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Provident Financial Holdings Reports Third Quarter of Fiscal 2017 Earnings

RIVERSIDE, Calif., April 27, 2017 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. ("Company"), (NASDAQ:PROV), the holding company for Provident Savings Bank, F.S.B. ("Bank"), today announced third quarter earnings for the fiscal year ending June 30, 2017.

For the quarter ended March 31, 2017, the Company reported net income of $1.15 million, or $0.14 per diluted share (on 8.09 million average diluted shares outstanding), down 23 percent from net income of $1.49 million, or $0.18 per diluted share (on 8.52 million average diluted shares outstanding), in the comparable period a year ago. The decrease in net income for the third 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, partly offset by decreases in salaries and employee benefits expense and other non-interest expense.

"Although our most recent quarterly results have declined due to the volatility experienced in mortgage banking, our community banking results continue to strengthen and our outlook for community banking is favorable," said Craig G. Blunden, Chairman and Chief Executive Officer of the Company. "Poorer mortgage banking performance resulted from recently higher mortgage interest rates in addition to the typical seasonality associated with the March quarter of each year. We continue to adjust our mortgage banking business model in response to the weaker loan origination environment," Mr. Blunden concluded.

Return on average assets for the third quarter of fiscal 2017 decreased to 0.39 percent from 0.51 percent for the same period of fiscal 2016; and return on average stockholders' equity for the third quarter of fiscal 2017 decreased to 3.46 percent from 4.36 percent for the comparable period of fiscal 2016.

On a sequential quarter basis, net income for the third quarter of fiscal 2017 reflects a $359,000, or 24 percent, decrease from the net income of $1.50 million in the second quarter of fiscal 2017. The decrease in net income in the third quarter of fiscal 2017 compared to the second quarter of fiscal 2017 was primarily attributable to decreases in net interest income and the gain on sale of loans, partly offset by a decrease in other non-interest expense. Diluted earnings per share for the third quarter of fiscal 2017 were $0.14 per share, down 22 percent, from the $0.18 per share during the second quarter of fiscal 2017. Return on average assets decreased to 0.39 percent for the third quarter of fiscal 2017 from 0.50 percent in the second quarter of fiscal 2017; and return on average stockholders' equity for the third quarter of fiscal 2017 was 3.46 percent, compared to 4.53 percent for the second quarter of fiscal 2017.

For the nine months ended March 31, 2017, net income decreased $676,000, or 14 percent, to $4.24 million from $4.92 million in the comparable period ended March 31, 2016; and diluted earnings per share for the nine months ended March 31, 2017 decreased nine percent to $0.52 per share from $0.57 per share for the comparable nine month period last year.

Net interest income increased $735,000, or nine percent, to $8.65 million in the third quarter of fiscal 2017 from $7.91 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 third quarter of fiscal 2017 increased 20 basis points to 3.00 percent from 2.80 percent in the same quarter last year, primarily due to the increase in the average yield of earning assets reflecting a change in the interest-earning-asset mix into additional higher yielding assets and a decrease in the average cost of interest-bearing liabilities. The average yield on interest-earning assets increased by 15 basis points to 3.56 percent in the third quarter of fiscal 2017 from 3.41 percent in the same quarter last year, while the average cost of liabilities decreased by five basis points to 0.64 percent in the third quarter of fiscal 2017 from 0.69 percent in the same quarter last year. The increase in the average yield on 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 interest-earning assets balance for the third quarter of fiscal 2017 was $1.15 billion, up two percent from $1.13 billion during the same period last year.

