UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 27, 2020

PROVIDENT FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:  (951) 686-6060

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item 2.02  Results of Operations and Financial Condition

On January 27, 2020, Provident Financial Holdings, Inc. (“Corporation”), the holding company for Provident Savings Bank, F.S.B., distributed its quarterly results for the quarter ended December 31, 2019. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01  Regulation FD Disclosure.

On January 27, 2020, the Corporation posted its Investor Presentation for the quarter ended December 31, 2019 on the Corporation’s website, www.myprovident.com, under Presentations in the Investor Relations section.  A copy of the Investor Presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits

(d)

Exhibits

The following exhibits are being furnished herewith and this list shall constitute the exhibit index:

99.1	News release of the Corporation’s quarterly results for the quarter ended December 31, 2019.

99.2	Investor Presentation of Provident Financial Holdings, Inc. for the quarter ended December 31, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  January 27, 2020	PROVIDENT FINANCIAL HOLDINGS, INC.
	/s/ Donavon P. Ternes
	Donavon P. Ternes President, Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer)

   

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PROVIDENT FINANCIAL HOLDINGS REPORTS

SECOND QUARTER OF FISCAL 2020 RESULTS

Net Income Increases by 22% in the December 2019 Quarter in Comparison to the

December 2018 Quarter

Net Interest Margin Expands Five Basis Points to 3.59% in the December 2019

Quarter in Comparison to the December 2018 Quarter

Loans Held for Investment Increase 7% to $941.7 Million

from June 30, 2019

Non-Performing Assets Decrease 45% to $3.4 Million at December 31, 2019 in

Comparison to $6.2 Million at June 30, 2019

Riverside, Calif. – January 27, 2020 – Provident Financial Holdings, Inc. (“Company”), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced second quarter earnings results for the fiscal year ending June 30, 2020.

            For the quarter ended December 31, 2019, the Company reported net income of $2.40 million, or $0.31 per diluted share (on 7.66 million average diluted shares outstanding), up 22 percent from the net income of $1.96 million, or $0.26 per diluted share (on 7.60 million average diluted shares outstanding), in the comparable period a year ago. Compared to the same quarter last year, the increase in earnings was primarily attributable to lower non-interest expenses, partly offset by lower non-interest income.

“I am pleased with our financial results for the December 2019 quarter.  We continue to demonstrate reasonable growth in our loan portfolio, our credit quality

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metrics are very good, operating expenses are under control, and our capital levels are strong,” said Craig G. Blunden, Chairman and Chief Executive Officer of the Company.  “We look forward to 2020 and believe we are well-positioned for growth by serving the communities of the Inland Empire,” Mr. Blunden concluded.

Return on average assets for the second quarter of fiscal 2020 was 0.87 percent compared to 0.69 percent for the same period of fiscal 2019; and return on average stockholders’ equity for the second quarter of fiscal 2020 was 7.81 percent compared to 6.42 percent for the comparable period of fiscal 2019.

On a sequential quarter basis, the $2.40 million net income for the second quarter of fiscal 2020 reflects a $164,000 or six percent decrease from $2.56 million in the first quarter of fiscal 2020. The decrease in earnings for the second quarter of fiscal 2020 compared to the first quarter of fiscal 2020 was primarily attributable to higher non-interest expenses (primarily due to the $296,000 partial reversion of a previously expensed legal settlement, which was recognized during the prior sequential quarter and not replicated this quarter) and a lower recovery from the allowance for loan losses, partly offset by higher non-interest income (primarily due to higher loan servicing and other fees). Diluted earnings per share for the second quarter of fiscal 2020 were $0.31 per share, down six percent from the $0.33 per share during the first quarter of fiscal 2020. Return on average assets was 0.87 percent for the second quarter of fiscal 2020 compared to 0.95 percent in the first quarter of fiscal 2020; and return on average stockholders’ equity for the second quarter of fiscal 2020 was 7.81 percent, compared to 8.46 percent for the first quarter of fiscal 2020.

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For the six months ended December 31, 2019 net income increased $1.18 million, or 31 percent, to $4.96 million from $3.78 million in the comparable period ended December 31, 2018; and diluted earnings per share for the six months ended December 31, 2019 increased 30 percent to $0.65 per share (on 7.65 million average diluted shares outstanding) from $0.50 per share (on 7.58 million average diluted shares outstanding) for the comparable six month period last year. Compared to the same period last year, the increase in earnings was primarily attributable to a $7.79 million decrease in non-interest expense; partly offset by a $5.52 million decrease in the gain on sale of loans.

