Provident Financial Holdings Reports Fourth Quarter and Fiscal 2020 Results

About this update from Provident Financial Holdings, Inc.

Company Reports Net Income of $1.58 Million in the June 2020 Quarter, up 101% from the June 2019 Quarter Non-Interest Expense Declines by 32% in the June 2020 Quarter from the June 2019 Quarter Loans Held for Investment Increase 3% to $902.8 Million from June 30, 2019 Total Deposits Increase 6% to $893.0 Million from June 30, 2019 Non-Performing Assets Decrease 21% to $4.9 Million at June 30, 2020 in Comparison to $6.2 Million at June 30, 2019 RIVERSIDE, Calif. , July 28, 2020 (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 results for the fiscal year ended June 30, 2020 . For the quarter ended June 30, 2020 , the Company reported net income of $1.58 million , or $0.21 per diluted share (on 7.49 million average diluted shares outstanding), up from net income of $787,000 , or $0.10 per diluted share (on 7.63 million average diluted shares outstanding), in the comparable period a year ago. Compared to the same quarter last year, the increase in earnings was primarily attributable to lower non-interest expenses (mainly, lower salaries and employee benefits expenses related to fewer employees and reduced incentive compensation and lower equipment expenses resulting from the scaling back of saleable single-family loan originations), partly offset by lower net interest income and a higher provision for loan losses. “Provident is profitable, strongly capitalized and well-positioned to serve the residents and businesses of the Inland Empire. We have been able to navigate the COVID-19 pandemic reasonably well and we will continue to operate the Company in a prudent manner,” said Craig G. Blunden , Chairman and Chief Executive Officer of the Company. “I specifically wish to recognize and thank our employees who are working diligently to support our customers and communities under unprecedented circumstances,” said Mr. Blunden . Return on average assets for the fourth quarter of fiscal 2020 was 0.55 percent, up from 0.29 percent for the same period of fiscal 2019; and return on average stockholders’ equity for the fourth quarter of fiscal 2020 was 5.14 percent, up from 2.60 percent for the comparable period of fiscal 2019. On a sequential quarter basis, the $1.58 million net income for the fourth quarter of fiscal 2020 reflects a 38 percent increase from $1.14 million in the third quarter of fiscal 2020. The increase in earnings for the fourth quarter of fiscal 2020 compared to the third quarter of fiscal 2020 was primarily attributable to decreases of $902,000 in non-interest expenses and $426,000 in the provision for loan losses, partly offset by a $600,000 reduction in net interest income. Diluted earnings per share for the fourth quarter of fiscal 2020 were $0.21 per share, up 40 percent from the $0.15 per share during the third quarter of fiscal 2020. Return on average assets was 0.55 percent for the fourth quarter of fiscal 2020 compared to 0.41 percent in the third quarter of fiscal 2020; and return on average stockholders’ equity for the fourth quarter of fiscal 2020 was 5.14 percent, compared to 3.70 percent for the third quarter of fiscal 2020. For the fiscal year ended June 30, 2020 net income increased $3.27 million , or 74 percent, to $7.69 million from $4.42 million in the comparable period ended June 30, 2019 ; and diluted earnings per share for the fiscal year ended June 30, 2020 increased 74 percent to $1.01 per share (on 7.58 million average diluted shares outstanding) from $0.58 per share (on 7.60 million average diluted shares outstanding) for the comparable 12-month period last year. Compared to the same period last year, the increase in earnings was primarily attributable to a $16.34 million decrease in non-interest expense, partly offset by a $7.99 million decrease in non-interest income (mainly, a $7.27 million decrease in the gain on sale of loans), a $1.77 million decrease in net interest income and a $1.59 million change in the provision for loan losses to a $1.12 million provision from a $475,000 recovery. The