PROVIDENT FINANCIAL HOLDINGS INC [PROV] Filings

10-Q 1 prov-20221231x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)




[ ✓ ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended	December 31, 2022

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ________________ to _________________

Commission File Number 000-28304

PROVIDENT FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-0704889
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3756 Central Avenue, Riverside, California 92506

(Address of principal executive offices and zip code)

(951) 686-6060

(Registrant’s telephone number, including area code)

_________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	PROV	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻	Accelerated filer ◻
Non-accelerated filer ⌧	Smaller reporting company ⌧
	Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ◻

Yes ⌧ No

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of January 31, 2023, there were 7,097,270 shares of the registrant's common stock, $0.01 par value per share, outstanding.

Table of Contents

PROVIDENT FINANCIAL HOLDINGS, INC.

Table of Contents

PART 1 -	FINANCIAL INFORMATION	Page

ITEM 1 -	Financial Statements. The Unaudited Interim Condensed Consolidated Financial Statements of Provident Financial Holdings, Inc. filed as a part of the report are as follows:

	Condensed Consolidated Statements of Financial Condition as of December 31, 2022 and June 30, 2022	1
	Condensed Consolidated Statements of Operations for the Quarters and Six Months Ended December 31, 2022 and 2021	2
	Condensed Consolidated Statements of Comprehensive Income for the Quarters and Six Months Ended December 31, 2022 and 2021	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Quarters and Six Months Ended December 31, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2022 and 2021	6
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	7

ITEM 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations:

	General	33
	Safe-Harbor Statement	34
	Critical Accounting Estimates	35
	Executive Summary and Operating Strategy	36
	Commitments and Derivative Financial Instruments	37
	Comparison of Financial Condition at December 31, 2022 and June 30, 2022	37
	Comparison of Operating Results for the Quarters and Six Months Ended December 31, 2022 and 2021	38
	Asset Quality	47
	Loan Volume Activities	50
	Liquidity and Capital Resources	50
	Supplemental Information	52

ITEM 3 -	Quantitative and Qualitative Disclosures about Market Risk	52

ITEM 4 -	Controls and Procedures	57

PART II -	OTHER INFORMATION

ITEM 1 -	Legal Proceedings	57
ITEM 1A -	Risk Factors	57
ITEM 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	58
ITEM 3 -	Defaults Upon Senior Securities	58
ITEM 4 -	Mine Safety Disclosures	58
ITEM 5 -	Other Information	58
ITEM 6 -	Exhibits	59

SIGNATURES		60

Table of Contents

PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Financial Condition

(Unaudited)

In Thousands, Except Share Information


	December 31,		June 30,
(In Thousands, Except Share Information)	2022		2022
Assets
Cash and cash equivalents	$	24,840	$	23,414
Investment securities - held to maturity, at cost		168,232		185,745
Investment securities - available for sale, at fair value		2,377		2,676
Loans held for investment, net of allowance for loan losses $5,830 and $5,564, respectively; includes $1,345 and $1,396 of loans held at fair value, respectively		1,040,337		939,992
Accrued interest receivable		3,343		2,966
Federal Home Loan Bank (“FHLB”) - San Francisco stock		8,239		8,239
Premises and equipment, net		8,911		8,826
Prepaid expenses and other assets		14,763		15,180

Total assets	$	1,271,042	$	1,187,038

Liabilities and Stockholders’ Equity

Liabilities:
Non interest-bearing deposits	$	108,891	$	125,089
Interest-bearing deposits		836,411		830,415
Total deposits		945,302		955,504

Borrowings		180,000		85,000
Accounts payable, accrued interest and other liabilities		16,499		17,884
Total liabilities		1,141,801		1,058,388

