PROVIDENT FINANCIAL HOLDINGS INC

The Corporation’s primary sources of funds are deposits, proceeds from principal and interest payments on loans and investment securities, proceeds from the maturity of loans and investment securities, FHLB – San Francisco advances, access to the discount window facility at the FRB of San Francisco and access to a federal funds facility with its correspondent bank. While maturities and scheduled amortization of loans and investment securities are a relatively predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

The primary investing activity of the Corporation is the origination and purchase of loans held for investment. During the first six months of fiscal 2026 and 2025, the Corporation originated loans held for investment of $71.8 million and $65.4 million, respectively, with no loan purchases during either period. At December 31, 2025, the Corporation had loan origination commitments totaling $10.1 million, undisbursed lines of credit totaling $1.3 million and undisbursed loan funds totaling $119,000. The Corporation anticipates having sufficient funds available to meet its current loan funding commitments. During the first six months of fiscal 2026 and 2025, total loan repayments were $81.2 million and $68.4 million, respectively.

The Corporation’s primary financing activity is gathering deposits and, when needed, borrowings, principally FHLB – San Francisco advances. During the first six months of fiscal 2026, total deposits decreased $16.4 million, or two percent, to $872.4 million, primarily due to a decline in transaction accounts. Time deposits, including brokered certificates of deposit, were $313.7 million and $312.3 million at December 31, 2025 and June 30, 2025, respectively. At December 31, 2025, time deposits with a principal amount of $250,000 or less and scheduled to mature in one year or less were $191.2

million and total time deposits with a principal amount of more than $250,000 and scheduled to mature in one year or less were $93.4 million. Historically, the Corporation has been able to retain most of its time deposits as they mature.

The Corporation maintains an adequate level of liquidity to ensure the availability of funds to support loan growth and deposit withdrawals, to satisfy financial commitments and to take advantage of investment opportunities. At December 31, 2025, total cash and cash equivalents were $54.4 million, or four percent of total assets, to meet short-term liquidity needs. Depending on market conditions and the pricing of deposit products, the Bank may rely on FHLB – San Francisco advances for part of its liquidity needs. As of December 31, 2025, borrowings with the FHLB – San Francisco totaled $213.1 million. Financing availability at the FHLB – San Francisco is limited to 35 percent of total assets, resulting in a remaining borrowing capacity of $213.1 million with available collateral of $294.2 million at December 31, 2025. In addition, the Bank had a $193.3 million discount window facility at the FRB of San Francisco, collateralized by investment securities and single-family loans with a total balance of $331.5 million. As of December 31, 2025, the Bank also had a $50 million federal funds borrowing arrangement with its correspondent bank. No advances were outstanding under either the FRB discount window or the correspondent bank facility as of December 31, 2025.

The Bank continues to maintain accounts with both the FHLB - San Francisco and FRB of San Francisco to ensure that borrowing capacity is continuously reviewed and updated and can be accessed promptly if required. This includes establishing accounts and pledging assets as needed to optimize available liquidity. The total remaining available borrowing capacity across all sources totaled approximately $456.4 million at December 31, 2025.

Regulations require the Bank to maintain adequate liquidity to assure safe and sound operations. The Bank’s average liquidity ratio (defined as the ratio of average qualifying liquid assets to average deposits and borrowings) for the quarter ended December 31, 2025 was 7.5 percent, down from 8.9 percent for the quarter ended June 30, 2025.

On January 23, 2025, the Board of Directors approved a stock repurchase plan (the “January 2025 stock repurchase program”) authorizing the purchase of up to 334,773 shares of the Corporation’s outstanding common stock over a one-year period. On January 22, 2026, the Board of Directors authorized a new stock repurchase plan for up to five percent of the Corporation’s common stock, or 318,875 shares. The Corporation plans to purchase shares periodically in the open market or through privately negotiated transactions over a one-year period, subject to market conditions, the Corporation’s capital requirements, available cash, and other relevant factors. The January 2025 stock repurchase program was canceled effective January 23, 2026, with 16,825 shares remaining unpurchased under that program.

Provident Financial Holdings is a separate legal entity from the Bank and, on a stand-alone level, must provide for its own liquidity and pay its own operating expenses and cash dividends. Provident Financial Holdings’ primary sources of funds consist of capital raised through dividends or capital distributions from the Bank, although there are general regulatory restrictions on the ability of the Bank to pay dividends. Future dividend payments are subject to the Board’s discretion and applicable regulatory restrictions. The Corporation currently pays quarterly cash dividends on its common stock which may be modified, suspended, or terminated at any time. Our current quarterly common stock dividend rate is $0.14 per share, which is intended to balance the Corporation’s objectives of supporting the Bank’s operations and returning cash to shareholders. Assuming continued cash dividend payments during fiscal 2026 at $0.14 per share, our average total dividend paid each quarter would be approximately $898,000 based on the number of outstanding shares at December 31, 2025. At December 31, 2025, the Corporation (on an unconsolidated basis) had liquid assets of $9.1 million.

The Bank, as a federally-chartered, federally insured savings bank, is subject to the capital requirements established by the OCC. Under the OCC’s capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

At December 31, 2025, the Bank exceeded all regulatory capital requirements. The Bank was categorized as "well-capitalized" at December 31, 2025 under the regulations of the OCC. As a bank holding company registered with the Federal Reserve, Provident Financial Holdings, Inc. is also subject to the capital adequacy requirements of the Federal Reserve. For a bank holding company with less than $3.0 billion in assets, the capital guidelines apply on a bank only basis, and the Federal Reserve expects the holding company’s subsidiary bank to be well capitalized under the prompt corrective action regulations.

The Bank’s actual and required minimum capital amounts and ratios at the dates indicated are as follows (dollars in thousands):

In addition to the minimum Tier 1, CET1 and Total capital ratios, the Bank is required to maintain a capital conservation buffer consisting of additional CET1 capital greater than 2.5% of risk-weighted assets above the required minimum capital levels. Failure to maintain the required buffer could result in limitations on the Bank’s ability to pay dividends, repurchase shares, and pay discretionary bonuses, based on specified percentages of eligible retained income. At December 31, 2025, the Bank’s capital exceeded the conservation buffer.

If the Bank does not have the ability to pay dividends to the Corporation, the Corporation may be limited in its ability to pay dividends to its stockholders. The Bank may not declare or pay a cash dividend if the effect thereafter would cause its net worth to be reduced below the regulatory capital requirements imposed by federal regulation. On September 25, 2025, the Bank paid a $10.5 million cash dividend to the Holding Company.