PROV Provident Financial Holdings Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 28, 2025

PROVIDENT FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:  (951) 686-6060

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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Item 2.02  Results of Operations and Financial Condition

On January 28, 2025, Provident Financial Holdings, Inc. (“Corporation”), the holding company for Provident Savings Bank, F.S.B., distributed its financial results for the quarter ended December 31, 2024. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01  Regulation FD Disclosure.

On January 28, 2024, the Corporation posted its Investor Presentation for the quarter ended December 31, 2024 on the Corporation’s website, www.myprovident.com, under Presentations in the Investor Relations section. A copy of the Investor Presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PROVIDENT FINANCIAL HOLDINGS REPORTS

SECOND QUARTER OF FISCAL YEAR 2025 RESULTS

Net Income of $872,000 in the December 2024 Quarter, Down 54% from the Sequential

Quarter and 59% from the Comparable Quarter Last Year

Net Interest Margin of 2.91% in the December 2024 Quarter, Up Seven Basis Points from the

Sequential Quarter and 13 Basis Points from the Comparable Quarter Last Year

Loans Held for Investment of $1.05 Billion at December 31, 2024, Unchanged from June 30,

2024

Total Deposits of $867.5 Million at December 31, 2024, Down 2% from June 30, 2024

Non-Performing Assets to Total Assets Ratio of 0.20% at December 31, 2024, Unchanged

from June 30, 2024

Non-Interest Expenses Remain Well Controlled

Riverside, Calif. – January 28, 2025 – 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, 2025.

"I am pleased with the progress we have made in our fundamental operating results. Net interest income increased by approximately two percent from the prior sequential quarter and was largely the result of an expanding net interest margin. Growth in the loans held for investment portfolio, which increased from the September 30, 2024 balance, also contributed to this improvement. Credit quality remains strong; however, the increase in mortgage interest rates  has resulted in a longer estimated average life of our loan portfolio and a corresponding provision for credit losses. Additionally, we remain active in our stock repurchase plan with our Board of Directors recently approving a new plan, demonstrating our commitment to sound capital

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management practices,” stated Donavon P. Ternes, President and Chief Executive Officer of the Company. “As I described last quarter, our business model performs better in a flat or upward-sloping yield curve environment. Now that the Federal Open Market Committee has implemented looser monetary policy and the inverted yield curve has reversed course, we are transitioning back to less restrictive operating strategies," concluded Ternes.

Return on average assets was 0.28 percent for the second quarter of fiscal 2025, compared to 0.61 percent in the first quarter of fiscal 2025 and 0.66 percent for the second quarter of fiscal 2024. Return on average stockholders’ equity for the second quarter of fiscal 2025 was 2.66 percent, compared to 5.78 percent for the first quarter of fiscal 2025 and 6.56 percent for the second quarter of fiscal 2024.

On a sequential quarter basis, the $872,000 net income for the second quarter of fiscal 2025 reflects a 54 percent decrease from $1.90 million in the first quarter of fiscal 2025. The decrease was primarily attributable to a $586,000 provision for credit losses, in contrast to a $697,000 recovery of credit losses, and a $271,000 increase in non-interest expense (primarily due to an increase in salaries and employee benefits), partly offset by a $143,000 increase in net interest income (primarily due to a higher net interest margin). The increase in salaries and employee benefits expense was primarily attributable to higher employee compensation. Diluted earnings per share for the second quarter of fiscal 2025 were $0.13 per share, down 54 percent from $0.28 per share in the first quarter of fiscal 2025.

For the six months ended December 31, 2024, net income decreased $1.13 million, or 29 percent, to $2.77 million from $3.90 million in the comparable period in fiscal 2024. Diluted earnings per share for the six months ended December 31, 2024 decreased 27 percent to $0.41 per share (on 6.83 million average diluted shares outstanding) from $0.56 per share (on 7.00 million average diluted shares outstanding) for the comparable six-month period last year. The decrease in earnings was primarily attributable to a $1.12 million increase in non-interest expense (primarily due to an increase in salaries and employee benefits and other operating expenses) and a $538,000 decrease in net interest income, partly offset by a $118,000 increase in non-interest income.