The average balance of loans outstanding, including loans held for sale, increased by $22.2 million, or two percent, to $974.2 million in the third quarter of fiscal 2017 from $952.0 million in the same quarter of fiscal 2016, primarily due to an increase in average loans held for investment, which was partly offset by a decrease in average loans held for sale attributable to a decrease in mortgage banking activity. The average yield on loans receivable increased by 11 basis points to 3.98 percent in the third quarter of fiscal 2017 from an average yield of 3.87 percent in the same quarter of fiscal 2016. The increase in the average loan yield was primarily attributable to an increase in the average yield of loans held for sale and an increase in the average yield of loans held for investment. The average balance of loans held for sale in the third quarter of fiscal 2017 was $104.7 million with an average yield of 3.87 percent as compared to $146.2 million with an average yield of 3.75 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 $44.1 million, or eight percent, to $563.3 million at March 31, 2017 from $519.2 million at June 30, 2016, net of undisbursed loan funds of $9.5 million and $11.3 million, respectively. The percentage of preferred loans to total loans held for investment at March 31, 2017 increased to 64 percent from 61 percent at June 30, 2016. Loan principal payments received in the third quarter of fiscal 2017 were $46.2 million, compared to $56.3 million in the same quarter of fiscal 2016.

The average balance of investment securities increased by $22.4 million, or 90 percent, to $47.3 million in the third quarter of fiscal 2017 from $24.9 million in the same quarter of fiscal 2016. The increase was attributable to mortgage-backed securities purchases, partly offset by principal payments received on mortgage-backed securities. The average yield on investment securities decreased 34 basis points to 1.20 percent in the third quarter of fiscal 2017 from 1.54 percent for the same quarter of fiscal 2016. The decrease in the average yield was primarily attributable to mortgage-backed securities purchases which had lower average yields than the existing portfolio and an accelerated premium amortization resulting from higher prepayments.

In the third quarter of fiscal 2017, the Federal Home Loan Bank ("FHLB") - San Francisco distributed $184,000 of quarterly cash dividends to the Bank, a $21,000 or 13 percent increase from the cash dividends 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 $20.4 million, or 14 percent, to $125.2 million in the third quarter of fiscal 2017 from $145.6 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 and purchases of investment securities. The average yield earned on interest-earning deposits in the third quarter of fiscal 2017 was 0.80 percent, up 30 basis points from 0.50 percent in the same quarter of fiscal 2016 as a result of the impact of the increases in the federal funds rate in March 2017 and December 2016.

Average deposits increased $7.7 million, or one percent, to $928.0 million in the third quarter of fiscal 2017 from $920.3 million in the same quarter of fiscal 2016. The average cost of deposits decreased by eight basis points to 0.40 percent in the third quarter of fiscal 2017 from 0.48 percent in the same quarter last year, primarily due to decreases in the average cost of transaction accounts and time deposits and a lower percentage of time deposits to the total deposit balance. Transaction account balances or "core deposits" increased $40.3 million, or seven percent, to $657.8 million at March 31, 2017 from $617.5 million at June 30, 2016, while time deposits decreased $28.4 million, or nine percent, to $280.5 million at March 31, 2017 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 $20.0 million, or 22 percent, to $111.3 million while the average cost of advances decreased 22 basis points to 2.60 percent in the third quarter of fiscal 2017, compared to an average balance of $91.3 million with an average cost of 2.82 percent in the same quarter of fiscal 2016. The decrease in the average cost of advances was primarily due to the long-term advances taken in August and September 2016 totaling $20.0 million with an average cost of 1.59 percent, well below the weighted average cost in the third quarter of fiscal 2016. The increase in the average balance of fixed-rate long-term advances is consistent with the Bank's management of interest rate risk embedded in the balance sheet.

During the third quarter of fiscal 2017, the Company recorded a recovery from the allowance for loan losses of $165,000 compared to the recovery of $694,000 recorded during the same period of fiscal 2016 and the $350,000 recovery recorded in the second quarter of fiscal 2017 (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, decreased $1.4 million, or 11 percent, to $11.6 million, or 0.97 percent of total assets, at March 31, 2017, compared to $13.0 million, or 1.11 percent of total assets, at June 30, 2016. Non-performing loans at March 31, 2017 decreased $1.5 million or 14 percent since June 30, 2016 to $8.9 million and were primarily comprised of 29 single-family loans ($8.2 million); one multi-family loan ($372,000); one commercial real estate loan ($201,000); one commercial business loan ($68,000) and one consumer loan (fully reserved). Real estate owned acquired in the settlement of loans at March 31, 2017 increased $62,000, or two percent, to $2.8 million (five single-family properties) from $2.7 million (four single-family properties) at June 30, 2016.

