Provident Financial Holdings Reports First Quarter of Fiscal 2017 Earnings

RIVERSIDE, Calif., Oct. 25, 2016 (GLOBE NEWSWIRE) — Provident Financial Holdings, Inc. (“Company”), (NASDAQ:PROV), the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced first quarter earnings for the fiscal year ending June 30, 2017.

For the quarter ended September 30, 2016, the Company reported net income of $1.59 million, or $0.20 per diluted share (on 8.15 million average diluted shares outstanding), down from net income of $2.44 million, or $0.28 per diluted share (on 8.74 million average diluted shares outstanding), in the comparable period a year ago.  The decrease in net income for the first quarter of fiscal 2017, as compared to the same period last year, was primarily attributable to a decrease in the gain on sale of loans and increases in salaries and employee benefits expense and other operating expenses, partly offset by an increase in net interest income.

“We continue to grow our preferred loan portfolio and are confident that the moderate pace of growth is the best strategy in the current environment where more rapid growth would require more liberal underwriting standards and, in our view, create unacceptable credit risk in the loan portfolio.  Additionally, it is important to note that our growth is primarily funded with a combination of core deposits and long-term borrowings which we believe mitigates our interest rate risk,” said Craig G. Blunden, Chairman and Chief Executive Officer of the Company.  “Mortgage banking volume was favorable for the quarter although our loan sale margin declined to the lower end of the recent range as a result of weaker loan servicing premiums and a less profitable product composition.  However, we expect better execution in the loan sale margin as we progress through our fiscal year as market volatility subsides,” he concluded.

Return on average assets for the first quarter of fiscal 2017 decreased to 0.53 percent from 0.83 percent for the same period of fiscal 2016; and return on average stockholders’ equity for the first quarter of fiscal 2017 decreased to 4.79 percent from 6.96 percent for the comparable period of fiscal 2016.

On a sequential quarter basis, net income for the first quarter of fiscal 2017 reflects a $961,000, or 38 percent, decrease from the net income of $2.56 million in the fourth quarter of fiscal 2016.  The decrease in net income in the first quarter of fiscal 2017 compared to the fourth quarter of fiscal 2016 was primarily attributable to a decrease in the gain on sale of loans.  Diluted earnings per share for the first quarter of fiscal 2017 were $0.20 per share, down 35 percent, from the $0.31 per share during the fourth quarter of fiscal 2016.  Return on average assets decreased to 0.53 percent for the first quarter of fiscal 2017 from 0.87 percent in the fourth quarter of fiscal 2016; and return on average stockholders’ equity for the first quarter of fiscal 2017 was 4.79 percent, compared to 7.61 percent for the fourth quarter of fiscal 2016.

Net interest income increased $1.02 million, or 13 percent, to $9.09 million in the first quarter of fiscal 2017 from $8.07 million for the same quarter of fiscal 2016, attributable to an increase in the net interest margin and a higher average earning assets balance.   The net interest margin during the first quarter of fiscal 2017 increased 26 basis points to 3.08 percent from 2.82 percent in the same quarter last year, primarily due to the increase in the average yield of earning assets and a decrease in the average cost of interest-bearing liabilities.  The average yield of interest-earning assets increased by 22 basis points to 3.67 percent in the first quarter of fiscal 2017 from 3.45 percent in the same quarter last year, while the average cost of liabilities decreased by six basis points to 0.64 percent in the first quarter of fiscal 2017 from 0.70 percent in the same quarter last year.  The increase in the average yield of interest-earning assets was primarily due to the utilization of interest-earning deposits earning a nominal yield to fund higher balances of loans receivable and investment securities, which earned a significantly higher yield.  The average earning assets balance for the first quarter of fiscal 2017 was $1.18 billion, up three percent from $1.14 billion during the same period last year.

