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Provident Financial (PROV) - 2025 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company presents its unaudited interim condensed consolidated financial statements and accompanying notes Condensed Consolidated Statements of Financial Condition Total assets slightly decreased to $1.26 billion, driven by lower investment securities and borrowings Condensed Consolidated Statements of Financial Condition (in thousands) | | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Assets | $1,260,180 | $1,272,200 | | Cash and cash equivalents | $50,915 | $51,376 | | Investment securities | $115,298 | $131,900 | | Loans held for investment, net | $1,058,980 | $1,052,979 | | Total Liabilities | $1,131,305 | $1,142,259 | | Total deposits | $901,319 | $888,348 | | Borrowings | $215,580 | $238,500 | | Total Stockholders' Equity | $128,875 | $129,941 | Condensed Consolidated Statements of Operations Quarterly net income rose to $1.86 million, while nine-month net income fell to $4.63 million Key Operating Results (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $9,212 | $8,559 | $26,587 | $26,472 | | (Recovery of) Provision for Credit Losses | ($391) | $124 | ($502) | ($51) | | Non-interest Income | $907 | $848 | $2,651 | $2,474 | | Non-interest Expense | $7,856 | $7,168 | $23,173 | $21,368 | | Net Income | $1,857 | $1,495 | $4,629 | $5,398 | | Diluted EPS | $0.28 | $0.22 | $0.68 | $0.77 | Condensed Consolidated Statements of Comprehensive Income Total comprehensive income was $1.86 million for the quarter and $4.65 million for the nine-month period Comprehensive Income (in thousands) | | Quarter Ended March 31, | Nine Months Ended March 31, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net Income | $1,857 | $1,495 | $4,629 | $5,398 | | Other comprehensive income (loss) | $1 | ($1) | $19 | $30 | | Total Comprehensive Income | $1,858 | $1,494 | $4,648 | $5,428 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $128.9 million due to dividends and stock buybacks outpacing net income - For the nine months ended March 31, 2025, stockholders' equity was impacted by $4.6 million in net income, offset by $2.8 million in cash dividends and $3.3 million in treasury stock purchases18 - Cash dividends of $0.42 per share were paid in the nine months ended March 31, 2025, consistent with the same period in the prior year1920 Condensed Consolidated Statements of Cash Flows Net cash used for financing outpaced cash from operations and investing, reducing cash by $461,000 Net Cash Flow Summary for Nine Months Ended March 31 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,205 | $6,441 | | Net cash provided by investing activities | $9,632 | $26,788 | | Net cash used for financing activities | ($16,298) | ($47,347) | | Net decrease in cash and cash equivalents | ($461) | ($14,118) | | Cash and cash equivalents at end of period | $50,915 | $51,731 | Notes to Unaudited Interim Condensed Consolidated Financial Statements The notes detail accounting policies, credit loss allowances, and fair value measurements for key accounts - The company is currently evaluating the impact of several new Accounting Standard Updates (ASUs), including ASU 2024-03, ASU 2023-09, and ASU 2023-07262728 - At March 31, 2025, investment securities had unrealized holding losses of $11.7 million, primarily due to changes in interest rates, not credit quality3739 - The Allowance for Credit Losses (ACL) on loans was $6.6 million, or 0.62% of gross loans, at March 31, 2025, down from $7.1 million at June 30, 20247582 - Non-performing loans decreased to $1.4 million (0.13% of LHFI) at March 31, 2025, from $2.6 million (0.25% of LHFI) at June 30, 2024262264 - On January 23, 2025, the Board authorized a new stock repurchase plan for up to 334,773 shares, with 293,132 shares remaining available for purchase154155 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, highlighting improved quarterly income but lower nine-month earnings Executive Summary and Operating Strategy The company focuses on community banking in Southern California with a strategy of moderate asset growth - The Corporation's strategy focuses on moderate asset growth, with an emphasis on expanding its lending portfolios while improving the deposit base173 - The company identifies elevated risk in commercial real estate, with office space loans totaling $39.9 million, or 3.8% of the total loan portfolio176 Comparison of Financial Condition at March 31, 2025 and June 30, 2024 Total assets decreased 1% to $1.26 billion due to a decline in investment securities and borrowings - Total assets decreased 1% to $1.26 billion, primarily from a 13% decrease in investment securities, offset by a modest increase in loans181183 - Total deposits increased by $13.0 million, driven by $50.1 million in new government deposits, which masked a decline in other deposit categories189 - Total borrowings decreased by 10% to $215.6 million due to scheduled maturities192 - Stockholders' equity