PROVIDENT FINANCIAL HOLDINGS INC

Previous wording

Forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements included in this document or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur, and you should not put undue reliance on any forward-looking statements. These factors could cause our actual results for fiscal 2026 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Corporation’s consolidated financial condition and consolidated results of operations as well as its stock price performance.

Current wording

Forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements included in this document or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur, and you should not put undue reliance on any forward-looking statements. These factors could cause our actual results for fiscal year 2027 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Corporation’s consolidated financial condition and consolidated results of operations as well as its stock price performance.

Previous wording

Provident, a Delaware corporation, was organized in January 1996 for the purpose of becoming the holding company of the Bank upon the Bank’s conversion completed on June 27, 1996. Provident is regulated by the FRB. At June 30, 2025, the Corporation, on a consolidated basis, had total assets of $1.25 billion, total deposits of $888.8 million and total stockholders’ equity of $128.5 million. Provident has not engaged in any significant activity other than holding the stock of the Bank. Accordingly, the information set forth in this report, including financial statements and related data, relates primarily to the Bank and its subsidiaries.

Current wording

Provident, a Delaware corporation, was organized in January 1996 for the purpose of becoming the holding company of the Bank upon the Bank’s conversion completed on June 27, 1996. Provident is regulated by the FRB. At June 30, 2026, the Corporation, on a consolidated basis, had total assets of $1.21 billion, total deposits of $910.4 million and total stockholders’ equity of $126.2 million. Provident has not engaged in any significant activity other than holding the stock of the Bank. Accordingly, the information set forth in this report, including financial statements and related data, relates primarily to the Bank and its subsidiaries.

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding the financial condition and results of operations of the Corporation. The information contained in this section should be read in conjunction with the audited Consolidated Financial Statements and accompanying selected Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Current wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding the financial condition and results of operations of the Corporation. The information contained in this section should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Previous wording

These estimates involve significant uncertainty and are based on historical experience, current conditions, and other factors management believes to be reasonable under the circumstances. We evaluate these estimates on an ongoing basis and discuss them with the Audit Committee of our Board of Directors. For a summary of our significant accounting policies, see Note 1—Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K.

Current wording

These estimates involve significant uncertainty and are based on historical experience, current conditions, and other factors management believes to be reasonable under the circumstances. We evaluate these estimates on an ongoing basis and discuss them with the Audit Committee of our Board of Directors. For a summary of our significant accounting policies, see Note 1 – Organization and Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K.

Previous wording

**Allowance for Credit Losses.**The ACL involves significant judgment and assumptions by management, which has a material impact on the carrying value of financial assets. The Corporation adopted ASC 326 using the prospective transition approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after July 1, 2023 are presented under CECL.

Current wording

**Allowance for Credit Losses.**The ACL involves significant judgment and assumptions by management, which have a material impact on the carrying value of financial assets. The Corporation adopted ASC 326 using the prospective transition approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. The Corporation adopted ASC 326 effective July 1, 2023, and results for reporting periods beginning on or after that date are presented under the CECL methodology.

Previous wording

As required by ASC 326,* on July 1, 2023 the Corporation implemented CECL and recognized a $1.2 million one-time increase to its ACL and a net of tax charge of $824,000 to retained earnings. Under ASC 326,* the ACL is a valuation account that is deducted from the related loan’s amortized cost basis to present the net amount expected to be collected on the loans. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

Current wording

Under ASC 326*,* the ACL is a valuation account that is deducted from the related loan’s amortized cost basis to present the net amount expected to be collected on the loans. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

Previous wording

operations as Provident Bank and through its subsidiary, PFC. The business activities of the Corporation, primarily through the Bank, consist of community banking and, to a lesser degree, investment services for customers and trustee services on behalf of the Bank.

Current wording

Provident Savings Bank, F.S.B., established in 1956, is a financial services company committed to serving consumers and small to mid-sized businesses in the Inland Empire region of Southern California. The Bank conducts its business operations as Provident Bank and through its subsidiary, PFC. The business activities of the Corporation, primarily through the Bank, consist of community banking and, to a lesser degree, investment services for customers and trustee services on behalf of the Bank.

Previous wording

Community banking operations primarily consist of accepting deposits from customers within the communities surrounding the Bank’s full service offices and investing those funds in single-family, multi-family and commercial real estate loans. Also, to a lesser extent, the Bank originates construction, commercial business, consumer and other mortgage loans. The primary source of income in community banking is net interest income, which is the difference between the interest income earned on loans and investment securities, and the interest expense paid on interest-bearing deposits and borrowed funds. Additionally, certain fees are collected from depositors, such as returned check fees, deposit account service charges, ATM fees, IRA/KEOGH fees, safe deposit box fees, wire transfer fees and overdraft protection fees, among others.

