Provident Financial Holdings Reports Second Quarter of Fiscal 2026 Results

Net Income of $1.44 million in the December 2025 Quarter, Down 15% from the Sequential Quarter but Up 65% from the Comparable Quarter Last Year 

Net Interest Margin of 3.03% in the December 2025 Quarter, Up Three Basis Points from the Sequential Quarter and Up 12 Basis Points from the Comparable Quarter Last Year

Loans Held for Investment of $1.04 Billion at December 31, 2025, Down 1% from $1.05 Billion at June 30, 2025

Total Deposits of $872.4 Million at December 31, 2025, Down 2% from $888.8 million at June 30, 2025

Non-Performing Assets to Total Assets Ratio of 0.08% at December 31, 2025, Down from 0.11% at June 30, 2025

RIVERSIDE, Calif., Jan. 27, 2026 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. (“Company”), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced earnings for the second quarter of the fiscal year ending June 30, 2026.

The Company reported net income of $1.44 million, or $0.22 per diluted share (on 6.53 million average diluted shares outstanding), for the quarter ended December 31, 2025, down 15 percent from $1.68 million, or $0.25 per diluted share (based on 6.63 million average diluted shares outstanding), in the first quarter of fiscal 2026, but up 65 percent from net income of $872,000, or $0.13 per diluted share (based on 6.79 million average diluted shares outstanding), in the comparable period a year ago. The decrease from the sequential quarter primarily reflected a $468,000 lower recovery of credit losses and a $315,000 increase in non-interest expense (mainly due to a non-recurring $214,000 pre-litigation voluntary mediation settlement expense related to an employment matter, recorded in other non-interest expense), partially offset by a $104,000 increase in non-interest income and a $440,000 decrease in the provision for income taxes. The increase from the second quarter ended December 31, 2024 was due primarily to a recovery of credit losses in contrast to a provision for credit losses, an increase in net interest income and an increase in non-interest income, partly offset by an increase in non-interest expense.

For the six months ended December 31, 2025, net income increased $345,000, or 12 percent, to $3.12 million from $2.77 million in the comparable period in fiscal 2025. Diluted earnings per share for the six months ended December 31, 2025 increased 15 percent to $0.47 per share (based on 6.58 million average diluted shares outstanding) from $0.41 per share (based on 6.83 million average diluted shares outstanding) for the comparable six-month period last year. The increase was primarily attributable to a $673,000 higher recovery of credit losses and a $479,000 increase in net interest income, partly offset by a $527,000 increase in the provision for income taxes (of which $251,000 was attributable to the write off of deferred tax assets related to the expiration of non-qualified stock options) and a $266,000 increase in non-interest expense (primarily due to an increase in equipment expenses, salaries and employee benefits expenses and other operating expenses, including the $214.000 non-recurring item mentioned above).

"Our financial results for the December quarter were steady,” said Donavon P. Ternes, President and Chief Executive Officer. “Even in a highly competitive environment for loans and deposits, we continued to execute with discipline, maintaining strong underwriting standards and prudent pricing. Credit quality remains excellent, our net interest margin expanded, and operating expenses were well controlled. We continue to create value for our shareholders through share repurchases and a consistent quarterly cash dividend. Looking ahead, we are encouraged by a stable economic environment and believe that a normalizing yield curve positions us well for future performance,” concluded Ternes.

Return on average assets was 0.47 percent for the second quarter of fiscal 2026, compared to 0.55 percent in the first quarter of fiscal 2026 and 0.28 percent for the second quarter of fiscal 2025. Return on average stockholders’ equity for the second quarter of fiscal 2026 was 4.44 percent, compared to 5.17 percent for the first quarter of fiscal 2026 and 2.66 percent for the second quarter of fiscal 2025.

In the second quarter of fiscal 2026, net interest income increased $165,000 or two percent to $8.92 million from $8.76 million for the same quarter last year. The increase was due to a higher net interest margin, which rose 12 basis points to 3.03 percent from 2.91 percent in the same quarter last year, reflecting a higher yield on interest-earning assets and a decline in funding costs. The average yield on interest-earning assets increased seven basis points to 4.73 percent in the second quarter of fiscal 2026 from 4.66 percent in the same quarter last year, while average funding costs decreased five basis points to 1.87 percent from 1.92 percent, due to a lower cost of borrowings which was partly offset by a higher cost of deposits. These benefits were partially offset by a two percent decrease in the average balance of interest-earning assets, which was $1.18 billion in the second quarter of fiscal 2026, down from $1.20 billion in the same quarter last year, primarily due to decreases in the average balances of investment securities and loans receivable, partly offset by an increase in interest-earning deposits, mainly cash balances at the Federal Reserve Bank (“FRB”) of San Francisco.

