Preferred Loans Grow by 23% for the Fiscal Year and Increase to 39%
of Loans Held for Investment
Deposits Grow by 9% for the Fiscal Year
RIVERSIDE, Calif., July 30, 2007 (PRIME NEWSWIRE) -- Provident Financial Holdings, Inc. ("Company"), (Nasdaq:PROV), the holding company for Provident Savings Bank, F.S.B. ("Bank"), today announced fourth quarter earnings for the fiscal year ended June 30, 2007.
For the quarter ended June 30, 2007, the Company reported net income of $2.00 million, or $0.32 per diluted share (on 6.32 million weighted-average shares outstanding), compared to net income of $3.82 million, or $0.56 per diluted share (on 6.88 million weighted-average shares outstanding), in the comparable period a year ago. The decline in net income in the quarter ended June 30, 2007 was primarily attributable to a decrease in net interest income, a decrease in the gain on sale of loans and an increase in compensation expense, partly offset by a decrease in other operating expenses. The decrease in weighted-average shares outstanding primarily reflects repurchases of common stock through the Company's stock repurchase programs.
"Although the current operating environment for community banks and thrifts remains very challenging, we remain confident in our efforts to enhance the franchise value of the Company over time," said Craig G. Blunden, Chairman, President and Chief Executive Officer of the Company. "Growing the community banking business in the Inland Empire region of Southern California is the catalyst to accomplish this long-term goal. We will continue to invest in our deposit gathering and preferred loan capabilities."
Mr. Blunden went on to say, "We continue to respond to the difficult mortgage banking environment. During the quarter, we closed or consolidated four mortgage banking offices and reduced our mortgage banking workforce by 18 percent from March 31, 2007."
Return on average assets for the fourth quarter of fiscal 2007 was 0.47 percent, compared to 0.96 percent for the same period of fiscal 2006. Return on average stockholders' equity for the fourth quarter of fiscal 2007 was 6.09 percent, compared to 11.20 percent for the comparable period of fiscal 2006.
On a sequential quarter basis, net income for the fourth quarter of fiscal 2007 decreased by $543,000, or 21 percent, to $2.00 million from $2.54 million in the third quarter of fiscal 2007; and diluted earnings per share decreased $0.07, or 18 percent, to $0.32 from $0.39 in the third quarter of fiscal 2007. Return on average assets decreased 11 basis points to 0.47 percent for the fourth quarter of fiscal 2007 from 0.58 percent in the third quarter of fiscal 2007 and return on average equity for the fourth quarter of fiscal 2007 was 6.09 percent, compared to 7.60 percent for the third quarter of fiscal 2007.
For the twelve months ended June 30, 2007, net income was $11.29 million, a decrease of 45 percent from net income of $20.54 million for the comparable period ended June 30, 2006; and diluted earnings per share for the twelve months ended June 30, 2007 decreased $1.26, or 42 percent, to $1.72 from $2.98 for the comparable period last year. The decrease in net income for the twelve months ended June 30, 2007 was primarily attributable to the specific loan loss reserve of $2.62 million (approximately $1.52 million net of statutory taxes) on 23 individual construction loans recognized in the quarter ended December 31, 2006 and the $6.28 million gain on sale of real estate (approximately $3.64 million net of statutory taxes) recognized in the quarter ended December 31, 2005 (not replicated in fiscal 2007), partly offset by the $2.31 million gain on sale of real estate (approximately $1.34 million net of statutory taxes) recognized in the quarter ended September 30, 2006. Return on average assets for the twelvemonths ended June 30, 2007 decreased 64 basis points to 0.66 percent from 1.30 percent for the twelve-month period a year earlier. Return on average stockholders' equity for the twelve months ended June 30, 2007 was 8.39 percent, compared to 15.71 percent for the twelve-month period a year earlier.
Net interest income before provision for loan losses decreased by $1.08 million, or 10 percent, to $9.85 million in the fourth quarter of fiscal 2007 from $10.93 million for the same period in fiscal 2006. Non-interest income decreased $2.41 million, or 52 percent, to $2.21 million in the fourth quarter of fiscal 2007 from $4.63 million in the comparable period of fiscal 2006. Non-interest expense decreased $167,000, or two percent, to $8.78 million in the fourth quarter of fiscal 2007 from $8.95 million in the comparable period in fiscal 2006.