Current wording

Community banking operations primarily consist of accepting deposits from customers within the communities surrounding the Bank’s full service offices and investing those funds in single-family, multi-family and commercial real estate loans. Also, to a lesser extent, the Bank may originate construction, commercial business, consumer and other mortgage loans. The primary source of income in community banking is net interest income, which is the difference between the interest income earned on loans and investment securities, and the interest expense paid on interest-bearing deposits and borrowed funds. Additionally, certain fees are collected from depositors, such as returned check fees, deposit

Previous wording

The Corporation plans to enhance its community banking business by moderately increasing its total assets, focusing on expanding single-family, multi-family, commercial real estate, construction, and commercial business loans. Additionally, the Corporation aims to reduce the percentage of retail time deposits in its deposit base while increasing the proportion of lower-cost checking and savings accounts. To diversify its deposit funding base, the Corporation will consider utilizing brokered certificates of deposit and public funds, subject to market conditions and funding needs. This strategy is designed to improve core revenue by achieving a higher net interest margin and, combined with the Corporation’s growth, ultimately increase net interest income. While the Corporation’s long-term strategy targets moderate growth, management acknowledges that this growth may be influenced by general economic conditions and other factors.

Current wording

The Corporation plans to enhance its community banking business by moderately increasing its total assets, focusing on expanding single-family, multi-family and commercial real estate loans. Additionally, the Corporation aims to reduce the percentage of retail time deposits in its deposit base while increasing the proportion of lower-cost checking and savings accounts. To diversify its deposit funding base, the Corporation will consider utilizing brokered certificates of deposit and public funds, subject to market conditions and funding needs. This strategy is designed to improve core revenue by achieving a higher net interest margin and, combined with the Corporation’s growth, ultimately increase net interest income. While the Corporation’s long-term strategy targets moderate growth, management acknowledges that this growth may be influenced by general economic conditions and other factors.

Previous wording

The California economic environment presents heightened risk to the Corporation, particularly with respect to real estate values and loan delinquencies. Because the majority of the Corporation’s loans are secured by real estate located in California, significant declines in California property values could limit the Corporation’s ability to recover on defaulted loans through the sale of the underlying collateral. Within commercial real estate, the office sector continues to face elevated risk, driven by higher vacancy rates, slower leasing activity, and downward pressure on rental rates in certain California markets. These trends may negatively affect collateral values and the repayment capacity of borrowers. In response, the Bank has evaluated its existing loans collateralized by office properties for outsized concentrations and has implemented tighter underwriting standards for such collateral. At June 30, 2025, our commercial real estate portfolio totaled $72.8 million, of which $39.5 million, or 54.2%, was secured by various types of office properties, representing 3.8% of the total loan portfolio. While current credit performance within the office segment remains satisfactory, management continues to monitor the portfolio closely in light of evolving market conditions.

Current wording

The California economic environment presents heightened risk to the Corporation, particularly with respect to real estate values and loan delinquencies. Because the majority of the Corporation’s loans are secured by real estate located in California, significant declines in California property values could limit the Corporation’s ability to recover on defaulted loans through the sale of the underlying collateral. Within commercial real estate, the office sector continues to face elevated risk, driven by higher vacancy rates, slower leasing activity, and downward pressure on rental rates in certain California markets. These trends may negatively affect collateral values and the repayment capacity of borrowers. In response, the Bank has evaluated its existing loans collateralized by office properties for outsized concentrations and has implemented tighter underwriting standards for such collateral. At June 30, 2026, our commercial real estate portfolio totaled $66.7 million, of which $33.3 million, or 49.9%, was secured by various types of office properties, representing 3.2% of the total loan portfolio. While current credit performance within the office segment remains satisfactory, management continues to monitor the portfolio closely in light of evolving market conditions.

Previous wording

Total assets decreased $26.6 million, or 2%, to $1.25 billion at June 30, 2025 from $1.27 billion at June 30, 2024. The decrease was primarily attributable to decreases in investment securities and loans held for investment.

Current wording

Total assets decreased $37.5 million, or 3%, to $1.21 billion at June 30, 2026 from $1.25 billion at June 30, 2025. The decrease was primarily attributable to decreases in investment securities and loans held for investment.

Previous wording

Total cash and cash equivalents, primarily excess cash deposited with the FRB of San Francisco, increased $1.7 million, or 3%, to $53.1 million at June 30, 2025 from $51.4 million at June 30, 2024. The increase was consistent with the Corporation’s strategy of adequately managing credit and liquidity risk.

Current wording

Total cash and cash equivalents, primarily excess cash deposited with the FRB of San Francisco, decreased $3.9 million, or 7%, to $49.2 million at June 30, 2026 from $53.1 million at June 30, 2025.

