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Provident Financial Holdings Reports Second Quarter of Fiscal 2020 Results

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Net Income Increases by 22% in the December 2019 Quarter in Comparison to the December 2018 Quarter

Net Interest Margin Expands Five Basis Points to 3.59% in the December 2019 Quarter in Comparison to the December 2018 Quarter

Loans Held for Investment Increase 7% to $941.7 Million from June 30, 2019

Non-Performing Assets Decrease 45% to $3.4 Million at December 31, 2019 in Comparison to $6.2 Million at June 30, 2019

RIVERSIDE, Calif., Jan. 27, 2020 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. (“Company”), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced second quarter earnings results for the fiscal year ending June 30, 2020.

For the quarter ended December 31, 2019, the Company reported net income of $2.40 million, or $0.31 per diluted share (on 7.66 million average diluted shares outstanding), up 22 percent from the net income of $1.96 million, or $0.26 per diluted share (on 7.60 million average diluted shares outstanding), in the comparable period a year ago. Compared to the same quarter last year, the increase in earnings was primarily attributable to lower non-interest expenses, partly offset by lower non-interest income.

“I am pleased with our financial results for the December 2019 quarter. We continue to demonstrate reasonable growth in our loan portfolio, our credit quality metrics are very good, operating expenses are under control, and our capital levels are strong,” said Craig G. Blunden, Chairman and Chief Executive Officer of the Company. “We look forward to 2020 and believe we are well-positioned for growth by serving the communities of the Inland Empire,” Mr. Blunden concluded.

Return on average assets for the second quarter of fiscal 2020 was 0.87 percent compared to 0.69 percent for the same period of fiscal 2019; and return on average stockholders’ equity for the second quarter of fiscal 2020 was 7.81 percent compared to 6.42 percent for the comparable period of fiscal 2019.

On a sequential quarter basis, the $2.40 million net income for the second quarter of fiscal 2020 reflects a $164,000 or six percent decrease from $2.56 million in the first quarter of fiscal 2020. The decrease in earnings for the second quarter of fiscal 2020 compared to the first quarter of fiscal 2020 was primarily attributable to higher non-interest expenses (primarily due to the $296,000 partial reversion of a previously expensed legal settlement, which was recognized during the prior sequential quarter and not replicated this quarter) and a lower recovery from the allowance for loan losses, partly offset by higher non-interest income (primarily due to higher loan servicing and other fees). Diluted earnings per share for the second quarter of fiscal 2020 were $0.31 per share, down six percent from the $0.33 per share during the first quarter of fiscal 2020. Return on average assets was 0.87 percent for the second quarter of fiscal 2020 compared to 0.95 percent in the first quarter of fiscal 2020; and return on average stockholders’ equity for the second quarter of fiscal 2020 was 7.81 percent, compared to 8.46 percent for the first quarter of fiscal 2020.

For the six months ended December 31, 2019 net income increased $1.18 million, or 31 percent, to $4.96 million from $3.78 million in the comparable period ended December 31, 2018; and diluted earnings per share for the six months ended December 31, 2019 increased 30 percent to $0.65 per share (on 7.65 million average diluted shares outstanding) from $0.50 per share (on 7.58 million average diluted shares outstanding) for the comparable six month period last year. Compared to the same period last year, the increase in earnings was primarily attributable to a $7.79 million decrease in non-interest expense; partly offset by a $5.52 million decrease in the gain on sale of loans.

Net interest income decreased $192,000, or two percent, to $9.64 million in the second quarter of fiscal 2020 from $9.83 million for the same quarter of fiscal 2019, attributable to a lower average interest-earning assets balance, partly offset by an increase in the net interest margin. The average balance of interest-earning assets decreased by $35.7 million, or three percent, to $1.07 billion in the second quarter of fiscal 2020 from $1.11 billion in the same quarter last year. The average balance of interest-bearing liabilities decreased by $36.1 million, or four percent, to $964.6 million in the second quarter of fiscal 2020 from $1.00 billion in the same quarter last year. The net interest margin during the second quarter of fiscal 2020 increased five basis points to 3.59 percent from 3.54 percent in the same quarter last year, primarily due to an increase in the average yield of interest-earning assets, partly offset by a slight increase in the average cost of interest-bearing liabilities. The average yield on interest-earning assets increased by six basis points to 4.18 percent in the second quarter of fiscal 2020 from 4.12 percent in the same quarter last year; while the average cost of interest-bearing liabilities increased by one basis point to 0.65 percent in the second quarter of fiscal 2020 from 0.64 percent in the same quarter last year.