The average balance of loans outstanding increased by $132.4 million to $1.46 billion in the fourth quarter of fiscal 2007 from $1.32 billion in the same quarter of fiscal 2006, and the average yield increased by six basis points to 6.28 percent in the fourth quarter of fiscal 2007 from an average yield of 6.22 percent in the same quarter of fiscal 2006. The increase in the average loan yield was primarily attributable to higher interest rates on newly originated loans and the repricing of existing adjustable rate loans in the loans held for investment portfolio, partly offset by accrued interest reversals on non-accrual loans, primarily from loan repurchases. Total loans originated for investment in the fourth quarter of fiscal 2007 were $56.3 million (including $2.1 million of loans purchased for investment), which consisted primarily of single-family and commercial real estate loans. This compares to total loans originated for investment of $161.5 million (including $39.9 million of loans purchased for investment) in the fourth quarter of fiscal 2006. The outstanding balance of "preferred loans" (multi-family, commercial real estate, construction and commercial business loans) increased by $98.1 million, or 23 percent, to $522.9 million at June 30, 2007 from $424.8 million at June 30, 2006. The ratio of preferred loans to total loans held for investment increased to 39 percent at June 30, 2007 compared to 34 percent at June 30, 2006. Loan prepayments in the fourth quarter of fiscal 2007 were $103.6 million, compared to $100.8 million in the same quarter of fiscal 2006.
Average deposits increased by $63.9 million to $986.8 million and the average cost of deposits increased by 88 basis points to 3.59 percent in the fourth quarter of fiscal 2007, compared to an average balance of $922.9 million and an average cost of 2.71 percent in the same quarter last year. Transaction account balances (core deposits) decreased by $41.1 million, or 11 percent, to $350.0 million at June 30, 2007 from $391.1 million at June 30, 2006. The decrease is primarily attributable to a $28.8 million, or 16 percent, decline in savings account balances. Time deposits increased by $122.1 million, or 23 percent, to $648.6 million at June 30, 2007 compared to $526.5 million at June 30, 2006. The increase in time deposits is primarily attributable to the Company's time deposit marketing campaigns and depositors switching from savings deposits to time deposits.
The average balance of borrowings, which primarily consists of Federal Home Loan Bank ("FHLB") of San Francisco advances, increased $55.0 million to $558.6 million and the average cost of advances increased 23 basis points to 4.64 percent in the fourth quarter of fiscal 2007, compared to an average balance of $503.6 million and an average cost of 4.41 percent in the same quarter of fiscal 2006. The increase in the average cost of borrowings was primarily the result of higher interest rates on short-term advances.
The net interest margin during the fourth quarter of fiscal 2007 decreased 45 basis points to 2.37 percent from 2.82 percent during the same quarter last year. On a sequential quarter basis, the net interest margin in the fourth quarter of fiscal 2007 decreased 13 basis points from 2.50 percent in the third quarter of fiscal 2007.
During the fourth quarter of fiscal 2007, the Company recorded a loan loss recovery of $490,000, compared to a loan loss recovery of $205,000 during the same period of fiscal 2006. The loan loss recovery in the fourth quarter of fiscal 2007 was primarily attributable to a $41.2 million sequential quarter decline in loans held for investment and a $6.2 million sequential quarter decline in classified assets, primarily as a result of loan payoffs or loan classification upgrades. Classified assets at June 30, 2007 were $32.3 million, comprised of $13.3 million in the special mention category and $19.0 million in the substandard category. Classified assets at March 31, 2007 were $38.5 million, comprised of $12.7 million in the special mention category and $25.8 million in the substandard category.
Non-performing assets increased to $19.7 million, or 1.20 percent of total assets, at June 30, 2007, compared to $14.7 million, or 0.83 percent of total assets at March 31, 2007 and $2.5 million, or 0.16 percent of total assets, at June 30, 2006. The non-performing assets at June 30, 2007 were primarily comprised of 16 single-family loans originated for investment ($4.8 million), 23 construction loans originated for investment ($2.4 million), 31 single-family loans repurchased from, or unable to sell to, investors ($8.5 million) and 10 single-family properties acquired in the settlement of loans ($3.8 million). Net charge-offs for the quarter ended June 30, 2007 were $402,000 or 0.11 percent of average loans outstanding, compared to $42,000 or 0.01 percent of average loans outstanding in the comparable quarter last year.