decrease in non-interest expense was mainly attributable to the scaling back of saleable single-family loan originations resulting in an $11.24 million decrease in salaries and employee benefits expenses (primarily related to fewer employees and lower incentive compensation), a $1.57 million decrease in premises and occupancy expenses, a $1.35 million decrease in equipment expenses and a $1.19 million decrease in other operating expenses (primarily decreases in loan origination related expenses). Net interest income decreased $1.08 million , or 12 percent, to $8.29 million in the fourth quarter of fiscal 2020 from $9.37 million for the same quarter of fiscal 2019, attributable to a decrease in the net interest margin, partly offset by a higher average interest-earning assets balance. The net interest margin during the fourth quarter of fiscal 2020 decreased 57 basis points to 2.95 percent from 3.52 percent in the same quarter last year, primarily due to a decrease in the average yield of interest-earning assets, partly offset by a much smaller decrease in the average cost of interest-bearing liabilities. The average yield on interest-earning assets decreased by 60 basis points to 3.46 percent in the fourth quarter of fiscal 2020 from 4.06 percent in the same quarter last year reflecting in part recent significant decreases in the targeted Federal Funds Rate; while the average cost of interest-bearing liabilities decreased by three basis points to 0.57 percent in the fourth quarter of fiscal 2020 from 0.60 percent in the same quarter last year. The average balance of interest-earning assets increased by $58.1 million , or five percent, to $1.12 billion in the fourth quarter of fiscal 2020 from $1.06 billion in the same quarter last year. The average balance of interest-bearing liabilities increased by $58.0 million , or six percent, to $1.01 billion in the fourth quarter of fiscal 2020 from $955.5 million in the same quarter last year. The average balance of loans receivable (including loans held for sale in the prior year) increased by $14.7 million , or two percent, to $894.5 million in the fourth quarter of fiscal 2020 from $879.8 million in the same quarter of fiscal 2019, due to an increase in loans held for investment, partly offset by a decrease in loans held for sale. There were no loans held for sale during the fourth quarter of fiscal 2020. The average yield on loans receivable decreased by 27 basis points to 4.08 percent in the fourth quarter of fiscal 2020 from an average yield of 4.35 percent in the same quarter of fiscal 2019. Net deferred loan cost amortization in the fourth quarter of fiscal 2020 increased 22% to $495,000 from $405,000 in the same quarter of fiscal 2019 due primarily to higher loan payoffs. Total loans originated and purchased for investment in the fourth quarter of fiscal 2020 were $44.2 million , down 14 percent from $51.2 million in the same quarter of fiscal 2019. Loan principal payments received in the fourth quarter of fiscal 2020 were $56.5 million , up three percent from $54.8 million in the same quarter of fiscal 2019. The average balance of investment securities decreased by $19.7 million , or 19 percent, to $85.3 million in the fourth quarter of fiscal 2020 from $105.0 million in the same quarter of fiscal 2019. The average yield on investment securities decreased 36 basis points to 2.16 percent in the fourth quarter of fiscal 2020 from 2.52 percent for the same quarter of fiscal 2019. The decrease in the average yield was primarily attributable to investment purchases with a lower average yield, partly offset by a lower premium amortization ( $110,000 vs. $148,000 ). During the fourth quarter of fiscal 2020, the Bank purchased investment securities totaling $54.1 million with an average yield of approximately 1.16%. In the fourth quarter of fiscal 2020, the Federal Home Loan Bank – San Francisco (“FHLB”) distributed a $102,000 cash dividend to the Bank on its FHLB stock, down 28 percent from $142,000 in the same quarter last year. The average balance of the Company’s interest-earning deposits, primarily cash with