Previous wording

Total investment securities (held to maturity and available for sale) decreased $20.9 million, or 16%, to $111.0 million at June 30, 2025 from $131.9 million at June 30, 2024. The decrease was the result of scheduled and accelerated principal payments on investment securities. During fiscal 2025, the Bank purchased $981,000 of investment securities and did not sell any investment securities; while during fiscal 2024, the Bank did not purchase or sell any investment securities. For additional information on investment securities, see Note 2 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Current wording

Total investment securities (held to maturity and available for sale) decreased $20.5 million, or 18%, to $90.5 million at June 30, 2026 from $111.0 million at June 30, 2025. The decrease was primarily the result of scheduled and accelerated principal payments on investment securities. During fiscal year 2026, the Bank did not purchase or sell any investment securities, while during fiscal year 2025, the Bank purchased $981,000 of investment securities and did not sell any investment securities. For additional information on investment securities, see Note 2 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Previous wording

Loans held for investment, net decreased $7.2 million, or 1%, to $1.05 billion at June 30, 2025 as compared to June 30, 2024. Total loan principal payments in fiscal 2025 were $133.3 million, up 33% from $99.9 million in fiscal 2024, while the Bank originated $122.7 million of loans held for investment in fiscal 2025, up 62% from $75.5 million in fiscal 2024. In both years these loans consisted primarily of single-family, multi-family and commercial real estate loans. The Bank did not purchase any loans in fiscal 2025 or 2024. Management attributes the increase in loan originations to the decision to increase or maintain the total balance of loans held for investment in response to higher loan prepayments in fiscal 2025. The balance of multi-family, commercial real estate, construction and commercial business loans, net of undisbursed loan funds, decreased $34.7 million, or 7%, to $497.9 million at June 30, 2025, from $532.6 million at June 30, 2024, representing 48% and 51% of loans held for investment, respectively. The balance of single-family loans held for investment increased $26.3 million, or 5%, to $544.4 million at June 30, 2025, from $518.1 million at June 30, 2024. There was no REO in fiscal 2025 and 2024. For additional information on loans held for investment, see Note 3 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Current wording

Loans held for investment, net decreased $13.1 million, or 1%, to $1.03 billion at June 30, 2026 from $1.05 billion at June 30, 2025. Total loan principal payments in fiscal year 2026 were $176.8 million, up 33% from $133.3 million in fiscal year 2025, while the Bank originated $162.3 million of loans held for investment in fiscal year 2026, up 32% from $122.7 million in fiscal year 2025. In both years these loans consisted primarily of single-family, multi-family and commercial real estate mortgage loans. The Bank did not purchase any loans in fiscal year 2026 or 2025. Management attributes the increase in loan originations to the decision to price more competitively and make changes to underwriting requirements more consistent with market competitors in response to higher loan prepayments in fiscal year 2026. The balance of multi-family, commercial real estate, construction and commercial business loans, net of undisbursed loan funds, decreased $35.3 million, or 7%, to $462.6 million at June 30, 2026, from $497.9 million at June 30, 2025, representing 45% and 48% of loans held for investment, respectively. The decrease was primarily attributable to a $27.5 million decrease in multi-family loans and a $6.0 million decrease in commercial real estate loans. The balance of single-family loans held for investment increased $21.5 million, or 4%, to $565.9 million at June 30, 2026, from $544.4 million at June 30, 2025. There was no REO at June 30, 2026 and 2025. For additional information on loans held for investment, see Note 3 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Previous wording

FHLB – San Francisco stock and other equity investments increased $190,000, or 2%, to $10.3 million at June 30, 2025, from $10.1 million at June 30, 2024. The increase was primarily due to a higher fair value adjustment of other equity investments, which consist solely of 1,297 shares of VISA Class C stock. As of June 30, 2025 and 2024, the fair value of these other equity investments was $730,000 and $540,000, respectively. The Bank did not purchase additional FHLB - San Francisco stock during fiscal 2025, while in fiscal 2024, the Bank purchased $63,000 of FHLB - San Francisco stock.

Current wording

FHLB – San Francisco stock and other equity investments increased $311,000, or 3%, to $10.6 million at June 30, 2026, from $10.3 million at June 30, 2025. The increase was due to a Visa, Inc. (NYSE:V) (“VISA”) stock conversion. In May 2026, the Bank converted its class B2 VISA stock to class B3 VISA stock and class C VISA stock. Subsequently, the Bank recorded the class C VISA stock at its fair value on its Consolidated Statements of Condition. As of June 30, 2026 and 2025, the fair value of these other equity investments (consisting of the VISA class C stock) was $1.0 million and $730,000, respectively. The Bank did not purchase additional FHLB - San Francisco stock during fiscal year 2026 and 2025.

