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Provident Financial Holdings Reports Fourth Quarter and Fiscal 2017 Earnings

HIGHLIGHTS INCLUDE:

Net Interest Margin Expands 21 Basis Points to 3.06% in Fiscal 2017 Compared to Fiscal 2016

Net Interest Income Increases by 11% in Fiscal 2017 Compared to Fiscal 2016

Loans Held for Investment Increase 8% to $904.9 Million from June 30, 2016

Core Deposits Increase 7% to $658.6 Million from June 30, 2016

Non-Performing Assets Decline 26% to $9.6 Million from June 30, 2016

Repurchased 425,350 Shares of Common Stock During the Current Fiscal Year

RIVERSIDE, Calif., July 26, 2017 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. (“Company”), (NASDAQ GS:PROV), the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced fourth quarter and full year earnings for the fiscal year ended June 30, 2017.

For the quarter ended June 30, 2017, the Company reported net income of $964,000, or $0.12 per diluted share (on 8.00 million average diluted shares outstanding), down 62 percent from net income of $2.56 million, or $0.31 per diluted share (on 8.30 million average diluted shares outstanding), in the comparable period a year ago. The decrease in net income for the fourth 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 an increase in other non-interest expense, partly offset by a decrease in salaries and employee benefits expense.

“We are very pleased with the improving fundamentals in our community banking business. Our net interest margin has expanded, our loan growth has accelerated, core deposits are growing, and the credit quality of our loan portfolios remains strong. Our outlook for the community banking business is favorable,” said Craig G. Blunden, Chairman and Chief Executive Officer of the Company. “Although the fundamentals in our mortgage banking business have slightly improved this quarter from last quarter, market challenges remain and we continue to adjust our business model in response to the overall weakness in the loan origination environment,” Mr. Blunden concluded.

Return on average assets for the fourth quarter of fiscal 2017 decreased to 0.32 percent from 0.87 percent for the same period of fiscal 2016; and return on average stockholders’ equity for the fourth quarter of fiscal 2017 decreased to 2.95 percent from 7.61 percent for the comparable period of fiscal 2016.

On a sequential quarter basis, net income for the fourth quarter of fiscal 2017 reflects an $181,000, or 16 percent, decrease from the net income of $1.15 million in the third quarter of fiscal 2017. The decrease in net income in the fourth quarter of fiscal 2017 compared to the third quarter of fiscal 2017 was primarily attributable to a $1.54 million increase in other non-interest expense primarily due to a litigation expense accrual of $1.02 million and a $243,000 higher net loss on the sale and operations of real estate owned, partly offset by an increase in net interest income of $271,000, an increase in the recovery from the allowance for loan losses of $212,000, a $416,000 increase in the gain on sale of loans and a $661,000 decrease in salaries and employee benefits expense. Diluted earnings per share for the fourth quarter of fiscal 2017 were $0.12 per share, down 14 percent, from the $0.14 per share during the third quarter of fiscal 2017. Return on average assets decreased to 0.32 percent for the fourth quarter of fiscal 2017 from 0.39 percent in the third quarter of fiscal 2017; and return on average stockholders’ equity for the fourth quarter of fiscal 2017 was 2.95 percent, compared to 3.46 percent for the third quarter of fiscal 2017.

For the fiscal year ended June 30, 2017, net income decreased $2.26 million, or 30 percent, to $5.21 million from $7.47 million in the prior fiscal year; and diluted earnings per share for the fiscal year ended June 30, 2017 decreased 27 percent to $0.64 per share from $0.88 per share for the last fiscal year.

Net interest income increased $156,000, or two percent, to $8.92 million in the fourth quarter of fiscal 2017 from $8.76 million for the same quarter of fiscal 2016, attributable to a higher average earning assets balance, partly offset by a slight decrease in the net interest margin. The average interest-earning assets balance for the fourth quarter of fiscal 2017 was $1.16 billion, up two percent from $1.13 billion during the same period last year. The net interest margin during the fourth quarter of fiscal 2017 decreased one basis point to 3.09 percent from 3.10 percent in the same quarter last year, primarily due to the decrease in the average yield of earning assets, which was slightly more than the decrease in the average cost of costing liabilities. The average yield on interest-earning assets decreased by five basis points to 3.64 percent in the fourth quarter of fiscal 2017 from 3.69 percent in the same quarter last year, while the average cost of liabilities decreased by four basis points to 0.62 percent in the fourth quarter of fiscal 2017 from 0.66 percent in the same quarter last year.

