10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

[  Ö ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                                                                                                              September 30, 2011

[     ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to _________________

Commission File Number 000-28304

PROVIDENT FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-0704889
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

3756 Central Avenue, Riverside, California 92506

(Address of principal executive offices and zip code)

(951) 686-6060

(Registrant’s telephone number, including area code)

                                                                                                         .

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes            ü  .                      No                  .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes      .No      .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ü ]
Non-accelerated filer [ ]	Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      .     No ü  .

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of class:	As of November 4, 2011
Common stock, $ 0.01 par value, per share	11,409,264 shares

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A (“Form 10-Q/A”) to our Form 10-Q for the quarter ended September 30, 2011, initially filed with the Securities and Exchange Commission (“SEC”) on November 9, 2011 (“Original Form 10-Q”), is being filed to amend Item 6 of Part II to furnish Exhibit 101 XBRL (eXtensible Business Reporting Language) interactive data files in accordance with Rule 405 (a)(2) of Regulation S-T.  Exhibit 101 to this Form 10-Q/A includes the following information formatted in XBRL: (1) Condensed Consolidated Statements of Financial Condition; (2) Condensed Consolidated Statements of Operations; (3) Condensed Consolidated Statements of Stockholders’ Equity; (4) Condensed Consolidated Statements of Cash Flows; and (5) Selected Notes to Consolidated Financial Statements.

No other changes have been made to the Original Form 10-Q, and this Form 10-Q/A does not reflect any subsequent events occurring after the filing date of the Original Form 10-Q or modify or update any other disclosures made in the Original Form 10-Q.

Item 6. Exhibits

Exhibits:

3.1(a)   Certificate of Incorporation of Provident Financial Holdings, Inc. (Incorporated by reference to Exhibit 3.1 to the Corporation’s Registration Statement on Form S-1 (File No. 333-2230))

 3.1(b)   Certificate of Amendment to Certificate of Incorporation of Provident Financial Holdings, Inc. as filed with the Delaware Secretary of State on November 24, 2009

3.2       Bylaws of Provident Financial Holdings, Inc. (Incorporated by reference to Exhibit 3.2 to the Corporation’s Current Report on Form 8-K filed on October 26, 2007)

10.1      Employment Agreement with Craig G. Blunden (Incorporated by reference to Exhibit 10.1 to the Corporation’s Form 8-K dated December 19, 2005)

10.2      Post-Retirement Compensation Agreement with Craig G. Blunden (Incorporated by reference to Exhibit 10.2 to the Corporation’s Form 8-K dated December 19, 2005)

10.3      1996 Stock Option Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated December 12, 1996)

10.4      1996 Management Recognition Plan (incorporated by reference to Exhibit B to the Corporation’s proxy statement dated December 12, 1996)

10.5      Form of Severance Agreement with Richard L. Gale, Kathryn R. Gonzales, Lilian Salter, Donavon P. Ternes and David S. Weiant (incorporated by reference to Exhibit 10.1 in the Corporation’s Form 8-K dated February 24, 2011)

10.6      2003 Stock Option Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 21, 2003)

10.7      Form of Incentive Stock Option Agreement for options granted under the 2003 Stock Option Plan (incorporated by reference to Exhibit 10.13 to the Corporation’s Annual Report on Form 10-K for the fiscal year June 30, 2005).

10.8      Form of Non-Qualified Stock Option Agreement for options granted under the 2003 Stock Option Plan (incorporated by reference to Exhibit 10.14 to the Corporation’s Annual Report on Form 10-K for the fiscal year June 30, 2005).

10.9      2006 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 12, 2006)

10.10    Form of Incentive Stock Option Agreement for options granted under the 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 in the Corporation’s Form 10-Q for the quarter ended December 31, 2006)

10.11    Form of Non-Qualified Stock Option Agreement for options granted under the 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.11 in the Corporation’s Form 10-Q for the quarter ended December 31, 2006)

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10.12    Form of Restricted Stock Agreement for restricted shares awarded under the 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.12 in the Corporation’s Form 10-Q for the quarter ended December 31, 2006)

10.13    2010 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 28, 2010)

10.14    Form of Incentive Stock Option Agreement for options granted under the 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 in the Corporation’s Form 8-K dated November 30, 2010)

10.15    Form of Non-Qualified Stock Option Agreement for options granted under the 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 in the Corporation’s Form 8-K dated November 30, 2010)

10.16    Form of Restricted Stock Agreement for restricted shares awarded under the 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 in the Corporation’s Form 8-K dated November 30, 2010)

10.17    Post-Retirement Compensation Agreement with Donavon P. Ternes (incorporated by reference to Exhibit 10.13 to the Corporation’s Form 8-K dated July 7, 2009)

14         Code of Ethics for the Corporation’s directors, officers and employees (incorporated by reference to Exhibit 14 in the Corporation’s Annual Report on Form 10-K dated September 12, 2007)

   31.1      Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)

 31.2      Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)

 32.1      Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)

 32.2      Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)

101      The following materials from the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in Extensible Business Reporting Language (XBRL): (1) Condensed Consolidated Statements of Financial Condition; (2) Condensed Consolidated Statements of Operations; (3) Condensed Consolidated Statements of Stockholders’ Equity; (4) Condensed Consolidated Statements of Cash Flows; and (5) Selected Notes to Consolidated Financial Statements. (2)

________

(1)	Filed with Provident Financial Holdings, Inc. Quarterly Report on Form 10-Q filed on November 9, 2011 for the period ended September 30, 2011.
(2)	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of theSecurities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Provident Financial Holdings, Inc.
November 15, 2011	/s/ Craig G. Blunden
	Craig G. Blunden
	Chairman and Chief Executive Officer
	(Principal Executive Officer)
November 15, 2011	/s/ Donavon P. Ternes
	Donavon P. Ternes
	President, Chief Operating Officer and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

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Provident Financial Holdings, Inc. Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended
	Sep. 30, 2011		Sep. 30, 2010
Interest income:
Loans receivable, net	$ 12,749		$ 15,561
Investment securities	147		241
FHLB - San Francisco stock	18	[1]	36	[1]
Interest-earning deposits	97		65
Total interest income	13,011		15,903
Interest expense:
Checking and money market deposits	200		305
Savings deposits	225		340
Time deposits	1,906		2,184
Borrowings	1,882		3,262
Total interest expense	4,213		6,091
Net interest income, before provision for loan losses	8,798		9,812
Provision for loan losses	972		877
Net interest income, after provision for loan losses	7,826		8,935
Non-interest income:
Loan servicing and other fees	132		124
Gain on sale of loans, net	7,276		9,447
Deposit account fees	603		629
Gain (loss) on sale and operations of real estate owned acquired in the settlement of loans, net	32		(368)
Card and processing fees	331	[2]	316	[2]
Other non-interest income	174		187
Total non-interest income	8,548		10,335
Non-interest expenses:
Salaries and employee benefits	8,854		7,377
Premises and occupancy	872		820
Equipment expense	314		325
Professional expenses	433		383
Sales and marketing expenses	199		134
Deposit insurance premiums and regulatory assessments	171	[3]	681	[3]
Other non-interest expense	1,460		1,490
Total non-interest expense	12,303		11,210
Income before taxes	4,071		8,060
Provision for income taxes	1,753		3,531
Net income	$ 2,318		$ 4,529
Basic earnings per share	$ 0.20		$ 0.40
Diluted earnings per share	$ 0.20		$ 0.40
Cash dividends per share	$ 0.03		$ 0.01

[1] Includes dividends received on FHLB Stock.

[2] Includes Debit Card transaction fees.

[3] Includes regulatory assessments.