Previous wording

Total deposits increased to $888.8 million at June 30, 2025 from $888.3 million at June 30, 2024. Transaction accounts decreased $38.0 million, or 6%, to $576.5 million at June 30, 2025 from $614.5 million at June 30, 2024, while time deposits increased $38.4 million, or 14%, to $312.3 million at June 30, 2025 from $273.9 million at June 30, 2024. Time deposits included brokered certificates of deposit of $131.0 million as of June 30, 2025, down slightly from $131.8 million at June 30, 2024. As of June 30, 2025 and 2024, the percentage of transaction accounts to total deposits was 65% and 69%, respectively. Total retail deposits, defined as total deposits excluding brokered certificates of deposit, increased to $757.8 million at June 30, 2025 from $756.5 million at June 30, 2024. This increase was due primarily to the increase in retail time deposits, which was largely offset by the decline in transaction account balances as some customers sought higher interest rates elsewhere. For additional information on deposits, see Note 6 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Current wording

Total deposits increased $21.6 million, or 2%, to $910.4 million at June 30, 2026 from $888.8 million at June 30, 2025. Time deposits increased $40.9 million, or 13%, to $353.2 million at June 30, 2026 from $312.3 million at June 30, 2025; while transaction accounts decreased $19.4 million, or 3%, to $557.1 million at June 30, 2026 from $576.5 million at June 30, 2025. Time deposits included brokered certificates of deposit of $161.4 million as of June 30, 2026, up $30.4 million, or 23%, from $131.0 million at June 30, 2025. As of June 30, 2026 and 2025, the percentage of transaction accounts to total deposits was 61% and 65%, respectively. Total retail deposits, defined as total deposits excluding brokered certificates of deposit, decreased $8.8 million, or 1%, to $749.0 million at June 30, 2026 from $757.8 million at June 30, 2025. This decrease was due primarily to the decrease in transaction account balances as some customers sought higher interest rates elsewhere, partly offset by the increase in retail time deposits. For additional information on deposits, see Note 6 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Previous wording

Borrowings, consisting primarily of FHLB – San Francisco advances, decreased $25.4 million, or 11%, to $213.1 million at June 30, 2025 from $238.5 million at June 30, 2024. The decrease was primarily due to scheduled maturities that were not fully renewed. The weighted average maturity of the Corporation’s FHLB – San Francisco advances was approximately 10 months at June 30, 2025, down from 13 months at June 30, 2024. For additional information on borrowings, see Note 7 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Current wording

Borrowings, consisting primarily of FHLB – San Francisco advances, decreased $56.1 million, or 26%, to $157.0 million at June 30, 2026 from $213.1 million at June 30, 2025. The decrease was primarily due to scheduled maturities that were not fully replaced. The weighted average maturity of the Bank’s FHLB – San Francisco advances was approximately 12 months at June 30, 2026, up from 10 months at June 30, 2025. For additional information on borrowings, see Note 7 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Previous wording

Total stockholders’ equity decreased $1.4 million, or 1%, to $128.5 million at June 30, 2025 from $129.9 million at June 30, 2024, primarily as a result of stock repurchases (see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Form 10-K) and quarterly cash dividends paid to shareholders, partly offset by net income and the amortization of stock-based compensation in fiscal 2025.

Current wording

Total stockholders’ equity decreased $2.3 million, or 2%, to $126.2 million at June 30, 2026 from $128.5 million at June 30, 2025, primarily as a result of stock repurchases (see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Form 10-K) and quarterly cash dividends paid to shareholders, partly offset by net income and the amortization of stock-based compensation.

Previous wording

**General.**The Corporation recorded net income of $6.3 million, or $0.93 per diluted share, for the fiscal year ended June 30, 2025, down $1.1 million, or 15%, from $7.4 million, or $1.06 per diluted share, for the fiscal year ended June 30, 2024. The decrease in net income was primarily attributable to a $2.3 million increase in non-interest expense and a $410,000 decrease in non-interest income, partly offset by a $666,000 recovery of credit losses recorded during fiscal 2025 as compared to a $63,000 recovery of credit losses during fiscal 2024, and a $546,000 increase in net interest income. The Corporation's efficiency ratio, defined as non-interest expense divided by the sum of net interest income and non-interest income, increased to 79% in fiscal 2025 from 73% in fiscal 2024 due primarily to an increase in non-interest expenses. Return on average assets in fiscal 2025 was 0.50% compared to 0.57% in fiscal 2024, and return on average stockholders' equity in fiscal 2025 was 4.79%, compared to 5.62% in fiscal 2024.

