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Provident Financial Holdings Reports Fourth Quarter and Fiscal 2016 Earnings

FOURTH QUARTER HIGHLIGHTS:

Net Income Rises 12% to $2.8 Million Compared to Same Quarter Last Year

Diluted Earnings Per Share Increases 21% to $0.34 Per Share Compared to Same Quarter Last Year

RIVERSIDE, Calif., July 26, 2016 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. (“Company”), (NASDAQ:PROV), the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced fourth quarter earnings for the fiscal year ended June 30, 2016.

For the quarter ended June 30, 2016, the Company reported net income of $2.80 million, or $0.34 per diluted share (on 8.30 million diluted shares outstanding), up from net income of $2.49 million, or $0.28 per diluted share (on 8.88 million diluted shares outstanding), in the comparable period a year ago. The increase in net income for the fourth quarter of fiscal 2016 was primarily attributable to an increase in the gain on sale of loans and a higher recovery from the allowance for loan losses as compared to the same period one year ago.

“Mortgage banking fundamentals continued to improve this quarter which resulted in the sequential quarter increase in net income. Expanding loan sale margins and an increase in sequential quarter loan sale volume both contributed to the better mortgage banking operations,” said Craig G. Blunden, Chairman and Chief Executive Officer of the Company. “We continue to increase our preferred loan portfolio at a solid pace, up 15 percent from last year, while the legacy single-family portfolio is declining, resulting in what we believe to be a more favorable loan portfolio composition. Additionally, asset quality continues to improve, resulting in low levels of non-performing assets; the net interest margin is improving as liquidity is redeployed to higher yielding assets; and operating expenses are well-contained. We are also pleased that we can return capital to our shareholders in the form of cash dividends and common stock repurchases, a low risk strategy to manage capital levels and ratios,” he concluded.

Return on average assets for the fourth quarter of fiscal 2016 increased to 0.96 percent from 0.84 percent for the same period of fiscal 2015; and return on average stockholders’ equity for the fourth quarter of fiscal 2016 increased to 8.32 percent from 7.02 percent for the comparable period of fiscal 2015.

On a sequential quarter basis, net income for the fourth quarter of fiscal 2016 reflects a $1.31 million, or 88 percent, increase from the net income of $1.49 million in the third quarter of fiscal 2016. The increase in net income in the fourth quarter of fiscal 2016 compared to the third quarter of fiscal 2016 was primarily attributable to an increase of $850,000 in net interest income and an increase of $2.17 million in non-interest income, partly offset by an increase of $656,000 in non-interest expense and an increase of $986,000 in the provision for income taxes. Diluted earnings per share for the fourth quarter of fiscal 2016 were $0.34 per share, up 89 percent, from the $0.18 per share during the third quarter of fiscal 2016. Return on average assets increased to 0.96 percent for the fourth quarter of fiscal 2016 from 0.51 percent in the third quarter of fiscal 2016; and return on average stockholders’ equity for the fourth quarter of fiscal 2016 was 8.32 percent, compared to 4.36 percent for the third quarter of fiscal 2016.

For the fiscal year ended June 30, 2016, net income decreased $2.09 million, or 21 percent, to $7.71 million from $9.80 million in the comparable period ended June 30, 2015; and diluted earnings per share for the fiscal year ended June 30, 2016 decreased $0.17 per share, or 16 percent, to $0.90 per share from $1.07 per share for the comparable twelve month period last year.

Net interest income decreased $88,000, or one percent, to $8.76 million in the fourth quarter of fiscal 2016 from $8.85 million for the same quarter of fiscal 2015, attributable to a lower average earning assets balance, partly offset by a slight increase in the net interest margin. The average earning assets balance for the fourth quarter of fiscal 2016 was $1.13 billion, down one percent from $1.14 billion during the same period last year. The net interest margin during the fourth quarter of fiscal 2016 increased one basis point to 3.10 percent from 3.09 percent in the same quarter last year. The increase was primarily due to the decrease in the average cost of interest-bearing liabilities. The average yield of interest-earning assets decreased by one basis point to 3.69 percent in the fourth quarter of fiscal 2016 from 3.70 percent in the same quarter last year, while the average cost of liabilities decreased by three basis points to 0.66 percent in the fourth quarter of fiscal 2016 from 0.69 percent in the same quarter last year.