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Provident Financial Holdings, Inc. Condensed Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Unearned Stock Compensation	Accumulated Other Conprehensive Income (Loss), Net of Tax	Total Stockholder's Equity
Balances at start of period - Amount at Jun. 30, 2010		$ 176	$ 85,663	$ 135,383	$ (93,942)	$ (203)	$ 667	$ 127,744
Balances at start of period - Shares at Jun. 30, 2010		11,406,654
Comprehensive income :
Net income	4,529			4,529				4,529
Change in unrealized holding loss on securities available for sale, net							(13)	(13)	[1]
Total comprehensive income								4,516
Distribution of restricted stock - Shares		800
Amortization of restricted stock			103					103
Stock options expense			135					135
Allocation of contributions to ESOP			17			68		85	[2]
Cash dividends				(114)				(114)
Balances at end of period - Amount at Sep. 30, 2010		176	85,918	139,798	(93,942)	(135)	654	132,469
Balances at end of period - Shares at Sep. 30, 2010		11,407,454
Balances at start of period - Amount at Jun. 30, 2011		176	85,432	148,147	(92,650)	0	638	141,743
Balances at start of period - Shares at Jun. 30, 2011		11,418,654
Comprehensive income :
Net income	2,318			2,318				2,318
Change in unrealized holding loss on securities available for sale, net							(43)	(43)	[3]
Total comprehensive income								2,275
Purchase of treasury stock - Shares		(79,690)							[4]
Purchase of treasury stock - Amount					(666)			(666)
Distribution of restricted stock - Shares		100,300
Amortization of restricted stock			302					302
Stock options expense			287					287
Cash dividends				(345)				(345)
Balances at end of period - Amount at Sep. 30, 2011		$ 176	$ 86,021	$ 150,120	$ (93,316)	$ 0	$ 595	$ 143,596
Balances at end of period - Shares at Sep. 30, 2011		11,439,264

[1] Change in unrealized holding loss on investment securities available for sale, net of reclassification of $0 of net gain included in net income and net of tax benefit of $(9).

[2] Employee Stock Ownership Plan ("ESOP").

[3] Change in unrealized holding loss on securities available for sale, net of reclassification of $0 of net gain included in net income and net of tax benefit of $(31).

[4] Includes the repurchase of 11,523 shares of distributed restricted stock.

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Document and Entity Information (USD $)	3 Months Ended
	Sep. 30, 2011
Document and Entity Information
Entity Registrant Name	PROVIDENT FINANCIAL HOLDINGS INC
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	true
Amendment Description	Filing of xbrl data
Entity Central Index Key	0001010470
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding	11,439,264
Entity Public Float	$ 99,979,167
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

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Derivative and Other Financial Instruments with Off-Balance Sheet Risks

3 Months Ended

Sep. 30, 2011

Derivative and Other Financial Instruments with Off-Balance Sheet Risks

Derivative and Other Financial Instruments with Off-Balance Sheet Risks

Note 7: Derivative and Other Financial Instruments with Off-Balance Sheet Risks

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit in the form of originating loans or providing funds under existing lines of credit, loan sale commitments to third parties and option contracts.  These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the accompanying Condensed Consolidated Statements of Financial Condition.  The Corporation’s exposure to credit loss, in the event of non-performance by the counterparty to these financial instruments, is represented by the contractual amount of these instruments.  The Corporation uses the same credit policies in entering into financial instruments with off-balance sheet risk as it does for on-balance sheet instruments.  As of September 30, 2011 and June 30, 2011, the Corporation had commitments to extend credit (on loans to be held for investment and loans to be held for sale) of $188.6 million and $107.7 million, respectively.

The following table provides information regarding undisbursed funds to borrowers on existing lines of credit with the Bank as well as commitments to originate loans to be held for investment.

	September 30,	June 30,
Commitments	2011	2011
(In Thousands)
Undisbursed lines of credit – Mortgage loans	$ 1,002	$ 1,028
Undisbursed lines of credit – Commercial business loans	2,466	2,867
Undisbursed lines of credit – Consumer loans	913	956
Commitments to extend credit on loans to be held for investment	1,604	200
Total	$ 5,985	$ 5,051

In accordance with ASC 815, “Derivatives and Hedging,” and interpretations of the Derivatives Implementation Group of the FASB, the fair value of the commitments to extend credit on loans to be held for sale, loan sale commitments, commitments to sell MBS, put option contracts and call option contracts are recorded at fair value on the Condensed Consolidated Statements of Financial Condition.  At September 30, 2011, $3.6 million was included in other assets and $1.9 million was included in other liabilities; at June 30, 2011, $1.3 million is included in other assets and $0 was included in other liabilities.  The Corporation does not apply hedge accounting to its derivative financial instruments; therefore, all changes in fair value are recorded in earnings.

The net impact of derivative financial instruments on the Condensed Consolidated Statements of Operations during the quarters ended September 30, 2011 and 2010 was as follows:

	For the Quarters Ended September 30,
Derivative Financial Instruments	2011		2010
(In Thousands)
Commitments to extend credit on loans to be held for sale	$  2,824		$   (528	)
Mandatory loan sale commitments	(533	)	554
TBA(1) MBS trades	(1,939	)	2,641
Option contracts	(154	)	(25	)
Total	$     198		$ 2,642

(1) To be announced (“TBA”).

The outstanding derivative financial instruments at the dates indicated were as follows:

	September 30, 2011				June 30, 2011
			Fair				Fair
Derivative Financial Instruments	Amount		Value		Amount		Value
(In Thousands)
Commitments to extend credit on loans
to be held for sale (1)	$  186,953		$  3,462		$  107,458		$    638
Best efforts loan sale commitments	(14,558	)	-		(8,159	)	-
Mandatory loan sale commitments	(168,952	)	(130	)	(96,356	)	403
TBA MBS trades	(279,500	)	(1,763	)	(183,500	)	176
Put option contracts	(10,000	)	48		(13,000	)	99
Call option contracts	10,000		94		-		-
Total	$ (276,057	)	$  1,711		$ (193,557	)	$ 1,316

(1)   Net of 38.6 percent at September 30, 2011 and 31.0 percent at June 30, 2011 of commitments, which management has estimated may not fund.

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Earnings Per Share

3 Months Ended

Sep. 30, 2011

Earnings Per Share

Earnings Per Share

Note 3: Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of the entity.

As of September 30, 2011 and 2010, there were outstanding options to purchase 1,249,700 shares and 905,200 shares of the Corporation’s common stock, respectively, of which 656,700 shares and 905,200 shares, respectively, were excluded from the diluted EPS computation as their effect was anti-dilutive.

The following table provides the basic and diluted EPS computations for the quarters ended September 30, 2011 and 2010, respectively.

(In Thousands, Except Share Information)	For the Quarter Ended September 30,
	2011		2010
Numerator:
Net income – numerator for basic earnings          per share and diluted earnings per share -          available to common stockholders	$	2,318	$	4,529
Denominator:
Denominator for basic earnings per share:          Weighted-average shares
		11,468		11,362
Effect of dilutive securities:
Restricted stock dilution		47		-
Denominator for diluted earnings per share:
Adjusted weighted-average shares and assumed              conversions		11,515		11,362
Basic earnings per share	$	0.20	$	0.40
Diluted earnings per share	$	0.20	$	0.40

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Fair Value of Financial Instruments

3 Months Ended

Sep. 30, 2011

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Note 9: Fair Value of Financial Instruments

The Corporation adopted ASC 820, “Fair Value Measurements and Disclosures,” on July 1, 2008 and elected the fair value option (ASC 825, “Financial Instruments”) on May 28, 2009 on loans originated for sale by PBM.  ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  ASC 825 permits entities to elect to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis (the Fair Value Option) at specified election dates.  At each subsequent reporting date, an entity is required to report unrealized gains and losses on items in earnings for which the fair value option has been elected.  The objective of the Fair Value Option is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.

The following table describes the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale at fair value.