Current wording

**General.**The Corporation recorded net income of $6.7 million, or $1.03 per diluted share, for the fiscal year ended June 30, 2026, up $400,000, or 6%, from $6.3 million, or $0.93 per diluted share, for the fiscal year ended June 30, 2025. The increase in net income was primarily attributable to a $859,000 increase in net interest income and a $195,000 increase in non-interest income, partly offset by a $113,000 lower recovery of credit losses and a $178,000 increase in non-interest expense. The Corporation's efficiency ratio, defined as non-interest expense divided by the sum of net interest income and non-interest income, improved to 77% in fiscal year 2026 from 79% in fiscal year 2025. Return on average assets in fiscal year 2026 was 0.55%, up from 0.50% in fiscal year 2025, and return on average stockholders' equity in fiscal year 2026 was 5.17%, up from 4.79% in fiscal year 2025.

Previous wording

**Net Interest Income.**Net interest income increased $546,000, or 2%, to $35.5 million in fiscal 2025 from $34.9 million in fiscal 2024. This increase reflects higher loan yields and the repricing of adjustable-rate loans, which outpaced increases in interest expense on deposits and borrowings. The net interest margin increased 15 basis points to 2.93% in fiscal 2025 from 2.78% in fiscal 2024. The average balance of interest-earning assets decreased $42.2 million, or 3%, to $1.21 billion in fiscal 2025 from $1.25 billion in fiscal 2024. The average balance of interest-bearing liabilities decreased $39.4 million, or 3%, to $1.10 billion during fiscal 2025 as compared to $1.14 billion during fiscal 2024.

Current wording

**Net Interest Income.**Net interest income increased $859,000, or 2%, to $36.3 million in fiscal 2026 from $35.5 million in fiscal 2025. This increase reflects a 17-basis-point increase in the interest rate spread, primarily reflecting lower funding costs, partly offset by a decrease in the average balance of interest-earning assets. The net interest margin increased 16 basis points to 3.09% in fiscal 2026 from 2.93% in fiscal 2025. The average balance of interest-earning assets decreased $35.3 million, or 3%, to $1.18 billion in fiscal 2026 from $1.21 billion in fiscal 2025. The average balance of interest-bearing liabilities decreased $34.2 million, or 3%, to $1.06 billion during fiscal 2026 as compared to $1.10 billion during fiscal 2025.

Previous wording

**Interest Income.**Total interest income increased $1.9 million, or 3%, to $56.6 million in fiscal 2025 from $54.7 million in fiscal 2024. The increase was primarily attributable to an increase of interest income on loans receivable.

Current wording

**Interest Income.**Total interest income decreased $735,000, or 1%, to $55.9 million in fiscal 2026 from $56.6 million in fiscal 2025. The decrease was primarily attributable to a decrease in the average balance of interest-earning assets, partly offset by higher average yields.

Previous wording

Interest income on loans receivable increased $2.3 million, or 5%, to $52.5 million in fiscal 2025 from $50.2 million in fiscal 2024. The increase was attributable to a higher average loan yield, partly offset by a lower average loan balance. The weighted average loan yield during fiscal 2025 increased 31 basis points to 5.00% from 4.69% in fiscal 2024, reflecting new loans being originated at higher interest rates and adjustable rate loans repricing higher due to overall higher market interest rates. The average balance of loans receivable decreased $18.2 million, or 2%, to $1.05 billion during fiscal 2025 from $1.07 billion during fiscal 2024.

Current wording

Interest income on loans receivable decreased $519,000, or 1%, to $52.0 million in fiscal year 2026 from $52.5 million in fiscal year 2025. The decrease was attributable to a lower average loan balance, partly offset by a higher average loan yield. The average balance of loans receivable decreased $15.3 million, or 1%, to $1.04 billion during fiscal year 2026 from $1.05 billion during fiscal year 2025. The weighted average loan yield during fiscal year 2026 increased two basis points to 5.02% from 5.00% in fiscal year 2025, reflecting new loans being originated at higher interest rates and adjustable-rate loans repricing higher due to overall higher market interest rates. Total loan originated for investment in fiscal year 2026 was $162.3 million at a weighted average loan rate of 6.19%, while total loan payoffs was $144.1 million at a weighted average rate of 6.54%. The net deferred loan cost amortization was $1.9 million in fiscal year 2026, up $499,000 or 35% from $1.4 million in fiscal year 2025. Total adjustable-rate loans that repriced in fiscal year 2026 was $256.8 million with a weighted average rate increase of 59 basis points to 6.98% from 6.39%.

