Exhibit 99.1
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3756 Central Avenue Riverside, CA 92506 (951) 686-6060 | NEWS RELEASE |
PROVIDENT FINANCIAL HOLDINGS REPORTS
THIRD QUARTER OF FISCAL 2018 RESULTS
Net Income Rises 51 Percent to $1.73 Million Compared to Same Quarter Last Year
Net Interest Margin Expands 15 Basis Points to 3.23%
Compared to Prior Sequential Quarter
Net Interest Income Rises Six Percent from the Same Quarter Last Year
Non-Interest Expense Declines 10 Percent from the Same Quarter Last Year
Non-Performing Assets Decline 21 Percent to $7.6 Million from June 30, 2017
Riverside, Calif. – April 26, 2018 – Provident Financial Holdings, Inc. ("Company"), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B. ("Bank"), today announced third quarter results for the fiscal year ending June 30, 2018.
For the quarter ended March 31, 2018, the Company reported net income of $1.73 million, or $0.23 per diluted share (on 7.62 million average diluted shares outstanding), an increase of 51 percent from net income of $1.15 million, or $0.14 per diluted share (on 8.09 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 an increase in net interest income, an increase in the recovery from the allowance for loan losses, and decreases in salaries and employee benefits and sales and
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marketing expenses, partly offset by a decrease in the gain on sale of loans and an increase in other non-interest expense.
"Our community banking results continue to strengthen and the outlook for our community banking business is favorable," said Craig G. Blunden, Chairman and Chief Executive Officer of the Company. "Unfortunately, and despite our aggressive response to date, weaker mortgage banking fundamentals have resulted in poorer performance from the business. We will continue to adjust our mortgage banking business model to improve on our results," Mr. Blunden concluded.
Return on average assets for the third quarter of fiscal 2018 increased to 0.59 percent from 0.39 percent for the same period of fiscal 2017; and return on average stockholders' equity for the third quarter of fiscal 2018 increased to 5.76 percent from 3.46 percent for the comparable period of fiscal 2017.
On a sequential quarter basis, the net income for the third quarter of fiscal 2018 of $1.73 million reflects a $2.51 million improvement from the net loss of $777,000 in the second quarter of fiscal 2018. The increase in the third quarter of fiscal 2018 results compared to the second quarter of fiscal 2018 was primarily attributable to a $373,000 increase in net interest income, a $494,000 increase in the recovery from the allowance for loan losses, a $774,000 decrease in other non-interest expense and a $1.40 million decrease in the provision for income taxes, partly offset by a $720,000 decrease in the gain on sale of loans. Diluted earnings per share for the third quarter of fiscal 2018 were $0.23 per share, up from the $0.10 loss per share during the second quarter of fiscal 2018. Return on average assets increased to 0.59 percent for the third quarter of fiscal 2018 from a loss on average assets of 0.27 percent in the second quarter of fiscal 2018; and
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return on average stockholders' equity for the third quarter of fiscal 2018 was 5.76 percent, compared to a loss on average stockholders' equity of 2.50 percent for the second quarter of fiscal 2018.
For the nine months ended March 31, 2018, net income decreased $3.51 million, or 83 percent, to $731,000 from net income of $4.24 million in the comparable period ended March 31, 2017; and diluted earnings per share for the nine months ended March 31, 2018 decreased 81 percent to $0.10 per share (on 7.63 million average diluted shares outstanding) from $0.52 per share (on 8.13 million average diluted shares outstanding) for the comparable nine month period last year.
Net interest income increased $477,000, or six percent, to $9.12 million in the third quarter of fiscal 2018 from $8.65 million for the same quarter of fiscal 2017, attributable to an increase in the net interest margin, partly offset by a lower average interest-earning assets balance. The net interest margin during the third quarter of fiscal 2018 increased 23 basis points to 3.23 percent from 3.00 percent in the same quarter last year, primarily due to an increase in the average yield of earning assets and, to a lesser extent, a decrease in the average cost of costing liabilities. The average yield on interest-earning assets increased by 22 basis points to 3.78 percent in the third quarter of fiscal 2018 from 3.56 percent in the same quarter last year and the average cost of liabilities decreased by two basis points to 0.62 percent in the third quarter of fiscal 2018 from 0.64 percent in the same quarter last year. The average balance of interest-earning assets decreased by $23.80 million, or two percent, to $1.13 billion in the third quarter of fiscal 2018 from $1.15 billion in the same quarter last year.
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The average balance of loans receivable, including loans held for sale, decreased by $12.4 million, or one percent, to $961.8 million in the third quarter of fiscal 2018 from $974.2 million in the same quarter of fiscal 2017, primarily due to a decrease in average loans held for sale attributable to a decrease in mortgage banking activity (primarily due to higher mortgage interest rates and the resulting lower refinance volume), partly offset by an increase in average loans held for investment. The average yield on loans receivable increased by 15 basis points to 4.13 percent in the third quarter of fiscal 2018 from an average yield of 3.98 percent in the same quarter of fiscal 2017. The increase in the average loan yield was primarily attributable to an increase in the average yield of loans held for investment and an increase in the average yield of loans held for sale with a lower percentage of loans held for sale to total loans receivable. The average balance of loans held for investment in the third quarter of fiscal 2018 was $888.6 million with an average yield of 4.13 percent, up from $869.5 million with an average yield of 4.00 percent in the same quarter of fiscal 2017; while the average balance of loans held for sale in the third quarter of fiscal 2018 was $73.3 million with an average yield of 4.13 percent, down from $104.7 million with an average yield of 3.87 percent in the same quarter of fiscal 2017. The outstanding balance of "preferred loans" (multi-family, commercial real estate, construction and commercial business loans) decreased by $6.1 million, or one percent, to $579.0 million at March 31, 2018 from $585.1 million at June 30, 2017, net of undisbursed loan funds of $5.6 million and $9.0 million, respectively. The percentage of preferred loans to total loans held for investment at March 31, 2018 increased to 65 percent from 64 percent at June 30, 2017. Loan principal payments
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received in the third quarter of fiscal 2018 were $43.2 million, compared to $46.2 million in the same quarter of fiscal 2017.
