updated 1/27/2011 6:15:26 AM ET 2011-01-27T11:15:26

Net Income Increases 66%

Gain on Sale of Loans Increases 78%

Net Charge-Offs Decline by 39% (Sequential Quarter)

Non-Performing Assets Continue to Decline

Core Deposits (Transaction Accounts) Increase by 12%

Net Interest Margin Expands 24 Basis Points

RIVERSIDE, Calif., Jan. 27, 2011 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. ("Company") (Nasdaq:PROV), the holding company for Provident Savings Bank, F.S.B. ("Bank"), today announced second quarter earnings for the fiscal year ending June 30, 2011.

For the quarter ended December 31, 2010, the Company reported net income of $4.26 million, or $0.37 per diluted share (on 11.39 million average shares outstanding), compared to net income of $2.56 million, or $0.37 per diluted share (on 6.98 million average shares outstanding), in the comparable period a year ago. The second quarter of fiscal 2011 net income was primarily attributable to a decrease in the provision for loan losses and an increase in non-interest income, partly offset by an increase in non-interest expenses as compared to the same period last year.

"We have demonstrated our resiliency during this weak economic environment and we are now beginning to benefit from the earnings power of our franchise as a result of the improving fundamentals in our businesses and lower levels of non-performing assets. We are cautiously optimistic that the slowly improving economic conditions will firmly take root in 2011 and look forward to the day when the execution of our Business Plan and boosting franchise value becomes the focus rather than asset quality alone," said Craig G. Blunden, Chairman, President and Chief Executive Officer of the Company. "The current mortgage banking environment remains favorable, although a little less so than the prior quarter as a result of the slight rise in mortgage interest rates, however we continue to capture a significant amount of mortgage banking loan origination volume."

As of December 31, 2010 the Bank exceeded all regulatory capital requirements with Tangible Capital, Core Capital, Total Risk-Based Capital and Tier 1 Risk-Based Capital ratios of 9.80 percent, 9.80 percent, 15.23 percent and 13.97 percent, respectively. As of June 30, 2010 these ratios were 8.82 percent, 8.82 percent, 13.17 percent and 11.91 percent, respectively. For each period, the Bank's capital ratios exceeded the minimum required ratios to be deemed "well-capitalized" (5.00 percent for Core Capital, 10.00 percent for Total Risk-Based Capital and 6.00 percent for Tier 1 Risk-Based Capital).

Return on average assets for the second quarter of fiscal 2011 improved to 1.24 percent from 0.70 percent for the same period of fiscal 2010. Return on average stockholders' equity for the second quarter of fiscal 2011 improved to 12.62 percent from 9.00 percent for the comparable period of fiscal 2010.

On a sequential quarter basis, second quarter results reflect net income of $4.26 million, a six percent decrease from $4.53 million in the first quarter of fiscal 2011. The decrease was primarily attributable to a decrease in net interest income before provision for loan losses, an increase in the provision for loan losses, a decrease in non-interest income and an increase in non-interest expenses. Diluted earnings per share for the second quarter of fiscal 2011 decreased to $0.37 per share from $0.40 per share in the first quarter of fiscal 2011. Return on average assets decreased to 1.24 percent for the second quarter of fiscal 2011 from 1.29 percent in the first quarter of fiscal 2011; and return on average stockholders' equity for the second quarter of fiscal 2011 was 12.62 percent, compared to 13.93 percent for the first quarter of fiscal 2011.

For the six months ended December 31, 2010, net income was $8.78 million, compared to a net loss of $(2.46) million in the comparable period ended December 31, 2009; and the diluted earnings per share for the six months ended December 31, 2010 improved to $0.77 from a loss of $(0.38) for the comparable period last year. The return on average assets for the six months ended December 31, 2010 improved to 1.27 percent from negative (0.32) percent for the six-month period a year earlier. The return on average stockholders' equity for the six months ended December 31, 2010 was 13.26 percent, compared to negative (4.33) percent for the six-month period a year earlier.

Net interest income before provision for loan losses increased $131,000, or one percent, to $9.71 million in the second quarter of fiscal 2011 from $9.58 million for the same period in fiscal 2010. Non-interest income increased $3.41 million, or 51 percent, to $10.10 million in the second quarter of fiscal 2011 from $6.69 million in the comparable period of fiscal 2010. Non-interest expenses increased $1.77 million, or 18 percent, to $11.34 million in the second quarter of fiscal 2011 from $9.57 million in the comparable period in fiscal 2010. The increase in both non-interest income and non-interest expenses relate primarily to increased mortgage banking loan production.