Previous wording

Interest income on investment securities decreased $202,000, or 10%, to $1.9 million in fiscal 2025 from $2.1 million in fiscal 2024, due to a decrease in the average balance, partly offset by an increase in the average yield. The average balance of investment securities decreased $23.1 million, or 16%, to $121.4 million in fiscal 2025 from $144.5 million in fiscal 2024 mainly as a result of scheduled and accelerated principal payments on mortgage-backed securities. The average yield on investment securities increased 10 basis points to 1.53% for fiscal 2025 from 1.43% for fiscal 2024. The increase in the average yield of investment securities was primarily attributable to a lower premium amortization resulting from lower principal payments. The total premium amortization in fiscal 2025 was $374,000, down $158,000, or 30%, from $532,000 in fiscal 2024.

Current wording

Interest income on investment securities decreased $245,000, or 29%, to $1.6 million in fiscal year 2026 from $1.9 million in fiscal year 2025, due to a decrease in the average balance, partly offset by an increase in the average yield. The average balance of investment securities decreased $20.4 million, or 17%, to $101.0 million in fiscal year 2026 from $121.4 million in fiscal year 2025 mainly as a result of scheduled and accelerated principal payments on mortgage-backed securities. The average yield on investment securities increased seven basis points to 1.60% for fiscal year 2026 from 1.53% for fiscal year 2025. The increase in the average yield of investment securities was primarily attributable to a lower premium amortization resulting from lower principal payments. The total premium amortization in fiscal year 2026 was $249,000, down $125,000, or 33%, from $374,000 in fiscal year 2025.

Previous wording

During fiscal 2025, the Bank received $845,000 of cash dividends from the FHLB - San Francisco and other equity investments, an increase of $43,000, or 5%, from the $802,000 of cash dividends received in fiscal 2024, resulting in an average yield of 8.27% during fiscal 2025 compared to 8.35% during fiscal 2024. The average balance of these investments was $10.2 million during fiscal 2025, up 6% from $9.6 million during fiscal 2024.

Current wording

During fiscal year 2026, the Bank received $1.1 million of cash dividends from the FHLB - San Francisco stock and other equity investments, an increase of $245,000, or 29%, from the $845,000 of cash dividends received in fiscal year 2025, resulting in an average yield of 10.58% during fiscal year 2026 compared to 8.27% during fiscal year 2025. The increase in cash dividends was primarily due to a $274,000 special cash dividend received from the FHLB – San Francisco in February 2026. The average balance of these investments was $10.3 million during fiscal year 2026, up 1% from $10.2 million during fiscal year 2025.

Previous wording

Interest income on interest-earning deposits, primarily cash deposited at the FRB of San Francisco, decreased $296,000, or 18%, to $1.4 million in fiscal 2025 from $1.7 million in fiscal 2024, due to a lower average yield and, to a lesser extent, a lower average balance. The average yield decreased 69 basis points to 4.69% in fiscal 2025 from 5.38% in fiscal 2024, resulting from decreases in the targeted federal funds interest rates during fiscal 2025. The average balance of interest-earning deposits decreased $1.6 million, or 5%, to $29.0 million in fiscal 2025 from $30.6 million in fiscal 2024.

Current wording

Interest income on interest-earning deposits, primarily cash deposited at the FRB of San Francisco, decreased $215,000, or 16%, to $1.2 million in fiscal year 2026 from $1.4 million in fiscal year 2025, due primarily to a lower average yield. The average yield decreased 77 basis points to 3.92% in fiscal year 2026 from 4.69% in fiscal year 2025, resulting from decreases in the targeted federal funds interest rates during fiscal year 2026. The average balance of interest-earning deposits increased $294,000, or 1%, to $29.3 million in fiscal year 2026 from $29.0 million in fiscal year 2025.

Previous wording

**Interest Expense.**Total interest expense for fiscal 2025 was $21.2 million compared to $19.8 million for fiscal 2024, an increase of $1.4 million or 7%. This increase was primarily attributable to a higher interest expense on deposits, particularly time deposits, partly offset by a lower interest expense on borrowings. The average cost of interest-bearing liabilities was 1.93% during fiscal 2025, up 19 basis points from 1.74% during fiscal 2024, while the average balance of interest-bearing liabilities was $1.10 billion during fiscal 2025, down $39.4 million, or 3%, from $1.14 billion during fiscal 2024.

Current wording

**Interest Expense.**Total interest expense for fiscal year 2026 was $19.6 million compared to $21.2 million for fiscal year 2025, a decrease of $1.6 million or 8%. This decrease was primarily attributable to a lower interest expense on borrowings, partly offset by a higher interest expense on deposits. The average cost of interest-bearing liabilities was 1.84% during fiscal year 2026, down nine basis points from 1.93% during fiscal year 2025 and the average balance of interest-bearing liabilities was $1.06 billion during fiscal year 2026, down $34.2 million, or 3%, from $1.10 billion during fiscal year 2025.