The average balance of investment securities increased by $52.1 million, or 110 percent, to $99.4 million in the third quarter of fiscal 2018 from $47.3 million in the same quarter of fiscal 2017. The increase was primarily attributable to mortgage-backed securities purchases, partly offset by principal payments received on mortgage-backed securities. The average yield on investment securities increased 34 basis points to 1.54 percent in the third quarter of fiscal 2018 from 1.20 percent for the same quarter of fiscal 2017. The increase in the average yield was primarily attributable to mortgage-backed securities purchases which had higher average yields than the existing portfolio and the repricing of variable rate investment securities to higher market interest rates.
In the third quarter of fiscal 2018, the Federal Home Loan Bank ("FHLB") – San Francisco distributed $144,000 of quarterly cash dividends to the Bank, a $40,000 or 22 percent decrease from the cash dividends received by the Bank in the same quarter last year.
The average balance of the Company's interest-earning deposits, primarily cash with the Federal Reserve Bank of San Francisco, decreased $63.6 million, or 51 percent, to $61.6 million in the third quarter of fiscal 2018 from $125.2 million in the same quarter of fiscal 2017. The decrease in interest-earning deposits was primarily due to the purchases of investment securities. The average yield earned on interest-earning deposits in the third quarter of fiscal 2018 was 1.51 percent, up 71 basis points from 0.80 percent in the same quarter of fiscal 2017 as a result of the impact of the increases in the federal funds rate over the last year.
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Average deposits decreased $16.0 million, or two percent, to $912.0 million in the third quarter of fiscal 2018 from $928.0 million in the same quarter of fiscal 2017. The average cost of deposits decreased by two basis points to 0.38 percent in the third quarter of fiscal 2018 from 0.40 percent in the same quarter last year, primarily due to a lower percentage of time deposits to total deposit. Transaction account balances or "core deposits" increased $18.4 million, or three percent, to $677.0 million at March 31, 2018 from $658.6 million at June 30, 2017, while time deposits decreased $22.4 million, or eight percent, to $245.5 million at March 31, 2018 from $267.9 million at June 30, 2017, consistent with the Bank's strategy to decrease the percentage of time deposits in its deposit base and to increase the percentage of checking and savings accounts.
The average balance of borrowings, which consisted of FHLB – San Francisco advances, increased $1.3 million, or one percent, to $112.6 million and the average cost of advances decreased four basis points to 2.56 percent in the third quarter of fiscal 2018, compared to an average balance of $111.3 million with an average cost of 2.60 percent in the same quarter of fiscal 2017. The decrease in the average cost of advances was primarily due to the maturity of a long-term advance which was renewed at a lower cost in the third quarter of fiscal 2018.
During the third quarter of fiscal 2018, the Company recorded a recovery from the allowance for loan losses of $505,000, compared to the recovery from the allowance for loan losses of $165,000 recorded during the same period of fiscal 2017 and the recovery from the allowance for loan losses of $11,000 recorded in the second quarter of fiscal 2018 (sequential quarter). The recovery from the allowance for loan losses was primarily attributable to the improving risk profile of the loan portfolio as reflected in the
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asset quality ratios and loan balances shifting to lower risk categories from higher risk categories.
Non-performing assets, with underlying collateral located in California, decreased $2.0 million, or 21 percent, to $7.6 million, or 0.64 percent of total assets, at March 31, 2018, compared to $9.6 million, or 0.80 percent of total assets, at June 30, 2017. Non-performing loans decreased $1.2 million, or 15 percent, to $6.8 million at March 31, 2018 from $8.0 million at June 30, 2017. The non-performing loans at March 31, 2018 are comprised of 24 single-family loans ($6.7 million) and one commercial business loan ($58,000). At March 31, 2018, real estate owned was $787,000, a decline of $828,000, or 51%, from $1.6 million at June 30, 2017 and was comprised of two single-family real estate owned properties acquired during the third quarter of fiscal 2018.
Net loan charge-offs for the quarter ended March 31, 2018 were $39,000 or 0.02 percent (annualized) of average loans receivable, compared to net loan recoveries of $49,000 or (0.02) percent (annualized) of average loans receivable for the quarter ended March 31, 2017 and net loan recoveries of $23,000 or (0.01) percent (annualized) of average loans receivable for the quarter ended December 31, 2017 (sequential quarter).
Classified assets at March 31, 2018 were $11.9 million, comprised of $2.8 million of loans in the special mention category, $8.3 million of loans in the substandard category and $787,000 in real estate owned; while classified assets at June 30, 2017 were $13.3 million, comprised of $3.7 million of loans in the special mention category, $8.0 million of loans in the substandard category and $1.6 million in real estate owned.
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For the quarter ended March 31, 2018, two loans totaling $2.2 million were restructured from their original terms and classified as restructured loans. The outstanding restructured loans at March 31, 2018 were $5.4 million, up from $3.6 million at June 30, 2017, of which $3.7 million or 68 percent were current at March 31, 2018, with respect to their modified payment terms.