Net recoveries for the quarter ended March 31, 2017 were $49,000 or 0.02 percent (annualized) of average loans receivable, compared to net recoveries of $126,000 or 0.05 percent (annualized) of average loans receivable for the quarter ended March 31, 2016 and net recoveries of $16,000 or 0.01 percent (annualized) of average loans receivable for the quarter ended December 31, 2016 (sequential quarter).

Classified assets at March 31, 2017 were $18.7 million, comprised of $7.1 million of loans in the special mention category, $8.8 million of loans in the substandard category and $2.8 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 March 31, 2017, no loans were restructured from their original terms or newly classified as a restructured loan.

The allowance for loan losses was $8.3 million at March 31, 2017, or 0.93 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 March 31, 2017.

Non-interest income decreased by $1.63 million, or 19 percent, to $6.79 million in the third quarter of fiscal 2017 from $8.42 million in the same period of fiscal 2016, primarily as a result of a decrease in the gain on sale of loans, partly offset by a lower net loss 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 $1.04 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 $5.40 million for the quarter ended March 31, 2017 from $7.15 million in the comparable quarter last year, reflecting the impact of a lower loan sale volume, partly offset by a slightly higher average loan sale margin. Total loan sale volume, which includes the net change in commitments to extend credit on loans to be held for sale, was $342.2 million in the quarter ended March 31, 2017, down $109.5 million or 24 percent, from $451.7 million in the comparable quarter last year. The average loan sale margin from mortgage banking was 158 basis points for the quarter ended March 31, 2017, up one basis point from 157 basis points in the same quarter last year and up 19 basis points from 139 basis points in the second quarter of fiscal 2017 (sequential quarter). 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 $635,000 in the third quarter of fiscal 2017, compared to a favorable fair-value adjustment that amounted to a net gain of $2.44 million in the same period last year.

In the third quarter of fiscal 2017, a total of $317.9 million of loans were originated and purchased for sale, 19 percent lower than the $392.9 million for the same period last year, and 41 percent lower than the $541.9 million during the second quarter of fiscal 2017 (sequential quarter). The loan origination volume has decreased from the previous year because increased mortgage interest rates have reduced refinance activity. Total loans sold during the quarter ended March 31, 2017 were $369.5 million, four percent lower than the $383.6 million sold during the same quarter last year, and 42 percent lower than the $638.5 million sold during the second quarter of fiscal 2017 (sequential quarter). Total loan originations (including loans originated and purchased for investment and loans originated and purchased for sale) were $375.9 million in the third quarter of fiscal 2017, a decrease of 14 percent from $439.5 million in the same quarter of fiscal 2016, and 38 percent lower than the $605.3 million in the second quarter of fiscal 2017 (sequential quarter).

The sale and operations of real estate owned acquired in the settlement of loans resulted in a net loss of $74,000 in the third quarter of fiscal 2017, compared to a $276,000 net loss in the comparable period last year. One real estate owned property was sold in the quarter ended March 31, 2017 compared to three real estate owned properties sold in the same quarter last year. Two real estate owned properties were acquired in the settlement of loans during the third quarter of fiscal 2017, the same number of properties acquired in the comparable period last year. As of March 31, 2017, the real estate owned balance was $2.8 million (five properties), compared to $2.7 million (four properties) at June 30, 2016.

Non-interest expenses decreased $717,000 to $13.77 million in the third quarter of fiscal 2017 from $14.49 million in the same quarter last year. The decrease was primarily a result of decreases in salaries and employee benefits expense, professional expenses and other non-interest expense. The decrease in salaries and employee benefits expense was primarily related to lower mortgage banking loan originations; while the decrease in professional expenses was attributable to lower legal expenses. The decrease in other non-interest expense was related to a $668,000 reversal of loan origination liability accruals recorded in prior periods and no longer required because the potential exposure was mitigated.

