PROVIDENT FINANCIAL HOLDINGS INC

Fiscal 2025

Last year, I described that our fiscal 2025 Business Plan reflected measured growth in loans and retail deposits, disciplined control of operating expenses, and sound capital management. Our fiscal 2025 financial results, described in the following Financial Highlights, were mixed, reflecting a decline in both net income and total assets compared to the prior year.

During fiscal 2025, the FOMC began implementing looser monetary policy. As the yield curve began to normalize, we transitioned to a less restrictive operating strategy as our business model performs better in a flat or upwardly sloping yield curve environment. Our loan production increased 61 percent to $122 million from the prior fiscal year, but our momentum was slowed by higher-than-normal levels of loan prepayments toward the end of the fiscal year. As a result, our loans held for investment decreased by approximately one percent for the fiscal year. Deposit growth remained a challenge as the competition for deposits remained intense. Some competitors, including large banks, were offering rates that were equal to, or above, wholesale levels. We made accommodations, as appropriate, to our pricing based on our evaluation of the customer relationships, while maintaining our pricing discipline, and augmented our funding needs with higher cost certificate of deposits. Total deposits remained flat but transaction accounts decreased six percent during the fiscal year. Our net interest margin reached an inflection point and increased 15 basis points to 2.93 percent for the fiscal year. The improvement came mostly through higher loan yields as loans exited their fixed rate term and generally adjusted to higher interest rates.

We continued our quarterly cash dividend of $0.14 per share in fiscal 2025 while repurchasing approximately 285,000 shares of our common stock under the stock repurchase plans.

Lastly, I would be remiss if I did not mention that we have not incurred any loan charge-offs during the year. In fact, it has been over seven years since the Company reported a net charge-off for a fiscal year.