The allowance for loan losses was $7.5 million at March 31, 2018, or 0.84 percent of gross loans held for investment, compared to $8.0 million at June 30, 2017, or 0.88 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 March 31, 2018.
Non-interest income decreased by $1.58 million, or 23 percent, to $5.21 million in the third quarter of fiscal 2018 from $6.79 million in the same period of fiscal 2017, primarily as a result of a decrease in the gain on sale of loans during the current quarter as compared to the comparable period last year. On a sequential quarter basis, non-interest income decreased $531,000, or nine percent, primarily as a result of a decrease in the gain on sale of loans.
The gain on sale of loans decreased $1.80 million, or 33 percent, to $3.60 million for the quarter ended March 31, 2018 from $5.40 million in the comparable quarter last year, and decreased $720,000 or 17 percent from the quarter ended December 31, 2017 (sequential quarter), reflecting the impact of a lower loan sale volume and a lower average loan sale margin. Total loan sale volume, which includes the net change in commitments to extend credit on loans to be held for sale, was $235.5 million in the quarter ended March 31, 2018, down $106.7 million or 31 percent, from $342.2 million
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in the comparable quarter last year and decreased $52.3 million or 18 percent from $287.8 million in the quarter ended December 31, 2017 (sequential quarter). The average loan sale margin from mortgage banking was 153 basis points for the quarter ended March 31, 2018, a decrease of five basis points from 158 basis points in the same quarter last year, yet four basis points higher than 149 basis points in the second quarter of fiscal 2018 (sequential quarter). The gain on sale of loans includes an unfavorable fair-value adjustment on loans held for sale and derivative financial instruments (commitments to extend credit, commitments to sell loans, commitments to sell mortgage-backed securities, and option contracts) that amounted to a net loss of $844,000 in the third quarter of fiscal 2018, compared to a favorable fair-value adjustment that amounted to a net gain of $635,000 in the same period last year and an unfavorable fair-value adjustment that amounted to a net loss of $1.30 million in the second quarter of fiscal 2018 (sequential quarter).
In the third quarter of fiscal 2018, $220.2 million of loans were originated and purchased for sale, 31 percent lower than the $317.9 million for the same period last year, and 34 percent lower than the $331.9 million during the second quarter of fiscal 2018 (sequential quarter). The loan origination volume has decreased from the previous year as a result of increased mortgage interest rates reducing refinance activity. Total loans sold during the quarter ended March 31, 2018 were $225.9 million, 39 percent lower than the $369.5 million sold during the same quarter last year, and 37 percent lower than the $361.4 million sold during the second quarter of fiscal 2018 (sequential quarter). Total loan originations (including loans originated and purchased for investment and loans originated and purchased for sale) were $269.5 million in the third quarter of fiscal 2018,
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a decrease of 28 percent from $375.9 million in the same quarter of fiscal 2017, and 27 percent lower than the $366.8 million in the second quarter of fiscal 2018 (sequential quarter).
Non-interest expenses decreased $1.33 million, or 10 percent, to $12.44 million in the third quarter of fiscal 2018 from $13.77 million in the same quarter last year. The decrease was primarily due to a $1.56 million decrease in salaries and employee benefits expense and a $208,000 decrease in sales and marketing expense, partly offset by a $373,000 increase in other non-interest expenses (primarily attributable to the $668,000 reversal of loan origination liability accruals in the third quarter of fiscal 2017 which was not replicated this quarter). The decrease in salaries and employee benefits expense was primarily related to lower variable compensation resulting from lower mortgage banking loan originations and staff reductions in mortgage banking. On a sequential quarter basis, non-interest expenses decreased $774,000 or six percent from $13.21 million, primarily as a result of a $773,000 decrease in other non-interest expenses (primarily attributable to the $650,000 litigation expense accrual recorded in the second quarter of fiscal 2018 which was not replicated this quarter).
The Company's efficiency ratio in the third quarter of fiscal 2018 was 87 percent, an improvement from 89 percent in the same quarter last year and an improvement from 91 percent in the second quarter of fiscal 2018 (sequential quarter).
The Company's income tax provision was $667,000 for the third quarter of fiscal 2018, down three percent from the $690,000 provision for income taxes in the same quarter last year. The decrease was primarily attributable to the reduction of the federal income tax rate resulting from the Tax Cuts and Jobs Act, partly offset by higher income
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before taxes. In addition, our fiscal year end requires the use of a blended rate as prescribed by the Internal Revenue Code, which is 28.06% and will be used through June 30, 2018. On a sequential quarter basis, the provision for income taxes decreased $1.40 million, or 68 percent, from $2.07 million in the second quarter of fiscal 2018, primarily attributable to the $1.84 million write-down of net deferred tax assets following a deferred tax revaluation resulting from the Tax Cuts and Jobs Act recorded in the second quarter of fiscal 2018. The Company believes that the tax provision recorded in the third quarter of fiscal 2018 reflects its current income tax obligations.
The Company repurchased 77,681 shares of its common stock during the quarter ended March 31, 2018 at an average cost of $18.21 per share. As of March 31, 2018, a total of 344,207 shares or 89 percent of the shares authorized in the June 2017 stock repurchase plan have been purchased, leaving 40,993 shares available for future purchases through June 19, 2018.
The Bank currently operates 14 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire). Provident Bank Mortgage operates two wholesale loan production offices and nine retail loan production offices located throughout California.
The Company will host a conference call for institutional investors and bank analysts on Thursday, April 26, 2018 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-800-288-8960 and requesting the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Thursday, May 3, 2018 by dialing 1-800-475-6701 and referencing access code number 447812.