The allowance for loan losses was $14.8 million at June 30, 2007, or 1.09 percent of gross loans held for investment, compared to $10.3 million, or 0.81 percent of gross loans held for investment at June 30, 2006. The allowance for loan losses at June 30, 2007 includes $3.3 million of specific loan loss reserves, compared to $238,000 of specific loan loss reserves at June 30, 2006. Management believes that the allowance for loan losses is sufficient to absorb potential losses inherent in loans held for investment.
The decrease in non-interest income in the fourth quarter of fiscal 2007 compared to the same period of fiscal 2006 was primarily the result of a decrease in the gain on sale of loans. The gain on sale of loans declined by $2.48 million, or 80 percent, to $601,000 for the quarter ended June 30, 2007 from $3.08 million in the comparable quarter last year. The decline in the gain on sale of loans was due to the lower volume of loans originated for sale and the lower average loan sale margin. Total loans sold for the quarter ended June 30, 2007 was $221.6 million, down 24 percent from $291.0 million for the same quarter last year. The average loan sale margin for mortgage banking was 31 basis points for the quarter ended June 30, 2007, down 64 basis points from 95 basis points in the comparable quarter last year. The decrease in the average loan sale margin was primarily attributable to a $423,000 lower of cost or market adjustment on unsaleable loans that were moved to loans held for investment, six single-family loans sold at a $415,000 loss, the $90,000 loss on derivative financial instruments consistent with SFAS No. 133, and a $62,000 reserve provision for loans sold that are subject to early payment default repurchase. Also, the mortgage banking environment remains highly competitive and volatile as a result of the well-publicized collapse of the sub-prime loan market, which has further eroded loan sale prices.
The volume of loans originated for sale decreased $103.2 million, or 35 percent, to $188.5 million in the fourth quarter of fiscal 2007 from $291.7 million during the same period last year. Total loan originations (including loans originated for investment, loans purchased for investment and loans originated for sale) were $244.7 million in the fourth quarter of fiscal 2007, a decrease of $208.5 million, or 46 percent, from $453.2 million in the same quarter of fiscal 2006. The decrease in loan originations was primarily attributable to a decrease in loan demand resulting from an increase in interest rates, a general decline in real estate values and more stringent underwriting guidelines.
In the fourth quarter of fiscal 2007, the fair-value adjustment of derivative financial instruments pursuant to Statement of Financial Accounting Standards ("SFAS") No. 133 on the Consolidated Statements of Operations was a loss of $90,000, compared to a loss of $257,000 in the same period last year. The fair-value adjustment for SFAS No. 133 is derived from changes in the market value of commitments to extend credit on loans to be held for sale, forward loan sale agreements and option contracts. The SFAS No. 133 adjustment is relatively volatile and results in timing differences in the recognition of income, which may have an adverse impact on future earnings.
The decrease in non-interest expense was the result of a decrease in other operating expenses, primarily attributable to last year's $500,000 contribution to the Provident Savings Bank Charitable Foundation (not replicated this year). The decrease in other operating expenses was partly offset by an increase in compensation expense, the result of lower deferred compensation attributable to the application of SFAS No. 91, which was partly offset by lower incentive compensation expenses. On July 1, 2006, the Bank lowered the SFAS No. 91 deferred compensation allocated to each loan originated after completing the annual review and analysis of SFAS No. 91.
The Company's efficiency ratio increased to 73 percent in the fourth quarter of fiscal 2007 from 58 percent in the fourth quarter of fiscal 2006.
The effective income tax rate for the fourth quarter of fiscal 2007 was 47.1 percent, up from 43.8 percent in the same quarter last year. The increase was primarily due to a higher percentage of non-deductible stock based compensation expenses relative to income before taxes. The Company believes that the effective income tax rate applied in the fourth quarter of fiscal 2007 reflects its current income tax obligations.
The Company repurchased 168,491 shares of its common stock during the quarter ended June 30, 2007 at an average cost of $24.79 per share. During the quarter, the Company completed the January 2007 Stock Repurchase Program. To date, the Company has not repurchased any shares authorized by the June 2007 Stock Repurchase Program, leaving 318,847 shares available for future repurchase activity.
The Bank currently operates 13 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire). Provident Bank Mortgage ("PBM") operates nine loan production offices located throughout Southern California and one loan production office located in Northern California. In the fourth quarter of fiscal 2007, PBM closed three loan production offices and consolidated one loan production office with another location. The one-time charge associated with the reorganization was approximately $215,000 primarily the result of lease obligations and employee severance payments.