Previous wording

Interest expense on borrowings, consisting primarily FHLB - San Francisco advances, for fiscal 2025 decreased $212,000, or 2%, to $9.9 million as compared to $10.1 million in fiscal 2024. The decrease in interest expense on borrowings was due to a lower average balance, partly offset by a higher average cost. The average balance of borrowings decreased $5.1 million, or 2%, to $216.3 million during fiscal 2025 from $221.4 million during fiscal 2024 and the average cost of borrowings was 4.59% in fiscal 2025, up one basis point from 4.58% in fiscal 2024.

Current wording

Interest expense on borrowings, consisting primarily of FHLB - San Francisco advances, for fiscal 2026 decreased $2.2 million, or 22%, to $7.7 million as compared to $9.9 million in fiscal 2025. The decrease in interest expense on borrowings was due to a lower average balance and, to a lesser extent, a lower average cost. The average balance of borrowings decreased $36.3 million, or 17%, to $180.0 million during fiscal 2026 from $216.3 million during fiscal 2025, while the average cost of borrowings decreased 29 basis points to 4.30% from 4.59%.

Previous wording

**Provision for (Recovery of) Credit Losses.**During fiscal 2025, the Corporation recorded a recovery of credit losses of $666,000, compared to a recovery of $63,000 during fiscal 2024. The increase in the recovery of credit losses in fiscal 2025 was primarily due to improved qualitative factors related to the single-family residential loans and lower historical loss rates, partially offset by an increase in the balance of single-family loans.

Current wording

**Recovery of Credit Losses.**During fiscal 2026, the Corporation recorded a net recovery of credit losses of $553,000, compared to a net recovery of $666,000 during fiscal 2025. The recovery of credit losses in fiscal 2026 was primarily due to lower historical loss rates and a shorter expected life of the loans held for investment, reflecting changes in expected prepayments.

Previous wording

At June 30, 2025, the ACL on loans held for investment was $6.4 million, comprised of all collectively evaluated allowances, down 9% from $7.1 million at June 30, 2024. The ACL on loans as a percentage of gross loans held for investment was 0.62% at June 30, 2025, compared to 0.67% at June 30, 2024. The decrease in the ACL on loans was due primarily to the recovery of credit losses recorded in fiscal 2025.

Current wording

At June 30, 2026, the ACL on loans held for investment was $5.9 million, comprised of allowances for collectively evaluated loans, down 9% from $6.4 million at June 30, 2025. The ACL on loans as a percentage of gross loans held for investment was 0.57% at June 30, 2026, compared to 0.62% at June 30, 2025. The decrease in the ACL on loans was due primarily to the recovery of credit losses recorded in fiscal 2026 and changes in the composition of the loan portfolio.

Previous wording

**Non-Interest Income.**Total non-interest income was $3.5 million in fiscal 2025, a decrease of $410,000 or 10% from $3.9 million in fiscal 2024, due primarily to decreases in card and processing fees and other non-interest income.

Current wording

**Non-Interest Income.**Total non-interest income was $3.7 million in fiscal year 2026, an increase of $195,000 or 6% from $3.5 million in fiscal year 2025, due primarily to increases in loan servicing and other fees and other non-interest income.

Previous wording

Loan servicing and other fees increased $82,000, or 24%, to $419,000 in fiscal 2025 from $337,000 in fiscal 2024, due primarily to higher late fees on loans.

Current wording

Loan servicing and other fees increased $164,000, or 39%, to $583,000 in fiscal year 2026 from $419,000 in fiscal year 2025, due primarily to higher loan prepayment fees.

Previous wording

Deposit account fees decreased $42,000, or 4%, to $1.1 million in fiscal 2025 from $1.2 million in fiscal 2024, due primarily to lower non-sufficient funds fees, associated with fewer transactions.

Current wording

Deposit account fees decreased $45,000, or 4%, to $1.1 million in fiscal year 2026 compared to fiscal year 2025, due primarily to lower non-sufficient funds fees, associated with fewer transactions.

Previous wording

Card and processing fees decreased $119,000, or 9%, to $1.3 million in fiscal 2025 from $1.4 million in fiscal 2024, due primarily to fewer debit card transactions.

Current wording

Card and processing fees decreased $62,000, or 5%, to $1.2 million in fiscal year 2026 from $1.3 million in fiscal year 2025, due primarily to fewer debit card transactions.

Previous wording

Other non-interest income decreased $331,000, or 31%, to $735,000 in fiscal 2025 from $1.1 million in fiscal 2024. The prior year included a $540,000 net gain on other equity investments from the VISA share conversion, partly offset by a $190,000 positive fair value adjustment on the VISA equity investment in fiscal 2025.