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For more financial information about the Company please visit the website at www.myprovident.com and click on the "Investor Relations" section.
Safe-Harbor Statement
This press release contains statements that the Company believes are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to the Company's financial condition, liquidity, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make.
Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially from the results anticipated or implied by our forward-looking statements include, but are not limited to increased competitive pressures; changes in the interest rate environment; secondary market conditions for loans and our ability to sell loans in the secondary market; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company's latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission ("SEC") - which are available on our website at www.myprovident.com and on the SEC's website at www.sec.gov. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements whether as a result of new information, future events or otherwise. These risks could cause our actual results for fiscal 2018 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us and could negatively affect our operating and stock price performance.
Contacts: | Craig G. Blunden | Donavon P. Ternes |
Chairman and | President, Chief Operating Officer, | |
| Chief Executive Officer | and Chief Financial Officer |
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| PROVIDENT FINANCIAL HOLDINGS, INC. Condensed Consolidated Statements of Financial Condition (Unaudited –In Thousands, Except Share Information) | ||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | |||||||||||||
| 2018 | 2017 | 2017 | 2017 | |||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | 50,574 | $ | 47,173 | $ | 49,217 | $ | 72,826 | ||||||||
| Investment securities – held to maturity, at cost | 95,724 | 87,626 | 64,751 | 60,441 | ||||||||||||
| Investment securities - available for sale, at fair value | 8,002 | 8,405 | 8,940 | 9,318 | ||||||||||||
Loans held for investment, net of allowance for loan losses of $7,531; $8,075; $8,063 and $8,039, respectively; includes $4,996; $5,157; $6,924 and $6,445 at fair value, respectively | 894,167 | 885,976 | 908,060 | 904,919 | ||||||||||||
| Loans held for sale, at fair value | 89,823 | 96,589 | 127,234 | 116,548 | ||||||||||||
| Accrued interest receivable | 3,100 | 3,147 | 2,989 | 2,915 | ||||||||||||
| Real estate owned, net | 787 | 621 | - | 1,615 | ||||||||||||
| FHLB – San Francisco stock | 8,108 | 8,108 | 8,108 | 8,108 | ||||||||||||
| Premises and equipment, net | 8,734 | 7,816 | 7,333 | 6,641 | ||||||||||||
| Prepaid expenses and other assets | 17,583 | 16,670 | 17,154 | 17,302 | ||||||||||||
| Total assets | $ | 1,176,602 | $ | 1,162,131 | $ | 1,193,786 | $ | 1,200,633 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Non interest-bearing deposits | $ | 87,520 | $ | 77,144 | $ | 82,415 | $ | 77,917 | ||||||||
| Interest-bearing deposits | 834,979 | 830,644 | 844,601 | 848,604 | ||||||||||||
| Total deposits | 922,499 | 907,788 | 927,016 | 926,521 | ||||||||||||
| Borrowings | 111,176 | 111,189 | 121,206 | 126,226 | ||||||||||||
Accounts payable, accrued interest and other liabilities | 22,327 | 22,454 | 20,643 | 19,656 | ||||||||||||
| Total liabilities | 1,056,002 | 1,041,431 | 1,068,865 | 1,072,403 | ||||||||||||
| 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; 18,033,115; 17,976, 615; 17,970,865 and 17,949,365 shares issued, respectively; 7,460,804; 7,474,776; 7,609,552 and 7,714,052 shares outstanding, respectively) | ||||||||||||||||
180 | 180 | 180 | 180 | |||||||||||||
| Additional paid-in capital | 94,719 | 94,011 | 93,669 | 93,209 | ||||||||||||
| Retained earnings | 190,301 | 189,610 | 191,451 | 192,754 | ||||||||||||
Treasury stock at cost (10,572,311; 10,501,839; 10,361,313 and 10,235,313 shares, respectively) | ||||||||||||||||
| (164,786 | ) | (163,311 | ) | (160,609 | ) | (158,142 | ) | |||||||||
| Accumulated other comprehensive income, net of tax | 186 | 210 | 230 | 229 | ||||||||||||
| Total stockholders' equity | 120,600 | 120,700 | 124,921 | 128,230 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 1,176,602 | $ | 1,162,131 | $ | 1,193,786 | $ | 1,200,633 | ||||||||
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PROVIDENT FINANCIAL HOLDINGS, INC. Condensed Consolidated Statements of Operations (Unaudited - In Thousands, Except Earnings Per Share) | ||||||||||||||||
Quarter Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Interest income: | ||||||||||||||||