The average balance of loans receivable, including loans held for sale, increased by $39.0 million, or four percent, to $999.4 million in the fourth quarter of fiscal 2017 from $960.4 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 decreased by 18 basis points to 3.98 percent in the fourth quarter of fiscal 2017 from an average yield of 4.16 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 investment, partly offset by an increase in the average yield of loans held for sale and a lower percentage of loans held for sale to total loans receivable. The average balance of loans held for investment in the fourth quarter of fiscal 2017 was $890.8 million with an average yield of 3.99 percent as compared to $805.9 million with an average yield of 4.26 percent in the same quarter of fiscal 2016; while the average balance of loans held for sale in the fourth quarter of fiscal 2017 was $108.7 million with an average yield of 3.94 percent as compared to $154.5 million with an average yield of 3.62 percent in the same quarter of fiscal 2016. The average yield of loans held for investment in the fourth quarter of fiscal 2016 included $544,000 of interest income received from payoffs of non-performing loans, as compared to $40,000 in the fourth quarter of fiscal 2017. The outstanding balance of “preferred loans” (multi-family, commercial real estate, construction and commercial business loans) increased by $65.9 million, or 13 percent, to $585.1 million at June 30, 2017 from $519.2 million at June 30, 2016, net of undisbursed loan funds of $9.0 million and $11.3 million, respectively. The percentage of preferred loans to total loans held for investment at June 30, 2017 increased to 64 percent from 61 percent at June 30, 2016. Loan principal payments received in the fourth quarter of fiscal 2017 were $45.5 million, compared to $47.1 million in the same quarter of fiscal 2016.

The average balance of investment securities increased by $19.2 million, or 43 percent, to $63.9 million in the fourth quarter of fiscal 2017 from $44.7 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 increased 27 basis points to 1.38 percent in the fourth quarter of fiscal 2017 from 1.11 percent for the same quarter of fiscal 2016. The increase in the average yield was primarily attributable to mortgage-backed securities purchases which had higher average yields than the existing portfolio and the repricing of variable rate investment securities to higher market rates.

In the fourth quarter of fiscal 2017, the Federal Home Loan Bank (“FHLB”) – San Francisco distributed $140,000 of quarterly cash dividends to the Bank, a $39,000 or 22 percent decrease 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 $34.3 million, or 29 percent, to $84.7 million in the fourth quarter of fiscal 2017 from $119.0 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 fourth quarter of fiscal 2017 was 1.03 percent, up 53 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 during fiscal 2017.

Average deposits increased $2.0 million to $928.3 million in the fourth quarter of fiscal 2017 from $926.3 million in the same quarter of fiscal 2016. The average cost of deposits decreased by six basis points to 0.39 percent in the fourth quarter of fiscal 2017 from 0.45 percent in the same quarter last year, primarily due to decreases in the average cost for each type of deposit category and a lower percentage of time deposits to the total deposit balance. Transaction account balances or “core deposits” increased $41.1 million, or seven percent, to $658.6 million at June 30, 2017 from $617.5 million at June 30, 2016, while time deposits decreased $41.0 million, or 13 percent, to $267.9 million at June 30, 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 $20.1 million, or 22 percent, to $111.4 million while the average cost of advances decreased 23 basis points to 2.59 percent in the fourth 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 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 of existing advances in the fourth quarter of fiscal 2016. The increase in the average balance of fixed-rate long-term advances is consistent with the Bank’s interest rate risk mitigation strategies.