In the second quarter of fiscal 2025, net interest income decreased slightly to $8.76 million from $8.77 million for the same quarter last year. The slight decrease in net interest income was due to a lower average balance of interest-earning assets, partly offset by a higher net interest margin. The average balance of interest-earning assets decreased five percent to $1.20 billion in the second quarter of fiscal 2025 from $1.26 billion in the same quarter last year, primarily due to decreases in the average balance of loans receivable, investment securities and interest-earning deposits. The net interest margin for the second quarter of fiscal 2025 increased 13 basis points to 2.91 percent from 2.78 percent in the same quarter last year. The increase in net interest margin was due to increased yields on interest-earning assets outpacing increased funding costs. The average yield on interest-earning assets increased 33 basis points to 4.66 percent in the second quarter of fiscal 2025 from 4.33 percent in the same quarter last year. In contrast, our average funding costs increased by 23 basis points to 1.92 percent in the second quarter of fiscal 2025 from 1.69 percent in the same quarter last year.

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Interest income on loans receivable increased $541,000, or four percent, to $13.05 million in the second quarter of fiscal 2025 from $12.51 million in the same quarter of fiscal 2024. The increase was due to a higher average loan yield, partly offset by a lower average loan balance. The average yield on loans receivable increased 33 basis points to 4.99 percent in the second quarter of fiscal 2025 from 4.66 percent in the same quarter last year. Adjustable-rate loans of approximately $100.7 million repriced upward in the second quarter of fiscal 2025 by approximately 15 basis points from a weighted average rate of 7.83 percent to 7.98 percent. The average balance of loans receivable decreased $27.8 million, or three percent, to $1.05 billion in the second quarter of fiscal 2025 from $1.07 billion in the same quarter last year. Total loans originated for investment in the second quarter of fiscal 2025 were $36.4 million, up 80 percent from $20.2 million in the same quarter last year, while loan principal payments received in the second quarter of fiscal 2025 were $34.3 million, up 93 percent from $17.8 million in the same quarter last year.

Interest income from investment securities decreased $53,000, or 10 percent, to $471,000 in the second quarter of fiscal 2025 from $524,000 for the same quarter of fiscal 2024. This decrease was attributable to a lower average balance, partly offset by a higher average yield. The average balance of investment securities decreased $23.4 million, or 16 percent, to $123.8 million in the second quarter of fiscal 2025 from $147.2 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 10 basis points to 1.52 percent in the second quarter of fiscal 2025 from 1.42 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 ($97,000 vs. $137,000) due to lower total principal repayments ($5.3 million vs. $5.9 million) and, to a lesser extent, the upward repricing of adjustable-rate mortgage-backed securities.

In the second quarter of fiscal 2025, the Bank received $213,000 in cash dividends from  the Federal Home Loan Bank (“FHLB”) – San Francisco stock and other equity investments, up eight percent from $197,000 in the same quarter last year, resulting in an average yield of 8.38 percent in the second quarter of fiscal 2025 compared to 8.29 percent in the same quarter last year. The average balance of FHLB – San Francisco stock and other equity investments in the second quarter of fiscal 2025 was $10.2 million, up from $9.5 million in the same quarter of fiscal 2024.

Interest income from interest-earning deposits, primarily cash deposited at the Federal Reserve Bank (“FRB”) of San Francisco, was $287,000 in the second quarter of fiscal 2025, down $148,000 or 34 percent from $435,000 in the same quarter of fiscal 2024. The decrease was due to a lower average balance and, to a lesser extent, a lower average yield. The average balance of the Company’s interest-earning deposits decreased $7.8 million, or 25 percent, to $23.7 million in the second quarter of fiscal 2025 from $31.5 million in the same quarter last year. The average yield earned on interest-earning deposits in the second quarter of fiscal 2025 was 4.74 percent, down 67 basis points from 5.41 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.

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Interest expense on deposits for the second quarter of fiscal 2025 was $2.67 million, an increase of $401,000 or 18 percent from $2.27 million for the same period last year. The increase was attributable to higher rates paid on deposits, partly offset by a lower average balance. The average cost of deposits was 1.23 percent in the second quarter of fiscal 2025, up 24 basis points from 0.99 percent in the same quarter last year. The increase in the average cost of deposits was primarily attributable to an increase in higher cost time deposits, particularly brokered certificates of deposit. The average balance of deposits decreased $51.5 million, or six percent, to $863.1 million in the second quarter of fiscal 2025 from $914.6 million in the same quarter last year.