Commitments and Contingencies

Stockholders’ equity:
Preferred stock, $0.01 par value (2,000,000 shares authorized; none issued and outstanding)		—		—
Common stock, $.01 par value; (40,000,000 and 40,000,000 shares authorized; 18,229,615 and 18,229,615 shares issued respectively; 7,132,270 and 7,285,184 outstanding, respectively)		183		183
Additional paid-in capital		98,732		98,826
Retained earnings		205,117		202,680
Treasury stock at cost (11,097,345 and 10,944,431 shares, respectively)		(174,758)		(173,041)
Accumulated other comprehensive income, net of tax		(33)		2

Total stockholders’ equity		129,241		128,650

Total liabilities and stockholders’ equity	$	1,271,042	$	1,187,038

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

In Thousands, Except Per Share Information


	Quarter Ended				Six Months Ended
	December 31,				December 31,
(In Thousands, Except Per Share Information)	2022		2021		2022		2021
Interest income:
Loans receivable, net	$	10,237	$	7,920	$	19,337	$	16,095
Investment securities		548		433		1,084		851
FHLB - San Francisco stock		145		123		268		245
Interest-earning deposits		241		35		380		66
Total interest income		11,171		8,511		21,069		17,257

Interest expense:
Checking and money market deposits		61		58		121		115
Savings deposits		44		45		88		86
Time deposits		370		199		583		414
Borrowings		1,311		546		1,927		1,091
Total interest expense		1,786		848		2,719		1,706

Net interest income		9,385		7,663		18,350		15,551
Provision (recovery) for loan losses		191		(1,067)		261		(1,406)
Net interest income, after provision (recovery) for loan losses		9,194		8,730		18,089		16,957

Non-interest income:
Loan servicing and other fees		115		444		223		630
Deposit account fees		327		325		670		637
Card and processing fees		367		399		748		804
Other		147		200		318		366
Total non-interest income		956		1,368		1,959		2,437

Non-interest expense:
Salaries and employee benefits		4,384		4,455		8,523		7,575
Premises and occupancy		796		758		1,657		1,663
Equipment expense		258		314		569		602
Professional expense		310		348		902		809
Sales and marketing expense		175		149		322		291
Deposit insurance premium and regulatory assessments		139		136		274		273
Other		736		739		1,492		1,354
Total non-interest expense		6,798		6,899		13,739		12,567

Income before income taxes		3,352		3,199		6,309		6,827
Provision for income taxes		981		935		1,848		1,896
Net income	$	2,371	$	2,264	$	4,461	$	4,931

Basic earnings per share	$	0.33	$	0.30	$	0.62	$	0.66
Diluted earnings per share	$	0.33	$	0.30	$	0.61	$	0.65

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

In Thousands


	For the Quarter Ended				For the Six Months Ended
	December 31,				December 31,
(In Thousands)	2022		2021		2022		2021
Net income	$	2,371	$	2,264	$	4,461	$	4,931

Change in unrealized holding losses on securities available for sale and interest-only strips		(23)		(11)		(50)		(20)
Reclassification of losses to net income		—		—		—		—
Other comprehensive loss, before income tax benefit		(23)		(11)		(50)		(20)
Income tax benefit		(7)		(3)		(15)		(6)
Other comprehensive loss		(16)		(8)		(35)		(14)
Total comprehensive income	$	2,355	$	2,256	$	4,426	$	4,917

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PROVIDENT FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

In Thousands, Except Share Information

For the Quarters Ended December 31, 2022 and 2021:


										Accumulated
										Other
	Common			Additional						Comprehensive
	Stock			Paid-In		Retained		Treasury		Loss,
	Shares	Amount		Capital		Earnings		Stock		Net of Tax		Total
Balance at September 30, 2022	7,235,560	$	183	$	98,559	$	203,750	$	(173,286)	$	(17)	$	129,189

Net income							2,371						2,371
Other comprehensive loss											(16)		(16)
Purchase of treasury stock	(103,290)								(1,472)				(1,472)
Amortization of restricted stock					211								211
Stock options expense					16								16
Tax effect from stock based compensation					(54)								(54)
Cash dividends⁽¹⁾							(1,004)						(1,004)

Balance at December 31, 2022	7,132,270	$	183	$	98,732	$	205,117	$	(174,758)	$	(33)	$	129,241

(1)	Cash dividends of $0.14 per share were paid in the quarter ended December 31, 2022.