(In Thousands)	Aggregate Fair Value	Aggregate Unpaid Principal Balance	Net Unrealized Gain
As of September 30, 2011:
Single-family loans measured at fair value	$ 278,212	$ 265,804	$ 12,408

On April 9, 2009, the FASB issued ASC 820-10-65-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.”  This ASC provides additional guidance for estimating fair value in accordance with ASC 820, “Fair Value Measurements,” when the volume and level of activity for the asset or liability have significantly decreased.

ASC 820 establishes a three-level valuation hierarchy that prioritizes inputs to valuation techniques used in fair value calculations.  The three levels of inputs are defined as follows:

Level 1	-	Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.
Level 2	-	Observable inputs other than Level 1 such as: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated to observable market data for substantially the full term of the asset or liability.
Level 3	-	Unobservable inputs for the asset or liability that use significant assumptions, including assumptions of risks.  These unobservable assumptions reflect the Corporation’s estimate of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include the use of pricing models, discounted cash flow models and similar techniques.

ASC 820 requires the Corporation to maximize the use of observable inputs and minimize the use of unobservable inputs.  If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

The Corporation’s financial assets and liabilities measured at fair value on a recurring basis consist of investment securities, loans held for sale at fair value, interest-only strips and derivative financial instruments; while non-performing loans, mortgage servicing assets and real estate owned are measured at fair value on a nonrecurring basis.

Investment securities are primarily comprised of U.S. government agency mortgage-backed securities, U.S. government sponsored enterprise mortgage-backed securities and private issue collateralized mortgage obligations.  The Corporation utilizes unadjusted quoted prices in active markets for identical securities for its fair value measurement of debt securities, quoted prices in active and less than active markets for similar securities for its fair value measurement of mortgage-backed securities and debt securities, and broker price indications for similar securities in non-active markets for its fair value measurement of collateralized mortgage obligations.

Derivative financial instruments are comprised of commitments to extend credit on loans to be held for sale, loan sale commitments and option contracts.  The fair value is determined, when possible, using quoted secondary-market prices.  If no such quoted price exists, the fair value of a commitment is determined by quoted prices for a similar commitment or commitments, adjusted for the specific attributes of each commitment.

Loans held for sale at fair value are primarily single-family loans.  The fair value is determined, when possible, using quoted secondary-market prices such as mandatory loan sale commitments.  If no such quoted price exists, the fair value of a loan is determined by quoted prices for a similar loan or loans, adjusted for the specific attributes of each loan.

Non-performing loans are loans which are inadequately protected by the current net worth and paying capacity of the borrowers or of the collateral pledged and the accrual of interest income has been discontinued.  The non-performing loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.  The Corporation assesses loans individually and identifies impairment when the loan is classified as non-performing, been restructured or management has serious doubts about the future collectibility of principal and interest, even though the loans may currently be performing.  The fair value of a non-performing loan is determined based on an observable market price or current appraised value of the underlying collateral.  Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the borrower.  For non-performing loans which are also restructured loans, the fair value is derived from discounted cash flow analysis, except those which are in the process of foreclosure, for which the fair value is derived from the appraised value of its collateral.  Non-performing loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above.  This loss is not recorded directly as an adjustment to current earnings or other comprehensive income (loss), but rather as a component in determining the overall adequacy of the allowance for loan losses.  These adjustments to the estimated fair value of non-performing loans may result in increases or decreases to the provision for loan losses recorded in current earnings.

The Corporation uses the amortization method for its mortgage servicing assets, which amortizes servicing assets in proportion to and over the period of estimated net servicing income and assesses servicing assets for impairment based on fair value at each reporting date.  The fair value of mortgage servicing assets is calculated using the present value method; which includes a third party’s prepayment projections of similar instruments, weighted-average coupon rates and the estimated average life.

The rights to future income from serviced loans that exceed contractually specified servicing fees are recorded as interest-only strips.  The fair value of interest-only strips is calculated using the same assumptions that are used to value the related servicing assets.

The fair value of real estate owned is derived from the lower of the appraised value at the time of foreclosure or the listing price, net of disposition costs.

The Corporation’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the Corporation’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The following fair value hierarchy table presents information about the Corporation’s assets measured at fair value on a recurring basis:

				Fair Value Measurement at September 30, 2011 Using:
(In Thousands)				Level 1	Level 2	Level 3	Total
Assets:
	Investment securities:
		U.S. government agency MBS		$ -	$   13,885	$        -	$   13,885
		U.S. government sponsored  enterprise MBS		-	10,080	-	10,080
		Private issue CMO		-	-	1,288	1,288
			Investment securities	-	23,965	1,288	25,253
	Loans held for sale, at fair value			-	278,212	-	278,212
	Interest-only strips			-	-	167	167
	Derivative assets:
		Commitments to extend credit on loans to be   held for sale		-	-	3,469	3,469
		Mandatory loan sale commitments		-	-	105	105
		Option contracts		-	-	142	142
			Derivative assets	-	-	3,716	3,716
Total assets				$ -	$ 302,177	$ 5,171	$ 307,348
Liabilities:
	Derivative liabilities:
		Commitments to extend credit on loans to be   held for sale		$ -	$             -	$        7	$             7
		Mandatory loan sale		-	-	235	235
		TBA MBS trades		-	1,763	-	1,763
			Derivative liabilities		1,763	242	2,005
Total liabilities				$ -	$    1,763	$   242	$     2,005

				Fair Value Measurement at June 30, 2011 Using:
(In Thousands)				Level 1	Level 2	Level 3	Total
Assets:
	Investment securities:
		U.S. government agency MBS		$ -	$   14,409	$        -	$   14,409
		U.S. government sponsored  enterprise MBS		-	10,417	-	10,417
		Private issue CMO		-	-	1,367	1,367
			Investment securities	-	24,826	1,367	26,193
	Loans held for sale, at fair value			-	191,678	-	191,678
	Interest-only strips			-	-	200	200
	Derivative assets:
		Commitments to extend credit on loans to be   held for sale		-	-	797	797
		Mandatory loan sale commitments		-	-	403	403
		TBA MBS trades		-	252	-	252
		Option contracts		-	-	99	99
			Derivative assets	-	252	1,299	1,551
Total assets				$ -	$ 216,756	$ 2,866	$ 219,622
Liabilities:
	Derivative liabilities:
		Commitments to extend credit on loans to be   held for sale		$ -	$   -	$ 159	$ 159
		TBA MBS trades		-	76	-	76
			Derivative liabilities	-	76	159	235
Total liabilities				$ -	$ 76	$ 159	$ 235

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the Condensed Consolidated Statements of Financial Condition using Level 3 inputs:

			Fair Value Measurement Using Significant Other Unobservable Inputs (Level 3)
(In Thousands)			Private Issue CMO		Interest- Only Strips		Loan Commit-ments to originate (1)		Manda- tory Commit- ments (2)		Option Contracts		Total
Beginning balance at July 1, 2011			$ 1,367		$ 200		$    638		$  403		$ 99		$2,707
	Total gains or losses (realized/unrealized):
		Included in earnings	-		-		(638	)	(403	)	(99	)	(1,140	)
		Included in other comprehensive income	(42	)	(33	)	-		-		-		(75	)
	Purchases		-		-		-		(130	)	142		12
	Issuances		-		-		3,462		-		-		3,462
	Settlements		(37	)	-		-		-		-		(37	)
	Transfers in and/or out of Level 3		-		-		-		-		-		-
Ending balance at September 30, 2011			$ 1,288		$ 167		$ 3,462		$ (130	)	$ 142		4,929

(1)	Consist of commitments to extend credit on loans to be held for sale.
(2)	Consist of mandatory loan sale commitments.