The Company will host a conference call for institutional investors and bank analysts on Tuesday, July 31, 2007 at 9:30 a.m. (Pacific Time) to discuss its financial results. The conference call can be accessed by dialing (800) 230-1093 and requesting the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Tuesday, August 7, 2007 by dialing (800) 475-6701 and referencing access code number 880095.
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
Certain matters in this News Release and the conference call noted above may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to, among others, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding the Company's mission and vision. These forward-looking statements are based upon current management expectations, and may, therefore, involve risks and uncertainties. The Company's actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide range of factors including, but not limited to, the general business environment, interest rates, the California real estate market, competitive conditions between banks and non-bank financial services providers,regulatory changes, and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2006.
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Financial Condition
(Unaudited - Dollars In Thousands)
June 30, June 30,
2007 2006
====================================================================
Assets
Cash and due from banks $ 11,024 $ 13,558
Federal funds sold 1,800 2,800
--------------------------------------------------------------------
Cash and cash equivalents 12,824 16,358
Investment securities -
held to maturity
(fair value $18,837 and
$49,914, respectively) 19,001 51,031
Investment securities -
available for sale at fair value 131,842 126,158
Loans held for investment,
net of allowance for loan
losses of $14,845 and
$10,307, respectively 1,349,289 1,262,997
Loans held for sale, at lower
of cost or market 1,337 4,713
Receivable from sale of loans 60,513 99,930
Accrued interest receivable 7,235 6,774
Real estate held for investment, net -- 653
Real estate owned, net 3,804 --
FHLB - San Francisco stock 43,832 37,585
Premises and equipment, net 7,123 6,860
Prepaid expenses and other assets 10,716 9,411
--------------------------------------------------------------------
Total assets $1,647,516 $1,622,470
====================================================================
Liabilities and Stockholders' Equity
Liabilities:
Non interest-bearing deposits $ 43,694 $ 48,776
Interest-bearing deposits 954,878 868,806
--------------------------------------------------------------------
Total deposits 998,572 917,582
Borrowings 502,774 546,211
Accounts payable, accrued
interest and other liabilities 17,243 22,467
--------------------------------------------------------------------
Total liabilities 1,518,589 1,486,260
Stockholders' equity:
Preferred stock, $.01 par value
(2,000,000 shares authorized;
none issued and outstanding) -- --
Common stock, $.01 par value
(15,000,000 shares authorized;
12,428,365 and 12,376,972 shares
issued, respectively;
6,376,945 and 6,991,842 shares
outstanding, respectively) 124 124
Additional paid-in capital 69,456 66,798
Retained earnings 149,523 142,867
Treasury stock at cost (6,051,420
and 5,385,130 shares,
respectively) (90,694) (72,524)
Unearned stock compensation (175) (644)
Accumulated other comprehensive
income (loss), net of tax 693 (411)
--------------------------------------------------------------------
Total stockholders' equity 128,927 136,210
--------------------------------------------------------------------
Total liabilities and
stockholders' equity $1,647,516 $1,622,470
====================================================================
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations
(Unaudited - In Thousands, Except Earnings Per Share)
Quarter Ended Twelve Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
====================================================================
Interest income:
Loans receivable, net $ 22,841 $ 20,571 $ 91,525 $ 77,821
Investment securities 1,768 1,617 7,149 6,831
FHLB - San Francisco stock 521 486 2,225 1,831
Interest-earning deposits 18 18 69 144
--------------------------------------------------------------------
Total interest income 25,148 22,692 100,968 86,627
Interest expense:
Checking and money market
deposits 405 316 1,471 1,224
Savings deposits 784 668 2,823 3,151