The average balance of loans outstanding decreased by $73.0 million, or six percent, to $1.15 billion in the second quarter of fiscal 2011 from $1.22 billion in the same quarter of fiscal 2010. The managed decline in the loan balance was consistent with the Company's short-term de-leveraging strategy of curtailing loan portfolio growth to further its goals of maintaining prudent capital ratios, reducing its credit risk profile in response to unfavorable economic conditions and providing sufficient balance sheet capacity for its mortgage banking operations. The average yield on loans receivable decreased by 42 basis points to 5.20 percent in the second quarter of fiscal 2011 from an average yield of 5.62 percent in the same quarter of fiscal 2010. The decrease in the average loan yield was primarily attributable to payoffs of loans which had a higher yield than the average yield of loans held for investment and adjustable rate loans repricing to lower interest rates. Loans originated for investment in the second quarter of fiscal 2011 totaled $100,000, consisting of a single commercial real estate loan. In the second quarter of fiscal 2010, loans originated for investment totaled $1.6 million, consisting primarily of commercial real estate loans. The outstanding balance of "preferred loans" (multi-family, commercial real estate, construction and commercial business loans) decreased by $50.4 million, or 10 percent, to $432.1 million at December 31, 2010 from $482.5 million at December 31, 2009. The percentage of preferred loans to total loans held for investment at December 31, 2010 increased to 45 percent from 43 percent at December 31, 2009. Loan principal payments received in the second quarter of fiscal 2011 were $28.9 million, compared to $29.8 million in the same quarter of fiscal 2010. In addition, real estate acquired in the settlement of loans (real estate owned) in the second quarter of fiscal 2011 totaled $10.6 million, compared to $14.2 million in the same quarter of fiscal 2010.

The average balance of investment securities decreased by $19.3 million, or 37 percent, to $32.3 million in the second quarter of fiscal 2011 from $51.6 million in the same quarter of fiscal 2010. The decrease was attributable primarily to the sale of investment securities in fiscal 2010. The average yield decreased 90 basis points to 2.69 percent in the second quarter of fiscal 2011 from 3.59 percent in the same quarter of fiscal 2010. The decline in average yield was primarily attributable to the downward repricing of adjustable rate mortgage-backed securities, principal paydowns of higher yielding mortgage-backed securities and the sale of higher yielding mortgage-backed securities.

In October 2010, the Federal Home Loan Bank ("FHLB") – San Francisco announced a partial redemption of excess capital stock held by member banks. As a result, a total of $1.2 million of excess capital stock was redeemed in November 2010. Also in October 2010, the FHLB – San Francisco declared a cash dividend for the quarter ended September 30, 2010; the $30,000 cash dividend was received by the Bank in the second quarter of fiscal 2011.

The average balance of excess liquidity, primarily cash with the Federal Reserve Bank of San Francisco, decreased slightly to $103.6 million in the second quarter of fiscal 2011 from $104.8 million in the same quarter of fiscal 2010. The Bank maintained high levels of cash and cash equivalents in the second quarter of fiscal 2011 in response to the uncertain operating environment and to fund its mortgage banking business. The average yield earned on interest-earning deposits was 0.25% in the second quarter of fiscal 2011, much lower than the yield that could have been earned if the excess liquidity was deployed in loans or investment securities.

Average deposits were $933.0 million in the second quarter of fiscal 2011, a small decline from $936.0 million in the same quarter of fiscal 2010. The average cost of deposits decreased by 61 basis points to 1.11 percent in the second quarter of fiscal 2011 from 1.72 percent in the same quarter last year, primarily due to higher costing time deposits repricing to lower interest rates and a reduction in rates paid on transaction account balances ("core deposits"). Core deposits increased by $50.7 million, or 12 percent, to $466.7 million at December 31, 2010 from $416.0 million at December 31, 2009, primarily attributable to an increase in interest-bearing checking and savings account balances. Time deposits decreased by $60.8 million, or 12 percent, to $459.9 million at December 31, 2010 compared to $520.7 million at December 31, 2009.