The average balance of loans outstanding, including loans held for sale, decreased by $74.7 million, or seven percent, to $960.4 million in the fourth quarter of fiscal 2016 from $1.04 billion in the same quarter of fiscal 2015, primarily due to a decrease in average loans held for sale attributable to lower mortgage banking activity. The average yield on loans receivable increased by 27 basis points to 4.16 percent in the fourth quarter of fiscal 2016 from an average yield of 3.89 percent in the same quarter of fiscal 2015. The increase in the average loan yield was primarily attributable to $544,000 of interest income received from payoffs of non-performing loans in the fourth quarter of fiscal 2016. The average balance of loans held for sale in the fourth quarter of fiscal 2016 was $154.5 million with an average yield of 3.62 percent as compared to $219.8 million with an average yield of 3.63 percent in the same quarter of fiscal 2015. The outstanding balance of “preferred loans” (multi-family, commercial real estate, construction and commercial business loans) increased by $65.8 million, or 15 percent, to $519.2 million at June 30, 2016 from $453.4 million at June 30, 2015, net of undisbursed loan funds of $11.3 million and $3.4 million, respectively. The percentage of preferred loans to total loans held for investment at June 30, 2016 increased to 61 percent from 55 percent at June 30, 2015. Loan principal payments received in the fourth quarter of fiscal 2016 were $47.1 million, compared to $32.0 million in the same quarter of fiscal 2015.

The average balance of investment securities increased by $29.2 million, or 188 percent, to $44.7 million in the fourth quarter of fiscal 2016 from $15.5 million in the same quarter of fiscal 2015. The increase was attributable to the mortgage-backed security 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 67 basis points to 1.11 percent in the fourth quarter of fiscal 2016 from 1.78 percent for the same quarter of fiscal 2015. The decrease in the average yield was primarily attributable to the mortgage-backed security purchases during fiscal 2016 which had lower average yields than the existing portfolio.

In the fourth quarter of fiscal 2016, the Federal Home Loan Bank (“FHLB”) – San Francisco distributed a $179,000 cash dividend to the Bank, a $215,000 decrease from the $394,000 cash dividend (inclusive of a $261,000 special 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, increased $33.8 million, or 40 percent, to $119.0 million in the fourth quarter of fiscal 2016 from $85.2 million in the same quarter of fiscal 2015. The increase in interest-earning deposits was primarily due to temporarily investing excess cash from ongoing business activities into short-term, highly liquid instruments as part of the Company’s interest rate risk management strategy. The average yield earned on interest-earning deposits in the fourth quarter of fiscal 2016 was 0.50 percent, up from 0.25 percent in the same quarter of fiscal 2015 as a result of the impact of the recent increase in the federal funds rate, but significantly lower than the yield that could have been earned if the excess liquidity was deployed in loans or investment securities.

Average deposits increased $8.2 million, or one percent, to $926.3 million in the fourth quarter of fiscal 2016 from $918.1 million in the same quarter of fiscal 2015. The average cost of deposits decreased by five basis points to 0.45 percent in the fourth quarter of fiscal 2016 from 0.50 percent in the same quarter last year, primarily due to higher cost time deposits repricing to lower current market interest rates and a lower percentage of time deposits to the total deposit balance. Transaction account balances or “core deposits” increased $39.1 million, or seven percent, to $617.5 million at June 30, 2016 from $578.4 million at June 30, 2015, while time deposits decreased $36.8 million, or 11 percent, to $308.9 million at June 30, 2016 from $345.7 million at June 30, 2015, 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, decreased $10.2 million, or 10 percent, to $91.3 million and the average cost of advances increased 44 basis points to 2.82 percent in the fourth quarter of fiscal 2016, compared to an average balance of $101.5 million and an average cost of 2.38 percent in the same quarter of fiscal 2015. The decrease in the average balance of borrowings was primarily attributable to the maturity of overnight borrowings, partly offset by newly acquired higher cost long-term advances during the second half of fiscal 2015 to protect against rising interest rates.

During the fourth quarter of fiscal 2016, the Company recorded a recovery from the allowance for loan losses of $621,000 compared to the recovery of $104,000 recorded during the same period of fiscal 2015 and the $694,000 recovery recorded in the third quarter of fiscal 2016 (sequential quarter). The increases in the recovery were primarily attributable to further improvement in loan credit quality and an increase in net recoveries of previously charged off loans.