The average balance of loans outstanding, including loans held for sale, increased by $115.4 million, or 12 percent, to $1.08 billion in the first quarter of fiscal 2017 from $962.6 million in the same quarter of fiscal 2016, primarily due to an increase in average loans held for sale attributable to elevated mortgage banking activity.  The average yield on loans receivable decreased by five basis points to 3.89 percent in the first quarter of fiscal 2017 from an average yield of 3.94 percent in the same quarter of fiscal 2016.  The decrease in the average loan yield was primarily attributable to a decrease in the average yield of loans held for sale.  The average balance of loans held for sale in the first quarter of fiscal 2017 was $231.1 million with an average yield of 3.59 percent as compared to $150.8 million with an average yield of 3.86 percent in the same quarter of fiscal 2016.  The outstanding balance of “preferred loans” (multi-family, commercial real estate, construction and commercial business loans) increased by $25.3 million, or five percent, to $544.5 million at September 30, 2016 from $519.2 million at June 30, 2016, net of undisbursed loan funds of $10.4 million and $11.3 million, respectively.  The percentage of preferred loans to total loans held for investment at September 30, 2016 increased to 63 percent from 61 percent at June 30, 2016.  Loan principal payments received in the first quarter of fiscal 2017 were $50.2 million, compared to $45.8 million in the same quarter of fiscal 2016.  

The average balance of investment securities increased by $35.0 million, or 240 percent, to $49.6 million in the first quarter of fiscal 2017 from $14.6 million in the same quarter of fiscal 2016.  The increase was attributable to the mortgage-backed securities purchases during fiscal 2016, partly offset by principal payments received on mortgage-backed securities during the same period.  The average yield on investment securities decreased 115 basis points to 0.68 percent in the first quarter of fiscal 2017 from 1.83 percent for the same quarter of fiscal 2016.  The decrease in the average yield was primarily attributable to the mortgage-backed securities purchases during fiscal 2016 which had lower average yields than the existing portfolio.

In the first quarter of fiscal 2017, the Federal Home Loan Bank (“FHLB”) – San Francisco distributed an $185,000 cash dividend to the Bank, a $15,000 decrease from the cash dividend received by the Bank in the same quarter last year.

The average balance of the Company’s interest-earning deposits, primarily cash with the Federal Reserve Bank of San Francisco, decreased $114.5 million, or 73 percent, to $43.3 million in the first quarter of fiscal 2017 from $157.8 million in the same quarter of fiscal 2016.  The decrease in interest-earning deposits was primarily due to redeployment of excess cash to fund loans held for investment, loans held for sale and purchases of investment securities.  The average yield earned on interest-earning deposits in the first quarter of fiscal 2017 was 0.50 percent, up from 0.25 percent in the same quarter of fiscal 2016 as a result of the impact of the increase in the federal funds rate in December 2015.

Average deposits increased $6.3 million, or one percent, to $932.8 million in the first quarter of fiscal 2017 from $926.5 million in the same quarter of fiscal 2016.  The average cost of deposits decreased by six basis points to 0.43 percent in the first quarter of fiscal 2017 from 0.49 percent in the same quarter last year, primarily due to a decrease in the average cost of savings accounts and a lower percentage of time deposits to the total deposit balance.  Transaction account balances or “core deposits” increased $24.1 million, or four percent, to $641.6 million at September 30, 2016 from $617.5 million at June 30, 2016, while time deposits decreased $7.0 million, or two percent, to $301.9 million at September 30, 2016 from $308.9 million at June 30, 2016, consistent with the Bank’s strategy to decrease the percentage of time deposits in its deposit base and to increase the percentage of lower cost checking and savings accounts.

The average balance of borrowings, which consisted of FHLB – San Francisco advances, increased $35.5 million, or 39 percent, to $126.9 million while the average cost of advances decreased 62 basis points to 2.19 percent in the first quarter of fiscal 2017, compared to an average balance of $91.4 million with an average cost of 2.81 percent in the same quarter of fiscal 2016.  The decrease in the average cost of advances was primarily due to the increased utilization of overnight borrowings and short-term advances with a lower interest rate than long-term advances.  The increase in the average balance of borrowings was utilized to fund loans held for sale and loans held for investment and purchases of investment securities.

During the first quarter of fiscal 2017, the Company recorded a recovery from the allowance for loan losses of $150,000 compared to the recovery of $38,000 recorded during the same period of fiscal 2016 and the $621,000 recovery recorded in the fourth quarter of fiscal 2016 (sequential quarter).  These recoveries were primarily attributable to continued improvement in loan credit quality and net recoveries of previously charged-off loans.

