PROVIDENT FINANCIAL HOLDINGS INC 10-K

Item 9A. Controls and Procedures ​ a) An evaluation of the Corporation’s disclosure controls and procedures (as defined in Section 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934 (the “Act”)) was carried out under the supervision and with the participation of the Corporation’s Chief Executive Officer (principal executive officer), Chief Financial Officer (principal financial officer) and the Corporation’s Disclosure Committee as of the end of the period covered by this report. In designing and evaluating the Corporation’s disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Also, because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Corporation have been detected. Additionally, in designing disclosure controls and procedures, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures as of June 30, 2024 are effective, at the reasonable assurance level, in ensuring that the information required to be disclosed by the Corporation in the reports it files or submits under the Act is (i) accumulated and communicated to the Corporation’s management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. ​ b) There have been no changes in the Corporation’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter year ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting. The Corporation does not expect that its internal control over financial reporting will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Corporation have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance 66 Table of Contents with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected. ​ Management Report on Internal Control Over Financial Reporting ​ This management report includes the subsidiary institution of Provident Financial Holdings, Inc. (the "Corporation"), Provident Savings Bank, F.S.B. which is subject to Part 363 in the statement of management's responsibilities; the report on management's assessment of compliance with the Federal laws and regulations pertaining to insider loans and the Federal and, if applicable, State laws and regulations pertaining to dividend restrictions; and the report on management's assessment of internal control over financial reporting. ​ Management of the Corporation is responsible for preparing the Corporation’s annual consolidated financial statements in accordance with generally accepted accounting principles; for establishing and maintaining an adequate internal control structure and procedures for financial reporting, including controls over the preparation of regulatory financial statements in accordance with the instructions for the Parent Company Only Financial Statements for Small Holding Companies (Form FR Y-9SP); and for complying with the Federal laws and regulations pertaining to insider loans and the Federal and, if applicable, State laws and regulations pertaining to dividend restrictions. The Corporation's internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. ​ To comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, the Corporation designed and implemented a structured and comprehensive assessment process to evaluate its internal control over financial reporting across the enterprise. The assessment of the effectiveness of the Corporation's internal control over financial reporting was based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management's assessment of the Corporation's internal control over financial reporting was also conducted to meet the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA), which include controls over the preparation of the schedules equivalent to the basic financial statements in accordance with the instructions for the Parent Company Only Financial Statements for Small Holding Companies (Form FR Y-9SP). ​ Because of its inherent limitations, including the possibility of human error and the circumvention of overriding controls, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on its assessment, management has concluded that, as of June 30, 2024, the Corporation's internal control over financial reporting, including controls over the preparation of regulatory financial statements in accordance with the instructions for the Parent Company Only Financial Statements for Small Holding Companies (Form FR Y-9SP), is effective based on the criteria established in Internal Control-Integrated Framework (2013). ​ Management of the Corporation has assessed the Corporation's compliance with the Federal laws and regulations pertaining to insider loans and the Federal and, if applicable, State laws and regulations pertaining to dividend restrictions during the fiscal year ended on June 30, 2024. Management has concluded that the Corporation complied with the Federal laws and regulations pertaining to insider loans and the Federal and, if applicable, State laws and regulations pertaining to dividend restrictions during the fiscal year ended on June 30, 2024. 67 Table of Contents ​ ​ Date: August 30, 2024 ​ ​ /s/ Donavon P. Ternes Donavon P. Ternes President and Chief Executive Officer /s/ Tam B. Nguyen Tam B. Nguyen Senior Vice President and Chief Financial Officer ​ ​ Item 9B. Other Information ​ (a) None ​ (b) Trading Plans. During the quarter ended June 30, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Corporation adopted or terminated a “Rule 10b5-1 trading arrangement” or “ non-Rule 10b5-1 trading arrangement ,” as each term is defined in Item 408(a) of Regulation S-K. ​ ​ Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ​ ​ Not Applicable. ​ ​ PART III ​ Item 10. Directors, Executive Officers and Corporate Governance ​ Directors and Executive Officers ​ The information required by this item regarding the Corporation’s Board of Directors is incorporated herein by reference from the section captioned “Proposal I – Election of Directors” in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end. ​ The executive officers of the Corporation and the Bank are elected annually and hold office until their respective successors have been elected and qualified or until death, resignation or removal by the Board of Directors. For information regarding the Corporation’s executive officers, see Item 1, “Business - Executive Officers” in this Form 10-K, which is incorporated herein by reference. ​ Code of Ethics for Senior Financial Officers ​ The Corporation has adopted a Code of Ethics, which applies to all directors, officers, and employees of the Corporation. The Code of Ethics is publicly available as Exhibit 14 to the Corporation’s Annual Report on Form 10-K for the fiscal year June 30, 2007, and is available on the Corporation’s website, www.myprovident.com . If the Corporation makes any substantial amendments to the Code of Ethics or grants any waiver, including any implicit waiver, from a provision of the Code of Ethics to the Corporation’s principal executive officer, principal financial and accounting officer, controller, or person performing similar functions, the Corporation will disclose the nature of such amendment or waiver on the Corporation’s website and in a report on Form 8-K. ​ 68 Table of Contents Audit Committee and Audit Committee Financial Expert ​ The Corporation has a separately-designated standing audit committee established in accordance with section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The audit committee consists of three independent directors of the Corporation: Judy A. Carpenter, Kathy M. Michalak and Matthew E. Webb. The Corporation has designated Judy A. Carpenter, Audit Committee Chair, as its audit committee financial expert. Ms. Carpenter is independent, as independence for audit committee members is defined under the listing standards of the NASDAQ Stock Market, is a Certified Public Accountant in California (inactive), has been in public accounting, and has extensive business knowledge, financial expertise and familiarity with our local market and communities. ​ Nominating Procedures ​ There have been no material changes to the procedures by which shareholders may recommend nominees to its Board of Directors since last disclosed to shareholders. ​ ​ Item 11. Executive Compensation ​ The information required by this item is incorporated herein by reference from the sections captioned “Executive Compensation” and “Directors’ Compensation” in the Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end. ​ ​ Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ​ a) Security Ownership of Certain Beneficial Owners. ​ The information required by this item is incorporated herein by reference from the section captioned “Security Ownership of Certain Beneficial Owners and Management” in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end. ​ b) Security Ownership of Management. ​ The information required by this item is incorporated herein by reference from the sections captioned “Security Ownership of Certain Beneficial Owners and Management” in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end. ​ c) Changes in Control. ​ The Corporation is not aware of any arrangements, including any pledge by any person of securities of the Corporation, the operation of which may at a subsequent date result in a change in control of the Corporation. ​ ​ 69 Table of Contents d) Equity Compensation Plan Information. ​ ​ The following table summarizes share and exercise price information regarding the Corporation's equity compensation plans as of June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Securities ​ ​ ​ ​ ​ ​ ​ Remaining Available for ​ ​ Number of Securities ​ ​ ​ ​ Future Issuance Under ​ ​ to Be Issued Upon ​ Weighted Average ​ Equity Compensation ​ ​ Exercise of ​ Exercise Price of ​ Plans (Excluding ​ ​ Outstanding Options, ​ Outstanding Options, ​ Securities Reflected in Plan Category ​ Warrants and Rights ​ Warrants and Rights ​ Column (a)) ​ (a) ​ (b) (c) ​ Equity compensation plans approved by security holders: ​ ​ 2006 Equity Incentive Plan: ​ ​ Stock Options 11,000 ​ $ 16.93 — ​ 2010 Equity Incentive Plan: ​ ​ Stock Options 158,000 ​ $ 15.65 — ​ 2013 Equity Incentive Plan: ​ ​ Stock Options 213,000 ​ $ 16.39 — ​ Restricted Stock 47,650 ​ N/A — ​ 2022 Equity Incentive Plan: ​ ​ ​ ​ ​ ​ ​ ​ Stock Options ​ 98,000 ​ $ 12.44 77,000 ​ Restricted Stock ​ 129,000 ​ N/A 69,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity compensation plans not approved by security holders N/A ​ N/A N/A ​ Total 656,650 ​ $ 15.35 ​ 146,000 ​ ​ ​ ​ ​ Item 13. Certain Relationships and Related Transactions, and Director Independence ​ Certain Relationships and Related Transactions. The information required by this item is incorporated herein by reference from the section captioned “Board of Directors’ Meetings, Board Committees and Corporate Governance Matters - Corporate Governance - Certain Relationships and Related Transactions” in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end. ​ Director Independence. The information contained in the section captioned “Board of Directors’ Meetings, Board Committees and Corporate Governance Matters - Corporate Governance - Director Independence” is incorporated herein by reference in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end. ​ ​ Item 14. Principal Accountant Fees and Services ​ The information required by this item is incorporated herein by reference from the section captioned “Proposal 3 - Ratification of Appointment of Independent Auditor” in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end. ​ 70 Table of Contents PART IV ​ Item 15. Exhibits and Financial Statement Schedules. ​ (a) 1. Financial Statements See Consolidated Financial Statements beginning on page 78 of this Form 10-K. ​ 2. Financial Statement Schedules Schedules to the Consolidated Financial Statements have been omitted as the required information is inapplicable. ​ (b) Exhibits Exhibits are available from the Corporation by written request. ​ 3.1 Amended and Restated Certificate of Incorporation of Provident Financial Holdings, Inc. as filed with the Delaware Secretary of State on November 24, 2009 (incorporated by reference to Exhibit 3.1 to the Corporation’s Quarterly Report on Form 10-Q filed on November 9, 2010) 3.2 Amended and Restated Bylaws of Provident Financial Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Corporation’s Current Report on Form 8-K filed on November 30, 2022) 4.1 Form of Certificate of Provident's Common Stock (incorporated by reference to the Corporation’s Registration Statement on Form S-1 (333-2230) filed on March 11, 1996)) 4.2 Description of Capital Stock of Provident Financial Holdings, Inc. (incorporated by reference to Exhibit 4.2 to the Corporation’s Annual Report on Form 10-K for the year ended June 30, 2019) 10.1 Transition Agreement with Craig G. Blunden (incorporated by reference to Exhibit 10.13 to the Corporation’s Form 8-K dated October 31, 2023) 10.2 Post-Retirement Compensation Agreement with Craig G. Blunden (incorporated by reference to Exhibit 10.2 to the Corporation’s Form 8-K dated December 19, 2005) ​ ​ 10.3 Employment Agreement with Donavon P. Ternes (incorporated by reference to Exhibit 10.14 to the Corporation’s Form 8-K dated October 31, 2023) ​ ​ 10.4 Post-Retirement Compensation Agreement with Donavon P. Ternes (incorporated by reference to Exhibit 10.1 to the Corporation’s Form 8-K dated July 7, 2009) 10.5 Form of Amended Severance Agreement with Tam B. Nguyen, Robert "Scott" Ritter, Lilian Salter, David S. Weiant and Gwendolyn L. Wertz (incorporated by reference to Exhibit 10.3 to the Corporation’s Form 10-Q dated May 8, 2024 ) 10.6 2006 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 12, 2006) 10.7 Form of Incentive Stock Option Agreement for options granted under the 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 in the Corporation’s Form 10-Q for the quarter ended December 31, 2006) 10.8 2010 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 28, 2010) 10.9 Form of Incentive Stock Option Agreement for options granted under the 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 in the Corporation’s Form 8-K dated November 30, 2010) 71 Table of Contents 10.10 Form of Non-Qualified Stock Option Agreement for options granted under the 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 in the Corporation’s Form 8-K dated November 30, 2010) 10.11 2013 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 24, 2013) 10.12 Form of Incentive Stock Option Agreement for options granted under the 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 in the Corporation’s Registration Statement on Form S-8 (333-192727) dated December 9, 2013) 10.13 Form of Non-Qualified Stock Option Agreement for options granted under the 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 in the Corporation’s Registration Statement on Form S-8 (333-192727) dated December 9, 2013) 10.14 Form of Restricted Stock Agreement for restricted shares awarded under the 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 in the Corporation’s Registration Statement on Form S-8 (333-192727) dated December 9, 2013) 10.15 2022 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 27, 2022) ​ ​ 10.16 Form of Incentive Stock Option Agreement for options granted under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 in the Corporation’s Form S-8 dated December 16, 2022) ​ ​ 10.17 Form of Non-Qualified Stock Option Agreement for options granted under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 in the Corporation’s Form S-8 dated December 16, 2022) ​ ​ 10.18 Form of Restricted Stock Agreement for restricted shares awarded under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 in the Corporation’s Form S-8 dated December 16, 2022) ​ ​ 13 2024 Annual Report to Stockholders ​ ​ 14.0 Code of Ethics for the Corporation’s directors, officers and employees (Registrant elects to satisfy Regulation S-K §229.406(c) by posting its Code of Ethics on its website at www.myprovident.com in the section titled About: Investor Relations. 21.1 Subsidiaries of the Registrant 23.1 Consent of Independent Registered Public Accounting Firm 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97 Compensation Recovery Policy 72 Table of Contents 101 The following materials from the Corporation’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, formatted in Extensible Business Reporting Language (XBRL): (1) Consolidated Statements of Financial Condition; (2) Consolidated Statements of Operations; (3) Consolidated Statements of Comprehensive Income; (4) Consolidated Statements of Stockholders’ Equity; (5) Consolidated Statements of Cash Flows; and (6) Selected Notes to Consolidated Financial Statements ​ ​ 104 The cover page from this Annual Report on Form 10-K for the year ended June 30, 2024, formatted in Inline XBRL and contained in Exhibit 101. ​ ​ ​ Item 16. Form 10-K Summary. ​ None. ​ ​ 73 Table of Contents SIGNATURES ​ Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ ​ Date: August 30, 2024 Provident Financial Holdings, Inc. /s/ Donavon P. Ternes Donavon P. Ternes President and Chief Executive Officer ​ ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. ​ SIGNATURES TITLE DATE /s/ Donavon P. Ternes President and August 30, 2024 Donavon P. Ternes Chief Executive Officer (Principal Executive Officer) /s/ Tam B. Nguyen Senior Vice President and August 30, 2024 Tam B. Nguyen Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Craig G. Blunden Chairman of the Board of Directors August 30, 2024 Craig G. Blunden /s/ Judy A. Carpenter Director August 30, 2024 Judy A. Carpenter /s/ Debbi H. Guthrie Director August 30, 2024 Debbi H. Guthrie ​ ​ ​ ​ /s/ Brian N. Hawley Director August 30, 2024 Brian N. Hawley ​ ​ ​ ​ /s/ Kathy M. Michalak Director August 30, 2024 Kathy M. Michalak ​ ​ ​ ​ /s/ William E. Thomas Lead Director August 30, 2024 William E. Thomas /s/ Matthew E. Webb Director August 30, 2024 Matthew E. Webb ​ ​ ​ ​ 74 Table of Contents Provident Financial Holdings, Inc. Consolidated Financial Statements Index ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 76 Consolidated Statements of Financial Condition as of June 30, 2024 and 2023 78 Consolidated Statements of Operations for the fiscal years ended June 30, 2024 and 2023 79 Consolidated Statements of Comprehensive Income for the fiscal years ended June 30, 2024 and 2023 80 Consolidated Statements of Stockholders’ Equity for the fiscal years ended June 30, 2024 and 2023 81 Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2024 and 2023 82 Notes to Consolidated Financial Statements 83 ​ ​ ​ 75 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Stockholders and the Board of Directors of Provident Financial Holdings, Inc. ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated statements of financial condition of Provident Financial Holdings, Inc. and subsidiary (the “Corporation”) as of June 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the two years in the period ended June 30, 2024, and the related (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matter ​ The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ Allowance for Credit Losses related to Qualitative Factors for Single Family Mortgage, Multifamily Mortgage, and Commercial Real Estate - Refer to Notes 1 and 3 to the Financial Statements ​ Critical Audit Matter Description ​ Management estimates the Corporation’s allowance for credit losses (“ACL”) Management calculates the quantitative portion of the collectively evaluated allowance for all loan categories using an average charge-off methodology. The Corporation primarily utilizes historical loss rates for the ACL based on its own specific historical losses and/or with peer loss history where applicable. Management considers whether additional or reduced allowance levels on collectively evaluated loans may be warranted, given the consideration of a variety of qualitative factors. ​ 76 Table of Contents The qualitative portion of the Corporation’s allowance on collectively evaluated loans are calculated using management judgment, to determine risk categorizations in each of the qualitative factors. The amount of qualitative allowance is also contingent upon the relative weighting of the qualitative factors according to management’s judgment. ​ Auditing the collectively evaluated loans of the Corporation’s ACL, specifically management’s qualitative loss factors for certain single-family, multi-family and commercial real estate loans, involved significant judgment. Given the management judgments required for the determination of risk categorization and relative weighting of qualitative factors, performing audit procedures to evaluate the Qualitative Factors in the ACL requires a high degree of auditor judgment and an increased extent of effort, including the need to involve our credit specialists. ​ How the Critical Audit Matter Was Addressed in the Audit ​ Our audit procedures related to the ACL included the following, among others: ● We performed inquiries and examined documentation to understand management’s methodology and process in determining the qualitative factors in the ACL, including the key assumptions and relevant data utilized. ​ ● We involved our credit specialists to assist us in evaluating the reasonableness and conceptual soundness of the qualitative and methodologies applied by management. ​ ● We tested the design and implementation of controls over the (i ) selection of the risk categorizations and relative weighting in each of the qualitative factors used as an input to the model and (ii) overall calculation and disclosure. ​ ● We evaluated the reasonableness of the ACL inputs, including management’s judgments and assumptions used in the development of the qualitative factors, including the directional consistency and magnitude of the qualitative factors applied, and the reasonableness of the period selected for the forecast and the associated economic factors identified by management. ​ ● We compared the Corporation’s ACL with benchmark data obtained independently to assess whether the ACL is within a reasonable range for specific loan categories. ​ ​ /s/ Deloitte & Touche LLP ​ Costa Mesa, California August 30, 2024 ​ We have served as the Corporation's auditor since 2001. ​ ​ ​ 77 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Financial Condition ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ June 30, (In Thousands, Except Share and Per Share Information) ​ 2024 2023 Assets ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 51,376 ​ $ 65,849 Investment securities - held to maturity, at cost with no allowance for credit losses ​ 130,051 ​ 154,337 Investment securities - available for sale, at fair value with no allowance for credit losses ​ 1,849 ​ 2,155 Loans held for investment, net of allowance for credit losses of $ 7,065 and $ 5,946 , respectively; includes $ 1,047 and $ 1,312 of loans held at fair value, respectively; $ 861.1 million and $ 967.6 million pledged to Federal Home Loan Bank ("FHLB") - San Francisco, respectively; $ 178.6 million and $ 0 pledged to Federal Reserve Bank ("FRB") - San Francisco, respectively ​ 1,052,979 ​ 1,077,629 Accrued interest receivable ​ 4,287 ​ 3,711 FHLB - San Francisco and other equity investments, includes $ 540 and $ 0 of other equity investments at fair value, respectively ​ 10,108 ​ 9,505 Premises and equipment, net ​ 9,313 ​ 9,231 Prepaid expenses and other assets ​ 12,237 ​ 10,531 ​ ​ ​ ​ ​ Total assets ​ $ 1,272,200 ​ $ 1,332,948 ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ Noninterest-bearing deposits ​ $ 95,627 ​ $ 103,007 Interest-bearing deposits ​ 792,721 ​ 847,564 Total deposits ​ 888,348 ​ 950,571 ​ ​ ​ ​ ​ Borrowings ​ 238,500 ​ 235,009 Accounts payable, accrued interest and other liabilities ​ 15,411 ​ 17,681 Total liabilities ​ 1,142,259 ​ 1,203,261 ​ ​ ​ ​ ​ Commitments and Contingencies (Note 13) ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ Preferred stock, $ 0.01 par value ( 2,000,000 shares authorized; none issued and outstanding) ​ — ​ — Common stock, $ 0.01 par value; ( 40,000,000 shares authorized; 18,229,615 and 18,229,615 shares issued; 6,847,821 and 7,043,170 shares outstanding, respectively) ​ 183 ​ 183 Additional paid-in capital ​ 98,532 ​ 99,505 Retained earnings ​ 209,914 ​ 207,274 Treasury stock at cost ( 11,381,794 and 11,186,445 shares, respectively) ​ ( 178,685 ) ​ ( 177,237 ) Accumulated other comprehensive loss, net of tax ​ ( 3 ) ​ ( 38 ) ​ ​ ​ ​ ​ Total stockholders’ equity ​ 129,941 ​ 129,687 ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 1,272,200 ​ $ 1,332,948 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 78 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, (In Thousands, Except Per Share Information) 2024 ​ 2023 Interest income: ​ ​ ​ ​ ​ Loans receivable, net ​ $ 50,194 $ 42,191 Investment securities ​ 2,060 2,169 FHLB - San Francisco and other equity investments ​ 802 556 Interest-earning deposits ​ 1,674 1,076 Total interest income ​ 54,730 45,992 ​ ​ ​ ​ ​ ​ Interest expense: ​ ​ ​ ​ ​ Deposits ​ 9,666 3,146 Borrowings ​ 10,141 5,861 Total interest expense ​ 19,807 9,007 ​ ​ ​ ​ ​ ​ Net interest income ​ 34,923 36,985 (Recovery of) provision for credit losses ​ ( 63 ) 374 Net interest income, after (recovery of) provision for credit losses ​ 34,986 36,611 ​ ​ ​ ​ ​ ​ Non-interest income: ​ ​ ​ ​ ​ Loan servicing and other fees ​ 337 414 Deposit account fees ​ 1,154 1,296 Card and processing fees ​ 1,384 1,525 Other ​ 1,066 840 Total non-interest income ​ 3,941 4,075 ​ ​ ​ ​ ​ ​ Non-interest expense: ​ ​ ​ ​ ​ Salaries and employee benefits ​ 17,642 17,737 Premises and occupancy ​ 3,586 3,447 Equipment ​ 1,309 1,152 Professional ​ 1,530 1,517 Sales and marketing ​ 709 622 Deposit insurance premium and regulatory assessments ​ 780 657 Other ​ 2,984 3,138 Total non-interest expense ​ 28,540 28,270 ​ ​ ​ ​ ​ ​ Income before income taxes ​ 10,387 12,416 Provision for income taxes ​ 3,036 3,824 Net income ​ $ 7,351 $ 8,592 ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 1.06 $ 1.20 Diluted earnings per share ​ $ 1.06 $ 1.19 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 79 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Comprehensive Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, (In Thousands) 2024 2023 Net income ​ $ 7,351 $ 8,592 ​ ​ ​ ​ ​ ​ Change in unrealized holding gains (losses) on securities available for sale and interest-only strips ​ 50 ( 57 ) Less: Income tax expense (benefit) ​ 15 ( 17 ) Other comprehensive income (loss) ​ 35 ( 40 ) Total comprehensive income ​ $ 7,386 $ 8,552 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 80 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Common ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive ​ ​ ​ ​ ​ Stock ​ Additional ​ ​ ​ ​ ​ ​ Income (Loss), ​ ​ ​ (In Thousands, Except Share Information) Shares Amount Paid-In Capital Retained Earnings Treasury Stock Net of Tax ​ Total Balance at June 30, 2022 ​ 7,285,184 $ 183 $ 98,826 $ 202,680 $ ( 173,041 ) $ 2 $ 128,650 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ ​ ​ ​ ​ ​ 8,592 ​ ​ ​ ​ ​ 8,592 Other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 40 ) ( 40 ) Purchase of treasury stock (1) ​ ( 335,764 ) ​ ​ ​ ​ ​ ​ ​ ( 4,648 ) ​ ​ ( 4,648 ) Awards for restricted stock ​ 93,750 ​ ​ ​ ​ ​ ( 479 ) ​ ​ ​ ​ ​ 479 ​ ​ ​ ​ ​ — Forfeiture of restricted stock ​ ​ ​ ​ 27 ​ ​ ​ ( 27 ) ​ ​ ​ ​ — Amortization of restricted stock, net of tax ​ ​ ​ ​ ​ ​ ​ 1,109 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,109 Stock options expense, net of tax ​ ​ ​ ​ 76 ​ ​ ​ ​ ​ ​ ​ 76 Tax effect from stock-based compensation ​ ​ ​ ​ ​ ​ ​ ( 54 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 54 ) Cash dividends (2) ​ ​ ​ ​ ​ ​ ​ ( 3,998 ) ​ ​ ​ ​ ​ ( 3,998 ) Balance at June 30, 2023 ​ 7,043,170 $ 183 $ 99,505 $ 207,274 $ ( 177,237 ) $ ( 38 ) $ 129,687 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ ​ ​ ​ ​ ​ 7,351 ​ ​ ​ ​ ​ 7,351 Other comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 35 35 Purchase of treasury stock ​ ( 197,349 ) ​ ​ ​ ​ ​ ​ ​ ( 2,601 ) ​ ​ ( 2,601 ) Distribution of restricted stock ​ 2,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Awards for restricted stock ​ ​ ​ ​ ​ ​ ​ ( 1,183 ) ​ ​ ​ ​ ​ 1,183 ​ ​ ​ ​ ​ — Forfeiture of restricted stock ​ ​ ​ ​ 30 ​ ​ ​ ( 30 ) ​ ​ ​ ​ — Amortization of restricted stock, net of tax ​ ​ ​ ​ ​ ​ ​ 203 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 203 Stock options expense, net of tax ​ ​ ​ ​ 37 ​ ​ ​ ​ ​ ​ ​ 37 Tax effect from stock-based compensation ​ ​ ​ ​ ​ ​ ​ ( 60 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 60 ) Cash dividends (2) ​ ​ ​ ​ ​ ​ ​ ( 3,887 ) ​ ​ ​ ​ ​ ( 3,887 ) Adoption of CECL standard ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 824 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 824 ) Balance at June 30, 2024 ​ 6,847,821 $ 183 $ 98,532 $ 209,914 $ ( 178,685 ) $ ( 3 ) $ 129,941 ​ (1) Includes the purchase of 33,045 shares of distributed restricted stock in fiscal 2023 in settlement of employees' withholding tax obligations. (2) Cash dividends of $ 0.56 per share were paid in both fiscal 2024 and 2023. ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 81 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, (In Thousands) 2024 2023 Cash flows from operating activities: ​ ​ ​ ​ ​ Net income ​ $ 7,351 $ 8,592 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ Depreciation and amortization ​ 3,155 3,188 (Recovery of) provision for credit losses ​ ( 63 ) 374 Net unrealized gain on other equity investments ​ ​ ( 540 ) ​ ​ — Stock-based compensation ​ 240 1,185 (Benefit) provision for deferred income taxes ​ ( 58 ) 1,231 (Decrease) increase in accounts payable, accrued interest and other liabilities ​ ( 2,399 ) 121 (Increase) decrease in prepaid expenses and other assets ​ ​ ( 2,001 ) ​ ​ 1,634 Net cash provided by operating activities ​ 5,685 16,325 ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ Decrease (increase) in loans held for investment, net ​ 22,604 ( 138,970 ) Maturity of investment securities - held to maturity ​ — 400 Principal payments from investment securities - held to maturity ​ 23,754 30,217 Principal payments from investment securities - available for sale ​ 356 464 Purchase of FHLB - San Francisco stock ​ ​ ( 63 ) ​ ​ ( 1,266 ) Purchase of premises and equipment ​ ( 1,589 ) ( 741 ) Net cash provided by (used for) investing activities ​ ​ 45,062 ​ ( 109,896 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Decrease in deposits, net ​ ​ ( 62,223 ) ​ ( 4,933 ) Proceeds from long-term borrowings ​ ​ 85,500 ​ 65,000 Repayments of long-term borrowings ​ ​ ( 30,009 ) ​ ( 30,000 ) (Repayment of) proceeds from short-term borrowings, net ​ ​ ( 52,000 ) ​ 115,009 Treasury stock purchases ​ ​ ( 2,601 ) ​ ( 4,648 ) Withholding taxes on stock-based compensation ​ ​ — ​ ( 424 ) Cash dividends ​ ​ ( 3,887 ) ​ ( 3,998 ) Net cash (used for) provided by financing activities ​ ​ ( 65,220 ) ​ 136,006 ​ ​ ​ ​ ​ ​ ​ Net (decrease) increase in cash and cash equivalents ​ ​ ( 14,473 ) ​ 42,435 Cash and cash equivalents at beginning of year ​ ​ 65,849 ​ 23,414 Cash and cash equivalents at end of year ​ $ 51,376 ​ $ 65,849 Supplemental information: ​ ​ Cash paid for interest ​ $ 19,762 ​ $ 7,480 Cash paid for income taxes ​ $ 3,090 ​ $ 2,725 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 82 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Note 1: Organization and Summary of Significant Accounting Policies ​ Basis of presentation The consolidated financial statements include the accounts of Provident Financial Holdings, Inc., and its wholly owned subsidiary, Provident Savings Bank, F.S.B. (collectively, the “Corporation”). All inter-company balances and transactions have been eliminated. ​ Provident Savings Bank, F.S.B. (the “Bank”) converted from a federally chartered mutual savings bank to a federally chartered stock savings bank effective June 27, 1996. Provident Financial Holdings, Inc., a Delaware corporation organized by the Bank, acquired all of the capital stock of the Bank issued in the conversion; the transaction was recorded on a book value basis. ​ The Corporation has determined that it operates in one business segment through the Bank. The Bank's activities include attracting deposits, offering banking services and originating and purchasing single-family, multi-family, commercial real estate, construction and other mortgage loans and, to a lesser extent, commercial business and consumer loans held for investment. Deposits are collected primarily from 13 banking locations located in Riverside and San Bernardino counties in California. Additional activities may include originating saleable single-family loans, primarily fixed-rate first mortgages. Loans are primarily originated and purchased in California. ​ Use of estimates The accounting and reporting policies of the Corporation conform to generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of investment securities, the valuation of loans held for investment at fair value, deferred tax assets, mortgage servicing assets, real estate owned and deferred compensation costs. ​ The following accounting policies, together with those disclosed elsewhere in the consolidated financial statements, represent the significant accounting policies of Provident Financial Holdings, Inc. and the Bank. ​ Cash and cash equivalents Cash and cash equivalents include cash on hand and due from banks, as well as overnight deposits placed at the FRB – San Francisco and correspondent banks. ​ Investment securities The Corporation classifies its qualifying investments as available for sale or held to maturity. The Corporation classifies investments as held to maturity when it has the ability and it is management’s positive intent to hold such securities to maturity. Securities held to maturity are carried at amortized historical cost. All other securities are classified as available for sale and are carried at fair value. Fair value generally is determined based upon quoted market prices. Changes in net unrealized gains (losses) on debt securities available for sale are included in accumulated other comprehensive income, net of tax. Gains and losses on sale or dispositions of investment securities are included in non-interest income and are determined using the specific identification method. Purchase premiums and discounts are amortized over the expected average life of the securities using the effective interest method. ​ The Corporation evaluates individual investment securities quarterly for impairment based on Accounting Standards Codification (“ASC”) 326, “Financial Instruments – Credit Losses,” which was adopted on July 1, 2023. The Corporation does not currently intend to sell any investment securities classified as held to maturity or available for sale and as such, records the investment security at book value or fair market value as prescribed by GAAP. As a part of the Corporation’s monthly risk assessment, the Corporation runs a number of stressed liquidity scenarios to determine if it is more likely than not that the Bank will be required to sell the investment security before the recovery of its amortized costs basis. These liquidity scenarios support the Corporation’s assessment that the Corporation has the ability to hold these held to maturity securities until maturity or available for sale securities until recovery of the amortized costs is realized and it is not more likely than not that the Corporation will be required to sell the securities prior to recovery of the amortized costs. 83 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ Loans held for investment Loans held for investment consist of long-term single-family adjustable and fixed rate loans secured by single-family residences and multi-family and commercial real estate loans secured by commercial property, land and other residential properties, which the Corporation intends to hold for the foreseeable future. These loans are generally offered to customers and businesses located in California. ​ Net loan origination fees and certain direct origination expenses are deferred and amortized to interest income over the contractual life of the loan using the effective interest method. Amortization is discontinued for non-performing loans. Interest receivable represents primarily the current month’s interest, which will be included as a part of the borrower’s next monthly loan payment. Interest receivable is accrued only if deemed collectible. Loans are placed on non-performing status when they become 90 days past due. When a loan is placed on non-performing status, interest accrued but not received is reversed against interest income. Interest income on non-performing loans is subsequently recognized only to the extent that cash is received and the principal balance is deemed collectible. If the principal balance is not deemed collectible, the entire payment received (principal and interest) is applied to the outstanding loan balance. Non-performing loans that become current as to both principal and interest are returned to accrual status after demonstrating satisfactory payment history (usually six consecutive months) and when future payments are expected to be collectible. ​ Allowance for credit losses The allowance for credit losses 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 while prior period amounts continue to be reported in accordance with previously applicable accounting standards. ​ Non-performing loans The Corporation assesses loans individually and classifies them as non-performing when the accrual of interest has been discontinued, loans have been modified or management has serious doubts about the future collectability of principal and interest, even though the loans may currently be performing. Factors considered in determining classification include, but are not limited to, expected future cash flows, the financial condition of the borrower and current economic conditions. The Corporation measures each non-performing loan based on ASC 326, establishes a collectively evaluated or individually evaluated allowance, and charges off those loans or portions of loans deemed uncollectible. Loans identified to be individually evaluated have an allowance that is based upon the appraised value of the collateral, less selling costs or discounted cash flow with an appropriate default factor. ​ Real estate owned Real estate acquired through foreclosure is initially recorded at the fair value of the real estate acquired, less estimated selling costs. Subsequent to foreclosure, the Corporation charges current earnings for estimated losses if the carrying value of the property exceeds its fair value. Gains or losses on the sale of real estate are recognized upon disposition of the property. Costs relating to improvement, maintenance and repairs of the property are expensed as incurred under gain (loss) on sale and operations of real estate owned acquired in the settlement of loans in the Consolidated Statements of Operations. ​ Impairment of long-lived assets The Corporation reviews its long-lived assets for impairment annually or when events or circumstances indicate that the carrying amount of these assets may not be recoverable. Long-lived assets include buildings, land, fixtures, furniture and equipment. An asset is considered impaired when the expected discounted cash flows over the remaining useful life are less than the net book value. When impairment is indicated for an asset, the amount of impairment loss is the excess of the net book value over its fair value. ​ 84 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Premises and equipment Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed primarily on a straight-line basis over the estimated useful lives as follows: ​ ​ ​ ​ Buildings 10 to 40 years Furniture and fixtures ​ 3 to 10 years Automobiles ​ 3 to 5 years Computer equipment ​ 3 to 5 years ​ Leasehold improvements are amortized over the lesser of their respective lease terms or the useful life of the improvement, which ranges from one to 10 years . Maintenance and repair costs are charged to operations as incurred. ​ Income taxes The Corporation accounts for income taxes in accordance with ASC 740, “Income Taxes.” ASC 740 requires the affirmative evaluation that it is more likely than not, based on the technical merits of a tax position, that an enterprise is entitled to economic benefits resulting from positions taken in income tax returns. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. ​ ASC 740 requires that when determining the need for a valuation allowance against a deferred tax asset, management must assess both positive and negative evidence with regard to the realizability of the tax losses represented by that asset. To the extent available, if sources of taxable income are insufficient to absorb tax losses, a valuation allowance is necessary. Sources of taxable income for this analysis include prior years’ tax returns, the expected reversals of taxable temporary differences between book and tax income, prudent and feasible tax-planning strategies, and future taxable income. The deferred income tax asset related to the allowance for credit losses will be realized when actual charge-offs are made against the allowance. Based on the availability of loss carry-backs and projected taxable income during the periods for which loss carry-forwards are available, management believes it is more likely than not the Corporation will realize the deferred tax asset. The Corporation continues to monitor the deferred tax asset on a quarterly basis for a valuation allowance. The future realization of these tax benefits primarily hinges on adequate future earnings to utilize the tax benefit. Prospective earnings or losses, tax law changes or capital changes could prompt the Corporation to reevaluate the assumptions which may be used to establish a valuation allowance. As of June 30, 2024 and 2023, the estimated net deferred tax asset, which is included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition, was $ 606,000 and $ 218,000 , respectively. The Corporation maintains net deferred tax assets for deductible temporary tax differences, such as loss reserves, deferred compensation, non-accrued interest and unrealized gains (losses), among other items. The increase in the net deferred tax asset resulted primarily from higher loss reserves and a decrease in deferred tax liabilities from lower net deferred loan costs. The Corporation did no t have any liabilities for uncertain tax positions or any known unrecognized tax benefit at June 30, 2024 or 2023. ​ Bank owned life insurance ("BOLI") ASC 715-60-35, "Accounting for Deferred Compensation and Post-retirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements," requires an employer to recognize obligations associated with endorsement split-dollar life insurance arrangements that extend into the participant’s post-employment benefit cost for the continuing life insurance or based on the future death benefit depending on the contractual terms of the underlying agreement. The Corporation adopted ASC 715-60-35 using the latter option, i.e., based on the future death benefit. The Bank purchases BOLI policies on the lives of certain executive officers while they are employed by the Bank and is the owner and beneficiary of the policies. The Bank invests in BOLI to provide an efficient form of funding for long-term retirement and other employee benefits costs. The Bank records these BOLI policies within prepaid expenses and other assets in the Consolidated Statements of Financial Condition at each policy’s respective cash surrender value, with net changes recorded in other non-interest income in the Consolidated Statements of Operations. ​ Cash dividend A declaration or payment of dividends is at the discretion of the Corporation’s Board of Directors, who take into account the Corporation’s financial condition, results of operations, tax considerations, capital requirements, industry standards, economic conditions and other factors, including the regulatory restrictions which affect the payment of dividends by the Bank to the Corporation. Under Delaware law, dividends may be paid either out of surplus or, if there is no surplus, out of net profits for the current fiscal year and/or the preceding fiscal year in which the dividend is declared. For additional 85 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements information, see Note 18 of the Notes to Consolidated Financial Statements regarding the subsequent event related to the cash dividend. ​ Stock repurchases The Corporation repurchased 197,349 shares of its common stock with an average cost of $ 13.05 per share during fiscal 2024 pursuant to its publicly announced stock repurchase plans. As of June 30, 2024, a total of 189,116 shares or 54 % of the shares authorized for repurchase under the Corporation’s existing stock repurchase plan remain available to purchase until the plan expires on September 28, 2024. ​ Earnings per common share (“EPS”) Basic EPS represents net income divided by the weighted average common shares outstanding during the period excluding any potential dilutive effects. Diluted EPS gives effect to any potential issuance of common stock that would have caused basic EPS to be lower as if the issuance had already occurred. Accordingly, diluted EPS reflects an increase in the weighted average shares outstanding as a result of the assumed exercise of stock options and the vesting of restricted stock. The computation of diluted EPS does not assume exercise of stock options and vesting of restricted stock that would have an anti-dilutive effect on EPS. ​ Stock-based compensation ASC 718, “Compensation – Stock Compensation,” requires companies to recognize in the Consolidated Statements of Operations the grant-date fair value of stock options and other equity-based compensation issued to employees and directors. Stock-based compensation, inclusive of restricted stock expense, recognized in the Consolidated Statements of Operations for the fiscal years ended June 30, 2024 and 2023 was $ 240,000 and $ 1.2 million, respectively. ​ Employee Stock Ownership Plan ("ESOP") The Corporation recognizes compensation expense when the Bank contributes funds to the ESOP for the purchase of the Corporation’s common stock to be allocated to the ESOP participants. Since the contributions are discretionary, the benefits payable under the ESOP cannot be estimated. ​ Restricted stock The Corporation recognizes compensation expense over the vesting period of the shares awarded, equal to the fair value of the shares at the award date. A total of $ 203,000 and $ 1.1 million of restricted stock expense was amortized during fiscal 2024 and 2023, respectively. ​ Post-retirement benefits The estimated obligation for post-retirement health care and life insurance benefits is determined based on an actuarial computation of the cost of current and future benefits for the eligible (grandfathered) retirees and employees. The post retirement benefit liability is included in accounts payable, accrued interest and other liabilities in the Consolidated Statements of Financial Condition. Effective July 1, 2003, the Corporation discontinued the post-retirement health care and life insurance benefits to any employee not previously qualified (grandfathered) for these benefits, unless included within an employment agreement. At June 30, 2024 and 2023, the accrued liability for post-retirement benefits was $ 450,000 and $ 270,000 , respectively. ​ Comprehensive income ASC 220, “Comprehensive Income,” requires that realized revenues, expenses, gains and losses be included in net income (loss). Unrealized gains (losses) on available for sale securities and interest-only strips are reported as a separate component of the stockholders’ equity section of the Consolidated Statements of Financial Condition and the change in the unrealized gains (losses) are reported on the Consolidated Statements of Comprehensive Income and Consolidated Statements of Stockholders’ Equity. 86 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Accounting Standard Updates (“ASU”) ASU 2023-09: In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires public business entities to annually (a) disclose specific categories in the rate reconciliation and (b) provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Corporation is in the process of reviewing the impact of this ASU and has not yet determined the impact of the adoption of this ASU on its consolidated financial statements. ​ ASU 2023-07: In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The key amendments include: (a) introducing a new requirement to disclose significant segment expenses regularly provided to the chief operating decision maker (“CODM”), (b) extending certain annual disclosures to interim periods, (c) clarifying that single reportable segment entities must apply ASC 280 in its entirety, (d) permitting more than one measure of segment profit or loss to be reported under certain conditions, and (e) requiring disclosure of the title and position of the CODM. This ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Corporation is in the process of reviewing the impact of this ASU and has not yet determined the impact of the adoption of this ASU on its consolidated financial statements. ​ ASU 2020-04: In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU applies to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or other rate references expected to be discontinued as a result of reference rate reform. The ASU permits an entity to make necessary modifications to eligible contracts or transactions without requiring contract remeasurement or reassessment of a previous accounting determination. In January 2021, ASU 2021-01 clarified that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the changes in the interest rates used for margining, discounting, or contract price alignment for derivative instruments that are being implemented as part of the market-wide transition to new reference rates (commonly referred to as the “discounting transition”). In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848. The FASB had originally included a sunset provision within Topic 848 based on expectations of when the LIBOR would cease being published. In March 2021, it was announced that the intended cessation date of LIBOR was extended to June 30, 2023. As a result, the FASB issued ASU 2022-06 deferring the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. This ASU is effective for all entities as of March 12, 2020 through December 31, 2024. As of June 30, 2023, the Corporation had approximately $ 469.4 million in loans held for investment with LIBOR indices. Beginning July 1, 2023, the Corporation started to transition these loans to Secured Overnight Financing Rate (“SOFR”) indices or other rate indices in accordance with the government agency guidelines. As of September 30, 2023, all loans held for investment with LIBOR indices had been transitioned to SOFR or other rate indices. The Corporation determined that the impact of the adoption of this ASU did not have a material impact to its consolidated financial statements. ​ ASU 2016-13: In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and subsequent amendments to the initial guidance. On July 1, 2023, the Corporation adopted this ASU that replaced the incurred loss methodology with the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and applies to financial assets measured at amortized cost, including loans held for investment, held-to-maturity investment securities and some off-balance sheet credit exposures such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses (“ACL”). ​ 87 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements In addition, CECL made changes to the accounting for available for sale investment securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell. ​ The Corporation adopted ASC 326, “Financial Instruments – Credit Losses,” and all related subsequent amendments using the prospective transition approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. The transition adjustment of the adoption of CECL included an $ 1.2 million increase in the ACL, which is presented as a reduction to net loans held for investment. The Corporation recorded a net decrease to retained earnings of $ 824,000 as of July 1, 2023 for the cumulative effect of adopting CECL, which reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded. Results for reporting periods beginning after July 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable accounting standards. ​ The Corporation adopted ASC 326 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to July 1, 2023. As of June 30, 2023, the Corporation did not have any other-than-temporary impaired investment securities. Therefore, upon adoption of ASC 326, the Corporation determined that an ACL on available for sale securities was not deemed necessary. ​ The following table illustrates the impact on the ACL from the adoption of ASC 326: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for Allowance Impact to ​ credit losses before adoption allowance after ASC ​ under ASC 326 of ASC 326 326 adoption (In Thousands) (07/01/2023) (06/30/2023) (07/01/2023) Assets: ​ ​ ​ Mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ Single-family $ 6,325 ​ $ 1,720 $ 4,605 ​ Multi-family ​ 656 ​ ​ 3,270 ​ ​ ( 2,614 ) ​ Commercial real estate ​ 82 ​ ​ 868 ​ ​ ( 786 ) ​ Construction ​ 62 ​ ​ 15 ​ ​ 47 ​ Other ​ 5 ​ ​ 2 ​ ​ 3 ​ Commercial business loans ​ 13 ​ ​ 67 ​ ​ ( 54 ) ​ Consumer loans ​ — ​ ​ 4 ​ ​ ( 4 ) ​ ACL on loans $ 7,143 ​ $ 5,946 ​ $ 1,197 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unfunded loan commitment reserve $ 42 ​ $ 42 ​ $ — ​ ​ In March 2022, FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures.” This ASU eliminates the concept and treatment of troubled debt restructurings (“TDR”) in relation to the adoption of the CECL model for the accounting for credit losses (see note above regarding ASU 2016-13). The new disclosure requirements are adopted in regards to loan modifications made to borrowers experiencing financial difficulties. The required disclosures regarding gross write-offs for financing receivables by year of origination and loan modifications are presented under Note 3 of the Notes to Consolidated Financial Statements. Subsequent to the adoption of ASC 326 on July 1, 2023, the Corporation did have any loan modifications for borrowers experiencing financial difficulties during fiscal 2024. ​ ​ 88 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Note 2: Investment Securities ​ The amortized cost and estimated fair value of investment securities as of June 30, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross Estimated ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ Carrying June 30, 2024 ​ Cost ​ Gains ​ (Losses) ​ Value ​ Value (In Thousands) ​ ​ ​ ​ ​ Held to maturity ​ ​ ​ ​ ​ U.S. government sponsored enterprise MBS (1) ​ $ 125,883 ​ $ 76 ​ $ ( 15,481 ) ​ $ 110,478 ​ $ 125,883 U.S. government sponsored enterprise CMO (2) ​ ​ 3,713 ​ ​ — ​ ​ ( 253 ) ​ ​ 3,460 ​ ​ 3,713 U.S. SBA securities (3) ​ 455 ​ — ​ — ​ 455 ​ 455 Total investment securities - held to maturity ​ ​ 130,051 ​ ​ 76 ​ ​ ( 15,734 ) ​ ​ 114,393 ​ ​ 130,051 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency MBS (1) ​ ​ 1,222 ​ ​ — ​ ​ ( 14 ) ​ ​ 1,208 ​ ​ 1,208 U.S. government sponsored enterprise MBS (1) ​ 548 ​ ​ 5 ​ ​ — ​ ​ 553 ​ ​ 553 Private issue CMO (2) ​ 91 ​ ​ — ​ ​ ( 3 ) ​ ​ 88 ​ ​ 88 Total investment securities - available for sale ​ ​ 1,861 ​ ​ 5 ​ ​ ( 17 ) ​ ​ 1,849 ​ ​ 1,849 Total investment securities ​ $ 131,912 ​ $ 81 ​ $ ( 15,751 ) ​ $ 116,242 ​ $ 131,900 ​ (1) Mortgage-backed securities (“MBS”) . (2) Collateralized mortgage obligations (“CMO”) . (3) Small Business Administration ("SBA") . ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross Estimated ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ Carrying June 30, 2023 ​ Cost ​ Gains ​ (Losses) ​ Value ​ Value (In Thousands) ​ ​ ​ ​ ​ Held to maturity ​ ​ ​ ​ ​ U.S. government sponsored enterprise MBS ​ $ 149,803 ​ $ — ​ $ ( 18,459 ) ​ $ 131,344 ​ $ 149,803 U.S. government sponsored enterprise CMO ​ ​ 3,883 ​ ​ — ​ ​ ( 336 ) ​ ​ 3,547 ​ ​ 3,883 U.S. SBA securities ​ 651 ​ — ​ ( 1 ) ​ 650 ​ 651 Total investment securities - held to maturity ​ ​ 154,337 ​ ​ — ​ ​ ( 18,796 ) ​ ​ 135,541 ​ ​ 154,337 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency MBS ​ ​ 1,417 ​ ​ — ​ ​ ( 47 ) ​ ​ 1,370 ​ ​ 1,370 U.S. government sponsored enterprise MBS ​ ​ 697 ​ ​ — ​ ​ ( 14 ) ​ ​ 683 ​ ​ 683 Private issue CMO ​ ​ 103 ​ ​ — ​ ​ ( 1 ) ​ ​ 102 ​ ​ 102 Total investment securities - available for sale ​ ​ 2,217 ​ ​ — ​ ​ ( 62 ) ​ ​ 2,155 ​ ​ 2,155 Total investment securities ​ $ 156,554 ​ $ — ​ $ ( 18,858 ) ​ $ 137,696 ​ $ 156,492 ​ In fiscal 2024 and 2023, the Corporation received principal payments from its investment securities of $ 24.1 million and $ 30.7 million, respectively and did no t sell any investment securities. The Corporation did no t purchase any investment securities in fiscal 2024 and 2023. 89 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements As of June 30, 2024 and 2023, the Corporation held investments with an unrealized loss position of $ 15.8 million and $ 18.9 million, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2024 ​ Unrealized Holding Losses ​ Unrealized Holding Losses ​ Unrealized Holding Losses (In Thousands) ​ Less Than 12 Months ​ 12 Months or More ​ Total ​ ​ Fair ​ Unrealized ​ Fair ​ Unrealized ​ Fair ​ Unrealized Description of Securities Value Losses Value Losses Value Losses Held to maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government sponsored enterprise MBS ​ $ — ​ $ — ​ $ 105,530 ​ $ 15,481 ​ $ 105,530 ​ $ 15,481 U.S. government sponsored enterprise CMO ​ ​ — ​ ​ — ​ ​ 3,460 ​ ​ 253 ​ ​ 3,460 ​ ​ 253 U.S. SBA securities ​ ​ 455 ​ $ — ​ ​ — ​ ​ — ​ ​ 455 ​ ​ — Total investment securities - held to maturity ​ ​ 455 ​ ​ — ​ ​ 108,990 ​ ​ 15,734 ​ ​ 109,445 ​ ​ 15,734 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S government agency MBS ​ ​ 91 ​ ​ — ​ ​ 1,117 ​ ​ 14 ​ ​ 1,208 ​ ​ 14 U.S. government sponsored enterprise MBS ​ ​ — ​ ​ — ​ ​ 8 ​ ​ — ​ ​ 8 ​ ​ — Private issue CMO ​ ​ — ​ ​ — ​ ​ 88 ​ ​ 3 ​ ​ 88 ​ ​ 3 Total investment securities - available for sale ​ ​ 91 ​ ​ — ​ ​ 1,213 ​ ​ 17 ​ ​ 1,304 ​ ​ 17 Total investment securities ​ $ 546 ​ $ — ​ $ 110,203 ​ $ 15,751 ​ $ 110,749 ​ $ 15,751 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2023 ​ Unrealized Holding Losses ​ Unrealized Holding Losses ​ Unrealized Holding Losses (In Thousands) ​ Less Than 12 Months ​ 12 Months or More ​ Total ​ ​ Fair ​ Unrealized ​ Fair ​ Unrealized ​ Fair ​ Unrealized Description of Securities Value Losses Value Losses Value Losses Held to maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government sponsored enterprise MBS ​ $ 10,839 ​ $ 253 ​ $ 120,506 ​ $ 18,206 ​ $ 131,345 ​ $ 18,459 U.S. government sponsored enterprise CMO ​ ​ — ​ ​ — ​ ​ 3,547 ​ ​ 336 ​ ​ 3,547 ​ ​ 336 U.S. SBA securities ​ ​ 650 ​ ​ 1 ​ ​ — ​ ​ — ​ ​ 650 ​ ​ 1 Total investment securities - held to maturity ​ ​ 11,489 ​ ​ 254 ​ ​ 124,053 ​ ​ 18,542 ​ ​ 135,542 ​ ​ 18,796 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S government agency MBS ​ ​ 696 ​ ​ 20 ​ ​ 673 ​ ​ 27 ​ ​ 1,369 ​ ​ 47 U.S. government sponsored enterprise MBS ​ ​ 87 ​ ​ 2 ​ ​ 558 ​ ​ 12 ​ ​ 645 ​ ​ 14 Private issue CMO ​ ​ — ​ ​ — ​ ​ 102 ​ ​ 1 ​ ​ 102 ​ ​ 1 Total investment securities - available for sale ​ ​ 783 ​ ​ 22 ​ ​ 1,333 ​ ​ 40 ​ ​ 2,116 ​ ​ 62 Total investment securities ​ $ 12,272 ​ $ 276 ​ $ 125,386 ​ $ 18,582 ​ $ 137,658 ​ $ 18,858 ​ The Corporation evaluates individual investment securities quarterly for impairment based on ASC 326 since the adoption on July 1, 2023. At June 30, 2024, all of the $ 15.8 million of unrealized holding losses were in a loss position for 12 months or more, while at June 30, 2023, $ 18.6 million of the $ 18.9 million of unrealized holding losses were in a loss position for 12 months or more. The unrealized losses on investment securities were attributable to changes in interest rates relative to when the investment securities were purchased and not due to the credit quality of the investment securities, 90 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements which are predominately U.S. government sponsored enterprise (GSE) securities that are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses. Therefore, the Corporation has determined that the unrealized losses are due to the fluctuating nature of interest rates, and not related to any potential credit risks within the investment portfolio. The Bank does not currently intend to sell any investment securities classified as held to maturity or available for sale and as such, records the investment security at amortized cost or fair market value as prescribed by GAAP. As a part of the Corporation’s monthly risk assessment, the Corporation runs a number of stressed liquidity scenarios to determine if it is more likely than not that the Bank will be required to sell the investment security before the recovery of its amortized costs basis. These liquidity scenarios support the Corporation’s assessment that the Corporation has the ability to hold these held to maturity securities until maturity or available for sale securities until recovery of the amortized costs is realized and it is not more likely than not that the Corporation will be required to sell the securities prior to recovery of the amortized costs. There were no ACL or impairment on investment securities held to maturity and there was no impairment on investment securities available for sale at the adoption date of ASC 326 on July 1, 2023 and at June 30, 2024. ​ In order to maintain adequate liquidity, the Bank has established borrowing facilities with various counterparties. The Bank had a remaining borrowing capacity of $ 261.3 million as of June 30, 2024 at the FHLB of San Francisco. In addition, the Bank has secured an estimated $ 208.6 million