The following fair value hierarchy table presents information about the Corporation’s assets measured at fair value at dates indicated on a nonrecurring basis:

	Fair Value Measurement at September 30, 2011 Using:
(In Thousands)	Level 1	Level 2	Level 3	Total
Non-performing loans (1)	$  -	$ 24,987	$ 12,399	$ 37,386
Mortgage servicing assets	-	-	272	272
Real estate owned (1)	-	7,905	-	7,905
Total	$  -	$ 32,892	$ 12,671	$ 45,563

 (1)  Amounts are based on collateral value as a practical expedient for fair value, and exclude estimated selling costs where determined.

	Fair Value Measurement at June 30, 2011 Using:
(In Thousands)	Level 1	Level 2	Level 3	Total
Non-performing loans (1)	$  -	$ 24,215	$ 13,187	$ 37,402
Mortgage servicing assets	-	-	322	322
Real estate owned (1)	-	9,033	-	9,033
Total	$  -	$ 33,248	$ 13,509	$ 46,757

 (1)  Amounts are based on collateral value as a practical expedient for fair value, and exclude estimated selling costs where determined.

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Incentive Plans

3 Months Ended

Sep. 30, 2011

Incentive Plans

Incentive Plans

Note 10: Incentive Plans

As of September 30, 2011, the Corporation had four share-based compensation plans, which are described below.  These plans are the 2010 Equity Incentive Plan (“2010 Plan”), the 2006 Equity Incentive Plan (“2006 Plan”), the 2003 Stock Option Plan and the 1996 Stock Option Plan.  The compensation cost that has been charged against income for these plans was $589,000 and $238,000 for the quarters ended September 30, 2011 and 2010, respectively, and there was no tax benefit from these plans during either quarter.

Equity Incentive Plan.  The Corporation established and the shareholders approved the 2010 Plan and the 2006 Plan for directors, advisory directors, directors emeriti, officers and employees of the Corporation and its subsidiary.  The 2010 Plan authorizes 586,250 stock options and 288,750 shares of restricted stock.  The 2010 Plan also provides that no person may be granted more than 117,250 stock options or 43,312 shares of restricted stock in any one year.  The 2006 Plan authorizes 365,000 stock options and 185,000 shares of restricted stock.  The 2006 Plan also provides that no person may be granted more than 73,000 stock options or 27,750 shares of restricted stock in any one year.

Equity Incentive Plan - Stock Options.  Under the 2010 Plan and 2006 Plan (collectively, “the Plans”), options may not be granted at a price less than the fair market value at the date of the grant.  Options typically vest over a five-year or shorter period as long as the director, advisory director, director emeritus, officer or employee remains in service to the Corporation.  The options are exercisable after vesting for up to the remaining term of the original grant.  The maximum term of the options granted is 10 years.

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option valuation model with the following assumptions.  The expected volatility is based on implied volatility from historical common stock closing prices for the prior 84 months.  The expected dividend yield is based on the most recent quarterly dividend on an annualized basis.  The expected term is based on the historical experience of all fully vested stock option grants and is reviewed annually.  The risk-free interest rate is based on the U.S. Treasury note rate with a term similar to the underlying stock option on the particular grant date.

There was no activity under the Plans in the first quarter of either fiscal 2012 or 2011.  As of September 30, 2011 and 2010, there were 184,450 stock options and 10,200 stock options available for future grants under the Plans, respectively.

The following table summarizes the stock option activity in the Plans for the quarter ended September 30, 2011.

Options	Shares	Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at July 1, 2011	766,800	$ 12.07
Granted	-	$         -
Exercised	-	$         -
Forfeited	-	$         -
Outstanding at September 30, 2011	766,800	$ 12.07	8.06	$ 849
Vested and expected to vest at September 30, 2011	662,848	$ 12.58	7.84	$ 722
Exercisable at September 30, 2011	320,040	$ 16.28	6.21	$ 310

As of September 30, 2011 and 2010, there was $1.5 million and $521,000 of unrecognized compensation expense, respectively, related to unvested share-based compensation arrangements granted as outstanding stock option awards under the Plans.  The expense is expected to be recognized over a weighted-average period of 3.5 years and 1.2 years, respectively.  The forfeiture rate during the first three months of fiscal 2012 and 2011 was 20 percent and 25 percent, respectively, and was calculated by using the historical forfeiture experience of all fully vested stock option grants and is reviewed annually.

Equity Incentive Plan – Restricted Stock.  The Corporation used 288,750 shares and 185,000 shares of its treasury stock to fund the 2010 Plan and the 2006 Plan, respectively.  Awarded shares typically vest over a five-year or shorter period as long as the director, advisory director, director emeriti, officer or employee remains in service to the Corporation.  Once vested, a recipient of restricted stock will have all rights of a shareholder, including the power to vote and the right to receive dividends.  The Corporation recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the award date.

In the first quarter of fiscal 2012 and 2011, a total of 100,300 shares and 800 shares of restricted stock, respectively, were vested and distributed, while no restricted stock was awarded or forfeited during either period.  As of September 30, 2011 and 2010, there were 168,100 shares and 25,350 shares of restricted stock available for future awards under the Plans, respectively.

The following table summarizes the unvested restricted stock activity in the quarter ended September 30, 2011.

Unvested Shares	Shares		Weighted-Average Award Date Fair Value
Unvested at July 1, 2011	258,300		$ 7.75
Granted	-		$       -
Vested	(100,300	)	$ 6.55
Forfeited	-		$       -
Unvested at September 30, 2011	158,000		$ 8.50
Expected to vest at September 30, 2011	126,400		$ 8.50

As of September 30, 2011 and 2010, the unrecognized compensation expense was $1.1 million and $774,000, respectively, related to unvested share-based compensation arrangements awarded as outstanding restricted stock awards under the Plans, and reported as a reduction to stockholders’ equity.  This expense is expected to be recognized over a weighted-average period of 3.3 years and 1.2 years, respectively.  Similar to stock options, a forfeiture rate of 20 percent and 25 percent has been applied for the restricted stock compensation expense calculations in the first three months of fiscal 2012 and 2011, respectively.  The fair value of shares vested and distributed during the quarters ended September 30, 2011 and 2010 was $857,000 and $4,000, respectively.

Stock Option Plans.  The Corporation established the 2003 Stock Option Plan and the 1996 Stock Option Plan (collectively, the “Stock Option Plans”) for key employees and eligible directors under which options to acquire up to 352,500 shares and 1.15 million  shares of common stock, respectively, may be granted.  Under the Stock Option Plans, stock options may not be granted at a price less than the fair market value at the date of the grant.  Stock options typically vest over a five-year period on a pro-rata basis as long as the employee or director remains in service to the Corporation.  The stock options are exercisable after vesting for up to the remaining term of the original grant.  The maximum term of the stock options granted is 10 years.

The fair value of each stock option grant is estimated on the date of the grant using the Black-Scholes option valuation model with the following assumptions.  The expected volatility is based on implied volatility from historical common stock closing prices for the prior 84 months.  The expected dividend yield is based on the most recent quarterly dividend on an annualized basis.  The expected term is based on the historical experience of all fully vested stock option grants and is reviewed annually.  The risk-free interest rate is based on the U.S. Treasury note rate with a term similar to the underlying stock option on the particular grant date.

There was no activity in the Stock Option Plans for either the first quarter of fiscal 2012 or 2011.  As of September 30, 2011 and 2010, the number of stock options available for future grants under the 2003 Stock Option Plan was 14,900 stock options.  No stock options remain available for future grant under the 1996 Stock Option Plan, which expired in January 2007.

The following is a summary of the activity in the Stock Option Plans for the quarter ended September 30, 2011.