Time deposits 7,640 5,241 26,867 17,691
Borrowings 6,469 5,540 28,031 20,507
--------------------------------------------------------------------
Total interest expense 15,298 11,765 59,192 42,573
--------------------------------------------------------------------
Net interest income, before
provision for loan losses 9,850 10,927 41,776 44,054
(Recovery) provision for loan
losses (490) (205) 5,078 1,134
--------------------------------------------------------------------
Net interest income, after
(recovery) provision for
loan losses 10,340 11,132 36,698 42,920
Non-interest income:
Loan servicing and other fees 706 635 2,132 2,572
Gain on sale of loans, net 601 3,077 9,318 13,481
Deposit account fees 530 507 2,087 2,093
Gain on sale of real estate 1 20 2,359 6,355
Other 376 386 1,665 1,708
--------------------------------------------------------------------
Total non-interest income 2,214 4,625 17,561 26,209
Non-interest expense:
Salaries and employee
benefits 5,616 5,194 22,032 20,480
Premises and occupancy 984 870 3,314 3,036
Equipment 349 445 1,570 1,689
Professional expenses 346 326 1,193 1,317
Sales and marketing expenses 221 409 945 1,125
Other 1,266 1,705 4,795 5,266
--------------------------------------------------------------------
Total non-interest expense 8,782 8,949 33,849 32,913
--------------------------------------------------------------------
Income before taxes 3,772 6,808 20,410 36,216
Provision for income taxes 1,777 2,984 9,124 15,676
--------------------------------------------------------------------
Net income $ 1,995 $ 3,824 $ 11,286 $ 20,540
====================================================================
Basic earnings per share $ 0.32 $ 0.57 $ 1.75 $ 3.10
Diluted earnings per share $ 0.32 $ 0.56 $ 1.72 $ 2.98
Cash dividends per share $ 0.18 $ 0.15 $ 0.69 $ 0.58
====================================================================
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Financial Condition - Sequential Quarter
(Unaudited - Dollars In Thousands)
June 30, March 31,
2007 2007
====================================================================
Assets
Cash and due from banks $ 11,024 $ 12,468
Federal funds sold 1,800 3,800
--------------------------------------------------------------------
Cash and cash equivalents 12,824 16,268
Investment securities - held to
maturity (fair value $18,837 and
$27,741, respectively) 19,001 28,031
Investment securities - available for
sale at fair value 131,842 137,009
Loans held for investment, net of
allowance for loan losses of
$14,845 and $15,737, respectively 1,349,289 1,390,457
Loans held for sale, at lower of cost
or market 1,337 34,854
Receivable from sale of loans 60,513 94,500
Accrued interest receivable 7,235 7,785
Real estate owned, net 3,804 932
FHLB - San Francisco stock 43,832 43,314
Premises and equipment, net 7,123 6,946
Prepaid expenses and other assets 10,716 9,938
--------------------------------------------------------------------
Total assets $1,647,516 $1,770,034
====================================================================
Liabilities and Stockholders' Equity
Liabilities:
Non interest-bearing deposits $ 43,694 $ 46,990
Interest-bearing deposits 954,878 935,567
--------------------------------------------------------------------
Total deposits 998,752 982,557
Borrowings 502,774 636,933
Accounts payable, accrued interest and
other liabilities 17,243 18,956
--------------------------------------------------------------------
Total liabilities 1,518,589 1,638,446
Stockholders' equity:
Preferred stock, $.01 par value
(2,000,000 shares authorized;
none issued and outstanding) -- --
Common stock, $.01 par value
(15,000,000 shares authorized;
12,428,365 and 12,426,922 shares issued,
respectively; 6,376,945 and 6,543,993
shares outstanding, respectively) 124 124
Additional paid-in capital 69,456 68,849
Retained earnings 149,523 148,688
Treasury stock at cost (6,051,420 and
5,882,929 shares, respectively) (90,694) (86,507)
Unearned stock compensation (175) (289)
Accumulated other comprehensive income,
net of tax 693 723
--------------------------------------------------------------------
Total stockholders' equity 128,927 131,588
--------------------------------------------------------------------
Total liabilities and
stockholders' equity $1,647,516 $1,770,034
====================================================================