Non-performing assets, with underlying collateral primarily located in California, increased slightly to $13.5 million, or 1.09 percent of total assets, at September 30, 2016, compared to $13.0 million, or 1.11 percent of total assets, at June 30, 2016.  Non-performing loans at September 30, 2016 decreased $296,000 or three percent since June 30, 2016 to $10.0 million and were primarily comprised of 34 single-family loans ($9.2 million); two multi-family loans ($703,000); one commercial business loan ($74,000) and one consumer loan (fully reserved).  Real estate owned acquired in the settlement of loans at September 30, 2016 increased $790,000, or 29 percent, to $3.5 million (six properties) from $2.7 million (four properties) at June 30, 2016.  The real estate owned at September 30, 2016 was comprised of six single-family real estate properties.  

Net recoveries for the quarter ended September 30, 2016 were $205,000 or 0.08 percent (annualized) of average loans receivable, compared to net recoveries of $348,000 or 0.14 percent (annualized) of average loans receivable for the quarter ended September 30, 2015 and net recoveries of $1.09 million or 0.45 percent (annualized) of average loans receivable for the quarter ended June 30, 2016 (sequential quarter).

Classified assets at September 30, 2016 were $22.4 million, comprised of $8.9 million of loans in the special mention category, $10.0 million of loans in the substandard category and $3.5 million in real estate owned.  Classified assets at June 30, 2016 were $21.9 million, comprised of $8.9 million of loans in the special mention category, $10.3 million of loans in the substandard category and $2.7 million in real estate owned.  For the quarter ended September 30, 2016, no loans were restructured from their original terms or newly classified as a restructured loan.

The allowance for loan losses was $8.7 million at September 30, 2016, or 1.01 percent of gross loans held for investment, compared to $8.7 million at June 30, 2016, or 1.02 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 September 30, 2016.

Non-interest income decreased by $1.20 million, or 11 percent, to $9.25 million in the first quarter of fiscal 2017 from $10.45 million in the same period of fiscal 2016, primarily as a result of a decrease in the gain on sale of loans and losses on the sale and operations of real estate owned during the current quarter as compared to the comparable period last year.  On a sequential quarter basis, non-interest income decreased $1.34 million, or 13 percent, primarily as a result of a decrease in the gain on sale of loans.

The gain on sale of loans decreased to $8.00 million for the quarter ended September 30, 2016 from $8.92 million in the comparable quarter last year, reflecting the impact of a lower average loan sale margin, partly offset by a higher loan sale volume.  The average loan sale margin from mortgage banking was 125 basis points for the quarter ended September 30, 2016, down 40 basis points from 165 basis points in the same quarter last year and down 36 basis points from 161 basis points in the fourth quarter of fiscal 2016 (sequential quarter).  Total loan sale volume, which includes the net change in commitments to extend credit on loans to be held for sale, was $640.3 million in the quarter ended September 30, 2016, up 19 percent, from $539.6 million in the comparable quarter last year.  The gain on sale of loans includes a favorable fair-value adjustment on loans held for sale and derivative financial instruments (commitments to extend credit, commitments to sell loans, commitments to sell mortgage-backed securities, and option contracts) that amounted to a net gain of $2.09 million in the first quarter of fiscal 2017, compared to an unfavorable fair-value adjustment that amounted to a net loss of $345,000 in the same period last year.

In the first quarter of fiscal 2017, a total of $647.3 million of loans were originated and purchased for sale, 20 percent higher than the $540.3 million for the same period last year, and 16 percent higher than the $557.2 million during the fourth quarter of fiscal 2016 (sequential quarter).  Total loans sold during the quarter ended September 30, 2016 were $568.3 million, five percent lower than the $601.0 million sold during the same quarter last year, but three percent higher than the $551.1 million sold during the fourth quarter of fiscal 2016 (sequential quarter).  Total loan originations (including loans originated and purchased for investment and loans originated and purchased for sale) were $705.6 million in the first quarter of fiscal 2017, an increase of 23 percent from $575.5 million in the same quarter of fiscal 2016, and 10 percent higher than the $639.1 million in the fourth quarter of fiscal 2016 (sequential quarter).