Options	Shares	Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at July 1, 2011	482,900	$ 22.23
Granted	-	$         -
Exercised	-	$         -
Forfeited	-	$         -
Outstanding at September 30, 2011	482,900	$ 22.23	2.90	$ -
Vested and expected to vest at September 30, 2011	480,900	$ 22.24	2.88	$ -
Exercisable at September 30, 2011	472,900	$ 22.28	2.83	$ -

As of September 30, 2011 and 2010, there was $34,000 and $170,000 of unrecognized compensation expense, respectively, related to unvested share-based compensation arrangements granted as outstanding option grants under the Stock Option Plans.  This expense is expected to be recognized over a weighted-average period of 0.8 years and 1.3 years, respectively.  The forfeiture rate during the first three months of fiscal 2012 and 2011 was 20 percent and 25 percent, respectively, and was calculated by using the historical forfeiture experience of all fully vested stock option grants and is reviewed annually.

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Income Taxes

3 Months Ended

Sep. 30, 2011

Income Taxes

Income Taxes

Note 8: Income Taxes

FASB ASC 740, “Income Taxes,” requires the affirmative evaluation that it is more likely than not, based on the technical merits of a tax position, that an enterprise is entitled to economic benefits resulting from positions taken in income tax returns.  If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements.  Management has determined that there are no unrecognized tax benefits to be reported in the Corporation’s financial statements, and none are anticipated during the fiscal year ending June 30, 2012.

ASC 740 requires that when determining the need for a valuation allowance against a deferred tax asset, management must assess both positive and negative evidence with regard to the realizability of the tax losses represented by that asset.  To the extent available sources of taxable income are insufficient to absorb tax losses, a valuation allowance is necessary.  Sources of taxable income for this analysis include prior years’ tax returns, the expected reversals of taxable temporary differences between book and tax income, prudent and feasible tax-planning strategies, and future taxable income.   The deferred tax asset related to the allowance will be realized when actual charge-offs are made against the allowance.  Based on the availability of loss carry-backs and projected taxable income during the periods for which loss carry-forwards are available, management believes it is more likely than not the Corporation will realize the deferred tax asset.  The Corporation continues to monitor the deferred tax asset on a quarterly basis for a valuation allowance.   The future realization of these tax benefits primarily hinges on adequate future earnings to utilize the tax benefit.  Prospective earnings or losses, tax law changes or capital changes could prompt the Corporation to reevaluate the assumptions which may be used to establish a valuation allowance.  As of September 30, 2011, the estimated deferred tax asset was $9.5 million, a $459,000 or five percent decrease, from $9.9 million at June 30, 2011.  The Corporation did not have any liabilities for uncertain tax positions or any known unrecognized tax benefit at September 30, 2011 or June 30, 2011.

The Corporation files income tax returns for the United States and state of California jurisdictions.  The Internal Revenue Service has audited the Bank’s income tax returns through 1996 and the California Franchise Tax Board has audited the Bank through 1990.  The Internal Revenue Service also completed a review of the Corporation’s income tax returns for fiscal 2006 and 2007.  Tax years subsequent to 2007 remain subject to federal examination, while the California state tax returns for years subsequent to 2004 are subject to examination by state taxing authorities.  The California Franchise Tax Board completed a review of the Corporation’s income tax returns for fiscal 2007 and 2008.  It is the Corporation’s policy to record any penalties or interest charges arising from federal or state taxes as a component of income tax expense.  For the quarter ended September 30, 2011, there was a $14,000 interest charge (related to the State of California tax return for fiscal 2007) and no tax penalties; and for the quarter ended September 30, 2010, there was a $13,000 interest charge (related to the State of California tax returns for fiscal 2007 and 2008) and no tax penalties.

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Basis of Presentation

3 Months Ended

Sep. 30, 2011

Basis of Presentation

Basis of Presentation

Note 1: Basis of Presentation

The unaudited interim condensed consolidated financial statements included herein reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results of operations for the interim periods presented.  All such adjustments are of a normal, recurring nature.  The condensed consolidated statements of financial condition at June 30, 2011 are derived from the audited consolidated financial statements of Provident Financial Holdings, Inc. and its wholly-owned subsidiary, Provident Savings Bank, F.S.B. (the “Bank”) (collectively, the “Corporation”).  Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) with respect to interim financial reporting.  It is recommended that these unaudited interim condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended June 30, 2011.  The results of operations for the quarter ended September 30, 2011 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2012.

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Operating Segment Reports

3 Months Ended

Sep. 30, 2011

Operating Segment Reports

Operating Segment Reports

Note 4: Operating Segment Reports

The Corporation operates in two business segments: community banking through the Bank and mortgage banking through Provident Bank Mortgage (“PBM”), a division of the Bank.

The following tables set forth condensed consolidated statements of operations and total assets for the Corporation’s operating segments for the quarters ended September 30, 2011 and 2010, respectively (in thousands).

	For the Quarter Ended September 30, 2011
			Provident
	Provident		Bank	Consolidated
	Bank		Mortgage	Totals
Net interest income, before provision for loan losses	$        7,558		$     1,240	$        8,798
Provision for loan losses	709		263	972
Net interest income, after provision for loan losses	6,849		977	7,826
Non-interest income:
Loan servicing and other fees	119		13	132
Gain on sale of loans, net	7		7,269	7,276
Deposit account fees	603		-	603
(Loss) gain on sale and operations of real estate         owned acquired in the settlement of loans, net	(32	)	64	32
Card and processing fees	331		-	331
Other	174		-	174
Total non-interest income	1,202		7,346	8,548
Non-interest expense:
Salaries and employee benefits	4,189		4,665	8,854
Premises and occupancy	597		275	872
Operating and administrative expenses	940		1,637	2,577
Total non-interest expense	5,726		6,577	12,303
Income before income taxes	2,325		1,746	4,071
Provision for income taxes	1,019		734	1,753
Net income	$        1,306		$     1,012	$        2,318
Total assets, end of period	$ 1,049,345		$ 270,523	$ 1,319,868

	For the Quarter Ended September 30, 2010
			Provident
	Provident		Bank	Consolidated
	Bank		Mortgage	Totals
Net interest income, before provision for loan losses	$ 8,705		$ 1,107	$  9,812
Provision for loan losses	516		361	877
Net interest income, after provision for loan losses	8,189		746	8,935
Non-interest income:
Loan servicing and other fees	111		13	124
(Loss) gain on sale of loans, net	(131	)	9,578	9,447
Deposit account fees	629		-	629
(Loss) gain on sale and operations of real estate         Owned acquired in the settlement of loans, net	(377	)	9	(368	)
Card and processing fess	316		-	316
Other	186		1	187
Total non-interest income	734		9,601	10,335
Non-interest expense:
Salaries and employee benefits	3,199		4,178	7,377
Premises and occupancy	610		210	820
Operating and administrative expenses	1,626		1,387	3,013
Total non-interest expense	5,435		5,775	11,210
Income before income taxes	3,488		4,572	8,060
Provision for income taxes	1,609		1,922	3,531
Net income	$ 1,879		$ 2,650	$  4,529
Total assets, end of period	$ 1,163,125		$ 226,042	$ 1,389,167

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Investment Securities

3 Months Ended

Sep. 30, 2011

Investment Securities

Investment Securities

Note 5: Investment Securities

The amortized cost and estimated fair value of investment securities as of September 30, 2011 and June 30, 2011 were as follows:

September 30, 2011		Amortized Cost	Gross Unrealized Gains	Gross Unrealized (Losses)		Estimated Fair Value	Carrying Value
(In Thousands)
Available for sale
	U.S. government agency MBS (1)	$ 13,405	$ 480	$     -		$ 13,885	$ 13,885
	U.S. government sponsored   enterprise MBS	9,626	454	-		10,080	10,080
	Private issue CMO (2)	1,359	-	(71	)	1,288	1,288
Total investment securities		$ 24,390	$ 934	$ (71	)	$ 25,253	$ 25,253

(1)	Mortgage-backed securities (“MBS”).
(2)	Collateralized Mortgage Obligations (“CMO”).

