Reportable Segments

12 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Reportable Segments

Reportable Segments

The segment reporting is organized consistent with the Corporation’s executive summary and operating strategy. The business activities of the Corporation consist primarily of the Bank and PBM, a division of the Bank.  The Bank's operations primarily consist of accepting deposits from customers within the communities surrounding the Bank’s full service offices and investing those funds in single-family, multi-family, commercial real estate, construction, commercial business, consumer and other mortgage loans.  PBM operations primarily consist of the origination and sale of mortgage loans secured by single-family residences.  The following table and discussion explain the results of the Corporation’s two major reportable segments, the Bank and PBM.

The following tables illustrate the Corporation’s operating segments for the years ended June 30, 2013, 2012 and 2011, respectively.

	For the Year Ended June 30, 2013
(In Thousands)	Provident Bank			Provident Bank Mortgage			Consolidated Totals
Net interest income	$	27,835		$	5,522		$	33,357
Recovery for loan losses	(1,229		)	(270		)	(1,499		)
Net interest income, after recovery for loan losses	29,064			5,792			34,856
Non-interest income:
Loan servicing and other fees	903			190			1,093
(Loss) gain on sale of loans, net	(84		)	68,577			68,493
Deposit account fees	2,449			—			2,449
Gain on sale and operations of real estate owned         acquired in the settlement of loans, net	703			213			916
Card and processing fees	1,292			—			1,292
Other	957			—			957
Total non-interest income	6,220			68,980			75,200
Non-interest expense:
Salaries and employee benefits	17,745			32,705			50,450
Premises and occupancy	2,705			1,727			4,432
Operating and administrative expenses	4,636			7,825			12,461
Total non-interest expense	25,086			42,257			67,343
Income before taxes	10,198			32,515			42,713
Provision for income taxes	3,245			13,671			16,916
Net income	$	6,953		$	18,844		$	25,797
Total assets, end of period	$	1,019,788		$	191,253		$	1,211,041

(In Thousands)	Year Ended June 30, 2012
	Provident Bank			Provident Bank Mortgage			Consolidated Total
Net interest income	$	30,514		$	6,216		$	36,730
Provision (recovery) for loan losses	5,932			(155		)	5,777
Net interest income, after provision (recovery) for loan losses	24,582			6,371			30,953
Non-interest income:
Loan servicing and other fees	627			106			733
(Loss) gain on sale of loans, net	(1,057		)	39,074			38,017
Deposit account fees	2,438			—			2,438
(Loss) gain on sale and operations of real estate owned acquired in the settlement of loans, net	(191		)	71			(120		)
Card and processing fees	1,282			—			1,282
Other	800			—			800
Total non-interest income	3,899			39,251			43,150
Non-interest expense:
Salaries and employee benefits	15,756			23,527			39,283
Premises and occupancy	2,449			1,314			3,763
Operating and administrative expenses	4,903			7,416			12,319
Total non-interest expenses	23,108			32,257			55,365
Income before income taxes	5,373			13,365			18,738
Provision for income taxes	2,309			5,619			7,928
Net income	$	3,064		$	7,746		$	10,810
Total assets, end of fiscal year	$	1,036,138		$	224,779		$	1,260,917

(In Thousands)	Year Ended June 30, 2011
	Provident Bank			Provident Bank Mortgage		Consolidated Total
Net interest income	$	33,512		$	4,237	$	37,749
Provision for loan losses	2,552			2,913		5,465
Net interest income, after provision for loan losses	30,960			1,324		32,284
Non-interest income:
Loan servicing and other fees	832			60		892
(Loss) gain on sale of loans, net	(113		)	31,307		31,194
Deposit account fees	2,504			—		2,504
(Loss) gain on sale and operations of real estate owned acquired in the settlement of loans, net	(1,364		)	13		(1,351		)
Gain on sale of premises and equipment	1,089			—		1,089
Card and processing fees	1,274			—		1,274
Other	753			2		755
Total non-interest income	4,975			31,382		36,357
Non-interest expense:
Salaries and employee benefits	13,828			16,138		29,966
Premises and occupancy	2,289			981		3,270
Operating and administrative expenses	6,347			5,789		12,136
Total non-interest expenses	22,464			22,908		45,372
Income before income taxes	13,471			9,798		23,269
Provision for income taxes	5,929			4,120		10,049
Net income	$	7,542		$	5,678	$	13,220
Total assets, end of fiscal year	$	1,125,453		$	188,271	$	1,313,724

The information above was derived from the internal management reporting system used by management to measure performance of the segments.

The Corporation’s internal transfer pricing arrangements determined by management primarily consist of the following:

1. Borrowings for PBM are indexed monthly to the higher of the three-month FHLB – San Francisco advance rate on the first Friday of the month plus 50 basis points or the Bank’s cost of funds for the prior month.

2. PBM receives servicing released premiums for new loans transferred to the Bank’s loans held for investment.  The servicing released premiums in the years ended June 30, 2013, 2012 and 2011 were $73,000, $3,000 and $14,000, respectively.

3. PBM receives a premium (gain on sale of loans) or a discount (loss on sale of loans) for the new loans transferred to the Bank’s loans held for investment.  The loss on sale of loans in the years ended June 30, 2013, 2012 and 2011 was $16,000, $2,000 and $1,000, respectively.

4. Loan servicing costs are charged to PBM by the Bank based on the number of loans held for sale at fair value multiplied by a fixed fee which is subject to management’s review.  The loan servicing costs in the years ended June 30, 2013, 2012 and 2011 were $110,000, $81,000 and $72,000, respectively.

5. The Bank allocates quality assurance costs to PBM for its loan production, subject to management’s review.  Quality assurance costs allocated to PBM in the years ended June 30, 2013, 2012 and 2011 were $321,000, $240,000 and $213,000, respectively.

6. The Bank allocates loan vault service costs to PBM for its loan production, subject to management’s review.  The loan vault service costs allocated to PBM in the years ended June 30, 2013, 2012 and 2011 were $240,000, $88,000 and $71,000, respectively.

7. Office rents for PBM offices located in the Bank branches or offices are internally charged based on the square footage used.  Office rents allocated to PBM in the years ended June 30, 2013, 2012 and 2011 were $186,000, $169,000 and $146,000, respectively.

8. A management fee, which is subject to regular review, is charged to PBM for services provided by the Bank.  The management fee in the years ended June 30, 2013, 2012 and 2011 was $1.7 million, $1.5 million and $1.3 million, respectively.