| Loans receivable, net | $ | 9,933 | $ | 9,704 | $ | 29,825 | $ | 30,300 | ||||||||
| Investment securities | 382 | 142 | 958 | 354 | ||||||||||||
| FHLB – San Francisco stock | 144 | 184 | 428 | 827 | ||||||||||||
| Interest-earning deposits | 233 | 250 | 591 | 406 | ||||||||||||
| Total interest income | 10,692 | 10,280 | 31,802 | 31,887 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Checking and money market deposits | 96 | 90 | 311 | 293 | ||||||||||||
| Savings deposits | 147 | 144 | 445 | 434 | ||||||||||||
| Time deposits | 613 | 686 | 1,877 | 2,189 | ||||||||||||
| Borrowings | 712 | 713 | 2,176 | 2,151 | ||||||||||||
| Total interest expense | 1,568 | 1,633 | 4,809 | 5,067 | ||||||||||||
| Net interest income | 9,124 | 8,647 | 26,993 | 26,820 | ||||||||||||
| Recovery from the allowance for loan losses | (505 | ) | (165 | ) | (347 | ) | (665 | ) | ||||||||
Net interest income, after recovery from the allowance for loan losses | 9,629 | 8,812 | 27,340 | 27,485 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Loan servicing and other fees | 493 | 362 | 1,173 | 939 | ||||||||||||
| Gain on sale of loans, net | 3,597 | 5,395 | 12,761 | 19,869 | ||||||||||||
| Deposit account fees | 529 | 562 | 1,623 | 1,664 | ||||||||||||
Loss on sale and operations of real estate owned acquired in the settlement of loans | (19 | ) | (74 | ) | (81 | ) | (240 | ) | ||||||||
| Card and processing fees | 372 | 338 | 1,126 | 1,063 | ||||||||||||
| Other | 238 | 208 | 701 | 580 | ||||||||||||
| Total non-interest income | 5,210 | 6,791 | 17,303 | 23,875 | ||||||||||||
| Non-interest expense: | ||||||||||||||||
| Salaries and employee benefits | 8,808 | 10,370 | 26,710 | 32,033 | ||||||||||||
| Premises and occupancy | 1,255 | 1,241 | 3,829 | 3,765 | ||||||||||||
| Equipment | 442 | 352 | 1,179 | 1,054 | ||||||||||||
| Professional expenses | 400 | 436 | 1,441 | 1,571 | ||||||||||||
| Sales and marketing expenses | 213 | 421 | 717 | 970 | ||||||||||||
Deposit insurance premiums and regulatory assessments | 189 | 189 | 591 | 614 | ||||||||||||
| Other | 1,132 | 759 | 6,919 | 4,061 | ||||||||||||
| Total non-interest expense | 12,439 | 13,768 | 41,386 | 44,068 | ||||||||||||
| Income before taxes | 2,400 | 1,835 | 3,257 | 7,292 | ||||||||||||
| Provision for income taxes | 667 | 690 | 2,526 | 3,049 | ||||||||||||
| Net income | $ | 1,733 | $ | 1,145 | $ | 731 | $ | 4,243 | ||||||||
| Basic earnings per share | $ | 0.23 | $ | 0.14 | $ | 0.10 | $ | 0.53 | ||||||||
| Diluted earnings per share | $ | 0.23 | $ | 0.14 | $ | 0.10 | $ | 0.52 | ||||||||
| Cash dividends per share | $ | 0.14 | $ | 0.13 | $ | 0.42 | $ | 0.39 | ||||||||
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PROVIDENT FINANCIAL HOLDINGS, INC. Condensed Consolidated Statements of Operations – Sequential Quarter (Unaudited – In Thousands, Except Share Information) | ||||||||||||
| Quarter Ended | ||||||||||||
| March 31, | December 31, | September 30, | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Interest income: | ||||||||||||
| Loans receivable, net | $ | 9,933 | $ | 9,735 | $ | 10,157 | ||||||
| Investment securities | 382 | 319 | 257 | |||||||||
| FHLB – San Francisco stock | 144 | 143 | 141 | |||||||||
| Interest-earning deposits | 233 | 168 | 190 | |||||||||
| Total interest income | 10,692 | 10,365 | 10,745 | |||||||||
| Interest expense: | ||||||||||||
| Checking and money market deposits | 96 | 112 | 103 | |||||||||
| Savings deposits | 147 | 149 | 149 | |||||||||
| Time deposits | 613 | 625 | 639 | |||||||||
| Borrowings | 712 | 728 | 736 | |||||||||
| Total interest expense | 1,568 | 1,614 | 1,627 | |||||||||
| Net interest income | 9,124 | 8,751 | 9,118 | |||||||||
| (Recovery) provision for loan losses | (505 | ) | (11 | ) | 169 | |||||||
Net interest income, after (recovery) provision for loan losses | 9,629 | 8,762 | 8,949 | |||||||||
| Non-interest income: | ||||||||||||
| Loan servicing and other fees | 493 | 317 | 363 | |||||||||
| Gain on sale of loans, net | 3,597 | 4,317 | 4,847 | |||||||||
| Deposit account fees | 529 | 536 | 558 | |||||||||
Loss on sale and operations of real estate owned acquired in the settlement of loans, net | (19 | ) | (22 | ) | (40 | ) | ||||||
| Card and processing fees | 372 | 373 | 381 | |||||||||
| Other | 238 | 220 | 243 | |||||||||
| Total non-interest income | 5,210 | 5,741 | 6,352 | |||||||||
| Non-interest expense: | ||||||||||||
| Salaries and employee benefits | 8,808 | 8,633 | 9,269 | |||||||||
| Premises and occupancy | 1,255 | 1,260 | 1,314 | |||||||||
| Equipment | 442 | 375 | 362 | |||||||||
| Professional expenses | 400 | 521 | 520 | |||||||||
| Sales and marketing expenses | 213 | 301 | 203 | |||||||||