										Accumulated
										Other
	Common			Additional						Comprehensive
	Stock			Paid-In		Retained		Treasury		Income (Loss),
	Shares	Amount		Capital		Earnings		Stock		Net of Tax		Total
Balance at September 30, 2021	7,491,705	$	183	$	98,179	$	199,344	$	(169,537)	$	66	$	128,235

Net income							2,264						2,264
Other comprehensive loss											(8)		(8)
Purchase of treasury stock	(102,762)								(1,734)				(1,734)
Distribution of restricted stock	1,000												—
Awards of restricted stock					(9)				9				—
Forfeiture of restricted stock					18				(18)				—
Amortization of restricted stock					204								204
Stock options expense					12								12
Cash dividends⁽¹⁾							(1,039)						(1,039)

Balance at December 31, 2021	7,389,943	$	183	$	98,404	$	200,569	$	(171,280)	$	58	$	127,934

(1)	Cash dividends of $0.14 per share were paid in the quarter ended December 31, 2021.

Table of Contents

For the Six Months Ended December 31, 2022 and 2021:


										Accumulated
										Other
	Common			Additional						Comprehensive
	Stock			Paid-In		Retained		Treasury		Income (Loss),
	Shares	Amount		Capital		Earnings		Stock		Net of Tax		Total
Balance at June 30, 2022	7,285,184	$	183	$	98,826	$	202,680	$	(173,041)	$	2	$	128,650

Net income							4,461						4,461
Other comprehensive loss											(35)		(35)
Purchase of treasury stock	(152,914)								(2,196)				(2,196)
Awards of restricted stock					(479)				479				—
Amortization of restricted stock					408								408
Stock options expense					31								31
Tax effect from stock based compensation					(54)								(54)
Cash dividends⁽¹⁾							(2,024)						(2,024)

Balance at December 31, 2022	7,132,270	$	183	$	98,732	$	205,117	$	(174,758)	$	(33)	$	129,241

(1)Cash dividends of $0.28 per share were paid in the six months ended December 31, 2022.

Accumulated

Other

Common

Additional

Comprehensive

Stock

Paid-In

Retained

Treasury

Income (Loss),

Shares

PROVIDENT FINANCIAL HOLDINGS INC [PROV] Filings
10-Q	[2023-02-08]
10-Q	[2022-11-04]
10-K	[2022-09-02]
10-Q	[2022-05-06]
10-Q	[2022-02-08]
10-Q	[2021-11-05]
10-K	[2021-09-03]
10-Q	[2021-05-07]
10-Q	[2021-02-08]
10-Q	[2020-11-06]
10-K	[2020-09-04]
10-Q	[2020-05-08]
10-Q	[2020-02-10]
10-Q	[2019-11-08]
10-K	[2019-08-30]
10-Q	[2019-05-09]
10-Q	[2019-02-08]
10-Q	[2018-11-08]
10-K	[2018-08-31]
10-Q	[2018-05-08]
10-Q	[2018-02-08]
10-Q	[2017-11-07]
10-K	[2017-09-01]
10-Q	[2017-05-08]
10-Q	[2017-02-07]
10-Q	[2016-11-07]
10-K	[2016-09-12]
10-Q	[2016-05-10]
10-Q	[2016-02-09]
10-Q	[2015-11-09]
10-K	[2015-09-14]
10-Q	[2015-05-11]
10-Q	[2015-02-09]
10-Q	[2014-11-10]
10-K	[2014-09-15]
10-Q	[2014-05-12]
10-Q	[2014-02-07]
10-Q	[2013-11-12]
10-K	[2013-09-13]
10-Q	[2013-05-10]
10-Q	[2013-02-08]
10-Q	[2012-11-09]
10-K	[2012-09-13]
10-Q	[2012-05-09]
10-Q	[2012-02-09]