The average balance of loans receivable (including loans held for sale in the prior year) decreased by $7.1 million, or one percent, to $934.1 million in the second quarter of fiscal 2020 from $941.2 million in the same quarter of fiscal 2019, primarily due to a decrease in the average balance of loans held for sale, partly offset by an increase in loans held for investment. There were no loans held for sale during the second quarter of fiscal 2020. The average yield on loans receivable increased by three basis points to 4.42 percent in the second quarter of fiscal 2020 from an average yield of 4.39 percent in the same quarter of fiscal 2019. The increase in the average yield on loans receivable was primarily attributable to a $378,000 deferred loan fee that was recognized in interest income as a result of a loan payoff in the second quarter of fiscal 2020 from a previously classified non-performing loan that had been upgraded to pass as compared to $159,000 of deferred interest payments that was recognized from two non-performing loans that were paid off in the same quarter last year. Total loans originated and purchased for investment in the second quarter of fiscal 2020 were $81.6 million, up 108 percent from $39.3 million in the same quarter of fiscal 2019. Loan principal payments received in the second quarter of fiscal 2020 were $65.2 million, up 58 percent from $41.2 million in the same quarter of fiscal 2019.

The average balance of investment securities decreased by $6.4 million, or seven percent, to $87.1 million in the second quarter of fiscal 2020 from $93.5 million in the same quarter of fiscal 2019. The average yield on investment securities increased 70 basis points to 2.60 percent in the second quarter of fiscal 2020 from 1.90 percent for the same quarter of fiscal 2019. The increase in the average yield was primarily attributable to a lower premium amortization ($97,000 vs. $224,000) and purchases of mortgage-backed securities during the last 12 months which had higher average yields than the existing portfolio.

In the second quarter of fiscal 2020, the Federal Home Loan Bank – San Francisco (“FHLB”) distributed a $145,000 cash dividend to the Bank on its FHLB stock, down from $278,000 in the same quarter last year, which included a $133,000 special cash dividend received on FHLB San Francisco stock last year, not replicated this quarter.

The average balance of the Company’s interest-earning deposits, primarily cash with the Federal Reserve Bank of San Francisco, decreased $22.3 million, or 33 percent, to $45.5 million in the second quarter of fiscal 2020 from $67.8 million in the same quarter of fiscal 2019. The average yield earned on interest-earning deposits in the second quarter of fiscal 2020 was 1.62 percent, down 61 basis points from 2.23 percent in the same quarter of fiscal 2019 largely as a result of three 25 basis point decreases in the targeted Federal Funds Rate in the first and second quarters of fiscal 2020.

Average deposits decreased $56.0 million, or six percent, to $833.6 million in the second quarter of fiscal 2020 from $889.6 million in the same quarter of fiscal 2019, primarily due to a managed run-off of higher cost time deposits consistent with the reduction in the Bank’s funding needs resulting from no loans originated for sale during the first and second quarters of fiscal 2020. The average cost of deposits improved, decreasing by three basis points to 0.37 percent in the second quarter of fiscal 2020 from 0.40 percent in the same quarter last year.

Transaction account balances or “core deposits” decreased slightly to $647.8 million at December 31, 2019 from $648.1 million at June 30, 2019, while time deposits decreased $7.2 million, or four percent, to $185.9 million at December 31, 2019 from $193.1 million at June 30, 2019.

The average balance of borrowings, which consisted of FHLB advances, increased $20.0 million, or 18 percent, to $131.1 million while the average cost of borrowings decreased 12 basis points to 2.43 percent in the second quarter of fiscal 2020, compared to an average balance of $111.1 million with an average cost of 2.55 percent in the same quarter of fiscal 2019. The increase in the average balance of borrowings was primarily due to the new long-term borrowings with a lower average cost obtained during the first quarter of fiscal 2020 (sequential quarter).

During the second quarter of fiscal 2020, the Company recorded a recovery from the allowance for loan losses of $22,000, as compared to a recovery of $217,000 recorded during the same period of fiscal 2019 and a recovery of $181,000 recorded in the first quarter of fiscal 2020 (sequential quarter).