Net interest income decreased $192,000, or two percent, to $9.64 million in the second quarter of fiscal 2020 from $9.83 million for the same quarter of fiscal 2019, attributable to a lower average interest-earning assets balance, partly offset by an increase in the net interest margin.  The average balance of interest-earning assets decreased by $35.7 million, or three percent, to $1.07 billion in the second quarter of fiscal 2020 from $1.11 billion in the same quarter last year. The average balance of interest-bearing liabilities decreased by $36.1 million, or four percent, to $964.6 million in the second quarter of fiscal 2020 from $1.00 billion in the same quarter last year. The net interest margin during the second quarter of fiscal 2020 increased five basis points to 3.59 percent from 3.54 percent in the same quarter last year, primarily due to an increase in the average yield of interest-earning assets, partly offset by a slight increase in the average cost of interest-bearing liabilities. The average yield on interest-earning assets increased by six basis points to 4.18 percent in the second quarter of fiscal 2020 from 4.12 percent in the same quarter last year; while the average cost of interest-bearing liabilities

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increased by one basis point to 0.65 percent in the second quarter of fiscal 2020 from 0.64 percent in the same quarter last year.

The average balance of loans receivable (including loans held for sale in the prior year) decreased by $7.1 million, or one percent, to $934.1 million in the second quarter of fiscal 2020 from $941.2 million in the same quarter of fiscal 2019, primarily due to a decrease in the average balance of loans held for sale, partly offset by an increase in loans held for investment. There were no loans held for sale during the second quarter of fiscal 2020. The average yield on loans receivable increased by three basis points to 4.42 percent in the second quarter of fiscal 2020 from an average yield of 4.39 percent in the same quarter of fiscal 2019.  The increase in the average yield on loans receivable was primarily attributable to a $378,000 deferred loan fee that was recognized in interest income as a result of a loan payoff in the second quarter of fiscal 2020 from a previously classified non-performing loan that had been upgraded to pass as compared to $159,000 of deferred interest payments that was recognized from two non-performing loans that were paid off in the same quarter last year.  Total loans originated and purchased for investment in the second quarter of fiscal 2020 were $81.6 million, up 108 percent from $39.3 million in the same quarter of fiscal 2019. Loan principal payments received in the second quarter of fiscal 2020 were $65.2 million, up 58 percent from $41.2 million in the same quarter of fiscal 2019.

The average balance of investment securities decreased by $6.4 million, or seven percent, to $87.1 million in the second quarter of fiscal 2020 from $93.5 million in the same quarter of fiscal 2019. The average yield on investment securities increased 70 basis points to 2.60 percent in the second quarter of fiscal 2020 from 1.90 percent for the same

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quarter of fiscal 2019. The increase in the average yield was primarily attributable to a lower premium amortization ($97,000 vs. $224,000) and purchases of mortgage-backed securities during the last 12 months which had higher average yields than the existing portfolio.

In the second quarter of fiscal 2020, the Federal Home Loan Bank – San Francisco (“FHLB”) distributed a $145,000 cash dividend to the Bank on its FHLB stock, down from $278,000 in the same quarter last year, which included a $133,000 special cash dividend received on FHLB San Francisco stock last year, not replicated this quarter.

The average balance of the Company’s interest-earning deposits, primarily cash with the Federal Reserve Bank of San Francisco, decreased $22.3 million, or 33 percent, to $45.5 million in the second quarter of fiscal 2020 from $67.8 million in the same quarter of fiscal 2019. The average yield earned on interest-earning deposits in the second quarter of fiscal 2020 was 1.62 percent, down 61 basis points from 2.23 percent in the same quarter of fiscal 2019 largely as a result of three 25 basis point decreases in the targeted Federal Funds Rate in the first and second quarters of fiscal 2020.