During the fourth quarter of fiscal 2017, the Company recorded a recovery from the allowance for loan losses of $377,000 compared to the recovery of $621,000 recorded during the same period of fiscal 2016 and the $165,000 recovery recorded in the third 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 $3.4 million, or 26 percent, to $9.6 million, or 0.80 percent of total assets, at June 30, 2017, compared to $13.0 million, or 1.11 percent of total assets, at June 30, 2016. Non-performing loans at June 30, 2017 decreased $2.3 million or 22 percent since June 30, 2016 to $8.0 million and were primarily comprised of 27 single-family loans ($7.7 million); one commercial real estate loan ($201,000) and one commercial business loan ($65,000). Real estate owned acquired in the settlement of loans at June 30, 2017 decreased $1.1 million, or 41 percent, to $1.6 million (two single-family properties) from $2.7 million (four single-family properties) at June 30, 2016.

Net recoveries for the quarter ended June 30, 2017 were $141,000 or 0.06 percent (annualized) of average loans receivable, compared to net recoveries of $1.09 million or 0.45 percent (annualized) of average loans receivable for the quarter ended June 30, 2016 and net recoveries of $49,000 or 0.02 percent (annualized) of average loans receivable for the quarter ended March 31, 2017 (sequential quarter).

Classified assets at June 30, 2017 were $13.3 million, comprised of $3.7 million of loans in the special mention category, $8.0 million of loans in the substandard category and $1.6 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 June 30, 2017, no loans were restructured from their original terms or newly classified as a restructured loan.
The allowance for loan losses was $8.0 million at June 30, 2017, or 0.88 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 June 30, 2017.

Non-interest income decreased by $3.64 million, or 34 percent, to $6.95 million in the fourth quarter of fiscal 2017 from $10.59 million in the same period of fiscal 2016, primarily as a result of a decrease in gain on sale of loans and a higher 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 increased $155,000, or two percent, primarily as a result of an increase in gain on sale of loans, partly offset by a higher net loss on the sale and operations of real estate owned.

The gain on sale of loans decreased $3.60 million, 38 percent, to $5.81 million for the quarter ended June 30, 2017 from $9.41 million in the comparable quarter last year, reflecting the impact of a lower loan sale volume and a lower 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 $382.1 million in the quarter ended June 30, 2017, down $202.4 million or 35 percent, from $584.5 million in the comparable quarter last year. The average loan sale margin from mortgage banking was 150 basis points for the quarter ended June 30, 2017, down 11 basis points from 161 basis points in the same quarter last year and down eight basis points from 158 basis points in the third 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 $273,000 in the fourth quarter of fiscal 2017, compared to a favorable fair-value adjustment that amounted to a net gain of $459,000 in the same period last year.

In the fourth quarter of fiscal 2017, $405.9 million of loans were originated and purchased for sale, 27 percent lower than the $557.2 million for the same period last year, but 28 percent higher than the $317.9 million during the third 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 June 30, 2017 were $397.3 million, 28 percent lower than the $551.1 million sold during the same quarter last year, but eight percent higher than the $369.5 million sold during the third quarter of fiscal 2017 (sequential quarter). Total loan originations (including loans originated and purchased for investment and loans originated and purchased for sale) were $479.8 million in the fourth quarter of fiscal 2017, a decrease of 25 percent from $639.1 million in the same quarter of fiscal 2016, but 28 percent higher than the $375.9 million in the third 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 $317,000 in the fourth quarter of fiscal 2017, compared to an $83,000 net loss in the comparable period last year. Three real estate owned properties were sold in the quarter ended June 30, 2017 compared to four real estate owned properties sold in the same quarter last year. No real estate owned properties were acquired in the settlement of loans during the fourth quarter of fiscal 2017, compared to three properties acquired in the comparable period last year. As of June 30, 2017, the real estate owned balance was $1.6 million (two properties), compared to $2.7 million (four properties) at June 30, 2016.

Non-interest expenses decreased $838,000 to $14.72 million in the fourth quarter of fiscal 2017 from $15.56 million in the same quarter last year. The decrease was primarily a result of a decrease in salaries and employee benefits expense, partly offset by an increase in other non-interest expense. The decrease in salaries and employee benefits expense was primarily related to lower mortgage banking loan originations; while the increase in other non-interest expenses was primarily attributable to a litigation expense accrual.
The Company’s efficiency ratio in the fourth quarter of fiscal 2017 was 93 percent, up from 80 percent in the same quarter last year.