Non-performing assets, with underlying collateral located in California, decreased $2.8 million, or 45 percent, to $3.4 million, or 0.31 percent of total assets, at December 31, 2019, compared to $6.2 million, or 0.57 percent of total assets, at June 30, 2019. The non-performing loans at December 31, 2019 are comprised of 16 single-family loans ($3.4 million) and one commercial business loan ($37,000). At both December 31, 2019 and June 30, 2019, there was no real estate owned.

Net loan recoveries for the quarter ended December 31, 2019 were $14,000 or 0.01 percent (annualized) of average loans receivable, compared to net loan recoveries of $123,000 or 0.05 percent (annualized) of average loans receivable for the quarter ended December 31, 2018 and net loan recoveries of $34,000 or 0.02 percent (annualized) of average loans receivable for the quarter ended September 30, 2019 (sequential quarter).

Classified assets at December 31, 2019 were $13.7 million, comprised of $9.4 million of loans in the special mention category, $4.3 million of loans in the substandard category and no real estate owned; while classified assets at June 30, 2019 were $16.2 million, comprised of $8.6 million of loans in the special mention category, $7.6 million of loans in the substandard category and no real estate owned.

For the quarter ended December 31, 2019, no new loans were restructured from their original terms and classified as restructured loans. The outstanding balance of restructured loans at December 31, 2019 was $1.8 million (six loans), down 53 percent from $3.8 million (eight loans) at June 30, 2019. As of December 31, 2019, all of the restructured loans were classified as substandard non-accrual. As of December 31, 2019, 49% or $888,000 of the restructured loans have a current payment status.

The allowance for loan losses was $6.9 million at December 31, 2019, or 0.73 percent of gross loans held for investment, compared to $7.1 million at June 30, 2019, or 0.80 percent of gross loans held for investment. Management believes that, based on currently available information, the allowance for loan losses is sufficient to absorb potential losses inherent in loans held for investment at December 31, 2019.

Non-interest income decreased by $2.26 million, or 63 percent, to $1.34 million in the second quarter of fiscal 2020 from $3.60 million in the same period of fiscal 2019, primarily as a result of no loan sales during the current quarter. The gain on sale of loans last year, during the second quarter of fiscal 2019, was $2.26 million. On a sequential quarter basis, non-interest income increased $274,000, or 26 percent, primarily as a result of an increase in loan servicing and other loan fees. There were no loans originated for sale during the current or sequential quarters.

Non-interest expenses decreased $3.33 million, or 31 percent, to $7.55 million in the second quarter of fiscal 2020 from $10.88 million in the same quarter last year. The decrease was due primarily to lower salaries and employee benefits expenses resulting from fewer employees and consistent with the scaling back of saleable single-family mortgage loan originations. On a sequential quarter basis, non-interest expenses increased $316,000 or four percent from $7.24 million. The increase in non-interest expenses for the sequential quarter was primarily due to the $296,000 partial reversion of a previously expensed legal settlement, which was recognized in other non-interest expense during the quarter ended September 30, 2019 and not replicated this quarter.

The Company’s efficiency ratio in the second quarter of fiscal 2020 was 69 percent, an improvement from 81 percent in the same quarter last year but a slight increase from 68 percent in the first quarter of fiscal 2020 (sequential quarter).

The Company’s provision for income tax was $1.05 million for the second quarter of fiscal 2020, up 30 percent from $810,000 in the same quarter last year. The effective tax rate in the second quarter of fiscal 2020 was 30.51% as compared to 29.26% in the same quarter of fiscal 2019. The Company believes that the tax provision recorded in the second quarter of fiscal 2020 reflects its current federal and state income tax obligations.

The Company repurchased 2,361 shares of its common stock during the quarter ended December 31, 2019 at an average cost of $21.84 per share. As of December 31, 2019, a total of 71,284 shares or 19 percent of the April 2018 stock repurchase plan have been purchased at an average cost of $19.97 per share, leaving 301,716 shares available for future purchases.

The Bank currently operates 13 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire).

The Company will host a conference call for institutional investors and bank analysts on Tuesday, January 28, 2020 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-844-721-7239 and referencing access code number 1069003. An audio replay of the conference call will be available through Tuesday, February 4, 2020 by dialing 1-866-207-1041 and referencing access code number 2689092.

For more financial information about the Company please visit the website at www.myprovident.com and click on the “Investor Relations” section.