Average deposits decreased $56.0 million, or six percent, to $833.6 million in the second quarter of fiscal 2020 from $889.6 million in the same quarter of fiscal 2019, primarily due to a managed run-off of higher cost time deposits consistent with the reduction in the Bank’s funding needs resulting from no loans originated for sale during the first and second quarters of fiscal 2020.  The average cost of deposits improved, decreasing by three basis points to 0.37 percent in the second quarter of fiscal 2020 from 0.40 percent in the same quarter last year.

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Transaction account balances or “core deposits” decreased slightly to $647.8 million at December 31, 2019 from $648.1 million at June 30, 2019, while time deposits decreased $7.2 million, or four percent, to $185.9 million at December 31, 2019 from $193.1 million at June 30, 2019.

The average balance of borrowings, which consisted of FHLB advances, increased $20.0 million, or 18 percent, to $131.1 million while the average cost of borrowings decreased 12 basis points to 2.43 percent in the second quarter of fiscal 2020, compared to an average balance of $111.1 million with an average cost of 2.55 percent in the same quarter of fiscal 2019. The increase in the average balance of borrowings was primarily due to the new long-term borrowings with a lower average cost obtained during the first quarter of fiscal 2020 (sequential quarter).

During the second quarter of fiscal 2020, the Company recorded a recovery from the allowance for loan losses of $22,000, as compared to a recovery of $217,000 recorded during the same period of fiscal 2019 and a recovery of $181,000 recorded in the first quarter of fiscal 2020 (sequential quarter).

Non-performing assets, with underlying collateral located in California, decreased $2.8 million, or 45 percent, to $3.4 million, or 0.31 percent of total assets, at December 31, 2019, compared to $6.2 million, or 0.57 percent of total assets, at June 30, 2019. The non-performing loans at December 31, 2019 are comprised of 16 single-family loans ($3.4 million) and one commercial business loan ($37,000).  At both December 31, 2019 and June 30, 2019, there was no real estate owned.

Net loan recoveries for the quarter ended December 31, 2019 were $14,000 or 0.01 percent (annualized) of average loans receivable, compared to net loan recoveries of

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$123,000 or 0.05 percent (annualized) of average loans receivable for the quarter ended December 31, 2018 and net loan recoveries of $34,000 or 0.02 percent (annualized) of average loans receivable for the quarter ended September 30, 2019 (sequential quarter).

Classified assets at December 31, 2019 were $13.7 million, comprised of $9.4 million of loans in the special mention category, $4.3 million of loans in the substandard category and no real estate owned; while classified assets at June 30, 2019 were $16.2 million, comprised of $8.6 million of loans in the special mention category, $7.6 million of loans in the substandard category and no real estate owned.

For the quarter ended December 31, 2019, no new loans were restructured from their original terms and classified as restructured loans. The outstanding balance of restructured loans at December 31, 2019 was $1.8 million (six loans), down 53 percent from $3.8 million (eight loans) at June 30, 2019. As of December 31, 2019, all of the restructured loans were classified as substandard non-accrual. As of December 31, 2019, 49% or $888,000 of the restructured loans have a current payment status.

The allowance for loan losses was $6.9 million at December 31, 2019, or 0.73 percent of gross loans held for investment, compared to $7.1 million at June 30, 2019, or 0.80 percent of gross loans held for investment. Management believes that, based on currently available information, the allowance for loan losses is sufficient to absorb potential losses inherent in loans held for investment at December 31, 2019.

Non-interest income decreased by $2.26 million, or 63 percent, to $1.34 million in the second quarter of fiscal 2020 from $3.60 million in the same period of fiscal 2019, primarily as a result of no loan sales during the current quarter. The gain on sale of loans last year, during the second quarter of fiscal 2019, was $2.26 million. On a sequential

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quarter basis, non-interest income increased $274,000, or 26 percent, primarily as a result of an increase in loan servicing and other loan fees. There were no loans originated for sale during the current or sequential quarters.

Non-interest expenses decreased $3.33 million, or 31 percent, to $7.55 million in the second quarter of fiscal 2020 from $10.88 million in the same quarter last year.  The decrease was due primarily to lower salaries and employee benefits expenses resulting from fewer employees and consistent with the scaling back of saleable single-family mortgage loan originations. On a sequential quarter basis, non-interest expenses increased $316,000 or four percent from $7.24 million. The increase in non-interest expenses for the sequential quarter was primarily due to the $296,000 partial reversion of a previously expensed legal settlement, which was recognized in other non-interest expense during the quarter ended September 30, 2019 and not replicated this quarter.