declined by $1.0 million, as dividends and stock repurchases outpaced net income for the nine-month period193 Comparison of Operating Results for the Quarters and Nine Months ended March 31, 2025 and 2024 Quarterly net income rose 24% year-over-year, while nine-month net income fell 14% on higher expenses Key Performance Metrics | Metric | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in millions) | $1.9 | $1.5 | $4.6 | $5.4 | | Diluted EPS | $0.28 | $0.22 | $0.68 | $0.77 | | Return on Average Assets | 0.59% | 0.47% | 0.50% | 0.56% | | Return on Average Equity | 5.71% | 4.57% | 4.72% | 5.51% | | Efficiency Ratio | 77.64% | 76.20% | 79.26% | 73.82% | Asset Quality Asset quality improved as non-performing assets decreased to $1.4 million, or 0.11% of total assets Non-Performing Assets (in thousands) | | At March 31, 2025 | At June 30, 2024 | | :--- | :--- | :--- | | Total non-performing loans | $1,395 | $2,596 | | Real estate owned, net | $— | $— | | Total non-performing assets | $1,395 | $2,596 | | Non-performing assets as a % of total assets | 0.11% | 0.20% | - Total classified assets increased to $6.8 million at March 31, 2025, from $5.8 million at June 30, 2024265 - The January 2025 wildfires in Los Angeles did not have a material impact, although the bank identified $23.7 million in potentially affected zones263 Loan Volume Activities Loan originations for investment increased 64% to $93.3 million in the nine-month period Loan Volume Activity (in thousands) | Activity | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total loans originated for investment | $93,277 | $56,941 | | Loan principal payments | ($91,351) | ($69,276) | | Net increase (decrease) in LHFI | $6,001 | ($11,868) | Liquidity and Capital Resources The company maintains a strong liquidity position and exceeds all regulatory capital requirements - Total remaining available borrowing capacity across all sources was approximately $470.8 million at March 31, 2025272273 - The Corporation repurchased 209,066 shares at a weighted average cost of $15.06 per share during the first nine months of fiscal 2025193275 Bank Regulatory Capital Ratios (as of March 31, 2025) | Ratio | Actual | Minimum to Be Well Capitalized | | :--- | :--- | :--- | | Tier 1 leverage capital | 9.85% | 5.00% | | CET1 capital | 19.01% | 6.50% | | Tier 1 capital | 19.01% | 8.00% | | Total capital | 20.03% | 10.00% | Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk, with analysis showing a liability-sensitive position short-term - The interest rate gap analysis as of March 31, 2025, shows a cumulative negative gap of $198.7 million for instruments repricing within 12 months298300 Net Portfolio Value (NPV) Sensitivity as of March 31, 2025 | Rate Change (bp) | NPV Change (in thousands) | Sensitivity Measure (bp) | | :--- | :--- | :--- | | +300 | ($16,485) | -106 | | +200 | ($4,949) | -28 | | +100 | $1,033 | 10 | | Base Case | $149,877 | | | -100 | ($1,761) | -15 | | -200 | ($14,247) | -105 | | -300 | ($15,993) | -120 | Net Interest Income (NII) Sensitivity (Next 12 Months) | Rate Change (bp) | Change in NII (as of Mar 31, 2025) | Change in NII (as of Jun 30, 2024) | | :--- | :--- | :--- | | +200 | 2.30% | -3.45% | | +100 | 1.98% | -0.51% | | -100 | -2.78% | -0.67% | | -200 | -5.68% | -1.15% | Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes - The CEO and Interim CFO concluded that the Corporation's disclosure controls and procedures were effective as of March 31, 2025309 - No material changes were made to the internal control over financial reporting during the quarter ended March 31, 2025310 PART II - OTHER INFORMATION Legal Proceedings The company settled two PAGA lawsuits for $231,600, which was fully expensed in the third quarter - The company settled two PAGA lawsuits from former employees for an aggregate amount of $231,600312315316 - The full settlement expense was recognized in the third quarter of fiscal 2025, and the settlement is pending court approval316 Risk Factors No material changes to risk factors were reported since the last annual report on Form 10-K - No material changes in risk factors were reported since the last Annual Report on Form 10-K318 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 51,869 shares in Q3 2025 under a new stock repurchase plan - A new stock repurchase plan for 334,773 shares was announced on January 23, 2025, replacing a previous plan320 Equity Security Purchases in Q3 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 14,980 | $15.66 | | Feb 2025 | 17,006 | $15.93 | | Mar 2025 | 19,883 | $14.49 | | Total | 51,869 | $15.30 | Defaults Upon Senior Securities This section is not applicable to the company - Not applicable321 Mine Safety Disclosures This section is not applicable to the company - Not applicable322 Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter325 Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data - Exhibits filed include corporate governance documents, executive employment agreements, and Sarbanes-Oxley certifications325