Interest income on loans receivable increased slightly to $13.07 million in the second quarter of fiscal 2026, up from $13.05 million in the same quarter last year, primarily due to a higher average loan yield, partly offset by a slightly lower average loan balance. The average yield on loans receivable increased three basis points to 5.02 percent in the second quarter of fiscal 2026 from 4.99 percent in the same quarter last year. Adjustable-rate loans of approximately $111.8 million repriced upward in the second quarter of fiscal 2026 by approximately 23 basis points, from a weighted average rate of 6.74 percent to 6.97 percent. Net deferred loan cost amortization was $534,000 in the second quarter of fiscal 2026, up 40 percent from $381,000 in the same quarter last year. The average balance of loans receivable decreased $5.6 million, or one percent, to $1.04 billion in the second quarter of fiscal 2026 from $1.05 billion in the same quarter last year. Total loans originated for investment in the second quarter of fiscal 2026 were $42.1 million, up 16 percent from $36.4 million in the same quarter last year, while loan principal payments received in the second quarter of fiscal 2026 were $46.7 million, up 36 percent from $34.3 million in the same quarter last year.

Interest income from investment securities decreased $60,000, or 13 percent, to $411,000 in the second quarter of fiscal 2026 from $471,000 for the same quarter of fiscal 2025. This decrease was attributable to a lower average balance, partly offset by a higher average yield. The average balance of investment securities decreased $20.5 million, or 17 percent, to $103.3 million in the second quarter of fiscal 2026 from $123.8 million in the same quarter last year. The decrease in the average balance was due to scheduled principal payments and prepayments of investment securities. The average yield on investment securities increased seven basis points to 1.59 percent in the second quarter of fiscal 2026 from 1.52 percent for the same quarter last year. The increase in the average yield was primarily attributable to a lower premium amortization during the current quarter in comparison to the same quarter last year ($66,000 vs. $97,000) due to lower total principal repayments ($5.0 million vs. $5.3 million) and, to a lesser extent, the upward repricing of adjustable-rate mortgage-backed securities.

In the second quarter of fiscal 2026, the Bank received $214,000 in cash dividends from the Federal Home Loan Bank (“FHLB”) – San Francisco stock and other equity investments, slightly higher than the $213,000 in the same quarter last year, resulting from a higher average balance that was partly offset by a lower average yield. The average balance in the second quarter of fiscal 2026 was $10.3 million, up from $10.2 million in the same quarter of fiscal 2025, while the average yield decreased four basis points to 8.34 percent in the second quarter of fiscal 2026 from 8.38 percent in the same quarter last year.

Interest income from interest-earning deposits, primarily cash deposited at the FRB of San Francisco, was $253,000 in the second quarter of fiscal 2026, down $34,000 or 12 percent from $287,000 in the same quarter of fiscal 2025. The decrease was due to a lower average yield, partly offset by a higher average balance. The average yield earned on interest-earning deposits in the second quarter of fiscal 2026 was 3.92 percent, down 82 basis points from 4.74 percent in the same quarter last year. The decrease in the average yield was due to a lower average interest rate on the FRB’s reserve balances resulting from decreases in the targeted federal funds rate during the comparable periods. The average balance of the Company’s interest-earning deposits increased $1.6 million, or seven percent, to $25.3 million in the second quarter of fiscal 2026 from $23.7 million in the same quarter last year.

Interest expense on deposits for the second quarter of fiscal 2026 was $2.93 million, an increase of $251,000 or nine percent from $2.67 million for the same period last year. The increase was attributable to higher rates paid on deposits and a slightly higher average balance. The average cost of deposits was 1.32 percent in the second quarter of fiscal 2026, up nine basis points from 1.23 percent in the same quarter last year, primarily due to a greater proportion of time deposits, including brokered certificates of deposit which carry higher interest rates. The average balance of deposits was $876.4 million in the second quarter of fiscal 2026, up two percent from $863.1 million in the same quarter last year.