Safe-Harbor Statement

This press release contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to the Company’s financial condition, liquidity, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially from the results anticipated or implied by our forward-looking statements include, but are not limited to increased competitive pressures; changes in the interest rate environment; secondary market conditions for loans and our ability to originate for sale and sell loans in the secondary market; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (“SEC”) - which are available on our website at www.myprovident.com and on the SEC’s website at www.sec.gov. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements whether as a result of new information, future events or otherwise. These risks could cause our actual results for fiscal 2020 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us and could negatively affect our operating and stock price performance.

Contacts:

Craig G. Blunden
Chairman and Chief Executive Officer

Donavon P. Ternes
President, Chief Operating Officer,
and Chief Financial Officer

(951) 686-6060


PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Financial Condition
(Unaudited –In Thousands, Except Share Information)

December 31,

September 30,

June 30,

March 31,

December 31,

2019

2019

2019

2019

2018

Assets

Cash and cash equivalents

$

48,233

$

54,515

$

70,632

$

61,458

$

67,359

Investment securities – held to maturity, at cost

77,161

85,088

94,090

102,510

84,990

Investment securities - available for sale, at fair value

5,237

5,517

5,969

6,294

6,563

Loans held for investment, net of allowance for loan losses of $6,921; $6,929; $7,076; $7,080 and $7,061, respectively; includes $4,173; $4,386; $5,094; $5,239 and $4,995 at fair value, respectively



941,729



924,314



879,925



883,554



875,413

Loans held for sale, at fair value

-

-

-

30,500

57,562

Accrued interest receivable

3,292

3,380

3,424

3,386

3,156

Real estate owned, net

-

-

-

-

-

FHLB – San Francisco stock

8,199

8,199

8,199

8,199

8,199

Premises and equipment, net

10,967

11,215

8,226

8,395

8,601

Prepaid expenses and other assets

12,569

13,068

14,385

15,099

15,327

Total assets

$

1,107,387

$

1,105,296

$

1,084,850

$

1,119,395

$

1,127,170

Liabilities and Stockholders’ Equity

Liabilities:

Non interest-bearing deposits

$

85,846

$

85,338

$

90,184

$

90,875

$

78,866

Interest-bearing deposits

747,804

746,398

751,087

786,009

794,018

Total deposits

833,650

831,736

841,271

876,884

872,884

Borrowings

131,085

131,092

101,107

101,121

111,135

Accounts payable, accrued interest and other liabilities



18,876



20,299



21,831



20,181



20,474

Total liabilities

983,611

983,127

964,209

998,186

1,004,493

Stockholders’ equity:

Preferred stock, $.01 par value (2,000,000 shares authorized; none issued and outstanding)

-

-

-

-

-

Common stock, $.01 par value (40,000,000 shares authorized; 18,097,615; 18,091,865; 18,081,365; 18,064,365and 18,053,115 shares issued, respectively; 7,483,071; 7,479,682; 7,486,106; 7,497,357 and 7,506,855 shares outstanding, respectively)

181

181

181

181

181

Additional paid-in capital

95,118

94,795

94,351

96,114

95,913

Retained earnings

193,704

192,354

190,839

191,103

192,306

Treasury stock at cost (10,614,544; 10,612,183; 10,559,259; 10,567,008 and 10,546,260 shares, respectively)

(165,360

)

(165,309

)

(164,891

)

(166,352

)

(165,892

)

Accumulated other comprehensive income, net of tax

133

148

161

163

169

Total stockholders’ equity

123,776

122,169

120,641

121,209

122,677

Total liabilities and stockholders’ equity

$

1,107,387

$

1,105,296

$

1,084,850

$

1,119,395

$

1,127,170



PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited - In Thousands, Except Earnings Per Share)

Quarter Ended

Six Months Ended

December 31,

December 31,

2019

2018

2019

2018

Interest income:

Loans receivable, net

$

10,320

$

10,331

$

20,395

$

20,505

Investment securities

567

444

1,181

789

FHLB – San Francisco stock

145

278

288

421

Interest-earning deposits

189

387

435

725

Total interest income

11,221

11,440

22,299

22,440

Interest expense:

Checking and money market deposits

117

117

227

225

Savings deposits

131

147

265

298

Time deposits

530

630

1,062

1,251

Borrowings

804

715

1,524

1,478

Total interest expense

1,582

1,609

3,078

3,252

Net interest income

9,639

9,831

19,221

19,188

Recovery from allowance for loan losses

(22

)

(217

)

(203

)

(454

)

Net interest income, after recovery from allowance for loan losses

9,661

10,048

19,424

19,642

Non-interest income:

Loan servicing and other fees

367

277

500

601

Gain (loss) on sale of loans, net

(43

)