The sale and operations of real estate owned acquired in the settlement of loans resulted in a net loss of $103,000 in the first quarter of fiscal 2017, compared to a $229,000 net gain in the comparable period last year.  One real estate owned property was sold in the quarter ended September 30, 2016 compared to two real estate owned properties sold in the same quarter last year.  Three real estate owned properties were acquired in the settlement of loans during the first quarter of fiscal 2017, compared to two properties acquired in the comparable period last year.  As of September 30, 2016, the real estate owned balance was $3.5 million (six properties), compared to $2.7 million (four properties) at June 30, 2016.

Non-interest expenses increased $1.27 million to $15.63 million in the first quarter of fiscal 2017 from $14.36 million in the same quarter last year.  The increase was primarily a result of increases in salaries and employee benefits expense, premises and occupancy expenses and other operating expenses.

The Company’s efficiency ratio increased to 85 percent in the first quarter of fiscal 2017 from 78 percent in the same quarter last year, due to the decrease in non-interest income and an increase in non-interest expenses, partly offset by an increase in net interest income.

The Company’s provision for income taxes was $1.26 million for the first quarter of fiscal 2017, a decrease of $486,000 or 28 percent, from $1.75 million in the same quarter last year, as a result of the decrease in income before taxes.  The effective income tax rate for the quarter ended September 30, 2016 was 44.2 percent as compared to 41.7 percent in the same quarter last year.  The Company believes that the tax provision recorded in the first quarter of fiscal 2017 reflects its current income tax obligations.

The Company repurchased 60,236 shares of its common stock during the quarter ended September 30, 2016 at an average cost of $19.27 per share.  During the quarter, the Company completed the purchase of the remaining 28,350 shares in the October 2015 stock repurchase plan; and as of September 30, 2016, a total of 31,886 shares or eight percent of the shares authorized in the May 2016 stock repurchase plan have been purchased, leaving 365,114 shares available for future purchases.

The Bank currently operates 14 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire).  Provident Bank Mortgage operates two wholesale loan production offices and 14 retail loan production offices located throughout California.

The Company will host a conference call for institutional investors and bank analysts on Wednesday, October 26, 2016 at 9:00 a.m. (Pacific) to discuss its financial results.  The conference call can be accessed by dialing 1-800-230-1085 and requesting the Provident Financial Holdings Earnings Release Conference Call.  An audio replay of the conference call will be available through Wednesday, November 2, 2016 by dialing 1-800-475-6701 and referencing access code number 404778.

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 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 2017 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.

 
 PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Financial Condition
(Unaudited –In Thousands, Except Share Information) 
 
  September 30,
2016
  June 30,
2016
   
Assets          
 Cash and cash equivalents $ 39,443       $ 51,206    
 Investment securities – held to maturity, at cost   36,290         39,979    
 Investment securities – available for sale at fair value   10,778         11,543    
 Loans held for investment  net of allowance for loan losses of          
  $8,725 and $8,670, respectively; includes $5,529 and $5,159 at fair value, respectively   853,958         840,022    
 Loans held for sale, at fair value   264,379         189,458    
 Accrued interest receivable   3,078         2,781    
 Real estate owned, net   3,496         2,706    
 FHLB – San Francisco stock   8,094         8,094    
 Premises and equipment, net   5,879         6,043    
 Prepaid expenses and other assets   17,119         19,549    
           
Total assets $ 1,242,514       $ 1,171,381    
           
Liabilities and Stockholders’ Equity          
Liabilities:          
 Non interest-bearing deposits $ 74,963       $ 71,158    
 Interest-bearing deposits   868,539         855,226    
Total deposits   943,502         926,384    
           
 Borrowings   146,281         91,299    
 Accounts payable, accrued interest and other liabilities   19,508         20,247    
Total liabilities   1,109,291         1,037,930    
           
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; 17,848,365 and 17,847,365 shares issued, respectively; 7,978,166 and 7,975,250 shares outstanding, respectively)          
  178         178    
 Additional paid-in capital   91,633         90,802    
 Retained earnings   192,227         191,666    
 Treasury stock at cost (9,870,199 and 9,872,115 shares, respectively)   (151,095       (149,508  
 Accumulated other comprehensive income, net of tax   280         313    
           
Total stockholders’ equity   133,223         133,451    
           
Total liabilities and stockholders’ equity $ 1,242,514       $ 1,171,381    
                   

 
PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited – In Thousands, Except Share Information)
 