Non-performing assets, with underlying collateral primarily located in California, decreased to $13.0 million, or 1.11 percent of total assets, at June 30, 2016, compared to $16.3 million, or 1.39 percent of total assets, at June 30, 2015. Non-performing loans at June 30, 2016 decreased $3.6 million or 26 percent since June 30, 2015 to $10.3 million and were primarily comprised of 35 single-family loans ($9.5 million); two multi-family loans ($709,000); and one commercial business loan ($76,000). Real estate owned acquired in the settlement of loans at June 30, 2016 increased $308,000, or 13 percent, to $2.7 million (four properties) from $2.4 million (three properties) at June 30, 2015. The real estate owned at June 30, 2016 was comprised of four single-family real estate properties.

Net recoveries for the quarter ended June 30, 2016 were $1.09 million or 0.45 percent (annualized) of average loans receivable, compared to net recoveries of $116,000 or 0.04 percent (annualized) of average loans receivable for the quarter ended June 30, 2015 and net recoveries of $126,000 or 0.05 percent (annualized) of average loans receivable for the quarter ended March 31, 2016 (sequential quarter).

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. Classified assets at June 30, 2015 were $31.1 million, comprised of $8.2 million of loans in the special mention category, $20.5 million of loans in the substandard category and $2.4 million in real estate owned. For the quarter ended June 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 June 30, 2016, or 1.02 percent of gross loans held for investment, compared to $8.7 million at June 30, 2015, or 1.06 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 June 30, 2016.

Non-interest income increased by $79,000, or one percent, to $10.59 million in the fourth quarter of fiscal 2016 from $10.51 million in the same period of fiscal 2015, primarily as a result of an increase in the gain on sale of loans, partly offset by losses on the disposition of investment securities and losses on the sale and operations of real estate owned during the current quarter as compared to gains on the sale and operations of real estate owned in the comparable period last year. On a sequential quarter basis, non-interest income increased $2.17 million, or 26 percent, primarily as a result of an increase in the gain on sale of loans.

The gain on sale of loans increased to $9.41 million for the quarter ended June 30, 2016 from $8.76 million in the comparable quarter last year, reflecting the impact of a higher average loan sale margin, partly offset by a lower loan sale volume. The average loan sale margin from mortgage banking was 161 basis points for the quarter ended June 30, 2016, up 22 basis points from 139 basis points in the same quarter last year and up four basis points from 157 basis points in the third 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 $584.5 million in the quarter ended June 30, 2016, down eight percent, from $636.8 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 $459,000 in the fourth quarter of fiscal 2016, compared to an unfavorable fair-value adjustment that amounted to a net loss of $5.34 million in the same period last year.

In the fourth quarter of fiscal 2016, a total of $557.2 million of loans were originated and purchased for sale, 23 percent lower than the $720.7 million for the same period last year, but 42 percent higher than the $392.9 million during the third quarter of fiscal 2016 (sequential quarter). Total loans sold during the quarter ended June 30, 2016 were $551.1 million, 31 percent lower than the $795.5 million sold during the same quarter last year, but 44 percent higher than the $383.6 million sold during the third quarter of fiscal 2016 (sequential quarter). Total loan originations (including loans originated and purchased for investment and loans originated and purchased for sale) were $639.1 million in the fourth quarter of fiscal 2016, a decrease of 15 percent from $747.5 million in the same quarter of fiscal 2015, but 45 percent higher than the $439.5 million in the third 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 $83,000 in the fourth quarter of fiscal 2016, compared to a $294,000 net gain in the comparable period last year. Four real estate owned properties were sold in the quarter ended June 30, 2016 compared to four 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 fourth quarter of fiscal 2016, compared to two properties acquired in the comparable period last year. As of June 30, 2016, the real estate owned balance was $2.7 million (four properties), compared to $2.4 million (three properties) at June 30, 2015.

Non-interest expenses were virtually unchanged, decreasing by $9,000 to $15.14 million in the fourth quarter of fiscal 2016 from $15.15 million in the same quarter last year. The decrease was primarily a result of decreases in equipment, sales and marketing and other operating expenses, partly offset by increases in salaries and employee benefits expense and premises and occupancy expenses.

The Company’s efficiency ratio remained unchanged at 78 percent in the fourth quarter of fiscal 2016 as compared to the same quarter last year.