discount window facility at the FRB of San Francisco collateralized by investment securities totaling $ 126.6 million and loans held for investment totaling $ 178.6 million as of June 30, 2024. As of June 30, 2024, the Bank also has an unsecured borrowing arrangement in the form of a federal funds facility with its correspondent bank for $ 50.0 million. The Bank had no advances under the Federal Reserve discount window or correspondent bank facility as of June 30, 2024. The total available borrowing capacity across all sources totaled approximately $ 519.9 million at June 30, 2024. ​ At June 30, 2023, the Bank had a remaining borrowing capacity of $ 287.9 million at the FHLB of San Francisco. In addition, the Bank had secured an estimated $ 139.0 million discount window facility at the FRB of San Francisco collateralized by investment securities totaling $ 150.3 million at June 30, 2023. As of June 30, 2023, the Bank also had an unsecured borrowing arrangement in the form of a federal funds facility with its correspondent bank for $ 50.0 million. The Bank had no advances under the Federal Reserve discount window or the correspondent bank facility as of June 30, 2023. The total available borrowing capacity across all sources totaled approximately $ 476.9 million at June 30, 2023. ​ At June 30, 2024 and 2023, the Corporation did not hold any investment securities held to maturity or investment securities available for sale with the intent to sell and determined it had the ability to hold these investment securities until maturity. It also determined that it was more likely than not that the Corporation would not be required to sell the securities prior to recovery of the amortized cost basis; therefore, no impairment losses were recorded on investment securities available for sale for fiscal years ended June 30, 2024 and 2023. In addition, no allowance for credit losses were recorded on investment securities held to maturity for the fiscal years ended June 30, 2024 and 2023. ​ 91 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Contractual maturities of investment securities as of June 30, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ June 30, 2023 ​ ​ ​ Estimated ​ ​ Estimated ​ ​ Amortized ​ Fair ​ Amortized ​ Fair (In Thousands) ​ Cost ​ Value ​ Cost ​ Value Held to maturity ​ ​ ​ ​ Due in one year or less ​ $ 349 ​ $ 343 ​ $ 303 ​ $ 300 Due after one through five years ​ 4,328 ​ 4,167 ​ 7,686 ​ 7,365 Due after five through ten years ​ 49,331 ​ 44,830 ​ 61,043 ​ 54,686 Due after ten years ​ 76,043 ​ 65,053 ​ 85,305 ​ 73,190 Total investment securities - held to maturity ​ ​ 130,051 ​ ​ 114,393 ​ ​ 154,337 ​ ​ 135,541 ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ ​ — ​ ​ — ​ ​ — ​ ​ — Due after one through five years ​ ​ — ​ ​ — ​ ​ — ​ ​ — Due after five through ten years ​ ​ 1,055 ​ ​ 1,053 ​ ​ 590 ​ ​ 580 Due after ten years ​ ​ 806 ​ ​ 796 ​ ​ 1,627 ​ ​ 1,575 Total investment securities - available for sale ​ ​ 1,861 ​ ​ 1,849 ​ ​ 2,217 ​ ​ 2,155 Total investment securities ​ $ 131,912 ​ $ 116,242 ​ $ 156,554 ​ $ 137,696 ​ ​ ​ ​ Note 3: Loans Held for Investment ​ Loans held for investment consisted of the following at June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ June 30, 2024 ​ June 30, 2023 Mortgage loans: ​ ​ ​ ​ ​ ​ Single-family $ 518,091 $ 518,821 Multi-family ​ ​ 445,182 ​ ​ 461,113 Commercial real estate ​ ​ 83,349 ​ ​ 90,558 Construction ​ ​ 2,692 ​ ​ 1,936 Other ​ ​ 95 ​ ​ 106 Commercial business loans ​ ​ 1,372 ​ ​ 1,565 Consumer loans ​ ​ 65 ​ ​ 65 Total loans held for investment, gross ​ ​ 1,050,846 ​ ​ 1,074,164 ​ ​ ​ ​ ​ ​ ​ Advance payments of escrows ​ ​ 102 ​ ​ 148 Deferred loan costs, net ​ ​ 9,096 ​ ​ 9,263 ACL on loans ​ ​ ( 7,065 ) ​ ​ ( 5,946 ) Total loans held for investment, net ​ $ 1,052,979 ​ $ 1,077,629 ​ ​ 92 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following table sets forth information at June 30, 2024 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans. Fixed-rate loans comprised 10 % and 11 % of loans held for investment at June 30, 2024 and 2023, respectively. Adjustable rate loans having no stated repricing date that reprice when the index to which they are tied to reprices (e.g. prime rate index) and checking account overdrafts are reported as repricing within one year, subject to periodic and maximum rate caps. The table does not include any estimate of prepayments which may cause the Corporation’s actual repricing experience to differ materially from that shown. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustable Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ After ​ After ​ After ​ ​ ​ ​ ​ ​ ​ ​ Within ​ One Year ​ 3 Years ​ 5 Years ​ ​ ​ ​ ​ ​ (In Thousands) ​ One Year ​ Through 3 Years ​ Through 5 Years ​ Through 10 Years ​ Fixed Rate ​ Total Mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Single-family $ 54,686 $ 30,234 $ 104,979 $ 219,436 $ 108,756 $ 518,091 Multi-family ​ ​ 180,464 ​ ​ 144,227 ​ ​ 115,785 ​ ​ 4,612 ​ ​ 94 ​ ​ 445,182 Commercial real estate ​ ​ 33,863 ​ ​ 24,241 ​ ​ 24,018 ​ ​ — ​ ​ 1,227 ​ ​ 83,349 Construction ​ ​ 2,692 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,692 Other ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 95 ​ ​ 95 Commercial business loans ​ ​ 1,372 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,372 Consumer loans ​ ​ 65 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 65 Total loans held for investment, gross ​ $ 273,142 ​ $ 198,702 ​ $ 244,782 ​ $ 224,048 ​ $ 110,172 ​ $ 1,050,846 ​ The following tables present the Corporation’s commercial real estate loans by property type and LTV as of June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner ​ ​ Non-Owner ​ ​ ​ ​ % of Total ​ ​ Weighted ​ June 30, 2024 ​ Occupied Loan ​ ​ Occupied Loan ​ ​ Total ​ Commercial ​ ​ Average ​ (Dollars In Thousands) ​ Balance ​ ​ Balance ​ ​ Balance ​ Real Estate ​ ​ LTV (1) ​ Office $ 6,690 $ 20,084 $ 26,774 32 % 43 % Mixed use (2) ​ ​ 293 ​ ​ 15,797 ​ ​ 16,090 ​ 19 ​ ​ 35 % Retail ​ ​ — ​ ​ 12,501 ​ ​ 12,501 ​ 15 ​ ​ 30 % Warehouse ​ ​ 2,076 ​ ​ 9,848 ​ ​ 11,924 ​ 14 ​ ​ 31 % Medical/dental office ​ ​ 2,439 ​ ​ 4,645 ​ ​ 7,084 ​ 9 ​ ​ 44 % Mobile home park ​ ​ — ​ ​ 6,909 ​ ​ 6,909 ​ 8 ​ ​ 38 % Restaurant/fast food ​ ​ 690 ​ ​ 500 ​ ​ 1,190 ​ 2 ​ ​ 46 % Automotive - non gasoline ​ ​ — ​ ​ 578 ​ ​ 578 ​ 1 ​ ​ 26 % Live/work ​ ​ — ​ ​ 299 ​ ​ 299 ​ — ​ ​ 13 % Total commercial real estate ​ $ 12,188 ​ $ 71,161 ​ $ 83,349 ​ 100 % ​ 37 % ​ (1) Current loan balance as a percentage of the original appraised value. (2) Mixed use includes $ 6.9 million in Office/Retail, $ 4.7 million in Multi-family/Retail, $ 3.0 million in Other Mixed Use, $ 754,000 in Multi-family/Commercial and $ 685,000 in Multi-family/Office. ​ 93 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner ​ Non-Owner ​ ​ ​ ​ % of Total ​ ​ Weighted ​ June 30, 2023 ​ Occupied Loan ​ Occupied Loan ​ ​ Total ​ Commercial ​ ​ Average ​ (Dollars In Thousands) ​ Balance ​ Balance ​ ​ Balance ​ Real Estate ​ ​ LTV (1) ​ Office $ 9,283 $ 23,915 $ 33,198 37 % 44 % Mixed use (2) ​ ​ 306 ​ ​ 17,614 ​ ​ 17,920 ​ 20 ​ ​ 36 % Retail ​ ​ — ​ ​ 12,991 ​ ​ 12,991 ​ 14 ​ ​ 32 % Warehouse ​ ​ 2,133 ​ ​ 8,511 ​ ​ 10,644 ​ 12 ​ ​ 31 % Mobile home park ​ ​ — ​ ​ 7,057 ​ ​ 7,057 ​ 8 ​ ​ 39 % Medical/dental office ​ ​ 1,117 ​ ​ 5,524 ​ ​ 6,641 ​ 7 ​ ​ 50 % Restaurant/fast food ​ ​ — ​ ​ 1,014 ​ ​ 1,014 ​ 1 ​ ​ 24 % Automotive - non gasoline ​ ​ — ​ ​ 485 ​ ​ 485 ​ 1 ​ ​ 19 % Live/work ​ ​ — ​ ​ 337 ​ ​ 337 ​ — ​ ​ 15 % Light industrial/manufacturing ​ ​ — ​ ​ 271 ​ ​ 271 ​ — ​ ​ 8 % Total commercial real estate ​ $ 12,839 ​ $ 77,719 ​ $ 90,558 ​ 100 % ​ 38 % ​ (1) Current loan balance as a percentage of the original appraised value. (2) Mixed use includes $ 8.2 million in Office/Retail, $ 5.6 million in Multi-family/Retail, $ 3.4 million in Other Mixed Use and $ 700,000 in Multi-family/Office. ​ The following tables present the Corporation’s commercial real estate loans by geographic concentration as of June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inland ​ ​ Southern ​ ​ Other ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ Empire (1) ​ ​ California (2) ​ ​ California ​ ​ Total ​ (Dollars in Thousands) ​ Balance ​ % ​ ​ Balance ​ % ​ ​ Balance ​ % ​ ​ Balance ​ % ​ Owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Office $ 1,540 23 % $ 4,959 74 % $ 191 3 % $ 6,690 100 % Mixed use ​ ​ — ​ — % ​ ​ — ​ — % ​ ​ 293 ​ 100 % ​ ​ 293 ​ 100 % Warehouse ​ ​ — ​ — % ​ ​ 1,689 ​ 81 % ​ ​ 387 ​ 19 % ​ ​ 2,076 ​ 100 % Medical/dental office ​ ​ 276 ​ 11 % ​ ​ 1,791 ​ 74 % ​ ​ 372 ​ 15 % ​ ​ 2,439 ​ 100 % Restaurant/fast food ​ ​ — ​ — % ​ ​ 690 ​ 100 % ​ ​ — ​ — % ​ ​ 690 ​ 100 % Total owner occupied ​ ​ 1,816 ​ 15 % ​ ​ 9,129 ​ 75 % ​ ​ 1,243 ​ 10 % ​ ​ 12,188 ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Office ​ ​ 2,951 ​ 15 % ​ ​ 13,837 ​ 69 % ​ ​ 3,296 ​ 16 % ​ ​ 20,084 ​ 100 % Mixed use ​ ​ 505 ​ 3 % ​ ​ 6,243 ​ 40 % ​ ​ 9,049 ​ 57 % ​ ​ 15,797 ​ 100 % Retail ​ ​ 1,050 ​ 8 % ​ ​ 6,996 ​ 56 % ​ ​ 4,455 ​ 36 % ​ ​ 12,501 ​ 100 % Warehouse ​ ​ 605 ​ 6 % ​ ​ 4,774 ​ 49 % ​ ​ 4,469 ​ 45 % ​ ​ 9,848 ​ 100 % Mobile home park ​ ​ 4,859 ​ 70 % ​ ​ 358 ​ 5 % ​ ​ 1,692 ​ 25 % ​ ​ 6,909 ​ 100 % Medical/dental office ​ ​ 1,797 ​ 39 % ​ ​ 2,159 ​ 46 % ​ ​ 689 ​ 15 % ​ ​ 4,645 ​ 100 % Automotive - non gasoline ​ ​ — ​ — % ​ ​ 578 ​ 100 % ​ ​ — ​ — % ​ ​ 578 ​ 100 % Restaurant/fast food ​ ​ — ​ — % ​ ​ 500 ​ 100 % ​ ​ — ​ — % ​ ​ 500 ​ 100 % Live/work ​ ​ — ​ — % ​ ​ — ​ — % ​ ​ 299 ​ 100 % ​ ​ 299 ​ 100 % Total non-owner occupied ​ ​ 11,767 ​ 16 % ​ ​ 35,445 ​ 50 % ​ ​ 23,949 ​ 34 % ​ ​ 71,161 ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total commercial real estate ​ $ 13,583 ​ 16 % ​ $ 44,574 ​ 54 % ​ $ 25,192 ​ 30 % ​ $ 83,349 ​ 100 % ​ (1) Inland Empire comprised of San Bernardino and Riverside counties. (2) Other than the Inland Empire. ​ 94 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inland ​ ​ Southern ​ ​ Other ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ Empire (1) ​ ​ California (2) ​ ​ California ​ ​ Total ​ (Dollars in Thousands) ​ Balance ​ % ​ ​ Balance ​ % ​ ​ Balance ​ % ​ ​ Balance ​ % ​ Owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Office $ 2,649 29 % $ 6,436 69 % $ 198 2 % $ 9,283 100 % Mixed use ​ ​ — ​ — % ​ ​ — ​ — % ​ ​ 306 ​ 100 % ​ ​ 306 ​ 100 % Warehouse ​ ​ — ​ — % ​ ​ 1,733 ​ 81 % ​ ​ 400 ​ 19 % ​ ​ 2,133 ​ 100 % Medical/dental office ​ ​ 281 ​ 25 % ​ ​ 453 ​ 41 % ​ ​ 383 ​ 34 % ​ ​ 1,117 ​ 100 % Total owner occupied ​ ​ 2,930 ​ 23 % ​ ​ 8,622 ​ 67 % ​ ​ 1,287 ​ 10 % ​ ​ 12,839 ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Office ​ ​ 4,420 ​ 18 % ​ ​ 14,767 ​ 62 % ​ ​ 4,728 ​ 20 % ​ ​ 23,915 ​ 100 % Mixed use ​ ​ 660 ​ 4 % ​ ​ 7,292 ​ 41 % ​ ​ 9,662 ​ 55 % ​ ​ 17,614 ​ 100 % Retail ​ ​ 1,076 ​ 8 % ​ ​ 7,353 ​ 57 % ​ ​ 4,562 ​ 35 % ​ ​ 12,991 ​ 100 % Warehouse ​ ​ 623 ​ 7 % ​ ​ 5,690 ​ 67 % ​ ​ 2,198 ​ 26 % ​ ​ 8,511 ​ 100 % Mobile home park ​ ​ 4,967 ​ 70 % ​ ​ 364 ​ 5 % ​ ​ 1,726 ​ 25 % ​ ​ 7,057 ​ 100 % Medical/dental office ​ ​ 1,910 ​ 35 % ​ ​ 3,325 ​ 60 % ​ ​ 289 ​ 5 % ​ ​ 5,524 ​ 100 % Restaurant/fast food ​ ​ — ​ — % ​ ​ 1,014 ​ 100 % ​ ​ — ​ — % ​ ​ 1,014 ​ 100 % Automotive - non gasoline ​ ​ — ​ — % ​ ​ 485 ​ 100 % ​ ​ — ​ — % ​ ​ 485 ​ 100 % Live/work ​ ​ — ​ — % ​ ​ — ​ — % ​ ​ 337 ​ 100 % ​ ​ 337 ​ 100 % Light industrial/ manufacturing ​ ​ — ​ — % ​ ​ 271 ​ 100 % ​ ​ — ​ — % ​ ​ 271 ​ 100 % Total non-owner occupied ​ ​ 13,656 ​ 18 % ​ ​ 40,561 ​ 52 % ​ ​ 23,502 ​ 30 % ​ ​ 77,719 ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total commercial real estate ​ $ 16,586 ​ 18 % ​ $ 49,183 ​ 54 % ​ $ 24,789 ​ 28 % ​ $ 90,558 ​ 100 % ​ (1) Other than the Inland Empire. ​ The Corporation has developed an internal loan grading system to evaluate and quantify loans held for investment with respect to quality and risk. Management continually evaluates the credit quality of the loan portfolio and conducts a quarterly review of the adequacy of the ACL. The Corporation has adopted an internal risk rating policy in which each loan is rated for credit quality with a rating of pass, special mention, substandard, doubtful or loss. The two primary components that are used during the loan review process to determine the proper allowance levels are individually evaluated allowances and collectively evaluated allowances. The collectively evaluated allowance is based on a pooling method for groups of homogeneous loans sharing similar loan characteristics to calculate an allowance which reflects an estimate of lifetime expected credit losses using historical experience, current conditions, and reasonable and supportable forecasts. Loans identified to be individually evaluated have an allowance that is based upon the appraised value of the collateral, less selling costs or discounted cash flow with an appropriate default factor. The Corporation categorizes all loans held for investment into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. A description of the general characteristics of the risk grades is as follows: ● Pass – A pass loan ranges from minimal credit risk to average, but still acceptable, credit risk. The likelihood of loss is considered remote. ● Special Mention - A special mention loan has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the Corporation is currently protected and loss is considered unlikely and not imminent. ● Substandard - A substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. ● Doubtful - A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable. 95 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ● Loss - A loss loan is considered uncollectible and of such little value that continuance as an asset of the Corporation is not warranted. ​ The following table presents the Corporation’s recorded investment in loans by risk categories and gross charge-offs by year of origination as of June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ Term Loans by Year of Origination ​ Revolving ​ ​ ​ (In Thousands) ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ Prior ​ Loans ​ Total Mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Single-family: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass $ 19,476 $ 60,688 $ 205,817 $ 149,084 $ 19,606 $ 59,702 $ 14 $ 514,387 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,111 ​ ​ - ​ ​ 1,111 Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 2,593 ​ ​ - ​ ​ 2,593 Total single-family ​ ​ 19,476 ​ ​ 60,688 ​ ​ 205,817 ​ ​ 149,084 ​ ​ 19,606 ​ ​ 63,406 ​ ​ 14 ​ ​ 518,091 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Multi-family: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 10,374 ​ ​ 28,892 ​ ​ 75,876 ​ ​ 86,916 ​ ​ 60,938 ​ ​ 180,119 ​ ​ - ​ ​ 443,115 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ 478 ​ ​ - ​ ​ 1,589 ​ ​ - ​ ​ 2,067 Total multi-family ​ ​ 10,374 ​ ​ 28,892 ​ ​ 75,876 ​ ​ 87,394 ​ ​ 60,938 ​ ​ 181,708 ​ ​ - ​ ​ 445,182 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 3,874 ​ ​ 13,763 ​ ​ 23,298 ​ ​ 4,018 ​ ​ 5,450 ​ ​ 32,946 ​ ​ - ​ ​ 83,349 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total commercial real estate ​ ​ 3,874 ​ ​ 13,763 ​ ​ 23,298 ​ ​ 4,018 ​ ​ 5,450 ​ ​ 32,946 ​ ​ - ​ ​ 83,349 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 1,480 ​ ​ 228 ​ ​ 984 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 2,692 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total construction ​ ​ 1,480 ​ ​ 228 ​ ​ 984 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 2,692 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 95 ​ ​ - ​ ​ - ​ ​ 95 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total other ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 95 ​ ​ - ​ ​ - ​ ​ 95 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial business loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ - ​ ​ - ​ ​ 133 ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,239 ​ ​ 1,372 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total commercial business loans ​ ​ - ​ ​ - ​ ​ 133 ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,239 ​ ​ 1,372 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Not graded ​ ​ 23 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 23 Pass ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 42 ​ ​ 42 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total consumer loans ​ ​ 23 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 42 ​ ​ 65 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans held for investment, gross ​ $ 35,227 ​ $ 103,571 ​ $ 306,108 ​ $ 240,496 ​ $ 86,089 ​ $ 278,060 ​ $ 1,295 ​ $ 1,050,846 Total current period gross charge-offs ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ 96 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following table presents the Corporation’s recorded investment in loans by risk categories by year of origination as of June 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ Term Loans by Year of Origination ​ Revolving ​ ​ ​ (In Thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Prior ​ Loans ​ Total Mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Single-family: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass $ 51,378 $ 216,989 $ 157,015 $ 20,741 $ 11,793 $ 59,451 $ 32 $ 517,399 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ 251 ​ ​ - ​ ​ 1,171 ​ ​ - ​ ​ 1,422 Total single-family ​ ​ 51,378 ​ ​ 216,989 ​ ​ 157,015 ​ ​ 20,992 ​ ​ 11,793 ​ ​ 60,622 ​ ​ 32 ​ ​ 518,821 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Multi-family: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 17,429 ​ ​ 77,956 ​ ​ 90,926 ​ ​ 65,127 ​ ​ 59,709 ​ ​ 149,456 ​ ​ - ​ ​ 460,603 Special Mention ​ ​ - ​ ​ - ​ ​ 510 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 510 Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total multi-family ​ ​ 17,429 ​ ​ 77,956 ​ ​ 91,436 ​ ​ 65,127 ​ ​ 59,709 ​ ​ 149,456 ​ ​ - ​ ​ 461,113 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 8,586 ​ ​ 23,815 ​ ​ 5,527 ​ ​ 6,525 ​ ​ 9,981 ​ ​ 35,577 ​ ​ - ​ ​ 90,011 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 547 ​ ​ - ​ ​ 547 Total commercial real estate ​ ​ 8,586 ​ ​ 23,815 ​ ​ 5,527 ​ ​ 6,525 ​ ​ 9,981 ​ ​ 36,124 ​ ​ - ​ ​ 90,558 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 94 ​ ​ 726 ​ ​ 1,116 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,936 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total construction ​ ​ 94 ​ ​ 726 ​ ​ 1,116 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,936 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ - ​ ​ - ​ ​ - ​ ​ 106 ​ ​ - ​ ​ - ​ ​ - ​ ​ 106 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total other ​ ​ - ​ ​ - ​ ​ - ​ ​ 106 ​ ​ - ​ ​ - ​ ​ - ​ ​ 106 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial business loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ - ​ ​ 171 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,394 ​ ​ 1,565 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total commercial business loans ​ ​ - ​ ​ 171 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 1,394 ​ ​ 1,565 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Not graded ​ ​ 15 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 15 Pass ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 50 ​ ​ 50 Special Mention ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Substandard ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - Total consumer loans ​ ​ 15 ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 50 ​ ​ 65 Current period gross charge-off ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans held for investment, gross ​ $ 77,502 ​ $ 319,657 ​ $ 255,094 ​ $ 92,750 ​ $ 81,483 ​ $ 246,202 ​ $ 1,476 ​ $ 1,074,164 Total current period gross charge-offs ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ ​ 97 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements 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. Under ASC 326 , the ACL is a valuation account that is deducted from the related loans’ 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. The Corporation’s ACL is calculated quarterly, with any difference in the calculated ACL and the recorded ACL trued-up through an entry to the provision for (recovery of) credit losses. Management calculates the quantitative portion of the collectively evaluated allowance for all loan categories using an average charge-off or loss rate methodology and generally evaluates collectively evaluated loans by Call Report code in order to group and determine portfolio loan segments with similar risk characteristics. The Corporation primarily utilizes historical loss rates for the CECL calculation based on its own specific historical losses and/or with peer loss history