Current wording

Other non-interest income increased $138,000, or 19%, to $873,000 in fiscal year 2026 from $735,000 in fiscal year 2025. The increase was primarily due to a $311,000 net gain on other equity investments from the VISA share conversion, partly offset by a $191,000 decrease in the fair value adjustment on the VISA equity investment in fiscal year 2026.

Previous wording

**Non-Interest Expense.**Total non-interest expense was $30.8 million in fiscal 2025, an increase of $2.3 million or 8% from $28.5 million in fiscal 2024. The increase in non-interest expense was primarily attributable to increases in salaries and employee benefits, equipment expense and other non-interest expenses.

Current wording

**Non-Interest Expense.**Total non-interest expense was $31.0 million in fiscal year 2026, an increase of $178,000 or 1% from $30.8 million in fiscal year 2025. The increase in non-interest expense was primarily attributable to increases in salaries and employee benefits and equipment expense, partly offset by decreases in premises and occupancy expenses, deposit insurance premiums and regulatory assessments and other non-interest expenses.

Previous wording

Salaries and employee benefits increased $1.4 million, or 8%, to $19.0 million in fiscal 2025 from $17.6 million in fiscal 2024. The increase in salaries and employee benefits was primarily attributable to increases in compensation costs, incentive compensation, group insurance costs and executive search costs.

Current wording

Salaries and employee benefits increased $257,000, or 1%, to $19.3 million in fiscal year 2026 from $19.0 million in fiscal year 2025. The increase in salaries and employee benefits was primarily attributable to increases in compensation costs, contributions to the executive retirement plan and an increase in group health insurance premium costs, partly offset by decreases in retirement plan expenses and executive search costs.

Previous wording

Equipment expense increased $233,000, or 18%, to $1.5 million in fiscal 2025 from $1.3 million in fiscal 2024, due primarily to higher software license and maintenance costs.

Current wording

Equipment expense increased $215,000, or 14%, to $1.8 million in fiscal year 2026 from $1.5 million in fiscal year 2025, due primarily to higher software license and maintenance costs.

Previous wording

The provision for income taxes was $2.6 million for fiscal 2025, representing an effective tax rate of 29.5%, down $418,000 or 14% from $3.0 million in fiscal 2024, representing an effective tax rate of 29.2%. The decrease in the provision for income taxes in fiscal 2025 compared to fiscal 2024 was due primarily to a lower income before the provision for income taxes.

Current wording

The provision for income taxes was $3.0 million for fiscal 2026, representing an effective tax rate of 30.9%, up $363,000 or 14% from $2.6 million in fiscal 2025, representing an effective tax rate of 29.5%. The increase in the effective tax rate was due primarily to the $251,000 write-off of deferred tax assets related to the expiration of stock options, partly offset by a $94,000 tax benefit attributable to the vesting of restricted stock in fiscal 2026. The increase in the provision for income taxes was also attributable to higher income before income taxes.

Previous wording

The Bank’s primary sources of funds are deposits, proceeds from principal and interest payments on loans, proceeds from the maturity and sale of investment securities, proceeds from FHLB - San Francisco advances, access to the discount window facility at the FRB of San Francisco and access to the correspondent bank’s federal funds facility. 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.

Current wording

The Bank’s primary sources of funds are deposits, principal and interest payments on loans, proceeds from the maturity and sale of investment securities, FHLB - San Francisco advances, the discount window facility at the FRB of San Francisco, and the correspondent bank’s federal funds facility. 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.

Previous wording

The primary investing activity of the Bank has been the origination and, to a lesser extent, purchase of loans held for investment. During the fiscal years ended June 30, 2025 and 2024, the Bank originated loans held for investment of $122.7 million and $75.5 million, respectively. The Bank did not purchase any loans held for investment from other financial institutions in fiscal 2025 or 2024. At June 30, 2025 and 2024, the Bank had loan origination commitments totaling $6.1 million and $9.4 million, with undisbursed loan funds of $582,000 and $435,000, respectively. The Bank anticipates that it will have sufficient funds available to meet its current loan origination commitments.

Current wording

The primary investing activity of the Bank has been the origination and, to a lesser extent, purchase of loans held for investment. During the fiscal years ended June 30, 2026 and 2025, the Bank originated loans held for investment of $162.3 million and $122.7 million, respectively, an increase of $39.6 million, or 32%, in fiscal 2026. The Bank did not purchase any loans held for investment from other financial institutions in fiscal 2026 or 2025. At June 30, 2026 and 2025, the Bank had loan origination commitments totaling $11.8 million and $6.1 million, with undisbursed loan funds of $0 and $582,000, respectively. The Bank anticipates that it will have sufficient funds available to meet its current loan origination commitments.