The Company's efficiency ratio remained unchanged at 89 percent in the third quarter of fiscal 2017 as compared to the same quarter last year.
The Company's provision for income taxes was $690,000 for the third quarter of fiscal 2017, a decrease of $361,000 or 34 percent, from $1.05 million in the same quarter last year, as a result of the decrease in income before taxes and a lower effective income tax rate. The effective income tax rate for the quarter ended March 31, 2017 was 37.6 percent, down from 41.3 percent in the same quarter last year. The decrease in the effective tax rate was attributable to the tax effect of stock-based compensation in the third quarter of fiscal 2017. The Company believes that the tax provision recorded in the third quarter of fiscal 2017 reflects its current income tax obligations.

The Company repurchased 89,819 shares of its common stock during the quarter ended March 31, 2017 at an average cost of $18.68 per share. As of March 31, 2017, a total of 207,505 shares or 52 percent of the shares authorized in the May 2016 stock repurchase plan have been purchased, leaving 189,495 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 12 retail loan production offices located throughout California.

The Company will host a conference call for institutional investors and bank analysts on Friday, April 28, 2017 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-800-230-1059 and requesting the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Friday, May 5, 2017 by dialing 1-800-475-6701 and referencing access code number 422360.

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)
March 31,
December 31, June 30,
2017 2016 2016
Assets
Cash and cash equivalents $125,298 $82,811 $51,206
Investment securities - held to maturity, at cost 41,035 33,369 39,979
Investment securities - available for sale, at fair value 9,862 10,278 11,543
Loans held for investment, net of allowance for loan
losses of $8,275; $8,391 and $8,670, respectively;
includes $6,250, $5,964 and $5,159 at fair value, respectively
880,510 867,985 840,022
Loans held for sale, at fair value 105,531 156,827 189,458
Accrued interest receivable 2,724 2,919 2,781
Real estate owned, net 2,768 2,949 2,706
FHLB - San Francisco stock 8,094 8,094 8,094
Premises and equipment, net 6,353 5,769 6,043
Prepaid expenses and other assets 17,270 21,154 19,549
Total assets $1,199,445 $1,192,155 $1,171,381
Liabilities and Stockholders’ Equity
Liabilities:
Non interest-bearing deposits $76,795 $73,830 $71,158
Interest-bearing deposits 861,511 854,843 855,226
Total deposits 938,306 928,673 926,384
Borrowings 111,244 111,263 91,299
Accounts payable, accrued interest and other
liabilities 18,304 19,664 20,247
Total liabilities 1,067,854 1,059,600 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; 17,931,365; 17,871,115 and 17,847,365
shares issued, respectively; 7,885,547; 7,915,116
and 7,975,250 shares outstanding, respectively) 179 179 178
Additional paid-in capital 92,775 92,215 90,802
Retained earnings 192,816 192,699 191,666
Treasury stock at cost (10,045,818; 9,955,999 and
9,872,115 shares, respectively) (154,427) (152,802) (149,508)
Accumulated other comprehensive income, net of tax 248 264 313
Total stockholders’ equity 131,591 132,555 133,451
Total liabilities and stockholders’ equity $1,199,445 $1,192,155 $1,171,381


PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited - In Thousands, Except Earnings Per Share)
Quarter Ended Nine Months Ended
March 31, March 31,
2017 2016
2017
2016
Interest income:
Loans receivable, net $9,704 $9,204 $30,300 $27,673
Investment securities 142 96 354 234
FHLB - San Francisco stock 184 163 827 542
Interest-earning deposits 250 183 406 417
Total interest income 10,280 9,646 31,887 28,866
Interest expense:
Checking and money market deposits 90 116 293 355
Savings deposits 144 170 434 507
Time deposits 686 807 2,189 2,500
Borrowings 713 641 2,151 1,937
Total interest expense 1,633 1,734 5,067 5,299
Net interest income 8,647 7,912 26,820 23,567
Recovery from the allowance for loan losses (165) (694) (665) (1,094)
Net interest income, after recovery from the allowance for loan
losses 8,812 8,606 27,485 24,661
Non-interest income:
Loan servicing and other fees 362 383 939 800
Gain on sale of loans, net 5,395 7,145 19,869 22,113
Deposit account fees 562 590 1,664 1,790
Loss on sale and operations of real estate
owned acquired in the settlement of loans (74) (276) (240) (12)
Card and processing fees 338 355 1,063 1,069
Other 208 227 580 711
Total non-interest income 6,791 8,424 23,875 26,471
Non-interest expense:
Salaries and employee benefits 10,370 10,630 32,033 31,393
Premises and occupancy 1,241 1,146 3,765 3,424
Equipment 352 349 1,054 1,158
Professional expenses 436 583 1,571 1,555
Sales and marketing expenses 421 356 970 952
Deposit insurance premiums and regulatory
assessments 189 252 614 764
Other 759 1,169 4,061 3,458
Total non-interest expense 13,768 14,485 44,068 42,704
Income before taxes 1,835 2,545 7,292 8,428
Provision for income taxes 690 1,051 3,049 3,509
Net income $1,145 $1,494 $4,243 $4,919
Basic earnings per share $0.14 $0.18 $0.53 $0.58
Diluted earnings per share $0.14 $0.18 $0.52 $0.57
Cash dividends per share $0.13 $0.12 $0.39 $0.36


PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations - Sequential Quarter
(Unaudited - In Thousands, Except Share Information)
Quarter Ended
March 31,
December 31,
2017
2016
Interest income:
Loans receivable, net $9,704 $10,116
Investment securities 142 128
FHLB - San Francisco stock 184 458
Interest-earning deposits 250 101
Total interest income 10,280 10,803
Interest expense:
Checking and money market deposits 90 105
Savings deposits 144 146
Time deposits 686 731
Borrowings 713 736
Total interest expense 1,633 1,718
Net interest income 8,647 9,085
Recovery from the allowance for loan losses (165) (350)
Net interest income, after recovery from the allowance for loan
losses 8,812 9,435
Non-interest income:
Loan servicing and other fees 362 310
Gain on sale of loans, net 5,395 6,478
Deposit account fees 562 552
Loss on sale and operations of real estate owned acquired
in the settlement of loans, net (74) (63)
Card and processing fees 338 361
Other 208 194
Total non-interest income 6,791 7,832
Non-interest expense:
Salaries and employee benefits 10,370 10,349
Premises and occupancy 1,241 1,235
Equipment 352 340
Professional expenses 436 630
Sales and marketing expenses 421 253
Deposit insurance premiums and regulatory assessments 189 177
Other 759 1,684
Total non-interest expense 13,768 14,668
Income before taxes 1,835 2,599
Provision for income taxes 690 1,095
Net income $1,145 $1,504
Basic earnings per share $0.14 $0.19
Diluted earnings per share $0.14 $0.18
Cash dividends per share $0.13 $0.13


PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands, Except Share Information)
Quarter Ended Nine Months Ended
March 31, March 31,
2017 2016 2017 2016
SELECTED FINANCIAL RATIOS:
Return on average assets 0.39% 0.51% 0.47% 0.56%
Return on average stockholders’ equity 3.46% 4.36% 4.26% 4.73%
Stockholders’ equity to total assets 10.97% 11.56% 10.97% 11.56%
Net interest spread 2.92% 2.72% 2.99% 2.69%
Net interest margin 3.00% 2.80% 3.06% 2.77%
Efficiency ratio 89.18% 88.67% 86.93% 85.34%
Average interest-earning assets to average
interest-bearing liabilities 111.11% 111.76% 111.15% 111.93%
SELECTED FINANCIAL DATA:
Basic earnings per share $0.14 $0.18 $0.53 $0.58
Diluted earnings per share $0.14 $0.18 $0.52 $0.57
Book value per share $16.69 $16.54 $16.69 $16.54
Shares used for basic EPS computation 7,925,531 8,318,075 7,942,903 8,427,075
Shares used for diluted EPS computation 8,093,571 8,516,542 8,126,051 8,620,045
Total shares issued and outstanding 7,885,547 8,201,883 7,885,547 8,201,883
LOANS ORIGINATED AND PURCHASED FOR SALE:
Retail originations $185,668 $214,294 $769,495 $737,681
Wholesale originations and purchases 132,241 178,585 737,667 667,990
Total loans originated and purchased for sale . $317,909 $392,879 $1,507,162 $1,405,671
LOANS SOLD:
Servicing released $363,443 $376,291 $1,547,435 $1,403,456
Servicing retained 6,074 7,356 28,895 39,621
Total loans sold $369,517 $383,647 $1,576,330 $1,443,077