The average balance of borrowings, which consisted of FHLB – San Francisco advances, decreased $122.4 million, or 30 percent, to $279.4 million in the second quarter of fiscal 2011 while the average cost of advances increased 13 basis points to 4.09 percent in the second quarter of fiscal 2011, compared to an average balance of $401.8 million and an average cost of 3.96 percent in the same quarter of fiscal 2010. The decrease in borrowings was primarily attributable to scheduled maturities.

The net interest margin during the second quarter of fiscal 2011 improved 24 basis points to 2.96 percent from 2.72 percent during the same quarter last year. The increase in the net interest margin was primarily attributable to the decrease in deposit costs, particularly time deposit costs, partly offset by a lower average yield on loans and investment securities, a higher level of excess liquidity invested at a nominal yield and a higher average cost of borrowings.

During the second quarter of fiscal 2011, the Company recorded a provision for loan losses of $1.05 million, compared to the $2.32 million provision for loan losses recorded during the same period of fiscal 2010 and the $877,000 provision recorded in the first quarter of fiscal 2011 (sequential quarter). Improving asset quality trends during the second quarter of fiscal 2011 resulted in a lower balance of non-performing loans, although the amount of the decline in non-performing loans was approximately the same as the increase in the 30 to 89 day delinquent category from the first quarter of fiscal 2011 (sequential quarter).

Non-performing assets, with underlying collateral primarily located in Southern California, decreased to $63.5 million, or 4.68 percent of total assets, at December 31, 2010, compared to $100.7 million, or 7.12 percent of total assets, at December 31, 2009 and $73.5 million, or 5.25 percent of total assets, at June 30, 2010. Non-performing loans at December 31, 2010 were primarily comprised of 140 single-family loans ($42.6 million); four multi-family loans ($4.1 million); six commercial real estate loans ($2.6 million); one construction loan ($250,000), three commercial business loans ($183,000) and one other loan ($232,000). Real estate owned was comprised of 50 single-family properties ($11.7 million), one multi-family property ($920,000), one commercial real estate property ($377,000), one developed lot ($398,000) and 25 undeveloped lots acquired in the settlement of loans ($78,000). Net charge-offs for the quarter ended December 31, 2010 were $3.21 million or 1.12 percent (annualized) of average loans receivable, compared to $4.96 million or 1.63 percent (annualized) of average loans receivable for the quarter ended December 31, 2009 and $5.29 million or 1.82 percent (annualized) of average loans receivable for the quarter ended September 30, 2010 (sequential quarter).

Classified assets at December 31, 2010 were $89.5 million, comprised of $22.2 million in the special mention category, $53.8 million in the substandard category and $13.5 million in real estate owned. Classified assets at June 30, 2010 were $95.6 million, comprised of $20.5 million in the special mention category, $60.4 million in the substandard category and $14.7 million in real estate owned.

For the quarter ended December 31, 2010, twenty-one loans for $9.6 million were re-underwritten and modified from their original terms, and were identified as restructured loans. As of December 31, 2010, the outstanding balance of restructured loans was $42.9 million: 29 loans are classified as pass, are not included in the classified asset totals described earlier and remain on accrual status ($13.7 million); nine loans are classified as special mention and remain on accrual status ($6.2 million); 61 loans are classified as substandard ($23.0 million, with 60 of the 61 loans or $22.6 million on non-accrual status); and one loan is classified as a loss, fully reserved and on non-accrual status. As of December 31, 2010, 77 percent, or $33.1 million of the restructured loans are current with respect to their payment status.

The allowance for loan losses was $36.9 million at December 31, 2010, or 3.81 percent of gross loans held for investment, compared to $43.5 million, or 4.14 percent of gross loans held for investment at June 30, 2010. The allowance for loan losses at December 31, 2010 includes $15.7 million of specific loan loss reserves and $21.2 million of general loan loss reserves, compared to $17.8 million of specific loan loss reserves and $25.7 million of general loan loss reserves at June 30, 2010. 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.

Non-interest income increased to $10.10 million in the second quarter of fiscal 2011 compared to $6.69 million in the same period of fiscal 2010, primarily the result of a $4.10 million increase in the gain on sale of loans.

