8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 27, 2020

PROVIDENT FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-28304	33-0704889
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3756 Central Avenue, Riverside, California	92506
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (951) 686-6060

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

[   ]Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ]Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ]Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

           (17 CFR 240.14d-2(b))

[   ]Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act 

           (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	PROV	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item 2.02  Results of Operations and Financial Condition

On January 27, 2020, Provident Financial Holdings, Inc. (“Corporation”), the holding company for Provident Savings Bank, F.S.B., distributed its quarterly results for the quarter ended December 31, 2019. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01  Regulation FD Disclosure.

On January 27, 2020, the Corporation posted its Investor Presentation for the quarter ended December 31, 2019 on the Corporation’s website, www.myprovident.com, under Presentations in the Investor Relations section.  A copy of the Investor Presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits

(d) Exhibits

The following exhibits are being furnished herewith and this list shall constitute the exhibit index:

99.1 News release of the Corporation’s quarterly results for the quarter ended December 31, 2019.

99.2 Investor Presentation of Provident Financial Holdings, Inc. for the quarter ended December 31, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  January 27, 2020	PROVIDENT FINANCIAL HOLDINGS, INC.
	/s/ Donavon P. Ternes
	Donavon P. Ternes President, Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer)

EX-99.1

Exhibit 99.1

3756 Central Avenue Riverside, CA 92506 (951) 686-6060	NEWS RELEASE

PROVIDENT FINANCIAL HOLDINGS REPORTS

SECOND QUARTER OF FISCAL 2020 RESULTS

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. – January 27, 2020 – 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

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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.

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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

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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

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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.

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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

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$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

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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

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

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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

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PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited - In Thousands, Except Earnings Per Share)

	Quarter Ended December 31,						Six Months Ended 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

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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

Page 12 of 18

   

PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands, Except Share Information)

	Quarter Ended December 31,						Six Months Ended 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

Page 13 of 18

   

PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands, Except Share Information)

	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
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

Page 14 of 18

   

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 RATIONS (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.

Page 15 of 18

   

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		0.20			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		0.40	%
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		1.90			21,135		2.81
Over three years to four years		20,000		2.00			10,000		2.20
Over four years to five years		20,007		2.50			20,000		2.00
Over five years		20,000		2.70			40,000		2.60
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.

Page 16 of 18

   

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.

Page 17 of 18

   

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.

Page 18 of 18

EX-99.2

Exhibit 99.2