where applicable. ​ The expected loss rates are applied to expected monthly loan balances estimated through the consideration of contractual repayment terms and expected prepayments. The prepayment assumptions applied to expected cash flow over the contractual life of the loans are estimated based on historical and bank-specific experience and the consideration of current and expected conditions and circumstances including the level of interest rates. The prepayment assumptions may be updated by management in the event that changing conditions impact management’s estimate or additional historical data gathered has resulted in the need for a reevaluation. ​ For its reasonable and supportable forecasting of current expected credit losses, the Corporation utilizes a regression model using forecasted economic metrics and historical loss data. The regression model utilized upon implementation of CECL on July 1, 2023 , and as of June 30, 2024, relied upon reasonable and supportable 12-month forecasts of the National Unemployment Rate and change in the Real Gross Domestic Product, after which it reverts to a historical loss rate. Management selected the National Unemployment Rate and the Real Gross Domestic Product as the drivers of the forward look component of the collectively evaluated allowance, primarily as a result of high correlation coefficients identified in regression modeling, the availability of forecasts, including the quarterly Federal Open Market Committee forecast, and the widespread familiarity of these economic metrics. ​ Management recognizes that there are additional factors impacting risk of loss in the loan portfolio beyond what is captured in the quantitative portion of allowance on collectively evaluated loans. As current and expected conditions may vary compared with conditions over the historical lookback period, which is utilized in the calculation of the quantitative allowance, management considers whether additional or reduced allowance levels on collectively evaluated loans may be warranted, given the consideration of a variety of qualitative factors. The following qualitative factors (“Q-factors”) considered by management reflect the regulatory guidance on the Q-factors: ​ ● Changes in the experience, ability, and depth of lending management and other relevant staff. ● Changes in the value of underlying collateral for collateral-dependent loans. ● The existence and effect of any concentrations of credit, and changes in the level of such concentrations. ● Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments. ● The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution's existing portfolio. ● Changes in the volume and severity of past due loans, the volume of non-performing loans, and the volume and severity of adversely classified or graded loans. ● Changes in the quality of the Corporation’s loan review system. ● Changes in the nature, volume and terms of loans in the portfolio. ● Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses. The qualitative portion of the Corporation’s allowance on collectively evaluated loans are calculated using management judgment, to determine risk categorizations in each of the Q-factors presented above. The amount of qualitative allowance is also contingent upon the relative weighting of the Q-factors according to management’s judgment. 98 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Loans that do not share similar risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable or the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date, less selling costs. ​ Accrued interest receivable for loans is included in accrued interest receivable in the Consolidated Statements of Financial Condition. The Corporation elected not to measure an allowance for accrued interest receivable and instead elected to reverse accrued interest income on loans that are placed on non-performing status. A loan is deemed non-performing when it is 90 days or more delinquent. The Corporation believes this policy results in the timely reversal of potentially uncollectible interest. ​ Pursuant to ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures,” the Corporation may agree to different types of modifications, including principal forgiveness, interest rate reductions, term extension, significant payment delay or any combination of modifications noted above. During the fiscal year ended June 30, 2024, there were no loan modifications to borrowers experiencing financial difficulties. ​ Management believes the ACL on loans held for investment is maintained at a level sufficient to provide for expected losses on the Corporation’s loans held for investment based on historical loss experience, current conditions, and reasonable and supportable forecasts. The provision for (recovery of) credit losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the ACL at appropriate levels. Future adjustments to the ACL may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation’s control. Non-performing loans are charged-off to their fair market values in the period the loans, or portion thereof, are deemed uncollectible, generally after the loan becomes 150 days delinquent for real estate secured first trust deed loans and 120 days delinquent for commercial business or real estate secured second trust deed loans. For loans that were previously modified from their original terms, were re-underwritten and identified as modified loans, the charge-off occurs when the loan becomes 90 days delinquent; and where borrowers file bankruptcy, the charge-off occurs when the loan becomes 60 days delinquent. The amount of the charge-off is determined by comparing the loan balance to the estimated fair value of the underlying collateral, less disposition costs, with the loan balance in excess of the estimated fair value charged-off against the ACL. For modified loans that are less than 90 days delinquent, the ACL is segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their modification period, classified lower than pass, and containing an embedded loss component or (b) collectively evaluated allowances based on the aggregated pooling method. For non-performing loans less than 60 days delinquent where the borrower has filed bankruptcy, the collectively evaluated allowances are assigned based on the aggregated pooling method. For non-performing commercial real estate loans, an individually evaluated allowance is derived based on the loan's discounted cash flow fair value (for modified loans) or collateral fair value less estimated selling costs and if the fair value is higher than the loan balance, no allowance is required. A non-performing loan can be restored to accrual status when a borrower is current in payments for six consecutive months. 99 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following tables summarize the Corporation’s ACL and recorded investment in gross loans, by portfolio type, at the dates and for the years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Single-family ​ Multi-family ​ Real Estate ​ Construction ​ Other Mortgage ​ Business ​ Consumer ​ Total ​ ACL: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACL, beginning of period $ 1,720 $ 3,270 $ 868 $ 15 $ 2 $ 67 $ 4 $ 5,946 ​ Adjustment to ACL for adoption of ASC 326 ​ ​ 4,605 ​ ​ ( 2,614 ) ​ ​ ( 786 ) ​ ​ 47 ​ ​ 3 ​ ​ ( 54 ) ​ ​ ( 4 ) ​ ​ 1,197 ​ (Recovery of) provision for credit losses ​ ( 30 ) ​ ( 61 ) ​ ( 16 ) ​ 35 ​ ( 4 ) ​ ( 2 ) ​ — ​ ( 78 ) ​ Recoveries ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ Charge-offs ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ ACL, end of period ​ $ 6,295 ​ $ 595 ​ $ 66 ​ $ 97 ​ $ 1 ​ $ 11 ​ $ — ​ $ 7,065 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACL: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for allowances ​ $ 37 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 37 ​ Collectively evaluated for allowances ​ 6,258 ​ 595 ​ 66 ​ 97 ​ 1 ​ 11 ​ — ​ 7,028 ​ ACL, end of period ​ $ 6,295 ​ $ 595 ​ $ 66 ​ $ 97 ​ $ 1 ​ $ 11 ​ $ — ​ $ 7,065 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for allowances ​ $ 1,134 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 1,134 ​ Collectively evaluated for allowances ​ 516,957 ​ 445,182 ​ 83,349 ​ 2,692 ​ 95 ​ 1,372 ​ 65 ​ 1,049,712 ​ Total loans held for investment, gross ​ $ 518,091 ​ $ 445,182 ​ $ 83,349 ​ $ 2,692 ​ $ 95 ​ $ 1,372 ​ $ 65 ​ $ 1,050,846 ​ ACL on loans as a percentage of gross loans held for investment ​ ​ 1.22 % ​ 0.13 % ​ 0.08 % ​ 3.60 % ​ 1.05 % ​ 0.80 % ​ — % ​ 0.67 % Net (recoveries) charge-offs to average loans receivable, net during the period ​ ​ — % ​ — % ​ — % ​ — % ​ — % ​ — % ​ — % ​ — % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Single-family ​ Multi-family ​ Real Estate ​ Construction ​ Other Mortgage ​ Business ​ Consumer ​ Total ​ ACL: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACL, beginning of period $ 1,383 $ 3,282 $ 816 $ 23 $ 3 $ 52 $ 5 $ 5,564 ​ Provision for (recovery of) credit losses ​ 329 ​ ( 12 ) ​ 52 ​ ( 8 ) ​ ( 1 ) ​ 15 ​ ( 1 ) ​ 374 ​ Recoveries ​ 8 ​ — ​ — ​ — ​ — ​ — ​ — ​ 8 ​ Charge-offs ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ ACL, end of period ​ $ 1,720 ​ $ 3,270 ​ $ 868 ​ $ 15 ​ $ 2 ​ $ 67 ​ $ 4 ​ $ 5,946 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACL: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for allowances ​ $ 37 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 37 ​ Collectively evaluated for allowances ​ 1,683 ​ 3,270 ​ 868 ​ 15 ​ 2 ​ 67 ​ 4 ​ 5,909 ​ ACL, end of period ​ $ 1,720 ​ $ 3,270 ​ $ 868 ​ $ 15 ​ $ 2 ​ $ 67 ​ $ 4 ​ $ 5,946 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for allowances ​ $ 996 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 996 ​ Collectively evaluated for allowances ​ 517,825 ​ 461,113 ​ 90,558 ​ 1,936 ​ 106 ​ 1,565 ​ 65 ​ 1,073,168 ​ Total loans held for investment, gross ​ $ 518,821 ​ $ 461,113 ​ $ 90,558 ​ $ 1,936 ​ $ 106 ​ $ 1,565 ​ $ 65 ​ $ 1,074,164 ​ ACL on loans as a percentage of gross loans held for investment ​ ​ 0.33 % ​ 0.71 % ​ 0.96 % ​ 0.77 % ​ 1.89 % ​ 4.28 % ​ 6.15 % ​ 0.55 % Net (recoveries) charge-offs to average loans receivable, net during the period ​ ​ ( 0.00 ) % ​ — % ​ — % ​ — % ​ — % ​ — % ​ — % ​ ( 0.00 ) % ​ 100 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following summarizes the components of the net change in the allowance for credit losses for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ Balance, beginning of year ​ $ 5,946 ​ $ 5,564 Adjustment to ACL for adoption of ASC 326 ​ ​ 1,197 ​ ​ — (Recovery of) provision for credit losses ​ ( 78 ) ​ 374 Recoveries ​ — ​ 8 Charge-offs ​ — ​ — Balance, end of year ​ $ 7,065 ​ $ 5,946 ​ The following tables identify the Corporation’s total recorded investment in non-performing loans by type at the dates and for the periods indicated. Generally, a loan is placed on non-performing status when it becomes 90 days past due as to principal or interest or after considering economic and business conditions and collection efforts, where the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. In addition, interest income is not recognized on any loan where management has determined that collection is not reasonably assured. A non-performing loan may be restored to accrual status when delinquent principal and interest payments are brought current, the borrower(s) has demonstrated sustained payment performance and future monthly principal and interest payments are expected to be collected on a timely basis. Loans with a related allowance have been (a) collectively evaluated using a pooling method analysis or (b) individually evaluated using either a discounted cash flow analysis or, for collateral dependent loans, current appraisals less costs to sell, to establish realizable value. This analysis may identify a specific allowance amount needed or may conclude that no allowance is needed. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended June 30, 2024 ​ ​ Unpaid ​ ​ ​ ​ ​ ​ ​ Net ​ Average ​ Interest ​ ​ Principal ​ Related ​ Recorded ​ ​ ​ Recorded ​ Recorded ​ Income (In Thousands) Balance Charge-offs Investment ACL (1) Investment Investment Recognized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Single-family: ​ ​ ​ ​ ​ ​ ​ With a related allowance ​ $ 2,267 ​ $ — ​ $ 2,267 ​ $ ( 73 ) ​ $ 2,194 ​ $ 1,627 ​ $ 96 Without a related allowance (2) ​ 427 ​ ( 25 ) ​ 402 ​ — ​ 402 ​ 444 ​ 23 Total single-family loans ​ 2,694 ​ ( 25 ) ​ 2,669 ​ ( 73 ) ​ 2,596 ​ 2,071 ​ 119 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-performing loans ​ $ 2,694 ​ $ ( 25 ) ​ $ 2,669 ​ $ ( 73 ) ​ $ 2,596 ​ $ 2,071 ​ $ 119 ​ (1) ACL, specifically assigned to the individual loan. (2) There was no related ACL because the loans were charged-off to their fair value or the fair value of the collateral was higher than the loan balance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended June 30, 2023 ​ ​ Unpaid ​ ​ ​ ​ ​ ​ ​ Net ​ Average ​ Interest ​ ​ Principal ​ Related ​ Recorded ​ ​ ​ Recorded ​ Recorded ​ Income (In Thousands) Balance Charge-offs Investment ACL (1) Investment Investment Recognized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage loans: ​ ​ ​ ​ ​ ​ ​ Single-family: ​ ​ ​ ​ ​ ​ ​ With a related allowance ​ $ 1,171 ​ $ — ​ $ 1,171 ​ $ ( 122 ) ​ $ 1,049 ​ $ 996 ​ $ 42 Without a related allowance (2) ​ 276 ​ ( 25 ) ​ 251 ​ — ​ 251 ​ 112 ​ — Total single-family loans ​ 1,447 ​ ( 25 ) ​ 1,422 ​ ( 122 ) ​ 1,300 ​ 1,108 ​ 42 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-performing loans ​ $ 1,447 ​ $ ( 25 ) ​ $ 1,422 ​ $ ( 122 ) ​ $ 1,300 ​ $ 1,108 ​ $ 42 ​ (1) ACL, specifically assigned to the individual loan. (2) There was no related ACL because the loans were charged-off to their fair value or the fair value of the collateral was higher than the loan balance. 101 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ At June 30, 2024 and 2023, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing. ​ During the fiscal years ended June 30, 2024 and 2023, the Corporation’s average investment in non-performing loans was $ 2.1 million and $ 1.1 million, respectively. The Corporation records payments on non-performing loans utilizing the cash basis or cost recovery method of accounting during the periods when the loans are on non-performing status. For the fiscal year ended June 30, 2024, the Corporation received $ 119,000 in interest payments from non-performing loans, all of which was recognized as interest income and none was applied to reduce the loan balances under the cost recovery method. In comparison, for the fiscal year ended June 30, 2023, the Bank received $ 49,000 in interest payments from non-performing loans, of which $ 42,000 was recognized as interest income. The remaining $ 7,000 was applied to reduce the loan balances under the cost recovery method. As outlined in the implementation of ASC 326, the Bank includes the off-balance sheet reserve for unfunded loan commitments within the provision for (recovery of) credit losses. ​ The following table provides information regarding the unfunded loan commitment reserve for the fiscal years ended June 30, 2024 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ June 30, (In Thousands) 2024 2023 Balance, beginning of the year ​ $ 42 ​ $ 130 Impact of ASC 326 CECL adoption ​ ​ — ​ ​ — Provision for (recovery of) credit losses ​ 15 ​ ( 88 ) Balance, end of the year ​ $ 57 ​ $ 42 ​ The method for calculating the unfunded commitment reserve is based on a historical funding rate applied to the undisbursed loan amount to estimate an average outstanding amount during the life of the loan commitment. The Corporation applies the same assumptions and methodologies by loan groupings to these unfunded loan commitments as it does for its funded loans held for investment to determine the reserve rate and the allowance. Assumptions are evaluated by management periodically as part of the CECL procedures. The unfunded loan commitment reserve is recorded in accounts payable, accrued interest and other liabilities in the Consolidated Statements of Financial Condition. ​ The following tables provide information on the past due status of the Corporation’s loans held for investment, gross, at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ ​ ​ ​ ​ 30-89 Days Past ​ ​ ​ ​ Total Loans Held for (In Thousands) Current Due Non-Accrual (1) Investment, Gross ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Single-family ​ $ 515,498 ​ $ — ​ $ 2,593 ​ $ 518,091 Multi-family ​ 445,182 ​ — ​ — ​ 445,182 Commercial real estate ​ 83,349 ​ — ​ — ​ 83,349 Construction ​ 2,692 ​ — ​ — ​ 2,692 Other ​ 95 ​ — ​ — ​ 95 Commercial business loans ​ 1,372 ​ — ​ — ​ 1,372 Consumer loans ​ 64 ​ 1 ​ — ​ 65 Total loans held for investment, gross ​ $ 1,048,252 ​ $ 1 ​ $ 2,593 ​ $ 1,050,846 ​ (1) All loans 90 days or greater past due are placed on non-accrual status. ​ 102 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ ​ ​ 30-89 Days Past ​ ​ Total Loans Held for (In Thousands) ​ Current ​ Due ​ Non-Accrual (1) ​ Investment, Gross ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Single-family ​ $ 517,399 ​ $ — ​ $ 1,422 ​ $ 518,821 Multi-family ​ 461,113 ​ — ​ — ​ 461,113 Commercial real estate ​ 90,558 ​ — ​ — ​ 90,558 Construction ​ 1,936 ​ — ​ — ​ 1,936 Other ​ ​ 106 ​ — ​ — ​ 106 Commercial business loans ​ 1,565 ​ — ​ — ​ 1,565 Consumer loans ​ 64 ​ 1 ​ — ​ 65 Total loans held for investment, gross ​ $ 1,072,741 ​ $ 1 ​ $ 1,422 ​ $ 1,074,164 ​ (1) All loans 90 days or greater past due are placed on non-accrual status. ​ In the ordinary course of business, the Bank may offer loans to its directors, officers and employees on substantially the same terms prevailing at the time of origination for comparable transactions with unaffiliated borrowers. During fiscal 2024 and 2023, there were no related-party loan activities and as of June 30, 2024 and 2023, there were no outstanding related-party loans. ​ ​ ​ Note 4: Leases ​ The Corporation accounts for its leases in accordance with ASC 842, which was implemented on July 1, 2019, and requires the Corporation to record liabilities for future lease obligations as well as assets representing the right to use the underlying leased assets. The Corporation’s leases primarily represent future obligations to make payments for the use of buildings, space or equipment for its operations. Liabilities to make future lease payments are recorded in accounts payable, accrued interest and other liabilities, while right-of-use assets are recorded in premises and equipment in the Consolidated Statements of Financial Condition. At June 30, 2024, all the Corporation’s leases were classified as operating leases and the Corporation did not have any operating leases with an initial term of 12 months or less (“short-term leases”). ​ Liabilities to make future lease payments and right-of-use assets are recorded for operating leases and do not include short-term leases. These liabilities and right-of-use assets are determined based on the total contractual base rents for each lease, which include options to extend or renew each lease, where applicable, and where the Corporation believes it has an economic incentive to extend or renew the lease. Since lease extensions are not reasonably certain, the Corporation generally does not recognize payments occurring during option periods in the calculation of its operating right-of-use lease assets and operating lease liabilities. The Bank utilizes the FHLB - San Francisco interest rates as a discount rate for each of the remaining contractual terms at the adoption date as well as for future leases if the discount rate is not stated in the lease. For leases that contain variable lease payments, the Corporation assumes future lease payment escalations based on a lease payment escalation rate specified in the lease or the specified index rate observed at the time of lease commencement. Liabilities to make future lease payments are accounted for using the interest method, being reduced by periodic contractual lease payments net of periodic interest accretion. Right-of-use assets for operating leases are amortized over the term of the associated lease by amounts that represent the difference between periodic straight-line lease expense and periodic interest accretion in the related liability to make future lease payments. ​ For the fiscal years ended June 30, 2024 and 2023, expenses associated with the Corporation’s leases totaled $ 927,000 and $ 882,000 , respectively, and were recorded in premises and occupancy expenses and equipment expenses in the Consolidated Statements of Operations. ​ ​ 103 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following table presents supplemental