 quarter [10] - The FTE count decreased to 161 from 178 year-over-year, indicating a 10% decline [10] Q&A Session Summary Question: Has refinance activity slowed or is it still elevated? - Management noted that refinance activity began to slow in the June quarter but has since grown as mortgage rates have decreased [14] Question: Can you describe the overall lending environment? - Management indicated that the purchase market is active but constrained by low inventory, with demand for single-family products remaining strong [15] Question: Was the current tax rate partly attributable to the employee retention tax credit? - Management confirmed that the employee retention credit provided a benefit, affecting the tax rate for the quarter [16] Question: Can you expand on the expense base and potential for branch consolidation? - Management stated that branch consolidation is reviewed as leases become due, and they have reduced FTE count significantly [20][21] Question: Is there a threshold where stock repurchase would become a priority? - Management emphasized that supporting the cash dividend is the priority, but stock repurchase remains part of their capital management strategy [22] Question: What is the concern level about future loan originations given health warnings? - Management believes there may be a minor impact from health conditions, but overall market activity remains strong [24][25]