June 30, 2011		Amortized Cost	Gross Unrealized Gains	Gross Unrealized (Losses)		Estimated Fair Value	Carrying Value
(In Thousands)
Available for sale
	U.S. government agency MBS	$ 13,935	$ 474	$     -		$ 14,409	$ 14,409
	U.S. government sponsored   enterprise MBS	9,960	457	-		10,417	10,417
	Private issue CMO	1,396	-	(29	)	1,367	1,367
Total investment securities		$ 25,291	$ 931	$ (29	)	$ 26,193	$ 26,193

In the first quarter of fiscal 2012 and 2011, the Bank received MBS principal payments of $898,000 and $2.0 million, respectively, and did not purchase or sell investment securities.  The Bank evaluates individual investment securities quarterly for other-than-temporary declines in market value.  The Bank does not believe that there are any other-than-temporary impairments at September 30, 2011 or June 30, 2011; therefore, no impairment losses have been recorded for the quarter ended September 30, 2011.

Contractual maturities of investment securities as of September 30, 2011 and June 30, 2011 were as follows:

	September 30, 2011				June 30, 2011
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
(In Thousands)	Cost		Value		Cost		Value
Available for sale
Due in one year or less	$	-	$	-	$	-	$	-
Due after one through five years		-		-		-		-
Due after five through ten years		-		-		-		-
Due after ten years		24,390		25,253		25,291		26,193
Total investment securities	$	24,390	$	25,253	$	25,291	$	26,193

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Loans Held for Investment

3 Months Ended

Sep. 30, 2011

Loans Held for Investment

Loans Held for Investment

Note 6: Loans Held for Investment

Loans held for investment consisted of the following:

(In Thousands)	September 30, 2011			June 30, 2011
Mortgage loans:
Single-family	$	480,530		$	494,192
Multi-family		298,072			304,808
Commercial real estate		100,863			103,637
Other		1,528			1,530
Commercial business loans		4,267			4,526
Consumer loans		748			750
Total loans held for investment, gross		886,008			909,443
Deferred loan costs, net		2,345			2,649
Allowance for loan losses		(28,704	)		(30,482	)
Total loans held for investment, net	$	859,649		$	881,610

As of September 30, 2011, the Bank had $48.4 million in mortgage loans that are subject to negative amortization, consisting of $29.6 million in multi-family loans, $11.3 million in commercial real estate loans and $7.5 million in single-family loans.  This compares to $50.4 million of negative amortization mortgage loans at June 30, 2011, consisting of $31.3 million in multi-family loans, $11.5 million in commercial real estate loans and $7.6 million in single-family loans.  The amount of negative amortization included in loan balances decreased to $339,000 at September 30, 2011 from $353,000 at June 30, 2011.  During the first quarter of fiscal 2012, approximately $13,000, or 0.10%, of loan interest income was added to the negative amortization loan balance, down from $17,000, or 0.11% in the comparable quarter of fiscal 2010.  Negative amortization involves a greater risk to the Bank because the loan principal balance may increase by a range of 110% to 115% of the original loan amount during the period of negative amortization and because the loan payment may increase beyond the means of the borrower when loan principal amortization is required.  Also, the Bank has originated interest-only ARM loans, which typically have a fixed interest rate for the first two to five years coupled with an interest only payment, followed by a periodic adjustable rate and a fully amortizing loan payment.  As of September 30, 2011 and June 30, 2011, the interest-only ARM loans were $238.2 million and $247.8 million, or 26.8% and 27.2% of loans held for investment, respectively.

The following table sets forth information at September 30, 2011 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans.  Fixed-rate loans comprised 5% of loans held for investment at September 30, 2011, unchanged from June 30, 2011.  Adjustable rate loans having no stated repricing dates but reprice when the index they are tied to reprices (e.g. prime rate index) and checking account overdrafts are reported as repricing within one year.  The table does not include any estimate of prepayments which may cause the Bank’s actual repricing experience to differ materially from that shown below.

		Adjustable Rate
			After	After	After
			One Year	3 Years	5 Years
		Within	Through	Through	Through	Fixed
(In Thousands)		One Year	3 Years	5 Years	10 Years	Rate	Total
Mortgage loans:
	Single-family	$ 421,929	$ 46,365	$   5,678	$      746	$   5,812	$ 480,530
	Multi-family	207,440	38,072	14,090	23,838	14,632	298,072
	Commercial real estate	64,976	10,655	2,695	4,721	17,816	100,863
	Other	1,292	-	-	-	236	1,528
Commercial business loans		2,118	-	-	-	2,149	4,267
Consumer loans		703	-	-	-	45	748
	Total loans held for investment, gross	$ 698,458	$ 95,092	$ 22,463	$ 29,305	$ 40,690	$ 886,008

The allowance for loan losses is maintained at a level sufficient to provide for estimated losses based on evaluating known and inherent risks in the loans held for investment and upon management’s continuing analysis of the factors underlying the quality of the loans held for investment.  These factors include changes in the size and composition of the loans held for investment, actual loan loss experience, current economic conditions, detailed analysis of individual loans for which full collectability may not be assured, and determination of the realizable value of the collateral securing the loans.  Provisions for loan losses are charged against operations on a monthly basis, as necessary, to maintain the allowance at appropriate levels.  Although management believes it uses the best information available to make such determinations, there can be no assurance that regulators, in reviewing the Bank’s loans held for investment, will not request that the Bank significantly increase its allowance for loan losses.  Future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Bank’s control.

The following tables summarize the Corporation’s allowance for loan losses at September 30, 2011 and June 30, 2011:

(In Thousands)			September 30, 2011	June 30,  2011
General loan loss allowance:
	Mortgage loans:
		Single-family	$ 11,157	$ 11,561
		Multi-family	2,823	2,810
		Commercial real estate	1,754	1,796
		Other	5	5
	Commercial business loans		177	178
	Consumer loans		15	16
		Total general loan loss allowance	15,931	16,366
Specific loan loss allowance:
	Mortgage loans:
		Single-family	11,267	12,654
		Multi-family	607	581
		Commercial real estate	236	231
		Other	320	321
	Commercial business loans		325	329
	Consumer loans		18	-
		Total specific loan loss allowance	12,773	14,116
Total loan loss allowance			$ 28,704	$ 30,482

The following table is provided to disclose additional details on the Corporation’s allowance for loan losses:

	Three Months Ended
	September 30,
(Dollars in Thousands)	2011			2010
Allowance at beginning of period	$	30,482		$	43,501
Provision for loan losses		972			877
Recoveries:
Mortgage loans:
Single-family		113			1
Total recoveries		113			1
Charge-offs:
Mortgage loans:
Single-family		(2,861	)		(5,291	)
Consumer loans		(2	)		(2	)
Total charge-offs		(2,863	)		(5,293	)
Net charge-offs		(2,750	)		(5,292	)
Allowance at end of period	$	28,704		$	39,086
Allowance for loan losses as a percentage of gross loans held for      investment
		3.23	%		3.88	%
Net charge-offs as a percentage of average loans receivable, net,      during the period
		1.04	%		1.82	%
Allowance for loan losses as a percentage of gross non-performing      loans at the end of the period
		57.61	%		55.28	%

The following tables identify the Corporation’s total recorded investment in non-performing loans by type, net of specific allowances for loan losses, at September 30, 2011 and June 30, 2011:

(In Thousands)				September 30, 2011
				Recorded Investment	Specific Allowance For Loan Losses		Net Investment
Mortgage loans:
	Single-family:
			With a related allowance	$ 41,508	$ (11,267	)	$ 30,241
			Without a related allowance	1,313	-		1,313
	Total single-family loans			42,821	(11,267	)	31,554
	Multi-family:
			With a related allowance	2,534	(607	)	1,927
	Total multi-family loans			2,534	(607	)	1,927
	Commercial real estate:
			With a related allowance	2,447	(236	)	2,211
		Without a related allowance		388	-		388
	Total commercial real estate loans			2,835	(236	)	2,599
	Other:
		With a related allowance		1,292	(320	)	972
	Total other loans			1,292	(320	)	972
Commercial business loans:
		With a related allowance		328	(325	)	3
	Total commercial business loans			328	(325	)	3
Consumer loans:
		With a related allowance		18	(18	)	-
	Total consumer loans			18	(18	)	-
Total non-performing loans				$ 49,828	$ (12,773	)	$ 37,055