  Quarter Ended
  09/30/2016   09/30/2015   06/30/2016  
Interest income:            
  Loans receivable, net $ 10,480     $ 9,490     $ 9,985    
  Investment securities   84       67       124    
  FHLB – San Francisco stock   185       200       179    
  Interest-earning deposits   55       100       150    
  Total interest income   10,804       9,857       10,438    
             
Interest expense:            
  Checking and money market deposits   98       117       95    
  Savings deposits   144       168       150    
  Time deposits   772       858       790    
  Borrowings   702       648       641    
  Total interest expense   1,716       1,791       1,676    
             
Net interest income   9,088       8,066       8,762    
Recovery from the allowance for loan losses   (150     (38     (621  
Net interest income, after recovery from the allowance for loan losses   9,238       8,104       9,383    
             
Non-interest income:            
  Loan servicing and other fees   267       111       268    
  Gain on sale of loans, net   7,996       8,924       9,408    
  Deposit account fees   550       610       529    
  (Loss) gain on sale and operations of real estate owned acquired in the settlement of loans   (103     229       (83  
  Card and processing fees   364       362       379    
  Other   178       213       89    
  Total non-interest income   9,252       10,449       10,590    
             
Non-interest expense:            
  Salaries and employee benefits   11,314       10,792       11,216    
  Premises and occupancy   1,289       1,108       1,222    
  Equipment   362       379       345    
  Professional expenses   505       500       534    
  Sales and marketing expenses   296       262       379    
  Deposit insurance and regulatory assessments   248       262       254    
  Other   1,618       1,057       1,605    
  Total non-interest expense   15,632       14,360       15,555    
             
Income before taxes   2,858       4,193       4418    
Provision for income taxes   1,264       1,750       1,863    
  Net income $ 1,594     $ 2,443     $ 2,555    
             
Basic earnings per share $ 0.20     $ 0.29     $ 0.32    
Diluted earnings per share $ 0.20     $ 0.28     $ 0.31    
Cash dividends per share $ 0.13     $ 0.12     $ 0.12    
                         

   
  PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited – Dollars in Thousands, Except Share Information )
 
   
  Quarter Ended      
  09/30/2016   09/30/2015      
SELECTED FINANCIAL RATIOS:            
Return on average assets   0.53 %     0.83 %      
Return on average stockholders’ equity   4.79 %     6.96 %      
Stockholders’ equity to total assets   10.72 %     11.83 %      
Net interest spread   3.03 %     2.75 %      
Net interest margin   3.08 %     2.82 %      
Efficiency ratio   85.23 %     77.56 %      
Average interest-earning assets to average interest-bearing liabilities   111.26 %     112.31 %      
             
SELECTED FINANCIAL DATA:            
Basic earnings per share $ 0.20     $ 0.29        
Diluted earnings per share $ 0.20     $ 0.28        
Book value per share $ 16.70     $ 16.52        
Average shares used for basic EPS   7,948,420       8,565,873        
Average shares used for diluted EPS   8,153,952       8,744,320        
Total shares issued and outstanding   7,978,166       8,429,678        
             
LOANS ORIGINATED AND PURCHASED FOR SALE:            
Retail originations $ 318,970     $ 275,098        
Wholesale originations and purchases   328,372       265,191        
  Total loans originated and purchased for sale $ 647,342     $ 540,289        
             
LOANS SOLD:            
Servicing released $ 559,013     $ 589,590        
Servicing retained   9,301       11,421        
  Total loans sold $ 568,314     $ 601,011        
                 
    As of     As of     As of     As of     As of   
  09/30/16   06/30/16   03/31/16   12/31/15   09/30/15  
ASSET QUALITY RATIOS AND
  DELINQUENT LOANS:
                   