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations - Sequential Quarter
(Unaudited - In Thousands, Except Earnings Per Share)
Quarter Ended
-----------------------------
June 30, March 31,
2007 2007
====================================================================
Interest income:
Loans receivable, net $ 22,841 $ 23,725
Investment securities 1,768 1,828
FHLB - San Francisco stock 521 597
Interest-earning deposits 18 14
--------------------------------------------------------------------
Total interest income 25,148 26,164
Interest expense:
Checking and money market deposits 405 369
Savings deposits 784 724
Time deposits 7,640 6,963
Borrowings 6,469 7,441
--------------------------------------------------------------------
Total interest expense 15,298 15,497
--------------------------------------------------------------------
Net interest income, before provision for
loan losses 9,850 10,667
(Recovery) provision for loan losses (490) 1,185
--------------------------------------------------------------------
Net interest income, after (recovery)
provision for loan losses 10,340 9,482
Non-interest income:
Loan servicing and other fees 706 462
Gain on sale of loans, net 601 2,306
Deposit account fees 530 525
Gain on sale of real estate, net 1 18
Other 376 368
--------------------------------------------------------------------
Total non-interest income 2,214 3,679
Non-interest expense:
Salaries and employee benefits 5,616 5,641
Premises and occupancy 984 801
Equipment 349 444
Professional expenses 346 305
Sales and marketing expenses 221 247
Other 1,266 1,154
--------------------------------------------------------------------
Total non-interest expense 8,782 8,592
--------------------------------------------------------------------
Income before taxes 3,772 4,569
Provision for income taxes 1,777 2,031
--------------------------------------------------------------------
Net income $ 1,995 $ 2,538
====================================================================
Basic earnings per share $ 0.32 $ 0.40
Diluted earnings per share $ 0.32 $ 0.39
Cash dividends per share $ 0.18 $ 0.18
====================================================================
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands, Except Share Information)
Quarter Ended Twelve Months Ended
June 30, June 30,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
SELECTED FINANCIAL RATIOS:
Return on average
assets 0.47% 0.96% 0.66% 1.30%
Return on average
stockholders' equity 6.09% 11.20% 8.39% 15.71%
Stockholders' equity to
total assets 7.83% 8.40% 7.83% 8.40%
Net interest spread 2.08% 2.55% 2.23% 2.65%
Net interest margin 2.37% 2.82% 2.51% 2.87%
Efficiency ratio 72.80% 57.54% 57.05% 46.84%
Average interest-earning
assets to average
interest-bearing
liabilities 107.54% 108.51% 107.85% 108.16%
SELECTED FINANCIAL DATA:
Basic earnings
per share $ 0.32 $ 0.57 $ 1.75 $ 3.10
Diluted earnings
per share $ 0.32 $ 0.56 $ 1.72 $ 2.98
Book value per share $ 20.22 $ 19.48 $ 20.22 $ 19.48
Shares used for basic
EPS computation 6,221,842 6,735,111 6,448,127 6,627,546
Shares used for
diluted EPS
computation 6,317,332 6,883,092 6,566,294 6,883,003
Total shares issued
and outstanding 6,376,945 6,991,842 6,376,945 6,991,842
ASSET QUALITY RATIOS:
Non-performing loans to
loans held for
investment, net 1.18% 0.20%
Non-performing assets to
total assets 1.20% 0.16%
Allowance for loan losses
to non-performing loans 93.32% 407.71%
Allowance for loan losses
to gross loans held for
investment 1.09% 0.81%
Net charge-offs to average
loans held for investment 0.11% 0.01%
REGULATORY CAPITAL RATIOS:
Tangible equity ratio 7.63% 8.08%
Tier 1 (core) capital
ratio 7.63% 8.08%
Total risk-based
capital ratio 12.51% 13.37%
Tier 1 risk-based
capital ratio 11.40% 12.37%
LOANS ORIGINATED FOR SALE:
Retail originations $ 59,254 $ 82,871 $ 296,356 $ 380,409
Wholesale originations 129,239 208,829 830,260 857,397
---------- ---------- ---------- ----------
Total loans
originated
for sale $ 188,493 $ 291,700 $1,126,616 $1,237,806
LOANS SOLD:
Servicing released $ 220,077 $ 289,353 $1,119,330 $1,242,093
Servicing retained 1,479 1,641 4,108 19,348
---------- ---------- ---------- ----------
Total loans sold $ 221,556 $ 290,994 $1,123,438 $1,261,441
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited)
(Dollars in Thousands) As of June 30,
------------------------------------------
2007 2006
-------------------- --------------------