the Federal Reserve Bank of San Francisco , increased $63.3 million , or 88 percent, to $135.1 million in the fourth quarter of fiscal 2020 from $71.8 million in the same quarter of fiscal 2019. The average yield earned on interest-earning deposits in the fourth quarter of fiscal 2020 was 0.11 percent, down 224 basis points from 2.35 percent in the same quarter of fiscal 2019 largely as a result of decreases in the targeted Federal Funds Rate since July 2019 . Average deposits increased $21.2 million , or two percent, to $875.6 million in the fourth quarter of fiscal 2020 from $854.4 million in the same quarter of fiscal 2019, primarily due to increases in transaction accounts resulting primarily from government assistance programs related to the COVID-19 pandemic, partly offset by a managed run-off of higher cost time deposits. The average cost of deposits improved, decreasing by six basis points to 0.30 percent in the fourth quarter of fiscal 2020 from 0.36 percent in the same quarter last year. Transaction account balances or “core deposits” increased $74.9 million , or 12 percent, to $723.0 million at June 30, 2020 from $648.1 million at June 30, 2019 , while time deposits decreased $23.1 million , or 12 percent, to $170.0 million at June 30, 2020 from $193.1 million at June 30, 2019 . The average balance of borrowings, which consisted of FHLB advances, increased $36.8 million , or 36 percent, to $137.9 million while the average cost of borrowings decreased 33 basis points to 2.32 percent in the fourth quarter of fiscal 2020, compared to an average balance of $101.1 million with an average cost of 2.65 percent in the same quarter of fiscal 2019. The increase in the average balance of borrowings was primarily due to new borrowings with a lower average cost obtained during fiscal 2020. During the fourth quarter of fiscal 2020, the Company recorded a provision for loan losses of $448,000 , in contrast to a $25,000 recovery from the allowance for loan losses recorded during the same period of fiscal 2019 but lower than the provision for loan losses of $874,000 recorded in the third quarter of fiscal 2020 (sequential quarter). The provision for loan losses in the June 2020 and March 2020 quarters was primarily due to a qualitative component established in our allowance for loan losses methodology in response to the COVID-19 pandemic and its continued and forecast adverse economic impact. Non-performing assets, with underlying collateral located in California , decreased $1.3 million , or 21 percent, to $4.9 million , or 0.42 percent of total assets, at June 30, 2020 , compared to $6.2 million , or 0.57 percent of total assets, at June 30, 2019 . The non-performing loans at June 30, 2020 are comprised of 18 single-family loans ( $4.9 million ) and one commercial business loan ( $31,000 ). At both June 30, 2020 and June 30, 2019 , there was no real estate owned. Net loan recoveries for the quarter ended June 30, 2020 were $7,000 or 0.00 percent (annualized) of average loans receivable, in contrast to net loan recoveries of $21,000 or 0.01 percent (annualized) of average loans receivable for the quarter ended June 30, 2019 and net loan recoveries of $15,000 or 0.01 percent (annualized) of average loans receivable for the quarter ended March 31, 2020 (sequential quarter). Classified assets at June 30, 2020 were $14.1 million , comprised of $8.6 million of loans in the special mention category, $5.5 million of loans in the substandard category and no real estate owned; while classified assets at June 30, 2019 were $16.2 million , comprised of $8.6 million of loans in the special mention category, $7.6 million of loans in the substandard category and no real estate owned. For the quarter ended June 30, 2020 , two new loans were restructured from their original terms and classified as restructured loans. The outstanding balance of restructured loans at June 30, 2020 was $2.6 million (eight loans), down 32 percent from $3.8 million (eight loans) at June 30, 2019 . As of June 30, 2020 , all of the restructured loans were classified as substandard non-accrual. As of June 30, 2020 , 65% or $1.7 million of the restructured loans have a current payment status. The Bank has received numerous requests from borrowers for some type of payment relief due to the COVID-19 pandemic. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these restructurings are not considered to be troubled debt restructurings at June 30, 2020 pursuant to applicable accounting guidance. The primary method of relief is to allow the borrower to defer loan payments for up to six months, although we have also waived late fees and suspended foreclosure proceedings. As of June 30, 2020 , there were 48 single-family loans in forbearance with outstanding balances of approximately $19.9 million or 2.20 percent of gross loans held for investment and five multi-family and commercial real estate loans in forbearance with outstanding balances of approximately $2.7 million or 0.29 percent of gross loans held for investment. Interest income is recognized during the forbearance period unless the loans are classified as non-performing. After the payment deferral period (up to six months), scheduled loan payments will once again become due and payable. The forbearance amount will be due and payable in full as a balloon payment at the end of the loan term or sooner if the loan becomes due and payable in full at an earlier date. In addition, as of June 30, 2020 , the Bank had pending requests for payment relief for an additional seven loans totaling approximately $3.0 million . The Company believes the steps it is taking are necessary to effectively manage the loan portfolio and assist its customers through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic. The allowance for loan losses was $8.3 million at June 30, 2020 , or 0.91 percent of gross loans held for investment, compared to $7.1 million at June 30, 2019 , or 0.80 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, 2020 under the incurred loss methodology. Non-interest income decreased by $310,000 , or 24 percent, to $1.01 million in the fourth quarter of fiscal 2020 from $1.32 million in the same period of fiscal 2019, primarily due to decreases in deposit account fees and card and processing fees reflecting reduced transactions as a result of the COVID-19 pandemic. On a sequential quarter basis, non-interest income decreased $96,000 , or nine percent, primarily as a result of a decrease in deposit account fees. Non-interest expenses decreased $3.06 million , or 32 percent, to $6.60 million in the fourth quarter of fiscal 2020 from $9.66 million in the same quarter last year resulting primarily from the scaling back of saleable single-family loan originations. The decrease was due primarily to lower salaries and employee benefits expenses resulting from fewer employees and lower incentive compensation and, to a lesser extent, reductions in equipment expenses, premises and occupancy expenses and professional expenses. On a sequential quarter basis, non-interest expenses decreased $902,000 or 12 percent to $6.60 million from $7.51 million , primarily due to lower salaries and employee benefits expenses resulting from fewer employees and lower incentive compensation. The Company’s efficiency ratio in the fourth quarter of fiscal 2020 was 71 percent, improving from 90 percent in the same quarter last year and 75 percent in the third quarter of fiscal 2020 (sequential quarter). The Company’s provision for income tax was $660,000 for the fourth quarter of fiscal 2020, up 148 percent from $266,000 in the same quarter last year primarily due to higher pre-tax income. The effective tax rate in the fourth quarter of fiscal 2020 was 29.41%. The Company believes that the tax provision recorded in the fourth quarter of fiscal 2020 reflects its current federal and state income tax obligations. The Company did not repurchase any shares of its common stock during the quarter ended June 30, 2020 . As of June 30, 2020 , a total of 371,815 shares or 100 percent of the shares authorized for repurchase under the April 2020 stock repurchase plan are available to purchase. 