The Company’s provision for income taxes was $2.04 million for the fourth quarter of fiscal 2016, an increase of $207,000 or 11 percent, from $1.83 million in the same quarter last year, as a result of the increase in income before taxes. The effective income tax rate for the quarter ended June 30, 2016 was 42.2 percent as compared to 42.4 percent in the same quarter last year. The Company believes that the tax provision recorded in the fourth quarter of fiscal 2016 reflects its current income tax obligations.

The Company repurchased 229,633 shares of its common stock during the quarter ended June 30, 2016 at an average cost of $17.95 per share. As of June 30, 2016, a total of 393,283 shares or 93 percent of the shares authorized in the October 2015 stock repurchase plan have been purchased, leaving 28,350 shares available for future purchases. The May 2016 stock repurchase plan authorizing the purchase of 397,000 shares will become effective once the Company has completed the October 2015 stock repurchase plan.

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, July 27, 2016 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-800-230-1093 and requesting the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Wednesday, August 3, 2016 by dialing 1-800-475-6701 and referencing access code number 398198.

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)
June 30,
2016
March 31, June 30,
2015
2016
Assets
Cash and cash equivalents$ 51,206 $ 111,481 $ 81,403
Investment securities – held to maturity, at cost 39,979 21,014 800
Investment securities - available for sale, at fair value 11,543 12,161 14,161
Loans held for investment, net of allowance for loan losses of $8,670, $8,200 and $8,724, respectively; includes $5,159, $4,583 and $4,518 at fair value, respectively
840,022

805,567

814,234
Loans held for sale, at fair value 189,458 184,025 224,715
Accrued interest receivable 2,781 2,607 2,839
Real estate owned, net 2,706 3,165 2,398
FHLB – San Francisco stock 8,094 8,094 8,094
Premises and equipment, net 6,043 5,446 5,417
Prepaid expenses and other assets 19,504 20,191 20,494
Total assets$1,171,336 $1,173,751 $1,174,555
Liabilities and Stockholders’ Equity
Liabilities:
Non interest-bearing deposits$ 71,158 $ 68,748 $ 67,538
Interest-bearing deposits 855,226 858,317 856,548
Total deposits 926,384 927,065 924,086
Borrowings 91,299 91,317 91,367
Accounts payable, accrued interest and other liabilities 19,962 19,719 17,965
Total liabilities 1,037,645 1,038,101 1,033,418
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; 17,847,365, 17,844,365 and 17,766,865 shares issued, respectively; 7,975,250, 8,201,883 and 8,634,607 shares outstanding, respectively)
179 179 177
Additional paid-in capital 90,801 90,512 88,893
Retained earnings 191,906 190,084 188,206
Treasury stock at cost (9,872,115, 9,642,482 and
9,132,258 shares, respectively)
(149,508) (145,387) (136,470)
Accumulated other comprehensive income, net of tax 313 262 331
Total stockholders’ equity 133,691 135,650 141,137
Total liabilities and stockholders’ equity$1,171,336 $1,173,751 $1,174,555



PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited - In Thousands, Except Earnings Per Share)
Quarter Ended
June 30,
Fiscal Year Ended
June 30,
2016 2015 2016 2015
Interest income:
Loans receivable, net$ 9,985 $10,077 $37,658 $38,337
Investment securities 124 69 358 287
FHLB – San Francisco stock 179 394 721 796
Interest-earning deposits 150 54 567 276
Total interest income 10,438 10,594 39,304 39,696
Interest expense:
Checking and money market deposits 95 104 450 419
Savings deposits 150 164 657 641
Time deposits 790 875 3,290 3,701
Borrowings 641 601 2,578 1,660
Total interest expense 1,676 1,744 6,975 6,421
Net interest income 8,762 8,850 32,329 33,275
Recovery from the allowance for loan losses (621) (104) (1,715) (1,387)
Net interest income, after recovery from the allowance for loan losses 9,383 8,954 34,044 34,662
Non-interest income:
Loan servicing and other fees 268 262 1,068 1,085
Gain on sale of loans, net 9,408 8,762 31,521 34,210
Deposit account fees 529 575 2,319 2,412
Loss on disposition of investment securities (103) - (103) -
(Loss) gain on sale and operations of real estate owned acquired in the settlement of loans (83) 294 (95) 282
Card and processing fees 379 376 1,448 1,406
Other 192 242 903 992
Total non-interest income 10,590 10,511 37,061 40,387
Non-interest expense:
Salaries and employee benefits 11,216 11,137 42,609 41,618
Premises and occupancy 1,222 1,062 4,646 4,666
Equipment 345 414 1,503 1,720
Professional expenses 534 551 2,089 2,179
Sales and marketing expenses 379 455 1,331 1,643
Deposit insurance premiums and regulatory assessments 254 236 1,018 974
Other 1,191 1,295 4,649 5,169
Total non-interest expense 15,141 15,150 57,845 57,969
Income before taxes 4,832 4,315 13,260 17,080
Provision for income taxes 2,037 1,830 5,546 7,277
Net income$ 2,795 $ 2,485 $ 7,714 $ 9,803
Basic earnings per share$ 0.34 $ 0.29 $ 0.92 $ 1.09
Diluted earnings per share$ 0.34 $ 0.28 $ 0.90 $ 1.07
Cash dividends per share$ 0.12 $ 0.12 $ 0.48 $ 0.45



PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations – Sequential Quarter
(Unaudited – In Thousands, Except Share Information)
Quarter Ended
June 30,March 31,
20162016
Interest income:
Loans receivable, net $ 9,985 $ 9,204
Investment securities 124 96
FHLB – San Francisco stock 179 163
Interest-earning deposits 150 183
Total interest income 10,438 9,646
Interest expense:
Checking and money market deposits 95 116
Savings deposits 150 170
Time deposits 790 807
Borrowings 641 641
Total interest expense 1,676 1,734
Net interest income 8,762 7,912
Recovery from the allowance for loan losses (621) (694)
Net interest income, after recovery from the allowance for loan losses 9,383 8,606
Non-interest income:
Loan servicing and other fees 268 383
Gain on sale of loans, net 9,408 7,145
Deposit account fees 529 590
Loss on disposition of investment securities (103) -
Loss on sale and operations of real estate owned acquired in the settlement of loans, net (83) (276)
Card and processing fees 379 355
Other 192 227
Total non-interest income 10,590 8,424
Non-interest expense:
Salaries and employee benefits 11,216 10,630
Premises and occupancy 1,222 1,146
Equipment 345 349
Professional expenses 534 583
Sales and marketing expenses 379 356
Deposit insurance premiums and regulatory assessments 254 252
Other 1,191 1,169
Total non-interest expense 15,141 14,485
Income before taxes 4,832 2,545
Provision for income taxes 2,037 1,051
Net income $ 2,795 $ 1,494
Basic earnings per share $ 0.34 $ 0.18
Diluted earnings per share $ 0.34 $ 0.18
Cash dividends per share$ 0.12 $ 0.12



PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands, Except Share Information )
Quarter Ended
June 30,
Fiscal Year Ended
June 30,
2016 2015 2016 2015
SELECTED FINANCIAL RATIOS:
Return on average assets 0.96% 0.84% 0.66% 0.87%
Return on average stockholders’ equity 8.32% 7.02% 5.60% 6.81%
Stockholders’ equity to total assets 11.41% 12.02% 11.41% 12.02%
Net interest spread 3.03% 3.01% 2.78% 2.96%
Net interest margin 3.10% 3.09% 2.85% 3.03%
Efficiency ratio 78.24% 78.25% 83.36% 78.70%
Average interest-earning assets to average
interest-bearing liabilities 111.26% 112.20% 111.75% 113.02%
SELECTED FINANCIAL DATA:
Basic earnings per share$ 0.34 $ 0.29 $ 0.92 $ 1.09
Diluted earnings per share$ 0.34 $ 0.28 $ 0.90 $ 1.07
Book value per share$ 16.76 $ 16.35 $ 16.76 $ 16.35
Shares used for basic EPS computation 8,107,282 8,669,375 8,347,564 8,996,952
Shares used for diluted EPS computation 8,304,332 8,878,201 8,541,554 9,173,857
Total shares issued and outstanding 7,975,250 8,634,607 7,975,250 8,634,607
LOANS ORIGINATED AND PURCHASED FOR SALE:
Retail originations$284,615 $339,578 $1,022,296 $1,175,413
Wholesale originations and purchases 272,583 381,098 940,573 1,305,302
Total loans originated and purchased for sale$557,198 $720,676 $1,962,869 $2,480,715
LOANS SOLD:
Servicing released$544,967 $790,621 $1,948,423 $2,392,251
Servicing retained 6,177 4,917 45,798 17,663
Total loans sold$551,144 $795,538 $1,994,221 $2,409,914
As of As of As of As of As of
06/30/16 03/31/16 12/31/15 09/30/15 06/30/15
ASSET QUALITY RATIOS AND
DELINQUENT LOANS:
Recourse reserve for loans sold$ 453 $ 887 $ 768 $ 768 $ 768
Allowance for loan losses$ 8,670 $ 8,200 $ 8,768 $ 9,034 $ 8,724
Non-performing loans to loans held for
investment, net