The gain on sale of loans increased to $9.33 million for the quarter ended December 31, 2010 from $5.23 million in the comparable quarter last year, reflecting a higher average loan sale margin and a higher loan sale volume. The average loan sale margin for mortgage banking was 172 basis points for the quarter ended December 31, 2010, compared to 127 basis points in the comparable quarter last year. 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 put option contracts) that amounted to a net loss of $(7.04) million in the second quarter of fiscal 2011, as compared to a favorable fair-value adjustment of $2.56 million in the same period last year. The gain on sale of loans for the second quarter of fiscal 2011 was partially reduced by a $173,000 recourse provision on loans sold that are subject to repurchase, compared to a $1.87 million recourse provision in the comparable quarter last year. As of December 31, 2010, the recourse reserve for loans sold that are subject to repurchase was $5.3 million, compared to $5.1 million at December 31, 2009 and $6.3 million at June 30, 2010. The mortgage banking environment has shown tremendous improvement as a result of relatively low mortgage interest rates but remains volatile.

The volume of loans originated for sale was $620.5 million in the second quarter of fiscal 2011, an increase of 33 percent from $465.0 million for the same period last year. The loan origination volumes were the result of favorable liquidity in the secondary mortgage markets particularly in FHA/VA, Fannie Mae and Freddie Mac loan products and relatively low mortgage interest rates. Total loans sold for the quarter ended December 31, 2010 were $689.7 million, an increase of 52 percent from $454.8 million for the same quarter last year. Total loan originations (including loans originated for investment and loans originated for sale) were $620.6 million in the second quarter of fiscal 2011, an increase of 33 percent from $466.6 million in the same quarter of fiscal 2010.

The sale and operations of real estate owned acquired in the settlement of loans resulted in a net loss of $(690,000) in the second quarter of fiscal 2011, as compared to a net loss of $(249,000) in the comparable period last year. Thirty-five real estate owned properties were sold in the quarter ended December 31, 2010 compared to 42 real estate owned properties sold in the same quarter last year. During the second quarter of fiscal 2011, twenty-nine real estate owned properties were acquired in the settlement of loans, compared to 33 real estate owned properties acquired in the settlement of loans in the comparable period last year. As of December 31, 2010, the real estate owned balance was $13.5 million (78 properties), compared to $14.7 million (77 properties) at June 30, 2010 and $10.9 million (55 properties) at December 31, 2009.

Non-interest expenses increased to $11.34 million in the second quarter of fiscal 2011 from $9.57 million in the same quarter last year, primarily as a result of an increase in compensation expense related to higher mortgage banking loan production.

The Company's efficiency ratio improved slightly to 57 percent in the second quarter of fiscal 2011 from 59 percent in the second quarter of fiscal 2010. The improvement was the result of an increase in net interest income (before provision for loan losses) and an increase in non-interest income, partly offset by an increase in non-interest expense.

The Company's tax provision was $3.16 million for the second quarter of fiscal 2011, up $1.34 million, or 74 percent, from $1.82 million in the same quarter last year. The effective income tax rate for the quarter ended December 31, 2010 was 42.6 percent as compared to 41.6 percent in the same quarter last year. The increase in the effective income tax rate was primarily the result of a higher percentage of permanent tax differences relative to income or loss before taxes. The Company believes that the tax provision recorded in the second quarter of fiscal 2011 reflects its current income tax obligations.

The Bank currently operates 14 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire). Provident Bank Mortgage operates wholesale loan production offices in Pleasanton and Rancho Cucamonga, California and retail loan production offices in City of Industry, Escondido, Glendora, Rancho Cucamonga and Riverside (3), California.

The Company will host a conference call for institutional investors and bank analysts on Friday, January 28, 2011 at 9:00 a.m. (Pacific) to discuss its financial results. The conference call can be accessed by dialing 1-800-288-8967 and requesting the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Friday, February 4, 2011 by dialing 1-800- 475-6701 and referencing access code number 188529.

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 and the conference call noted above contain statements that the Company believes are "forward-looking statements." These statements relate to the Company's financial condition, 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 include, but are not limited to the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Office of Thrift Supervision or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules; our ability to attract and retain deposits; further increases in premiums for deposit insurance; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; computer systems on which we depend could fail or experience a security breach; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our branch expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common stock; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; and other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described 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, 2010.