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, July 29, 2020 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-844-291-6362 and referencing access code number 6176327. An audio replay of the conference call will be available through Wednesday, August 5, 2020 by dialing 1-866-207-1041 and referencing access code number 2795378. 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 the effect of the COVID-19 pandemic, including on Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes,; including as a result of the COVID-19 pandemic; 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 2021 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 Contacts: Craig G. Blunden Chairman and Chief Executive Officer Donavon P. Ternes President, Chief Operating Officer and Chief Financial Officer (951) 686-606 PROVIDENT FINANCIAL HOLDINGS, INC. Condensed Consolidated Statements of Financial Condition (Unaudited –In Thousands, Except Share Information) June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Assets Cash and cash equivalents $ 116,034 $ 84,250 $ 48,233 $ 54,515 $ 70,632 Investment securities – held to maturity, at cost 118,627 69,482 77,161 85,088 94,090 Investment securities - available for sale, at fair value 4,717 4,828 5,237 5,517 5,969 Loans held for investment, net of allowance for loan losses of $8,265 ; $7,810 ; $6,921 ; $6,929 and $7,076 , respectively; includes $2,258 ; $3,835 ; $4,173 ; $4,386 and $5,094 at fair value, respectively 902,796 914,307 941,729 924,314 879,925 Accrued interest receivable 3,271 3,154 3,292 3,380 3,424 FHLB – San Francisco stock 7,970 8,199 8,199 8,199 8,199 Premises and equipment, net 10,254 10,606 10,967 11,215 8,226 Prepaid expenses and other assets 13,168 12,741 12,569 13,068 14,385 Total assets $ 1,176,837 $ 1,107,567 $ 1,107,387 $ 1,105,296 $ 1,084,850 Liabilities and Stockholders’ Equity Liabilities: Non interest-bearing deposits $ 118,771 $ 86,585 $ 85,846 $ 85,338 $ 90,184 Interest-bearing deposits 774,198 749,246 747,804 746,398 751,087 Total deposits 892,969 835,831 833,650 831,736 841,271 Borrowings 141,047 131,070 131,085 131,092 101,107 Accounts payable, accrued interest and other liabilities 18,845 17,508 18,876 20,299 21,831 Total liabilities 1,052,861 984,409 983,611 983,127 964,209 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; 18,097,615; 18,097,615; 18,097,615; 18,091,865 and 18,081,365 shares issued, respectively; 7,436,315; 7,436,315; 7,483,071; 7,479,682 and 7,486,106 shares outstanding, respectively) 181 181 181 181 181 Additional paid-in capital 95,593 95,355 95,118 94,795 94,351 Retained earnings 194,345 193,802 193,704 192,354 190,839 Treasury stock at cost (10,661,300; 10,661,300; 10,614,544; 10,612,183 and 10,595,259 shares, respectively) (166,247 ) (166,247 ) (165,360 ) (165,309 ) (164,891 ) Accumulated other comprehensive income, net of tax 104 67 133 148 161 Total stockholders’ equity 123,976 123,158 123,776 122,169 120,641 Total liabilities and stockholders’ equity $ 1,176,837 $ 1,107,567 $ 1,107,387 $ 1,105,296 $ 1,084,850 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 , 2020 2019 2020 2019 Interest income: Loans receivable, net $ 9,128 $ 9,576 $ 39,145 $ 40,092 Investment securities 461 661 2,120 2,042 FHLB – San Francisco stock 102 142 534 707 Interest-earning deposits 36 426 657 1,537 Total interest income 9,727 10,805 42,456 44,378 Interest expense: Checking and money market deposits 91 101 424 428 Savings deposits 100 135 496 572 Time deposits 452 530 2,023 2,381 Borrowings 794 669 3,112 2,827 Total interest expense 1,437 1,435 6,055 6,208 Net interest income 8,290 9,370 36,401 38,170 Provision (recovery) for loan losses 448 (25 ) 1,119 (475 ) Net interest income, after provision (recovery) for loan losses 7,842 9,395 35,282 38,645 Non-interest income: Loan servicing and other fees 188 188 819 1,051 (Loss) gain on sale of loans, net (17 ) 21 (132 ) 7,135 Deposit account fees 289 443 1,610 1,928 Card and processing fees 333 405 1,454 1,568 Other 212 258 769 829 Total non-interest income 1,005 1,315 4,520 12,511 Non-interest expense: Salaries and employee benefits 3,963 5,396 18,913 30,149 Premises and occupancy 862 1,133 