Transaction account balances, or “core deposits,” decreased $21.6 million, or four percent, to $592.9 million at December 31, 2024 from $614.5 million at June 30, 2024, while time deposits increased slightly to $274.6 million at December 31, 2024 from $273.9 million at June 30, 2024. As of December 31, 2024, brokered certificates of deposit totaled $143.8 million, up $12.0 million or nine percent from $131.8 million at June 30, 2024. The weighted average cost of brokered certificates of deposit was 4.56 percent and 5.18 percent (including broker fees) at December 31, 2024 and June 30, 2024, respectively.

Interest expense on borrowings, consisting of FHLB advances, for the second quarter of fiscal 2025 decreased $30,000, or one percent, to $2.59 million from $2.62 million for the same period last year. The decrease in interest expense on borrowings was primarily the result of a lower average balance, partly offset by a higher average cost. The average balance of borrowings decreased $3.8 million, or two percent, to $226.7 million in the second quarter of fiscal 2025 from $230.5 million in the same quarter last year. The average cost of borrowings increased two basis points to 4.53 percent in the second quarter of fiscal 2025 from 4.51 percent in the same quarter last year.

At December 31, 2024, the Bank had approximately $246.2 million of remaining borrowing capacity at the FHLB. Additionally, the Bank has an unused secured borrowing facility of approximately $198.5 million with the FRB of San Francisco and an unused unsecured federal funds borrowing facility of $50.0 million with its correspondent bank. The total available borrowing capacity across all sources totaled approximately $494.7 million at December 31, 2024.

The Bank continues to work with both the FHLB and FRB of San Francisco to ensure that its borrowing capacity is continuously reviewed and updated in order to be accessed seamlessly should the need arise.

During the second quarter of fiscal 2025, the Company recorded a provision for credit losses of $586,000 (which included a $41,000 recovery of unfunded commitment reserves), in contrast to a $720,000 recovery of credit losses recorded during the same period last year and a $697,000 recovery of credit losses recorded in the first quarter of fiscal 2025 (sequential quarter). The provision for credit losses recorded in the second quarter of fiscal 2025 was primarily attributable to a longer estimated life of the loan portfolio resulting from lower loan prepayment estimates (attributable to higher interest rates) and a slight increase in the outstanding balance of loans held for investment at December 31, 2024 from September 30, 2024.

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Non-performing assets, comprised solely of non-accrual loans with underlying collateral located in California, decreased $66,000 or three percent to $2.5 million, which represented 0.20 percent of total assets at December 31, 2024, compared to $2.6 million, which represented 0.20 percent of total assets at June 30, 2024. At both December 31, 2024 and June 30, 2024, non-performing loans were comprised of 10 single-family loans. At both December 31, 2024 and June 30, 2024, there was no real estate owned and no loans past due by 90 days or more that were accruing interest. For the quarters ended December 31, 2024 and 2023, there were no loan charge-offs.

The recent wildfires in Los Angeles, California did not have a material impact on the Company's operations or the Bank’s customers. The Bank’s branches and facilities remained operational throughout the wildfire events, and there were no significant disruptions to customer services or business activities observed. Additionally, the Bank has not identified any significant credit exposure or financial impact attributable to the wildfires at this time.

Classified assets were $5.8 million at December 31, 2024, consisting of $631,000 of loans in the special mention category and $5.1 million of loans in the substandard category. Classified assets at June 30, 2024 were $5.8 million, consisting of $1.1 million of loans in the special mention category and $4.7 million of loans in the substandard category.

The allowance for credit losses on loans held for investment was $7.0 million, or 0.66 percent of gross loans held for investment, at December 31, 2024, down from $7.1 million, or 0.67 percent of gross loans held for investment, at June 30, 2024. The decrease in the allowance for credit losses was due primarily to a shorter estimated life of the loan portfolio, partly offset by a slightly higher balance of loans held for investment. Management believes that, 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, 2024.

Non-interest income decreased by $30,000, or three percent, to $845,000 in the second quarter of fiscal 2025 from $875,000 in the same period last year, due primarily to decreases in loan servicing and other fess, deposit fees and card and processing fees, partly offset by an increase in other fees. On a sequential quarter basis, non-interest income decreased $54,000, or six percent, primarily due to decreases in loan servicing and other fess, deposit fees and card and processing fees, partly offset by an increase in other fees.

