PROVIDENT FINANCIAL HOLDINGS INC

The Bank is headquartered in Riverside, California and operates 12 full-service banking offices in Riverside County and one full-service banking office in San Bernardino County. Management considers Riverside and Western San Bernardino counties to be the Bank’s primary market for deposits. As of June 30, 2024, the Bank was the largest independent community bank headquartered in Riverside County and held the eighth largest deposit market share of all banks in the county, with the largest share among community banks.

The region encompassing Riverside and San Bernardino counties, known as the “Inland Empire,” is the Bank’s main market area. According to the 2020 Census Bureau, these counties have the fourth and fifth largest populations in California, respectively, and are part of the greater Los Angeles metropolitan area, consisting primarily of suburban and urban communities. The Inland Empire, with a population of approximately 4.7 million, is relatively densely populated. The U.S. Department of Labor’s Bureau of Labor Statistics reported an unemployment rate of 5.3% in the Inland Empire in June 2024, slightly higher than California’s rate of 5.2% and the national rate of 4.1%. In June 2023, these rates were 4.4% in the Inland Empire, 4.6% in California, and 3.6% nationwide.

California’s home sales remained stagnant for the second consecutive month in June 2024, with a 30-year fixed mortgage rate above 7% throughout most of May 2024. Closed escrow sales of existing single-family detached homes in California were at a seasonally adjusted annualized rate of 270,200 in June 2024, down 0.8% from the revised 272,410 homes sold in May 2024 and 2.7% from June 2023’s revised 277,690. This sales pace has been below the 300,000 threshold for 21 consecutive months, with year-to-date home sales falling behind last year’s level by 0.5% in the first half of 2024. After setting record highs in the past two months, the statewide median home price decreased by 0.8% from $908,040 in May 2024 to $900,720 in June 2024, marking the third month in a row above the $900,000 benchmark. The June 2024 median home price was 7.5% higher than the $837,850 recorded in June 2023, marking the 12th consecutive month of annual price increases, although the smallest since January 2024. The continued rise in million-dollar home sales in California contributed to median price growth, with the million-dollar-and-higher market segment increasing by 2.0% year-over-year in June 2024, while the sub-$500,000 segment declined by 21.0%. Homes priced above $1 million now account for 36.3% of all sales, the largest share in at least five years.(Source data from California Association of Realtors – July 17, 2024 News Release).

The Inland Empire, also known as the Riverside-San Bernardino-Ontario Metropolitan Statistical Area, is a large, two-county area where about 30% of the labor force commutes, with nearly 400,000 people traveling daily from the Inland Empire to coastal areas. Over the past 20 years, the region has undergone significant changes, particularly in the health care and transportation and warehousing sectors, which have seen substantial employment growth. Typically, the Inland Empire's unemployment rate is higher than those of California and the U.S. except during specific recessions like the dot-com and COVID-19 periods. The region performed better during the recovery from the 2020 recession, with the latest unemployment rate published by the Employment Development Department (EDD) for December 2023 at 5.1%. The change in unemployment rate from February 2020 to December 2023 was 0.2% for the U.S., 0.5% for California, and 1.2% for the Inland Empire, indicating a higher increase in the Inland Empire, which is less desirable. Conversely, the employment growth rate over the same period was 1.8% for the U.S., -1.2% for California, and 2.8% for the Inland Empire. In 2023, the Inland Empire was a top performer in job creation compared to other California regions, with a 1.9% increase. The Inland Empire also led the state in business creation during the recovery from the 2020 recession, with a significant acceleration starting in the second quarter of 2022 and reaching near-national levels by the second quarter of 2023. (Source data from the Lowe Institute of Political Economy - The State of the Region the Inland Empire 2024 – March 2024).