(In Thousands)				June 30, 2011
				Recorded Investment	Specific Allowance For Loan Losses		Net Investment
Mortgage loans:
	Single-family:
			With a related allowance	$ 42,958	$ (12,655	)	$ 30,303
			Without a related allowance	1,535	-		1,535
	Total single-family loans			44,493	(12,655	)	31,838
	Multi-family:
			With a related allowance	2,534	(581	)	1,953
	Total multi-family loans			2,534	(581	)	1,953
	Commercial real estate:
			With a related allowance	2,451	(231	)	2,220
	Total commercial real estate loans			2,451	(231	)	2,220
	Other:
		With a related allowance		1,292	(320	)	972
	Total other loans			1,292	(320	)	972
Commercial business loans:
		With a related allowance		331	(329	)	2
		Without a related allowance		141	-		141
	Total commercial business loans			472	(329	)	143
Total non-performing loans				$ 51,242	$ (14,116	)	$ 37,126

At September 30, 2011 and June 30, 2011, there were no commitments to lend additional funds to those borrowers whose loans were classified as impaired.

The following table describes the aging analysis (length of time on non-performing status) of non-performing loans, net of specific allowance for loan losses, as of September 30, 2011:

(In Thousands)		3 Months or Less	Over 3 to 6 Months	Over 6 to 12 Months	Over 12 Months	Total
Mortgage loans:
	Single-family	$   9,969	$ 7,605	$ 3,996	$   9,984	$ 31,554
	Multi-family	-	-	-	1,927	1,927
	Commercial real estate	388	918	1,293	-	2,599
	Other	-	-	972	-	972
Commercial business loans		-	-	3	-	3
	Total	$ 10,357	$ 8,523	$ 6,264	$ 11,911	$ 37,055

During the quarters ended September 30, 2011 and 2010, the Corporation’s average investment in non-performing loans was $36.6 million and $58.4 million, respectively.  Interest income of $1.5 million and $1.7 million was recognized, based on cash receipts, on non-performing loans during the quarters ended September 30, 2011 and 2010, respectively.  The Corporation records interest on non-performing loans utilizing the cash basis method of accounting during the periods when the loans are on non-performing status.  Foregone interest income, which would have been recorded had the non-performing loans been current in accordance with their original terms, amounted to $313,000 and $363,000 for the quarters ended September 30, 2011 and 2010, respectively, and was not included in the results of operations.

For the quarter ended September 30, 2011, twelve loans for $4.8 million were modified from their original terms, were re-underwritten and were identified in the Corporation’s asset quality reports as restructured loans. This compares to 21 loans for $9.4 million that were re-underwritten and were identified in the Corporation’s asset quality reports as restructured loans during the quarter ended September 30, 2010.  During the quarter ended September 30, 2011, two restructured loans with a total loan balance of $771,000 were in default within a 12-month period subsequent to their original restructuring and required a $200,000 additional provision for loan losses.  This compares to one restructured loan with a total loan balance of $285,000 that was in default within a 12-month period subsequent to its original restructuring and required an additional provision for loan losses of $133,000 in the quarter ended September 30, 2010.  As of September 30, 2011, the net outstanding balance of the 87 restructured loans was $36.1 million:  26 were classified as pass and remain on accrual status ($11.6 million); eight were classified as special mention and remain on accrual status ($5.7 million); 52 were classified as substandard ($18.8 million total, with 47 of the 52 loans or $17.1 million on non-accrual status); and one loan was classified as a complete loss and is on non-accrual status.

The Corporation upgrades restructured single-family loans to the pass category if the borrower has demonstrated satisfactory contractual payments for at least six consecutive months; and if the borrower has demonstrated satisfactory contractual payments beyond 12 consecutive months, the loan is no longer categorized as a restructured loan.  In addition to the payment history described above, multi-family, commercial real estate, construction and commercial business loans (which are sometimes referred to in this report as “preferred loans”) must also demonstrate a combination of the following characteristics to be upgraded, such as: satisfactory cash flow, satisfactory guarantor support, and additional collateral support, among others.

To qualify for restructuring, a borrower must provide evidence of their creditworthiness such as, current financial statements, their most recent income tax returns, current paystubs, current W-2s, and most recent bank statements, among other documents, which are then verified by the Bank.  The Bank re-underwrites the loan with the borrower’s updated financial information, new credit report, current loan balance, new interest rate, remaining loan term, updated property value and modified payment schedule, among other considerations, to determine if the borrower qualifies.

The following table summarizes at the dates indicated the restructured loans by loan types and non-accrual versus accrual status:

(In Thousands)			September 30, 2011	June 30, 2011
Restructured loans on non-accrual status:
	Mortgage loans:
		Single-family	$ 13,940	$ 15,133
		Multi-family	490	490
		Commercial real estate	1,660	1,660
		Other	972	972
	Commercial business loans		3	143
		Total	17,065	18,398
Restructured loans on accrual status:
	Mortgage loans:
		Single-family	12,940	15,589
		Multi-family	4,172	3,665
		Commercial real estate	1,473	1,142
	Other		236	237
	Commercial business loans		189	125
		Total	19,010	20,758
		Total restructured loans	$ 36,075	$ 39,156

The following table shows the restructured loans by type, net of specific valuation allowances for loan losses, at September 30, 2011 and June 30, 2011:

(In Thousands)			September 30, 2011
			Recorded Investment	Specific Allowance For Loan Losses		Net Investment
Mortgage loans:
	Single-family:
		With a related allowance	$ 16,943	$ (3,003	)	$ 13,940
		Without a related allowance	12,940	-		12,940
	Total single-family loans		29,883	(3,003	)	26,880
	Multi-family:
		With a related allowance	517	(27	)	490
		Without a related allowance	4,172	-		4,172
	Total multi-family loans		4,689	(27	)	4,662
	Commercial real estate:
		With a related allowance	1,837	(177	)	1,660
		Without a related allowance	1,473	-		1,473
	Total commercial real estate loans		3,310	(177	)	3,133
	Other:
		With a related allowance	1,292	(320	)	972
		Without a related allowance	236	-		236
	Total other loans		1,528	(320	)	1,208
Commercial business loans:
		With a related allowance	328	(325	)	3
		Without a related allowance	189	-		189
	Total commercial business loans		517	(325	)	192
Total restructured loans			$ 39,927	$ (3,852	)	$ 36,075

(In Thousands)			June 30, 2011
			Recorded Investment	Specific Allowance For Loan Losses		Net Investment
Mortgage loans:
	Single-family:
		With a related allowance	$ 19,092	$ (3,959	)	$ 15,133
		Without a related allowance	15,589	-		15,589
	Total single-family loans		34,681	(3,959	)	30,722
	Multi-family:
		With a related allowance	517	(27	)	490
		Without a related allowance	3,665	-		3,665
	Total multi-family loans		4,182	(27	)	4,155
	Commercial real estate:
		With a related allowance	1,837	(177	)	1,660
		Without a related allowance	1,142	-		1,142
	Total commercial real estate loans		2,979	(177	)	2,802
	Other:
		With a related allowance	1,293	(321	)	972
		Without a related allowance	237	-		237
	Total other loans		1,530	(321	)	1,209
Commercial business loans:
		With a related allowance	53	(51	)	2
		Without a related allowance	266	-		266
	Total commercial business loans		319	(51	)	268
Total restructured loans			$ 43,691	$ (4,535	)	$ 39,156

During the quarter ended September 30, 2011, sixteen properties were acquired in the settlement of loans, while 18 previously foreclosed upon properties were sold.  As of September 30, 2011, real estate owned was comprised of 52 properties with a net fair value of $7.3 million, primarily located in Southern California.  This compares to 54 real estate owned properties, primarily located in Southern California, with a net fair value of $8.3 million at June 30, 2011.  A new appraisal was obtained on each of the properties at the time of foreclosure and fair value was calculated by using the lower of the appraised value or the listing price of the property, net of disposition costs.  Any initial loss was recorded as a charge to the allowance for loan losses before being transferred to real estate owned.  Subsequently, if there is further deterioration in real estate values, specific real estate owned loss reserves are established and charged to the statement of operations.  In addition, the Corporation reflects costs to carry real estate owned as real estate operating expenses as incurred.