The Company’s provision for income taxes was $560,000 for the fourth quarter of fiscal 2017, a decrease of $1.30 million or 70 percent, from $1.86 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 June 30, 2017 was 36.8 percent, down from 42.2 percent in the same quarter last year. The decrease in the effective tax rate was attributable to a lower federal tax rate for fiscal 2017 which was applied to our tax accrual schedules in the fourth quarter of fiscal 2017. The Company believes that the tax provision recorded in the fourth quarter of fiscal 2017 reflects its current income tax obligations.

The Company repurchased 189,495 shares of its common stock during the quarter ended June 30, 2017 at an average cost of $19.61 per share. As of June 30, 2017, all 397,000 shares under the May 2016 stock repurchase plan have been purchased at an average cost of $19.31 per share. In June 2017, the Board of Directors authorized a new stock repurchase plan of up to 5% of the Corporation’s common stock, or approximately 385,200 shares. To date, no shares have been repurchased under this 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 12 retail loan production offices located throughout California.

The Company will host a conference call for institutional investors and bank analysts on Wednesday, July 26, 2017 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-877-531-2988 and requesting the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Wednesday, August 2, 2017 by dialing 1-800-475-6701 and referencing access code number 426764.

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 2018 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,
2017
March 31, June 30,
2016
2017
Assets
Cash and cash equivalents$72,826 $125,298 $51,206
Investment securities – held to maturity, at cost 60,441 41,035 39,979
Investment securities - available for sale, at fair value 9,318 9,862 11,543
Loans held for investment, net of allowance for loan losses of $8,039; $8,275 and $8,670, respectively; includes $6,445, $6,250 and $5,159 at fair value, respectively 904,919 880,510 840,022
Loans held for sale, at fair value 116,548 105,531 189,458
Accrued interest receivable 2,915 2,724 2,781
Real estate owned, net 1,615 2,768 2,706
FHLB – San Francisco stock 8,108 8,094 8,094
Premises and equipment, net 6,641 6,353 6,043
Prepaid expenses and other assets 17,302 17,270 19,549
Total assets$1,200,633 $1,199,445 $1,171,381
Liabilities and Stockholders’ Equity
Liabilities:
Non interest-bearing deposits$ 77,917 $ 76,795 $ 71,158
Interest-bearing deposits 848,604 861,511 855,226
Total deposits 926,521 938,306 926,384
Borrowings 126,226 111,244 91,299
Accounts payable, accrued interest and other
liabilities


19,656


18,304


20,247
Total liabilities 1,072,403 1,067,854 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; 17,949,365; 17,931,365 and 17,847,365 shares issued, respectively; 7,714,052; 7,885,547 and 7,975,250 shares outstanding, respectively)
180 179 178
Additional paid-in capital 93,209 92,775 90,802
Retained earnings 192,754 192,816 191,666
Treasury stock at cost (10,235,313; 10,045,818 and 9,872,115 shares, respectively)
(158,142) (154,427) (149,508)
Accumulated other comprehensive income, net of tax 229 248 313
Total stockholders’ equity 128,230 131,591 133,451
Total liabilities and stockholders’ equity $1,200,633 $1,199,445 $1,171,381