3,465 5,038 Equipment 274 1,141 1,129 2,474 Professional expenses 349 493 1,439 1,864 Sales and marketing expenses 267 312 773 980 Deposit insurance premiums and regulatory assessments 130 129 227 590 Other 758 1,053 2,954 4,141 Total non-interest expense 6,603 9,657 28,900 45,236 Income before taxes 2,244 1,053 10,902 5,920 Provision for income taxes 660 266 3,213 1,503 Net income $ 1,584 $ 787 $ 7,689 $ 4,417 Basic earnings per share $ 0.21 $ 0.10 $ 1.03 $ 0.59 Diluted earnings per share $ 0.21 $ 0.10 $ 1.01 $ 0.58 Cash dividends per share $ 0.14 $ 0.14 $ 0.56 $ 0.56 PROVIDENT FINANCIAL HOLDINGS, INC. Condensed Consolidated Statements of Operations – Sequential Quarters (Unaudited – In Thousands, Except Share Information) Quarter Ended June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Interest income: Loans receivable, net $ 9,128 $ 9,622 $ 10,320 $ 10,075 $ 9,576 Investment securities 461 478 567 614 661 FHLB – San Francisco stock 102 144 145 143 142 Interest-earning deposits 36 186 189 246 426 Total interest income 9,727 10,430 11,221 11,078 10,805 Interest expense: Checking and money market deposits 91 106 117 110 101 Savings deposits 100 131 131 134 135 Time deposits 452 509 530 532 530 Borrowings 794 794 804 720 669 Total interest expense 1,437 1,540 1,582 1,496 1,435 Net interest income 8,290 8,890 9,639 9,582 9,370 Provision (recovery) for loan losses 448 874 (22 ) (181 ) (25 ) Net interest income, after provision (recovery) for loan losses 7,842 8,016 9,661 9,763 9,395 Non-interest income: Loan servicing and other fees 188 131 367 133 188 (Loss) gain on sale of loans, net (17 ) 14 (43 ) (86 ) 21 Deposit account fees 289 423 451 447 443 Card and processing fees 333 360 371 390 405 Other 212 173 198 186 258 Total non-interest income 1,005 1,101 1,344 1,070 1,315 Non-interest expense: Salaries and employee benefits 3,963 4,966 4,999 4,985 5,396 Premises and occupancy 862 845 880 878 1,133 Equipment 274 314 262 279 1,141 Professional expenses 349 351 331 408 493 Sales and marketing expenses 267 177 212 117 312 Deposit insurance premiums and regulatory assessments 130 54 59 (16 ) 129 Other 758 798 811 587 1,053 Total non-interest expense 6,603 7,505 7,554 7,238 9,657 Income before taxes 2,244 1,612 3,451 3,595 1,053 Provision for income taxes 660 467 1,053 1,033 266 Net income $ 1,584 $ 1,145 $ 2,398 $ 2,562 $ 787 Basic earnings per share $ 0.21 $ 0.15 $ 0.32 $ 0.34 $ 0.10 Diluted earnings per share $ 0.21 $ 0.15 $ 0.31 $ 0.33 $ 0.10 Cash dividends per share $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited - Dollars in Thousands, Except Share Information) Quarter Ended June 30 , Fiscal Year Ended June 30 , 2020 2019 2020 2019 SELECTED FINANCIAL RATIOS: Return on average assets 0.55 % 0.29 % 0.69 % 0.39 % Return on average stockholders’ equity 5.14 % 2.60 % 6.26 % 3.63 % Stockholders’ equity to total assets 10.53 % 11.12 % 10.53 % 11.12 % Net interest spread 2.89 % 3.46 % 3.30 % 3.40 % Net interest margin 2.95 % 3.52 % 3.36 % 3.47 % Efficiency ratio 71.04 % 90.38 % 70.62 % 89.26 % Average interest-earning assets to average interest-bearing liabilities 110.80 % 111.45 % 111.32 % 111.14 % SELECTED FINANCIAL DATA: Basic earnings per share $ 0.21 $ 0.10 $ 1.03 $ 0.59 Diluted earnings per share $ 0.21 $ 0.10 $ 1.01 $ 0.58 Book value per share $ 16.67 $ 16.12 $ 16.67 $ 16.12 Shares used for basic EPS computation 7,436,315 7,496,457 7,467,577 7,484,925 Shares used for diluted EPS computation 7,485,019 7,626,661 7,576,182 7,596,268 Total shares issued and outstanding 7,436,315 7,486,106 7,436,315 7,486,106 LOANS ORIGINATED AND PURCHASED FOR INVESTMENT: Mortgage Loans: Single-family $ 11,206 $ 31,982 $ 107,160 $ 88,666 Multi-family 32,876 14,513 122,366 58,836 Commercial real estate - 2,882 14,468 16,559 Construction - 1,846 3,983 7,159 Other 143 1,846 143 7,159 Consumer loans - - 1 - Total loans originated and purchased for investment $ 44,225 $ 51,223 $ 248,121 $ 171,220 LOANS ORIGINATED FOR SALE: Retail originations $ - $ 9,593 $ - $ 296,992 Wholesale originations - 4,057 - 170,102 Total loans originated for sale $ - $ 13,650 $ - $ 467,094 LOANS SOLD: Servicing released $ - $ 40,956 $ - $ 551,754 Servicing retained - 2,003 - 7,196 Total loans sold $ - $ 42,959 $ - $ 558,950 PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited - Dollars in Thousands, Except Share Information) Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended 06/30/20 03/31/20 12/31/19 09/30/19 06/30/19 SELECTED FINANCIAL RATIOS: Return on average assets 0.55 % 0.41 % 0.87 % 0.95 % 0.29 % Return on average stockholders’ equity 5.14 % 3.70 % 7.81 % 8.46 % 2.60 % Stockholders’ equity to total assets 10.53 % 11.12 % 11.18 % 11.05 % 11.12 % Net interest spread 2.89 % 3.23 % 3.53 % 3.58 % 3.46 % Net interest margin 2.95 % 3.30 % 3.59 % 3.64 % 3.52 % Efficiency ratio 71.04 % 75.12 % 68.78 % 67.95 % 90.38 % Average interest-earning assets to average interest-bearing liabilities 110.80 % 111.39 % 111.43 % 111.61 % 111.45 % SELECTED FINANCIAL DATA: Basic earnings per share $ 0.21 $ 0.15 $ 0.32 $ 0.34 $ 0.10 Diluted earnings per share $ 0.21 $ 0.15 $ 0.31 $ 0.33 $ 0.10 Book value per share $ 16.67 $ 16.56 $ 16.54 $ 16.33 $ 16.12 Average shares used for basic EPS 7,436,315 7,468,932 7,482,300 7,482,435 7,496,457 Average shares used for diluted EPS 7,485,019 7,590,348 7,658,050 7,647,763 7,626,661 Total shares issued and outstanding 7,436,315 7,436,315 7,483,071 7,479,682 7,486,106 LOANS ORIGINATED AND PURCHASED FOR INVESTMENT: Mortgage Loans: Single-family $ 11,206 $ 9,654 $ 52,671 $ 33,629 $ 31,982 Multi-family 32,876 12,850 20,164 56,476 14,513 Commercial real estate - 5,570 6,479 2,419 2,882 Construction - 774 2,313 896 1,846 Other 143 - - - - Consumer loans - - 1 - - Total loans originated and purchased for investment $ 44,225 $ 28,848 $ 81,628 $ 93,420 $ 51,223 LOANS ORIGINATED FOR SALE: Retail originations $ - $ - $ - $ - $ 9,593 Wholesale originations - - - - 4,057 Total loans originated for sale $ - $ - $ - $ - $ 13,650 LOANS SOLD: Servicing released $ - $ - $ - $ - $ 40,956 Servicing retained - - - - 2,003 Total loans sold $ - $ - $ - $ - $ 42,959 PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited - Dollars in Thousands) As of As of As of As of As of 06/30/20 03/31/20 12/31/19 09/30/19 06/30/19 ASSET QUALITY RATIOS AND DELINQUENT LOANS: Recourse reserve for loans sold $ 270 $ 250 $ 250 $ 250 $ 250 Allowance for loan losses $ 8,265 $ 7,810 $ 6,921 $ 6,929 $ 7,076 Non-performing loans to loans held for investment, net 0.55 % 0.40 % 0.36 % 0.57 % 0.71 % Non-performing assets to total assets 0.42 % 0.33 % 0.31 % 0.47 % 0.57 % Allowance for loan losses to gross loans held for investment . 0.91 % 0.85 % 0.73 % 0.74 % 0.80 % Net loan charge-offs (recoveries) to average loans receivable (annualized) 0.00 % (0.01 )% (0.01 )% (0.02 )% (0.01 )% Non-performing loans $ 4,924 $ 3,635 $ 3,427 $ 5,230 $ 6,218 Loans 30 to 89 days delinquent $ 219 $ 2,827 $ 986 $ 990 $ 665 Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended 06/30/20 03/31/20 12/31/19 09/30/19 06/30/19 Provision (recovery) for loan losses $ 448 $ (874 ) $ (22 ) $ (81 ) $ (25 ) Net loan charge-offs (recoveries) $ (7 ) $ (15 ) $ (14 ) $ (34 ) $ (21 ) As of As of As of As of As of 06/30/20 03/31/20 12/31/19 09/30/19 06/30/19 REGULATORY CAPITAL RATIOS (BANK): Tier 1 leverage ratio 10.13 % 10.36 % 10.24 % 10.21 % 10.50 % Common equity tier 1 capital ratio 17.51 % 17.26 % 16.62 % 16.32 % 18.00 % Tier 1 risk-based capital ratio 17.51 % 17.26 % 16.62 % 16.32 % 18.00 % Total risk-based capital ratio 18.76 % 18.45 % 17.65 % 17.37 % 19.13 % As of June 30 , 2020 2019 Balance Rate(1) Balance Rate(1) INVESTMENT SECURITIES: Held to maturity: Certificates of deposit $ 800 1.53 % $ 800 2.63 % U.S. SBA securities 2,064 0.60 2,896 2.85 U.S. government sponsored enterprise MBS 115,763 1.85 90,394 2.84 Total investment securities held to maturity $ 118,627 1.83 % $ 94,090 2.84 % Available for sale (at fair value): U.S. government agency MBS $ 2,943 3.32 % $ 3,613 3.86 % U.S. government sponsored enterprise MBS 1,577 3.75 2,087 4.75 Private issue collateralized mortgage obligations 197 3.70 269 4.66 Total investment securities available for sale $ 4,717 3.48 % $ 5,969 4.21 % Total investment