2,263

(129

)

5,395

Deposit account fees

451

509

898

1,014

Loss on sale and operations of real estate owned acquired in the settlement of loans

-

(7

)

-

(6

)

Card and processing fees

371

392

761

790

Other

198

161

384

350

Total non-interest income

1,344

3,595

2,414

8,144

Non-interest expense:

Salaries and employee benefits

4,999

7,211

9,984

15,461

Premises and occupancy

880

1,274

1,758

2,619

Equipment

262

495

541

916

Professional expenses

331

411

739

858

Sales and marketing expenses

212

253

329

422

Deposit insurance premiums and regulatory

assessments

59

172

43

337

Other

811

1,059

1,398

1,966

Total non-interest expense

7,554

10,875

14,792

22,579

Income before taxes

3,451

2,768

7,046

5,207

Provision for income taxes

1,053

810

2,086

1,426

Net income

$

2,398

$

1,958

$

4,960

$

3,781

Basic earnings per share

$

0.32

$

0.26

$

0.66

$

0.51

Diluted earnings per share

$

0.31

$

0.26

$

0.65

$

0.50

Cash dividends per share

$

0.14

$

0.14

$

0.28

$

0.28


PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations – Sequential Quarters
(Unaudited – In Thousands, Except Share Information)

Quarter Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2019

2019

2019

2019

2018

Interest income:

Loans receivable, net

$

10,320

$

10,075

$

9,576

$

10,011

$

10,331

Investment securities

567

614

661

592

444

FHLB – San Francisco stock

145

143

142

144

278

Interest-earning deposits

189

246

426

386

387

Total interest income

11,221

11,078

10,805

11,133

11,440

Interest expense:

Checking and money market deposits

117

110

101

102

117

Savings deposits

131

134

135

139

147

Time deposits

530

532

530

600

630

Borrowings

804

720

669

680

715

Total interest expense

1,582

1,496

1,435

1,521

1,609

Net interest income

9,639

9,582

9,370

9,612

9,831

Provision (recovery) for loan losses

(22

)

(181

)

(25

)

4

(217

)

Net interest income, after provision (recovery) for loan losses

9,661

9,763

9,395

9,608

10,048

Non-interest income:

Loan servicing and other fees

367

133

188

262

277

Gain (loss) on sale of loans, net

(43

)

(86

)

21

1,719

2,263

Deposit account fees

451

447

443

471

509

Gain (loss) on sale and operations of real estate owned acquired in the settlement of loans, net

-

-

-

2

(7

)

Card and processing fees

371

390

405

373

392

Other

198

186

258

225

161

Total non-interest income

1,344

1,070

1,315

3,052

3,595

Non-interest expense:

Salaries and employee benefits

4,999

4,985

5,396

9,292

7,211

Premises and occupancy

880

878

1,133

1,286

1,274

Equipment

262

279

1,141

417

495

Professional expenses

331

408

493

513

411

Sales and marketing expenses

212

117

312

246

253

Deposit insurance premiums and regulatory assessments

59

(16

)

129

124

172

Other

811

587

1,053

1,122

1,059

Total non-interest expense

7,554

7,238

9,657

13,000

10,875

Income (loss) before taxes

3,451

3,595

1,053

(340

)

2,768

Provision (benefit) for income taxes

1,053

1,033

266

(189

)

810

Net income (loss)

$

2,398

$

2,562

$

787

$

(151

)

$

1,958

Basic earnings (loss) per share

$

0.32

$

0.34

$

0.10

$

(0.02

)

$

0.26

Diluted earnings (loss) per share

$

0.31

$

0.33

$

0.10

$

(0.02

)

$

0.26

Cash dividends per share

$

0.14

$

0.14

$

0.14

$

0.14

$

0.14

PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)

Quarter Ended

Six Months Ended

December 31,

December 31,

2019

2018

2019

2018

SELECTED FINANCIAL RATIOS:

Return on average assets

0.87

%

0.69

%

0.91

%

0.66

%

Return on average stockholders’ equity

7.81

%

6.42

%

8.13

%

6.22

%

Stockholders’ equity to total assets

11.18

%

10.88

%

11.18

%

10.88

%

Net interest spread

3.53

%

3.48

%

3.55

%

3.36

%

Net interest margin

3.59

%

3.54

%

3.61

%

3.42

%

Efficiency ratio

68.78

%

81.00

%

68.37

%

82.61

%

Average interest-earning assets to average interest-bearing liabilities

111.43

%

110.98

%

111.52

%

110.92

%

SELECTED FINANCIAL DATA:

Basic earnings per share

$

0.32

$

0.26

$

0.66

$

0.51

Diluted earnings per share

$

0.31

$

0.26

$

0.65

$

0.50

Book value per share

$

16.54

$

16.34

$

16.54

$

16.34

Shares used for basic EPS computation

7,482,300

7,506,106

7,482,367

7,468,537

Shares used for diluted EPS computation

7,658,050

7,601,759

7,651,441

7,579,414

Total shares issued and outstanding

7,483,071

7,506,855

7,483,071

7,506,855

LOANS ORIGINATED AND PURCHASED FOR INVESTMENT:

Mortgage Loans:

Single-family

$

52,671

$

24,180

$

86,300

$

41,396

Multi-family

20,164

10,068

76,640

22,777

Commercial real estate

6,479

3,175

8,898

8,480

Construction

2,313

1,863

3,209

3,343

Consumer loans

1

-

1

-

Total loans originated and purchased for investment

$

81,628

$

39,286

$

175,048

$

75,996

LOANS ORIGINATED FOR SALE:

Retail originations

$

-

$

87,913

$

-

$

215,046

Wholesale originations

-

58,504

-

127,692

Total loans originated for sale

$

-

$

146,417

$

-

$

342,738

LOANS SOLD:

Servicing released

$

-

$

165,484

$

-

$

376,534

Servicing retained

-

2,026

-

2,784

Total loans sold

$

-

$

167,510

$

-

$

379,318


PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands, Except Share Information)

Quarter

Quarter

Quarter

Quarter

Quarter

Ended

Ended

Ended

Ended

Ended

12/31/19

9/30/19

6/30/19

3/31/19

12/31/18

SELECTED FINANCIAL RATIOS:

Return (loss) on average assets

0.87

%

0.95

%

0.29

%

-0.05

%

0.69

%

Return (loss) on average stockholders’ equity

7.81

%

8.46

%

2.60

%

-0.49

%

6.42

%

Stockholders’ equity to total assets

11.18

%

11.05

%

11.12

%

10.83

%

10.88

%

Net interest spread

3.53

%

3.58

%

3.46

%

3.46

%

3.48

%

Net interest margin

3.59

%

3.64

%

3.52

%

3.53

%

3.54

%

Efficiency ratio

68.78

%

67.95

%

90.38

%

102.65

%

81.00

%

Average interest-earning assets to average interest-bearing liabilities

111.43

%

111.61

%

111.45

%

111.28

%

110.98

%

SELECTED FINANCIAL DATA:

Basic earnings (loss) per share

$

0.32

$

0.34

$

0.10

$

(0.02

)

$

0.26

Diluted earnings (loss) per share

$

0.31

$

0.33

$

0.10

$

(0.02

)

$

0.26

Book value per share

$

16.54

$

16.33

$

16.12

$

16.17

$

16.34

Average shares used for basic EPS

7,482,300

7,482,435

7,496,457

7,506,770

7,506,106

Average shares used for diluted EPS

7,658,050

7,647,763

7,626,661

7,506,770

7,601,759

Total shares issued and outstanding

7,483,071

7,479,682

7,486,106

7,497,357

7,506,855

LOANS ORIGINATED AND PURCHASED FOR INVESTMENT:

Mortgage Loans:

Single-family

$

52,671

$

33,629

$

31,982

$

15,288

$

24,180

Multi-family

20,164

56,476

14,513

21,546

10,068

Commercial real estate

6,479

2,419

2,882

5,197

3,175

Construction

2,313

896

1,846

1,970

1,863

Consumer loans

1

-

-

-

-

Total loans originated and purchased for investment

$

81,628

$

93,420

$

51,223

$

44,001

$

39,286

LOANS ORIGINATED FOR SALE:

Retail originations

$

-

$

-

$

9,593

$

72,353

$

87,913

Wholesale originations

-

-

4,057

38,353

58,504

Total loans originated for sale

$

-

$

-

$

13,650

$

110,706

$

146,417

LOANS SOLD:

Servicing released

$

-

$

-

$

40,956

$

134,264

$

165,484

Servicing retained

-

-

2,003

2,409

2,026

Total loans sold

$

-

$

-

$

42,959

$

136,673

$

167,510


PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)