Recourse reserve for loans sold $ 453     $ 453     $ 887     $ 768     $ 768    
Allowance for loan losses $ 8,725     $ 8,670     $ 8,200     $ 8,768     $ 9,034    
Non-performing loans to loans held for investment, net   1.17 %     1.23 %     1.52 %     1.50 %     1.83 %  
Non-performing assets to total assets   1.09 %     1.11 %     1.31 %     1.47 %     1.57 %  
Allowance for loan losses to gross non-performing loans   79.93 %     77.38 %     62.31 %     67.35 %     57.33 %  
Allowance for loan losses to gross loans held for investment   1.01 %     1.02 %     1.01 %     1.07 %     1.11 %  
Net recoveries to average loans  receivable (annualized)   (0.08 )%     (0.45 )%     (0.05 )%     (0.04 )%     (0.14 )%  
Non-performing loans $ 10,013     $ 10,309     $ 12,261     $ 12,187     $ 14,764    
Loans 30 to 89 days delinquent $ 1,385     $ 1,644     $ 1,508     $ 522     $ 1,219    
                     
   
  PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited – Dollars in Thousands)
 
   
  Quarter
Ended
  Quarter
Ended
  Quarter
Ended
  Quarter
Ended
  Quarter
Ended
   
  09/30/16   06/30/16   03/31/16   12/31/15   09/30/15    
Recourse provision for loans sold $     $ 3     $ 119     $ 30     $ 3      
Recovery from the allowance for loan losses $ (150 )   $ (621 )   $ (694 )   $ (362 )   $ (38 )    
Net (recoveries) charge-offs $ (205 )   $ (1,091 )   $ (126 )   $ (96 )   $ (348 )    
                     
    As of     As of     As of     As of     As of  
  09/30/16   06/30/16   03/31/16   12/31/15   09/30/15  
REGULATORY CAPITAL RATIOS (BANK):  
Tier 1 leverage ratio   9.32 %     10.29 %     10.06 %     9.85 %     9.68 %  
Common equity tier 1 capital ratio   14.43 %     16.16 %     16.63 %     16.18 %     16.32 %  
Tier 1 risk-based capital ratio   14.43 %     16.16 %     16.63 %     16.18 %     16.32 %  
Total risk-based capital ratio   15.57 %     17.36 %     17.82 %     17.43 %     17.58 %  
                     
REGULATORY CAPITAL RATIOS (HOLDING COMPANY):  
Tier 1 leverage ratio   10.98 %     11.40 %     11.61 %     11.77 %     11.82 %  
Common equity tier 1 capital ratio   17.00 %     17.89 %     19.19 %     19.32 %     19.92 %  
Tier 1 risk-based capital ratio   17.00 %     17.89 %     19.19 %     19.32 %     19.92 %  
Total risk-based capital ratio   18.14 %     19.09 %     20.37 %     20.57 %     21.17 %  
                     
                     
  As of September 30,  
    2016       2015    
  Balance   Rate(1)   Balance   Rate(1)  
INVESTMENT SECURITIES:                    
Held to maturity:                    
Certificates of deposit $ 800     0.72 %   $ 800     0.50 %  
U.S. government sponsored enterprise MBS   35,490     1.56              
  Total investment securities held to maturity $ 36,290     1.54 %   $ 800     0.50 %  
                     
Available for sale (at fair value):                    
U.S. government agency MBS $ 6,131     1.99 %   $ 7,573     1.69 %  
U.S. government sponsored enterprise MBS   4,087     2.73       5,046     2.42    
Private issue collateralized mortgage obligations   560     2.76       691     2.49    
Common stock – community development financial institution             151        
  Total investment securities available for sale $ 10,778     2.31 %   $ 13,461     1.99 %  
   
  Total investment securities $ 47,068     1.72 %   $ 14,261     1.90 %  
                 
(1) The interest rate described in the rate column is the weighted-average interest rate or yield of all instruments, which are included in the balance of the respective line item.  
   

   
  PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited – Dollars in Thousands) 
 
   
    As of September 30,
    2016   2015
    Balance   Rate(1)   Balance   Rate(1)
  LOANS HELD FOR INVESTMENT:                  
  Single-family (1 to 4 units) $ 312,795     3.73 %   $ 356,963     3.33 %
  Multi-family (5 or more units)   438,423     4.09       355,442     4.36  
  Commercial real estate   100,136     4.74       94,580     5.12  
  Construction   15,811     5.48       6,185     5.37  
  Other   331     5.66       72     6.25  
  Commercial business   624     6.11       399     6.70  
  Consumer   199     10.91       243     10.07  
    Total loans held for investment   868,319     4.06 %     813,884     4.01 %
                     