1.23

%

1.52

%

1.50

%

1.83

%

1.71

%
Non-performing assets to total assets 1.11% 1.31% 1.47% 1.57% 1.39%
Allowance for loan losses to gross non-performing loans
77.38% 62.31% 67.35% 57.33% 59.77%
Allowance for loan losses to gross loans held
for investment 1.02% 1.01% 1.07% 1.11% 1.06%
Net recoveries to average loans receivable
(annualized)

(0.45

)%

(0.05

)%

(0.04

)%

(0.14

)%

(0.04

)%
Non-performing loans$10,309 $12,261 $12,187 $14,764 $13,946
Loans 30 to 89 days delinquent $ 1,644 $ 1,508 $ 522 $ 1,219 $ 1,335
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)
Quarter
Ended
Quarter
Ended
Quarter
Ended
Quarter
Ended
Quarter
Ended
06/30/16 03/31/16 12/31/15 09/30/15
06/30/15
Recourse provision for loans sold$ 3 $ 119 $ 30 $ 3 $ 72
Recovery from the allowance for loan losses$ (621) $(694) $(362) $ (38) $(104)
Net (recoveries) charge-offs$(1,091) $(126) $ (96) $(348) $(116)
As of As of As of As of As of
06/30/16 03/31/16 12/31/15 09/30/15 06/30/15
REGULATORY CAPITAL RATIOS (BANK):
Tier 1 leverage ratio 10.31% 10.06% 9.85% 9.68% 10.68%
Common equity tier 1 capital ratio 16.20% 16.63% 16.18% 16.32% 17.22%
Tier 1 risk-based capital ratio 16.20% 16.63% 16.18% 16.32% 17.22%
Total risk-based capital ratio 17.39% 17.82% 17.43% 17.58% 18.47%
REGULATORY CAPITAL RATIOS (COMPANY):
Tier 1 leverage ratio 11.42% 11.61% 11.77% 11.82% 11.94%
Common equity tier 1 capital ratio 17.93% 19.19% 19.32% 19.92% 19.24%
Tier 1 risk-based capital ratio 17.93% 19.19% 19.32% 19.92% 19.24%
Total risk-based capital ratio 19.12% 20.37% 20.57% 21.17% 20.49%
As of June 30,
2016 2015
Balance Rate(1) Balance Rate(1)
INVESTMENT SECURITIES:
Held to maturity:
Certificates of deposit$ 800 0.72% $ 800 0.50%
U.S. government sponsored enterprise MBS 39,179 1.43 - -
Total investment securities held to maturity$39,979 1.42% $ 800 0.50%
Available for sale (at fair value):
U.S. government agency MBS$ 6,572 1.90% $ 7,906 1.66%
U.S. government sponsored enterprise MBS 4,223 2.69 5,387 2.40
Private issue collateralized mortgage obligations 601 2.76 717 2.49
Common stock – community development financial institution 147 - 151 -
Total investment securities available for sale$11,543 2.21% $14,161 1.97%
Total investment securities$51,522 1.59% $14,961 1.89%
(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 June 30,
2016 2015
Balance Rate(1) Balance Rate(1)
LOANS HELD FOR INVESTMENT:
Single-family (1 to 4 units)$324,497 3.66% $365,961 3.28%
Multi-family (5 or more units) 415,627 4.18 347,020 4.48
Commercial real estate 99,528 4.77 100,897 5.27
Construction 14,653 5.45 8,191 5.24
Other 332 5.66 - -
Commercial business 636 6.50 666 6.53
Consumer 203 10.89 244 9.94
Total loans held for investment 855,476 4.08% 822,979 4.06%
Undisbursed loan funds (11,258) (3,360)
Advance payments of escrows 56 199
Deferred loan costs, net 4,418 3,140
Allowance for loan losses (8,670) (8,724)
Total loans held for investment, net$840,022 $814,234
Purchased loans serviced by others included above$ 807 5.88% $ 5,377 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 June 30,
2016
2015
Balance
Rate(1) Balance Rate(1)
DEPOSITS:
Checking accounts – non interest-bearing $71,158 -% $67,538 -%
Checking accounts – interest-bearing 237,979 0.11 224,090 0.15
Savings accounts 275,310 0.21 255,090 0.26
Money market accounts 33,082 0.27 31,672 0.31
Time deposits 308,855 1.01 345,696 1.02
Total deposits$926,384 0.44% $924,086 0.50%
BORROWINGS:
Overnight $ - -% $ - -%
Three months or less - - - -
Over three to six months - - - -
Over six months to one year - - - -
Over one year to two years 10,036 3.02 - -
Over two years to three years 10,000 1.53 10,059 3.03
Over three years to four years - - 10,000 1.53
Over four years to five years 20,000 3.85 - -
Over five years 51,263 2.55 71,308 2.92
Total borrowings$91,299 2.78% $91,367 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
June 30, 2016 June 30, 2015
Balance Rate(1) Balance Rate(1)
SELECTED AVERAGE BALANCE SHEETS:
Loans receivable, net (2)$960,447 4.16% $1,035,154 3.89%
Investment securities 44,671 1.11% 15,508 1.78%
FHLB – San Francisco stock 8,094 8.85% 8,003 19.69%
Interest-earning deposits 118,984 0.50% 85,203 0.25%
Total interest-earning assets$1,132,196 3.69% $1,143,868 3.70%
Total assets$1,168,009 $1,179,421
Deposits$926,347 0.45% $918,052 0.50%
Borrowings 91,305 2.82% 101,483 2.38%
Total interest-bearing liabilities $1,017,652 0.66% $1,019,535 0.69%
Total stockholders’ equity$134,363 $141,544
(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.
Fiscal Year Ended Fiscal Year Ended
June 30, 2016
June 30, 2015
Balance Rate(1) Balance Rate(1)
SELECTED AVERAGE BALANCE SHEETS:
Loans receivable, net (2) $949,412 3.97% $965,035 3.97%
Investment securities 24,895 1.44% 16,227 1.77%
FHLB – San Francisco stock 8,094 8.91% 7,294 10.91%
Interest-earning deposits 151,867 0.37% 108,971 0.25%
Total interest-earning assets $1,134,268 3.47% $1,097,527 3.62%
Total assets $1,169,277 $1,133,097
Deposits $923,641 0.48% $910,059 0.52%
Borrowings 91,331 2.82% 61,074 2.72%
Total interest-bearing liabilities $1,014,972 0.69% $971,133 0.66%
Total stockholders’ equity$137,701 $143,978
(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
06/30/16 03/31/16 12/31/15 09/30/15 06/30/15
Loans on non-accrual status (excluding
restructured loans):
Mortgage loans:
Single-family$ 6,292 $ 6,918 $ 7,652 $ 8,807 $ 7,010
Multi-family 709 721 394 399 653
Commercial real estate - - - 1,016 680
Total 7,001 7,639 8,046 10,222 8,343
Accruing loans past due 90 days or more: - - - - -
Total - - - - -
Restructured loans on non-accrual status:
Mortgage loans:
Single-family 3,232 3,002 2,502 2,879 2,902
Multi-family - 1,542 1,559 1,576 1,593
Commercial real estate - - - - 1,019
Commercial business loans 76 78 80 87 89
Total 3,308 4,622 4,141 4,542 5,603
Total non-performing loans 10,309 12,261 12,187 14,764 13,946
Real estate owned, net 2,706 3,165 4,913 3,674 2,398
Total non-performing assets $13,015 $15,426 $17,100 $18,438 $16,344
(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.


Contacts: Craig G. Blunden Chairman and Chief Executive Officer Donavon P. Ternes President, Chief Operating Officer, and Chief Financial Officer 3756 Central Avenue Riverside, CA 92506 (951) 686-6060

Source:Provident Financial Holdings, Inc.