securities $ 123,344 1.89 % $ 100,059 2.92 % (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 , 2020 2019 Balance Rate(1) Balance Rate(1) LOANS HELD FOR INVESTMENT: Held to maturity: Single-family (1 to 4 units) $ 298,810 4.04 % $ 324,952 4.50 % Multi-family (5 or more units) 491,903 4.24 439,041 4.52 Commercial real estate 105,235 4.75 111,928 4.92 Construction 7,801 6.35 4,638 7.34 Other 143 5.25 167 6.50 Commercial business 480 5.99 478 6.72 Consumer 94 15.00 134 15.50 Total loans held for investment 904,466 4.25 % 881,338 4.58 % Advance payments of escrows 68 53 Deferred loan costs, net 6,527 5,610 Allowance for loan losses (8,265 ) (7,076 ) Total loans held for investment, net $ 902,796 $ 879,925 Purchased loans serviced by others included above $ 23,899 3.71 % $ 33,934 3.78 % (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 , 2020 2019 Balance Rate(1) Balance Rate(1) DEPOSITS: Checking accounts – non interest-bearing $ 118,771 - % $ 90,184 - % Checking accounts – interest-bearing 290,463 0.10 257,909 0.12 Savings accounts 273,769 0.13 264,387 0.20 Money market accounts 39,989 0.22 35,646 0.28 Time deposits 169,977 0.95 193,145 1.12 Total deposits $ 892,969 0.26 % $ 841,271 0.37 % BORROWINGS: Overnight $ - - % $ - - % Three months or less - - - - Over three to six months 15,000 2.62 - - Over six months to one year 15,000 2.52 - - Over one year to two years 31,047 1.90 20,000 3.85 Over two years to three years 30,000 1.92 21,107 2.06 Over three years to four years 30,000 2.25 10,000 2.25 Over four years to five years 20,000 2.70 30,000 2.25 Over five years - - 20,000 2.70 Total borrowings $ 141,047 2.23 % $ 101,107 2.62 % (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, 2020 June 30, 2019 Balance Rate(1) Balance Rate(1) SELECTED AVERAGE BALANCE SHEETS: Held to maturity: Loans receivable, net (2) $ 894,522 4.08 % $ 879,835 4.35 % Investment securities 85,255 2.16 105,024 2.52 FHLB – San Francisco stock 8,020 5.09 8,199 6.93 Interest-earning deposits 135,138 0.11 71,768 2.35 Total interest-earning assets $ 1,122,935 3.46 % $ 1,064,826 4.06 % Total assets $ 1,154,834 $ 1,095,818 Deposits $ 875,628 0.30 % $ 854,359 0.36 % Borrowings 137,871 2.32 101,112 2.65 Total interest-bearing liabilities $ 1,013,499 0.57 % $ 955,471 0.60 % Total stockholders’ equity $ 123,256 $ 121,129 (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 sale at fair value for the quarter ended June 30, 2019 . Fiscal Year Ended Fiscal Year Ended June 30, 2020 June 30, 2019 Balance Rate(1) Balance Rate(1) SELECTED AVERAGE BALANCE SHEETS: Held to maturity: Loans receivable, net (2) $ 915,353 4.28 % $ 926,003 4.33 % Investment securities 86,761 2.44 97,870 2.09 FHLB – San Francisco stock 8,155 6.55 8,199 8.62 Interest-earning deposits 71,766 0.90 67,816 2.24 Total interest-earning assets $ 1,082,035 3.92 $ 1,099,888 4.03 % Total assets $ 1,113,755 $ 1,130,666 Deposits $ 844,148 0.35 % $ 880,118 0.38 % Borrowings 127,882 2.43 109,558 2.58 Total interest-bearing liabilities $ 972,030 0.62 $ 989,676 0.63 % Total stockholders’ equity $ 122,757 $ 121,702 (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 sale at fair value for the fiscal year ended June 30, 2019 . PROVIDENT FINANCIAL HOLDINGS, INC. Asset Quality(1) (Unaudited – Dollars in Thousands) As of As of As of As of As of 06/30/20 03/31/20 12/31/19 09/30/19 06/30/19 Loans on non-accrual status (excluding restructured loans): Mortgage loans: Single-family $ 2,281 $ 1,875 $ 1,607 $ 2,737 $ 3,315 Construction - - - 1,139 971 Total 2,281 1,875 1,607 3,876 4,286 Accruing loans past due 90 days or more: - - - - - Total - - - - - Restructured loans on non-accrual status: Mortgage loans: Single-family 2,612 1,726 1,783 1,316 1,891 Commercial business loans 31 34 37 38 41 Total 2,643 1,760 1,820 1,354 1,932 Total non-performing loans 4,924 3,635 3,427 5,230 6,218 Real estate owned, net - - - - - Total non-performing assets $ 4,924 $ 3,635 $ 3,427 $ 5,230 $ 6,218 (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 adjustments. Source: Provident Financial Holdings, Inc.

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