 
 
PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Financial Condition
(Unaudited – Dollars In Thousands)
     
  December 31, 2010 June 30, 2010
Assets    
Cash and cash equivalents $ 153,691 $ 96,201
Investment securities – available for sale at fair value 31,104 35,003
Loans held for investment, net of allowance for loan losses of $36,925 and $43,501, respectively 932,199 1,006,260
Loans held for sale, at fair value 152,061 170,255
Accrued interest receivable 4,133 4,643
Real estate owned, net 13,470 14,667
FHLB – San Francisco stock 29,349 31,795
Premises and equipment, net 5,830 5,841
Prepaid expenses and other assets 36,249 34,736
     
Total assets $1,358,086 $1,399,401
     
Liabilities and Stockholders' Equity    
Liabilities:    
Non interest-bearing deposits $ 45,475 $ 52,230
Interest-bearing deposits 881,105 880,703
Total deposits 926,580 932,933
     
Borrowings 271,623 309,647
Accounts payable, accrued interest and other liabilities 23,092 29,077
Total liabilities 1,221,295 1,271,657
     
Stockholders' equity:    
Preferred stock, $.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, respectively; 17,610,865 and 17,610,865 shares issued, respectively; 11,407,454 and 11,406,654 shares outstanding, respectively) 176 176
Additional paid-in capital 86,146 85,663
Retained earnings 143,939 135,383
Treasury stock at cost (6,203,411 and 6,204,211 shares, respectively) (93,942) (93,942)
Unearned stock compensation (68) (203)
Accumulated other comprehensive income, net of tax 540 667
     
Total stockholders' equity 136,791 127,744
     
Total liabilities and stockholders' equity $1,358,086 $1,399,401
 
 
PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Financial Condition – Sequential Quarter
(Unaudited – Dollars In Thousands)
     
  December 31, 2010 September 30, 2010
Assets    
Cash and cash equivalents $ 153,691 $ 67,430
Investment securities – available for sale at fair value 31,104 33,016
Loans held for investment, net of allowance for loan losses of $36,925 and $39,086, respectively 932,199 968,323
Loans held for sale, at fair value 152,061 229,103
Accrued interest receivable 4,133 4,416
Real estate owned, net 13,470 16,937
FHLB – San Francisco stock 29,349 30,571
Premises and equipment, net 5,830 5,768
Prepaid expenses and other assets 36,249 33,603
     
Total assets $ 1,358,086 $ 1,389,167
     
Liabilities and Stockholders' Equity    
Liabilities:    
Non interest-bearing deposits $ 45,475 $ 50,670
Interest-bearing deposits 881,105 881,578
Total deposits 926,580 932,248
     
Borrowings 271,623 294,635
Accounts payable, accrued interest and other liabilities 23,092 29,815
Total liabilities 1,221,295 1,256,698
     
Stockholders' equity:    
Preferred stock, $.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, respectively; 17,610,865 and 17,610,865 shares issued, respectively; 11,407,454 and 11,407,454 shares outstanding, respectively) 176 176
Additional paid-in capital 86,146 85,918
Retained earnings 143,939 139,798
Treasury stock at cost (6,203,411 and 6,203,411 shares, respectively) (93,942) (93,942)
Unearned stock compensation (68) (135)
Accumulated other comprehensive income, net of tax 540 654
     
Total stockholders' equity 136,791 132,469
     
Total liabilities and stockholders' equity $ 1,358,086 $ 1,389,167
 
 
PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited - In Thousands, Except Earnings (Loss) Per Share)
         
  Quarter Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
Interest income:        
 Loans receivable, net $ 14,888 $ 17,126 $ 30,449 $ 35,274
 Investment securities 217 463 458 1,558
 FHLB – San Francisco stock 30 -- 66 69
 Interest-earning deposits 65 66 130 120
 Total interest income 15,200 17,655 31,103 37,021
         
Interest expense:        
 Checking and money market deposits 271 364 576 690
 Savings deposits 287 503 627 1,024
 Time deposits 2,051 3,196 4,235 7,100
 Borrowings 2,883 4,015 6,145 8,524
 Total interest expense 5,492 8,078 11,583 17,338
         
Net interest income, before provision for loan losses 9,708 9,577 19,520 19,683
Provision for loan losses 1,048 2,315 1,925 19,521
Net interest income, after provision for loan losses 8,660 7,262 17,595 162
         
Non-interest income:        
 Loan servicing and other fees 275 183 399 418
 Gain on sale of loans, net 9,332 5,230 18,779 8,373
 Deposit account fees 671 705 1,300 1,468
 Gain on sale of investment securities -- 341 -- 2,290
 (Loss) gain on sale and operations of real estate

 owned acquired in the settlement of loans
 

(690)
 