| Deposit insurance premiums and regulatory assessments | 189 | 218 | 184 | |||||||||
| Other | 1,132 | 1,905 | 3,882 | |||||||||
| Total non-interest expense | 12,439 | 13,213 | 15,734 | |||||||||
| Income (loss) before taxes | 2,400 | 1,290 | (433 | ) | ||||||||
| Provision (benefit) for income taxes | 667 | 2,067 | (208 | ) | ||||||||
| Net income (loss) | $ | 1,733 | $ | (777 | ) | $ | (225 | ) | ||||
| Basic earnings (loss) per share | $ | 0.23 | $ | (0.10 | ) | $ | (0.03 | ) | ||||
| Diluted earnings (loss) per share | $ | 0.23 | $ | (0.10 | ) | $ | (0.03 | ) | ||||
| Cash dividends per share | $ | 0.14 | $ | 0.14 | $ | 0.14 | ||||||
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PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited - Dollars in Thousands, Except Share Information ) | ||||||||||||||||
Quarter Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| SELECTED FINANCIAL RATIOS: | ||||||||||||||||
| Return on average assets | 0.59 | % | 0.39 | % | 0.08 | % | 0.47 | % | ||||||||
| Return on average stockholders' equity | 5.76 | % | 3.46 | % | 0.78 | % | 4.26 | % | ||||||||
| Stockholders' equity to total assets | 10.25 | % | 10.97 | % | 10.25 | % | 10.97 | % | ||||||||
| Net interest spread | 3.16 | % | 2.92 | % | 3.10 | % | 2.99 | % | ||||||||
| Net interest margin | 3.23 | % | 3.00 | % | 3.16 | % | 3.06 | % | ||||||||
| Efficiency ratio | 86.78 | % | 89.18 | % | 93.43 | % | 86.93 | % | ||||||||
| Average interest-earning assets to average | ||||||||||||||||
| interest-bearing liabilities | 110.37 | % | 111.11 | % | 110.69 | % | 111.15 | % | ||||||||
| SELECTED FINANCIAL DATA: | ||||||||||||||||
| Basic earnings per share | $ | 0.23 | $ | 0.14 | $ | 0.10 | $ | 0.53 | ||||||||
| Diluted earnings per share | $ | 0.23 | $ | 0.14 | $ | 0.10 | $ | 0.52 | ||||||||
| Book value per share | $ | 16.16 | $ | 16.69 | $ | 16.16 | $ | 16.69 | ||||||||
| Shares used for basic EPS computation | 7,457,275 | 7,925,531 | 7,573,301 | 7,942,903 | ||||||||||||
| Shares used for diluted EPS computation | 7,615,570 | 8,093,571 | 7,626,066 | 8,126,051 | ||||||||||||
| Total shares issued and outstanding | 7,460,804 | 7,885,547 | 7,460,804 | 7,885,547 | ||||||||||||
| LOANS ORIGINATED AND PURCHASED FOR SALE: | ||||||||||||||||
| Retail originations | $ | 129,816 | $ | 185,668 | $ | 526,904 | $ | 769,495 | ||||||||
| Wholesale originations and purchases | 90,377 | 132,241 | 417,445 | 737,667 | ||||||||||||
| Total loans originated and purchased for sale | $ | 220,193 | $ | 317,909 | $ | 944,349 | $ | 1,507,162 | ||||||||
| LOANS SOLD: | ||||||||||||||||
| Servicing released | $ | 220,532 | $ | 363,443 | $ | 945,715 | $ | 1,547,435 | ||||||||
| Servicing retained | 5,326 | 6,074 | 22,574 | 28,895 | ||||||||||||
| Total loans sold | $ | 225,858 | $ | 369,517 | $ | 968,289 | $ | 1,576,330 | ||||||||
| As of | As of | As of | As of | As of | ||||||||||||||||
03/31/18 | 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | ||||||||||||||||
ASSET QUALITY RATIOS AND DELINQUENT LOANS: | ||||||||||||||||||||
| Recourse reserve for loans sold | $ | 283 | $ | 283 | $ | 305 | $ | 305 | $ | 403 | ||||||||||
| Allowance for loan losses | $ | 7,531 | $ | 8,075 | $ | 8,063 | $ | 8,039 | $ | 8,275 | ||||||||||
Non-performing loans to loans held for investment, net | 0.76 | % | 0.90 | % | 0.88 | % | 0.88 | % | 1.01 | % | ||||||||||
| Non-performing assets to total assets | 0.64 | % | 0.74 | % | 0.67 | % | 0.80 | % | 0.97 | % | ||||||||||
| Allowance for loan losses to gross loans held | ||||||||||||||||||||
| for investment | 0.84 | % | 0.90 | % | 0.88 | % | 0.88 | % | 0.93 | % | ||||||||||
Net loan charge-offs (recoveries) to average loans receivable (annualized) | 0.02 | % | (0.01 | )% | 0.06 | % | (0.06 | )% | (0.02 | )% | ||||||||||
| Non-performing loans | $ | 6,766 | $ | 7,985 | $ | 7,991 | $ | 7,995 | $ | 8,852 | ||||||||||
| Loans 30 to 89 days delinquent | $ | 160 | $ | 1,537 | $ | 1,512 | $ | 1,035 | $ | 978 | ||||||||||
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PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited - Dollars in Thousands) | ||||||||||||||||||||
Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||||||||
03/31/18 | 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | ||||||||||||||||
| Recourse recovery for loans sold | $ | - | $ | (22 | ) | $ | - | $ | (98 | ) | $ | (9 | ) | |||||||
| (Recovery) provision for loan losses | $ | (550 | ) | $ | (11 | ) | $ | 169 | $ | (377 | ) | $ | (165 | ) | ||||||
| Net loan charge-offs (recoveries) | $ | 39 | $ | (23 | ) | $ | 145 | $ | (141 | ) | $ | (49 | ) | |||||||
| As of | As of | As of | As of | As of | ||||||||||||||||