Transaction account balances, or “core deposits,” decreased $17.7 million, or three percent, to $558.8 million at December 31, 2025 from $576.5 million at June 30, 2025. Time deposits increased slightly to $313.7 million at December 31, 2025 from $312.3 million at June 30, 2025. Brokered certificates of deposit totaled $129.2 million at December 31, 2025, down slightly from $131.0 million at June 30, 2025. The weighted average cost of brokered certificates of deposit was 4.01 percent and 4.24 percent at December 31, 2025 and June 30, 2025, respectively.

Interest expense on borrowings, primarily comprised of FHLB advances, decreased $487,000, or 19 percent, to $2.10 million during the second quarter of fiscal 2026, compared to $2.59 million for the same period last year. This decrease was due to a $36.7 million, or 16 percent, decrease in average borrowings to $190.0 million from $226.7 million and, to a lesser extent, a 14 basis point decrease in average borrowing costs to 4.39 percent from 4.53 percent.

At December 31, 2025, the Bank had approximately $213.1 million of remaining borrowing capacity with the FHLB, an additional $193.3 million available through a borrowing facility with the FRB of San Francisco, and an unused unsecured federal funds borrowing facility of $50.0 million with its correspondent bank. Total available borrowing capacity across all sources was approximately $456.4 million at December 31, 2025.

During the second quarter of fiscal 2026, the Company recorded a recovery of credit losses of $158,000, which included a $12,000 recovery related to unfunded loan commitment reserves. This compares with a $586,000 provision of credit losses in the same quarter last year and a $626,000 recovery of credit losses in the first quarter of fiscal 2026 (the sequential quarter). The recovery of credit losses was primarily due to a decline in the expected life of the loan portfolio attributable to a decline in mortgage interest rates.

Non-performing assets, comprised solely of non-accrual loans secured by properties located in California, decreased $424,000, or 30 percent, to $990,000, representing 0.08 percent of total assets at December 31, 2025, compared to $1.4 million, or 0.11 percent, of total assets at June 30, 2025. At December 31, 2025, non-performing loans were comprised of four single-family loans and one multi-family loan, compared to seven single-family loans and one multi-family loan at June 30, 2025. At both dates, the Bank had no real estate owned and no loans 90 days or more past due that were still accruing interest. Additionally, no loan charge-offs occurred during the quarters ended December 31, 2025 and 2024.

Classified assets were $2.0 million at December 31, 2025, all of which are in substandard category. This compares to $5.0 million at June 30, 2025, consisting of $1.1 million of loans in the special mention category and $3.9 million of loans in the substandard category.

The allowance for credit losses on loans held for investment was $5.6 million, or 0.55 percent of gross loans held for investment, at December 31, 2025, down from $6.4 million, or 0.62 percent of gross loans held for investment, at June 30, 2025. The decrease in the allowance for credit losses was due primarily to a shorter estimated average life of the loan portfolio attributable to a decline in mortgage interest rates. Management believes, based on currently available information, the allowance for credit losses is sufficient to absorb expected losses inherent in loans held for investment at December 31, 2025.

Non-interest income increased $72,000, or nine percent, to $917,000 in the second quarter of fiscal 2026 from $845,000 in the same period last year, primarily due to an increase in loan servicing and other fees attributable to higher loan prepayment fees. On a sequential quarter basis, non-interest income increased $104,000, or 13 percent, primarily due to increases in other non-interest income, attributable primarily to a higher unrealized gain on other equity investments and no losses on loan sales in the current quarter compared to a $34,000 loss on the sale of loans in the prior sequential quarter.

Non-interest expense increased $155,000, or two percent, to $7.95 million in the second quarter of fiscal 2026 from $7.79 million for the same quarter last year, primarily due to a $176,000, or 20 percent, increase in other non-interest expenses and a $100,000, or 26 percent, increase in equipment expenses, partly offset by decreases in salaries and employee benefits expenses and premises and occupancy expenses. The higher other non-interest expenses were primarily due to a non-recurring $214,000 pre-litigation voluntary mediation settlement expense related to an employment matter. The increase in equipment expense was due to software upgrades and maintenance. On a sequential quarter basis, non-interest expense increased $315,000, or four percent, as compared to the first quarter of fiscal 2026, primarily due to the non-recurring item mentioned above.