information related to operating leases at the date and for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, (In Thousands) ​ 2024 ​ ​ 2023 Consolidated Statements of Condition: ​ ​ Premises and equipment - Operating lease right of use assets ​ $ 1,356 $ 2,147 Accounts payable, accrued interest and other liabilities – Operating lease liabilities ​ $ 1,407 $ 2,169 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ ​ 2024 ​ ​ 2023 Consolidated Statements of Operations: ​ ​ Premises and occupancy expenses from operating leases (1) ​ $ 789 $ 787 Equipment expenses from operating leases (1) ​ ​ 138 ​ 95 Total lease expense ​ $ 927 ​ $ 882 ​ ​ ​ ​ ​ ​ ​ Consolidated Statements of Cash Flows: ​ Operating cash flows from operating leases, net ​ $ 884 $ 879 ​ (1) Includes immaterial variable lease costs. The following table provides information related to remaining minimum contractual lease payments and other information associated with the Corporation’s leases as of June 30, 2024: ​ ​ ​ ​ ​ ​ ​ Amount (1) Year Ending June 30, (In Thousands) ​ 2025 ​ $ 678 ​ 2026 ​ 387 ​ 2027 ​ 192 ​ 2028 ​ 156 ​ 2029 ​ 74 ​ Thereafter ​ — ​ Total contract lease payments ​ $ 1,487 ​ ​ ​ ​ ​ ​ Total liability to make lease payments ​ $ 1,407 ​ Difference in undiscounted and discounted future lease payments ​ $ 80 ​ Weighted average discount rate ​ 3.34 % Weighted average remaining lease term (years) ​ 3.0 ​ ​ (1) Contractual base rents do not include property taxes and other operating expenses due under respective lease agreements. ​ ​ 104 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Note 5: Premises and Equipment ​ Premises and equipment at June 30, 2024 and 2023 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (In Thousands) 2024 2023 Land ​ $ 2,853 ​ $ 2,853 Buildings ​ 10,136 ​ 10,311 Leasehold improvements ​ 4,065 ​ 3,135 Furniture and equipment ​ 5,458 ​ 5,226 Automobiles ​ 149 ​ 176 Operating lease – right of use assets (1) ​ ​ 1,356 ​ ​ 2,147 ​ ​ 24,017 ​ 23,848 Less accumulated depreciation and amortization ​ ( 14,704 ) ​ ( 14,617 ) Total premises and equipment, net ​ $ 9,313 ​ $ 9,231 ​ (1) Net of accumulated amortization. ​ Depreciation and amortization expense for the fiscal years ended June 30, 2024 and 2023 amounted to $ 1.6 million and $ 1.4 million, respectively. ​ ​ Note 6: Deposits ​ Deposits at June 30, 2024 and 2023 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ June 30, 2023 (Dollars in Thousands) Interest Rate Amount Interest Rate Amount Checking deposits – noninterest-bearing — ​ $ 95,627 — ​ $ 103,006 ​ Checking deposits – interest-bearing (1) 0.00 % - 0.20 % ​ 254,624 0.00 % - 0.20 % ​ 302,872 ​ Savings deposits (1) 0.00 % - 4.64 % ​ 238,878 0.00 % - 0.70 % ​ 290,204 ​ Money market deposits (1) 0.00 % - 4.64 % ​ 25,324 0.00 % - 2.00 % ​ 33,551 ​ Time deposits: ​ ​ ​ $250 and under (1)(2) 0.00 % - 5.35 % ​ 226,110 0.00 % - 5.25 % ​ 192,147 ​ Over $250 0.10 % - 5.12 % ​ 47,785 0.10 % - 5.35 % ​ 28,791 ​ Total deposits (3) ​ ​ ​ $ 888,348 ​ ​ $ 950,571 ​ Weighted average interest rate on deposits ​ ​ 1.29 % ​ ​ 0.73 % ​ (1) Certain interest-bearing checking, savings, money market and time deposits require a minimum balance to earn interest. (2) Includes brokered certificates of deposit of $ 131.8 million and $ 106.4 million at June 30, 2024 and 2023, respectively. (3) Includes uninsured deposits of approximately $ 122.7 million and $ 140.1 million at June 30, 2024 and 2023, respectively. ​ The aggregate annual maturities of time deposits at June 30, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (In Thousands) 2024 2023 One year or less ​ $ 245,713 ​ $ 166,501 Over one to two years ​ 19,604 ​ 37,062 Over two to three years ​ 3,779 ​ 9,922 Over three to four years ​ 1,896 ​ 3,069 Over four to five years ​ 1,649 ​ 2,578 Over five years ​ 1,254 ​ 1,806 Total time deposits ​ $ 273,895 ​ $ 220,938 ​ 105 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Interest expense on deposits for the years indicated is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, (In Thousands) 2024 2023 Checking deposits – interest-bearing ​ $ 118 ​ $ 140 Savings deposits ​ 313 ​ 168 Money market deposits ​ 172 ​ 87 Time deposits ​ 9,063 ​ 2,751 Total interest expense on deposits ​ $ 9,666 ​ $ 3,146 ​ At June 30, 2024, the Bank had related party deposits of approximately $ 6.3 million, compared to $ 8.1 million at June 30, 2023. At June 30, 2024 and 2023, deposits with negative balances (i.e. overdrafts) that were reclassified to loans held for investment totaled $ 24,000 and $ 15,000 , respectively. The Bank is required to maintain reserve balances with the Federal Reserve Bank of San Francisco. Effective March 26, 2020, the FRB lowered the reserve ratios on transaction accounts maintained at a depository institution to zero percent so there was no required reserve balance at June 30, 2024 and 2023. ​ ​ Note 7: Borrowings ​ As of June 30, 2024, the Bank’s FHLB – San Francisco maximum borrowing capacity was approximately $ 516.0 million, which is limited to 40 % of total assets reported on the Bank’s quarterly Call Report. This borrowing capacity was collateralized by pledges of certain real estate loans with an aggregate loan balance of $ 774.1 million and investment securities of $ 3.9 million. As of June 30, 2024, the Bank’s borrowings from the FHLB – San Francisco were $ 238.5 million, with varying maturity dates through the year 2028. In addition, the Bank utilizes its borrowing facility for letters of credit and for the Mortgage Partnership Finance (“MPF”) program credit enhancement. The outstanding letters of credit was $ 16.0 million and the outstanding MPF credit enhancement was $ 216,000 at June 30, 2024. As of June 30, 2024, the remaining borrowing capacity with the FHLB – San Francisco was $ 261.3 million. ​ As of June 30, 2023, the Bank’s FHLB – San Francisco maximum borrowing capacity was approximately $ 534.1 million, which is limited to 40 % of total assets reported on the Bank’s quarterly Call Report. This borrowing capacity was collateralized by pledges of certain real estate loans with an aggregate loan balance of $ 967.6 million and investment securities of $ 4.2 million. As of June 30, 2023, the Bank’s borrowings from the FHLB – San Francisco were $ 235.0 million, with varying maturity dates through the year 2028. In addition, the Bank utilizes its borrowing facility for letters of credit and for the MPF program credit enhancement. The outstanding letters of credit were $ 11.0 million and the outstanding MPF credit enhancement was $ 216,000 at June 30, 2023. As of June 30, 2023, the remaining borrowing capacity with FHLB – San Francisco was $ 287.9 million. ​ In addition, as of June 30, 2024 and 2023, the Bank had $ 208.6 million and $ 139.0 million of borrowing capacity available from the discount window facility at the FRB of San Francisco, respectively, collateralized by investment securities and loans held for investment at June 30, 2024 and collateralized by investment securities only at June 30, 2023. As of June 30, 2024 and 2023, the Bank also had a borrowing arrangement in the form of a federal funds facility with its correspondent bank for $ 50.0 million at both dates. The Bank intends to request a renewal of its borrowing arrangement with the correspondent bank prior to maturity on June 30, 2025. As of both June 30, 2024 and 2023, there were no outstanding borrowings under the discount window facility or the federal funds facility. ​ Borrowings at June 30, 2024 and 2023 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ FHLB - San Francisco advances ​ $ 238,500 ​ $ 235,009 ​ As a member of the FHLB – San Francisco, the Bank is required to maintain a minimum investment in FHLB – San Francisco capital stock. At June 30, 2024 and 2023, the Bank held a stock investment of $ 9.6 million and $ 9.5 million, respectively, with no excess capital stock. 106 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ During fiscal 2024 and 2023, the Bank purchased $ 63,000 and $ 1.3 million of FHLB - San Francisco capital stock, respectively. In fiscal 2024 and 2023, the FHLB – San Francisco distributed $ 793,000 and $ 556,000 of cash dividends, respectively, to the Bank. ​ The following tables set forth certain information regarding borrowings by the Bank at the dates and for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended June 30, ​ (Dollars in Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ Balance outstanding at the end of year: ​ ​ ​ ​ ​ ​ ​ FHLB - San Francisco advances ​ $ 238,500 ​ $ 235,009 ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average rate at the end of year: ​ ​ ​ ​ ​ ​ ​ FHLB - San Francisco advances ​ 4.88 % 4.34 % ​ ​ ​ ​ ​ ​ ​ ​ Maximum amount of borrowings outstanding at any month end: ​ ​ ​ ​ ​ ​ ​ FHLB - San Francisco advances ​ $ 242,500 ​ $ 235,009 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average short-term borrowings during the year with respect to: (1) ​ ​ ​ FHLB - San Francisco advances ​ $ 127,506 ​ $ 113,688 ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average short-term borrowing rate during the year with respect to: (1) ​ ​ ​ FHLB - San Francisco advances ​ 4.70 % 3.87 % ​ (1) Borrowings with a remaining term of 12 months or less. ​ The aggregate annual contractual maturities of borrowings at June 30, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (Dollars in Thousands) 2024 2023 Within one year ​ $ 145,500 ​ $ 150,009 ​ Over one to two years ​ 68,000 ​ 70,000 ​ Over two to three years ​ 10,000 ​ 10,000 ​ Over three to four years ​ 5,000 ​ — ​ Over four to five years ​ 10,000 ​ 5,000 ​ Over five years ​ — ​ — ​ Total borrowings ​ $ 238,500 ​ $ 235,009 ​ Weighted average interest rate ​ 4.88 % 4.34 % ​ ​ ​ Note 8: Income Taxes ​ ASC 740, “Income Taxes,” requires the affirmative evaluation that it is more likely than not, based on the technical merits of a tax position, that an enterprise is entitled to economic benefits resulting from positions taken in income tax returns. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. Management has determined that there were no unrecognized tax benefits to be reported in the Corporation’s consolidated financial statements for the fiscal years ended June 30, 2024 and 2023. ​ Under generally accepted accounting principles, the Corporation uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their 107 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. ​ The Corporation’s effective tax rate may differ from the estimated statutory tax rates described above due to discrete items such as further adjustments to net deferred tax assets, excess tax benefits derived from stock option exercises and non-taxable earnings from bank owned life insurance, among other items. ​ The Corporation utilizes the asset and liability method of accounting for income taxes whereby deferred tax assets are recognized for deductible temporary differences and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment. ​ The provision for income taxes for the years indicated consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ Current: ​ ​ Federal ​ $ 2,161 ​ $ 1,638 State ​ 1,278 ​ 955 ​ ​ 3,439 ​ 2,593 Deferred: ​ ​ Federal ​ ( 238 ) ​ 783 State ​ ( 165 ) ​ 448 ​ ​ ( 403 ) ​ 1,231 Provision for income taxes ​ $ 3,036 ​ $ 3,824 ​ The Corporation’s tax expense from non-qualified stock-based compensation recognized in the Consolidated Statements of Operations in connection with the adoption of ASU 2016-09 for fiscal 2024 and 2023 was $ 0 and $ 186,000 , respectively. ​ The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to net income before income taxes as a result of the following differences for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, ​ ​ 2024 ​ 2023 ​ (In Thousands) Amount Tax Rate Amount Tax Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal income tax at statutory rate ​ $ 2,181 21.00 % $ 2,607 21.00 % State income tax, net of federal income tax benefit ​ 880 8.48 % 1,107 8.92 % Changes in taxes resulting from: ​ ​ ​ ​ ​ Bank-owned life insurance ​ ( 39 ) ( 0.38 ) % ( 39 ) ( 0.31 ) % Non-deductible expenses ​ 12 0.12 % 11 0.09 % Shortfall on stock-based compensation ​ — — % 132 1.06 % Return to provision adjustment ​ ​ ( 1 ) ​ ( 0.01 ) % ​ 4 ​ 0.03 % Other ​ 3 0.02 % 2 0.01 % Effective income tax ​ $ 3,036 29.23 % $ 3,824 30.80 % ​ 108 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Deferred tax assets at June 30, 2024 and 2023 by jurisdiction were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ Deferred taxes - federal ​ $ 404 ​ $ 179 Deferred taxes - state ​ 202 ​ 39 Total net deferred tax assets ​ $ 606 ​ $ 218 ​ Net deferred tax assets at June 30, 2024 and 2023 were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ Loss reserves ​ $ 2,387 ​ $ 2,032 Non-accrued interest ​ 175 ​ 188 Deferred compensation ​ 2,388 ​ 2,339 Accrued vacation ​ 187 ​ 194 Depreciation ​ 174 ​ 155 State tax ​ 203 ​ 199 Unrealized loss on investment securities ​ 4 ​ 19 Lease liability ​ ​ 448 ​ ​ 691 Other ​ 208 ​ 288 Total deferred tax assets ​ 6,174 ​ 6,105 ​ ​ ​ ​ ​ ​ ​ FHLB - San Francisco stock dividends ​ ( 645 ) ​ ( 645 ) Prepaid expenses ​ ( 39 ) ​ ( 45 ) Unrealized gain on interest-only strips ​ ( 3 ) ​ ( 3 ) Right-of-use asset ​ ​ ( 432 ) ​ ​ ( 684 ) Deferred loan costs, net ​ ( 4,449 ) ​ ( 4,510 ) Total deferred tax liabilities ​ ( 5,568 ) ​ ( 5,887 ) Net deferred tax assets ​ $ 606 ​ $ 218 ​ The net deferred tax assets were included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition. The Corporation analyzes the deferred tax assets to determine whether a valuation allowance is required based on the more-likely-than-not criteria that such assets will be realized principally through future taxable income. This criteria takes into account the actual earnings and the estimates of future profitability. The Corporation may carryback net federal tax losses to the preceding five taxable years and forward to the succeeding 20 taxable years. At June 30, 2024 and 2023, the Corporation had no federal and state net tax loss carryforwards. Based on management’s consideration of historical and anticipated future income before income taxes, as well as the reversal period for the items giving rise to the deferred tax assets and liabilities, a valuation allowance was not considered necessary at June 30, 2024 and 2023 and management believes it is more likely than not the Corporation will realize its deferred tax asset. ​ Retained earnings at June 30, 2024 and 2023 include approximately $ 9.0 million (pre-1988 bad debt reserve for tax purposes) for which federal income tax of $ 3.1 million has not been provided. If the amounts that qualify as deductions for federal income tax purposes are later used for purposes other than for bad debt losses, including distribution in liquidation, they will be subject to federal income tax at the then-current corporate tax rate. If those amounts are not so used, they will not be subject to tax even in the event the Bank were to convert its charter from a thrift to a bank. ​ The Corporation files income tax returns for the United States and California jurisdictions. The Internal Revenue Service has audited the Bank’s income tax returns through 1996 and the California Franchise Tax Board has audited the Bank through 1990. Also, the Internal Revenue Service completed a review of the Corporation’s income tax returns for fiscal 2006 and 2007; and the California Franchise Tax Board completed a review of the Corporation’s income tax returns for 109 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements fiscal 2009 and 2010. Fiscal years 2022 and thereafter remain subject to federal examination, while the California state tax returns for fiscal years 2021 and thereafter are subject to examination by state taxing authorities. ​ It is the Corporation’s policy to record any penalties or interest charges arising from federal or state taxes as a component of income tax expense. For the fiscal years ended June 30, 2024 and 2023, there were no tax penalties and no interest charges arising from federal or state taxes. ​ ​ Note 9: Capital ​ The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. Under 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 weightings and other factors. ​ For a bank holding company such as the Corporation with less than $3.0 billion in assets, the capital guidelines apply on a bank only basis. The FRB expects the holding company’s subsidiary bank to be well capitalized under the prompt corrective action regulations. If the Corporation was subject to regulatory guidelines for bank holding companies at June 30, 2024, it would have exceeded all regulatory capital requirements. ​ The Bank is subject to capital regulations which establish minimum required capital ratios for Tier 1 leverage, common equity Tier 1 (“CET1”), Tier 1 risk-based and total risk-based capital. Additionally, a capital conservation buffer is required over the required minimum capital ratios, and capital regulations also defines what qualifies as capital for purposes of meeting the capital requirements. Failure to meet minimum requirements can initiate certain mandatory and possibly additional discretionary actions by bank regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. ​ In addition to the minimum capital ratios, the Bank must maintain a capital conservation buffer consisting of additional CET1 capital greater than 2.5 % above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. ​ 110 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The Bank’s actual and required minimum capital amounts and ratios at the dates indicated are as follows (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Regulatory Requirements ​ ​ ​ ​ ​ ​ ​ Minimum for Capital ​ Minimum to Be ​ ​ Actual ​ Adequacy Purposes (1) ​ Well Capitalized ​ Amount Ratio Amount Ratio Amount Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provident Savings Bank, F.S.B.: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2024 (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage capital (to adjusted average assets) ​ $ 126,601 10.02 % $ 50,555 4.00 % $ 63,194 5.00 % CET1 capital (to risk-weighted assets) ​ $ 126,601 19.29 % $ 45,934 7.00 % $ 42,653 6.50 % Tier 1 capital (to risk-weighted assets) ​ $ 126,601 19.29 % $ 55,777 8.50 % $ 52,496 8.00 % Total capital (to risk-weighted assets) ​ $ 133,723 20.38 % $ 68,900 10.50 % $ 65,620 10.