(249)
 

(1,058)
 

189
Other 509 478 1,012 956
Total non-interest income 10,097 6,688 20,432 13,694
         
Non-interest expense:        
Salaries and employee benefit 7,565 5,853 14,942 10,783
Premises and occupancy 804 754 1,624 1,542
Equipment 378 334 703 691
Professional expenses 418 366 801 753
Sales and marketing expenses 160 148 294 260
Deposit insurance and regulatory assessments 664 957 1,345 1,673
Other 1,353 1,159 2,843 2,420
Total non-interest expense 11,342 9,571 22,552 18,122
         
Income (loss) before taxes 7,415 4,379 15,475 (4,266)
Provision (benefit) for income taxes 3,160 1,821 6,691 (1,808)
Net income (loss) $ 4,255 $ 2,558 $ 8,784 $ (2,458)
         
Basic earnings (loss) per share $ 0.37 $ 0.37 $ 0.77 $ (0.38)
Diluted earnings (loss) per share $ 0.37 $ 0.37 $ 0.77 $ (0.38)
Cash dividends per share $ 0.01 $ 0.01 $ 0.02 $ 0.02
 
 
PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations – Sequential Quarter
(Unaudited – In Thousands, Except Earnings Per Share)
     
  Quarter Ended
  December 31,

2010
September 30,

2010
Interest income:    
 Loans receivable, net $ 14,888 $ 15,561
 Investment securities 217 241
 FHLB – San Francisco stock 30 36
 Interest-earning deposits 65 65
 Total interest income 15,200 15,903
     
Interest expense:    
 Checking and money market deposits 271 305
 Savings deposits 287 340
 Time deposits 2,051 2,184
  Borrowings 2,883 3,262
 Total interest expense 5,492 6,091
     
Net interest income, before provision for loan losses 9,708 9,812
Provision for loan losses 1,048 877
Net interest income, after provision for loan losses 8,660 8,935
     
Non-interest income:    
 Loan servicing and other fees 275 124
 Gain on sale of loans, net 9,332 9,447
 Deposit account fees 671 629
 Loss on sale and operations of real estate owned

 acquired in the settlement of loans, net
 

(690)
 

(368)
 Other 509 503
 Total non-interest income 10,097 10,335
     
Non-interest expense:    
 Salaries and employee benefits 7,565 7,377
 Premises and occupancy 804 820
 Equipment 378 325
 Professional expenses 418 383
 Sales and marketing expenses 160 134
 Deposit insurance premiums and regulatory assessments 664 681
 Other 1,353 1,490
 Total non-interest expense 11,342 11,210
     
Income before taxes 7,415 8,060
Provision for income taxes 3,160 3,531
 Net income $ 4,255 $ 4,529
     
Basic earnings per share $ 0.37 $ 0.40
Diluted earnings per share $ 0.37 $ 0.40
Cash dividends per share $ 0.01 $ 0.01
 
 
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited -- Dollars in Thousands, Except Share Information)
         
  Quarter Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
SELECTED FINANCIAL RATIOS:        
Return (loss) on average assets 1.24% 0.70% 1.27% (0.32)%
Return (loss) on average stockholders' equity 12.62% 9.00% 13.26% (4.33)%
Stockholders' equity to total assets 10.07% 8.74% 10.07% 8.74%
Net interest spread 2.83% 2.61% 2.83% 2.60%
Net interest margin 2.96% 2.72% 2.95% 2.70%
Efficiency ratio 57.27% 58.84% 56.45% 54.29%
Average interest-earning assets to average interest-bearing liabilities 108.22% 105.28% 107.54% 105.21%
         
SELECTED FINANCIAL DATA:        
Basic earnings (loss) per share  $ 0.37  $ 0.37  $ 0.77  $ (0.38)
Diluted earnings (loss) per share  $ 0.37  $ 0.37  $ 0.77  $ (0.38)
Book value per share  $ 11.99  $ 10.85  $ 11.99  $ 10.85
Shares used for basic EPS computation  11,377,186  6,975,515  11,369,469 6,544,709
Shares used for diluted EPS computation  11,386,838  6,975,515 11,374,295  6,544,709
Total shares issued and outstanding 11,407,454 11,395,454 11,407,454 11,395,454
         