The Company’s efficiency ratio in the second quarter of fiscal 2020 was 69 percent, an improvement from 81 percent in the same quarter last year but a slight increase from 68 percent in the first quarter of fiscal 2020 (sequential quarter).

The Company’s provision for income tax was $1.05 million for the second quarter of fiscal 2020, up 30 percent from $810,000 in the same quarter last year. The effective tax rate in the second quarter of fiscal 2020 was 30.51% as compared to 29.26% in the same quarter of fiscal 2019. The Company believes that the tax provision recorded in the second quarter of fiscal 2020 reflects its current federal and state income tax obligations.

The Company repurchased 2,361 shares of its common stock during the quarter ended December 31, 2019 at an average cost of $21.84 per share. As of December 31, 2019, a total of 71,284 shares or 19 percent of the April 2018 stock repurchase plan have

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been purchased at an average cost of $19.97 per share, leaving 301,716 shares available for future purchases.

The Bank currently operates 13 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire).

The Company will host a conference call for institutional investors and bank analysts on Tuesday, January 28, 2020 at 9:00 a.m. (Pacific) to discuss its financial results.  The conference call can be accessed by dialing 1-844-721-7239 and referencing access code number 1069003.  An audio replay of the conference call will be available through Tuesday, February 4, 2020 by dialing 1-866-207-1041 and referencing access code number 2689092.

For more financial information about the Company please visit the website at www.myprovident.com and click on the “Investor Relations” section.

Safe-Harbor Statement

This press release contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements relate to the Company’s financial condition, liquidity, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially from the results anticipated or implied by our forward-looking statements include, but are not limited  to increased competitive pressures; changes in the interest rate environment; secondary market conditions for loans and our ability to originate for sale and sell loans in the secondary market; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (“SEC”) - which are available on our website at www.myprovident.com and on the SEC’s website at www.sec.gov. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements whether as a result of new information, future events or otherwise. These risks could cause our actual results for fiscal 2020 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us and could negatively affect our operating and stock price performance.

Contacts:	Craig G. Blunden Chairman and Chief Executive Officer	Donovan P. Ternes President, Chief Operating Officer, and Chief Financial Officer

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		December 31				September 30,				June 30,				March 31,				December 31,
		2019				2019				2019				2019				2018
Assets
Cash and cash equivalents		$	48,233			$	54,515			$	70,632			$	61,458			$	67,359
Investment securities – held to maturity, at   cost			77,161				85,088				94,090				102,510				84,990
Investment securities - available for sale, at   fair value			5,237				5,517				5,969				6,294				6,563
Loans held for investment, net of allowance   for loan losses of $6,921; $6,929; $7,076;   $7,080 and $7,061, respectively; includes   $4,173; $4,386; $5,094; $5,239 and $4,995   at fair value, respectively			941,729				924,314				879,925				883,554				875,413
Loans held for sale, at fair value			-				-				-				30,500				57,562
Accrued interest receivable			3,292				3,380				3,424				3,386				3,156
Real estate owned, net			-				-				-				-				-
FHLB – San Francisco stock			8,199				8,199				8,199				8,199				8,199
Premises and equipment, net			10,967				11,215				8,226				8,395				8,601
Prepaid expenses and other assets			12,569				13,068				14,385				15,099				15,327
Total assets		$	1,107,387			$	1,105,296			$	1,084,850			$	1,119,395			$	1,127,170
Liabilities and Stockholders’ Equity
Liabilities:
Non interest-bearing deposits		$	85,846			$	85,338			$	90,184			$	90,875			$	78,866
Interest-bearing deposits			747,804				746,398				751,087				786,009				794,018
Total deposits			833,650				831,736				841,271				876,884				872,884
Borrowings			131,085				131,092				101,107				101,121				111,135
Accounts payable, accrued interest and other   liabilities			18,876				20,299				21,831				20,181				20,474
Total liabilities			983,611				983,127				964,209				998,186				1,004,493
Stockholders’ equity:
Preferred stock, $.01 par value (2,000,000   shares authorized; none issued and outstanding)
			-				-				-				-				-
Common stock, $.01 par value (40,000,000   shares authorized; 18,097,615; 18,091,865;   18,081,365; 18,064,365and 18,053,115   shares issued, respectively; 7,483,071;   7,479,682; 7,486,106; 7,497,357 and   7,506,855 shares outstanding, respectively)
			181				181				181				181				181
Additional paid-in capital			95,118				94,795				94,351				96,114				95,913
Retained earnings			193,704				192,354				190,839				191,103				192,306
Treasury stock at cost (10,614,544;   10,612,183; 10,559,259; 10,567,008 and   10,546,260 shares, respectively)
			(165,360	)			(165,309	)			(164,891	)			(166,352	)			(165,892	)
Accumulated other comprehensive income,   net of tax			133				148				161				163				169
Total stockholders’ equity			123,776				122,169				120,641				121,209				122,677
Total liabilities and stockholders’ equity		$	1,107,387			$	1,105,296			$	1,084,850			$	1,119,395			$	1,127,170