03/31/18 | 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | ||||||||||||||||
| REGULATORY CAPITAL RATIOS (BANK): | ||||||||||||||||||||
| Tier 1 leverage ratio | 9.83 | % | 9.59 | % | 9.54 | % | 9.90 | % | 9.79 | % | ||||||||||
| Common equity tier 1 capital ratio | 16.72 | % | 16.44 | % | 15.79 | % | 16.14 | % | 16.10 | % | ||||||||||
| Tier 1 risk-based capital ratio | 16.72 | % | 16.44 | % | 15.79 | % | 16.14 | % | 16.10 | % | ||||||||||
| Total risk-based capital ratio | 17.84 | % | 17.65 | % | 16.95 | % | 17.28 | % | 17.28 | % | ||||||||||
| REGULATORY CAPITAL RATIOS (COMPANY): | ||||||||||||||||||||
| Tier 1 leverage ratio | 10.33 | % | 10.28 | % | 10.55 | % | 10.77 | % | 11.07 | % | ||||||||||
| Common equity tier 1 capital ratio | 17.56 | % | 17.62 | % | 17.46 | % | 17.57 | % | 18.20 | % | ||||||||||
| Tier 1 risk-based capital ratio | 17.56 | % | 17.62 | % | 17.46 | % | 17.57 | % | 18.20 | % | ||||||||||
| Total risk-based capital ratio | 18.68 | % | 18.83 | % | 18.62 | % | 18.71 | % | 19.38 | % | ||||||||||
| As of March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| Balance | Rate(1) | Balance | Rate(1) | |||||||||||||
| INVESTMENT SECURITIES: | ||||||||||||||||
| Held to maturity: | ||||||||||||||||
| Certificates of deposit | $ | 600 | 1.76 | % | $ | 800 | 0.86 | % | ||||||||
| U.S. SBA loan pool securities | 3,009 | 1.86 | - | - | ||||||||||||
| U.S. government sponsored enterprise MBS | 92,115 | 2.10 | 40,235 | 1.91 | ||||||||||||
| Total investment securities held to maturity | $ | 95,724 | 2.09 | % | $ | 41,035 | 1.89 | % | ||||||||
| Available for sale (at fair value): | ||||||||||||||||
| U.S. government agency MBS | $ | 4,656 | 2.72 | % | $ | 5,700 | 2.12 | % | ||||||||
| U.S. government sponsored enterprise MBS | 2,951 | 3.50 | 3,661 | 2.87 | ||||||||||||
| Private issue collateralized mortgage obligations | 395 | 3.16 | 501 | 2.82 | ||||||||||||
| Total investment securities available for sale | $ | 8,002 | 3.03 | % | $ | 9,862 | 2.43 | % | ||||||||
| Total investment securities | $ | 103,726 | 2.16 | % | $ | 50,897 | 2.00 | % | ||||||||
(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. | ||||||||||||||||
Page 17 of 20
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PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)
| As of March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| Balance | Rate(1) | Balance | Rate(1) | |||||||||||||
| LOANS HELD FOR INVESTMENT: | ||||||||||||||||
| Held to maturity: | ||||||||||||||||
| Single-family (1 to 4 units) | $ | 316,912 | 4.18 | % | $ | 319,714 | 3.94 | % | ||||||||
| Multi-family (5 or more units) | 466,266 | 4.10 | 459,180 | 4.05 | ||||||||||||
| Commercial real estate | 106,937 | 4.67 | 96,364 | 4.63 | ||||||||||||
| Construction | 10,915 | 6.69 | 16,552 | 5.75 | ||||||||||||
| Other | - | - | 241 | 5.57 | ||||||||||||
| Commercial business | 450 | 6.06 | 668 | 6.11 | ||||||||||||
| Consumer | 130 | 13.80 | 126 | 13.48 | ||||||||||||
| Total loans held for investment | 901,610 | 4.23 | % | 892,845 | 4.11 | % | ||||||||||
| Undisbursed loan funds | (5,591 | ) | (9,468 | ) | ||||||||||||
| Advance payments of escrows | 160 | 165 | ||||||||||||||
| Deferred loan costs, net | 5,519 | 5,243 | ||||||||||||||
| Allowance for loan losses | (7,531 | ) | (8,275 | ) | ||||||||||||
| Total loans held for investment, net | $ | 894,167 | $ | 880,510 | ||||||||||||
| Purchased loans serviced by others included above | $ | 20,659 | 3.32 | % | $ | 23,397 | 3.37 | % | ||||||||
(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 March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| Balance | Rate(1) | Balance | Rate(1) | |||||||||||||
| DEPOSITS: | ||||||||||||||||
| Checking accounts – non interest-bearing | $ | 87,520 | - | % | $ | 76,795 | - | % | ||||||||
| Checking accounts – interest-bearing | 260,492 | 0.11 | 258,197 | 0.11 | ||||||||||||
| Savings accounts | 295,606 | 0.20 | 290,158 | 0.20 | ||||||||||||
| Money market accounts | 33,396 | 0.21 | 32,648 | 0.21 | ||||||||||||
| Time deposits | 245,485 | 1.03 | 280,508 | 0.98 | ||||||||||||
| Total deposits | $ | 922,499 | 0.38 | % | $ | 938,306 | 0.39 | % | ||||||||
| BORROWINGS: | ||||||||||||||||
| Overnight | $ | - | - | % | $ | - | - | % | ||||||||
| Three months or less | - | - | - | - | ||||||||||||
| Over three to six months | - | - | - | - | ||||||||||||
| Over six months to one year | - | - | 10,017 | 3.01 | ||||||||||||
| Over one year to two years | 10,000 | 1.53 | - | - | ||||||||||||
| Over two years to three years | 20,000 | 3.85 | 10,000 | 1.53 | ||||||||||||
| Over three years to four years | 21,176 | 2.07 | 20,000 | 3.85 | ||||||||||||