LOANS ORIGINATED FOR SALE:        
Retail originations $ 220,794 $ 113,733 $  454,533 $ 203,408
Wholesale originations 399,748 351,242 815,480 753,142
Total loans originated for sale $ 620,542 $ 464,975 $ 1,270,013 $ 956,550
         
LOANS SOLD:        
Servicing released $ 689,724 $ 453,308 $ 1,280,313 $ 962,097
Servicing retained -- 1,492 185 1,492
Total loans sold $ 689,724 $ 454,800 $ 1,280,498 $ 963,589
         
  As of

12/31/10
As of

09/30/10
As of

06/30/10
As of

03/31/10
ASSET QUALITY RATIOS AND DELINQUENT LOANS:        
Recourse reserve for loans sold $ 5,295 $ 6,498 $ 6,335 $ 6,073
Allowance for loan losses $ 36,925 $ 39,086 $ 43,501 $ 50,849
Non-performing loans to loans held for investment, net 5.37% 5.76% 5.84% 7.15%
Non-performing assets to total assets 4.68% 5.23% 5.25% 6.50%
Allowance for loan losses to non-performing loans 73.80% 70.07% 74.00% 68.86%
Allowance for loan losses to gross loans held for investment 3.81% 3.88% 4.14% 4.69%
Net charge-offs to average loans receivable (annualized) 1.12% 1.82% 2.49% 2.35%
Non-performing loans $ 50,035 $ 55,785 $ 58,783 $ 73,839
Loans 30 to 89 days delinquent $ 9,497 $ 4,323 $ 5,849 $ 6,937
         
  Quarter

Ended
Quarter

Ended
Quarter

Ended
 Quarter

Ended
  12/31/10 09/30/10 06/30/10 03/31/10
Recourse provision for loans sold $ 173 $ 536 $ 2,051 $ 1,178
Provision for loan losses $ 1,048 $ 877 $  -- $ 2,322
   
 
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited)
  As of

12/31/10
 As of

09/30/10
 As of

06/30/10
As of

03/31/10
         
REGULATORY CAPITAL RATIOS:        
Tangible equity ratio  9.80% 9.25% 8.82% 8.53%
Core capital ratio  9.80% 9.25% 8.82% 8.53%
Total risk-based capital ratio  15.23% 13.96% 13.17% 15.53%
Tier 1 risk-based capital ratio  13.97% 12.69% 11.91% 14.25%
         
(Dollars in Thousands) As of December 31,
  2010 2009
INVESTMENT SECURITIES: Balance Rate Balance Rate
Available for sale (at fair value):        
U.S. government sponsored enterprise debt securities  $ 3,259 4.00% $ 5,332 4.00%
U.S. government agency MBS  15,421 2.77 19,559 3.68
U.S. government sponsored enterprise MBS  11,024 2.59 13,739 3.48
Private issue collateralized mortgage obligations 1,400 2.65 1,580 3.04
Total investment securities available for sale $ 31,104 2.83% $ 40,210 3.63%
         
LOANS HELD FOR INVESTMENT:        
Single-family (1 to 4 units) $ 531,686 4.51% $ 635,967 5.37%
Multi-family (5 or more units) 320,279 6.13 355,952 6.26
Commercial real estate 105,720 6.86 115,437 6.85
Construction 400 5.25 3,138 7.66
Other mortgage 1,531 5.69 1,532 6.16
Commercial business 5,723 7.12 8,052 7.41
Consumer 792 7.71 931 7.33
Total loans held for investment 966,131 5.32% 1,121,009 5.83%
         
Undisbursed loan funds --   (64)  
Deferred loan costs, net 2,993   3,853  
Allowance for loan losses (36,925)    (55,364)  
Total loans held for investment, net $ 932,199   $ 1,069,434  
         
Purchased loans serviced by others included above $ 21,296 4.76% $ 23,851 4.84%
         
DEPOSITS:        
Checking accounts – non interest-bearing $ 45,475 --% $ 40,564 --%
Checking accounts – interest-bearing 185,086 0.37 166,503 0.82
Savings accounts 203,940 0.50 184,301 1.10
Money market accounts 32,182 0.66 24,602 1.14
Time deposits 459,897 1.68 520,683 2.23
Total deposits $ 926,580 1.04% $ 936,653 1.63%
         