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,
2017 2016 2017 2016
Interest income:
Loans receivable, net $ 9,949 $ 9,985 $40,249 $37,658
Investment securities 221 124 575 358
FHLB – San Francisco stock 140 179 967 721
Interest-earning deposits 220 150 626 567
Total interest income 10,530 10,438 42,417 39,304
Interest expense:
Checking and money market deposits 94 95 387 450
Savings deposits 145 150 579 657
Time deposits 653 790 2,842 3,290
Borrowings 720 641 2,871 2,578
Total interest expense 1,612 1,676 6,679 6,975
Net interest income 8,918 8,762 35,738 32,329
Recovery from the allowance for loan losses (377) (621) (1,042) (1,715)
Net interest income, after recovery from the allowance for loan losses 9,295 9,383 36,780 34,044
Non-interest income:
Loan servicing and other fees 312 268 1,251 1,068
Gain on sale of loans, net 5,811 9,408 25,680 31,521
Deposit account fees 530 529 2,194 2,319
Loss on disposition of investment securities - (103) - (103)
Loss on sale and operations of real estate owned acquired in the settlement of loans (317) (83) (557) (95)
Card and processing fees 388 379 1,451 1,448
Other 222 192 802 903
Total non-interest income 6,946 10,590 30,821 37,061
Non-interest expense:
Salaries and employee benefits 9,709 11,216 41,742 42,609
Premises and occupancy 1,296 1,222 5,061 4,646
Equipment. 393 345 1,447 1,503
Professional expenses 504 534 2,075 2,089
Sales and marketing expenses 353 379 1,323 1,331
Deposit insurance premiums and regulatory assessments 159 254 773 1,018
Other 2,303 1,605 6,364 5,063
Total non-interest expense 14,717 15,555 58,785 58,259
Income before taxes 1,524 4,418 8,816 12,846
Provision for income taxes 560 1,863 3,609 5,372
Net income$ 964 $ 2,555 $ 5,207 $ 7,474
Basic earnings per share$ 0.12 $ 0.32 $ 0.66 $ 0.90
Diluted earnings per share $ 0.12 $ 0.31 $ 0.64 $ 0.88
Cash dividends per share $ 0.13 $ 0.12 $ 0.52 $ 0.48
PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations – Sequential Quarter
(Unaudited – In Thousands, Except Share Information)
Quarter Ended
June 30,March 31,
2017
2017
Interest income:
Loans receivable, net $ 9,949 $ 9,704
Investment securities 221 142
FHLB – San Francisco stock 140 184
Interest-earning deposits 220 250
Total interest income 10,530 10,280
Interest expense:
Checking and money market deposits 94 90
Savings deposits 145 144
Time deposits 653 686
Borrowings 720 713
Total interest expense 1,612 1,633
Net interest income 8,918 8,647
Recovery from the allowance for loan losses (377) (165)
Net interest income, after recovery from the allowance for loan losses 9,295 8,812
Non-interest income:
Loan servicing and other fees 312 362
Gain on sale of loans, net 5,811 5,395
Deposit account fees 530 562
Loss on sale and operations of real estate owned acquired in the settlement of loans, net (317) (74)
Card and processing fees 388 338
Other 222 208
Total non-interest income 6,946 6,791
Non-interest expense:
Salaries and employee benefits 9,709 10,370
Premises and occupancy 1,296 1,241
Equipment 393 352
Professional expenses . 504 436
Sales and marketing expenses 353 421
Deposit insurance premiums and regulatory assessments 159 189
Other 2,303 759
Total non-interest expense 14,717 13,768
Income before taxes 1,524 1,835
Provision for income taxes 560 690
Net income $ 964 $ 1,145
Basic earnings per share $ 0.12 $ 0.14
Diluted earnings per share $ 0.12 $ 0.14
Cash dividends per share $ 0.13 $ 0.13


PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands, Except Share Information)
Quarter Ended
June 30,
Fiscal Year Ended
June 30,
2017 2016 2017 2016
SELECTED FINANCIAL RATIOS:
Return on average assets 0.32% 0.87% 0.43% 0.64%
Return on average stockholders’ equity 2.95% 7.61% 3.94% 5.43%
Stockholders’ equity to total assets 10.68% 11.39% 10.68% 11.39%
Net interest spread 3.02% 3.03% 3.00% 2.78%
Net interest margin 3.09% 3.10% 3.06% 2.85%
Efficiency ratio 92.77% 80.38% 88.32% 83.96%
Average interest-earning assets to average
interest-bearing liabilities 111.19% 111.26% 111.16% 111.75%
SELECTED FINANCIAL DATA:
Basic earnings per share $ 0.12 $ 0.32 $ 0.66 $ 0.90
Diluted earnings per share $ 0.12 $ 0.31 $ 0.64 $ 0.88
Book value per share $ 16.62 $ 16.73 $ 16.62 $ 16.73
Shares used for basic EPS computation 7,844,839 8,107,282 7,918,454 8,347,564
Shares used for diluted EPS computation 8,002,431 8,304,332 8,098,991 8,541,554
Total shares issued and outstanding 7,714,052 7,975,250 7,714,052 7,975,250
LOANS ORIGINATED AND PURCHASED FOR SALE:
Retail originations $227,647 $284,615 $ 997,142 $1,022,296
Wholesale originations and purchases 178,229 272,583 915,896 940,573
Total loans originated and purchased for sale $405,876 $557,198 $1,913,038 $1,962,869
LOANS SOLD:
Servicing released $387,914 $544,967 $1,935,349 $1,948,423
Servicing retained 9,355 6,177 38,250 45,798
Total loans sold $397,269 $551,144 $1,973,599 $1,994,221
As of As of As of As of As of
06/30/17 03/31/17 12/31/16 09/30/16 06/30/16
ASSET QUALITY RATIOS AND
DELINQUENT LOANS:
Recourse reserve for loans sold $305 $403 $412 $453 $453
Allowance for loan losses $8,039 $8,275 $8,391 $8,725 $8,670
Non-performing loans to loans held for investment, net 0.88% 1.01% 1.16% 1.17% 1.23%
Non-performing assets to total assets 0.80% 0.97% 1.09% 1.09% 1.11%
Allowance for loan losses to gross non-performing loans 96.88% 90.05% 78.69% 79.93% 77.38%
Allowance for loan losses to gross loans held
for investment 0.88% 0.93% 0.96% 1.01% 1.02%
Net recoveries to average loans receivable (annualized) (0.06)% (0.02)% (0.01)% (0.08)% (0.45)%
Non-performing loans $7,995 $8,852 $10,065 $10,013 $10,309
Loans 30 to 89 days delinquent $ 1,035 $ 978 $ 1,298 $ 1,385 $ 1,644
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)
Quarter
Ended
Quarter
Ended
Quarter
Ended
Quarter
Ended
Quarter
Ended
06/30/17 03/31/17 12/31/16 09/30/16 06/30/16
Recourse (recovery) provision for loans sold $(98) $(9) $(30) $- $3
Recovery from the allowance for loan losses $(377) $(165) $(350) $(150) $(621)
Net (recoveries) charge-offs $(141) $(49) $(16) $(205) $(1,091)
As of As of As of As of As of
06/30/17 03/31/17 12/31/16 09/30/16 06/30/16
REGULATORY CAPITAL RATIOS (BANK):
Tier 1 leverage ratio 9.90% 9.79% 9.50% 9.32% 10.29%
Common equity tier 1 capital ratio 16.13% 16.10% 15.43% 14.44% 16.16%
Tier 1 risk-based capital ratio 16.13% 16.10% 15.43% 14.44% 16.16%
Total risk-based capital ratio 17.27% 17.28% 16.58% 15.57% 17.36%
REGULATORY CAPITAL RATIOS (COMPANY):
Tier 1 leverage ratio 10.77% 11.07% 10.94% 10.98% 11.40%
Common equity tier 1 capital ratio 17.55% 18.20% 17.78% 17.00% 17.89%
Tier 1 risk-based capital ratio 17.55% 18.20% 17.78% 17.00% 17.89%
Total risk-based capital ratio 18.70% 19.38% 18.93% 18.14% 19.09%
As of June 30,
2017 2016
Balance Rate(1) Balance Rate(1)
INVESTMENT SECURITIES:
Held to maturity:
Certificates of deposit $ 600 1.13% $ 800 0.72%
U.S. government sponsored enterprise MBS 59,841 1.88 39,179 1.43
Total investment securities held to maturity$60,441 1.87% $39,979 1.42%
Available for sale (at fair value):
U.S. government agency MBS $ 5,383 2.21% $ 6,572 1.90%
U.S. government sponsored enterprise MBS 3,474 3.00 4,223 2.69
Private issue collateralized mortgage obligations 461 3.00 601 2.76
Common stock – community development financial institution - - 147 -