| Over four years to five years | - | - | 21,227 | 2.08 | ||||||||||||
| Over five years | 60,000 | 2.40 | 50,000 | 2.36 | ||||||||||||
| Total borrowings | $ | 111,176 | 2.52 | % | $ | 111,244 | 2.56 | % | ||||||||
(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. |
Page 18 of 20
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PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)
| Quarter Ended | Quarter Ended | |||||||||||||||
| March 31, 2018 | March 31, 2017 | |||||||||||||||
| Balance | Rate(1) | Balance | Rate(1) | |||||||||||||
| SELECTED AVERAGE BALANCE SHEETS: | ||||||||||||||||
Loans receivable, net (2) | $ | 961,826 | 4.13 | % | $ | 974,207 | 3.98 | % | ||||||||
| Investment securities | 99,390 | 1.54 | % | 47,283 | 1.20 | % | ||||||||||
| FHLB – San Francisco stock | 8,108 | 7.10 | % | 8,094 | 9.09 | % | ||||||||||
| Interest-earning deposits | 61,591 | 1.51 | % | 125,155 | 0.80 | % | ||||||||||
| Total interest-earning assets | $ | 1,130,915 | 3.78 | % | $ | 1,154,739 | 3.56 | % | ||||||||
| Total assets | $ | 1,165,735 | $ | 1,186,709 | ||||||||||||
| Deposits | $ | 912,029 | 0.38 | % | $ | 927,994 | 0.40 | % | ||||||||
| Borrowings | 112,625 | 2.56 | % | 111,251 | 2.60 | % | ||||||||||
| Total interest-bearing liabilities | $ | 1,024,654 | 0.62 | % | $ | 1,039,245 | 0.64 | % | ||||||||
| Total stockholders' equity | $ | 120,277 | $ | 132,218 | ||||||||||||
(1)The interest rate described in the rate column is the weighted-average interest rate or yield/cost of all instruments, which are included in the balance of the respective line item. |
(2)Includes loans held for investment and loans held for sale at fair value, net of the allowance for loan losses. |
| Nine Months Ended | Nine Months Ended | |||||||||||||||
| March 31, 2018 | March 31, 2017 | |||||||||||||||
| Balance | Rate(1) | Balance | Rate(1) | |||||||||||||
| SELECTED AVERAGE BALANCE SHEETS: | ||||||||||||||||
Loans receivable, net (2) | $ | 986,952 | 4.03 | % | $ | 1,034,671 | 3.90 | % | ||||||||
| Investment securities | 87,710 | 1.46 | % | 47,495 | 0.99 | % | ||||||||||
| FHLB – San Francisco stock | 8,108 | 7.04 | % | 8,094 | 13.62 | % | ||||||||||
| Interest-earning deposits | 57,254 | 1.36 | % | 79,813 | 0.67 | % | ||||||||||
| Total interest-earning assets | $ | 1,140,024 | 3.72 | % | $ | 1,170,073 | 3.63 | % | ||||||||
| Total assets | $ | 1,173,264 | $ | 1,202,136 | ||||||||||||
| Deposits | $ | 917,131 | 0.38 | % | $ | 933,406 | 0.42 | % | ||||||||
| Borrowings | 112,766 | 2.57 | % | 119,299 | 2.40 | % | ||||||||||
| Total interest-bearing liabilities | $ | 1,029,897 | 0.62 | % | $ | 1,052,705 | 0.64 | % | ||||||||
| Total stockholders' equity | $ | 124,193 | $ | 132,769 | ||||||||||||
(1)The interest rate described in the rate column is the weighted-average interest rate or yield/cost of all instruments, which are included in the balance of the respective line item. |
(2)Includes loans held for investment and loans held for sale at fair value, net of the allowance for loan losses. |
Page 19 of 20
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PROVIDENT FINANCIAL HOLDINGS, INC. Asset Quality (1) (Unaudited – Dollars in Thousands) | ||||||||||||||||||||
| As of | As of | As of | As of | As of | ||||||||||||||||
03/31/18 | 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | ||||||||||||||||
Loans on non-accrual status (excluding restructured loans): | ||||||||||||||||||||
| Mortgage loans: | ||||||||||||||||||||
| Single-family | $ | 3,616 | $ | 4,508 | $ | 4,534 | $ | 4,668 | $ | 4,704 | ||||||||||
| Multi-family | - | - | - | - | 372 | |||||||||||||||
| Commercial real estate | - | - | - | 201 | 201 | |||||||||||||||
| Total | 3,616 | 4,508 | 4,534 | 4,869 | 5,277 | |||||||||||||||
| Accruing loans past due 90 days or more: | - | - | - | - | - | |||||||||||||||
| Total | - | - | - | - | - | |||||||||||||||
| Restructured loans on non-accrual status: | ||||||||||||||||||||
| Mortgage loans: | ||||||||||||||||||||
| Single-family | 3,092 | 3,416 | 3,393 | 3,061 | 3,507 | |||||||||||||||
| Commercial business loans | 58 | 61 | 64 | 65 | 68 | |||||||||||||||
| Total | 3,150 | 3,477 | 3,457 | 3,126 | 3,575 | |||||||||||||||
| Total non-performing loans | 6,766 | 7,985 | 7,991 | 7,995 | 8,852 | |||||||||||||||
| Real estate owned, net | 787 | 621 | - | 1,615 | 2,768 | |||||||||||||||
| Total non-performing assets | $ | 7,553 | $ | 8,606 | $ | 7,991 | $ | 9,610 | $ | 11,620 | ||||||||||
(1) | The non-performing loans balances are net of individually evaluated or collectively evaluated allowances, specifically attached to the individual loans and include fair value credit adjustments. |
Page 20 of 20