Brokered deposits included above $ 19,612 2.78% $ 19,612 2.78%
         
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 December 31,
  2010 2009
  Balance Rate Balance Rate
BORROWINGS:        
Overnight $ -- --% $  -- --%
Six months or less 85,000 4.20 10,000 4.24
Over six to twelve months 30,000 3.84 48,000 5.22
Over one to two years 60,000 3.86 125,000 3.90
Over two to three years 75,000 3.80 60,000 3.86
Over three to four years 10,000 2.93 75,000 3.80
Over four to five years -- -- 10,000 2.93
Over five years 11,623 4.27 6,670 3.83
 Total borrowings $ 271,623 3.93% $ 334,670 4.04%
         
  Quarter Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
SELECTED AVERAGE BALANCE SHEETS: Balance Balance Balance Balance
         
Loans receivable, net (1) $ 1,146,220 $ 1,219,158 $ 1,155,746 $ 1,251,964
Investment securities 32,261 51,588 33,083 77,305
FHLB – San Francisco stock 29,946 33,023 30,545 33,023
Interest-earning deposits 103,643 104,790 102,975 94,700
Total interest-earning assets $ 1,312,070 $ 1,408,559 $ 1,322,349 $ 1,456,992
Total assets $ 1,374,776 $ 1,472,048 $ 1,387,475 $ 1,518,832
         
Deposits $ 932,980 $ 936,047 $ 935,376 $ 956,760
Borrowings 279,399 401,837 294,275 428,093
Total interest-bearing liabilities $ 1,212,379 $ 1,337,884 $ 1,229,651 $ 1,384,853
Total stockholders' equity $ 134,915 $ 113,744 $ 132,460 $ 113,623
         
  Quarter Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
  Yield/Cost Yield/Cost Yield/Cost Yield/Cost
         
Loans receivable, net (1) 5.20% 5.62% 5.27% 5.63%
Investment securities 2.69% 3.59% 2.77% 4.03%
FHLB – San Francisco stock 0.40% --% 0.43% 0.42%
Interest-earning deposits 0.25% 0.25% 0.25% 0.25%
Total interest-earning assets 4.63% 5.01% 4.70% 5.08%
         
Deposits 1.11% 1.72% 1.15% 1.83%
Borrowings 4.09% 3.96% 4.14% 3.95%
Total interest-bearing liabilities 1.80% 2.40% 1.87% 2.48%
         
(1) Includes loans held for investment, loans held for sale at fair value and loans held for sale at lower of cost or market, net of allowance for loan losses.
 
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.
Asset Quality
(Unaudited – Dollars in Thousands)
         
   As of

12/31/10
As of

09/30/10
As of

06/30/10
 As of

03/31/10
Loans on non-accrual status:    
Mortgage loans:        
Single-family $ 23,975 $ 26,640 $ 30,129 $ 37,670
Multi-family 1,525 3,440 3,945 4,016
Commercial real estate  1,645 377 725 1,571
Construction 250 250 350 373
Commercial business loans 37 37 -- --
Consumer loans -- -- 1 --
Total 27,432 30,744 35,150 43,630
         
Accruing loans past due 90 days or more: -- -- -- --
Total -- -- -- --
         
Restructured loans on non-accrual status:        
Mortgage loans:        
Single-family  18,620 21,267 19,522 25,982
Multi-family 2,622 2,631 2,541 2,540
Commercial real estate 983 1,000 1,003 1,224
Construction -- -- -- 319
Other  232 -- -- --
Commercial business loans  146 143 567 144
Total 22,603 25,041 23,633 30,209
         
Total non-performing loans 50,035 55,785 58,783 73,839
         
Real estate owned, net  13,470 16,937 14,667 17,555
Total non-performing assets $ 63,505 $ 72,722 $ 73,450 $ 91,394
         
Restructured loans on accrual status:        
Mortgage loans:        
Single-family  $ 16,149 $ 19,044 $ 33,212 $ 27,594
Multi-family 918 -- -- --
Commercial real estate 1,830 1,832 1,832 537
Other 1,292 1,292 1,292 1,292
Commercial business loans  94 96 -- 750
Total $ 20,283 $ 22,264 $ 36,336 $ 30,173
CONTACT: Craig G. Blunden, CEO
         Donavon P. Ternes, COO, CFO
         (951) 686-6060

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

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