As of

As of

As of

As of

As of

12/31/19

09/30/19

06/30/19

03/31/19

12/31/18

ASSET QUALITY RATIOS AND DELINQUENT LOANS:

Recourse reserve for loans sold

$

250

$

250

$

250

$

250

$

250

Allowance for loan losses

$

6,921

$

6,929

$

7,076

$

7,080

$

7,061

Non-performing loans to loans held for investment, net

0.36

%

0.57

%

0.71

%

0.69

%

0.69

%

Non-performing assets to total assets

0.31

%

0.47

%

0.57

%

0.55

%

0.54

%

Allowance for loan losses to gross loans held for investment

0.73

%

0.74

%

0.80

%

0.79

%

0.80

%

Net loan charge-offs (recoveries) to average loans receivable (annualized)

(0.01

)%

(0.02

)%

(0.01

)%

(0.01

)%

(0.05

)%

Non-performing loans

$

3,427

$

5,230

$

6,218

$

6,115

$

6,062

Loans 30 to 89 days delinquent

$

986

$

990

$

665

$

699

$

2


Quarter
Ended

Quarter
Ended

Quarter
Ended

Quarter
Ended

Quarter
Ended

12/31/19

09/30/19

06/30/19

03/31/19

12/31/18

Provision (recovery) for loan losses

$ (22

)

$ (181

)

$ (25

)

$ 4

$ (217

)

Net loan charge-offs (recoveries)

$ (14

)

$ (34

)

$ (21

)

$ (15

)

$ (123

)

As of

As of

As of

As of

As of

12/31/19

09/30/19

06/30/19

03/31/19

12/31/18

REGULATORY CAPITAL RATIOS (BANK):

Tier 1 leverage ratio

10.24%

10.21%

10.50%

10.17%

9.96%

Common equity tier 1 capital ratio

16.62%

16.32%

18.00%

17.24%

17.17%

Tier 1 risk-based capital ratio

16.62%

16.32%

18.00%

17.24%

17.17%

Total risk-based capital ratio

17.65%

17.37%

19.13%

18.34%

18.26%

As of December 31,

2019

2018

Balance

Rate(1)

Balance

Rate(1)

INVESTMENT SECURITIES:

Held to maturity:

Certificates of deposit

$ 800

2.63

%

$ 600

2.32

%

U.S. SBA securities

2,816

2.35

2,939

2.60

U.S. government sponsored enterprise MBS

73,545

2.85

81,451

2.51

Total investment securities held to maturity

$ 77,161

2.83

%

$ 84,990

2.51

%

Available for sale (at fair value):

U.S. government agency MBS

$ 3,246

3.77

%

$ 3,942

3.49

%

U.S. government sponsored enterprise MBS

1,760

4.51

2,311

4.28

Private issue collateralized mortgage obligations

231

4.63

310

3.95

Total investment securities available for sale

$ 5,237

4.06

%

$ 6,563

3.79

%

Total investment securities

$ 82,398

2.91

%

$ 91,553

2.60

%

(1) The interest rate described in the rate column is the weighted-average interest rate or yield of all instruments, which are included in the balance of the respective line item.


PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)

As of December 31,

2019

2018

Balance

Rate(1)

Balance

Rate(1)

LOANS HELD FOR INVESTMENT:

Held to maturity:

Single-family (1 to 4 units)

$

347,344

4.20

%

$

312,499

4.48

%

Multi-family (5 or more units)

479,151

4.34

447,033

4.29

Commercial real estate

107,613

4.98

112,830

4.83

Construction

6,914

7.04

3,986

7.37

Other

-

-

167

6.50

Commercial business

578

6.09

455

6.45

Consumer

140

15.00

103

15.05

Total loans held for investment

941,740

4.38

%

877,073

4.44

%

Advance payments of escrows

56

95

Deferred loan costs, net

6,854

5,306

Allowance for loan losses

(6,921

)

(7,061

)

Total loans held for investment, net

$

941,729

$

875,413

Purchased loans serviced by others included above

$

29,798

3.74

%

$

17,247

3.36

%

(1) The interest rate described in the rate column is the weighted-average interest rate or yield of all instruments, which are included in the balance of the respective line item.