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2023 ​ ​ ​ ​ Tier 1 leverage capital (to adjusted average assets) ​ $ 125,979 9.59 % $ 52,521 4.00 % $ 65,651 5.00 % CET1 capital (to risk-weighted assets) ​ $ 125,979 18.50 % $ 47,674 7.00 % $ 44,269 6.50 % Tier 1 capital (to risk-weighted assets) ​ $ 125,979 18.50 % $ 57,890 8.50 % $ 54,485 8.00 % Total capital (to risk-weighted assets) ​ $ 131,967 19.38 % $ 71,511 10.50 % $ 68,106 10.00 % ​ (1) Inclusive of the conservation buffer of 2.50 % for CET1 capital, Tier 1 capital and Total capital ratios . (2) The Bank elected to recognize the full $ 824 thousand adjustment to retained earnings resulting from the adoption of CECL on July 1, 2023 instead of over the permitted three-year phase-in option . ​ At June 30, 2024, the Bank exceeded all regulatory capital requirements. The Bank was categorized as "well-capitalized" at June 30, 2024 under the regulations of the Office of the Comptroller of the Currency (“OCC”). ​ The ability of Provident Financial Holdings to pay dividends to stockholders depends primarily on the ability of the Bank to pay dividends to Provident Financial Holdings. Provident Financial Holdings and the Bank may not declare or pay cash dividends on or repurchase any of its shares of common stock, if the effect would cause stockholders’ equity to be reduced below applicable regulatory capital maintenance requirements or if such declaration and payment would otherwise violate regulatory requirements. ​ Generally, savings institutions, such as the Bank, that are well-capitalized before and after the proposed distribution may make capital distributions during any calendar year up to 100% of net income for the year-to-date plus retained net income for the two preceding years. However, an institution deemed to be in need of more than normal supervision or classified as troubled condition by the OCC may have its dividend authority restricted by the OCC. If the Bank, however, proposes to make a capital distribution when it does not meet its capital requirements (or will not following the proposed capital distribution) or that will exceed the net income-based limitations, it must obtain the OCC's approval prior to making such distribution. In addition, the Bank must file a prior written notice of a dividend with the FRB. The FRB or the OCC may object to a capital distribution based on safety and soundness concerns. Additional restrictions on Bank dividends may apply if the Bank fails the Qualified Thrift Lender test. In fiscal 2024 and 2023, the Bank declared and paid $ 7.0 million and $ 9.5 million of cash dividends to its parent, Provident Financial Holdings, respectively. ​ ​ Note 10: Benefit Plans ​ The Corporation has a 401(k) defined-contribution plan covering all employees meeting specific age and service requirements. Under the plan, employees may contribute to the plan from their pretax compensation up to the limits set by the Internal Revenue Service. The Corporation makes matching contributions up to 3 % of a participants’ pretax compensation. Participants vest immediately in their own contributions with 100 % vesting in the Corporation’s 111 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements contributions occurring after six years of credited service. The Corporation’s expense for the plan was approximately $ 303,000 and $ 306,000 for the fiscal years ended June 30, 2024 and 2023, respectively. ​ The Corporation has a multi-year employment agreement and a post-retirement compensation agreement with one executive officer. In addition, the Corporation has a transition agreement and a post-retirement compensation agreement with the previous executive officer (currently the Chairman of the Board of Directors). At June 30, 2024 and 2023, the accrued liability of the post-retirement compensation agreements was $ 5.7 million at both dates; any costs (recoveries) are being accrued and expensed quarterly. In fiscal 2024, the increase in the discount rate and a lower life expectancy was offset by a higher current compensation. For fiscal 2024 and 2023, the accrued expense (recovery) for these liabilities was $ 85,000 and $( 1.1 million), respectively. The current obligation for these post-retirement benefits was fully funded consistent with contractual requirements and actuarially determined estimates of the total future obligation. The Corporation invests in BOLI to provide sufficient funding for these post-retirement obligations. As of June 30, 2024 and 2023, the total outstanding cash surrender value of the BOLI was $ 8.6 million and $ 8.4 million, respectively. For fiscal 2024 and 2023, total BOLI non-taxable income, net of mortality cost, was $ 186,000 for both periods. ​ Employee Stock Ownership Plan The Corporation established an ESOP on June 27, 1996 for all employees who are age 21 or older and have completed one year of service with the Corporation during which they have served a minimum of 1,000 hours. ​ The Corporation recognizes compensation expense when the Corporation contributes funds to the ESOP for the purchase of the Corporation’s common stock to be allocated to the ESOP participants. The Corporation's contribution to the ESOP plan is discretionary. During fiscal 2024 and 2023, there were 40,000 shares for each year that were purchased in the open market to fulfill the annual discretionary allocation. Since the annual contributions are discretionary, the benefits payable under the ESOP cannot be estimated. ​ Benefits generally become 100 % vested after six years of credited service. Vesting accelerates upon retirement, death or disability of the participant or in the event of a change in control of the Corporation. Forfeitures are reallocated among remaining participating employees in the same proportion as contributions. Benefits are payable upon death, retirement, early retirement, disability or separation from service. ​ The net expense related to the ESOP for the fiscal years ended June 30, 2024 and 2023 was $ 540,000 and $ 563,000 , respectively. Available shares and cash contributions, if any, are allocated every calendar year end. The total ESOP allocation for calendar 2023 was 40,000 shares, as compared to 20,000 shares and $ 317,000 of cash contributions for calendar 2022. ​ ​ Note 11: Incentive Plans ​ As of June 30, 2024, the Corporation had four share-based compensation plans: the 2022 Equity Incentive Plan (“2022 Plan”); the 2013 Equity Incentive Plan (“2013 Plan”); the 2010 Equity Incentive Plan (“2010 Plan”); and the 2006 Equity Incentive Plan (“2006 Plan”), collectively, the “Plans”. For the fiscal years ended June 30, 2024 and 2023, the compensation cost for the Plans was $ 240,000 and $ 1.2 million, respectively. ​ Equity Incentive Plans. The Corporation established the Plans, which were all approved by shareholders for directors, advisory directors, directors emeriti, officers and employees of the Corporation and its subsidiary. The 2022 Plan authorizes 175,000 stock options and 200,000 shares of restricted stock. The 2022 Plan also provides that no person may be granted more than 35,000 stock options or 30,000 shares of restricted stock in any one year. The 2013 Plan authorizes 300,000 stock options and 300,000 shares of restricted stock. The 2013 Plan also provides that no person may be granted more than 60,000 stock options or 45,000 shares of restricted stock in any one year. The 2010 Plan authorized 586,250 stock options and 288,750 shares of restricted stock. The 2006 Plan authorized 365,000 stock options and 185,000 shares of restricted stock. As of June 30, 2024, equity awards may be granted only from the 2022 Plan, while no new equity awards can be granted from the 2013 Plan, 2010 Plan and 2006 Plan. ​ Equity Incentive Plans - Stock Options. Under the Plans, options may not be granted at a price less than the fair market value at the date of the grant. Options typically vest over a five-year or shorter period as long as the director, advisory 112 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements director, director emeritus, officer or employee remains in service to the Corporation. The options are exercisable after vesting for up to the remaining term of the original grant. The maximum term of the options granted is 10 years . ​ The fair value of each option grant is estimated using the Black-Scholes option valuation model with the following assumptions as of the grant date for the periods indicated. The expected volatility is based on implied volatility from historical common stock closing prices for the prior 84 months . The expected dividend yield is based on the most recent quarterly dividend on an annualized basis. The expected term is based on the historical experience of all fully vested stock option grants and is reviewed annually. The risk-free interest rate is based on the U.S. Treasury note rate with a term similar to the underlying stock option on the particular grant date. ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2024 Fiscal 2023 Expected volatility 21.6 % - 22.9 % 20.3 % Weighted average volatility 22.5 % 20.3 % Expected dividend yield 4.5 % 3.9 % Expected term (in years) 7.4 7.3 Risk-free interest rate 4.3 % 2.9 % ​ As of June 30, 2024, there were 77,000 options available for future grants under the 2022 Plan. As of June 30, 2023, there were 175,000 options available for future grants under the 2022 Plan and 21,000 options available for future grants under the 2013 Plan. ​ The following tables summarize the stock option activity in the Plans during the fiscal years ended June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ Weighted ​ Average ​ Aggregate ​ ​ ​ ​ Average ​ Remaining ​ Intrinsic ​ ​ ​ ​ Exercise ​ Contractual ​ Value Options ​ Shares ​ Price ​ Term (Years) ​ ($000) Outstanding at June 30, 2022 431,000 ​ $ 16.24 ​ Granted 30,000 ​ $ 14.52 ​ Exercised — ​ $ — ​ Forfeited ( 7,500 ) ​ $ 20.19 ​ Expired ​ ( 19,000 ) ​ $ 16.47 ​ ​ ​ ​ ​ Outstanding at June 30, 2023 434,500 ​ $ 16.04 3.01 ​ $ — Vested and expected to vest at June 30, 2023 425,700 ​ $ 16.06 2.89 ​ $ — Exercisable at June 30, 2023 390,500 ​ $ 16.13 2.34 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at June 30, 2023 434,500 ​ $ 16.04 ​ Granted 98,000 ​ $ 12.44 ​ Exercised — ​ $ — ​ Forfeited ( 5,000 ) ​ $ 14.52 ​ Expired ​ ( 47,500 ) ​ $ 15.71 ​ ​ ​ ​ ​ Outstanding at June 30, 2024 480,000 ​ $ 15.35 3.29 ​ $ — Vested and expected to vest at June 30, 2024 475,950 ​ $ 16.36 3.25 ​ $ — Exercisable at June 30, 2024 355,000 ​ $ 16.18 1.14 ​ $ — ​ As of June 30, 2024 and 2023, there was $ 231,000 and $ 72,000 of unrecognized compensation expense, respectively, related to unvested share-based compensation arrangements with respect to stock options issued under the Plans. The expense is expected to be recognized over a weighted average period of 3.5 years and 2.9 years, respectively. The forfeiture rate during fiscal 2024 and 2023 was 15 % and 20 %, respectively, and was calculated by using the historical forfeiture experience of all fully vested stock option grants which is reviewed annually. ​ 113 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Equity Incentive Plans – Restricted Stock. Awarded shares typically vest over a five-year or shorter period as long as the director, advisory director, director emeriti, officer or employee remains in service to the Corporation. Once vested, a recipient of restricted stock will have all rights of a shareholder, including the power to vote and the right to receive dividends. The Corporation recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the award date. ​ As of June 30, 2024, there were 69,000 shares available for future awards under the 2022 Plan. As of June 30, 2023, there were 200,000 shares available for future awards under the 2022 Plan and 18,250 shares available for future awards under the 2013 Plan. ​ The following table summarizes the restricted stock activity for the fiscal years ended June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Award Date Unvested Shares ​ Shares Fair Value Unvested at June 30, 2022 94,750 ​ $ 18.57 Awarded 53,000 ​ $ 12.95 Vested ( 93,750 ) ​ $ 18.57 Forfeited ( 3,000 ) ​ $ 14.82 Unvested at June 30, 2023 51,000 ​ $ 12.95 Expected to vest at June 30, 2023 40,800 ​ $ 12.95 ​ ​ ​ ​ ​ ​ Unvested at June 30, 2023 51,000 ​ $ 12.95 Awarded 131,000 ​ $ 11.08 Vested ( 2,000 ) ​ $ 12.09 Forfeited ( 3,350 ) ​ $ 12.95 Unvested at June 30, 2024 176,650 ​ $ 11.57 Expected to vest at June 30, 2024 150,153 ​ $ 11.57 ​ As of June 30, 2024 and 2023, the unrecognized compensation expense was $ 1.8 million and $ 544,000 , respectively, related to unvested share-based compensation arrangements with respect to restricted stock issued under the Plans, and reported as a reduction to stockholders’ equity. This expense is expected to be recognized over a weighted average period of 3.5 years and 3.1 years, respectively. Similar to stock options, a forfeiture rate of 15 % and 20 % was applied to the restricted stock compensation expense calculations in fiscal 2024 and 2023, respectively. For the fiscal years ended June 30, 2024 and 2023, the fair value of shares vested and distributed was $ 24,000 and $ 1.1 million, respectively. ​ ​ Note 12: Earnings Per Share ​ Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of the Corporation. ​ As of June 30, 2024 and 2023, there were outstanding options to purchase 480,000 shares and 434,500 shares of the Corporation’s common stock, of which 382,000 shares and 434,500 shares, respectively, were excluded from the diluted EPS computation as their effect was anti-dilutive. As of June 30, 2024 and 2023, there were outstanding restricted stock awards of 176,650 shares and 51,000 shares, respectively. ​ 114 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following table provides the basic and diluted EPS computations for the fiscal years ended June 30, 2024 and 2023, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended June 30, 2024 ​ Income Shares Per-Share (Dollars in Thousands, Except Share Amount) ​ (Numerator) ​ (Denominator) ​ Amount ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic EPS ​ $ 7,351 6,942,918 ​ $ 1.06 Effect of dilutive shares: ​ ​ Stock options ​ ​ ​ 76 ​ ​ ​ Restricted stock ​ ​ ​ 16,149 ​ ​ ​ Diluted EPS ​ $ 7,351 6,959,143 ​ $ 1.06 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended June 30, 2023 ​ Income Shares Per-Share (Dollars in Thousands, Except Share Amount) ​ (Numerator) ​ (Denominator) ​ Amount ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic EPS ​ $ 8,592 7,143,273 ​ $ 1.20 Effect of dilutive shares: ​ ​ Stock options ​ ​ — ​ ​ ​ Restricted stock ​ ​ 48,412 ​ ​ ​ Diluted EPS ​ $ 8,592 7,191,685 ​ $ 1.19 ​ ​ ​ Note 13: Commitments and Contingencies ​ Periodically, there have been various claims and lawsuits involving the Corporation, such as claims to enforce liens, condemnation proceedings on properties in which the Corporation holds security interests, claims involving the making and servicing of real property loans, employment matters and other issues in the ordinary course of and incidental to the Corporation’s business. These proceedings and the associated legal claims are often contested and the outcome of individual matters is not always predictable. Additionally, in some actions, it is difficult to assess potential exposure because the Corporation is still in the early stages of the litigation. The Corporation is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition, operations or cash flows. ​ The Corporation conducts a portion of its operations in leased facilities and has maintenance contracts under non-cancelable agreements classified as operating leases, which include leases recorded under ASC 842 on liabilities for future lease obligations as well as assets representing the right-to-use the underlying leased assets (See Note 4 of the Notes to Consolidated Financial Statements). ​ The following is a schedule of the Corporation’s lease and operating commitments: ​ ​ ​ ​ ​ ​ Amount Year Ending June 30, ​ (In Thousands) ​ ​ ​ ​ 2025 ​ $ 1,837 2026 ​ 1,139 2027 ​ 358 2028 ​ 156 2029 ​ 74 Thereafter ​ — Total minimum payments required ​ $ 3,564 ​ For the fiscal years ended June 30, 2024 and 2023, the lease and operating commitment expense was approximately $ 2.3 million and $ 1.9 million, respectively. 115 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ The Bank sold single-family mortgage loans to unrelated third parties with standard representation and warranty provisions in the ordinary course of its business activities. Under these provisions, the Bank is required to repurchase any previously sold loan for which the representations or warranties of the Bank prove to be inaccurate, incomplete or misleading. In the event of a borrower default or fraud, pursuant to a breached representation or warranty, the Bank may be required to reimburse the investor for any losses suffered. As of June 30, 2024 and 2023, the Bank maintained a non-contingent recourse liability related to these representations and warranties of $ 18,000 and $ 25,000 , respectively. In addition, the Bank maintained a recourse liability of $ 8,000 at both June 30, 2024 and 2023 for loans sold to the FHLB – San Francisco under the MPF program. ​ In the ordinary course of business, the Corporation enters into contracts with third parties under which the third parties provide services on behalf of the Corporation. In many of these contracts, the Corporation agrees to indemnify the third party service provider under certain circumstances. The terms of the indemnity vary from contract to contract and the amount of the indemnification liability, if any, cannot be determined. The Corporation also enters into other contracts and agreements; such as, loan sale agreements, litigation settlement agreements, confidentiality agreements, loan servicing agreements, leases and subleases, among others, in which the Corporation agrees to indemnify third parties for acts by the Corporation’s agents, assignees and/or sub-lessees, and employees. Due to the nature of these indemnification provisions, the Corporation cannot calculate its aggregate potential exposure. ​ Pursuant to their governing instruments, the Corporation and its subsidiaries provide indemnification to directors, officers, employees and, in some cases, agents of the Corporation against certain liabilities incurred as a result of their service on behalf of or at the request of the Corporation and its subsidiaries. It is not possible for the Corporation to determine the aggregate potential exposure resulting from the obligation to provide this indemnity. ​ ​ Note 14: Derivative and Other Financial Instruments with Off-Balance Sheet Risks ​ The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit in the form of originating loans or providing funds under existing lines of credit, loan sale commitments to third parties and option contracts. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the accompanying Consolidated Statements of Financial Condition. The Corporation’s exposure to credit loss, in the event of non-performance by the counterparty to these financial instruments, is represented by the contractual amount of these instruments. The Corporation uses the same credit policies in entering into financial instruments with off-balance sheet risk as it does for on-balance sheet instruments. As of June 30, 2024 and 2023, the Corporation had commitments to extend credit on loans to be held for investment of $ 9.4 million and $ 2.4 million, respectively. ​ The following table provides information at the dates indicated regarding undisbursed funds to borrowers on existing lines of credit with the Corporation as well as commitments to originate loans to be held for investment at the dates indicated below: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, Commitments ​ 2024 ​ 2023 (In Thousands) ​ ​ Undisbursed loan funds – Construction loans ​ $ 435 ​ $ 2,032 Undisbursed lines of credit – Commercial business loans ​ 2,936 ​ 607 Undisbursed lines of credit – Consumer loans ​ 341 ​ 363 Commitments to extend credit on loans to be held for investment ​ 9,387 ​ 2,394 Total ​ $ 13,099 ​ $ 5,396 ​ ​ ​ 116 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Note 15: Fair Value of Financial Instruments ​ The Corporation adopted ASC 820, “Fair Value Measurements and Disclosures,” and elected the fair value option pursuant to ASC 825, “Financial Instruments” on single-family loans originated for sale. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 825 permits entities to elect to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis (the “Fair Value Option”) at specified election dates. At each subsequent reporting date, an entity is required to report unrealized gains and losses on items in earnings for which the fair value option has been elected. The objective of the Fair Value Option is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. ​ The following table describes the difference at the dates indicated between the aggregate fair value and the aggregate unpaid principal balance of loans held for investment at fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ ​ ​ ​ ​ ​ Unpaid ​ Net ​ ​ Aggregate ​ Principal ​ Unrealized (In Thousands) Fair Value Balance Loss As of June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment, at fair value ​ $ 1,047 ​ $ 1,200 ​ $ ( 153 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2023: ​ ​ ​ Loans held for investment, at fair value ​ $ 1,312 ​ $ 1,483 ​ $ ( 171 ) ​ ASC 820 establishes a three-level valuation hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows: Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date. Level 2 - Observable inputs other than Level 1 such as: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated to observable market data for substantially the full term of the asset or liability. Valuation techniques may include the use of discounted cash flow models and similar techniques. Level 3 - Unobservable inputs for the asset or liability that use significant assumptions, including assumptions of risks. These unobservable assumptions reflect the Corporation’s estimate of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of pricing models, discounted cash flow models and similar techniques. ​ ASC 820 requires the Corporation to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. ​ The Corporation’s financial assets and liabilities measured at fair value on a recurring basis consist of investment securities available for sale, loans held for investment at fair value, other equity investments and interest-only strips; while loans with individually evaluated allowances and mortgage servicing assets (“MSA”) are measured at fair value on a nonrecurring basis. ​ Investment securities - available for sale are primarily comprised of U.S. government agency MBS, U.S. government sponsored enterprise MBS, private issue CMO and investment in equity securities. The Corporation utilizes quoted prices in active markets for similar securities for its fair value measurement of MBS and investment in equity securities (Level 2) and broker price indications for similar securities in non-active markets for its fair value measurement of the private issue CMO (Level 3). ​ 117 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Loans held for investment at fair value are primarily single-family loans which have been transferred from loans held for sale. The fair value is determined by management estimates of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan (Level 3). ​ Loans with individually evaluated allowance that are recorded at fair value on a nonrecurring basis are loans which are inadequately protected by the current sound worth and paying capacity of the borrowers or of the collateral pledged. These loans are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. The fair value of a loan with an individually evaluated allowance is determined based on the discounted cash flow or current appraised value of the underlying collateral. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the collateral. For commercial real estate loans with an individually evaluated allowance, the fair value is derived from the appraised value of its collateral. Loans with an individually evaluated allowance are reviewed and evaluated on at least a quarterly basis for additional allowance and adjusted accordingly, based on the same factors identified above (Level 3). This loss is not recorded directly as an adjustment to current earnings or other comprehensive income (loss), but rather as a component in determining the overall adequacy of the ACL. These adjustments to the estimated fair value of loans with an individually evaluated allowance may result in increases or decreases to the provision for (recovery of) credit losses recorded in current earnings. ​ The fair value of other equity investments is derived from quoted prices in active markets for the equivalent or similar investments (Level 2). ​ The Corporation uses the amortization method for its MSA, which amortizes the MSA in proportion to and over the period of estimated net servicing income and assesses the MSA for impairment based on fair value at each reporting date. The fair value of the MSA is derived using the present value method; which includes a third party’s prepayment projections of similar instruments, weighted average coupon rates, estimated servicing costs and discount interest rates (Level 3). ​ The fair value of interest-only strips is derived using the same assumptions that are used to value the related MSA (Level 3). ​ The Corporation’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Corporation’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. ​ 118 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following fair value hierarchy tables present information at the dates indicated about the Corporation’s assets and liabilities measured at fair value on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement at June 30, 2024 Using: (In Thousands) Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities - available for sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency MBS ​ $ — ​ $ 1,208 ​ $ — ​ $ 1,208 U.S. government sponsored enterprise MBS ​ — ​ 553 ​ — ​ 553 Private issue CMO ​ — ​ — ​ 88 ​ 88 Investment securities - available for sale ​ — ​ 1,761 ​ 88 ​ 1,849 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment, at fair value ​ — ​ — ​ 1,047 ​ 1,047 Other equity investments, fair value ​ ​ — ​ ​ 540 ​ ​ — ​ ​ 540 Interest-only strips ​ — ​ — ​ 8 ​ 8 Total assets ​ $ — ​ $ 2,301 ​ $ 1,143 ​ $ 3,444 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ $ — ​ $ — ​ $ — ​ $ — Total liabilities ​ $ — ​ $ — ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement at June 30, 2023 Using: (In Thousands) ​ Level 1 ​ ​ Level 2 ​ Level 3 ​ Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities - available for sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency MBS ​ $ — ​ $ 1,370 ​ $ — ​ $ 1,370 U.S. government sponsored enterprise MBS ​ — ​ 683 ​ — ​ 683 Private issue CMO ​ — ​ — ​ 102 ​ 102 Investment securities - available for sale ​ — ​ 2,053 ​ 102 ​ 2,155 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment, at fair value ​ — ​ — ​ 1,312 ​ 1,312 Interest-only strips ​ — ​ — ​ 9 ​ 9 Total assets ​ $ — ​ $ 2,053 ​ $ 1,423 ​ $ 3,476 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ $ — ​ $ — ​ $ — ​ $ — Total liabilities ​ $ — ​ $ — ​ $ — ​ $ — ​ 119 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The following tables provide a reconciliation of the beginning and ending balances during the periods shown of recurring fair value measurements recognized in the Consolidated Statements of Financial Condition using Level 3 inputs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement ​ ​ Using Significant Other Unobservable Inputs ​ ​ (Level 3) ​ ​ Private ​ Loans Held For ​ Interest- ​ ​ ​ ​ Issue ​ Investment, at ​ Only ​ ​ (In Thousands) CMO fair value (1) Strips Total Beginning balance at June 30, 2023 ​ $ 102 ​ $ 1,312 ​ $ 9 ​ $ 1,423 Adjustment due to ASC 326 CECL adoption ​ ​ — ​ ​ 28 ​ ​ — ​ ​ 28 Total gains or losses (realized/unrealized): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Included in earnings ​ — ​ ( 10 ) ​ — ​ ( 10 ) Included in other comprehensive income (loss) ​ ( 1 ) ​ — ​ ( 1 ) ​ ( 2 ) Purchases ​ — ​ — ​ — ​ — Issuances ​ — ​ — ​ — ​ — Settlements ​ ( 13 ) ​ ( 283 ) ​ — ​ ( 296 ) Transfers in and/or out of Level 3 ​ — ​ — ​ — ​ — Ending balance at June 30, 2024 ​ $ 88 ​ $ 1,047 ​ $ 8 ​ $ 1,143 ​ (1) The valuation of loans held for investment at fair value includes management’s estimate of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for interest rate characteristics. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement ​ ​ Using Significant Other Unobservable Inputs ​ ​ (Level 3) ​ ​ Private ​ Loans Held For ​ Interest- ​ ​ ​ ​ Issue ​ Investment, at ​ Only ​ ​ (In Thousands) CMO fair value (1) Strips Total Beginning balance at June 30, 2022 ​ $ 113 ​ $ 1,396 ​ $ 7 ​ $ 1,516 Total gains or losses (realized/ unrealized): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Included in earnings ​ — ​ 2 ​ — ​ 2 Included in other comprehensive income (loss) ​ 3 ​ — ​ 2 ​ 5 Purchases ​ — ​ — ​ — ​ — Issuances ​ — ​ — ​ — ​ — Settlements ​ ( 14 ) ​ ( 86 ) ​ — ​ ( 100 ) Transfers in and/or out of Level 3 ​ — ​ — ​ — ​ — Ending balance at June 30, 2023 ​ $ 102 ​ $ 1,312 ​ $ 9 ​ $ 1,423 ​ (1) The valuation of loans held for investment at fair value includes management’s estimate of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for interest rate characteristics. ​ The following fair value hierarchy table presents information about the Corporation’s assets measured at fair value at the dates indicated on a nonrecurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement at June 30, 2024 Using: (In Thousands) Level 1 Level 2 Level 3 Total Loans with individually evaluated allowance ​ $ — ​ $ — ​ $ 695 ​ $ 695 Mortgage servicing assets ​ — ​ — ​ 87 ​ 87 Total ​ $ — ​ $ — ​ $ 782 ​ $ 782 ​ 120 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement at June 30, 2023 Using: (In Thousands) ​ Level 1 ​ Level 2 ​ Level 3 ​ Total Loans with individually evaluated allowance $ — ​ $ 251 ​ $ 1,049 ​ $ 1,300 Mortgage servicing assets ​ — ​ — ​ 90 ​ 90 Total ​ $ — ​ $ 251 ​ $ 1,139 ​ $ 1,390 ​ The following table presents additional information about valuation techniques and inputs used for assets and liabilities, including derivative financial instruments, which are measured at fair value and categorized within Level 3 as of June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact to ​ ​ Fair Value ​ ​ ​ ​ ​ ​ ​ Valuation ​ ​ As of ​ ​ ​ ​ ​ ​ ​ from an ​ ​ June 30, ​ Valuation ​ ​ ​ Range (1) ​ Increase in (Dollars In Thousands) 2024 Techniques Unobservable Inputs (Weighted Average) Inputs (2) Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities available-for sale: Private issue CMO ​ $ 88 Market comparable pricing Comparability adjustment ( 2.0 %) - ( 6.5 %) ( 2.9 %) Increase ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment, at fair value ​ $ 1,047 Relative value analysis Broker quotes 86.9 % - 89.0 % ( 88.2 %) of par Increase ​ ​ ​ ​ ​ ​ ​ Credit risk factor 1.0 % - 1.1 % ( 1.0 %) ​ Decrease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans with individually evaluated allowance ​ $ 695 Discounted cash flow Default rate 5.0 % ​ Decrease ​ ​ ​ ​ ​ ​ ​ Discount rate ​ 6.9 % ​ Decrease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ MSAs ​ $ 87 Discounted cash flow Prepayment rate (CPR) 5.1 % - 60.0 % ( 9.6 %) Decrease ​ ​ ​ ​ ​ ​ Discount rate 9.0 % - 10.5 % ( 9.1 %) Decrease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-only strips ​ $ 8 Discounted cash flow Prepayment rate (CPR) 7.3 % - 12.3 % ( 8.6 %) ​ Decrease ​ ​ ​ ​ ​ ​ Discount rate 9.0 % Decrease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) The range is based on the historical estimated fair values and management estimates. (2) Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements. ​ The significant unobservable inputs used in the fair value measurement of the Corporation’s assets and liabilities include the following: CMO offered quotes, prepayment rates and discount rates, among others. Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement. The various unobservable inputs used to determine valuations may have similar or diverging impacts on valuation. For the fiscal year ended June 30, 2024, there were no significant changes to the Corporation's valuation techniques and inputs that had, or are expected to have, a material impact on its consolidated financial position or results of operations. 121 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements The carrying amount and fair value of the Corporation’s other financial instruments as of June 30, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ ​ Carrying ​ Fair ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) Amount Value Level 1 Level 2 Level 3 Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment, not recorded at fair value ​ $ 1,051,932 ​ $ 973,453 ​ $ — ​ $ — ​ $ 973,453 Investment securities - held to maturity ​ $ 130,051 ​ $ 114,393 ​ $ — ​ $ 114,393 ​ $ — FHLB – San Francisco stock ​ $ 9,568 ​ $ 9,568 ​ $ — ​ $ 9,568 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ Deposits ​ $ 888,348 ​ $ 888,527 ​ $ — ​ $ 888,527 ​ $ — Borrowings ​ $ 238,500 ​ $ 237,691 ​ $ — ​ $ 237,691 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ ​ Carrying ​ Fair ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) Amount Value Level 1 Level 2 Level 3 Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment, not recorded at fair value ​ $ 1,076,317 ​ $ 970,277 ​ $ — ​ $ — ​ $ 970,277 Investment securities - held to maturity ​ $ 154,337 ​ $ 135,541 ​ $ — ​ $ 135,541 ​ $ — FHLB – San Francisco stock ​ $ 9,505 ​ $ 9,505 ​ $ — ​ $ 9,505 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ $ 950,571 ​ $ 949,116 ​ $ — ​ $ 949,116 ​ $ — Borrowings ​ $ 235,009 ​ $ 232,764 ​ $ — ​ $ 232,764 ​ $ — ​ Loans held for investment, not recorded at fair value: For loans that reprice frequently at market rates, the carrying amount approximates the fair value. For fixed-rate loans, the fair value is determined by either (i) discounting the estimated future cash flows of such loans over their estimated remaining contractual maturities using a current interest rate at which such loans would be made to borrowers, or (ii) quoted market prices. ​ Investment securities - held to maturity: The investment securities - held to maturity consist of U.S. SBA securities, U.S. government sponsored enterprise MBS and U.S. government sponsored enterprise CMO. For the U.S. SBA securities and U.S. government sponsored enterprise MBS and CMO, the Corporation utilizes quoted prices in active markets for similar securities for its fair value measurement (Level 2). ​ FHLB – San Francisco stock is carried at cost/par value and represents its fair value. When redeemed, the Corporation will receive an amount equal to the par value of the stock. ​ Deposits: The fair value of time deposits is estimated using a discounted cash flow calculation. The discount rate is based upon observable inputs, including rates currently offered for deposits of similar remaining maturities. The fair value of transaction accounts (checking, money market and savings accounts) is equal to the carrying amounts payable on demand. ​ Borrowings: The fair value of borrowings has been estimated using a discounted cash flow calculation. The discount rate on such borrowings is based upon rates currently offered for borrowings of similar remaining maturities. ​ The Corporation has various processes and controls in place to ensure that fair value is reasonably estimated. The Corporation generally determines fair value of their Level 3 assets and liabilities by using internally developed models which primarily utilize discounted cash flow techniques and prices obtained from independent management services or brokers. The Corporation performs due diligence procedures over third-party pricing service providers in order to support their use in the valuation process. ​ While the Corporation believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a 122 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements different estimate of fair value at the reporting date. For the fiscal year ended June 30, 2024, there were no significant changes to the Corporation’s valuation techniques that had, or are expected to have, a material impact on its consolidated financial position or results of operations. ​ ​ Note 16: Revenue From Contracts With Customers ​ In accordance with ASC 606, revenues are recognized when goods or services are transferred to the customer in exchange for the consideration the Corporation expects to be entitled to receive. The largest portion of the Corporation’s revenue is from interest income, which is not in the scope of ASC 606. All the Corporation’s revenue from contracts with customers in the scope of ASC 606 is recognized in non-interest income. ​ If a contract is determined to be within the scope of ASC 606, the Corporation recognizes revenue as it satisfies a performance obligation. Payments from customers are generally collected at the time services are rendered, monthly, or quarterly. For contracts with customers within the scope of ASC 606, revenue is either earned at a point in time or revenue is earned over time. Examples of revenue earned at a point in time are automated teller machine ("ATM") transaction fees, wire transfer fees, overdraft fees and interchange fees. Revenue is primarily based on the number and type of transactions that are generally derived from transactional information accumulated by the Corporation’s systems and is recognized immediately as the transactions occur or upon providing the service to complete the customer's transaction. The Corporation is generally the principal in these contracts, with the exception of interchanges fees, in which case the Corporation is acting as the agent and records revenue net of expenses paid to the principal. Examples of revenue earned over time, which generally occur on a monthly basis, are deposit account maintenance fees, investment advisory fees, merchant revenue, trust and investment management fees and safe deposit box fees. Revenue is generally derived from transactional information accumulated by its systems or those of third-parties and is recognized as the related transactions occur or services are rendered to the customer. ​ Disaggregation of Revenue: ​ The following table includes the Corporation's non-interest income disaggregated by type of services for the fiscal years ended June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, Type of Services 2024 2023 (In Thousands) ​ ​ Loan servicing and other fees (1) ​ $ 337 ​ $ 414 Deposit account fees ​ ​ 1,154 ​ ​ 1,296 Card and processing fees ​ ​ 1,384 ​ ​ 1,525 Other (2) ​ 1,066 ​ 840 Total non-interest income ​ $ 3,941 ​ $ 4,075 ​ (1) Not within the scope of ASC 606. (2) Includes income on BOLI of $ 186 thousand and $ 186 thousand, net loss on sale of loans of $ 66 thousand and net gain on sale of loans of $ 124 thousand and net unrealized gain on other equity investments of $ 540 thousand and $ 0 for the fiscal years ended June 30, 2024 and 2023, respectively, which are not within the scope of ASC 606. ​ For the fiscal years ended June 30, 2024 and 2023, substantially all the Corporation’s revenues within the scope of ASC 606 were for performance obligations satisfied at a specified date. ​ Revenues recognized within the scope of ASC 606: ​ Deposit account fees: Fees are earned on the Bank's deposit accounts for various products offered to or services performed for the Bank's customers. Fees include business account fees, non-sufficient fund fees, ATM fees and others. These fees are recognized on a daily, monthly or quarterly basis, depending on the type of service. ​ Card and processing fees: Debit interchange income represents fees earned when a debit card issued by the Bank is used. The Bank earns interchange fees from cardholder transactions through a third party payment network. Interchange fees 123 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the cardholders' debit card. Certain expenses directly associated with the debit cards are recorded on a net basis with the interchange income. ​ Other: Includes asset management fees, stop payment fees, wire services fees, safe deposit box fees and other fees earned on other services, such as merchant services or occasional non-recurring type services, are recognized at the time of the event or the applicable billing cycle. Asset management fees are variable, since they are based on the underlying portfolio value, which is subject to market conditions and amounts invested by customers through a third-party provider. Asset management fees are recognized over the period that services are provided, and when the portfolio values are known or can be estimated at the end of each month. ​ Note 17: Holding Company Condensed Financial Information ​ This information should be read in conjunction with the other notes to the consolidated financial statements. The following is the Condensed Statements of Financial Condition for Provident Financial Holdings (Holding Company only) as of June 30, 2024 and 2023 and Condensed Statements of Operations and Cash Flows for the fiscal years ended June 30, 2024 and 2023. ​ Condensed Statements of Financial Condition ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 3,385 ​ $ 3,737 Investment in subsidiary ​ 126,601 ​ 125,949 Other assets ​ 64 ​ 67 ​ ​ $ 130,050 ​ $ 129,753 ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ Other liabilities ​ $ 109 ​ $ 66 Stockholders’ equity ​ 129,941 ​ 129,687 ​ ​ $ 130,050 ​ $ 129,753 ​ ​ Condensed Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ Dividend from the Bank ​ $ 7,000 ​ $ 9,500 Interest and other income ​ 2 ​ 3 Total income ​ 7,002 ​ 9,503 ​ ​ ​ General and administrative expenses ​ 1,294 ​ 1,267 Earnings before income taxes and equity in undistributed earnings of the Bank ​ 5,708 ​ 8,236 ​ ​ ​ Income tax benefit ​ ( 382 ) ​ ( 373 ) Earnings before equity in undistributed earnings of the Bank ​ 6,090 ​ 8,609 ​ ​ ​ Equity in undistributed earnings of the Bank ​ 1,261 ​ ( 17 ) Net income ​ $ 7,351 ​ $ 8,592 ​ 124 Table of Contents PROVIDENT FINANCIAL HOLDINGS, INC. Notes to Consolidated Financial Statements Condensed Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended June 30, (In Thousands) 2024 2023 ​ ​ ​ ​ ​ ​ ​ Cash flow from operating activities: ​ ​ Net income ​ $ 7,351 ​ $ 8,592 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ Equity in undistributed earnings of the Bank ​ ( 1,261 ) ​ 17 Decrease (increase) in other assets ​ 3 ​ ( 6 ) Increase in other liabilities ​ 43 ​ 29 Net cash provided by operating activities ​ 6,136 ​ 8,632 ​ ​ ​ Cash flow from financing activities: ​ ​ Treasury stock purchases ​ ( 2,601 ) ​ ( 4,648 ) Cash dividends ​ ( 3,887 ) ​ ( 3,998 ) Net cash used for financing activities ​ ( 6,488 ) ​ ( 8,646 ) Net decrease in cash during the year ​ ( 352 ) ​ ( 14 ) Cash and cash equivalents at beginning of year ​ 3,737 ​ 3,751 Cash and cash equivalents at end of year ​ $ 3,385 ​ $ 3,737 ​ ​ ​ Note 18: Subsequent Events ​ On July 25, 2024 , the Corporation announced that the Provident Financial Holdings Board of Directors declared a quarterly cash dividend of $ 0.14 per share. Shareholders of Provident Financial Holdings common stock at the close of business on August 15, 2024 are entitled to receive the cash dividend, payable on September 5, 2024 . ​ ************ ​ 125