Total investment securities available for sale $ 9,318 2.54% $11,543 2.21%
Total investment securities $69,759 1.96% $51,522 1.59%
(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,
2017 2016
Balance Rate(1) Balance Rate(1)
LOANS HELD FOR INVESTMENT:
Held to maturity:
Single-family (1 to 4 units)$322,197 4.01% $324,497 3.66%
Multi-family (5 or more units) 479,959 4.11 415,627 4.18
Commercial real estate 97,562 4.65 99,528 4.77
Construction 16,009 6.07 14,653 5.45
Other - - 332 5.66
Commercial business 576 6.06 636 6.50
Consumer 129 13.54 203 10.89
Total loans held for investment 916,432 4.17% 855,476 4.08%
Undisbursed loan funds (9,015) (11,258)
Advance payments of escrows 61 56
Deferred loan costs, net 5,480 4,418
Allowance for loan losses (8,039) (8,670)
Total loans held for investment, net $904,919 $840,022
Purchased loans serviced by others included above $ 23,261 3.37% $ 807 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 June 30,
2017 2016
Balance Rate(1) Balance Rate(1)
DEPOSITS:
Checking accounts – non interest-bearing $ 77,917 -% $ 71,158 -%
Checking accounts – interest-bearing 259,437 0.11 237,979 0.11
Savings accounts 285,967 0.20 275,310 0.21
Money market accounts 35,323 0.27 33,082 0.27
Time deposits 267,877 0.98 308,855 1.01
Total deposits$926,521 0.39% $926,384 0.44%
BORROWINGS:
Overnight$- -% $- -%
Three months or less 15,000 1.15 - -
Over three to six months 11 6.49 - -
Over six months to one year 10,000 3.01 - -
Over one year to two years 10,000 1.53 10,036 3.02
Over two years to three years - - 10,000 1.53
Over three years to four years 20,000 3.85 - -
Over four years to five years 21,215 2.08 20,000 3.85
Over five years 50,000 2.36 51,263 2.55
Total borrowings$126,226 2.39% $91,299 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, 2017 June 30, 2016
Balance Rate(1) Balance Rate(1)
SELECTED AVERAGE BALANCE SHEETS:
Loans receivable, net (2) $ 999,431 3.98% $ 960,447 4.16%
Investment securities 63,861 1.38% 44,671 1.11%
FHLB – San Francisco stock 8,105 6.91% 8,094 8.85%
Interest-earning deposits 84,667 1.03% 118,984 0.50%
Total interest-earning assets $1,156,064 3.64% $1,132,196 3.69%
Total assets $1,187,903 $1,168,009
Deposits $ 928,295 0.39% $ 926,347 0.45%
Borrowings 111,397 2.59% 91,305 2.82%
Total interest-bearing liabilities$1,039,692 0.62% $1,017,652 0.66%
Total stockholders’ equity $ 130,882 $ 134,363
(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, 2017 June 30, 2016
Balance Rate(1) Balance Rate(1)
SELECTED AVERAGE BALANCE SHEETS:
Loans receivable, net (2) $1,025,885 3.92% $ 949,412 3.97%
Investment securities 51,575 1.11% 24,895 1.44%
FHLB – San Francisco stock 8,097 11.94% 8,094 8.91%
Interest-earning deposits 81,027 0.76% 151,867 0.37%
Total interest-earning assets$1,166,584 3.64% $1,134,268 3.47%
Total assets$1,198,587 $1,169,277
Deposits $ 932,132 0.41% $ 923,641 0.48%
Borrowings 117,329 2.45% 91,331 2.82%
Total interest-bearing liabilities $1,049,461 0.64% $1,014,972 0.69%
Total stockholders’ equity $ 132,298 $ 137,701
(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
06/30/17 03/31/17 12/31/16 09/30/16 06/30/16
Loans on non-accrual status (excluding
restructured loans):
Mortgage loans:
Single-family $4,668 $ 4,704 $ 5,716 $ 5,586 $ 6,292
Multi-family - 372 568 703 709
Commercial real estate 201 201 - - -
Total 4,869 5,277 6,284 6,289 7,001
Accruing loans past due 90 days or more: - - - - -
Total - - - - -
Restructured loans on non-accrual status:
Mortgage loans:
Single-family 3,061 3,507 3,711 3,650 3,232
Commercial business loans 65 68 70 74 76
Total 3,126 3,575 3,781 3,724 3,308
Total non-performing loans 7,995 8,852 10,065 10,013 10,309
Real estate owned, net 1,615 2,768 2,949 3,496 2,706
Total non-performing assets $9,610 $11,620 $13,014 $13,509 $13,015

(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 (951) 686-6060

Source:Provident Financial Holdings, Inc.