PROVIDENT FINANCIAL HOLDINGS INC

Fiscal 2026

Last year, I described that our fiscal 2026 Business Plan reflected measured growth in loans and retail deposits, disciplined control of operating expenses, and sound capital management. Our financial results, described in the following Financial Highlights, reflected improved earnings compared to the prior year, despite a moderate decline in total assets.

During fiscal 2026, as the yield curve normalized, we adjusted our strategy accordingly to support increased loan production. Following a 61 percent increase in loan production during fiscal 2025, we achieved an additional 32 percent increase in loan production in fiscal 2026. However, these production gains were fully offset by higher-than-normal levels of loan prepayments. As a result, our loans held for investment decreased by approximately one percent for the fiscal year. The deposit landscape remained challenging, as competition for deposits continued to be intense. Competitors of all sizes, including large national banks, aggressively marketed promotional deposit rates that remain elevated today, even as the FOMC lowered short-term rates in 2025. 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 certificates of deposit and borrowings. Total deposits increased two percent during the fiscal year although transaction accounts declined three percent. Our net interest margin exceeded three percent for the year, reaching 3.09 percent, with the improvement driven primarily by the repricing of Federal Home Loan Bank advances to lower rates as they matured. Despite inflationary pressures, operating expenses increased by less than one percent for the fiscal year. Finally, we recorded no loan charge-offs during fiscal 2026 - our eighth consecutive year without reporting a net charge-off.

Returning capital to our shareholders is a priority. During fiscal 2026, we maintained our quarterly cash dividend of $0.14 per share and increased our share repurchases to approximately 344,000 shares, compared to approximately 285,000 shares in fiscal 2025.