The Company’s efficiency ratio, defined as non-interest expense divided by the sum of net interest income and non-interest income, in the second quarter of fiscal 2026 was 80.77 percent, an improvement from 81.15 percent in the same quarter last year, but slightly higher compared to 78.35 percent in the first quarter of fiscal 2026 (the sequential quarter). The improvement in the efficiency ratio from the comparable quarter last year was due to a higher net interest income and a higher total non-interest income, partly offset by a higher total non-interest expense.

The Company’s provision for income taxes was $614,000 for the second quarter of fiscal 2026, up 74 percent from $352,000 in the same quarter last year and down 42 percent from $1.05 million for the first quarter of fiscal 2026 (the sequential quarter). The increase during the current quarter compared to the same quarter last year was due to a higher pre-tax income with the effective tax rate of 30.0 percent and 28.8 percent, respectively. The decrease during the current quarter compared to the sequential quarter was due to a lower pre-tax income and the $251,000 adjustment recorded in the prior sequential quarter, attributable to the write-off of deferred tax assets associated with expired non-qualified stock options that reduced the expected tax benefit.

The Company repurchased 96,260 shares of its common stock at an average cost of $15.80 per share during the quarter ended December 31, 2025. As of December 31, 2025, a total of 54,061 shares remained available for future purchase under the Company’s current repurchase program.

The Bank currently operates 13 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire).

The Company will host a conference call for institutional investors and bank analysts on Wednesday, January 28, 2026 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-800-715-9871 and referencing Conference ID number 7361828. An audio replay of the conference call will be available through Wednesday, February 4, 2026 by dialing 1-800-770-2030 and referencing Conference ID number 7361828.

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 various 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 actual results to differ materially from those express or implied by these forward-looking statements and from historical performance. Factors that could cause actual results to differ materially include, but are not limited to: adverse economic conditions in the Company’s local market areas or other markets in which it has lending relationships; changes in employment levels, labor shortages, persistent inflation, recessionary pressures, or slowing economic growth; changes in interest rate levels and volatility, and the timing and pace of such changes, including actions by the Board of Governors of the Federal Reserve System (the “Federal Reserve”), which could adversely affect the Company’s revenues and expenses, the value of its assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and related monetary and fiscal policy responses, and their effect on consumer and business behavior; the effects of a federal government shutdown, debt ceiling standoff, or other fiscal policy uncertainty; credit risks associated with lending activities, including loan delinquencies, charge-offs, changes in the allowance for credit losses (“ACL”), and the provision for credit losses; increased competitive pressures, including repricing and competitors’ pricing initiatives, and their impact on the Company’s market position and loan and deposit products; the quality and composition of the Company’s securities portfolio and the impact of adverse changes in the securities markets; fluctuations in deposits; secondary market conditions for loans and the Company’s ability to sell loans in the secondary market; liquidity risks, including the Company’s ability to borrow funds or raise additional capital, if necessary; the Company’s ability to successfully implement key growth initiatives and strategic priorities; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry on investor and depositor sentiment; results of examinations by regulatory authorities, including the possibility that a regulatory authority may, among other things, institute a formal or informal enforcement action against the Company or its bank subsidiary that could require the Company to increase its ACL, write down assets, alter its regulatory capital position, affect its ability to borrow funds or maintain or increase deposits, or impose additional requirements or restrictions, any of which could adversely affect its liquidity and earnings; the Company’s ability to adapt to rapid technological changes, including advancements related to artificial intelligence, digital banking platforms, and cybersecurity; legislative or regulatory changes, including but not limited to changes in capital requirements, banking regulation, tax laws, or consumer protection laws; the use of estimates in determining the fair value of assets, which may prove inaccurate; vulnerabilities in information systems or third-party service providers, including disruptions, breaches, or cyberattacks; geopolitical developments and international conflicts, including but not limited to tensions or instability in Eastern Europe, the Middle East, South America and Asia, or the imposition of new or increased tariffs or trade restrictions, which could disrupt financial markets, global supply chains, commodity prices, or economic activity; staffing fluctuations in response to changes in product demand or corporate implementation strategies; the Company’s ability to pay dividends on its common stock; environmental, social and governance matters; effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, domestic political unrest, and other external events; and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other reports filed with or furnished to the Securities and Exchange Commission (“SEC”), which are available on the Company’s 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 2026 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.