  Undisbursed loan funds   (10,447 )           (2,691 )      
  Advance payments of escrows   23             193        
  Deferred loan costs, net   4,788             3,334        
  Allowance for loan losses   (8,725 )           (9,034 )      
    Total loans held for investment, net $ 853,958           $ 805,686        
                     
  Purchased loans serviced by others included above $ 23,663     3.37 %   $ 5,333     4.82 %
                 
  (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 September 30,  
  2016   2015  
  Balance   Rate(1)   Balance   Rate(1)  
                 
  DEPOSITS:                    
  Checking accounts – non interest-bearing   $ 74,963     %   $ 68,102    
  Checking accounts – interest-bearing     251,809     0.11       228,688     0.15  
  Savings accounts     279,565     0.21       258,911     0.26  
  Money market accounts     35,312     0.36       33,424     0.36  
  Time deposits     301,853     1.01       335,741     1.02  
    Total deposits   $ 943,502     0.43 %   $ 924,866     0.49
                   
  BORROWINGS:                  
  Overnight     15,000     0.38 %   $    
  Three months or less     20,000     0.40            
  Over three to twelve months                    
  Over twelve months to one year                    
  Over one year to two years     10,030     3.02            
  Over two years to three years     10,000     1.53       10,053     3.03  
  Over three years to four years               10,000     1.53  
  Over four years to five years     31,251     3.18            
  Over five years     60,000     2.34       71,298     2.92  
    Total borrowings   $ 146,281     2.04 %   $ 91,351     2.78
         
(1) The interest rate described in the rate column is the weighted-average interest rate or cost of all instruments, which are included in the balance of the respective line item.  

   
 PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited – Dollars in Thousands) 
 
   
  Quarter Ended   Quarter Ended  
  September 30, 2016   September 30, 2015  
  Balance   Rate(1)   Balance   Rate(1)  
                 
SELECTED AVERAGE BALANCE SHEETS:                
Loans receivable, net (2) $ 1,078,082       3.89 %   $ 962,635       3.94 %  
Investment securities   49,597       0.68 %     14,648       1.83 %  
FHLB – San Francisco stock   8,094       9.14 %     8,094       9.88 %  
Interest-earning deposits   43,309       0.50 %     157,784       0.25 %  
Total interest-earning assets $ 1,179,082       3.67 %   $ 1,143,161       3.45 %  
Total assets $ 1,210,650         $ 1,175,134        
                 
Deposits $ 932,834       0.43 %   $ 926,482       0.49 %  
Borrowings   126,940       2.19 %     91,357       2.81 %  
Total interest-bearing liabilities $ 1,059,774       0.64 %   $ 1,017,839       0.70 %  
Total stockholders’ equity $ 133,175         $ 140,496        
                 
(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 investment and loans held for sale at fair value, net of the allowance for loan losses.
 

   
PROVIDENT FINANCIAL HOLDINGS, INC.
Asset Quality (1)
(Unaudited – Dollars in Thousands) 
 
   
    As of     As of     As of     As of     As of  
  09/30/16   06/30/16   03/31/16   12/31/15   09/30/15  
Loans on non-accrual status (excluding
  restructured loans):
                   
   Mortgage loans:                    
    Single-family $ 5,586     $ 6,292     $ 6,918     $ 7,652     $ 8,807    
    Multi-family   703       709       721       394       399    
    Commercial real estate                           1,016    
    Total   6,289       7,001       7,639       8,046       10,222    
                       
Accruing loans past due 90 days or more:                              
    Total                              
                       
Restructured loans on non-accrual status:                    
  Mortgage loans:                    
    Single-family   3,650       3,232       3,002       2,502       2,879    
    Multi-family               1,542       1,559       1,576    
  Commercial business loans   74       76       78       80       87    
    Total   3,724       3,308       4,622       4,141       4,542    
                           
      Total non-performing loans   10,013       10,309       12,261       12,187       14,764    
                     
Real estate owned, net   3,496       2,706       3,165       4,913       3,674    
Total non-performing assets $ 13,509     $ 13,015     $ 15,426     $ 17,100     $ 18,438    
                       
(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 credit adjustments.
                       
CONTACT: Contacts:		

Craig G. Blunden					
Chairman and							
Chief Executive Officer

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

(951) 686-6060