As of December 31,

2019

2018

Balance

Rate(1)

Balance

Rate(1)

DEPOSITS:

Checking accounts – non interest-bearing

$

85,846

-

%

$

78,866

-

%

Checking accounts – interest-bearing

269,454

0.12

256,549

0.12

Savings accounts

259,035

0.2

277,145

0.21

Money market accounts

33,418

0.28

36,627

0.28

Time deposits

185,897

1.13

223,697

1.12

Total deposits

$

833,650

0.37

%

$

872,884

0.4

%

BORROWINGS:

Overnight

$

-

-

%

$

-

-

%

Three months or less

-

-

-

-

Over three to six months

-

-

10,000

1.53

Over six months to one year

10,000

3.92

-

-

Over one year to two years

31,078

2.41

10,000

3.92

Over two years to three years

30,000

1.9

21,135

2.81

Over three years to four years

20,000

2

10,000

2.2

Over four years to five years

20,007

2.5

20,000

2

Over five years

20,000

2.7

40,000

2.6

Total borrowings

$

131,085

2.41

%

$

111,135

2.52

%

(1) The interest rate described in the rate column is the weighted-average interest rate or cost of all instruments, which are included in the balance of the respective line item.


PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)

Quarter Ended

Quarter Ended

December 31, 2019

December 31, 2018

Balance

Rate(1)

Balance

Rate(1)

SELECTED AVERAGE BALANCE SHEETS:

Loans receivable, net (2)

$

934,060

4.42

%

$

941,192

4.39

%

Investment securities

87,108

2.60

%

93,468

1.90

%

FHLB – San Francisco stock

8,199

7.07

%

8,199

13.56

%

Interest-earning deposits

45,519

1.62

%

67,760

2.23

%

Total interest-earning assets

$

1,074,886

4.18

%

$

1,110,619

4.12

%

Total assets

$

1,107,102

$

1,142,302

Deposits

$

833,554

0.37

%

$

889,557

0.40

%

Borrowings

131,084

2.43

%

111,141

2.55

%

Total interest-bearing liabilities

$

964,638

0.65

%

$

1,000,698

0.64

%

Total stockholders’ equity

$

122,820

$

122,017

(1) The interest rate described in the rate column is the weighted-average interest rate or yield/cost of all instruments, which are included in the balance of the respective line item.

(2) Includes loans held for sale at fair value for the quarter ended December 31, 2018.

Six Months Ended

Six Months Ended

December 31, 2019

December 31, 2018

Balance

Rate(1)

Balance

Rate(1)

SELECTED AVERAGE BALANCE SHEETS:

Loans receivable, net (2)

$

918,666

4.44

%

$

954,148

4.30

%

Investment securities

91,527

2.58

%

92,384

1.71

%

FHLB – San Francisco stock

8,199

7.03

%

8,199

10.27

%

Interest-earning deposits

45,015

1.89

%

67,552

2.10

%

Total interest-earning assets

$

1,063,407

4.19

%

$

1,122,283

4.00

%

Total assets

$

1,095,219

$

1,153,265

Deposits

$

832,187

0.37

%

$

896,217

0.39

%

Borrowings

121,363

2.49

%

115,577

2.54

%

Total interest-bearing liabilities

$

953,550

0.64

%

$

1,011,794

0.64

%

Total stockholders’ equity

$

122,001

$

121,511

(1) The interest rate described in the rate column is the weighted-average interest rate or yield/cost of all instruments, which are included in the balance of the respective line item.

(2) Includes loans held for sale at fair value for the six months ended December 31, 2018.


PROVIDENT FINANCIAL HOLDINGS, INC.
Asset Quality (1)
(Unaudited – Dollars in Thousands)

As of

As of

As of

As of

As of

12/31/19

09/30/19

06/30/19

03/31/19

12/31/18

Loans on non-accrual status (excluding
restructured loans):

Mortgage loans:

Single-family

$

1,607

$

2,737

$

3,315

$

2,657

$

2,572

Construction

-

1,139

971

745

745

Total

1,607

3,876

4,286

3,402

3,317

Accruing loans past due 90 days or more:

-

-

-

-

-

Total

-

-

-

-

-

Restructured loans on non-accrual status:

Mortgage loans:

Single-family

1,783

1,316

1,891

2,669

2,698

Commercial business loans

37

38

41

44

47

Total

1,820

1,354

1,932

2,713

2,745

Total non-performing loans

3,427

5,230

6,218

6,115

6,062

Real estate owned, net

-

-

-

-

-

Total non-performing assets

$

3,427

$

5,230

$

6,218

$

6,115

$

6,062

(1) The non-performing loans balances are net of individually evaluated or collectively evaluated allowances, specifically attached to the individual loans and include fair value adjustments.