As of As of As of As of As of
3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016
ASSET QUALITY RATIOS AND
DELINQUENT LOANS:
Recourse reserve for loans sold$403 $412 $453 $453 $887
Allowance for loan losses$8,275 $8,391 $8,725 $8,670 $8,200
Non-performing loans to loans held for
investment, net 1.01% 1.16% 1.17% 1.23% 1.52%
Non-performing assets to total assets 0.97% 1.09% 1.09% 1.11% 1.31%
Allowance for loan losses to gross non-
performing loans 90.05% 78.69% 79.93% 77.38% 62.31%
Allowance for loan losses to gross loans held
for investment 0.93% 0.96% 1.01% 1.02% 1.01%
Net recoveries to average loans receivable
(annualized) (0.02)% (0.01)% (0.08)% (0.45)% (0.05)%
Non-performing loans$8,852 $10,065 $10,013 $10,309 $12,261
Loans 30 to 89 days delinquent$978 $1,298 $1,385 $1,644 $1,508

PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)
Quarter Quarter Quarter Quarter Quarter
Ended
Ended
Ended
Ended Ended
3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016
(Recovery) recourse provision for loans sold$(9) $(30) $- $3 $119
Recovery from the allowance for loan losses$(165) $(350) $(150) $(621) $(694)
Net (recoveries) charge-offs$(49) $(16) $(205) $(1,091) $(126)
As of
As of
As of
As of
As of
3/31/2017
12/31/2016
9/30/2016
6/30/2016
3/31/2016
REGULATORY CAPITAL RATIOS (BANK):
Tier 1 leverage ratio 9.79% 9.50% 9.32% 10.29% 10.06%
Common equity tier 1 capital ratio 16.10% 15.43% 14.44% 16.16% 16.63%
Tier 1 risk-based capital ratio 16.10% 15.43% 14.44% 16.16% 16.63%
Total risk-based capital ratio 17.28% 16.58% 15.57% 17.36% 17.82%
REGULATORY CAPITAL RATIOS (COMPANY):
Tier 1 leverage ratio 11.07% 10.94% 10.98% 11.40% 11.61%
Common equity tier 1 capital ratio 18.20% 17.78% 17.00% 17.89% 19.19%
Tier 1 risk-based capital ratio 18.20% 17.78% 17.00% 17.89% 19.19%
Total risk-based capital ratio 19.38% 18.93% 18.14% 19.09% 20.37%
As of March 31,
2017 2016
Balance Rate(1) Balance Rate(1)
INVESTMENT SECURITIES:
Held to maturity:
Certificates of deposit$800 0.86% $800 0.58%
U.S. government sponsored enterprise MBS 40,235 1.91 20,214 1.46
Total investment securities held to maturity$41,035 1.89% $21,014 1.43%
Available for sale (at fair value):
U.S. government agency MBS$5,700 2.12% $6,947 1.84%
U.S. government sponsored enterprise MBS 3,661 2.87 4,450 2.57
Private issue collateralized mortgage obligations 501 2.82 617 2.56
Common stock – community development financial
institution - - 147 0.82
Total investment securities available for sale$9,862 2.43% $12,161 2.13%
Total investment securities$50,897 2.00% $33,175 1.68%
(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 March 31,
2017
2016
Balance Rate(1) BalanceRate(1)
LOANS HELD FOR INVESTMENT:
Held to maturity:
Single-family (1 to 4 units)$319,714 3.94% $335,797 3.51%
Multi-family (5 or more units) 459,180 4.05 378,871 4.26
Commercial real estate 96,364 4.63 93,384 4.85
Construction 16,552 5.75 9,679 5.42
Other 241 5.57 72 6.25
Commercial business 668 6.11 452 6.57
Consumer 126 13.48 230 10.13
Total loans held for investment 892,845 4.11% 818,485 4.03%
Undisbursed loan funds (9,468) (8,648)
Advance payments of escrows 165 247
Deferred loan costs, net 5,243 3,683
Allowance for loan losses (8,275) (8,200)
Total loans held for investment, net$880,510 $805,567
Purchased loans serviced by others included above$23,397 3.37% $816 5.88%
(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 March 31,
2017
2016
DEPOSITS:Balance Rate(1) Balance Rate(1)
Checking accounts – non interest-bearing$76,795 -% $68,748 -%
Checking accounts – interest-bearing 258,197 0.11 240,502 0.15
Savings accounts 290,158 0.2 269,909 0.26
Money market accounts 32,648 0.21 31,171 0.26
Time deposits 280,508 0.98 316,735 1.03
Total deposits$938,306 0.39% $927,065 0.47%
BORROWINGS:
Overnight$- -% $- -%
Three months or less - - - -
Over three to six months - - - -
Over six months to one year 10,017 3.01 - -
Over one year to two years - - 10,042 3.02
Over two years to three years 10,000 1.53 - -
Over three years to four years 20,000 3.85 10,000 1.53
Over four years to five years 21,227 2.08 20,000 3.85
Over five years 50,000 2.36 51,275 2.55
Total borrowings$111,244 2.56% $91,317 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
March 31, 2017 March 31, 2016
Balance
Rate(1) Balance Rate(1)
SELECTED AVERAGE BALANCE SHEETS:
Loans receivable, net (2)$974,207 3.98% $951,996 3.87%
Investment securities 47,283 1.20% 24,861 1.54%
FHLB – San Francisco stock 8,094 9.09% 8,094 8.06%
Interest-earning deposits 125,155 0.80% 145,602 0.50%
Total interest-earning assets$1,154,739 3.56% $1,130,553 3.41%
Total assets$1,186,709 $1,165,410
Deposits$927,994 0.40% $920,312 0.48%
Borrowings 111,251 2.60% 91,322 2.82%
Total interest-bearing liabilities$1,039,245 0.64% $1,011,634 0.69%
Total stockholders’ equity$132,218 $137,111
(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.