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Provident Financial Holdings, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	3 Months Ended
	Sep. 30, 2011		Sep. 30, 2010
Cash flows from operating activities:
Net income	$ 2,318		$ 4,529
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization	452		360
Provision for loan losses	972		877
Provision for losses on real estate owned	105		230
Gain on sale of loans, net	(7,276)		(9,447)
Net realized gain on sale of real estate owned	(361)		(391)
Stock-based compensation expense	589		238
ESOP expense			84
Decrease in current and deferred income taxes	1,721		3,422
Increase in cash surrender value of bank owned life insurance	(48)		(51)
Increase in accounts payable, accrued interest and other liabilities	1,751		1,454
(Increase) decrease in prepaid expenses and other assets	(2,095)		780
Loans originated for sale	(568,060)		(649,471)
Proceeds from sale of loans	488,657		596,493
Net cash used for operating activities	(81,275)		(50,893)
Cash flows from investing activities:
Net decrease in loans held for investment	17,234		26,185
Principal payments from investment securities available for sale	898	[1]	2,022	[1]
Proceeds from redemption of FHLB - San Francisco stock	1,199		1,224
Proceeds from sales of real estate owned	4,793		8,626
Purchase of premises and equipment	(329)		(125)
Net cash provided by investing activities	23,795		37,932
Cash flows from financing activities:
Increase (decrease) in deposits, net	16,109		(685)
Repayments of long-term borrowings	(20,012)		(15,012)
ESOP loan payment			1
Cash dividends paid	(345)		(114)
Treasury Stock purchases	(666)
Net cash used for financing activities	(4,914)		(15,810)
Net decrease in cash and cash equivalents	(62,394)		(28,771)
Cash and cash equivalents at beginning of year	142,550		96,201
Cash and cash equivalents at end of year	80,156		67,430
Supplemental information:
Cash paid for interest	4,301		6,134
Cash paid for income taxes			100
Transfer of loans held for sale to loans held for investment	856
Real estate acquired in the settlement of loans	$ 5,682		$ 14,975

[1] Includes Mortgage Backed Securities held for sale.

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Accounting Standard Updates ("ASU")

3 Months Ended

Sep. 30, 2011

Accounting Standard Updates ("ASU")

Accounting Standard Updates ("ASU")

Note 2: Accounting Standard Updates (“ASU”)

ASU 2010-06:

In January 2010, the Financial Accounting Standards Board (“FASB”) issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements.” ASU 2010-06 requires additional disclosures about fair value measurements including transfers in and out of Levels 1 and 2 and a higher level of disaggregation for the different types of financial instruments.  For the reconciliation of Level 3 fair value measurements, information about purchases, sales, issuances and settlements should be presented separately.  This ASU was effective for annual and interim reporting periods beginning after December 15, 2009 for most of the disclosures and for periods beginning after December 15, 2010 for the new Level 3 disclosures. Comparative disclosures are not required in the first year the disclosures are required.  The Corporation’s adoption of this ASU did not have a material effect on its consolidated financial statements.

ASU 2011-02:

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.”  This ASU provides additional guidance for creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring.  The provisions of this standard are effective for the first interim or annual period beginning on or after June 15, 2011.  The Corporation’s adoption of this ASU did not have a material effect on its consolidated financial statements.

ASU 2011-03:

In April 2011, the FASB issued ASU No. 2011-03, “Reconsideration of Effective Control for Repurchase Agreements.”  The update amends existing guidance to remove from the assessment of effective control, the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and, as well, the collateral maintenance implementation guidance related to that criterion.  ASU No. 2011-03 is effective for the Corporation’s reporting period beginning on or after December 15, 2011. The guidance applies prospectively to transactions or modification of existing transactions that occur on or after the effective date and early adoption is not permitted.  The Corporation has not determined the impact of this ASU on the Corporation’s consolidated financial statements.

ASU 2011-04:

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU 2011-04 developed common requirements between U.S. GAAP and IFRSs for measuring fair value and for disclosing information about fair value measurements.  The effective date of ASU 2011-04 will be during interim or annual period beginning after December 15, 2011 and should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date.  Early adoption is not permitted.  The Corporation has not determined the impact of this ASU on the Corporation’s consolidated financial statements.

ASU 2011-05:

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.”  ASU 2011-05 attempts to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The effective date of ASU 2011-05 will be the first interim or fiscal period beginning after December 15, 2011 and should be applied retrospectively to transactions or modifications of existing transactions that occur on or after the effective date.  Early adoption is permitted.  The Corporation has not determined the impact of this ASU on the Corporation’s consolidated financial statements.

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Subsequent Events

3 Months Ended

Sep. 30, 2011

Subsequent Events

Subsequent Events

Note 11: Subsequent Events

Management has evaluated events through the date that the financial statements were issued.  No material subsequent events have occurred since September 30, 2011 that would require recognition or disclosure in these condensed consolidated financial statements, except that on October 27, 2011, the Corporation announced a cash dividend of $0.03 per share on the Corporation’s outstanding shares of common stock for shareholders of record at the close of business on November 18, 2011, payable on December 12, 2011.

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Provident Financial Holdings, Inc. Condensed Consolidated Statements of Financial Condition (Unaudited) (USD $) In Thousands	Sep. 30, 2011		Jun. 30, 2011
Assets
Cash and cash equivalents	$ 80,156		$ 142,550
Investment securities - available for sale, at fair value	25,253		26,193
Loans held for investment, net	859,649	[1]	881,610	[1]
Loans held for sale, at fair value	278,212		191,678
Accrued interest receivable	3,480		3,778
Real estate owned, net	7,300		8,329
Federal Home Loan Bank ("FHLB") - San Francisco stock	25,777		26,976
Premises and equipment, net	4,941		4,805
Prepaid expenses and other assets	35,100		28,630
Total assets	1,319,868		1,314,549
Liabilities:
Non interest-bearing deposits	46,044		45,437
Interest-bearing deposits	915,832		900,330
Total deposits	961,876		945,767
Borrowings	186,586		206,598
Accounts payable, accrued interest and other liabilities	27,810		20,441
Total liabilities	1,176,272		1,172,806
Stockholder's equity:
Preferred stock, $.01 par value		[2]		[2]
Common stock, $.01 par value	176	[3]	176	[3]
Additional paid-in capital	86,021		85,432
Retained earnings	150,120		148,147
Treasury stock at cost	(93,316)	[4]	(92,650)	[4]
Accumulated other comprehensive income, net of tax	595		638
Total stockholders' equity	143,596		141,743
Total liabilities and stockholders' equity	$ 1,319,868		$ 1,314,549

[1] Net of allowance for loan losses of $28,704 and $30,482, respectively.

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

[3] Common stock, $.01 par value; (40,000,000 shares authorized; 17,610,865 shares issued; 11,439,264 and 11,418,654 shares outstanding, respectively).

[4] Treasury stock 6,171,601 and 6,192,211 shares, respectively.