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		Quarter Ended December 31,								Six Months Ended December 31,
		2019				2018				2019				2018
SELECTED FINANCIAL RATIOS:
Return on average assets			0.87	%			0.69	%			0.91	%			0.66	%
Return on average stockholders’ equity			7.81	%			6.42	%			8.13	%			6.22	%
Stockholders’ equity to total assets			11.18	%			10.88	%			11.18	%			10.88	%
Net interest spread			3.53	%			3.48	%			3.55	%			3.36	%
Net interest margin			3.59	%			3.54	%			3.61	%			3.42	%
Efficiency ratio			68.78	%			81.00	%			68.37	%			82.61	%
Average interest-earning assets to average
interest-bearing liabilities			111.43	%			110.98	%			111.52	%			110.92	%
SELECTED FINANCIAL DATA:
Basic earnings per share		$	0.32			$	0.26			$	0.66			$	0.51
Diluted earnings per share		$	0.31			$	0.26			$	0.65			$	0.50
Book value per share		$	16.54			$	16.34			$	16.54			$	16.34
Shares used for basic EPS computation			7,482,300				7,506,106				7,482,367				7,468,537
Shares used for diluted EPS computation			7,658,050				7,601,759				7,651,441				7,579,414
Total shares issued and outstanding			7,483,071				7,506,855				7,483,071				7,506,855
LOANS ORIGINATED AND PURCHASED FOR INVESTMENT:
Mortgage Loans:
Single-family		$	52,671			$	24,180			$	86,300			$	41,396
Multi-family			20,164				10,068				76,640				22,777
Commercial real estate			6,479				3,175				8,898				8,480
Construction			2,313				1,863				3,209				3,343
Consumer loans			1				-				1				-
Total loans originated and purchased for     investment		$	81,628			$	39,286			$	175,048			$	75,996
LOANS ORIGINATED FOR SALE:
Retail originations		$	-			$	87,913			$	-			$	215,046
Wholesale originations			-				58,504				-				127,692
Total loans originated for sale		$	-			$	146,417			$	-			$	342,738
LOANS SOLD:
Servicing released		$	-			$	165,484			$	-			$	376,534
Servicing retained			-				2,026				-				2,784
Total loans sold		$	-			$	167,510			$	-			$	379,318

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		As of				As of				As of				As of				As of
		12/31/19				09/30/19				06/30/19				03/31/19				12/31/18
ASSET QUALITY RATIOS AND   DELINQUENT LOANS:
Recourse reserve for loans sold		$	250			$	250			$	250			$	250			$	250
Allowance for loan losses		$	6,921			$	6,929			$	7,076			$	7,080			$	7,061
Non-performing loans to loans held for   investment, net			0.36	%			0.57	%			0.71	%			0.69	%			0.69	%
Non-performing assets to total assets			0.31	%			0.47	%			0.57	%			0.55	%			0.54	%
Allowance for loan losses to gross loans held
for investment			0.73	%			0.74	%			0.80	%			0.79	%			0.80	%
Net loan charge-offs (recoveries) to average   loans receivable (annualized)			(0.01	)%			(0.02	)%			(0.01	)%			(0.01	)%			(0.05	)%
Non-performing loans		$	3,427			$	5,230			$	6,218			$	6,115			$	6,062
Loans 30 to 89 days delinquent		$	986			$	990			$	665			$	699			$	2

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