Nine Months Ended Nine Months Ended
March 31, 2017 March 31, 2017
Balance Rate(1) Balance Rate(1)
SELECTED AVERAGE BALANCE SHEETS:
Loans receivable, net (2)$1,034,671 3.90% $945,761 3.90%
Investment securities 47,495 0.99% 18,350 1.70%
FHLB – San Francisco stock 8,094 13.62% 8,094 8.93%
Interest-earning deposits 79,813 0.67% 162,829 0.34%
Total interest-earning assets$1,170,073 3.63% $1,135,034 3.39%
Total assets$1,202,136 $1,169,679
Deposits$933,406 0.42% $922,746 0.48%
Borrowings 119,299 2.40% 91,340 2.82%
Total interest-bearing liabilities$1,052,705 0.64% $1,014,086 0.70%
Total stockholders’ equity$132,769 $138,806
(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
3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016
Loans on non-accrual status (excluding
restructured loans):
Mortgage loans:
Single-family $4,704 $5,716 $5,586 $6,292 $6,918
Multi-family 372 568 703 709 721
Commercial real estate 201 - - - -
Total 5,277 6,284 6,289 7,001 7,639
Accruing loans past due 90 days or more: - - - - -
Total - - - - -
Restructured loans on non-accrual status:
Mortgage loans:
Single-family 3,507 3,711 3,650 3,232 3,002
Multi-family - - - - 1,542
Commercial business loans 68 70 74 76 78
Total 3,575 3,781 3,724 3,308 4,622
Total non-performing loans 8,852 10,065 10,013 10,309 12,261
Real estate owned, net 2,768 2,949 3,496 2,706 3,165
Total non-performing assets $11,620 $13,014 $13,509 $13,015 $15,426
(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.