    Non-interest expense increased $450,000, or six percent, to $7.79 million in the second quarter of fiscal 2025 from $7.34 million for the same quarter last year, primarily due to higher salaries and employee benefits expenses and other operating expenses. The higher salaries and employee benefits expenses was primarily due to higher compensation expenses, retirement plan benefit expenses and executive search agency costs, partly offset by a lower accrual adjustment for the supplemental executive retirement plans expense. On a sequential quarter basis, non-interest expense increased $271,000, or four percent as compared to $7.52 million in the first quarter of fiscal 2025, due primarily to higher salaries and employee benefits expenses. The higher salaries and employee benefits expenses was primarily due to higher compensation expenses, a

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 2025 was 81.15 percent, an increase from 76.11 percent in the same quarter last year and 79.06 percent in the first quarter of fiscal 2025 (sequential quarter). The increase in the efficiency ratio during the current quarter in comparison to the comparable quarter last year was due to higher non-interest expense and, to a lesser extent, a lower net interest income and non-interest income.

The Company’s provision for income taxes was $352,000 for the second quarter of fiscal 2025, down 60 percent from $884,000 in the same quarter last year and down 55 percent from $789,000 for the first quarter of fiscal 2025 (sequential quarter). The decrease during the current quarter compared to both the sequential quarter and same quarter last year was due to a decrease in pre-tax income. The effective tax rate in the second quarter of fiscal 2025 was 28.8 percent as compared to 29.2 percent in the same quarter last year and 29.3 percent for the first quarter of fiscal 2025 (sequential quarter).

The Company repurchased 63,556 shares of its common stock pursuant to its current stock repurchase program at an average cost of $16.04 per share during the quarter ended December 31, 2024. As of December 31, 2024, a total of 31,919 shares remained available for future purchase under the Company’s current repurchase program, which expires on September 26, 2025.

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 Tuesday, January 28, 2025 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 Tuesday, February 4, 2025 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.

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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: adverse economic conditions in our local market areas or other markets where we have lending relationships; effects of employment levels, labor shortages, inflation, a recession or slowed economic growth; changes in the interest rate environment, including the increases and decreases in the Board of Governors of the Federal Reserve Board (the “Federal Reserve”) benchmark rate and the duration of such levels, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and the Federal Reserve monetary policy; the effects of any Federal government shutdown; credit risks of lending activities, including loan delinquencies, write-offs, changes in our ACL, and provision for credit losses; increased competitive pressures, including repricing and competitors’ pricing initiatives, and their impact on our market position, loan, and deposit products; quality and composition of our securities portfolio and the impact of adverse changes in the securities markets; fluctuations in deposits; secondary market conditions for loans and our ability to sell loans in the secondary market; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; expectations regarding key growth initiatives and strategic priorities; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; results of examinations of us by regulatory authorities, which may the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or our bank subsidiary which could require us to increase our ACL, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; legislative and regulatory changes, including changes in banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules; use of estimates in determining the fair value of assets, which may prove incorrect; disruptions or security breaches, or other adverse events, failures or interruptions in or attacks on our information technology systems or on our third-party vendors; the potential imposition of new tariffs or changes to existing trade policies that could affect economic activity or specific industry sectors; staffing fluctuations in response to product demand or corporate implementation strategies; our ability to pay dividends on our common stock; environmental, social and governance goals; effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil 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 and furnished to 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 2025 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.

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PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Financial Condition

(Unaudited –In Thousands, Except Share and Per Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited - In Thousands, Except Per Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Operations – Sequential Quarters

(Unaudited – In Thousands, Except Per Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands, Except Share and Per Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands, Except Share and Per Share Information)

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PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands)

(1)	Weighted-average yield earned on all instruments included in the balance of the respective line item.

PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands)

(1)	Weighted-average yield earned on all instruments included in the balance of the respective line item.

(1)	Weighted-average rate paid on all instruments included in the balance of the respective line item.

(2)	Includes uninsured deposits of approximately $134.7 million and $140.3 million at December 31, 2024 and 2023, respectively.

(3)	The average balance of deposit accounts was approximately $35 thousand and $34 thousand at December 31, 2024 and 2023, respectively.

(4)

The Bank had approximately $246.2 million and $266.5 million of remaining borrowing capacity at the FHLB – San Francisco, approximately $198.5 million and $183.0 million of borrowing capacity at the FRB of San Francisco and $50.0 million and $50.0 million of borrowing capacity with its correspondent bank at December 31, 2024 and 2023, respectively.

PROVIDENT FINANCIAL HOLDINGS, INC.

Financial Highlights

(Unaudited - Dollars in Thousands)