Balance Rate Balance Rate
-------------------- --------------------
INVESTMENT SECURITIES:
Held to maturity:
U.S. government
sponsored enterprise
debt securities $ 19,000 3.15% $ 51,028 2.83%
U.S. government agency
mortgage-backed
securities ("MBS") 1 8.81 3 8.82
---------- ----------
Total investment
securities held to
maturity 19,001 3.15 51,031 2.83
Available for sale (at fair value):
U.S. government sponsored
enterprise debt
securities 9,683 3.20 21,264 2.85
U.S. government agency
MBS 57,539 4.99 37,365 4.09
U.S. government sponsored
enterprise MBS 59,066 5.05 61,249 4.23
Private issue
collateralized
mortgage obligations 4,641 4.28 5,412 3.81
Freddie Mac common stock 364 342
Fannie Mae common stock 26 19
Other common stock 523 507
---------- ----------
Total investment
securities available
for sale 131,842 4.83 126,158 3.91
---------- ----------
Total investment
securities $ 150,843 4.61% $ 177,189 3.60%
LOANS HELD FOR INVESTMENT:
Single-family
(1 to 4 units) $ 826,249 5.89% $ 828,091 5.66%
Multi-family
(5 or more units) 330,231 6.67 219,072 6.34
Commercial real estate 147,545 7.10 127,342 6.92
Construction 60,571 9.22 149,517 9.23
Commercial business 10,054 8.59 12,911 8.49
Consumer 509 12.15 734 10.64
Other 9,307 10.03 16,244 9.75
---------- ----------
Total loans held for
investment 1,384,466 6.40% 1,353,911 6.36%
Undisbursed loan funds (25,484) (84,024)
Deferred loan costs 5,152 3,417
Allowance for loan losses (14,845) (10,307)
---------- ----------
Total loans held for
investment, net $1,349,289 $1,262,997
Purchased loans serviced by
others included above $ 159,787 6.89% $ 102,700 7.05%
DEPOSITS:
Checking accounts - non
interest-bearing $ 43,694 --% $ 48,776 --%
Checking accounts -
interest-bearing 122,588 0.76 131,265 0.70
Savings accounts 153,036 2.04 181,806 1.38
Money market accounts 30,647 2.45 29,274 1.29
Time deposits 648,607 4.85 526,461 4.21
---------- ---------
Total deposits $ 998,572 3.63% $ 917,582 2.83%
Note: The interest rate or yield/cost described in the rate or yield/
cost column is the weighted-average interest rate or yield/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)
As of June 30,
---------------------------------------
2007 2006
----------------- -----------------
Balance Rate Balance Rate
----------------- -----------------
BORROWINGS:
Overnight $ 1,000 5.48% $ 75,500 5.38%
Six months or less 173,000 4.81 66,900 4.89
Over six to twelve months 72,000 4.14 15,000 3.87
Over one to two years 30,000 3.45 132,000 4.03
Over two to three years 72,000 4.02 30,000 3.45
Over three to four years 88,000 5.23 72,000 4.02
Over four to five years 65,000 4.41 88,000 5.23
Over five years 1,774 6.37 66,811 4.46
-------- --------
Total borrowings $502,774 4.55% $546,211 4.53%
Quarter Ended Twelve Months Ended
June 30, June 30,
---------------------- ----------------------
SELECTED AVERAGE 2007 2006 2007 2006
BALANCE SHEETS: Balance Balance Balance Balance
---------- ---------- ---------- ----------
Loans receivable,
net (a) $1,455,419 $1,323,026 $1,444,845 $1,288,657
Investment securities 161,421 185,468 175,439 203,096
FHLB - San Francisco
stock 43,684 37,872 41,588 38,266
Interest-earning
deposits 1,439 1,472 1,339 3,722
---------- ---------- ---------- ----------
Total interest-earning
assets $1,661,963 $1,547,838 $1,663,211 $1,533,741
Deposits $ 986,839 $ 922,867 $ 942,876 $ 932,553
Borrowings 558,644 503,567 599,286 485,523
---------- ---------- ---------- ----------
Total interest-bearing
liabilities $1,545,483 $1,426,434 $1,542,162 $1,418,076
Quarter Ended Twelve Months Ended
June 30, June 30,
------------------ -------------------
2007 2006 2007 2006
Yield/ Yield/ Yield/ Yield/
Cost Cost Cost Cost
-------- -------- -------- --------
Loans receivable, net (a) 6.28% 6.22% 6.33% 6.04%
Investment securities 4.38% 3.49% 4.07% 3.36%
FHLB - San Francisco stock 4.77% 5.13% 5.35% 4.78%
Interest-earning deposits 5.28% 4.89% 5.15% 3.87%
Total interest-earning assets 6.05% 5.86% 6.07% 5.65%
Deposits 3.59% 2.71% 3.30% 2.37%
Borrowings 4.64% 4.41% 4.68% 4.22%
Total interest-bearing
liabilities 3.97% 3.31% 3.84% 3.00%
(a) Includes loans held for investment, loans held for sale and
receivable from sale of loans.
Note: The interest rate or yield/cost described in the rate or
yield/cost column is the weighted-average interest rate or
yield/cost of all instruments, which are included in the balance
of the respective line item.